Dan Janki -IR Jeff Immelt- Chairman, CEO KeithSherin - CFO

BobCampbell - Lehman Brothers JeffSprague - Citigroup StephenTusa – JP Morgan NicoleParent - Credit Suisse Deane Dray- Goldman Sachs Scott Davis- Morgan Stanley RobertMcCarthy - Banc of America Securities Nigel Coe -Deutsche Bank DavidBleustein - UBS Ann Duignan- Bear Stearns PeterNesvold - Bear Stearns

Good day ladies and gentlemen and welcome to the GeneralElectric third quarter 2007 earnings conference call. (OperatorInstructions) I would now like to turnthe program over to your host for today's conference, Mr. Dan Janki, VicePresident of Investor Communications. Please proceed, sir. Dan Janki: Thank you, Bill. Iwould like to welcome everybody to today's earnings conference call. Ourearnings release went out at 6:30 thismorning and that, along with the presentation and supplemental information, isavailable on our investor website, www.GE.com/investor. This presentation does contain forward-looking statementsbased on the world and economic environment as we see it today; that is subjectto change. Today we'll give you an update on third quarter operatingresults, fourth quarter outlook, and then we'll take your questions, as usual,at the end. To cover that material, we have Jeff Immelt, our Chairmanand CEO; and Keith Sherin, our Vice Chairman and CFO. I would like to turn it over to Jeff now. Jeff Immelt: Great, Dan. Goodmorning everyone. On the first page, I just wanted to cover some of thehighlights. The environment, we believe, remains good for GE. Global marketsare solid and the financial market risk is repricing. This shows up inphenomenal growth numbers. Our revenues were up 12%, orders up 20%, assets up23%, and organic growth at 8%. We delivered solid operating performance, despite a fewspecific one-time headwinds. We did have a $100 million negative mark on ourfinancial service business. In the infrastructure business we had some pullforward on program spending and some service timing challenges which willlargely improve in Q4 and our Q4 and infrastructure looks very solid. We had $100 million more restructuring than originallyplanned and this was slightly offset with a lower tax rate but year-to-date,our tax rate is at 18% and we are on track for the year. Our buyback program continues. We are on track for $14billion in 2007 with about $6 billion in Q4. We had a gain from the sale of theplastics business and we used that to restructure both in our industrialbusinesses to improve cost and also to removed headwinds in WMC in Japan. Our fourth quarter guidance and total year guidance is veryrobust with fourth quarter guidance at $0.67 to $0.69, up 18% to 21%. Just to look at the world we see and give you some of theeconomic flavor on a global economy that we see as generally favorable, I willjust tick through some of the various segments in the businesses we see. First the global markets remain very strong. I was in Asiaa couple of weeks ago, visited four or five countries and we just continue tosee solid growth everywhere. The infrastructure markets remain very strong. Wesee orders everywhere around the world and that seems to be accelerating andnot diminishing. Our asset growth is at very high margins so the new assetsthat we are adding on book are largely being repriced. The advertising markets,which are a pretty good barometer of the USeconomy, are still robust and scatter pricing is high. Some of the things that are the same as they were over thelast few months, the commercial finance and global delinquencies remain stable.Capital markets are volatile but we believe they are improving and the broad USeconomy ex-housing remains okay and we see solid single-digit order rate growthin these areas. What remains still tough is housing and sub-prime mortgagesare still tough, and we see U.S.consumer delinquencies trending up slightly and the U.S.healthcare market where the Deficit Reduction Act remains challenging. GE we believe is very well positioned in this environmentwith our global strength, our infrastructure technology, our diverse businessmix, tremendous AAA rated balance sheet and risk management, and we believethat the restructuring has allowed us really to improve our portfolio andreduce risk. Just some of the key metrics for the quarter. Growth, as Isaid earlier, remains extremely strong; orders up 20%, revenues up 12%, assetsup 23%, organic growth up 8%. EPS on plan, continuing EPS up 9% and netearnings up 15%. Returns on target at 18.5% and we remain on target for 20% by2008. Margins had headwind that we were unable to offset the mixin healthcare and the equipment service mix, but still 70 basis points up year-to-dateand still making progress in driving the margin rates very hard. Cash, verystrong, with industrial CFOA up 16% and using that to fuel the buyback. So onbalance, a solid performance for the quarter and we feel like we arewell-positioned for the year. Finally just on executing the long-term strategy, the thingswe have talked about over time, investing in leadership businesses. We reallythink we are seeing broad strength. Infrastructure, commercial finance, NBCUgrowth is accelerating. Selling plastics when we did and receiving the price wedid I think makes us feel great about our ability to redeploy that capital backinto good acquisitions like Sondex and Oxygen and we believe that exiting theJapan personal loan business at WMC takes risk off the table looking at thefuture. From an execution standpoint, cash, returns and buybackremain on track, they are extremely strong. As I said, 70 basis points year-to-dateon margin rates, we continue to focus on that as a key initiative. Growth as a process I think is pretty undeniable. This is anextensive string of organic growth of at least 8%. Services revenues are good.Global growth remains very strong. The ecomagination breakthroughs,particularly eco-products are very solid delivering $5 billion of revenuegrowth for the quarter and the team remains very solid and committed todelivering for investors. So with that, let me to turn it back over to Keith and lethim give you some of the details of the operations. Keith Sherin: Thanks, Jeff. I'm going to startwith orders. We had another great orders quarter. On the left side you can seethe major equipment orders in the quarter were $12 billion. The orders were up39%. If you look, aviation is up 93%. GEnx and GE90 had great order strengtharound the world. Energy more than doubled in the quarter, over $4 billion oforders driven by tremendous performance in thermal and wind. Oil and gas up 56%, tremendously strong around the world.Transportation down in the quarter, as we have said all along, these majorequipment orders are lumpy, but they had a one-time large order with Kazakhstanlast year. They are up 27% year-to-date so the business is in great shape. Overallinfrastructure orders up 62% on major equipment. You can see it is up 38%organically. The backlog continues to grow up 56% and up $15 billion since theend of the year. So the major equipment orders are tremendous for us globally. In the middle, our service orders of $8.2 billion, up 4%.That is driven by aviation and oil and gas. The commercial aviation businesshad tremendous spares performance, about $19 million a day, up 20%. The energy business you can see is down and services orderspretty much driven by nuclear. We had a tough comparison. We had a non-repeatof a large Entergy service order last year and also we have been impacted bythe timing of fuel reloads specifically, in TEPCO in Japandue to the earthquake. Then on the right side, the flow orders of $4 billion wereup 5%. We had great strength in lighting and industrial. Appliances was downslightly with the growth in retail offset by the contract channels. So overalla continuous strong performance, $24 billion of orders in total, up 20%; andyear-to-date, $71 billion of orders, up 18%. Next is a review of margins and delinquencies in financialservices. On the left side is margin. We show you this chart each quarter. Theblue bars are the net revenue or the contributed value as a percent of averageassets. The green bars are the net revenue less the losses as a percent ofaverage assets. If you look on the left side, the risk-adjusted margins arebasically flat year over year. The earnings growth drivers, we are getting justtremendous asset growth. Our origination teams continue to really perform. Iwill show you that in the details later, and then the productivity andsimplification of restructuring helping us to grow our earnings. On the right side you can see the 30-plus day delinquencies.Equipment financing delinquencies are basically flat and continue to be athistoric low levels. GE Money delinquencies are down slightly overall. They areup some in the U.S.and I will cover that in more detail on the GE Money page. The portfolioquality continues at very strong levels. Next is industrial margins. The top half of the page is thethird quarter and third quarter year-to-date margins. We're down slightly in Q3but up 70 basis points year-to-date. Healthcare and infrastructure