<PAGE>

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

                                  -------------
                                    FORM 10-K
                                  -------------


            |X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                       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 0-14804
                           --------------------------

                     GENERAL ELECTRIC CAPITAL SERVICES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

           DELAWARE                                            06-1109503
(State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                           Identification No.)

   260 LONG RIDGE ROAD,
   STAMFORD, CONNECTICUT               06927                (203) 357-4000
  (Address of principal             (Zip Code)        (Registrant's telephone
   executive offices)                               number, including area code)

                           --------------------------

                         SECURITIES REGISTERED PURSUANT
                          TO SECTION 12(b) OF THE ACT:

                                                         NAME OF EACH
   TITLE OF EACH CLASS                           EXCHANGE ON WHICH REGISTERED
 -----------------------                       --------------------------------
7 1/2% GUARANTEED SUBORDINATED                      NEW YORK STOCK EXCHANGE
   NOTES DUE AUGUST 21, 2035

                         SECURITIES REGISTERED PURSUANT
                          TO SECTION 12(g) OF THE ACT:

                               TITLE OF EACH CLASS
                             -----------------------
                    COMMON STOCK, PAR VALUE $10,000 PER SHARE

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 | |

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

At March 24, 1998,  101 shares of voting common stock,  which  constitute all of
the outstanding common equity, with a par value of $10,000 were outstanding.

Aggregate market value of the outstanding common equity held by nonaffiliates of
the registrant at March 24, 1998. None.

                      DOCUMENTS INCORPORATED BY REFERENCE

The consolidated  financial statements of General Electric Company, set forth in
the Annual  Report on Form 10-K of General  Electric  Company for the year ended
December 31, 1997 are incorporated by reference into Part IV hereof.

Item 1.  Business - Property and Casualty  Reserves for Unpaid  Claims and Claim
Expenses,  set forth in the  Annual  Report on Form 10-K of GE Global  Insurance
Holding  Corporation  for the year ended  December 31, 1997 is  incorporated  by
reference into Part I hereof.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b)
OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE REDUCED  DISCLOSURE
FORMAT.



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                                TABLE OF CONTENTS

                                                                        PAGE
                                                                      --------
PART I

     Item 1.   Business .............................................     1
     Item 2.   Properties ...........................................    11
     Item 3.   Legal Proceedings ....................................    11
     Item 4.   Submission of Matters to a Vote of Security Holders ..    12

PART II

     Item 5.   Market for the Registrant's Common Equity and
                 Related Stockholder Matters ........................    12
     Item 6.   Selected Financial Data ..............................    13
     Item 7.   Management's Discussion and Analysis of
                 Results of Operations ..............................    14
     Item 7A.  Quantitative and Qualitative Disclosures
                 About Market Risk ..................................    22
     Item 8.   Financial Statements and Supplementary Data ..........    23
     Item 9.   Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure .............    47

PART III

     Item 10.  Directors and Executive Officers of the Registrant ...    47
     Item 11.  Executive Compensation ...............................    47
     Item 12.  Security Ownership of Certain Beneficial Owners
                 and Management .....................................    47
     Item 13.  Certain Relationships and Related Transactions .......    47

PART IV

     Item 14.  Exhibits, Financial Statement Schedules, and Reports
                 on Form 8-K ........................................    48



<PAGE>

                                     PART I

ITEM 1.   BUSINESS.

GENERAL ELECTRIC CAPITAL SERVICES, INC.

General Electric Capital Services, Inc. (herein,  together with its consolidated
affiliates, called "GE Capital Services", "the Corporation" or "GECS" unless the
context  otherwise  requires) was incorporated in 1984 in the State of Delaware.
Until February 1993, the name of the Corporation was General Electric  Financial
Services,  Inc. All outstanding  common stock of GE Capital Services is owned by
General Electric Company, a New York corporation ("GE Company"). The business of
GE Capital Services consists of ownership of two principal  subsidiaries  which,
together  with their  affiliates,  constitute GE Company's  principal  financial
services  businesses.  GE Capital Services is the sole owner of the common stock
of General Electric  Capital  Corporation ("GE Capital" or "GECC") and GE Global
Insurance Holding Corporation ("GE Global Insurance" or "GIH").

GE Capital Services'  principal  executive offices are located at 260 Long Ridge
Road, Stamford, Connecticut 06927 (Telephone number (203) 357-4000).


GENERAL ELECTRIC CAPITAL CORPORATION

GE  Capital  was  incorporated  in 1943  in the  State  of New  York  under  the
provisions  of the New York Banking Law  relating to  investment  companies,  as
successor to General Electric Contracts  Corporation,  which was formed in 1932.
The capital  stock of GE Capital was  contributed  to GE Capital  Services by GE
Company in June 1984.  Until  November  1987,  the name of the  corporation  was
General  Electric  Credit  Corporation.  The  business of GE Capital  originally
related principally to financing the distribution and sale of consumer and other
products of GE  Company.  Currently,  however,  the types and brands of products
financed and the services offered are significantly  more diversified.  Very few
of the products financed by GE Capital are manufactured by GE Company.

GE Capital  operates  in four  financing  industry  segments  and in a specialty
insurance  industry segment.  GE Capital's  financing  activities include a full
range of leasing, lending, equipment management sales and services, and consumer
savings and insurance  services.  GE Capital's  specialty  insurance  activities
include providing financial guaranty  insurance,  principally on municipal bonds
and structured finance issues, private mortgage insurance and creditor insurance
covering  international  customer  loan  repayments.  GE  Capital  is an  equity
investor in Montgomery Ward Holding Corp. ("MWHC"),  a retail organization,  and
certain other service and financial services organizations. As discussed on page
21 and in  note  3 to  the  consolidated  financial  statements,  MWHC  filed  a
bankruptcy petition for reorganization in 1997.

GE  Capital's  operations  are  subject  to a variety  of  regulations  in their
respective jurisdictions.

Services of GE Capital  are  offered  primarily  throughout  the United  States,
Canada,  Europe and the Pacific Basin. GE Capital's  principal executive offices
are located at 260 Long Ridge Road, Stamford, Connecticut 06927. At December 31,
1997, GE Capital and affiliates employed approximately 65,000 persons.


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GE GLOBAL INSURANCE HOLDING CORPORATION

GE Global  Insurance,  together with its affiliates,  writes  substantially  all
lines of  reinsurance.  Employers  Reinsurance  Corporation  ("ERC"),  GE Global
Insurance's  principal  affiliate,  together  with its  subsidiaries,  reinsures
property  and  casualty  risks  written by more than 1,000  insurers  around the
world,  and also writes certain  specialty lines of insurance on a direct basis,
principally excess workers' compensation for self-insurers, errors and omissions
coverage for insurance and real estate agents and brokers,  excess indemnity for
self-insurers of medical  benefits,  and libel and allied torts.  Other property
and casualty  affiliates write excess and surplus lines  insurance,  and provide
reinsurance  brokerage  services.  GE Global  Insurance  also is  engaged in the
reinsurance  of life insurance  products,  including  term,  whole and universal
life, annuities,  group long-term health products and the provision of financial
reinsurance to life insurers.

In July  1995,  GE Global  Insurance,  through  its ERC  affiliate,  acquired  a
majority of two German  reinsurance  businesses,  Frankona  Reinsurance Group in
Munich,  Germany  and  Aachen  Reinsurance  Group  in  Aachen,   Germany.  These
businesses, together with other ERC affiliates located in Denmark and the United
Kingdom, write property and casualty and life reinsurance, principally in Europe
and elsewhere throughout the world.

Insurance  and  reinsurance  operations  are  subject to  regulation  by various
insurance regulatory agencies.

GE Global Insurance and its affiliates  conduct business through 50 offices,  26
of which are in the United States.  GE Global  Insurance and certain  affiliates
are  licensed in all states of the United  States,  the  District  of  Columbia,
certain  provinces  of Canada  and in other  jurisdictions  - such  business  is
written on both a direct basis and through brokers.  The principal offices of GE
Global  Insurance  are located at 5200 Metcalf  Avenue,  Overland  Park,  Kansas
66201.  At December  31,  1997,  GE Global  Insurance  and  affiliates  employed
approximately 2,500 persons.

Item 1.  Business - Property and Casualty  Reserves for Unpaid  Claims and Claim
Expenses,  set forth in the  Annual  Report on Form 10-K of GE Global  Insurance
Holding  Corporation  for the year ended December 31, 1997, is  incorporated  by
reference hereto.


INDUSTRY SEGMENTS

The  Corporation  provides a wide variety of financing,  asset  management,  and
insurance  products and services which are organized into the following industry
segments:

    o        Consumer  Services -  private-label  and bank  credit  card  loans,
             personal  loans,  time sales and  revolving  credit  and  inventory
             financing  for  retail   merchants,   auto  leasing  and  inventory
             financing,  mortgage servicing,  and consumer savings and insurance
             services.

    o        Equipment  Management - leases,  loans,  sales and asset management
             services for portfolios of commercial and transportation equipment,
             including  aircraft,  trailers,  auto fleets,  modular space units,
             railroad rolling stock, data processing equipment,  containers used
             on ocean-going vessels, and satellites.

    o        Mid-Market Financing - loans and financing and operating leases for
             middle-market customers, including manufacturers,  distributors and
             end users, for a variety of equipment that includes data processing
             equipment,  medical and diagnostic equipment, and equipment used in
             construction,     manufacturing,     office     applications    and
             telecommunications activities.

    o        Specialized  Financing  - loans  and  financing  leases  for  major
             capital assets,  including industrial facilities and equipment, and
             energy-related  facilities;  commercial and residential real estate
             loans and  investments;  and loans to and investments in management
             buyouts,   including  those  with  high  leverage,   and  corporate
             recapitalizations.


                                       2
<PAGE>

    o        Specialty Insurance - U.S. and international multiple-line property
             and  casualty  reinsurance;   certain  directly  written  specialty
             insurance  and  life  reinsurance;  financial  guaranty  insurance,
             principally  on  municipal  bonds and  structured  finance  issues;
             private  mortgage   insurance;   and  creditor  insurance  covering
             international customer loan repayments.

Insurance services,  previously included within the Specialty Insurance segment,
has been  combined  with the consumer  savings and  insurance  operations in the
Consumer  Services  segment.  Prior-year  information  has been  reclassified to
reflect this and certain other organizational changes.

Refer  to  Item  7,   "Management's   Discussion  and  Analysis  of  Results  of
Operations,"  in this Form 10-K for  discussion of the  Corporation's  Portfolio
Quality.  A description of the  Corporation's  principal  businesses by industry
segment follows.

CONSUMER SERVICES

GE Financial Assurance

GE Financial  Assurance ("GEFA") provides consumers financial security solutions
by selling a wide variety of  insurance,  investment  and  retirement  products,
primarily in the United States, which help consumers accumulate wealth, transfer
wealth,  and protect their  lifestyles and assets.  It achieves this through its
family of insurance and annuity companies.

GEFA's  principal  product lines are annuities  (deferred and immediate;  either
fixed or  variable),  life  insurance  (universal,  term,  ordinary  and group),
guaranteed  investment  contracts,   mutual  funds,  long-term  care  insurance,
supplemental  accident  and  health  insurance,  personal  lines  of  automobile
insurance  and  credit   insurance.   The  distribution  of  these  products  is
accomplished  through  four  distribution  methods:   intermediaries  (brokerage
general agents,  banks,  securities brokerage firms,  personal producing general
agents and specialized  brokers),  career or dedicated  sales forces,  marketing
through businesses and affinity groups and direct marketing.

GEFA's principal  operating companies include General Electric Capital Assurance
Company,  First Colony Life Insurance  Company,  The Life  Insurance  Company of
Virginia, Colonial Penn Insurance Company, Union Fidelity Life Insurance Company
and GE Capital Life Assurance of New York.

GEFA headquarters are in Richmond, Virginia.

Auto Financial Services

Auto  Financial  Services  ("AFS")  is a full  service  provider  of  automobile
financing for automobile  dealers,  manufacturers  and their  customers in North
America, Europe and, to a lesser extent, Asia.

In the United  States,  AFS is one of the leading  independent  auto lessors and
offers leasing, retail financing and, to a lesser degree, sub-prime financing to
customers.  AFS also provides the  private-label  financing  for American  Isuzu
Motors, Inc. and participates in a private-label  purchase program with Volvo of
North America.  In addition,  AFS offers inventory financing programs and direct
loans to segments of the  automotive  industry,  including  dealers,  rental car
companies and leasing companies.

AFS is active in the European markets through  affiliates in France,  the United
Kingdom,  and Italy. AFS also provides  automobile  financing through businesses
located in  Austria,  Spain,  Sweden,  Poland,  and  Switzerland.  In 1997,  AFS
expanded  its  presence in Europe to include  Ireland,  Portugal,  Denmark,  and
Czechoslovakia through acquisitions.

                                       3
<PAGE>

AFS' Asian  activities  include  affiliates in Taiwan,  Hong Kong,  Thailand and
Japan. AFS also maintains additional presence in Asia through equity investments
in Indonesia, Taiwan, Singapore, Malaysia, Korea, and India.

AFS headquarters are in Barrington, Illinois.

Retailer Financial Services

Retailer  Financial  Services ("RFS") provides sales financing services to North
American retailers in a broad range of consumer industries. Details of financing
plans differ,  but include  customized  private-label  credit card programs with
retailers and inventory financing programs with manufacturers,  distributors and
retailers.

RFS provides  financing  directly to  customers  of  retailers or purchases  the
retailers'  customer  receivables.  Most  of the  retailers  sell a  variety  of
products of various  manufacturers  on a time sales  basis.  The terms for these
financing plans differ  according to the size of contract and credit standing of
the customer.  RFS generally  maintains a security  interest in the  merchandise
financed.  Financing is provided to consumers  under  contractual  arrangements,
both with and  without  recourse  to  retailers.  RFS' wide  range of  financial
services  includes  application  processing,   sales  authorization,   statement
billings, customer services and collection services.

RFS provides  inventory  financing for retailers  primarily in the appliance and
consumer  electronics  industries.  RFS  maintains  a security  interest  in the
inventory  and  retailers  are obliged to maintain  insurance  coverage  for the
merchandise financed.

RFS has a  noncontrolling  investment  in the common  stock of  Montgomery  Ward
Holding  Corp.  ("MWHC"),  which,  together  with its  wholly-owned  subsidiary,
Montgomery Ward & Co. Incorporated  ("MWC"), is engaged in retail  merchandising
and direct response marketing,  the latter conducted primarily through Signature
Financial/Marketing,   Inc.  ("Signature"),  which  markets  consumer  club  and
insurance  products.  RFS  also  provides  financing  to  customers  of MWHC and
affiliates.  As discussed on page 21 and in note 3 to the consolidated financial
statements,  MWHC,  MWC and certain of their  affiliates  (excluding  Signature)
filed a bankruptcy petition for reorganization in 1997.

RFS headquarters are in Stamford, Connecticut.

Global Consumer Finance

Global  Consumer  Finance  ("GCF") is a leading  provider of credit  services to
non-U.S.  retailers and consumers.  GCF provides  private-label credit cards and
proprietary credit services to retailers in Europe and Asia, as well as offering
a  variety  of  direct-to-consumer  credit  programs  such  as  consumer  loans,
bankcards and credit insurance.

During 1997, GCF expanded its European presence through  acquisitions  including
Multiservis AS in the Czech Republic,  Bank Aufina Ltd. in Switzerland,  and AVA
Bank in Austria.

GCF provides  financing to consumers  through  operations in the United Kingdom,
Austria,  France,  Ireland,  Germany, The Netherlands,  Italy, Spain,  Portugal,
Poland,  Switzerland,  Czech Republic, Japan, Thailand, Hong Kong, China, Brazil
and  Australia and joint  ventures in Indonesia  and India.  GCF's wide range of
proprietary  financial  services  includes  private-label  credit cards,  credit
promotion and accounting services, billing (in the retailer's name) and customer
credit and collection services.

GCF headquarters are in Stamford, Connecticut.

Mortgage Services

GE Capital Mortgage Corporation,  through its wholly-owned  affiliate GE Capital
Mortgage  Services,  Inc.  ("GECMSI"),  is   engaged   in   the    business   of
wholesale     originations     and  servicing   residential    mortgage    loans
collateralized    by   one - to - four - family   homes    located    throughout
the      United      States.     GECMSI      obtains      servicing      through


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the purchase of mortgage loans and servicing  rights,  and packages the loans it
purchases into  mortgage-backed  securities which it sells to investors.  GECMSI
also originates and services home equity loans.

GECMSI headquarters are in Cherry Hill, New Jersey.

Consumer Financial Services

Consumer   Financial   Services   ("CFS")   primarily   provides   and  services
MasterCard(R)  and Visa(R) credit card loan products issued to retail  customers
throughout  the United  States.  These loans  originate  through loan  portfolio
acquisitions, direct mail campaigns, private-label credit card loan conversions,
telemarketing efforts and point-of-sale applications.  During 1997, CFS acquired
two large  loan  portfolios,  totaling  $1,419  million,  and  suspended  active
participation  in the consumer home equity loan market by selling loans totaling
$594 million.

CFS also issues and services the GE Capital  Corporate Card,  providing  payment
and information systems which help medium and large-size companies reduce travel
costs,  and the GE Capital  Purchasing  Card,  which helps customers  streamline
their purchasing and accounts payable processes.

CFS has offices in Canton,  Ohio and Salt Lake City,  Utah. CFS headquarters are
in Mason, Ohio.

EQUIPMENT MANAGEMENT

Aviation Services

GE Capital Aviation Services ("GECAS") is a global commercial aviation financial
services  business  that offers a broad range of financial  products to airlines
and  aircraft  operators,  owners,  lenders and  investors.  Financial  products
include  financing  leases,  operating  leases,  and  tax-advantaged  and  other
incentive-based financing. GECAS also provides asset management,  marketing, and
technical support services to aircraft owners, lenders and investors.

GECAS has firm  orders  and  options  for more than 270 new  Boeing  and  Airbus
aircraft with deliveries  scheduled  through 2003. GECAS current fleet comprises
850  owned  and  managed  aircraft  leased  to more  than  150  customers  in 55
countries.

GECAS headquarters are in Stamford, Connecticut, with regional offices in Miami,
Florida;  Shannon, Ireland; Beijing and Hong Kong, China; Singapore; and Vienna,
Austria.

Fleet Services

GE Capital  Fleet  Services  ("GECFS")  is one of the  leading  corporate  fleet
management  companies with  operations in North America,  Europe,  Australia and
Japan  with  approximately  900,000  cars and  trucks  under  lease and  service
management.  GECFS  offers  finance  and  operating  leases to several  thousand
customers with an average lease term of 33 months.  The primary product in North
America is a Terminal  Rental  Adjustment  Clause (TRAC) lease through which the
customer  assumes the residual  risk - that is, risk that the book value will be
greater than market value at lease  termination.  In Europe, the primary product
is a closed-end  lease in which GECFS assumes  residual risk. In addition to the
services  directly  associated with the lease,  GECFS offers  value-added  fleet
management  services designed to reduce customers' total fleet management costs.
These services include, among others, maintenance management programs,  accident
services,  national  account  purchasing  programs,  fuel programs and title and
licensing services.  GECFS customer base is diversified with respect to industry
and geography and includes many Fortune 500 companies.

During 1997,  GECFS  completed  acquisitions of ARO Lease in The Netherlands and
BRS Leasing in the United Kingdom.

GECFS headquarters are in Eden Prairie, Minnesota.


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IT Solutions

GE Capital IT Solutions ("IT  Solutions") is a leading  worldwide  provider of a
broad array of information technology products and services, including full life
cycle services that provide customers with cost-effective control and management
of  their  information  systems.   Products  offered  include  desktop  personal
computers,  client server  systems,  UNIX  systems,  local and wide area network
hardware, and software.  Included among the services offered are network design,
network support,  asset management,  help desk,  disaster  recovery,  enterprise
management and financial services.  IT Solutions serves commercial,  educational
and governmental  customers in over 20 countries around the world.  During 1997,
the company  expanded its global  presence  through  acquisitions  in the United
States,  Canada,  Mexico,  Brazil,  the United  Kingdom,  Portugal,  Austria and
Denmark.

IT Solutions headquarters are in Stamford, Connecticut.

Transport International Pool

Transport  International Pool ("TIP") is one of the leading trailer  specialists
offering diverse trailer programs and associated  services.  TIP's fleet of over
150,000 dry freight,  refrigerated and double vans, flatbeds, intermodal assets,
and  specialized  trailers is available for rent,  lease or purchase at over 200
locations in the United States,  Europe,  Canada,  and Mexico.  TIP's commercial
vehicle fleet of over 20,000 units is available for rent,  lease, or purchase in
the United  Kingdom.  TIP also  finances new and used  trailers and buys trailer
fleets.  During 1997,  TIP acquired  two  publicly  traded  companies in Europe:
Central  Transport  Rental Group plc, a pan-European  trailer rental and leasing
business,  and TLS plc, a United Kingdom  commercial  vehicle rental and leasing
business.  TIP's customer base comprises trucking  companies,  manufacturers and
retailers.

TIP  operates a European  service  center in  Amsterdam,  The  Netherlands.  TIP
headquarters are in Devon, Pennsylvania.

