10-K/A 1 frm10ka.htm FORM 10-K/A Form 10-K/A

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

FORM 10-K/A

Amendment No. 1 to Form 10-K

(Mark One)
 
þ 
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the fiscal year ended December 31, 2004
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 1-35
_____________________________
 
General Electric Company
(Exact name of registrant as specified in charter)

New York
      
14-0689340
(State or other jurisdiction of incorporation or organization)
      
(I.R.S. Employer Identification No.)
 
        
3135 Easton Turnpike, Fairfield, CT
  
06828-0001
  
203/373-2211
(Address of principal executive offices)
  
(Zip Code)
  
(Telephone No.)
         
  
Securities Registered Pursuant to Section 12(b) of the Act:
 
Title of each class
  
Name of each exchange
on which registered
Common stock, par value $0.06 per share
  
New York Stock Exchange
Boston Stock Exchange

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 þ 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. ¨
 
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes þ No ¨.
 
The aggregate market value of the outstanding common equity of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was $342.1 billion. Affiliates of the Company beneficially own, in the aggregate, less than one-tenth of one percent of such shares. There were 10,599,919,379 shares of voting common stock with a par value of $0.06 outstanding at February 10, 2005.
 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
The definitive proxy statement relating to the registrant’s Annual Meeting of Shareowners, held on April 27, 2005, is incorporated by reference in Part III to the extent described therein.
 



(1)


Table of Contents
 
 
Page
   
2005 Restatement
3
 
  
Part I 
  
     
Item 1.
Business
9
Item 2.
Properties
21
Item 3.
Legal Proceedings
21
Item 4.
Submission of Matters to a Vote of Security Holders
21
   
Part II 
  
     
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
22
Item 6.
Selected Financial Data
22
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
55
Item 8.
Financial Statements and Supplementary Data
55
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
125
Item 9A.
Controls and Procedures
125
Item 9B.
Other Information
129
   
Part III 
  
     
Item 10.
Directors and Executive Officers of the Registrant
130
Item 11.
Executive Compensation
131
Item 12.
Security Ownership of Certain Beneficial Owners and Management
131
Item 13.
Certain Relationships and Related Transactions
131
Item 14.
Principal Accounting Fees and Services
131
   
Part IV 
  
     
Item 15.
Exhibits and Financial Statement Schedules
131
 
Signatures
137

 

(2)

2005 Restatement
 
Overview
 
We are filing this amendment to General Electric Company’s (GE) Annual Report on Form 10-K for the year ended December 31, 2004, to amend and restate financial statements and other financial information for the years 2004, 2003 and 2002 and financial information for the year 2001 and for each of the quarters in the years 2004 and 2003 with respect to the accounting for certain derivatives transactions. These transactions relate to treasury operations at General Electric Capital Corporation (GECC). The effect of the restatement on our statement of financial position at the end of the reported periods is immaterial and the restatement has no effect on our cash flows.

Cumulatively through December 31, 2004, and separately in first quarter 2005, this non-cash restatement had the following earnings effects:
 
 
Effects of Correction
 
(In millions)
Total
  
Quarter ending
March 31, 2005
  
Cumulative through
December 31, 2004
  
                   
Increase (decrease) in earnings
                  
before accounting changes
$
381
  
$
(78
)
$
459
  
Accounting changes
  
157
    
-
    
157
  
Increase (decrease) in net earnings
$
538
  
$
(78
)
$
616
  

 
We have also determined that a control deficiency related to this subset of derivatives giving rise to the restatement constituted a material weakness in our internal control over financial reporting. The material weakness related to accounting for derivatives that were entered into prior to August of 2003 (except for one immaterial transaction), and there were no subsequent transactions of this sort. We have fully remediated that weakness as of the date of this report. See “Item 9A - Controls and Procedures.”

Internal Audit
 

In the course of a regularly scheduled audit, our internal corporate audit staff identified errors with respect to GECC’s use of hedge accounting for certain transactions under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS 133). Descriptions of these errors follow:

•
The first errors were in accounting for interest rate and currency swaps at GECC that included fees paid or received at inception. These swaps related to about 14% of our overall borrowings at January 1, 2001, and about 6% of our overall borrowings at December 31, 2004. Our initial accounting viewed these fees as immaterial. KPMG LLP, our independent registered public accounting firm, reviewed this initial accounting in connection with their 2001 audit. In 2003, we discontinued use of such swaps, except for one immaterial transaction, but continued the previous accounting for those already in place. Because of the swap fees, however, the fair values of the swaps were not zero at inception as required by SFAS 133 and, accordingly, we were required to, but did not, test periodically for effectiveness.

•
The second errors arose from a hedge accounting position related to a portfolio of assets consolidated by GECC in July 2003 at the implementation of Financial Accounting Standards Board Interpretation No. (FIN) FIN 46, Consolidation of Variable Interest Entities. This portfolio included assets equal to 2% and 1% of GE’s total assets at consolidation and at December 31, 2004, respectively. We entered into interest rate swaps in 2003 to adjust the economic yield on these newly-consolidated fixed-rate assets from a fixed to a floating rate. Adhering to our hedge documentation at the 2003 inception of these swaps, we did not perform subsequent periodic testing of their effectiveness. We determined as a result of the internal audit that the prepayment penalties in the underlying assets, which penalties had not been identified by us or KPMG LLP at implementation, were not appropriately mirrored in the associated swaps, as required in order to avoid periodic testing of effectiveness under SFAS 133. Accordingly, periodic effectiveness testing was required under SFAS 133 for these swaps.

(3)

•
In the course of the internal audit, we also identified other errors under SFAS 133 with respect to other aspects of certain swaps and other derivative instruments. Adjustments to correct the accounting for these transactions also are included in our restated results of operations. We do not believe these other adjustments are material, individually or in the aggregate, to our financial position or our results of operations for any reported period.

During its audit, the internal audit staff reported its findings to management, to KPMG LLP and to the Audit Committee of the Board of Directors. After initial discussions with the Audit Committee, management reviewed these matters in further detail, and after completing its analysis on May 5, 2005, recommended to the Audit Committee that previously reported financial results be restated to reflect correction of these errors. The Audit Committee agreed with this recommendation. Pursuant to the recommendation of the Audit Committee, the Board of Directors determined at its meeting on May 5, 2005, that previously reported results for GE, General Electric Capital Services (GECS) and GECC be restated to eliminate hedge accounting for these swaps and, in light of the restatement, that the financial statements and other information referred to above should no longer be relied upon.

Based on information to date, our personnel did not use these accounting issues to influence incentive or other compensation in the past. Going forward, adjustments in the restated financial results will not be used to influence positively any person’s compensation.


Restatement

In response to the issues raised by the internal audit relating to the derivatives transactions described above:

•
we have completed a review of the documentation and accounting for interest rate and currency swaps with respect to the types of hedging transactions affected by the restatement at GECC treasury operations;
 
•
we are taking action to adjust our interest rate and currency swaps thereby eliminating any significant volatility associated with these swaps; and
 
•
we have reversed the effects of incorrect hedge accounting by restating our previously issued financial statements.
 

