<PAGE>
SECTIONS
Business 2
Properties 15
Legal Proceedings 15
Market for Stock 20
Selected Financial Data 20
Management's Discussion 20
Financial Statements 21
Disagreements 21
Directors and Officers 21
Executive Compensation 22
Security Ownership 22
Certain Relationships 22
Exhibits, Financial Statement Schedules 23
Signatures 27
Differences Letter F-42
<PAGE>
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
(x) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1994 Commission file number 1-35
or
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------- --------
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
New York 14-0689340
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3135 Easton Turnpike, Fairfield, CT 06431-0001 203/373-2459
(Address of principal executive offices) (Zip Code) (Telephone No.)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on
which registered
Common stock, par value $0.32 per share New York Stock Exchange
Boston Stock Exchange
There were 1,696,558,648 shares of common stock with a par value of
$0.32 outstanding at March 5, 1995. These shares, which constitute all of
the voting stock of the registrant, had an aggregate market value on
March 6, 1995, of $89.5 billion. Affiliates of the Company beneficially
own, in the aggregate, less than one-tenth of one percent of such shares.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. x
---
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant's Annual
Meeting of Share Owners, to be held April 26, 1995, is incorporated by
reference in Part III to the extent described therein.
<PAGE>
2
PART I
Item 1. Business
General
Unless otherwise indicated by the context, the terms "GE," "GECS" and
"GE Capital Services" are used on the basis of consolidation described in
note 1 to the consolidated financial statements on page 45 of the 1994
Annual Report to Share Owners of General Electric Company. The financial
section of such Annual Report to Share Owners (pages 25 through 64 of that
document) is set forth in Part IV Item 14(a)(1) of this 10-K Report and is
an integral part hereof. References in Parts I and II of this 10-K Report
are to the page numbers of the 1994 Annual Report to Share Owners included
in Part IV of this 10-K Report. Also, unless otherwise indicated by the
context, "General Electric" means the parent Company, General Electric
Company.
General Electric's address is 1 River Road, Schenectady, NY 12345-
6999; the Company also maintains executive offices at 3135 Easton Turnpike,
Fairfield, CT 06431-0001.
The "Company" (General Electric Company and consolidated affiliates)
is one of the largest and most diversified industrial corporations in the
world. From the time of General Electric's incorporation in 1892, the
Company has engaged in developing, manufacturing and marketing a wide
variety of products for the generation, transmission, distribution, control
and utilization of electricity. Over the years, development and
application of related and new technologies have broadened considerably the
scope of activities of the Company and its affiliates. The Company's
products include, but are not limited to, lamps and other lighting
products; major appliances for the home; industrial automation products and
components; motors; electrical distribution and control equipment;
locomotives; power generation and delivery products; nuclear reactors,
nuclear power support services and fuel assemblies; commercial and military
aircraft jet engines; materials, including engineered plastics, silicones
and cutting materials; and a wide variety of high technology products,
including products used in medical diagnostic applications.
The Company also offers a broad variety of services including product
support services; electrical product supply houses; electrical apparatus
installation, engineering, repair and rebuilding services; and computer-
related information services. Through a wholly owned subsidiary, General
Electric Capital Services, Inc., (GECS) and its two principal subsidiaries,
the Company engages in a broad spectrum of financial services including
consumer financing, commercial and industrial financing, real estate
financing, asset management and leasing, annuity and mutual fund sales,
specialty insurance, and reinsurance. Other services offered include U.S.
satellite communications furnished by GE Americom. Another wholly owned
subsidiary, National Broadcasting Company, Inc. (NBC), is engaged
principally in furnishing network television services, in operating
television stations, and in providing cable programming and distribution
services in the United States, Europe and Latin America. The Company also
licenses patents and provides technical know-how related to products it
developed, but such activities are not material to the Company.
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3
In November 1994, GE elected to terminate the operations of Kidder,
Peabody Group Inc. (Kidder, Peabody), the GECS securities broker-dealer, by
initiating an orderly liquidation of its assets and liabilities. As part of
the liquidation plan, GE received securities of Paine Webber Group Inc. in
exchange for certain broker-dealer assets and operations. Principal
activities that were discontinued include securities underwriting; sales
and trading of equity and fixed income securities; financial futures
activities; advisory services for mergers, acquisitions and other corporate
finance matters; merchant banking; research services; and asset management.
GE's Aerospace business segment, its subsidiary GE Government Services,
Inc., and a component of GE that operated Knolls Atomic Power Laboratory
under contract with the U.S. Department of Energy (together, GE Aerospace)
were transferred on April 2, 1993, to a new company controlled by the
shareholders of Martin Marietta Corporation. The businesses transferred
provided high-technology products and services such as automated test
systems, electronics, avionic systems, computer software, armament systems,
military vehicle equipment, missile system components, simulation systems,
spacecraft, communication systems, radar, sonar and systems integration,
and a variety of specialized services for government customers. Kidder,
Peabody and GE Aerospace have been classified as discontinued operations in
the 1994 Annual Report to Share Owners and throughout this report.
Aggressive and able competition is encountered worldwide in virtually
all of the Company's business activities. In many instances, the
competitive climate is characterized by changing technology requiring
continuing research and development commitments, and by capital-intensive
needs to meet customer requirements. With respect to manufacturing
operations, it is believed that, in general, GE has a leadership position
(i.e., number one or two) in most major markets served. The NBC Television
Network is one of four competing major national commercial broadcast
television networks. It also competes with two newly-launched commercial
broadcast networks, syndicated broadcast television programming and cable
and satellite television programming activities. The businesses in which
GE Capital Services engages are subject to vigorous competition from
various types of financial institutions, including commercial banks,
thrifts, investment banks, credit unions, leasing companies, consumer loan
companies, independent finance companies, finance companies associated with
manufacturers, and insurance and reinsurance companies.
GE has substantial export sales from the United States. In addition,
the Company has majority and minority or other joint venture interests in a
number of non-U.S. companies engaged primarily in manufacturing and
distributing products and providing nonfinancial services similar to those
sold within the United States. GECS' financial services operations outside
of the United States have expanded considerably over the past several
years.
Industry Segments
The Company's operations are highly decentralized. The basic
organization of the Company's continuing operations consists of twelve key
businesses which contain management units of differing sizes. For industry
segment reporting purposes, the businesses are aggregated by the principal
industries in which the Company participates. This aggregation is on a
worldwide basis, which means that multi-industry non-U.S. affiliates'
operations are classified by appropriate industry segment.
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4
Financial information on consolidated industry segments is presented
on page 35 of the 1994 Annual Report to Share Owners in two parts: one for
GE that includes GECS in the All Other segment on a one-line basis in
accordance with the equity method of accounting, and one for GECS as a
separate entity. For GE, five of the 12 key businesses (Aircraft Engines,
Appliances, Power Systems, Plastics and NBC) represent individual segments
(namely, Aircraft Engines, Appliances, Power Generation, Materials and
Broadcasting, respectively). Except for "All Other," the remaining
businesses are aggregated by the two industry segments in which they
participate (Industrial Products and Systems, and Technical Products and
Services). The All Other segment consists primarily of GECS' earnings
discussed above and revenues derived from licensing use of GE know-how and
patents to others. For GECS, revenues and operating profit are presented
separately by the two industry segments in which it conducts its business
(Financing and Specialty Insurance). There is appropriate elimination of
the net earnings of GECS and the immaterial effect of transactions between
GE and GECS segments to arrive at total consolidated data.
Additional financial data and commentary on recent operating results
for industry segments are reported on pages 33-38 of the 1994 Annual Report
to Share Owners. Further details, including a description of the 1994
segment changes affecting Power Generation and Industrial Products and
Systems, can be found in note 26 (pages 60 and 61 of that Report) to the
consolidated financial statements. These data and comments are for General
Electric Company's continuing operations, except as otherwise indicated,
and should be referred to in conjunction with the summary description of
each of the industry segments which follows.
