<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, 1996

                                       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|

Aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant  at March 24, 1997.  None.

At March 24,  1997,  101 shares of common stock with a par value of $10,000 were
outstanding.
                       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, 1996 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, 1996 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....................................    12
     Item 7.   Management's Discussion and Analysis of Results
                 of Operations............................................    13
     Item 8.   Financial Statements and Supplementary Data................    21
     Item 9.   Changes in and Disagreements with Accountants on
                 Accounting and Financial Disclosure......................    46

PART III

     Item 10.  Directors and Executive Officers of the Registrant.........    46
     Item 11.  Executive Compensation.....................................    46
     Item 12.  Security Ownership of Certain Beneficial Owners 
                 and Management...........................................    46
     Item 13.  Certain Relationships and Related Transactions.............    46

PART IV

     Item 14.  Exhibits, Financial Statement Schedules, and Reports
                 on Form 8-K..............................................    47



<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").

In November 1994, the Corporation elected to terminate the operations of Kidder,
Peabody Group Inc. ("Kidder,  Peabody") by initiating an orderly  liquidation of
its assets and  liabilities.  As part of the  liquidation  plan, the Corporation
received  securities  of  Paine  Webber  Group  Inc.  in  exchange  for  certain
broker-dealer assets and operations. Principal activities that were discontinued
include  securities  underwriting,  sales and trading of equity and fixed income
securities,   financial  futures  activities,  advisory  services  for  mergers,
acquisitions,  and other corporate finance matters,  merchant banking,  research
services and asset management.  This liquidation has been substantially complete
since mid-1995.  In 1996, regulatory  authorities  permitted Kidder,  Peabody to
de-register  as a  broker-dealer.  Kidder,  Peabody  has  been  classified  as a
discontinued  operation in the financial  statements and  supplementary  data in
Item 8 of this Form 10-K.

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 financial  services offered are significantly more diversified.
Very little of the financing  provided by GE Capital involves  products that 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., a retail  organization,  and certain
other service and financial services organizations.  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,
1996, GE Capital and affiliates employed approximately 49,400 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 traditional  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 located 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 23 U.S. offices
and 18 non-U.S.  offices.  GE Global  Insurance and certain U.S.  affiliates are
licensed in all of the United  States,  the  District  of  Columbia  and certain
provinces  of Canada and write  property and  casualty  reinsurance  on 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,
1996, GE Global Insurance and affiliates employed approximately 2,150 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, 1996 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 and asset management services,
             including  sales,  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        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
             buy-outs,   including  those  with  high  leverage,  and  corporate
             recapitalizations.

    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.

                                       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.

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

Consumer Savings and Insurance Group

The Consumer Savings and Insurance Group ("CSIG")  delivers  financial  security
solutions  to  consumers   with  products  and  services  which  help  consumers
accumulate wealth,  transfer wealth, and protect their lifestyles and assets. It
achieves  this through its family of insurance  and annuity  companies  which is
split into two  primary  groups.  The Wealth  Accumulation  and  Transfer  Group
includes:  First Colony  Corporation  ("FCC");  Life of Virginia ("LOV");  Great
Northern  Annuity  ("GNA");  Federal Home Life ("FHL") and GE Capital  Assurance
("GECA").  FCC and LOV were both  acquired  during  1996.  FCC markets term life
insurance  and  immediate and deferred  annuities  and  structured  settlements,
predominately  through brokerage general agencies and specialized  brokers.  LOV
specializes in variable  annuity and substandard  life insurance  coverages sold
through securities brokerages,  brokerage general agencies and a dedicated sales
force. GNA and GE Capital  Assurance write and market  tax-deferred,  structured
and immediate  annuities,  and third-party mutual funds through  independent and
captive agents and financial  institutions.  The Wealth and Lifestyle Protection
Group includes GE Capital Assurance  Long-Term Care (formerly AMEX Life);  Union
Fidelity Life;  Harvest Life; and GE Capital Auto Dealer  Services  ("ADS").  GE
Capital Assurance Long-Term Care writes and markets  principally  long-term care
insurance  for nursing  home and home health  care needs.  Effective  January 1,
1997,  the  operations  of Union  Fidelity  Life  Insurance  Company  ("UFLIC"),
acquired during 1996,  will be included  within the consumer  segment along with
certain other operations  previously  reflected  within the specialty  insurance
segment.  UFLIC is a marketer of supplementary  accident and health products and
life  insurance  to farm  and  small  town  populations.  ADS  provides  service
contracts on autos.

CSIG,  currently  based  in  Stamford,  Connecticut,  will be  headquartered  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 Asia.

In the United  States,  AFS is one of the leading  independent  auto lessors and
offers leasing, retail financing and 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 also 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 majority-owned entities in France,
the United Kingdom,  and Italy. AFS also provides  automobile  financing through
businesses located in Austria, Spain, Sweden, and Poland.


                                       3
<PAGE>

AFS' Asian activities  include majority ownership of entities located in Taiwan,
Hong Kong,  and, with its 1996  acquisition of 80% of Marubeni Car Systems,  AFS
now  operates in Japan.  AFS also  maintains a presence in Asia  through  equity
investments in Indonesia,  Taiwan, Singapore,  Malaysia, and Korea. In 1996, AFS
increased its minority equity investment in GS Capital Corporation (Thailand) to
an 80% majority ownership interest.

AFS headquarters are located 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  purchases  consumer  receivables  from  retailers,  primarily in the United
States  and  Canada,  most  of  whom  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.  Maximum
maturities  ordinarily  do not  exceed 40  months.  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,  as part of the  agreement,  retailers  are  required to provide
insurance coverage for the merchandise financed.

RFS holds a  noncontrolling  equity  investment in Montgomery Ward Holding Corp.
("MWHC"),  which, together with its wholly-owned  subsidiary,  Montgomery Ward &
Co.  Incorporated,  are  engaged in retail  merchandising  and  direct  response
advertising  (conducted primarily through Signature  Financial/Marketing,  Inc.,
which markets consumer club and insurance products). RFS also provides financing
to customers of MWHC and affiliates through GE Capital's wholly-owned affiliate,
Montgomery Ward Credit Corporation.

RFS headquarters are located 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.

GCF provides  financing to consumers  through  operations in the United Kingdom,
Australia,  Japan,  Thailand,  Scandinavia,  Austria,  France,  Ireland,  China,
Brazil, Belgium,  Germany and Poland and joint ventures in Indonesia,  India and
Spain. 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 located 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


                                       4
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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 located in Cherry Hill, New Jersey.

Consumer Financial Services

Consumer  Financial  Services  ("CFS")  issues and  services  MasterCard(R)  and
Visa(R) products originated through direct mail campaigns,  private-label credit
card conversions,  telemarketing and point-of-sale applications. CFS also issues
and services the GE Capital  Corporate Card,  providing  payment and information
systems to help medium and large-size  companies reduce travel costs, and the GE
Capital  Purchasing  Card,  which  helps  companies  streamline  purchasing  and
accounts payable processes.

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

During  1996,  GECAS  placed firm orders for more than 150 new Boeing and Airbus
aircraft with  deliveries  scheduled  from  December  1996 through 2001.  GECAS'
current fleet  comprises 880 owned and managed  aircraft leased to more than 150
customers in 55 countries.

GECAS  headquarters  are  located in  Stamford,  Connecticut,  and its  regional
offices are located in San Francisco, California; Miami, Florida; Dallas, Texas;
Shannon, Ireland; Beijing, China; Hong Kong; and Singapore.

Fleet Services

GE Capital  Fleet  Services  ("GECFS")  is one of the  leading  corporate  fleet
management  companies in North America,  Europe and Australia with approximately
830,000 cars, trucks and specialty vehicles 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' customers are diversified with respect to industry,
size and geography.

During 1996, GECFS added approximately 40,000 vehicles to its portfolio with the
acquisition  of JMJ Fleet  Services,  a  leading  supplier  of fleet  management
services to companies throughout Australia.

GECFS headquarters are located in Eden Prairie, Minnesota.

Technology Management Services

GE Capital  Technology  Management  Services  ("TMS") is a leader in providing a
broad  spectrum  of  services  that  enable  customers  to  utilize  information
technology  more  efficiently  by  combining  consulting,  services,  sales  and

                                       5
<PAGE>

financing  options  to  help  businesses  plan,  acquire,   manage  and  refresh
technology assets.  These services and financing options include,  among others,
leasing, rental, procurement,  logistics, asset tracking, help desk, network and
data  center  outsourcing  services,  and  test  equipment  rental,  repair  and
calibration services.

During 1996, TMS acquired several  companies  including  Ameridata  Technologies
Inc., based in Stamford,  Connecticut,  an international provider of distributed
computer  products and services,  as well as business and technology  consulting
services;  CompuNet  Computer  AG  ("CompuNet"),  based in  Kerpen,  Germany,  a
provider of  distributed  computing and  communications  technologies;  Ferntree
Computer   Corporation   ("Ferntree"),   an  Australian  based  desktop  systems
integrator; and other strategic operations.

At the end of 1996,  GE Capital  formed a new  company,  GE Capital  Information
Technology  Solutions ("ITS"), to provide computer products and services as well
as  computer   networking  and  other  technology  services  to  government  and
commercial  customers.  This entity  combined  several TMS businesses  including
Ameridata,  CompuNet,  Ferntree and TMS-Canada,  a systems integrator in Canada.
ITS headquarters are located in Stamford, Connecticut.

TMS has  principal  locations in Canada and  California.  TMS  headquarters  are
located in Norcross, Georgia.

Genstar Container

Genstar Container Corporation  ("Genstar") is one of the world's largest lessors
of intermodal shipping  containers.  Genstar maintains a fleet of over 1,300,000
TEU ("twenty-foot equivalent units") of dry-cargo,  refrigerated and specialized
containers for global intermodal cargo transport. Lessees are primarily shipping
lines which lease on a long-term or master lease basis.

Genstar headquarters are located in San Francisco, California.

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
100,000 dry  freight,  refrigerated  and double vans,  flatbeds and  specialized
trailers is available  for rent,  lease or purchase at over 180 locations in the
United  States,  Canada,  Mexico  and  Europe.  TIP also  finances  new and used
trailers, buys trailer fleets, and executes sale-leaseback  transactions.  TIP's
customer base comprises trucking companies, manufacturers and retailers.

TIP headquarters are located in Devon, Pennsylvania.

Railcar Services

GE Capital  Railcar  Services  ("GERSCO") is a major railcar  leasing company in
North  America,  with over 140,000  railcars in its  portfolio.  Serving Class 1
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 strategically 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.

GERSCO headquarters are located in Chicago, Illinois.

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

                                       6
<PAGE>

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 located in Princeton, New Jersey.

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  83,000 modular units. In addition,  GECMS'
operating leases range from a few months to sixty months,  depending on customer
needs, with the average operating lease approximating 12-18 months.

During 1996,  GECMS continued its European growth through  acquisitions  such as
Groenendijk  Yellowcabin in Belgium and Gefi  Handelsgesellschaft in Germany, in
addition to its operations in France and Holland.  GECMS also acquired an entity
in the United States.

GECMS has offices located in North America as well as Europe. GECMS headquarters
are located in Malvern, Pennsylvania.


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.

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
greater than $5 million to multi-property  portfolios of several hundred million
dollars. Approximately 90% of all loans are senior mortgages.

CRE   continues  to  broaden  its   investment   base  by  buying  or  providing
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. Such loans 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.


                                       7
<PAGE>

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

Structured Finance Group

Structured  Finance  Group  ("SFG"),  formally  Global  Project  and  Structured
Finance,  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 the full spectrum of debt and equity
instruments,  with  particular  expertise in  structured  finance  transactions,
including leasing and partnerships.

SFG has offices  located in Mexico,  the United Kingdom,  Singapore,  Hong Kong,
China,  India,  Australia,  Ireland and the  Philippines.  SFG  headquarters are
located in Stamford, Connecticut.

Commercial Finance

Commercial Finance ("CF") provides revolving and term debt financing for working
capital and capital  expansion.  The portfolio is diversified with approximately
140 accounts  throughout the United States and, to a lesser  degree,  Canada and
Europe.  Loans  range in amount  from $5  million  to  several  hundred  million
dollars,  and represent  investments in the manufacturing,  retail,  healthcare,
cable  television/media  and food and beverage  industries.  CF is active in the
loan syndication market, selling and occasionally  purchasing  participations in
leveraged transactions.

During 1996, CF broadened  its product base as well as its global  presence with
the  acquisition  of  a  European  factoring  company  in  Milan,   Italy.  This
acquisition  supports  CF's  strategy of  developing  a presence in the European
community with the creation of a European factoring platform.

CF has offices located  throughout the United States and in London,  England and
Milan, Italy. CF headquarters are located in Stamford, Connecticut.

