<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-35
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GENERAL ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
New York 14-0689340
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3135 Easton Turnpike, Fairfield, CT 06431-0001
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (203) 373-2459
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
There were 1,682,427,293 shares with a par value of $0.32 per share
outstanding at June 30, 1995.
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars, except per-share amounts, in millions) Second quarter ended June 30 (Unaudited)
---------------------------------------------------------------------
Consolidated GE GECS
---------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of goods $8,572 $7,542 $8,578 $7,548 $ - $ -
Sales of services 2,633 2,478 2,659 2,490 - -
Earnings of GECS from continuing operations - - 572 495 - -
GECS revenues from operations 6,425 4,705 - - 6,415 4,730
Other income 179 178 179 179 - -
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 17,809 14,903 11,988 10,712 6,415 4,730
---------- ---------- ---------- ---------- ---------- ----------
Cost of goods sold 6,192 5,534 6,199 5,541 - -
Cost of services sold 1,793 1,742 1,819 1,754 - -
Interest and other financial charges 1,830 1,184 158 104 1,677 1,084
Insurance losses and policyholder and annuity benefits 1,223 779 - - 1,223 779
Provision for losses on financing receivables 279 251 - - 279 251
Other costs and expenses 3,856 3,068 1,448 1,207 2,392 1,882
Minority interest in net earnings of
consolidated affiliates 46 56 20 6 26 50
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses 15,219 12,614 9,644 8,612 5,597 4,046
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations before income taxes 2,590 2,289 2,344 2,100 818 684
Provision for income taxes (864) (735) (618) (546) (246) (189)
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations 1,726 1,554 1,726 1,554 572 495
Loss from discontinued operations net of income
tax benefit of $28 - (32) - (32) - (32)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings $1,726 $1,522 $1,726 $1,522 $572 $463
========== ========== ========== ========== ========== ==========
Net earnings per share
Continuing operations $1.02 $0.91
Discontinued operations - (0.02)
---------- ----------
Net earnings per share $1.02 $0.89
========== ==========
Dividends declared per share $0.41 $0.36
---------- ----------
<FN>
See notes to Condensed Consolidated Financial Statements. Data for 1994 have been reclassified to state the results of Kidder,
Peabody Group Inc., the securities broker-dealer subsidiary of GECS, as a discontinued operation. Consolidating data are shown
for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
</TABLE>
<PAGE>
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars, except per-share amounts, in millions) Six months ended June 30 (Unaudited)
---------------------------------------------------------------------
Consolidated GE GECS
---------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of goods $15,668 $13,718 $15,676 $13,730 $ - $ -
Sales of services 4,792 4,553 4,839 4,572 - -
Earnings of GECS from continuing operations - - 1,131 976 - -
GECS revenues from operations 12,118 9,075 - - 12,169 9,123
Other income 357 339 359 341 - -
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 32,935 27,685 22,005 19,619 12,169 9,123
---------- ---------- ---------- ---------- ---------- ----------
Cost of goods sold 11,349 9,974 11,357 9,986 - -
Cost of services sold 3,325 3,272 3,372 3,291 - -
Interest and other financial charges 3,492 2,282 284 195 3,220 2,094
Insurance losses and policyholder and annuity benefits 2,314 1,472 - - 2,314 1,472
Provision for losses on financing receivables 358 421 - - 358 421
Other costs and expenses 7,340 6,121 2,801 2,454 4,580 3,710
Minority interest in net earnings of consolidated
affiliates 85 87 32 13 53 74
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses 28,263 23,629 17,846 15,939 10,525 7,771
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations before income taxes 4,672 4,056 4,159 3,680 1,644 1,352
Provision for income taxes (1,574) (1,283) (1,061) (907) (513) (376)
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations 3,098 2,773 3,098 2,773 1,131 976
Loss from discontinued operations net of income
tax benefit of $126 - (183) - (183) - (183)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings $3,098 $2,590 $3,098 $2,590 $1,131 $793
========== ========== ========== ========== ========== ==========
Net earnings per share
Continuing operations $1.83 $1.62
Discontinued operations - (0.10)
---------- ----------
Net earnings per share $1.83 $1.52
========== ==========
Dividends declared per share $0.82 $0.72
---------- ----------
<FN>
See notes to Condensed Consolidated Financial Statements. Data for 1994 have been reclassified to state the results of Kidder,
Peabody Group Inc., the securities broker-dealer subsidiary of GECS, as a discontinued operation. Consolidating data are shown
for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
</TABLE>
<PAGE>
Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars in millions) Consolidated GE GECS
---------------------- ---------------------- --------------------
6/30/95 12/31/94 6/30/95 12/31/94 6/30/95 12/31/94
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Cash and equivalents $3,115 $2,591 $1,382 $1,373 $1,733 $1,218
Investment securities 33,502 30,965 2 93 33,500 30,872
Current receivables 8,092 7,527 8,179 7,807 - -
Inventories 5,254 3,880 5,254 3,880 - -
GECS financing receivables - net 84,537 76,357 - - 84,537 76,357
Other GECS receivables 6,479 5,763 - - 6,797 6,012
Property, plant and equipment (including equipment
leased to others) - net 25,038 23,465 10,088 9,525 14,950 13,940
Investment in GECS - - 11,417 9,380 - -
Intangible assets 12,294 11,373 6,654 6,336 5,640 5,037
Other assets 24,671 23,950 12,344 12,419 12,327 11,531
Assets of discontinued securities broker-dealer operations 2,020 8,613 - - 2,020 8,613
--------- ---------- ---------- ---------- ---------- ---------
Total assets $205,002 $194,484 $55,320 $50,813 $161,504 $153,580
========= ========== ========== ========== ========== =========
