Edgar Filing: GENERAL ELECTRIC CO

Form 10-Q

Securities and Exchange Commission
Washington, D.C. 20549

Form 10-Q

(Mark One)
[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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 its 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
(Address of principal executive offices)		(Zip Code)

(Registrant's telephone number, including area code) (203) 373-2211

Former name, former address and former fiscal year, if changed since last report

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

There were 9,949,471,000 shares with a par value of $0.06 per share outstanding at June 28, 2002.

General Electric Company

Part I. Financial Information Page



    Item 1. Financial Statements

             Statement of Earnings

                     Second Quarter Ended June 30, 2002 3

                     Six Months Ended June 30, 2002 4

             Statement of Financial Position 5

             Statement of Cash Flows 6

             Summary of Operating Segments 7

             Notes to Financial Statements 8

    Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 14

Part II. Other Information

    Item 1. Legal Proceedings 37

    Item 4. Submission of Matters to a Vote of Security Holders 38

    Item 6. Exhibits and Reports on Form 8–K 39

    Signatures 40

Forward Looking Statements

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

Part I. Financial Information

Item 1. Financial Statements

Condensed Statement of Earnings
General Electric Company and consolidated affiliates

Second quarter ended June 30 (Unaudited)

Consolidated
GE
GECS

(Dollars, except per-share amounts, in millions) 2002 2001 2002 2001 2002 2001

Sales of goods $ 14,678 $ 13,427 $ 13,822 $ 12,474 $ 899 $ 960

Sales of services 5,583 5,053 5,637 5,114 – –

Earnings of GECS – – 1,327 1,477 – –

GECS revenues from services 12,867 13,341 – – 12,953 13,439

Other income 86 156 103 200 – –

   Total revenues 33,214 31,977 20,889 19,265 13,852 14,399

Cost of goods sold 10,300 9,196 9,521 8,337 822 866

Cost of services sold 3,565 3,513 3,619 3,574 – –

Interest and other financial charges 2,443 2,707 75 115 2,429 2,671

Insurance losses and policyholder

   and annuity benefits 3,689 3,712 – – 3,689 3,712

Provision for losses on financing receivables 785 496 – – 785 496

Other costs and expenses 6,735 6,756 2,201 2,062 4,576 4,757

Minority interest in net earnings of

   consolidated affiliates 90 101 50 59 40 42

   Total costs and expenses 27,607 26,481 15,466 14,147 12,341 12,544

Earnings before income taxes 5,607 5,496 5,423 5,118 1,511 1,855

Provision for income taxes (1,181) (1,599) (997) (1,221) (184) (378)

   Net earnings $ 4,426 $ 3,897 $ 4,426 $ 3,897 $ 1,327 $ 1,477

Per-share amounts

    Diluted earnings per share $ 0.44 $ 0.39

    Basic earnings per share $ 0.45 $ 0.39



Dividends declared per share $ 0.18 $ 0.16

See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.

Condensed Statement of Earnings
General Electric Company and consolidated affiliates

Six months ended June 30 (Unaudited)

Consolidated
GE
GECS

(Dollars, except per-share amounts, in millions) 2002 2001 2002 2001 2002 2001

Sales of goods $ 27,224 $ 25,861 $ 25,552 $ 23,840 $ 1,715 $ 2,028

Sales of services 10,525 9,479 10,655 9,598 – –

Earnings of GECS before accounting changes – – 2,984 2,878 – –

GECS revenues from services 25,845 26,915 – – 26,036 27,094

Other income 141 215 189 309 – –

   Total revenues 63,735 62,470 39,380 36,625 27,751 29,122

Cost of goods sold 19,204 17,784 17,683 15,964 1,564 1,827

Cost of services sold 7,008 6,718 7,138 6,837 – –

Interest and other financial charges 4,817 5,783 232 370 4,717 5,569

Insurance losses and policyholder and

   annuity benefits 7,238 7,235 – – 7,238 7,235

Provision for losses on financing receivables 1,447 979 – – 1,447 979

Other costs and expenses 13,241 13,818 4,220 4,216 9,128 9,719

Minority interest in net earnings of consolidated

    affiliates 166 203 92 104 74 99

   Total costs and expenses 53,121 52,520 29,365 27,491 24,168 25,428

Earnings before income taxes and accounting changes 10,614 9,950 10,015 9,134 3,583 3,694

Provision for income taxes (2,670) (3,036) (2,071) (2,220) (599) (816)

   Earnings before accounting changes 7,944 6,914 7,944 6,914 2,984 2,878

Cumulative effect of accounting changes (notes 3 and 4) (1,015) (444) (1,015) (444) (1,015) (169)

   Net earnings $ 6,929 $ 6,470 $ 6,929 $ 6,470 $ 1,969 $ 2,709

Per-share amounts before accounting changes

    Diluted earnings per share $ 0.79 $ 0.69

    Basic earnings per share $ 0.80 $ 0.70



Per-share amounts after accounting changes

    Diluted earnings per share $ 0.69 $ 0.64

    Basic earnings per share $ 0.70 $ 0.65



Dividends declared per share $ 0.36 $ 0.32

See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.

Condensed Statement of Financial Position
General Electric Company and consolidated affiliates

Consolidated
GE
GECS

(Dollars in millions) 6/30/02   12/31/01 6/30/02   12/31/01 6/30/02   12/31/01

Cash and equivalents $ 10,211 $ 9,082 $ 1,688 $ 10,447 $ 8,580 $ 7,314

Investment securities 107,157 101,017 565 879 106,592 100,138

Current receivables 10,207 9,590 10,477 9,805 – –

Inventories 9,139 8,565 8,873 8,295 266 270

Financing receivables – net 185,373 174,032 – – 185,373 174,032

Other GECS receivables 40,218 38,422 – – 42,224 40,584

Property, plant and equipment (including equipment

   leased to others) – net 44,471 42,140 13,186 12,799 31,285 29,341

Investment in GECS – – 29,643 28,590 – –

Intangible assets – net 43,718 35,124 21,423 14,367 22,295 20,757

All other assets 90,394 77,051 27,291 24,551 64,010 53,048

Total assets $ 540,888 $ 495,023 $ 113,146 $ 109,733 $ 460,625 $ 425,484

Short-term borrowings $ 135,224 $ 153,076 $ 2,378 $ 1,722 $ 133,772 $ 160,844

Accounts payable, principally trade accounts 17,510 18,158 6,323 6,680 13,541 13,705

Progress collections and price adjustments accrued 9,132 11,751 9,132 11,751 – –

Other GE current liabilities 16,860 15,919 16,860 15,919 – –

Long-term borrowings 125,206 79,806 870 787 124,448 79,091

Insurance liabilities, reserves and annuity benefits 128,974 114,223 – – 128,974 114,223

All other liabilities 33,740 32,921 16,674 16,089 16,914 16,647

Deferred income taxes 10,194 9,130 1,202 1,013 8,992 8,117

Total liabilities 476,840 434,984 53,439 53,961 426,641 392,627

Minority interest in equity of consolidated

   affiliates 5,321 5,215 980 948 4,341 4,267

Accumulated gains/(losses) – net (a)

   Investment securities 100 (232) 100 (232) 230 (348)

   Currency translation adjustments (2,985) (3,136) (2,985) (3,136) (929) (840)

   Derivatives qualifying as hedges (1,351) (955) (1,351) (955) (1,333) (890)

Common stock (9,949,471,000 and 9,925,938,000

    shares outstanding at June 30, 2002 and

   December 31, 2001, respectively) 669 669 669 669 1 1

Other capital 17,146 16,693 17,146 16,693 5,988 5,989

Retained earnings 72,051 68,701 72,051 68,701 25,686 24,678

Less common stock held in treasury (26,903) (26,916) (26,903) (26,916) – –

   Total share owners' equity 58,727 54,824 58,727 54,824 29,643 28,590

Total liabilities and equity $ 540,888 $ 495,023 $ 113,146 $ 109,733 $ 460,625 $ 425,484

(a) The sum of accumulated gains/(losses) on currency translation adjustments, investment securities and derivatives qualifying as hedges constitutes "Accumulated nonowner changes other than earnings," and was $(4,236) million and $(4,323) million at June 30, 2002 and December 31, 2001, respectively.
See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." June 30, 2002, information is unaudited. Transactions between GE and GECS have been eliminated from the "consolidated" columns.

Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates

Six months ended June 30 (Unaudited)

Consolidated
GE
GECS

(Dollars in millions) 2002 2001 2002 2001 2002 2001

Cash flows – operating activities

Net earnings $ 6,929 $ 6,470 $ 6,929 $ 6,470 $ 1,969 $ 2,709

Adjustments to reconcile net earnings to cash

   provided from operating activities

      Cumulative effect of accounting changes 1,015 444 1,015 444 1,015 169

      Depreciation and amortization of

         property, plant and equipment 2,730 2,542 1,010 952 1,720 1,590

      Amortization of goodwill – 605 – 259 – 346

      Earnings retained by GECS – – (2,023) (1,872) – –

      Deferred income taxes 1,574 (265) 354 262 1,220 (527)

      Increase in GE current receivables (107) (347) (162) (294) – –

      Decrease (increase) in inventories (185) (238) (189) (585) 4 347

      Increase (decrease) in accounts payable (631) 1,655 (521) (137) 16 2,022

      Increase in insurance liabilities, reserves

         and annuity benefits 2,626 1,967 – – 2,626 1,967

      Provision for losses on financing receivables 1,447 979 – – 1,447 979

      All other operating activities (4,552) 2,456 (2,936) 2,305 (1,600) 676

Cash from operating activities 10,846 16,268 3,477 7,804 8,417 10,278

Cash flows – investing activities

Additions to property, plant and equipment (5,652) (7,730) (953) (1,336) (4,699) (6,394)

Net increase in GECS financing receivables (7,614) (1,006) – – (7,614) (1,006)

Payments for principal businesses purchased (12,752) (3,704) (7,508) (424) (5,244) (3,280)

All other investing activities (1,757) 53 (207) 786 (1,787) (1,236)

Cash used for investing activities (27,775) (12,387) (8,668) (974) (19,344) (11,916)

Cash flows – financing activities

Increase (decrease) in borrowings (maturities 90 days or less) (26,541) (1,507) 830 315 (35,883) 431

Newly issued debt (maturities longer than 90 days) 59,124 12,461 300 396 58,864 12,037

Repayments and other reductions (maturities

   longer than 90 days) (12,777) (10,538) (587) (595) (12,190) (9,943)

Net purchases of GE shares for treasury (535) (1,337) (535) (1,337) – –

Dividends paid to share owners (3,576) (3,178) (3,576) (3,178) (961) (1,006)

All other financing activities 2,363 23 – – 2,363 23

Cash from (used for) financing activities 18,058 (4,076) (3,568) (4,399) 12,193 1,542

Increase (decrease) in cash and equivalents 1,129 (195) (8,759) 2,431 1,266 (96)

Cash and equivalents at beginning of year 9,082 8,195 10,447 7,210 7,314 6,052

Cash and equivalents at June 30 $ 10,211 $ 8,000 $ 1,688 $ 9,641 $ 8,580 $ 5,956

See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.

