<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 September 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
(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) 373-2211
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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 1,670,275,112 shares of common stock, par value of $0.32 per
share, outstanding at September 30, 1995.
<PAGE>
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
(Dollars, except per-share amounts, in millions)
<TABLE>
<CAPTION>
Third quarter ended September 30 (Unaudited)
---------------------------------------------------------------------
Consolidated GE GECS
---------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of goods $7,910 $7,414 $7,919 $7,419 $ - $ -
Sales of services 2,166 1,952 2,187 1,965 - -
Earnings of GECS from continuing operations - - 711 615 - -
GECS revenues from operations 7,075 5,076 - - 7,099 5,097
Other income 190 190 189 188 - -
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 17,341 14,632 11,006 10,187 7,099 5,097
---------- ---------- ---------- ---------- ---------- ----------
Cost of goods sold 5,787 5,532 5,796 5,537 - -
Cost of services sold 1,495 1,393 1,516 1,406 - -
Interest and other financial charges 1,911 1,246 190 121 1,726 1,128
Insurance losses and policyholder and annuity benefits 1,540 1,089 - - 1,540 1,089
Provision for losses on financing receivables 352 186 - - 352 186
Other costs and expenses 3,823 3,039 1,437 1,243 2,404 1,812
Minority interest in net earnings of
consolidated affiliates 40 33 11 8 29 25
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses 14,948 12,518 8,950 8,315 6,051 4,240
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations before income taxes 2,393 2,114 2,056 1,872 1,048 857
Provision for income taxes (783) (657) (446) (415) (337) (242)
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations 1,610 1,457 1,610 1,457 711 615
Loss from discontinued operations net of income
tax benefit of $86 - (89) - (89) - (89)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings $1,610 $1,368 $1,610 $1,368 $711 $526
========== ========== ========== ========== ========== ==========
Net earnings per share
Continuing operations $0.96 $0.85
Discontinued operations - (0.05)
---------- ----------
Net earnings per share $0.96 $0.80
========== ==========
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>
3
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars, except per-share amounts, in millions) Nine months ended September 30 (Unaudited)
---------------------------------------------------------------------
Consolidated GE GECS
---------------------- ---------------------- ---------------------
1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Sales of goods $23,578 $21,132 $23,595 $21,149 $ - $ -
Sales of services 6,958 6,505 7,026 6,537 - -
Earnings of GECS from continuing operations - - 1,842 1,591 - -
GECS revenues from operations 19,193 14,151 - - 19,268 14,220
Other income 547 529 548 529 - -
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 50,276 42,317 33,011 29,806 19,268 14,220
---------- ---------- ---------- ---------- ---------- ----------
Cost of goods sold 17,136 15,506 17,153 15,523 - -
Cost of services sold 4,820 4,665 4,888 4,697 - -
Interest and other financial charges 5,403 3,528 474 316 4,946 3,222
Insurance losses and policyholder and annuity benefits 3,854 2,561 - - 3,854 2,561
Provision for losses on financing receivables 710 607 - - 710 607
Other costs and expenses 11,163 9,160 4,238 3,697 6,984 5,522
Minority interest in net earnings of consolidated
affiliates 125 120 43 21 82 99
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses 43,211 36,147 26,796 24,254 16,576 12,011
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations before income taxes 7,065 6,170 6,215 5,552 2,692 2,209
Provision for income taxes (2,357) (1,940) (1,507) (1,322) (850) (618)
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations 4,708 4,230 4,708 4,230 1,842 1,591
Loss from discontinued operations net of income
tax benefit of $212 - (272) - (272) - (272)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings $4,708 $3,958 $4,708 $3,958 $1,842 $1,319
========== ========== ========== ========== ========== ==========