were a dragin the quarter. Healthcare is about two-tenths of a point drag, just having ahigh-margin business flat is a mix issue for us in total. Then infrastructure,both mix as we continue to sell high quantities of equipment at greater ratesthan the services growth and then the acquisitions are performing really well,but they are coming in at lower margin rates than the rest of the business, sothat is a drag. If you look at the right side, the drivers for year-to-dategrowth are listed. You can see the real key here is we are getting great growthin infrastructure. However, the equipment services mix is about a four-tenths dragyear-to-date. It is a great news story; I mean, we are delivering growth andequipment at 30% plus and the services growth at 10%, so we're building thatinstalled base and that is going to be great for services as we go forward. Itis just a slight drag on the margin rate. On the bottom, we are looking at the total year and thefourth quarter. The fourth quarter we are going to get 50 basis points ofgrowth and if we look at the drivers on the right side for the total year, youcan see that productivity is strong, price is outpacing inflation. We've got abenefit in NBC from the Olympics. That equipment services mix will be with usall year. The infrastructure acquisitions are with us all year and then thehealthcare drag. So with the 50 basis points in the fourth quarter, it willdeliver the total year at 70 basis points and we are committed to deliveringthat. Next is a recap of gains and capital allocation. Back inDecember, our original guidance was that we were going to have about $1 billionto $1.5 billion of after-tax gains which would fund restructuring. With thegreat results from the plastics sale we have done much better and those gainshave allowed us to fund $2.7 billion of actions. We have improved our businessposition with a lot of good restructuring to lower our cost footprint and wehave also reduced the risk in GE Money with the actions in WMC and GE Money Japan. Disposition activity also has given us a lot moreflexibility on capital allocation. Dispositions came in at the high end of therange that we set at the beginning of the year as we successfully exitedplastics and Swiss Re and completed the nuclear JV with Hitachi.We have significantly improved our aviation and oil and gas franchises with theacquisitions of Smiths and Vetco, and we have announced acquisitions that arealso going to enhance our energy controls and entertainment cable businesses, soreinvesting in the portfolio. In addition, with the Abbott acquisition off the table, weincreased our buyback to $14 billion this year and we are going to complete our$27 billion program one year early. The gains have funded restructuring andbusiness exits and 2007 has been a terrific year for us for strengthening theportfolio for the future. Next is an update on restructuring and other charges andthis is just a continuation of the reporting that we initiated in the firstquarter. During Q3 we completed the plastics sale, as everyone knows. Werealized a $1.8 billion after-tax benefit and that benefit is reported indiscontinued operations. On the left side, you can see the amounts of therestructuring and other charges in the quarter. In the third quarter GE Money Japan,the personal loan business which was known as Lake, andalso WMC went into discontinued operations. So if you look at the charge for Lake,the GE Money Japanline here is currently our best estimate of the loss on the sale of thebusiness. We have engaged advisors and we are proceeding with the exit process.For WMC, we reduced our assets. At the end of the second quarter we had $1.1billion of assets. We have taken that down to about $375 million at the end ofQ3 and the sale of that business is also proceeding. In continuing ops, you can see we had $568 million ofrestructuring. There were events across the businesses that I will describe onthe right side in addition to an environmental related charge in corporate. Onthe right side, you can see the amounts by category that we continue to showyou the business exits being the largest one, but we also had a significantamount of restructuring in C&I. We are going to have a global reduction of13 lighting facilities. We are transitioning to low-cost regions, we areclosing six industrial and appliance plants, we have had cost structure actionsin healthcare and NBCU and energy and we also continue to simplify ourfinancial services businesses. We had site consolidations in the USand the UK andsite consolidations in Mexicoand Australiaand New Zealand. So the continuing ops restructuring is giving us about athree-year payback and a total year reduction of about 9,000 headcount. Thegains have enabled us to lower our cost structure which is going to help usgoing forward and also improve the risk profile of the company. Before I get into the third quarter numbers, I also want togive you an update on our accounting. As we mentioned in our press release thismorning, we filed an 8-K to update prior period financials for some immaterialitems that our audit and controller teams identified during the third quarter. Letme start with the status on the left side. We are in the third year of our ongoing investigation by theSEC. We have dedicated significant resources to this effort. Our own corporateaudit staff and our outside auditors, KPMG; we have additional outsidetechnical teams from both Ernst & Young and Charles River Associates; and,outside counsel. We are reviewing our revenue recognition policies andprocedures across the company and we are committed to timely and transparentaction and disclosure. On the right side, you can see there is a brief summary ofthe two items that we described in the 8-K this morning. The first iteminvolves revenue recognition at shipping. We determined that we retainedtransit risk because of insurance practices and because we retained transitrisk, we had to revise that revenue for some of our businesses to a destinationbasis instead of a shipment basis. The second item involves aviation contractual servicesagreements. We had an issue involving the credits that we get for parts that weobtain when we overhaul an engine and take parts off the old engine beingoverhauled. You can see that the financial impact of these corrections isimmaterial. The annual revenue impact of these items is never more than three-tenthsof a percent in any year and the net income impact is never more than six-tenthsof a percent in any year. The impact of these adjustments is not significant in2007. We have put all the details on our website and in the 8-K. So these are the items that we found to date. The managementteam, the audit committee, the board, we're committed to transparentdisclosure. We have given you all the details in the 8-K by quarter, bysegment, and annually for what the impact of both these items are and as we goforward and file our 10-Q and file the 10-K next year, we will update theamounts in those filings. Next is a high-level recap of the third quarter EPSdynamics. These are the actual numbers from the framework that we gave at theSeptember infrastructure meeting. On the right side you can see our continuingoperations, the results before restructuring were at $0.56. In the quarter, wehad $0.06 of restructuring that I described on the other page and that washigher than our previous guidance by $0.01 and that resulted in $0.50 ofcontinuing EPS, up 9%. In discontinued operations, the net of the plastics gain andthe Lake and WMC charges rounds to $0.04 on an EPS basisand the final reported EPS, up 15%. So continuing operations restructuring washigher than we previously communicated and we were pleased to be able tocomplete that $0.06 in the quarter. Let me cover the third quarter consolidated results. On theleft side is a summary of continuing ops; the revenue is at $42.5 billion, up12%; a very strong top line quarter. Earnings at $5.1 billion, up 7% and EPScontinuing at $0.50, up 9%; a little benefit from the buyback there. We alsoadded the reported EPS which includes the impact of the discontinued opsactivity that I just covered. Cash flow year-to-date of $16.3 billion was inline with our expectations and industrial cash very strong. I will cover moredetails in cash in a minute. On taxes, you can see the third quarter year-to-date rateswere in line with our previous guidance of 17% consolidated total yearestimate. For the third quarter, the industrial rate is at 25% and ourconsolidated rate is lower than the year-to-date rate, driven by the movementof both WMC and GE Money Japaninto discontinued operations. You can see that reflected in the capital rate inthe quarter of zero. That movement resulted in a third quarter reversal offirst-half tax provisions, lowering the third quarter GECS rate in order to getthe third quarter year-to-date rate in line with our current projection for thetotal year. So the lower taxes in the quarter are the result of WMC and GEMoney Japangoing into discontinued operations as well as the effect of the higher taxrestructuring