Aircraft Engines
Aircraft Engines (9.5%, 11.8% and 13.9% of consolidated revenues in
1994, 1993 and 1992, respectively) produces and sells aircraft engines and
related replacement parts for use in military and commercial aircraft.
GE's military engines are used in a wide variety of aircraft that includes
fighters, bombers, tankers, helicopters and surveillance aircraft. GE's
CFM56 and CF6 engines power aircraft in all categories of large commercial
aircraft: short/medium, intermediate and long-range. Applications for
GE's CFM56 engine, produced jointly by GE and SNECMA of France, include:
Boeing's 737-300/-400/-500 series and the new 737-500X/-700/-800 series;
Airbus Industrie's A319, A320, A321 and A340 series; and military aircraft
such as the KC-135R/C-135FR, E/KE-3 and E-6. The Company's CF6 family of
engines powers intermediate and long-range aircraft such as Boeing's 747
and 767 series, Airbus Industrie's A300, A310 and A330 series, and
McDonnell Douglas' DC-10 and MD-11 series. The Company also produces jet
engines for executive aircraft and regional commuter aircraft, and aircraft
engine derivatives used for marine propulsion, mechanical drives and
industrial power generation sources. The Company also provides maintenance
and repair services for many models of engines, including engines
manufactured by competitors.
The worldwide competition in aircraft jet engines is intense. Both
U.S. and export markets are important. Product development cycles are long
and product quality and efficiency are critical to success. Research and
development expenditures, both customer-financed and internally funded, are
also important in this segment. In cooperation with partners SNECMA, IHI,
and Fiat, Aircraft Engines is currently developing the GE90 engine to power
Boeing's new 777 twin-engine aircraft. The GE90 was certified by the
Federal Aviation Administration in February 1995 and a GE90-powered
<PAGE>
5
Boeing 777 began flight testing. Potential sales for any engine are
limited by, among other things, its technological lifetime, which may vary
considerably depending upon the rate of advance in the state of the art, by
the small number of potential customers and by the limited number of
airframes. Sales of replacement parts and services are an important part
of the business. Aircraft engine orders tend to follow military and
airline procurement cycles, although cycles for military and commercial
engine procurements are different. U.S. procurements of military jet
engines are affected by the government's response to changes in the global
political and economic outlook.
In line with industry practice, sales of commercial jet aircraft
engines often involve long-term financing commitments to customers. In
making such commitments, it is GE's general practice to require that it
have, or be able to establish, a secured position in the aircraft being
financed. Under such airline financing programs, GE had issued loans and
guaranties (principally guaranties) amounting to $1.3 billion at year-end
1994, and had entered into commitments totaling $1.1 billion to provide
financial assistance on future aircraft engine sales. Estimated fair
values of the aircraft securing these receivables and guaranties exceeded
the related account balances or guaranteed amounts at December 31, 1994.
For current information about Aircraft Engines orders and backlog,
see page 33 of the 1994 Annual Report to Share Owners.
Appliances
Appliances (9.9%, 10.0% and 10.0% of consolidated revenues in 1994,
1993 and 1992, respectively) manufactures and/or markets a single class of
product - major appliances - including kitchen and laundry equipment such
as refrigerators, ranges, microwave ovens, freezers, dishwashers, clothes
washers and dryers, and room air conditioners. These are sold under GE,
Hotpoint, RCA, Monogram and Profile brands as well as under private brands
for retailers. GE microwave ovens and room air conditioners are mainly
sourced from Asian suppliers while investment in Company-owned U.S.
facilities is focused on refrigerators, dishwashers, ranges (primarily
electric, but some gas) and home laundry equipment. A large portion of
appliance sales is for the replacement market. Such sales are through a
variety of retail outlets. The other principal market consists of
residential building contractors who install appliances in new dwellings.
GE has a U.S. service network that supports GE's appliance business.
Appliances is increasing its operating presence in the global
business arena and participates in numerous manufacturing and distribution
joint ventures around the world. This increase included the start-up of
Godrej-GE, a joint venture with India's largest appliance manufacturer,
Godrej & Boyce Ltd., in 1993. GE and Toshiba established a joint venture
in 1991 to cooperate in marketing GE, Hotpoint and Creda products in Japan
through Toshiba's distribution network. A 1990 joint venture in Mexico,
Mabe, produces high-quality gas ranges for the Mexican and U.S. markets.
In 1993, Mabe completed a new top-mount refrigerator facility and opened a
new technology center.
Markets for appliances are influenced by economic trends such
as increases or decreases in consumer disposable income, availability
of credit, and housing construction. Competition is very active
<PAGE>
6
in all products and comes from a number of principal manufacturers and
suppliers. An important factor is cost, and considerable competitive
emphasis is placed on minimizing manufacturing and distribution costs, and
on reducing cycle time from order to product delivery. Other significant
factors include brand recognition, quality, features offered, innovation,
customer responsiveness and appliance service capability. A number of
processes, such as Quick Response, New Product Introduction and Quick
Market Intelligence, have been implemented to improve GE's competitiveness
in these areas. An example of a significant initiative is "Save the Park,"
a joint initiative between management and unions, which was implemented
during 1993 at Appliance Park in Louisville, Ky. to streamline processes,
improve quality, realize significant savings and, ultimately, to prevent
relocation to alternative sites.
Broadcasting
Broadcasting (5.6%, 5.6% and 6.3% of consolidated revenues in 1994,
1993 and 1992, respectively) consists primarily of the National
Broadcasting Company (NBC). NBC's principal businesses are the furnishing
within the United States of network television services to affiliated
television stations, the production of live and recorded television
programs, the operation, under licenses from the Federal Communications
Commission (FCC), of six VHF television broadcasting stations, the
operation of cable/satellite networks around the world, and investment and
programming activities in multimedia and cable television. The NBC
Television Network is one of the competing major U.S. commercial broadcast
television networks and serves more than 200 affiliated stations within the
United States. The television stations that NBC owned and operated at
December 31, 1994, are located in Chicago; Denver; Los Angeles; Miami; New
York; and Washington, D.C. Broadcasting operations, including the NBC
Television Network and owned stations, are subject to FCC regulation.
NBC's operations include investment and programming activities in cable
television, principally through its ownership of CNBC and America's Talking
and equity investments in Arts and Entertainment, Court TV, American Movie
Classics, Bravo, Prime Network and regional Sports Channels across the
United States. In 1994, NBC introduced a desktop video service that
provides live or on-demand video business news to the personal computers of
subscribers. In 1993, NBC acquired control of Super Channel, the largest
pan-European satellite-delivered general program service. It also launched
Canal de Noticias NBC, a new 24-hour Spanish-language channel delivered by
satellite to Latin America. The cable television and network broadcast
programming environments are highly competitive.
Industrial Products and Systems (principally the former Industrial segment)
Industrial Products and Systems (15.6%, 15.4% and 15.5% of
consolidated revenues in 1994, 1993 and 1992, respectively) encompasses
lighting products, electrical distribution and control equipment for
industrial and commercial construction, transportation systems, motors,
industrial automation products and GE Supply. No "similar" class of
products or services within the segment approached 10% of any year's
consolidated revenues during the three years ended December 31, 1994.
Customers for many of these products and services include electrical
distributors, original equipment manufacturers and industrial end users.
Lighting products include a wide variety of lamps - incandescent,
fluorescent, high intensity discharge, halogen and specialty - as well as
<PAGE>
7
outdoor lighting fixtures, wiring devices and quartz products. Markets and
customers are principally in the United States and Europe, although other
international markets continue to increase in importance. In 1994, the
Lighting business purchased Focos S.A. in Mexico and Lindner Licht GmbH in
Germany. The Lighting business has also strengthened its position in Asia
with the formation of three joint ventures, GE Jiabao Lighting Company,
Ltd. in China and P.T. GE Angkasa Lighting in Indonesia, completed in 1994,
and Hitachi GE Lighting Ltd. in Japan, completed in 1993. Another GE
Lighting venture, GE Apar Lighting Private Ltd., in India continued to
expand with investments in new facilities and in the only "ribbon" glass
making equipment in India or Southeast Asia. In addition, the 1993
acquisition of Lumalampan AB's well-regarded Luma brand strengthened
Lighting's position in Scandinavia. The 1990 acquisition of a majority
interest in Tungsram Company, Ltd. of Hungary (now wholly owned) and the
early 1991 acquisition of the light source business of Thorn EMI of the
United Kingdom are fully integrated into European operations. Markets for
lighting products are extremely varied, ranging from household consumers to
commercial and industrial end users and original equipment manufacturers.
