GENERAL ELECTRIC CAPITAL CORP - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________

FORM 10-K
__________________________

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

________________

Commission file number 1-6461
________________

General Electric Capital Corporation
(Exact name of registrant as specified in its charter)

Delaware 13-1500700
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)

260 Long Ridge Road,
Stamford, Connecticut 06927 (203) 357-4000
- --------------------------------------- --------- -----------------------
(Address of principal executive offices) (Zip Code) (Registrant's telephone
number, including
area code)
________________

SECURITIES REGISTERED PURSUANT
TO SECTION 12(b) OF THE ACT:

Name of each
Title of each class exchange on which registered
- ------------------------------------ ----------------------------
7 7/8% Guaranteed Subordinated Notes New York Stock Exchange
Due December 1, 2006

SECURITIES REGISTERED PURSUANT
TO SECTION 12(g) OF THE ACT:

None.

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No __

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

At March 7, 2002, 3,837,825 shares of voting common stock, which constitute all
of the outstanding common equity, with a par value of $0.01 were outstanding.

Aggregate market value of the outstanding common equity held by nonaffiliates of
the registrant at March 7, 2002. None.

DOCUMENTS INCORPORATED BY REFERENCE

The consolidated financial statements of General Electric Company, set forth in
the Annual Report on Form 10-K of General Electric Company for the year ended
December 31, 2001 are incorporated by reference into Part IV hereof.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b)
OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE REDUCED DISCLOSURE
FORMAT.

TABLE OF CONTENTS

Page

PART I

Item 1. Business .......................................................................................... 1
Item 2. Properties ........................................................................................ 13
Item 3. Legal Proceedings ................................................................................. 13
Item 4. Submission of Matters to a Vote of Security Holders ............................................... 13

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters ......................... 14
Item 6. Selected Financial Data ........................................................................... 14
Item 7. Management's Discussion and Analysis of Results of Operations ..................................... 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ........................................ 27
Item 8. Financial Statements and Supplementary Data ....................................................... 28
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .............. 52

PART III

Item 10. Directors and Executive Officers of the Registrant ................................................ 53
Item 11. Executive Compensation ............................................................................ 53
Item 12. Security Ownership of Certain Beneficial Owners and Management .................................... 53
Item 13. Certain Relationships and Related Transactions .................................................... 53

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .................................. 54

1

PART I

Item 1. Business.

GENERAL

General Electric Capital Corporation (herein, together with its consolidated
affiliates, called "the Corporation" or "GE Capital" unless the context
otherwise requires) was incorporated in 1943 in the State of New York under the
provisions of the New York Banking Law relating to investment companies, as
successor to General Electric Contracts Corporation, which was formed in 1932.
Until November 1987, the name of the Corporation was General Electric Credit
Corporation. On July 2, 2001, GE Capital changed its state of incorporation to
Delaware. All outstanding common stock of the Corporation is owned by General
Electric Capital Services, Inc. ("GE Capital Services"), formerly General
Electric Financial Services, Inc., the common stock of which is in turn wholly
owned directly or indirectly by General Electric Company ("GE Company" or "GE").
The business of the Corporation originally related principally to financing the
distribution and sale of consumer and other products of GE Company. Currently,
however, the types and brands of products financed and the services offered are
significantly more diversified. Very few of the products financed by GE Capital
are manufactured by GE Company.

GE Capital operates in five key operating segments that are described below.
These operations are subject to a variety of regulations in their respective
jurisdictions.

Services of the Corporation are offered primarily in the United States, Canada,
Europe and the Pacific Basin. The Corporation's principal executive offices are
located at 260 Long Ridge Road, Stamford, Connecticut 06927 (Telephone number
(203) 357-4000). At December 31, 2001, the Corporation employed approximately
88,000 persons.

The Corporation's principal assets are classified as time sales and loans,
investment in financing leases, equipment on operating leases and investment
securities. The following table presents, by operating segment, these principal
assets which, together with other assets, constitute the Corporation's total
assets at December 31, 2001 and 2000.

2

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

FINANCIAL INFORMATION BY OPERATING SEGMENT

(In millions) 2001
------------------------------------------------------------
Time Net
sales investment Allowance
and Net in for
loans, investment equipment losses
net of in on and all
deferred financing operating Investment other Total
income leases leases securities assets assets
--------- ---------- --------- ---------- --------- --------
CONSUMER SERVICES

GE Financial Assurance .......... $ - $ - $ - $ 62,662 $ 36,589 $ 99,251
Auto Financial Services ......... 496 1,567 157 95 568 2,883
GE Card Services ................ 10,857 1 - 697 6,669 18,224
Global Consumer Finance ......... 31,141 4,635 2 305 5,679 41,762
Other............................ 1,827 313 7 355 574 3,076
--------- ---------- --------- ---------- --------- --------
Total ........................ 44,321 6,516 166 64,114 50,079 165,196

EQUIPMENT MANAGEMENT
Aviation Services ............... 2,087 6,483 11,990 920 2,443 23,923
Fleet Services .................. 200 4,687 2,158 12 2,026 9,083
Information Technology
Solutions ....................... - 105 22 - 2,099 2,226
Transport International Pool /
Modular Space................ 93 419 5,295 - 1,754 7,561
GE SeaCo......................... 11 241 794 21 284 1,351
Penske Truck Leasing ............ - - - - 4,820 4,820
GE American Communications....... - - - - - -
Other ........................... - 770 2,296 - 165 3,231
--------- ---------- --------- ---------- --------- --------
Total ........................ 2,391 12,705 22,555 953 13,591 52,195

MID-MARKET FINANCING
Commercial Equipment Financing .. 20,527 15,617 3,218 248 5,429 45,039
Commercial Finance .............. 15,400 1 - 96 1,010 16,507
Vendor Financial Services ....... 5,794 6,066 458 69 2,859 15,246
GE European Equipment Finance ... 1,183 6,203 182 - 894 8,462
Heller Financial................. 14,095 1,903 605 837 5,335 22,775
Other............................ 116 - - - 43 159
--------- ---------- --------- ---------- --------- --------
Total ........................ 57,115 29,790 4,463 1,250 15,570 108,188

SPECIALIZED FINANCING
Real Estate ..................... 11,548 969 - 113 7,376 20,006
Structured Finance Group ........ 5,212 5,356 135 1,345 4,393 16,441
GE Equity ....................... 80 - - 439 3,054 3,573
Other............................ - - - 125 24 149
--------- ---------- --------- ---------- --------- --------
Total ........................ 16,840 6,325 135 2,022 14,847 40,169

SPECIALTY INSURANCE ............. - - - 9,494 4,082 13,576
ALL OTHER........................ 41 - (5) 890 826 1,752
--------- ---------- --------- ---------- --------- --------
TOTAL ........................ $ 120,708 $ 55,336 $ 27,314 $ 78,723 $ 98,995 $381,076
========= ========== ========= ========== ========= ========

(In millions) 2000
------------------------------------------------------------
Time Net
sales investment Allowance
and Net in for
loans, investment equipment losses
net of in on and all
deferred financing operating Investment other Total
income leases leases securities assets assets
--------- ---------- --------- ---------- --------- --------
CONSUMER SERVICES

GE Financial Assurance .......... $ - $ - $ - $ 55,532 $ 39,625 $ 95,157
Auto Financial Services ......... 1,639 4,353 412 155 431 6,990
GE Card Services ................ 13,110 1 - 412 6,148 19,671
Global Consumer Finance ......... 25,562 4,390 10 183 4,896 35,041
Other............................ 1,673 252 15 321 499 2,760
--------- ---------- --------- ---------- --------- --------
Total ........................ 41,984 8,996 437 56,603 51,599 159,619

EQUIPMENT MANAGEMENT
Aviation Services ............... 1,223 4,636 9,403 242 2,425 17,929
Fleet Services .................. 96 4,201 2,132 15 2,010 8,454
Information Technology
Solutions ....................... - 170 29 1 3,195 3,395
Transport International Pool /
Modular Space................. 53 331 5,086 - 1,737 7,207
GE SeaCo......................... 13 197 1,186 24 172 1,592
Penske Truck Leasing ............ - - - - 4,206 4,206
GE American Communications....... - - - - 2,268 2,268
Other ........................... - 505 2,359 - 166 3,030
--------- ---------- --------- ---------- --------- --------
Total ........................ 1,385 10,040 20,195 282 16,179 48,081

MID-MARKET FINANCING
Commercial Equipment Financing .. 16,440 14,468 2,722 91 1,747 35,468
Commercial Finance .............. 13,234 - - 136 2,241 15,611
Vendor Financial Services ....... 4,246 6,191 569 20 2,245 13,271
GE European Equipment Finance ... 693 5,372 114 - 592 6,771
Heller Financial................. - - - - - -
Other............................ 127 - - - 47 174
--------- ---------- --------- ---------- --------- --------
Total ........................ 34,740 26,031 3,405 247 6,872 71,295

SPECIALIZED FINANCING
Real Estate ..................... 11,269 994 2 434 7,320 20,019
Structured Finance Group ........ 3,185 4,848 168 1,439 2,417 12,057
GE Equity ....................... 49 - - 355 4,178 4,582
Other............................ - - - 238 21 259
--------- ---------- --------- ---------- --------- --------
Total ........................ 14,503 5,842 170 2,466 13,936 36,917

SPECIALTY INSURANCE ............. 90 - - 9,549 4,058 13,697
ALL OTHER........................ 838 21 (62) 1,135 1,095 3,027
--------- ---------- --------- ---------- --------- --------
TOTAL ........................ $ 93,540 $ 50,930 $ 24,145 $ 70,282 $ 93,739 $332,636
========= ========== ========= ========== ========= ========

3

OPERATING SEGMENTS

The Corporation provides a wide variety of financing, asset management, and
insurance products and services which are organized into the following operating
segments:

- - Consumer Services - private-label credit card loans, personal loans, time
sales and revolving credit and inventory financing for retail merchants,
auto leasing and inventory financing, mortgage servicing, retail businesses
and consumer savings and insurance services.

- - Equipment Management - leases, loans, sales and asset management services
for portfolios of commercial and transportation equipment, including
aircraft, trailers, auto fleets, modular space units, railroad rolling
stock, data processing equipment and marine shipping containers.

- - Mid-Market Financing - loans, financing and operating leases, and other
services for middle-market customers, including manufacturers, distributors
and end-users, for a variety of equipment that includes vehicles, corporate
aircraft, data processing equipment, medical and diagnostic equipment, and
equipment used in construction, manufacturing, office applications,
electronics and telecommunications activities.

- - Specialized Financing - loans and financing leases for major capital
assets, including industrial facilities and equipment, and energy-related
facilities; commercial and residential real estate loans and investments;
and loans to and investments in public and private entities in diverse
industries.

- - Specialty Insurance - financial guaranty insurance, principally on
municipal bonds and asset-backed securities; and private mortgage
insurance.

Refer to Item 7, "Management's Discussion and Analysis of Results of
Operations," in this Annual Report on Form 10-K for a discussion of the
Corporation's Portfolio Quality. A description of the Corporation's principal
businesses by operating segment follows.

CONSUMER SERVICES

GE Financial Assurance

GE Financial Assurance ("GEFA") provides consumers financial security solutions
by selling a wide variety of insurance, investment and retirement products,
payment protection insurance and income protection packages, primarily in North
America, Europe and Asia. These products help consumers invest, protect and
retire and are sold through a family of regulated insurance and annuity
affiliates. GEFA's principal product lines in North America and Asia are
annuities (deferred and immediate, fixed and variable), life insurance
(universal, term, ordinary and group), guaranteed investment contracts including
funding agreements, long-term care insurance, accident and health insurance,
personal lines of automobile insurance and consumer club memberships.

GEFA's principal product lines and services in Europe are payment protection
insurance (designed to protect customers' loan repayment obligations), personal
investment products, and travel and personal accident insurance, as well as
management of uninsured loss claims on behalf of victims of traffic accidents.

GEFA's product distribution in North America, Europe and Asia is accomplished
primarily through four channels: intermediaries (brokerage general agencies,
banks and securities brokerage firms), dedicated sales forces and financial
advisors, worksites, and direct and affinity based marketing (through
the Internet, telemarketing, and direct mail).

GEFA's principal operating affiliates include General Electric Capital Assurance
Company, First Colony Life Insurance Company, Federal Home Life Insurance
Company, GE Life and Annuity Assurance Company, GE Edison Life Insurance
Company, GE Insurance Holding Limited and GE Life Group Limited.

GEFA recognizes that consolidation in the financial services industry will
create fewer but larger competitors. GEFA believes that the principal
competitive factors in the sale of insurance and investment products are product
features, commission structure, perceived stability of the insurer, claims
paying ability ratings, service, name recognition, price and cost efficiency.
GEFA's ability to compete is affected by its ability to provide competitive
products and quality service to the consumer, general agents, licensed insurance
agents and brokers; to maintain operating scale; and to continually reduce its
expenses through the elimination of duplicate functions and enhanced technology.

Many of GEFA's activities are regulated by a variety of insurance and
other regulators.

GEFA headquarters are in Richmond, Virginia.

4

Auto Financial Services

GE Capital Auto Financial Services ("AFS") provided financial services in North
America to automobile dealers, manufacturers, banks, financing companies and the
consumer customers of those entities, both through traditional channels and
through the Internet. In the United States, AFS was a leading independent
provider of leases for new and used motor vehicles and of non-prime financing
products. In addition, AFS offered inventory financing programs, off-lease
vehicle sales, productivity enhancing Internet solutions, and direct loans to
the industry.

On November 29, 2000, AFS announced its decision to discontinue originating new
lease, loan and commercial transactions effective December 1, 2000. Since that
date, AFS operations have consisted of servicing their existing portfolios and
re-marketing off-lease vehicles.

AFS headquarters are in Barrington, Illinois.

GE Card Services

GE Card Services ("CS") is a leading provider of sales financing services to
North American retailers in a broad range of consumer industries. Details of
financing plans differ, but include customized private-label credit card
programs with retailers and inventory financing programs with manufacturers,
distributors and retailers.

CS offers customized private-label credit card solutions designed to attract and
retain customers for retailers such as JC Penney, ExxonMobil, Wal-Mart, The Home
Depot, Sam's Club, Macy's and Lowe's. CS provides financing directly to
customers of retailers or purchases the retailers' customer receivables. Most of
the retailers sell a variety of products of various manufacturers on a time
sales basis. The terms for these financing plans differ according to the size of
contract and credit standing of the customer. Financing is provided to consumers
under contractual arrangements, both with and without recourse to retailers. CS'
wide range of financial services includes application processing, sales
authorization, statement billings, customer services and collection services. CS
provides inventory financing for retailers primarily in the appliance and
consumer electronics industries. CS maintains a security interest in the
inventory financed and retailers are obliged to maintain insurance coverage for
the merchandise financed.

Additionally, CS issues and services the GE Capital Corporate Card product,
providing payment and information systems which help medium and large-sized
companies reduce travel costs, and the GE Capital Purchasing Card product, which
helps customers streamline their purchasing and accounts payable processes.

CS competes in the unsecured consumer lending market, doing business principally
in the United States and Canada. CS' operations are subject to a variety of bank
and consumer protection regulations.

The unsecured consumer lending market's principal methods of competition are
price, servicing capability including Internet value added e-services and risk
management capability. The unsecured consumer lending market is subject to
various risks including declining retail sales, increases in personal bankruptcy
filings, increasing payment delinquencies and rising interest rates.

CS headquarters are in Stamford, Connecticut.

Global Consumer Finance

GE Capital Global Consumer Finance ("GCF") is a leading provider of credit and
insurance products and services to non-U.S. retailers and consumers. GCF
provides private-label credit cards and proprietary credit services to retailers
in Europe, Asia and, to a lesser extent, Central and South America, including
Tesco, The Home Depot, Metro, and Wal-Mart, as well as offering a variety of
direct-to-consumer credit programs such as consumer loans, auto loans and
finance leases, mortgages, debt consolidation, bankcards and the distribution of
credit insurance.

GCF provides financing to consumers through operations in Argentina, Australia,
Austria, Brazil, the Caribbean, the Czech Republic, Denmark, France, Germany,
Hong Kong, Hungary, India, Indonesia, Italy, Japan, Korea, Mexico, New Zealand,
Norway, Poland, Portugal, Republic of Ireland, Slovakia, Spain, Sweden,
Switzerland, Taiwan, Thailand, and the United Kingdom.

In March, May and September 2001, GCF closed transactions increasing a former
minority interest in Budapest Bank in Hungary to a 99% majority holding.
Budapest Bank is a commercial and retail bank offering a variety of consumer and
small business financing products and new services such as electronic banking.

In June 2001, GCF acquired igroup Limited, a leading provider of mortgage and
debt consolidation products to the UK market, which is based in Watford,
England.

5

GCF's operations are subject to a variety of bank and consumer protection
regulations in their respective jurisdictions and a number of countries have
ceilings on rates chargeable to consumers in financial service transactions. The
consumer lending market is also subject to the risk of declining retail sales,
changes in interest and currency exchange rates, increases in personal
bankruptcy filings and payment delinquencies.

The businesses in which GCF engages are subject to competition from various
types of financial institutions including commercial banks, leasing companies,
consumer loan companies, independent finance companies, manufacturers' captive
finance companies, and insurance companies. Cross selling multiple products into
its customer base is a critical success factor for GCF.

GCF headquarters are in Stamford, Connecticut.

Mortgage Services

GE Capital Mortgage Services, Inc. ("Mortgage Services") engaged primarily in
the business of originating, purchasing, selling and servicing residential
mortgage loans collateralized by one-to-four-family homes located throughout the
United States. Mortgage Services obtained servicing through the origination and
purchase of mortgage loans and servicing rights, and primarily packaged the
loans it originated and purchased into mortgage-backed securities which it sold
to investors. Mortgage Services also originated and serviced home equity loans.

On September 29, 2000, Mortgage Services closed on a transaction with a major
mortgage company, which is owned by a major national bank holding company, to
subservice Mortgage Services' mortgage servicing portfolio and to acquire
Mortgage Services' servicing facility and mortgage origination business.
Mortgage Services retains its financial interest in the servicing portfolio and
the related assets, which are now being managed by GE Capital Mortgage Insurance
(see page 12) and the results of which are now included in the Specialty
Insurance segment. As a result of this transaction, Mortgage Services exited the
business of originating, purchasing and selling of residential mortgage loans.

EQUIPMENT MANAGEMENT

Aviation Services

GE Capital Aviation Services ("GECAS"), the world's foremost aircraft leasing
company, is a global commercial aviation financial services business that offers
a broad range of financial products to airlines, aircraft operators, owners,
lenders and investors. Financial solutions provided to customers include
operating leases, sale/leasebacks, aircraft purchasing and trading, financing
leases, engine/spare parts financing, pilot training, fleet planning and
financial advisory services.

GECAS owns approximately 1,000 aircraft and manages approximately 300 on behalf
of third parties. In addition, it has planes on order or on option from Boeing,
Airbus, Dornier, Embraer and Bombardier. GECAS has over 200 customers in over 60
countries.

GECAS operates in a highly competitive area serving a cyclical industry that
could further consolidate if airlines generally continue to weaken financially.
The impact of the events of September 11 has hastened and deepened a downturn in
the aviation industry served by GECAS. The business can also be affected by
regulatory changes that may impact aircraft values. Regulations under current
consideration, if enacted, that reduce permissible noise levels emitted from
commercial aircraft would have an effect on aircraft values.

GECAS headquarters are in Stamford, Connecticut, with regional offices in
Shannon, Republic of Ireland; New York, New York; Miami, Florida; Chicago,
Illinois; Vienna, Austria; Toulouse, France; Luxembourg; Beijing and Hong Kong,
China; Tokyo, Japan; and Singapore.

Fleet Services

GE Capital Fleet Services ("Fleet") is one of the leading corporate fleet
management companies with operations in North America, Europe, Australia, New
Zealand and Japan and has approximately 1.2 million cars and trucks under lease
and service management. Fleet offers finance and operating leases to several
thousand customers. The business via Web applications and other unique channels,
delivers productivity solutions that drive commercial vehicle cost savings to
company fleets of all sizes.

The primary product in North America is a terminal rental adjustment clause
lease through which the customer assumes the residual risk - that is, risk that
the book value will be greater than market value at lease termination. In
Europe, the primary product is a closed-end lease in which Fleet assumes
residual risk. In addition to the services directly associated with the lease,
Fleet offers value-added fleet management services designed to reduce customers'
total fleet management costs. These services include, among others, web-based

6

vehicle ordering and reporting, maintenance management programs, accident
services, national account purchasing programs, fuel programs, title and
licensing services and strategic cost analysis consulting. Fleet's customer base
is diversified with respect to industry and geography and includes many Fortune
500 companies.

Fleet competes both on a local and global basis with other leasing businesses of
various sizes as well as automobile manufacturers in some parts of the world.
The industry is dependent upon the attractiveness of leasing and fleet
management as a viable alternative for customers, along with the stability of
new and used car prices. Future success will depend upon the ability to maintain
a large and diverse customer portfolio, to estimate used car prices as well as
mitigate the impact of fluctuations in those prices, and to continue to
understand and deliver unique product and service offerings to the customers in
the most efficient and cost effective manner possible.

Fleet headquarters are in Eden Prairie, Minnesota.

Information Technology Solutions

GE Capital Information Technology Solutions ("IT Solutions") is a provider of a
broad array of information technology products and services, including full life
cycle services that provide customers with cost-effective control and management
of their information systems. Products offered include desktop personal
computers, client server systems, UNIX systems, local and wide area network
hardware, and software. Services offered include network design, network
support, asset management, help desk, disaster recovery, enterprise management
and financial services. IT Solutions serves commercial, educational and
governmental customers in 13 countries. During 2001, IT Solutions exited,
including through sales of portions of business units, its operations in France
and the United Kingdom.

The worldwide competition in information technology products and services is
intense. Competition is very active in all products and services and comes from
a number of principal manufacturers and other distributors and resellers of
information technology products. Markets for products and services are highly
price competitive. Additionally, many information technology product
manufacturers are bypassing traditional information technology resellers in
favor of direct manufacturer relationships with the ultimate end-users.

IT Solutions' North American headquarters are in Newport, Kentucky; its European
headquarters are in Munich, Germany.

Transport International Pool/Modular Space

In April, 1999, Transport International Pool and GE Capital Modular Space were
consolidated to generate cost savings and management synergies. This merger has
resulted in the elimination of duplicate support functions and the integration
of back offices.

Transport International Pool ("TIP") is one of the global leaders in renting,
leasing, selling and financing transportation equipment. With more than 40 years
of experience in the renting, leasing and selling of trailers, TIP's mission is
to provide customers with products and services that help them increase
productivity and lower operating costs. TIP's fleet of over 390,000 dry freight,
refrigerated and double vans, flatbeds, intermodal assets, and specialized
trailers is available for rent, lease or purchase at over 200 locations in the
United States, Europe, Canada, and Mexico. TIP's commercial vehicle fleet of
over 35,000 units is available for rent, lease, or purchase in the United
Kingdom. TIP also finances new and used trailers and buys trailer fleets. TIP's
customer base comprises trucking companies, railroads, shipping lines,
manufacturers and retailers.

TIP's competitive environment is made up of a few large national competitors and
many smaller, often changing regional players. TIP is a major participant in the
transportation renting, leasing, selling and financing market. The industry is
characterized by thin operating margins and continued consolidation of
companies, with their volume driven by the gross domestic product and their
costs affected by fuel prices and driver labor. The ability to remain
competitive will require the continued expansion of value-added services around
the core business of renting, leasing and financing transportation equipment.

GE Capital Modular Space ("Modular Space") provides commercial mobile and
modular structures for rental, lease and sale from over 100 facilities in the
United States, Europe, Canada and Mexico. The buildings are provided with
flexible customized financing, turnkey services and dedicated local sales staff.
The primary markets served include construction, education, healthcare,
financial, commercial, institutional and government. Modular Space products are
available as custom mobile and modular buildings, designed to customer
specifications, or are available through the Modular Space stock fleet of
approximately 120,000 mobile and modular units.

Competition consists primarily of national modular companies and regional/local
competitors who provide services in selected territories. Modular Space also
competes with construction companies on permanent structure opportunities.

7

Competitive factors for rental and lease customers include price, condition and
availability of local fleet. Factors for custom and fleet sales opportunities
include price, alternative solutions, and delivery.

TIP/Modular Space have offices in North America and Europe. The world
headquarters for TIP/Modular Space are in Devon, Pennsylvania. TIP/Modular Space
European headquarters and pooled accounting service center are in Amsterdam, The
Netherlands, and a commercial vehicle operation and administrative center is
located in Manchester, England.