Effects of Restatement

The following tables set forth the effects of the restatement relating to derivatives transactions on affected line items within our previously reported Statements of Earnings for the years 2004, 2003, 2002 and 2001 and for each of the quarters in the years 2004 and 2003. The restatement has an immaterial effect on our Statements of Financial Position at the end of each of the restated periods and has no effect on the timing or amount of operating cash flows.


(4)

Effects on Statements of Earnings
 
Income (expense) (in millions; per-share amounts in dollars)
Total
  
2004
  
2003
  
2002
  
2001
  
                               
Revenues
$
930
    
$
503
    
$
454
    
$
16
    
$
(43
)
Interest and other financial charges
  
(170
)
  
(129
)
  
(67
)
  
65
    
(39
)
Provision for income taxes
  
(301
)
  
(148
)
  
(153
)
  
(32
)
  
32
  
Earnings before accounting changes
  
459
    
226
    
234
    
49
    
(50
)
Cumulative effect of accounting changes
  
157
    
-
    
-
    
-
    
157
  
Net earnings
$
616
  
$
226
  
$
234
  
$
49
  
$
107
  
                               
                     
     
2004
  
2003
  
2002
  
2001
  
                               
Per-share amounts before accounting changes
                              
Diluted, as reported
      
$
1.59
  
$
1.55
  
$
1.51
  
$
1.41
  
Adjustment
        
0.02
    
0.02
    
-
    
(0.01
)
Diluted, as restated
      
$
1.61
  
$
1.57
  
$
1.51
  
$
1.40
  
                               
Basic, as reported
      
$
1.60
  
$
1.56
  
$
1.52
  
$
1.42
  
Adjustment
        
0.02
    
0.02
    
-
    
-
  
Basic, as restated
      
$
1.62
  
$
1.58
  
$
1.52
  
$
1.42
  
                               
Per-share amounts after accounting changes
                              
Diluted, as reported
      
$
1.59
  
$
1.49
  
$
1.41
  
$
1.37
  
Adjustment
        
0.02
    
0.02
    
-
    
-
  
Diluted, as restated
      
$
1.61
  
$
1.51
  
$
1.41
  
$
1.37
  
                               
Basic, as reported
      
$
1.60
  
$
1.50
  
$
1.42
  
$
1.38
  
Adjustment
        
0.02
    
0.02
    
-
    
0.01
  
Basic, as restated
      
$
1.62
  
$
1.52
  
$
1.42
  
$
1.39
  



(5)


 
2004
  
Income (expense) (in millions; per-share amounts in dollars)
Total
  
First
quarter
  
Second
quarter
  
Third
quarter
  
Fourth
quarter
  
                               
Revenues
$
503
  
$
242
  
$
(254
)
$
64
  
$
451
  
Interest and other financial charges
  
(129
)
  
(33
)
  
(33
)
  
(31
)
  
(32
)
Provision for income taxes
  
(148
)
  
(83
)
  
114
    
(13
)
  
(166
)
Net earnings
$
226
  
$
126
  
$
(173
)
$
20
  
$
253
  
                               
     
First
quarter
  
Second
quarter
  
Third
quarter
  
Fourth
quarter
  
                               
Per-share amounts before accounting changes
                              
Diluted, as reported
      
$
0.32
  
$
0.38
  
$
0.38
  
$
0.51
  
Adjustment
        
0.01
    
(0.02
)
  
-
    
0.02
  
Diluted, as restated
      
$
0.33
  
$
0.36
  
$
0.38
  
$
0.53
  
                               
Basic, as reported
      
$
0.32
  
$
0.38
  
$
0.38
  
$
0.51
  
Adjustment
        
0.01
    
(0.02
)
  
0.01
    
0.02
  
Basic, as restated
      
$
0.33
  
$
0.36
  
$
0.39
  
$
0.53
  
                               
Per-share amounts after accounting changes
                              
Diluted, as reported
      
$
0.32
  
$
0.38
  
$
0.38
  
$
0.51
  
Adjustment
        
0.01
    
(0.02
)
  
-
    
0.02
  
Diluted, as restated
      
$
0.33
  
$
0.36
  
$
0.38
  
$
0.53
  
                               
Basic, as reported
      
$
0.32
  
$
0.38
  
$
0.38
  
$
0.51
  
Adjustment
        
0.01
    
(0.02
)
  
0.01
    
0.02
  
Basic, as restated
      
$
0.33
  
$
0.36
  
$
0.39
  
$
0.53
  

 

(6)


 
2003
  
Income (expense) (in millions; per-share amounts in dollars)
Total
  
First
quarter
  
Second
quarter
  
Third
quarter
  
Fourth
quarter
  
                               
Revenues
$
454
  
$
441
  
$
775
  
$
(703
)
$
(59
)
Interest and other financial charges
  
(67
)
  
33
    
(30
)
  
(34
)
  
(36
)
Provision for income taxes
  
(153
)
  
(187
)
  
(295
)
  
291
    
38
  
Net earnings
$
234
  
$
287
  
$
450
  
$
(446
)
$
(57
)
                               
     
First
quarter
  
Second
quarter
  
Third
quarter
  
Fourth
quarter
  
                               
Per-share amounts before accounting changes
                              
Diluted, as reported
      
$
0.32
  
$
0.38
  
$
0.40
  
$
0.45
  
Adjustment
        
0.03
    
0.04
    
(0.05
)
  
-
  
Diluted, as restated
      
$
0.35
  
$
0.42
  
$
0.35
  
$
0.45
  
                               
Basic, as reported
      
$
0.32
  
$
0.38
  
$
0.40
  
$
0.45
  
Adjustment
        
0.03
    
0.04
    
(0.04
)
  
-
  
Basic, as restated
      
$
0.35
  
$
0.42
  
$
0.36
  
$
0.45
  
                               
Per-share amounts after accounting changes
                              
Diluted, as reported
      
$
0.30
  
$
0.38
  
$
0.36
  
$
0.45
  
Adjustment
        
0.03
    
0.04
    
(0.04
)
  
-
  
Diluted, as restated
      
$
0.33
  
$
0.42
  
$
0.32
  
$
0.45
  
                               
Basic, as reported
      
$
0.30
  
$
0.38
  
$
0.36
  
$
0.45
  
Adjustment
        
0.03
    
0.04
    
(0.04
)
  
-
  
Basic, as restated
      
$
0.33
  
$
0.42
  
$
0.32
  
$
0.45
  

Reversal of these cumulative adjustments will affect net earnings negatively over the terms of the underlying assets and debt, but to a degree that we do not expect to be significant in any individual period given the terms of the arrangements and our plan to reduce accounting volatility by replacing volatile swaps not qualifying for hedge accounting.
 