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 to  realize
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 located in Stamford, Connecticut.


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.

                                       8
<PAGE>

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.

During 1996, CEF acquired Mietfinanz,  a mid-market equipment financing company,
located in  Muelheim,  Germany.  Mietfinanz's  portfolio  consists  of loans and
leases for a variety of commercial equipment.

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

Vendor Financial Services

GE Capital Vendor Financial Services ("VFS") provides captive financing services
to  over 90  equipment  manufacturers,  3,500  dealers  and  more  than  500,000
customers  in over 25  countries  throughout  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  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 1996, VFS acquired BellSouth Financial Services expanding its presence in the
growing  telecommunications  financial services industry. VFS is now BellSouth's
preferred provider of leasing and financing to large business users of equipment
such as private branch exchanges  (PBXs) and network routers.  VFS also expanded
its European  financing  capabilities with the acquisition of LocaFrance S.A., a
leading  equipment  financing  company in France,  and through GE Capital's 1995
acquisition  of Sovac S.A. in France and the 1996  acquisition  of Mietfinanz in
Germany.

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

GE Capital Hawaii

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

GECH headquarters are located in Honolulu, Hawaii.


SPECIALTY INSURANCE

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

Financial Guaranty Insurance

FGIC Corporation  ("FGIC"),  through its subsidiary Financial Guaranty Insurance
Company ("Financial Guaranty"),  is an insurer of municipal bonds, including new
issues  and  bonds  traded  in the  secondary  market  and  bonds  held  in unit
investment trusts and mutual funds.  Financial  Guaranty also guarantees certain
structured debt issues in the taxable market.  The guaranteed  principal,  after
reinsurance,  amounted  to  approximately  $104  billion at December  31,  1996.
Approximately  85% of the  business  written to date by  Financial  Guaranty  is
municipal bond insurance.


                                       9
<PAGE>

Companies  affiliated with Financial  Guaranty offer a variety of other services
to state and local governments and agencies.  These affiliates provide liquidity
facilities in  variable-rate  transactions,  municipal  investment  products and
other services.

FGIC headquarters are located 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  and the  District  of
Columbia and,  at December 31, 1996, was the primary  insurance carrier for over
1,400,000   residential   homes,  with  total  insurance  in  force  aggregating
approximately $163 billion and total risk  in  force  aggregating  approximately
$36  billion.  When  a  claim is  received,  GE   Capital   Mortgage   Insurance
proceeds  by  either  paying 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.  

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

Creditor Insurance

Consolidated  Financial  Insurance  ("CFI") is one of the leading  providers  of
payment  protection in the United Kingdom.  The 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.

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.  To extend its
product range,  CFI acquired IMCO, a leading  administrator  of extended product
warranty  insurance  in  the  United  Kingdom,   headquartered  in  London  with
operations in Brazil and Belgium.

CFI is expanding distribution geographically and now has insurance operations in
11 countries across Europe and also in Australia. In 1996, CFI acquired Vie Plus
and RD Plus, payment protection  insurance companies with headquarters in Paris,
France.

CFI headquarters are located in London, England.

                                       10
<PAGE>

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
such  regulations  have not had a material  adverse effect on the  Corporation's
operations or profitability.

The Corporation's charges for providing financing services are changed from time
to time  either on a  general  basis or for  specific  types of  financing  when
warranted in light of competition or interest and other costs. 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,  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 claim 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.  Dammerman,  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
complaint  for failure to make a  pre-litigation  demand,  and that decision has
been appealed.  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.

                                       11
<PAGE>

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 14 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.

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)                             1996        1995        1994        1993        1992
                                                       --------    --------     -------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>    

Earned income ......................................   $ 32,713    $ 26,492    $ 19,875    $ 17,276    $ 14,418

Earnings from continuing operations ................      2,817       2,415       2,085       1,567       1,331
Earnings (loss) from discontinued operations .......       --          --        (1,189)        240         168
Net earnings .......................................      2,817       2,415         896       1,807       1,499

Return on common equity <F1> <F2> ..................      22.24%      21.98%      20.14%      16.59%      15.82%
GECS ratio of earnings to fixed charges <F3> .......       1.55        1.53        1.65        1.63        1.46
GECC ratio of earnings to fixed charges <F3> .......       1.53        1.51        1.63        1.62        1.44
GECC ratio of debt to equity <F1> ..................       7.92        7.89        7.94        7.96        7.91

Financing receivables - net ........................   $ 99,714    $ 93,272    $ 76,357    $ 63,948    $ 59,388

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

Total assets .......................................   $227,419    $185,729    $144,967    $126,637    $ 99,010

Short-term borrowings ..............................     77,945      62,808      57,087      55,243      50,481
Long-term senior notes .............................     46,680      47,794      33,615      25,112      21,182
Long-term subordinated notes .......................        996         996         697         697         697
Minority interest ..................................      2,530       2,522       1,465       1,301         994
Equity <F4> ........................................     14,276      12,774       9,380      10,809       8,884

Insurance premiums written for the year ............      8,185       6,158       3,962       3,956       2,900
<FN>

<F1>      Equity excludes unrealized gains and losses on investment  securities,
          net of tax.

<F2>      Return on common equity is calculated  using earnings from  continuing
          operations.  Earnings are  adjusted for  preferred stock dividends and
          equity excludes preferred stock.

<F3>      Ratio of earnings to fixed charges is calculated  using  earnings from
          continuing operations.

<F4>      The Corporation  adopted Statement of Financial  Accounting  Standards
          ("SFAS")  No.  115,  Accounting  for  Certain  Investments in Debt and
          Equity Securities, on December 31, 1993, resulting in the inclusion in
          equity, net of tax, of net unrealized  gains on investment  securities
          of $668 million and  $989  million  at  December 31,  1996  and  1995,
          respectively, net unrealized losses  of $821  million at  December 31, 
          1994, and net  unrealized  gains of $812 million at December 31, 1993.

</FN>
</TABLE>
                                     12
<PAGE>

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

OVERVIEW

The Corporation's net earnings were $2,817 million in 1996, compared with $2,415
million and $896 million,  in 1995 and 1994,  respectively.  The increase in net
earnings  in both  1996 and 1995 was  largely  attributable  to the  effects  of
continued  asset  growth,   principally  from  acquisitions  of  businesses  and
portfolios in 1996, and equal  contributions  from  acquisitions and origination
volume in 1995. The 1995 increase also reflected no 1995 counterpart to the 1994
discontinued  operations  loss from the  Kidder,  Peabody  Group  Inc.  (Kidder,
Peabody). Net earnings from continuing operations (exclusive of Kidder, Peabody)
were $2,415 million in 1995, up 16% from $2,085 million in 1994.

DISCONTINUED OPERATIONS

In 1994, the  Corporation  elected to terminate the operations of its securities
broker-dealer,  Kidder,  Peabody.  Discontinued operations had no impact on 1996
and 1995 earnings  compared with a net loss of $1,189  million in 1994. The 1994
net loss from discontinued operations included a provision of $868 million after
taxes for exit  costs  related  to the  liquidation  of  Kidder,  Peabody.  This
liquidation has been  substantially  complete since mid-1995.  See note 2 to the
consolidated   financial   statements  for  further   details  of   discontinued
operations.

OPERATING RESULTS FROM CONTINUING OPERATIONS

EARNINGS  FROM  CONTINUING  OPERATIONS  were $2,817  million in 1996 up 17% from
$2,415 million in 1995,  which increased 16% from 1994. The increase in earnings
in both years reflected strong  performances in the financing segments resulting
from asset  growth,  with  1995's  increase  partially  offset by a decrease  in
financing  spreads  (the excess of yields over  interest  rates on  borrowings).
Financing  spreads  were  essentially  flat in 1996 as a reduction in yields was
offset by decreases in borrowing rates.

Earnings in the  Specialty  Insurance  segment also showed strong growth in 1996
and 1995. 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.  Earnings  in the  Specialty
Insurance segment increased in 1995 due to growth,  primarily from acquisitions,
and no 1995 counterpart to the 1994 adverse loss development in private mortgage
pool insurance.

EARNED INCOME from all sources  increased 23% to $32.7 billion in 1996 following
a 33% increase to $26.5  billion in 1995.  In both years,  earned  income of the
financing  segments  increased  significantly,  primarily  as a result  of asset
growth,  but was partially  offset in 1996 by lower yields.  Yields increased in
1995 and contributed  slightly to the increase.  A significant  component of the
1996 revenue increase was the contribution  provided by the consumer savings and
insurance  businesses  acquired  in 1995  and 1996  and the  computer  equipment
businesses acquired in 1996.

Specialty  Insurance  revenues  increased  20% to $9.0 billion in 1996 from $7.4
billion  in 1995,  which  was up 51% over  1994.  The  1996  increase  primarily
reflected  inclusion  of a full year's  results for the  European  property  and
casualty  reinsurance  businesses  acquired in 1995.  This increase was somewhat
offset by GE Global Insurance's  decline in net premiums earned on U.S. business
reflecting  the  effects  of lower  industry  pricing  and the  exit of  certain
unprofitable   reinsurance  contracts.   The  1995  increase  reflected  growth,
primarily  associated with business  acquisitions,  in the property and casualty
reinsurance business.

INTEREST  EXPENSE on  borrowings  in 1996 was $7.3  billion,  10% higher than in
1995,  which was 47% higher than in 1994.  The  increase in 1996  reflected  the
effects of higher  average  borrowings  used to finance asset growth,  partially
offset  by the  effects  of lower  average  interest  rates.  The 1995  increase
resulted  from higher  average  borrowings  used to finance asset growth and the
effects of higher average interest rates. The Corporation's use of floating rate
versus fixed rate  borrowings is largely a function of the assets  against which
borrowings  are  matched.  The  composite  interest  rate  on the  Corporation's
borrowings  was  6.24% in 1996  compared  with  6.76% in 1995 and 5.47% in 1994.

                                       13
<PAGE>

OPERATING AND ADMINISTRATIVE EXPENSES were $11.3 billion in 1996, a 46% increase
over 1995,  which was 25% higher than 1994.  The  increase in both 1996 and 1995
primarily reflected costs associated with acquired businesses and portfolios and
higher investment  levels.  Included in the 1996 increase are costs of sales and
services of computer  equipment  businesses  acquired in 1996. The 1995 increase
was partially  offset by a reduction in provisions for losses on commercial real
estate assets charged to operating and administrative expenses.

INSURANCE LOSSES AND  POLICYHOLDER  AND ANNUITY  BENEFITS  increased 26% to $6.7
billion in 1996,  compared  with a 51% increase to $5.3  billion in 1995.  These
increases  were  primarily  driven  by  business   acquisitions  and  growth  in
originations.

PROVISION  FOR LOSSES ON FINANCING  RECEIVABLES  decreased to $1,033  million in
1996 from $1,117  million in 1995,  following  an increase  from $873 million in
1994. These provisions  principally related to private-label  credit cards, bank
credit cards,  auto loans and auto leases in the Consumer Services segment along
with  commercial  real  estate  loans,  all of which are  discussed  below under
Portfolio Quality.

DEPRECIATION  AND  AMORTIZATION  OF BUILDINGS  AND  EQUIPMENT  AND  EQUIPMENT ON
OPERATING  LEASES  increased 7% to $2,150  million in 1996  compared with $2,013
million in 1995,  a 21% increase  over 1994.  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 in 1996, and business and portfolio acquisitions as
well as origination volume in 1995 and 1996.

PROVISION  FOR  INCOME  TAXES  was  $1,231   million in 1996 (an  effective  tax
rate of 30.4%),  compared with $1,105  million in 1995 (an effective tax rate of
31.4%),  and $864 million in 1994 (an effective  tax rate of 29.3%).  The higher
provision  for income taxes in both 1996 and 1995  reflected  increased  pre-tax
earnings  subject to statutory tax rates. The 1996 decrease in the effective tax
rate  reflected  increased tax credits and a decrease in non-U.S.  income taxes.
The  1995  increase  in  the  effective   tax  rate  resulted   primarily   from
proportionately  lower  tax-exempt  income and an increase  in  non-U.S.  income
taxes.

OPERATING PROFIT BY INDUSTRY SEGMENT

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

CONSUMER   SERVICES   operating   profit  was  $1,272 million in 1996,  compared
with $1,030  million in 1995,  and $1,067  million in 1994. 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.  These
increases were  partially  offset by a higher  provision for losses,  reflecting
higher average receivable balances and increased delinquencies,  consistent with
industry  experience,  and  losses  associated  with  the  Corporation's  equity
investment in Montgomery Ward Holding Corp. Strong  performances  during 1995 in
the bank credit card, annuity and non-U.S. private-label credit card businesses,
resulting  primarily from acquisition growth, were offset by losses from adverse
market conditions in the mortgage servicing business.