GE SeaCo

GE SeaCo SRL ("GE SeaCo") is a joint venture between GE Capital and Sea
Containers Ltd., which operates the combined marine container fleets of Genstar
Container Corporation ("Genstar") and Sea Containers Ltd. GE SeaCo is one of the
world's largest lessors of marine shipping containers with a combined fleet of
over 900,000 twenty foot equivalent units of dry cargo, refrigerated and
specialized containers for global cargo transport. Lessees are primarily
shipping lines that lease on a long term or master lease basis.

The marine container leasing industry continues to be cyclical due to periods of
excess capacity and changes in trade volumes. Further risk is attributable to
the lessees, which are the major steamship lines and which exhibit cyclical
results and generally weak financial condition, exposing GE SeaCo to customer
credit risk. GE SeaCo is subject to asset value compression resulting from
declining new container prices and positioning risk attributed to the increased
use of one-way leases.

GE SeaCo headquarters are in Bridgetown, Barbados.

Penske Truck Leasing

GE Capital is a limited partner in Penske Truck Leasing Co. L.P. ("Penske"),
which is a leading provider of full-service truck leasing and commercial and
consumer truck rental in the United States and Canada. Penske operates through a
national network of full-service truck leasing and rental facilities. At
December 31, 2001, Penske had a fleet of about 145,000 tractors, trucks and
trailers in its leasing and rental fleets and provided contract maintenance
programs or other support services for about 50,000 additional vehicles.

Penske also provides dedicated logistics operations support which combines
company-employed drivers with its full-service lease vehicles to provide
dedicated contract carriage services. In addition, Penske offers supply chain
services such as distribution consulting, warehouse management and information
systems support.

In February 2001, Penske acquired Rollins Truck Leasing Corporation for
approximately $2 billion in cash and assumed debt. Rollins Truck Leasing
Corporation was one of the largest national full-service truck leasing and
rental companies, with locations in the United States and Canada.

Penske competes with several other companies conducting nationwide truck leasing
and rental operations, a large number of regional truck leasing companies, many
similar companies operating primarily on a local basis and both local and
nationwide common and contract carriers.

On a nationwide basis, Penske offers full-service truck leasing, commercial and
consumer rental and logistics services. In its leasing and support services,
Penske competes primarily on the basis of customer service. Geographic location,
price and equipment availability are also important competitive factors in this
business. In its consumer rental operations, Penske competes primarily on the
basis of equipment availability, price, geographic location and customer
service.

Penske headquarters are in Reading, Pennsylvania.

GE American Communications

GE American Communications ("Americom") engaged primarily as a satellite service
supplier to a diverse array of customers, including the broadcast and cable TV
industries, as well as broadcast radio. It also supplied integrated
communications services for government and commercial customers. Americom also
operated communications satellites and maintained a supporting network of earth
stations, central terminal offices, and telemetry, tracking and control
facilities.

8

On November 9, 2001, the Corporation exchanged the stock of Americom and other
related assets and liabilities for a combination of cash and stock in SES Global
("SES"), a leading satellite company. As a result of the transaction, GE Capital
now owns 30.7% of the combined operations of both Americom and SES. The
investment in the combined entity is now part of the Structured Finance Group.

Americom headquarters were in Princeton, New Jersey.

Rail Services

GE Capital Rail Services ("GERSCO") is one of the leading railcar leasing
companies in North America, with a fleet of 190,000 railcars in its total
portfolio. Serving Class 1 and short-line railroads and shippers throughout
North America, GERSCO offers one of the most diverse fleets in the industry and
a variety of lease options.

GERSCO also owns and operates a network of railcar repair and maintenance
facilities located throughout North America. The repair facilities offer a
variety of services, ranging from light maintenance to heavy repair of damaged
railcars. The company also provides railcar management, administration and other
services.

In addition, GERSCO is a pan-European provider of rail transport services,
offering a broad range of railcar equipment and rail-related services to
railroads, shippers and other transport providers.

Traditional competitors include railroads, stand-alone leasing companies and
other owners of railcar fleets, diversified financial institutions, and railcar
builders. Customers who lease railcars also have the choice of purchasing them,
either outright or through a financial sale. Certain segments of the North
American railcar leasing industry continue to be affected by an oversupply of
cars. Ongoing technology changes in car design and capacity are also impacting
car supply. In Europe, liberalization and privatization of national railroads
continue to significantly impact the rail industry. In addition, on both
continents, changes in supply and demand for commodities shipped by rail also
impact the demand for cars. In that regard, the trucking industries on both
continents continue to make inroads into traditional haulage by rail. The
interaction and timing of these forces across the portfolio of cars can impact
the profitability of GERSCO. The ability to remain competitive will require the
commitment to constant productivity gains and improvement in its breadth and
quality of service through the implementation of technology and process
improvements.

European sales offices are in England, France, Germany, Italy and Sweden. GERSCO
headquarters are in Chicago, Illinois.

MID-MARKET FINANCING

Commercial Equipment Financing

GE Capital Commercial Equipment Financing ("CEF") offers large and small
companies with a broad line of innovative financial solutions including leases
and loans to middle-market customers, including manufacturers, distributors,
dealers and end-users, as well as municipal financing and facilities financing,
in such areas as construction equipment, corporate aircraft, medical equipment,
trucks and trailers. It also furnishes customers with direct-source tax-exempt
finance programs, as well as lease and sale/leaseback offerings. Products are
either held for CEF's own account or brokered to third parties.

Generally, transactions range in size from $50 thousand to $50 million, with
financing terms from 36 to 180 months. CEF also maintains an asset management
operation that redeploys off-lease and repossessed equipment and other assets.

The global equipment financing industry continues to be highly fragmented and
intensely competitive. Competitors in the U.S. domestic and international
markets include independent financing companies, financing subsidiaries of
equipment manufacturers, and banks (national, regional, and local). Industry
participants compete not only on the basis of monthly payments, interest rates
and fees charged customers but also on deal structures and credit terms. The
profitability of CEF is affected not only by broad economic conditions that
impact customer credit quality and the availability and cost of capital, but
also by successful management of credit risk, operating risk and such market
risks as interest rate and currency exchange risk. Important factors to
continued success include maintaining strong risk management systems, diverse
portfolios, service and distribution channels, strong collateral and asset
management knowledge, deal structuring expertise and the reduction of costs
through enhanced use of technology.

During 2001, CEF purchased the stock of Franchise Finance Corporation of America
and certain assets and liabilities from Mellon Financial Corporation and SAFECO
Corporation. The purchase price for these acquisitions amounted to approximately
$4.4 billion.

9

CEF operates from offices throughout the Americas, Europe, Asia and Australia
and through joint ventures in Indonesia and China. CEF headquarters are in
Danbury, Connecticut.

Commercial Finance

GE Capital Commercial Finance ("CF") is a leading global provider of innovative
financing, primarily revolving and term debt and equity to finance acquisitions,
business expansion, bank refinancings, recapitalizations and other special
situations. Products also include asset securitization facilities, capital
expenditure lines and bankruptcy-related facilities, as well as factoring
services. Loan transactions range in size from under $10 million to over $200
million.

CF's clients are owners, managers and buyers of both public and private
companies, principally manufacturers, distributors, retailers and diversified
service providers, and CF has industry specialists in the retail, media and
communications, and high technology industries. Through its Merchant Banking
Group, CF provides senior debt, subordinated debt and bridge financing to buyout
and private equity firms, and co-invests in equity with buying groups or invests
directly on a select basis.

The corporate financing business is characterized by intense competition from a
variety of lenders and factoring services providers, including local, regional,
national and international banks and non-bank financing institutions.
Competition is based on interest rates, fees, credit terms, and transaction
structures. In addition to these factors, successful management of credit risks
within the existing customer loan portfolio also affects profitability.
Important factors to continued success include maintaining deal structuring
expertise, strong risk management systems, and collateral management knowledge.

CF headquarters are in Stamford, Connecticut. CF has lending operations in 25
cities, including international offices in Canada, Mexico, Thailand, Korea,
Australia, The Netherlands, and the United Kingdom, and also has significant
factoring operations in the U.S., France, the United Kingdom and Italy serving
U.S. and European companies.

Vendor Financial Services

GE Capital Vendor Financial Services ("VFS") provides financial solutions and
services to over 100 equipment manufacturers and more than 4,500
dealers/distributors in North America, Europe and Asia (including Japan),
enabling them to offer financing options to their customers. With nearly $20
billion in served assets, VFS helps its partners focus on their core businesses
and improve sales by providing flexible financial solutions and services.
Customers include major U.S. and non-U.S. manufacturers in a variety of
industries including information technology, office equipment, healthcare,
telecommunications, energy and industrial equipment. VFS establishes sales
financing in two ways - by forming captive partnerships with manufacturers that
do not have them, and by outsourcing captive partnerships from manufacturers
that do (captive partnerships provide sales financing solely for products of a
given manufacturer). VFS offers industry-specific knowledge, leading edge
technology, leasing and equipment expertise, and global capabilities. In
addition, VFS provides an expanding array of related financial services to
customers, including trade payables services.

In June 2001, VFS acquired the Manufacturer and Dealer Services business (MDS)
of Mellon Leasing for approximately $480 million. MDS provides financial
services for office equipment and industrial equipment manufacturers.

In September 2001, VFS signed a framework agreement with Xerox to form a Joint
Venture, Xerox Capital Services. Through this joint venture, VFS will become the
primary financing provider for Xerox customers across the United States.

An economic slowdown would impact the continued expansion of the equipment
financing industry, intensifying a competitive pricing environment, pressure
delinquencies and residual realizations, and pressure any recourse obligations
from vendor relationships. The ability to remain competitive will depend upon,
among other things, the ability to drive down costs through the significant
investment in productivity initiatives and the ability to continue to
effectively manage its spread of risk in industry sectors and equipment
categories in conjunction with vendor partners.

VFS has sales offices throughout the United States, Canada, Europe, Asia
(including Japan), and Australia. VFS headquarters are in Danbury, Connecticut.

GE European Equipment Finance

GE European Equipment Finance ("EEF") is one of Europe's leading diversified
equipment leasing businesses, offering financial solutions on a single-country
and pan-European basis. Customers include manufacturers, vendors and end-users
in industries such as office imaging, materials handling, corporate aircraft,

10

information technology, broadcasting, machine tools, telecommunications and
transportation. Products and services include loans, leases, master lease
coordination and other services, such as helping end-users increase purchasing
power through financing options and helping manufacturers and vendors to offer
leasing programs. For financial reporting purposes, EEF's operating results are
allocated to CEF and VFS.

EEF is subject to competition from various types of financial institutions,
including leasing companies, commercial and investment banks, and finance
companies associated with manufacturers. Consolidation in the financial services
industry will create fewer but larger competitors. EEF continues to be impacted
by pricing pressures, slow growth in some of its markets, and is directly
affected by the general economic conditions within country economies. Its
ability to effectively compete in a changing environment will be dependent upon,
among other things, its ability to increase productivity and offer innovative
financial products and services. Operations are subject to varying degrees of
regulation in several jurisdictions across the European continent.

EEF operates from offices in the United Kingdom, France, Germany, Switzerland,
Belgium, The Netherlands, Ireland, Italy, Spain, Norway, Denmark, Sweden and
Finland, as well as having transaction capabilities in countries such as
Portugal. EEF headquarters are in Hounslow, England.

Heller Financial

In October 2001, the Corporation acquired Heller Financial, Inc. ("Heller
Financial") for approximately $5.3 billion. At December 31, 2001, the
Corporation reported Heller Financial as a stand-alone entity within the
Mid-Market Financing segment due to the proximity of the acquisition to
year-end. During 2002, the Corporation will report Heller Financial's operations
with those of the Corporation's businesses with which they were combined,
primarily Commercial Finance, VFS and CEF. In addition, one of the strongest
Heller Financial / GE Capital synergies was achieved when their healthcare
businesses were combined to create a new business to meet the financial needs of
the dynamic healthcare industry, Healthcare Financial Services. Overall, Heller
Financial provides financing solutions to middle-market and small business
clients including collateralized cash flow and asset based lending, secured real
estate financing, debt and lease equipment financing and small businesses
financing.

Heller Financial originates transactions in the United States through its 62
domestic office locations and internationally through a network of wholly owned
subsidiaries and joint venture commercial finance companies in 22 countries
outside the United States. Heller Financial concentrates primarily on senior
secured lending, with approximately 90% of consolidated lending assets and
investments at December 31, 2001 being made on that basis. Heller Financial's
primary clients and customers are entities in the manufacturing and service
sectors having annual sales generally in the range of $5 million to $250 million
and in the real estate sector having property values generally in the range of
$1 million to $40 million.

Heller Financial's markets are highly fragmented and extremely competitive and
are characterized by competitive factors that vary by product and geographic
region. Heller Financial's competitors include commercial finance companies,
national and regional banks and thrift institutions, investment banks, leasing
companies, investment companies, and manufacturers and vendors. Heller Financial
competes primarily on the basis of pricing, terms, structure and service.

Heller Financial's operations are subject, in certain instances, to supervision
and regulation by state and federal governmental authorities. They may also be
subject to various laws and judicial and administrative decisions imposing
various requirements and restrictions, which, among other things, regulate
credit granting activities, establish maximum interest rates and finance
charges, restrict foreign ownership or investment, govern secured transactions
and set collection, foreclosure, repossession and claims handling procedures.

Heller Financial headquarters are in Chicago, Illinois.

SPECIALIZED FINANCING

Real Estate

GE Capital Real Estate ("Real Estate") provides funds for the acquisition,
refinancing and renovation of a wide range of apartment buildings, industrial
properties, multi-family housing, retail facilities and offices located
throughout the United States, Canada, Mexico, Europe and Asia. Real Estate also
provides asset management services to real estate investors and selected
services to real estate owners. Real Estate is one of the world's leading
providers of capital and services to the global commercial real estate market,
providing debt and equity for real estate operators, developers, REITs and
opportunity funds to allow them to meet their acquisition, refinancing and
renovation needs.

11

Lending is a major portion of Real Estate's business in the form of
intermediate-term senior or subordinated fixed and floating-rate loans secured
by existing income-producing commercial properties such as office buildings,
rental apartments, shopping centers, industrial buildings, mobile home parks,
hotels and warehouses. Loans range in amount from single-property mortgages
typically not less than $5 million to multi-property portfolios of several
hundred million dollars. Approximately 90% of all loans are senior mortgages.

Real Estate purchases and provides restructuring financing for portfolios of
real estate, mortgage loans, limited partnerships, and tax-exempt bonds. Real
Estate's business also includes the origination and securitization of low
leverage real estate loans, which are intended to be held less than one year
before outplacement. Additionally, Real Estate provides equity capital for real
estate partnerships through the holding of limited partnership interests and
receives preferred returns; typically such investments range from $2 million to
$10 million.

Real Estate also offers a variety of asset management services to outside
investors, institutions, corporations, investment banks, and others through its
real estate services subsidiaries. Asset management services include
acquisitions and dispositions, strategic asset management, asset restructuring,
and debt and equity management. In addition, Real Estate offers owners of
multi-family housing ways to reduce costs and enhance value in properties by
offering buying services (e.g., for appliances and roofing).

Competition is intense in each of Real Estate's areas and across all product
lines. Competitors include local, regional and, increasingly, multi-national
lenders and investors. Important competitive factors in Real Estate's lending
activities include financing rates, loan proceeds, loan structure and the
ability to complete transactions quickly. Where Real Estate provides equity
capital, principal competitive factors include the valuation of underlying
properties and investment structure as well as transaction cycle time.

Real Estate has offices throughout the United States, as well as in Canada,
Mexico, Australia, Japan, Sweden, France, Spain, Germany, Italy and the United
Kingdom. Real Estate headquarters are in Stamford, Connecticut.

Structured Finance Group

GE Capital Structured Finance Group ("SFG") provides innovative financial
solutions through equity, debt and structured investments to clients throughout
the world. SFG's clients are primarily in the energy, telecommunications,
industrial and transportation sectors and range from household names to early
stage businesses.

SFG combines industry and technical expertise to deliver a full range of
sophisticated financial services and products. Services include corporate
finance, acquisition finance and project finance (construction and term).
Products include a variety of debt and equity instruments, as well as structured
transactions, including leases and partnerships. SFG manages an investment
portfolio of approximately $17 billion.

SFG's competition is diverse and global, ranging from large financial
institutions to small niche capital providers. Additionally, two of SFG's client
industry segments, telecommunications and energy, are faced with extraordinary
challenges fostered by deregulation, globalization and technical innovation.
Both of these industries have been recently experiencing significant volatility
in demand for their products and services. The ability to remain competitive
will require innovative and unique ways of providing capital, based on industry
knowledge and competitive pricing, as well as the ability to properly assess
credit risks and effectively manage portfolios.

SFG headquarters are in Stamford, Connecticut, and it has offices in Chicago,
Illinois; Houston, Texas; New York, New York; and San Francisco, California.
Internationally, SFG is represented in London, United Kingdom; Frankfurt,
Germany; Milan, Italy; Tokyo, Japan; and Mexico City, Mexico.

GE Equity

GE Equity purchases equity investments in early-stage, early growth, pre-IPO
companies with a primary objective of long-term capital appreciation. GE
Equity's portfolio consists primarily of direct investments in convertible
preferred and common stocks in both public and private companies; GE Equity also
participates in certain investment limited partnerships. The portfolio includes
investments in the technology and communications, media and entertainment,
business services, financial services and healthcare sectors. The portfolio is
geographically diversified with investments located throughout the United
States, as well as in Latin America, Europe and Asia.

GE Equity operates in a highly competitive environment and competes with other
domestic and foreign institutions. Competitors include corporate investors,
private equity firms, investment banking companies, and a variety of other
financial services and advisory companies. GE Equity seeks to develop meaningful
business relationships with investees by offering GE's network of brands,
services and management expertise. GE Equity's competitive environment is
subject to the cyclical nature of the industries it invests in, as well as the
momentum in the stock market.

12

GE Equity headquarters are in Stamford, Connecticut.

SPECIALTY INSURANCE

Financial Guaranty Insurance Company

FGIC Holdings ("FGIC"), through its subsidiary, Financial Guaranty Insurance
Company ("Financial Guaranty"), is an insurer of municipal bonds, including new
issues, bonds traded in the secondary market and bonds held in unit investment
trusts and mutual funds. Financial Guaranty also guarantees certain taxable
structured debt. The in force guaranteed principal, after reinsurance, amounted
to approximately $174 billion at December 31, 2001. Approximately 84% of the
business written by Financial Guaranty is municipal bond insurance.

FGIC subsidiaries provide a variety of services to state and local governments
and agencies, liquidity facilities in variable-rate transactions, municipal
investment products and other services.

The municipal bond insurance business is fairly mature. This environment
requires FGIC to place increasing emphasis on strategies that differentiate its
offerings. Additionally, the stable nature of the industry continues to attract
interest from potential new competitors, such as multi-line insurance companies.
Important factors to continued success include maintaining strong
capitalization, superior customer service and competitive pricing.

FGIC headquarters are in New York, New York.

Mortgage Insurance

GE Capital Mortgage Insurance ("Mortgage Insurance") helps families become
homeowners by smoothing the way for customers to obtain low-down-payment
mortgages while protecting lenders and investors against the risks of default.
It enables more than a quarter million families per year to obtain
low-down-payment mortgages and now has a no-down-payment product as well.
Mortgage Insurance is engaged principally in providing residential mortgage
guaranty insurance in the United States, United Kingdom, Canada and Australia.
At December 31, 2001, Mortgage Insurance was the mortgage insurance carrier for
over 1.9 million residential homes, with total insurance in force aggregating
approximately $184 billion and total risk in force aggregating approximately $80
billion. When a valid claim is received, Mortgage Insurance either pays up to a
guaranteed percentage based on the specified coverage, or pays the mortgage and
delinquent interest, taking title to the property and arranging for its sale.

The mortgage insurance industry is sensitive to the interest rate environment
and housing market conditions. The mortgage insurance industry is intensely
competitive as excess market capacity seeks to underwrite business being
generated from a consolidating customer base. In addition, considerable
influence is exerted on the industry by two government-sponsored enterprises,
which buy the majority of the loans insured by mortgage insurers.

Mortgage Insurance headquarters are in Raleigh, North Carolina.

OTHER

Wards

All other consists primarily of Montgomery Ward, LLC ("Wards") from August 2,
1999, when the Corporation acquired control of the retailer upon its emergence
from bankruptcy reorganization, to December 28, 2000, when Wards again filed for
bankruptcy protection. The retailer is substantially liquidated.

REGULATIONS AND COMPETITION

The Corporation's activities are subject to a variety of federal and state
regulations including, at the federal level, the Consumer Credit Protection Act,
the Equal Credit Opportunity Act and certain regulations issued by the Federal
Trade Commission. A majority of states have ceilings on rates chargeable to
customers in retail time sales transactions, installment loans and revolving
credit financing. Insurance and reinsurance operations are subject to regulation
by various state insurance commissions or foreign regulatory authorities, as
applicable. The Corporation's international operations are subject to regulation
in their respective jurisdictions. To date, compliance with such regulations has
not had a material adverse effect on the Corporation's financial position or
results of operations.

The businesses in which the Corporation engages are highly competitive. The
Corporation is subject to competition from various types of financial
institutions, including banks, thrifts, investment banks, broker-dealers, credit
unions, leasing companies, consumer loan companies, independent finance
companies, finance companies associated with manufacturers and insurance and
reinsurance companies.

13

BUSINESS AND ECONOMIC CONDITIONS

The Corporation's businesses are generally affected by general business and
economic conditions in countries in which the Corporation conducts business.
When overall economic conditions deteriorate in those countries, there generally
are adverse effects on the Corporation's operations, although those effects are
dynamic and complex. For example, a downturn in employment or economic growth in
a particular national or regional economy will generally increase the pressure
on customers, which generally will result in deterioration of repayment patterns
and a reduction in the value of collateral. However, in such a downturn, demand
for loans and other products and services offered by the Corporation may
actually increase. Interest rates, another macro-economic factor, are important
to the Corporation's businesses. In the lending and leasing businesses, higher
real interest rates increase the Corporation's cost to borrow funds, but also
provide higher levels of return on new investments. For the Corporation's
operations that are less directly linked to interest rates, such as the
insurance operations, rate changes generally affect returns on investment
portfolios.

FORWARD LOOKING STATEMENTS

This document includes certain "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on management's current expectations and are subject to uncertainty and
changes in circumstances. Actual results may differ materially from these
expectations due to changes in global political, economic, business,
competitive, market and regulatory factors.

Item 2. Properties.

The Corporation conducts its business from various facilities, most of which are
leased. The locations of the Corporation's primary facilities are described in
Item 1. Business.

Item 3. Legal Proceedings.

The Corporation is not involved in any material pending legal proceedings.

Item 4. Submission of Matters to a Vote of Security Holders.

Omitted.

14

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.

See note 13 to the consolidated financial statements. The common stock of the
Corporation is owned entirely by GE Capital Services and, therefore, there is no
trading market in such stock.

Item 6. Selected Financial Data.

The following selected financial data should be read in conjunction with the
financial statements of GE Capital and consolidated affiliates and the related
Notes to Consolidated Financial Statements.

Year ended December 31
-----------------------------------------------------------------------------
(In millions) 2001 2000 1999 1998 1997
------------- -------------- -------------- -------------- ---------------

Revenues ............................... $ 48,545 $ 54,267 $ 46,605 $ 41,405 $ 33,404
Earnings before accounting changes ..... 6,060 4,289 4,208 3,374 2,729
Cumulative effect of accounting changes.
(158) - - - -
Net earnings............................ 5,902 4,289 4,208 3,374 2,729
Return on common equity (a) ............ 21.94% 18.97% 21.81% 20.33% 18.62%
Ratio of earnings to fixed charges ..... 1.72 1.52 1.60 1.50 1.48
Ratio of earnings to combined fixed
charges and preferred stock
dividends ............................ 1.70 1.50 1.58 1.48 1.46
Ratio of debt to equity ................ 7.31 7.53 8.44 7.86 7.45

Financing receivables - net ............ $ 171,301 $ 140,500 $ 132,023 $ 118,098 $ 101,133

Total assets ........................... 381,076 332,636 307,441 269,050 228,777

Short-term borrowings................... 154,124 117,482 123,073 107,419 91,680

Long-term senior notes ................. 75,601 78,078 68,164 57,486 44,437
Long-term subordinated notes ........... 873 698 698 697 697
Minority interest ...................... 1,650 1,344 1,767 1,137 860
Share owners' equity ................... 31,563 26,073 22,746 21,069 18,373

(a) Common equity excludes unrealized gains and losses on investment securities
and derivatives qualifying as hedges, net of tax. Return on common equity
is calculated using earnings that are adjusted for preferred stock
dividends and common equity excludes preferred stock.