For additional information relating to the effect of the restatement, see the following items:

Part I

Item 1 - Business

Part II:

Item 6 - Selected Financial Data
Item 7 - Management’s Discussion and Analysis of Results of Operations and Financial Condition
Item 7A - Quantitative and Qualitative Disclosures About Market Risk
Item 8 - Financial Statements and Supplementary Data
Item 9A - Controls and Procedures

(7)

Part IV:

Item 15 - Exhibits and Financial Statements Schedule

In our Quarterly Report on Form 10-Q for the three months ended March 31, 2005, which is being filed on the date hereof, we are reporting net earnings of $3,965 million for the three months ended March 31, 2005, compared with $4,043 million that we reported in our earnings release on April 15, 2005. This decrease results from the restatement and errors of the same type that gave rise to the restatement.

In light of the restatement, readers should no longer rely on our previously filed financial statements and other financial information for the years and for each of the quarters in the years 2004, 2003, 2002 and 2001. Readers also should no longer rely on our April 15, 2005, earnings release.

(8)

 
Part I
 
 
Item 1. Business
 
General
 
Unless otherwise indicated by the context, we use the terms “GE,” “GECS” and “GE Capital” on the basis of consolidation described in note 1 to the consolidated financial statements of General Electric Company (the Company) on pages 00. Also, unless otherwise indicated by the context, “General Electric” means the parent company, General Electric Company.
 
General Electric’s address is 1 River Road, Schenectady, NY 12345-6999; we also maintain executive offices at 3135 Easton Turnpike, Fairfield, CT 06828-0001.
 
GE is one of the largest and most diversified industrial corporations in the world. We have engaged in developing, manufacturing and marketing a wide variety of products for the generation, transmission, distribution, control and utilization of electricity since our incorporation in 1892. Over the years, we have developed or acquired new technologies and services that have broadened considerably the scope of our activities.
 
Our products include major appliances; lighting products; industrial automation products; medical diagnostic imaging systems; bioscience assays and separation technology products; electrical distribution and control equipment; locomotives; power generation and delivery products; nuclear power support services and fuel assemblies; commercial and military aircraft jet engines; chemicals and equipment for treatment of water and process systems; security equipment and systems; and engineered materials, such as plastics and silicones.
 
Our services include product services; electrical product supply houses; electrical apparatus installation, engineering, and repair and rebuilding services. Through our affiliate, NBC Universal, Inc., we produce and deliver network television services, operate television stations, produce and distribute motion pictures, operate cable/satellite networks, operate theme parks, and program activities in multimedia and the Internet. Through another affiliate, General Electric Capital Services, Inc., we offer a broad array of financial and other services including consumer financing, commercial and industrial financing, real estate financing, asset management and leasing, mortgage services, consumer savings and insurance services, and specialty insurance and reinsurance.
 
In virtually all of our global business activities, we encounter aggressive and able competition. In many instances, the competitive climate is characterized by changing technology that requires continuing research and development, as well as customer commitments. With respect to manufacturing operations, we believe that, in general, we are one of the leading firms in most of the major industries in which we participate. The NBC Television Network is one of four major U.S. commercial broadcast television networks. We also compete with syndicated broadcast television programming, cable and satellite television programming activities and in the motion picture industry. The businesses in which GECS engages are subject to competition from various types of financial institutions, including commercial 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.
 

(9)

This document contains “forward-looking statements” - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the behavior of financial markets, including fluctuations in interest rates and commodity prices; from future integration of acquired businesses; from future financial performance of major industries which we serve including, without limitation, the air and rail transportation, energy generation and healthcare industries; from unanticipated loss development in our insurance businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.
 
Our consolidated global revenues increased to $71.8 billion in 2004, compared with $60.8 billion in 2003 and $53.4 billion in 2002. For additional information about our global operations, see pages 37-39.
 
Operating Segments
 
Segment revenue and profit information is presented on page 63. Additional financial data and commentary on recent financial results for operating segments are provided on pages 31-37 and in note 27 (page 113) to the consolidated financial statements.
 
Operating businesses that are reported as segments include Advanced Materials, Commercial Finance, Consumer Finance, Consumer & Industrial, Energy, Equipment & Other Services, Healthcare, Infrastructure, Insurance, NBC Universal and Transportation. There is appropriate elimination of the net earnings of GECS and the immaterial effect of transactions between segments to arrive at total consolidated data. A summary description of each of our operating segments follows.
 
Advanced Materials
 
Advanced Materials (5.4%, 5.3% and 5.3% of consolidated revenues in 2004, 2003 and 2002, respectively) manufactures and sells high-performance plastics used by compounders, molders, and major original equipment manufacturers for use in a variety of applications, including fabrication of automotive parts, computer enclosures, compact disks and optical-quality media, major appliance parts, telecommunications equipment and construction materials. Our products also include structured products, silicones, high-purity quartzware and, until the sale of our Superabrasives business in late 2003, industrial grade and gem quality diamonds. Market opportunities are created by substituting many of these products for other materials, thereby providing our customers with productivity through improved material performance at lower system costs. We sell these materials to a diverse, worldwide customer base, mainly manufacturers. Our business has a significant operating presence around the world and we participate in numerous manufacturing and distribution joint ventures. In 2003, we acquired OSi Specialties, a leading, global supplier of silanes, specialty silicones and urethane additives, and we divested our Specialty Chemicals and Superabrasives units.
 
Our business environment is characterized by technological innovation and heavy capital investment. To remain competitive we must maintain emphasis on efficient manufacturing process implementation and devote significant resources to market and application development. Our competitors include large, technology-driven suppliers of the same, as well as other functionally similar, materials. Our business is cyclical and is sensitive to variations in price and to the effects of supply/demand factors on the cost of raw materials such as benzene, cumene and methanol. Competition is affected by availability of manufacturing capacity and anticipation of new product or material performance requirements. Our application development, often in association with our existing or potential customers, and associated technology assistance have added additional market demand. Product and manufacturing process patents establish barriers to entry in many product lines.
 

(10)

Our headquarters are in Pittsfield, Massachusetts and our operations are located in North America, Asia, Europe, and South America.
 
Commercial Finance
 
Commercial Finance (15.4%, 15.5% and 14.8% of consolidated revenues in 2004, 2003, and 2002, respectively) offers a broad range of financial services worldwide. We have particular expertise in the mid-market, and offer loans, leases, and other financial services to customers, including manufacturers, distributors and end-users, for a variety of equipment and major capital assets. These assets include industrial and energy-related facilities and equipment; commercial and residential real estate; vehicles; aircraft; and equipment used in many industries, including the construction, manufacturing, telecommunications and healthcare industries.
 
During 2004, we acquired the commercial lending business of Transamerica Finance Corporation; the U.S. leasing business of IKON Office Solutions; Sophia, S.A., a real estate company in France; and Benchmark Group PLC, a U.K.-listed real estate property company.
 
We operate in a highly competitive environment. Our competitors include commercial banks, investment banks, leasing companies, financing companies associated with manufacturers and independent finance companies. Competition is based on price, that is interest rates and fees, as well as deal structure and terms. Profitability is affected not only by broad economic conditions that affect customer credit quality and the availability and cost of capital, but also by successful management of credit risk, operating risk and market risks such as interest rate and currency exchange risks. Success requires high quality risk management systems, customer and industry specific knowledge, diversification, service and distribution channels, strong collateral and asset management knowledge, deal structuring expertise and the ability to reduce costs through technology and productivity.
 