Genstar Container

Genstar Container Corporation  ("Genstar") is one of the world's largest lessors
of marine shipping  containers.  Genstar maintains a fleet of over 1,100,000 TEU
("twenty-foot  equivalent  units") of dry-cargo,  refrigerated  and  specialized
containers  for global cargo  transport.  Lessees are primarily  shipping  lines
which lease on a long-term or master lease basis.

In September 1997, a memorandum of understanding  was signed with Sea Containers
Ltd.  to form GE SeaCo Ltd.,  a joint  venture to operate  the  combined  marine
container fleet of Genstar and Sea Containers Ltd. The joint venture is expected
to be formed in 1998.

Genstar headquarters are in San Francisco, California.

Penske Truck Leasing

GE Capital is a  limited  partner in  Penske  Truck  Leasing  ("Penske"),  which
operates the second largest  full-service  truck leasing  business and is one of
the largest  commercial  and  consumer  truck  rental  businesses  in the United
States. Penske operates through a national network of full-service truck leasing
and rental facilities.  At December 31, 1997, Penske had a fleet of about 73,000
tractors,  trucks and  trailers in its leasing  and rental  fleets and  provided
contract  maintenance  programs  or other  support  services  for  about  28,500
additional vehicles.

Penske also provides  dedicated  logistics  operations  support  which  combines
company-employed  drivers  with  its  full-service  lease  vehicles  to  provide
dedicated  contract carriage services.  In addition,  Penske offers supply chain
services such as distribution  consulting,  warehouse management and information
systems support.

Penske headquarters are in Reading, Pennsylvania.


                                       6
<PAGE>

Satellite Telecommunications Services

GE  American  Communications  ("GE  Americom")  is a leading  satellite  service
supplier to a diverse array of  customers,  including the broadcast and cable TV
industries,  broadcast radio, business information and integrated communications
services  for  government  and  commercial  customers.  GE Americom  operates 12
communications  satellites and maintains a supporting network of earth stations,
central terminal offices,  and telemetry,  tracking and control  facilities.  GE
Americom's GE Capital Spacenet  Services  business offers a full range of global
one-way and two-way Very Small Aperture  Terminal  (VSAT)  network  products and
services.

GE Americom headquarters are in Princeton, New Jersey.

Railcar Services

GE Capital  Railcar  Services  ("GERSCO") is one of the leading  railcar leasing
companies in North America, with over 180,000 railcars in its portfolio. Serving
Class I railroads,  short-line railroads, and shippers throughout North America,
GERSCO  offers one of the most  diverse  fleets in the industry and a variety of
lease options.

GERSCO  also owns and  operates  a network of  railcar  repair  and  maintenance
facilities  located  throughout  North America.  The repair  facilities  offer a
variety of services,  ranging from light  maintenance to heavy repair of damaged
railcars. The company also provides railcar management, administration and other
services.

In addition,  Cargowaggon,  GERSCO's pan-European business acquired during 1997,
provides rail transport  services and rail wagons to the  automotive,  steel and
paper  industries  in  Eastern  and  Western  Europe.  Cargowaggon  is  based in
Frankfurt,  Germany and has  offices in the United  Kingdom,  Italy,  Sweden and
France.

GERSCO headquarters are in Chicago, Illinois.

Modular Space

GE Capital Modular Space ("GECMS") provides non-residential  relocatable modular
structures  for rental,  lease and sale from over 100  facilities  in the United
States,   Europe,   Canada  and  Mexico.  The  primary  markets  served  include
construction,  education, healthcare,  financial, commercial,  institutional and
government.   GECMS  products  are  tailored  as  much  as  possible  to  client
specifications,  accomplished  through  either  custom  modular units or through
GECMS stock fleet of  approximately  103,200 modular units.  In addition,  GECMS
operating  leases range from a few months to sixty months,  with an average term
of 12-18 months.

During 1997, GECMS continued its European growth through acquisitions  including
Bacon B.V. in The Netherlands,  Adco & Dixi GmbH and ACB GmbH in Germany, AFIBAT
in France, and DBS Nationwide plc in the United Kingdom.

GECMS has  offices  in North  America  and  Europe.  GECMS  headquarters  are in
Malvern, Pennsylvania.

Technology Management Services

GE Capital  Technology  Management  Services ("TMS") has provided  services that
enable  customers to use information  technology  more  efficiently by combining
consulting  and other  services,  including  data center  outsourcing  services.
During  1997,  TMS sold its  test  equipment  rental,  repair  and  calibrations
services businesses,  as well as certain assets of its computer rental business.
Effective January 1, 1998,  operational  control of the TMS consulting  business
was transferred to IT Solutions.  In addition,  in March 1998, TMS announced the
sale of its data center outsourcing business.

TMS headquarters are in Alpharetta, Georgia.


                                       7
<PAGE>

MID-MARKET FINANCING

Commercial Equipment Financing

GE  Capital  Commercial  Equipment  Financing  ("CEF")  offers  a broad  line of
financial  products  including  leases  and  loans to  middle-market  customers,
including  manufacturers,  distributors,  dealers  and  end-users,  as  well  as
municipal financing.  Products are either held for CEF's own account or brokered
to third parties.

Generally,  transactions  range in size from $50 thousand to $50  million,  with
financing  terms from 36 to 120 months.  CEF also maintains an asset  management
operation that both redeploys off-lease equipment and monitors asset values. The
portfolio  includes  loans and leases  for  vehicles,  manufacturing  equipment,
corporate aircraft, construction equipment, medical diagnostic equipment, office
equipment, telecommunications equipment and electronics.

CEF operates from offices  throughout  the United States,  Puerto Rico,  Canada,
Mexico,  Europe,  India and Asia and through  joint  ventures in  Indonesia  and
China. CEF headquarters are in Danbury, Connecticut.

Vendor Financial Services

GE Capital Vendor Financial Services ("VFS") provides captive financing services
to over 90 equipment manufacturers and more than 3,500 dealers in North America,
Europe and Asia.  Customers  include major U.S. and foreign  manufacturers  in a
variety  of  industries  including  information  technology,  office  equipment,
healthcare, telecommunications, energy and industrial equipment. VFS establishes
sales  financing  captives in two ways - by forming  captive  partnerships  with
manufacturers  that  do  not  have  them,  and  by  outsourcing   captives  from
manufacturers  that do. VFS offers  industry-specific  knowledge,  leading  edge
technology,  leasing  and  equipment  expertise,  and  global  capabilities.  In
addition,  VFS  provides an  expanding  array of related  financial  services to
customers including trade payables financing and inventory financing.

In  1997,  VFS  acquired  Transleasing  Inc.,  expanding  its  presence  in  the
healthcare industry.  VFS also expanded its European financing capabilities with
the   acquisition   of  Fimacom   Financiere   Matra   Comm,   S.A.,   a  French
telecommunications  captive, and through GE Capital's acquisition of Woodchester
Investments plc with locations in Ireland, Portugal and the United Kingdom.

VFS has sales offices  throughout the United  States,  Canada,  Mexico,  Europe,
Asia, and Australia. VFS headquarters are in Danbury, Connecticut.

GE Capital Hawaii

GE Capital Hawaii Inc.  ("GECH") operates in the states of Hawaii and Alaska and
in the  territory of Guam.  Through a network of 8 branch  offices,  GECH offers
commercial  and  residential  real estate  loans,  auto and  equipment  leasing,
inventory financing, equity lines of credit and modular space rental and sales.

GECH headquarters are in Honolulu, Hawaii.

SPECIALIZED FINANCING

Commercial Real Estate

Commercial  Real Estate  Financing and Services  ("CRE")  provides funds for the
acquisition,  refinancing  and  renovation  of a wide  range of  commercial  and
residential  properties located  throughout the United States,  and, to a lesser
extent,  in Canada,  Mexico  and  Europe.  CRE also  provides  asset  management
services to real estate investors and selected services to real estate owners.


                                       8
<PAGE>

Lending is a major  portion of CRE's  business in the form of  intermediate-term
senior or  subordinated  fixed  and  floating-rate  loans  secured  by  existing
income-producing   commercial  properties  such  as  office  buildings,   rental
apartments,  shopping centers,  industrial buildings,  mobile home parks, hotels
and warehouses.  Loans range in amount from single-property  mortgages typically
not less than $5 million to multi-property portfolios of several hundred million
dollars. Approximately 90% of all loans are senior mortgages.

CRE  purchases  and provides  restructuring  financing  for  portfolios  of real
estate,  mortgage  loans,  limited  partnerships,  and tax-exempt  bonds.  CRE's
business also includes the origination and  securitization  of low leverage real
estate  loans,  which  are  intended  to be  held  less  than  one  year  before
outplacement.  To a lesser degree,  CRE provides  equity capital for real estate
partnerships  through the holding of limited partnership  interests and receives
preferred  returns;  typical  such  investments  range  from $2  million  to $10
million.

CRE also  offers  a  variety  of real  estate  management  services  to  outside
investors, institutions,  corporations, investment banks, and others through its
real  estate  services   subsidiaries.   Asset   management   services   include
acquisitions and dispositions,  strategic asset management, asset restructuring,
and debt and  equity  management.  CRE also  provides  investment  products  and
advisory  and asset  management  services  to pension  fund  clients  through GE
Capital Investment Advisors,  its registered investment advisor, as well as loan
administration  and servicing through GE Capital Asset Management.  In addition,
CRE offers owners of multi-family housing ways to reduce costs and enhance value
in properties by offering buying services  (e.g.,  for appliances,  roofing) and
bundled telecommunications and video services.

CRE has offices  throughout  the United  States,  as well as in Canada,  Mexico,
Singapore,  Sweden,  France  and the United  Kingdom.  CRE  headquarters  are in
Stamford, Connecticut.

Structured Finance Group

Structured  Finance Group ("SFG") develops  specialized  financial  products and
services  to  meet  the  specific  transaction  requirements  of  corporate  and
government clients.

SFG provides  capital,  capital market services and financial  advisory services
for major infrastructure, energy, telecommunications, and industrial development
worldwide.   The  range  of  financial   services   includes   project   finance
(construction and term), corporate finance,  acquisition finance and arrangement
and  placement  services.   Products  include  a  variety  of  debt  and  equity
instruments,  with particular  concentration in structured finance transactions,
including leasing and partnerships.

SFG has offices in the United States,  Australia,  Brazil,  Canada,  China, Hong
Kong, India, Mexico,  Singapore, and the United Kingdom. SFG headquarters are in
Stamford, Connecticut.

Commercial Finance

GE Capital Commercial Finance ("CF") is a leading provider of revolving and term
debt, and equity to finance acquisitions, business expansion, bank refinancings,
recapitalizations  and other  special  situations.  Products  also include asset
securitization  facilities,  capital  expenditure  lines and  bankruptcy-related
facilities.  Transactions  typically range in size from under $5 million to over
$200 million.

CF's  clients  are  owners,  managers  and  buyers of both  public  and  private
companies,  principally manufacturers,  distributors,  retailers and diversified
service  providers  in the  healthcare,  retail and  communications  industries.
Through its Merchant Banking Group, CF provides senior debt,  subordinated  debt
and bridge financing to buyout and private equity firms,  and co-invests  equity
with buying groups, or invests directly on a select basis.

CF has  lending  operations  in 25 cities,  including  international  offices in
Toronto,  Montreal,  Mexico City, and London, and also has significant factoring
operations in France and Italy serving European companies and U.S. exporters. CF
headquarters are in Stamford, Connecticut.


                                       9
<PAGE>

Equity Capital Group

Equity Capital Group ("ECG") purchases equity investments, primarily convertible
preferred and common stock investments including,  in some cases, stock warrants
convertible into equity ownership.  ECG's primary objective is long-term capital
appreciation.  Investments include the retail,  financial services,  healthcare,
food and beverage, cable and broadcasting industries.

The portfolio is geographically  diversified with investments located throughout
the United States, as well as in Latin America, Europe and Asia.

ECG headquarters are in Stamford, Connecticut.

SPECIALTY INSURANCE

In addition to GE Global Insurance Holding  Corporation  (discussed above), GECS
principal specialty insurance businesses are as follows.

Financial Guaranty Insurance

FGIC Holdings  ("FGIC"),  through its subsidiary,  Financial  Guaranty Insurance
Company ("Financial Guaranty"),  is an insurer of municipal bonds, including new
issues,  bonds traded in the secondary  market and bonds held in unit investment
trusts and mutual funds.  Financial  Guaranty also  guarantees  certain  taxable
structured  debt.  The  guaranteed  principal,  after  reinsurance,  amounted to
approximately  $108  billion at  December  31,  1997.  Approximately  85% of the
business written to date by Financial Guaranty is municipal bond insurance.

During  1997,  FGIC  acquired a  Chicago-based  specialty  property and casualty
insurer serving the public entity market. FGIC subsidiaries provide a variety of
services to state and local  governments and agencies,  liquidity  facilities in
variable-rate transactions, municipal investment products and other services.

FGIC headquarters are in New York, New York.

Mortgage Insurance

GE Capital Mortgage  Insurance is engaged  principally in providing  residential
mortgage  guaranty  insurance.  Operating  in 25  field  locations,  GE  Capital
Mortgage  Insurance  is licensed in 50 states,  the District of Columbia and the
Virgin  Islands.  At December 31, 1997,  GE Capital  Mortgage  Insurance was the
mortgage  insurance  carrier for over 1,480,000  residential  homes,  with total
insurance  in force  aggregating  approximately  $153  billion and total risk in
force  aggregating  approximately  $40  billion.  When a claim is  received,  GE
Capital  Mortgage  Insurance  proceeds  by  either  paying  up  to a  guaranteed
percentage  based  on  the  specified  coverage,  or  paying  the  mortgage  and
delinquent interest, taking title to the property and arranging for its sale. GE
Capital  Mortgage  Insurance also provides  mortgage  guaranty  insurance in the
United Kingdom and Canada, and commencing in 1998, in Australia.

GE Capital Mortgage Insurance headquarters are in Raleigh, North Carolina.

Creditor Insurance

Consolidated  Financial  Insurance  ("CFI") is one of the leading  providers  of
payment protection  insurance in the United Kingdom and has insurance operations
in 11  countries in Europe and in  Australia.  Payment  protection  insurance is
designed  to  protect  customers'  loan  repayment  obligations  in the event of
unemployment,  disability or death.  The product is sold alongside most forms of
consumer credit through banks, building societies and finance houses.


                                       10
<PAGE>

CFI also  offers  personal  accident  insurance,  which is  distributed  through
financial institutions,  and personal investment products, which are distributed
through a network of over 6,000  independent  financial  advisors  in the United
Kingdom.  CFI is also a  leading  administrator  of  extended  product  warranty
insurance in the United Kingdom.

During  1997,  CFI  expanded  its product  and  distribution  with  acquisitions
including Pet Protect Ltd., a pet insurance  administrator;  First Call Accident
Assistance  Ltd.,  offering  management and recovery of uninsured loss claims on
behalf of victims of road traffic accidents; World Cover and Accident & General,
travel insurance brokers and administrators; and Stalwart Group Ltd., a provider
of compulsory purchase annuities and home income products.

CFI headquarters are in London, England.


REGULATIONS AND COMPETITION

The  Corporation's  activities  are  subject to a variety  of federal  and state
regulations including, at the federal level, the Consumer Credit Protection Act,
the Equal Credit  Opportunity Act and certain  regulations issued by the Federal
Trade  Commission.  A majority of states have  ceilings on rates  chargeable  to
customers in retail time sales  transactions,  installment  loans and  revolving
credit  financing.  Common  carrier  services  of GE  Americom  are  subject  to
regulation by the Federal Communications  Commission.  Insurance and reinsurance
operations are subject to regulation by various state  insurance  commissions or
foreign regulatory authorities,  as applicable. The Corporation's  international
operations are subject to regulation in their respective jurisdictions. To date,
compliance with such  regulations  has  not had a material adverse effect on the
Corporation's financial position or results of operations.

The  businesses in which the  Corporation  engages are highly  competitive.  The
Corporation  is  subject  to   competition   from  various  types  of  financial
institutions, including banks, thrifts, investment banks, broker-dealers, credit
unions,  leasing  companies,   consumer  loan  companies,   independent  finance
companies,  finance  companies  associated  with  manufacturers,  insurance  and
reinsurance companies.


ITEM 2.   PROPERTIES.

GE Capital Services and its  subsidiaries  conduct their businesses from various
facilities, most of which are leased.


ITEM 3.   LEGAL PROCEEDINGS.

The  following  is  not  material  to  the   Corporation  but  is  provided  for
informational purposes. As previously reported, following the announcement by GE
Company on April 17, 1994, of a $210 million  charge to net earnings  based upon
its  discovery  of false  trading  profits at its indirect  subsidiary,  Kidder,
Peabody  & Co.,  Incorporated  ("Kidder"),  the  United  States  Securities  and
Exchange  Commission  ("SEC"),  the  United  States  Attorney  for the  Southern
District of New York, and the New York Stock Exchange  initiated  investigations
relating to the false  trading  profits.  On January 9, 1996,  the SEC initiated
administrative  enforcement  proceedings  against  the former  head of  Kidder's
government  securities  trading desk,  Joseph Jett,  alleging that he engaged in
securities fraud and other violations and against two of his former  supervisors
for failure to supervise. Also, two civil suits purportedly brought on behalf of
GE  Company  as  shareholder  derivative  actions  were  filed in New York State
Supreme Court in New York County. Both suits claimed that GE Company's directors
breached their fiduciary duties to GE Company by failing to adequately supervise
and control the Kidder employee responsible for the irregular trading. One suit,
claiming  damages  of over  $350  million,  was  filed on May 10,  1994,  by the
Teachers'  Retirement  System of  Louisiana  against GE Company,  its  directors
(other than Messrs. Cash, Dammerman, Murphy, Nunn, Opie and Penske), Kidder, its
parent,  Kidder, Peabody Group Inc., and certain of Kidder's former officers and
directors.  The other suit was filed on June 3, 1994,  by  William  Schrank  and
others against GE Company's  directors  claiming  unspecified  damages and other
relief.  Both suits were  consolidated in an amended complaint filed on March 6,
1995. On May 19, 1995, GE Company and the director  defendants  moved to dismiss
the amended consolidated  complaint for failure to make a pre-litigation demand,
among   other   reasons.   On  April  16,  1996,  the    court   dismissed   the
amended    consolidated    complaint    for   failure     to   make    a    pre-


                                       11
<PAGE>

litigation  demand.  On November 18,  1997,  a four-judge  panel of the New York
Supreme Court,  Appellate Division,  First Department,  unanimously affirmed the
dismissal of the suits, and, on January 27, 1998, denied  plaintiff's motion for
leave  to  appeal  to the New  York  Court  of  Appeals.  In  addition,  various
shareholders  of GE Company have filed two purported class action suits claiming
that GE  Company  and  Kidder,  and  certain of  Kidder's  former  officers  and
employees,  allegedly  violated  federal  securities laws by issuing  statements
concerning  GE Company's  financial  condition  that  included the false trading
profits at  Kidder,  and  seeking  compensatory  damages  for  shareholders  who
purchased GE Company's  stock beginning as early as January 1993. The defendants
filed motions to dismiss these purported class action suits. On October 4, 1995,
the court dismissed the complaint  against GE Company,  but denied the motion to
dismiss the complaint against Kidder. On November 3, 1995, the plaintiffs in the
case against GE Company appealed the trial court's  dismissal of their complaint
to the Second Circuit Court of Appeals, which affirmed the lower court decision.
In light of the dismissal of the purported shareholder  derivative suits against
the directors named as defendants, this matter will no longer be updated because
the remaining proceedings are not material to GE Company or GE Capital Services.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

                                     Omitted



                                     PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS.

See note 13 to the consolidated  financial  statements.  The common stock of the
Corporation is owned entirely by GE Company and, therefore,  there is no trading
market in such stock.


                                       12
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA.

The following  selected  financial data should be read in  conjunction  with the
financial statements of GE Capital Services and consolidated  affiliates and the
related Notes to Consolidated Financial Statements.

<TABLE>
<CAPTION>

                                                                          YEAR ENDED DECEMBER 31
                                                       --------------------------------------------------------
(Dollar amounts in millions)                              1997        1996        1995        1994        1993
                                                       --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>
Revenues ...........................................   $ 39,931    $ 32,713    $ 26,492    $ 19,875    $ 17,276

Earnings from continuing operations ................      3,256       2,817       2,415       2,085       1,567
Earnings (loss) from discontinued operations <F1> ..       --          --          --        (1,189)        240
Net earnings .......................................      3,256       2,817       2,415         896       1,807

Return on common equity <F2> <F3> ..................      22.59%      22.24%      21.98%      20.14%      16.59%
GECS ratio of earnings to fixed charges <F4> .......       1.56        1.55        1.53        1.65        1.63
GECC ratio of earnings to fixed charges <F4> .......       1.48        1.53        1.51        1.63        1.62
GECC ratio of debt to equity <F2> ..................       7.94        7.92        7.89        7.94        7.96

Financing receivables - net ........................   $103,799    $ 99,714    $ 93,272    $ 76,357    $ 63,948

Percent of allowance for losses on financing
  receivables to total financing receivables .......       2.63%       2.63%       2.63%       2.63%       2.63%

Total assets .......................................   $255,408    $227,419    $185,729    $144,967    $126,637

Short-term borrowings ..............................     95,274      77,945      62,808      57,087      55,243
Long-term senior notes .............................     44,993      46,680      47,794      33,615      25,112
Long-term subordinated notes .......................        996         996         996         697         697
Minority interest ..................................      3,113       2,530       2,522       1,465       1,301
Equity .............................................     17,239      14,276      12,774       9,380      10,809

Insurance premiums written for the year ............      9,396       8,185       6,158       3,962       3,956

<FN>
<F1>   In 1994, the Corporation  terminated  the operations  of  Kidder, Peabody
       Group Inc.