Item 7. Management's Discussion and Analysis of Results of Operations.

Overview

The Corporation's earnings before accounting changes were $6,060 million in
2001, up 41% from $4,289 million in 2000, with strong double-digit earnings
growth in four of the five operating segments. Net earnings in 2000 increased 2%
from 1999. Earnings growth throughout the three-year period resulted from
origination volume and asset growth, productivity and acquisitions of businesses
and portfolios. Principal factors in the 2001 increase were strong productivity
($0.7 billion) partially offset by lower realized gains on financial
instruments. Excluding effects of Paine Webber Group, Inc. (PaineWebber) in 2000
and Americom in 2001, both of which are discussed below, such pre-tax gains were
lower in 2001 by $0.4 billion ($0.3 billion after tax). Pre-tax gains on sales
of investment securities declined in 2001 by $0.4 billion, of which $0.4 billion
related to GE Equity; other GE Equity gains were $0.8 billion lower; while gains
on securitizations were up $0.8 billion from 2000.

On November 9, 2001, the Corporation exchanged the stock of Americom and other
related assets and liabilities for a combination of cash and stock in SES
Global, a leading satellite company. The transaction resulted in a gain of
$1,158 million ($642 million after tax).

On December 28, 2000, Montgomery Ward, LLC (Wards), formerly a GE Capital
subsidiary, filed for bankruptcy protection and began liquidation proceedings.
Net earnings for the year 2000 included operating losses from Wards amounting to
$245 million as well as a charge, primarily to other costs and expenses, for
$815 million ($537 million after tax) to recognize the additional associated
losses.

15

Operating Results

Total Revenues decreased 11% to $48.5 billion in 2001, following a 16% increase
to $54.3 billion in 2000. The three principal reasons for the decrease in
revenues in 2001 compared with 2000 were: the deconsolidation of Wards and
resulting absence of sales in 2001 ($3.2 billion); the effects of
rationalization of operations and market conditions at IT Solutions ($2.9
billion); and reduced surrender fees compared with 2000 ($1.2 billion)
associated with the planned run-off of restructured insurance policies of Toho
Mutual Life Insurance Company (Toho) at GE Financial Assurance (GEFA). The
increase in 2000 reflected post-acquisition revenues from acquired businesses
($6.1 billion) as well as volume growth ($1.4 billion). Revenues in 2000 also
included a gain of $219 million ($133 million, after tax) from sale of the
Corporation's investment in common stock of PaineWebber. Additional information
about other revenue items is provided in the analysis of the Corporation's
operating segments beginning on page 16.

Interest expense on borrowings in 2001 was $10.0 billion, compared with $10.5
billion in 2000 and $8.9 billion in 1999. The change in both years reflected the
effects of both interest rates and the average level of borrowings used to
finance asset growth. The average composite effective interest rate was 5.11% in
2001, compared with 5.84% in 2000 and 5.11% in 1999. In 2001, average assets of
$345.8 billion were 7% higher than in 2000, which in turn were 14% higher than
in 1999. See page 21 for a discussion of interest rate risk management.

Operating and administrative expenses were $13.5 billion, $16.4 billion and
$13.5 billion in 2001, 2000 and 1999, respectively. Changes over the three-year
period were largely the result of acquisitions and unusual charges, which were
more than offset in 2001 by productivity at Consumer Services and Equipment
Management. Costs and expenses in 2001 included $0.4 billion of costs in
businesses that were acquired after January 1, 2001, as well as $0.3 billion of
costs discussed in the analysis of the All Other operating segment. Similarly,
2000 included $2.2 billion of costs in businesses that were acquired after
January 1, 2000; charges for costs associated with Wards amounting to $0.8
billion, as discussed previously; and $0.5 billion of costs to rationalize
certain operations discussed in the analysis of the All Other operating segment.

Insurance losses and policyholder and annuity benefits increased to $8.2 billion
in 2001, compared with $7.7 billion in 2000 and $5.6 billion in 1999. This
increase reflected effects of growth in premium volume and business acquisitions
at GEFA throughout the period, partially offset by the planned run-off of
restructured insurance policies at Toho.

Cost of goods sold declined to $3.3 billion in 2001, compared with $8.5 billion
in 2000 and $8.0 billion in 1999, reflecting volume declines at IT Solutions and
the deconsolidation of Wards on December 28, 2000, when Wards commenced
liquidation proceedings. The increase in 2000 primarily reflected the
consolidation of Wards from August 2, 1999, through December 28, 2000.

Provision for losses on financing receivables was $2.3 billion in 2001, compared
with $2.0 billion in 2000 and $1.7 billion in 1999. These provisions principally
related to private-label credit cards, bank credit cards, personal loans and
auto loans and leases as well as commercial, industrial, and equipment loans and
leases, all of which are discussed on page 19 under Portfolio Quality. The
provision throughout the three-year period reflected higher average receivable
balances, changes in the mix of business, and the effects of delinquency rates -
higher during 2001 and lower during 2000 - consistent with industry experience.

Depreciation and amortization of buildings and equipment and equipment on
operating leases increased 4% to $3.4 billion in 2001, compared with $3.3
billion in 2000, a 5% increase over 1999. The increase in both years was
primarily the result of higher levels of short-lived equipment on operating
leases, primarily reflecting acquisitions of vehicles and aircraft.

Provision for income taxes was $1.7 billion in 2001 (an effective tax rate of
22.2%), compared with $1.6 billion in 2000 (an effective tax rate of 26.6%) and
$1.6 billion in 1999 (an effective tax rate of 27.0%). The 2001 effective tax
rate reflects the effects of continuing globalization and certain transactions
(see note 15). Management expects that trends in the Corporation's businesses,
particularly the continuing impact of globalization, are likely to result in an
effective tax rate for the Corporation in 2002 that will be lower than the 2000
and 1999 rates, but higher than the 2001 rate.

Financing Spreads - Over the last three years, market interest rates have been
more volatile than the average composite effective interest rates of the
Corporation, principally because of the mix of effectively fixed-rate borrowings
in the Corporation's financing structure. The Corporation's portfolio of fixed
and floating-rate financial products has behaved similarly over that period.
Consequently, financing spreads have remained relatively flat over the
three-year period.

16

Operating Segments

Revenues and earnings before accounting changes of the Corporation, by operating
segment, for the past three years are summarized and discussed as follows. For
additional information, see note 16 to the consolidated financial statements.

Consolidated

(In millions) 2001 2000 1999
-------------- -------------- -----------

Revenues
Consumer Services .......................... $ 23,033 $ 23,439 $ 18,659
Equipment Management ....................... 12,486 14,677 15,329
Mid-Market Financing ....................... 8,585 6,952 5,884
Specialized Financing ...................... 2,927 4,028 3,250
Specialty Insurance ........................ 1,876 1,782 1,648
All other .................................. (362) 3,389 1,835
-------------- -------------- -----------
Total revenues .......................... $ 48,545 $ 54,267 $ 46,605
============== ============== ===========
Net earnings
Consumer Services .......................... $ 2,224 $ 1,590 $ 1,138
Equipment Management ....................... 1,607 833 684
Mid-Market Financing ....................... 1,281 1,016 836
Specialized Financing ...................... 574 1,204 1,004
Specialty Insurance ........................ 688 404 541
All other .................................. (314) (758) 5
-------------- -------------- ------------
Total earnings before accounting changes.. 6,060 4,289 4,208
Cumulative effect of accounting changes... (158) - -
-------------- -------------- ------------
Net earnings ............................ $ 5,902 $ 4,289 $ 4,208
============== ============== ============

Following is a discussion of revenues and earnings before accounting changes
from operating segments. For purposes of this discussion, earnings before
accounting changes is referred to as net earnings.

Consumer Services

(In millions) 2001 2000 1999
-------------- -------------- ---------------

Revenues
Global Consumer Finance...................... $ 5,282 $ 5,138 $ 4,839
GE Financial Assurance....................... 13,537 13,641 9,585
GE Card Services............................. 3,434 3,465 2,451
Other Consumer Services...................... 780 1,195 1,784
-------------- -------------- ---------------
Total revenues ............................ $ 23,033 $ 23,439 $ 18,659
============== ============== ===============
Net earnings (a)
Global Consumer Finance...................... $ 903 $ 710 $ 580
GE Financial Assurance....................... 687 564 411
GE Card Services............................. 559 414 195
Other Consumer Services...................... 75 (98) (48)
-------------- -------------- ---------------
Net earnings .............................. $ 2,224 $ 1,590 $ 1,138
============== ============== ===============

(a) Charges of $196 million and $107 million in 2001 and 2000, respectively
were not allocated to this segment and are included in the All Other
operating segment.

17

Consumer Services revenues declined 2% in 2001, following a 26% increase in
2000. Overall, the revenue performance in both years reflected the
post-acquisition revenues from acquired businesses and volume growth at GEFA,
Global Consumer Finance and Card Services which were offset by decreases at Auto
Financial Services and Mortgage Services, which both stopped accepting new
business in 2000 (included in Other Consumer Services) and, in 2001, a decrease
in surrender fee income at GEFA associated with the planned run-off of
restructured insurance policies at Toho. Net earnings increased 40% in 2001 and
in 2000. The increase in 2001 reflected productivity benefits at Global Consumer
Finance and GEFA, volume growth at Card Services and reduced residual losses at
Auto Financial Services. The increase in net earnings in 2000 resulted from
acquisition and volume growth at Card Services, GEFA, and Global Consumer
Finance, partially offset by losses at Mortgage Services.

Equipment Management

(In millions) 2001 2000 1999
--------------- -------------- -----------------

Revenues
Aviation Services (GECAS)................................. $ 2,173 $ 1,962 $ 1,551
Americom.................................................. 1,698 594 463
IT Solutions.............................................. 4,180 7,073 8,380
Other Equipment Management................................ 4,435 5,048 4,935
--------------- -------------- -----------------
Total revenues ......................................... $ 12,486 $ 14,677 $ 15,329
=============== ============== =================
Net earnings (a)
Aviation Services (GECAS).................................. $ 470 $ 474 $ 280
Americom................................................... 896 195 150
IT Solutions............................................... 11 (197) (66)
Other Equipment Management................................. 230 361 320
--------------- -------------- -----------------
Net earnings ............................................ $ 1,607 $ 833 $ 684
=============== ============== =================

(a) Charges of $135 million and $191 million in 2001 and 2000, respectively,
were not allocated to this segment and are included in the All Other
operating segment.

Equipment Management revenues decreased 15% in 2001 following a 4% decline in
2000. The decrease in both years was primarily attributable to effects of
rationalization of operations and market conditions on revenues at IT Solutions,
partially offset by the gain on the disposition of Americom in 2001, and volume
growth at GECAS in both years. Other Equipment Management revenues decreased in
2001, primarily as a result of lower volume across all of the remaining
businesses. Net earnings increased 93% in 2001 and 22% in 2000, reflecting the
Americom gain and productivity benefits at IT Solutions in 2001 and volume
growth at GECAS in 2000. The decrease in Other Equipment Management net earnings
in 2001 primarily reflected lower results at Transport International Pool and GE
Capital Modular Space.

Mid-Market Financing

(In millions) 2001 2000 1999
-------------- -------------- -----------------

Revenues
Commercial Equipment Financing................................ $ 4,505 $ 3,610 $ 3,180
Commercial Finance............................................ 1,641 1,468 1,251
Vendor Financial Services..................................... 2,085 1,792 1,371
Other Mid-Market Financing.................................... 354 82 82
-------------- -------------- -----------------
Total revenues ............................................ $ 8,585 $ 6,952 $ 5,884
============== ============== =================
Net earnings (a)
Commercial Equipment Financing................................ $ 590 $ 496 $ 396
Commercial Finance............................................ 365 282 239
Vendor Financial Services..................................... 288 245 200
Other Mid-Market Financing.................................... 38 (7) 1
-------------- -------------- -----------------
Net earnings .............................................. $ 1,281 $ 1,016 $ 836
============== ============== =================

(a) Charges of $52 million in 2001 were not allocated to this segment and are
included in the All Other operating segment.

18

Mid-Market Financing revenues increased 23% in 2001, following a 18% increase in
2000, resulting from acquisition and volume growth at Commercial Equipment
Financing, Vendor Financial Services and Commercial Finance, including the
acquisition of Heller Financial on October 24, 2001, (included in Other
Mid-Market Financing), and increased gains on securitizations of financial
assets. The increase in revenues in 2000 primarily reflected asset growth from
originations across all major businesses. Net earnings increased 26% in 2001 and
22% in 2000. Growth in net earnings in 2001 reflected securitization gains and
asset growth from acquisitions across all major businesses. In 2000,
improvements in net earnings resulted from favorable tax effects and asset
growth from originations.

Specialized Financing

(In millions) 2001 2000 1999
-------------- -------------- ----------------

Revenues
Real Estate................................................ $ 1,093 $ 1,900 $ 1,524
Structured Finance Group................................... 1,857 999 812
GE Equity.................................................. (67) 1,079 863
Other Specialized Financing................................ 44 50 51
-------------- -------------- ----------------
Total revenues ......................................... $ 2,927 $ 4,028 $ 3,250
============== ============== ================
Net earnings (a)
Real Estate.................................................$ 465 $ 353 $ 285
Structured Finance Group.................................... 385 344 270
GE Equity................................................... (232) 525 416
Other Specialized Financing................................. (44) (18) 33
-------------- -------------- ----------------
Net earnings ........................................... $ 574 $ 1,204 $ 1,004
============== ============== ================

(a) Charges of $103 million and $49 million in 2001 and 2000, respectively,
were not allocated to this segment and are included in the All Other
operating segment.

Specialized Financing revenues declined 27%, following a 24% increase in 2000,
and net earnings declined 52% in 2001 following a 20% increase in 2000. The
decrease in revenues and net earnings in 2001 were a result of reduced asset
gains at GE Equity, partially offset by profitable origination growth at
Structured Finance Group and higher asset gains and productivity benefits at
Real Estate. Revenues and net earnings growth in 2000 were principally the
result of origination growth across all businesses and a particularly high level
of gains on equity investment sales at GE Equity.

Specialty Insurance

(In millions) 2001 2000 1999
-------------- -------------- ----------------

Revenues
Mortgage Insurance......................................... $ 1,029 $ 973 $ 936
Other Specialty Insurance.................................. 847 809 712
-------------- -------------- ----------------
Total revenues .......................................... $ 1,876 $ 1,782 $ 1,648
============== ============== ================
Net earnings (a)
Mortgage Insurance......................................... $ 395 $ 366 $ 340
Other Specialty Insurance.................................. 293 38 201
-------------- -------------- ----------------
Net earnings ............................................ $ 688 $ 404 $ 541
============== ============== ================

(a) Charges of $1 million in 2001 were not allocated to this segment and are
included in the All Other operating segment.

Specialty Insurance revenues increased 5% and 8% in 2001 and 2000, respectively,
resulting from increased origination growth at Mortgage Insurance and increased
revenues in the Other Specialty Insurance businesses, driven primarily by
origination volume in municipal bond insurance at Financial Guaranty Insurance
Company. Net earnings increased 70% in 2001, following a 25% decrease in 2000.
The increase in 2001 primarily reflected favorable origination growth across all
businesses. The 2000 decrease primarily reflected reduced earnings from bond
refundings and a lower level of realized gains at Financial Guaranty Insurance
Company and reserve strengthening at a public entity liability insurance
company. In addition, net earnings in both years were favorably affected by
improved conditions in the Mortgage Insurance businesses, resulting from
favorable economic conditions, improvement in certain real estate markets and
loss mitigation efforts.

19

All Other

(In millions) 2001 2000 1999
--------------- -------------- --------------
Total revenues............... $ (362) $ 3,389 $ 1,835
=============== ============== ==============
Total net earnings........... $ (314) $ (758) $ 5
=============== ============== ==============

All Other includes results of operations of businesses other than those in the
five operating segments as well as charges management has not allocated to those
segments. In 2001, $354 million of charges, principally for asset write-downs,
resulted in a negative total for this category. Revenues in 2000 included the
results of Wards through December 28, 2000; a pre-tax gain of $219 million from
sale of the Corporation's investment in common stock of PaineWebber; and charges
of $238 million, principally for asset write-downs. The net loss of $314 million
for 2001 included after-tax costs of $487 million in certain financing product
lines that are being exited; in disposing of and providing for disposition of
several nonstrategic investments and other assets; and in restructuring various
global operations. These costs included asset write-downs totaling $231 million.
The net loss of $758 million for 2000 comprised the PaineWebber gain of $133
million; charges of $537 million related to Wards; strategic rationalization
costs of $347 million related to other operating segments, primarily for asset
write-downs, employee severance and lease terminations; and operating losses
from Wards of $245 million.

Portfolio Quality

Financing receivables is the largest category of assets of the Corporation and
represents one of its primary sources of revenues. The portfolio of financing
receivables, before allowance for losses, increased to $176.0 billion at the end
of 2001 from $144.5 billion at the end of 2000, as discussed in the following
paragraphs. The related allowance for losses at the end of 2001 amounted to $4.7
billion ($4.0 billion at the end of 2000), representing management's best
estimate of probable losses inherent in the portfolio.

A discussion of the quality of certain elements of the financing receivables
portfolio follows. "Nonearning" receivables are those that are 90 days or more
delinquent (or for which collection has otherwise become doubtful) and
"reduced-earning" receivables are commercial receivables whose terms have been
restructured to a below-market yield.

Consumer financing receivables, primarily credit card and personal loans and
auto loans and leases, were $50.8 billion at year-end 2001, an increase of $4.0
billion from year-end 2000. Credit card and personal receivables increased $7.5
billion, primarily from increased origination and acquisition growth, partially
offset by sales and securitizations and the net effects of foreign currency
translation. Auto receivables decreased $3.5 billion, primarily as a result of
the run-off of the liquidating Auto Financial Services portfolio. Nonearning
consumer receivables at year-end 2001 were $1.5 billion, about 3.0% of
outstandings, compared with $1.0 billion, about 2.3% of outstandings at year-end
2000. Write-offs of consumer receivables increased to $1.6 billion from $1.3
billion for 2000, reflecting the maturing of private label credit card
portfolios and higher personal bankruptcies on credit card loan portfolios in
Japan. Consistent with industry trends, consumer delinquency rates increased
during 2001.

Other financing receivables, which totaled $125.2 billion at December 31, 2001,
consisted of a diverse commercial, industrial and equipment loan and lease
portfolio. This portfolio increased $27.5 billion during 2001, reflecting
increased acquisition and origination growth, partially offset by sales and
securitizations. Related nonearning and reduced-earning receivables were $1.7
billion, about 1.4% of outstandings at year-end 2001, compared with $0.9
billion, about 1.0% of outstandings at year-end 2000 reflecting several large
bankruptcies and the current economic environment. These receivables are backed
by assets and are covered by reserves for probable losses.

The Corporation's loans and leases to commercial airlines amounted to $21.5
billion at the end of 2001, up from $15.3 billion at the end of 2000. The
Corporation's commercial aircraft positions also included financial guarantees,
funding commitments, credit and liquidity support agreements and aircraft orders
as discussed in note 6.

International Operations

The Corporation's international operations include its operations located
outside the United States and certain of its operations that cannot be
meaningfully associated with specific geographic areas (for example, commercial
aircraft). The Corporation's international revenues were $19.7 billion in 2001,
a decrease of 10% from $21.9 billion in 2000.

Revenues in the Pacific Basin decreased 19% in 2001, as 2000 revenues included
surrender fee income at GEFA from the planned run-off of restructured insurance
policies of Toho. Revenues in Europe decreased 8% in 2001 as acquisition and
core growth at Global Consumer Finance were more than offset by reduced

20

revenues, associated with the rationalization of certain operations at IT
Solutions. International assets grew 16%, from $124.5 billion at year-end 2000
to $144.6 billion at the end of 2001. The increase in 2001 primarily reflected
growth in the Corporation's asset base. The Corporation's assets increased 19%
in Europe, reflecting a mix of origination and acquisition growth. The
Corporation also achieved significant asset growth at GECAS.

The Corporation's activities span all global regions and primarily encompass
leasing of aircraft and providing certain financial services within these
regional economies. As such, when certain countries or regions such as the
Pacific Basin and Latin America experience currency and/or economic stress, the
Corporation may have increased exposure to certain risks but also may have new
profit opportunities. Potential increased risks include, among other things,
higher receivables delinquencies and bad debts, delays or cancellation of sales
and orders principally related to aircraft, higher local currency financing
costs and a slowdown in established financial services activities. New profit
opportunities include, among other things, more opportunities for lower cost
outsourcing, expansion of financial services activities through purchases of
companies or assets at reduced prices and lower U.S. debt financing costs.

Financial results reported in U.S. dollars are affected by currency exchange. A
number of techniques are used to manage the effects of currency exchange,
including selective borrowings in local currencies and selective hedging of
significant cross-currency transactions. Principal currencies are the euro, the
Japanese yen and the Canadian dollar. The Corporation's operations in Europe are
all euro-capable as of January 1, 2002.

Capital Resources and Liquidity

Statement of Financial Position

Investment securities for each of the past two years comprised mainly
investment-grade debt securities held by GE Financial Assurance and the
specialty insurance businesses of the Corporation in support of obligations to
annuitants and policyholders. Investment securities were $78.7 billion in 2001,
compared with $70.3 billion in 2000. The increase of $8.4 billion resulted from
investment of premiums received, reinvestment of investment income, and the
addition of securities from acquired companies, partially offset by sales and
maturities as well as decreases in the fair value of certain debt and equity
securities. A breakdown of the investment securities portfolio is provided in
note 2 to the consolidated financial statements.

Inventories were $270 million and $666 million at December 31, 2001 and 2000,
respectively. The decrease in 2001 primarily reflected the rationalization of
certain operations at IT Solutions, as well as improved inventory management.

Financing receivables were $171.3 billion at year-end 2001, net of allowance for
losses, up $30.8 billion over 2000. These receivables are discussed in the
Portfolio Quality section and in notes 3 and 4 to the consolidated financial
statements.

Insurance receivables were $10.6 billion at year-end 2001, a decrease of $1.4
billion that was primarily attributable to the planned run-off of assets at Toho
partially offset by core growth (see note 5).

Other receivables totaled $15.1 billion at year-end 2001 and $14.3 billion at
year-end 2000, and consists primarily of nonfinancing customer receivables,
accrued investment income, amounts due from GE (generally related to certain
trade payable programs), amounts due under operating leases, receivables due on
sales of securities and various sundry items.

Equipment on operating leases was $27.3 billion at December 31, 2001, up $3.2
billion from 2000. Details by category of investment can be found in note 6 to
the consolidated financial statements. Additions to equipment on operating
leases were $12.6 billion during 2001 ($11.4 billion during 2000), primarily
reflecting acquisitions of transportation equipment.

Intangible assets were $17.0 billion at year-end 2001, up from $13.2 billion at
year-end 2000. The $3.8 billion increase in intangible assets related primarily
to goodwill and other intangibles associated with acquisitions, the largest of
which was the acquisition of Heller Financial, partially offset by amortization.

Other assets totaled $52.0 billion at year-end 2001, compared with $48.1 billion
at the end of 2000. The $3.9 billion increase was principally attributed to
additional investments in associated companies and real estate, the recognition
of all derivatives at fair value in accordance with SFAS 133, and increases in
deferred insurance acquisition costs, partially offset by decreases in "separate
accounts" (see note 9).

21

Borrowings were $230.6 billion at December 31, 2001, of which $154.1 billion is
due in 2002 and $76.5 billion is due in subsequent years. Comparable amounts at
the end of 2000 were $196.3 billion in total, $117.5 billion due within one year
and $78.8 billion due thereafter. The Corporation's composite interest rates are
discussed in the Interest Expense section of Operating Results. A large portion
of the Corporation's borrowings ($110.9 billion and $88.1 billion at the end of
2001 and 2000, respectively) was issued in active commercial paper markets that
management believes will continue to be a reliable source of short-term
financing. The average remaining terms and interest rates of the Corporation's
commercial paper were 46 days and 2.37% at the end of 2001, compared with 45
days and 6.43% at the end of 2000. The Corporation's ratio of debt to equity was
7.31 to 1 at the end of 2001 and 7.53 to 1 at the end of 2000.

