A. Results of Operations

General Electric Company's consolidated financial statements represent the combination of the industrial manufacturing and product services businesses of General Electric Company (GE) and the financial services businesses of General Electric Capital Services, Inc. (GECS or financial services).

In the accompanying analysis of financial information, we sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). Certain of these data are considered "non-GAAP financial measures" under the U.S. Securities and Exchange Commission (SEC) rules. For such measures, we have provided supplemental explanations and reconciliations in Exhibit 99 to this report on Form 10-Q.

Unless otherwise indicated, we refer to captions such as revenues and earnings from continuing operations simply as "revenues" and "earnings" throughout this Management's Discussion and Analysis. Similarly, discussion of other matters in our condensed, consolidated financial statements relates to continuing operations unless otherwise indicated.

Overview

General Electric Company's earnings from continuing operations decreased 12% to $4.477 billion in the third quarter of 2008 compared with $5.111 billion in 2007. Earnings per share (EPS) from continuing operations were $0.45 in the third quarter of 2008, down 10% compared with $0.50 in the third quarter of 2007.

For the first nine months of 2008, earnings from continuing operations decreased 9% to $14.222 billion compared with $15.630 billion for the same period in 2007. EPS from continuing operations were $1.42 in the first nine months of 2008, down 7% compared with $1.52 in the first nine months of 2007.

Loss from discontinued operations, net of taxes, was $0.2 billion in the third quarter of 2008 compared with earnings of $0.4 billion for the same period in 2007, including the results of our Japanese personal loan business (Lake) and our Japanese mortgage and card businesses, excluding our minority ownership in GE Nissen Credit Co., Ltd. (GE Money Japan), our U.S. mortgage business (WMC), Plastics, Advanced Materials, most of GE Insurance Solutions Corporation (GE Insurance Solutions), GE Life and Genworth Financial, Inc. (Genworth).

Loss from discontinued operations, net of taxes, was $0.5 billion in the first nine months of 2008 compared with $0.1 billion for the same period in 2007.

Net earnings decreased 22% to $4.312 billion and EPS decreased 20% to $0.43 in the third quarter of 2008 compared with $5.559 billion and $0.54, respectively, in the third quarter of 2007.

For the first nine months of 2008, net earnings decreased 12% to $13.688 billion compared with $15.512 billion for the same period in 2007, and EPS decreased 9% to $1.37 compared with $1.51 in the first nine months of 2007.

Revenues of $47.2 billion in the third quarter of 2008 were 11% higher than in the corresponding period of 2007, reflecting organic growth of 3%, the weaker U.S. dollar, the net effects of acquisitions and dispositions and the effects of the 2008 Olympics broadcasts. A reconciliation between reported and organic revenues is shown in Exhibit 99. Industrial sales increased 17% to $28.9 billion, reflecting strong organic growth, the effects of the 2008 Olympics broadcasts, the weaker U.S. dollar and the net effects of acquisitions and dispositions. Sales of product services (including sales of spare parts and related services) grew 8% to $8.5 billion in the third quarter of 2008. Financial services revenues increased 2% over the comparable period of last year to $18.4 billion, reflecting the net effects of acquisitions and dispositions and the weaker U.S. dollar, partially offset by organic revenue declines.

Revenues for the first nine months of 2008 rose 10% to $136.3 billion compared with $124.0 billion for the first nine months of 2007. Industrial sales of $80.9 billion were 15% higher than in 2007 reflecting strong organic growth, the net effects of acquisitions and dispositions, the weaker U.S. dollar and the effects of the 2008 Olympics broadcasts. Financial services revenues for the first nine months of 2008 increased 5% to $55.5 billion as a result of the effects of acquisitions and dispositions and the weaker U.S. dollar, partially offset by organic revenue declines, including the 2007 gain on sale of Swiss Reinsurance Company (Swiss Re) common stock.