We provide additional information on two of our segment product lines, Real Estate (commercial real estate financing) and Aviation Services (commercial aircraft financing). Each of these product lines finances a single form of collateral, and each has understandable concentrations of risk and opportunities.
 
Real Estate
 
Our Real Estate product line operates globally, both directly and through joint ventures. Our Real Estate business finances, with both equity and loan structures, the acquisition, refinancing and renovation of office buildings, apartment buildings, self storage facilities, retail facilities, industrial properties, parking facilities and franchise properties. Our typical Real Estate loans are intermediate term, may be either senior or subordinated, fixed or floating-rate, and are secured by existing income-producing commercial properties. Our originations of low loan-to-value loans are conducted for term securitization within one year. We invest in, and provide restructuring financing for, portfolios of mortgage loans, limited partnerships and tax-exempt bonds.
 
Aviation Services
 
Our Aviation Services product line 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 products include leases, aircraft purchasing and trading, loans, engine/spare parts financing, pilot training, fleet planning and financial advisory services.
 
Our headquarters are in Stamford, Connecticut with offices throughout North America, South America, Europe and Asia.
 

(11)

Consumer Finance
 
Consumer Finance (10.3%, 9.5% and 7.8% of consolidated revenues in 2004, 2003 and 2002, respectively) is a leading provider of credit products and services to consumers, retailers and auto dealers in 41 countries. We offer a broad range of financial products, including private-label credit cards; personal loans; bank cards; auto loans, leases and inventory financing; residential mortgages; corporate travel and purchasing cards; debt consolidation loans; home equity loans; and credit and other insurance products for customers on a global basis.
 
In 2004, as part of our continued global expansion, we acquired Australian Financial Investments Group, a residential mortgage lender in Australia; WMC Finance Co., a U.S. wholesale mortgage lender; and the private-label credit card portfolio of Dillard’s Inc.
 
Our operations are subject to a variety of bank and consumer protection regulations, including regulations controlling data privacy. Further, a number of countries have ceilings on rates chargeable to consumers in financial service transactions. We 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. Industry participants compete on the basis of price, servicing capability, promotional marketing, risk management, and cross selling. The markets in which we operate are also subject to the risks of declining retail sales, changes in interest and currency exchange rates, and increases in personal bankruptcy filings.
 
Our headquarters are in Stamford, Connecticut and our operations are located in the North America, Europe, Asia, South America and Australia.
 
Consumer & Industrial
 
Consumer & Industrial (9.0%, 9.5% and 9.7% of consolidated revenues in 2004, 2003 and 2002, respectively) sells products characterized by high volume and relatively low unit prices. Our products share several characteristics - competitive design, efficient manufacturing and effective distribution and service. Strong global competition rarely permits premium pricing, so cost control, including productivity, is key. Despite pricing pressures on many of our products, we also invest in the development of differentiated, premium products that are more profitable. The combination of three separate industrial businesses provides scale and facilitates synergies in headquarter, back office and distribution channel costs. While some Consumer & Industrial products are primarily directed to consumer applications (appliances, for example), and some primarily to industrial applications (switchgear, for example), others are directed to both markets (lighting, for example).
 
Our headquarters are in Louisville, Kentucky and our operations are located in North America, Europe, Asia and South America.
 
We describe the segment according to market channel - Consumer, and Industrial including GE Supply.
 
Through our Consumer business, we sell and service home appliances including refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, and residential water systems for filtration, softening and heating. Brands are Monogram®, GE Profile™, GE®, and Hotpoint®.
 

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We manufacture certain products, and also source finished product and component parts from third-party global manufacturers. A large portion of our appliances sales are through a variety of retail outlets for replacement of installed units. Residential building contractors installing units in new construction are our second major U.S. channel. We offer the largest manufacturer’s service organization in the appliances industry, providing in-home repair, extended service plans, warranty administration and risk management services. We also manufacture and sell approximately 6,000 different lamp products for commercial, industrial and consumer markets, including full lines of incandescent, halogen, fluorescent, high-intensity discharge, light-emitting diode, automotive and miniature products.
 
Our Industrial business provides integrated electrical equipment and systems used to distribute, protect and control energy and equipment. We manufacture and distribute electrical distribution and control products including transformers, meters, relays, circuit breakers, panel boards and general purpose controls that are used to distribute and manage power in a variety of residential, commercial, consumer and industrial applications. In addition, we design and manufacture motors and control systems used in end-industrial and consumer products such as heating, ventilation and air conditioning, dishwashers, and clothes washers and dryers. We also provide customer-focused solutions centered on the delivery and control of electric power, and market a wide variety of commercial lighting systems and lighting for aircraft, automotive and other transportation applications, front and rear projection, video projection, medical, architectural, fiber optic, stage, studio, nightclub and theater applications.
 
The aggregate level of economic activity in markets for such products and services generally lag overall economic slowdowns as well as subsequent recoveries. In the United States, industrial markets are undergoing significant structural changes reflecting, among other factors, increased international competition and pressures to modernize productive capacity.
 
Our GE Supply business is a network of electrical product supply houses selling electrical products and parts, fasteners, voice and datacom parts, lighting equipment and supplies from GE and other leading manufacturers. Our business serves electrical contractors, industrial and commercial users, engineer constructors, original equipment manufacturers, utilities and the aerospace industry.
 
Energy
 
Energy (11.3%, 14.2% and 17.9% of consolidated revenues in 2004, 2003 and 2002, respectively) serves power generation, industrial, government and other customers worldwide with products and services related to energy production, distribution and management. In 2003, we made several acquisitions including Jenbacher A.G. of Austria. These acquisitions continue to improve our ability to serve our global customers and further add to the portfolio of complete solutions for the energy industry. The acquisition of Jenbacher A.G. added reciprocating gas engines to the portfolio. We offer wind turbines as part of our renewable energy portfolio, which also includes hydropower, solar, and geothermal technology. We also sell aircraft engine derivatives for use as industrial power sources. This activity is also reported in the Transportation segment. Gas turbines and generators are used principally in power plants for generation of electricity and for industrial cogeneration and mechanical drive applications. We are a worldwide supplier of gas turbines for Integrated Gasification Combined Cycle (IGCC) applications, having provided gas turbines for a significant number of the world's operating IGCC plants. IGCC systems convert coal and other hydrocarbons into synthetic gas which, after cleanup, is used as the primary fuel for gas turbines in combined-cycle systems. IGCC systems produce fewer air pollutants compared to traditional pulverized coal power plants. Our Oil and Gas business offers advanced technology turbomachinery products and services for production, liquid natural gas, transportation, storage, refineries, petrochemical and distribution systems. We have leading technology in total pipeline integrity solutions including analysis and pipeline asset management. We sell steam turbines and generators to the electric utility industry and to private industrial customers for cogeneration applications. Nuclear reactors, fuel and support services for both new and installed boiling water reactors are also a part of this segment. We provide our customers with total solutions to meet their needs through a complete portfolio of aftermarket services, including equipment upgrades, contractual services agreements, repairs, equipment installation, monitoring and diagnostics, asset management and performance optimization tools, remote
 

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performance testing and Dry Low NOx (DLN) tuning. We continue to invest in advanced technology development that will provide more value to our customers and more efficient solutions that comply with today’s strict environmental regulations.
 