and other charges during the quarter, and our total yearconsolidated rate estimate remains at 17%. On the right side, you can see the business results.Infrastructure, commercial finance, GE Money all delivered double-digitearnings growth. Healthcare, NBCU and industrial together were on expectations.Overall if you look at the operating results for the quarter, we had very goodresults from our businesses even with the impact of about $100 million eachfrom higher restructuring and continuing ops in corporate, higher programsimpact and infrastructure, and marks in financial services partially offset bythe lower taxes. So we feel we had a nice strong quarter. I will cover thedetails by business in a minute. Next is cash. Q3 cash continued in line with ourexpectations. On the left side, we delivered $16.3 billion of CFOA which isdown from last year, as we planned. The driver of that, you can see on thebottom left during the first half of 2006 we had $3 billion more of specialdividends from insurance proceeds than we received this year. If you look atthe industrial CFOA of $10.5 billion, that is up 16% year-to-date. That isslightly ahead of our plan, driven by strong timing of progress collections inour infrastructure business. On the right side is the cash balance walk, beginningbalance of $4.5 billion. You add the cash flow from the left side of $16.3 billionless than dividends paid of $8.7 billion. We have repurchased $8.1 billion ofstock year-to-date. We bought $6.3 billion of that in the third quarter and weare on track for the $14 billion for the total year. Our plant and equipmentwas $2 billion. We completed the plastics disposition which was partiallyoffset by the Smith and Vetco acquisitions and we ended the quarter with $7.2billion of cash. So our cash performance is as expected, on track for $22billion of CFOA for the total year and if you look at the total return toshareholders, our dividends and buyback this year will total $26 billion returnto shareholders. Now the framework for the fourth quarter on the left side isthe outlook by business. You can see fourth quarter looks really strong forinfrastructure, should be up 20% plus. We expect double-digit growth inindustrial, commercial finance and NBC Universal. GE Money up 5% to 10% andhealthcare about flat. On the right side, you can see it is another strong top linequarter; solid double-digit earnings growth and earnings per share growth. Ifyou look at the fourth quarter guidance of $0.67 to $0.69; up 18% to 21%. Thenthe total year, as Jeff said, on track for the $2.19 to $2.22, up 18% to 19%.So the outlook for the fourth quarter is very strong. Now let me get into the businesses. I'm going to start withinfrastructure. John Rice and the team delivered 19% revenue growth and 12%segment profit growth. You can see the business results down the left side andI am going to cover aviation and energy on the next page in more detail. For the segment in total, the orders continue to betremendous, up 32% in total; equipment is up 60%. We added $14 billion to thebacklog. Top line growth is also tremendous. The revenue in the quarter drivenby aviation, oil and gas and transportation. We continue to have great growthin equipment at greater rates than the services which is a terrific story forgrowing the installed base but it does dampen margins as I reported. For the verticals the aviation, financial services is down 2%in the quarter but if you look at the total year, third quarter year-to-datethey are up 17%. They are having a great year and energy financial services hada very strong quarter, up 14%. So for fourth quarter, I am going to show youaviation and energy but we expect an acceleration of profit growth and theoutlook is for the segment profit to be up 20% plus. Let me dive right in onthe next page to aviation. Aviation revenues up 35% and segment profit up 7%. Ordersare extremely strong. The total orders of $5.5 billion were up 50%. Majorequipment orders were up 93%. Commercial engines, $1.7 billion of orders up 24%,driven by both the GE90 and the GEnx. Military engine orders were up 90%,driven by an F-15 Saudi re-engine contract and a U.S. Navy contract and theservice orders of $2.3 billion were up 15%. The backlog in aviation is $18billion is up 89% year over year. Smiths in the quarter had revenue. They are delivering about$600 million and about 10% op profit. If you look at our revenue growth, $4.2billion, up 35%. Commercial engine revenues were up 19%. We shipped 40 morecommercial engines than the prior year. Commercial services were up 16%, sparesat 19 a day, as Isaid, versus 16 last year. Military was up 2%. The op profit up 7%; that wasdriven by Smiths up 9% offset by the core ops down 2%. We had two specific items in the quarter. The program impactprincipally for GEnx and Leap 56 was up$90 million year over year and we had no repeatable one-time service benefit inthe third quarter '06 which was about $50 million. If you adjust for these twoitems, the op profit would have been up about 20% and the outlook for thefourth quarter is for a 20% segment profit growth. So a good outlook inaviation. On the right side is energy, revenue up 3% and op profit up8%. Total orders in energy are also booming. Total orders of $6.5 billion wereup 39% in the quarter. The major equipment orders were up 103%. Thermal wasincredibly strong, $2 billion, up 209%. We received orders for 35 gas turbinesin the quarter versus 22 last year. The thermal backlog is now at $5.8 billion.It is up 110% from a year ago. The wind orders of $1.5 billion were up 90%. The windbacklog of $7 billion is up 112% from a year ago and nuclear is up over 100%including our second $100 million order for long-lead items for a new plant,and this one from Entergy. So overall, power gen incredibly strong and the powergen orders price was up about 7% year-to-date. Revenues $5.2 billion, up 33%.You can see the power gen revenue was up 13%. We shipped 45 gas turbines in thequarter, just up a little bit from 43 last year. We shipped 662 wind units, upfrom 613 last year so up a little bit. The service revenues were the drag inthe quarter down 9% on tough comparisons. In services, we exited some low return businesses likerentals, parts of our transmission and distribution business, and we also hadsome unfavorable timing in comparison to nuclear in our contractual servicebusiness. Both those dispositions and timing impacted revenue and op profit andeven with the services drag, the margins are up 80 basis points. The outlookfor the fourth quarter is very strong, up about 30%. So if you look at aviation and energy and going into thefourth quarter, all the fundamentals around orders and growth are tremendouslystrong and the outlook for the fourth quarter is strong in both businesses. Next is GE Money. On the left side, Dave Nissen and the teamdelivered 13% earnings growth. The revenues of $6.2 billion were up 23% drivingthe segment profit of 942, up 13%. Good strong asset growth. It's driven bycore growth in both Europe and the Americas.The segment profit was driven by emerging markets. Europewas up 11% in total and that was driven by Central and Eastern Europe up very strong. Asia was up 34%.That is driven by Korea,Southeast Asia, Australiaand New Zealand. The Americaswere down 4%. They had good volume growth and productivity but that was offsetby higher provisions and write-offs, and that was driven by delinquencies.Delinquencies overall you can see are down globally for GE Money, but they areup 35 basis points in the US.Our team has tightened underwriting. We have lowered credit lines. We haveadded collectors so we are getting in front of this. Delinquencies arebasically coming off their historic lows, but they are back to about 2005levels now in the Americas. So the fourth quarter outlook, segment profit up 5% to 10%.We expect continued good global growth and continued pressure in the Americas. On the right side is industrial. Lloyd Trotter and the teamdelivered 6% segment profit growth. It's up 10% if you adjust for the impact ofdispositions like Supply and ModSpace. We also in the quarter reorganizedindustrial. Jim Campbell continues to run the C&I business and CharleneBegley now heads the enterprise solutions business, which includes businesseslike sensing, security, digital, energy and equipment services. So for the quarter, top line growth was driven by theenterprise solutions business. C&I was up 2%, driven by lighting. Appliancerevenue was down 1%. The retail business was up 1% but it was offset bycontract. The builder channel which was down 5%, as you would expect. Globallighting revenue was really strong. It was up 16% driven by Ecomaginationproducts like CFLs and when you look at the segment profit up 6%, it was drivenby C&I. Lighting was very strong. Enterprisesolutions also had a very strong quarter and the fourth quarter outlook forindustrial segment is profit up 10% to 15%. Next is NBCU. Jeff Zucker and the team delivered theirfourth quarter in a row of positive earnings growth. Revenues of $3.8 billionwere up 3%. The segment