Short-term borrowings $57,889 $57,781 $3,448 $906 $54,455 $57,087
Accounts payable 6,956 6,766 3,541 3,141 3,815 3,777
Other GE current liabilities 8,158 8,307 8,236 8,562 - -
Long-term borrowings 48,011 36,979 2,145 2,699 45,902 34,312
Insurance reserves and annuity benefits 30,202 29,438 - - 30,202 29,438
Other liabilities 14,257 12,906 8,853 8,468 5,281 4,316
Deferred income taxes 6,330 5,205 423 268 5,907 4,937
Liabilities of discontinued securities broker-dealer operations 2,406 8,868 - - 2,406 8,868
--------- ---------- ---------- ---------- ---------- ---------
Total liabilities 174,209 166,250 26,646 24,044 147,968 142,735
--------- ---------- ---------- ---------- ---------- ---------
Minority interest in equity of consolidated
affiliates 2,551 1,847 432 382 2,119 1,465
--------- ---------- ---------- ---------- ---------- ---------
Common stock (1,857,013,000 shares issued) 594 594 594 594 1 1
Unrealized gains (losses) on investment securities 444 (810) 444 (810) 425 (821)
Other capital 1,520 1,122 1,520 1,122 2,064 2,006
Retained earnings 32,505 30,793 32,505 30,793 8,927 8,194
Less common stock held in treasury (6,821) (5,312) (6,821) (5,312) - -
--------- ---------- ---------- ---------- ---------- ---------
Total share owners' equity 28,242 26,387 28,242 26,387 11,417 9,380
--------- ---------- ---------- ---------- ---------- ---------
Total liabilities and equity $205,002 $194,484 $55,320 $50,813 $161,504 $153,580
========= ========== ========== ========== ========== =========
<FN>
See notes to Condensed Consolidated Financial Statements. June data are unaudited. Consolidating data are shown
for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
</TABLE>
<PAGE>
Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars in millions) Six months ended June 30 (Unaudited)
---------------------------------------------------------------------
Consolidated GE GECS
---------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities
- ------------------------------------
Net earnings $3,098 $2,590 $3,098 $2,590 $1,131 $793
Adjustments for discontinued operations - 183 - 183 - 183
Adjustments to reconcile net earnings to cash
provided from (used for) continuing operating activities
Depreciation, depletion and amortization 1,757 1,504 814 736 943 768
Earnings retained by GECS-continuing operations - - (733) (702) - -
Deferred income taxes 327 760 154 316 173 444
Decrease (increase) in GE current receivables 11 202 (27) 241 - -
Increase in GE inventories (804) (676) (804) (676) - -
Increase (decrease) in accounts payable (636) (746) 35 105 (422) (941)
Increase (decrease) in insurance reserves 1,116 (86) - - 1,116 (86)
Provision for losses on financing
receivables 358 421 - - 358 421
All other operating activities (316) (582) (1,014) (1,275) 482 785
---------- ---------- ---------- ---------- ---------- ----------
Cash from continuing operations 4,911 3,570 1,523 1,518 3,781 2,367
Cash from discontinued operations 1,202 41 - - 1,202 41
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from operating activities 6,113 3,611 1,523 1,518 4,983 2,408
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from investing activities
- ------------------------------------
Property, plant and equipment (including
equipment leased to others) - additions (3,724) (2,433) (674) (727) (3,050) (1,706)
Net increase in GECS financing receivables (4,835) (3,748) - - (4,835) (3,748)
Payments for principal businesses purchased (1,999) (1,484) (130) (431) (1,880) (1,053)
All other investing activities 63 3,385 105 (55) (63) 3,446
---------- ---------- ---------- ---------- ---------- ----------
Cash used for continuing operations (10,495) (4,280) (699) (1,213) (9,828) (3,061)
Cash from discontinued operations 85 236 - - 85 236
---------- ---------- ---------- ---------- ---------- ----------
Cash used for investing activities (10,410) (4,044) (699) (1,213) (9,743) (2,825)
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from financing activities
- ------------------------------------
Net change in borrowings (maturities 90 days or less) (2,530) (2,737) 2,270 896 (4,763) (3,680)
Newly issued debt (maturities more than 90 days) 20,382 10,946 437 520 19,945 10,426
Repayments and other reductions (maturities
more than 90 days) (9,351) (6,361) (705) (492) (8,646) (5,869)
Disposition of GE shares from treasury 564 343 564 343 - -
Purchase of GE shares for treasury (1,986) (287) (1,986) (287) - -
Dividends paid to share owners (1,395) (1,230) (1,395) (1,230) (398) (274)
All other financing activities 293 156 - - 293 156
---------- ---------- ---------- ---------- ---------- ----------
Cash from (used for) continuing operations 5,977 830 (815) (250) 6,431 759
Cash used for discontinued operations (1,156) (277) - - (1,156) (277)
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) financing activities 4,821 553 (815) (250) 5,275 482
---------- ---------- ---------- ---------- ---------- ----------
Increase in cash and equivalents 524 120 9 55 515 65
Cash and equivalents at beginning of year 2,591 3,056 1,373 1,536 1,218 1,520
---------- ---------- ---------- ---------- ---------- ----------
Cash and equivalents at June 30 $3,115 $3,176 $1,382 $1,591 $1,733 $1,585
========== ========== ========== ========== ========== ==========
<FN>
See notes to Condensed Consolidated Financial Statements. Consolidating data are shown for "GE" and
"GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed quarterly financial statements represent
the consolidation of General Electric Company and all companies which it
directly or indirectly controls, either through majority ownership or
otherwise. Reference is made to note 1 to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994. That note discusses consolidation and financial
statement presentation. As used in this Report and in the Report on Form 10-
K, "GE" represents the adding together of all affiliated companies except
General Electric Capital Services, Inc. ("GECS"), which is presented on a
one-line basis; GECS consists of General Electric Capital Services, Inc. and
all of its affiliates; and "consolidated" represents the adding together of
GE and GECS with the effects of transactions between the two eliminated.