Net earnings per share
Continuing operations $2.79 $2.47
Discontinued operations - (0.15)
---------- ----------
Net earnings per share $2.79 $2.32
========== ==========
Dividends declared per share $1.23 $1.08
---------- ----------
<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>
4
Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars in millions) Consolidated GE GECS
---------------------- ---------------------- ---------------------
9/30/95 12/31/94 9/30/95 12/31/94 9/30/95 12/31/94
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cash and equivalents $3,159 $2,591 $1,072 $1,373 $2,087 $1,218
Investment securities 36,820 30,965 6 93 36,814 30,872
Current receivables 8,248 7,527 8,357 7,807 - -
Inventories 5,229 3,880 5,229 3,880 - -
GECS financing receivables - net 87,389 76,357 - - 87,389 76,357
Other GECS receivables 9,700 5,763 - - 10,063 6,012
Property, plant and equipment (including equipment
leased to others) - net 24,476 23,465 9,931 9,525 14,545 13,940
Investment in GECS - - 11,960 9,380 - -
Intangible assets 12,739 11,373 6,590 6,336 6,149 5,037
Other assets 25,745 23,950 12,354 12,419 13,396 11,531
Assets of discontinued securities broker-dealer operations 1,426 8,613 - - 1,426 8,613
---------- ---------- ---------- ---------- ---------- ----------
Total assets $214,931 $194,484 $55,499 $50,813 $171,869 $153,580
========== ========== ========== ========== ========== ==========
Short-term borrowings $60,251 $57,781 $3,985 $906 $56,278 $57,087
Accounts payable 8,834 6,766 3,528 3,141 5,522 3,777
Other GE current liabilities 7,527 8,307 7,866 8,562 - -
Long-term borrowings 49,853 36,979 2,114 2,699 47,772 34,312
Insurance reserves and annuity benefits 34,534 29,438 - - 34,534 29,438
Other liabilities 14,077 12,906 8,909 8,468 5,045 4,316
Deferred income taxes 7,209 5,205 403 268 6,806 4,937
Liabilities of discontinued securities broker-dealer
operations 1,813 8,868 - - 1,813 8,868
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 184,098 166,250 26,805 24,044 157,770 142,735
---------- ---------- ---------- ---------- ---------- ----------
Minority interest in equity of consolidated
affiliates 2,559 1,847 420 382 2,139 1,465
---------- ---------- ---------- ---------- ---------- ----------
Common stock (1,857,013,000 shares issued) 594 594 594 594 1 1
Unrealized gains (losses) on investment securities 560 (810) 560 (810) 541 (821)
Other capital 1,378 1,122 1,378 1,122 2,027 2,006
Retained earnings 33,429 30,793 33,429 30,793 9,391 8,194
Less common stock held in treasury (7,687) (5,312) (7,687) (5,312) - -
---------- ---------- ---------- ---------- ---------- ----------
Total share owners' equity 28,274 26,387 28,274 26,387 11,960 9,380
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and equity $214,931 $194,484 $55,499 $50,813 $171,869 $153,580
========== ========== ========== ========== ========== ==========
<FN>
See notes to Condensed Consolidated Financial Statements. September 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>
5
Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates
<TABLE>
<CAPTION>
(Dollars in millions) Nine months ended September 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 $4,708 $3,958 $4,708 $3,958 $1,842 $1,319
Adjustments for discontinued operations - 272 - 272 - 272
Adjustments to reconcile net earnings to cash
provided from (used for) continuing operating activities
Depreciation, depletion and amortization 2,616 2,300 1,182 1,106 1,434 1,194
Earnings retained by GECS-continuing operations - - (1,197) (1,136) - -
Deferred income taxes 901 1,019 237 497 664 522
Decrease (increase) in GE current receivables (151) 366 (205) 514 - -
Increase in GE inventories (779) (846) (779) (846) - -
Increase (decrease) in accounts payable 206 (669) 22 480 188 (1,231)
Increase in insurance reserves 679 687 - - 679 687
Provision for losses on financing
receivables 710 607 - - 710 607
All other operating activities (1,017) (1,546) (1,553) (2,235) 658 651
---------- ---------- ---------- ---------- ---------- ----------
Cash from continuing operations 7,873 6,148 2,415 2,610 6,175 4,021
Cash from discontinued operations 1,428 692 - - 1,428 692
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from operating activities 9,301 6,840 2,415 2,610 7,603 4,713