Worldwide competition for power generation products and services is intense. Demand for most power generation products and services is global and, as a result, is sensitive to the economic and political environment of each country in which we do business. Regional load growth requirements and demand side management are important factors. The availability of fuels and related prices have a large impact on demand. For information about orders and backlog, see page 50.
 
Our headquarters are in Atlanta, Georgia, and our operations are located in North America, Europe, South America and Asia.
 
Equipment & Other Services
 
Equipment & Other Services (5.9%, 3.6% and 4.2% of consolidated revenues in 2004, 2003 and 2002, respectively) helps customers manage, finance and operate a wide variety of business equipment worldwide. We provide rentals, leases, sales, asset management services and loans for portfolios of commercial and transportation equipment, including tractors, trailers, railroad rolling stock, modular space units, intermodal shipping containers and marine containers. Our operations are conducted in highly competitive markets. Economic conditions, geographic location, pricing and equipment availability are important factors in this business. Future success will depend upon our ability to maintain a large and diverse customer portfolio, optimize asset mix, maximize asset utilization and manage credit risk. In addition, we seek to understand our customers and to meet their needs with unique, efficient and cost effective product and service offerings.
 
In December 2004, we sold a majority interest in Gecis, our global business processing operation, to two leading private investment firms. We retained a 40% investment in Gecis.
 
Also included in the segment are activities and businesses that are not measured within one of the other financial services segments - for example, corporate expenses, liquidating businesses and other non-segment aligned operations.
 
Our headquarters are in Stamford, Connecticut with offices throughout North America and in South America and Europe.
 
Healthcare
 
Healthcare (8.8%, 7.6% and 6.8% of consolidated revenues in 2004, 2003 and 2002, respectively) manufacturers, sells and services a wide range of medical equipment including equipment for magnetic resonance (MR), computed tomography (CT), Positron Emission Tomography (PET) imaging, x-ray, patient monitoring, diagnostic cardiology, nuclear imaging, ultrasound, bone densitometry, anesthesiology and oxygen therapy, neonatal and critical care, and therapy. In April 2004, we acquired Amersham plc, a world leader in medical diagnostics and life sciences. Products include diagnostic imaging agents used in medical scanning procedures, protein separations products including chromotography purification systems used in the manufacture of bio-pharmaceuticals, and high-throughput systems for applications in genomics, proteomics and bioassays. We sell product services to hospitals, medical facilities, and pharmaceutical and research companies worldwide. Our product services include remote diagnostic and repair services for medical equipment manufactured by GE and by others, as well as computerized data management and customer productivity services.
 
We compete with a variety of U.S. and non-U.S. manufacturers and services operations. Technological competence and innovation, excellence in design, high product performance, quality of services and competitive pricing are among the key factors affecting competition for these products and services. Throughout the world, we play a critical role in delivering new technology to improve patient outcomes and productivity tools to help control healthcare costs.
 

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For information about orders and backlog, see page 35.
 
Our headquarters are in Chalfont St. Giles, United Kingdom and our operations are located in North America, Europe, Asia, Australia and South America.
 
Infrastructure
 
Infrastructure (2.3%, 2.3% and 1.4% of consolidated revenues in 2004, 2003 and 2002, respectively) is a high-technology platform comprising some of our fastest-growing businesses. We offer protection and productivity solutions to some of the most pressing issues that industries face: pure water, safe facilities, plant automation and sensing applications in the operating environment. From home to industry to national security, our technology covers the full spectrum of security solutions, including card access systems, high-tech video monitoring, intrusion and smoke detection, real estate and property control and explosives and narcotics detection. We are an industry leader in the design and manufacture of sensing elements, devices, instruments and systems that enable customers to monitor, protect, control and ensure the safety of their critical applications. Other product services include precision sensors for temperature flow rate, pressure, humidity, gas, infrared and ultrasonic applications; high-quality handheld and portable field calibrators; stand-alone measurement instrumentation; and systems that provide the end-to-end solutions necessary to validate or certify vital processes. We supply specialty chemicals, pumps, valves, filters and fluid handling equipment for improving the performance of water, wastewater and process systems. We deliver automation hardware and software designed to help users reduce costs, increase efficiency and enhance profitability through a diverse array of capabilities and products, including controllers, embedded systems, advanced software, motion control, computer numerical controls, operator interfaces, industrial computers, and lasers.
 
Our products and services are sold to a diverse worldwide commercial and residential customer base in the transportation, industrial, pharmaceutical and healthcare markets. Our business environment is characterized by technological innovation and market growth. Our competitors include technology-driven suppliers of the same, as well as other functionally equivalent, products and services.
 
Our headquarters are in Wilton, Connecticut and our operations are located in North America, South America, Europe and Asia.
 
Insurance
 
Insurance (15.1%, 19.5% and 17.6% of consolidated revenues in 2004, 2003 and 2002, respectively) offers a broad range of insurance and investment products that provide reinsurance and primary commercial insurance products to insurance companies, Fortune 100 companies, self-insurers and healthcare providers, and help consumers create and preserve personal wealth, protect assets and enhance their life styles. For lenders and investors, we provide protection against the risks of default on low-down-payment mortgages.
 
Our Insurance businesses are subject to intense competition. We believe the principal competitive factors in the sale of our products are service, brand, product features, price, commission structure, marketing and distribution arrangements, reputation, and financial strength ratings. In the commercial insurance and reinsurance sector, we are well positioned to compete in select niche market segments given our expertise, analytics capabilities and service. In the consumer sector, we believe we are well positioned to benefit from a number of significant demographic, governmental and market trends, including aging U.S. populations with growing retirement income needs and increased risk of outliving their savings, growing lifestyle protection gaps, and increasing opportunities for mortgage insurance in the U.S. and other countries.
 

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Our headquarters are in Kansas City, Missouri with offices throughout North America, Europe, South America, Australia, and Asia.
 
In May 2004, we completed the initial public offering of Genworth Financial, Inc. (Genworth), our formerly wholly-owned subsidiary that conducts most of our consumer insurance business, including life and mortgage insurance operations. We sold approximately 30% of the common shares of Genworth to the public, and we expect (subject to market conditions) to reduce our ownership over the next two years as Genworth transitions to full independence.
 
GE Insurance Solutions Corporation
 
Through our principal insurance and reinsurance company affiliates, Employers Reinsurance Corporation (ERC), GE Reinsurance Corporation, the GE Frankona Group and the Medical Protective Corporation, we protect people, property and reputations by writing substantially all lines of reinsurance, where the insured party is another insurance company, and select lines of direct property and casualty insurance, where the insured party is a non-insurance company or an individual.
 