Summary of Operating Segments
General Electric Company and consolidated affiliates

(Dollars in millions) Second quarter ended
June 30 (Unaudited)      Six months ended
June 30 (Unaudited)

2002 2001 2002 2001

Revenues

   GE

      Aircraft Engines $ 2,764 $ 3,055 $ 5,341 $ 5,793

      Appliances 1,600 1,402 3,014 2,717

      Industrial Products and Systems 3,025 2,982 5,676 5,829

      Materials 2,028 1,856 3,608 3,790

      NBC 1,987 1,831 3,985 3,182

      Power Systems 6,526 5,142 11,797 9,402

      Technical Products and Services 2,316 2,148 4,284 4,146

      Eliminations (757) (667) (1,468) (1,216)

          Total GE segment revenues 19,489 17,749 36,237 33,643

   Corporate items 73 39 159 104

   Earnings of GECS before accounting changes 1,327 1,611 2,984 3,151

         Total GE revenues 20,889 19,399 39,380 36,898

   GECS segment revenues 13,852 14,399 27,751 29,122

   Eliminations (a) (1,527) (1,821) (3,396) (3,550)

Consolidated revenues $ 33,214 $ 31,977 $ 63,735 $ 62,470

Segment profit

   GE

      Aircraft Engines $ 566 $ 552 $ 987 $ 1,032

      Appliances 119 93 210 180

      Industrial Products and Systems 310 382 506 642

      Materials 369 431 623 851

      NBC 545 491 858 789

      Power Systems 1,910 1,153 3,462 2,010

      Technical Products and Services 411 423 682 747

          Total GE operating profit 4,230 3,525 7,328 6,251

   Earnings of GECS before accounting changes 1,327 1,611 2,984 3,151

         Total segment profit 5,557 5,136 10,312 9,402

   Corporate items and eliminations (59) 97 (65) 102

   GE interest and other financial charges (75) (115) (232) (370)

   GE provision for income taxes (997) (1,221) (2,071) (2,220)

Earnings before accounting changes 4,426 3,897 7,944 6,914

   Cumulative effect of accounting changes – – (1,015) (444)

Consolidated net earnings $ 4,426 $ 3,897 $ 6,929 $ 6,470

(a) Principally the elimination of GECS earnings before accounting changes.
See notes to condensed consolidated financial statements

Notes to Condensed Consolidated Financial Statements (Unaudited)

     1. The accompanying condensed quarterly financial statements represent the consolidation of General Electric Company and all companies which it directly or indirectly controls, either through majority ownership or otherwise. Reference is made to note 1 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2001. That note discusses consolidation and financial statement presentation. As used in this report on Form 10-Q (Report) and in the Annual Report on Form 10-K, "GE" represents the adding together of all affiliated companies except General Electric Capital Services, Inc. (GECS), which is presented on a one-line basis; GECS consists of General Electric Capital Services, Inc. and all of its affiliates; and "consolidated" represents the adding together of GE and GECS with the effects of transactions between the two eliminated. Certain prior year amounts have been reclassified to conform to the current period's presentation.

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

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

     GE and GECS ceased amortizing goodwill effective January 1, 2002. Simultaneously, to maintain a consistent basis for its measurement of performance, management revised previously-reported segment information to correspond to the earnings measurements by which businesses were to be evaluated. Accordingly, goodwill amortization is now treated as a corporate rather than a segment cost. Other measurement changes relate to the GE pension and other retiree benefit plans, whose effects are now reported at the corporate level, and allocation to segments of other selected costs previously reported at the corporate level. GECS previously-reported segment information has also been revised to reflect changes effective as of January 1, 2002, in GECS internal organization. GECS Asia/Pacific operations previously managed by region are now managed and reported by the respective operating business. Also, certain businesses previously in separate segments are now reviewed directly by the GECS chief operating decision maker, and are therefore designated by GECS as operating segments. Because none of these operating segments qualifies as a GECS reporting segment, they have been combined for reporting purposes and are presented in "All Other GECS."

     Goodwill amortization expense for the second quarter ended June 30, 2001, was $138 million ($133 million after tax) and $172 million ($134 million after tax) for GE and GECS, respectively. Goodwill amortization expense for the six months ended June 30, 2001, was $259 million ($244 million after tax) and $346 million ($273 million after tax) for GE and GECS, respectively. The effects on earnings and earnings per share of excluding such goodwill amortization from the second quarter and first six months of 2001 follow.

Second quarter ended June 30

Consolidated

GE

GECS

(Dollars, except per-share amounts in millions)

2002

2001

2002

2001

2002

2001

Net earnings, as reported

$

4,426

$

3,897

$

4,426

$

3,897

$

1,327

$

1,477

Net earnings, excluding 2001 goodwill
     amortization

$

4,426

$

4,164

$

4,426

$

4,164

$

1,327

$

1,611

Diluted

Basic

2002

2001

2002

2001

Earnings per share, as reported

$

0.44

$

0.39

$

0.45

$

0.39

Earnings per share, excluding
     2001 goodwill amortization

$

0.44

$

0.41

$

0.45

$

0.42

Six months ended June 30

Consolidated

GE

GECS

(Dollars, except per-share amounts in millions)

2002

2001

2002

2001

2002

2001

Earnings before accounting changes, as

reported

$

7,944

$

6,914

$

7,944

$

6,914

$

2,984

$

2,878

Earnings before accounting changes,
     excluding 2001 goodwill amortization

$

7,944

$

7,431

$

7,944

$

7,431

$

2,984

$

3,151

Net earnings, as reported

$

6,929

$

6,470

$

6,929

$

6,470

$

1,969

$

2,709

Net earnings, excluding 2001 goodwill
     amortization

$

6,929

$

6,987

$

6,929

$

6,987

$

1,969

$

2,982

Diluted

Basic

2002

2001

2002

2001

Earnings per share before accounting
     changes, as reported

$

0.79

$

0.69

$

0.80

$

0.70

Earnings per share before accounting
     changes, excluding 2001 goodwill
     amortization

$

0.79

$

0.74

$

0.80

$

0.75

Earnings per share, as reported

$

0.69

$

0.64

$

0.70

$

0.65

Earnings per share, excluding
     2001 goodwill amortization

$

0.69

$

0.69

$

0.70

$

0.70

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

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

     The result of testing goodwill of GE and GECS for impairment in accordance with SFAS 142, as of January 1, 2002, was a non-cash charge of $1.204 billion ($1.015 billion after tax, or $0.10 per share), which is reported in the caption "Cumulative effect of accounting changes." Substantially all of the charge relates to GECS IT Solutions business and the GECS GE Auto and Home business, a direct subsidiary of GE Financial Assurance. The primary factors resulting in the impairment charge were the difficult economic environment in the information technology sector and heightened price competition in the auto insurance industry. No impairment charge was appropriate under the FASB's previous goodwill impairment standard, which was based on undiscounted cash flows.

Intangibles Subject to Amortization

(Dollars in millions)

At
June 30, 2002



At
December 31, 2001

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

GE

Patents, licenses and other

$1,926

$(458)

$960

$(382)

Capitalized software

2,461

(1,040)

2,353

(918)

     Total GE

4,387

(1,498)

3,313

(1,300)

GECS

Present value of

     future profits (PVFP)

5,752

(3,434)

5,504

(3,306)

Capitalized software

1,389

(500)

1,307

(406)

Mortgage servicing assets

3,942

(3,081)

3,768

(2,629)

All other

851

(498)

1,092

(506)

     Total GECS

11,934

(7,513)

11,671

(6,847)

Total

$16,321

$(9,011)

$14,984

$(8,147)

     Consolidated amortization expense related to intangible assets, excluding goodwill for the quarters ended June 30, 2002 and 2001, was $568 million ($117 million for GE and $451 million for GECS) and $437 million ($55 million for GE and $382 million for GECS), respectively. Consolidated amortization expense related to intangible assets, excluding goodwill for the six months ended June 30, 2002 and 2001, was $918 million ($197 million for GE and $721 million for GECS) and $731 million ($110 million for GE and $621 million for GECS), respectively. The estimated percentage of the December 31, 2001, PVFP balance to be amortized over each of the next five years follows:

2002

13.0

%

2003

10.5

%

2004

8.9

%

2005

7.6

%

2006

6.3

%

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

Goodwill

     Goodwill balances follow:

(Dollars in millions)



Balance
12/31/01

Transition
Impairment

Acquired

Foreign
Exchange
and Other

Balance
6/30/02

Aircraft Engines

$1,916

$         --

$345

$   11

$2,272

Appliances

234

--

--

(11)

223

Industrial Products and Systems

1,357

--

949

6

2,312

Materials

1,923

--

1,474

(21)

3,376

NBC

2,568

--

2,386

--

4,954

Power Systems

1,948

--

689

58

2,695

Technical Products and Services

2,408

--

278

16

2,702

     Total GE

12,354

--

6,121

59

18,534

GECS

15,933

(1,204)

2,756

389

17,874

Total

$28,287

$(1,204)

$8,877

$448

$36,408

     4. At January 1, 2001, GE and GECS adopted SFAS 133, Accounting for Derivative Instruments and Hedging Activities, as amended. Under SFAS 133, all derivative instruments are recognized in the statement of financial position at their fair values. The cumulative effect of adopting this standard was a one-time reduction of net earnings in the first quarter of 2001 of $324 million ($0.03 per share) and comprised two significant elements: one element represented the fair value of equity options embedded in loans that provided both GE and the borrower the right, but not the obligation, to convert the loans into shares of the borrower's stock; the second element of the transition effect was a portion of the effect of marking to market options and currency contracts used for hedging. Also at January 1, 2001, GE and GECS adopted the consensus of the Emerging Issues Task Force of the FASB on accounting for impairment of beneficial interests (EITF 99-20). Under this consensus, impairment of certain beneficial interests in securitized assets must be recognized when the asset's fair value is below its carrying value and it is probable that there has been an adverse change in estimated cash flows. The cumulative effect of adopting EITF 99-20 was a one-time reduction of net earnings in the first quarter of 2001 of $120 million ($0.01 per share).