EQUIPMENT  MANAGEMENT  operating  profit  increased to $929 million in 1996 from
$897 million in 1995, which was up from $624 million in 1994.  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  businesses  acquired,  which was  partially
offset by no counterpart to the 1995 sale of an outdoor media business. The 1995
increase also resulted from increased  prices at the trailer,  modular space and
railcar businesses along with the sale of the outdoor media business.

SPECIALIZED  FINANCING  operating  profit increased to $726 million in 1996 from
$673  million in 1995,  which  increased  26% over 1994.  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

                                       14
<PAGE>

related to the lower investment  levels and increased  operating  expenses.  The
1995 increase  resulted from lower  provisions for losses,  particularly  in the
commercial   real  estate   business,   and  increased   end-of-lease   residual
realization.

MID-MARKET FINANCING operating profit increased to $538 million in 1996 compared
with $445 million in 1995,  which was up from $435 million in 1994. 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 $1,234 million in 1996 from
$1,020 million in 1995. 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.  The 1995
operating profit increased $431 million over 1994,  primarily  resulting from no
1995  counterpart to the 1994 adverse loss  development in private mortgage pool
insurance,  the result of poor economic conditions and housing value declines in
southern  California,  improved returns on investment  securities and effects of
acquisitions.

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  $11.6  billion in 1996 and  year-end  assets  were  about  $65.3
billion. These revenues,  which are derived primarily from operations in Europe,
Canada and the Pacific Basin, were up from $8.1 billion in 1995; year-end assets
increased  23% during the year from  approximately  $53.3  billion at the end of
1995. These increases are attributable to the Corporation's  continued expansion
as a global provider of financial products and services.

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 $18.8  billion  during  1996 was  principally
related to acquisitions.  A breakdown of the investment  securities portfolio is
provided in note 3 to the consolidated financial statements.

FINANCING  RECEIVABLES were $99.7 billion at year-end 1996, net of allowance for
doubtful accounts, up $6.4 billion over 1995. These receivables are discussed on
page 19 and in notes 4 and 5 to the consolidated financial statements.

OTHER  RECEIVABLES were $16.0 billion and $12.9 billion at December 31, 1996 and
1995,  respectively.  The 1996 increase was primarily  attributable to insurance
activities,  particularly  increases  in  premiums  receivable  and  reinsurance
recoverables  of  acquired   businesses  as  well  as  a  general   increase  in
underwriting  activity,  and  receivables  associated  with the  acquisitions of
computer equipment businesses in 1996.

EQUIPMENT ON OPERATING  LEASES was $16.1  billion at December 31, 1996,  up $2.3
billion from 1995.  Details by category of investment  can be found in note 7 to
the  consolidated  financial  statements.  Additions  to  equipment on operating
leases  were  $5.3  billion   during  1996  versus  $4.5  billion  during  1995,
principally  reflecting  a shift in auto lease volume from  financing  leases in
1995 to operating leases in 1996 and increased volume in aircraft.

INTANGIBLE  ASSETS were $8.6 billion at year-end  1996,  up from $5.0 billion at
year-end  1995.  The $3.6  billion  increase in  intangible  assets  principally
related to increases in goodwill  attributable to various  acquisitions  and the
present value of future profits  associated with  acquisitions of life insurance
enterprises.

                                       15
<PAGE>

OTHER ASSETS totaled $22.0 billion at year-end 1996, compared with $16.1 billion
at the end of 1995. The $5.9 billion  increase  principally  related to separate
accounts of acquired life  insurance  businesses  and  investments in associated
companies.

Other Assets includes $314 million representing the Corporation's noncontrolling
investment in common stock of Montgomery  Ward Holding  Corp.  ("MWHC").  During
1996, MWHC reported  significant  losses from operations,  and the Corporation's
investment  was  reduced  for its  share  of such  losses.  In  addition  to the
investment in MWHC common stock,  the  Corporation  engages in various  ordinary
course of business financing transactions with MWHC and affiliates.  At December
31,  1996,  such  investments,  primarily  financing  receivables  from MWHC and
affiliates,  amounted to approximately $747 million.  These investments were all
performing  in  accordance  with their terms at December 31, 1996. No impairment
writedown was considered  necessary for investments in or financing  receivables
from MWHC and  affiliates  at  December  31,  1996.  In  addition  to the direct
transactions with MWHC and affiliates,  the Corporation also provides  financing
to customers of MWHC and affiliates through GE Capital's wholly-owned affiliate,
Montgomery Ward Credit Corporation.

INSURANCE  LIABILITIES,  RESERVES  AND ANNUITY  BENEFITS  were $61.3  billion at
year-end  1996,  $21.6 billion  higher than in 1995.  The increase was primarily
attributable  to  acquisitions  in 1996.  For  additional  information  on these
liabilities, see note 12 to the consolidated financial statements.

BORROWINGS  were $125.6  billion at December 31, 1996, of which $77.9 billion is
due in 1997 and $47.7 billion is due in subsequent years.  Comparable amounts at
the end of 1995 were $111.6 billion in total,  $62.8 billion due within one year
and $48.8 billion due thereafter. The Corporation's composite interest rates are
discussed on page 13. A large  portion of the  Corporation's  borrowings  ($54.2
billion and $41.2 billion at the end of 1996 and 1995,  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 is
issued by GE  Capital.  The average  remaining  terms and  interest  rates of GE
Capital's commercial paper were 42 days and 5.58%,  respectively,  at the end of
1996 compared with 41 days and 5.88% at the end of 1995.

GE  Capital's  leverage  (ratio of debt to  equity,  excluding  from  equity net
unrealized gains on investment securities) was 7.92 to 1 at the end of 1996, and
7.89 to 1 at the end of 1995. By comparison,  including in equity net unrealized
gains on investment securities, GE Capital's ratio of debt to equity was 7.84 to
1 at the end of 1996, and 7.59 to 1 at the end of 1995.

GE Company has  committed  to make  contributions  to GE Capital in the event of
either a significant,  specified  decrease 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, 1996 and 1995.  Management  believes the likelihood that
GE Company will be required to make  contributions  or payments 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  $4.3  billion.  New  borrowings  of  $82.2  billion  having
maturities  longer  than 90 days were added  during  those  years,  while  $53.4
billion of such  longer-term  borrowings  were  retired.  The  Corporation  also
generated $26.7 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 $55.2  billion that the  Corporation  invested in continuing
operations  over the past three years,  $23.1  billion was used for additions to
financing  receivables,  $15.7  billion  was used to  invest  in new  equipment,
principally for lease to others,  and $11.8 billion was used for acquisitions of
new businesses.


                                       16
<PAGE>

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

The Corporation uses various financial instruments,  particularly interest rate,
currency and basis 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,  11,  and  22  to  the  consolidated  financial  statements.

The relationship  between interest rate changes and financing spreads is subject
to many  factors  and  cannot  be  forecasted  with  reliability.  Although  not
necessarily  predictive of future effects,  management  estimates that, all else
constant,  an  increase of 100 basis  points in  interest  rates for all of 1996
would have reduced net earnings by  approximately  $74 million.  For comparison,
the effect on 1995 net earnings would have been $65 million.

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 and currency swaps  (including  non-U.S.  currency and cross
currency  interest rate swaps) to achieve lower borrowing  costs.  Substantially
all of these swaps 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 the 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.


                                       17
<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, 1996, the
notional amount of long-term  derivatives for which the  counterparty  was rated
below Aa3/AA- was $5.6 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                         1996        1995        1994
 -------------------------                        ------      ------      ------
<S>                                                  <C>         <C>         <C>
Aaa/AAA ....................................         79%         75%         78%
Aa/AA ......................................         16%         22%         17%
A/A and below ..............................          5%          3%          5%

</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  principal  and  interest  will be  received  and
floating rate  non-U.S.  currency  principal and 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.
This type of structure  usually  results from using several swap  counterparties
for steps (2) and (3). 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.


                                       18
<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.

PORTFOLIO QUALITY

THE PORTFOLIO OF FINANCING RECEIVABLES,  before allowance for losses,  increased
to $102.4  billion  at the end of 1996 from  $95.8  billion  at the end of 1995.
Financing  receivables are the Financing segment's largest asset and its primary
source of revenues. The related allowance for losses at the end of 1996 amounted
to $2.7  billion  (2.63% of  receivables  - the same as 1995 and 1994)  and,  in
management's  judgment,  is appropriate given the risk profile of the portfolio.
Amounts  written  off in 1996 were  approximately  1.03% of the  year's  average
financing  receivables,  compared  with  1.01% and 1.04%  during  1995 and 1994,
respectively.  The increase in 1996 principally reflects increased delinquencies
in the consumer portfolio,  consistent with industry experience. A discussion of
the  quality of certain  elements  of the  portfolio  of  financing  receivables
follows.  Further  details are included in notes 4, 5 and 7 to the  consolidated
financial statements.

"Nonearning"  receivables  are  those  that are 90 days or more  delinquent  and
"reduced-earning"  receivables are commercial  receivables whose terms have been
restructured to a below-market yield.

CONSUMER RECEIVABLES at year-end 1996 and 1995 are shown in the following table:
<TABLE>
<CAPTION>

(In millions)                                                 1996        1995
                                                           --------    --------
<S>                                                        <C>         <C>     
Credit card and personal loans .........................   $ 27,127    $ 23,937
Auto loans .............................................      5,915       5,555
Auto financing leases ..................................     13,113      12,461
                                                           --------    --------
  Total consumer .......................................   $ 46,155    $ 41,953
                                                           ========    ========

Nonearning .............................................   $    926    $    671
- As a percentage of total .............................        2.0%        1.6%
Receivable write-offs for the year .....................   $    870    $    644
</TABLE>

Most of the nonearning consumer receivables were U.S.  private-label credit card
loans,  the majority of which were subject to various loss sharing  arrangements
that provide full or partial recourse to the originating retailer.

COMMERCIAL  REAL ESTATE LOANS  classified  as financing  receivables  were $12.1
billion at December 31, 1996, a decrease of $1.3 billion from 1995,  principally
reflecting  sales of  receivables.  Nonearning and  reduced-earning  receivables
decreased   to   $158 million   at   December  31, 1996,    compared   with $179
million         at         year-end         1995.         Write-offs          of


                                       19
<PAGE>

commercial  real estate loans  declined to $45 million in 1996 from $147 million
in 1995 as markets  continued  to  stabilize.  Commercial  real estate loans are
generally secured by first mortgages.

In addition to loans,  the commercial real estate portfolio  included,  in other
assets,  $1.6 billion at year-end 1996 ($1.9 billion at year-end 1995) of assets
acquired  for resale from various  financial  institutions.  Values  realized on
sales of these  assets  continue to meet or exceed  expectations  at the time of
purchase. Also included in other assets were investments in real estate ventures
at year-end 1996 totaling $2.5 billion,  up from $2.0 billion at year-end  1995.
Those  investments  are made as a part of original  financings or in conjunction
with certain loan restructurings.  The commercial real estate portfolio includes
investments  in a variety of property  types and continues to be well  dispersed
geographically, principally in the continental United States.

OTHER  FINANCING  RECEIVABLES,  totaling  $44.1  billion at December  31,  1996,
consisted  of a diverse  commercial,  industrial  and  equipment  loan and lease
portfolio.  This portfolio increased $3.7 billion during 1996, primarily because
of acquisitions.  Related nonearning and  reduced-earning  receivables were $313
million at year-end 1996, compared with $285 million at year-end 1995.

The Corporation held loans and leases to commercial  airlines  amounting to $8.2
billion  at the end of 1996,  down from  $8.3  billion  at the end of 1995.  The
Corporation's  commercial aircraft positions also included financial guarantees,
funding  commitments  and  aircraft  orders  as  discussed  in  note  7  to  the
consolidated financial statements.

ENTERING 1997,  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 global economy.

NEW ACCOUNTING STANDARDS

New accounting  standards  include Statement of Financial  Accounting  Standards
("SFAS") No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments   of  Liabilities.   Among  other  things,   the  new  Statement
distinguishes  transfers of financial  assets that are sales from transfers that
are secured borrowings, based on control of the transferred assets. SFAS No. 125
is effective  for transfers of financial  assets  occurring  after  December 31,
1996,  and its  adoption  will not have an effect on the  financial  position or
results of operations of the Corporation.