Overall, acquisitions contributed $1.7 billion and $2.2 billion to consolidated revenues in the third quarters of 2008 and 2007, respectively. Our consolidated earnings in the third quarters of 2008 and 2007 included approximately $0.2 billion and $0.1 billion, respectively, from acquired businesses. We integrate acquisitions as quickly as possible. Only revenues and earnings from the date we complete the acquisition through the end of the fourth following quarter are attributed to such businesses. Dispositions also affected our operations through lower revenues of $0.1 billion and $1.1 billion in the third quarters of 2008 and 2007, respectively. The effect of dispositions on earnings was an insignificant amount in the third quarter of 2008 and a decrease of $0.2 billion in the third quarter of 2007.

Acquisitions contributed $6.1 billion and $5.3 billion to consolidated revenues in the first nine months of 2008 and 2007, respectively. Our consolidated net earnings in the first nine months of 2008 and 2007 included approximately $0.6 billion and $0.3 billion, respectively, from acquired businesses. Dispositions also affected our operations through higher revenues of $0.3 billion in the first nine months of 2008 and lower revenues of $2.9 billion in the first nine months of 2007. The effects of dispositions on earnings was an increase of $0.4 billion and $0.3 billion in the first nine months of 2008 and 2007, respectively.

The most significant acquisitions affecting results in 2008 were Smiths Aerospace Group Ltd. and Whatman Plc. at Technology Infrastructure; Vetco Gray; Hydril Pressure Control; and Sondex PLC at Energy Infrastructure; Regency Energy Partners LP; Merrill Lynch Capital; Sanyo Electric Credit Co., Ltd. (Sanyo); CitiCapital; Bank BPH; and Diskont und Kredit AG and Disko Leasing GmbH (DISKO) and ASL Auto Service-Leasing GmbH (ASL), the leasing businesses of KG Allgemeine Leasing GmbH & Co. at Capital Finance; and Oxygen Media Corp. and Sparrowhawk Holdings Ltd. at NBC Universal.

We continue to explore strategic options for our Consumer & Industrial segment, including our Appliance business.

Segment Operations

Operating segments comprise our five businesses focused on the broad markets they serve: Technology Infrastructure, Energy Infrastructure, Capital Finance, NBC Universal and Consumer & Industrial.

Segment profit is determined based on internal performance measures used by the Chief Executive Officer to assess the performance of each business in a given period. In connection with that assessment, the Chief Executive Officer may exclude matters such as charges for restructuring; rationalization and other similar expenses; in-process research and development and certain other acquisition-related charges and balances; technology and product development costs; certain gains and losses from dispositions; and litigation settlements or other charges, responsibility for which preceded the current management team.

Segment profit always excludes the effects of principal pension plans, results reported as discontinued operations and accounting changes. Segment profit excludes or includes interest and other financial charges and income taxes according to how a particular segment's management is measured - excluded in determining segment profit, which we sometimes refer to as "operating profit," for Technology Infrastructure, Energy Infrastructure, NBC Universal and Consumer & Industrial; included in determining segment profit, which we sometimes refer to as "net earnings," for Capital Finance.

We have reclassified certain prior-period amounts to conform to the current-period's presentation. In addition to providing information on segments in their entirety, we have also provided supplemental information for certain businesses within the segments.

Technology Infrastructure

                       Three months ended       Nine months ended
                          September 30            September 30
(In millions)               2008       2007         2008       2007

Revenues             $    11,450   $ 10,549   $   33,761   $ 30,309

Segment profit       $     1,900   $  1,869   $    5,657   $  5,408

Revenues
Aviation             $     4,841   $  4,240   $   14,084   $ 11,770
Enterprise Solutions       1,192      1,137        3,532      3,192
Healthcare                 4,191      4,062       12,569     12,002
Transportation             1,256      1,109        3,606      3,344

Segment profit
Aviation             $       834   $    736   $    2,523   $  2,263
Enterprise Solutions         187        193          503        462
Healthcare                   634        692        1,909      2,021
Transportation               255        253          750        684

Technology Infrastructure revenues increased 9%, or $0.9 billion, in the third quarter of 2008 on higher volume ($0.6 billion), the weaker U.S. dollar ($0.2 billion) and higher prices ($0.1 billion). The increase in volume reflected increased sales of commercial and military engines at Aviation, global locomotives at Transportation, and services at Healthcare. The effects of the weaker U.S. dollar were primarily at Healthcare. Higher prices were primarily at Aviation, partially offset by lower prices at Healthcare.

