New Accounting Standard
In December 2004, the FASB issued Statement of Financial Accounting Standards (SFAS) 123 (revised 2004), Share-Based Payment (SFAS 123R). Among other things, SFAS 123R requires expensing the fair value of stock options, previously optional accounting that we adopted in 2002. For transition, upon adoption on July 1, 2005, SFAS 123R will require us to expense the unvested portion of options granted in 2000 and 2001, reducing net earnings by approximately $30 million in 2005 and by a similar amount in 2006. SFAS 123R also will require us to change the classification of certain tax benefits from options deductions to financing rather than operating cash flows. While the effects of these future tax deductions will depend on several variables, had SFAS 123R been in effect, approximately $0.3 billion would have been required to be classified as cash from financing, not operating, activities in 2004; the related 2003 amount would have been approximately $0.2 billion.

Financial Measures that Supplement Generally Accepted Accounting Principles
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 SEC rules. Specifically, we have referred, in various sections of this Annual Report, to:

• Organic revenue growth in 2004,
  
  
• Earnings growth, excluding Insurance dispositions, in 2004,
  
  
• Growth in Industrial CFOA in 2004,
  
  
• GE earnings before income taxes and accounting changes excluding GECS earnings, and the corresponding effective tax rate, for the three years ended December 31, 2004,
  
  
• Net revenues (revenues from services less interest) of the Commercial Finance and Consumer Finance segments for the three years ended December 31, 2004, and
  
  
• Delinquency rates on financing receivables of the Commercial Finance and Consumer Finance segments for 2004, 2003 and 2002.
  

The reasons we use these non-GAAP financial measures and their reconciliation to their most directly comparable GAAP financial measures follow.

ORGANIC REVENUE GROWTH

(In millions)	2004 (Restated)			2003 (Restated)			% change
Revenues as reported	$	152,866		$	134,641
Less:
Effects of acquisitions, dispositions
and currency exchange rates		19,244			1,289
Insurance		23,070			26,194
Energy		17,348			19,082
Revenues excluding the effects of
acquisitions, dispositions and
currency exchange rates, Insurance
and Energy (organic revenues)	$	93,204		$	88,076			6	%
EARNINGS GROWTH, EXCLUDING INSURANCE DISPOSITIONS
(In millions)	2004 (Restated)			2003 (Restated)			% change
Earnings before accounting changes as reported	$	16,819		$	15,823
Less effect of Insurance dispositions		(721	)		728
Earnings, excluding Insurance dispositions	$	17,540		$	15,095			16%
GROWTH IN INDUSTRIAL CFOA
(In millions)	2004			2003			% change
Cash from GE’s operating activities as reported	$	15,204		$	12,975
Less GECS dividends		3,105			3,435
Cash from GE’s operating activities excluding dividends from GECS (Industrial CFOA)	$	12,099		$	9,540			27	%
GE TAX RATE, EXCLUDING GECS EARNINGS
(In millions)	2004 (Restated)			2003 (Restated)			2002 (Restated)
GE earnings before income taxes and accounting changes	$	18,792		$	18,680		$	19,019
Less GECS earnings before accounting changes		8,387			7,988			4,675
Total	$	10,405		$	10,692		$	14,344
Provision for income taxes	$	1,973		$	2,857		$	3,837
Effective tax rate		19.0	%		26.7	%		26.7	%

We believe that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. In some cases, short-term patterns and long-term trends may be obscured by large factors or events. For example, events or trends in a particular segment may be so significant as to obscure patterns and trends of our industrial or financial services businesses in total. For this reason, we believe that investors may find it useful to see our 2004 revenue growth without the effect of acquisitions, dispositions and currency exchange rates, and without the effects of two businesses, Insurance and Energy, whose revenues were adversely affected by their changing economic environments and other factors; and 2004 earnings without the effect of Insurance dispositions. Similarly, we believe that investors would find it useful to compare our 2004 operating cash flow against our 2003 operating cash flow without the impact of GECS dividends.

NET REVENUES
We provided reconciliations of net revenues to reported revenues for these segments on pages 32 and 33. Because net revenues is a common industry measure of margin, these disclosures enable investors to compare the results of our financial services businesses with results of others in the same industry.

DELINQUENCY RATES ON FINANCING RECEIVABLES
Delinquency rates on financing receivables follow.

COMMERCIAL FINANCE
December 31	2004			2003			2002
Managed		1.40	%		1.38	%		1.75	%
Off-book		0.90			1.27			0.09
On-book		1.58			1.41			2.16
CONSUMER FINANCE
December 31		2004			2003			2002
Managed		4.85	%		5.62	%		5.62	%
Off-book		5.09			5.04			4.84
On-book		4.84			5.67			5.76

We believe that delinquency rates on managed financing receivables provide a useful perspective of our portfolio quality and are key indicators of financial performance. Further, investors use such information, including the results of both the on-book and securitized portfolios, which are relevant to our overall performance.

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