     5. A summary of increases/(decreases) in share owners' equity that do not result directly from transactions with share owners, net of income taxes, follows:

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Net earnings

$

4,426

$

3,897

Investment securities -- net changes in value

779

(938

)

Currency translation adjustments

556

(171

)

Derivatives qualifying as hedges -- net changes in value

(759)

343

Total

$

5,002

$

3,131

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Net earnings

$

6,929

$

6,470

Investment securities -- net changes in value

332

71

Currency translation adjustments

151

(27

)

Derivatives qualifying as hedges -- net changes in value

(396)

(213

)

Cumulative effect on equity of adopting SFAS 133

--

(827

)

Total

$

7,016

$

5,474

     6. Inventories consisted of the following:

At

(Dollars in millions)

6/30/02

12/31/01

GE

Raw materials and work in process

$

4,955

$

4,708

Finished goods

4,258

3,951

Unbilled shipments

320

312

Revaluation to LIFO

(660

)

(676

)

Total GE inventories

8,873

8,295

GECS

Finished goods

266

270

Total

$

9,139

$

8,565

     7. Property, plant and equipment (including equipment leased to others) -- net, consisted of the following:

At

(Dollars in millions)

6/30/02

12/31/01

Original cost

     GE

$

32,258

$

31,232

     GECS

43,126

40,055

          Total

75,384

71,287

Accumulated depreciation and amortization

     GE

19,072

18,433

     GECS

11,841

10,714

          Total

30,913

29,147

Property, plant and equipment -- net

     GE

13,186

12,799

     GECS

31,285

29,341

          Total

$

44,471

$

42,140

     8. GE's authorized common stock consisted of 13,200,000,000 shares, having a par value of $0.06 each. Information related to the calculation of earnings per share follows.

Second quarter ended

6/30/02

6/30/01

(Dollar amounts and shares in millions;

per-share amounts in dollars)

Diluted

Basic

Diluted

Basic

Consolidated operations

Net earnings available to common share owners

$

4,426

$

4,426

$

3,897

$

3,897

Dividend equivalents -- net of tax

3

--

3

--

Net earnings available for per-share calculation

$

4,429

$

4,426

$

3,900

$

3,897

Average equivalent shares

Shares of GE common stock

9,942

9,942

9,936

9,936

Employee compensation-related shares,
     including stock options

87

--

129

--

Total average equivalent shares

10,029

9,942

10,065

9,936

Net earnings per share

$

0.44

$

0.45

$

0.39

$

0.39

Six months ended

6/30/02

6/30/01

(Dollar amounts and shares in millions;

per-share amounts in dollars)

Diluted

Basic

Diluted

Basic

Consolidated operations

Earnings before accounting changes

$

7,944

$

7,944

$

6,914

$

6,914

Dividend equivalents -- net of tax

6

--

6

--

Earnings before accounting changes for
     per-share calculation

$

7,950

$

7,944

$

6,920

$

6,914

Cumulative effect of accounting changes

$

(1,015

)

$

(1,015

)

$

(444

)

$

(444

)

Net earnings available to common share owners

$

6,929

$

6,929

$

6,470

$

6,470

Dividend equivalents -- net of tax

6

--

6

--

Net earnings available for per-share calculation

$

6,935

$

6,929

$

6,476

$

6,470

Average equivalent shares

Shares of GE common stock

9,937

9,937

9,935

9,935

Employee compensation-related shares,
     including stock options

95

--

131

--

Total average equivalent shares

10,032

9,937

10,066

9,935

Per-share amounts

Earnings before accounting changes

$

0.79

$

0.80

$

0.69

$

0.70

Cumulative effect of accounting changes

(0.10

)

(0.10

)

(0.05

)

(0.05

)

Net earnings

$

0.69

$

0.70

$

0.64

$

0.65

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition

A. Results of Operations -- Second Quarter of 2002 Compared With Second Quarter of 2001

     General Electric Company's earnings rose 14% to $4.426 billion from $3.897 billion in the second quarter of 2001, and earnings per share increased 13% to $0.44. Both earnings and earnings per share were records for the quarter. Power Systems, NBC, Medical Systems and Appliances had double-digit operating profit growth and eight GE Capital businesses had double-digit net earnings growth. Earnings reflect $358 million from a favorable settlement with the Internal Revenue Service of a dispute regarding exports from Aircraft Engines since 1979; a $70 million after-tax benefit from the termination of Power Systems gas turbine orders; approximately $350 million of after-tax adjustments to estimates of prior-year loss events at Employers Reinsurance Corporation (ERC), a direct subsidiary of GE Global Insurance Holdings, which resulted in a quarterly loss for GE Global Insurance Holdings of $236 million; and a $110 million after-tax loss to recognize impairment of WorldCom, Inc. bonds.

     Revenues rose 4% over the second quarter of 2001 to $33.214 billion. GE industrial revenues grew 10%, with double-digit growth at Power Systems, Medical Systems, Appliances and Specialty Materials. Revenues at GE Capital Services (GECS) declined 4% because of the revenue effects of ERC and portfolio losses including the impairment of WorldCom, Inc. bonds.

     Acquisitions contributed $215 million to earnings in the second quarter of 2002 compared with approximately $25 million in the comparable 2001 period. For purposes of this discussion, only earnings during the first 12 months following the quarter in which the acquisition is completed are considered to be related to acquired companies.

     GE's second-quarter operating margin was 21.2%, up from last year's 20.6%, reflecting continuing productivity gains.

     Cash generated from GE's operating activities, excluding progress collections, was $6.1 billion in the first half of 2002, up 12% from $5.4 billion last year. Progress collections are primarily payments received from customers in advance of the sale of heavy-duty gas turbines and aircraft engines. Excluding progress payments from operating activities portrays cash flow as if collections occurred at the time of sale. Reported cash flow from GE's operating activities was $3.5 billion which, reflecting the record progress collections in 2001, was 55% lower than last year's $7.8 billion. GE returned $4.7 billion to shareowners in the first half of 2002 through $3.6 billion in dividends and $1.1 billion in shares repurchased.

Segment Analysis:

     The comments that follow compare revenues and segment profit by operating segment for the second quarters of 2002 and 2001.

       • Aircraft Engines reported revenues of $2.764 billion, 10% lower than the second quarter of 2001, reflecting reduced commercial engine sales and servicing revenues partially offset by increased military sales. Operating profit increased to $566 million, 3% over the second quarter of 2001, reflecting continued base cost productivity that offset the effects of lower volume and unfavorable product mix.

       • Appliances revenues of $1.600 billion rose 14% over the second quarter of 2001 as new products continued to gain market share, more than offsetting lower selling prices. Operating profit increased 28% to $119 million largely as a result of volume, continued base cost productivity and lower material costs, which more than offset decreases in selling prices.

       • Industrial Products and Systems

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Industrial Systems

$

1,273

$

1,220

Lighting

532

604

Transportation Systems

594

572

GE Supply

626

586

     Total revenues

$

3,025

$

2,982

Operating profit

Industrial Systems

$

129

$

160

Lighting

29

78

Transportation Systems

124

122

GE Supply

28

22

     Total operating profit

$

310

$

382

Industrial Products and Systems reported a 1% increase in revenues and a 19% decrease in operating profit primarily as a result of lower selling prices across the businesses. Industrial Systems revenues were 4% higher than in the second quarter of 2001 reflecting contributions from acquisitions that more than offset lower volume and sharply lower selling prices. Industrial Systems operating profit was 19% lower than last year primarily because of sharply lower selling prices. Lighting continued to experience lower volumes and pricing which adversely affected revenues -- down 12% and operating profit -- 63% lower than last year. Transportation System's operating profit rose 2% on 4% higher revenue reflecting the effect of acquisitions. GE Supply reported an operating profit increase of $6 million on revenues that were 7% higher reflecting higher volume, lower material costs and productivity which offset the effect of lower prices.

       • Materials

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Plastics

$

1,420

$

1,363

Specialty Materials

608

493

     Total revenues

$

2,028

$

1,856

Operating profit

Plastics

$

275

$

334

Specialty Materials

94

97

     Total operating profit

$

369

$

431

Materials revenues were up 9% from last year's first quarter as volume increases, including revenues from acquired businesses, more than offset continued weakness in pricing. Operating profit decreased 14% principally as a result of lower pricing that more than offset higher volumes and lower material costs. Plastics experienced continued pricing pressure that accounted for most of an 18% decline in operating profit. Specialty Materials revenue increased 23% primarily as a result of acquisition volume. Operating profit in the second quarter of 2002 was 3% lower than last year as pricing and lower productivity offset the benefits of higher volumes and lower material costs.

       • NBC reported a 9% increase in revenues compared with the second quarter of 2001, primarily reflecting improved performance in the advertising market, the Telemundo acquisition and the absence of a counterpart to a one-time charge related to the shutdown of the XFL in 2001. Operating profit increased 11% reflecting improved performance in the advertising market, productivity improvements and absence of the XFL charge.

       • Power Systems revenues increased 27%, primarily as a result of higher volume in gas turbines (109 vs. 90 in 2001), growth in services, higher selling prices and contract cancellation fees of $162 million. Operating profit rose 66%, reflecting the combined effects of higher volume, productivity, improved selling prices and contract cancellation fees, net of related costs.

       • Technical Products and Services

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Medical Systems

$

2,212

$

1,960

Global eXchange Services

104

188

     Total revenues

$

2,316

$

2,148

Operating profit

Medical Systems

$

401

$

356

Global eXchange Services

10

67

     Total operating profit

$

411

$

423

Technical Products and Services revenues increased 8% from the second quarter of 2001, primarily as a result of 13% revenue and operating profit growth at Medical Systems, which reported higher equipment volume, including acquisitions, and continued growth in services. Operating profit for the segment fell 3% in the second quarter, reflecting the absence in 2002 of a counterpart to a gain on disposition of a joint venture at Global eXchange Services in 2001.

       • GE Capital Services

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Consumer Services

$

5,330

$

5,618

Equipment Management

1,733

1,768

Mid-Market Financing

2,346

1,920

Specialized Financing

784

727

Specialty Insurance

2,446

2,981

All Other

1,213

1,385

     Total revenues

$

13,852

$

14,399

Net earnings

Consumer Services

$

559

$

586

Equipment Management

183

360

Mid-Market Financing

392

277

Specialized Financing

171

161

Specialty Insurance

(50

)

279

All Other

72

(52

)

     Net earnings

$

1,327

$

1,611

GECS net earnings for the second quarter of 2002 were $1,327 million, a $150 million (10%) decrease from the second quarter of 2001. Excluding the effect of the prior year goodwill amortization ($134 million after tax) net earnings decreased 18% reflecting approximately $350 million of after-tax adjustments to estimates of prior-year loss events at Employers Reinsurance Corporation, a direct subsidiary of GE Global Insurance Holdings, increased credit losses, $270 million lower after-tax gains from investment securities (including a $110 million after-tax impairment on WorldCom, Inc. bonds) and $55 million after-tax of lower gains on securitizations. These decreases were partially offset by contributions from acquisitions, productivity and origination growth. Contributions from acquired companies to net earnings in the second quarter of 2002 and 2001 included approximately $168 million and $20 million, respectively. Acquisitions are integrated as quickly as possible; only earnings during the first 12 months following the quarter in which the acquisition is completed are considered to be related to acquired companies.