Our reinsurance operations include the reinsurance of property and casualty risks written by more than 1,000 insurers around the world. Direct insurance operations are focused on niche lines of business, principally medical malpractice coverage for physicians and dentists, medical professional liability for hospitals, errors and omissions coverage for insurance agents and brokers, professional liability insurance for attorneys, excess indemnity for self-insurers of medical benefits, excess workers compensation for self-insurers, as well as coverage for airlines, airline manufacturers and marine enterprises. Our life reinsurance affiliates are engaged in the reinsurance of life insurance products, including term, whole and universal life, annuities, certain health-related coverages and the provision of financial reinsurance to life insurers. During 2003, we announced our intent to scale back our life reinsurance operations to improve overall returns. Consequently, we ceased writing new life reinsurance business in the United States and sold one of our United States life reinsurance businesses - ERC Life Reinsurance Corporation.
 
ERC is one of the largest competitors in its marketplace. Our property and casualty reinsurance operations are ranked fourth in the world in terms of net premiums written and we compete with the world’s largest reinsurers as well as dozens of smaller niche competitors.
 

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NBC Universal
 
NBC Universal, Inc. (NBC Universal) (8.4%, 5.1% and 5.4% of consolidated revenues in 2004, 2003 and 2002, respectively) was formed in May 2004 upon the combination of NBC with Vivendi Universal Entertainment LLLP and certain related assets. NBC Universal is principally engaged in the broadcast of network television services to affiliated television stations within the United States; the production of live and recorded television programs; the production and distribution of motion pictures; the operation, under licenses from the Federal Communications Commission (FCC), of television broadcasting stations; the ownership of several cable/satellite networks around the world; the operation of theme parks; and investment and programming activities in multimedia and the Internet. The NBC Television Network is one of four major U.S. commercial broadcast television networks and serves more than 230 affiliated stations within the United States. Telemundo is a leading U.S. Spanish-language commercial broadcast television network. At December 31, 2004, we owned and/or operated 29 VHF and UHF television stations including those located in Birmingham, AL; Los Angeles, CA; San Diego, CA; Hartford, CT; Miami, FL; Chicago, IL; New York, NY; Raleigh-Durham, NC; Columbus, OH; Philadelphia, PA; Providence, RI; Dallas, TX; and Washington, DC. Broadcasting operations of the NBC Television Network, the Telemundo network, and the company’s owned stations are subject to FCC regulation. Our operations include investment and programming activities in cable television, principally through USA Network, Bravo, CNBC, SCI FI Channel, MSNBC, CNBC Europe, CNBC Asia Pacific, and entertainment channels across Europe and Latin America; equity investments in Arts and Entertainment, The History Channel, the Sundance Channel, ValueVision Media, Inc.; and a non-voting interest in Paxson Communications Corporation. Through a strategic alliance with Dow Jones, we operate CNBC Europe and CNBC Asia Pacific using the European and Asian business news resources of Dow Jones, and we use Dow Jones editorial resources in the United States. We have secured exclusive United States television rights to the 2006, 2008, 2010 and 2012 Olympic Games.
 
Our headquarters are in New York, New York and our operations are located in North America and Europe.
 
Transportation
 
Transportation (10.2%, 10.0% and 10.3% of consolidated revenues in 2004, 2003 and 2002, respectively) produces, sells and services equipment for the air and rail transportation industries.
 
We describe the segment according to market channel - Aircraft Engines and Rail.
 
For information about orders and backlog, see page 37.
 
Our Aircraft Engines business produces, sells and services jet engines, turboprop and turbo shaft engines, and related replacement parts for use in military and commercial aircraft. Our military engines are used in a wide variety of aircraft including fighters, bombers, tankers, helicopters and surveillance aircraft and our commercial engines power aircraft in all categories of range: short/medium, intermediate and long-range, as well as executive and regional aircraft. We also produce engines through CFM International, a company jointly owned by GE and Snecma Moteurs of France, and a new engine is being designed and marketed in a joint venture with the Pratt & Whitney division of United Technologies Corporation.
 
We provide maintenance, component repair and overhaul services (MRO), including sales of replacement parts, for many models of engines, including repair and overhaul of engines manufactured by competitors. We also manufacture aircraft engine derivatives used for marine propulsion, mechanical drives and industrial power generation sources, the latter of which is also reported as part of the Energy segment. In December 2003, we completed the acquisition of the non-destructive testing (NDT) business of Agfa-Gevaert. This business has been combined with Aircraft Engines’ NDT business to offer radiographic, ultrasonic, eddy current and other inspection solutions that test the structure and tolerance of materials without damaging them.
 

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The worldwide competition in aircraft jet engines and MRO (including parts sales) is intense. Both U.S. and export markets are important. Product development cycles are long and product quality and efficiency are critical to success. Research and development expenditures, both customer-financed and internally funded, are important in this business, as are focused intellectual property strategies and protection of key aircraft engine design, manufacture, repair and product upgrade technologies.
 
Potential sales for any engine are limited by, among other things, its technological lifetime, which may vary considerably depending upon the rate of advance in technology, the small number of potential customers and the limited number of relevant airframe applications. Aircraft engine orders tend to follow military and airline procurement cycles, although cycles for military and commercial engine procurement are different.
 
Our Rail business provides technology solutions for customers in a variety of industries including railroad, transit, mining, oil and gas, power generation, and marine. We serve customers in more than 100 countries. Our products include high horsepower diesel-electric locomotives as well as parts and services for locomotives, including locomotives manufactured by competitors.
 
With the launch of the Evolution Series™ Locomotive, we created our most technologically advanced, most fuel-efficient, diesel locomotive, while meeting or exceeding the EPA’s Tier II requirements. Commercial production of the GE Evolution Series™ locomotive began in January 2005.
 
The GE suite of locomotive service offerings, designed to improve fleet efficiency and reduce operating expenses, includes repair services, locomotive enhancements, modernizations, and information-based services like remote monitoring and diagnostics. We provide train control products, railway management services, and signaling systems to increase service levels, optimize asset utilization, and streamline operations for railroad owners and operators by delivering leading edge tools that improve asset availability and reliability, optimize network planning, and control network execution to plan. We also offer leading drive technology solutions to the mining, transit, marine and stationary and drilling industries. Our motors operate in thousands of applications, from electrical drive systems for large haulage trucks used in the mining industry to transit cars and drilling rigs, and our engines are used for marine power as well as stationary power generation applications. We also provide gearing technology for critical applications such as wind turbines.
 
Our headquarters are in Evendale, Ohio and our operations are located in North America, Europe, Asia and South America.
 
Geographic Data, Exports from the U.S. and Total Global Operations
 
Geographic data (based on the location of the Company operation supplying goods or services and including exports from the U.S. to unaffiliated customers) are reported in note 27 to the consolidated financial statements on page 113.
 
Additional financial data about our exports from the U.S. and total global operations are provided on pages 37-39.
 
Orders Backlog
 
See pages 34, 35, 37 and 50 for information about our backlog of unfilled orders.
 
Research and Development
 
Total expenditures for research and development were $3,091 million in 2004. Total expenditures were $2,656 million in 2003 and $2,631 million in 2002. Of these amounts, $2,443 million in 2004 was GE-funded ($2,103 million in 2003 and $2,215 million in 2002); and $648 million in 2004 was funded by customers ($553 million in 2003 and $416 million in 2002), principally the U.S. government. Transportation accounts for the largest share of GE’s research and development expenditures from both GE and customer funds. Healthcare and Energy also made significant expenditures of GE and customer research and development funds.
 