                                       20
<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, 1996 and
1995,  and the results of their  operations and their cash flows for each of the
years in the  three-year  period ended  December 31, 1996,  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 7, 1997

                                       21
<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)                                    1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>    
EARNED INCOME
Time sales, loan and other income (Note 15) ................................   $ 13,236    $ 10,462    $  7,698
Operating lease rentals (Note 7) ...........................................      4,341       4,080       3,802
Financing leases (Note 15) .................................................      3,485       3,176       2,539
Investment income ..........................................................      3,506       2,542       2,011
Premium and commission income of insurance affiliates (Note 12) ............      8,145       6,232       3,825
                                                                               --------    --------    --------
  Total earned income ......................................................     32,713      26,492      19,875
                                                                               --------    --------    --------

EXPENSES
Interest (Note 11) .........................................................      7,326       6,661       4,545
Operating and administrative (Note 16) .....................................     11,311       7,756       6,200
Insurance losses and policyholder and annuity benefits (Note 12) ...........      6,678       5,285       3,507
Provision for losses on financing receivables (Note 5) .....................      1,033       1,117         873
Depreciation and amortization of buildings and equipment and
  equipment on operating leases (Notes 7 & 8) ..............................      2,150       2,013       1,662
Minority interest in net earnings of consolidated affiliates ...............        167         140         139
                                                                               --------    --------    --------
  Total expenses ...........................................................     28,665      22,972      16,926
                                                                               --------    --------    --------
Earnings from continuing operations before income taxes ....................      4,048       3,520       2,949
Provision for income taxes (Note 17) .......................................     (1,231)     (1,105)       (864)
                                                                               --------    --------    --------
Earnings from continuing operations ........................................      2,817       2,415       2,085
Loss from discontinued operations (Note 2) .................................       --          --        (1,189)
                                                                               --------    --------    --------
NET EARNINGS ...............................................................      2,817       2,415         896
Dividends paid (Note 14) ...................................................       (981)     (1,091)       (914)
Retained earnings at January 1 .............................................      9,518       8,194       8,212
                                                                               --------    --------    --------
RETAINED EARNINGS AT DECEMBER 31 ...........................................   $ 11,354    $  9,518    $  8,194
                                                                               ========    ========    ========
</TABLE>


See Notes to Consolidated Financial Statements.

                                       22
<PAGE>

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

                         STATEMENT OF FINANCIAL POSITION

 At December 31 (In millions)                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
ASSETS
Cash and equivalents ...................................................................   $  3,234    $  1,949
Investment securities (Note 3) .........................................................     59,872      41,063
Financing receivables (Note 4):
  Time sales and loans, net of deferred income .........................................     62,832      59,591
  Investment in financing leases, net of deferred income ...............................     39,575      36,200
                                                                                           --------    --------
                                                                                            102,407      95,791
  Allowance for losses on financing receivables (Note 5) ...............................     (2,693)     (2,519)
                                                                                           --------    --------
    Financing receivables - net ........................................................     99,714      93,272
Other receivables -  net (Note 6) ......................................................     15,962      12,897
Equipment on operating leases (at cost), less accumulated amortization of $5,625
  and $4,670 (Note 7) ..................................................................     16,134      13,793
Buildings and equipment (at cost), less accumulated depreciation of $1,246 and
  $964 (Note 8) ........................................................................      1,829       1,652
Intangible assets (Note 9) .............................................................      8,640       5,011
Other assets (Note 10) .................................................................     22,034      16,092
                                                                                           --------    --------
  TOTAL ASSETS .........................................................................   $227,419    $185,729
                                                                                           ========    ========

LIABILITIES AND EQUITY
Short-term borrowings (Note 11) ........................................................   $ 77,945    $ 62,808
Long-term borrowings (Note 11) .........................................................     47,676      48,790
                                                                                           --------    --------
  Total borrowings .....................................................................    125,621     111,598
Accounts payable .......................................................................      6,787       5,952
Insurance liabilities, reserves and annuity benefits (Note 12) .........................     61,327      39,699
Other liabilities ......................................................................      9,138       5,982
Deferred income taxes (Note 17) ........................................................      7,740       7,202
                                                                                           --------    --------
  Total liabilities ....................................................................    210,613     170,433
                                                                                           --------    --------

Minority interest in equity of consolidated affiliates (Note 13) .......................      2,530       2,522
                                                                                           --------    --------
Cumulative preferred stock, $10,000 par value (80,000 shares authorized; 51,000
  shares issued and held primarily by  consolidated  affiliates at December 31, 1996
  and December 31, 1995) ...............................................................         10          10
Common stock, $10,000 par value (101 shares authorized and outstanding) ................          1           1
Additional paid-in capital .............................................................      2,316       2,314
Retained earnings ......................................................................     11,354       9,518
Unrealized gains on investment securities ..............................................        668         989
Foreign currency translation adjustments ...............................................        (73)        (58)
                                                                                           --------    --------
  Total equity (Note 14) ...............................................................     14,276      12,774
                                                                                           --------    --------
  TOTAL LIABILITIES AND EQUITY .........................................................   $227,419    $185,729
                                                                                           ========    ========
</TABLE>

See Notes to Consolidated Financial Statements.

                                       23
<PAGE>

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

                             STATEMENT OF CASH FLOWS

 For the years ended December 31 (In millions)                                    1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ...............................................................   $  2,817    $  2,415    $    896
Adjustments for discontinued operations ....................................       --          --         1,189
Adjustments to reconcile net earnings to cash provided from
  operating activities:
   Provision for losses on financing receivables ...........................      1,033       1,117         873
   Increase in insurance liabilities, reserves and annuity benefits ........      1,491       2,490       1,624
   Increase in deferred income taxes .......................................      1,077         678         653
   Depreciation and amortization of buildings and equipment and
    equipment on operating leases ..........................................      2,150       2,013       1,662
   Increase (decrease) in accounts payable .................................        318         418        (222)
   Other - net .............................................................        881         946         140
                                                                               --------    --------    --------
  Cash from operating activities ...........................................      9,767      10,077       6,815
                                                                               --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in financing receivables (Note 21) ............................     (2,278)    (11,309)     (9,525)
Buildings and equipment and equipment on operating leases
  - additions ..............................................................     (5,371)     (4,616)     (5,749)
  - dispositions ...........................................................      1,333       1,504       2,420
Payments for principal businesses purchased, net of cash acquired ..........     (4,394)     (5,403)     (2,031)
All other investing activities (Note 21) ...................................     (6,090)     (3,913)        176
                                                                               --------    --------    --------
  Cash used for investing activities .......................................    (16,800)    (23,737)    (14,709)
                                                                               --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) ......................     11,026      (4,510)     (2,261)
Newly issued debt (maturities longer than 90 days) (Note 21) ...............     22,901      36,778      22,473
Repayments and other reductions (maturities longer than 90 days) (Note 21) .    (24,656)    (17,045)    (11,699)
Dividends paid .............................................................       (981)     (1,091)       (904)
All other financing activities (Note 21) ...................................         28         259         183
                                                                               --------    --------    --------
  Cash from financing activities ...........................................      8,318      14,391       7,792
                                                                               --------    --------    --------

  Cash used for discontinued operations (Note 21) ..........................       --          --          (200)
                                                                               --------    --------    --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR.................      1,285         731        (302)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ..................................      1,949       1,218       1,520
                                                                               --------    --------    --------
CASH AND EQUIVALENTS AT END OF YEAR ........................................   $  3,234    $  1,949    $  1,218
                                                                               ========    ========    ========
</TABLE>


See Notes to Consolidated Financial Statements.

                                       24
<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  affiliates,  generally  companies  in which  the
Corporation  owns  20 to 50  percent  of the  voting  rights  ("non-consolidated
affiliates"),  are included in other assets and valued at the appropriate  share
of  equity  plus  loans  and  advances.  Certain  prior  period  data  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.

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

METHODS OF RECORDING  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.

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.

INVESTMENT  SECURITIES - The  Corporation has designated its investments in debt
securities  and  marketable  equity  securities  as  available  for sale.  Those
securities  are  reported at fair value,  with net  unrealized  gains and losses

                                       25
<PAGE>

included in equity,  net of applicable  taxes.  Unrealized losses that are other
than  temporary  are  recognized  in  earnings.  Realized  gains  and  losses on
investments are determined using the specific  identification method.  

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 thirty years.
Goodwill in excess of associated  expected operating cash flows is considered to
be impaired and is written down to fair value.

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 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  property  and  casualty  and  accident  and  health  risks  contracts
     (including financial guaranty  insurance),  premiums are reported as earned
     income,  generally on a pro rata basis, over the terms of related insurance
     policies or reinsurance treaties.

  o  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 term and whole life contracts,  premiums are reported as earned income
     when due under terms of the respective policies.

  o  For  annuity  and  investment  contracts  -  contracts  that  do not  have
     significant  mortality  or  morbidity  risk - premiums  are not reported as
     revenues, but as liabilities (included in "Insurance liabilities,  reserves
     and  annuity  benefits")  and  are  adjusted  according  to  terms  of  the
     respective policies.

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 systematically over the respective policy terms.

  o  For  property  and  casualty  and  accident  and health  risks  (including
     financial guaranty insurance),  these costs are amortized pro rata over the
     contract periods in which the related premiums are earned.

                                       26
<PAGE>

  o  For term and whole life  contracts,  these  costs are  amortized  over the
     respective  contract  periods in proportion to either  anticipated  premium
     income or gross profit, as appropriate.

  o  For annuity and  investment  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").  Amortization of PVFP
is based on gross profit projections from the underlying contracts,  adjusted to
reflect actual experience and any impairment.


NOTE 2.        DISCONTINUED OPERATIONS

In November 1994, the Corporation elected to terminate the operations of Kidder,
Peabody  Group  Inc.  ("Kidder,  Peabody"),  its  securities  broker-dealer,  by
initiating an orderly liquidation of its assets and liabilities.  As part of the
liquidation plan, the Corporation received securities of Paine Webber Group Inc.
valued  at $657  million  in  exchange  for  certain  broker-dealer  assets  and
operations.   Summary  operating  results  of  the  discontinued   broker-dealer
operations follow.

<TABLE>
<CAPTION>

(In millions)                                                             1994
                                                                       --------
<S>                                                                    <C>     
Revenues ...........................................................   $  4,578
                                                                       ========

Loss before income taxes ...........................................   $   (551)
Income tax benefit .................................................        230
                                                                       --------
Loss from discontinued operations ..................................       (321)
Provision for loss, net of income tax benefit of $266 ..............       (868)
                                                                       --------
Loss from discontinued operations ..................................   $ (1,189)
                                                                       ========
</TABLE>


The 1994 provision of $868 million after taxes,  shown in the summary above, was
related to exit costs  associated  with  liquidation  of Kidder,  Peabody.  This
liquidation has been substantially  complete since mid-1995. In 1996, regulatory
authorities  permitted  Kidder,  Peabody  to  de-register  as  a  broker-dealer,
releasing  approximately  $900  million of  investments  that were used to repay
Kidder, Peabody borrowings.

                                       27
<PAGE>

NOTE 3.        INVESTMENT SECURITIES

A summary of investment securities follows:
<TABLE>
<CAPTION>

 (In millions)                                                                   GROSS      GROSS
                                                                  AMORTIZED   UNREALIZED  UNREALIZED  ESTIMATED
 DECEMBER 31, 1996                                                   COST        GAINS      LOSSES   FAIR VALUE
                                                                   --------    --------    --------    --------
<S>                                                                <C>         <C>         <C>         <C>    
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
                                                                   ========    ========    ========    ========

DECEMBER 31, 1995

Debt securities
  U.S. corporate ...............................................   $ 12,313    $    463    $    (63)   $ 12,713
  State and municipal ..........................................      9,460         570         (11)     10,019
  Mortgage-backed ..............................................      5,991         255         (65)      6,181
  Corporate - non-U.S ..........................................      3,764          98         (34)      3,828
  Government - non-U.S .........................................      3,123         115          (3)      3,235
  U.S. government and federal agency ...........................      1,817          77          (3)      1,891
Equity securities ..............................................      2,843         412         (59)      3,196
                                                                   --------    --------    --------    --------
                                                                   $ 39,311    $  1,990    $   (238)   $ 41,063
                                                                   ========    ========    ========    ========
</TABLE>

The  majority  of  mortgage-backed  securities  shown  in the  table  above  are
collateralized by U.S.  residential  mortgages.  Mortgage-backed  securities are
subject to prepayment  risk, which affects yield but does not impair recovery of
principal.

At December 31, 1996,  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:
  1997 .................................................................................   $  2,569    $  2,579
  1998-2001 ............................................................................     10,705      10,261
  2002-2006 ............................................................................     10,749      11,052
  2007 and later .......................................................................     19,563      19,979
</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 1996 were $11,868 million ($11,017 million in 1995 and
$5,821  million in 1994).  Gross  realized gains were $638 million in 1996 ($503
million  in 1995 and $281  million in 1994).  Gross  realized  losses  were $190
million in 1996 ($157 million in 1995 and $112 million in 1994).