Segment profit rose 2% as higher prices ($0.1 billion), higher volume ($0.1 billion) and productivity ($0.1 billion) were partially offset by higher material and other costs ($0.3 billion). The increase in volume, effects of productivity and higher material and other costs primarily related to Aviation.

Technology Infrastructure revenues rose 11% to $33.8 billion for the nine months ended September 30, 2008, on higher volume ($2.8 billion), the weaker U.S. dollar ($0.6 billion) and higher prices ($0.1 billion). The increase in volume reflected the effects of acquisitions and increased sales of military and commercial engines and services at Aviation; increased sales in the international diagnostic imaging, clinical systems and life science businesses, as well as surgical imaging equipment at Healthcare; increased equipment sales at Transportation; and increases at Digital Energy and Sensing and Inspection at Enterprise Solutions. The effects of the weaker U.S. dollar were at Healthcare and Enterprise Solutions. Higher prices were primarily at Aviation and Transportation, partially offset by lower prices at Healthcare.

Segment profit for the first nine months of 2008 rose 5% to $5.7 billion compared with $5.4 billion in 2007, as higher volume ($0.5 billion), productivity ($0.4 billion) and higher prices ($0.1 billion) were partially offset by higher material and other costs ($0.7 billion). Volume increases were primarily at Aviation. The effects of productivity were primarily at Healthcare and Transportation. The increase in material costs was primarily at Aviation and Transportation, partially offset by a decrease at Healthcare. Labor and other costs increased across all businesses of the segment.

Energy Infrastructure

                 Three months ended       Nine months ended
                    September 30            September 30
(In millions)        2008        2007         2008       2007

Revenues       $    9,769    $  7,386   $   27,164   $ 21,251

Segment profit $    1,425    $  1,086   $    4,074   $  3,016

Revenues
Energy         $    7,392    $  5,357   $   20,367   $ 15,534
Oil & Gas           1,891       1,699        5,321      4,668

Segment profit
Energy         $    1,109    $    818   $    3,241   $  2,410
Oil & Gas             305         237          721        528

Energy Infrastructure revenues rose 32%, or $2.4 billion, in the third quarter of 2008 on higher volume ($1.7 billion), higher prices ($0.5 billion) and the weaker U.S. dollar ($0.2 billion). The increase in volume reflected increased sales of thermal and wind equipment at Energy, and the effects of acquisitions and increased sales of services at Oil & Gas. The increase in price was primarily at Energy, while the effects of the weaker U.S. dollar were primarily at Energy and Oil & Gas.

Segment profit rose 31%, or $0.3 billion, as higher prices ($0.5 billion) and higher volume ($0.3 billion) more than offset the effects of productivity ($0.2 billion) and higher material and other costs ($0.2 billion). The increase in volume primarily related to Energy. The effects of productivity and higher material and other costs were across all businesses of the segment.

Energy Infrastructure revenues rose 28% to $27.2 billion for the first nine months ended September 30, 2008, on higher volume ($4.2 billion), higher prices ($1.0 billion) and the weaker U.S. dollar ($0.8 billion). The increase in volume reflected increased sales of thermal and wind equipment at Energy and the effects of acquisitions and increased sales of services at Oil & Gas. Higher prices and the effects of the weaker U.S. dollar were across all businesses of the segment.