2. In November 1994, GE elected to terminate the operations of Kidder,
Peabody Group Inc. (Kidder, Peabody), the securities broker-dealer
subsidiary of GECS, by initiating an orderly liquidation of its assets and
liabilities. The financial results of Kidder, Peabody are shown as a
discontinued operation in the condensed financial statements.
3. GE adopted Statement of Financial Accounting Standards (SFAS) No.
114, "Accounting by Creditors for Impairment of a Loan," and the related
SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures," on January 1, 1995. The adoption of these
Statements had no effect on earnings or financial position as the same level
of allowance for losses was appropriate under both the previous accounting
policy and the newly-adopted policy.
4. The condensed consolidated quarterly financial statements are
unaudited. These statements include all adjustments (consisting of normal
recurring accruals) considered necessary by management to present a fair
statement of the results of operations, financial position and cash flows.
The results reported in these condensed consolidated financial statements
should not be regarded as necessarily indicative of results that may be
expected for the entire year.
5. GE's inventories consisted of the following:
<TABLE>
<CAPTION>
(Dollars in millions) At
---------------------
6/30/95 12/31/94
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<S> <C> <C>
Raw materials and work in process $3,887 $2,933
Finished goods 2,544 2,165
Unbilled shipments 227 214
------- -------
6,658 5,312
Less Revaluation to LIFO (1,404) (1,432)
------- -------
Total inventories $5,254 $3,880
======= =======
</TABLE>
6. Property, plant and equipment, including equipment leased to
others, consisted of the following:
<TABLE>
<CAPTION>
(Dollars in millions) At
---------------------
6/30/95 12/31/94
------- --------
<S> <C> <C>
Original cost
- - GE $24,730 $22,907
- - GECS 20,379 18,763
------- -------
Total 45,109 41,670
------- -------
Accumulated depreciation and amortization
- - GE 14,642 13,382
- - GECS 5,429 4,823
------- -------
Total 20,071 18,205
------- -------
</TABLE>
7. GE's authorized common stock consisted of 2,200,000,000 shares having a
par value of $0.32 each. Average shares outstanding for the second quarter
of 1995 and 1994 were 1,688,152,513 and 1,710,380,465, respectively.
Average shares outstanding for the first six months of 1995 and 1994 were
1,694,090,647 and 1,709,354,523, respectively.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A. RESULTS OF OPERATIONS -- SECOND QUARTER OF 1995 COMPARED WITH SECOND
QUARTER OF 1994
General Electric Company achieved record earnings for the second
quarter of 1995. On a continuing operations basis, earnings per share
increased 12% to $1.02 from last year's comparable $0.91, and earnings
increased 11% to $1.726 billion from last year's comparable $1.554 billion.
Earnings per share grew faster than earnings, reflecting the cumulative
impact of $1.7 billion of shares repurchased under a two-year, $5 billion
share repurchase program.
Net earnings of $1,726 million in the second quarter of 1995 were up
13% compared with the previous year's reported $1,522 million, which
included the results of discontinued operations. Earnings per share
increased 15% to $1.02 from $0.89.
Consolidated revenues totaled $17.8 billion, up 19% from the
comparable $14.9 billion in the second quarter of last year. Ten businesses
reported higher revenues, with six achieving double-digit increases.
Operating margin in the second quarter of 1995 rose to a record 15.8%
of sales, an improvement over last year's record 15.3%. Eight businesses
reported improved operating profit with seven - led by Plastics, NBC,
Aircraft Engines and Transportation - achieving double-digit increases.
SEGMENT ANALYSIS:
The comments that follow compare revenues and operating profit by
industry segment for the second quarters of 1995 and 1994.