Insurance liabilities, reserves and annuity benefits were $82.2 billion, $2.3
billion higher than in 2000. The increase was primarily attributable to growth
in deferred annuities and guaranteed investment contracts, partially offset by
the planned run-off of policyholder contracts at Toho and decreases in separate
accounts. For additional information on these liabilities, see note 11.

Interest Rate and Currency Risk Management

Interest rate and currency risk management is important in the normal business
activities of the Corporation. Derivative financial instruments are used by the
Corporation to mitigate or eliminate certain financial and market risks,
including those related to changes in interest rates and currency exchange
rates. As a matter of policy, the Corporation does not engage in derivatives
trading, derivatives market-making, or other speculative activities. More
detailed information regarding these financial instruments, as well as the
strategies and policies for their use, is contained in notes 1, 10 and 20 to the
consolidated financial statements.

The Corporation manages its exposure to changes in interest rates, in part, by
funding its assets with an appropriate mix of fixed and variable rate debt and
its exposure to currency fluctuations principally by funding local currency
denominated assets with debt denominated in those same currencies. It uses
interest rate swaps, currency swaps (including non-U.S. currency and cross
currency interest rate swaps) and currency forwards to achieve lower borrowing
costs. Substantially all of these derivatives have been designated as modifying
interest rates and/or currencies associated with specific debt instruments.

One example of the risks to which the Corporation is exposed is prepayment risk
in certain of its business activities, such as in its mortgage servicing
activities. The Corporation uses interest rate swaps, purchased options and
futures as an economic hedge of the fair value of mortgage servicing rights.
These swaps, futures and option-based instruments are governed by the credit
risk policies described below and are transacted in either exchange-traded or
over-the-counter markets.

Established practices require that derivative financial instruments relate to
specific asset, liability or equity transactions or to currency exposures.
Substantially all treasury actions are centrally executed by the Corporation's
Treasury Department, which maintains controls on all exposures, adheres to
stringent counterparty credit standards and actively monitors marketplace
exposures.

Counterparty credit risk is managed on an individual counterparty basis, which
means that gains and losses are netted for each counterparty to determine the
amount at risk. When a counterparty exceeds credit exposure limits in terms of
amounts due to the Corporation, typically as a result of changes in market
conditions (see table below), no additional transactions are executed until the
exposure with that counterparty is reduced to an amount that is within the
established limit. All swaps are executed under master swap agreements
containing mutual credit downgrade provisions that provide the ability to
require assignment or termination in the event either party is downgraded below
A3 or A-.

As part of its ongoing activities, the Corporation enters into swaps that are
integrated into investments in or loans to particular customers. Such integrated
swaps not involving assumption of third-party credit risk are evaluated and
monitored like their associated investments or loans and are not therefore
subject to the same credit criteria that would apply to a stand-alone position.
Except for such positions, all other swaps, purchased options and forwards with
contractual maturities longer than one year are conducted within the credit
policy constraints provided in the table below. Foreign exchange forwards with
contractual maturities shorter than one year must be executed with
counterparties having an A-1+/ P-1 credit rating and the credit limit for these
transactions is $150 million.

22

Counterparty credit criteria Credit rating
-------------------------------
Standard &
Moody's Poor's
-------------- --------------
Term of transaction
Between one and five years .......... Aa3 AA-
Greater than five years ............. Aaa AAA
Credit exposure limits
Up to $50 million ................... Aa3 AA-
Up to $75 million ................... Aaa AAA

The conversion of interest rate and currency risk into credit risk results in a
need to monitor counterparty credit risk actively. At December 31, 2001, the
notional amount of long-term derivatives for which the counterparty was rated
below Aa3/AA- was $0.9 billion. These amounts are primarily the result of (1)
counterparty downgrades, (2) transactions executed prior to the adoption of the
Corporation's current counterparty credit standards, and (3) transactions
relating to acquired assets or businesses.

Following is an analysis of credit risk exposures for the last three years.

Percentage of Notional Derivative Exposure by Counterparty Credit Rating
------------------------------------------------------------------------

Moody's/Standard & Poor's 2001 2000 1999
--------------------------- ---------------- --------------- --------------
Aaa/AAA ................... 70% 64% 59%
Aa/AA ..................... 29% 35% 37%
A/A and below ............. 1% 1% 4%

The interplay of the Corporation's credit risk policy with its funding
activities is seen in the following example, in which the Corporation is assumed
to have been offered three alternatives for funding five-year fixed rate U.S.
dollar assets with five-year fixed rate U.S. dollar debt.

Spread over U.S. Treasuries
in basis points Counterparty
------------------------------ -------------------------

(a) Fixed rate five-year medium-term note ............. +75 -
(b) U.S. dollar commercial paper swapped into five-year
U.S. dollar fixed rate funding .................... +60 A
(c) Swiss franc fixed rate debt swapped into five-year
U.S. dollar fixed rate funding .................... +73 B

Counterparty A is a major brokerage house with an Aaa/AAA rated swap subsidiary
and a current exposure in terms of amounts due to the Corporation of $39
million. Counterparty B is an Aa2/AA rated insurance company with a current
exposure of $50 million.

In this hypothetical case, the Corporation would have chosen alternative (a) or
alternative (b), depending on the ratio of commercial paper outstanding to total
debt outstanding. Alternative (c) would not have been chosen as the additional
credit risk of Counterparty B would have exceeded the Corporation's risk
management limits.

The U.S. Securities and Exchange Commission requires that registrants provide
information about potential effects of changes in interest rates and currency
exchange. Although the rules offer alternatives for presenting this information,
none of the alternatives is without limitations. The following discussion is
based on so-called "shock-tests," which model effects of interest rate and
currency shifts on the reporting company. Shock tests, while probably the most
meaningful analysis permitted, are constrained by several factors, including the
necessity to conduct the analysis based on a single point in time and by their
inability to include the complex market reactions that normally would arise from
the market shifts modeled. While the following results of shock tests for
changes in interest rates and currency exchange rates may have some limited use
as benchmarks, they should not be viewed as forecasts.

- One means of assessing exposure to interest rate changes is a
duration-based analysis that measures the potential loss in net earnings
resulting from a hypothetical increase in interest rates of 100 basis
points across all maturities (sometimes referred to as a "parallel shift in
the yield curve"). Under this model, with all else constant, it is
estimated that such an increase, including repricing effects in the
securities portfolio, would reduce the 2002 net earnings of the Corporation

23

based on year-end 2001 positions by approximately $157 million. Based on
positions at year-end 2000, the pro forma effect on 2001 net earnings of
such an increase in interest rates was estimated to be a decrease of
approximately $93 million.

- The geographic distribution of the Corporation's operations is diverse.
One means of assessing exposure to changes in currency exchange rates is to
model effects on reported earnings using a sensitivity analysis. Year-end
2001 consolidated currency exposures, including financial instruments
designated and effective as hedges, were analyzed to identify Corporation
assets and liabilities denominated in other than their relevant functional
currency. Net unhedged exposures in each currency were then remeasured
assuming a 10% decrease (substantially greater decreases for
hyperinflationary currencies) in currency exchange rates compared with the
U.S. dollar. Under this model, management estimated at year-end 2001 that
such a decrease would have an insignificant effect on 2002 earnings of the
Corporation.

Statement of Changes in Share Owners' Equity

Share owners' equity increased $5,490 million to $31,563 million at year-end
2001. The increase was largely attributable to net earnings during the period of
$5,902 million and capital contributions of $2,649 million, partially offset by
dividends of $2,042 million.

Currency translation adjustments increased equity by $36 million in 2001.
Changes in the currency translation adjustment reflect the effects of changes in
currency exchange rates on the Corporation's net investment in non-U.S.
subsidiaries that have functional currencies other than the U.S. dollar.
Accumulated currency translation adjustments affect net earnings only when all
or a portion of an affiliate is disposed of.

Adoption of SFAS 133 in 2001 reduced equity by $832 million, including $810
million at the date of adoption. Further information about this accounting
change is provided in note 1.

Statement of Cash Flows

The Corporation's cash and equivalents aggregated $6.8 billion at the end of
2001, up from $5.8 billion at year-end 2000. One of the primary sources of cash
for the Corporation is short and long-term borrowings. Over the past three
years, the Corporation's borrowings with maturities of 90 days or less have
increased by $27.8 billion. New borrowings of $123.5 billion having maturities
longer than 90 days were added during those years, while $94.9 billion of such
longer-term borrowings were retired. The Corporation also generated $40.6
billion from operating activities, which benefited in 2001 from an increase in
insurance liabilities and reserves and a decrease from the planned run-off of
policyholder contracts at Toho.

The principal use of cash by the Corporation has been investing in assets to
grow its businesses. Of the $106.7 billion that the Corporation invested over
the past three years, $39.4 billion was used for additions to financing
receivables; $37.4 billion was used to invest in new equipment, principally for
lease to others; and $22.0 billion was used for acquisitions of new businesses,
the largest of which were Heller Financial and Mellon Leasing in 2001 and Japan
Leasing and the credit card operations of JC Penney in 1999.

With the financial flexibility that comes with excellent credit ratings,
management believes that the Corporation should be well positioned to meet the
global needs of its customers for capital and to continue growing its
diversified asset base.

Liquidity

The major debt-rating agencies evaluate the financial condition of GE Capital.
Factors that are important to the ratings of GE Capital include the following:
cash generating ability - including cash generated from operating activities;
earnings quality - including revenue growth and the breadth and diversity of
sources of income; leverage ratios - such as debt to total capital and interest
coverage; and asset utilization, including return on assets and asset turnover
ratios. Considering those factors, as well as other criteria appropriate to GE
Capital, those major rating agencies continue to give the highest ratings to
debt of GE Capital (long-term credit rating AAA/Aaa; short-term credit rating
A-1+/P-1).

Global commercial paper markets are a primary source of liquidity for the
Corporation. GE Capital is the most widely-held name in those markets, with
$110.9 billion and $88.1 billion outstanding at the end of 2001 and 2000,
respectively. Money markets are extremely robust. In 2001, GE Capital's
commercial paper accounted for only 2.4% of activity with maturities of less
than one year in the U.S. market, the largest of the global money markets.
Management believes that alternative sources of liquidity are sufficient to
permit an orderly transition from commercial paper in the unlikely event of
impaired access to those markets. Funding sources on which management would rely
would depend on the nature of such a hypothetical event, but include $33 billion

24

of contractually committed lending agreements with highly-rated global banks,
medium and long-term funding, monetization and asset securitization, cash
receipts from the Corporation's lending and leasing activities, short-term
secured funding on global assets, and asset sales. Strength of commercial paper
markets and GE Capital's access to those markets was evidenced on and
immediately after September 11, when many financial markets were closed, but GE
Capital continued to issue commercial paper without interruption.

Off-balance sheet arrangements are used in the ordinary course of business to
achieve improved share owner returns. One of the most common forms of
off-balance sheet arrangements is asset securitization. The transactions
described below are similar to those used by many financial institutions and are
part of an $800 billion annual market for asset-backed commercial paper. The
Corporation uses sponsored and third-party entities as well as term execution
for securitizations. As part of this program, management considers the relative
risks and returns of each alternative and predominantly uses sponsored entities.
Management believes these transactions could be readily executed through
non-sponsored entities or term securitization at insignificant incremental cost.

In addition to improved share owner returns, special purpose entities serve as
funding sources for a variety of diversified lending and securities
transactions, transfer selected credit risk and improve cash flows while
enhancing the ability to provide a full range of competitive products for
customers.

The discussion below and on pages 25 and 26 describes sponsored special purpose
entities, and is organized as follows:

- - Structure of sponsored special purpose entities and of transactions that
result in gains on sales and removal of assets from the financial
statements. This section describes assets in the entities as well as
management prohibitions on certain types of activities.

- - Support, both financial and operational, provided for special purpose
entities. This section describes the potential risks associated with
special purpose entities as well as management's measures to control risk
and conclusions about its potential significance.

- - Accounting outlook for these entities. This section briefly discusses the
accounting policy deliberations that have been undertaken recently
regarding special purpose entities.

Structure. Simply stated, the Corporation is selling high-quality, low-yield
financial assets to highly-rated entities that have financed those purchases
using low-cost commercial paper. Because the Corporation is the sponsor of these
entities and guarantees certain of their positions, management believes that the
structures warrant a more complete explanation, as follows.

The first step in the securitization process uses entities that meet the
accounting criteria for Qualifying Special Purpose Entities (qualifying
entities). Among other criteria, a qualifying entity's activities must be
restricted to passive investment in financial assets and issuance of beneficial
interests in those assets. Under generally accepted accounting principles,
entities meeting these criteria are not consolidated in the sponsor's financial
statements. The Corporation sells selected financial assets to qualifying
entities. Examples include the Corporation's financing and credit card
receivables. On the whole, the credit quality of such assets is equal to or
higher than the credit quality of similar assets owned by the Corporation.

Qualifying entities raise cash by issuing beneficial interests - rights to cash
flows from the assets - to other GE Capital-sponsored special purpose entities
that issue highly-rated commercial paper to third-party institutional investors.
These entities use commercial paper proceeds to obtain beneficial interests in
the financial assets of qualifying entities, as well as financial assets
originated by multiple third parties. The Corporation provides credit support
for certain of these assets, as well as liquidity support for the commercial
paper, as described on page 25. In accordance with its contractual commitments
to the entities, the Corporation rigorously underwrites and services the
associated assets, both those originated by the Corporation, and those
originated by other participants. All of the entities' assets serve as
collateral for the commercial paper. These entities are not consolidated in the
accompanying financial statements. Support activities include credit reviews at
acquisition and ongoing review, billing and collection activities - the same
support activities that the Corporation employs for its own financing
receivables.

GE Capital-sponsored special purpose entities are routinely evaluated by the
major credit rating agencies, including monthly reviews of key performance
indicators and annual reviews of asset quality. Commercial paper issued by these
entities has always received the highest available ratings from the major credit
rating agencies and at year-end 2001 was rated A-1+/P-1.

25

The following table summarizes receivables held by special purpose entities.

(In millions) 2001 2000
--------------- --------------
Receivables - secured by
Equipment (a)................. $ 12,781 $ 7,993
Commercial real estate........ 8,276 6,389
Other assets (a).............. 7,761 6,249
Credit card receivables.......... 9,470 6,170
Trade receivables (a)............ 3,028 3,138
--------------- --------------
Total receivables........... $ 41,316 $ 29,939
=============== ==============

(a) GE assets included in the categories above at year-end 2001 and 2000,
respectively, are as follows: Equipment - $631 million and $269 million;
Other assets - $757 million and $611 million; Trade receivables - $2,396
million and $1,733 million.

Each of the categories of assets shown in the table above represent portfolios
of assets that, in addition to being highly rated, are diversified to avoid
concentrations of risk. In each of the first three categories, financing
receivables are collateralized by a diverse mix of assets. Examples of assets in
each category follow: equipment - loans and leases on manufacturing and
transportation equipment; commercial real estate - loans on diversified
commercial property; other assets - diversified commercial loans; credit card
receivables - more than 23 million individual accounts; trade receivables -
balances of high credit quality accounts from sales of a broad range of products
and services to a diversified customer base.

In addition to the activities discussed previously, Financial Guaranty Insurance
Company (FGIC), a leader in the municipal bond insurance market, uses special
purpose entities that offer municipalities guaranteed investment contracts with
interests in high-quality, fixed-maturity, investment grade assets. FGIC
actively manages these assets under strict investment criteria and GE Capital
also provides certain performance guarantees. Total assets in sponsored FGIC
entities amounted to $13.4 billion and $10.2 billion at December 31, 2001 and
2000, respectively.

None of these special purpose entities or qualifying entities is permitted to
hold GE stock and there are no commitments or guarantees that provide for the
potential issuance of GE stock. These entities do not engage in speculative
activities of any description, are not used to hedge GE Capital positions, and
under GE integrity policies, no GE employee is permitted to invest in any
sponsored special purpose entity.

Support. Financial support for certain special purpose entities is provided in
the following ways.

- - Under active liquidity support agreements, the Corporation has agreed to
lend to these entities on a secured basis if (a) certain market conditions
render the entities unable to issue new debt instruments, or (b) the
entity's credit ratings were reduced below specified levels. The maximum
amount of such support for commercial paper outstanding was $41.5 billion
at December 31, 2001. Under related unused liquidity support agreements,
the Corporation has made additional liquidity support commitments of $9.4
billion at December 31, 2001, that would be effective upon addition of
qualified assets to the entities.

- - Under credit support agreements, the Corporation provides recourse for a
maximum of $14.3 billion of credit losses in special purpose entities. $8.9
billion of this support represents full recourse for certain assets; the
balance is based on loss-sharing formulas. Assets with credit support are
funded by commercial paper that is subject to the liquidity support
described above. Potential credit losses are provided for in the
Corporation's financial statements based on management's best estimate of
probable losses inherent in the portfolio using the same methodology as for
owned assets. The Corporation's allowances for losses amounted to $0.6
billion and $0.5 billion at year-end 2001 and 2000, respectively.

- - Performance guarantees relate to letters of credit and liquidity support
for guaranteed investment contracts and are subject to a maximum of $3.8
billion at December 31, 2001.

Management has extensive experience in evaluating economic, liquidity and credit
risk. In view of this experience, the high quality of assets in these entities,
the historically robust quality of commercial paper markets, and the historical
reliability of controls applied both to asset servicing and to activities in the
credit markets, management believes that, under any reasonable future economic
developments, the likelihood is remote that any such arrangements could have a
significant effect on the Corporation's operations, cash flows or financial
position.

Sales of securitized assets to special purpose entities result in a gain or loss
amounting to the net of sales proceeds, the carrying amount of net assets sold,
the fair value of servicing rights and an allowance for losses. Securitization
sales resulted in gains of $1.3 billion and about $0.5 billion in 2001 and 2000,
respectively, and are included in time sales, loan and other income.

26

Accounting outlook. Various generally accepted accounting principles specify the
conditions that the Corporation observes in not consolidating special purpose
entities and qualifying entities. Accounting for special purpose entities is
under review by the Financial Accounting Standards Board, and their
non-consolidated status may change as a result of those reviews.

Summary. The special purpose entities described above meet the Corporation's
economic objectives for their use while complying with generally accepted
accounting principles. In the event that accounting rules change in a way that
adversely affects sponsored entities, alternative securitization techniques
discussed on page 24 would likely serve as a substitute at insignificant
incremental cost.

Principal debt conditions that could automatically result in remedies, such as
acceleration of the Corporation's debt, are described below.

- - If the short-term credit rating of GE Capital or certain special purpose
entities previously discussed were to fall below A-1+/P-1, GE Capital would
be required to provide substitute liquidity for those entities or to
purchase the outstanding commercial paper. The maximum amount that GE
Capital would be required to provide in the event of such a downgrade is
$41.5 billion at December 31, 2001.

- - If the long-term credit rating of GE Capital or certain special purpose
entities previously discussed were to fall below AA-/Aa3, GE Capital would
be required to provide substitute credit support or liquidate the special
purpose entities. The maximum amount that GE Capital would be required to
substitute in the event of such a downgrade is $14.3 billion at December
31, 2001.

- - If the long-term credit rating of the Corporation under certain swap,
forward and option contracts falls below A-/A3, certain remedies are
required as discussed in note 20.

- - If GE Capital's ratio of earnings to fixed charges, which was 1.72 to 1 at
the end of 2001 deteriorates to 1.10 to 1 or, upon redemption of certain
preferred stock, its ratio of debt to equity, which was 7.31 to 1 at the
end of 2001 exceeds 8 to 1, GE has committed to contribute capital to GE
Capital.

None of these conditions has been met in the Corporation's history, and
management believes that under any reasonable future economic developments, the
likelihood is remote that any such arrangements could have a significant effect
on the Corporation's operations, cash flows or financial position.

Timing of contractual commitments at the Corporation, related to leases and
debt, follow.

(In billions) 2002 2003 2004 2005 2006
------------- -------------- -------------- ------------- -------------

Commercial paper........ $ 110.9 $ - $ - $ - $ -
Other................... 44.2 25.7 15.2 10.5 6.9

Critical Accounting Policies

High-quality financial statements require rigorous application of high-quality
accounting policies. The policies discussed below are considered by management
to be critical to an understanding of the Corporation's financial statements
because their application places the most significant demands on management's
judgment, with financial reporting results relying on estimation about the
effect of matters that are inherently uncertain. Specific risks for these
critical accounting policies are described in the following paragraphs. For all
of these policies, management cautions that future events rarely develop exactly
as forecast, and the best estimates routinely require adjustment.

Losses on financing receivables are recognized when they are incurred.
Measurement of such losses requires consideration of historical loss experience,
including the need to adjust for current conditions, and judgments about the
probable effects of relevant observable data, including present economic
conditions such as delinquency rates, financial health of specific customers and
market sectors, collateral value, and the present and expected levels of
interest rates. The Corporation's exposure to losses on financing receivables at
year-end 2001 was approximately $190 billion, including credit support for
special purpose entities, against which an allowance for losses of approximately
$5.3 billion was provided. An analysis of changes in the allowance for losses is
provided on page 19 which discusses financing receivable portfolio quality.
While losses depend to a large degree on future economic conditions, management
does not forecast significant adverse credit development in 2002. Further
information is provided in notes 1, 3 and 4.

Impairment of investment securities results in a charge to operations when a
market decline below cost is other than temporary. Management regularly reviews
each investment security for impairment based on criteria that include the
extent to which cost exceeds market value, the duration of that market decline
and the financial health of and specific prospects for the issuer. The
Corporation's investment securities amounted to approximately $79 billion at
year-end 2001. Gross unrealized gains and losses included in that carrying

27

amount related to debt securities were $1.6 billion and $2.0 billion,
respectively. Gross unrealized gains and losses on equity securities were $0.2
billion and $0.3 billion, respectively. Of those securities whose carrying
amount exceeds fair value at year-end 2001, and based on application of the
Corporation's accounting policy for impairment, approximately $600 million of
portfolio value is at risk of being charged to earnings in 2002. The Corporation
actively performs comprehensive market research, monitors market conditions and
segments its investments by credit risk in order to minimize impairment risks.
Further information is provided in notes 1 and 2 and on page 20, which discusses
the investment securities portfolio.

Insurance liabilities and reserves differ for short and long-duration insurance
contracts. Short-duration contracts such as property and casualty policies are
accounted for based on actuarial estimates of the amount of loss inherent in
that period's claims, including losses for which claims have not yet been
reported. Short-duration contract loss estimates rely on actuarial observations
of ultimate loss experience for similar historical events. Measurement of
long-duration insurance liabilities (such as term and whole life insurance
policies) also is based on approved actuarial techniques, but necessarily
includes assumptions about mortality, lapse rates and future yield on related
investments. The Corporation's insurance liabilities, reserves and annuity
benefits totaled $82.2 billion at year-end 2001. Of that total, approximately
$4.3 billion related to unpaid claims and claims adjustment expenses for
short-duration insurance coverage. Management continually evaluates the
potential for changes in loss estimates, both positive and negative, and uses
the results of these evaluations both to adjust recorded provisions and to
adjust underwriting criteria and product offerings. Further information about
insurance liabilities is provided in note 11.

Other loss contingencies are recorded as liabilities when it is probable that a
liability has been incurred and the amount of the loss is reasonably estimable.
Disclosure is required when there is a reasonable possibility that the ultimate
loss will exceed the recorded provision. Contingent liabilities are often
resolved over long time periods. Estimating probable losses requires analysis of
multiple forecasts that often depend on judgments about potential actions by
third parties such as regulators.

Other significant accounting policies, not involving the same level of
measurement uncertainties as those discussed above, are nevertheless important
to an understanding of the financial statements. Policies related to financial
instruments and consolidation policy require difficult judgments on complex
matters that are often subject to multiple sources of authoritative guidance.
Certain of these matters are among topics currently under reexamination by
accounting standards setters and regulators. Although no specific conclusions
reached by these standard setters appear likely to cause a material change in
the Corporation's accounting policies, outcomes cannot be predicted with
confidence. Also see note 1, Summary of Significant Accounting Policies, which
discusses accounting policies that must be selected by management when there are
acceptable alternatives.

New Accounting Standards

Major provisions of new accounting standards that may be significant to the
Corporation's financial statements in the future are described in the following
paragraphs.