Segment profit for the first nine months rose 35% to $4.1 billion compared with $3.0 billion in 2007, as higher prices ($1.0 billion), higher volume ($0.8 billion) and the weaker U.S. dollar ($0.1 billion) more than offset higher material and other costs ($0.5 billion) and productivity ($0.3 billion). The increase in volume, material and other cost increases and the effects of productivity were primarily at Energy.

Capital Finance

                 Three months ended       Nine months ended
                    September 30            September 30
(In millions)         2008       2007         2008       2007

Revenues       $    17,292   $ 16,979   $   52,242   $ 48,447

Segment profit $     2,020   $  3,021   $    7,602   $  9,080




                                        At
               September 30,      September 30,       December 31,
(In millions)       2008               2007               2007

Total assets        $ 622,135          $ 553,959       $ 583,965




                                       Three months ended       Nine months ended
                                          September 30            September 30
(In millions)                              2008        2007         2008       2007

Revenues
Commercial Lending and Leasing (CLL) $    6,547    $  6,862   $   20,525   $ 19,859
Energy Financial Services                 1,261         832        3,020      1,573
GECAS                                     1,265       1,195        3,690      3,660
GE Money                                  6,540       6,153       19,481     18,246
Real Estate                               1,679       1,937        5,526      5,109

Segment profit
CLL                                  $      394    $    905   $    2,005   $  2,633
Energy Financial Services                   306         255          606        501
GECAS                                       285         274          955        960
GE Money                                    791         947        2,832      3,306
Real Estate                                 244         640        1,204      1,680




                                               At
                      September 30,       September 30,       December 31,
(In millions)              2008                2007               2007

Assets
CLL                         $ 252,477          $ 220,391       $ 229,608
Energy Financial Services      21,856             17,493          18,705
GECAS                          49,841             47,038          47,189
GE Money                      209,222            196,840         209,178
Real Estate                    88,739             72,197          79,285

Capital Finance revenues increased 2% and net earnings decreased 33% compared with the third quarter of 2007. Revenues for the third quarters of 2008 and 2007 included $1.4 billion and $0.3 billion of revenue from acquisitions, respectively, and in 2008 were reduced by $0.1 billion as a result of dispositions. Revenues for the quarter also decreased $0.7 billion compared with the third quarter of 2007 as a result of organic revenue declines, partially offset by the weaker U.S. dollar. Net earnings decreased by $1.0 billion in the third quarter of 2008 compared with the third quarter of 2007.

Capital Finance revenues increased 8% and net earnings decreased 16% compared with the first nine months of 2007. Revenues for the first nine months of 2008 and 2007 included $3.6 billion and $0.5 billion of revenue from acquisitions, respectively, and in 2008 were increased by $0.1 billion as a result of dispositions. Revenues for the first nine months also increased $0.7 billion compared with the first nine months of 2007 as a result of the weaker U.S. dollar, partially offset by organic revenue declines. Net earnings decreased by $1.5 billion in the first nine months of 2008 compared with the first nine months of 2007.

Additional information about certain Capital Finance businesses follows.

CLL revenues decreased 5% and net earnings decreased 56% compared with the third quarter of 2007. Revenues for the third quarter of 2008 included $0.4 billion from acquisitions. Revenues for the quarter decreased $0.7 billion compared with the third quarter of 2007 as a result of organic revenue declines ($0.9 billion), partially offset by the weaker U.S. dollar ($0.2 billion). Net earnings decreased by $0.5 billion in the third quarter of 2008, resulting from core declines ($0.5 billion), partially offset by acquisitions ($0.1 billion). Net earnings included the effects of higher mark-to-market losses and other-than-temporary impairments ($0.3 billion) and Genpact mark-to-market losses ($0.2 billion), and the absence of the effects of the 2007 SES transaction ($0.1 billion).