<F2>   Equity excludes unrealized gains and losses on investment securities, net
       of tax.

<F3>   Return on common equity is  calculated  using  earnings  from  continuing
       operations.  Earnings are  adjusted for  preferred  stock  dividends  and
       equity excludes preferred stock.

<F4>   Ratio  of   earnings  to  fixed  charges  is  calculated  using  earnings
       from continuing operations.

</FN>
</TABLE>


                                       13
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.

OVERVIEW

The  Corporation's  net earnings were $3,256 million in 1997, up 16% from $2,817
million in 1996,  which increased 17% from 1995. The increase in net earnings in
both 1997 and 1996 was largely  attributable  to the effects of continued  asset
growth,  principally from  acquisitions of businesses and portfolios  throughout
the period and higher origination volume in 1997.

The increase in earnings in both years reflected strong  performances in most of
the  financing  segments.  Earnings  in 1997  were  affected  by  higher  losses
associated with the  Corporation's  investment in Montgomery Ward Holding Corp.,
discussed on page 21, as well as by increased  automobile residual losses. These
matters  were more than  offset by asset  gains,  the  largest of which was $284
million  (net of tax) from a  transaction  that  included  the  reduction of the
Corporation's  investment  in the  common  stock  of  Paine  Webber  Group  Inc.
Financing  spreads (the excess of yields over interest rates on borrowings) were
essentially  flat in 1997 and 1996 as the  reduction  in  yields  was  offset by
decreases  in borrowing  rates.  Increased  investment  income was caused by the
combination of ongoing growth in the investment portfolios and a higher level of
gains on investment securities.

Earnings in the  Specialty  Insurance  segment  also grew in 1997 and 1996.  The
increase in 1997 primarily  reflected higher  investment  income,  the result of
continued  growth  in  investment  portfolios  and  higher  gains on  investment
securities, as well as improved earnings in the mortgage insurance business, the
result of improved market  conditions.  Higher  insurance  losses,  reserves and
other costs and expenses  partially  offset these  increases.  The 1996 increase
principally  reflected  the  effects of a full  year's  results of the  European
property and casualty  reinsurance  businesses  acquired in 1995: higher premium
and investment  income,  partially  offset by increases in insurance  losses and
other costs and expenses.

OPERATING RESULTS

REVENUES from all sources increased 22% to $39.9 billion in 1997 following a 23%
increase to $32.7 billion in 1996.  Significant portions of the revenue increase
of the  financing  segments  arose  from  the  computer  equipment  distribution
businesses  acquired  during  1997 and 1996 and from the  consumer  savings  and
insurance  businesses acquired during 1996 and 1995. Asset growth contributed to
increased  revenues in both years,  but was  partially  offset by lower  yields.
Financing segments revenues were negatively affected by higher losses associated
with the investment in Montgomery  Ward Holding Corp.  That effect was more than
offset by gains on asset transactions, including securitizations.

Specialty  Insurance  revenues  increased  8% to $8.8  billion in 1997 from $8.2
billion in 1996,  which was up 16% over 1995. The increase in 1997 resulted from
increased  premium and investment  income  associated with  origination  volume,
acquisitions  and continued  growth in the investment  portfolios,  as well as a
higher level of gains from  investment  securities.  GE Global  Insurance's  net
premiums earned on U.S. business increased in 1997 - the result of strong growth
in the life  reinsurance  business  - while  net  premiums  earned  on  European
business  declined,  reflecting the effects of currency  translation  and market
conditions.  The increase in 1996  primarily  resulted from  inclusion of a full
year's  results for the European  property and casualty  reinsurance  businesses
acquired in 1995. GE Global  Insurance's  net premiums  earned on U.S.  business
declined  in  1996 on  lower  industry-wide  pricing  and  the  exit of  certain
unprofitable  reinsurance  contracts.  Revenues  from  the  Corporation's  other
insurance  businesses  increased  during  1997  and  1996  as a  result  of both
origination volume and acquisitions.

INTEREST EXPENSE on borrowings in 1997 was $7.6 billion, 4% higher than in 1996,
which was 10% higher than in 1995. The increases in 1997 and 1996 were caused by
higher average borrowings used to finance asset growth,  partially offset by the
effects of lower average  interest  rates.  The  composite  interest rate on the
Corporation's  borrowings  was 6.07% in 1997,  compared  with  6.24% in 1996 and
6.76% in 1995. See pages 18-20 for an analysis of interest rate sensitivities.


                                       14
<PAGE>

OPERATING AND ADMINISTRATIVE EXPENSES were $11.4 billion in 1997, a 19% increase
over 1996,  which was 31% higher than 1995.  The  increase in both 1997 and 1996
primarily reflected costs associated with acquired businesses and portfolios and
higher investment levels.

INSURANCE LOSSES AND  POLICYHOLDER  AND ANNUITY  BENEFITS  increased 24% to $8.3
billion in 1997,  compared  with a 26% increase to $6.7  billion in 1996.  These
increases  were  primarily  driven  by  business   acquisitions  and  growth  in
originations throughout the period.

COST OF GOODS  SOLD was  associated  with the  computer  equipment  distribution
businesses.  This cost  amounted  to $4.1  billion in 1997,  compared  with $1.7
billion  in 1996 and $0.4  billion in 1995,  the  result of  acquisition-related
growth in 1997 and 1996.

PROVISION  FOR LOSSES ON FINANCING  RECEIVABLES  increased to $1,421  million in
1997,  compared with $1,033  million in 1996 and $1,117  million in 1995.  These
provisions principally related to private-label credit cards, bank credit cards,
auto loans and auto leases in the Consumer  Services  segment,  all of which are
discussed  below under  Portfolio  Quality.  The  increase  in 1997  principally
reflected higher average receivable balances as well as increased  delinquencies
in the consumer portfolio, consistent with industry experience. Higher portfolio
growth from originations resulted in higher provisions in 1995 than in 1996.

DEPRECIATION  AND  AMORTIZATION  OF BUILDINGS  AND  EQUIPMENT  AND  EQUIPMENT ON
OPERATING  LEASES  increased 14% to $2,460  million in 1997 compared with $2,150
million in 1996,  a 7% increase  over 1995.  The  increase in both years was the
result of additions to equipment  on operating  leases,  primarily  reflecting a
shift in auto  lease  volume  from  financing  leases to  operating  leases  and
increased volume in aircraft.

PROVISION FOR INCOME TAXES was $1,166  million in 1997 (an effective tax rate of
26.4%),  compared  with $1,231  million in 1996 (an effective tax rate of 30.4%)
and $1,105  million in 1995 (an effective  tax rate of 31.4%).  The decreases in
the 1997 provision for income taxes and effective tax rate were primarily caused
by increased tax credits and decreased taxes on non-U.S. earnings. The provision
for income  taxes  increased  in 1996,  reflecting  increased  pre-tax  earnings
subject to statutory tax rates; the lower effective tax rate resulted  primarily
from increased tax credits and decreased taxes on non-U.S. earnings.

OPERATING PROFIT BY INDUSTRY SEGMENT

Operating profit of the Corporation,  by industry segment, is summarized in note
17 to the consolidated financial statements and discussed below.

CONSUMER  SERVICES  operating  profit was $563  million in 1997,  compared  with
$1,268  million in 1996 and $1,044  million in 1995.  As indicated  above,  1997
operating  profit  included  higher  losses  associated  with the  investment in
Montgomery Ward Holding Corp. ("MWHC"), increased automobile residual losses and
a higher  provision  for  losses on  financing  receivables,  reflecting  higher
average  receivable  balances  and  increased  delinquencies,   consistent  with
industry  experience.  These items were partially offset by acquisition and core
growth,  principally from the consumer savings and insurance businesses, as well
as gains on asset transactions,  including securitizations. The increase in 1996
was led by strong  performances  from the auto  finance,  consumer  savings  and
insurance and non-U.S. private-label credit card businesses, resulting from both
acquisition  growth  and  higher  origination  volume.  The 1996  increase  also
reflected  improved market conditions in the mortgage  servicing  business.  The
1996  increases  were partially  offset by a higher  provision for losses,  also
reflecting  higher  average  receivable  balances and  increased  delinquencies,
consistent  with  industry  experience,  and higher losses  associated  with the
investment in MWHC.

EQUIPMENT  MANAGEMENT  operating profit increased to $1,062 million in 1997 from
$892 million in 1996, which was up from $870 million in 1995.  Increases in both
years reflected higher volume in most businesses resulting from originations and
acquisitions  of  businesses  and  portfolios.  The 1996  increase  included the
effects of the computer equipment  distribution  businesses acquired,  which was
partially  offset by  absence  of a  counterpart  to the 1995 gain on sale of an
outdoor media business.


                                       15
<PAGE>

SPECIALIZED  FINANCING operating profit increased to $1,489 million in 1997 from
$742 million in 1996, which increased 9% over 1995.  Increased  operating profit
in 1997 primarily  reflected  higher asset gains,  the largest of which was $284
million  (net of tax) from a  transaction  that  included  the  reduction of the
Corporation's  investment  in the common  stock of Paine  Webber  Group Inc. The
increase in 1996 principally  reflected lower  provisions for losses,  primarily
related to lower investment levels from sales of receivables and loan repayments
and improved  conditions in commercial real estate, and higher sales of warrants
and other equity  interests.  These increases were offset in part by a reduction
in  earnings  related to the lower  investment  levels and  increased  operating
expenses.

MID-MARKET  FINANCING  operating  profit  increased  to $622  million  in  1997,
compared  with $558  million  in 1996,  which was up from $467  million in 1995.
Asset growth from higher volumes and  acquisitions  of businesses and portfolios
was the most significant contributing factor in both years.

SPECIALTY  INSURANCE  operating  profit increased to $1,293 million in 1997 from
$1,238  million in 1996,  which  increased  from  $1,002  million  in 1995.  The
increase in 1997 primarily  reflected higher  investment  income,  the result of
continued  growth  in  investment  portfolios  and  higher  gains on  investment
securities, as well as improved earnings in the mortgage insurance business, the
result of improved market  conditions.  Higher  insurance  losses,  reserves and
other costs and expenses partially offset these increases.  The increase in 1996
principally  reflected  the  effects of a full  year's  results of the  European
property and casualty  reinsurance  businesses  acquired in 1995: higher premium
and  investment  income  partially  offset by increases in insurance  losses and
other costs and expenses.

INTERNATIONAL OPERATIONS

The  Corporation's  international  operations  include  its  operations  located
outside  the  United  States  and  certain  of its  operations  that  cannot  be
meaningfully  associated with specific  geographic areas (for example,  shipping
containers  used  on  ocean-going  vessels).  The  Corporation's   international
revenues  were $13.7  billion in 1997,  an increase of 18% from $11.6 billion in
1996,  while  international  assets grew 21% from $65.3  billion at December 31,
1996,  to $79.2  billion  at the end of 1997.  This  revenue  and  asset  growth
occurred  primarily in Europe and, to a lesser extent, in Canada and the Pacific
Basin.  These  increases  were  attributable  to  the  Corporation's   continued
expansion as a global provider of a wide range of services.

Recent economic  developments  in parts of Asia have altered  somewhat the risks
and opportunities of the Corporation's  activities in affected economies.  These
activities  encompass  primarily  leasing  of  aircraft  and  providing  certain
financial  services within those Asian economies.  As such,  exposure exists to,
among other things,  increased receivable delinquencies and potential bad debts,
delays in orders,  principally  related  to  aircraft-related  equipment,  and a
slowdown  in   financial   services   activities.   Conversely,   new   sourcing
opportunities may arise and  liberalization  of financial  regulations opens new
opportunities to penetrate Asian financial  services markets.  Taken as a whole,
while this situation bears close monitoring and increased management  attention,
the current  situation is not expected to have a material  adverse effect on the
Corporation's financial position, results of operations or liquidity in 1998.

CAPITAL RESOURCES AND LIQUIDITY

STATEMENT OF FINANCIAL POSITION

INVESTMENT   SECURITIES  for  each  of  the  past  two  years  comprised  mainly
investment-grade  debt securities held by the Corporation's  specialty insurance
and annuity and investment businesses in support of obligations to policyholders
and  annuitants.  The  increase of $10.5  billion  during  1997 was  principally
related to  acquisitions  and  increases in fair value as well as  investment of
premiums  received.  A  breakdown  of the  investment  securities  portfolio  is
provided in note 2 to the consolidated financial statements.

INVENTORIES  were $786  million and $376  million at December 31, 1997 and 1996,
respectively.  The  increase in 1997  primarily  reflected  acquisitions  in the
computer equipment distribution businesses.

FINANCING RECEIVABLES were $103.8 billion at year-end 1997, net of allowance for
doubtful accounts, up $4.1 billion over 1996. These receivables are discussed on
page 20 and in notes 3 and 4 to the consolidated financial statements.


                                       16
<PAGE>

OTHER  RECEIVABLES were $18.3 billion and $16.0 billion at December 31, 1997 and
1996,  respectively.  Of the 1997  increase,  $1.2 billion was  attributable  to
acquisitions and the remainder resulted from core growth.

EQUIPMENT ON OPERATING  LEASES was $18.7  billion at December 31, 1997,  up $2.6
billion from 1996.  Details by category of investment  can be found in note 6 to
the  consolidated  financial  statements.  Additions  to  equipment on operating
leases  were  $6.8  billion   during  1997  versus  $5.3  billion  during  1996,
principally  reflecting  a shift in auto lease volume from  financing  leases to
operating leases and increased acquisitions of new aircraft.

INTANGIBLE  ASSETS were $10.3 billion at year-end  1997, up from $8.6 billion at
year-end 1996. The $1.7 billion increase in intangible  assets related primarily
to goodwill from acquisitions.

OTHER ASSETS totaled $25.7 billion at year-end 1997, compared with $21.7 billion
at the end of 1996. The $4.0 billion increase  related  principally to increases
in assets acquired for resale,  primarily residential  mortgages,  and increased
"separate  accounts," which are investments  controlled by policyholders and are
associated with identical amounts reported as insurance liabilities.

INSURANCE  LIABILITIES,  RESERVES  AND ANNUITY  BENEFITS  were $67.3  billion at
year-end  1997,  $5.9 billion  higher than in 1996.  The increase was  primarily
attributable to acquisitions in 1997 and the increase in separate accounts.  For
additional  information on these  liabilities,  see note 11 to the  consolidated
financial statements.

BORROWINGS  were $141.3  billion at December 31, 1997, of which $95.3 billion is
due in 1998 and $46.0 billion is due in subsequent years.  Comparable amounts at
the end of 1996 were $125.6 billion total, $77.9 billion due within one year and
$47.7 billion due thereafter.  The  Corporation's  composite  interest rates are
discussed on page 14. A large  portion of the  Corporation's  borrowings  ($71.2
billion and $54.2 billion at the end of 1997 and 1996,  respectively) was issued
in active commercial paper markets that management  believes will continue to be
a reliable source of short-term  financing.  Most of this  commercial  paper was
issued by GE  Capital.  The average  remaining  terms and  interest  rates of GE
Capital  commercial  paper  were 44 days and 5.83% at the end of 1997,  compared
with 42 days and 5.58% at the end of 1996.

GE  Capital  leverage  (ratio  of debt to  equity,  excluding  from  equity  net
unrealized gains on investment  securities) was 7.94 to 1 at the end of 1997 and
7.92 to 1 at the end of 1996. By comparison,  including in equity net unrealized
gains on investment securities,  the GE Capital ratio of debt to equity was 7.45
to 1 at the end of 1997 and 7.84 to 1 at the end of 1996.

GE Company has  committed  to  contribute  capital to GE Capital in the event of
either a decrease below a specified level in the ratio of GE Capital's  earnings
to fixed charges, or a failure to maintain a specified  debt-to-equity  ratio in
the event certain GE Capital  preferred  stock is redeemed.  GE Company also has
guaranteed  the  Corporation's  subordinated  debt  with a face  amount  of $1.0
billion at December 31, 1997 and 1996.  Management  believes the likelihood that
GE Company will be required to contribute  capital under either the  commitments
or the guarantees is remote.

STATEMENT OF CASH FLOWS

One of the  Corporation's  primary  sources  of  cash  is  financing  activities
involving  the  continued  rollover of  short-term  borrowings  and  appropriate
addition of borrowings  with a reasonable  balance of maturities.  Over the past
three years,  the  Corporation's  borrowings  with maturities of 90 days or less
have  increased  by  $20.1  billion.  New  borrowings  of $80.5  billion  having
maturities  longer  than 90 days were added  during  those  years,  while  $64.5
billion of such  longer-term  borrowings  were  retired.  The  Corporation  also
generated $26.1 billion of cash from continuing  operating activities during the
last three years.

The Corporation's principal use of cash has been investing in assets to grow its
businesses.  Of the $55.9  billion that the  Corporation  invested in continuing
operations  over the past three years,  $15.5  billion was used for additions to


                                       17
<PAGE>

financing  receivables;  $16.2  billion  was used to  invest  in new  equipment,
principally for lease to others;  and $13.6 billion was used for acquisitions of
new businesses.

With the  financial  flexibility  that  comes  with  excellent  credit  ratings,
management believes the Corporation should be well positioned to meet the global
needs of its customers for capital and to continue growing its diversified asset
base.

INTEREST RATE AND CURRENCY RISK MANAGEMENT

In normal  operations,  the  Corporation  must deal with  effects  of changes in
interest rates and currency exchange rates. The following discussion presents an
overview of how such changes are managed and a view of their potential effects.

The Corporation uses various financial  instruments,  particularly interest rate
and currency swaps, but also futures,  options and currency forwards,  to manage
risks.  The Corporation is exclusively an end user of these  instruments,  which
are commonly referred to as derivatives.  The Corporation does not engage in any
derivatives  trading,  market-making  or  other  speculative  activities  in the
derivative  markets.   More  detailed  information   regarding  these  financial
instruments,  as well as the strategies and policies for their use, is contained
in notes 1, 10 and 21 to the consolidated financial statements.

The  Corporation  manages its exposure to changes in interest rates, in part, by
funding its assets with an  appropriate  mix of fixed and variable rate debt and
its exposure to currency  fluctuations  principally  by funding  local  currency
denominated  assets  with debt  denominated  in those same  currencies.  It uses
interest  rate swaps,  currency  swaps  (including  non-U.S.  currency and cross
currency  interest rate swaps) and currency  forwards to achieve lower borrowing
costs.  Substantially all of these derivatives have been designated as modifying
interest rates and/or currencies associated with specific debt instruments.

These financial  instruments allow the Corporation to lower its cost of funds by
substituting  credit  risk for  interest  rate and  currency  risks.  Since  the
Corporation's  principal use of such swaps is to optimize funding costs, changes
in interest rates and exchange rates  underlying  swaps would not be expected to
have a material  impact on the  Corporation's  financial  position or results of
operations.   The   Corporation   conducts  almost  all  activities  with  these
instruments in the over-the-counter markets.

The  Corporation  is exposed  to  prepayment  risk in  certain  of its  business
activities, such as in its mortgage servicing and annuities activities. In order
to hedge those exposures,  the Corporation uses swaps, futures, and option-based
financial  instruments.  These  instruments  generally  behave  based on  limits
("caps",  "floors" or "collars") on interest rate movement. These swaps, futures
and option-based  instruments are governed by the credit risk policies described
below and are transacted in either exchange-traded or over-the-counter markets.

In addition,  as part of its ongoing  customer  activities,  the Corporation may
enter into swaps that are integrated with  investments in or loans to particular
customers  and do not  involve  assumption  of  third-party  credit  risk.  Such
integrated swaps are evaluated and monitored like their  associated  investments
or loans,  and are not therefore  subject to the same credit criteria that would
apply to a  stand-alone  swap.  All other  swaps,  forward  contracts  and other
derivatives have been designated as hedges of non-U.S.  net investments or other
assets.

Established  practices require that derivative  financial  instruments relate to
specific  asset,  liability  or equity  transactions  or to currency  exposures.
Substantially  all treasury actions are centrally  executed by the Corporation's
Treasury  Department,  which  maintains  controls on all  exposures,  adheres to
stringent  counterparty  credit  standards  and  actively  monitors  marketplace
exposures.

Given  the ways in which the  Corporation  uses  swaps,  purchased  options  and
forwards,  the principal risk is credit risk - risk  that counterparties will be
financially   unable  to  make  payments  in  accordance  with  the  agreements.
Associated  market risk is  meaningful  only as it relates to how changes in the
market value affect  credit  exposure to  individual  counterparties.  Except as
noted  above for  positions  that are  integrated  into  financings,  all swaps,
purchased  options and  forwards  are carried  out within the  following  credit
policy constraints.