                                       28
<PAGE>

NOTE 4.        FINANCING RECEIVABLES

Financing receivables at December 31, 1996 and 1995 are shown below.
<TABLE>
<CAPTION>

 (In millions)                                                                                1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Time sales and loans:
  Consumer Services ....................................................................   $ 40,479    $ 33,430
  Specialized Financing ................................................................     14,584      18,230
  Mid-Market Financing .................................................................      9,914       8,795
  Equipment Management .................................................................        760       1,371
  Specialty Insurance ..................................................................        339         189
                                                                                           --------    --------
                                                                                             66,076      62,015
Deferred income ........................................................................     (3,244)     (2,424)
                                                                                           --------    --------
   Time sales and loans - net of deferred income .......................................     62,832      59,591
                                                                                           --------    --------
Investment in financing leases:
  Direct financing leases ..............................................................     36,576      33,291
  Leveraged leases .....................................................................      2,999       2,909
                                                                                           --------    --------
   Investment in financing leases ......................................................     39,575      36,200
                                                                                           --------    --------
                                                                                            102,407      95,791
Less allowance for losses (Note 5) .....................................................     (2,693)     (2,519)
                                                                                           --------    --------
                                                                                           $ 99,714    $ 93,272
                                                                                           ========    ========
</TABLE>


Time sales and loans  represent  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 1996 and 1995,
specialized  financing and consumer  services loans included $12,075 million and
$13,405 million, respectively, for commercial real estate loans. Note 7 contains
information on commercial airline loans and leases.

At  December  31,  1996,  contractual  maturities  for time sales and loans were
$28,128 million in 1997; $12,504 million in 1998; $7,255 million in 1999; $5,279
million  in  2000;  $3,743  million  in 2001 and  $9,167  million  thereafter  -
aggregating $66,076 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,  automobiles  and other  transportation
equipment,  data  processing  equipment,  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.

Investments 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.

                                       29
<PAGE>

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, 1996 and
1995 is shown below.

<TABLE>
<CAPTION>
                                                  TOTAL                  DIRECT
                                             FINANCING LEASES        FINANCING LEASES        LEVERAGED LEASES
                                           --------------------    --------------------    --------------------
(In millions)                                 1996        1995        1996        1995        1996        1995
                                           --------    --------    --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>     
Total minimum lease payments
  receivable ...........................   $ 54,009    $ 50,059    $ 40,555    $ 37,434    $ 13,454    $ 12,625
Less principal and interest on
  third-party nonrecourse debt .........    (10,213)     (9,329)       --          --       (10,213)     (9,329)
                                           --------    --------    --------    --------    --------    --------
  Net rentals receivable ...............     43,796      40,730      40,555      37,434       3,241       3,296
Estimated unguaranteed residual  value
  of leased assets .....................      6,248       5,768       4,906       4,630       1,342       1,138
Less deferred income ...................    (10,469)    (10,298)     (8,885)     (8,773)     (1,584)     (1,525)
                                           --------    --------    --------    --------    --------    --------
  Investment in financing leases .......     39,575      36,200      36,576      33,291       2,999       2,909

Less:  Allowance for losses ............       (720)       (745)       (641)       (669)        (79)        (76)
       Deferred taxes arising from
        financing leases ...............     (7,488)     (6,243)     (4,077)     (3,215)     (3,411)     (3,028)
                                           --------    --------    --------    --------    --------    --------
Net investment in financing leases .....   $ 31,367    $ 29,212    $ 31,858    $ 29,407    $   (491)   $   (195)
                                           ========    ========    ========    ========    ========    ========
</TABLE>


At December  31,  1996,  contractual  maturities  for rentals  receivable  under
financing  leases were $12,890 million in 1997;  $9,759 million in 1998;  $6,716
million  in 1999;  $3,616  million  in 2000;  $2,071  million in 2001 and $8,744
million thereafter - aggregating  $43,796 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.

In connection with the sales of financing  receivables with recourse, GE Capital
received  proceeds of $4,026 million in 1996,  $2,139 million in 1995 and $1,239
million in 1994.  GE  Capital's  exposure  under  such  recourse  provisions  is
included in "credit and liquidity support - securitizations" in note 22.

Nonearning   consumer   receivables,   primarily   private-label   credit   card
receivables,  amounted to $926 million and $671 million at December 31, 1996 and
1995,  respectively.  A majority of these  receivables  were  subject to various
loss-sharing   arrangements  that  provide  full  or  partial  recourse  to  the
originating  private-label  entity.  Nonearning and reduced-earning  receivables
other than consumer  receivables  were $471 million and $464 million at year-end
1996 and 1995, 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, 1996 and 1995: loans requiring  allowances for losses ($583 million
and $647  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  ($187 million and $220 million,  respectively);
allowances  for  losses on these  loans  were  $222  million  and $285  million,
respectively.  Average  investment  in these loans during 1996 and 1995 was $842
million and $1,037 million, respectively,  before allowance for losses; interest
income  earned,  principally  on the cash  basis,  while  they  were  considered
impaired was $30 million and $49 million in 1996 and 1995, respectively.


                                       30
<PAGE>

NOTE 5.        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)                                                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
Balance at January 1 .......................................................   $  2,519    $  2,062    $  1,730
Provisions charged to operations ...........................................      1,033       1,117         873
Net transfers related to companies acquired or sold ........................        139         217         199
Amounts written off - net ..................................................       (998)       (877)       (740)
                                                                               --------    --------    --------

Balance at December 31 .....................................................   $  2,693    $  2,519    $  2,062
                                                                               ========    ========    ========
</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.


NOTE 6.        OTHER RECEIVABLES

This account  includes  reinsurance  recoverables  of $4,403  million and $4,547
million and premiums receivable of $3,860 million and $3,001 million at year-end
1996 and 1995,  respectively.  Also included are amounts for accrued  investment
income, trade receivables,  operating lease receivables,  insurance policy loans
and a variety of sundry items.


NOTE 7.        EQUIPMENT ON OPERATING LEASES

Equipment on operating leases by type of equipment and accumulated  amortization
at December 31, 1996 and 1995 are shown below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Original cost
  Vehicles .............................................................................   $  6,789    $  4,948
  Aircraft .............................................................................      6,647       5,682
  Marine shipping containers ...........................................................      3,053       3,253
  Railroad rolling stock ...............................................................      2,093       1,811
  Other ................................................................................      3,177       2,769
                                                                                           --------    --------
                                                                                             21,759      18,463
Accumulated amortization ...............................................................     (5,625)     (4,670)
                                                                                           --------    --------
                                                                                           $ 16,134    $ 13,793
                                                                                           ========    ========
</TABLE>

Amortization of equipment on operating leases was $1,848 million, $1,702 million
and $1,435 million in 1996, 1995 and 1994,  respectively.  Noncancelable  future
rentals  due  from  customers  for  equipment  on   operating  leases  at  year-

                                       31
<PAGE>

end 1996 totaled $9,093 million and are due as follows:  $2,908 million in 1997;
$1,923  million in 1998;  $1,128  million in 1999;  $686  million in 2000;  $446
million in 2001 and $2,002 million thereafter.

The Corporation acts as a lender and lessor to the commercial  airline industry.
At December 31, 1996 and 1995,  the balance of such loans,  leases and equipment
leased to others  was  $8,240  million  and  $8,337  million,  respectively.  In
addition,  at December 31, 1996, the Corporation had issued financial guarantees
and funding  commitments of $221 million ($409 million at year-end 1995) and had
placed  multiyear orders for various Boeing and Airbus aircraft with list prices
of approximately $6.5 billion. Included in the Corporation's equipment leased to
others at year-end 1996 was $190 million,  net, of commercial aircraft off-lease
($101 million at the end of 1995).

Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the
Impairment of  Long-Lived  Assets and for  Long-Lived  Assets to be Disposed Of,
specifies  circumstances in which certain long-lived assets must be reviewed for
impairment.  If such  review  indicates  that the  carrying  amount  of an asset
exceeds the sum of its expected  future cash flows,  the asset's  carrying value
must be written  down to fair  value.  Adoption  of this  standard on January 1,
1996,  did not have a material  effect on the  financial  position or results of
operations of the Corporation.


NOTE 8.        BUILDINGS AND EQUIPMENT

Buildings and  equipment  include  office  buildings,  satellite  communications
equipment, data processing equipment,  vehicles, furniture and office equipment.
Depreciation  expense was $302  million in 1996,  $311  million in 1995 and $227
million in 1994.


NOTE 9.        INTANGIBLE ASSETS

Intangible assets at December 31, 1996 and 1995 are shown in the table below.
<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Goodwill ...............................................................................   $  5,847    $  3,984
Present value of future profits (PVFP) .................................................      2,438         624
Other intangibles ......................................................................        355         403
                                                                                           --------    --------
                                                                                           $  8,640    $  5,011
                                                                                           ========    ========
</TABLE>

The Corporation's intangible assets are shown net of accumulated amortization of
$1,988 million at December 31, 1996 and $1,352 million at December 31, 1995.

The year-end 1996 PVFP balance includes $1,896 million related to life insurance
enterprises acquired during 1996. PVFP amortization,  which is on an accelerated
basis and net of interest,  is projected to range from 11% to 8% of the year-end
1996 unamortized balance for each of the next five years.

                                       32
<PAGE>

NOTE 10.       OTHER ASSETS

Other assets at December 31, 1996 and 1995 are shown in the table below.

<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Investments
  Assets acquired for resale ...........................................................   $  2,993    $  3,558
  Investments in and advances to nonconsolidated affiliates ............................      4,916       3,566
  Real estate ventures .................................................................      2,469       2,004
  Other ................................................................................      2,095       2,072
                                                                                           --------    --------
                                                                                             12,473      11,200
Separate accounts ......................................................................      3,516        --
Mortgage servicing rights ..............................................................      1,663       1,688
Deferred insurance acquisition costs ...................................................      1,720       1,336
Other ..................................................................................      2,662       1,868
                                                                                           --------    --------
                                                                                           $ 22,034    $ 16,092
                                                                                           ========    ========
</TABLE>

Separate  accounts  represent  investments  controlled by policyholders  and are
associated with identical amounts reported as insurance liabilities in note 12.

SFAS  No.  122,   Accounting  for  Mortgage  Servicing  Rights,   requires  that
capitalized  rights to service  mortgage  loans be assessed  for  impairment  by
individual  risk stratum by comparing  each stratum's  carrying  amount with its
fair value. Impairment, if any, is recognized as a charge to earnings.  Adoption
of this  standard  on  January 1,  1996,  did not have a material  effect on the
financial position or results of operations of the Corporation.


NOTE 11.       BORROWINGS

Total  short-term  borrowings  at December  31, 1996 and 1995  consisted  of the
following:
<TABLE>
<CAPTION>

                                                                           1996                    1995
                                                                   --------------------    --------------------
                                                                                AVERAGE                 AVERAGE
(Dollars in millions)                                               AMOUNT        RATE      AMOUNT        RATE
                                                                   --------     -------    --------     -------
<S>                                                                <C>             <C>     <C>             <C> 
Commercial paper - U.S. ........................................   $ 50,435        5.68%   $ 37,432        5.82%
Commercial paper - non-U.S .....................................      3,737        4.30       3,796        6.33
Current portion of long-term debt ..............................     16,471        6.17 <F1> 15,719        6.51 <F1>
Other ..........................................................      7,302                   5,861
                                                                   --------                --------
                                                                   $ 77,945                $ 62,808
                                                                   ========                ========

<FN>
<F1>   Includes the effects of associated interest rate and currency swaps.
</FN>
</TABLE>


Total long-term borrowings at December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
                                                                       1996
                                                                     AVERAGE
(Dollars in millions)                                                  RATE         
                                                                       <F1>   MATURITIES      1996        1995
                                                                     -------  ----------   --------    --------
<S>                                                                    <C>     <C>         <C>         <C>     
Senior notes ...................................................       6.18%   1998-2055   $ 46,680    $ 47,794
Subordinated notes <F2>.........................................       7.88    2006-2035        996         996
                                                                                           --------    --------
                                                                                           $ 47,676    $ 48,790
                                                                                           ========    ========
<FN>
<F1>   Includes the effects of associated interest rate and currency swaps.
<F2>   Guaranteed by GE Company.
</FN>
</TABLE>

                                       33
<PAGE>

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 22.

LIQUIDITY  requirements  of the  Corporation  are principally met through credit
markets.  Maturities of long-term  borrowings,  including the current portion of
long-term  debt,  at December  31, 1996 were  $16,471  million in 1997;  $14,414
million  in 1998;  $7,986  million  in 1999;  $5,433  million in 2000 and $3,773
million in 2001.