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from investing activities
- ------------------------------------
Property, plant and equipment (including
equipment leased to others) - additions (5,300) (4,744) (1,086) (1,115) (4,214) (3,629)
Net increase in GECS financing receivables (7,528) (6,335) - - (7,528) (6,335)
Payments for principal businesses purchased (3,463) (1,874) (238) (560) (3,236) (1,314)
Proceeds from principal business dispositions 660 - 96 - 575 -
All other investing activities (10) 3,426 309 (3) (423) 3,414
---------- ---------- ---------- ---------- ---------- ----------
Cash used for continuing operations (15,641) (9,527) (919) (1,678) (14,826) (7,864)
Cash from discontinued operations 92 285 - - 92 285
---------- ---------- ---------- ---------- ---------- ----------
Cash used for investing activities (15,549) (9,242) (919) (1,678) (14,734) (7,579)
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from financing activities
- ------------------------------------
Net change in borrowings (maturities 90 days or less) (3,402) (3,676) 3,165 1,238 (6,535) (4,927)
Newly issued debt (maturities more than 90 days) 29,134 18,118 468 676 28,666 17,442
Repayments and other reductions (maturities
more than 90 days) (13,036) (9,244) (1,125) (675) (11,911) (8,569)
Disposition of GE shares from treasury 934 441 934 441 - -
Purchase of GE shares for treasury (3,154) (557) (3,154) (557) - -
Dividends paid to share owners (2,085) (1,846) (2,085) (1,846) (645) (455)
All other financing activities (187) 112 - - (187) 112
---------- ---------- ---------- ---------- ---------- ----------
Cash from (used for) continuing operations 8,204 3,348 (1,797) (723) 9,388 3,603
Cash used for discontinued operations (1,388) (977) - - (1,388) (977)
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) financing activities 6,816 2,371 (1,797) (723) 8,000 2,626
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in cash and equivalents 568 (31) (301) 209 869 (240)
Cash and equivalents at beginning of year 2,591 3,056 1,373 1,536 1,218 1,520
---------- ---------- ---------- ---------- ---------- ----------
Cash and equivalents at September 30 $3,159 $3,025 $1,072 $1,745 $2,087 $1,280
========== ========== ========== ========== ========== ==========
<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.
<PAGE>
5. GE's inventories consisted of the following:
<TABLE>
<CAPTION>
At
----------------------
(Dollars in millions) 9/30/95 12/31/94
-------- --------
<S> <C> <C>
Raw materials and work in process $3,861 $ 2,933
Finished goods 2,448 2,165
Unbilled shipments 289 214
Revaluation to LIFO (1,369) (1,432)
-------- --------
Total inventories $5,229 $ 3,880
======== ========
</TABLE>
<PAGE>
6. Property, plant and equipment (including equipment leased to others)
- - net consisted of the following:
<TABLE>
<CAPTION>
At
------------------------
(Dollars in millions) 9/30/95 12/31/94
-------- --------
<S> <C> <C>
Original cost
-- GE $24,687 $22,907
-- GECS 19,997 18,763
-------- --------
Total 44,684 41,670
-------- --------
Accumulated depreciation and amortization
-- GE 14,756 13,382
-- GECS 5,452 4,823
-------- --------
Total 20,208 18,205
-------- --------
Property, plant and equipment - net
-- GE 9,931 9,525
-- GECS 14,545 13,940
-------- --------
Total $24,476 $23,465
======== ========
</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 third quarter
of 1995 and 1994 were 1,676,351,203 and 1,711,013,810, respectively. Average
shares outstanding for the first nine months of 1995 and 1994 were
1,688,136,763 and 1,709,430,954, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A. RESULTS OF OPERATIONS -- THIRD QUARTER OF 1995 COMPARED WITH THIRD
QUARTER OF 1994
General Electric Company achieved record third quarter earnings in 1995,
with another double-digit increase. On a continuing operations basis,
earnings per share increased 13% to $0.96 from last year's comparable $0.85,
and earnings increased 11% to $1,610 million from last year's comparable
$1,457 million.
Net earnings of $1,610 million in the third quarter of 1995 were up 18%
compared with the previous year's reported $1,368 million, which included the
loss from discontinued operations. Earnings per share increased 20% to $0.96
from $0.80.