Consumer Services

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Global Consumer Finance

$

1,501

$

1,370

GE Financial Assurance

2,817

3,198

GE Card Services

962

956

Other Consumer Services

50

94

     Total revenues

$

5,330

$

5,618

Net earnings

Global Consumer Finance

$

323

$

242

GE Financial Assurance

53

149

GE Card Services

176

187

Other Consumer Services

7

8

     Net earnings

$

559

$

586

Consumer Services revenues decreased 5% and net earnings decreased 5% compared with the second quarter of 2001, as the effects of acquisitions were more than offset by lower earnings at GE Financial Assurance, which reflected impairment of $167 million pre-tax ($110 million after tax) of WorldCom, Inc. bonds, decreased premium volume, and the planned transition of the restructured Toho insurance policies. GE Financial Assurance had $42 million remaining exposure to WorldCom, Inc. at June 30, 2002. Other Consumer Services revenues decreased as a result of the planned run-off of the U.S. auto finance business portfolio. Consumer Services net earnings decreased primarily as a result of losses recognized on the impairment of investments at GE Financial Assurance, as well as lower securitization gains at GE Financial Assurance and Card Services, the combination of which more than offset increased productivity at GE Financial Assurance and Global Consumer Finance, increased volume growth and acquisitions at Global Consumer Finance and volume growth at Card Services.

Equipment Management

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Aviation Services (GECAS)

$

683

$

589

Americom

--

118

Other Equipment Management

1,050

1,061

     Total revenues

$

1,733

$

1,768

Net earnings

Aviation Services (GECAS)

$

117

$

155

Americom

--

34

Other Equipment Management

66

171

     Net earnings

$

183

$

360

Equipment Management revenues and net earnings decreased 2% and 49%, respectively, in the second quarter of 2002, compared with the corresponding period in 2001, reflecting the absence of a counterpart to 2001 Americom revenues following its divestiture in the fourth quarter of 2001, partially offset by volume growth at GECAS. The decrease in net earnings is attributable to prior year tax benefits from restructuring at Penske (included in Other Equipment Management), decreased gains from asset sales at GECAS and the divestiture of Americom, partially offset by volume growth and acquisitions at GECAS. As a result of the divestiture of Americom, GECS received an equity interest in SES Global, which is included in the Specialized Financing operating activity.

Mid-Market Financing

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Commercial Equipment Financing

$

1,170

$

997

Commercial Finance

554

436

Vendor Financial Services

554

487

Other Mid-Market Financing

68

--

     Total revenues

$

2,346

$

1,920

Net earnings

Commercial Equipment Financing

$

165

$

119

Commercial Finance

138

92

Vendor Financial Services

74

62

Other Mid-Market Financing

15

4

     Net earnings

$

392

$

277

Mid-Market Financing revenues and net earnings increased 22% and 42%, respectively, in the second quarter of 2002 compared with the second quarter of 2001. The increase in revenues principally reflected acquisition growth across all businesses. The increase in net earnings reflected contributions from acquisitions across all businesses, partially offset by higher credit losses at Commercial Finance, Commercial Equipment Financing and Vendor Financial Services. Other Mid-Market Financing also includes results of the Healthcare Financial Services business, which was recently launched primarily from assets acquired in the October 2001, acquisition of Heller Financial, Inc. ("Heller").

Specialized Financing

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Real Estate

$

557

$

461

Structured Finance Group

296

275

GE Equity

(87

)

(21

)

Other Specialized Financing

18

12

     Total revenues

$

784

$

727

Net earnings

Real Estate

$

133

$

123

Structured Finance Group

125

106

GE Equity

(85

)

(64

)

Other Specialized Financing

(2

)

(4

)

     Net earnings

$

171

$

161

Specialized Financing revenues increased 8% in the second quarter of 2002 as a result of acquisitions at Real Estate and Structured Finance Group and revenues associated with Structured Finance Group's equity method investment in SES Global (acquired in the fourth quarter of 2001), partially offset by increased asset losses on investments at GE Equity and reduced asset gains at Structured Finance Group and Real Estate. GE Equity manages equity investments in early-stage, early growth, pre-IPO companies. Revenues at GE Equity include income, gains and losses on such investments. During the second quarter of 2002 and 2001, losses on GE Equity's investments exceeded gains and other investment income, resulting in negative revenues. Specialized Financing net earnings increased 6% as a result of acquisitions at Real Estate and volume growth and net income associated with the equity investment in SES Global at Structured Finance Group, the combination of which more than offset increased asset losses at GE Equity and reduced asset gains at Structured Finance Group.

Specialty Insurance

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Mortgage Insurance

$

256

$

270

GE Global Insurance Holdings

2,076

2,565

Other Specialty Insurance

114

146

     Total revenues

$

2,446

$

2,981

Net earnings

Mortgage Insurance

$

133

$

93

GE Global Insurance Holdings

(236

)

140

Other Specialty Insurance

53

46

     Net earnings

$

(50

)

$

279

Specialty Insurance revenues decreased 18% in the second quarter of 2002 primarily as a result of reduced premiums resulting from approximately $325 million of pre-tax adjustments to estimates of prior-year loss events, lower investment income at GE Global Insurance Holdings and reduced gains at GE Global Insurance Holdings and Mortgage Insurance. The decrease in Other Specialty Insurance revenues related to the portfolio run-off at Mortgage Services, partially offset by increased investment gains at Financial Guaranty Insurance Company. The 118% decrease in Specialty Insurance net earnings during the second quarter of 2002 resulted from approximately $350 million of after-tax adjustments (including both reduced revenues and increased costs) to estimates of prior-year loss events, lower investment income at GE Global Insurance Holdings, and reduced investment gains at GE Global Insurance Holdings and Mortgage Insurance, partially offset by favorable development on prior year loss reserves and volume growth at Mortgage Insurance, primarily in Canada and Australia.

All Other GECS

Second quarter ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

IT Solutions

$

994

$

1,090

Other

219

295

     Total revenues

$

1,213

$

1,385

Net earnings

IT Solutions

$

7

$

(4

)

Other

65

(48

)

     Net earnings

$

72

$

(52

)

All Other GECS decline in revenues primarily related to reduced volume at IT Solutions, including the effects of exiting lower performing businesses. The increase in All Other GECS net earnings reflects the inclusion of a tax settlement with the Internal Revenue Service (IRS) resulting from revised IRS regulations, allowing the deductibility of previously realized losses associated with the prior disposition of Kidder Peabody preferred stock and the recovery of state tax benefits. Corporate expenses were also lower in 2002. The net earnings improvement in IT Solutions related to exiting lower performing businesses.

B. Results of Operations -- First Half of 2002 Compared With First Half of 2001

     Earnings before accounting changes for the first half rose 15% to $7.944 billion and earnings per share before accounting changes increased 14% to $.79, up from last year's $.69. Earnings before accounting changes exclude the one-time, non-cash impact of adopting new accounting rules (discussed in notes 3 and 4 of this 10-Q report). Both earnings per share and earnings were records for the first half.

     Consolidated revenues for the first six months of 2002 aggregated $63.7 billion, up 2% from last year. GE sales of goods and services were 8% higher, with improvements led by double-digit increases at Power Systems, NBC and Appliances. Operating profit of GE's industrial operating segments increased to $7.3 billion up from $6.3 billion in the first half of 2001, as double-digit growth in Power Systems and Appliances more than offset lower operating profit at Lighting, Plastics, Specialty Materials and Industrial Systems.

     Acquisitions contributed $374 million to earnings in the first six months of 2002 compared with approximately $50 million in the comparable 2001 period.

     Operating margin in the first half of 2002 was 19.8% of sales, compared with last year's 19.2%. The improvement in operating margin reflects continuing productivity gains.

Segment Analysis:

     The following comments compare revenues and segment profit by industry segment for the first half of 2002 with the same period of 2001.

       • Aircraft Engines revenues decreased 8% from the first half of 2001, reflecting reduced commercial product service revenues partially offset by increased military sales. Following the events of September 11, product service revenues were adversely affected by reduced customer flight hours and corresponding servicing requirements, resulting in lower product service revenue during the first half of 2002. Operating profit was 4% lower primarily as a result of lower service volumes and lower pricing, partially offset by base cost and other productivity.

       • Appliances revenues were 11% higher than last year as new products continued to gain market share, especially in the U.S. market, more than offsetting lower selling prices. Operating profit increased 17% principally as a result of volume, base cost productivity and lower material costs, which more than offset decreases in selling prices.

       • Industrial Products and Systems

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Industrial Systems

$

2,370

$

2,344

Lighting

1,072

1,213

Transportation Systems

1,076

1,120

GE Supply

1,158

1,152

     Total revenues

$

5,676

$

5,829

Operating profit

Industrial Systems

$

232

$

293

Lighting

49

137

Transportation Systems

177

172

GE Supply

48

40

     Total operating profit

$

506

$

642

Industrial Products and Systems reported a 3% decrease in revenues and 21% lower operating profit primarily as a result of declines in selling prices across the businesses in the segment. Industrial Systems revenues rose 1% compared with last year reflecting contributions from acquisitions that more than offset lower volume and sharply lower selling prices. Industrial Systems' lower operating profit was principally the result of lower selling prices that offset the contributions of acquisitions. During the first half of 2002, Lighting was adversely affected by volume declines, higher advertising costs related to new product introductions and charges related to customer delinquencies, resulting in a 12% decline in revenues and a 64% drop in operating profit. Transportation operating profit rose 3% on 4% lower revenues as a result of strong variable cost productivity. Supply operating profits for the first half of 2002 increased $8 million on revenues that were about flat, reflecting lower material costs and continued variable and base cost productivity.

       • Materials

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Plastics

$

2,599

$

2,811

Specialty Materials

1,009

979

     Total revenues

$

3,608

$

3,790

Operating profit

Plastics

$

482

$

673

Specialty Materials

141

178

     Total operating profit

$

623

$

851

Materials revenues decreased 5% and operating profit declined 27% from first half of 2001 levels. Plastics revenues were 8% below the first half of 2001, primarily due to continued weakness in pricing. Operating profit declined 28% as lower raw material prices were not sufficient to offset lower pricing. Similarly at Specialty Materials, operating profit decreased 21% as higher volumes and lower material costs were more than offset by lower pricing and productivity.