SFAS 141, Business Combinations, and SFAS 142, Goodwill and Other Intangible
Assets, modify the accounting for business combinations, goodwill and
identifiable intangible assets. As of January 1, 2002, all goodwill and
indefinite-lived intangible assets must be tested for impairment and a
transition adjustment will be recognized. Management has not yet determined the
exact amount of goodwill impairment under these new standards, but believes the
non-cash transition charge to earnings will be approximately $1.0 billion and
recognized in the first quarter of 2002. Amortization of goodwill will cease as
of January 1, 2002, and, thereafter, all goodwill and any indefinite-lived
intangible assets must be tested at least annually for impairment. The effect of
the non-amortization provisions on 2002 operations will be affected by 2002
acquisitions and cannot be forecast, but if these rules had applied to goodwill
in 2001, management believes that full-year 2001 net earnings would have
increased by approximately $525 million.

SFAS 143, Accounting for Asset Retirement Obligations, requires recognition of
the fair value of obligations associated with the retirement of long-lived
assets when there is a legal obligation to incur such costs. This amount is
accounted for like an additional element of the corresponding asset's cost, and
is depreciated over that asset's useful life. SFAS 143 will be effective for the
Corporation on January 1, 2003. Management has not yet determined the effect of
adopting this standard on the Corporation's financial position and results of
operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Information about potential effects of changes in interest rates and currency
exchange on the Corporation is discussed in the Interest Rate and Currency Risk
Management section of Item 7.

28

Item 8. Financial Statements and Supplementary Data.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
General Electric Capital Corporation:

We have audited the consolidated financial statements of General Electric
Capital Corporation and consolidated affiliates as listed in Item 14. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule listed in Item 14. These
consolidated financial statements and the financial statement schedule are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated financial statements and the financial
statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of General Electric
Capital Corporation and consolidated affiliates at December 31, 2001 and 2000,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

As discussed in note 1 to the consolidated financial statements, the Corporation
in 2001 changed its method of accounting for derivative instruments and hedging
activities and impairment of certain beneficial interests in securitized assets.

/s/ KPMG LLP

Stamford, Connecticut
February 8, 2002

29

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

Statement of Earnings

For the years ended December 31 (In millions) 2001 2000 1999
-------------- -------------- ------------

REVENUES
Time sales, loan and other income .................................. $ 21,306 $ 21,519 $ 17,893
Operating lease rentals ............................................ 6,079 6,179 6,020
Financing leases.................................................... 4,237 3,692 3,587
Investment income .................................................. 4,949 5,458 4,390
Premium and commission income of insurance affiliates (note 11)..... 8,347 8,011 5,975
Sales of goods ..................................................... 3,627 9,408 8,740
-------------- -------------- ------------
Total revenues ................................................... 48,545 54,267 46,605
-------------- -------------- ------------
EXPENSES
Interest ........................................................... 10,025 10,461 8,936
Operating and administrative (note 14) ............................. 13,465 16,379 13,500
Insurance losses and policyholder and annuity benefits.............. 8,171 7,697 5,564
Cost of goods sold ................................................. 3,266 8,537 7,976
Provision for losses on financing receivables (note 4) ............. 2,312 1,975 1,655
Depreciation and amortization of buildings and equipment and
equipment on operating leases (notes 6 & 7) ...................... 3,428 3,288 3,145
Minority interest in net earnings of consolidated affiliates ....... 84 86 68
-------------- -------------- ------------
Total expenses ................................................... 40,751 48,423 40,844
-------------- -------------- ------------

Earnings before income taxes and accounting changes................. 7,794 5,844 5,761
Provision for income taxes (note 15) ............................... (1,734) (1,555) (1,553)
-------------- -------------- ------------
Earnings before accounting changes.................................. 6,060 4,289 4,208
Cumulative effect of accounting changes (note 1).................... (158) - -
-------------- -------------- ------------
NET EARNINGS........................................................ $ 5,902 $ 4,289 $ 4,208
============== ============== ============

Statement of Changes in Share Owners' Equity

(In millions) 2001 2000 1999
-------------- -------------- --------------

CHANGES IN SHARE OWNERS' EQUITY
Balance at January 1 ............................................... $ 26,073 $ 22,746 $ 21,069
-------------- -------------- --------------
Transactions with share owners (note 13) ........................... 607 (642) (1,086)
-------------- -------------- --------------
Changes other than transactions with share owners:
Increases attributable to net earnings ........................... 5,902 4,289 4,208
Investment securities - net (note 13)............................. (223) 24 (1,330)
Currency translation adjustments (note 13) ....................... 36 (344) (115)
Derivatives qualifying as hedges (note 13)........................ (832) - -
-------------- -------------- --------------
Total changes other than transactions with share owners ......... 4,883 3,969 2,763
-------------- -------------- --------------
Balance at December 31 ............................................. $ 31,563 $ 26,073 $ 22,746
============== ============== ==============

See notes to Consolidated Financial Statements.

30

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

Statement of Financial Position

At December 31 (In millions) 2001 2000
-------------- ---------------

ASSETS
Cash and equivalents ............................................................. $ 6,784 $ 5,819
Investment securities (note 2) ................................................... 78,723 70,282
Financing receivables (note 3):
Time sales and loans, net of deferred income .................................. 120,708 93,540
Investment in financing leases, net of deferred income ........................ 55,336 50,930
-------------- ---------------
176,044 144,470
Allowance for losses on financing receivables (note 4) ........................ (4,743) (3,970)
-------------- ---------------
Financing receivables - net ................................................. 171,301 140,500

Insurance receivables (note 5).................................................... 10,642 12,060
Other receivables ................................................................ 15,132 14,308
Inventories ...................................................................... 270 666
Equipment on operating leases (at cost), less accumulated amortization of $9,133
and $7,900 (note 6) ............................................................ 27,314 24,145
Buildings and equipment (at cost), less accumulated depreciation of $1,521 and
$1,999 (note 7) ................................................................ 1,898 3,511
Intangible assets - net (note 8) ................................................. 16,986 13,216
Other assets (note 9) ............................................................ 52,026 48,129
-------------- ---------------
Total assets .................................................................. $ 381,076 $ 332,636
============== ===============
LIABILITIES AND SHARE OWNERS' EQUITY
Short-term borrowings (note 10) .................................................. $ 154,124 $ 117,482
Long-term borrowings (note 10) ................................................... 76,474 78,776
-------------- ---------------
Total borrowings .............................................................. 230,598 196,258
Accounts payable ................................................................. 12,479 9,484
Insurance liabilities, reserves and annuity benefits (note 11) ................... 82,224 79,933
Other liabilities ................................................................ 14,451 11,280
Deferred income taxes (note 15) .................................................. 8,111 8,264
-------------- ---------------
Total liabilities ............................................................. 347,863 305,219
-------------- ---------------
Minority interest in equity of consolidated affiliates (note 12) ................. 1,650 1,344
-------------- ---------------
Variable cumulative preferred stock, $100 par value, liquidation preference
$100,000 per share (33,000 shares authorized at December 31, 2001 and 2000 and
26,000 shares outstanding at December 31, 2001 and 2000) ....................... 3 3
Common stock, $0.01 par value (3,866,000 shares authorized and 3,837,825 shares
outstanding at December 31, 2001 and 2000, respectively) ....................... 1 1
Additional paid-in capital ....................................................... 9,763 7,114
Retained earnings ................................................................ 23,554 19,694
Accumulated gains / (losses) - net:
Investment securities (a) .................................................... (362) (139)
Currency translation adjustments (a) .......................................... (564) (600)
Derivatives qualifying as hedges (a)........................................... (832) -
-------------- ---------------
Total share owners' equity (note 13) .......................................... 31,563 26,073
-------------- ---------------
Total liabilities and share owners' equity .................................... $ 381,076 $ 332,636
============== ===============

(a) The sum of accumulated gains/(losses) on investment securities,
currency translation adjustments and derivatives qualifying as hedges
constitutes "Accumulated nonowner changes other than earnings," as
shown in note 13, and was ($1,758) million and ($739) million at
year-end 2001 and 2000, respectively.

See notes to Consolidated Financial Statements.

31

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

Statement of Cash Flows

For the years ended December 31 (In millions) 2001 2000 1999
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES

Net earnings .................................................... $ 5,902 $ 4,289 $ 4,208
Adjustments to reconcile net earnings to cash provided from
operating activities:
Cumulative effect of accounting changes...................... 158 - -
Depreciation and amortization of buildings and equipment and
equipment on operating leases ............................. 3,428 3,288 3,145
Provision for losses on financing receivables ............... 2,312 1,975 1,655
Amortization of goodwill and other intangibles .............. 1,036 2,020 1,083
Increase in deferred income taxes ........................... 705 514 854
Decrease (increase) in inventories .......................... 396 (261) 327
Increase (decrease) in accounts payable ..................... 3,914 3,089 (215)
Increase (decrease) in insurance liabilities and reserves ... 3,499 (2,890) 2,085
All other operating activities .............................. (4,705) (1,969) 757
--------------- --------------- ---------------
Cash from operating activities ................................. 16,645 10,055 13,899
--------------- --------------- ---------------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Net increase in financing receivables (note 19) ................. (13,090) (15,397) (10,889)
Buildings and equipment and equipment on operating leases
- additions .................................................. (12,569) (11,384) (13,432)
- dispositions ............................................... 7,258 6,680 6,252
Payments for principal businesses purchased, net of
cash acquired................................................. (10,993) (1,176) (9,823)
All other investing activities (note 19) ........................ (6,315) (13,649) (8,182)
--------------- --------------- ---------------
Cash used for investing activities ............................. (35,709) (34,926) (36,074)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities of 90 days or less) ........ 23,424 (2,445) 6,865
Newly issued debt (maturities longer than 90 days) (note 19) .... 30,738 46,188 46,556
Repayments and other reductions (maturities longer than
90 days) (note 19) .......................................... (36,051) (31,907) (26,924)
Dividends paid .................................................. (2,042) (1,612) (1,537)
All other financing activities (note 19) ........................ 3,960 13,961 640
--------------- --------------- ---------------
Cash from financing activities ................................. 20,029 24,185 25,600
--------------- --------------- ---------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR ..... 965 (686) 3,425
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ....................... 5,819 6,505 3,080
--------------- --------------- ---------------
CASH AND EQUIVALENTS AT END OF YEAR ............................. $ 6,784 $ 5,819 $ 6,505
=============== =============== ===============

See notes to Consolidated Financial Statements.

32

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

Notes to Consolidated Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation - The consolidated financial statements represent the adding
together of General Electric Capital Corporation ("the Parent" or "GE Capital")
and all of its majority-owned and controlled affiliates ("consolidated
affiliates"), (collectively called "the Corporation"). All outstanding common
stock of the Parent is owned by General Electric Capital Services, Inc. ("GE
Capital Services"), all of whose common stock is owned, directly or indirectly,
by General Electric Company ("GE Company" or "GE"). On July 2, 2001, the parent
changed its state of incorporation to Delaware. In connection with the
reincorporation, the par value of the common stock decreased from $200 per share
to $0.01 per share. The consolidated financial statements contained herein have
been restated to give retroactive effect to the reincorporation.

All significant transactions among the Parent and consolidated affiliates have
been eliminated. Associated companies, generally companies that are 20% to 50%
owned and over which the Corporation, directly or indirectly, has significant
influence, are included in other assets and valued at the appropriate share of
equity plus loans and advances. Certain prior-year amounts have been
reclassified to conform to the current year presentation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts and related disclosures. Actual results could differ
from those estimates.

Methods of Recording Revenues from Services (Earned Income) - Income on all
loans is recognized on the interest method. Accrual of interest income is
suspended at the earlier of the time at which collection of an account becomes
doubtful or the account becomes 90 days delinquent. Interest income on impaired
loans is recognized either as cash is collected or on a cost recovery basis as
conditions warrant.

Financing lease income is recorded on the interest method so as to produce a
level yield on funds not yet recovered. Estimated unguaranteed residual values
of leased assets are based primarily on periodic independent appraisals of the
values of leased assets remaining at expiration of the lease terms.

Operating lease income is recognized on a straight-line basis over the terms of
the underlying leases.

Origination, commitment and other nonrefundable fees related to fundings are
deferred and recorded in earned income on the interest method. Commitment fees
related to loans not expected to be funded and line-of-credit fees are deferred
and recorded in earned income on a straight-line basis over the period to which
the fees relate. Syndication fees are recorded in earned income at the time
related services are performed unless significant contingencies exist.

Income from investment and insurance activities is discussed on page 33.

Sales of Goods - Sales of goods are recorded when a firm sales agreement is in
place, delivery has occurred and collectibility of the fixed or determinable
sales price is reasonably assured.

Cash and Equivalents - Certificates and other time deposits are treated as cash
equivalents.

Recognition of Losses on Financing Receivables and Investments - The allowance
for losses on small-balance receivables reflects management's best estimate of
probable losses inherent in the portfolio determined principally on the basis of
historical experience. For other receivables, principally the larger loans and
leases, the allowance for losses is determined primarily on the basis of
management's best estimate of probable losses, including specific allowances for
known troubled accounts.

All accounts or portions thereof deemed to be uncollectible or to require an
excessive collection cost are written off to the allowance for losses.
Small-balance accounts generally are written off when 6 to 12 months delinquent,
although any such balance judged to be uncollectible, such as an account in
bankruptcy, is written down immediately to estimated realizable value.
Large-balance accounts are reviewed at least quarterly, and those accounts with
amounts that are judged to be uncollectible are written down to estimated
realizable value.

When collateral is repossessed in satisfaction of a loan, the receivable is
written down against the allowance for losses to estimated fair value of the
asset less costs to sell, transferred to other assets and subsequently carried
at the lower of cost or estimated fair value less costs to sell. This accounting
method has been employed principally for specialized financing transactions.

33

Investment Securities - Investments in debt and marketable equity securities are
reported at fair value based primarily on quoted market prices or, if quoted
prices are not available, discounted expected cash flows using market rates
commensurate with credit quality and maturity of the investment. Substantially
all investment securities are designated as available for sale, with unrealized
gains and losses included in share owners' equity, net of applicable taxes and
other adjustments. Investment securities are regularly reviewed for impairment
based on criteria that include the extent to which cost exceeds market value,
the duration of the market decline, and the financial health of and specific
prospects for the issuer. Unrealized losses that are other than temporary are
recognized in earnings. Realized gains and losses are accounted for on the
specific identification method.

Inventories - The Corporation's inventories consist primarily of finished
products held for sale. All inventories are stated at the lower of cost or
realizable values. Cost is primarily determined on a first-in, first-out basis.

Equipment on Operating Leases - Equipment is amortized, principally on a
straight-line basis, to estimated residual value over the lease term or over the
estimated economic life of the equipment.

Buildings and Equipment - Depreciation is recorded on either a sum-of-the-years
digits formula or a straight-line basis over the lives of the assets.

Intangible Assets - Goodwill is amortized over its estimated period of benefit
on a straight-line basis; other intangible assets are amortized on appropriate
bases over their estimated lives. No amortization period exceeds 40 years. When
an intangible asset exceeds associated expected operating cash flows, it is
considered to be impaired and is written down to fair value, which is determined
based on either discounted future cash flows or appraised values.

Insurance Accounting Policies - Accounting policies for insurance businesses are
as follows.

Premium income. Insurance premiums are reported as earned income as follows:

- - For short-duration insurance contracts (including property and casualty,
accident and health, and financial guaranty insurance), premiums are
reported as earned income, generally on a pro rata basis, over the terms of
the related agreements. For retrospectively rated reinsurance contracts,
premium adjustments are recorded based on estimated losses and loss
expenses, taking into consideration both case and incurred-but-not-reported
reserves.

- - For traditional long-duration insurance contracts (including term and whole
life contracts and annuities payable for the life of the annuitant),
premiums are reported as earned income when due.

- - For investment contracts and universal life contracts, premiums received
are reported as liabilities, not as revenues. Universal life contracts are
long-duration insurance contracts with terms that are not fixed and
guaranteed; for these contracts, revenues are recognized for assessments
against the policyholder's account, mostly for mortality, contract
initiation, administration and surrender. Investment contracts are
contracts that have neither significant mortality nor significant morbidity
risk, including annuities payable for a determined period; for these
contracts, revenues are recognized on the associated investments and
amounts credited to policyholder accounts are charged to expense.

Deferred policy acquisition costs. Costs that vary with and are primarily
related to the acquisition of new and renewal insurance and investment contracts
are deferred and amortized over the respective policy terms. For short-duration
insurance contracts, acquisition costs consist primarily of commissions,
brokerage expenses and premium taxes. For long-duration insurance contracts,
these costs consist primarily of first-year commissions in excess of recurring
renewal commissions, certain variable sales expenses and certain support costs
such as underwriting and policy issue expenses.

- - For short-duration insurance contracts, these costs are amortized pro rata
over the contract periods in which the related premiums are earned.

- - For traditional long-duration insurance contracts, these costs are
amortized over the respective contract periods in proportion to either
anticipated premium income or, in the case of limited-payment contracts,
estimated benefit payments.

- - For investment contracts and universal life contracts, these costs are
amortized on the basis of anticipated gross profits.

Periodically, deferred policy acquisition costs are reviewed for recoverability;
anticipated investment income is considered in recoverability evaluations.

34

Present value of future profits. The actuarially determined present value of
anticipated net cash flows to be realized from insurance, annuity and investment
contracts in force at the date of acquisition of life insurance enterprises is
recorded as the present value of future profits and is amortized over the
respective policy terms in a manner similar to deferred policy acquisition
costs. Unamortized balances are adjusted to reflect experience and impairment,
if any.

Accounting Changes

At January 1, 2001, the Corporation adopted Statement of Financial Accounting
Standards (SFAS) 133, Accounting for Derivative Instruments and Hedging
Activities, as amended. Under SFAS 133, all derivative instruments (including
certain derivative instruments embedded in other contracts) are recognized in
the balance sheet at their fair values and changes in fair value are recognized
immediately in earnings, unless the derivatives qualify as hedges of future cash
flows. For derivatives qualifying as hedges of future cash flows, the effective
portion of changes in fair value is recorded temporarily in equity, then
recognized in earnings along with the related effects of the hedged items. Any
ineffective portion of hedges is reported in earnings as it occurs. Further
information about derivatives and hedging is provided in note 20.

The cumulative effect of adopting this accounting change at January 1, 2001, was
as follows:

Share Owners'
(In millions) Earnings Equity
------------- --------------
Adjustment to fair value of derivatives (a).... $ (60) $ (1,315)
Income tax effects............................. 22 505
------------- --------------
Total..................................... $ (38) $ (810)
============= ==============

(a) For earnings effect, amount shown is net of adjustment to hedged items.

The cumulative effect on earnings comprised two significant elements. One
element was associated with conversion option positions that were embedded in
financing agreements, and the other was a portion of the effect of marking to
market options and currency contracts used for hedging. The cumulative effect on
share owners' equity was primarily attributable to marking to market forward and
swap contracts used to hedge variable-rate borrowings. Decreases in the fair
values of these instruments were attributable to declines in interest rates
since inception of the hedging arrangements. As a matter of policy, the
Corporation ensures that funding, including the effect of derivatives, of its
lending and other financing asset positions are substantially matched in
character (e.g., fixed vs. floating) and duration. As a result, declines in the
fair values of these effective derivatives are offset by unrecognized gains on
the related financing assets and hedged items, and future earnings will not be
subject to volatility arising from interest rate changes.

In November 2000, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB) reached a consensus on accounting for
impairment of retained beneficial interests (EITF 99-20). Under this consensus,
impairment of certain beneficial interests in securitized assets must be
recognized when (1) the asset's fair value is below its carrying value, and (2)
it is probable that there has been an adverse change in estimated cash flows.
The cumulative effect of adopting EITF 99-20 at January 1, 2001, was a one-time
reduction of net earnings of $120 million.

These accounting changes did not involve cash, and management expects that they
will have no more than a modest effect on future results.

35

NOTE 2. INVESTMENT SECURITIES

A summary of investment securities follows:

Gross Gross
Amortized unrealized unrealized Estimated
(In millions) cost gains losses fair value
--------------- --------------- --------------- ---------------

December 31, 2001
Debt securities:
U.S. corporate ............................... $ 41,880 $ 824 $ (1,537) $ 41,167
State and municipal .......................... 6,445 107 (60) 6,492
Mortgage-backed .............................. 12,281 357 (55) 12,583
Corporate - non-U.S. ......................... 10,351 174 (235) 10,290
Government - non-U.S. ........................ 2,537 118 (98) 2,557
U.S. government and federal agency ........... 961 21 (31) 951
Equity securities ............................. 4,868 158 (343) 4,683
--------------- --------------- --------------- ---------------
$ 79,323 $ 1,759 $ (2,359) $ 78,723
=============== =============== =============== ===============
December 31, 2000
Debt securities:
U.S. corporate ............................... $ 34,759 $ 420 $ (1,186) $ 33,993
State and municipal .......................... 6,459 243 (125) 6,577
Mortgage-backed .............................. 10,367 278 (141) 10,504
Corporate - non-U.S. ......................... 9,043 323 (104) 9,262
Government - non-U.S. ........................ 2,874 60 (79) 2,855
U.S. government and federal agency ........... 1,623 10 (38) 1,595
Equity securities ............................. 5,301 634 (439) 5,496
--------------- --------------- --------------- ---------------
$ 70,426 $ 1,968 $ (2,112) $ 70,282
=============== =============== =============== ===============

A substantial portion of mortgage-backed securities shown in the table above are
collateralized by U.S. residential mortgages.

At December 31, 2001, contractual maturities of debt securities, excluding
mortgage-backed securities, were as follows:
Estimated fair
(In millions) Amortized cost value
---------------- -------------------
Due in:
2002 ............................... $ 2,600 $ 2,654
2003-2006 .......................... 13,854 13,721
2007-2011 .......................... 14,969 14,730
2012 and later ..................... 30,751 30,352

It is expected that actual maturities will differ from contractual maturities
because borrowers have the right to call or prepay certain obligations.

Supplemental information about gross realized gains and losses on investment
securities follows.

(In millions) 2001 2000 1999
---------------- ------------------- ------------------
Gains (a)...... $ 1,234 $ 1,494 $ 553
Losses......... (713) (337) (327)
---------------- ------------------- ------------------
Net....... $ 521 $ 1,157 $ 226
================ =================== ==================

(a) Includes $219 million, in 2000, from the sale of the Corporation's
investment in common stock of Paine Webber Group, Inc.

Proceeds from sales of investment securities in 2001 were $24,171 million
($12,384 million in 2000 and $9,354 million in 1999).

36

NOTE 3. FINANCING RECEIVABLES

Financing receivables at December 31, 2001 and 2000, are shown below.

(In millions) 2001 2000
----------- -----------
Time sales and loans:
Consumer Services ................................. $ 44,321 $ 41,984
Equipment Management .............................. 2,391 1,385
Mid-Market Financing .............................. 57,115 34,740
Specialized Financing ............................. 16,840 14,503
Other ............................................ 41 928
----------- -----------
Time sales and loans - net of deferred income .... 120,708 93,540
----------- -----------
Investment in financing leases:
Direct financing leases ........................... 48,601 46,053
Leveraged leases .................................. 6,735 4,877
----------- -----------
Investment in financing leases -
net of deferred income............................ 55,336 50,930
----------- -----------
176,044 144,470
Less allowance for losses (note 4) .................. (4,743) (3,970)
----------- -----------
Net investment................................... $ 171,301 $ 140,500
=========== ===========

Time sales and loans represents transactions in a variety of forms, including
time sales, revolving charge and credit, mortgages, installment loans,
intermediate-term loans and revolving loans secured by business assets. The
portfolio includes time sales and loans carried at the principal amount on which
finance charges are billed periodically, and time sales and loans carried at
gross book value, which includes finance charges. At year-end 2001 and 2000,
commercial real estate loans and leases of $25,393 million and $21,265 million,
respectively, were included in either financing receivables or insurance
receivables. Note 6 contains information on commercial airline loans and leases.

Investment in financing leases consists of direct financing and leveraged leases
of aircraft, railroad rolling stock, autos, other transportation equipment, data
processing equipment and medical equipment, as well as other manufacturing,
power generation, commercial real estate, and commercial equipment and
facilities.

As the sole owner of assets under direct financing leases and as the equity
participant in leveraged leases, the Corporation is taxed on total lease
payments received and is entitled to tax deductions based on the cost of leased
assets and tax deductions for interest paid to third-party participants. The
Corporation is generally entitled to any residual value of leased assets.

Investment in direct financing and leveraged leases represents net unpaid
rentals and estimated unguaranteed residual values of leased equipment, less
related deferred income. The Corporation has no general obligation for principal
and interest on notes and other instruments representing third-party
participation related to leveraged leases; such notes and other instruments have
not been included in liabilities but have been offset against the related
rentals receivable. The Corporation's share of rentals receivable on leveraged
leases is subordinate to the share of other participants who also have security
interests in the leased equipment.