Earnings per share grew faster than earnings, reflecting the cumulative
impact of $2.6 billion of shares purchased under a two-year, $5 billion share
repurchase program.
Consolidated revenues, including acquisitions, rose to $17.3 billion, an
increase of 19% over last year's third quarter. Eleven of GE's twelve
businesses reported higher revenues, with six businesses -- led by GE Capital
Services, NBC and Plastics -- achieving double-digit increases.
Operating margin in the third quarter of 1995 rose to 13.4%, up from
last year's 12.8%. Five businesses -- led by NBC, Plastics and Aircraft
Engines -- achieved double-digit increases in operating profit. NBC's
improved performance resulted from better advertising markets and improved
ratings. Plastics and Aircraft Engines results benefited from higher revenues
and improved productivity. As expected, market conditions resulted in lower
operating profit at Power Systems.
Earnings from continuing operations at GECS were $711 million, up 16%
from last year's comparable $615 million. The improved performance was led by
strong growth in its Specialized Financing, Specialty Insurance and Equipment
Management activities.
SEGMENT ANALYSIS:
The comments that follow compare revenues and operating profit by
industry segment for the third quarters of 1995 and 1994.
* Aircraft Engines operating profit was much higher than last year on
slightly higher revenues as good productivity performance and improved volume,
principally in commercial and military spares, more than offset continued
price declines.
* Appliances reported somewhat lower operating profit on flat revenues.
Operating profit declined principally because this quarter's increases in
commodity prices and other material costs more than offset productivity
improvements.
* Broadcasting operating profit was substantially ahead of last year on
a strong increase in revenues, primarily the result of an improved advertising
market and excellent ratings, particularly in prime time.
* GECS net earnings were up 16% to $711 million, primarily as a result
of strong performances in Specialized Financing, Specialty Insurance and
Equipment Management activities.
* Industrial Products and Systems reported much improved operating
profit compared with last year on somewhat higher revenues. The increase in
operating profit was principally attributable to productivity improvements
across the segment, particularly at Transportation and Electrical Distribution
& Control, as well as higher volume and improved pricing in most businesses,
the combination of which more than offset the effects of cost increases.
* Materials operating profit increased significantly this year on
considerably higher revenues as price increases, particularly in resins, more
than offset the effects of higher material costs.
* Power Generation reported considerably higher revenues, reflecting
this year's consolidation of Nuovo Pignone. Operating profit was much lower as
the effects of adverse market conditions more than offset the contribution of
Nuovo Pignone.
* Technical Products & Services operating profit was down considerably
this year on a slight decrease in revenues as price declines and cost
inflation across the segment more than offset the effects of productivity.
* All other operating profit and revenues were somewhat lower than the
prior year principally as a result of lower licensing revenues.
B. RESULTS OF OPERATIONS -- FIRST NINE MONTHS OF 1995 COMPARED WITH FIRST
NINE MONTHS OF 1994
Earnings from continuing operations were $4,708 million in the first
nine months, up 11% from the comparable $4,230 million in 1994's first nine
months. Earnings per share increased 13% to $2.79 from $2.47.
Net earnings for the first nine months of 1995 were $4,708 million, or
$2.79 per share, compared with $3,958 million, or $2.32 per share, in the
first nine months of 1994.
Earnings per share grew faster than earnings, reflecting the cumulative
impact of $2.6 billion of shares purchased under a two-year, $5 billion share
repurchase program.
Consolidated revenues for the first nine months of 1995 aggregated $50.3
billion, up 19% from the comparable $42.3 billion in 1994's first nine months.
GE's sales of goods and services were 11% higher as Plastics, Power Systems,
NBC, Transportation and Lighting all reported double-digit increases. The
sales 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 nine months of 1995 was 14.2% of sales, an
improvement over last year's 13.6%. The improvement in operating margin was
led by Plastics, Aircraft Engines, NBC, and Electrical Distribution and
Control.
SEGMENT ANALYSIS:
The following comments compare revenues and operating profit by industry
segment for the first nine months of 1995 with the same period of 1994.
* Aircraft Engines reported much higher operating profit on a modest
increase in revenues. The improved operating profit reflected productivity
gains as well as the effects of higher volume in commercial and military
spares.
