Giving credit where credit is due

Some recent media articles have raised questions about the strength of our credit rating. When the rating agencies confirmed GE’s Triple-A ratings on September 25, 2008, they took into account the most recent and comprehensive quantitative and qualitative information about the company. While it is true that GE’s borrowing costs relative to various benchmarks have risen in 2008, by all accounts we are in a period of unprecedented turmoil and disruption in the credit markets. One of the indicators of borrowing costs cited in the media, the pricing of credit default swaps (CDS), reflects a thinly-traded instrument in an unregulated market that has proven to be prone to significant distortion. Moreover, comparisons of GE’s borrowing costs to those of other companies with different business mixes and financial structures are of limited value.

GE is committed to maintaining a strong balance sheet and a very low risk profile. We have clearly demonstrated this commitment over the past several months by raising equity, reducing leverage in GE Capital even further, reducing our Commercial Paper usage to a level where it is fully covered by cash and backup credit lines, and growing our retail deposit base by $20 billion.

In an economic environment in which many companies are reporting losses and cutting or eliminating their dividends, GE will earn approximately $20 billion in 2008, and we have maintained our dividend. In financial services, where many of our competitors are reporting huge losses, filing for bankruptcy or being forced into government-assisted mergers, we have earned more than $7 billion year to date in 2008, making us one of the most profitable financial services companies in the world. GE has no exposure to CDS, SIVs, CDOs, or buyout loans and we exited U.S. sub prime mortgage lending in 2007. Our financial services business, GE Capital, is very conservatively capitalized, with debt-to-equity leverage of 8:1, a level far below many of our financial services competitors.

For over 130 years, GE has rewarded its investors with consistent performance and reliability. When Warren Buffet made his recent $3 billion investment in GE, he reaffirmed his belief that GE will continue to prosper for many years to come.