profit was up 9%. We are really pleased with thisprogress and just to go around the different elements of the turnaround that wecontinue to give you updates on, the network is performing very well; it tiedfor first in the demo season to date. Bionic Woman is the number one new show, TheOffice is the number one comedy. Heroes is number one on Monday night. Sunday NightFootball is very strong and the fact that we own our content is really helping thestudio and the TV network. We are monetizing Heroes. We are monetizing The Office andeven House, which is not on our network but we produce it; it is tremendouslystrong and scatter pricing if you look at the network is up 25%. So network isreally good. Entertainment and info cable continues the strongperformance. USAnumber 1, Sci-Fi number 7. Bravo had its best summer ever. MSNBC and CNBC updouble-digit and we added to our cable assets with the Sondex and Oxygenacquisitions building out our global network and our cable platforms. If you look at film and parks, we had a great summeroverall. The strong performance was led by the Bourne movie which far exceededexpectations. Chuck and Larry, Knocked Up, and we were number 2 in domestic box office for the summerwhich bodes well for the next six months when you look at the follow-up DVDstream. Parks had the best quarter ever and in digital we continueto grow. NBC Direct and the new site, Hulu, is going to launch next month andwe have got a partnership with Amazon on content. So great content in film,cable, the NBC studio is all doing well and the fall season is off to a strongstart. If you look at the fourth quarter, that progress will continue. Ourexpectation is revenues up 5% and op profit up 10% to 15%. Next is healthcare. Joe Hogan and the team delivered resultsin line with the second quarter guidance. Revenues up 4% and segment profitdown 1%. Orders are flat globally. Service is strong but that is offset by theequipment which is down 3%. The DRA and OEC were a 7 point drag on orders so weare seeing nice growth globally. Europe is up 19%, Chinawas up 13%, offset by the Americaswhere orders are down 8%. Japanis also soft, down 15%. Revenues is a similar story. We have got great growthglobally. You can see some of the numbers here, about a 5 point impact in the USfrom DRA and OEC, and then obviously that has an impact on our segment profitgrowth which we have shown you. You can see that in detail on the right sidewhere you look at the dynamics. We have updated from the second quarterguidance; total business op profit is on the top of the chart. You can see theimpact in third quarter from OEC and DRA and the strength in the balance of thebusiness. In the third quarter the balance of the business was up 17% and forthe fourth quarter, we have a little less OEC impact because we weren'tshipping last year. But overall, the strength in the rest of the businessoffsets the U.S.imaging from DRA and OEC. When you look forward, we expect continued weakness in theimaging and continued strength in the rest of the business. We do expect OEC tobegin shipping in the fourth quarter but based on timing today, it is not goingto be significant for the year. It really sets us up for next year. Fourth quarter outlook is segment profit to be about flatand on the right side, we have given you the '08 framework. If you think about'08 for healthcare, even if we are flat in DI from continued softness in the USmarket, we are going to have a significant positive next year from the OECcomparisons and we do expect continued strong performance from the balance ofthe business leading to our 10% to 15% outlook for the total business for '08. Finally, commercial finance. Mike Neil and the commercialfinance team had another terrific quarter; revenues up 17%, segment profit up12% and asset growth very strong. If you look at real estate, you can see wecontinue to see an outstanding origination environment. We have added $60billion in assets over the past 12 months across the different businessplatforms. If you look at the profit growth in the quarter, real estate reallyhad another great quarter. Net income of 640 was up 45%. That was driven bystrong asset growth, up 49% as well strong sales performance. In the third quarter we sold 104 properties and that wasabout $2 billion worth of assets and even with that, we continue to divest, assetswere up about $10 billion. The portfolio quality is excellent. There is lessthan a 0.1% of non-earning assets in real estate today and the outlook is stillvery strong. Capital solutions, you can see the earnings were down 19% to$424 million in the quarter. They were impacted by the disruptions in thecapital markets. We basically chose not to execute some asset sales and also hadsome tougher comparisons last year in the third quarter, but the business is ontrack for a strong double-digit quarter in the fourth quarter. As Jeff mentioned, we did have a small impact from marketvolatility. This is the result of marks on our warehouse and some of oursecuritized retained interest. I think if you'd compare that to anybody else infinancial services, it is an incredible result and that is because weunderwrite to hold. We are mostly senior secured. We have got great delegationand risk limit disciplines and the team did a terrific job of working their waythrough the market this summer. For the fourth quarter if you look, the positives areincredible asset growth, high-quality portfolio. We are anticipating a littleslower earnings growth in real estate versus the pace they have been on andoverall the commercial finance outlook for the fourth quarter, segment profitup around 10%. So with that, let me turn it back to Jeff. Jeff Immelt: Keith, thanks. I just want to recap how the company looksgoing forward and particularly in the environment that we are in today. I feelgreat about the overall outlook for the company. If you just tick down thebusinesses and how they are positioned, infrastructure is about 37% of ourprofit. We believe that we are very well-positioned with strong backlogs, greatglobal growth, good technology and we are still in the early innings of wethink the big infrastructure build, building big install bases with servicerevenue yet to follow. If anything, the equipment growth has been surprisingfrom the standpoint of how robust it has been and we feel great about how weare positioned. In commercial finance, 20% of our earnings, again, it's a greattime to be a AAA-rated company. There has been a big repricing of risk. Ourrisk policies, our spread of risk, the great global origination we have I thinkreally bodes well for the commercial finance business. GE Money, I think we have eliminated two of the drags. Ithink we were an early mover in mortgages and removing the headwind from Japan.I think we have got a nice global position and strong track record of growth. Healthcare is 11% of our earnings. You know, let's face it;we are going to have easier comps when we go into 2008 and the addition of OECwe believe will be a positive. NBC Universal we feel great about the momentum that we havegot; great cable and film performance. The network turnaround is progressing.We have got real momentum in that business and it is setup for a soliddouble-digit earnings growth in 2008. Industrial is 8% of our earnings. I think we have reallyeliminated all of the feedstock and related businesses like plastics and thatnow is a platform of high-tech and brand advantage businesses. So I think whenyou look out over the next 12 to 18 months, GE has got great position withstrong businesses globally positioned, new technology, big backlogs and is wellpositioned to grow. Just to recap, I think we are on track to deliver a solid2007 and strong business momentum going into the fourth quarter. The gains havebeen used to restructure the businesses and to fund business exits. The organicgrowth rate is real and continues to drive tremendous momentum and we have got70 basis points of margin expansion in hand. We are trying to push for morethan that but we have got good momentum on our programs and I think from acapital allocation standpoint, we have improved the portfolio and we arereturning an immense amount of capital to the investors and we arewell-positioned for a total year of $2.19 to $2.22, up 18% to 19%. I think if you just step back and recap the first threequarters of the year, we sold plastics and redeployed that capital to buy VetcoGray, Smiths, some high-tech industrial businesses and NBCU Cable. So a tremendoustrade of assets there. We used the gains from plastics to lower our coststructure and reduce risk for the long term. So we feel great about how thathas been redeployed. We are returning $26 billion to shareholders in the formof a buyback and a dividend and we have positioned the company for stronggrowth in global markets with high technology initiatives. Again, I think we feel like the company is in great shapeand well-positioned for a strong fourth quarter and 2008. Dan, let me turn it back over to you. Dan Janki: Thank you. Bill, we'd like to open it up for questions now.