* Aircraft Engines operating profit was much higher than last year on
flat revenues principally because of good productivity performance during
the quarter.
* Appliances reported slightly lower operating profit this year on a
modest decrease in revenues, reflecting effects of lower overall industry
sales following last year's very strong performance.
* Broadcasting operating profit was substantially ahead of last year
on a strong increase in revenues primarily because of strength in prime-time
entertainment and the owned-and-operated stations.
* GECS' earnings from continuing operations were $572 million, a 16%
improvement from 1994's comparable $495 million. The increase was primarily
attributable to growth in the Financing segment, led by strong results in
Equipment Management, Consumer Services and Specialized Financing
activities.
* Industrial Products and Systems reported a strong current year
increase in operating profit on considerably higher revenues. The operating
profit increase was primarily attributable to productivity improvements
across the segment and higher volume at Transportation Systems, Lighting and
Motors which more than offset higher costs.
* Materials operating profit was up sharply this year on strong
revenue growth as higher prices, good productivity and volume growth more
than offset increases in material costs.
* Power Generation revenues increased sharply from a year ago, as a
result of the second quarter 1994 acquisition of Nuovo Pignone, an Italian
electrical equipment manufacturer, which was consolidated as of January 1,
1995. Operating profit was slightly lower as the contribution of Nuovo
Pignone was more than offset by lower selling prices and cost inflation.
* Technical Products and Services operating profit was slightly lower
compared with a year ago on somewhat higher revenues as price declines in
all geographic regions at Medical Systems more than offset volume growth
and good productivity. Information Services had a substantial increase in
operating profit which was attributable to higher revenues and continued
productivity increases.
* All other operating profit was flat on a slight decrease in
revenues.
B. RESULTS OF OPERATIONS -- FIRST HALF OF 1995 COMPARED WITH FIRST HALF
OF 1994
Earnings from continuing operations were $3,098 million in the first
half, up 12% from the comparable $2,773 million in 1994's first half.
Earnings per share increased 13% to $1.83 from $1.62.
Net earnings for the first half of 1995 were $3,098 million, or $1.83
per share, compared with $2,590 million, or $1.52 per share, in the first
half of 1994.
Consolidated revenues for the first six months of 1995 aggregated
$32.9 billion, up 19% from the comparable $27.7 billion in 1994's first
half. GE's sales of goods and services were 12% higher as Plastics, Power
Systems, NBC, Transportation and Lighting all reported double-digit
increases. The revenue growth was largely attributable to improvements in
the volume of goods and services sold and the impact of the Nuovo Pignone
consolidation in 1995.
Operating margin in the first half of 1995 was 14.5% of sales, an
improvement over last year's 14.0%. The improvement in operating margin was
led by Plastics, NBC, Aircraft Engines and Electrical Distribution and
Control.
SEGMENT ANALYSIS:
The following comments compare revenues and operating profit by
industry segment for the first half of 1995 with the same period of 1994.
* Aircraft Engines reported much higher operating profit on revenues
that were about the same as in 1994 reflecting productivity gains and
improved volume in commercial and military spares.
* Appliances reported somewhat higher operating profit on flat
revenues, reflecting primarily improved productivity performance following
very strong industry results in the prior year.
* Broadcasting operating profit was up sharply over last year on much
higher revenues, primarily because of strong performances in prime-time
entertainment and in the owned-and-operated stations.
* GECS' earnings from continuing operations were up 16% to $1,131
million. The increase was primarily attributable to growth in the Financing
segment, lead by strong results in Equipment Management and Consumer
Services.
* Industrial Products and Systems operating profit was well ahead of
1994's first half on considerably higher revenues. The increase in
operating profit was the result of continuing productivity improvements
across the segment and higher volume at Transportation Systems, Lighting and
Motors, which more than offset higher costs.
* Materials revenues and operating profit increased sharply in the
first half as higher prices, good productivity and volume growth more than
offset increases in material costs.
* Power Generation operating profit was about the same as a year ago
despite a substantial increase in revenues resulting from the consolidation
of Nuovo Pignone. The operating profit contribution of Nuovo Pignone was
offset by continued cost inflation and selling price decreases.
* Technical Products and Services operating profit was slightly lower
compared with a year ago on somewhat higher revenues. Medical Systems
operating profit was somewhat lower on a modest increase in revenues as
continuing pricing pressures more than offset productivity and volume
growth. Information Services had a good increase in operating profit on
somewhat higher revenues, reflecting continued worldwide growth in
electronic commerce services and the effects of productivity.
* All other operating profit increased considerably on higher
revenues, reflecting higher levels of licensing income compared with the
first half of 1994.
C. FINANCIAL CONDITION
With respect to the Condensed Statement of Financial Position,
consolidated assets of $205.0 billion at June 30, 1995, were $10.5 billion
higher than the $194.5 billion at December 31, 1994.
GE's assets were $55.3 billion at June 30, 1995, an increase of $4.5
billion from December 31, 1994. The increase was principally attributable
to an increase of $2.0 billion in the investment in GECS, primarily as a
result of GECS' earnings, net of dividends, and the effect of a $1.3
billion, after-tax, increase in the market value of GECS' marketable
securities. The second factor in the increase in total assets was
inventories, reflecting principally the effect of the consolidation of Nuovo
Pignone and normal seasonal increases in several other GE businesses.