37

The Corporation's net investment in financing leases at December 31, 2001 and
2000, is shown below.

Total financing leases Direct financing leases Leveraged leases
-------------------------- ------------------------- --------------------------
(In millions) 2001 2000 2001 2000 2001 2000
------------- ------------ ------------ ------------ ------------ -------------

Total minimum lease payments
receivable ..................... $ 82,631 $ 74,909 $ 53,185 $ 50,505 $ 29,446 $ 24,404
Less principal and interest on
third-party nonrecourse debt .... (22,588) (19,773) - - (22,588) (19,773)
------------- ------------ ------------ ------------ ------------ -------------
Net rentals receivable .......... 60,043 55,136 53,185 50,505 6,858 4,631
Estimated unguaranteed residual
value of leased assets .......... 8,396 7,202 4,944 4,490 3,452 2,712
Less deferred income .............. (13,103) (11,408) (9,528) (8,942) (3,575) (2,466)
------------- ------------ ------------ ------------ ------------ -------------
Investment in financing leases .. 55,336 50,930 48,601 46,053 6,735 4,877
Less: Allowance for losses ....... (679) (646) (606) (558) (73) (88)
Deferred taxes arising from
financing leases .......... (9,128) (8,423) (4,603) (4,511) (4,525) (3,912)
------------- ------------ ------------ ------------ ------------ -------------
Net investment in financing leases $ 45,529 $ 41,861 $ 43,392 $ 40,984 $ 2,137 $ 877
============= ============ ============ ============ ============ =============

Contractual Maturities

At December 31, 2001 the Corporation's contractual maturities for time sales and
loans and net rentals receivable were:

(In millions) Total time
sales and Net rentals
Due in: loans (a) receivable (a)
--------------- ------------------
2002 ...................... $ 38,128 $ 15,232
2003....................... 22,017 13,025
2004 ...................... 19,439 8,973
2005 ...................... 10,247 6,198
2006 ...................... 7,729 3,455
2007 and later ............ 23,148 13,160
--------------- ------------------
$ 120,708 $ 60,043
=============== ==================

(a) Experience has shown that a substantial portion of receivables will be paid
prior to contractual maturity, and these amounts should not be regarded as
forecasts of future cash flows.

Nonearning consumer receivables were $1,540 million and $1,043 million at
December 31, 2001 and 2000, respectively, a substantial amount of which were
private-label credit card loans. Nonearning and reduced-earning receivables
other than consumer receivables were $1,712 million and $949 million at year-end
2001 and 2000, respectively.

"Impaired" loans are defined by generally accepted accounting principles as
large balance loans for which it is probable that the lender will be unable to
collect all amounts due according to original contractual terms of the loan
agreement.

An analysis of impaired loans at December 31, 2001 and 2000, is shown below.

(In millions) 2001 2000
--------------- --------------
Loans requiring allowance for losses ....... $ 1,037 $ 471
Loans expected to be fully recoverable ..... 560 371
--------------- --------------
$ 1,597 (a) $ 842
=============== ==============
Allowance for losses ....................... $ 419 $ 163
Average investment during year ............. 1,103 798
Interest income earned while impaired (b) .. 17 17

(a) Includes $408 million of loans classified as impaired by Heller Financial
which was acquired in October 2001.
(b) Recognized principally on cash basis.

38

NOTE 4. ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

(In millions) 2001 2000 1999
-------------- -------------- --------------

Balance at January 1 ............................................ $ 3,970 $ 3,637 $ 3,207
Provisions charged to operations ................................ 2,312 1,975 1,655
Net transfers primarily related to acquisitions and sales ....... 585 22 218
Amounts written off - net ....................................... (2,124) (1,664) (1,443)
-------------- -------------- --------------
Balance at December 31 .......................................... $ 4,743 $ 3,970 $ 3,637
============== ============== ==============

NOTE 5. INSURANCE RECEIVABLES

At year-end 2001 and 2000, insurance receivables included reinsurance
recoverables of $2,287 million and $1,816 million and receivables at insurance
affiliates of $8,355 million and $10,244 million, respectively. Receivables at
insurance affiliates include investments in whole real estate, premium
receivables and other loans, policy loans and funds on deposit with reinsurers.

NOTE 6. EQUIPMENT ON OPERATING LEASES

Equipment on operating leases by type of equipment and accumulated amortization
at December 31, 2001 and 2000, are shown below.

(In millions) 2001 2000
--------------- ---------------
Original cost
Aircraft....................................$ 16,173 $ 12,888
Vehicles ................................... 10,779 9,872
Railroad rolling stock ..................... 3,439 3,459
Marine shipping containers ................. 1,618 2,196
Mobile and modular structures............... 1,325 1,288
Information technology equipment............ 1,321 1,069
Construction and manufacturing equipment.... 799 591
Scientific, medical and other equipment .... 993 682
--------------- ---------------
36,447 32,045
Accumulated amortization ..................... (9,133) (7,900)
--------------- ---------------
$ 27,314 $ 24,145
=============== ===============

Amortization of equipment on operating leases was $2,955 million, $2,618 million
and $2,673 million in 2001, 2000 and 1999, respectively. Noncancelable future
rentals due from customers for equipment on operating leases at year-end 2001
totaled $16,072 million and are due as follows: $3,954 million in 2002; $3,183
million in 2003; $2,396 million in 2004; $1,749 million in 2005; $1,245 million
in 2006 and $3,545 million thereafter.

The Corporation acts as a lender and lessor to the commercial airline industry.
At December 31, 2001 and 2000, the balance of such loans and leases was $21.5
billion and $15.3 billion, respectively. In addition, at December 31, 2001, the
Corporation had issued financial guarantees and funding commitments of $0.9
billion ($0.6 billion at year-end 2000), credit and liquidity support agreements
to special purpose entities sponsored by the Corporation of $0.9 billion ($0.6
billion at year-end 2000) and had placed multi-year orders for various Boeing,
Airbus and other aircraft with list prices of approximately $19.9 billion ($22.9
billion at year-end 2000).

NOTE 7. BUILDINGS AND EQUIPMENT

Buildings and equipment include office buildings, satellite communications
equipment, computer hardware, vehicles, furniture and office equipment.
Depreciation expense was $473 million in 2001, $670 million in 2000 and $472
million in 1999.

39

NOTE 8. INTANGIBLE ASSETS

Intangible assets at December 31, 2001 and 2000, are shown in the table below.

(In millions) 2001 2000
-------------- --------------
Goodwill ...................................... $ 14,474 $ 10,063
Present value of future profits ("PVFP") ...... 2,033 2,579
Other intangibles ............................. 479 574
-------------- --------------
$ 16,986 $ 13,216
============== ==============

The Corporation's intangible assets are shown net of accumulated amortization of
$6,244 million at December 31, 2001, and $5,225 million at December 31, 2000.

The amount of goodwill amortization included in net earnings (net of income
taxes) in 2001, 2000 and 1999, was $474 million, $536 million and $450 million,
respectively.

PVFP amortization, which is on an accelerated basis and net of interest, is
projected to range from 13.3% to 6.2% of the year-end 2001 unamortized balance
for each of the next five years.

NOTE 9. OTHER ASSETS

Other assets at December 31, 2001 and 2000, are shown in the table below.

(In millions) 2001 2000
-------------- ---------------
Investments:
Associated companies (a) ................. $ 14,386 $ 12,784
Real estate............................... 8,083 6,496
Assets acquired for resale ............... 1,725 1,394
Other .................................... 5,007 4,959
-------------- ---------------
29,201 25,633
Separate accounts .......................... 9,988 11,628
Deferred insurance acquisition costs ....... 5,149 4,315
Derivative instruments (b).................. 1,672 308
Servicing assets (c)........................ 1,139 1,378
Other ...................................... 4,877 4,867
-------------- ---------------
$ 52,026 $ 48,129
============== ===============

(a) Includes advances to associated companies which are non-controlled,
non-consolidated equity investments.
(b) Amounts at December 31, 2001, are stated at fair value in accordance with
SFAS 133; corresponding amounts at December 31, 2000, are stated at
amortized cost. See note 20 for a discussion of the types and uses of
derivative instruments.
(c) Associated primarily with serviced residential mortgage loans amounting to
$59 billion and $81 billion at December 31, 2001 and 2000, respectively.

Separate accounts represent investments controlled by policyholders and are
associated with identical amounts reported as insurance liabilities in note 11.

NOTE 10. BORROWINGS

Total short-term borrowings at December 31, 2001 and 2000, consisted of the
following:

2001 2000
--------------------------------- ---------------------------------
Average Average
(In millions) Amount rate (a) Amount rate (a)
---------------- ---------------- ---------------- ----------------

Commercial paper - U.S. ........................ $ 93,599 2.20% $ 71,085 6.67%
Commercial paper - non-U.S. .................... 17,289 3.36 16,965 5.46
Current portion of long-term debt .............. 30,952 5.08 19,283 5.95
Other .......................................... 12,441 10,149
---------------- ----------------
$ 154,281 $ 117,482
Foreign currency loss (b)....................... (157) -
---------------- ----------------
$ 154,124 $ 117,482
================ ================

40

Total long-term borrowings at December 31, 2001 and 2000, were as follows:

2001 2000
----------------------------------- ------------------
(In millions) Maturities Amount Average Rate (a) Amount
-------------- ------------- -------------------- ------------------

Senior notes ....................... 2003-2055 $ 76,028 4.85% $ 78,078
Subordinated notes (c) ............. 2006-2012 873 7.83 698
------------- ------------------
76,901 78,776
Foreign currency loss (b)........... (427) -
------------- ------------------
$ 76,474 $ 78,776
============= ==================

(a) Based on year-end balances and year-end local currency interest rates,
including the effects of related interest rate and currency swaps, if any,
directly associated with the original debt issuance.
(b) Borrowings in 2001 exclude the foreign exchange effects of related currency
swaps in accordance with the provisions of SFAS 133.
(c) At year-end 2001 and 2000, $698 million of subordinated notes were
guaranteed by GE.

Borrowings of the Corporation are addressed as follows from two perspectives -
liquidity and interest rate risk management. Additional information about
borrowings and associated swaps can be found in note 20.

Liquidity requirements of the Corporation are principally met through the credit
markets. Maturities of long-term borrowings during the next five years,
including the current portion of long-term debt, at December 31, 2001, were
$30,795 million in 2002; $25,063 million in 2003; $14,630 million in 2004;
$9,907 million in 2005 and $6,469 million in 2006.

Committed credit lines of $4.7 billion had been extended to GE by 22 banks at
year-end 2001. All of GE's credit lines are available to the Corporation or GE
Capital Services.

At year-end 2001, the Corporation held committed lines of credit aggregating
$28.6 billion, including $12.2 billion of revolving credit agreements pursuant
to which it has the right to borrow funds for periods exceeding one year. A
total of $4.0 billion of these credit lines were also available for use by GE
Capital Services. The Corporation compensates banks for credit facilities in the
form of fees, which were insignificant in each of the past three years.

Interest rate risk is managed by the Corporation in light of the anticipated
behavior, including prepayment behavior, of assets in which debt proceeds are
invested. A variety of instruments, including interest rate and currency swaps
and currency forwards, are employed to achieve management's interest rate
objectives. Effective interest rates are lower under these "synthetic" positions
than could have been achieved by issuing debt directly.

The following table shows the Corporation's borrowing positions at December 31,
2001 and 2000, considering the effects of currency and interest rate swaps.

2001 2000
---------------------------------------- ---------------
(In millions) Amount Average rate Amount
---------------- ---------------------- ---------------

Effective borrowings (including swaps)
Short-term (a)......................................... $ 95,981 2.57% $ 75,251
================ ==============
Long-term (including current portion)
Fixed rate (b) ...................................... 101,170 5.56 94,703
Floating rate ....................................... 34,031 3.23 26,304
---------------- --------------
Total long-term ....................................... $ 135,201 $ 121,007
================ ==============

(a) Includes commercial paper and other short-term debt.
(b) Includes fixed rate borrowings and $27.3 billion ($22.9 billion at year-end
2000) notional long-term interest rate swaps that effectively convert the
floating-rate nature of short-term borrowings to fixed rates of interest.

At December 31, 2001, swap maturities ranged from 2002 to 2048.

41

NOTE 11. INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS

Insurance liabilities, reserves and annuity benefits at December 31, 2001 and
2000, are shown below.

(In millions) 2001 2000
----------- -----------
Investment contracts and universal life benefits ....... $ 36,143 $ 31,071
Life insurance benefits (a) ............................ 28,233 29,652
Unpaid claims and claims adjustment expenses (b)........ 4,299 4,143
Unearned premiums ...................................... 3,561 3,439
Separate accounts (see note 9) ......................... 9,988 11,628
----------- -----------
$ 82,224 $ 79,933
=========== ===========

(a) Life insurance benefits are accounted for mainly by a net-level-premium
method using estimated yields generally ranging from 2% to 9% in both 2001
and 2000.
(b) Principally property and casualty reserves; includes amounts for both
reported and incurred-but-not-reported claims, reduced by anticipated
salvage and subrogation recoveries. Estimates of liabilities are reviewed
and updated continually, with changes in estimated losses reflected in
operations.

When the Corporation cedes insurance to third parties, it is not relieved of its
primary obligation to policyholders. Losses on ceded risks give rise to claims
for recovery; allowances for probable losses are established on such receivables
from reinsurers as required.

A summary of activity affecting unpaid claims and claims adjustment expenses,
principally in property and casualty lines, follows.

(In millions) 2001 2000 1999
-------------- -------------- --------------

Balance at January 1 - gross ................................... $ 4,143 $ 3,235 $ 3,721
Less reinsurance recoverables .................................. (542) (552) (578)
--------------- --------------- ---------------
Balance at January 1 - net ..................................... 3,601 2,683 3,143
Claims and expenses incurred:
Current year ................................................. 3,147 3,969 2,286
Prior years .................................................. (156) (155) (328)
Claims and expenses paid:
Current year ................................................. (1,801) (2,190) (1,210)
Prior years .................................................. (1,258) (1,309) (1,276)
Claim reserves related to acquired companies ................... - 209 136
Other .......................................................... 209 394 (68)
--------------- --------------- ---------------
Balance at December 31 - net ................................... 3,742 3,601 2,683
Add reinsurance recoverables ................................... 557 542 552
--------------- --------------- ---------------
Balance at December 31 - gross ................................. $ 4,299 $ 4,143 $ 3,235
=============== =============== ===============

Prior-year claims and expenses incurred in the preceding table resulted
principally from settling claims established in earlier accident years for
amounts that differed from expectations.

Financial guarantees and credit life risk of insurance affiliates at December
31, 2001 and 2000, are summarized below.

(In millions) 2001 2000
-------------- ---------------

Guarantees, principally on municipal bonds and asset-backed securities ............ $ 213,944 $ 190,184
Mortgage insurance risk in force .................................................. 79,892 68,112
Credit life insurance risk in force ............................................... 16,590 19,910
Less reinsurance .................................................................. (41,148) (42,143)
-------------- ---------------
$ 269,278 $ 236,063
============== ===============

Certain GE Capital insurance affiliates offer insurance guaranteeing the timely
payment of scheduled principal and interest on municipal bonds and certain
asset-backed securities. These insurance affiliates also provide insurance to
protect residential mortgage lenders from severe financial loss caused by the
non-payment of loans and 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 their
overall risk management process, GE Capital insurance affiliates cede to third
parties a portion of their risk associated with these guarantees. In doing so,
they are not relieved of their primary obligation to policyholders.

42

The effects of reinsurance on premiums written and premium and commission income
were as follows:

Premiums written Premium and commission income
---------------------------------------------- -----------------------------------------------
(In millions) 2001 2000 1999 2001 2000 1999
-------------- -------------- -------------- -------------- -------------- ---------------

Direct ............ $ 8,092 $ 7,929 $ 6,378 $ 8,075 $ 7,783 $ 6,108
Assumed ........... 1,056 890 556 1,055 864 583
Ceded ............. (776) (611) (534) (783) (636) (716)
-------------- -------------- -------------- -------------- -------------- ---------------
Net ............... $ 8,372 $ 8,208 $ 6,400 $ 8,347 $ 8,011 $ 5,975
============== ============== ============== ============== ============== ===============

Reinsurance recoveries recognized as a reduction of insurance losses and
policyholder and annuity benefits amounted to $503 million, $457 million and
$386 million for the years ended December 31, 2001, 2000 and 1999, respectively.

NOTE 12. MINORITY INTEREST

Minority interest in equity of consolidated affiliates includes preferred stock
issued by affiliates of GE Capital. The preferred stock primarily pays
cumulative dividends at variable rates. Value of the preferred shares is
summarized below.

(In millions) 2001 2000
-------------- --------------
GE Capital affiliates..................... $ 1,446 $ 1,066

Dividend rates in local currency on the preferred stock ranged from 1.64% to
6.40% during 2001 and from 4.35% to 6.82% during 2000.

43

NOTE 13. SHARE OWNERS' EQUITY

Changes in share owners' equity for each of the last three years were as
follows:

(In millions) 2001 2000 1999
-------------- -------------- --------------

Variable Cumulative Preferred Stock Issued .................. $ 3 $ 3 $ 3
-------------- -------------- --------------
Common Stock Issued ......................................... 1 1 1
-------------- -------------- --------------
Accumulated nonowner changes other than earnings
Balance at January 1 ........................................ (739) (419) 1,026
Cumulative effect of adopting SFAS 133 - net of deferred
taxes of ($505)........................................... (810) - -
Investment securities - net of deferred taxes of $69, $376
and ($474) ............................................... 116 776 (1,178)
Currency translation adjustments - net of deferred taxes of
$19, ($185) and ($62)..................................... 36 (344) (115)
Derivatives qualifying as hedges - net of deferred taxes of
($413).................................................... (525) - -
Reclassification adjustments -
Investment Securities - net of deferred taxes of ($182),
($405) and ($82) ...................................... (339) (752) (152)
Derivatives qualifying as hedges - net of deferred taxes
of $381................................................ 503 - -
-------------- -------------- --------------
Balance at December 31 ...................................... (1,758) (739) (419)
-------------- -------------- --------------
Other Capital
Balance at January 1 ....................................... 7,114 6,150 5,700
Contributions .............................................. 2,649 964 450
-------------- -------------- --------------
Balance at December 31 ..................................... 9,763 7,114 6,150
-------------- -------------- --------------
Retained Earnings
Balance at January 1 ....................................... 19,694 17,011 14,340
Net Earnings ............................................... 5,902 4,289 4,208
Dividends .................................................. (2,042) (1,606) (1,537)
-------------- -------------- --------------
Balance at December 31 ..................................... 23,554 19,694 17,011
-------------- -------------- --------------
Total Share Owners' Equity ................................. $ 31,563 $ 26,073 $ 22,746
============== ============== ==============

All common stock is owned by GE Capital Services, all of the common stock of
which is in turn owned, directly or indirectly, by GE Company.

Changes in fair value of available-for-sale investment securities are reflected,
net of applicable taxes and other adjustments, in equity. The changes from year
to year were primarily attributable to the effects of changes in year-end market
interest rates on the fair value of the securities.

During 1999, the Corporation issued 3,000 additional shares of its variable
cumulative preferred stock. Dividend rates on the preferred stock ranged from
1.6% to 4.9% during 2001, 4.2% to 5.2% during 2000 and 3.5% to 5.1% during 1999.

During 1998, the Corporation authorized 750,000 shares of preferred stock, $0.01
par value, none of which was issued or outstanding at December 31, 2001 or 2000.

44

NOTE 14. OPERATING AND ADMINISTRATIVE EXPENSES

Employees and retirees of the Corporation are covered under a number of pension,
health and life insurance plans. The principal pension plan is the GE Company
Pension Plan, a defined benefit plan, while employees of certain affiliates are
covered under separate plans. The Corporation provides health and life insurance
benefits to certain of its retired employees, principally through GE Company's
benefit program, as well as through plans sponsored by other affiliates. The
annual cost to the Corporation of providing these benefits is not material.

Rental expense relating to equipment the Corporation leases from others for the
purposes of subleasing was $400 million in 2001, $496 million in 2000 and $483
million in 1999. Other rental expense was $570 million in 2001, $646 million in
2000 and $552 million in 1999, principally for the rental of office space and
data processing equipment. Minimum future rental commitments under noncancelable
leases at December 31, 2001 are $4,983 million; $966 million in 2002; $649
million in 2003; $574 million in 2004; $617 million in 2005; $390 million in
2006 and $1,787 million thereafter. The Corporation, as a lessee, has no
material lease agreements classified as capital leases.

Amortization of deferred insurance acquisition costs charged to operations in
2001, 2000 and 1999 was $939 million, $1,225 million and $1,031 million,
respectively.

NOTE 15. INCOME TAXES

The provision for income taxes is summarized in the following table.

(In millions) 2001 2000 1999
--------------- --------------- --------------

Current tax expense ..............................................$ 1,029 $ 1,041 $ 699
Deferred tax expense from temporary differences .................. 705 514 854
--------------- --------------- --------------
$ 1,734 $ 1,555 $ 1,553
=============== =============== ==============

GE Company files a consolidated U.S. federal income tax return which includes
the Corporation. The provision for current tax expense includes the effect of
the Corporation on the consolidated return.

Current tax expense (benefit) includes amounts applicable to U.S. federal income
taxes of $300 million, $274 million and, ($142) million in 2001, 2000 and 1999,
respectively, and amounts applicable to non-U.S. jurisdictions of $697 million,
$749 million and $765 million in 2001, 2000 and 1999, respectively. Deferred tax
expense related to U.S. federal income taxes was $722 million, $426 million and
$833 million in 2001, 2000 and 1999, respectively.

Deferred income tax balances reflect the impact of temporary differences between
the carrying amounts of assets and liabilities and their tax bases and are
stated at enacted tax rates expected to be in effect when taxes are actually
paid or recovered.

Except for certain earnings that the Corporation intends to reinvest
indefinitely, provision has been made for the estimated U.S. federal income tax
liabilities applicable to undistributed earnings of affiliates and associated
companies. It is not practicable to determine the U.S. federal income tax
liability, if any, that would be payable if such earnings were not reinvested
indefinitely.

U.S. income before taxes and cumulative effect of accounting changes was $3.9
billion in 2001, $2.7 billion in 2000 and $3.5 billion in 1999. The
corresponding amounts for non-U.S. based operations were $3.9 billion in 2001,
$3.1 billion in 2000 and $2.3 billion in 1999.

A reconciliation of the U.S. federal statutory rate to the actual income tax
rate follows.

2001 2000 1999
--------------- --------------- ---------------

Statutory U.S. federal income tax rate .......................... 35.0% 35.0% 35.0%
Increase (reduction) in rate resulting from:
Amortization of goodwill ....................................... 0.6 1.1 0.9
Tax-exempt income .............................................. (2.1) (2.8) (2.7)
Tax on international activities including exports............... (5.3) (5.1) (5.2)
Americom / Rollins goodwill..................................... (2.9) - -
Other - net .................................................... (3.1) (1.6) (1.0)
--------------- --------------- ---------------
Actual income tax rate .......................................... 22.2% 26.6% 27.0%
=============== =============== ===============

45

Principal components of the net deferred tax liability balances at December 31,
2001 and 2000, were as follows:

(In millions) 2001 2000
------------- -------------
Assets:
Allowance for losses .................... $ 2,107 $ 1,649
Insurance reserves ...................... 1,382 1,252
AMT credit carryforwards................. 695 671
Other ................................... 4,886 3,185
------------- -------------
Total deferred tax assets ................. 9,070 6,757
------------- -------------
Liabilities:
Financing leases ........................ 9,128 8,423
Operating leases ........................ 3,397 3,300
Deferred insurance acquisition costs..... 1,000 719
Other ................................... 3,656 2,579
------------- -------------
Total deferred tax liabilities ............ 17,181 15,021
------------- -------------
Net deferred tax liability ................ $ 8,111 $ 8,264
============= =============

NOTE 16. OPERATING SEGMENT DATA

The Corporation's operating segments are organized based on the nature of
products and services provided. A description of the operating segments can be
found in Item 1. Business under the heading Operating Segments on page 3 of this
report. The accounting policies for these segments are the same as those
described for the consolidated entity. The Corporation evaluates the performance
of its operating segments primarily on the basis of earnings before accounting
changes. Details of total revenues and earnings before accounting changes by
operating segment are provided in Item 7. Management's Discussion and Analysis
of Results of Operations in the tables beginning on page 16 of this report.
Other specific information is provided as follows.