At December 31, 1996, the Corporation had committed lines of credit  aggregating
$20.4  billion  with 118 banks,  including  $11.2  billion of  revolving  credit
agreements  pursuant  to which it has the  right to  borrow  funds  for  periods
exceeding  one year.  A total of $1.7  billion of GE  Capital's  credit lines is
available  for  use  by  GE  Company.   In  addition,   at  December  31,  1996,
approximately  $116 million of committed lines of credit were directly available
to a  non-U.S.  affiliate  of the  Corporation.  Also,  at  December  31,  1996,
substantially all of the approximately $3.6 billion of GE Company's credit lines
were available for use by the Corporation.  During 1996, 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,
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.

The  following  table shows the  Corporation's  borrowing  positions at December
31,1996 and 1995, considering the effects of swaps.

<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
EFFECTIVE BORROWINGS (INCLUDING SWAPS)
Short-term .............................................................................   $ 46,450    $ 38,508
                                                                                           ========    ========
Long-term (including current portion)
  Fixed rate <F1> ......................................................................   $ 56,190    $ 49,582
  Floating rate ........................................................................     22,981      23,508
                                                                                           --------    --------
Total long-term ........................................................................   $ 79,171    $ 73,090
                                                                                           ========    ========
<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, 1996,  interest rate swap  maturities  ranged from 1997 to 2029,
and weighted average interest rates for "synthetic"  fixed-rate  borrowings were
6.45% (6.62% at year-end 1995).

                                       34
<PAGE>

NOTE 12.       INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS

Insurance  liabilities,  reserves and annuity  benefits at December 31, 1996 and
1995 are shown below.
<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Annuity and investment contract benefits ...............................................   $ 20,210    $ 14,007
Life insurance benefits and other <F1> .................................................     19,784       9,223
Unpaid claims and claims adjustment expenses ...........................................     13,184      12,662
Unearned premiums ......................................................................      4,633       3,807
Separate accounts (see note 10) ........................................................      3,516        --
                                                                                           --------    --------
                                                                                           $ 61,327    $ 39,699
                                                                                           ========    ========
<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 1996
     and 1995.
</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.

Activity in the liability for unpaid  claims and claims  adjustment  expenses is
summarized below.
<TABLE>
<CAPTION>
(In millions)                                                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
Balance at January 1 - gross ...............................................   $ 12,662    $  7,032    $  6,405
Less reinsurance recoverables ..............................................     (1,853)     (1,084)     (1,142)
                                                                               --------    --------    --------
Balance at January 1 - net .................................................     10,809       5,948       5,263
Claims and expenses incurred
  Current year .............................................................      4,087       3,268       2,016
  Prior years ..............................................................        104         492         558
Claims and expenses paid
  Current year .............................................................     (1,357)       (706)       (543)
  Prior years ..............................................................     (2,373)     (1,908)     (1,432)
Claim reserves related to acquired companies ...............................        309       3,696          49
Other ......................................................................       (217)         19          37
                                                                               --------    --------    --------
Balance at December 31 - net ...............................................     11,362      10,809       5,948
Add reinsurance recoverables ...............................................      1,822       1,853       1,084
                                                                               --------    --------    --------
Balance at December 31 - gross .............................................   $ 13,184    $ 12,662    $  7,032
                                                                               ========    ========    ========
</TABLE>

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

                                       35
<PAGE>

Financial  guarantees  and credit life risk of insurance  affiliates at December
31, 1996 and 1995, are summarized below.
<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Guarantees, principally on municipal bonds and structured finance issues ...............   $140,575    $119,516
Mortgage insurance risk in force .......................................................     36,279      32,599
Credit life insurance risk in force ....................................................     25,961      13,670
Less reinsurance .......................................................................    (32,413)    (21,749)
                                                                                           --------    --------
                                                                                           $170,402    $144,036
                                                                                           ========    ========
</TABLE>

The  Corporation's  insurance risk is ceded on both a pro rata and 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)                                 1996        1995        1994        1996        1995        1994
                                           --------    --------    --------    --------    --------    --------
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>     
Direct .................................   $  3,926    $  2,984    $  1,816    $  3,850    $  2,604    $  1,787
Assumed ................................      5,455       3,978       2,696       5,353       4,414       2,596
Ceded ..................................     (1,196)       (804)       (550)     (1,058)       (786)       (558)
                                           --------    --------    --------    --------    --------    --------
Net premiums ...........................   $  8,185    $  6,158    $  3,962    $  8,145    $  6,232    $  3,825
                                           ========    ========    ========    ========    ========    ========
</TABLE>

Reinsurance  recoveries  recognized  as a  reduction  of  insurance  losses  and
policyholder  and annuity  benefits  amounted to $937 million,  $459 million and
$434 million for the years ended December 31, 1996, 1995 and 1994, respectively.


NOTE 13.       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, 1996 and 1995, is summarized below.
<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
GE Capital .............................................................................   $  1,800    $  1,800
GE Capital subsidiary ..................................................................        485         360
</TABLE>

Dividend rates on the preferred stock ranged from 3.8% to 5.2% during 1996, from
4.2% to 5.2% during 1995 and from 2.3% to 4.9% during 1994.

                                       36
<PAGE>

NOTE 14.       EQUITY

Changes in equity for each of the years ended  December 31, 1996,  1995 and 1994
were as follows:
<TABLE>
<CAPTION>
                                                                              UNREALIZED       
                                                                                GAINS        FOREIGN
                              CUMULATIVE              ADDITIONAL             (LOSSES) ON    CURRENCY
(In millions)                  PREFERRED    COMMON     PAID-IN     RETAINED   INVESTMENT  TRANSLATION
                                 STOCK       STOCK      CAPITAL    EARNINGS   SECURITIES  ADJUSTMENTS     TOTAL  
                               --------    --------    --------    --------   ----------  -----------    --------
<S>                            <C>         <C>         <C>         <C>         <C>         <C>         <C>       
Balance at January 1, 1994 .   $   --      $      1    $  1,877    $  8,212    $    812    $    (93)   $ 10,809
Capital contributions ......       --          --           187        --          --          --           187
Net unrealized losses on
 investment securities .....       --          --          --          --        (1,633)       --        (1,633)
Currency translation
 adjustments ...............       --          --          --          --          --            25          25
Net earnings ...............       --          --          --           896        --          --           896
Dividends declared:
 Stock dividend ............         10        --          --           (10)       --          --          --
 Common stock ..............       --          --          --          (903)       --          --          (903)
 Preferred stock ...........       --          --          --            (1)       --          --            (1)
                               --------    --------    --------    --------    --------    --------    --------
Balance at December 31, 1994         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
                               ========    ========    ========    ========    ========    ========    ========
</TABLE>

General Electric Capital Services,  Inc.'s outstanding  preferred stock amounted
to $510  million at December  31,  1996,  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  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.  In 1994, GE Company  contributed to
the Corporation the net assets of Consolidated  Insurance Group, which increased
the Corporation's additional paid-in capital by $187 million.

Changes in fair value of investment  securities  are  reflected,  net of tax, 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, 1996 and 1995,  the aggregate  statutory  capital and surplus of
the insurance  businesses totaled $10.2 billion and $7.7 billion,  respectively.
In preparing statutory statements, no significant permitted accounting practices
were used that differ from prescribed accounting practices.

                                       37
<PAGE>

NOTE 15.       EARNED INCOME

Time sales, loan and other income includes the  Corporation's  share of earnings
from equity  investees  of  approximately  $85  million,  $116  million and $169
million for 1996, 1995 and 1994, respectively.

Included in earned  income from  financing  leases for 1996,  1995 and 1994 were
pretax gains on the sale of equipment at lease completion of $115 million,  $191
million and $180 million, respectively.


NOTE 16.       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 $269 million in 1996,  $273 million in 1995 and $262
million in 1994.  Other rental expense was $278 million in 1996, $251 million in
1995 and $206  million in 1994,  principally  for the rental of office space and
data processing equipment. Minimum future rental commitments under noncancelable
leases at December  31, 1996,  are $471  million in 1997;  $415 million in 1998;
$375  million in 1999;  $327  million in 2000;  $302  million in 2001 and $1,222
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
1996,  1995  and 1994 was  $1,671  million,  $1,319  million  and $945  million,
respectively.


NOTE 17.       INCOME TAXES

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

<TABLE>
<CAPTION>
(In millions)                                                                     1996        1995       1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
Estimated amounts payable ..................................................   $    164    $    434    $    447
Deferred tax expense from temporary differences ............................      1,067         671         417
                                                                               --------    --------    --------
                                                                               $  1,231    $  1,105    $    864
                                                                               ========    ========    ========
</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.

Estimated amounts payable includes amounts applicable to non-U.S.  jurisdictions
of $614  million,  $172  million  and  $224  million  in 1996,  1995  and  1994,
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.

                                       38
<PAGE>

Consolidated  U.S. income before taxes was $2.6 billion in 1996, $2.7 billion in
1995 and $2.4 billion in 1994.  The  corresponding  amounts for  non-U.S.  based
operations  were $1.5 billion in 1996,  $0.8 billion in 1995 and $0.5 billion in
1994.

A  reconciliation  of the U.S.  federal  statutory rate to the actual income tax
rate follows.
<TABLE>
<CAPTION>
                                                                                  1996        1995        1994
                                                                               --------    --------    --------
<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 .................................................        1.2         1.1         1.0
  Tax-exempt income ........................................................       (5.4)       (5.8)       (6.9)
  Foreign Sales Corporation tax benefits ...................................       (0.3)       --          --
  Dividends received, not fully  taxable ...................................       (1.1)       (0.8)       (0.8)
  Other - net ..............................................................        1.0         1.9         1.0
                                                                               --------    --------    --------
Actual income tax rate .....................................................       30.4%       31.4%       29.3%
                                                                               ========    ========    ========
</TABLE>

Principal  components of the net deferred tax liability balances at December 31,
1996 and 1995 are as follows:

<TABLE>
<CAPTION>
(In millions)                                                                                 1996        1995
                                                                                           --------    --------
<S>                                                                                        <C>         <C>     
Assets
  Allowance for losses .................................................................   $ (1,184)   $   (852)
  Insurance reserves ...................................................................       (787)       (218)
  AMT credit carryforwards .............................................................       (561)       --
  Other ................................................................................       (778)       (904)
                                                                                           --------    --------
Total deferred tax assets ..............................................................     (3,310)     (1,974)
                                                                                           --------    --------
Liabilities
  Financing leases .....................................................................      7,488       6,243
  Operating leases .....................................................................      1,833       1,485
  Net unrealized gains on securities ...................................................        404         608
  Other ................................................................................      1,325         840
                                                                                           --------    --------
Total deferred tax liabilities .........................................................     11,050       9,176
                                                                                           --------    --------
Net deferred tax liability .............................................................   $  7,740    $  7,202
                                                                                           ========    ========
</TABLE>



                                       39
<PAGE>

NOTE 18.       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.

<TABLE>
<CAPTION>
(In millions)                                                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
Earned income:
  Consumer Services ........................................................   $ 10,217    $  7,586    $  5,508
  Equipment Management .....................................................      8,010       6,173       5,209
  Specialized Financing ....................................................      2,975       3,099       2,640
  Mid-Market Financing .....................................................      2,540       2,184       1,575
  Specialty Insurance ......................................................      8,966       7,444       4,926
                                                                               --------    --------    --------
Total segment earned income ................................................     32,708      26,486      19,858
  Corporate ................................................................          5           6          17
                                                                               --------    --------    --------
Total earned income ........................................................   $ 32,713    $ 26,492    $ 19,875
                                                                               ========    ========    ========

Segment operating profit:
  Consumer Services ........................................................   $  1,272    $  1,030    $  1,067
  Equipment Management .....................................................        929         897         624
  Specialized Financing ....................................................        726         673         536
  Mid-Market Financing .....................................................        538         445         435
  Specialty Insurance ......................................................      1,234       1,020         589
                                                                               --------    --------    --------
Total segment operating profit .............................................      4,699       4,065       3,251
  Corporate ................................................................       (651)       (545)       (302)
                                                                               --------    --------    --------
Earnings before income taxes ...............................................   $  4,048    $  3,520    $  2,949
                                                                               ========    ========    ========

Identifiable assets at December 31:
  Consumer Services ........................................................   $101,110    $ 73,076    $ 54,171
  Equipment Management .....................................................     30,601      25,145      23,250
  Specialized Financing ....................................................     27,725      30,297      28,183
  Mid-Market Financing .....................................................     25,151      21,544      16,362
  Specialty Insurance ......................................................     41,575      34,795      22,058
                                                                               --------    --------    --------
Total segment identifiable assets ..........................................    226,162     184,857     144,024
  Corporate ................................................................      1,257         872         943
                                                                               --------    --------    --------
Total assets ...............................................................   $227,419    $185,729    $144,967
                                                                               ========    ========    ========
</TABLE>