GECS' assets from continuing operations increased by $14.5 billion
from the end of 1994, principally as a result of higher levels of financing
receivables and investment securities. GE Capital's financing receivables,
which aggregated $84.5 billion, net of reserves, at the end of the second
quarter, increased $8.1 billion from the year-end 1994 level of $76.4
billion. The increase resulted from acquisitions of businesses and
portfolios as well as origination volume. Management believes that GE
Capital's reserves of $2.3 billion (2.63% of the receivables balance at June
30, 1995 - the same as year-end 1994) are appropriate given the strength and
diversity of the portfolio and current economic circumstances. Investment
securities increased $2.6 billion during the first half of 1995, largely the
result of increases in the market value of GECS' marketable securities.
Consolidated liabilities of $174.2 billion at June 30, 1995, were $7.9
billion higher than the year-end 1994 balance of $166.3 billion. GE's
liabilities were up $2.6 billion; GECS' liabilities increased $5.2 billion.
GE's total borrowings were $5.6 billion ($3.5 billion short-term and
$2.1 billion long-term) at June 30, 1995, an increase of $2.0 billion from
December 31, 1994. GE's ratio of debt to total capital at the end of June
1995 was 16.3% compared with 11.9% at the end of last year and 17.6% at June
30, 1994.
GECS' liabilities from continuing operations increased by $11.7
billion, principally because of the additional $9.0 billion of borrowings to
finance acquisitions and asset growth. Short-term borrowings decreased by
$2.6 billion to $54.5 billion and long-term borrowings increased by $11.6
billion to $45.9 billion, reflecting a shift in the financing mix to longer-
term debt. Deferred income taxes increased by $1.0 billion to $5.9 billion,
principally because of the $0.7 billion tax impact of the increase in market
value of investment securities discussed previously.
Assets of discontinued securities broker-dealer operations decreased
by $6.6 billion from year-end 1994 and liabilities decreased by $6.5
billion, reflecting the continued orderly liquidation of the remaining
assets of Kidder, Peabody.
With respect to cash flows, consolidated cash and equivalents were
$3.1 billion at June 30, 1995, an increase of $0.5 billion during the first
half of 1995. Cash and equivalents were $3.2 billion at June 30, 1994, an
increase of $0.1 billion during last year's first half.
GE's cash and equivalents were $1.4 billion at June 30, 1995, and at
December 31, 1994. During the first half of 1995, cash from operating
activities totaled $1.5 billion, despite the use of (a) $1.0 billion for
"all other activities," which consisted of the net result of numerous
changes (none of which was significant) in all other assets and other
current and noncurrent liabilities, and (b) $0.8 billion for normal seasonal
increases in inventories. Cash used for investing activities ($0.7 billion)
represented principally investments in new plant and equipment for a wide
variety of projects to reduce costs and improve efficiencies. Cash used for
financing activities ($0.8 billion) included $2.0 billion for repurchases of
the Company's common stock and $1.4 billion for dividends paid to share
owners, representing a 14% increase in the per-share dividend rate compared
with the first half of last year. The dividends and share repurchases were
partially offset by funds provided from a combination of higher borrowings
($2.0 billion) and disposition of GE shares from treasury ($0.6 billion).
GE's cash and equivalents increased $0.1 billion to $1.6 billion at
June 30, 1994, compared with $1.5 billion at year-end 1993. During the first
half of 1994, cash from operating activities totaled $1.5 billion, despite
the use of (a) $1.3 billion for "all other activities," which consisted of
the net result of numerous changes (none of which was significant) in all
other assets and other current and noncurrent liabilities, and (b) $0.7
billion for normal seasonal increases in inventories from inventory levels
which were much lower at the end of 1993 than they had been at the end of
1992. Cash used for investing activities ($1.2 billion) primarily was
attributable to investments in new plant and equipment for a wide variety of
projects to reduce costs and improve efficiencies, and for acquisition of a
majority interest in Nuovo Pignone. Cash used for financing activities ($0.3
billion) included $1.2 billion for dividends paid to share owners,
representing a 14% increase in the per-share dividend rate compared with the
first half of 1993, which was offset partially by cash from higher
borrowings of $0.9 billion.
GECS' cash and equivalents increased $0.5 billion during the first
half of 1995. Cash was used primarily to fund GE Capital's growth in
financing receivables ($4.8 billion), for additions to equipment that is
provided to third parties on operating leases ($3.1 billion), and for
acquisitions of businesses ($1.9 billion), the largest of which were certain
businesses of ITT Financial, Credit De L'Est (France), Pallas Group (United
Kingdom) and the remaining 50% interest in United Merchants Financing (Hong
Kong). Cash provided from operating activities totaled $5.0 billion. Cash
provided from continuing financing activities resulted from increased
borrowings during the first six months of 1995, which aggregated $6.5
billion.