(In millions) Depreciation and amortization (a) Provision for income taxes
-------------------------------------- --------------------------------------
For the years ended December 31 2001 2000 1999 2001 2000 1999
------------ ------------ ----------- ----------- ----------- ------------

Consumer Services .................. $ 951 $ 1,934 $ 1,042 $ 775 $ 612 $ 346
Equipment Management ............... 2,431 2,421 2,440 561 389 317
Mid-Market Financing ............... 961 722 564 460 370 401
Specialized Financing .............. 27 27 48 1 406 293
Specialty Insurance ................ 31 12 26 186 49 111
All other .......................... 63 192 108 (249) (271) 85
------------ ------------ ----------- ----------- ----------- ------------
Total ........................... $ 4,464 $ 5,308 $ 4,228 $ 1,734 $ 1,555 $ 1,553
============ ============ =========== =========== =========== ============

Time sales, loan, investment and
other income (b) Interest expense
-------------------------------------- --------------------------------------
For the years ended December 31 2001 2000 1999 2001 2000 1999
------------ ------------ ----------- ----------- ----------- ------------

Consumer Services .................. $ 15,167 $ 15,805 $ 12,776 $ 3,075 $ 3,544 $ 3,332
Equipment Management ............... 3,147 2,358 2,318 1,891 1,796 1,598
Mid-Market Financing ............... 5,010 4,014 3,508 3,554 3,134 2,457
Specialized Financing .............. 2,365 3,579 2,676 1,561 1,630 1,349
Specialty Insurance ................ 856 852 701 422 458 369
All other .......................... (290) 369 304 (478) (101) (169)
------------ ------------ ----------- ----------- ----------- ------------
Total ........................... $ 26,255 $ 26,977 $ 22,283 $ 10,025 $ 10,461 $ 8,936
============ ============ =========== =========== =========== ============

46

Property, plant and equipment
additions (including equipment
Assets leased to others) (c)
At December 31 For the years ended December 31
--------------------------------------- --------------------------------------
2001 2000 1999 2001 2000 1999
------------- ------------ ----------- ----------- ----------- ------------

Consumer Services (d) ............. $ 165,196 $ 159,619 $ 147,455 $ 571 $ 763 $ 2,332
Equipment Management (d) .......... 52,195 48,081 43,141 9,594 8,298 8,011
Mid-Market Financing .............. 108,188 71,295 62,768 3,420 1,634 3,954
Specialized Financing (d).......... 40,169 36,917 33,914 11 533 150
Specialty Insurance ............... 13,576 13,697 10,182 1 6 9
All other ......................... 1,752 3,027 9,981 72 152 949
------------- ------------ ----------- ----------- ----------- ------------
Total .......................... $ 381,076 $ 332,636 $ 307,441 $ 13,669 $ 11,386 $ 15,405
============= ============ =========== =========== =========== ============

(a) Includes amortization of goodwill and other intangibles.
(b) Principally interest income.
(c) Additions to property, plant and equipment (including equipment leased to
others) include amounts relating to principal businesses purchased.
(d) Total assets of the Consumer Services, Equipment Management and Specialized
Financing segments at December 31, 2001, include investments in and
advances to non-consolidated affiliates of $4,636 million, $5,164 million
and $3,856 million, respectively, which contributed approximately $304
million, $233 million and $17 million, respectively, to segment pre-tax
income for the year ended December 31, 2001.

NOTE 17. QUARTERLY FINANCIAL DATA (unaudited)

Summarized quarterly financial data were as follows:

First quarter Second quarter Third quarter Fourth quarter
-------------------- -------------------- --------------------- -----------------------
(In millions) 2001 2000 2001 2000 2001 2000 2001 2000
--------- --------- ---------- --------- --------- ----------- ---------- -----------

Revenues ................. $ 12,078 $ 13,305 $ 11,678 $ 13,732 $ 11,622 $ 13,714(b) $ 13,167(a) $ 13,516(b)
--------- --------- ---------- --------- --------- ----------- ----------- -----------
Expenses:
Interest ................. 2,744 2,424 2,512 2,660 2,358 2,592 2,411 2,785
Operating and
administrative and
cost of goods sold .... 4,375 6,134 4,031 6,221 3,684 5,855 4,641 6,706
Insurance losses and
policy-holder and
annuity benefits ...... 1,940 1,528 2,113 2,166 1,961 2,123 2,157 1,880
Provision for losses on
financing receivables . 460 508 447 406 521 448 884 613
Depreciation and
amortization of
buildings and
equipment and
equipment on operating
leases ................ 787 936 791 665 917 786 933 901
Minority interest in net
earnings of
consolidated
affiliates ............ 30 19 17 21 15 22 22 24
--------- --------- --------- --------- --------- ----------- ----------- -----------
Earnings before income
taxes ................. 1,742 1,756 1,767 1,593 2,166 1,888 2,119 607
Provision for income
taxes ................. (402) (549) (341) (391) (495) (568) (496) (47)
--------- --------- --------- --------- --------- ----------- ----------- -----------
Earnings before
accounting changes .... $ 1,340 $ 1,207 $ 1,426 $ 1,202 $ 1,671 $ 1,320(c) $ 1,623 $ 560(d)
========= ========= ========= ========= ========= =========== =========== ===========

(a) Fourth quarter revenues in 2001 were increased by a gain on the sale of
Americom of $1,158 million.
(b) Third and fourth quarter revenues in 2000 were increased by the inclusion
of gains related to PaineWebber of $193 million and $26 million,
respectively.
(c) Third quarter net earnings in 2000 were reduced by after-tax charges of
$239 million. Such charges were primarily included in Operating and
administrative and cost of goods sold. Also in the third quarter, net
earnings were increased by the inclusion of an after-tax gain of $117
million related to PaineWebber.
(d) Fourth quarter net earnings in 2000 were reduced by after-tax charges of
$645 million. Such charges were primarily included in Operating and
administrative and cost of goods sold. Also in the fourth quarter, net
earnings were increased by the inclusion of an after-tax gain of $622
million related to PaineWebber.

47

NOTE 18. RESTRICTED NET ASSETS OF AFFILIATES

Certain of the Corporation's consolidated affiliates are restricted from
remitting funds to the Parent in the form of dividends or loans by a variety of
regulations, the purpose of which is to protect affected insurance
policyholders, depositors or investors. At year-end 2001, net assets of the
Corporation's regulated affiliates amounted to $28.2 billion, of which $22.9
billion was restricted.

At December 31, 2001 and 2000, the aggregate statutory capital and surplus of
the insurance businesses totaled $11.7 billion and $11.1 billion respectively.
Accounting practices prescribed by statutory authorities are used in preparing
statutory statements.

NOTE 19. SUPPLEMENTAL CASH FLOWS INFORMATION

"All other operating activities" in the Statement of Cash Flows consists
primarily of adjustments to current and noncurrent accruals and deferrals of
costs and expenses, adjustments for gains and losses on assets, increases and
decreases in assets held for sale, and adjustments to assets.

Certain supplemental information related to the Corporation's cash flows were as
follows for the past three years.

(In millions) 2001 2000 1999
-------------- -------------- --------------

Financing receivables
Increase in loans to customers .................................. $ (136,423) $ (97,735) $ (92,314)
Principal collections from customers - loans .................... 117,268 84,383 83,629
Investment in equipment for financing leases .................... (19,969) (15,453) (18,173)
Principal collections from customers - financing leases ......... 11,973 7,986 13,618
Net change in credit card receivables ........................... (15,230) (8,983) (9,122)
Sales of financing receivables .................................. 29,291 14,405 11,473
-------------- -------------- --------------
$ (13,090) $ (15,397) $ (10,889)
============== ============== ==============
All other investing activities
Purchases of securities by insurance and annuity businesses ..... $ (35,071) $ (24,985) $ (15,897)
Dispositions and maturities of securities by insurance and
annuity businesses ........................................... 28,189 14,465 13,432
Proceeds from principal business dispositions ................... 2,572 (605) 176
Other ........................................................... (2,005) (2,524) (5,893)
-------------- -------------- --------------
$ (6,315) $ (13,649) $ (8,182)
============== ============== ==============
Newly issued debt having maturities longer than 90 days
Short-term (91 to 365 days) ..................................... $ 12,622 $ 12,782 $ 15,799
Long-term (longer than one year) ................................ 16,104 31,598 29,033
Proceeds - nonrecourse, leveraged lease debt .................... 2,012 1,808 1,724
-------------- -------------- --------------
$ 30,738 $ 46,188 $ 46,556
============== ============== ==============
Repayments and other reductions of debt having maturities
longer than 90 days
Short-term (91 to 365 days) ..................................... $ (29,195) $ (27,777) $ (21,211)
Long-term (longer than one year) ................................ (6,582) (3,953) (5,447)
Principal payments - nonrecourse, leveraged lease debt .......... (274) (177) (266)
-------------- -------------- --------------
$ (36,051) $ (31,907) $ (26,924)
============== ============== ==============
All other financing activities
Proceeds from sales of investment contracts ..................... $ 8,113 $ 8,717 $ 7,092
Redemption of investment contracts .............................. (6,802) (8,828) (6,965)
Preferred stock issued by consolidated affiliates................ - - 213
Preferred stock issued in excess of par.......................... - - 300
Capital contributions from GE Capital Services................... 2,649 895 -
Cash received upon assumption of Toho Mutual Life Insurance
Company insurance liabilities................................. - 13,177 -
-------------- -------------- --------------
$ 3,960 $ 13,961 $ 640
============== ============== ==============
Cash paid during the year for:
Interest ........................................................ $ (10,246) $ (10,564) $ (9,194)
Income taxes .................................................... (269) (595) (246)

48

Changes in operating assets and liabilities are net of acquisitions and
dispositions of principal businesses.

"Payments for principal businesses purchased" in the Statement of Cash Flows is
net of cash acquired and includes debt assumed and immediately repaid in
acquisitions. In conjunction with the acquisitions, liabilities were assumed as
follows:

(In millions) 2001 2000 1999
------------- ------------- -------------
Fair value of assets acquired .......$ 36,007 $ 10,544 $ 14,888
Cash paid ........................... (11,980) (1,230) (9,737)
------------- ------------- -------------
Liabilities assumed .................$ 24,027 $ 9,314 $ 5,151
============= ============= =============

NOTE 20. ADDITIONAL INFORMATION ABOUT CERTAIN FINANCIAL INSTRUMENTS

Assets and liabilities that are reflected in the accompanying financial
statements at fair value are not included in the following disclosures; such
items include cash and equivalents, investment securities, separate accounts
and, beginning in 2001, derivative financial instruments. Other assets and
liabilities - those not carried at fair value - are discussed in the following
pages. Apart from certain borrowings by GE Capital and certain marketable
securities, few of the instruments discussed below are actively traded and their
fair values must often be determined using models. Although management has made
every effort to develop the fairest representation of fair value for this
section, it would be unusual if the estimates could actually have been realized
at December 31, 2001 or 2000.

A description of how fair values are estimated follows.

Borrowings. Based on market quotes or comparables.

Time sales and loans. Based on quoted market prices, recent transactions and/or
discounted future cash flows, using rates at which similar loans would have been
made to similar borrowers.

Investment contract benefits. Based on expected future cash flows, discounted at
currently offered discount rates for immediate annuity contracts or cash
surrender values for single premium deferred annuities.

Financial guarantees and credit life. Based on expected future cash flows,
considering expected renewal premiums, claims, refunds and servicing costs,
discounted at a current market rate.

All other instruments. Based on comparable market transactions, discounted
future cash flows, quoted market prices, and/or estimates of the cost to
terminate or otherwise settle obligations.

49
Financial Instruments

2001 2000
--------------------------------------------- -----------------------------------------------
Assets (liabilities) Assets (liabilities)
---------------------------------- -----------------------------------
Carrying Estimated fair value Carrying Estimated fair value
Notional amount --------------------- Notional amount ----------------------
(In millions) amount (net) High Low amount (net) High Low
--------- ---------- --------- --------- --------- ---------- --------- ----------

Assets
Time sales and loans ....... $ (a) $ 116,664 $ 118,084 $ 116,028 $ (a) $ 90,246 $ 90,870 $ 89,691
Mortgages acquired for
resale .................... (a) 1,596 1,631 1,596 (a) 1,267 1,250 1,245
Other financial
instruments ............... (a) 9,451 9,625 9,553 (a) 10,847 11,035 11,007
Liabilities
Borrowings (b) (c) .......... (a) (231,182) (234,182) (234,182) (a) (196,258) (198,526) (198,526)
Investment contract
benefits .................. (a) (30,581) (30,341) (29,964) (a) (26,514) (25,105) (25,105)
Insurance - financial
guarantees and credit
life (d)................... 269,278 (2,932) (2,973) (3,078) 236,063 (2,740) (2,777) (2,882)
Other financial
instruments ............... 4,678 (629) (590) (590) 2,982 (1,184) (1,114) (1,114)
Special purpose entity support
Credit and liquidity (e)(f).. 41,513 (597) (597) (597) 28,977 (492) (492) (492)
Credit and liquidity -
unused..................... 9,404 - - - 6,470 - - -
Performance guarantees....... 3,759 - - - 2,870 (g) - - -
- unused................... 441 - - - 1,330 (g) - - -
Swap guarantees and other
guarantees................. 7,131 - - - 6,260 (g) - - -
Other firm commitments
Ordinary course of business
lending commitments ....... 9,636 - - - 9,450 - - -
Unused revolving credit lines
Commercial ................ 27,770 - - - 19,372 (h) - - -
Consumer - principally
credit cards.............. 211,695 - - - 171,112 - - -

(a) These financial instruments do not have notional amounts.
(b) Includes effects of interest rate and currency swaps.
(c) See note 10.
(d) See note 11.
(e) Includes credit support of $14,345 million and $9,633 million at December
31, 2001 and 2000, respectively.
(f) Pre-tax gains on sales of financial assets through securitizations amounted
to $1,327 million and $489 million in 2001 and 2000, respectively.
(g) Reported, in total, as $6,740 million in 2000.
(h) Reported as $11,278 million in 2000.

Derivatives and Hedging. The Corporation's global business activities routinely
deal with fluctuations in interest rates, in currency exchange rates and in
commodity and other asset prices. The Corporation applies strict policies to
managing each of these risks, including prohibitions on derivatives trading,
derivatives market-making or other speculative activities. These policies
require the use of derivative instruments in concert with other techniques to
reduce or eliminate these risks.

On January 1, 2001, the Corporation adopted SFAS 133, Accounting for Derivative
Instruments and Hedging Activities, as discussed in note 1. The paragraphs that
follow provide additional information about derivatives and hedging
relationships in accordance with the requirements of SFAS 133.

Cash flow hedges. Under SFAS 133, cash flow hedges are hedges that use simple
derivatives to offset the variability of expected future cash flows. Variability
can appear in floating rate assets, floating rate liabilities or from certain
types of forecasted transactions, and can arise from changes in interest rates
or currency exchange rates. For example, the Corporation often borrows funds at
a variable rate of interest. If the Corporation needs the funds to make a
floating rate loan, there is no exposure to interest rate changes, and no hedge
is necessary. However, if a fixed rate loan is made, the Corporation will
contractually commit to pay a fixed rate of interest to a counterparty who will
pay the Corporation a variable rate of interest (an "interest rate swap"). This
swap will then be designated as a cash flow hedge of the associated variable
rate borrowing. If, as would be expected, the derivative is perfectly effective
in offsetting variable interest in the borrowing, changes in its fair value are
recorded in a separate component in equity and released to earnings
contemporaneously with the earnings effects of the hedged item. Further
information about hedge effectiveness is provided below.

The Corporation uses currency forwards, interest rate swaps and currency swaps,
to optimize borrowing costs and investment returns. For example, currency swaps
and non-functional currency borrowings together provide lower funding costs than
could be achieved by issuing debt directly in a given currency.

50

Adoption of SFAS 133 resulted in a reduction of share owners' equity of $810
million at January 1, 2001. Of that amount, $288 million was transferred to
earnings in 2001 along with the earnings effects of the related forecasted
transactions for no net impact on earnings. At December 31, 2001, amounts
related to derivatives qualifying as cash flow hedges amounted to a reduction of
equity of $832 million, of which $560 million was expected to be transferred to
earnings in 2002 along with the earnings effects of the related forecasted
transactions. In 2001, there were no forecasted transactions that failed to
occur. At December 31, 2001, the term of derivative instruments hedging
forecasted transactions, except those related to variable interest on existing
financial instruments, was zero.

Fair value hedges. Under SFAS 133, fair value hedges are hedges that eliminate
the risk of changes in the fair values of assets, liabilities and certain types
of firm commitments. For example, the Corporation will use an interest rate swap
in which it receives a fixed rate of interest and pays a variable rate of
interest to change the cash flow profile of a fixed rate borrowing to match the
variable rate financial asset that it is funding. Changes in fair value of
derivatives designated and effective as fair value hedges are recorded in
earnings and are offset by corresponding changes in the fair value of the hedged
item.

The Corporation uses interest rate swaps, currency swaps and interest rate and
currency forwards to hedge the effect of interest rate and currency exchange
rate changes on local and nonfunctional currency denominated fixed-rate
borrowings and certain types of fixed-rate assets. Equity options are used to
hedge price changes in investment securities and equity-indexed annuity
liabilities at the Corporation.

Net investment hedges. The net investment hedge designation under SFAS 133
refers to the use of derivative contracts or cash instruments to hedge the
foreign currency exposure of a net investment in a foreign operation. At the
Corporation, currency exposures that result from net investments in affiliates
are managed principally by funding assets denominated in local currency with
debt denominated in that same currency. In certain circumstances, such exposures
are managed using currency forwards and currency swaps.

Derivatives not designated as hedges. SFAS 133 specifies criteria that must be
met in order to apply any of the three forms of hedge accounting. For example,
hedge accounting is not permitted for hedged items that are marked to market
through earnings. The Corporation uses derivatives to hedge exposures when it
makes economic sense to do so, including circumstances in which the hedging
relationship does not qualify for hedge accounting as described in the following
paragraph. The Corporation also will occasionally receive derivatives, such as
equity warrants, in the ordinary course of business. Under SFAS 133, derivatives
that do not qualify for hedge accounting are marked to market through earnings.

The Corporation uses option contracts, including caps, floors and collars, as an
economic hedge of changes in interest rates, currency exchange rates and equity
prices on certain types of assets and liabilities. For example, the Corporation
uses equity options to hedge the risk of changes in equity prices embedded in
insurance liabilities associated with annuity contracts written by GE Financial
Assurance. The Corporation also uses interest rate swaps, purchased options and
futures as an economic hedge of the fair value of mortgage servicing rights. The
Corporation occasionally obtains equity warrants as part of sourcing or
financing transactions. Although these instruments are considered to be
derivatives under SFAS 133, their economic risk is similar to, and managed on
the same basis as, other equity instruments held by the Corporation.

Earnings effects of derivatives. The table that follows provides additional
information about the earnings effects of derivatives. In the context of hedging
relationships, "effectiveness" refers to the degree to which fair value changes
in the hedging instrument offset corresponding fair value changes in the hedged
item. Certain elements of hedge positions cannot qualify for hedge accounting
under SFAS 133 whether effective or not, and must therefore be marked to market
through earnings. Time value of purchased options is the most common example of
such elements in instruments used by the Corporation. Earnings effects of such
items are shown in the following table as "amounts excluded from the measure of
effectiveness."

December 31, 2001 (In millions) Cash flow hedges Fair value hedges
---------------------- ---------------------

Ineffectiveness...............................................$ 7 $ 28
Amounts excluded from the measure of effectiveness............. - (21)

At December 31, 2001, the fair value of derivatives in a gain position and
recorded in "All other assets" is $1.7 billion and the fair value of derivatives
in a loss position and recorded in "All other liabilities" is $3.3 billion.

The following table provides fair value information about derivative instruments
for the year 2000. Following adoption of SFAS 133 on January 1, 2001, all
derivative instruments are reported at fair value in the financial statements
and similar disclosures for December 31, 2001, are not relevant.

51

2000
------------------------------------------------------------------
Assets (liabilities)
----------------------------------------------
Carrying
Notional amount Estimated
(In millions) amount (net) fair value
---------------- --------------------- -------------------

Assets
Integrated swaps........................ $ 21,893 $ (37) $ (744)
Purchased options....................... 9,832 105 164
Options, including "floors"............. 21,775 196 196
Interest rate swaps and futures......... 2,798 29 38
Liabilities
Interest rate swaps..................... 51,081 - (165)
Currency swaps.......................... 24,314 - (957)
Currency forwards....................... 27,381 - 379
Other firm commitments
Currency forwards....................... 1,585 8 47

Counterparty credit risk. The risk that counterparties to derivative contracts
will be financially unable to make payments to the Corporation according to the
terms of the agreements is counterparty credit risk. Counterparty credit risk is
managed on an individual counterparty basis, which means that gains and losses
are netted for each counterparty to determine the amount at risk. When a
counterparty exceeds credit exposure limits in terms of amounts due to the
Corporation, typically as a result of changes in market conditions (see table
below), no additional transactions are executed until the exposure with that
counterparty is reduced to an amount that is within the established limit. All
swaps are executed under master swap agreements containing mutual credit
downgrade provisions that provide the ability to require assignment or
termination in the event either party is downgraded below A3 or A-. If the
downgrade provisions had been triggered at December 31, 2001, the Corporation
could have been required to disburse up to $2.7 billion and could have claimed
$0.4 billion from counterparties - the net fair value losses and gains. At
December 31, 2001 and 2000, gross fair value gains amounted to $2.5 billion and
$2.7 billion, respectively. At December 31, 2001 and 2000, gross fair value
losses amounted to $4.8 billion and $3.7 billion, respectively.

As part of its ongoing activities, the Corporation enters into swaps that are
integrated into investments in or loans to particular customers. Such integrated
swaps not involving assumption of third-party credit risk are evaluated and
monitored like their associated investments or loans and are not therefore
subject to the same credit criteria that would apply to a stand-alone position.
Except for such positions, all other swaps, purchased options and forwards with
contractual maturities longer than one year are conducted within the credit
policy constraints provided in the table below. Foreign exchange forwards with
contractual maturities shorter than one year must be executed with
counterparties having an A-1+/ P-1 credit rating and the credit limit for these
transactions is $150 million.

Counterparty credit criteria Credit rating
-------------------------------
Standard &
Moody's Poor's
-------------- --------------
Term of transaction
Between one and five years ........ Aa3 AA-
Greater than five years ........... Aaa AAA
Credit exposure limits
Up to $50 million ................. Aa3 AA-
Up to $75 million ................. Aaa AAA

52

NOTE 21. GEOGRAPHIC SEGMENT INFORMATION

The table below presents data by geographic region. Revenues shown below are
classified according to their country of origin.

Revenues Long-lived assets (c)
For the years ended December 31 At December 31
----------------------------------------- ---------------------------------------
(In millions) 2001 2000 1999 2001 2000 1999
- ----------------------------------------- ------------ ------------ ------------ ------------ -----------

United States ............. $ 28,860 $ 32,361 $ 28,618 $ 10,203 $ 10,951 $ 12,917
Europe .................... 9,304 10,154 10,363 3,397 3,181 3,446
Pacific Basin ............. 5,806 7,147 3,722 986 1,146 1,311
Global (a) ................ 2,291 2,134 1,788 12,979 10,763 8,959
Other (b) ................. 2,284 2,471 2,114 1,647 1,615 1,698
------------ ------------ ------------ ------------ ------------ ------------
Total .................. $ 48,545 $ 54,267 $ 46,605 $ 29,212 $ 27,656 $ 28,331
============ ============ ============ ============ ============ ============

(a) Consists of operations that cannot meaningfully be associated with specific
geographic areas (for example, commercial aircraft and shipping containers
used on ocean-going vessels).
(b) Principally the Americas other than the United States.
(c) Property, plant and equipment (including equipment leased to others).

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

Not applicable

53

PART III

Item 10. Directors and Executive Officers of the Registrant.

Omitted

Item 11. Executive Compensation.

Omitted

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Omitted

Item 13. Certain Relationships and Related Transactions.