Your first question comes from Bob Campbell - LehmanBrothers. Bob Campbell - Lehman Brothers: A couple of questions on the forward-looking category. Youhave been talking about the big order growth, so forth and so on, ininfrastructure in particular. Could you give us an idea of how do the marginslook in that backlog relative to what has been reporting? Obviously you have guidedto a strong fourth quarter but maybe just to take a bigger look at that profitstream, looking all the way out into '08 and beyond? Keith Sherin: We are expecting to be able to grow our margins andinfrastructure. As you look forward, Bob, I think the good news is if you lookat orders price for us, if you go to aviation, the new engine orders price thatwe are seeing is about 4% up. If you look at the gas turbine orders we havegot, it's 10% in the quarter and year-to-date, it is up 8%. If you look at thewind orders, they are up 7% and we are starting to see that just start to rollinto the equipment sales a little bit in the third quarter. Overall price forthe company was up about 0.7% and just more than offset inflation. But we areonly starting to see those orders that we were getting better price starting inthe second half of last year coming into the start of sales. So I think you aregoing to see that start to improve. I think the second piece is going to be the acquisitiondilution and margin effect from Smiths and Vetco certainly doesn't continueinto 2008 because you have got the comparison as well as the synergy teams thatare working like crazy to not only help grow the business but get those marginrates up. That is a real opportunity for us. Today those two businesses aresomewhere around 10% margin versus the infrastructure average. That is thesecond thing that is an opportunity. I think the third thing is we are going to continue to seeequipment deliveries grow at a faster pace than services. That is a good newseffect in total as we set about building the business, but we do expectinfrastructure to be able to grow its margin somewhere close to 100 basispoints which is what we are driving for the whole company for 2008. Bob Campbell - Lehman Brothers: The other point you mentioned was the asset growth highmargins on the finance side. How much of a margin improvement in asset growthare we looking at? Keith Sherin: We are going to workand show you how that rolls through the portfolio. Basically our average assetperiod in commercial finance might be three years. So again, if you assume thatyou are starting to see better returns on both debt and equity investments inthe third quarter, it is going to take awhile to roll through the wholeportfolio. But clearly the capital from the disruptions in the market we saw,the sum of the capital we are putting to work today is at better returns and weare very pleased with that. That is going to help commercial finance businessgoing forward. But it takes a while to roll through in terms of the totalportfolio because of the size.

Your next question comes from Jeff Sprague - Citigroup. Jeff Sprague - Citigroup: Could you just explain how the taxes played out in GECapital? I am just a little bitconfused. If WMC and Lake in aggregate were losing moneyin the first half, why would there be a positive reversal? I would think youwould have had a tax negative tax accrual in the first half. Keith Sherin: Yes, that's a greatquestion. I think the way I would explain how it lowers the third quarter, letme try it a little differently. If you look at the first half, the GECS rate asreported was 11% and that included one half a year's tax impact from the largelosses that we had in both WMC and GE Money Japan at those high tax rates,because we have to include ongoing effects relative to the year rate, not inthe time that they just occur. So even though we had large losses in the firsthalf, those losses were basically included in our total year estimate. So if the GECS rate was 11% in the first half, when you putWMC and GE Money Japaninto discontinued operations, the first half GECS rate went up to 18%. Now theonly way to get the third quarter rate in line with the year rate was toreverse those first-half tax provisions. So taking WMC and GE Money into disc opsresulted in a reversal of tax provisions from the first half. On a year-to-date basis, if you look at those rates we areright in line with what we expected but the credit in the third quarter iscoming because we had deferred some of those tax benefits into the second half. Jeff Sprague - Citigroup: How big was thecredit in the third quarter? Keith Sherin: The credit was about$190 billion. Again, if you look at the total dynamics here, you have gothigher restructuring; you have got lower pretax earnings because some of itfrom the restructuring and some of it just from the lower pretax earnings, thosealso drove down the tax rate a bit. But on the WMC and GE Money, it is about$190 million, Jeff. Jeff Sprague - Citigroup: So that implies theongoing GE Capital tax rate is 6% in the quarter though, right? Keith Sherin: No, I think if youlook at it ex that, it is going to be at the 13% year-to-date rate. Jeff Sprague - Citigroup: Just to clarify, all of the restructuring is below the linein corporate from a reporting standpoint or is some of it in the segmentnumbers? Keith Sherin: No, the restructuringis in the corporate line. I think if you look at the income statement and thecorporate items and eliminations, it is a negative 600 in the quarter. I noticed there weresome questions about that in the pre-notes. We have about $800 million ofrestructuring pretax in that line, as well as the corporate costs. The offsetin that line that isn't readily apparent is the tax credit is going into thatline. So the offset to the restructuring is a tax credit for the reversal ofthose provisions in the first half, about $190 million. In addition because of our restatement, we had about $100million adjustment last year that makes that variance look a little higher aswell. So the restructuring is partially offset by the tax benefit and therestatement that we had last year.