* Appliances had slightly higher operating profit on flat revenues,
primarily as a result of improved productivity offset by cost increases.
* 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 $1,842
million. The increase was primarily attributable to strong results in
Equipment Management, Specialized Financing, Specialty Insurance and
Consumer Services activities.
* Industrial Products and Systems operating profit was well ahead of
last year on a good increase in revenues. The increase in operating profit
was the result of continuing productivity improvements across the segment and
higher volume at Transportation, Lighting and Motors, which more than offset
higher costs.
* Materials operating profit was up sharply on a strong increase in
revenues. The operating profit improvement was primarily attributable to
higher prices, good productivity and volume growth, which more than offset
increases in material costs.
* Power Generation operating profit was lower than a year ago despite a
strong increase in revenues resulting from the consolidation of Nuovo Pignone.
The operating profit contribution of Nuovo Pignone was more than offset by
adverse market conditions, including continued cost inflation and selling
price decreases.
* Technical Products and Services operating profit was lower than a year
ago on a modest increase in revenues. Medical Systems operating profit was
considerably lower on slightly higher revenues as continuing pricing pressures
more than offset productivity gains. Information Services revenues and
operating profit were somewhat higher, reflecting continued worldwide growth
in electronic commerce services and the effects of productivity.
* All other operating profit was somewhat higher on a modest increase in
revenues, reflecting principally higher levels of licensing income compared
with the first nine months of 1994.
C. FINANCIAL CONDITION
With respect to the Condensed Statement of Financial Position,
consolidated assets of $214.9 billion at September 30, 1995, were $20.4
billion higher than the $194.5 billion at December 31, 1994.
GE assets were $55.5 billion at September 30, 1995, an increase of $4.7
billion from December 31, 1994. The increase was principally attributable to
an increase of $2.6 billion in the investment in GECS, primarily as a result
of GECS earnings, net of dividends, and the effect of a $1.4 billion after-tax
increase in the market value of GECS marketable securities. The second factor
in the increase in total assets was inventories, resulting from the
consolidation of Nuovo Pignone and normal seasonal increases in several other
GE businesses.
GECS assets from continuing operations increased by $25.5 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 $87.4 billion, net of reserves, at the end of the third
quarter, increased $11.0 billion from the year-end 1994 level of $76.4
billion. The increase resulted primarily from origination volume ($6.6
billion) as well as acquisitions of businesses and portfolios, the largest of
which were ITT Financial Corporation ($1.3 billion) and Credit de l'Est ($1.0
billion). Management believes that GE Capital's reserves of $2.4 billion
(2.63% of the receivables balance at September 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 $5.9 billion
during the first nine months of 1995, largely the result of increases in the
market value of GECS' marketable securities ($2.2 billion) and the effect of
acquisitions, principally Frankona Reinsurance($2.1 billion) and Achen
Reinsurance ($0.9 billion).
Consolidated liabilities of $184.1 billion at September 30, 1995, were
$17.8 billion higher than the year-end 1994 balance of $166.3 billion. GE
liabilities were up $2.8 billion; GECS liabilities increased $15.0 billion to
$157.8 billion.
GE total borrowings were $6.1 billion ($4.0 billion short-term and $2.1
billion long-term) at September 30, 1995, an increase of $2.5 billion from
December 31, 1994. The ratio of debt to total capital for GE at the end of
September 1995 was 17.5% compared with 11.9% at the end of last year and 18.1%
at September 30, 1994.
GECS liabilities from continuing operations increased by $22.1 billion,
principally because of the additional $12.7 billion of borrowings to finance
acquisitions and asset growth. Short-term borrowings decreased by $0.8
billion to $56.3 billion and long-term borrowings increased by $13.5 billion
to $47.8 billion, reflecting a continuing shift in the financing mix to longer-
term debt. Insurance reserves and annuity benefits increased $5.1 billion to
$34.5 billion, with almost all of the change attributable to business
acquisitions. Deferred income taxes increased by $1.9 billion to $6.8
billion, principally because of the $0.8 billion tax impact of the increase in
market value of investment securities discussed previously and increases in
temporary differences attributable to leasing activities.