Electrical distribution and control equipment (including power
delivery products such as transformers, electricity meters, relays,
capacitors and arresters) is sold for installation in commercial,
industrial and residential facilities. To bolster European market share
and global competitiveness, GE signed an agreement in 1994 under which GE
may, in 1995, acquire a majority interest in the low voltage business of
the German manufacturer AEG. GE Electrical Distribution and Control (ED&C)
and Honeywell's MICRO SWITCH division formed a venture, GE/MICRO SWITCH
Controls, Inc., during 1992 through which both businesses jointly sell and
distribute complementary factory control products in the United States.
Power Controls B.V., an ED&C affiliate, had acquired both Lemag and Agut
S.A. of Spain during 1992, enhancing product offerings in residential
distribution and industrial control markets.
Transportation systems include diesel-electric and electric
locomotives, transit propulsion equipment, motors for drilling devices and
motorized wheels for off-highway vehicles such as those used in mining
operations. Locomotives are sold worldwide, principally to railroads,
while markets for other products include state and urban transit
authorities and industrial users. In 1994, the business began production
of its alternating current (AC) locomotives. Orders have been received for
approximately 800 AC units; over 70 have been delivered to customers. For
further information about Transportation Systems orders and backlog see
page 34 of the 1994 Annual Report to Share Owners.
Motors and motor-related products, systems and services serve the
appliance, commercial, industrial, heating, air conditioning, automotive
and utility markets. Drive systems are customized controls and drives for
metal and paper processing, for mining, for utilities and for marine
applications. Installation, engineering and repair services include
management and technical expertise for large projects, such as power
plants; maintenance, inspection, repair and rebuilding of electrical
apparatus produced by GE and others; and on-site engineering and upgrading
of already installed products sold by GE and others. Motor products are
used within GE and also are sold externally. Industrial automation
products cover a broad range of electrical and electronic products with
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8
emphasis on manufacturing and advanced engineering automation applications.
(See the discussion of GE Fanuc below.)
GE Supply operates a U.S. network of electrical supply houses and
through its subsidiary, GE Supply Mexico, operates three supply houses in
Mexico. GE Supply offers products of General Electric and other
manufacturers to electrical contractors and industrial, commercial, and
utility customers.
Markets for industrial products generally lag overall economic
slowdowns as well as subsequent recoveries. U.S. industrial markets are
undergoing significant structural changes reflecting, among other factors,
international competition and pressures to modernize productive capacity.
Additional information about certain of GE's industrial businesses follows.
Competition for lighting products comes from a relatively small
number of major firms and is based principally on brand awareness, price,
distribution and product innovation. The nature of lighting products and
market diversity make the lighting business somewhat less sensitive to
economic cycles than other businesses in this segment.
Electrical distribution and control equipment is sold to
distributors, electrical contractors, large industrial users and original
equipment manufacturers. Markets are affected principally by levels of
(and cycles in) residential and non-residential construction as well as
domestic industrial plant and equipment expenditures. Competitors include
other large manufacturers, with international competition in U.S. markets
increasing.
In transportation systems, demand is historically cyclical. There is
strong worldwide competition from major firms engaged in the sale of
transportation equipment.
External sales of motors and related products are principally to
manufacturers of original equipment, distributors and industrial users.
Competition includes other motor and component producers, integrated
manufacturers and customers' own in-house capability. Markets for these
products are price competitive, putting emphasis on economies of scale and
manufacturing technology. Other market factors include energy-driven
technological changes and the cyclical nature of the consumer end-user
market.
Through a 50-50 joint venture (GE Fanuc Automation Corporation) which
has two operating subsidiaries (one in North America and the other in
Europe), GE offers a wide range of high-technology industrial automation
systems and equipment, including computer numerical controls and
programmable logic controls. Competition in industrial automation is
intense and comes from a number of U.S. and international sources.
Materials
Materials (9.5%, 9.1% and 9.1% of consolidated revenues in 1994, 1993
and 1992, respectively) includes high-performance plastics used by
compounders, molders, and major original equipment manufacturers for use in
a variety of applications, including fabrication of automotive parts,
computer enclosures, major appliance parts and construction materials.
Products also include silicones, superabrasives, specialty chemicals and
<PAGE>
9
laminates. Market opportunities for many of these products are created by
substituting resins for other material which provides customers with
productivity through improved material performance at lower cost. These
materials are sold to a diverse worldwide customer base, mainly
manufacturers. The business has a significant operating presence around
the world and participates in numerous manufacturing and distribution joint
ventures.
The business environment is characterized by technological innovation
and heavy capital investment. Being competitive requires emphasis on
efficient manufacturing process implementation and significant resources
devoted to market and application development. Competitors include large,
technology-driven suppliers of the same, as well as other functionally
equivalent, materials. Adequate capacity to satisfy growing demand and
anticipation of new product or material performance requirements are key
factors affecting this competition. The business is cyclical and is
subject to variations in price and in the availability of raw materials,
such as cumene, benzene, and methanol.
Materials also included Ladd Petroleum Corporation, an oil and
natural gas developer and supplier with operations mainly in the United
States, until December 21, 1990, when it was sold to Amax Oil and Gas,
Inc., a subsidiary of Amax, Inc.
Power Generation (principally the former Power Systems segment)
Power Generation (9.9%, 9.9% and 9.6% of consolidated revenues in
1994, 1993 and 1992, respectively) serves utility, industrial and
governmental customers worldwide with products for the generation of
electricity, with related installation, engineering and repair services and
environmental systems. Worldwide competition continues to be intense. For
information about orders and backlog, see page 34 of the 1994 Annual Report
to Share Owners. Steam turbine-generators are sold to the electric utility
industry, to the U.S. Navy and, for cogeneration, to private industrial
customers. Marine steam turbines and propulsion gears also are sold to the
U.S. Navy. Gas turbines, which for the past several years has been the
fastest growing part of this segment, are used principally as packaged
power plants for electric utilities, and for industrial cogeneration and
mechanical drive applications. Through a joint venture with GEC Alsthom of
France, GE has access to the European gas turbine market. Centrifugal
compressors are sold for application in gas reinjection, pipeline services
and such process applications as refineries and ammonia plants. In 1994,
the business acquired an 80% interest in Nuovo Pignone, an Italian
electrical equipment manufacturer. This move further strengthens the
Company's position in Europe, North Africa, the Middle East, and Asia,
particularly Russia, where Nuovo Pignone recently received commitments for
$1.6 billion to replace and modify gas turbines on Russian pipelines. There
have been no nuclear power plant orders in the United States since the mid-
1970s and international activity has been very low. GE continues to invest
in advanced technology development and to focus its resources on refueling
and servicing its installed boiling-water reactors.
As discussed in the previous paragraph, there is intense worldwide
competition for power generation products and services. The markets for
most power generation products and services are worldwide and as a result
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10
are sensitive to the economic and political environment of each country in
which the business participates. In the United States, many power
generation markets are sensitive to the financial condition of the electric
utility industry as well as the electric power conservation efforts by
power users. Internationally, the influence of oil prices on a country's
economy has a large impact on its markets.