CLL revenues increased 3% and net earnings decreased 24% compared with the first nine months of 2007. Revenues for the first nine months of 2008 and 2007 included $1.3 billion and $0.2 billion from acquisitions, respectively, and in 2008 were reduced by $0.2 billion as a result of dispositions. Revenues for the first nine months decreased $0.2 billion compared with the first nine months of 2007 as a result of organic revenue declines ($1.0 billion), partially offset by the weaker U.S. dollar ($0.8 billion). Net earnings decreased by $0.6 billion in the first nine months of 2008, resulting from core declines ($1.0 billion), including an increase of $0.1 billion in the provision for losses on financing receivables and lower investment income ($0.1 billion), partially offset by acquisitions ($0.3 billion) and higher securitization ($0.1 billion). Net earnings included the effects of higher mark-to-market losses and other-than-temporary impairments ($0.5 billion), and the absence of the effects of the 2007 SES transaction ($0.6 billion), partially offset by Genpact mark-to-market gains ($0.3 billion). These results also included a gain on sale of a portion of our investment in Penske Truck Leasing Co., L.P. ($0.1 billion).

Energy Financial Services revenues and net earnings increased 52% and 20%, respectively, compared with the third quarter of 2007. Revenues for the third quarters of 2008 and 2007 included $0.6 billion and $0.3 billion from acquisitions. Revenues for the quarter also increased $0.1 billion compared with the third quarter of 2007 as a result of organic revenue growth ($0.1 billion). The increase in net earnings resulted primarily from core growth.

Energy Financial Services revenues and net earnings increased 92% and 21%, respectively, compared with the first nine months of 2007. Revenues for the first nine months of 2008 and 2007 included $1.5 billion and $0.3 billion from acquisitions. Revenues for the first nine months also increased $0.2 billion compared with the first nine months of 2007 as a result of organic revenue growth ($0.2 billion). The increase in net earnings resulted primarily from core growth ($0.1 billion).

GECAS revenues and net earnings increased 6% and 4%, respectively, compared with the third quarter of 2007. The increase in revenues resulted primarily from organic revenue growth ($0.1 billion). The increase in net earnings resulted primarily from core growth.

GECAS revenues increased 1% and net earnings decreased 1% compared with the first nine months of 2007. The increase in revenues is primarily as a result of organic revenue growth ($0.1 billion), partially offset by lower investment income ($0.1 billion). The decrease in net earnings resulted primarily from lower investment income, partially offset by core growth.

GE Money revenues increased 6% and net earnings decreased 16% compared with the third quarter of 2007. Revenues for the third quarter of 2008 included $0.3 billion from acquisitions and were reduced by $0.1 billion as a result of dispositions. Revenues for the quarter also increased $0.2 billion compared with the third quarter of 2007 as a result of the weaker U.S. dollar ($0.3 billion), partially offset by organic revenue declines ($0.2 billion). The decrease in net earnings resulted primarily from core declines ($0.2 billion), including the effects of higher delinquencies of $0.2 billion, and lower securitization income ($0.1 billion), partially offset by growth in lower-taxed earnings from global operations ($0.1 billion).

GE Money revenues increased 7% and net earnings decreased 14% compared with the first nine months of 2007. Revenues for the first nine months of 2008 included $0.4 billion from acquisitions and $0.4 billion from the gain on sale of our CPS business and were reduced by $0.1 billion from dispositions. Revenues for the first nine months also increased $0.5 billion compared with the first nine months of 2007 as a result of the weaker U.S. dollar ($1.1 billion), partially offset by organic revenue declines ($0.6 billion). The decrease in net earnings resulted primarily from core declines ($0.8 billion) (including lower results reflecting the effects of higher delinquencies of $0.5 billion) and lower securitization income ($0.4 billion). These decreases were partially offset by growth in lower-taxed earnings from global operations ($0.4 billion), the gain on the sale of our CPS business ($0.2 billion), the weaker U.S. dollar ($0.1 billion) and acquisitions ($0.1 billion).