                                       18
<PAGE>

     o   Once a  counterparty reaches a credit exposure limit (see table below),
         no additional  transactions  are permitted until the exposure with that
         counterparty  is  reduced to an amount  that is within the  established
         limit. Open contracts remain in force.
<TABLE>
<CAPTION>

COUNTERPARTY CREDIT CRITERIA                                  CREDIT RATING
                                                          ---------------------
                                                                     STANDARD &
                                                            MOODY'S    POOR'S
                                                          ---------- ----------
<S>                                                            <C>        <C>
Term of transaction
  Between one and five years ...........................       Aa3        AA-
  Greater than five years ..............................       Aaa        AAA
Credit exposure limits
  Up to $50 million ....................................       Aa3        AA-
  Up to $75 million ....................................       Aaa        AAA
</TABLE>


     o   All swaps  are executed under master swap agreements  containing mutual
         credit  downgrade  provisions  that  provide  the  ability  to  require
         assignment or termination in the event either party is downgraded below
         A3 or A-.

More credit latitude is permitted for  transactions  having original  maturities
shorter than one year because of their lower risk.

The  conversion of interest rate and currency risk into credit risk results in a
need to monitor  counterparty  credit risk  actively.  At December 31, 1997, the
notional amount of long-term  derivatives for which the  counterparty  was rated
below Aa3/AA- was $5.1 billion. These amounts are the result of (1) counterparty
downgrades, (2) transactions executed prior to the adoption of the Corporation's
current counterparty credit standards, and (3) transactions relating to acquired
assets or businesses.

Following is an analysis of credit risk exposures for the last three years.
<TABLE>
<CAPTION>

   PERCENTAGE OF NOTIONAL DERIVATIVE EXPOSURE BY COUNTERPARTY CREDIT RATING
--------------------------------------------------------------------------------
MOODY'S/STANDARD & POOR'S                          1997        1996        1995
-------------------------                         ------      ------      ------
<S>                                                  <C>         <C>         <C>
Aaa/AAA ....................................         75%         79%         75%
Aa/AA ......................................         20%         16%         22%
A/A and below ..............................          5%          5%          3%
</TABLE>

The optimal funding strategy is sometimes  achieved by using multiple swaps. For
example,  to obtain fixed rate U.S. dollar  funding,  several  alternatives  are
generally  available.  One alternative is a swap of non-U.S.  dollar denominated
fixed rate debt into U.S.  dollars.  The synthetic U.S. dollar  denominated debt
would be effectively  created by taking the following  steps:  (1) issuing fixed
rate, non-U.S.  currency  denominated debt, (2) entering into a swap under which
fixed rate non-U.S.  currency denominated interest will be received and floating
rate non-U.S.  currency denominated interest will be paid, and (3) entering into
a swap under which floating rate non-U.S.  currency  principal and interest will
be received and fixed rate U.S. dollar  denominated  principal and interest will
be paid. The end result is, in every important  respect,  fixed rate U.S. dollar
denominated financing with an element of controlled credit risk. The Corporation
uses multiple swaps only as part of such transactions.

The  interplay  of  the  Corporation's  credit  risk  policy  with  its  funding
activities is seen in the following example, in which the Corporation is assumed
to have been offered three  alternatives  for funding  five-year fixed rate U.S.
dollar assets with five-year fixed rate U.S. dollar debt.


                                       19
<PAGE>

<TABLE>
<CAPTION>
                                                    SPREAD OVER
                                                        U.S.
                                                   TREASURIES IN
                                                    BASIS POINTS   COUNTERPARTY
                                                   -------------- --------------
<S>                                                     <C>             <C>
1.  Fixed rate five-year medium term note ........      +65             --
2.  U.S. dollar commercial paper swapped into
      five-year U S. dollar fixed rate funding ...      +40              A
3.  Swiss franc fixed rate debt swapped into
      five-year U.S dollar fixed rate funding ....      +35              B
</TABLE>

Counterparty A is a major  brokerage  house with a Aaa/AAA rated swap subsidiary
and a current  exposure to the  Corporation of $39 million.  Counterparty B is a
Aa2/AA rated insurance company with a current exposure of $50 million.

In this  hypothetical  case, the  Corporation  would have chosen  alternative 2.
Alternative 1 is unacceptably costly.  Although alternative 3 would have yielded
a lower  immediate cost of funds,  the additional  credit risk of Counterparty B
would have exceeded the Corporation's risk management limits.

The  Securities  and Exchange  Commission  requires  that  registrants  disclose
information  about  potential  effects of changes in interest rates and currency
exchange. Although the rules offer alternatives for presenting this information,
none of the  alternatives is without  limitations.  The following  discussion is
based on  so-called  "shock-tests,"  which model  effects of  interest  rate and
currency shifts on the reporting  company.  Shock tests, while probably the most
meaningful analysis permitted, are constrained by several factors, including the
necessity to conduct the  analysis  based on a single point in time and by their
inability to include the extraordinarily  complex market reactions that normally
would arise from the market shifts modeled. While the following results of shock
tests for interest rates and currencies may have some limited use as benchmarks,
they should not be viewed as forecasts.

 o   One  means  of   assessing   exposure  to   interest   rate  changes  is  a
     duration-based  analysis that  measures the potential  loss in net earnings
     resulting  from a  hypothetical  increase  in  interest  rates of 100 basis
     points across all maturities (sometimes referred to as a "parallel shift in
     the yield  curve").  Under  this  model,  it is  estimated  that,  all else
     constant,  such an increase,  including repricing effects in the securities
     portfolio,  would reduce the 1998 net earnings of the Corporation  based on
     year-end 1997 positions by approximately $112 million.

 o   One means of  assessing  exposure to changes in currency  exchange rates is
     to  model  effects  on  reported  earnings  using a  sensitivity  analysis.
     Year-end  1997  consolidated   currency   exposures,   including  financial
     instruments  designated and effective as hedges,  were analyzed to identify
     Corporation assets and liabilities denominated in other than their relevant
     functional  currency.  Net unhedged  exposures in each  currency  were then
     remeasured  assuming a 10% decrease  (substantially  greater  decreases for
     hyperinflationary  currencies) in currency exchange rates compared with the
     U.S.  dollar.  Under this model,  it is estimated  that, all else constant,
     such a decrease would reduce the 1998 net earnings of the Corporation based
     on year-end 1997 positions by an insignificant amount.

PORTFOLIO QUALITY

FINANCING  RECEIVABLES are the Financing segment's largest asset and its primary
source of revenues. The portfolio of financing receivables, before allowance for
losses,  increased to $106.6  billion at the end of 1997 from $102.4  billion at
the end of 1996,  principally  reflecting  acquisition  growth  and  origination
volume that were partially offset by securitizations of receivables. The related
allowance  for  losses at the end of 1997  amounted  to $2.8  billion  (2.63% of
receivables  - the same as 1996 and 1995)  and,  in  management's  judgment,  is
appropriate given the risk profile of the portfolio. A discussion of the quality
of certain elements of the portfolio of financing  receivables follows.  Further
details  are  included  in  notes  3,  4 and  6 to  the  consolidated  financial
statements.


                                       20
<PAGE>

"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. The following  discussion of nonearning and reduced-earning
receivable balances and write-off amounts excludes amounts related to Montgomery
Ward Holding Corp. and affiliates which are separately discussed below.

CONSUMER  FINANCING  RECEIVABLES  at  year-end  1997 and  1996 are  shown in the
following table:
<TABLE>
<CAPTION>

(In millions)                                                 1997        1996
                                                           --------    --------
<S>                                                        <C>         <C>
Credit card and personal loans .........................   $ 25,773    $ 27,127
Auto loans .............................................      8,973       5,915
Auto financing leases ..................................     13,346      13,113
                                                           --------    --------
  Total consumer financing receivables .................   $ 48,092    $ 46,155
                                                           ========    ========

Nonearning .............................................   $  1,049    $    926
  - As a percentage of total ...........................        2.2%        2.0%
Receivable write-offs for the year .....................   $  1,298    $    870
</TABLE>

The decrease in credit card and personal loan portfolios primarily resulted from
securitization  of receivables,  partially offset by portfolio  acquisitions and
origination volume. Both the auto loan and financing lease portfolios  increased
as a result of  acquisition  growth;  however,  the  increase in auto  financing
leases was  partially  offset by a shift in U.S.  lease  volume  from  financing
leases to operating leases.  Nonearning receivables did not change significantly
during 1997. A substantial  amount of the nonearning  consumer  receivables were
U.S.  private-label credit card loans which were subject to various loss-sharing
arrangements that provide full or partial recourse to the originating  retailer.
Increased write-offs of consumer receivables were primarily  attributable to the
impact of higher delinquencies and personal bankruptcies on the credit card loan
portfolios in the United States, consistent with overall industry experience, as
well as higher average receivable balances worldwide.

OTHER  FINANCING  RECEIVABLES,  totaling  $58.5  billion at December  31,  1997,
consisted  of a diverse  commercial,  industrial  and  equipment  loan and lease
portfolio.  This portfolio increased $2.3 billion during 1997, primarily because
of  increased  origination  volume,  partially  offset by sales of  receivables.
Related nonearning and reduced-earning receivables were $353 million at year-end
1997, compared with $471 million at year-end 1996.

As discussed in note 3 to the consolidated financial statements, Montgomery Ward
Holding Corp.  ("MWHC") filed a bankruptcy  petition for reorganization in 1997.
MWHC reported losses from operations during 1997, and the Corporation's share of
such losses was $380 million (after tax). The Corporation  recorded its share of
losses by reducing its investments in MWHC,  resulting in the writing off of its
investments  in MWHC common and  preferred  stock.  In addition to those  equity
investments,   the  Corporation  has  other  investments,   primarily  inventory
financing, that resulted from ordinary course of business transactions with MWHC
and affiliates. Such investments, after reduction for the Corporation's share of
losses as discussed above,  amounted to  approximately  $795 million at December
31, 1997 ($617 million classified as financing receivables).  Income recognition
had  been  suspended  on these  pre-bankruptcy  investments.  Subsequent  to the
petition,  the  Corporation  committed  to  provide  MWHC up to $1.0  billion in
debtor-in-possession  financing, subject to certain conditions, in order to fund
working capital  requirements and general corporate expenses. A majority of this
facility has been  syndicated;  total borrowings under this facility at December
31,  1997,  were  insignificant.  The  Corporation  also  provides  financing to
customers  of  MWHC  and  affiliates  through  the  Corporation's   wholly-owned
affiliates,  Montgomery Ward Credit Corporation and Monogram Credit Card Bank of
Georgia.  These receivables,  which represent revolving credit card transactions
directly with customers of MWHC and affiliates,  aggregated approximately $4,232
million at December 31, 1997,  including $1,755 million that have been sold with
recourse by the  Corporation's  affiliates.  The  obligations  of customers with
respect to these receivables are not affected by the bankruptcy filing. MWHC and
its affiliates, under new management in 1997, are continuing their restructuring
efforts as well as developing a plan of reorganization.


                                       21
<PAGE>

The Corporation held loans and leases to commercial  airlines  amounting to $9.0
billion  at the end of  1997,  up from  $8.2  billion  at the end of  1996.  The
Corporation's  commercial aircraft positions also included financial guarantees,
funding  commitments  and  aircraft  orders  as  discussed  in  note  6  to  the
consolidated financial statements.

ENTERING 1998,  management  believes that continued  vigilant  attention to risk
management  and  controllership  and  a  strong  focus  on  quality  -  complete
satisfaction  of  customer  needs -  position  it to deal  effectively  with the
increasing competition in an ever-changing economy.

YEAR 2000

Year 2000 compliance  programs and information  systems  modifications have been
initiated  in an attempt to ensure  that these  systems and key  processes  will
remain functional. This objective is expected to be achieved either by modifying
present systems using existing internal and external programming resources or by
installing new systems, including enterprise systems, and by monitoring supplier
and other third-party interfaces.  While there can be no assurance that all such
modifications  will be successful,  management does not expect that either costs
of modifications or consequences of any unsuccessful modifications should have a
material  adverse effect on the  Corporation's  financial  position,  results of
operations or liquidity.

NEW ACCOUNTING STANDARDS

New accounting  standards issued in 1997 are described  below.  Neither of these
standards  will  have  any  effect  on the  financial  position  or  results  of
operations of the Corporation.  The Financial  Accounting Standards Board issued
two  Statements  of Financial  Accounting  Standards  ("SFAS")  that will affect
presentation in the Corporation's 1998 Annual Report on Form 10-K. SFAS No. 130,
Reporting  Comprehensive  Income,  will require  display of certain  information
about  adjustments  to equity - most  notably,  adjustments  arising from market
value changes in marketable securities. SFAS No. 131, Disclosures about Segments
of an Enterprise and Related  Information,  will require additional  information
about industry segments.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information  about  potential  effects of changes in interest rates and currency
exchange on the Corporation is discussed on pages 18-20.


                                       22
<PAGE>


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
General Electric Capital Services, Inc.:

We have  audited  the  consolidated  financial  statements  of General  Electric
Capital  Services,  Inc. and  consolidated  affiliates  as listed in Item 14. In
connection with our audits of the  consolidated  financial  statements,  we also
have  audited the  financial  statement  schedules  as listed in Item 14.  These
consolidated  financial  statements  and financial  statement  schedules are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these consolidated  financial  statements and financial  statement
schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of General Electric
Capital  Services,  Inc. and  consolidated  affiliates  at December 31, 1997 and
1996,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 31, 1997,  in  conformity  with
generally  accepted  accounting  principles.  Also in our  opinion,  the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
consolidated  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information set forth therein.



/s/ KPMG Peat Marwick LLP

Stamford, Connecticut
February 13, 1998


                                       23
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

                   STATEMENT OF CURRENT AND RETAINED EARNINGS


For the years ended December 31 (In millions)                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
REVENUES
Time sales, loan and other income (Note 14) ................................   $ 12,211    $ 11,310    $  9,995
Operating lease rentals ....................................................      4,819       4,341       4,080
Financing leases ...........................................................      3,499       3,485       3,176
Investment income ..........................................................      5,512       3,506       2,542
Premium and commission income of insurance affiliates (Note 11) ............      9,268       8,145       6,232
Sales of goods .............................................................      4,622       1,926         467
                                                                               --------    --------    --------
  Total revenues ...........................................................     39,931      32,713      26,492
                                                                               --------    --------    --------
EXPENSES
Interest ...................................................................      7,649       7,326       6,661
Operating and administrative (Note 15) .....................................     11,433       9,591       7,341
Insurance losses and policyholder and annuity benefits (Note 11) ...........      8,278       6,678       5,285
Cost of goods sold .........................................................      4,147       1,720         415
Provision for losses on financing receivables (Note 4) .....................      1,421       1,033       1,117
Depreciation and amortization of buildings and equipment and
  equipment on operating leases (Notes 6 & 7) ..............................      2,460       2,150       2,013
Minority interest in net earnings of consolidated affiliates ...............        121         167         140
                                                                               --------    --------    --------
  Total expenses ...........................................................     35,509      28,665      22,972
                                                                               --------    --------    --------
Earnings before income taxes ...............................................      4,422       4,048       3,520
Provision for income taxes (Note 16) .......................................     (1,166)     (1,231)     (1,105)
                                                                               --------    --------    --------
NET EARNINGS ...............................................................      3,256       2,817       2,415
Dividends paid (Note 13) ...................................................     (1,659)       (981)     (1,091)
Retained earnings at January 1 .............................................     11,354       9,518       8,194
                                                                               --------    --------    --------
RETAINED EARNINGS AT DECEMBER 31 ...........................................   $ 12,951    $ 11,354    $  9,518
                                                                               ========    ========    ========
</TABLE>


See Notes to Consolidated Financial Statements.


                                       24
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

                         STATEMENT OF FINANCIAL POSITION

At December 31 (In millions)                                                                  1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
ASSETS
Cash and equivalents ...................................................................   $  4,904    $  3,234
Investment securities (Note 2) .........................................................     70,356      59,872
Financing receivables (Note 3):
  Time sales and loans, net of deferred income .........................................     64,832      62,832
  Investment in financing leases, net of deferred income ...............................     41,769      39,575
                                                                                           --------    --------
                                                                                            106,601     102,407
  Allowance for losses on financing receivables (Note 4) ...............................     (2,802)     (2,693)
                                                                                           --------    --------
    Financing receivables - net ........................................................    103,799      99,714
Other receivables -  net (Note 5) ......................................................     18,332      15,962
Inventories ............................................................................        786         376
Equipment on operating leases (at cost), less accumulated amortization of $6,126
  and $5,625 (Note 6) ..................................................................     18,689      16,134
Buildings and equipment (at cost), less accumulated depreciation of $1,478 and
  $1,246 (Note 7) ......................................................................      2,509       1,829
Intangible assets (Note 8) .............................................................     10,366       8,640
Other assets (Note 9) ..................................................................     25,667      21,658
                                                                                           --------    --------
  TOTAL ASSETS .........................................................................   $255,408    $227,419
                                                                                           ========    ========

LIABILITIES AND EQUITY
Short-term borrowings (Note 10) ........................................................   $ 95,274    $ 77,945
Long-term borrowings (Note 10) .........................................................     45,989      47,676
                                                                                           --------    --------
  Total borrowings .....................................................................    141,263     125,621
Accounts payable .......................................................................      6,490       6,787
Insurance liabilities, reserves and annuity benefits (Note 11) .........................     67,270      61,327
Other liabilities ......................................................................     11,067       9,138
Deferred income taxes (Note 16) ........................................................      8,966       7,740
                                                                                           --------    --------
  Total liabilities ....................................................................    235,056     210,613
                                                                                           --------    --------

Minority interest in equity of consolidated affiliates (Note 12) .......................      3,113       2,530
                                                                                           --------    --------
Cumulative preferred stock, $10,000 par value (80,000 shares authorized; 51,000
  shares issued and held primarily by consolidated affiliates at December 31,
  1997 and 1996) .......................................................................         10          10
Common stock, $10,000 par value (101 shares authorized and outstanding) ................          1           1
Additional paid-in capital .............................................................      2,327       2,316
Retained earnings ......................................................................     12,951      11,354
Unrealized gains on investment securities ..............................................      2,135         668
Foreign currency translation adjustments ...............................................       (185)        (73)
                                                                                           --------    --------
  Total equity (Note 13) ...............................................................     17,239      14,276
                                                                                           --------    --------
  TOTAL LIABILITIES AND EQUITY .........................................................   $255,408    $227,419
                                                                                           ========    ========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       25
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

                             STATEMENT OF CASH FLOWS


For the years ended December 31 (In millions)                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ...............................................................   $  3,256    $  2,817    $  2,415
Adjustments to reconcile net earnings to cash provided from
  operating activities:
    Provision for losses on financing receivables ..........................      1,421       1,033       1,117
    Increase in insurance liabilities, reserves and annuity benefits .......      1,669       1,491       2,490
    Increase in inventories ................................................       (244)        (58)        (15)
    Increase in deferred income taxes ......................................        798       1,077         678
    Depreciation and amortization of buildings and equipment and
      equipment on operating leases ........................................      2,460       2,150       2,013
    Increase (decrease) in accounts payable ................................        (64)        318         418
    Other - net ............................................................     (3,071)        939         961
                                                                               --------    --------    --------
  Cash from operating activities ...........................................      6,225       9,767      10,077
                                                                               --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in financing receivables (Note 20) ............................     (1,898)     (2,278)    (11,309)
Buildings and equipment and equipment on operating leases
  - additions ..............................................................     (6,197)     (5,371)     (4,616)
  - dispositions ...........................................................      2,212       1,333       1,504
Payments for principal businesses purchased, net of cash acquired ..........     (3,820)     (4,394)     (5,403)
All other investing activities (Note 20) ...................................     (5,646)     (6,090)     (3,913)
                                                                               --------    --------    --------
  Cash used for investing activities .......................................    (15,349)    (16,800)    (23,737)
                                                                               --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities of 90 days or less) ...................     13,594      11,026      (4,510)
Newly issued debt (maturities longer than 90 days) (Note 20) ...............     20,825      22,901      36,778
Repayments and other reductions (maturities longer than 90 days) (Note 20) .    (22,757)    (24,656)    (17,045)
Dividends paid .............................................................     (1,653)       (981)     (1,091)
All other financing activities (Note 20) ...................................        785          28         259
                                                                               --------    --------    --------
  Cash from financing activities ...........................................     10,794       8,318      14,391
                                                                               --------    --------    --------

INCREASE IN CASH AND EQUIVALENTS DURING THE YEAR ...........................      1,670       1,285         731
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ..................................      3,234       1,949       1,218
                                                                               --------    --------    --------
CASH AND EQUIVALENTS AT END OF YEAR ........................................   $  4,904    $  3,234    $  1,949
                                                                               ========    ========    ========
</TABLE>


See Notes to Consolidated Financial Statements.


                                       26
<PAGE>


       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION - General Electric Capital Services,  Inc. ("the Parent") owns all
of the common stock of General Electric  Capital  Corporation ("GE Capital") and
GE Global Insurance Holding Corporation ("GE Global Insurance"). All outstanding
common stock of the Parent is owned by General  Electric Company ("GE Company").
The  consolidated  financial  statements  represent  the adding  together of the
Parent and all of its  majority-owned and controlled  affiliates  ("consolidated
affiliates"),  including GE Capital and GE Global Insurance (collectively called
"the Corporation").