Technical Products and Services
Technical Products and Services (7.1%, 7.5% and 8.8% of consolidated
revenues in 1994, 1993 and 1992, respectively) consists of technology
operations providing products, systems and services to a variety of
customers. Businesses in this segment include medical systems and
services, network-based information services and certain other specialized
services. Medical systems include magnetic resonance (MR) scanners,
computed tomography (CT) scanners, x-ray, nuclear imaging, ultrasound, and
other diagnostic and therapy equipment and supporting services sold to
hospitals and medical facilities worldwide. GE Medical Systems has a
significant operating presence in Europe and Asia, including the operations
of its affiliates, GE Medical Systems S.A. (France), GE Yokogawa Medical
Systems (Japan) and WIPRO GE Medical Systems (India). Acquisitions and
joint ventures continue to expand GE Medical Systems' activities in world
markets. Continued globalization increased GE Medical Systems' presence in
Asia during 1993, where it purchased an x-ray manufacturer in Japan,
announced plans to enlarge manufacturing facilities in China, and
established new sales and service joint ventures in Taiwan and Thailand.
Additionally, its presence continued to expand in Latin America with new
facilities in Argentina, Brazil and Mexico.
Information services are provided both to internal and external
customers by GE Information Services (GEIS). GEIS provides network-based
information services that electronically link businesses with their
suppliers, distributors, manufacturers and customers to streamline business
transactions and improve the flow of information. In May 1994, Ameritech
Corporation, a leading telecommunications company, invested $472 million in
GEIS that will convert, when U.S. law permits, to a 30% equity position in
that business. In 1993, GEIS exercised an option to purchase the remaining
shares of International Network Services, Ltd., a leading European supplier
of electronic data interchange services and software. This segment included
GE Computer Services before the 1992 transfer of that business to GE
Capital Corporation. See page 12 for further information. GE Consulting
Services (custom system design and programming services) was sold to Keane,
Inc. on January 1, 1993.
Serving a diversity of customers for special needs (which are rapidly
changing in certain areas such as medical and information systems),
businesses in this segment compete against a variety of both U.S. and non-
U.S. manufacturers or service operations including, in certain customer in-
house capability. Technological competence and innovation, excellence of
design, high product performance, quality of service, and competitive
pricing are among the key factors affecting competition in the markets for
these products and services. Throughout the world, demands on health care
providers to control costs have become much more important. Medical
Systems is responding with cost-effective technologies that improve
operating efficiency and clinical productivity. See page 36 of the 1994
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11
Annual Report to Share Owners for information about orders and backlog of
GE Medical Systems' products.
All Other GE
All Other GE consists mostly of earnings of and investment in General
Electric Capital Services, Inc. (GECS), a wholly owned consolidated
affiliate, which are accounted for on a one-line basis in accordance with
the equity method of accounting but are eliminated in consolidation. Other
ongoing operations (0.4%, 0.4% and 0.5% of consolidated revenues in 1994,
1993 and 1992, respectively) mainly involve licensing the use of GE's know-
how and patents to others. A separate discussion of segments within GECS
appears below.
GECS Segments
GECS consists of the ownership of two principal affiliates that,
together with their affiliates and other investments, constitute General
Electric Company's principal financial services activities. GECS owns all
of the common stock of General Electric Capital Corporation (GE Capital or
GECC) and Employers Reinsurance Corporation (ERC). GECS also owns all of
the common stock of Kidder, Peabody, whose operations, as discussed on
page 3, were discontinued in 1994.
For industry segment purposes, Financing (24.8%, 22.3% and 19.9% of
consolidated revenues in 1994, 1993 and 1992, respectively) consists solely
of noninsurance activities of GE Capital; Specialty Insurance (8.2%, 8.7%
and 7.3% of consolidated revenues in 1994, 1993 and 1992, respectively)
consists of the activities of ERC as well as the activities of insurance
entities discussed on page 13; and All Other is GECS corporate activities
not identifiable with specific industry segments.
Additional information follows.
Financing activities of GE Capital, none of which individually
constitutes as much as 10% of consolidated revenues, comprise the
following:
* Consumer services - private-label and bank credit card loans,
time sales and revolving credit and inventory financing for
retail merchants, auto leasing and inventory financing,
mortgage servicing, and annuities and mutual fund sales;
* Specialized financing - loans and leases for major capital
assets, including industrial facilities and equipment and
energy-related facilities; commercial and residential real
estate loans and investments; and loans to and investments in
highly leveraged management buyouts and corporate
recapitalizations;
* Equipment management - leases, loans and asset management
services for portfolios of commercial and transportation
equipment, including aircraft, trailers, auto fleets, modular
space units, railroad rolling stock, data processing equipment,
ocean-going containers and satellites; and
<PAGE>
12
* Mid-market financing - loans and financing and operating leases
for middle-market customers, including manufacturers,
distributors and end users, for a variety of equipment,
including data processing equipment, medical and diagnostic
equipment, and equipment used in construction, manufacturing,
office applications and telecommunications activities.
Very little of the financing provided by GE Capital involves products
that are manufactured by GE. Beginning in the second half of 1992, the
financing segment includes GE Computer Services, which provides independent
maintenance and rental/leasing services for minicomputers and
microcomputers, electronic test instruments and data communications
equipment. This component had been included in GE's Technical Products and
Services segment prior to its transfer to the Financing segment. GE Capital
also is an equity investor in a retail organization and certain other
service and financial services organizations. GE Capital continues to
experience broad growth. In 1994, its consumer services operations expanded
into Japan with the acquisition of the consumer financing business of
Minebea Co., Ltd., which provides a variety of consumer financial products
and services, including consumer credit cards, home improvement loans,
educational loans and collections. Consumer Services operations also
acquired Harcourt General's insurance businesses, which underwrite
individual life, health, accident and credit insurance annuities. Mid-
market financing acquired Northern Telecom Finance Corporation, which
provides financing to Northern Telecom's customers and dealers. In 1993,
Consumer Services operations acquired GNA Corporation from Weyerhauser
Company and Weyerhauser Financial Services, Inc. and United Pacific Life
Insurance Company from Reliance Insurance Company and its parent, Reliance
Group Holdings, Inc. Together, these two acquisitions constitute GECS'
annuity business, a business that writes and markets tax-deferred annuities
and sells proprietary and third-party mutual funds through independent
agents and financial institutions. Other 1993 acquisitions expanded GECS'
financial services activities in Europe, Scandinavia and Canada. GE
Capital had previously increased its presence in Europe with the 1992
acquisition of Avis Europe's vehicle leasing and fleet management business,
following 1991 and 1990 acquisitions of private-label credit card
operations of major U.K. retailers.
GE Capital's activities are subject to a variety of federal and state
regulations including, at the federal level, the Consumer Credit Protection
Act, the Equal Credit Opportunity Act and certain regulations issued by the
Federal Trade Commission. A majority of states have ceilings on rates
chargeable to customers in retail time sales transactions, installment
loans and revolving credit financing. GECS' international operations are
also subject to regulation in their respective jurisdictions. To date,
such regulations have not had a material adverse effect on GE Capital's
volume of financing operations or profitability. Common carrier services
of GE Americom are subject to regulation by the Federal Communications
Commission.
On March 28, 1991, GE entered into an agreement to make payments to
GE Capital, constituting additions to pre-tax income, to the extent
necessary to cause the ratio of earnings to fixed charges of GE Capital and
consolidated affiliates (determined on a consolidated basis) to be not less
than 1.10 for the period, as a single aggregation, of each GE Capital
fiscal year commencing with fiscal year 1991. The agreement can only be
terminated by written notice and termination is not effective until the
third anniversary of the date of such notice. GE Capital's ratios of
<PAGE>
13
earnings to fixed charges for the years 1994, 1993 and 1992, respectively,
were 1.63, 1.62 and 1.44, substantially above the level at which payments
would be required.
Specialty Insurance includes ERC, a multiple line property and
casualty reinsurer that writes all lines of reinsurance other than title
and annuities, and other insurance activities of GE Capital. ERC reinsures
property and casualty risks written by more than 1,000 U.S. and non-U.S.
insurers, and has subsidiaries located in the United Kingdom and Denmark.