Real Estate revenues decreased 13% and net earnings decreased 62% compared with the third quarter of 2007. Revenues for the third quarter included $0.1 billion from acquisitions. Revenues for the quarter decreased $0.3 billion compared with the third quarter of 2007 as a result of organic revenue declines ($0.4 billion), partially offset by the weaker U.S. dollar ($0.1 billion). Real Estate net earnings decreased $0.4 billion compared with the third quarter of 2007, primarily from a decline in net earnings from real estate equity investments ($0.5 billion), partially offset by an increase in net earnings from real estate lending ($0.1 billion).

Real Estate assets at September 30, 2008 increased $9.5 billion, or 12%, from December 31, 2007, including $13.2 billion, or 36%, attributable to an increase in real estate lending, partially offset by a $3.5 billion, or 9%, decline in real estate equity investments. During the first nine months of 2008, we sold real estate equity investment assets with a book value totaling $5.1 billion, which resulted in net earnings of $1.2 billion that were partially offset by depreciation and other expenses.

Real Estate revenue increased 8% and net earnings decreased 28% compared with the first nine months of 2007. Revenues for the first nine months of 2008 included $0.3 billion from acquisitions. Revenues for the first nine months increased $0.2 billion compared with the first nine months of 2007 as a result of the weaker U.S. dollar ($0.3 billion), partially offset by organic revenue declines ($0.1 billion).

Real Estate net earnings decreased $0.5 billion compared with the first nine months of 2007, primarily from a decline in net earnings from real estate equity investments ($0.5 billion), partially offset by an increase in net earnings from real estate lending ($0.1 billion). Net earnings from the sale of real estate equity investments were lower as a result of increasingly difficult market conditions experienced in the first nine months of 2008. In the normal course of our business operations, we sell certain real estate equity investments when it is economically advantageous for us to do so. However, as real estate values are affected by certain forces beyond our control (e.g. market fundamentals and demographic conditions), it is difficult to predict with certainty the level of future sales or sales prices.

NBC Universal revenues of $5.1 billion increased 35%, or $1.3 billion, in the third quarter of 2008, on revenues from the Olympics broadcasts ($1.0 billion) and higher revenues in film ($0.2 billion) and cable ($0.2 billion). Segment profit of $0.6 billion increased 10% as higher earnings from cable ($0.1 billion) and film ($0.1 billion) and proceeds from insurance claims ($0.1 billion) more than offset losses from the Olympics broadcasts.

NBC Universal reported revenues of $12.5 billion in the first nine months of 2008, an increase of $1.7 billion or 15% from the first nine months of 2007, reflecting revenues from the Olympics broadcasts ($1.0 billion), higher revenues in cable ($0.6 billion) and film ($0.3 billion), partially offset by lower revenues in broadcast television ($0.2 billion) and lower gains from other actions ($0.1 billion). Segment profit of $2.3 billion increased 4% as higher earnings from cable ($0.3 billion) and proceeds from insurance claims ($0.1 billion) more than offset losses from lower earnings from broadcast television ($0.1 billion) and the Olympics broadcasts.

Consumer & Industrial revenues of $3.0 billion decreased 6%, or $0.2 billion, in the third quarter of 2008 compared with the third quarter of 2007 as lower volume ($0.3 billion) was partially offset by higher prices and the weaker U.S. dollar. The decrease in volume reflected tightened spending in the U.S. domestic market. Segment profit decreased 82%, or $0.2 billion, in the third quarter of 2008 as higher material and other costs ($0.1 billion) and the effects of productivity ($0.1 billion) were partially offset by higher prices.

Consumer & Industrial revenues of $9.0 billion decreased 4%, or $0.3 billion, for the nine months ended September 30, 2008, as lower volume ($0.6 billion) was partially offset by the weaker U.S. dollar ($0.1 billion) and higher prices ($0.1 billion). The decrease in volume reflected tightened spending in the U.S. domestic market. Segment profit of $0.3 billion decreased 58%, or $0.5 billion, . . .