       • NBC reported a 25% increase in revenues compared with the first half of 2001, primarily reflecting NBC's improved performance in the advertising market, its broadcast of the Winter Olympics, the Telemundo acquisition and absence of a counterpart to a one-time charge related to the shutdown of the XFL in 2001. Operating profit increased 9% reflecting NBC's improved performance in the advertising market and absence of the XFL charge.

       • Power Systems revenues increased 25%, reflecting higher volume in gas turbines (194 vs. 170 in 2001), continued growth in services, higher selling prices and contract cancellation fees of $638 million. Operating profit increased 72%, primarily as a result of the increase in volume coupled with higher selling prices, productivity and contract cancellation fees, net of related costs.

       • Technical Products and Services

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Medical Systems

$

4,075

$

3,788

Global eXchange Services

209

358

     Total revenues

$

4,284

$

4,146

Operating profit

Medical Systems

$

667

$

649

Global eXchange Services

15

98

     Total operating profit

$

682

$

747

Technical Products and Services revenues increased 3% from the first half of 2001, principally as a result of 8% revenue growth at Medical Systems, which reported higher equipment volume, including acquisitions, and continued growth in services. Operating profit for the segment fell 9% as the growth at Medical Systems was more than offset by the absence of a counterpart to a gain on disposition of a joint venture at Global eXchange Services in 2001.

       • GE Capital Services

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Consumer Services

$

10,740

$

11,310

Equipment Management

3,332

3,613

Mid-Market Financing

4,617

3,871

Specialized Financing

1,504

1,562

Specialty Insurance

5,231

5,869

All Other

2,327

2,897

     Total revenues

$

27,751

$

29,122

Earnings before accounting changes

Consumer Services

$

1,263

$

1,234

Equipment Management

352

666

Mid-Market Financing

746

569

Specialized Financing

389

280

Specialty Insurance

184

549

All Other

50

(147

)

     Total earnings before accounting changes

$

2,984

$

3,151

GECS earnings before accounting changes decreased 5% to $2,984 million reflecting increased credit losses, $367 million lower after-tax gains from investment securities (including a $110 million after-tax impairment on WorldCom, Inc. bonds), approximately $385 million after-tax adjustments to estimates of prior-year loss events at Employers Reinsurance Corporation, a direct subsidiary of GE Global Insurance Holdings, and $82 million after tax of lower gains on securitizations. These decreases were partially offset by contributions from acquisitions, productivity and origination growth, as well as lower taxes. Contributions to net earnings in the first six months of 2002 and 2001 included approximately $317 million and $37 million, respectively, from acquired companies. Acquisitions are integrated as quickly as possible; only earnings during the first 12 months following the quarter in which the acquisition is completed are considered to be related to acquired companies. For purposes of this discussion, earnings before accounting changes is referred to as "net earnings."

Consumer Services

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Global Consumer Finance

$

2,971

$

2,688

GE Financial Assurance

5,800

6,298

GE Card Services

1,865

2,078

Other Consumer Services

104

246

     Total revenues

$

10,740

$

11,310

Net earnings

Global Consumer Finance

$

643

$

539

GE Financial Assurance

226

308

GE Card Services

387

364

Other Consumer Services

7

23

     Net earnings

$

1,263

$

1,234

Consumer Services net earnings increased 2% on revenues that were 5% lower compared with the first six months of 2001. Revenues decreased at GE Financial Assurance and Card Services and were partially offset by increased revenues at Global Consumer Finance. The decrease at GE Financial Assurance included impairment of $167 million pre-tax ($110 million after tax) of WorldCom, Inc. bonds, declines from the planned transition of restructured Toho insurance policies and decreased premium volume. GE Financial Assurance had $42 million remaining exposure to WorldCom, Inc. at June 30, 2002. The decrease at Card Services related to exited businesses and lower securitizations. The revenue decreases at GE Financial Assurance and Card Services were partially offset by acquisitions at all three major businesses and volume growth at Global Consumer Finance. Other Consumer Services revenues decreased as a result of the planned run-off of the U.S. auto finance business portfolio. The increase in Consumer Services net earnings reflects acquisitions and volume growth at Global Consumer Finance, volume growth at Card Services, as well as productivity at GE Financial Assurance, the combination of which was partially offset by losses recognized on the impairments of investments at GE Financial Assurance, lower securitization gains at Card Services and the planned run-off of the auto finance business portfolio.

Equipment Management

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Aviation Services (GECAS)

$

1,251

$

1,105

Americom

--

355

Other Equipment Management

2,081

2,153

     Total revenues

$

3,332

$

3,613

Net earnings

Aviation Services (GECAS)

$

212

$

285

Americom

--

125

Other Equipment Management

140

256

     Net earnings

$

352

$

666

Equipment Management revenues decreased 8% and net earnings decreased 47% in the first six months of 2002 compared with the corresponding period in 2001. The decrease in revenues principally reflected the divestiture of Americom in the fourth quarter of 2001, partially offset by volume growth and acquisitions at GECAS. The decrease in net earnings principally reflected the divestiture of Americom, prior year tax benefits from restructuring at Penske (included in Other Equipment Management), and decreased gains from asset sales at GECAS, the combination of which more than offset volume growth and acquisitions at GECAS. As a result of the divestiture of Americom, GECS received an equity interest in SES Global, which is included in the Specialized Financing operating activity.

Mid-Market Financing

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Commercial Equipment Financing

$

2,251

$

1,953

Commercial Finance

1,164

960

Vendor Financial Services

1,089

958

Other Mid-Market Financing

113

--

     Total revenues

$

4,617

$

3,871

Net earnings

Commercial Equipment Financing

$

333

$

239

Commercial Finance

245

205

Vendor Financial Services

141

119

Other Mid-Market Financing

27

6

     Net earnings

$

746

$

569

Mid-Market Financing revenues and net earnings increased 19% and 31%, respectively, in the first six months of 2002 compared with the first six months of 2001. The increase in revenues principally reflected acquisitions across all businesses, partially offset by decreased market interest rates. Growth in net earnings reflected the results of acquisitions across all businesses, partially offset by reduced asset gains at Commercial Finance and higher credit losses at Commercial Finance, Commercial Equipment Financing and Vendor Financial Services. Other Mid-Market Financing principally includes the results of the Healthcare Financial Services business, which was recently launched primarily from assets acquired in the October 2001, acquisition of Heller.

Specialized Financing

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Real Estate

$

1,018

$

1,059

Structured Finance Group

592

587

GE Equity

(142

)

(110

)

Other Specialized Financing

36

26

     Total revenues

$

1,504

$

1,562

Net earnings

Real Estate

$

295

$

255

Structured Finance Group

254

212

GE Equity

(155

)

(181

)

Other Specialized Financing

(5

)

(6

)

     Net earnings

$

389

$

280

Specialized Financing revenues decreased 4% in the first six months of 2002, primarily reflecting lower market interest rates at Real Estate, lower asset gains at Structured Finance Group and increased asset losses on investments at GE Equity, partially offset by acquisitions at Real Estate and Structured Finance Group and revenues associated with Structured Finance Group's equity method investment in SES Global (acquired in the fourth quarter of 2001). GE Equity manages equity investments in early-stage, early growth, pre-IPO companies. Revenues at GE Equity include income, gains and losses on such investments. During the first six months of 2002 and 2001, losses on GE Equity's investments exceeded gains and other investment income, resulting in negative revenues. Specialized Financing net earnings increased 39% in the first six months of 2002, reflecting origination growth at Structured Finance Group, acquisitions at Real Estate and Structured Finance Group and net income associated with Structured Finance Group's equity investment in SES Global, partially offset by lower asset gains at Structured Finance Group.

Specialty Insurance

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

Mortgage Insurance

$

536

$

579

GE Global Insurance Holdings

4,483

5,062

Other Specialty Insurance

212

228

     Total revenues

$

5,231

$

5,869

Net earnings

Mortgage Insurance

$

233

$

217

GE Global Insurance Holdings

(156

)

286

Other Specialty Insurance

107

46

     Net earnings

$

184

$

549

Specialty Insurance revenues decreased 11% in the first six months of 2002, primarily as a result of reduced premiums resulting from approximately $325 million of pre-tax adjustments to estimates of prior- year loss events and reduced gains at GE Global Insurance Holdings, reduced premiums associated with mortgage refinancing activities and reduced gains at Mortgage Insurance. Net earnings decreased 66% in the first six months of 2002, resulting from approximately $385 million of after-tax adjustments (including both reduced revenues and increased costs) to estimates of prior-year loss events and lower investment income at GE Global Insurance Holdings, as well as reduced gains at GE Global Insurance Holdings and Mortgage Insurance, partially offset by volume growth at Mortgage Insurance, primarily in Canada and Australia. The increase in Other Specialty Insurance was attributable to lower costs associated with the portfolio run-off at Mortgage Services and higher earned premiums at Financial Guaranty Insurance Company.

All Other GECS

Six months ended

(Dollars in millions)

6/30/02

6/30/01

Revenues

IT Solutions

$

1,910

$

2,311

Other

417

586

     Total revenues

$

2,327

$

2,897

Net earnings

IT Solutions

$

5

$

(7

)

Other

45

(140

)

     Net earnings

$

50

$

(147

)

All Other GECS decline in revenues primarily related to reduced volume at IT Solutions including the effects of exiting lower performing businesses. The increase in All Other GECS net earnings reflects the inclusion of a tax settlement with the Internal Revenue Service resulting from revised IRS regulations, allowing the deductibility of previously realized losses associated with the prior disposition of Kidder Peabody preferred stock and the recovery of state tax benefits. Corporate expenses were also lower in 2002. The net earnings improvement in IT Solutions related to exiting lower performing businesses.

C. Financial Condition

     With respect to the Condensed Statement of Financial Position, consolidated assets of $540.9 billion at June 30, 2002, were $45.9 billion higher than at December 31, 2001.

     GE assets were $113.1 billion at June 30, 2002, an increase of $3.4 billion from December 31, 2001. The increase was primarily attributable to a $7.1 billion increase in intangible assets from acquisitions, principally Telemundo and Betz Dearborn, and an increase of $2.7 billion in all other assets offset , by an $8.8 billion decrease in cash and equivalents. During the second quarter of 2002, GE announced its intent to sell the Global eXchange Services (GXS) business. GXS assets and liabilities have therefore been classified as assets and liabilities held for sale. GXS assets approximate $265 million, primarily intangible assets, accounts receivable and property, plant and equipment, and are included in "All other assets." Related GXS liabilities approximating $80 million are included in "All other liabilities."