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Approximately 14,800 person-years of scientist and engineering effort were devoted to research and development activities in 2004, with about 90% of the time involved primarily in GE-funded activities.
 
Environmental Matters
 
Our operations, like operations of other companies engaged in similar businesses, involve the use, disposal and cleanup of substances regulated under environmental protection laws.
 
We have developed and implemented environmental, health and safety management systems at all of our facilities and track our performance. Since 1996, we have reduced employee injuries by over 75% as well as reducing air and wastewater exceedances and emissions at our facilities. We also actively participate in various programs that recognize facilities with health and safety programs that exceed legal requirements, including the United States Occupational Safety and Health Administration’s Voluntary Protection Program (VPP), as well as a similar government program in Mexico. Participation in these programs requires government audits to verify our comprehensive health and safety management systems. We are a leading participant in the U.S. VPP program with 89 sites, and have an additional 20 sites participating in the Mexico program. We have a Global Star program designed to recognize sites with world-class health and safety programs in those countries without government VPP programs. Our 56 Global Star sites have passed a rigorous evaluation conducted by GE internal health and safety experts. We also have 89 sites accredited by outside auditors under the ISO 14000 Standard for Environmental Management Systems.
 
Over the last two years we spent a total of about $0.1 billion for capital projects related to the environment. These amounts exclude expenditures for remediation actions, which are principally expensed and are discussed below. Capital expenditures for environmental purposes have included pollution control devices—such as wastewater treatment plants, groundwater monitoring devices, air strippers or separators, and incinerators—at new and existing facilities constructed or upgraded in the normal course of business. Consistent with policies stressing environmental responsibility, we expect our capital expenditures other than for remediation projects to total about $0.1 billion over the next two years for new or expanded programs to build facilities or modify manufacturing processes to minimize waste and reduce emissions.
 
We also are involved in a sizable number of remediation actions to clean up hazardous wastes as required by federal and state laws. Such statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site. Expenditures for site remediation actions amounted to $0.1 billion in each of the last two years. We presently expect that such remediation actions will require average annual expenditures in the range of $0.1 billion to $0.2 billion over the next two years.
 
The U.S. Environmental Protection Agency (EPA) ruled in February 2002 that approximately 150,000 pounds of polychlorinated biphenyls (PCBs) must be dredged from a 40-mile stretch of the upper Hudson River in New York State. We have submitted what is known as a “Good Faith Offer” under the Superfund law and continue to cooperate and negotiate with the EPA in the implementation of this ruling. Pursuant to negotiated agreements, we have conducted extensive sampling of the project area to determine the location of PCBs that may be dredged and have agreed to undertake the design and engineering of the remedy. The agreements also provide for the reimbursement of certain EPA costs expended in the past and which would be expended in the future. The remedial design and engineering activities are scheduled to be completed during 2006. Negotiations continue concerning performance of the remedial work. Our Statement of Financial Position as of December 31, 2004 and 2003, included liabilities for the estimated costs of this remediation.
 
See pages 39 and 106 for additional discussion of environmental matters.
 

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Employee Relations
 
At year-end 2004, General Electric Company and consolidated affiliates employed 307,000 persons, of whom approximately 165,000 were employed in the United States. For further information about employees, see page 23.
 
Approximately 23,700 GE manufacturing and service employees in the United States are represented for collective bargaining purposes by a total of approximately 150 different local collective bargaining groups. A majority of such employees are represented by union locals that are affiliated with, and bargain in conjunction with, the International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers (IUE/CWA-AFL-CIO). During 2003, General Electric Company negotiated four-year contracts with unions representing a substantial majority of those United States employees who are represented by unions. Most of these contracts will terminate in June 2007. NBC Universal is party to approximately 160 labor agreements covering about 3,500 staff employees (and a large number of freelance employees) in the United States. These agreements are with various labor unions, expire at various dates and are generally for a term ranging from three to five years.
 
Executive Officers
 
See Part III, Item 10 of this 10-K Report for information about Executive Officers of the Registrant.
 
Other
 
Because of the diversity of our products and services, as well as the wide geographic dispersion of our production facilities, we use numerous sources for the wide variety of raw materials needed for our operations. We have not been adversely affected by the inability to obtain raw materials.
 
We own, or hold licenses to use, numerous patents. New patents are continuously being obtained through our research and development activities as existing patents expire. Patented inventions are used both within the Company and are licensed to others, but no operating segment is substantially dependent on any single patent or group of related patents.
 
Agencies of the U.S. Government constitute our largest single customer. An analysis of sales of goods and services as a percentage of revenues follows:
 
 
% of Consolidated Revenues
  
% of GE Revenues
 
2004
  
2003
  
2002
  
2004
  
2003
  
2002
                                   
Total sales to U.S. Government Agencies
2
%
  
2
%
  
2
%
  
4
%
  
4
%
  
4
%
Transportation segment defense-related sales
2
    
2
    
2
    
3
    
3
    
3
  
 
 
GE is a trademark and service mark of General Electric Company; NBC is a trademark and service mark of NBC Universal, Inc.; and MSNBC is a trademark and service mark of MSNBC Cable, LLC.
 
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on our website, www.ge.com/en/company/investor/secfilings.htm, as soon as reasonably practicable after they are filed electronically with the SEC. Copies are also available, without charge, from GE Corporate Investor Communications, 3135 Easton Turnpike, Fairfield, CT 06828.
 

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Item 2. Properties
 
Manufacturing operations are carried out at approximately 231 manufacturing plants located in 40 states in the United States and Puerto Rico and at 293 manufacturing plants located in 36 other countries.
 
 
Item 3. Legal Proceedings
 
On April 29, 2005, the Company received a subpoena from the Northeast Regional Office of the Securities and Exchange Commission. This subpoena requires the Company to produce documents related to “certain loss mitigation insurance products,” such as finite risk reinsurance. The Company will cooperate fully with the SEC.
 
GE Insurance Solutions has made limited use of reinsurance with finite risk characteristics to manage the risks of catastrophic events, such as storms or hurricanes, and to protect itself from the volatility inherent in its business. Based on its numerous reviews of GE Insurance Solutions’ reinsurance agreements with finite risk characteristics in the past several years, the Company believes that the agreements have been properly structured and accounted for, with appropriate risk transfer, and properly disclosed.
 
After we commenced the work for an internal audit in connection with GECC’s treasury operation, we received a letter dated January 20, 2005 from the Boston District Office of the U.S. Securities and Exchange Commission, indicating that it was conducting an informal investigation and requesting that GE and GECC voluntarily provide certain documents and information with respect to the use of hedge accounting for derivatives by us and GECC. In response to the staff’s request, we and GECC have voluntarily provided documents and other information and we intend to continue to cooperate fully with them in their ongoing investigation.
 
Environmental
 
In compliance with SEC disclosure requirements, the following are environmental proceedings involving potential monetary sanctions of $100,000 or greater.
 