Assets of discontinued securities broker-dealer operations decreased by
$7.2 billion from year-end 1994 and liabilities decreased by $7.1 billion,
reflecting the continued orderly liquidation of the remaining assets of
Kidder, Peabody.
With respect to cash flows, consolidated cash and equivalents were $3.2
billion at September 30, 1995, an increase of $0.6 billion during the first
nine months of 1995. Cash and equivalents were $3.0 billion at September 30,
1994, about the same as at the beginning of the year.
GE's cash and equivalents were $1.1 billion at September 30, 1995, a
decrease of $0.3 billion from $1.4 billion at December 31, 1994. During the
first nine months of 1995, cash from operating activities totaled $2.4
billion, despite the use of (a) $1.5 billion for "all other operating
activities," more than half of which was attributable to a reduction in
progress collections and (b) $0.8 billion for normal seasonal increases in
inventories discussed previously. Cash used for investing activities ($0.9
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 ($1.8 billion) included $3.2 billion for repurchases
of the Company's common stock and $2.1 billion for dividends paid to share
owners, representing a 14% increase in the per-share dividend rate compared
with the first nine months of last year. Cash used for dividends and share
repurchases was, in part, provided from a combination of proceeds from both
higher borrowings ($2.5 billion) and disposition of GE shares from treasury
($0.9 billion).
GE's cash and equivalents increased $0.2 billion to $1.7 billion at
September 30, 1994, compared with $1.5 billion at year-end 1993. During the
first nine months of 1994, cash provided from operating activities equaled the
comparable amount of $2.6 billion at year-end 1993, despite the use of $2.2
billion for "all other operating activities" which was the net result of
numerous, relatively small changes in all other assets and other current and
noncurrent liabilities. Cash used for investing activities ($1.7 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 ($0.7 billion) included $1.8 billion for dividends paid to share
owners, representing a 14% increase in the per-share dividend rate compared
with the first nine months of 1993, and $0.1 billion for net repurchases of GE
shares for treasury. The combination of these two items was offset partially
by cash provided from higher borrowings of $1.2 billion.
GECS' cash and equivalents increased $0.9 billion during the first nine
months of 1995. Cash was used primarily to fund GE Capital's growth in
financing receivables ($7.5 billion), for additions to equipment that is
provided to third parties on operating leases ($4.2 billion), and for
acquisitions of businesses ($3.2 billion), the largest of which were certain
businesses of ITT Financial Corporation, Credit de l'Est (France), Frankona
Reinsurance (Germany), Australian Retail Financial Network (Australia), Pallas
Group (United Kingdom) and the remaining 50% interest in United Merchants
Finance Limited (Hong Kong). Cash provided from operating activities totaled
$7.6 billion. Cash provided from continuing financing activities was $9.4
billion, principally the result of increased borrowings during the first nine
months of 1995.
GECS' cash and equivalents decreased $0.2 billion during the first nine
months of 1994. Cash was used primarily for investing activities: to fund GE
Capital's growth in financing receivables ($6.3 billion); for additions to
equipment that is provided to third parties on operating leases ($3.6
billion); and for acquisitions of businesses ($1.3 billion), the largest of
which was Northern Telecom Finance Corporation. Cash of $3.4 billion was
provided by "all other investing activities," principally as a result of
dispositions of GE Capital's equipment leased to others ($2.0 billion) and a
reduced level of other assets ($1.6 billion) which was largely attributable to
a reduced level of mortgages acquired for resale. Cash provided by operating
activities totaled $4.7 billion. Cash provided from increased borrowings
during the first nine months of 1994 aggregated $3.9 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, following the Company's announcement on April
17, 1994, of a $210 million charge to net earnings based upon its discovery of
false trading profits at its indirect subsidiary, Kidder, Peabody & Co.,
Incorporated ("Kidder"), the United States Securities and Exchange Commission,
the United States Attorney for the Southern District of New York, and the New
York Stock Exchange initiated investigations, which are ongoing, relating to
the false trading profits. Also, two civil suits purportedly brought on
behalf of the Company as shareholder derivative actions were filed in New York
State Supreme Court in New York County. Both suits claim that the Company's
directors breached their fiduciary duties to the Company by failing to
adequately supervise and control the Kidder employee responsible for the
irregular trading. One suit, claiming damages of over $350 million, was filed
on May 10, 1994, by the Teachers' Retirement System of Louisiana against the
Company, its directors (other than Mr. Dammerman, Mr. Opie and Mr. Penske),
Kidder, its parent, Kidder, Peabody Group Inc., and certain of Kidder's former
officers and directors. The other suit was filed on June 3, 1994, by William
Schrank and others against the Company's directors claiming unspecified
damages and other relief. The defendants' time for responding to these
complaints was extended until 45 days after the plaintiffs' March 6, 1995,
filing of an amended consolidated complaint. The Company and the director
defendants have moved to dismiss the consolidated complaint. In addition,
various shareholders of the Company have filed purported class action suits
claiming that the Company, and certain of its directors and officers, among
others, allegedly violated federal securities laws by issuing statements
concerning the Company's financial condition that included the false trading
profits at Kidder, and seeking compensatory damages for shareholders who
purchased the Company's stock beginning as early as January 1993. The
defendants have filed motions to dismiss these purported class action suits.