All significant  transactions among the Corporation and consolidated  affiliates
have been eliminated.  Other associated companies,  generally companies that are
20% to 50% owned and over which the  Corporation,  directly or  indirectly,  has
significant  influence,   are  included  in  other  assets  and  valued  at  the
appropriate share of equity plus loans and advances.  Certain prior-year amounts
have been reclassified to conform to the current year presentation.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  reported  amounts and related  disclosures.  Actual results could differ
from those estimates.

METHODS OF RECORDING  REVENUES  FROM  SERVICES  (EARNED  INCOME) - Income on all
loans is  recognized  on the  interest  method.  Accrual of  interest  income is
suspended at the earlier of the time at which  collection of an account  becomes
doubtful or the account becomes 90 days delinquent.  Interest income on impaired
loans is recognized  either as cash is collected or on a cost recovery  basis as
conditions warrant.

Financing  lease  income is recorded on the  interest  method so as to produce a
level yield on funds not yet recovered.  Estimated  unguaranteed residual values
of leased assets are based primarily on periodic  independent  appraisals of the
values of leased assets remaining at expiration of the lease terms.

Operating lease income is recognized on a straight-line  basis over the terms of
the underlying leases.

Origination,  commitment  and other  nonrefundable  fees related to fundings are
deferred and recorded in earned income on the interest  method.  Commitment fees
related to loans not expected to be funded and line-of-credit  fees are deferred
and recorded in earned income on a straight-line  basis over the period to which
the fees  relate.  Syndication  fees are  recorded in earned  income at the time
related services are performed unless significant contingencies exist.

Premium income from insurance activities is discussed under insurance accounting
policies.

SALES OF GOODS - A sale is recorded when title passes to the customer.

CASH AND EQUIVALENTS - Certificates  and other time deposits are treated as cash
equivalents.

ALLOWANCE  FOR LOSSES ON  FINANCING  RECEIVABLES  AND  INVESTMENTS  - GE Capital
maintains an allowance for losses on financing  receivables at an amount that it
believes is sufficient to provide adequate  protection  against future losses in
the portfolio.

When  collateral is  repossessed  in  satisfaction  of a loan, the receivable is
written down against the allowance for losses to estimated fair value less costs
to sell,  transferred to other assets and  subsequently  carried at the lower of
cost or estimated fair value less costs to sell. This accounting method has been
employed principally for specialized financing transactions.


                                       27
<PAGE>

INVESTMENT SECURITIES - Investments in debt and marketable equity securities are
reported at fair value.  Substantially all investment  securities are designated
as available for sale, with unrealized gains and losses included in equity,  net
of applicable taxes and other adjustments. Unrealized losses that are other than
temporary are  recognized in earnings.  Realized  gains and losses are accounted
for on the specific identification method.

INVENTORIES  - The  Corporation's  inventories  consist  primarily  of  finished
products  held for  sale.  All  inventories  are  stated at the lower of cost or
realizable values. Cost is primarily determined on a first-in, first-out basis.

EQUIPMENT  ON  OPERATING  LEASES -  Equipment  is  amortized,  principally  on a
straight-line  basis,  to estimated net salvage value over the lease term or the
estimated economic life of the equipment.

BUILDINGS AND EQUIPMENT - Depreciation is recorded on either a  sum-of-the-years
digits formula or a straight-line basis over the lives of the assets.

INTANGIBLE  ASSETS - Goodwill is amortized over its estimated  period of benefit
on a straight-line  basis;  other intangible assets are amortized on appropriate
bases over their  estimated  lives.  No  amortization  period  exceeds 40 years.
Goodwill in excess of associated  expected operating cash flows is considered to
be impaired  and is written  down to fair value,  which is  determined  based on
either discounted future cash flows or appraised values, depending on the nature
of the assets.

INTEREST  RATE AND  CURRENCY  RISK  MANAGEMENT  - As a  matter  of  policy,  the
Corporation  does not  engage in  derivatives  trading,  market-making  or other
speculative activities. The Corporation uses swaps primarily to optimize funding
costs. To a lesser degree,  and in combination with options and limit contracts,
the Corporation uses swaps to stabilize cash flows from mortgage-related assets.

Interest rate and currency  swaps that modify  borrowings or designated  assets,
including  swaps  associated  with forecasted  commercial  paper  renewals,  are
accounted for on an accrual basis. The Corporation  requires all other swaps, as
well as futures,  options and currency forwards,  to be designated and accounted
for as  hedges  of  specific  assets,  liabilities  or  committed  transactions;
resulting payments and receipts are recognized contemporaneously with effects of
hedged  transactions.  A payment or receipt arising from early termination of an
effective  hedge is accounted  for as an  adjustment  to the basis of the hedged
transaction.

Instruments  used as hedges must be effective  at reducing  the risk  associated
with  the  exposure  being  hedged  and  must be  designated  as a hedge  at the
inception  of the  contract.  Accordingly,  changes  in  market  values of hedge
instruments  must  be  highly  correlated  with  changes  in  market  values  of
underlying  hedged items both at inception of the hedge and over the life of the
hedge contract.  Any instrument  designated but ineffective as a hedge is marked
to market and recognized in operations immediately.

INSURANCE ACCOUNTING POLICIES - Accounting policies for insurance businesses are
as follows.

PREMIUM INCOME. Insurance premiums are reported as earned income as follows:

 o   For short-duration  insurance contracts  (including  property and casualty,
     accident  and health,  and  financial  guaranty  insurance),  premiums  are
     reported as earned income, generally on a pro rata basis, over the terms of
     the related agreements.  For retrospectively  rated reinsurance  contracts,
     premium  adjustments  are  recorded  based  on  estimated  losses  and loss
     expenses, taking into consideration both case and incurred-but-not-reported
     reserves.

 o   For  traditional  long-duration  insurance  contracts  (including  term and
     whole life contracts and annuities  payable for the life of the annuitant),
     premiums are reported as earned income when due.

 o   For  investment  contracts and universal life contracts,  premiums received
     are reported as liabilities,  not as revenues. Universal life contracts are
     long-duration  insurance  contracts  with  terms  that  are not  fixed  and
     guaranteed;  for these  contracts,  revenues are recognized for assessments
     against  the  policyholder's  account,   mostly  for  mortality,   contract
     initiation,   administration  and  surrender.   Investment   contracts  are
     contracts that have neither significant mortality nor significant morbidity
     risk,     including     annuities     payable     for      a     determined


                                       28
<PAGE>

     period; for these contracts, revenues are  recognized  on  the   associated
     investments and amounts credited to policyholder  accounts  are  charged to
     expense.

DEFERRED  POLICY  ACQUISITION  COSTS.  Costs  that vary  with and are  primarily
related to the acquisition of new and renewal insurance and investment contracts
are deferred and amortized over the respective policy terms.

 o     For short-duration insurance  contracts,  these  costs  are amortized pro
       rata over the contract periods in which the related premiums are earned.

 o     For  traditional long-duration  insurance  contracts,   these  costs  are
       amortized  over the respective  contract periods in  proportion to either
       anticipated premium income or, in the case of limited-payment  contracts,
       estimated benefit payments.

 o     For  investment contracts and universal life  contracts,  these costs are
       amortized on the basis of anticipated gross profits.

Periodically, deferred policy acquisition costs are reviewed for recoverability;
anticipated   investment   income  is   considered   in  making   recoverability
evaluations.

PRESENT VALUE OF FUTURE  PROFITS.  The actuarially  determined  present value of
anticipated net cash flows to be realized from insurance, annuity and investment
contracts in force at the date of acquisition  of life insurance  enterprises is
recorded as the present value of future profits ("PVFP"). PVFP is amortized over
the respective  policy terms in a manner similar to deferred policy  acquisition
costs;  unamortized  balances are adjusted to reflect experience and impairment,
if any.


NOTE 2.        INVESTMENT SECURITIES

A summary of investment securities follows:

<TABLE>
<CAPTION>
(In millions)                                                                    GROSS      GROSS
                                                                  AMORTIZED   UNREALIZED  UNREALIZED  ESTIMATED
DECEMBER 31, 1997                                                    COST        GAINS      LOSSES   FAIR VALUE
                                                                   --------    --------    --------    --------
<S>                                                                <C>         <C>         <C>         <C>
Debt securities:
 U.S. corporate ................................................   $ 24,580    $  1,028    $    (53)   $ 25,555
 State and municipal ...........................................     10,780         636          (2)     11,414
 Mortgage-backed ...............................................     12,074         341         (30)     12,385
 Corporate - non-U.S. ..........................................      7,683         310         (12)      7,981
 Government - non-U.S. .........................................      3,714         150          (3)      3,861
 U.S. government and federal agency ............................      2,413         103          (4)      2,512
Equity securities ..............................................      5,414       1,336        (102)      6,648
                                                                   --------    --------    --------    --------
                                                                   $ 66,658    $  3,904    $   (206)   $ 70,356
                                                                   ========    ========    ========    ========
DECEMBER 31, 1996

Debt securities:
 U.S. corporate ................................................   $ 22,080    $    308    $   (641)   $ 21,747
 State and municipal ...........................................     10,232         399         (34)     10,597
 Mortgage-backed ...............................................     11,072         297        (108)     11,261
 Corporate - non-U.S. ..........................................      5,587         142         (13)      5,716
 Government - non-U.S. .........................................      3,347          99          (2)      3,444
 U.S. government and federal agency ............................      2,340          34          (7)      2,367
Equity securities ..............................................      4,117         677         (54)      4,740
                                                                   --------    --------    --------    --------
                                                                   $ 58,775    $  1,956    $   (859)   $ 59,872
                                                                   ========    ========    ========    ========
</TABLE>

The  majority  of  mortgage-backed  securities  shown  in the  table  above  are
collateralized by U.S. residential mortgages.


                                       29
<PAGE>

At December 31, 1997,  contractual  maturities  of debt  securities,  other than
mortgage-backed securities, were as follows:

<TABLE>
<CAPTION>

(In millions)                                             AMORTIZED   ESTIMATED
                                                             COST    FAIR VALUE
                                                           --------    --------
<S>                                                        <C>         <C>
Due in:
 1998 ..................................................   $  2,570    $  2,583
 1999-2002 .............................................     13,329      13,653
 2003-2007 .............................................     12,881      13,406
 2008 and later ........................................     20,390      21,681
</TABLE>

It is expected that actual  maturities will differ from  contractual  maturities
because  borrowers  have  the  right  to call  or  prepay  certain  obligations,
sometimes  without  call  or  prepayment  penalties.   Proceeds  from  sales  of
investment  securities in 1997 were $14,728 million ($11,868 million in 1996 and
$11,017 million in 1995). Gross realized gains were $1,018 million in 1997 ($638
million  in 1996 and $503  million in 1995).  Gross  realized  losses  were $173
million in 1997 ($190 million in 1996 and $157 million in 1995).


NOTE 3.        FINANCING RECEIVABLES

Financing receivables at December 31, 1997 and 1996, are shown below.
<TABLE>
<CAPTION>

(In millions)                                                 1997        1996
                                                           --------    --------
<S>                                                        <C>         <C>
Time sales and loans:
 Consumer Services .....................................   $ 42,270    $ 40,479
 Specialized Financing .................................     13,974      14,832
 Mid-Market Financing ..................................     11,401       9,978
 Equipment Management ..................................        469         448
 Specialty Insurance ...................................        202         339
                                                           --------    --------
                                                             68,316      66,076
Deferred income ........................................     (3,484)     (3,244)
                                                           --------    --------
  Time sales and loans - net of deferred income ........     64,832      62,832
                                                           --------    --------
Investment in financing leases:
 Direct financing leases ...............................     38,616      36,576
 Leveraged leases ......................................      3,153       2,999
                                                           --------    --------
  Investment in financing leases .......................     41,769      39,575
                                                           --------    --------
                                                            106,601     102,407
Less allowance for losses (Note 4) .....................     (2,802)     (2,693)
                                                           --------    --------
                                                           $103,799    $ 99,714
                                                           ========    ========
</TABLE>

Time sales and loans  represents  transactions in a variety of forms,  including
time  sales,  revolving  charge  and  credit,   mortgages,   installment  loans,
intermediate-term  loans and  revolving  loans secured by business  assets.  The
portfolio includes time sales and loans carried at the principal amount on which
finance  charges are billed  periodically,  and time sales and loans  carried at
gross book value,  which includes  finance  charges.  At year-end 1997 and 1996,
specialized  financing and consumer  services loans included $10,503 million and
$12,075 million, respectively, for commercial real estate loans. Note 6 contains
information on commercial airline loans and leases.


                                       30
<PAGE>

At  December  31,  1997,  contractual  maturities  for time sales and loans were
$28,983 million in 1998; $12,792 million in 1999; $7,967 million in 2000; $5,156
million  in  2001;  $3,985  million  in 2002 and  $9,433  million  thereafter  -
aggregating $68,316 million.  Experience has shown that a substantial portion of
receivables  will  be paid  prior  to  contractual  maturity.  Accordingly,  the
maturities of time sales and loans are not to be regarded as forecasts of future
cash collections.

Investment in financing leases consists of direct financing and leveraged leases
of aircraft, railroad rolling stock, autos, other transportation equipment, data
processing  equipment  and medical  equipment,  as well as other  manufacturing,
power generation, mining and commercial equipment and facilities.

As the sole  owner of assets  under  direct  financing  leases and as the equity
participant  in  leveraged  leases,  the  Corporation  is taxed  on total  lease
payments  received and is entitled to tax deductions based on the cost of leased
assets and tax  deductions for interest paid to  third-party  participants.  The
Corporation generally is entitled to any residual value of leased assets.

Investment in direct  financing and leveraged leases  represents  unpaid rentals
and estimated  unguaranteed  residual values of leased  equipment,  less related
deferred  income.  The Corporation  has no general  obligation for principal and
interest on notes and other instruments representing  third-party  participation
related to  leveraged  leases;  such notes and other  instruments  have not been
included  in  liabilities  but have been  offset  against  the  related  rentals
receivable. The Corporation's share of rentals receivable on leveraged leases is
subordinate to the share of other  participants who also have security interests
in the leased equipment.

The  Corporation's  net investment in financing  leases at December 31, 1997 and
1996, is shown below.
<TABLE>
<CAPTION>
                                                  TOTAL                   DIRECT
                                             FINANCING LEASES        FINANCING LEASES        LEVERAGED LEASES
                                           --------------------    --------------------    --------------------
(In millions)                                 1997        1996        1997        1996        1997        1996
                                           --------    --------    --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
Total minimum lease payments receivable    $ 58,543    $ 54,009    $ 42,901    $ 40,555    $ 15,642    $ 13,454
Less principal and interest on
  third-party nonrecourse debt .........    (12,097)    (10,213)       --          --       (12,097)    (10,213)
                                           --------    --------    --------    --------    --------    --------
  Net rentals receivable ...............     46,446      43,796      42,901      40,555       3,545       3,241
Estimated unguaranteed residual value
  of leased assets .....................      5,591       6,248       4,244       4,906       1,347       1,342
Less deferred income ...................    (10,268)    (10,469)     (8,529)     (8,885)     (1,739)     (1,584)
                                           --------    --------    --------    --------    --------    --------
  Investment in financing leases .......     41,769      39,575      38,616      36,576       3,153       2,999

Less:  Allowance for losses ............       (656)       (720)       (575)       (641)        (81)        (79)
       Deferred taxes arising from
         financing leases ..............     (7,909)     (7,488)     (4,671)     (4,077)     (3,238)     (3,411)
                                           --------    --------    --------    --------    --------    --------
Net investment in financing leases .....   $ 33,204    $ 31,367    $ 33,370    $ 31,858    $   (166)   $   (491)
                                           ========    ========    ========    ========    ========    ========
</TABLE>

At December 31, 1997,  contractual  maturities for net rentals  receivable under
financing leases were $12,820 million in 1998;  $10,616 million in 1999;  $8,395
million  in 2000;  $3,871  million  in 2001;  $2,371  million in 2002 and $8,373
million thereafter - aggregating  $46,446 million. As with time sales and loans,
experience  has  shown  that a  portion  of  receivables  will be paid  prior to
contractual  maturity,  and these amounts should not be regarded as forecasts of
future cash flows.

The  Corporation  has  a  noncontrolling  investment  in  the  common  stock  of
Montgomery  Ward Holding Corp.  ("MWHC") which,  together with its  wholly-owned
subsidiary,  Montgomery Ward & Co.,  Incorporated  ("MWC"), is engaged in retail
merchandising  and direct response  marketing,  the latter  conducted  primarily
through Signature Financial/Marketing Inc. ("Signature"), which markets consumer
club and insurance  products.  On July 7, 1997,  MWHC,  MWC and certain of their
affiliates (excluding Signature)filed for reorganization under Chapter 11 of the


                                       31
<PAGE>

U.S.  Bankruptcy  Code. As  a  result,  inventory  financing  loans to  MWHC and
affiliates  became  "impaired"  loans (as  defined  below)  because,  due to the
automatic stay in bankruptcy,  the Corporation is not receiving current interest
payment on its loans and, in  management's  judgment,  it is therefore  probable
that the  Corporation  will be unable to collect all amounts  due  according  to
original  contractual  terms of the loan  agreements.  The total  amount of such
loans was $617 million at December 31, 1997. The nonearning and  reduced-earning
receivable  balances and the impaired  loan  balances  discussed  below  exclude
amounts related to MWHC and affiliates.

Nonearning consumer receivables were $1,049 million and $926 million at December
31,  1997 and  1996,  respectively,  a  substantial  amount  of which  were U.S.
private-label credit card loans subject to various loss-sharing  agreements that
provide full or partial  recourse to the  originating  retailer.  Nonearning and
reduced-earning  receivables  other than consumer  receivables were $353 million
and $471 million at year-end 1997 and 1996, respectively.

"Impaired"  loans are defined by generally  accepted  accounting  principles  as
loans for which it is  probable  that the lender  will be unable to collect  all
amounts due according to original contractual terms of the loan agreement.  That
definition   excludes,   among  other   things,   leases  or  large   groups  of
smaller-balance  homogenous  loans,  and therefore  applies  principally  to the
Corporation's commercial loans.

Under these principles,  the Corporation has two types of "impaired" loans as of
December 31, 1997 and 1996: loans requiring  allowances for losses ($339 million
and $583  million,  respectively);  and loans  expected to be fully  recoverable
because the carrying amount has been reduced previously  through  charge-offs or
deferral of income  recognition ($167 million and $187 million,  respectively) -
allowances  for  losses on these  loans  were  $170  million  and $222  million,
respectively.  Average  investment  in these loans during 1997 and 1996 was $647
million and $842 million,  respectively,  before allowance for losses;  interest
income  earned,  principally  on the cash  basis,  while  they  were  considered
impaired was $32 million and $30 million in 1997 and 1996, respectively.


NOTE 4.        ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

The allowance for losses on small-balance  receivables is determined principally
on the basis of actual  experience  during the  preceding  three years.  Further
allowances  are provided to reflect  management's  judgment of  additional  loss
potential.  For other receivables,  principally the larger loans and leases, the
allowance  for  losses is  determined  primarily  on the  basis of  management's
judgment of the net loss  potential,  including  specific  allowances  for known
troubled  accounts.  The table below shows the  activity  in the  allowance  for
losses on financing receivables during each of the past three years.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                <C>                                                         <C>         <C>         <C>
Balance at January 1 .......................................................   $  2,693    $  2,519    $  2,062
Provisions charged to operations ...........................................      1,421       1,033       1,117
Net transfers primarily related to companies acquired or sold ..............        127         139         217
Amounts written off - net ..................................................     (1,439)       (998)       (877)
                                                                               --------    --------    --------
Balance at December 31 .....................................................   $  2,802    $  2,693    $  2,519
                                                                               ========    ========    ========
</TABLE>

All accounts or portions  thereof  deemed to be  uncollectible  or to require an
excessive  collection  cost  are  written  off  to  the  allowance  for  losses.
Small-balance accounts generally are written off when 6 to 12 months delinquent,
although  any  balance  judged  to  be  uncollectible,  such  as an  account  in
bankruptcy,   is  written  down  immediately  to  estimated   realizable  value.
Large-balance accounts are reviewed at least quarterly,  and those accounts with
amounts  that are  judged to be  uncollectible  are  written  down to  estimated
realizable value.


                                       32
<PAGE>

NOTE 5.        OTHER RECEIVABLES

This account  includes  reinsurance  recoverables  of $5,027  million and $4,403
million and  insurance-related  receivables of $4,932 million and $4,833 million
at year-end 1997 and 1996, respectively.  Premium receivables,  funds on deposit
with reinsurers and policy loans are included in insurance-related  receivables.
Also in other  receivables are trade  receivables,  accrued  investment  income,
operating lease receivables and a variety of sundry items.


NOTE 6.        EQUIPMENT ON OPERATING LEASES

Equipment on operating leases by type of equipment and accumulated  amortization
at December 31, 1997 and 1996, are shown below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Original cost
 Vehicles ..............................................................................   $  9,144    $  6,789
 Aircraft ..............................................................................      7,686       6,647
 Marine shipping containers ............................................................      2,774       3,053
 Railroad rolling stock ................................................................      2,367       2,093
 Other .................................................................................      2,844       3,177
                                                                                           --------    --------
                                                                                             24,815      21,759
Accumulated amortization ...............................................................     (6,126)     (5,625)
                                                                                           --------    --------
                                                                                           $ 18,689    $ 16,134
                                                                                           ========    ========
</TABLE>

Amortization of equipment on operating leases was $2,102 million, $1,848 million
and $1,702 million in 1997, 1996 and 1995,  respectively.  Noncancelable  future
rentals due from  customers for  equipment on operating  leases at year-end 1997
totaled $10,438 million and are due as follows:  $3,247 million in 1998;  $2,243
million in 1999;  $1,473 million in 2000;  $935 million in 2001; $628 million in
2002 and $1,912 million thereafter.

