See Notes to Condensed, Consolidated Financial Statements.

1

See Notes to Condensed, Consolidated Financial Statements.

2

(Unaudited)

See Notes to Condensed, Consolidated Financial Statements.

3

        2.     The condensed, consolidated quarterly financial statements are unaudited. These statements include all adjustments (consisting of normal recurring accruals) considered necessary by management to present a fair statement of the results of operations, financial position and cash flows. The results reported in these condensed, consolidated quarterly financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year.

        3.     The Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards (SFAS) 142, Goodwill and Other Intangible Assets, generally became effective on January 1, 2002. Under SFAS 142, goodwill is no longer amortized but is tested for impairment using a fair value methodology.

        GECC ceased amortizing goodwill effective January 1, 2002. Simultaneously, to maintain a consistent basis for its measurement of performance, management revised previously-reported segment information to correspond to the earnings measurements by which businesses were to be evaluated. As required by SFAS 131, Disclosures about Segments of an Enterprise and Related Information, previously reported segment results (presented under the heading Operating Segments on pages 8 and 14), have been restated to be consistent with 2002 reporting. Goodwill amortization expense for the third quarter and nine months ended September 29, 2001, was $165 million ($126 million after tax) and $466 million ($361 million after tax), respectively. The effect on earnings of excluding such goodwill amortization from the third quarter and first nine months of 2001 follow:

        Under SFAS 142, GECC was required to test all existing goodwill for impairment as of January 1, 2002, on a "reporting unit" basis. A reporting unit is the operating segment unless, at businesses one level below that operating segment (the "component" level), discrete financial information is prepared and regularly reviewed by management, in which case such component is the reporting unit.

        A fair value approach is used to test goodwill for impairment. An impairment charge is recognized for the amount, if any, by which the carrying amount of goodwill exceeds its fair value. Fair values were established using discounted cash flows. When available and as appropriate, comparative market multiples were used to corroborate discounted cash flow results.

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        The result of testing goodwill of GECC for impairment in accordance with SFAS 142, as of January 1, 2002, was a non-cash charge of $1,204 million ($1,015 million after tax), which is reported in the caption "Cumulative effect of accounting changes". Substantially all of the charge relates to the IT Solutions business and the GE Auto and Home business, a direct subsidiary of GE Financial Assurance. The primary factors resulting in the impairment charge were the difficult economic environment in the information technology sector and heightened price competition in the auto insurance industry. No impairment charge was appropriate under the FASB's previous goodwill impairment standard, which was based on undiscounted cash flows.

        Amortization expense related to intangible assets, excluding goodwill, for the third quarter of 2002 and 2001 was $506 million and $396 million, respectively and for the first nine months of 2002 and 2001 was $1,195 million and $987 million, respectively. The estimated percentage of the December 31, 2001 net PVFP balance to be amortized over each of the next five years follows:

        Amortization expense for PVFP in future periods will be affected by acquisitions, realized capital gains/losses or other factors affecting the ultimate amount of gross profits realized from certain lines of business. Similarly, future amortization expense for other intangibles will depend on acquisition activity and other business transactions.

Goodwill

        The following table contains goodwill balances by operating segment of General Electric Capital Services, Inc. ("GECS"), the sole owner of the common stock of GECC, including eliminations to reconcile to the Total GECC column.  The most significant component of these eliminations, included in the All Other GECS and Eliminations column, is the exclusion at the GECC level of the goodwill of GE Global Insurance Holdings (principally Employers Reinsurance Corporation - ERC), which is not a subsidiary of GECC but is a direct subsidiary of GECS.

        4.        At January 1, 2001, GECC adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Under SFAS 133, all derivative instruments are recognized in the statement of financial position at their fair values. The cumulative effect of adopting this standard was a one-time reduction of net earnings in the first quarter of 2001 of $38 million and comprised a portion of the effect of marking to market options and currency contracts used for hedging. Also at January 1, 2001, GECC adopted the consensus of the Emerging Issues Task Force of the FASB on accounting for impairment of beneficial interests (EITF 99-20). Under this consensus, impairment of certain beneficial interests in securitized assets must be recognized when the asset's fair value is below its carrying value and it is probable that there has been an adverse change in estimated cash flows. The cumulative effect of adopting EITF 99-20 was a one-time reduction of net earnings in the first quarter of 2001 of $120 million.

        6.        Revenues and net earnings before accounting changes of GECC, by operating segment, for the third quarters and nine months ended September 28, 2002 and September 29, 2001, can be found in the consolidated tables on pages 8 and 14 of this report, respectively.

6

        GECC net earnings before accounting changes (discussed in notes 3 and 4 to the condensed, consolidated financial statements) for the third quarter of 2002 were $1,758 million, a $87 million (5%) increase from the third quarter of 2001. Excluding the effect of the prior-year goodwill amortization ($126 million after tax), net earnings before accounting changes decreased 2%. This decrease resulted from lower securitization gains primarily at GE Commercial Finance, lower investment gains primarily at GE Insurance and increased losses on investments at GE Equity. These decreases were partially offset by higher asset gains primarily at GE Commercial Finance, origination growth primarily at GE Commercial Finance and GE Consumer Finance, the effects of acquisitions primarily at GE Commercial Finance, as well as increased tax benefits from growth in low taxed earnings from international operations and a favorable tax settlement with the Internal Revenue Service regarding the treatment of certain reserves for obligations to policyholders on life insurance contracts at GE Insurance. Contributions from acquired companies to net earnings in the third quarter of 2002 and 2001 were approximately $83 million and $43 million, respectively. Acquisitions are integrated as quickly as possible; only earnings during the first 12 months following the quarter in which the acquisition is completed are considered to be related to acquired companies.