     GECS assets increased by $35.1 billion from the end of 2001 primarily because of increases in financing receivables, all other assets and investment securities. Financing receivables, net of the allowance for losses, aggregated $185.4 billion at June 30, 2002, an increase of $11.3 billion. The increase primarily reflected the effects of higher origination volume, acquisitions and the effects of foreign currency translation, partially offset by securitizations. GECS allowance for losses on financing receivables of $5.2 billion at June 30, 2002, reflected management's best estimate of probable losses inherent in the portfolio. All other assets increased $11.0 billion at the end of the second quarter primarily due to acquisitions in separate accounts and real estate investments. Investment securities increased $6.5 billion to $106.6 billion at the end of the second quarter, primarily reflecting investment of premiums received and acquisitions. In addition, property, plant and equipment (including equipment leased to others) increased $1.9 billion to $31.3 billion at the end of the second quarter and primarily related to the acquisition of aircraft. Intangible assets increased $1.5 billion to $22.3 billion at the end of the second quarter primarily due to acquisitions, partially offset by the goodwill impairment recorded upon adoption of SFAS 142. Other GECS receivables increased $1.6 billion to $42.2 billion at the end of the second quarter primarily due to growth from the acquisitions of AGC Limited and Saison Life.

     Consolidated liabilities of $476.8 billion at June 30, 2002, were $41.9 billion higher than the year-end 2001 balance. GE liabilities were relatively unchanged; GECS liabilities increased $34.0 billion.

     GE total borrowings were $3.3 billion ($2.4 billion short-term and $0.9 billion long-term) at June 30, 2002, an increase of $0.7 billion from December 31, 2001. GE's ratio of debt to total capital at the end of June 2002 was 5.2% compared with 4.3% at the end of last year and 3.4% at June 30, 2001.

     GECS liabilities increased by $34.0 billion reflecting an increase in long-term borrowings of $45.4 billion and a decrease in short-term borrowings of $27.1 billion from year-end 2001 as discussed in the "Liquidity" section of this report. In addition, insurance liabilities, reserves and annuity benefits increased $14.8 billion to $129.0 billion at the end of June 2002, primarily reflecting acquisition growth and growth in deferred annuities and guaranteed investment contracts. Other changes in GECS liabilities comprised numerous, relatively small items.

     Consolidated cash and equivalents were $10.2 billion at June 30, 2002, an increase of $1.1 billion during the first half of 2002. Cash and equivalents were $8.0 billion at June 30, 2001, a decrease of $0.2 billion during last year's first half.

     GE cash and equivalents decreased $8.8 billion during the first half of 2002 to $1.7 billion at June 30, 2002. Cash provided from operating activities was $3.5 billion during the first six months of 2002, compared with $7.8 billion in the first half of 2001, reflecting continuing improvements in earnings and lower progress collections during the period. Progress collections are primarily payments received from customers in advance of the sale of heavy-duty gas turbines and aircraft engines. Had collections occurred at the time of sale, cash provided from operating activities would have been $6.1 billion compared with $5.4 billion in 2001. Cash used for investing activities ($8.7 billion) principally resulted from investments in business acquisitions. Cash used for financing activities ($3.6 billion) included $1.1 billion for repurchases of common stock under the share repurchase program and $3.6 billion for dividends paid to share owners, a 12.5% increase in the per-share dividend rate compared with the first half of last year.

     GE cash and equivalents increased $2.4 billion during the first half of 2001 to $9.6 billion at June 30, 2001. Cash provided from operating activities was $7.8 billion during the first six months of 2001, compared with $5.9 billion in the first half of 2000, reflecting continuing improvements in earnings as well as higher progress collections during the period. Cash used for investing activities ($1.0 billion) principally resulted from investments in new plant and equipment for a diverse number of projects to lower costs and improve efficiencies as well as investments in business acquisitions. Cash used for financing activities ($4.4 billion) included $1.5 billion for repurchases of common stock under the share repurchase program and $3.2 billion for dividends paid to share owners, a 17% increase in the per-share dividend rate compared with the first half of 2000.

     GECS cash and equivalents increased by $1.3 billion during the first half of 2002 to $8.6 billion. Cash provided from operating activities was $8.4 billion during the first six months of 2002, compared with $10.3 billion during the first half of 2001. The decrease in cash from operating activities compared with last year was largely attributable to lack of a current year counterpart to the prior year increase in accounts payable, increases in income taxes payable and payables on purchases of investment securities. Cash from financing activities totaled $12.2 billion, reflecting net additions of debt. The principal use of GECS cash during the period was for investing activities ($19.3 billion), a majority of which was attributable to financing receivables, business acquisitions and additions to property, plant and equipment (including equipment leased to others).

     GECS cash and equivalents decreased by $0.1 billion during the first half of 2001 to $6.0 billion. Cash provided from operating activities was $10.3 billion during the first six months of 2001, compared with $0.8 billion during the first half of 2000. The increase in cash from operating activities compared with last year was largely attributable to insurance policyholder redemptions in 2000 associated with the Toho acquisition. Cash from financing activities totaled $1.5 billion, reflecting net additions of debt. The principal use of GECS cash during the period was for investing activities ($11.9 billion), a majority of which was attributable to additions to property, plant and equipment (including equipment leased to others) and business acquisitions.

Liquidity

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

     Global commercial paper markets are a primary source of cash for GE and GECS. GE Capital is the most widely-held name in those markets. GECS began the year with $117 billion of commercial paper, about 49% of GECS total debt outstanding at December 31, 2001, and at the end of the second quarter of 2002 had $83 billion of commercial paper outstanding, about 32% of GECS total debt outstanding. GECS now targets a ratio for commercial paper as a percent of outstanding debt of 25% to 35%.

     As of June 30, 2002, GECS held approximately $54 billion of contractually committed lending agreements with highly-rated global banks and investment banks, an increase of $21 billion since December 31, 2001. When considering the contractually committed lending agreements as well as other sources of liquidity, including medium and long-term funding, monetization, asset securitization, cash receipts from GECS lending and leasing activities, short-term secured funding on global assets, and potential asset sales, management believes it could achieve an orderly transition from commercial paper in the unlikely event of impaired access to the commercial paper market.

     During the first half of 2002, GECS issued approximately $58 billion of long-term debt in U.S. and international markets. These funds were used primarily to reduce the amount of commercial paper outstanding, fund maturing long-term debt, and fund acquisitions and asset growth. GECS anticipates issuing approximately $20 billion to $40 billion of additional long-term debt using both U.S. and international markets during the remainder of 2002. The proceeds from such issuances will be used to fund maturing long-term debt, additional acquisitions and asset growth. The ultimate amount of debt issuances will depend upon the growth in assets, acquisition activity, availability of markets and movements in interest rates.

     GE and GECS use special purpose entities as described in the December 31, 2001, Annual Report on Form 10-K. Receivables held by special purpose entities as of June 30, 2002 and December 31, 2001, were $44.4 billion and $43.0 billion, respectively, and the maximum amount of liquidity support for commercial paper outstanding was about the same at $43.3 billion. The maximum recourse provided under credit support agreements increased from $14.5 billion at December 31, 2001, to $15.1 billion at June 30, 2002.

GECS Portfolio Quality

     Financing receivables is the largest category of assets for GECS and represents one of its primary sources of revenues. The portfolio of financing receivables, before allowance for losses, increased to $190.6 billion at June 30, 2002, from $178.8 billion at the end of 2001, primarily reflecting acquisitions, as well as the effects of foreign currency translation of financing receivables, in excess of securitizations. The related allowance for losses at June 30, 2002 amounted to $5.2 billion ($4.8 billion at the end of 2001) and represents GECS management's best estimate of probable losses inherent in the portfolio. A discussion about the quality of certain elements of the portfolio of financing receivables follows. "Nonearning" receivables are those that are 90 days or more delinquent (or for which collection has otherwise become doubtful) and "reduced-earning" receivables are commercial receivables whose terms have been restructured to a below-market yield.

     Consumer financing receivables, primarily credit card and personal loans and auto loans and leases, were $60.7 billion at June 30, 2002 ($52.3 billion at December 31, 2001). Nonearning consumer receivables at June 30, 2002 were consistent with year-end 2001, at $1.5 billion, about 2.4% of outstandings at June 30, 2002 and about 2.9% of outstandings at December 31, 2001. Write-offs of consumer receivables were $0.9 billion for the first six months of both 2002 and 2001.

     Commercial financing receivables, which totaled $129.9 billion at June 30, 2002 ($126.5 billion at December 31, 2001), consisted of a diverse commercial, industrial and equipment loan and lease portfolio. Related nonearning and reduced-earning receivables were $2.5 billion at June 30, 2002, about 1.9% of outstandings, compared with $1.7 billion, about 1.4% of outstandings at year-end 2001. The increase is primarily driven by nonearning and reduced-earning receivables associated with Heller of approximately $430 million; at December 31, 2001, $408 million of such loans were earning but classified as impaired. The increase also related to several bankruptcies and deal restructurings involving middle-market customers, including a significant amount related to the telecommunication industry. These receivables are generally backed by assets and are covered by reserves for probable losses. Such reserves are based on management's best estimates and changes to these provisions will be dependent upon future associated business and economic conditions. At June 30, 2002 and December 31, 2001, the portfolio included loans and leases on commercial aircraft of $24.2 billion and $21.5 billion, respectively.

     Investment securities comprise principally investment grade debt securities held by GE Financial Assurance and the GECS specialty insurance businesses and were $106.6 billion, including gross unrealized gains and losses of $2.6 billion and $2.0 billion, respectively, at June 30, 2002 ($100.1 billion, including gross unrealized gains and losses of $2.1 billion and $2.7 billion, respectively, as of December 31, 2001). Investment securities are regularly reviewed for impairment based on criteria that include the extent to which cost exceeds market value, the duration of that market decline and the financial health and specific prospects for the issuer. Of those securities whose carrying amount exceeds fair value at June 30, 2002, and based upon application of GE' accounting policy for impairment, approximately $570 million of portfolio value is at risk of being charged to earnings in the second half of 2002. Impairment losses recognized for the first six months of 2002 were $429 million, including $334 million ($217 million after-tax) from the telecommunications and cable industries, of which $167 million ($110 million after tax) was recognized in the second quarter of 2002 due to the events relating to WorldCom, Inc.

     In recent periods the telecommunication and cable industries have experienced significant volatility. GECS investments in (primarily within financing receivables and investment securities), and commitments to these industries aggregate approximately $13 billion as of June 30, 2002. These investments are subject to GE and GECS policies for reserving (on financing receivables) and other than temporary impairment, as appropriate; future losses will be dependent upon associated business and economic conditions.