The Corporation acts as a lender and lessor to the commercial  airline industry.
At December 31, 1997 and 1996,  the balance of such loans,  leases and equipment
leased to others  was  $8,980  million  and  $8,240  million,  respectively.  In
addition,  at December 31, 1997, the Corporation had issued financial guarantees
and funding  commitments of $123 million ($221 million at year-end 1996) and had
placed  multiyear orders for various Boeing and Airbus aircraft with list prices
of approximately $6.2 billion ($6.5 billion at year-end 1996).


NOTE 7.        BUILDINGS AND EQUIPMENT

Buildings and  equipment  include  office  buildings,  satellite  communications
equipment, data processing equipment,  vehicles, furniture and office equipment.
Depreciation  expense was $358  million in 1997,  $302  million in 1996 and $311
million in 1995.


                                       33
<PAGE>

NOTE 8.        INTANGIBLE ASSETS

Intangible assets at December 31, 1997 and 1996, are shown in the table below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Goodwill ...............................................................................   $  8,090    $  5,847
Present value of future profits ("PVFP") ...............................................      1,824       2,438
Other intangibles ......................................................................        452         355
                                                                                           --------    --------
                                                                                           $ 10,366    $  8,640
                                                                                           ========    ========
</TABLE>

The Corporation's intangible assets are shown net of accumulated amortization of
$2,615 million at December 31, 1997, and $1,988 million at December 31, 1996.

PVFP  amortization,  which is on an  accelerated  basis and net of interest,  is
projected to range from 13% to 8% of the year-end 1997  unamortized  balance for
each of the next five years.


NOTE 9.        OTHER ASSETS

Other assets at December 31, 1997 and 1996, are shown in the table below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Investments:
 Assets acquired for resale ............................................................   $  4,403    $  2,993
 Investments in and advances to associated companies ...................................      4,695       4,916
 Real estate ventures ..................................................................      2,326       2,469
 Other .................................................................................      2,452       2,095
                                                                                           --------    --------
                                                                                             13,876      12,473
Separate accounts ......................................................................      4,926       3,516
Servicing assets .......................................................................      1,713       1,663
Deferred insurance acquisition costs ...................................................      2,521       1,720
Other ..................................................................................      2,631       2,286
                                                                                           --------    --------
                                                                                           $ 25,667    $ 21,658
                                                                                           ========    ========
</TABLE>

Separate  accounts  represent  investments  controlled by policyholders  and are
associated with identical amounts reported as insurance liabilities in note 11.


                                       34
<PAGE>


NOTE 10.       BORROWINGS

Total  short-term  borrowings  at December  31, 1997 and 1996,  consisted of the
following:

<TABLE>
<CAPTION>
                                                                           1997                    1996
                                                                    -------------------     -------------------
                                                                               AVERAGE                 AVERAGE
(Dollars in millions)                                                AMOUNT      RATE        AMOUNT      RATE
                                                                    --------   --------     --------   --------
<S>                                                                 <C>            <C>      <C>            <C>
Commercial paper - U.S. ........................................    $ 67,355       5.93%    $ 50,435       5.68%
Commercial paper - non-U.S. ....................................       3,879       4.18        3,737       4.30
Current portion of long-term debt ..............................      15,101       6.30 <F1>  16,471       6.17 <F1>
Other ..........................................................       8,939                   7,302
                                                                    --------                --------
                                                                    $ 95,274                $ 77,945
                                                                    ========                ========
<FN>
<F1>   Includes the effects of associated interest rate and currency swaps.
</FN>
</TABLE>

Total long-term borrowings at December 31, 1997 and 1996, were as follows:

<TABLE>
<CAPTION>
                                                                      1997
                                                                    AVERAGE
                                                                      RATE
(Dollars in millions)                                                 <F1>   MATURITIES        1997       1996
                                                                    -------- ----------     --------   --------
<S>                                                                     <C>   <C>           <C>        <C>
Senior notes ...................................................        6.59% 1999-2055     $ 44,993   $ 46,680
Subordinated notes <F2> ........................................        7.88  2006-2035          996        996
                                                                                            --------   --------
                                                                                            $ 45,989   $ 47,676
                                                                                            ========   ========

<FN>
<F1>   Includes the effects of associated interest rate and currency swaps.
<F2>   Guaranteed by GE Company.
</FN>
</TABLE>

Borrowings  of the  Corporation  are  addressed  below from two  perspectives  -
liquidity and interest rate management.  Additional information about borrowings
and associated swaps can be found in note 21.

LIQUIDITY requirements of the Corporation are principally met through the credit
markets.  Maturities  of  long-term  borrowings  during  the  next  five  years,
including  the current  portion of long-term  debt,  at December 31, 1997,  were
$15,101 million in 1998;  $9,801 million in 1999; $6,927 million in 2000; $5,763
million in 2001 and $4,816 million in 2002.

At December 31, 1997, the Corporation held committed lines of credit aggregating
$20.9  billion  with 113 banks,  including  $11.8  billion of  revolving  credit
agreements  pursuant  to which it has the  right to  borrow  funds  for  periods
exceeding  one year.  A total of $1.4  billion of GE  Capital's  credit lines is
available for use by GE Company.  Also, at December 31, 1997,  substantially all
of the  approximately  $3.9 billion of GE Company's  credit lines were available
for use by the Corporation.  During 1997, neither the Corporation nor GE Company
borrowed under any of these credit lines. The Corporation  compensates banks for
credit  facilities in the form of fees, which were  insignificant in each of the
past three years.

INTEREST  RATES  ARE  MANAGED  by the  Corporation  in light of the  anticipated
behavior,  including prepayment  behavior,  of assets in which debt proceeds are
invested.  A variety of instruments,  including interest rate and currency swaps
and  currency  forwards,  are  employed to achieve  management's  interest  rate
objectives. Effective interest rates are lower under these "synthetic" positions
than could have been achieved by issuing debt directly.


                                       35
<PAGE>

The following table shows the Corporation's  borrowing positions at December 31,
1997 and 1996, considering the effects of swaps.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
EFFECTIVE BORROWINGS (INCLUDING SWAPS)
Short-term .............................................................................   $ 56,961    $ 46,450
                                                                                           ========    ========
Long-term (including current portion)
 Fixed rate <F1> .......................................................................   $ 59,329    $ 56,190
 Floating rate .........................................................................     24,973      22,981
                                                                                           --------    --------
Total long-term ........................................................................   $ 84,302    $ 79,171
                                                                                           ========    ========
<FN>
<F1>Includes  the  notional  amount  of  long-term   interest  rate  swaps  that
    effectively  convert the  floating-rate  nature of short-term  borrowings to
    fixed rates of interest.
</FN>
</TABLE>

At December 31, 1997,  interest rate swap  maturities  ranged from 1998 to 2029,
and average  interest rates for  "synthetic"  fixed-rate  borrowings  were 6.32%
(6.45% at year-end 1996).


NOTE 11.       INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS

Insurance  liabilities,  reserves and annuity  benefits at December 31, 1997 and
1996, are shown below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Investment contracts and universal life benefits .......................................   $ 28,266    $ 26,140
Life insurance benefits and other <F1> .................................................     14,356      13,854
Unpaid claims and claims adjustment expenses ...........................................     14,654      13,184
Unearned premiums ......................................................................      5,068       4,633
Separate accounts (see note 9) .........................................................      4,926       3,516
                                                                                           --------    --------
                                                                                           $ 67,270    $ 61,327
                                                                                           ========    ========
<FN>
<F1> Life  insurance  benefits  are accounted for mainly by a  net-level-premium
     method using estimated yields generally  ranging from 5% to 9% in both 1997
     and 1996.
</FN>
</TABLE>

The  liability  for unpaid claims and claims  adjustment  expenses,  principally
property    and    casualty    reserves,    consists    of   both    case    and
incurred-but-not-reported  reserves.  Where  experience  is  not  sufficient  to
determine reserves, industry averages are used. Estimated amounts of salvage and
subrogation  recoverable on paid and unpaid losses are deducted from outstanding
losses.


                                       36
<PAGE>

Activity in the liability for unpaid  claims and claims  adjustment  expenses is
summarized below.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                <C>                                                         <C>         <C>         <C>
Balance at January 1 - gross ...............................................   $ 13,184    $ 12,662    $  7,032
Less reinsurance recoverables ..............................................     (1,822)     (1,853)     (1,084)
                                                                               --------    --------    --------
Balance at January 1 - net .................................................     11,362      10,809       5,948
Claims and expenses incurred:
 Current year ..............................................................      4,494       4,087       3,268
 Prior years ...............................................................        146         104         492
Claims and expenses paid:
 Current year ..............................................................     (1,780)     (1,357)       (706)
 Prior years ...............................................................     (2,816)     (2,373)     (1,908)
Claim reserves related to acquired companies ...............................      1,360         309       3,696
Other ......................................................................       (358)       (217)         19
                                                                               --------    --------    --------
Balance at December 31 - net ...............................................     12,408      11,362      10,809
Add reinsurance recoverables ...............................................      2,246       1,822       1,853
                                                                               --------    --------    --------
Balance at December 31 - gross .............................................   $ 14,654    $ 13,184    $ 12,662
                                                                               ========    ========    ========
</TABLE>

Prior-year claims and expenses incurred in the above table resulted  principally
from settling  claims  established  in earlier  accident  years for amounts that
differed from expectations.

Financial  guarantees  and credit life risk of insurance  affiliates at December
31, 1997 and 1996, are summarized below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Guarantees, principally on municipal bonds and structured finance issues ...............   $144,647    $140,575
Mortgage insurance risk in force .......................................................     46,245      36,279
Credit life insurance risk in force ....................................................     26,593      25,961
Less reinsurance .......................................................................    (33,528)    (32,413)
                                                                                           --------    --------
                                                                                           $183,957    $170,402
                                                                                           ========    ========
</TABLE>

Insurance  risk is  ceded  on both a pro  rata  and an  excess  basis.  When the
Corporation cedes insurance to third parties,  it is not relieved of its primary
obligation  to  policyholders.  Losses on ceded  risks  give rise to claims  for
recovery; allowances are established for such receivables from reinsurers.

The effects of  reinsurance  on premiums  written and premiums  and  commissions
earned were as follows for the past three years.

<TABLE>
<CAPTION>
                                                   PREMIUMS WRITTEN             PREMIUMS AND COMMISSIONS EARNED
                                           --------------------------------    --------------------------------
(In millions)                                 1997        1996        1995        1997        1996        1995
                                           --------    --------    --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
Direct .................................   $  5,206    $  3,926    $  2,984    $  5,138    $  3,850    $  2,604
Assumed ................................      5,501       5,455       3,978       5,386       5,353       4,414
Ceded ..................................     (1,311)     (1,196)       (804)     (1,256)     (1,058)       (786)
                                           --------    --------    --------    --------    --------    --------
Net ....................................   $  9,396    $  8,185    $  6,158    $  9,268    $  8,145    $  6,232
                                           ========    ========    ========    ========    ========    ========
</TABLE>

Reinsurance  recoveries  recognized  as a  reduction  of  insurance  losses  and
policyholder  and annuity  benefits  amounted to $903 million,  $937 million and
$459 million for the years ended December 31, 1997, 1996 and 1995, respectively.


                                       37
<PAGE>

NOTE 12.       MINORITY INTEREST

Minority interest in equity of consolidated  affiliates includes preferred stock
issued by GE Capital and by a subsidiary of GE Capital. The preferred stock pays
cumulative  dividends  at variable  rates.  The  liquidation  preference  of the
preferred shares at December 31, 1997 and 1996, is summarized below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
GE Capital .............................................................................   $  2,230    $  1,800
GE Capital subsidiary ..................................................................        660         485
</TABLE>

Dividend  rates on the preferred  stock ranged from 3.8% to 5.2% during 1997 and
1996, and from 4.2% to 5.2% during 1995.


NOTE 13.       EQUITY

Changes in equity for each of the last three years were as follows:

<TABLE>
<CAPTION>
                                                                             UNREALIZED
                                                                                GAINS     FOREIGN
                              CUMULATIVE              ADDITIONAL             (LOSSES)ON   CURRENCY
                               PREFERRED     COMMON     PAID-IN    RETAINED  INVESTMENT  TRANSLATION
(In millions)                    STOCK       STOCK      CAPITAL    EARNINGS  SECURITIES  ADJUSTMENTS     TOTAL
                               --------    --------    --------    --------    --------    --------    --------
<S>                            <C>         <C>          <C>        <C>         <C>         <C>         <C>
Balance at January 1, 1995 .   $     10    $      1    $  2,064    $  8,194    $   (821)   $    (68)   $  9,380
Capital contributions ......       --          --           250        --          --          --           250
Net unrealized gains on
 investment securities .....       --          --          --          --         1,810        --         1,810
Currency translation
 adjustments ...............       --          --          --          --          --            10          10
Net earnings ...............       --          --          --         2,415        --          --         2,415
Dividends declared:
 Common stock ..............       --          --          --        (1,090)       --          --        (1,090)
 Preferred stock ...........       --          --          --            (1)       --          --            (1)
                               --------    --------    --------    --------    --------    --------    --------
Balance at December 31, 1995         10           1       2,314       9,518         989         (58)     12,774
Capital contributions ......       --          --             2        --          --          --             2
Net unrealized losses on
 investment securities .....       --          --          --          --          (321)       --          (321)
Currency translation
 adjustments ...............       --          --          --          --          --           (15)        (15)
Net earnings ...............       --          --          --         2,817        --          --         2,817
Dividends declared:
 Common stock ..............       --          --          --          (980)       --          --          (980)
 Preferred stock ...........       --          --          --            (1)       --          --            (1)
                               --------    --------    --------    --------    --------    --------    --------
Balance at December 31, 1996         10           1       2,316      11,354         668         (73)     14,276
Capital contributions ......       --          --            11        --          --          --            11
Net unrealized gains on
 investment securities .....       --          --          --          --         1,467        --         1,467
Currency translation
 adjustments ...............       --          --          --          --          --          (112)       (112)
Net earnings ...............       --          --          --         3,256        --          --         3,256
Dividends declared:
 Common stock ..............       --          --          --        (1,658)       --          --        (1,658)
 Preferred stock ...........       --          --          --            (1)       --          --            (1)
                               --------    --------    --------    --------    --------    --------    --------
Balance at December 31, 1997   $     10    $      1    $  2,327    $ 12,951    $  2,135    $   (185)   $ 17,239
                               ========    ========    ========    ========    ========    ========    ========
</TABLE>

General  Electric  Capital Services, Inc.'s outstanding preferred stock amounted
to $510  million at December  31,  1997,  all of which was held by  consolidated
affiliates    with    the    exception    of   $10  million    of  such  shares,
which    were    dividended    to    GE    Company   in    1994.    All    other
equity   is owned    entirely    by   GE   Company.   In   1995,   GE    Company


                                       38
<PAGE>

contributed to the  Corporation  certain assets of Caribe GE Products,  Inc. and
Fee For Service, which increased the Corporation's additional paid-in capital by
$250 million.

Changes in fair value of available-for-sale investment securities are reflected,
net of applicable taxes and other adjustments,  in equity. The changes from year
to year were primarily attributable to the effects of changes in year-end market
interest rates on the fair value of the securities.

At December 31, 1997 and 1996,  the aggregate  statutory  capital and surplus of
the insurance businesses totaled $12.4 billion and $10.2 billion,  respectively.
In preparing statutory statements, no significant permitted accounting practices
are used that differ from prescribed accounting practices.


NOTE 14.       REVENUES

Time sales,  loan and other income  includes the  Corporation's  share of losses
from equity investments of approximately $584 million in 1997, and earnings from
equity  investments of  approximately  $85 million and $116 million for 1996 and
1995, respectively.


NOTE 15.       OPERATING AND ADMINISTRATIVE EXPENSES

Employees and retirees of the Corporation are covered under a number of pension,
health and life insurance  plans.  The principal  pension plan is the GE Company
Pension Plan, a defined  benefit plan,  while  employees of certain  affiliates,
including GE Global Insurance, are covered under separate plans. The Corporation
provides health and life insurance benefits to certain of its retired employees,
principally  through GE  Company's  benefit  program,  as well as through  plans
sponsored by GE Global  Insurance and other  affiliates.  The annual cost to the
Corporation of providing these benefits is not material.

Rental expense relating to equipment the Corporation  leases from others for the
purposes of subleasing  was $392 million in 1997,  $269 million in 1996 and $273
million in 1995.  Other rental expense was $342 million in 1997, $278 million in
1996 and $251  million in 1995,  principally  for the rental of office space and
data processing equipment. Minimum future rental commitments under noncancelable
leases at December  31, 1997,  are $652  million in 1998;  $574 million in 1999;
$512  million in 2000;  $487  million in 2001;  $452  million in 2002 and $2,420
million  thereafter.  The  Corporation,  as a  lessee,  has  no  material  lease
agreements classified as capital leases.

Amortization of deferred  insurance  acquisition  costs charged to operations in
1997,  1996 and 1995 was $1,554  million,  $1,671  million  and $1,319  million,
respectively.


NOTE 16.       INCOME TAXES

The provision for income taxes is summarized in the following table.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
Estimated amounts payable ..................................................   $    368    $    164    $    434
Deferred tax expense from temporary differences ............................        798       1,067         671
                                                                               --------    --------    --------
                                                                               $  1,166    $  1,231    $  1,105
                                                                               ========    ========    ========
</TABLE>

GE Company files a  consolidated  U.S.  federal income tax return which includes
the  Corporation.  The provision for estimated taxes payable includes the effect
of the Corporation on the consolidated return.


                                       39
<PAGE>

Estimated amounts payable includes amounts applicable to non-U.S.  jurisdictions
of $636  million,  $614  million  and  $172  million  in 1997,  1996  and  1995,
respectively.

Deferred income tax balances reflect the impact of temporary differences between
the  carrying  amounts  of assets  and  liabilities  and their tax bases and are
stated at enacted tax rates  expected  to be in effect  when taxes are  actually
paid or recovered.

Except  for  certain   earnings  that  the   Corporation   intends  to  reinvest
indefinitely,  provision has been made for the estimated U.S. federal income tax
liabilities  applicable to  undistributed  earnings of affiliates and associated
companies.

U.S. income before taxes was $2.8 billion in 1997, $2.6 billion in 1996 and $2.7
billion in 1995. The  corresponding  amounts for non-U.S.  based operations were
$1.6 billion in 1997, $1.5 billion in 1996 and $0.8 billion in 1995.

A  reconciliation  of the U.S.  federal  statutory rate to the actual income tax
rate follows.