        Total revenues increased $745 million (6%) to $12,367 million for the third quarter of 2002, compared with $11,622 million for the third quarter of 2001. This increase resulted from the effects of acquisitions and origination growth primarily at GE Commercial Finance and GE Consumer Finance and higher premiums earned in the current year at GE Insurance, offset by lower securitization gains across all segments, and the absence of a current year counterpart to Americom which was divested in the fourth quarter of 2001.

        Interest expense on borrowings for the third quarter of 2002 was $2,557 million, 8% higher than for the third quarter of 2001. The increase reflected the effects of higher average borrowings used to finance acquisitions and asset growth partially offset by the effects of lower interest rates. The average composite interest rate on GECC's borrowings for the third quarter of 2002 was 4.19% compared with 4.90% in the third quarter of 2001.

        Operating and administrative expenses were $3,410 million for the third quarter of 2002, a 14% increase over the third quarter of 2001. The increase resulted from the effects of acquisitions at GE Commercial Finance and GE Consumer Finance and increased commissions relating to volume increases at GE Insurance, partially offset by the absence of amortization expense related to goodwill, as in accordance with SFAS 142 GECC ceased amortizing goodwill effective January 1, 2002.

        Cost of goods sold is associated with activities of GECC's computer equipment distribution business. This cost amounted to $673 million for the third quarter of 2002, compared with $692 million for the third quarter of 2001. The decrease primarily reflected volume declines at IT Solutions.

        Insurance losses and policyholder and annuity benefits increased $143 million to $2,104 million for the third quarter of 2002, compared with the third quarter of 2001. The increase is primarily a result of increased premium volume and the effects of acquisitions at GE Financial Assurance.

        Provision for losses on financing receivables were $619 million for the third quarter of 2002 compared with $521 million for the third quarter of 2001. These provisions principally relate to consumer receivables and leases (private-label credit cards, bank credit cards, personal loans and auto loans) as well as commercial receivables (commercial, industrial, and equipment loans and leases), all of which are discussed below under Portfolio Quality. The increase in the provision primarily reflected higher credit losses as well as higher receivable balances. Future provisions for losses will depend primarily on the size of the portfolio, which is expected to continue to grow, and on associated business and economic conditions.

        Depreciation and amortization of buildings and equipment and equipment on operating leases increased to $980 million for the third quarter of 2002, compared with $917 million for the third quarter of 2001. The increase was principally the result of higher levels of equipment on operating leases at GE Commercial Finance, primarily reflecting origination growth and acquisitions, partially offset by the divestiture of Americom.

        Provision for income taxes was $242 million for the third quarter of 2002 (an effective tax rate of 12.1%), compared with $495 million for the third quarter of 2001 (an effective tax rate of 22.9%). The lower effective tax rate primarily reflected the effect of increased low taxed earnings from international operations and the benefits of a favorable settlement at GE Insurance with the Internal Revenue Service regarding the treatment of certain reserves for obligations to policyholders on life insurance contracts.

7

        Revenues and net earnings before accounting changes by operating segment of General Electric Capital Services, Inc. ("GECS"), the sole owner of the common stock of GECC, are summarized and discussed below with a reconciliation to the GECC-only results, for the third quarters ended September 28, 2002 and September 29, 2001.  The most significant component of these reconciliations is the exclusion from the GE Insurance segment at the GECC level of the results of GE Global Insurance Holdings (principally Employers Reinsurance Corporation - ERC), which is not a subsidiary of GECC but is a direct subsidiary of GECS. 

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        Revenues also benefited from recent increases in pricing and growth within certain niche markets at GE Global Insurance Holdings as well as acquisition and origination growth at GE Financial Assurance. These increases were partially offset by selective exits from certain lines of business and customer relationships as part of a portfolio review at GE Global Insurance Holdings. Investment gains were also lower in 2002.

        Net earnings also benefited by $75 million from the recognition of a favorable tax settlement with the Internal Revenue Service regarding the treatment of certain reserves for obligations to policyholders on life insurance contracts and productivity benefits at GE Financial Assurance, partially offset by adverse development and adjustments to estimates of prior-year loss events at GE Global Insurance Holdings and lower investment gains.

        The most significant component of GE Insurance not included in GECC is the exclusion of the results of GE Global Insurance Holdings (principally Employers Reinsurance Corporation - ERC) which is not a subsidiary of GECC but is a direct subsidiary of GECS.