On October 4, 1995, the court dismissed the complaint against the Company, but
denied the motion to dismiss the complaint against Kidder.
ENVIRONMENTAL
As previously reported, in April of 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. In September of 1995 a settlement was
reached whereby the Company agreed to fund $1.2 million in Supplemental
Environmental Projects.
As previously reported, in November of 1994 the Florida Department of
Environmental Protection indicated that it would seek $326,000 in penalties
for alleged violations of the Resource Conservation and Recovery Act. In
August of 1995, the Company agreed to settle the matter for $112,134 in
penalties. The Company also agreed to reimburse $25,000 in costs.
In August of 1995, the Georgia Department of Natural Resources issued a
draft Corrective Action Consent Order seeking $100,000 in penalties for
violations of the Georgia Hazardous Waste Rules at the Company's Rome, Georgia
facility. Settlement negotiations are underway.
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 September 30, 1995.
No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
<PAGE>
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)
November 13, 1995 Philip D. Ameen
- ----------------- ---------------------------------------------------
Date Vice President and Comptroller
Duly Authorized Officer and Principal
Accounting Officer
<PAGE>
1 of 2
Exhibit 11
GENERAL ELECTRIC COMPANY
COMPUTATION OF PER SHARE EARNINGS
(Shares in thousands; dollar amounts, except
earnings per share, in millions)
<TABLE>
<CAPTION>
Fully
Earnings Primary diluted
Nine months ended September 30, 1995 per common earnings earnings
- ------------------------------------ share per share per share
---------- ---------- ---------
<S> <C> <C> <C>
Net earnings applicable to common stock $4,708 $4,708 $4,708
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 7 7
-------- -------- --------
Earnings for per-share calculations $4,708 $4,715 $4,175
-------- -------- --------
Average number of shares outstanding 1,688,137 1,688,137 1,688,137
Average number of deferred incentive
compensation shares - 8,272 8,272
Average stock option shares - 12,480 16,458
Average number of restricted stock units - 1,258 1,414
---------- ---------- ----------
Shares for earnings calculation 1,688,137 1,710,147 1,714,281
---------- ---------- ----------
Earnings per share $2.79 $2.76 $2.75
- ------------------ ======== ======== ========
Nine months ended September 30, 1994
- ------------------------------------
Net earnings applicable to common stock $3,958 $3,958 $3,958
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 5 5
-------- -------- --------
Earnings for per-share calculations $3,958 $3,963 $3,963
-------- -------- --------
Average number of shares outstanding 1,709,431 1,709,431 1,709,431
Average number of deferred incentive
compensation shares - 8,547 8,547
Average stock option shares - 10,366 10,366
Average number of restricted stock units - 1,118 1,118
---------- ---------- ----------
Shares for earnings calculation 1,709,431 1,729,462 1,729,462
---------- ---------- ----------
Earnings per share $2.32 $2.29 $2.29
- ------------------ ======== ======== ========
</TABLE>
<PAGE>
2 of 2
Exhibit 11
GENERAL ELECTRIC COMPANY
COMPUTATION OF PER SHARE EARNINGS
(Shares in thousands; dollar amounts, except
earnings per share, in millions)
<TABLE>
<CAPTION>
Fully
Earnings Primary diluted
Third quarter ended September 30, 1995 per common earnings earnings
- -------------------------------------- share per share per share