                                       40
<PAGE>

NOTE 19.       QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data were as follows:
<TABLE>
<CAPTION>
                                               FIRST QUARTER         SECOND QUARTER   
                                           --------------------   --------------------
(In millions)                                 1996        1995       1996        1995 
                                           --------    --------   --------    --------
<S>                                        <C>         <C>        <C>         <C>     
Earned income ..........................   $  7,245    $  5,754   $  7,457    $  6,415
                                           --------    --------   --------    --------
Expenses:
  Interest .............................      1,735       1,543      1,789       1,677
  Operating and administrative .........      2,185       1,736      2,366       1,901
  Insurance losses and policyholder
    and annuity benefits ...............      1,602       1,091      1,558       1,223
  Provision for losses on financing
    receivables ........................        213          79        228         279
  Depreciation and amortization of
    buildings and equipment and
    equipment on operating leases ......        493         452        527         491
  Minority interest in net earnings
    of consolidated affiliates .........         44          27         38          26
                                           --------    --------   --------    --------
Earnings before income taxes . .........        973         826        951         818
Provision for income taxes .............       (323)       (267)      (268)       (246)
                                           --------    --------   --------    --------
Net earnings ...........................   $    650    $    559   $    683    $    572
                                           ========    ========   ========    ========

                                               THIRD QUARTER         FOURTH QUARTER
                                           --------------------   --------------------
                                              1996        1995       1996        1995 
                                           --------    --------   --------    --------
Earned income ..........................   $  8,449    $ 7,099    $  9,562    $  7,224
                                           --------    --------    --------    --------
Expenses:
  Interest .............................      1,756       1,726       2,046       1,715
  Operating and administrative .........      3,110       1,913       3,650       2,206
  Insurance losses and policyholder
    and annuity benefits ...............      1,553       1,540       1,965       1,431
  Provision for losses on financing
    receivables ........................        254         352         338         407
  Depreciation and amortization of
    buildings and equipment and
    equipment on operating leases ......        559         491         571         579
  Minority interest in net earnings
    of consolidated affiliates .........         38          29          47          58
                                           --------    --------    --------    --------
Earnings before income taxes ...........      1,179       1,048         945         828
Provision for income taxes .............       (363)       (337)       (277)       (255)
                                           --------    --------    --------    --------
Net earnings ...........................   $    816    $    711    $    668    $    573
                                           ========    ========    ========    ========
</TABLE>


NOTE 20.       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  1996,  net assets of the
Corporation's  regulated  affiliates  amounted to $20.3 billion,  of which $17.4
billion was restricted.


NOTE 21.       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
of costs and  expenses,  amortization  of  premium  and  discount  on debt,  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.

                                       41
<PAGE>

Certain supplemental information related to the Corporation's cash flows were as
follows for the past three years.
<TABLE>
<CAPTION>
(In millions)                                                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>      
FINANCING RECEIVABLES
Increase in loans to customers .............................................   $(49,890)   $(46,154)   $(37,059)
Principal collections from customers .......................................     49,923      44,840      31,264
Investment in equipment for financing leases ...............................    (14,427)    (17,182)    (10,528)
Principal collections on financing leases ..................................     11,158       8,821       8,461
Net change in credit card receivables ......................................     (3,068)     (3,773)     (2,902)
Sales of financing receivables with recourse ...............................      4,026       2,139       1,239
                                                                               --------    --------    --------
                                                                               $ (2,278)   $(11,309)   $ (9,525)
                                                                               ========    ========    ========

ALL OTHER INVESTING ACTIVITIES
Purchases of securities by insurance and annuity businesses ................   $(15,925)   $(14,452)   $ (8,663)
Dispositions and maturities of securities by insurance and
  annuity businesses .......................................................     14,018      12,460       6,338
Proceeds from principal business dispositions ..............................       --           575        --
Other ......................................................................     (4,183)     (2,496)      2,501
                                                                               --------    --------    --------
                                                                               $ (6,090)   $ (3,913)   $    176
                                                                               ========    ========    ========

NEWLY ISSUED DEBT HAVING MATURITIES LONGER THAN 90 DAYS
Short-term (91 to 365 days) ................................................   $  5,061    $  2,545    $  3,214
Long-term (longer than one year) ...........................................     17,245      32,507      19,228
Long-term subordinated .....................................................       --           298        --
Proceeds - nonrecourse, leveraged lease debt ...............................        595       1,428          31
                                                                               --------    --------    --------
                                                                               $ 22,901    $ 36,778    $ 22,473
                                                                               ========    ========    ========

REPAYMENTS AND OTHER REDUCTIONS OF DEBT HAVING MATURITIES LONGER
  THAN 90 DAYS
Short-term (91 to 365 days) ................................................   $(23,355)   $(16,075)   $(10,460)
Long-term (longer than one year) ...........................................     (1,025)       (678)       (930)
Principal payments - nonrecourse, leveraged lease debt .....................       (276)       (292)       (309)
                                                                               --------    --------    --------
                                                                               $(24,656)   $(17,045)   $(11,699)
                                                                               ========    ========    ========

ALL OTHER FINANCING ACTIVITIES
Proceeds from sales of investment and annuity contracts ....................   $  2,561    $  1,754    $  1,207
Preferred stock issued by consolidated affiliates ..........................        155       1,045         240
Redemption of investment and annuity contracts .............................     (2,688)     (2,540)     (1,264)
                                                                               --------    --------    --------
                                                                               $     28    $    259    $    183
                                                                               ========    ========    ========

CASH FROM (USED FOR) DISCONTINUED OPERATIONS
Cash from GECS broker-dealer operating activities..........................    $    892    $  1,414    $  1,635
Cash from (used for) GECS broker-dealer investing activities ...............        (93)         92         334
Cash used for GECS broker-dealer financing activities ......................       (799)     (1,506)     (2,169)
                                                                               --------    --------    --------
                                                                               $   --      $   --      $   (200)
                                                                               ========    ========    ========

CASH RECOVERED (PAID) DURING THE YEAR FOR:
Interest ...................................................................   $ (7,463)   $ (6,177)   $ (4,150)
Income taxes ...............................................................       (106)        168        (321)
</TABLE>


                                       42
<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)                                                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
Fair value of assets acquired ..............................................   $ 27,352    $ 23,534    $ 10,197
Cash paid ..................................................................     (4,849)     (5,980)     (2,225)
                                                                               --------    --------    --------
Liabilities assumed ........................................................   $ 22,503    $ 17,554    $  7,972
                                                                               ========    ========    ========
</TABLE>


NOTE 22.       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, 1996 or 1995. Moreover,  the disclosed values
are  representative of fair values only as of the dates indicated.  Assets 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
assets include cash and equivalents and investment securities.

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.

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

FINANCIAL GUARANTEES.  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.

                                       43
<PAGE>

Information  about financial  instruments that were not carried at fair value at
December 31, 1996 and 1995, is shown below.

<TABLE>
<CAPTION>
                                                               1996                   
                                            ------------------------------------------
                                                             ASSETS (LIABILITIES)     
                                                     ---------------------------------
                                                                  ESTIMATED FAIR VALUE
                                                                  --------------------
                                                       CARRYING                       
                                             NOTIONAL   AMOUNT                        
(In millions)                                 AMOUNT     (NET)       HIGH         LOW 
                                            ------------------    --------------------
<S>                                         <C>       <C>         <C>         <C>     
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
   Memo: mortgages held for sale <F2>...        <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>     3,352       3,900       3,652

Liabilities
 Borrowings and related instruments
  Borrowings <F3> <F4> .................        <F1>  (125,621)   (125,648)   (125,648)
  Interest rate swaps ..................     34,491       --          (575)       (575)
  Currency swaps .......................     25,623       --           337         337
  Purchased options ....................      1,882         10           1           1
  Other ................................       --         --          --          --   
 Annuity and investment contract
  benefits .............................        <F1>   (20,210)    (19,953)    (19,953)
 Separate accounts .....................        <F1>    (3,516)     (3,516)     (3,516)
 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 .....................      7,988       --            75          74
 Currency swaps ........................         99       --            (7)         (7)
 Ordinary course of business lending
  commitments ..........................      4,950       --           (27)        (27)
 Unused revolving credit lines
  Commercial ...........................      3,375       --          --          --   
  Consumer - principally credit cards ..    116,878       --          --          --   


                                                               1995                   
                                            ------------------------------------------
                                                             ASSETS (LIABILITIES)     
                                                     ---------------------------------
                                                                  ESTIMATED FAIR VALUE
                                                                  --------------------
                                                       CARRYING                       
                                             NOTIONAL   AMOUNT                        
                                              AMOUNT     (NET)       HIGH         LOW 
                                            ------------------    --------------------


Assets
 Time sales and loans ..................   $    <F1>  $ 57,817    $ 59,188    $ 58,299
 Integrated interest rate swaps ........      1,703       --           (93)        (93)
 Purchased options .....................      1,213         24          11          11
 Mortgage-related positions
  Mortgage purchase commitments.........      1,360       --            17          17
  Mortgage sale commitments ............      1,334       --           (11)        (11)
   Memo: mortgages held for sale <F2>...        <F1>     1,663       1,663       1,663
  Options, including "floors" ..........     18,522         67         144         144
  Interest rate swaps and futures.......      1,990       --            31          31
 Other cash financial instruments.......        <F1>     3,527       3,973       3,711

Liabilities
 Borrowings and related instruments
  Borrowings <F3> <F4> .................        <F1>  (111,598)   (112,553)   (112,553)
  Interest rate swaps ..................     29,881       --          (630)       (630)
  Currency swaps .......................     22,342       --           937         937
  Purchased options ....................      2,751         26          12          11
  Other ................................        515       --           (65)        (65)
 Annuity and investment contract
  benefits .............................        <F1>   (14,007)    (13,734)    (13,734)
 Separate accounts .....................        <F1>      --          --          --
 Insurance - financial guarantees
  and credit life ......................    144,036     (1,570)       (832)       (922)
 Credit and liquidity support
  -securitizations .....................      7,035        (58)        (65)        (65)
 Performance guarantees
  -principally letters of credit .......      2,920        (48)        (78)        (78)
 Other .................................      3,556       (302)        (36)        (45)

Other firm commitments
 Currency forwards .....................      7,657       --            69          69
 Currency swaps ........................        280       --           (22)        (22)
 Ordinary course of business lending
  commitments ..........................      6,929       --           (60)        (60)
 Unused revolving credit lines
  Commercial ...........................      3,223       --          --          --
  Consumer - principally credit cards...    118,710       --          --          --
<FN>

<F1>      Not applicable.
<F2>      Included in other cash financial instruments.
<F3>      Includes interest rate and currency swaps.
<F4>      See note 11.
</FN>
</TABLE>

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

                                       44
<PAGE>

CURRENCY  FORWARDS  AND  OPTIONS  are  employed  by the  Corporation  to  manage
exposures  to changes in currency  exchange  rates  associated  with  commercial
purchase and sales transactions.  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 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 11). In addition,
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, 1996 and 1995,  this gross market risk amounted to $0.7 billion and
$1.1 billion,  respectively.  Aggregate  fair values that  represent  associated
probable future obligations,  normally associated with a right of offset against
probable future receipts, amounted to $0.7 billion at year-end 1996 and 1995.

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.

                                       45
<PAGE>

NOTE 23.       GEOGRAPHIC SEGMENT INFORMATION

Geographic segment operating data and total assets were as follows.

<TABLE>
<CAPTION>
                                                     EARNED INCOME                     OPERATING PROFIT
                                           --------------------------------    --------------------------------
For the years ended December 31              1996        1995        1994        1996        1995        1994
                                           --------    --------    --------    --------    --------    --------
(In millions)
<S>                                        <C>         <C>         <C>         <C>         <C>         <C>     
United States ..........................   $ 21,105    $ 18,374    $ 15,213    $  2,757    $  2,752    $  2,413
Europe .................................      7,891       4,974       2,457         884         469         252
Pacific Basin ..........................        693         403          42          57          33          10
Other <F1> .............................      3,024       2,741       2,163         350         266         274
                                           --------    --------    --------    --------    --------    --------
Total ..................................   $ 32,713    $ 26,492    $ 19,875    $  4,048    $  3,520    $  2,949
                                           ========    ========    ========    ========    ========    ========
<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>


<TABLE>
<CAPTION>
                                                                                         TOTAL ASSETS
                                                                               --------------------------------
December 31 (In millions)                                                         1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
United States ..............................................................   $162,079    $132,415    $114,069
Europe .....................................................................     43,135      33,462      14,378
Pacific Basin ..............................................................      5,060       3,567       1,714
Other <F1> .................................................................     17,145      16,285      14,806
                                                                               --------    --------    --------
Total ......................................................................   $227,419    $185,729    $144,967
                                                                               ========    ========    ========

<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

                                       46
<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, 1996

                Statement of Financial Position at December 31, 1996 and 1995

                Statement of Cash Flows for each of the years in the  three-year
                  period ended December 31, 1996

                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, 1996 (pages F-1 through F-40) 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.