GECS' cash and equivalents increased $0.1 billion during the first
half of 1994. Cash was used primarily to fund GE Capital's growth in
financing receivables ($3.7 billion), for additions to equipment that is
provided to third parties on operating leases ($1.7 billion), and for
acquisitions of businesses ($1.1 billion), the largest of which was Northern
Telecom Financial Corporation. Cash provided by operating activities totaled
$2.4 billion. Cash of $3.4 billion was provided by "all other investing
activities," principally because of a decrease in other assets ($1.5
billion), largely attributable to a reduced level of mortgages acquired for
resale, and because of a net decrease ($1.8 billion) in GE Capital's other
receivables and dispositions of equipment leased to others. Funds provided
from continuing financing activities resulted from increased borrowings
during the first six months of 1994, which aggregated $0.9 billion.
D. ACCOUNTING STANDARDS TO BE ADOPTED
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," requires among other things that certain long-
lived assets be reviewed for impairment when events or circumstances
indicate that the carrying amount of the asset may not be recoverable. An
impairment loss is recognized if, upon such review, the sum of expected
future cash flows is less than the carrying amount of the asset. An
impairment loss is measured based on the difference between the carrying
amount of the asset and its fair value. The effect of adopting SFAS No. 121
is not expected to be material. Adoption is required by no later than the
first quarter of 1996.
SFAS No. 122, "Accounting for Mortgage Servicing Rights," requires
that rights to service mortgage loans be recognized when the underlying
loans are sold. The standard also requires that capitalized mortgage
servicing rights be assessed for impairment by individual risk stratum based
on the fair value of such rights. Management is gathering information and
evaluating the requirements of SFAS No. 122, but has not determined the
impact of its application on the Company's financial position or results of
operations. Adoption is required by no later than the first quarter of
1996.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General
As previously reported, on September 15, 1992, Evelyn Benfield filed a
shareholder derivative action in United States District Court in Cincinnati,
Ohio purportedly on behalf of the Company, seeking compensatory damages and
equitable relief arising out of the alleged failure to implement effective
internal controls to prevent government contract fraud. The complaint names
as defendants all of the current directors (except Messrs. Dammerman,
Gonzalez, Penske and Warner), certain former directors, a former officer,
and a former employee of the Company. Plaintiff claims, in substance, that
various defendants breached their fiduciary duties to the Company under
state law by either participating in or failing to prevent government
contract fraud. Plaintiff's claims are based primarily upon the fact that,
in July 1992, the Company pled guilty to four federal felony counts and
settled a related federal False Claims Act civil suit, all of which were
related to diversions of funds in connection with the Company's sale of
military aircraft engines to Israel. The Company paid a fine of $9.5
million and simultaneously agreed to pay $59.5 million to settle the False
Claims Act suit. On December 3, 1993, the court approved a settlement of
the derivative action. Under the terms of the settlement, the Company will
receive a payment of $19.5 million from an insurance policy it maintains to
cover officers' liability, less plaintiff's counsel fees and expenses
awarded by the court. The defendants have denied all allegations of
wrongdoing, and all parties to the action have agreed that the settlement is
premised upon the litigation risks associated with the claims that a single
former officer non-willfully failed to implement effectively the Company's
compliance policies and procedures. In agreeing to resolve this matter,
plaintiff did not contest the director-defendants' position that they had
lawfully discharged their duties to GE and that the Company, at all relevant
times, has had in existence detailed plans and procedures designed to
promote and enforce compliance with relevant laws. One share owner has
appealed the United States District Court's order approving the settlement.
The United States Court of Appeals for the Sixth Circuit dismissed the
appeal on November 10, 1994, and on January 12, 1995, denied the share
owner's petition for rehearing. The case was concluded on June 25, 1995,
when the United States Supreme Court denied the shareowner's petition for a
writ of certiorari.
Environmental
As previously reported, on May 12,1989, the U.S. Environmental
Protection Agency ("EPA") issued an administrative complaint against the
Company alleging violation of regulations issued by EPA under the Toxic
Substances Control Act ("TSCA") relating to disposal and processing of
polychlorinated biphenyls ("PCBs"). The complaint seeks civil penalties of
$225,000. The Company filed an answer denying the alleged violations. On
February 2, 1992, an administrative Law Judge issued a decision assessing a
$40,000 penalty. EPA's Appeals Board lowered the penalty to $25,000. The
Company has filed an appeal. In April 1995, the Court of Appeals upheld the
violation but eliminated the penalty on grounds that the EPA's regulatory
interpretations were unclear.
As previously reported, on February 12, 1990, EPA issued an
administrative complaint against the Company alleging violations of
regulations promulgated by EPA under TSCA relating to disposal and storage
of PCBs. The complaint sought a civil penalty of $205,500. EPA
subsequently issued an amended complaint adding additional allegations of
unlawful use of PCBs, bringing the total civil penalty sought to $365,500.
This case presented the same issues as the case discussed in the preceding
paragraph. In July 1995, EPA withdrew this case with prejudice.