On April 16, 2004, the New York Department of Environmental Conservation (DEC) informed us that it would be seeking $97,800 in penalties for violations by our Waterford, NY facility of the State of New York's water and hazardous waste laws. In July 2004, DEC informed us that it was dropping certain allegations and including others pertaining to the reporting of information and increasing its penalty demand to $117,000. We are currently engaged in settlement discussions with the DEC.
 
On October 18, 2004, the California Department of Pesticide Registration informed us that it would be seeking $202,959 in penalties for violations by our Betz Water business of the State of California’s pesticide registration requirements. The California Department of Pesticide Registration has since reduced its penalty demand to $160,000, and settlement discussions are continuing.
 
 
Item 4. Submission of Matters to a Vote of Security Holders
 
Not applicable.
 

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Part II
 
 
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
With respect to “Market Information”, in the United States, GE common stock is listed on the New York Stock Exchange (its principal market) and on the Boston Stock Exchange. GE common stock also is listed on The Stock Exchange, London and on Euronext Paris. Trading prices, as reported on the New York Stock Exchange, Inc., Composite Transactions Tape, and dividend information follow:
 
 
Common stock market price
  
Dividends
(In dollars)
High
  
Low
  
declared
           
2004
          
Fourth quarter
$37.75
  
$32.65
  
$.22
Third quarter
34.53
  
31.42
  
.20
Second quarter
33.49
  
29.55
  
.20
First quarter
34.57
  
28.88
  
.20
 
          
2003
          
Fourth quarter
$31.30
  
$27.37
  
$.20
Third quarter
32.42
  
26.90
  
.19
Second quarter
31.66
  
25.50
  
.19
First quarter
28.00
  
21.30
  
.19
 
As of January 31, 2005, there were about 660,000 shareowner accounts of record.
 
Period
  
Total number
of shares
purchased(a)
  
Average
price paid
per share
  
Total number of
shares purchased as
part of our share
repurchase program(b)
  
Approximate dollar
value of shares that
may yet be purchased
under our share
repurchase program
(Shares in thousands)
                                   
2004
                                  
October
    
6,154
      
$33.98
      
705
            
November
    
6,925
      
$35.40
      
325
            
December
    
2,791
      
$36.63
      
1,040
            
Total
    
15,870
      
$35.06
      
2,070
      
$
15.0 billion
  
                                   
(a)
This category includes 13,800 thousand shares repurchased from our various benefit plans, primarily the GE Savings and Security Program (the S&SP). Through the S&SP, a defined contribution plan with 401(k) features, we repurchase shares resulting from changes in investment options by plan participants.
(b)
Of the total 2,070 thousand shares, 1,230 thousand shares were repurchased through the 1994 GE Share Repurchase Program (the ’94 Program) under which we were authorized to repurchase up to $30 billion of Company common stock. The ’94 Program was closed out in December 2004, after a total of 1,109 million shares were purchased at an aggregate cost of approximately $23 billion. In December 2004, our Board of Directors authorized a new three year, $15 billion share repurchase program (the Program). A total of 840 thousand shares were purchased under this program in December 2004. The Program is flexible and shares are acquired with a combination of borrowings and free cash flow. As major acquisitions or other circumstances warrant, we modify the frequency and amount of share repurchases under the Program.

 
Item 6. Selected Financial Data
 
Information below is divided into three sections: upper portion - consolidated data; middle portion - GE data that reflect various conventional measurements for such enterprises; and lower portion - GECS data that reflect key information pertinent to financial services businesses.

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The selected financial data set forth in this Item 6 have been restated to reflect adjustments to our consolidated financial statements and other financial information contained in our Annual Report on Form 10-K for the year ended December 31, 2004, originally filed with the U.S. Securities and Exchange Commission on March 1, 2005. The following selected financial data should be read in conjunction with our restated financial statements and the related Notes to Consolidated Financial Statements.

(In millions; per-share amounts in dollars)
2004
(Restated)
  
2003
(Restated)
  
2002
(Restated)
  
2001
(Restated)
  
2000
  
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
                    
Revenues
$
152,866
  
$
134,641
  
$
132,226
  
$
126,373
  
$
130,385
  
Earnings before accounting changes
  
16,819
    
15,823
    
15,182
    
14,078
    
12,735
  
Cumulative effect of accounting changes
  
-
    
(587
)
  
(1,015
)
  
(287
)
  
-
  
Net earnings
  
16,819
    
15,236
    
14,167
    
13,791
    
12,735
  
Dividends declared
  
8,594
    
7,759
    
7,266
    
6,555
    
5,647
  
Return on average shareowners’ equity excluding the
                              
effect of accounting changes
  
17.6
%
  
22.2
%
  
25.7
%
  
26.8
%
  
27.5
%
Per share
                              
Earnings before accounting changes-diluted
$
1.61
  
$
1.57
  
$
1.51
  
$
1.40
  
$
1.27
  
Cumulative effect of accounting changes-diluted
  
-
    
(0.06
)
  
(0.10
)
  
(0.03
)
  
-
  
Earnings-diluted
  
1.61
    
1.51
    
1.41
    
1.37
    
1.27
  
Earnings before accounting changes-basic
  
1.62
    
1.58
    
1.52
    
1.42
    
1.29
  
Cumulative effect of accounting changes-basic
  
-
    
(0.06
)
  
(0.10
)
  
(0.03
)
  
-
  
Earnings-basic
  
1.62
    
1.52
    
1.42
    
1.39
    
1.29
  
Dividends declared
  
0.82
    
0.77
    
0.73
    
0.66
    
0.57
  
Stock price range
  
37.75-28.88
    
32.42-21.30
    
41.84-21.40
    
52.90-28.25
    
60.50-41.67
  
Year-end closing stock price
  
36.50
    
30.98
    
24.35
    
40.08
    
47.94
  
Total assets
  
750,507
    
647,828
    
575,236
    
495,012
    
437,006
  
Long-term borrowings
  
212,670
    
171,966
    
140,401
    
79,653
    
82,132
  
Shares outstanding-average (in thousands)
  
10,399,629
    
10,018,587
    
9,947,113
    
9,932,245
    
9,897,110
  
Shareowner accounts-average
  
658,000
    
670,000
    
655,000
    
625,000
    
597,000
  
GE DATA
                              
Short-term borrowings
$
3,409
  
$
2,555
  
$
8,786
  
$
1,722
  
$
940
  
Long-term borrowings
  
7,625
    
8,388
    
970
    
787
    
841
  
Minority interest
  
7,701
    
1,079
    
1,028
    
948
    
968
  
Shareowners’ equity
  
110,821
    
79,631
    
64,079
    
55,000
    
50,492
  
Total capital invested
$
129,556
  
$
91,653
  
$
74,863
  
$
58,457
  
$
53,241
  
Return on average total capital invested
                              
excluding effect of accounting changes
  
16.0
%
  
20.0
%
  
24.4
%
  
26.7
%
  
27.4
%
Borrowings as a percentage of total capital invested
  
9.0
%
  
11.9
%
  
13.0
%
  
4.3
%
  
3.3
%
Working capital(a)
$
8,328