<TABLE>
<CAPTION>
                                                                                  1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                                <C>         <C>         <C>
Statutory U.S. federal income tax rate .....................................       35.0%       35.0%       35.0%
Increase (reduction) in rate resulting from:
 Amortization of goodwill ..................................................        1.1         1.2         1.1
 Tax-exempt income .........................................................       (4.9)       (5.4)       (5.8)
 Foreign Sales Corporation tax benefits ....................................       (0.5)       (0.3)       --
 Dividends received, not fully taxable .....................................       (0.9)       (1.1)       (0.8)
 Other - net ...............................................................       (3.4)        1.0         1.9
                                                                               --------    --------    --------
Actual income tax rate .....................................................       26.4%       30.4%       31.4%
                                                                               ========    ========    ========
</TABLE>

Principal  components of the net deferred tax liability balances at December 31,
1997 and 1996, were as follows:

<TABLE>
<CAPTION>
(In millions)                                                                                 1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
Assets:
 Allowance for losses ..................................................................   $  1,372    $  1,184
 Insurance reserves ....................................................................      1,000         787
 AMT credit carryforwards ..............................................................        354         561
 Other .................................................................................      1,594         778
                                                                                           --------    --------
Total deferred tax assets ..............................................................      4,320       3,310
                                                                                           --------    --------
Liabilities:
 Financing leases ......................................................................      7,909       7,488
 Operating leases ......................................................................      2,156       1,833
 Net unrealized gains on securities ....................................................      1,264         404
 Other .................................................................................      1,957       1,325
                                                                                           --------    --------
Total deferred tax liabilities .........................................................     13,286      11,050
                                                                                           --------    --------
Net deferred tax liability .............................................................   $  8,966    $  7,740
                                                                                           ========    ========
</TABLE>


                                       40
<PAGE>

NOTE 17.       INDUSTRY SEGMENT DATA

Industry  segment   operating  data  and  identifiable   assets  for  continuing
operations  are  shown  below.  Corporate  level  expenses  principally  include
interest  expense related to acquisition  debt and other  unallocated  expenses.
Insurance services,  previously included within the Specialty Insurance segment,
has been  combined  with the consumer  savings and  insurance  operations in the
Consumer  Services  segment.  Prior-year  information  has been  reclassified to
reflect this and certain other organizational changes.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
Revenues:
 Consumer Services .........................................................   $ 13,266    $ 11,028    $  7,990
 Equipment Management ......................................................     11,493       7,951       6,118
 Mid-Market Financing ......................................................      2,952       2,626       2,268
 Specialized Financing .....................................................      3,454       2,949       3,070
 Specialty Insurance .......................................................      8,844       8,155       7,042
                                                                               --------    --------    --------
Total segment revenues .....................................................     40,009      32,709      26,488
 Corporate and other .......................................................        (78)          4           4
                                                                               --------    --------    --------
Total revenues .............................................................   $ 39,931    $ 32,713    $ 26,492
                                                                               ========    ========    ========
Segment operating profit:
 Consumer Services .........................................................   $    563    $  1,268    $  1,044
 Equipment Management ......................................................      1,062         892         870
 Mid-Market Financing ......................................................        622         558         467
 Specialized Financing .....................................................      1,489         742         681
 Specialty Insurance .......................................................      1,293       1,238       1,002
                                                                               --------    --------    --------
Total segment operating profit .............................................      5,029       4,698       4,064
 Corporate and other .......................................................       (607)       (650)       (544)
                                                                               --------    --------    --------
Earnings before income taxes ...............................................   $  4,422    $  4,048    $  3,520
                                                                               ========    ========    ========

Identifiable assets at December 31:
 Consumer Services .........................................................   $116,299    $104,338    $ 74,313
 Equipment Management ......................................................     34,759      29,714      24,451
 Mid-Market Financing ......................................................     29,824      25,932      22,417
 Specialized Financing .....................................................     30,257      28,488      30,771
 Specialty Insurance .......................................................     44,048      38,575      33,714
                                                                               --------    --------    --------
Total segment identifiable assets ..........................................    255,187     227,047     185,666
 Corporate and other .......................................................        221         372          63
                                                                               --------    --------    --------
Total assets ...............................................................   $255,408    $227,419    $185,729
                                                                               ========    ========    ========
</TABLE>


                                       41
<PAGE>

NOTE 18.       QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data were as follows:

<TABLE>
<CAPTION>
                       FIRST QUARTER          SECOND QUARTER           THIRD QUARTER          FOURTH QUARTER
                   --------------------    --------------------    --------------------    --------------------
(In millions)         1997        1996        1997        1996        1997        1996        1997        1996
                   --------    --------    --------    --------    --------    --------    --------    --------
<S>                <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Revenues ......... $  9,544    $  7,245    $  9,317    $  7,457    $ 10,182    $  8,449    $ 10,888    $  9,562
                   --------    --------    --------    --------    --------    --------    --------    --------
Expenses:
 Interest ........    1,783       1,735       1,862       1,789       1,919       1,756       2,085       2,046
 Operating and
  administrative
  and cost of
  goods sold .....    3,524       2,185       3,380       2,366       4,022       3,110       4,654       3,650
 Insurance losses
  and policyholder
  and annuity
  benefits .......    2,244       1,602       2,012       1,558       1,980       1,553       2,042       1,965
 Provision for
  losses on
  financing
  receivables ....      312         213         337         228         371         254         401         338
 Depreciation and
  amortization of
  buildings and
  equipment and
  equipment on
  operating leases      570         493         567         527         628         559         695         571
 Minority interest
  in net earnings
  of consolidated
  affiliates .....       30          44          21          38          33          38          37          47
                   --------    --------    --------    --------    --------    --------    --------    --------
Earnings before
 income taxes ....    1,081         973       1,138         951       1,229       1,179         974         945
Provision for
 income taxes ....    (327)        (323)       (340)       (268)       (291)       (363)       (208)       (277)
                   --------    --------    --------    --------    --------    --------    --------    --------
Net earnings ..... $   754     $    650    $    798    $    683    $    938    $    816    $    766    $    668
                   ========    ========    ========    ========    ========    ========    ========    ========
</TABLE>


NOTE 19.       RESTRICTED NET ASSETS OF AFFILIATES

Certain  of  the  Corporation's  consolidated  affiliates  are  restricted  from
remitting  funds to the Parent in the form of dividends or loans by a variety of
regulations,   the   purpose   of  which  is  to  protect   affected   insurance
policyholders,  depositors or  investors.  At year-end  1997,  net assets of the
Corporation's  regulated  affiliates  amounted to $22.9 billion,  of which $19.4
billion was restricted.


NOTE 20.       SUPPLEMENTAL CASH FLOWS INFORMATION

"Other - net  operating  activities"  in the  Statement  of Cash Flows  consists
principally of adjustments to other liabilities, current and noncurrent accruals
and deferrals of costs and expenses, adjustments for gains and losses on assets,
increases and decreases in assets held for sale, and  adjustments to assets such
as amortization of goodwill and intangibles.

The Statement of Cash Flows excludes  certain noncash  transactions  that had no
significant effect on the investing or financing activities of the Corporation.


                                       42
<PAGE>

Certain supplemental information related to the Corporation's cash flows were as
follows for the past three years.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
FINANCING RECEIVABLES
Increase in loans to customers .............................................   $(55,689)   $(49,890)   $(46,154)
Principal collections from customers .......................................     50,679      49,923      44,840
Investment in equipment for financing leases ...............................    (16,420)    (14,427)    (17,182)
Principal collections on financing leases ..................................     13,796      11,158       8,821
Net change in credit card receivables ......................................     (4,186)     (3,068)     (3,773)
Sales of financing receivables .............................................      9,922       4,026       2,139
                                                                               --------    --------    --------
                                                                               $ (1,898)   $ (2,278)   $(11,309)
                                                                               ========    ========    ========
ALL OTHER INVESTING ACTIVITIES
Purchases of securities by insurance and annuity businesses ................   $(19,274)   $(15,925)   $(14,452)
Dispositions and maturities of securities by insurance and
  annuity businesses .......................................................     17,280      14,018      12,460
Proceeds from principal business dispositions ..............................        241        --           575
Other ......................................................................     (3,893)     (4,183)     (2,496)
                                                                               --------    --------    --------
                                                                               $ (5,646)   $ (6,090)   $ (3,913)
                                                                               ========    ========    ========
NEWLY ISSUED DEBT HAVING MATURITIES LONGER THAN 90 DAYS
Short-term (91 to 365 days) ................................................   $  3,502    $  5,061    $  2,545
Long-term (longer than one year) ...........................................     15,566      17,245      32,507
Long-term subordinated .....................................................       --          --           298
Proceeds - nonrecourse, leveraged lease debt ...............................      1,757         595       1,428
                                                                               --------    --------    --------
                                                                               $ 20,825    $ 22,901    $ 36,778
                                                                               ========    ========    ========
REPAYMENTS AND OTHER REDUCTIONS OF DEBT HAVING MATURITIES LONGER
THAN 90 DAYS
Short-term (91 to 365 days) ................................................   $(21,320)   $(23,355)   $(16,075)
Long-term (longer than one year) ...........................................     (1,150)     (1,025)       (678)
Principal payments - nonrecourse, leveraged lease debt .....................       (287)       (276)       (292)
                                                                               --------    --------    --------
                                                                               $(22,757)   $(24,656)   $(17,045)
                                                                               ========    ========    ========
ALL OTHER FINANCING ACTIVITIES
Proceeds from sales of investment and annuity contracts ....................   $  4,717    $  2,561    $  1,754
Preferred stock issued by consolidated affiliates ..........................        605         155       1,045
Redemption of investment and annuity contracts .............................     (4,537)     (2,688)     (2,540)
                                                                               --------    --------    --------
                                                                               $    785    $     28    $    259
                                                                               ========    ========    ========

CASH RECOVERED (PAID) DURING THE YEAR FOR:
Interest ...................................................................   $ (7,797)   $ (7,463)   $ (6,177)
Income taxes ...............................................................       (341)       (106)        168
</TABLE>


                                       43
<PAGE>

Changes  in  operating  assets  and  liabilities  are  net of  acquisitions  and
dispositions of businesses.

"Payments for principal businesses  purchased" in the Statement of Cash Flows is
net of cash  acquired  and  includes  debt  assumed  and  immediately  repaid in
acquisitions. In conjunction with the acquisitions,  liabilities were assumed as
follows.

<TABLE>
<CAPTION>
(In millions)                                                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
Fair value of assets acquired ..............................................   $ 15,190    $ 27,352    $ 23,534
Cash paid ..................................................................     (4,736)     (4,849)     (5,980)
                                                                               --------    --------    --------
Liabilities assumed ........................................................   $ 10,454    $ 22,503    $ 17,554
                                                                               ========    ========    ========
</TABLE>


NOTE 21.       ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS

This note contains  estimated  fair values of certain  financial  instruments to
which the Corporation is a party.  Apart from the  Corporation's  own borrowings
and certain  marketable  securities,  relatively  few of these  instruments  are
actively traded. Thus, fair values must often be determined by using one or more
models that indicate value based on estimates of quantifiable characteristics as
of a particular date. Because this undertaking is, by its nature,  difficult and
highly judgmental,  for a limited number of instruments,  alternative  valuation
techniques may have produced  disclosed  values  different from those that could
have been realized at December 31, 1997 or 1996. Moreover,  the disclosed values
are  representative  of fair values only as of the dates  indicated.  Assets and
liabilities  that,  as a matter  of  accounting  policy,  are  reflected  in the
accompanying  financial  statements  at  fair  value  are  not  included  in the
following  disclosures;  such items  include  cash and  equivalents,  investment
securities and separate accounts.

Values are estimated as follows.

TIME SALES AND LOANS. Based on quoted market prices,  recent transactions and/or
discounted future cash flows, using rates at which similar loans would have been
made to similar borrowers.

BORROWINGS. Based on quoted market prices or market comparables.  Fair values of
interest rate and currency swaps on borrowings are based on quoted market prices
and include the effects of counterparty creditworthiness.

INVESTMENT CONTRACT BENEFITS. Based on expected future cash flows, discounted at
currently  offered  discount  rates  for  immediate  annuity  contracts  or cash
surrender values for single premium deferred annuities.

FINANCIAL  GUARANTEES AND CREDIT LIFE.  Based on future cash flows,  considering
expected renewal premiums,  claims, refunds and servicing costs, discounted at a
market rate.

ALL OTHER INSTRUMENTS.  Based on comparable  transactions,  market  comparables,
discounted future cash flows, quoted market prices, and/or estimates of the cost
to terminate or otherwise settle obligations to counterparties.


                                       44
<PAGE>

Information  about financial  instruments that were not carried at fair value at
December 31, 1997 and 1996, is shown below.

<TABLE>
<CAPTION>
                                                                                         1997
                                                                   --------------------------------------------
                                                                                      ASSETS (LIABILITIES)
                                                                               --------------------------------
                                                                               CARRYING    ESTIMATED FAIR VALUE
                                                                   NOTIONAL     AMOUNT     --------------------
(In millions)                                                       AMOUNT       (NET)       HIGH         LOW
                                                                   --------------------    --------    --------
<S>                                                                <C>         <C>          <C>        <C>
Assets
 Time sales and loans ...........................................  $    <F1>   $ 62,712    $ 63,105    $ 61,171
 Integrated interest rate swaps .................................    12,323          19        (125)       (125)
 Purchased options ..............................................     1,617          31          31          31
 Mortgage-related positions
  Mortgage purchase commitments .................................     2,082        --            11          11
  Mortgage sale commitments .....................................     2,540        --            (9)         (9)
  Mortgages held for sale .......................................       <F1>      2,378       2,379       2,379
  Options, including "floors" ...................................    30,347          51         141         141
  Interest rate swaps and futures ...............................     3,681        --            23          23
 Other cash financial instruments ...............................       <F1>      2,242       2,592       2,349

Liabilities
 Borrowings and related instruments
  Borrowings <F2> <F3> ..........................................       <F1>   (141,263)   (141,828)   (141,828)
  Interest rate swaps ...........................................    42,531        --          (250)       (250)
  Currency swaps ................................................    23,382        --        (1,249)     (1,249)
  Currency forwards .............................................    15,550        --           371         371
  Purchased options .............................................       375          33           8           8
 Investment contract benefits ...................................       <F1>    (23,045)    (22,885)    (22,885)
 Insurance - financial guarantees and credit life ...............   183,957      (2,897)     (2,992)     (3,127)
 Credit and liquidity support - securitizations .................    13,634         (46)        (46)        (46)
 Performance guarantees - principally letters of credit .........     2,699         (34)       --           (67)
 Other ..........................................................     3,147      (1,134)     (1,282)     (1,303)

Other firm commitments
 Currency forwards ..............................................     1,744        --            11          11
 Currency swaps .................................................     1,073         192         192         192
 Ordinary course of business lending commitments ................     7,891        --           (62)        (62)
 Unused revolving credit lines
  Commercial ....................................................     4,850        --          --          --
  Consumer - principally credit cards ...........................   134,123        --          --          --


                                                                                        1996
                                                                   --------------------------------------------
                                                                                      ASSETS (LIABILITIES)
                                                                               --------------------------------
                                                                               CARRYING    ESTIMATED FAIR VALUE
                                                                   NOTIONAL     AMOUNT     --------------------
(In millions)                                                       AMOUNT       (NET)       HIGH         LOW
                                                                   --------------------    --------    --------
Assets
 Time sales and loans ...........................................  $    <F1>   $ 60,859    $ 61,632    $ 60,544
 Integrated interest rate swaps .................................     4,376        --            91          91
 Purchased options ..............................................     1,938          11          12          12
 Mortgage-related positions
  Mortgage purchase commitments .................................     1,193        --             2           2
  Mortgage sale commitments .....................................     1,417        --             3           3
  Mortgages held for sale .......................................       <F1>      1,112       1,165       1,165
  Options, including "floors" ...................................    27,422          78          81          81
  Interest rate swaps and futures ...............................     1,731        --           (29)        (29)
 Other cash financial instruments ...............................       <F1>      2,240       2,735       2,487

Liabilities
 Borrowings and related instruments
  Borrowings <F2> <F3> ..........................................       <F1>   (125,621)   (125,648)   (125,648)
  Interest rate swaps ...........................................    34,491        --          (575)       (575)
  Currency swaps ................................................    24,588        --           368         368
  Currency forwards .............................................     6,165        --            72          72
  Purchased options .............................................     1,882          10           1           1
 Investment contract benefits ...................................       <F1>    (20,210)    (19,953)    (19,953)
 Insurance - financial guarantees and credit life ...............   170,402      (3,801)     (3,614)     (4,025)
 Credit and liquidity support - securitizations .................     6,842         (73)         (9)         (9)
 Performance guarantees - principally letters of credit .........     3,470         (55)       (132)       (133)
 Other ..........................................................     2,901      (1,560)     (1,175)     (1,176)

Other firm commitments
 Currency forwards ..............................................     1,823        --             3           2
 Currency swaps .................................................     1,134        --           (38)        (38)
 Ordinary course of business lending commitments ................     4,950        --           (27)        (27)
 Unused revolving credit lines
  Commercial ....................................................     3,375        --          --          --
  Consumer - principally credit cards ...........................   116,878        --          --          --

<FN>
<F1>      Not applicable.
<F2>      Includes  effects  of interest rate and currency swaps, which also are
          listed separately.
<F3>      See note 10.
</FN>
</TABLE>

Additional  information about certain  financial  instruments in the above table
follows.


                                       45
<PAGE>


CURRENCY  FORWARDS  AND  OPTIONS  are  employed  by the  Corporation  to  manage
exposures  to changes in currency  exchange  rates  associated  with  commercial
purchase and sale  transactions and to optimize  borrowing costs as discussed in
note  10.  These  financial  instruments  generally  are  used to fix the  local
currency cost of purchased  goods or services or selling  prices  denominated in
currencies other than the functional  currency.  Currency  exposures that result
from net  investments  in affiliates  are managed  principally by funding assets
denominated in local currency with debt denominated in those same currencies. In
certain  circumstances,  net  investment  exposures are managed  using  currency
forwards and currency swaps.

OPTIONS AND INSTRUMENTS  CONTAINING  OPTION FEATURES that behave based on limits
("caps",  "floors" or "collars") on interest rate movement are used primarily to
hedge prepayment risk in certain of the Corporation's business activities,  such
as the mortgage servicing and annuities businesses.

SWAPS OF INTEREST RATES AND  CURRENCIES are used by the  Corporation to optimize
borrowing  costs for a particular  funding  strategy (see note 10). In addition,
interest rate and currency swaps, along with purchased options and futures,  are
used by the Corporation to establish specific hedges of mortgage-related  assets
and to manage  net  investment  exposures.  Credit  risk of these  positions  is
evaluated by management  under the credit criteria  discussed  below. As part of
its ongoing customer activities, the Corporation also enters into swaps that are
integrated  into  investments  in or loans to  particular  customers  and do not
involve  assumption  of  third-party  credit  risk.  Such  integrated  swaps are
evaluated and monitored like their associated  investments or loans, and are not
therefore  subject to the same credit criteria that would apply to a stand-alone
position.

COUNTERPARTY  CREDIT RISK - risk that  counterparties will be financially unable
to make  payments  according to the terms of the  agreements - is the  principal
risk associated with swaps,  purchased options and forwards.  Gross market value
of probable  future  receipts is one way to measure this risk, but is meaningful
only in the context of net credit  exposure  to  individual  counterparties.  At
December 31, 1997 and 1996,  this gross market risk amounted to $2.0 billion and
$0.7 billion,  respectively.  Aggregate  fair values that  represent  associated
probable future obligations,  normally associated with a right of offset against
probable  future  receipts,  amounted to $2.9 billion at year-end  1997 and $0.7
billion at year-end 1996.

Except as noted above for positions that are  integrated  into  financings,  all
swaps,  purchased  options and  forwards  are  carried out within the  following
credit policy constraints.

 o       Once a  counterparty exceeds a credit exposure limit (see table below),
         no additional  transactions  are permitted until the exposure with that
         counterparty  is  reduced to an amount  that is within the  established
         limit. Open contracts remain in force.

<TABLE>
<CAPTION>
COUNTERPARTY CREDIT CRITERIA                                   CREDIT RATING
                                                          ---------------------
                                                                     STANDARD &
                                                            MOODY'S    POOR'S
                                                          ---------- ----------
<S>                                                            <C>        <C>
Term of transaction
  Between one and five years ...........................       Aa3        AA-
  Greater than five years ..............................       Aaa        AAA
Credit exposure limits
  Up to $50 million ....................................       Aa3        AA-
  Up to $75 million ....................................       Aaa        AAA
</TABLE>

 o       All swaps are executed under master  swap agreements  containing mutual
         credit  downgrade  provisions  that  provide  the  ability  to  require
         assignment or termination in the event either party is downgraded below
         A3 or A-.

More credit latitude is permitted for  transactions  having original  maturities
shorter than one year because of their lower risk.


                                       46
<PAGE>

NOTE 22.       GEOGRAPHIC SEGMENT INFORMATION

Geographic segment operating data and total assets were as follows.

<TABLE>
<CAPTION>
                                                       REVENUES                        OPERATING PROFIT
                                           --------------------------------    --------------------------------
For the years ended December 31               1997        1996        1995        1997        1996        1995
                                           --------    --------    --------    --------    --------    --------
(In millions)
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>
United States ..........................   $ 26,188    $ 21,105    $ 18,374    $  2,939    $  2,757    $  2,752
Europe .................................      9,490       7,891       4,974       1,036         884         469
Pacific Basin ..........................        940         693         403          51          57          33
Other <F1> .............................      3,313       3,024       2,741         396         350         266
                                           --------    --------    --------    --------    --------    --------
  Total ................................   $ 39,931    $ 32,713    $ 26,492    $  4,422    $  4,048    $  3,520
                                           ========    ========    ========    ========    ========    ========

                                                     TOTAL ASSETS
                                           --------------------------------
December 31                                   1997        1996        1995
                                           --------    --------    --------
(In millions)
United States ..........................   $176,227    $162,079    $132,415
Europe .................................     53,744      43,135      33,462
Pacific Basin ..........................      5,785       5,060       3,567
Other <F1> .............................     19,652      17,145      16,285
                                           --------    --------    --------
  Total ................................   $255,408    $227,419    $185,729
                                           ========    ========    ========
<FN>
<F1> Principally the Americas,  other than the United States,  but also includes
     operations that cannot  meaningfully be associated with specific geographic
     areas (for example, shipping containers used on ocean-going vessels).
</FN>
</TABLE>


ITEM 9.      CHANGES  IN  AND DISAGREEMENTS  WITH  ACCOUNTANTS ON ACCOUNTING AND
             FINANCIAL DISCLOSURE.

                                 Not applicable


                                    PART III


ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

                                     Omitted


ITEM 11.     EXECUTIVE COMPENSATION.

                                     Omitted


ITEM 12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

                                     Omitted


ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

                                     Omitted


                                       47
<PAGE>


                                     PART IV

ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a)  1.      FINANCIAL STATEMENTS
             Included in Part II of this report:

                Independent Auditors' Report

                Statement of Current and Retained Earnings for each of the years
                  in the three-year period ended December 31, 1997

                Statement of Financial Position at December 31, 1997 and 1996

                Statement of Cash Flows for each of the years in the  three-year
                  period ended December 31, 1997

                Notes to  Consolidated  Financial Statements

             Incorporated by reference:
                The  consolidated   financial  statements  of  General  Electric
                Company,  set forth in the Annual Report on Form 10-K of General
                Electric Company (S.E.C.  File No. 001-00035) for the year ended
                December 31, 1997 (pages F-1 through F-42) and Exhibit 12 (Ratio
                of Earnings to Fixed Charges) of General Electric Company.