As previously reported, EPA has filed five administrative complaints
against GE alleging that GE's use of a system developed by GE for cleaning
PCBs from electrical equipment violated a requirement of TSCA that such
systems be authorized by an EPA permit. Three of the complaints include
counts relating to other alleged violations of EPA regulations applicable to
handling and storage of PCBs. The GE facilities which received the
administrative complaints, the dates the complaints were filed, and the
amounts of civil penalties sought are as follows: Houston Apparatus Service
Center, September 15, 1990, $185,000; Philadelphia Apparatus Service Center,
September 20, 1990, $772,000; Cleveland Apparatus Service Center,
September 25, 1990, $968,000; Chicago Apparatus Service Center, September
25, 1990, $1,107,925; Cincinnati Apparatus Service Center, September 25,
1990, $1,023,750. These cases presented the same issues as the cases
discussed in the preceding two paragraphs of this environmental section. In
July 1995, EPA withdrew this case with prejudice.
As previously reported, in September of 1993, EPA notified the Company
that it was seeking at least $600,000 in penalties for alleged violations of
the Clean Air Act at its Lynn, Massachusetts, Aircraft Engines facility.
The allegations include the failure to undergo required permit reviews. The
Company tentatively agreed to settle the matter for $400,000.
In January 1995, the Louisiana Department of Environmental Quality
announced that it was seeking a penalty of $101,884 for alleged violations
of its groundwater protection act. The Company has requested a hearing and
settlement discussions are underway.
In April 1995, the New York State Department of Environmental
Conservation indicated that it was seeking at least $500,000 in penalties
for violations of the resource Conservation and Recovery Act at the
Company's Waterford, N.Y. facility. Settlement negotiations are underway.
ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of Share Owners of General Electric Company
was held on April 26, 1995.
(b) All director nominees were elected.
(c) Certain matters voted upon at the meeting and the votes cast
with respect to such matters are as follows:
PROPOSALS AND VOTE TABULATIONS
<TABLE>
<CAPTION>
Votes Cast
----------------------- Broker
For Against Abstain Non-votes
--- ------- ------- ---------
<S> <C> <C> <C> <C>
MANAGEMENT PROPOSALS
Approval of the appointment
of independent
auditors for 1995 1,399,085,544 10,555,444 7,124,258 0
SHARE OWNER PROPOSALS
(1) Relating to prior
government service 37,663,133 1,174,317,325 42,911,303 161,873,495
(2) Relating to GE's nuclear
power business 38,261,216 1,117,300,600 99,329,945 161,873,495
(3) Relating to radioactive
waste and
decommissioning 38,455,515 1,116,029,044 100,407,202 161,873,495
(4) Relating to NBC
programming 83,395,739 1,065,603,254 105,892,768 161,873,495
(5) Relating to Maquiladoras 101,217,503 1,038,395,328 115,278,930 161,873,495
(6) Relating to community
reinvestment at
GE Capital 46,820,154 1,118,685,761 89,385,846 161,873,495
</TABLE>
ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
Director Votes Received Votes Withheld
-------- -------------- --------------
<S> <C> <C>
H. Brewster Atwater, Jr. 1,410,870,287 5,894,969
D. Wayne Calloway 1,410,892,506 5,872,750
Silas S. Cathcart 1,408,372,101 8,393,155
Dennis D. Dammerman 1,410,779,830 5,985,426
Lawrence E. Fouraker 1,409,290,601 7,474,655
Paolo Fresco 1,410,684,728 6,080,528
Claudio X. Gonzalez 1,410,645,733 6,119,523
Robert E. Mercer 1,407,911,746 8,853,510
Gertrude G. Michelson 1,409,627,284 7,137,972
Roger S. Penske 1,410,646,653 6,118,603
Barbara Scott Preiskel 1,409,172,829 7,592,427
Frank H. T. Rhodes 1,410,063,483 6,701,773
Andrew C. Sigler 1,410,657,019 6,108,237
Douglas A. Warner III 1,410,852,433 5,912,823
John F. Welch, Jr. 1,409,855,387 6,909,869
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 11. Computation of Per Share Earnings.
Exhibit 12. Computation of Ratio of Earnings to Fixed Charges.
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K during the quarter ended June 30, 1995.
No reports on Form 8-K were filed during the quarter ended June
30, 1995.