Part II. Other Information

Item 1. Legal Proceedings

Environmental

     As previously reported, in January 2002, the Company entered into discussions with the New York State Department of Environmental Conservation regarding potential noncompliance with the state's Clean Water Act at its Waterford, NY facility. The state alleges spills and discharges in excess of permitted limits as well as reporting violations. The state has informed the company that it is currently seeking a penalty of $1.5 million. The Company has disputed both the allegations and penalty amount. Negotiations are underway with the State.

     In April 2002, the Ohio Environmental Protection Agency informed the Company that it was seeking penalties of $4.3 million for violations of the state's Clean Air Act at its Newark, OH facility. The state alleges that the site constructed air emission sources without undergoing adequate New Source Review. The matter involves conditions identified by the Company and voluntarily disclosed to the state more than 5 years ago which the Company proactively addressed with the concurrence of the State. The Company believes that the penalty demand by the state is inappropriate and unreasonable considering the history of the matter. Negotiations with the State are underway.

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

(a)     The annual meeting of Share Owners of General Electric Company was held on April 24, 2002.

(b)     All director nominees were elected.

(c)     Certain matters voted upon at the meeting and the votes cast with respect to such matters are as follows:

Proposals and Vote Tabulations

Votes Cast

Broker

For

Against

Abstain

Non-votes

Management Proposals

Approval of the appointment of
independent auditors for 2002

7,896,606,625

297,096,241

54,930,336

0

Proposal to approve material terms of executive officer performance goals

7,802,890,560

346,104,521

99,638,121

0

Share Owner Proposals

(1)

Relating to cumulative voting

1,625,542,524

4,796,391,987

121,177,359

1,705,521,332

(2)

Relating to global warming

1,165,992,005

4,915,366,495

461,753,370

1,705,521,332

(3)

Relating to nuclear power report

362,349,198

5,844,927,778

335,834,894

1,705,521,332

(4)

Relating to report on PCB cleanup costs

1,360,500,795

4,903,418,739

279,192,336

1,705,521,332

(5)

Relating to poison pill

2,553,318,036

3,854,959,604

134,834,230

1,705,521,332

(6)

Relating to pension fund income/executive compensation

848,064,339

5,544,897,701

150,149,830

1,705,521,332

(7)

Relating to performance-based stock options

2,019,606,863

4,388,248,216

135,256,791

1,705,521,332

(8)

Related to executive severance agreements

2,458,423,421

3,850,087,784

234,600,665

1,705,521,332

Election of Directors

Director

Votes Received

Votes Withheld

James I. Cash, Jr.

7,942,670,273

305,962,929

Dennis D. Dammerman

7,920,628,859

328,004,343

Paolo Fresco

7,921,525,398

327,107,804

Ann M. Fudge

7,854,712,598

393,920,604

Claudio X. Gonzalez

7,895,543,791

353,089,411

Jeffrey R. Immelt

7,920,960,441

327,672,761

Andrea Jung

7,944,200,883

304,432,319

Kenneth G. Langone

7,920,565,094

328,068,108

Rochelle B. Lazarus

7,945,434,987

303,198,215

Scott G. McNealy

7,874,846,940

373,786,262

Sam Nunn

7,861,818,850

386,814,352

Roger S. Penske

7,854,963,478

393,669,724

Gary L. Rogers

7,920,736,573

327,896,629

Andrew C. Sigler

7,893,342,433

355,290,769

Douglas A. Warner III

7,901,554,400

347,078,802

Robert C. Wright

7,921,471,443

327,161,759

Item 6. Exhibits and Reports on Form 8-K

a.     Exhibits

     Exhibit 11. Computation of Per Share Earnings*
     Exhibit 12. Computation of Ratio of Earnings to Fixed Charges.
     Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*     Data required by Statement of Financial Accounting Standards No. 128, Earnings per Share, is provided in note 8 to the condensed consolidated financial statements in this report.

b.     Reports on Form 8-K during the quarter ended June 30, 2002.

     A Form 8-K was filed on April 11, 2002, under Item 9, incorporating by reference GE's April 11, 2002, press release setting forth GE's first-quarter 2002 earnings.

Signatures
          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

General Electric Company
            (Registrant)

July 31, 2002
/s/ Philip D. Ameen

Date Philip D. Ameen

Vice President and Comptroller
Duly Authorized Officer and Principal Accounting Officer

Part I. Financial Information		Page

Item 1. Financial Statements
Statement of Earnings
Second Quarter Ended June 30, 2002		3
Six Months Ended June 30, 2002		4
Statement of Financial Position		5
Statement of Cash Flows		6
Summary of Operating Segments		7
Notes to Financial Statements		8
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition		14

Part II. Other Information

Item 1. Legal Proceedings		37
Item 4. Submission of Matters to a Vote of Security Holders		38
Item 6. Exhibits and Reports on Form 8–K		39
Signatures		40


	Second quarter ended June 30 (Unaudited)
	Consolidated				GE				GECS
(Dollars, except per-share amounts, in millions)		2002		2001		2002		2001		2002		2001

Sales of goods	$	14,678	$	13,427	$	13,822	$	12,474	$	899	$	960
Sales of services		5,583		5,053		5,637		5,114		–		–
Earnings of GECS		–		–		1,327		1,477		–		–
GECS revenues from services		12,867		13,341		–		–		12,953		13,439
Other income		86		156		103		200		–		–

Total revenues		33,214		31,977		20,889		19,265		13,852		14,399

Cost of goods sold		10,300		9,196		9,521		8,337		822		866
Cost of services sold		3,565		3,513		3,619		3,574		–		–
Interest and other financial charges		2,443		2,707		75		115		2,429		2,671
Insurance losses and policyholder
and annuity benefits		3,689		3,712		–		–		3,689		3,712
Provision for losses on financing receivables		785		496		–		–		785		496
Other costs and expenses		6,735		6,756		2,201		2,062		4,576		4,757
Minority interest in net earnings of
consolidated affiliates		90		101		50		59		40		42

Total costs and expenses		27,607		26,481		15,466		14,147		12,341		12,544

Earnings before income taxes		5,607		5,496		5,423		5,118		1,511		1,855
Provision for income taxes		(1,181)		(1,599)		(997)		(1,221)		(184)		(378)

Net earnings	$	4,426	$	3,897	$	4,426	$	3,897	$	1,327	$	1,477

Per-share amounts
Diluted earnings per share	$	0.44	$	0.39
Basic earnings per share	$	0.45	$	0.39

Dividends declared per share	$	0.18	$	0.16

See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.


	Six months ended June 30 (Unaudited)
	Consolidated				GE				GECS
(Dollars, except per-share amounts, in millions)		2002		2001		2002		2001		2002		2001

Sales of goods	$	27,224	$	25,861	$	25,552	$	23,840	$	1,715	$	2,028
Sales of services		10,525		9,479		10,655		9,598		–		–
Earnings of GECS before accounting changes		–		–		2,984		2,878		–		–
GECS revenues from services		25,845		26,915		–		–		26,036		27,094
Other income		141		215		189		309		–		–

Total revenues		63,735		62,470		39,380		36,625		27,751		29,122

Cost of goods sold		19,204		17,784		17,683		15,964		1,564		1,827
Cost of services sold		7,008		6,718		7,138		6,837		–		–
Interest and other financial charges		4,817		5,783		232		370		4,717		5,569
Insurance losses and policyholder and
annuity benefits		7,238		7,235		–		–		7,238		7,235
Provision for losses on financing receivables		1,447		979		–		–		1,447		979
Other costs and expenses		13,241		13,818		4,220		4,216		9,128		9,719
Minority interest in net earnings of consolidated
affiliates		166		203		92		104		74		99

Total costs and expenses		53,121		52,520		29,365		27,491		24,168		25,428

Earnings before income taxes and accounting changes		10,614		9,950		10,015		9,134		3,583		3,694
Provision for income taxes		(2,670)		(3,036)		(2,071)		(2,220)		(599)		(816)

Earnings before accounting changes		7,944		6,914		7,944		6,914		2,984		2,878
Cumulative effect of accounting changes (notes 3 and 4)		(1,015)		(444)		(1,015)		(444)		(1,015)		(169)

Net earnings	$	6,929	$	6,470	$	6,929	$	6,470	$	1,969	$	2,709

Per-share amounts before accounting changes
Diluted earnings per share	$	0.79	$	0.69
Basic earnings per share	$	0.80	$	0.70

Per-share amounts after accounting changes
Diluted earnings per share	$	0.69	$	0.64
Basic earnings per share	$	0.70	$	0.65

Dividends declared per share	$	0.36	$	0.32

See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.


	Consolidated				GE				GECS
(Dollars in millions)	6/30/02		12/31/01		6/30/02		12/31/01		6/30/02		12/31/01

Cash and equivalents	$	10,211	$	9,082	$	1,688	$	10,447	$	8,580	$	7,314
Investment securities		107,157		101,017		565		879		106,592		100,138
Current receivables		10,207		9,590		10,477		9,805		–		–
Inventories		9,139		8,565		8,873		8,295		266		270
Financing receivables – net		185,373		174,032		–		–		185,373		174,032
Other GECS receivables		40,218		38,422		–		–		42,224		40,584
Property, plant and equipment (including equipment
leased to others) – net		44,471		42,140		13,186		12,799		31,285		29,341
Investment in GECS		–		–		29,643		28,590		–		–
Intangible assets – net		43,718		35,124		21,423		14,367		22,295		20,757
All other assets		90,394		77,051		27,291		24,551		64,010		53,048

Total assets	$	540,888	$	495,023	$	113,146	$	109,733	$	460,625	$	425,484

Short-term borrowings	$	135,224	$	153,076	$	2,378	$	1,722	$	133,772	$	160,844
Accounts payable, principally trade accounts		17,510		18,158		6,323		6,680		13,541		13,705
Progress collections and price adjustments accrued		9,132		11,751		9,132		11,751		–		–
Other GE current liabilities		16,860		15,919		16,860		15,919		–		–
Long-term borrowings		125,206		79,806		870		787		124,448		79,091
Insurance liabilities, reserves and annuity benefits		128,974		114,223		–		–		128,974		114,223
All other liabilities		33,740		32,921		16,674		16,089		16,914		16,647
Deferred income taxes		10,194		9,130		1,202		1,013		8,992		8,117

Total liabilities		476,840		434,984		53,439		53,961		426,641		392,627

Minority interest in equity of consolidated
affiliates		5,321		5,215		980		948		4,341		4,267
Accumulated gains/(losses) – net (a)
Investment securities		100		(232)		100		(232)		230		(348)
Currency translation adjustments		(2,985)		(3,136)		(2,985)		(3,136)		(929)		(840)
Derivatives qualifying as hedges		(1,351)		(955)		(1,351)		(955)		(1,333)		(890)
Common stock (9,949,471,000 and 9,925,938,000
shares outstanding at June 30, 2002 and
December 31, 2001, respectively)		669		669		669		669		1		1
Other capital		17,146		16,693		17,146		16,693		5,988		5,989
Retained earnings		72,051		68,701		72,051		68,701		25,686		24,678
Less common stock held in treasury		(26,903)		(26,916)		(26,903)		(26,916)		–		–

Total share owners' equity		58,727		54,824		58,727		54,824		29,643		28,590

Total liabilities and equity	$	540,888	$	495,023	$	113,146	$	109,733	$	460,625	$	425,484


(a) The sum of accumulated gains/(losses) on currency translation adjustments, investment securities and derivatives qualifying as hedges constitutes "Accumulated nonowner changes other than earnings," and was $(4,236) million and $(4,323) million at June 30, 2002 and December 31, 2001, respectively. See notes to condensed consolidated financial statements. Consolidating information is shown for "GE" and "GECS." June 30, 2002, information is unaudited. Transactions between GE and GECS have been eliminated from the "consolidated" columns.