(a)  2.      FINANCIAL STATEMENT SCHEDULES

             I.   Condensed financial information of registrant.

             V.   Supplemental  information  concerning  property  and  casualty
                  insurance operations.

             All  other   schedules  are  omitted  because  of  the  absence  of
             conditions  under which they are  required or because the  required
             information is shown in the financial statements or notes thereto.

(a)  3.      EXHIBIT INDEX

             The exhibits  listed below,  as part of Form 10-K,  are numbered in
             conformity with the numbering used in Item 601 of Regulation S-K of
             the Securities and Exchange Commission.


                                       48
<PAGE>


EXHIBIT NUMBER                        DESCRIPTION
--------------                        -----------
    3(i)       A  complete  copy  of the  Certificate  of  Incorporation  of the
               Corporation  as last amended on February 10, 1993,  and currently
               in effect.  (Incorporated  by  reference  to Exhibit  3(i) of the
               Corporation's  Form 10-K Report for the year ended  December  31,
               1993).

    3(ii)      A  complete   copy of  the By-Laws  of  the  Corporation  as last
               amended on June 30, 1994, and currently in effect.  (Incorporated
               by  reference  to Exhibit  3(ii) of the  Corporation's  Form 10-K
               Report for the year ended December 31, 1994).

    4(iii)     Agreement   to   furnish   to   the   Securities   and   Exchange
               Commission upon request a copy of instruments defining the rights
               of holders of certain  long-term  debt of the  registrant and all
               subsidiaries for which  consolidated or unconsolidated  financial
               statements are required to be filed.

   12(a)       Computation of ratio of earnings to fixed charges.

   12(b)       Computation  of  ratio  of earnings to combined fixed charges and
               preferred stock dividends.

   23(ii)      Consent of KPMG Peat Marwick LLP.

   24          Power of Attorney.

   27          Financial Data Schedule (filed electronically herewith).

   99(a)       Income  Maintenance  Agreement  dated  March  28,  1991,  between
               General   Electric   Company   and   General   Electric   Capital
               Corporation.  (Incorporated  by  reference  to  Exhibit 28 of the
               Corporation's  Form 10-K Report for the year ended  December  31,
               1992).

   99(b)       The  consolidated   financial   statements  of  General  Electric
               Company,  set forth in the Annual  Report on Form 10-K of General
               Electric Company (S.E.C.  File No.  001-00035) for the year ended
               December 31, 1997, (pages F-1 through F-42) and Exhibit 12 (Ratio
               of Earnings to Fixed Charges) of General Electric Company.

   99(c)       Item 1.  Business -  Property and  Casualty  Reserves  for Unpaid
               Claims and Claim Expenses, set forth in the Annual Report on Form
               10-K of GE Global Insurance Holding  Corporation (S.E.C. File No.
               0-27394)  for the year ended  December  31, 1997 (Pages 5 through
               10).

   99(d)       Letter,  dated  September 26, 1996, from Dennis  D. Dammerman  of
               General  Electric  Company to Gary C.  Wendt of General  Electric
               Capital  Corporation  pursuant to which General  Electric Company
               agrees to provide  additional  equity to General Electric Capital
               Corporation  in conjunction  with certain  redemptions by General
               Electric Capital Corporation of shares of its Variable Cumulative
               Preferred Stock.  (Incorporated by reference to Exhibit 99 (g) to
               General Electric Capital Corporation's  Registration Statement on
               Form S-3, File No. 333-13195).

   (b)         REPORTS ON FORM 8-K

               None.


                                       49
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                     GENERAL ELECTRIC CAPITAL SERVICES, INC.

              CONDENSED STATEMENT OF CURRENT AND RETAINED EARNINGS

For the years ended December 31 (In millions)                                     1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
REVENUES ...................................................................   $   237     $   --      $   --
                                                                               --------    --------    --------
EXPENSES:
 Interest ..................................................................        289         211         195
 Operating and administrative ..............................................        445         372         293
                                                                               --------    --------    --------

Loss before income taxes and equity in earnings of affiliates ..............       (497)       (583)       (488)
Income tax benefit .........................................................        175         161         110
Equity in earnings of affiliates ...........................................      3,578       3,239       2,793
                                                                               --------    --------    --------

NET EARNINGS ...............................................................      3,256       2,817       2,415
Dividends paid .............................................................     (1,659)       (981)     (1,091)
Retained earnings at January 1 .............................................     11,354       9,518       8,194
                                                                               --------    --------    --------
RETAINED EARNINGS AT DECEMBER 31 ...........................................   $ 12,951    $ 11,354    $  9,518
                                                                               ========    ========    ========
</TABLE>


See Notes to Condensed Financial Statements.


                                       50
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (CONTINUED)

                     GENERAL ELECTRIC CAPITAL SERVICES, INC.

                    CONDENSED STATEMENT OF FINANCIAL POSITION

At December 31 (In millions)                                                                  1997        1996
                                                                                           --------    --------
<S>                                                                                        <C>         <C>
ASSETS

Cash and equivalents ...................................................................   $   --      $      7
Receivables - net ......................................................................        208         164
Investment in and advances to affiliates ...............................................     21,877      18,642
                                                                                           --------    --------
  TOTAL ASSETS .........................................................................   $ 22,085    $ 18,813
                                                                                           ========    ========

LIABILITIES AND EQUITY

Short-term borrowings ..................................................................   $  3,575    $  3,352
Long-term borrowings ...................................................................        299         298
Accounts payable .......................................................................         34         169
Other liabilities ......................................................................        438         218
                                                                                           --------    --------
  Total liabilities ....................................................................      4,346       4,037
                                                                                           --------    --------
Cumulative preferred stock, $10,000 par value (80,000 shares authorized; 51,000
 shares issued and held primarily by affiliates at December 31, 1997 and 1996) .........        510         510
Common stock, $10,000 par value (101 shares authorized and outstanding) ................          1           1
Additional paid-in capital .............................................................      2,327       2,316
Retained earnings ......................................................................     12,951      11,354
Unrealized gains on investment securities held by affiliates ...........................      2,135         668
Foreign currency translation adjustments ...............................................       (185)        (73)
                                                                                           --------    --------
  Total equity .........................................................................     17,739      14,776
                                                                                           --------    --------
  TOTAL LIABILITIES AND EQUITY .........................................................   $ 22,085    $ 18,813
                                                                                           ========    ========
</TABLE>


See Notes to Condensed Financial Statements.


                                       51
<PAGE>


<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (CONTINUED)

                     GENERAL ELECTRIC CAPITAL SERVICES, INC.

                        CONDENSED STATEMENT OF CASH FLOWS

For the years end December 31 (In millions)                                       1997        1996        1995
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>
CASH FROM OPERATING ACTIVITIES .............................................   $  1,414    $    510    $    745
                                                                               --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in investment and advances to affiliates ............................         59          79        (962)
Net change in investment securities ........................................       --            70         (55)
Net change in receivables ..................................................        (44)       (114)        649
                                                                               --------    --------    --------
 Cash from (used for) investing activities .................................         15          35        (368)
                                                                               --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (less than 90-day maturities) .....................        223         416         438
Newly issued debt - long-term subordinated .................................       --          --           298
Dividends paid .............................................................     (1,659)       (981)     (1,091)
                                                                               --------    --------    --------
 Cash used for financing activities ........................................     (1,436)       (565)       (355)
                                                                               --------    --------    --------

INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR ................         (7)        (20)         22
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ..................................          7          27           5
                                                                               --------    --------    --------
CASH AND EQUIVALENTS AT END OF YEAR ........................................   $   --      $      7    $     27
                                                                               ========    ========    ========
</TABLE>


See Notes to Condensed Financial Statements.


                                       52
<PAGE>


       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - (CONCLUDED)

                     GENERAL ELECTRIC CAPITAL SERVICES, INC.

                     NOTES TO CONDENSED FINANCIAL STATEMENTS


INCOME TAXES

General  Electric  Company files a consolidated  U.S.  federal income tax return
which includes General Electric Capital Services,  Inc. ("GE Capital Services").
Income  tax  benefit   includes  the  effect  of  GE  Capital  Services  on  the
consolidated return.

DIVIDENDS FROM AFFILIATES

In 1997 and 1996,  GE Capital  Services  received  dividends of $315 million and
$145 million,  respectively,  from GE Global Insurance  Holding  Corporation and
$1,468 million and $815 million,  respectively,  from General  Electric  Capital
Corporation ("GE Capital").


                                       53
<PAGE>

<TABLE>
<CAPTION>
       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES

                SCHEDULE V - SUPPLEMENTAL INFORMATION CONCERNING
                   PROPERTY AND CASUALTY INSURANCE OPERATIONS

                                  (in millions)

                    AT DECEMBER 31                                             YEAR ENDED DECEMBER 31
       ----------------------------------------    --------------------------------------------------------------------------------
                           DISCOUNT
                           DEDUCTED
                             FROM
              LIABILITY   LIABILITY                                         CLAIMS AND CLAIMS
              FOR UNPAID  FOR UNPAID                                       ADJUSTMENT EXPENSES   AMORTIZATION
    DEFERRED  CLAIMS AND  CLAIMS AND                EARNED                 INCURRED RELATED TO:  OF DEFERRED  PAID CLAIMS
     POLICY     CLAIMS      CLAIMS                 PREMIUMS       NET      --------------------     POLICY    AND CLAIMS
 ACQUISITION  ADJUSTMENT  ADJUSTMENT   UNEARNED      AND      INVESTMENT   CURRENT       PRIOR   ACQUISITION  ADJUSTMENT   PREMIUMS
      COSTS    EXPENSES    EXPENSES    PREMIUMS  COMMISSIONS    INCOME       YEAR        YEARS       COSTS     EXPENSES     WRITTEN
       ----    --------    --------    --------    --------    --------    --------    --------    --------    --------    --------
<S>    <C>     <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
1997   $853    $ 13,672    $    347    $  3,653    $  5,702    $  1,185    $  3,355    $    124    $  1,365    $  3,505    $  5,645
       ====    ========    ========    ========    ========    ========    ========    ========    ========    ========    ========

1996   $817    $ 12,266    $    397    $  3,345    $  5,671    $  1,162    $  3,619    $     90    $  1,087    $  3,266    $  5,761
       ====    ========    ========    ========    ========    ========    ========    ========    ========    ========    ========

1995   $821    $ 12,117    $    383    $  3,232    $  5,118    $    890    $  3,033    $    468    $    927    $  2,467    $  4,976
       ====    ========    ========    ========    ========    ========    ========    ========    ========    ========    ========
</TABLE>



                                       54
<PAGE>

                                                                  EXHIBIT 4(iii)


                                                                 March  25, 1998

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549


Subject:   General Electric  Capital  Services, Inc. Annual  Report on Form 10-K
           for the fiscal year ended December 31, 1997 - File No. 0-14804

Dear Sirs:

Neither General Electric Capital Services,  Inc. (the  "Corporation") nor any of
its  subsidiaries  has  outstanding any instrument with respect to its long-term
debt that is not registered with the Commission and under which the total amount
of securities  authorized  exceeds 10% of the total assets of the registrant and
its  subsidiaries on a consolidated  basis. In accordance with paragraph (b) (4)
(iii) of Item 601 of Regulation S-K (17 CFR ss.229.601),  the Corporation hereby
agrees to furnish to the Securities  and Exchange  Commission,  upon request,  a
copy of each  instrument  which defines the rights of holders of such  long-term
debt.

                                        Very truly yours,

                                        GENERAL ELECTRIC CAPITAL SERVICES, INC.

                                        By: /s/ J.A. Parke
                                            ----------------------
                                            J.A. Parke,
                                            Senior Vice President, Finance


                                       55
<PAGE>

                                                                 EXHIBIT 12 (a)

<TABLE>
<CAPTION>
                     GENERAL ELECTRIC CAPITAL SERVICES, INC.
                           AND CONSOLIDATED AFFILIATES

                COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                                                          YEARS ENDED DECEMBER 31
                                                       --------------------------------------------------------
(Dollar amounts in millions)                              1997        1996        1995        1994        1993
                                                       --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>
Earnings from continuing operations ................   $  3,256    $  2,817    $  2,415    $  2,085    $  1,567
Provision for income taxes .........................      1,166       1,231       1,105         864         642
Minority interest ..................................        121         167         140         139         134
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
 interest ..........................................      4,543       4,215       3,660       3,088       2,343
                                                       --------    --------    --------    --------    --------
Fixed charges:
 Interest ..........................................      7,762       7,402       6,731       4,598       3,585
 One-third of rentals ..............................        245         182         175         156         138
                                                       --------    --------    --------    --------    --------
Total fixed charges ................................      8,007       7,584       6,906       4,754       3,723
                                                       --------    --------    --------    --------    --------
Less interest capitalized, net of amortization .....         52          41          21           9           4
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
 interest, plus fixed charges ......................   $ 12,498    $ 11,758    $ 10,545    $  7,833    $  6,062
                                                       ========    ========    ========    ========    ========
Ratio of earnings to fixed charges .................       1.56        1.55        1.53        1.65        1.63
                                                       ========    ========    ========    ========    ========
</TABLE>



                                       56
<PAGE>

                                                                  EXHIBIT 12 (b)


<TABLE>
<CAPTION>
                     GENERAL ELECTRIC CAPITAL SERVICES, INC.
                           AND CONSOLIDATED AFFILIATES

 COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS


                                                                          YEARS ENDED DECEMBER 31
                                                       --------------------------------------------------------
(Dollar amounts in millions)                              1997        1996        1995        1994        1993
                                                       --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>
Earnings from continuing operations ................   $  3,256    $  2,817    $  2,415    $  2,085    $  1,567
Provision for income taxes .........................      1,166       1,231       1,105         864         642
Minority interest ..................................        121         167         140         139         134
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
 interest ..........................................      4,543       4,215       3,660       3,088       2,343
                                                       --------    --------    --------    --------    --------
Fixed charges:
 Interest ..........................................      7,762       7,402       6,731       4,598       3,585
 One-third of rentals ..............................        245         182         175         156         138
                                                       --------    --------    --------    --------    --------
Total fixed charges ................................      8,007       7,584       6,906       4,754       3,723
                                                       --------    --------    --------    --------    --------
Less interest capitalized, net of amortization .....         52          41          21           9           4
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
 interest, plus fixed charges ......................   $ 12,498    $ 11,758    $ 10,545    $  7,833    $  6,062
                                                       ========    ========    ========    ========    ========

Preferred stock dividend requirements ..............   $      1    $      1    $      1    $      1    $   --

Ratio of earnings from continuing operations
 before provisions for income taxes to earnings
 from continuing operations ........................       1.36        1.44        1.46        1.41        --
                                                       --------    --------    --------    --------    --------
Preferred stock dividend factor on pre-tax basis ...          1           1           1           1        --
Fixed charges ......................................      8,007       7,584       6,906       4,754       3,723
                                                       --------    --------    --------    --------    --------
Total fixed charges and preferred stock dividend
 requirements ......................................   $  8,008    $  7,585    $  6,907    $  4,755    $  3,723
                                                       ========    ========    ========    ========    ========
Ratio of earnings to combined fixed charges and
 preferred stock dividends .........................       1.56        1.55        1.53        1.65        1.63
                                                       ========    ========    ========    ========    ========
</TABLE>


                                       57
<PAGE>


                                                                 EXHIBIT 23 (ii)

To the Board of Directors
General Electric Capital Services, Inc.:

We consent to  incorporation  by reference in the  Registration  Statement  (No.
33-7348) on Form S-3 of General Electric Capital  Services,  Inc., of our report
dated  February 13,  1998,  relating to the  statement of financial  position of
General  Electric  Capital  Services,  Inc. and  consolidated  affiliates  as of
December  31, 1997 and 1996 and the related  statements  of current and retained
earnings  and cash flows for each of the years in the  three-year  period  ended
December 31, 1997, and related  schedules,  which report appears in the December
31, 1997 annual report on Form 10-K of General Electric Capital Services, Inc.


/s/ KPMG Peat Marwick LLP


Stamford, Connecticut
March 26, 1998


                                       58
<PAGE>


                                                                      EXHIBIT 24

                                POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS,  that each of the  undersigned,  being directors
and/or  officers  of  General  Electric  Capital  Services,   Inc.,  a  Delaware
corporation (the "Corporation"),  hereby constitutes and appoints Gary C. Wendt,
James A. Parke, Joan C. Amble and Nancy E. Barton and each of them, his true and
lawful   attorney-in-fact  and  agent,  with  full  power  of  substitution  and
resubstitution,  for  him  and in his  name,  place  and  stead  in any  and all
capacities, to sign one or more Annual Reports for the Corporation's fiscal year
ended December 31, 1997, on Form 10-K under the Securities Exchange Act of 1934,
as amended,  or such other form as such  attorney-in-fact  may deem necessary or
desirable, any amendments thereto, and all additional amendments thereto in such
form as they or any one of them  may  approve,  and to file  the  same  with all
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission,  granting unto said  attorneys-in-fact  and agents, and
each of them,  full power and authority to do and perform each and every act and
thing  requisite  and necessary to be done to the end that such Annual Report or
Annual  Reports  shall  comply  with the  Securities  Exchange  Act of 1934,  as
amended, and the applicable Rules and Regulations of the Securities and Exchange
Commission  adopted or issued pursuant thereto,  as fully and to all intents and
purposes as he might or could do in person,  hereby ratifying and confirming all
that  said  attorneys-in-fact  and  agents,  or  any of  them  or  their  or his
substitute  or  resubstitute,  may  lawfully  do or cause  to be done by  virtue
hereof.

IN WITNESS WHEREOF,  each of the undersigned has hereunto set his hand this 25th
day of March, 1998.



/s/ Gary C. Wendt                                 /s/ James A. Parke
----------------------                            ----------------------
Gary C. Wendt,                                    James A. Parke,
Chairman of the Board,                            Senior Vice President, Finance
President and Chief Executive Officer             (Principal Financial Officer)
(Principal Executive Officer)



                           /s/ Joan C. Amble
                           ----------------------
                           Joan C. Amble,
                           Vice President and Controller
                           (Principal Accounting Officer)




                                                                   (Page 1 of 2)


                                       59
<PAGE>



/s/ Kaj Ahlmann
--------------------------                            --------------------------
Kaj Ahlmann,                                          W. James McNerney, Jr.,
Director                                              Director


/s/ Nigel D.T. Andrews                                /s/ John H. Myers
--------------------------                            --------------------------
Nigel D.T. Andrews,                                   John H. Myers,
Director                                              Director


/s/ James R. Bunt                                     /s/ Robert L. Nardelli
--------------------------                            --------------------------
James R. Bunt,                                        Robert L. Nardelli,
Director                                              Director


/s/ David M. Cote                                     /s/ Denis J. Nayden
--------------------------                            --------------------------
David M. Cote,                                        Denis J. Nayden,
Director                                              Director


/s/ Dennis D. Dammerman
--------------------------                            --------------------------
Dennis D. Dammerman,                                  Michael A. Neal,
Director                                              Director


                                                      /s/ John M. Samuels
--------------------------                            --------------------------
Paolo Fresco,                                         John M. Samuels,
Director                                              Director


/s/ Benjamin W. Heineman, Jr.                         /s/ Edward D. Stewart
--------------------------                            --------------------------
Benjamin W. Heineman, Jr.,                            Edward D. Stewart,
Director                                              Director


/s/ Jeffrey R. Immelt                                 /s/ John F. Welch, Jr.
--------------------------                            --------------------------
Jeffrey R. Immelt,                                    John F. Welch, Jr.,
Director                                              Director



A MAJORITY OF THE BOARD OF DIRECTORS

                                                                   (Page 2 of 2)



                                       60
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) 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 CAPITAL SERVICES, INC.
March 25, 1998                           By:      /s/ Gary C. Wendt
                                         ---------------------------------------
                                                     (Gary C. Wendt)
                                                        President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the date indicated.


   Signature                             Title                        Date
   ---------                             -----                        ----
/s/ Gary C. Wendt           Chairman of the Board, President      March 25, 1998
------------------          and Chief Executive Officer
(Gary C. Wendt)             (Principal Executive Officer)



/s/ James A. Parke          Senior Vice President, Finance        March 25, 1998
------------------          (Principal Financial Officer)
(James A. Parke)



/s/ Joan C. Amble           Vice President and Controller         March 25, 1998
------------------          (Principal Accounting Officer)
(Joan C. Amble)



KAJ AHLMANN*                             Director
NIGEL D.T. ANDREWS*                      Director
JAMES R. BUNT*                           Director
DAVID M. COTE*                           Director
DENNIS D. DAMMERMAN*                     Director
BENJAMIN W. HEINEMAN, JR.*               Director
JEFFREY R. IMMELT*                       Director
JOHN H. MYERS*                           Director
ROBERT L. NARDELLI*                      Director
DENIS J. NAYDEN*                         Director
JOHN M. SAMUELS*                         Director
EDWARD D. STEWART*                       Director
JOHN F. WELCH, JR.*                      Director


A MAJORITY OF THE BOARD OF DIRECTORS


*By: /s/ Joan C. Amble                                            March 25, 1998
     ------------------
     (Joan C. Amble)
     Attorney-in-fact


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