Your next question comes from Stephen Tusa – JP Morgan. Stephen Tusa - JP Morgan: A question on healthcare. Joe Hogan was speaking at aconference in September and he mentioned that there is a line that said in thepresentation US DRA imaging down 20%. Is he just talking about the specificbusiness that is impacted by DRA? I am just trying to calibrate that with thefact that you are kind of reaffirming your flat guidance for U.S.imaging. The follow on to that would be, what really gives you theconfidence there? Is it playing out as you would have expected or maybe you canjust give us an update on where things stand there and the data points you areseeing from the field? Keith Sherin: If you look at the orders, I am not sure exactly what Joewas referring to, but I can give you a couple of data points. If you look atthe orders impact on DRA in the U.S.,it is somewhere around 20% to 30%. It varies by modality. Overall DI is downabout 20% in the third quarter from DRA. So I think he is referring to orders. Then if you look at the impact of US imaging, I think if youlook at our schedule that we have given you, the dynamics, we show that becauseof that impact of orders and sales being down that is driving it, and in thethird quarter had a 12% drag on our op profit in healthcare and then we expectit to be somewhere around 10% to 15% in the fourth quarter. I think if you lookat next year, you are going to have a much better starting point comparisonthat we are going to deal with. Jeff Immelt: Steve, I would just say it is getting no worse. It hasstayed at a depressed level and so I think when we look at 2008, we are notgoing to count on any improvement but we are not going to count on it gettingworse either. Stephen Tusa - JP Morgan: You guys gave the guidance for infrastructure after thesecond quarter and then we just had this meeting a couple of weeks ago. Everybodytalks about infrastructure as being a visible business. I mean, that's what welove about it. Should we expect quarter to quarter what I would call maybebumps in the road like this, where maybe it comes in a little bit light ofexpectations but just assume that over the course of time, it is going to be asvisible as we would want it to be? Jeff Immelt: Steve, I still think infrastructure is going to be on forthe year. We are going to have really a boomer in Q4, as Keith pointed out. Ithink there are always going to be some specific moves. I think from adiscretionary standpoint we decided to heavy up some of the technical spending.We have got some big technical launches underway in both the aviation and theenergy business. We do that in a discretionary way to the tune of about $100million, but that doesn't repeat. I would say some of the service contract timing and thingslike that might go quarter to quarter, but look; I mean, if you look at all thefundamentals of backlog growth, spares growth, wind, margin pricing, CSAdevelopment, globalization, this is a boomer. In terms of how I build my model,it was about $185 million off in the quarter from a 20% goal that we had andthat was really all driven by discretionary stuff that we think is going toimprove Q4 and 2008. Those things happen. When a company our size, running a $60billion business, you are going to get some of that but this business couldn'tbe any better positioned than it is right now with extremely high visibility.

Your next question comes from Nicole Parent - Credit Suisse. Nicole Parent - Credit Suisse: Jeff, first I'd love to hear your perspective on M&A.You have been active buying Oxygen and if we believe the market speculation outthere this week alone, we would think you are buying everybody under the sun. Withrespect to security strategy now that you are not proceeding with the SmithsJV, could you just remind us where you are seeing additional portfolio movesgoing forward? Jeff Immelt: Nicole, again I think we are committed to the buyback thisyear. At the end of the year we are going to announce another buyback in 2008and beyond. Nicole, I like where the portfolio is right now. I think we havegot a lot of engines of growth that are out there today that can keep us goingforward. I think what Keith and I have talked about is an industrialacquisition level that is in the $3 billion to $5 billion range. I think thatis pretty much what I am looking at on the buy side. And on the sell side,look, I think we are committed to opportunistically looking at the portfolioand where there are businesses that we can't run that well that we think otherpeople can run it better, we are going to look for opportunities to sell thosebusinesses. I just think we are disciplined and we are going to executethe same plan we outlined in the second quarter. Nicole Parent - Credit Suisse: With respect to healthcare, how do you think aboutadditional DRA cuts in 2008? This might be a stupid question, but why do youthink you can recoup the loss on the OEC sales given that you haven't shippedanything all year? What would make the customer come back next year? Jeff Immelt: Nicole, I would say on the first one, again, a lot of thisis going to be decided in Washington, but I would believe that we have statedour case on DRA pretty clearly and we think it is good technology and goodscience and pro-patient. I think that isa pretty broadly held view and we believe that what has already been done isthey are going to let it settle in and we are not going to see additional cutsin 2008. On the OEC side, Nicole, this is a great franchise. We havegot $200 million of backlog, very little of it has been canceled. We have asuperior product. We are working very constructively with the FDA to resumethis business. But when we went into the consent decree, this was maybe one ofthe strongest – if not the strongest franchise -- in our entire portfolio. Nicole Parent - Credit Suisse: One last one on aviation. Could you give us a little bit ofcolor on what the incremental R&D spend was on? Was it incremental businessjet? Could you also update us on any impact tied to you guys as you look at the787 delay Boeing announced this week? Jeff Immelt: There is a couple of big programs there. Clearly the GEnxfor the 787, the Leap 56 which is the next narrow body and the Honda JV whichis going to go in the business jet market, these are all big programs thatwe're funding. I think on the 787, Keith, you spoke with the business on the787. I don't think it has any impact on us at all. Keith Sherin: No. We are going to continueour development program on the original schedule and so we are going tocontinue to work with Boeing to make sure that we deliver all our commitmentsand we don't anticipate that is going to have a big impact on us.

Your next question comes from Deane Dray - Goldman Sachs. Deane Dray - Goldman Sachs: Regarding the turmoil the credit markets just has continuedto go through, it looks like GE clearly benefited from a AAA credit rating. I would be interested in hearing from afunding side and if you could quantify the activity on the short end fromcommercial paper demand? On the long end, you were active issuing 60-yearpaper. Where and how could you quantify where that AAA benefit came in? A related question is given the size of the portfolio, itlooked like your mark-to-market between those two points you called out -- thewarehouse and securitized retained interest -- looked pretty small. Is this anongoing review process or do you feel like that has been sized? Keith Sherin: First, during the summer we had a tremendous advantage as aAAA company. There was clearly a flight to quality. We never had any turmoil inour CP funding, Deane. During the month of August, we issued $18 billion oflong-term debt in some pretty choppy markets. We had on one Friday a largestate pension fund called us and asked if they could give us $5 billion. Sothere was definitely a flight to quality in the summer. Our CP was trading at100 basis points lower than asset-backed conduits which demonstrated theconfidence in the ratings. So the AAA really was a huge value for us in thesummer. You know in terms of the mark-to-markets, again, if you lookat our business model of origination for putting it on the balance sheet incommercial finance that served us well. We are very disciplined around being asenior secured lender. Our total warehouse for mezzanine and subordinated debtwas $100 million at the end of the quarter. Again, this is a set of risk management principles andunderwriting principles and origination principles that has served us prettywell. Clearly we think that everything we did in the quarter was related to thedisruptions that we saw in the marketplace and it is not a continuing effectfor us. Deane Dray - Goldman Sachs: As a follow-up on GE Money with regard to delinquencies, itreally looked reasonably contained. How are you modeling for the next couple ofquarters on delinquencies and what should the expectations be regardingadditional reserves? Keith Sherin: Well if you look atthe quarter, I showed you the delinquency rate in the Americaswas up about 35 basis points. If we look going forward, we think we are goingto continue to see delinquencies at those levels and we added about $200million to the provision for GE Money in the quarter. That is in line with thedelinquencies as well as the asset growth. We expect to continue to see pressure in the Americas.We have got to see how housing plays out, see how the consumer does in thefourth quarter but we are anticipating that we are going to continue to seethose delinquencies and continue to strengthen provisions as we go into thefourth quarter.