By means of other subsidiaries ERC writes property and casualty reinsurance
through brokers and provides reinsurance brokerage services. ERC also
writes certain specialty lines of insurance on a direct basis, principally
excess workers' compensation for self-insurers, libel and allied torts and
errors and omissions coverage for insurance and real estate agents and
brokers. In December 1994, certain life and property and casualty
affiliates of GE Capital were transferred to ERC. These affiliates had been
managed by ERC since 1986. ERC is licensed in all states of the United
States, the District of Columbia, certain provinces of Canada and in other
jurisdictions. The other insurance activities of GECS consist of GE
Capital affiliates that provide various forms of insurance. Financial
Guaranty Insurance Company provides financial guaranty insurance,
principally on municipal bonds and structured finance issues. GE Capital's
mortgage insurance operations are engaged in providing primary and, on a
limited basis, pooled private mortgage insurance. Other affiliates provide
creditor insurance for international retail borrowers and, for GE Capital
customers, credit life and certain types of property and casualty
insurance. Businesses in the Specialty Insurance segment are generally
subject to regulation by various insurance regulatory agencies.
Geographic Segments, Exports from the U.S. and Total International
Operations
Financial data for geographic segments (based on the location of the
Company operation supplying goods or services and including exports from
the U.S. to unaffiliated customers) are reported in note 27 to consolidated
financial statements on page 62 of the 1994 Annual Report to Share Owners.
Additional financial data about GE's exports from the U.S. and total
international operations are on page 38 of the 1994 Annual Report to Share
Owners.
Orders Backlog
See pages 33, 34, 36 and 42 of the 1994 Annual Report to Share Owners
for information about GE's backlog of unfilled orders.
Research and Development
Total expenditures for research and development were $1,741 million
in 1994. Total expenditures had been $1,955 million in 1993 and $1,896
million in 1992. Of these amounts, $1,176 million in 1994 was GE-funded
($1,297 million in 1993 and $1,353 million in 1992) and $565 million in
1994 was funded by others ($658 million in 1993 and $543 million in 1992),
principally the U.S. government. Aircraft Engines accounts for the largest
share of GE's R&D expenditures from both Company and customer funds. Other
<PAGE>
14
significant expenditures of Company and customer research and development
funds were for Medical Systems, Plastics and Power Systems.
Approximately 8,900 person-years of scientist and engineering effort
were devoted to research and development activities in 1994, with about 76%
of the time involved primarily in GE-funded activities.
Environmental Matters
See page 42 of GE's 1994 Annual Report to Share Owners for a
discussion of environmental matters.
Employee Relations
At year-end 1994, General Electric Company and consolidated
affiliates employed 216,000 persons in their continuing operations, of whom
approximately 156,000 were in the United States. In addition, there were
5,000 persons employed in the discontinued securities broker-dealer
operations at the end of 1994, primarily in the United States. For further
information about employees, see page 43 of the 1994 Annual Report to Share
Owners.
Approximately 46,600 GE manufacturing, engineering and service
employees in the United States are represented for collective bargaining
purposes by a total of approximately 170 different local collective
bargaining groups. A majority of such employees is represented by union
locals which are affiliated with, and bargain in conjunction with, the
International Union of Electronic, Electrical, Salaried, Machine and
Furniture Workers (IUE-AFL-CIO). During 1994, General Electric Company
negotiated three-year contracts with unions representing a substantial
majority of those United States employees who are represented by unions.
Most of these contracts will terminate in June 1997. NBC is party to
approximately 100 labor agreements covering about 2,000 staff employees
(and a large number of freelance employees) in the United States. These
agreements are with various labor unions, expire at various dates, and are
generally for a term of three to four years. Contracts covering more than
one third of NBC's staff employees have expired and are currently under
negotiation.
Executive Officers
See Part III, Item 10 of this 10-K Report for information about
Executive Officers of the Registrant.
Other
Because of the diversity of the Company's products and services, as
well as the wide geographic dispersion of its productive facilities, the
Company uses numerous sources for the wide variety of raw materials needed
for its operations. The Company has not been adversely affected by
inability to obtain raw materials.
The Company owns, or holds licenses to use, numerous patents. New
patents are continually being obtained through the Company's research and
development activities as existing patents expire. Patented inventions are
used both within the Company and licensed to others, but no industry
<PAGE>
15
segment is substantially dependent on any single patent or group of related
patents.
About 4% of consolidated revenues in 1994 (5% of GE revenues) were
from sales of goods and services to agencies of the U.S. government, which
is the Company's largest single customer. About 3% of consolidated
revenues in 1994 (4% of GE revenues) were defense-related sales of aircraft
engine goods and services.
About 5% of consolidated revenues in 1993 (7% of GE revenues) were
from sales of goods and services to agencies of the U.S. government, which
is the Company's largest single customer. About 4% of consolidated
revenues in 1993 (6% of GE revenues) were defense-related sales of aircraft
engine goods and services.
In 1992, about 6% of consolidated revenues (8% of GE revenues) were
from sales of goods and services to agencies of the U.S. government. About
5% of consolidated revenues in 1992 (6% of GE revenues) were defense-
related sales of aircraft engine goods and services.
Item 2. Properties
Manufacturing operations are carried on at approximately 145
manufacturing plants located in 31 states in the United States and Puerto
Rico and some 113 manufacturing plants located in 25 other countries.
Item 3. Legal Proceedings
General
-------
As previously reported, the directors (other than Messrs. Calloway,
Gonzalez, Penske and Warner) and certain officers are defendants in a civil
suit purportedly brought on behalf of the Company as a shareholder
derivative action by Leslie McNeil, Harold Sachs, Arun Shingala and Paul
and Harriet Luts (the McNeil action) in New York State Supreme Court on
November 19, 1991. The suit alleges the Company was negligent and engaged
in fraud in connection with the design and construction of containment
systems for nuclear power plants and contends that, as a result, GE has
incurred significant financial liabilities and is potentially exposed to
additional liabilities from claims brought by the Company's customers. The
suit alleges breach of fiduciary duty by the defendants and seeks
unspecified compensatory damages and other relief. On March 31, 1992, the
defendants filed motions to dismiss the suit. On September 28, 1992, the
court denied the motions as premature but ruled that they may be renewed
after the completion of limited discovery. Defendants moved for
reconsideration of that order, and on April 3, 1993, the court granted
defendants' motion for reconsideration and directed that discovery be
stayed pending the filing of an amended complaint. Plaintiffs filed an
amended complaint on March 18, 1994, alleging breach of fiduciary duty,
waste and indemnification claims. The defendants' time for responding to
the amended complaint has been extended until 30 days following the
completion of discovery. The defendants believe the plaintiffs' claims are
without merit.
<PAGE>
16
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 share owner has
indicated his intention to petition for review by the United States Supreme
Court.
As previously reported, the directors (except Messrs. Dammerman and
Penske) and certain former directors are defendants in a civil suit
purportedly brought on behalf of the Company as a share owner derivative
action (the Bildstein action) which was commenced in New York State Supreme
Court in January 1994. The suit seeks compensatory damages arising out of
the purported failure of the defendants to prevent alleged government
contract fraud and alleged violations of the Foreign Corrupt Practices Act
in connection with U.S. government-funded sales of military equipment to
Egypt by a unit of the Company's former GE Aerospace component. The GE
Aerospace businesses were transferred to a new company controlled by the
shareholders of Martin Marietta Corporation in 1993. The suit claims that
the risk of litigation arising from the alleged wrongdoing caused the
Company to receive less than it would have otherwise received in connection
with the transfer of GE Aerospace. On April 6, 1994, the Company and all
other defendants moved to dismiss the complaint based on the plaintiff's
failure to make a pre-litigation demand, among other reasons. On September
30, 1994, the court dismissed the complaint. On November 11, 1994, the
plaintiff filed a notice of appeal from that decision.
As previously reported, on March 12, 1993, a complaint was filed in
United States District Court for the District of Connecticut by ten
employees of the Company's Aerospace business, purportedly on behalf of all
GE Aerospace employees whose GE employment status is or was affected by the
<PAGE>
17
then planned transfer of GE Aerospace to a new company controlled by the
stockholders of Martin Marietta. The complaint sought to clarify and
enforce the plaintiffs' claimed rights to pension benefits in accordance
with, and rights to assets then held in, the GE Pension Plan (the "Plan").