11

All Other GECS

            Two factors explain these results:

12

        GECC net earnings before accounting changes (discussed in notes 3 and 4 to the condensed, consolidated financial statements) for the first nine months of 2002 were $4,935 million, a $498 million (11%) increase from the first nine months of 2001. Excluding the effect of the prior-year goodwill amortization ($361 million after-tax), net earnings before accounting changes increased 3%. This increase resulted from acquisitions predominantly at GE Commercial Finance, origination growth primarily at GE Consumer Finance and GE Commercial Finance, as well as increased tax benefits from growth in low taxed earnings from international operations and favorable tax settlements with the Internal Revenue Service. These increases were offset by lower investment gains at GE Insurance, lower securitization gains across all segments and the lack of a current year counterpart to the divestiture of Americom. Contributions from acquired companies to net earnings in the first nine months of 2002 and 2001 were approximately $400 million and $80 million, respectively. Acquisitions are integrated as quickly as possible; only earnings during the first 12 months following the quarter in which the acquisition is completed are considered to be related to acquired companies.

        Total revenues increased $69 million to $35,447 million for the first nine months of 2002, compared with $35,378 million for the first nine months of 2001. This increase resulted from acquisitions primarily at GE Commercial Finance and GE Consumer Finance and origination growth, partially offset by reduced market interest rates primarily at GE Commercial Finance, lower investment gains across all segments, the absence of revenues from Americom which was divested in the fourth quarter of 2001, volume decreases at IT Solutions, and lower securitization gains across all segments.

        Interest expense on borrowings for the first nine months of 2002 was $7,068 million, 7% lower than for the first nine months of 2001. The decrease reflected the effects of lower interest rates, partially offset by the effects of higher average borrowings used to finance acquisitions and asset growth. The average composite interest rate on GECC borrowings for the first nine months of 2002 was 4.08% compared with 5.37% in the first nine months of 2001.

        Operating and administrative expenses were $9,443 million for the first nine months of 2002, a 1% decrease compared with the first nine months of 2001. The decrease reflected productivity gains and the absence of amortization expense related to goodwill, as in accordance with SFAS 142 GECC ceased amortizing goodwill effective January 1, 2002. These decreases were partially offset by operating and administrative expenses associated with recent acquisitions, and increased commissions in the current year relating to volume increase at GE Insurance.

        Cost of goods sold is associated with activities of GECC's computer equipment distribution business. This cost amounted to $2,237 million for the first nine months of 2002, compared with $2,519 million for the first nine months of 2001. The decrease primarily reflected volume declines at IT Solutions.

        Insurance losses and policyholder and annuity benefits increased $30 million to $6,044 million for the first nine months of 2002, compared with the first nine months of 2001. The increase is primarily a result of the effects of acquisitions at GE Financial Assurance, offset by favorable development on prior-year loss reserves at Mortgage Insurance.

        Provision for losses on financing receivables were $2,029 million for the first nine months of 2002 compared with $1,428 million for the first nine months of 2001. These provisions principally relate to consumer receivables and leases (private-label credit cards, bank credit cards, personal loans and auto loans) as well as commercial receivables (commercial, industrial, and equipment loans and leases), all of which are discussed below under Portfolio Quality. The increase in the provision primarily reflected higher credit losses as well as higher receivable balances. Future provisions for losses will depend primarily on the size of the portfolio, which is expected to continue to grow, and on associated business and economic conditions.

        Depreciation and amortization of buildings and equipment and equipment on operating leases increased to $2,684 million for the first nine months of 2002, compared with $2,495 million for the first nine months of 2001. The increase was principally the result of higher levels of equipment on operating leases at GE Commercial Finance, primarily reflecting origination growth and acquisitions, partially offset by the divestiture of Americom.

        Provision for income taxes was $934 million for the first nine months of 2002 (an effective tax rate of 15.9%), compared with $1,238 million for the first nine months of 2001 (an effective tax rate of 21.8%). The lower effective tax rate primarily reflected the effect of increased low taxed earnings from international operations and favorable tax settlements with the Internal Revenue Service.

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Operating Segments

        Revenues and net earnings before accounting changes by operating segment of General Electric Capital Services, Inc. ("GECS"), the sole owner of the common stock of GECC, are summarized and discussed below with a reconciliation to the GECC-only results, for the first nine months ended September 28, 2002 and September 29, 2001.  The most significant component of these reconciliations is the exclusion from the GE Insurance segment at the GECC level of the results of GE Global Insurance Holdings (principally Employers Reinsurance Corporation - ERC), which is not a subsidiary of GECC but is a direct subsidiary of GECS.

Consolidated

                For purposes of this discussion, earnings before accounting changes are referred to as "net earnings."

14

        GE Commercial Finance revenues and net earnings increased 15% and 13%, respectively, in the first nine months of 2002 compared with the first nine months of 2001. The increase in revenues principally reflected acquisitions across all businesses, origination growth and increased asset sales at GECAS, partially offset by reduced market interest rates and lower securitization gains. The increase in net earnings resulted from acquisitions across all businesses, origination growth and increased asset sales at GECAS, partially offset by increased credit losses in 2002 and lower securitization gains. Other GE Commercial Finance principally includes 2002 revenues of $179 million and net earnings of $48 million of the Healthcare Financial Services business acquired in October 2001.

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GE Consumer Finance