(Dollars in millions)	Second quarter ended June 30 (Unaudited)				Six months ended June 30 (Unaudited)

	2002		2001		2002		2001

Revenues
GE
Aircraft Engines	$	2,764	$	3,055	$	5,341	$	5,793
Appliances		1,600		1,402		3,014		2,717
Industrial Products and Systems		3,025		2,982		5,676		5,829
Materials		2,028		1,856		3,608		3,790
NBC		1,987		1,831		3,985		3,182
Power Systems		6,526		5,142		11,797		9,402
Technical Products and Services		2,316		2,148		4,284		4,146
Eliminations		(757)		(667)		(1,468)		(1,216)

Total GE segment revenues		19,489		17,749		36,237		33,643
Corporate items		73		39		159		104
Earnings of GECS before accounting changes		1,327		1,611		2,984		3,151

Total GE revenues		20,889		19,399		39,380		36,898
GECS segment revenues		13,852		14,399		27,751		29,122
Eliminations (a)		(1,527)		(1,821)		(3,396)		(3,550)

Consolidated revenues	$	33,214	$	31,977	$	63,735	$	62,470

Segment profit
GE
Aircraft Engines	$	566	$	552	$	987	$	1,032
Appliances		119		93		210		180
Industrial Products and Systems		310		382		506		642
Materials		369		431		623		851
NBC		545		491		858		789
Power Systems		1,910		1,153		3,462		2,010
Technical Products and Services		411		423		682		747

Total GE operating profit		4,230		3,525		7,328		6,251
Earnings of GECS before accounting changes		1,327		1,611		2,984		3,151

Total segment profit		5,557		5,136		10,312		9,402
Corporate items and eliminations		(59)		97		(65)		102
GE interest and other financial charges		(75)		(115)		(232)		(370)
GE provision for income taxes		(997)		(1,221)		(2,071)		(2,220)

Earnings before accounting changes		4,426		3,897		7,944		6,914
Cumulative effect of accounting changes		–		–		(1,015)		(444)

Consolidated net earnings	$	4,426	$	3,897	$	6,929	$	6,470


(a) Principally the elimination of GECS earnings before accounting changes. See notes to condensed consolidated financial statements

	Second quarter ended June 30

	Consolidated				GE				GECS

(Dollars, except per-share amounts in millions)		2002		2001		2002		2001		2002		2001

Net earnings, as reported	$	4,426	$	3,897	$	4,426	$	3,897	$	1,327	$	1,477

Net earnings, excluding 2001 goodwill amortization	$	4,426	$	4,164	$	4,426	$	4,164	$	1,327	$	1,611


	Diluted				Basic

		2002		2001		2002		2001

Earnings per share, as reported	$	0.44	$	0.39	$	0.45	$	0.39

Earnings per share, excluding 2001 goodwill amortization	$	0.44	$	0.41	$	0.45	$	0.42

	Six months ended June 30

	Consolidated				GE				GECS

(Dollars, except per-share amounts in millions)		2002		2001		2002		2001		2002		2001

Earnings before accounting changes, as reported	$	7,944	$	6,914	$	7,944	$	6,914	$	2,984	$	2,878

Earnings before accounting changes, excluding 2001 goodwill amortization	$	7,944	$	7,431	$	7,944	$	7,431	$	2,984	$	3,151

Net earnings, as reported	$	6,929	$	6,470	$	6,929	$	6,470	$	1,969	$	2,709

Net earnings, excluding 2001 goodwill amortization	$	6,929	$	6,987	$	6,929	$	6,987	$	1,969	$	2,982


	Diluted				Basic

		2002		2001		2002		2001

Earnings per share before accounting changes, as reported	$	0.79	$	0.69	$	0.80	$	0.70

Earnings per share before accounting changes, excluding 2001 goodwill amortization	$	0.79	$	0.74	$	0.80	$	0.75

Earnings per share, as reported	$	0.69	$	0.64	$	0.70	$	0.65

Earnings per share, excluding 2001 goodwill amortization	$	0.69	$	0.69	$	0.70	$	0.70

(Dollars in millions)	At June 30, 2002		At December 31, 2001

	Gross Carrying Amount	Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization

GE
Patents, licenses and other	$1,926	$(458)	$960	$(382)
Capitalized software	2,461	(1,040)	2,353	(918)

Total GE	4,387	(1,498)	3,313	(1,300)

GECS
Present value of
future profits (PVFP)	5,752	(3,434)	5,504	(3,306)
Capitalized software	1,389	(500)	1,307	(406)
Mortgage servicing assets	3,942	(3,081)	3,768	(2,629)
All other	851	(498)	1,092	(506)

Total GECS	11,934	(7,513)	11,671	(6,847)

Total	$16,321	$(9,011)	$14,984	$(8,147)

(Dollars in millions)	Balance 12/31/01	Transition Impairment	Acquired	Foreign Exchange and Other	Balance 6/30/02

Aircraft Engines	$1,916	$ --	$345	$ 11	$2,272
Appliances	234	--	--	(11)	223
Industrial Products and Systems	1,357	--	949	6	2,312
Materials	1,923	--	1,474	(21)	3,376
NBC	2,568	--	2,386	--	4,954
Power Systems	1,948	--	689	58	2,695
Technical Products and Services	2,408	--	278	16	2,702

Total GE	12,354	--	6,121	59	18,534

GECS	15,933	(1,204)	2,756	389	17,874

Total	$28,287	$(1,204)	$8,877	$448	$36,408

	Second quarter ended

(Dollars in millions)	6/30/02		6/30/01

Net earnings	$	4,426	$	3,897
Investment securities -- net changes in value		779		(938	)
Currency translation adjustments		556		(171	)
Derivatives qualifying as hedges -- net changes in value		(759)		343

Total	$	5,002	$	3,131

	Six months ended

(Dollars in millions)	6/30/02		6/30/01

Net earnings	$	6,929	$	6,470
Investment securities -- net changes in value		332		71
Currency translation adjustments		151		(27	)
Derivatives qualifying as hedges -- net changes in value		(396)		(213	)
Cumulative effect on equity of adopting SFAS 133		--		(827	)

Total	$	7,016	$	5,474

		Votes Cast
					Broker
		For	Against	Abstain	Non-votes
Management Proposals

Approval of the appointment of independent auditors for 2002		7,896,606,625	297,096,241	54,930,336	0
Proposal to approve material terms of executive officer performance goals		7,802,890,560	346,104,521	99,638,121	0

Share Owner Proposals

(1)	Relating to cumulative voting	1,625,542,524	4,796,391,987	121,177,359	1,705,521,332
(2)	Relating to global warming	1,165,992,005	4,915,366,495	461,753,370	1,705,521,332
(3)	Relating to nuclear power report	362,349,198	5,844,927,778	335,834,894	1,705,521,332
(4)	Relating to report on PCB cleanup costs	1,360,500,795	4,903,418,739	279,192,336	1,705,521,332
(5)	Relating to poison pill	2,553,318,036	3,854,959,604	134,834,230	1,705,521,332
(6)	Relating to pension fund income/executive compensation	848,064,339	5,544,897,701	150,149,830	1,705,521,332
(7)	Relating to performance-based stock options	2,019,606,863	4,388,248,216	135,256,791	1,705,521,332
(8)	Related to executive severance agreements	2,458,423,421	3,850,087,784	234,600,665	1,705,521,332

Director	Votes Received	Votes Withheld

James I. Cash, Jr.	7,942,670,273	305,962,929
Dennis D. Dammerman	7,920,628,859	328,004,343
Paolo Fresco	7,921,525,398	327,107,804
Ann M. Fudge	7,854,712,598	393,920,604
Claudio X. Gonzalez	7,895,543,791	353,089,411
Jeffrey R. Immelt	7,920,960,441	327,672,761
Andrea Jung	7,944,200,883	304,432,319
Kenneth G. Langone	7,920,565,094	328,068,108
Rochelle B. Lazarus	7,945,434,987	303,198,215
Scott G. McNealy	7,874,846,940	373,786,262
Sam Nunn	7,861,818,850	386,814,352
Roger S. Penske	7,854,963,478	393,669,724
Gary L. Rogers	7,920,736,573	327,896,629
Andrew C. Sigler	7,893,342,433	355,290,769
Douglas A. Warner III	7,901,554,400	347,078,802
Robert C. Wright	7,921,471,443	327,161,759

		General Electric Company (Registrant)
July 31, 2002		/s/ Philip D. Ameen
Date		Philip D. Ameen
		Vice President and Comptroller Duly Authorized Officer and Principal Accounting Officer

Part I. Financial Information

Item 1. Financial Statements

Condensed Statement of Earnings General Electric Company and consolidated affiliates

Condensed Statement of Earnings General Electric Company and consolidated affiliates

Condensed Statement of Financial Position General Electric Company and consolidated affiliates

Condensed Statement of Cash Flows General Electric Company and consolidated affiliates

Summary of Operating Segments General Electric Company and consolidated affiliates

Notes to Condensed Consolidated Financial Statements (Unaudited)

GE

GECS

Signatures

Condensed Statement of Earnings
General Electric Company and consolidated affiliates

Condensed Statement of Earnings
General Electric Company and consolidated affiliates

Condensed Statement of Financial Position
General Electric Company and consolidated affiliates

Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates

Summary of Operating Segments
General Electric Company and consolidated affiliates