The complaint names the Company, the trustees of the GE Pension Trust
("Trust"), and Martin Marietta Corporation and one of its former plan
administrators as defendants. The complaint alleged that the Company's
planned transfer of certain assets of the Trust to a Martin Marietta
pension trust, in connection with the transfer of the Aerospace business,
violated the rights of the plaintiffs under the Plan and applicable
provisions of the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code. The complaint sought equitable and declaratory
relief, including an injunction against transfer of the Plan assets except
under circumstances and protections, if any, approved by the court, an
order that the Company disgorge all profits allegedly received by it as a
result of any such transfer and the making of restitution to the Trust for
alleged investment losses resulting from the Company's treatment of Plan
assets in connection with the transaction or alternatively the transfer of
additional assets from the Trust to a new Martin Marietta pension trust,
and an order requiring Martin Marietta to continue to offer transferred
employees all accrued pension-related benefits for which they were eligible
under the Plan as of the closing date of the transfer of the GE Aerospace
business to Martin Marietta.
On March 23, 1993, the Company and Martin Marietta Corporation filed
motions to dismiss the complaint on the basis that the complaint does not
state any claim upon which relief can be granted as a matter of law. This
motion remains pending. On April 2, 1993, the transfer of the Aerospace
business occurred, and on June 7, 1993, the court issued an order denying
plaintiffs' request for injunctive relief.
Also as previously reported, allegations of various federal law
violations, including alleged antitrust violations involving the Company
and DeBeers Consolidated Mines, Ltd. in the industrial diamonds industry,
were made in a wrongful termination action brought by a former vice
president of the Company. Various allegations of antitrust violations
concerning industrial diamonds are also the subject of two previously
reported civil suits against the Company purportedly brought on behalf of
classes of industrial diamond purchasers and an additional civil suit
against the Company brought on behalf of two corporations engaged in the
manufacture and sale of industrial diamonds. On February 16, 1994, the
wrongful termination action was dismissed with prejudice and the former
officer filed a sworn statement conceding that he had no personal knowledge
of any wrongdoing by Company personnel and that he had become aware that
the Company had removed him based on its view of his performance, not
because he was a "whistleblower." On February 17, 1994, an indictment was
returned in the United States District Court in Columbus, Ohio, following
the previously reported grand jury investigation by the United States
Department of Justice, charging the Company and one European employee of
the Company's superabrasives business, and other unrelated parties, with
entering into an anti-competitive agreement in violation of federal
antitrust laws. Trial of the criminal charges began on October 25, 1994,
and concluded on December 5, 1994, when the United States District Court
granted the Company's motion for judgment of acquittal.
Following the Company's announcement on April 17, 1994, of a $210
million charge to net earnings based upon its discovery of false trading
<PAGE>
18
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 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 has been extended until 45 days after the
plaintiffs' March 6, 1995, filing of an amended 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.
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.
Also 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 has
subsequently issued an amended complaint adding additional allegations of
unlawful use of PCBs, bringing the total civil penalty sought to $365,500.
The Company has filed answers denying all alleged violations and settlement
discussions are underway. This case presents the same issues as the case
discussed in the preceding paragraph.
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
<PAGE>
19
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. The Company has filed an answer denying
the alleged violations and settlement discussions are underway. These
cases present the same issues as the cases discussed in the preceding two
paragraphs of this environmental section.
As previously reported, in June of 1992, EPA issued an administrative
complaint against the Company alleging violations of regulations issued
under TSCA at its Anaheim facility, including improper storage and disposal
of PCBs. The complaint sought penalties of $205,000. On March 9, 1993,
EPA amended the complaint to increase the amount of the penalties being
sought to $353,000. The matter was settled in January 1995 for $53,000.
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 has supplied information to the Agency and is
conducting ongoing settlement discussions.
In March 1994, EPA issued an administrative complaint against the
Company seeking $125,000 in penalties for violations of the Clean Water Act
at its Palmer, Puerto Rico, facility, including permit violations. The
matter was settled in January 1995 for $36,000.
As previously reported, on December 29, 1993, EPA issued an
administrative complaint to the Company alleging a violation of TSCA for
manufacturing a chemical not on the EPA TSCA Inventory at its Waterford,
N.Y. facility. The complaint seeks a penalty of $137,250. The matter was
settled in June, 1994 for $34,600.
In November 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. The allegations included
the unlawful disposal of hazardous waste. Settlement negotiations are
underway.
___________________________________
It is the view of management that none of the above described
proceedings will have a material effect upon the Company's earnings,
liquidity or competitive position.
For further information regarding environmental matters, see page 14
of this Report.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
<PAGE>
20
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
With respect to "Stock Exchange Information", in the United States,
GE common stock is listed on the New York Stock Exchange (its principal
market) and on the Boston Stock Exchange. GE common stock also is listed
on certain foreign exchanges, including The Stock Exchange, London and the
Tokyo Stock Exchange. Trading, as reported on the New York Stock Exchange,
Inc., Composite Transactions Tape, and dividend information follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Common stock market price
------------------------- Dividends
(In dollars) High Low declared
------------------------------------------------------------------------
<S> <C> <C> <C>
1994
Fourth quarter $ 51 7/8 $ 45 3/8 $ .41
Third quarter 51 3/8 46 1/4 .36
Second quarter 50 3/8 45 .36
First quarter <F1> 54 7/8 48 1/4 .36
1993
Fourth quarter <F1> 53 1/2 46 3/8 .36
Third quarter <F1> 50 3/8 47 1/4 .315
Second quarter <F1> 48 1/8 44 1/8 .315
First quarter <F1> 45 1/2 40 3/8 .315
------------------------------------------------------------------------
<FN>
<F1> Per share amounts have been adjusted to reflect the 2-for-1
stock split in April 1994.
</TABLE>
As of December 31, 1994, there were about 460,000 share owner
accounts of record.
Item 6. Selected Financial Data
Reported as data for revenues; earnings from continuing operations;
earnings from continuing operations per share; earnings from discontinued
operations; earnings before accounting changes; net earnings; net earnings
per share; dividends declared; dividends declared per share; long-term
borrowings; and total assets appearing on page 43 of the Annual Report to
Share Owners for the fiscal year ended December 31, 1994.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reported on pages 32-34 and 36-43 (and graphs on pages 25, 33, 37,
38, 39, 40, 41 and 42) of the Annual Report to Share Owners for the fiscal
year ended December 31, 1994.
<PAGE>
21
Item 8. Financial Statements and Supplementary Data
See index under item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of Registrant
Executive Officers of the Registrant (As of March 24, 1995)
<TABLE>
<CAPTION>
Date
assumed
Executive
Officer
Name Position Age position
---- -------- --- -------------
---
<S> <C> <C> <C>
John F. Welch, Jr. Chairman of the Board and Chief
Executive Officer 59 April 1981
Philip D. Ameen Vice President and Comptroller 46 April 1994
James R. Bunt Vice President and Treasurer 53 January 1993
William J. Conaty Senior Vice President, Human Resources 49 October 1993
Dennis D. Dammerman Senior Vice President, Finance 49 March 1984
Frank P. Doyle Executive Vice President 64 September
1981
Lewis S. Edelheit Senior Vice President, Research and
Development 52 November 1992
Paolo Fresco Vice Chairman and Executive Officer 61 October 1987
Dale F. Frey Vice President and President, GE Investment
Corporation 62 January 1993
David C. Genever-Watling Senior Vice President, GE Power Systems 49 September 1990
Benjamin W. Heineman, Jr. Senior Vice President, General Counsel
and Secretary 51 September 1987
W. James McNerney, Jr. Senior Vice President, GE Asia-Pacific 45 January 1992
Eugene F. Murphy Senior Vice President, GE Aircraft Engines 59 October 1986
Robert L. Nardelli Vice President, GE Transportation Systems 46 February 1992
Robert W. Nelson Vice President, Financial Planning
and Analysis 54 September 1991
John D. Opie Senior Vice President, GE Lighting 57 August 1986
Gary M. Reiner Vice President, Business Development 40 January 1991
Gary L. Rogers Senior Vice President, GE Plastics 50 December 1989
James W. Rogers Vice President, GE Motors and
Industrial Systems 44 May 1991
Hellene S. Runtagh Vice President, GE Information Services 46 March 1992
J. Richard Stonesifer Senior Vice President, GE Appliances 58 January 1992
John M. Trani Senior Vice President, GE Medical Systems 50 September 1986
Lloyd G. Trotter Vice President, GE Electrical Distribution
and Control 49 November 1992
</TABLE>
<PAGE>
22
All Executive Officers are elected by the Board of Directors for an
initial term which continues until the first Board meeting following the
next annual statutory meeting of share owners and thereafter are elected
for one-year terms or until their successors have been elected.