---------- ---------- ---------
<S> <C> <C> <C>
Net earnings applicable to common stock $1,610 $1,610 $1,610
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 4 4
-------- -------- --------
Earnings for per-share calculations $1,610 $1,614 $1,614
-------- -------- --------
Average number of shares outstanding 1,676,351 1,676,351 1,676,351
Average number of deferred incentive
compensation shares - 7,855 7,855
Average stock option shares - 14,801 17,006
Average number of restricted stock units - 1,210 1,358
---------- ---------- ----------
Shares for earnings calculation 1,676,351 1,700,217 1,702,570
---------- ---------- ----------
Earnings per share $0.96 $0.95 $0.95
- ------------------ ======== ======== ========
Third quarter ended September 30, 1994
- --------------------------------------
Net earnings applicable to common stock $1,368 $1,368 $1,368
Dividend equivalents (net of tax) applicable
to deferred incentive compensation shares - 3 3
-------- -------- --------
Earnings for per-share calculations $1,368 $1,371 $1,371
-------- -------- --------
Average number of shares outstanding 1,711,014 1,711,014 1,711,014
Average number of deferred incentive
compensation shares - 8,473 8,473
Average stock option shares - 10,508 10,508
Average number of restricted stock units - 1,117 1,117
---------- ---------- ----------
Shares for earnings calculation 1,711,014 1,731,112 1,731,112
---------- ---------- ----------
Earnings per share $0.80 $0.79 $0.79
- ------------------ ======== ======== ========
</TABLE>
<PAGE>
GENERAL ELECTRIC COMPANY EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(Dollars in millions) Nine months ended
September 30, 1995
------------------
<S> <C>
GE except GECS
"Earnings" <F1> $6,258
Less: Equity in undistributed earnings
of General Electric Capital
Services, Inc. <F2> (1,197)
Plus: Interest and other financial
charges included in expense 474
One-third of rental expense <F3> 129
------
Adjusted "earnings" $5,664
======
Fixed Charges:
Interest and other financial charges $ 474
Interest capitalized 7
One-third of rental expense <F3> 129
-------
Total fixed charges $610
-------
Ratio of earnings to fixed charges 9.29
=======
General Electric Company and consolidated affiliates
"Earnings" <F1> $ 7,190
Plus: Interest and other financial
charges included in expense 5,443
One-third of rental expense <F3> 245
-------
Adjusted "earnings" $12,878
=======
Fixed Charges:
Interest and other financial charges $ 5,443
Interest capitalized 20
One-third of rental expense <F3> 245
-------
Total fixed charges $ 5,708
=======
Ratio of earnings to fixed charges 2.26
=======
<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 September 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,159
<SECURITIES> 36,820
<RECEIVABLES> 0 <F1>
<ALLOWANCES> 0 <F1>
<INVENTORY> 5,229
<CURRENT-ASSETS> 0
<PP&E> 44,684
<DEPRECIATION> 20,208
<TOTAL-ASSETS> 214,931
<CURRENT-LIABILITIES> 0 <F2>
<BONDS> 49,853
<COMMON> 594
0
0
<OTHER-SE> 27,680
<TOTAL-LIABILITY-AND-EQUITY> 214,931
<SALES> 23,578
<TOTAL-REVENUES> 30,536 <F3>
<CGS> 17,136
<TOTAL-COSTS> 21,956 <F4>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0 <F1>
<INTEREST-EXPENSE> 5,403
<INCOME-PRETAX> 7,065
<INCOME-TAX> 2,357
<INCOME-CONTINUING> 4,708
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,708
<EPS-PRIMARY> 2.76
<EPS-DILUTED> 2.75
<FN>
<F1>Not disclosed in interim periods.
<F2>Not applicable to consolidated GE.
<F3>GE sales of goods ($23,578) and services ($6,958).
<F4>GE cost of goods ($17,136) and services ($4,820) sold.
</FN>
</TABLE>