                                       47
<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,  1996,  (pages F-1 through F-40)
                    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, 1996 (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.

                                       48
<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)                                     1996        1995        1994
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
EARNED INCOME ..............................................................   $   --      $   --      $   --  
                                                                               --------    --------    --------
EXPENSES:
  Interest .................................................................        211         195         132
  Operating and administrative .............................................        372         293         128
                                                                               --------    --------    --------

Loss before income taxes and equity in earnings of affiliates ..............       (583)       (488)       (260)
Income tax benefit .........................................................        161         110          80
Equity in earnings from continuing operations of affiliates ................      3,239       2,793       2,265
                                                                               --------    --------    --------
Earnings from continuing operations ........................................      2,817       2,415       2,085
Loss from discontinued operations ..........................................       --          --        (1,189)
                                                                               --------    --------    --------
NET EARNINGS ...............................................................      2,817       2,415         896
Dividends paid .............................................................       (981)     (1,091)       (914)
Retained earnings at January 1 .............................................      9,518       8,194       8,212
                                                                               --------    --------    --------
RETAINED EARNINGS AT DECEMBER 31 ...........................................   $ 11,354    $  9,518    $  8,194
                                                                               ========    ========    ========
</TABLE>

See Notes to Condensed Financial Statements.


                                       49
<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)                                                                 1996        1995 
                                                                                           --------    --------
<S>                                                                                        <C>          <C>    
ASSETS

Cash and equivalents ...................................................................   $      7     $    27
Investment securities ..................................................................       --            55
Receivables - net ......................................................................        164          50
Investment in and advances to affiliates ...............................................     18,642      16,722
                                                                                           --------    --------
  TOTAL ASSETS .........................................................................   $ 18,813    $ 16,854
                                                                                           ========    ========
LIABILITIES AND EQUITY

Short-term borrowings ..................................................................   $  3,352    $  2,936
Long-term borrowings ...................................................................        298         298
Accounts payable .......................................................................        169         216
Other liabilities ......................................................................        218         130
                                                                                           --------    --------
  Total liabilities ....................................................................      4,037       3,580
                                                                                           --------    --------

Cumulative preferred stock, $10,000 par value (80,000 shares authorized; 51,000
  shares issued and held primarily by affiliates at December 31, 1996 and 1995) ........        510         510
Common stock, $10,000 par value (101 shares authorized and outstanding) ................          1           1
Additional paid-in capital .............................................................      2,316       2,314
Retained earnings ......................................................................     11,354       9,518
Unrealized gains on investment securities held by affiliates ...........................        668         989
Foreign currency translation adjustments ...............................................        (73)        (58)
                                                                                           --------    --------
  Total equity .........................................................................     14,776      13,274
                                                                                           --------    --------
  TOTAL LIABILITIES AND EQUITY .........................................................   $ 18,813    $ 16,854
                                                                                           ========    ========
</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 CASH FLOWS

For the years ended December 31 (In millions)                                     1996        1995        1994 
                                                                               --------    --------    --------
<S>                                                                            <C>         <C>         <C>     
CASH FROM OPERATING ACTIVITIES .............................................   $    510    $    745    $    549
                                                                               --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in investment and advances to affiliates ............................         79        (962)         16
Net change in investment securities ........................................         70         (55)        100
Net change in receivables ..................................................       (114)        649         (14)
                                                                               --------    --------    --------
  Cash from (used for) investing activities ................................         35        (368)        102
                                                                               --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (less than 90-day maturities) .....................        416         438         158
Newly issued debt - long-term subordinated .................................       --           298        --  
Dividends paid .............................................................       (981)     (1,091)       (904)
                                                                               --------    --------    --------
  Cash used for financing activities .......................................       (565)       (355)       (746)
                                                                               --------    --------    --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR ................        (20)         22         (95)
CASH AND EQUIVALENTS AT BEGINNING OF YEAR ..................................         27           5         100
                                                                               --------    --------    --------
CASH AND EQUIVALENTS AT END OF YEAR ........................................   $      7    $     27    $      5
                                                                               ========    ========    ========
</TABLE>


See Notes to Condensed Financial Statements.

                                       51
<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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Certain  reclassifications  have been made to prior year amounts to conform with
1996 presentation.

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 1996 and 1995,  GE Capital  Services  received  dividends of $145 million and
$124 million,  respectively,  from GE Global Insurance  Holding  Corporation and
$815 million and $1,588 million,  respectively,  from General  Electric  Capital
Corporation  ("GE Capital").  The 1995 dividend from GE Capital included certain
assets that were subsequently  sold. The proceeds on the sale were invested back
into GE Capital.

DISCONTINUED OPERATIONS

In November  1994, GE Capital  Services  elected to terminate the  operations of
Kidder,  Peabody Group Inc. by initiating an orderly  liquidation  of its assets
and liabilities.  As part of the liquidation  plan, GE Capital Services received
securities  of Paine  Webber  Group Inc.  valued at $657 million in exchange for
certain   broker-dealer  assets  and  operations.   This  liquidation  has  been
substantially complete since mid-1995.


                                       52
<PAGE>

<TABLE>
<CAPTION>

       GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
                SCHEDULE V - SUPPLEMENTAL INFORMATION CONCERNING
                   PROPERTY AND CASUALTY INSURANCE OPERATIONS

                                  (in millions)

                                                                             CLAIMS AND CLAIM
                                                                            ADJUSTMENT EXPENSES
                                                                            INCURRED RELATED TO:
                                                                            --------------------
               RESERVES    DISCOUNT                                                             AMORTIZATION
    DEFERRED  FOR UNPAID   DEDUCTED                                                              OF DEFERRED PAID CLAIMS
     POLICY     CLAIMS   FROM LOSSES                              NET                               POLICY    AND CLAIM
  ACQUISITION ADJUSTMENT   AND LOSS    UNEARNED     EARNED    INVESTMENT    CURRENT      PRIOR   ACQUISITION  ADJUSTMENT   PREMIUMS
      COSTS    EXPENSES    EXPENSES    PREMIUMS    PREMIUMS     INCOME        YEAR       YEARS      COSTS      EXPENSES     WRITTEN
      -----    --------    --------    --------    --------    --------    --------    --------    --------    --------    --------
<S>   <C>      <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>     
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
      =====    ========    ========    ========    ========    ========    ========    ========    ========    ========    ========

1994  $ 581    $  6,911    $    320    $  2,372    $  3,375    $    721    $  1,885    $    558    $    606    $  1,946    $  3,514
      =====    ========    ========    ========    ========    ========    ========    ========    ========    ========    ========
</TABLE>



                                       53
<PAGE>


                                                                  EXHIBIT 4(iii)

                                                                  March 25, 1997

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, 1996  - 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 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


                                       54
<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)                              1996        1995        1994        1993        1992 
                                                       --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>     
Earnings from continuing operations ................   $  2,817    $  2,415    $  2,085    $  1,567    $  1,331
Provision for income taxes .........................      1,231       1,105         864         642         404
Minority interest ..................................        167         140         139         134          40
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority interest .      4,215       3,660       3,088       2,343       1,775
                                                       --------    --------    --------    --------    --------
Fixed charges:
Interest ...........................................      7,402       6,731       4,598       3,585       3,780
One-third of rentals ...............................        182         175         156         138          92
                                                       --------    --------    --------    --------    --------
Total fixed charges ................................      7,584       6,906       4,754       3,723       3,872
                                                       --------    --------    --------    --------    --------
Less interest capitalized, net of amortization .....         41          21           9           4           6
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
  interest, plus fixed charges .....................   $ 11,758    $ 10,545    $  7,833    $  6,062    $  5,641
                                                       ========    ========    ========    ========    ========

Ratio of earnings to fixed charges .................       1.55        1.53        1.65        1.63        1.46
                                                       ========    ========    ========    ========    ========
</TABLE>



                                       55
<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)                              1996        1995        1994        1993        1992 
                                                       --------    --------    --------    --------    --------
<S>                                                    <C>         <C>         <C>         <C>         <C>     
Earnings from continuing operations ................   $  2,817    $  2,415    $  2,085    $  1,567    $  1,331
Provision for income taxes .........................      1,231       1,105         864         642         404
Minority interest ..................................        167         140         139         134          40
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority interest .      4,215       3,660       3,088       2,343       1,775
                                                       --------    --------    --------    --------    --------
Fixed charges:
Interest ...........................................      7,402       6,731       4,598       3,585       3,780
One-third of rentals ...............................        182         175         156         138          92
                                                       --------    --------    --------    --------    --------
Total fixed charges ................................      7,584       6,906       4,754       3,723       3,872
                                                       --------    --------    --------    --------    --------
Less interest capitalized, net of amortization .....         41          21           9           4           6
                                                       --------    --------    --------    --------    --------
Earnings before income taxes and minority
  interest, plus fixed charges .....................   $ 11,758    $ 10,545    $  7,833    $  6,062    $  5,641
                                                       ========    ========    ========    ========    ========
Preferred stock dividend requirements ..............   $      1    $      1    $      1    $   --      $   --  

Ratio of earnings from continuing operations
  before provisions for income taxes to earnings
  from continuing operations .......................       1.44        1.46        1.41        --          --
                                                       --------    --------    --------    --------    --------
Preferred stock dividend factor on pre-tax basis ...          1           1           1        --          --
Fixed charges ......................................      7,584       6,906       4,754       3,723       3,872
                                                       --------    --------    --------    --------    --------
Total fixed charges and preferred stock dividend
  requirements .....................................   $  7,585    $  6,907    $  4,755    $  3,723    $  3,872
                                                       ========    ========    ========    ========    ========
Ratio of earnings to combined fixed charges and
  preferred stock dividends ........................       1.55        1.53        1.65        1.63        1.46
                                                       ========    ========    ========    ========    ========
</TABLE>

                                       56
<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 7, 1997,  relating to the  statement  of  financial  position of
General  Electric  Capital  Services,  Inc. and  consolidated  affiliates  as of
December  31, 1996 and 1995 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, 1996,  and related  schedules  which report appears in the December
31, 1996 annual report on Form 10-K of General Electric Capital Services, Inc.


/s/ KPMG Peat Marwick LLP

Stamford, Connecticut
March 25, 1997


                                       57
<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, 1996, 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, 1997.


/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)


                                       58
<PAGE>


/s/Kaj Ahlmann                                /s/Robert L. Nardelli 
-----------------------------------           ----------------------------------
Kaj Ahlmann,                                  Robert L. Nardelli,
Director                                      Director

/s/Nigel D.T. Andrews                         /s/Denis J. Nayden
-----------------------------------           ----------------------------------
Nigel D.T. Andrews,                           Denis J. Nayden,
Director                                      Director

/s/James R. Bunt                              /s/Michael A. Neal
-----------------------------------           ----------------------------------
James R. Bunt,                                Michael A. Neal,
Director                                      Director

/s/Dennis D. Dammerman                                                          
-----------------------------------           ----------------------------------
Dennis D. Dammerman,                          John M. Samuels,
Director                                      Director

                                              /s/Edward D. Stewart
-----------------------------------           ----------------------------------
Paolo Fresco,                                 Edward D. Stewart,
Director                                      Director

                                              /s/John F. Welch, Jr.
-----------------------------------           ----------------------------------
Benjamin W. Heineman, Jr.,                    John F. Welch, Jr.,
Director                                      Director

/s/John H. Myers
-----------------------------------
John H. Myers,
Director


A MAJORITY OF THE BOARD OF DIRECTORS

                                                                   (Page 2 of 2)


                                       59
<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, 1997                           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, 1997
------------------          and Chief Executive Officer
(Gary C. Wendt)             (Principal Executive Officer)


/s/ James A. Parke          Senior Vice President, Finance        March 25, 1997
------------------          (Principal Financial Officer)
(James A. Parke)


/s/ Joan C. Amble           Vice President and Controller         March 25, 1997
------------------          (Principal Accounting Officer)
(Joan C. Amble) 



KAJ AHLMANN*                             Director
NIGEL D.T. ANDREWS*                      Director
JAMES R. BUNT*                           Director
DENNIS D. DAMMERMAN*                     Director
JOHN H. MYERS*                           Director
ROBERT L. NARDELLI*                      Director
DENIS J. NAYDEN*                         Director
MICHAEL A. NEAL*                         Director
EDWARD D. STEWART*                       Director
JOHN F. WELCH, JR.*                      Director

A MAJORITY OF THE BOARD OF DIRECTORS

*By:   /s/ Joan C. Amble                                          March 25, 1997
       -----------------
      (Joan C. Amble)   
      Attorney-in-fact


                                       60