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Leaseurope Brussels Noreen Whelan Global Controller – International Financial Reporting General Electric Company November Leaseurope Brussels Noreen Whelan Global Controller – International Financial Reporting General Electric Company November 5, 2007

Agenda • GE in EMEA • GE and IFRS • IASB and FASB Joint Agenda • GE in EMEA • GE and IFRS • IASB and FASB Joint Leasing Project • Questions 2

GE Substantial Presence Throughout EMEA • 115, 000 GE employees today • $41. 9 GE Substantial Presence Throughout EMEA • 115, 000 GE employees today • $41. 9 billion sales in 2006 (up from $3 billion in 1987) • Six businesses: Commercial Finance, Healthcare, Infrastructure, Industrial, GE Money and NBC-U, • GE’s International headquarters in Brussels…GE Healthcare & GE - Oil & Gas: global headquarters near London & Florence • Global Research Centre in Munich 3

GE Locations: • Infrastructure • Industrial • Global Research • Healthcare • Money • GE Locations: • Infrastructure • Industrial • Global Research • Healthcare • Money • Comm. Finance • NBC Universal

GE and IFRS GE and IFRS

Promising steps are underway. . . global trend is convergence with IFRS • > Promising steps are underway. . . global trend is convergence with IFRS • > 100 countries permit or require IFRS. . . Australia, China, Canada, EU, Russia • Expect by 2012 150 countries (including India, Israel, Japan and Korea) using IFRS • IASB/FASB Convergence Roadmap – Not identical standards…close alignment of principles and continued co-operation – Goal 2009: eliminate SEC reconciliation foreign registrants 6

US issuers - SEC ‘Concept Release’ • Published in Aug 2007, to obtain information US issuers - SEC ‘Concept Release’ • Published in Aug 2007, to obtain information about the level of public interest in allowing U. S. issuers, to prepare financial statements in accordance with IFRS or US GAAP • Comments due on or before Nov. 13, 2007 • US issuer choice provides a level playing field for raising capital • For GE - cost and simplification opportunity 7

Countries converging to IFRS on different time schedules • Today: GE ensuring compliance for Countries converging to IFRS on different time schedules • Today: GE ensuring compliance for statutory and regulated filings in global jurisdictions • ‘IFRS as adopted by’…… – Benefits to investors, regulators and preparers? ? – Consistent application? ? • Going forward: IFRS global accounting standards – One set of books…less complexity of reporting processes, polices, training and IT platforms – Integrity of financial statements 8

Principles bring challenges • Education of all interested parties…internal and external on accounting policies Principles bring challenges • Education of all interested parties…internal and external on accounting policies • More disclosure of assumptions, judgements and support for careful judgement? • Greater User sophistication • Trend is difficulty of Standards keeps rising – Benefits to investor community? (approx. 10% of comment letters from investor community) – Specialists required (eg preparers, auditors) – Work plan of SEC and CESR should avoid conflicting regulatory decisions on application IFRS and US GAAP 9

IASB/FASB Lease Project IASB/FASB Lease Project

What is GE Doing? • Joining with worldwide leasing organisations to interact with the What is GE Doing? • Joining with worldwide leasing organisations to interact with the IASB and FASB -- International Working Group – Providing industry input & expertise – Discussing the compliance burden – Discussing day 2 impacts 11

Objectives • Fundamental review of current accounting model: – Leased asset either capitalized by Objectives • Fundamental review of current accounting model: – Leased asset either capitalized by lessee or offbalance sheet (all or nothing) – Lessor recognises a finance lease receivable – US GAAP >50 authoritative pieces of literature • Global harmonization of accounting treatments • Financial Statements reflect the economics of leasing transactions (lessee and lessor) • Allow investors make sound economic investment decisions 12

Overview • Project added to agenda July 2006 • Develop further a ‘right of Overview • Project added to agenda July 2006 • Develop further a ‘right of use approach’ (ie put rights and obligations on balance sheet at fair value) – Lessee’s right to use = Asset – Lessee’s obligation to pay = Liability • Principles based approach…. but may be complex to implement in practice • Critical that changes result in improved quality financial reporting. . . what do Users want? 13

Lessee - Open Items Include • Relationship of leasing project to existing literature and Lessee - Open Items Include • Relationship of leasing project to existing literature and defination of ‘Right to Use’? • Measurement asset and liability – Fair value (consider interaction IFRS Fair Value DP…next slide) • Questions – Does the asset equal the liability? – Is there a day one gain or loss? • Right to terminate may define lease term – Effect of renewal options, variable lease payments, residual guarantees? 14

Fair Value Measurement - IASB DP • Defines fair value and establishes a framework Fair Value Measurement - IASB DP • Defines fair value and establishes a framework for measuring fair value – three-tier hierarchy • Expands fair value disclosure requirements • FASB issued SFAS 157…. Effective Date and Transition: – “Effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years” • GE established FAS 157 implementation committee – Significant impact on M&A and Financial Services 15

Lessor Accounting Not Yet Discussed • Derecognition of the “hard” asset and recognition of Lessor Accounting Not Yet Discussed • Derecognition of the “hard” asset and recognition of a “financial asset”…. recognition and measurement approach? • Revenue Recognition project exploring ‘performance obligations’ model (eg. obligations to: deliver goods, warranties, accept returns) – Likely two models exposed: (1) fair value model (lay off notion) (2) customer consideration model (total contract price allocated to performance obligations) • Necessary and before final lease standard issued – Thorough consideration of interaction of FVM, Revenue Recognition and Lease projects – Request: Don’t over-engineer! 16

Questions? Questions?

Appendix Appendix

FAS 157: Summary of Significant Changes Issue Current SFAS 157 Fair Value Amount at FAS 157: Summary of Significant Changes Issue Current SFAS 157 Fair Value Amount at which an asset or liability could Price that would be received for an asset or paid to be bought or sold in a current transaction transfer a liability between market participants at the between willing parties, that is, other than in measurement date EXIT PRICE a forced or liquidation sale ENTRY OR EXIT PRICE Market participants Current guidance on market participants in unclear. Buyer-specific intent may be considered Buyer-specific attributes and intent should be dismissed if different from other multiple market participants Transaction Entry Price Presumed equal to fair value May not be representative of fair value, provides indicators of when the transaction price may not be fair value Highest and best use Current practice is to value assets in continued use unless identified for disposition Independent of the reporting entity’s intent; considered from market participant perspective Use of market data in valuations Use of market data encouraged. In some circumstances entity intent permitted to be considered in valuations Valuation techniques must maximize use of market observable data and minimize use of unobservable data Hierarchy No current mandated hierarchy Three levels distinguishing between observable and unobservable inputs: Level 1: Active markets; Level 2: Observable other than quoted prices; Level 3: Unobservable inputs; Principal/Most Advantageous Market 19 -- Principal market: Entity sells assets/transfers liabilities with the greatest volume and level of activity. Most advantageous market is used when there is no principal market.