Your next question comes from Scott Davis - Morgan Stanley. Scott Davis - Morgan Stanley: It was a little bit of a confusing quarter, but if I was totake some of the bullish takes here, I think what you are talking about is apretty strong improvement in backlog and pricing. You have improvedrestructuring. I guess the root of my question is, do you think that is enoughto get to your 100 basis points a year margin target, because you will fall alittle bit short this year, of course. Keith Sherin: I think it is goingto be pretty strong. I think if you look at one of the drags obviously thisyear versus our target is healthcare. I mean healthcare is a business that hasgot great operating profit rates but being flat for the year, that is about 30basis points off our target on its own. It is only 10 basis points drag yearover year but versus our target, it is 30 basis points. So I think obviously the improvements that we are expectingin healthcare as well as the benefits that we see in infrastructure pricing,backlog growth, improvements in Smiths and Vetco, we are feeling pretty goodabout getting to 100 basis points next year. Jeff Immelt: Scott, it is going to be one of the three or four metricsthat people get paid on, the senior managers of the company. That was here thisyear so a few people are going to miss and it is going to be in place nextyear. We think with the kind of visibility in backlog we have got now thatfocusing on the supply chain and lowering costs, we have got some real marginupside here. Scott Davis - Morgan Stanley: Let me play the Devil'sadvocate with you a little bit. You have been showing pretty strongimprovements in your backlog now for probably seven or eight quarters andpricing has really just started to pick up in the last quarter. I know there'ssome exceptions to that, but is it possible that maybe some of your guys have beenswinging a little bit aggressively at market share and volumes when you maybecould have gotten a little bit more aggressive on price and that has had someprofit impact? Jeff Immelt: I think if you'd segregate the businesses, Scott, inaviation that is probably true but that would have happened in 2003. Sobasically you have got a time lag of a couple of years and coming out of 9/11we are shipping still things that were post-9/11 where clearly people had noidea where the commercial aviation industry was going to go. That's not truetoday. I would say what is coming back in the backlog is truly at a higherprice. On the energy side, we are actually seeing that today and itis just getting wiped out by the incredible growth in product versus service.But on balance, I think with the restructuring we have been able to do and thepricing we've got in the backlog, we feel pretty good. Scott Davis - Morgan Stanley: Lastly, the language you gave on the macro environment inthe presentation, I think you used “okay”. Can you get into that a little bitfurther? I know certainly your infrastructure businesses, you are clearly notseeing much of any pullback. Appliances was a little bit weak as you wouldexpect just given the housing market, but are there any other indicators thatyou look at that lead you to believe that we could be running into someproblems here in the U.S.? Jeff Immelt: I would say globally, Scott, I have been kind of around theworld in the last month or so and the global economy remains extremely robust.I just don't see any signs of a slowdown almost anywhere. We picked up a bigturbine order in Francelast week and I could go down the list of just both developed country andemerging market growth. I think the U.S.housing remains very tough and we don't see any imminent improvement in housingnecessarily, but the other economy around housing -- light industrial,commercial stuff like that -- still appears to be in positive territory. Soglobal is strong. U.S.housing tough, but the rest of the U.S.seems fine to us.

Your next question comes from Robert McCarthy - Banc ofAmerica. Robert McCarthy - Banc of America Securities: I just want to follow up on some of Scott's comments aboutthe global environment. If we could just drill down into first globally, we dohave a weak dollar out there and some of your peers have suggested that overtime in 2008 that should probably prove to moderate some of the economic growthand resurgence we have seen coming out of the euro zone region. Alternatively,there has been some anecdotal signs of at least a step down in terms ofinvestment prospectively coming out of Asia. Do you have any comments there? I know you are fairly longcycle in a lot of your businesses, particularly in infrastructure, but are youseeing any signs there or would you expect to see some deceleration in the backhalf of 2008? Jeff Immelt: Rob, I am not an economist but I just can give you a senseof, I was in Asia -- Japan, China, Malaysia, Vietnam -- and I saw no signswhether it was aviation, healthcare, oil and gas, energy. I was in some of thetowns outside of Shanghai and Beijingand there are cranes in every place. So we will do $1 billion in Vietnam.There is just lots of stuff going on globally. From a European standpoint, Eastern Europe, Russia,Turkey and eventhe developed part of Europe for the products we areselling which are healthcare, energy, aviation, oil and gas, we just seetremendous long-term growth in infrastructure. So I think maybe the currencyslows down some of the more flow type products, automotive and things likethat, but we don't see it changing commercial aviation. We don't see itchanging the need for infrastructure. Robert McCarthy - Banc of America Securities: You will be somewhatinsulated due to your long cycle nature? Jeff Immelt: We have got more in backlog than at any time in our historyand I would say our visibility in this business at least through the end of '08is pretty precise. Keith Sherin: I think the petrol dollarsare another factor, certainly driving a lot of our growth but we had turbineorders in Ireland,in the UK and Spainin the third quarter. We are seeing developed markets need to add capacity andour gas turbines are going to be the most environmentally friendly and thequickest type of power generation capacity that can be cited. Robert McCarthy - Banc of America Securities: Switching gears to the U.S.then, obviously there has been a lot of concern around the state of the U.S.economy and commercial construction in particular following the residentialdownturn we have seen here. Given the fact that you have a commercial realestate business and selling to non-residential construction, any kind of viewthere of any kind of change in the margin? Jeff Immelt: I would say the commercial real estate market remainsreasonably good, Rob, because there is still a shortage in certain cities. Itis a very town by town kind of dynamic. Ithink on the commercial construction side, schools, hospitals, governmentaltype stuff is still very robust and you can see that in a pretty stronglighting and pretty strong industrial growth rate, even in the US. Keith Sherin: Sure, I would agree.I think our financing volume in our capital solutions business, we had a strongdouble-digit growth in the third quarter in financing volume and that is middlemarket. Robert McCarthy - Banc of America Securities: And then if you'll indulge me on just one more question. Onlighting, you announced pretty significant restructuring there and thatbusiness seems to be undergoing a fair amount of change overall in theunderlying industry dynamics with technology, energy efficiency, et cetera.You've seen that in some pretty nice growth coming out of that business. Is that a business that is at a crossroads for the portfolioin the sense that you really haven't actively been investing in it all thatmuch but you may have to have some incremental investment going forward, evenperhaps acquisitions? I mean some of your competitors may be even trying toenter into the USlighting fixtures market. What is your view of that business over the near tomedium term? Would it be something a candidate for exit, divestiture? Becauseit seems you have to basically invest or think about an exit? Jeff Immelt: Being able to use the plastics gain to lean into taking realsignificant actions on the incandescent side I think was a big help. I just think having the plastic gain to justdo that, get out of sub-prime, get out of Japanand consumer finance, that is really helpful. There is going to be a renaissance of technology in thelighting business, some of which we will invest in ourselves but having againjust been in Asia, I think we have got great opportunities to do some of thesame things in lighting that we have done in appliances effectively, which isthere are all kinds of chip manufacturers in Taiwan and China who we think canprovide very excellent outlets for LED technology and the same way with CFLs.So we feel like we have got plenty of global opportunities in that business todo whatever we need to do over time.