All Executive Officers have been executives of GE for the last five
years except Robert L. Nardelli, Gary M. Reiner and Lewis S. Edelheit. Mr.
Nardelli, who was an employee of GE from June 1971 through June 1988, was
Executive Vice President and General Manager of J. I. Case, a manufacturer
of construction equipment and farm machinery, from July 1988 to May 1991,
and thereafter President of Camco, a Canadian subsidiary of GE that
manufactures, distributes, sells and services appliances, until February
1992. Mr. Reiner was a Vice President of Boston Consulting Group,
strategic planners and designers, prior to joining GE in 1991. Dr.
Edelheit, who was an employee of GE from 1969 through 1985, was President
and CEO of Quantum Medical Systems, Inc. (Quantum) from 1986 to August
1991, and thereafter Manager - Electronic Systems Research Center, GE
Corporate Research and Development Laboratory, until November 1992.
Quantum is a venture capital-backed medical ultrasound company which was
acquired by Siemens A.G. in July 1990.
The remaining information called for by this item is incorporated by
reference to "Election of Directors" in the definitive proxy statement
relating to the registrant's Annual Meeting of Share Owners to be held
April 26, 1995.
Item 11. Executive Compensation
Incorporated by reference to "Board of Directors and Committees,"
"Summary Compensation Table," "Stock Appreciation Rights and Stock
Options," and "Retirement Benefits" in the definitive proxy statement
relating to the registrant's Annual Meeting of Share Owners to be held
April 26, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to "Information relating to Directors,
Nominees and Executive Officers" in the registrant's definitive proxy
statement relating to its Annual Meeting of Share Owners to be held April
26, 1995.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to "Certain Transactions" in the
registrant's definitive proxy statement relating to its Annual Meeting of
Share Owners to be held April 26, 1995.
<PAGE>
23
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. Financial statements applicable to General Electric Company and
consolidated affiliates and contained on the page(s) indicated
in the GE Annual Report to Share Owners for the fiscal year
ended December 31, 1994.
<TABLE>
<CAPTION>
Annual 10-K
Report Report
Page(s) Page(s)
------- -------
<S> <C> <C>
Statement of earnings for the years
ended December 31, 1994, 1993 and 1992 26 F-2
Statement of financial position at
December 31, 1994 and 1993 28 F-4
Statement of cash flows for the years
ended December 31, 1994, 1993 and 1992 30 F-6
Independent Auditors' Report 44 F-20
Other financial information:
Notes to consolidated financial
statements 45-64 F-21 to F-40
Industry segment information 35 F-11
60-61 F-36 to F-37
Geographic segment information 62 F-38
Operations by quarter (unaudited) 64 F-40
</TABLE>
(a)2. Financial Statement Schedule for General Electric Company and
consolidated affiliates.
<TABLE>
<CAPTION>
Schedule Page
-------- ----
<S> <C> <C>
II Valuation and Qualifying Accounts F-41
</TABLE>
The schedules listed in Reg. 210.5-04, except those listed
above, have been omitted because they are not applicable or the
required information is shown in the financial statements or
notes thereto.
(a)3. Exhibit Index
(3) Restated Certificate of Incorporation, as amended, and By-
laws, as amended, of General Electric Company. (i)
(4) Agreement to furnish to the Securities and Exchange
Commission upon request a copy of instruments defining
the rights of holders of certain long-term debt of the
registrant and consolidated subsidiaries.*
(10) All of the following exhibits consist of Executive
Compensation Plans or Arrangements:
(a) General Electric Incentive Compensation Plan as
amended effective July 1, 1991.(ii)
(b) General Electric 1983 Stock Option-Performance
Plan. (iii)
<PAGE>
24
(c) General Electric Supplementary Pension Plan as
amended effective July 1, 1991.(iv)
(d) Amendment to General Electric Supplementary Pension
Plan dated May 22, 1992.(v)
(e) Amendment to General Electric Supplementary Pension
Plan dated September 10, 1993.(vi)
(f) Amendment to General Electric Supplementary Pension
Plan dated July 1, 1994.*
(g) General Electric Deferred Compensation Plan for
Directors as amended May 25, 1990.(vii)
(h) General Electric Insurance Plan for
Directors.(viii)
(i) General Electric Financial Planning Program, as
amended through September 1993.(vi)
(j) General Electric Supplemental Life Insurance
Program, as amended February 8, 1991.(ix)
(k) General Electric Directors' Retirement and Optional
Life Insurance Plan.(x)
(l) General Electric 1987 Executive Deferred Salary
Plan.(xi)
(m) General Electric 1989 Stock Option Plan for Non-
Employee Directors.(xii)
(n) General Electric 1990 Long-Term Incentive
Plan.(xiii)
(o) General Electric 1991 Executive Deferred Salary
Plan. (xiv)
(p) General Electric 1994 Executive Deferred Salary
Plan. (xv)
(q) General Electric Directors' Charitable Gift Plan,
as amended through May 1993. (xvi)
(r) Restated Employment Agreement, dated January 2,
1992, and Restated U.K. Employment Agreement, dated
January 3, 1992, in each case between the
(r)registrant and P. Fresco, an Executive Officer
and Director of the registrant.(xvii)
(s) General Electric Leadership Life Insurance Program,
effective January 1, 1994. (xviii)
(11) Statement re Compilation of Per Share Earnings.*
<PAGE>
25
(12) Computation of Ratio of Earnings to Fixed Charges.*
(21) Subsidiaries of Registrant.*
(23) Consent of independent auditors incorporated by reference
in each Prospectus constituting part of the Registration
Statements on Form S-3 (Registration Nos. 33-29024,
33-3908, 2-82072, 33-37106, 33-35922, 33-44593, 33-39596,
33-39596-01, 33-47181, 33-47085 and 33-50639) and on Form
S-8 (Registration Nos. 33-4239, 33-23441,
33-24679, 2-84145, 33-47500 and 33-49053).*
(24) Power of Attorney.*
(27) Financial Data Schedule.*
(99)(a)Income Maintenance Agreement, dated March 28, 1991,
between the registrant and General Electric Capital
Corporation.(xix)
(99)(b) Undertaking for Inclusion in Registration Statements on
Form S-8 of General Electric Company. (xx)
Notes to Exhibits
-----------------
(i) Incorporated by reference to Exhibit of the same number to
General Electric Form 8-K (Commission file number 1-35)
filed with the Commission April 28, 1994.
(ii) Incorporated by reference to Exhibit of the same number to
General Electric Annual Report on Form 10-K (Commission file
number 1-35) for the fiscal year ended December 31, 1991.
(iii) Incorporated by reference to Exhibit of the same number to
General Electric Annual Report on Form 10-K (Commission file
number 1-35) for the fiscal year ended December 31, 1988.
(iv) Incorporated by reference to Exhibit 10(e) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1991.
(v) Incorporated by reference to Exhibit 10(d) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for
the fiscal year ended December 31, 1992.
(vi) Incorporated by reference to Exhibit 10(e) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1993.
(vii) Incorporated by reference to Exhibit 10(f) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1990.
<PAGE>
26
(viii) Incorporated by reference to Exhibit 10(i) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1980.
(ix) Incorporated by reference to Exhibit 10(i) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1990.
(x) Incorporated by reference to Exhibit 10(j) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for
the fiscal year ended December 31, 1986.