Omitted

54

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a) 1. Financial Statements

Included in Part II of this report:

Independent Auditors' Report

Statement of Earnings for each of the years in the three-year period
ended December 31, 2001

Statement of Changes in Share Owners' Equity for each of the years in
the three-year period ended December 31, 2001

Statement of Financial Position at December 31, 2001 and 2000

Statement of Cash Flows for each of the years in the three-year period
ended December 31, 2001

Notes to Consolidated Financial Statements

Incorporated by reference:

The consolidated financial statements of General Electric Company, set
forth in the Annual Report on Form 10-K of General Electric Company
(S.E.C. File No. 001-00035) for the year ended December 31, 2001
(pages F-1 through F-52) and Exhibit 12 (Ratio of Earnings to Fixed
Charges) of General Electric Company.

(a) 2. Financial Statement Schedules

Schedule I. Condensed financial information of registrant.

All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is
shown in the financial statements or notes thereto.

(a) 3. Exhibit Index

The exhibits listed below, as part of Form 10-K, are numbered in
conformity with the numbering used in Item 601 of Regulation S-K of
the Securities and Exchange Commission.

Exhibit
Number Description
------------ --------------------

2(a) Agreement and Plan of Merger dated June 25, 2001, between the
Corporation and GECS Merger Sub, Inc. (Incorporated by reference
to Exhibit 2.1 of the Corporation's Current Report on Form 8-K
dated as of July 3, 2001.)

3(i) The Corporation's Certificate of Merger and Restated Certificate
of Incorporation filed with the Secretary of State of the State
of Delaware on June 29, 2001 and June 27, 2001, respectively.

3(ii) A complete copy of the By-Laws of the Corporation as last amended
on June 30, 1994, and currently in effect. (Incorporated by
reference to Exhibit 3(ii) of the Corporation's Form 10-K Report
for the year ended December 31, 1994).

4(a) Second Amended and Restated Fiscal and Paying Agency Agreement
dated as of March 31, 1999 among the Corporation, GE Capital
Australia, GE Capital Australia Funding Pty Ltd, GE Capital
Finance Australia, General Electric Capital Canada, Inc., GE
Capital Canada Funding Company, GE Capital Canada Retailer
Financial Services Company and The Chase Manhattan Bank, London
Branch (Incorporated by reference to Exhibit 4(ee) to the
Corporation's Post-Effective Amendment No. 4 to Registration
Statement on Form S-3, File No. 333-59707).

55

4(b) Form of Euro Medium-Term Note and Debt Security - Temporary
Global Fixed Rate Bearer Note (Incorporated by reference to
Exhibit 4(u) to the Corporation's Registration Statement on Form
S-3, File No. 333-66560).

4(c) Form of Euro Medium-Term Note and Debt Security - Permanent
Global Fixed Rate Bearer Note (Incorporated by reference to
Exhibit 4(v) to the Corporation's Registration Statement on Form
S-3, File No. 333-66560).

4(d) Form of Euro Medium-Term Note and Debt Security - Temporary
Global Floating Rate Bearer Note (Incorporated by reference to
Exhibit 4(x) to the Corporation's Post-Effective Amendment No. 4
to Registration Statement on Form S-3, File No. 333-66560).

4(e) Form of Euro Medium-Term Note and Debt Security - Permanent
Global Floating Rate Bearer Notes (Incorporated by reference to
Exhibit 4(y) to the Corporation's Registration Statement on Form
S-3, File No. 333-66560).

4(f) Form of Euro Medium-Term Note and Debt Security - Definitive
Global Fixed Rate Bearer Note (Incorporated by reference to
Exhibit 4(w) to the Corporation's Registration Statement on Form
S-3, File No. 333-66560).

4(g) Form of Euro Medium-Term Note and Debt Security - Definitive
Global Floating Rate Bearer Note (Incorporated by reference to
Exhibit 4(z) to the Corporation's Registration Statement on Form
S-3, File No. 333-66560).

4(h) Agreement to furnish to the Securities and Exchange Commission
upon request a copy of instruments defining the rights of holders
of certain long-term debt of the registrant and all subsidiaries
for which consolidated or unconsolidated financial statements are
required to be filed.

12(a) Computation of ratio of earnings to fixed charges.

12(b) Computation of ratio of earnings to combined fixed charges and
preferred stock dividends.

23(ii) Consent of KPMG LLP.

24 Power of Attorney.

99(a) Income Maintenance Agreement dated March 28, 1991, between
General Electric Company and the Corporation. (Incorporated by
reference to Exhibit 28(a) of the Corporation's Form 10-K Report
for the year ended December 31, 1992).

99(b) The consolidated financial statements of General Electric
Company, set forth in the Annual Report on Form 10-K of General
Electric Company (S.E.C. File No. 001-00035) for the year ended
December 31, 2001, (pages F-1 through F-52) and Exhibit 12 (Ratio
of Earnings to Fixed Charges) of General Electric Company.

99(c) Letter, dated February 4, 1999 from Dennis D. Dammerman of
General Electric Company to Denis J. Nayden of General Electric
Capital Corporation pursuant to which General Electric Company
agrees to provide additional equity to General Electric Capital
Corporation in conjunction with certain redemptions by General
Electric Capital Corporation of shares of its Variable Cumulative
Preferred Stock. (Incorporated by reference to Exhibit 99(g) to
the Corporation's Post-Effective Amendment No. 1 to Registration
Statement on Form S-3, File No. 333-59707).

56

(b) Reports on Form 8-K

A Current Report on Form 8-K was filed on July 3, 2001, under Item 5 to
disclose that, the Registrant was reincorporated as a Delaware business
corporation (the "Reincorporation"). The Reincorporation was effected by
means of the merger (the "Merger") of the Registrant's existing New York
corporation ("GE Capital-NY") with and into a newly-formed corporation
organized under the Delaware General Corporation Law ("GE Capital-DE"). GE
Capital-DE was the surviving corporation in the Merger and upon
consummation of the Merger, changed its name to "General Electric Capital
Corporation." As a result of the Merger, GE Capital-DE succeeded to and
assumed all rights and obligations of GE Capital-NY, and immediately after
the Merger GE Capital-DE had the same assets and liabilities as GE
Capital-NY had immediately prior to the Merger. The directors and officers
of GE Capital-NY immediately prior to the Merger became the directors and
officers of GE Capital-DE upon consummation of the Merger.

Apart from the change in its state of incorporation, the Merger had no
effect on GE Capital-NY's business, management, employees, fiscal year,
assets or liabilities, or location of its facilities (including corporate
headquarters), and did not result in any relocation of management or other
employees. In addition, pursuant to the Merger, GE Capital-NY's obligations
under its contracts, agreements, and guarantees were assumed by GE
Capital-DE.

57

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

GENERAL ELECTRIC CAPITAL CORPORATION

CONDENSED STATEMENT OF CURRENT AND RETAINED EARNINGS

For the years ended December 31 (In millions) 2001 2000 1999
------------- ------------- -------------

REVENUES ......................................................... $ 6,863 $ 6,596 $ 5,527
------------- ------------- -------------
EXPENSES
Interest, net of allocations ..................................... 6,795 7,338 7,096
Operating and administrative ..................................... 1,865 1,937 1,904
Provision for losses on financing receivables .................... 485 307 241
Depreciation and amortization .................................... 417 332 530
------------- ------------- -------------
Total expenses............................................... 9,562 9,914 9,771
------------- ------------- -------------
Loss before income taxes and equity in earnings of affiliates .... (2,699) (3,318) (4,244)
Income tax benefit ............................................... 555 965 1,734
Equity in earnings of affiliates ................................. 8,204 6,642 6,718
Cumulative effect of accounting changes, net of tax............... (158) - -
------------- ------------- -------------
NET EARNINGS ..................................................... 5,902 4,289 4,208
Dividends paid ................................................... (2,042) (1,606) (1,537)
Retained earnings at January 1 ................................... 19,694 17,011 14,340
------------- ------------- -------------
RETAINED EARNINGS AT DECEMBER 31 ................................. $ 23,554 $ 19,694 $ 17,011
============= ============= =============

See notes to Condensed Financial Statements.

58

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (Continued)

GENERAL ELECTRIC CAPITAL CORPORATION

CONDENSED STATEMENT OF FINANCIAL POSITION

At December 31 (In millions) 2001 2000
------------ -----------

ASSETS
Cash and equivalents ............................................................. $ 719 $ -
Investment securities ............................................................ 4,448 3,789
Financing receivables:
Time sales and loans ............................................................ 33,847 29,797
Investment in financing leases .................................................. 16,019 14,907
------------ -----------
49,866 44,704
Allowance for losses on financing receivables ................................... (1,211) (1,047)
------------ -----------
Financing receivables - net .................................................. 48,655 43,657
Investments in and advances to affiliates ........................................ 153,391 130,551
Equipment on operating leases (at cost),
less accumulated amortization of $842 and $855 ................................ 3,378 3,341
Other assets ..................................................................... 14,882 16,337
------------ -----------
Total assets ................................................................. $ 225,473 $ 197,675
============ ===========
LIABILITIES AND SHARE OWNERS' EQUITY
Short-term borrowings ............................................................ $ 121,020 $ 91,522
Long-term borrowings ............................................................. 60,367 69,704
------------ -----------
Total borrowings.............................................................. 181,387 161,226
Other liabilities ................................................................ 9,510 7,729
Deferred income taxes ............................................................ 3,013 2,647
------------ -----------
Total liabilities ............................................................ $ 193,910 $ 171,602
------------ -----------
Variable cumulative preferred stock, $100 par value, liquidation preference
$100,000 per share (33,000 shares authorized at December 31, 2001 and 2000
and 26,000 shares outstanding at December 31, 2001 and 2000) ................... 3 3

Common stock, $0.01 par value (3,866,000 shares authorized and 3,837,825 shares
outstanding at December 31, 2001 and 2000, respectively)........................ 1 1

Additional paid-in capital ....................................................... 9,763 7,114
Retained earnings ................................................................ 23,554 19,694
Accumulated gains/(losses) - net:
Investment securities (a) ...................................................... (362) (139)
Currency translation adjustments (a) ........................................... (564) (600)
Derivatives qualifying as hedges (a) ........................................... (832) -
------------- ------------
Total share owners' equity ................................................... 31,563 26,073
------------- ------------
Total liabilities and share owners' equity ................................... $ 225,473 $ 197,675
============= ============

(a) The sum of accumulated gains/(losses) on investment securities, currency
translation adjustments and derivatives qualifying as hedges constitutes
"Accumulated nonowner changes other than earnings," and was ($1,758) and
($739) million at year-end 2001 and 2000, respectively.

See notes to Condensed Financial Statements.

59

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (Continued)

GENERAL ELECTRIC CAPITAL CORPORATION

CONDENSED STATEMENT OF CASH FLOWS

For the years ended December 31 (In millions) 2001 2000 1999
------------- ------------- ---------------

CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES $ (1,048) $ 2,100 $ (1,537)
------------- ------------- ---------------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Increase in loans to customers ...................................... (84,290) (57,198) (58,899)
Principal collections from customers - loans ........................ 80,098 52,260 55,114
Investment in equipment for financing leases ........................ (6,545) (4,687) (4,712)
Principal collections from customers - financing leases ............. 4,569 2,493 2,788
Net change in credit card receivables ............................... (102) (48) 193
Buildings, equipment and equipment on operating leases
- additions ...................................................... (1,042) (1,494) (1,710)
- dispositions ................................................... 702 2,007 976
Payments for principal businesses purchased, net of cash acquired ... (10,993) (1,176) (9,823)
Proceeds from principal business dispositions ....................... 2,608 (605) 176
Change in investment in and advances to affiliates .................. (6,635) 1,750 6,193
All other investing activities ...................................... 298 (4,139) (4,687)
------------- ------------- ---------------
Cash used for investing activities ............................... (21,332) (10,837) (14,391)
------------- ------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities of 90 days or less) ............ 30,834 (576) (2,591)
Newly issued debt
- short-term (91-365 days) ....................................... 5,124 7,601 14,081
- long-term senior ............................................... 14,437 28,780 25,016
Proceeds - non-recourse, leveraged lease debt ....................... 1,008 1,139 816
Repayments and other reductions
- short-term ..................................................... (23,810) (27,382) (17,291)
- long-term senior ............................................... (4,957) (2,672) (97)
Principal payments - non-recourse, leveraged lease debt ............. (144) (94) (126)
Dividends paid ...................................................... (2,042) (1,612) (1,537)
Contributions from GE Capital Services .............................. 2,649 895 -
Preferred stock issued in excess of par ............................. - - 300
------------- ------------- ---------------
Cash from financing activities ................................... 23,099 6,079 18,571
------------- ------------- ---------------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR ..........
719 (2,658) 2,643
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ........................... - 2,658 15
------------- ------------- ---------------
CASH AND EQUIVALENTS AT END OF YEAR ................................. $ 719 $ - $ 2,658
============= ============= ===============

See notes to Condensed Financial Statements.

60

GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (Concluded)

GENERAL ELECTRIC CAPITAL CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

Borrowings

Total long-term borrowings at December 31, 2001 and 2000, are shown below.

2001 2000
---------------------------------------- ------------------
(In millions) Maturities Amount Average rate (a) Amount
--------------- ----------------- ---------------------- ------------------

Senior notes .......................... 2003-2055 $ 60,535 5.38% $ 69,006
Subordinated notes (c) ................ 2006-2012 698 8.04 698
----------------- ------------------
61,233 69,704
Foreign currency loss (b).............. (866) -
----------------- ------------------
$ 60,367 $ 69,704
================= ==================

(a) Based on year-end balances and year-end local currency interest rates,
including the effects of related interest rate and currency swaps, if any,
directly associated with the original debt issuance.
(b) Borrowings in 2001 exclude the foreign exchange effects of related currency
swaps in accordance with the provisions of SFAS 133.
(c) At year-end 2001 and 2000, $698 million of subordinated notes were
guaranteed by GE.

At December 31, 2001, maturities of long-term borrowings during the next five
years, including the current portion of long-term debt, are $24,136 million in
2002, $20,608 million in 2003, $11,652 million in 2004, $6,629 million in 2005,
and $4,447 million in 2006.

Interest rate risk is managed by GE Capital in light of the anticipated
behavior, including prepayment behavior, of assets in which debt proceeds are
invested. A variety of instruments, including interest rate and currency swaps
and currency forwards, are employed to achieve management's interest rate
objectives. Effective interest rates are lower under these "synthetic" positions
than could have been achieved by issuing debt directly. At December 31, 2001
interest rate swap maturities ranged from 2002 to 2048, and average interest
rates for fixed-rate borrowings (including "synthetic" fixed-rate borrowings)
were 5.94% (6.24% at year-end 2000).

Interest expense on the Condensed Statement of Current and Retained Earnings is
net of interest income on loans and advances to majority owned affiliates of
$1,585 million, $1,610 million and $1,129 million for 2001, 2000 and 1999,
respectively.

Income Taxes

General Electric Company files a consolidated U.S. federal income tax return
which includes GE Capital. Income tax benefit includes the effect of GE Capital
on the consolidated return.

61

Exhibit 4 (h)

March 7, 2002

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Subject: General Electric Capital Corporation Annual Report on Form 10-K for the
fiscal year ended December 31, 2001 - File No. 1-6461

Dear Sirs:

Neither General Electric Capital Corporation (the "Corporation") nor any of its
subsidiaries has outstanding any instrument with respect to its long-term debt
that is not registered or filed with the Commission and under which the total
amount of securities authorized exceeds 10% of the total assets of the
registrant and its subsidiaries on a consolidated basis. In accordance with
paragraph (b) (4) (iii) of Item 601 of Regulation S-K (17 CFR ss.229.601),the
Corporation hereby agrees to furnish to the Securities and Exchange Commission,
upon request, a copy of each instrument which defines the rights of holders of
such long-term debt.

Very truly yours,

GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ J.A. Parke
-------------------------
J.A. Parke,
Vice Chairman and
Chief Financial Officer

62

Exhibit 12 (a)

GENERAL ELECTRIC CAPITAL CORPORATION
AND CONSOLIDATED AFFILIATES

Computation of Ratio of Earnings to Fixed Charges

Years ended December 31
-----------------------------------------------------------------
(In millions) 2001 2000 1999 1998 1997
------------- ------------ ------------- ------------ -----------

Net earnings ....................................$ 5,902 $ 4,289 $ 4,208 $ 3,374 $ 2,729
Provision for income taxes ...................... 1,734 1,555 1,553 1,185 997
Minority interest ............................... 84 86 68 49 40
------------- ------------ ------------- ------------ -----------
Earnings before income taxes and minority
interest ....................................... 7,720 5,930 5,829 4,608 3,766
------------- ------------ ------------- ------------ -----------
Fixed charges:
Interest ....................................... 10,261 10,763 9,183 8,772 7,440
One-third of rentals ........................... 324 381 345 289 240
------------- ------------ ------------- ------------ -----------
Total fixed charges ............................. 10,585 11,144 9,528 9,061 7,680
------------- ------------ ------------- ------------ -----------
Less interest capitalized, net of amortization .. (88) (121) (87) (88) (52)
------------- ------------ ------------- ------------ -----------
Earnings before income taxes and minority
interest plus fixed charges ....................$ 18,217 $ 16,953 $ 15,270 $ 13,581 $ 11,394
============= ============ ============= ============ ===========
Ratio of earnings to fixed charges .............. 1.72 1.52 1.60 1.50 1.48
============= ============ ============= ============ ===========

63

Exhibit 12 (b)

GENERAL ELECTRIC CAPITAL CORPORATION
AND CONSOLIDATED AFFILIATES

Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends

Years ended December 31
-----------------------------------------------------------------
(In millions) 2001 2000 1999 1998 1997
------------ ----------- ------------ ------------ -----------

Net earnings .................................... $ 5,902 $ 4,289 $ 4,208 $ 3,374 $ 2,729
Provision for income taxes ...................... 1,734 1,555 1,553 1,185 997
Minority interest ............................... 84 86 68 49 40
------------ ----------- ------------ ------------ -----------
Earnings before income taxes and minority
interest ....................................... 7,720 5,930 5,829 4,608 3,766
------------ ----------- ------------ ------------ -----------
Fixed charges:
Interest ...................................... 10,261 10,763 9,183 8,772 7,440
One-third of rentals .......................... 324 381 345 289 240
------------ ----------- ------------ ------------ -----------
Total fixed charges ............................. 10,585 11,144 9,528 9,061 7,680
Less interest capitalized, net of amortization .. (88) (121) (87) (88) (52)
------------ ----------- ------------ ------------ -----------
Earnings before income taxes and minority
interest plus fixed charges .................... $ 18,217 $ 16,953 $ 15,270 $ 13,581 $ 11,394
============ =========== ============ ============ ===========
Preferred stock dividend requirements ........... $ 80 $ 126 $ 115 $ 97 $ 78
Ratio of earnings before provision for income
taxes to net earnings .......................... 1.29 1.36 1.37 1.35 1.37
------------ ----------- ------------ ------------ -----------
Preferred stock dividend factor on pre-tax basis 103 171 157 131 107
Fixed charges ................................... 10,585 11,144 9,528 9,061 7,680
------------ ----------- ------------ ------------ -----------
Total fixed charges and preferred stock dividend
requirements ................................... $ 10,688 $ 11,315 $ 9,685 $ 9,192 $ 7,787
============ =========== ============ ============ ===========
Ratio of earnings to combined fixed charges and
preferred stock dividends ...................... 1.70 1.50 1.58 1.48 1.46
============ =========== ============ ============ ===========

64

Exhibit 23 (ii)

To the Board of Directors
General Electric Capital Corporation:

We consent to incorporation by reference in the Registration Statements (Nos.
33-43420, 333-22265, 333-59977, and 333-66560) on Form S-3 of General Electric
Capital Corporation, and in the Registration Statement (No. 33-39596) on Form
S-3 jointly filed by General Electric Capital Corporation and General Electric
Company, of our report dated February 8, 2002, relating to the statement of
financial position of General Electric Capital Corporation and consolidated
affiliates as of December 31, 2001 and 2000, and the related statements of
earnings, changes in share owners' equity and cash flows for each of the years
in the three-year period ended December 31, 2001, and the related schedule,
which report appears in the December 31, 2001 annual report on Form 10-K of
General Electric Capital Corporation.

/s/ KPMG LLP

Stamford, Connecticut
March 8, 2002

65

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being directors
and/or officers of General Electric Capital Corporation, a Delaware corporation
(the "Corporation"), hereby constitutes and appoints Denis J. Nayden, James A.
Parke, Joan C. Amble and Nancy E. Barton, and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead in any and all capacities, to sign one
or more Annual Reports for the Corporation's fiscal year ended December 31,
2001, on Form 10-K under the Securities Exchange Act of 1934, as amended, or
such other form as such attorney-in-fact may deem necessary or desirable, any
amendments thereto, and all additional amendments thereto in such form as they
or any one of them may approve, and to file the same with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done to the end that such Annual Report or Annual
Reports shall comply with the Securities Exchange Act of 1934, as amended, and
the applicable Rules and Regulations of the Securities and Exchange Commission
adopted or issued pursuant thereto, as fully and to all intents and purposes as
he might or could in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their or his substitute or
resubstitute, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this 7th
day of March 2002.

/s/ Denis J. Nayden /s/ James A. Parke
- ----------------------------- ------------------------------
Denis J. Nayden, James A. Parke,
Chairman of the Board and Director, Vice Chairman and
Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Financial Officer)

/s/ Joan C. Amble
-----------------------------
Joan C. Amble,
Vice President and Controller
(Principal Accounting Officer)

(Page 1 of 2)

66

/s/ Nancy E. Barton /s/ Denis J. Nayden
- ------------------------------------- ----------------------------------
Nancy E. Barton, Denis J. Nayden,
Director Director

/s/ James R. Bunt /s/ Michael A. Neal
- ------------------------------------- ----------------------------------
James R. Bunt, Michael A. Neal,
Director Director

/s/ James A. Parke
- ------------------------------------- ----------------------------------
David L. Calhoun, James A. Parke,
Director Director

/s/ Dennis D. Dammerman /s/ Ronald R. Pressman
- ------------------------------------- ----------------------------------
Dennis D. Dammerman, Ronald R. Pressman,
Director Director

/s/ Gary M. Reiner
- ------------------------------------- ----------------------------------
Scott C. Donnelly, Gary M. Reiner,
Director Director

/s/ Michael D. Fraizer /s/ Gary L. Rogers
- ------------------------------------- ----------------------------------
Michael D. Fraizer, Gary L. Rogers,
Director Director

/s/ Arthur H. Harper /s/ John M. Samuels
- ------------------------------------- ----------------------------------
Arthur H. Harper, John M. Samuels,
Director Director

/s/ Keith S. Sherin
- ------------------------------------- ----------------------------------
Benjamin W. Heineman, Jr., Keith S. Sherin,
Director Director

/s/ Jeffrey R. Immelt /s/ Edward D. Stewart
- ------------------------------------- ----------------------------------
Jeffrey R. Immelt, Edward D. Stewart,
Director Director

/s/ Robert Jeffe /s/ Robert C. Wright
- ------------------------------------- ----------------------------------
Robert Jeffe, Robert C. Wright,
Director Director

- -------------------------------------
John H. Myers,
Director

A MAJORITY OF THE BOARD OF DIRECTORS
(Page 2 of 2)

67

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

GENERAL ELECTRIC CAPITAL CORPORATION

March 7, 2002 By: /s/ Denis J. Nayden
--------------------------------
(Denis J. Nayden)
Chairman of the Board
and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.

Signature Title Date

/s/ Denis J. Nayden Chairman of the Board and March 7, 2002
- --------------------------- Chief Executive Officer
(Denis J. Nayden) (Principal Executive Officer)

/s/ James A. Parke Vice Chairman March 7, 2002
- --------------------------- and Chief Financial Officer
(James A. Parke) (Principal Financial Officer)

/s/ Joan C. Amble Vice President and Controller March 7, 2002
- --------------------------- (Principal Accounting Officer)
(Joan C. Amble)

NANCY E. BARTON* Director
JAMES R. BUNT* Director
DENNIS D. DAMMERMAN* Director
MICHAEL D. FRAIZER* Director
ARTHUR H. HARPER* Director
JEFFREY R. IMMELT* Director
ROBERT JEFFE* Director
DENIS J. NAYDEN* Director
MICHAEL A. NEAL* Director
JAMES A. PARKE* Director
RONALD R. PRESSMAN* Director
GARY M. REINER* Director
GARY L. ROGERS* Director
JOHN M. SAMUELS* Director
KEITH S. SHERIN* Director
EDWARD D. STEWART* Director
ROBERT C. WRIGHT* Director

A MAJORITY OF THE BOARD OF DIRECTORS

*By: /s/ Joan C. Amble March 7, 2002
---------------------------
(Joan C. Amble)
Attorney-in-fact