Your next question comes from Nigel Coe - Deutsche Bank. Nigel Coe - Deutsche Bank: Given the turmoil in the financial markets for the lastquarter, can you just talk very broadly about how this makes you think about GECapital and some of the out exposures in GE Capital? The funding within GECapital, obviously we saw a shock in lock down in the commercial paper marketand I know it didn't impact you but do you see yourself shifting more fromshort paper to long paper over time? Keith Sherin: Let me start with the funding question and then we'll goback to the asset exposure. I would say if you look at the funding question, wewill continue to do more long-term term debt, not because of a particular viewon necessarily short-term rates or whatever, but really from a funding/planningperspective so that we have manageable amounts of long-term debt that matureseach year and keeps our funding needs at a pretty steady pace as you go forwardover the next five years. I think we have about $90 billion of commercial paper. Weare going to continue to have commercial paper around that level and the growthin assets will be funded by more term debt. In terms of asset exposure, if you look at the commercialfinance business, you know for us we feel like we are in a great positiontoday. We are seeing opportunities to put capital to work, senior securedposition 70% loan to value, senior secured debt at $0.95 to par on deals thatwe have underwritten. We know the company well; we know our money good. So weare putting capital to work today in places that are higher returns than wehave seen in the last three years for debt-type structures. So that is a greatopportunity. I think if you look at our global leasing and loanportfolio, companies' balance sheets have never been in as good a shape as theyare today. Our delinquencies are at all-time lows and the customer portfolioand companies have basically improved their balance sheets dramatically interms of deleveraging and dealing with global competition. The real estate business, as Jeff said, we feel like we havegot a terrific franchise. Again, everything around that business is driven bysupply and demand and critical underwriting of what's the capacity outlook forthe region and pricing and replacement costs. There is nothing about that thatdoesn't say that replacement costs are going to be tougher in any one of themajor regions where we have invested in real estate. So I feel great about thereal estate business as well. Jeff Immelt: I think there are going to be more opportunities to grow incommercial finance, not just in the U.S.,but globally, created by these dislocations and at higher margin rates. Keith Sherin: I think the other fact is in a time cycle like this whencapital is a little tougher for companies to get, it as a great time to have abalance sheet like ours where we can provide financing to our customers. Sothat is coming back our way a bit as well, Nigel. Nigel Coe - Deutsche Bank: Just one more question -- and perhaps you have answered thisquestion already, but -- it sounds like you've got lots of opportunities forgrowth in GE Capital given the environment. But is there any debate about maybestepping up the payout ratio from 40% to maybe 50%, given there is obviously ahuge amount of capital deployment within the GE parent with the buybacks andacquisitions? Keith Sherin: You are talking aboutthe dividend out of GECS? Nigel Coe - Deutsche Bank: Right. Keith Sherin: Right now we areanticipating just leaving it at 40%. Again, if you look at the last severalyears it has been far in excess of that because of all the insurancedispositions, we have dividended those proceeds out. But right now I would saythe framework is to keep it at about that level.

Your next question comes from David Bleustein - UBS. David Bleustein - UBS: First, can you break down the gas turbine orders betweendomestic and non-U.S.? Keith Sherin: There were no U.S.orders in the quarter for gas turbines. Those were all global. David Bleustein - UBS: Okay. That's easy. Second,can you walk through your thoughts behind the 787 delay? I know you said thereis no immediate financial impact, but what type of delay out of Boeing wouldcause a material impact to you and how would you quantify the odds of a furtherdelay? Keith Sherin: Well they haven'tissued a new production schedule by customer yet, so that is a little hard. Ithink if you think about it just financially for us, we are going to continueour development program to make sure we meet all their needs; those earlyengines that go out are not going to be high-margin engines. I do not have it all quantified because we donot have any detailed production schedules from Boeing yet; but again, that iswhy I am reasonably confident saying I do not think this is going to have a bigimpact on us. David Bleustein - UBS: But in yourexperience with these programs, once there has been one delay of this magnitudeis there usually another? Jeff Immelt: David, we are notgoing there. We are going to take care of our end of it and make sure that bothin terms of our engine and in terms of what Smiths' is committed to that thoseare done with excellence.

Your final question comes from Ann Duignan - Bear Stearns. Ann Duignan - Bear Stearns: Jeff, what is your long-term vision for the oil and gasbusiness? Do you see that business expanding more into services or are youcomfortable with the portfolio you have built in that segment as of today? Jeff Immelt: You know, Ann, we have been able to digest the sub sea verysuccessfully. I would say that the Vetco Gray acquisition is probably at leasta $100 million above deal case. I want to keep us on the technology side of thebusiness and we will continue to look at niche technologies as time goes on. It is going to be about a $7 billion business run ratetoday. There is no reason why it could not be bigger, but we have got such greatorganic growth opportunities in the business that I do not feel a compellingneed to do big acquisitions in that space right now. Ann Duignan - Bear Stearns: There were some rumors out there about moving into services,so thanks for that. Peter Nesvold - Bear Stearns: On the capital side, you have continued deceleration inprofit growth at GE Money going to potentially high single-digits in the nextquarter. I was hoping you couldelaborate a bit on what is driving that? Is it lower originations, higherreserves or something else? As a follow up to that, in the past several years you'vetalked about GE Capital being a 15% type consistent earnings grower. Are wehitting a point in the credit cycle where that is not going to be sustainablefor the next year or two and will be below that trend? Jeff Immelt: Peter, your questionwas on GE Money? Peter Nesvold - Bear Stearns: Yes. Keith Sherin: I think if you look in the quarter, global growth wastremendous. We have great asset growth. We have nice profit growth in both Asiaand Europe and the drag came in the Americas.The Americaswas down about 4%, and I think it is all going to be related to both our creditcard book and our retail sales finance book here in the U.S.We are going to watch how the consumer does. You know, it is pretty formulaic. If the delinquencies rise,our reserves go up, our provisions go up. You saw that impact in the quarter.The $200 million increase in provisions here in money was mostly related to theAmericas book,and we would anticipate that is going to continue to be pressured. I think thatis a driver for that. If you look at overall GECS growth, really it is a functionof the ROEs and the retained earnings. At the end of the day, with a 25% ROEand a 60% retained earnings, we ought to be able to grow our earnings around13%, 14%. That is the framework that we are operating under. It is aself-funded checkbook. It is something we are very disciplined about, and allthe teams get their capital allocated based on their returns. Peter Nesvold - Bear Stearns: A final follow-up question on GECS, I noticed in GE Moneyand equipment financing, the on book versus off book delinquencies, we areseeing a divergence there. Any color you can provide around that? Keith Sherin: I am going to have toget back to you on that. Non-book versus off book, I didn't get into that inthe prep here. Jeff Immelt: I just wanted to thank everybody for attending this morning.We had a lot going on in this quarter but I think the company's fundamentalsare great. We delivered in a quarter that had lots of external volatility and afew specific one-time items inside the company. We have got acceleratingearnings going into Q4. We feel great about the long-term focus of the company. We have got some really great businesses: infrastructure ingreat shape, commercial money, commercial finance and GE Money in very solidshape; NBCU improving; a strong industrial franchise and a healthcare businessthat is positioned for better performance in 2008. So we feel great about wherethe company is. Dan Janki: Thank you, Jeff. Joanne and I are available all day for yourcalls. Today's replay and transcript will be available at our website. Thankyou very much.