SIGNATURES
Pursuant to the requirements 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 Company
(Registrant)
August 11, 1995 Philip D. Ameen
- --------------- ---------------------------------------------------
Date Vice President and Comptroller
Duly Authorized Officer and Principal
Accounting Officer
<PAGE>
1 Exhibit 11
GENERAL ELECTRIC COMPANY
COMPUTATION OF PER SHARE EARNINGS
<TABLE>
(Shares in thousands; dollar amounts, except
earnings per share, in millions)
<CAPTION>
Fully
Earnings Primary diluted
per common earnings earnings
Second quarter ended June 30, 1995 share per share per share
- ---------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Net earnings applicable to common stock $1,726 $1,726 $1,726
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - - -
-------- -------- --------
Earnings for per-share calculations $1,726 $1,726 $1,726
-------- -------- --------
Average number of shares outstanding 1,688,153 1,688,153 1,688,153
Average number of deferred incentive
compensation shares - 8,314 8,314
Average stock option shares - 13,113 13,113
Average number of restricted stock units - 1,322 1,322
---------- ---------- ----------
Shares for earnings calculation 1,688,153 1,710,902 1,710,902
---------- ---------- ----------
Earnings per share $1.02 $1.01 $1.01
- ------------------ ======== ======== ========
Second quarter ended June 30, 1994
- ----------------------------------
Net earnings applicable to common stock $1,522 $1,522 $1,522
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - - -
------- ------- -------
Earnings for per-share calculations $1,522 $1,522 $1,522
------- ------- -------
Average number of shares outstanding 1,710,380 1,710,380 1,710,380
Average number of deferred incentive
compensation shares - 8,607 8,607
Average stock option shares - 8,917 8,917
Average number of restricted stock units - 1,084 1,084
---------- ---------- ----------
Shares for earnings calculation 1,710,380 1,728,988 1,728,988
---------- ---------- ----------
Earnings per share $0.89 $0.88 $0.88
- ------------------ ======= ======= =======
<PAGE>
2 Exhibit 11
GENERAL ELECTRIC COMPANY
COMPUTATION OF PER SHARE EARNINGS
</TABLE>
<TABLE>
(Shares in thousands; dollar amounts, except
earnings per share, in millions)
<CAPTION>
Fully
Earnings Primary diluted
per common earnings earnings
Six months ended June 30, 1995 share per share per share
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Net earnings applicable to common stock $3,098 $3,098 $3,098
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 2 2
-------- -------- --------
Earnings for per-share calculations $3,098 $3,100 $3,100
-------- -------- --------
Average number of shares outstanding 1,694,091 1,694,091 1,694,091
Average number of deferred incentive
compensation shares - 8,404 8,404
Average stock option shares - 11,810 12,834
Average number of restricted stock units - 1,321 1,346
---------- ---------- ----------
Shares for earnings calculation 1,694,091 1,715,626 1,716,675
---------- ---------- ----------
Earnings per share $1.83 $1.81 $1.81
- ------------------ ======== ======== ========
Six months ended June 30, 1994
- ------------------------------
Net earnings applicable to common stock $2,590 $2,590 $2,590
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 2 2
------- ------- -------
Earnings for per-share calculations $2,590 $2,592 $2,592
------- ------- -------
Average number of shares outstanding 1,709,355 1,709,355 1,709,355
Average number of deferred incentive
compensation shares - 8,557 8,557
Average stock option shares - 10,679 10,679
Average number of restricted stock units - 1,119 1,119
---------- ---------- ----------
Shares for earnings calculation 1,709,355 1,729,710 1,729,710
---------- ---------- ----------
Earnings per share $1.52 $1.50 $1.50
- ------------------ ======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 12
GENERAL ELECTRIC COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
<S> <C>
(Dollars in millions) Six months ended
June 30, 1995
----------------
GE except GECS
"Earnings" <F1> $4,191
Less: Equity in undistributed earnings
of General Electric Capital
Services, Inc. <F2> (733)
Plus: Interest and other financial
charges included in expense 284
One-third of rental expense <F3> 86
---------
Adjusted "earnings" $3,828
=========
Fixed Charges:
Interest and other financial charges $284
Interest capitalized 4
One-third of rental expense <F3> 86
---------
Total fixed charges $374
=========
Ratio of earnings to fixed charges 10.24
=========
General Electric Company and consolidated affiliates
"Earnings" <F1> $4,757
Plus: Interest and other financial
charges included in expense 3,520
One-third of rental expense <F3> 164
---------
Adjusted "earnings" $8,441
=========
Fixed Charges:
Interest and other financial charges $3,520
Interest capitalized 11
One-third of rental expense <F3> 164
---------
Total fixed charges $3,695
=========
Ratio of earnings to fixed charges 2.28
=========
<FN>
<F1> Earnings from continuing operations before income taxes and minority
interest.
<F2> Earnings after income taxes, net of dividends.
<F3> Considered to be representative of interest factor in rental expense
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements for the period ended June 30, 1995,
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000040545
<NAME> GENERAL ELECTRIC COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,115
<SECURITIES> 33,502
<RECEIVABLES> 0 <F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 5,254
<CURRENT-ASSETS> 0 <F2>
<PP&E> 45,109
<DEPRECIATION> 20,071
<TOTAL-ASSETS> 205,002
<CURRENT-LIABILITIES> 0 <F2>
<BONDS> 48,011
<COMMON> 594
0
0
<OTHER-SE> 27,648
<TOTAL-LIABILITY-AND-EQUITY> 205,002
<SALES> 15,668
<TOTAL-REVENUES> 20,460 <F3>
<CGS> 11,349
<TOTAL-COSTS> 14,674 <F4>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0 <F1>
<INTEREST-EXPENSE> 3,492
<INCOME-PRETAX> 4,672
<INCOME-TAX> 1,574
<INCOME-CONTINUING> 3,098
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,098
<EPS-PRIMARY> 1.81
<EPS-DILUTED> 1.80
<FN>
<F1>Not disclosed in interim periods.
<F2>Not applicable to consolidated GE.
<F3>GE sales of goods ($15,668) and services ($4,792).
<F4>GE cost of goods ($11,349) and services ($3,325) sold.
</FN>
</TABLE>