(xi) Incorporated by reference to Exhibit 10(k) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1987.
(xii) Incorporated by reference to Exhibit A to the General
Electric Proxy Statement for its Annual Meeting of Share
Owners held on April 26, 1989.
(xiii) Incorporated by reference to Exhibit A to the General
Electric Proxy Statement for its Annual Meeting of Share
Owners held April 25, 1990.
(xiv) Incorporated by reference to Exhibit 10(n) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1990.
(xv) Incorporated by reference to Exhibit 10(o) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1993.
(xvi) Incorporated by reference to Exhibit 10(p) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1993.
(xvii) Incorporated by reference to Exhibit 10(o) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1992.
(xviii) Incorporated by reference to Exhibit 10(r) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1993.
(xix) Incorporated by reference to Exhibit 28(a) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1990.
(xx) Incorporated by reference to Exhibit 99(b) to General
Electric Annual Report on Form 10-K (Commission file number
1-35) for the fiscal year ended December 31, 1992.
* Filed electronically herewith.
(b) Reports on Form 8-K during the quarter ended December 31, 1994.
There were no reports on Form 8-K filed by the registrant
during the fourth quarter of 1994.
<PAGE>
27
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities and
Exchange Act of 1934, the registrant has duly caused this annual report on
Form 10-K for the fiscal year ended December 31, 1994, to be signed on its
behalf by the undersigned, and in the capacities indicated, thereunto duly
authorized in the Town of Fairfield and State of Connecticut on the 24th
day of March 1995.
General Electric Company
(Registrant)
By Dennis D. Dammerman
-----------------------------
Senior Vice President-Finance
(Principal Financial Officer)
<PAGE>
28
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signer Title Date
------ ----- ----
Dennis D. Dammerman
-------------------------------
Senior Vice President - Finance Principal Financial March 24, 1995
Officer
Philip D. Ameen
------------------------------
Vice President and Comptroller Principal Accounting March 24, 1995
Officer
John F. Welch, Jr.* Chairman of the Board of Directors
(Principal Executive Officer)
H. Brewster Atwater, Jr.* Director
D. Wayne Calloway* Director
Silas S. Cathcart* Director
Dennis D. Dammerman* Director
Lawrence E. Fouraker Director
Paolo Fresco* Director
Claudio X. Gonzalez* Director
Henry H. Henley, Jr.* Director
David C. Jones* Director
Robert E. Mercer* Director
Gertrude G. Michelson* Director
Roger S. Penske* Director
Barbara Scott Preiskel* Director
Frank H. T. Rhodes* Director
Andrew C. Sigler* Director
Douglas A. Warner III* Director
A majority of the Board of Directors
*By Benjamin W. Heineman, Jr.
--------------------------------
Attorney-in-fact
March 24, 1995
<PAGE>
F-1
(ANNUAL REPORT PAGES)
Annual Report Page 25
FINANCIAL SECTION
CONTENTS
INDEPENDENT AUDITORS' REPORT 44
Audited Financial Statements
Earnings 26
Financial Position 28
Cash Flows 30
Notes to Consolidated Financial Statements 45
MANAGEMENT'S DISCUSSION
Operations
Consolidated Operations 32
GE Continuing Operations 32
Industry Segments 33
GECS Continuing Operations 36
International Operations 38
Financial Resources and Liquidity 39
Selected Financial Data 42
Financial Responsibility 44
<TABLE>
CHART:
REVENUES FROM CONTINUING OPERATIONS
<CAPTION>
(In billions) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$49.696 $51.283 $53.051 $55.701 $60.109
------------------------------------------------------------------------------
</TABLE>
<TABLE>
CHART:
EARNINGS PER SHARE FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGES
<CAPTION>
(In dollars) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$2.21 $2.27 $2.41 $2.45 $3.46
------------------------------------------------------------------------------
</TABLE>
<TABLE>
CHART:
DIVIDENDS PER SHARE
<CAPTION>
(In dollars) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$0.96 $1.04 $1.16 $1.305 $1.49
------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-2
Annual Report Page 26
<TABLE>
STATEMENT OF EARNINGS
<CAPTION>
General Electric Company
and consolidated affiliates
-----------------------------------
For the years ended December 31 (In millions) 1994 1993 1992
-------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C>
REVENUES
Sales of goods $30,740 $29,509 $29,575
Sales of services 8,803 8,268 8,331
Other income (note 3) 793 735 799
Earnings of GECS from continuing operations - - -
GECS revenues from operations (note 4) 19,773 17,189 14,346
------- ------- -------
Total revenues 60,109 55,701 53,051
------- ------- -------
COSTS AND EXPENSES (note 5)
Cost of goods sold 22,748 22,606 22,107
Cost of services sold 6,214 6,308 6,273
Interest and other financial charges (note 7) 4,949 4,054 4,464
Insurance losses and policyholder and annuity benefits 3,507 3,172 1,957
Provision for losses on financing receivables (note 8) 873 987 1,056
Other costs and expenses 12,987 12,287 11,168
Minority interest in net earnings of consolidated
affiliates 170 151 53
------- ------- -------
Total costs and expenses 51,448 49,565 47,078
------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
ACCOUNTING CHANGE 8,661 6,136 5,973
Provision for income taxes (note 9) (2,746) (1,952) (1,836)
------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGE 5,915 4,184 4,137
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS (note 2) (1,189) 993 588
------- ------- -------
EARNINGS BEFORE ACCOUNTING CHANGE 4,726 5,177 4,725
Cumulative effect of accounting change (note 20) - (862) -
------- ------- -------
Net earnings $ 4,726 $ 4,315 $ 4,725
======= ======= =======
-------------------------------------------------------------- -----------------------------------
NET EARNINGS PER SHARE (in dollars)
Continuing operations before accounting change $ 3.46 $ 2.45 $ 2.41
Discontinued operations before accounting change (0.69) 0.58 0.34
------- ------- -------
Earnings before accounting change 2.77 3.03 2.75
Cumulative effect of accounting change - (0.51) -
------- ------- -------
Net earnings per share $ 2.77 $ 2.52 $ 2.75
======= ======= =======
-------------------------------------------------------------- -----------------------------------
DIVIDENDS DECLARED PER SHARE (in dollars) $ 1.49 $ 1.305 $ 1.16
--------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement. In 1994,
Kidder, Peabody Group Inc., the securities broker-dealer subsidiary of GECS, was discontinued. Data for 1993
and 1992 have been reclassified to reflect this change. Per-share amounts have been adjusted for the 2-for-1
stock split in April 1994.
</TABLE>
<PAGE>
F-3
Annual Report Page 27
<TABLE>
<CAPTION>
GE GECS
-------------------------------- --------------------------------
1994 1993 1992 1994 1993 1992
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Sales of goods $30,767 $29,533 $29,595 $ - $ - $ -
Sales of services 8,863 8,289 8,348 - - -
Other income (note 3) 783 730 812 - - -
Earnings of GECS from continuing operations 2,085 1,567 1,331 - - -
GECS revenues from operations (note 4) - - - 19,875 17,276 14,418
------- ------- ------- ------- ------- -------
Total revenues 42,498 40,119 40,086 19,875 17,276 14,418
------- ------- ------- ------- ------- -------
COSTS AND EXPENSES (note 5)
Cost of goods sold 22,775 22,630 22,127 - - -
Cost of services sold 6,274 6,329 6,290 - - -
Interest and other financial charges (note 7) 410 525 768 4,545 3,538 3,726
Insurance losses and policyholder and annuity benefits - - - 3,507 3,172 1,957
Provision for losses on financing receivables (note 8) - - - 873 987 1,056
Other costs and expenses 5,211 5,124 5,319 7,862 7,236 5,904
Minority interest in net earnings of consolidated
affiliates 31 17 13 139 134 40
------- ------- ------- ------- ------- -------
Total costs and expenses 34,701 34,625 34,517 16,926 15,067 12,683
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
ACCOUNTING CHANGE 7,797 5,494 5,569 2,949 2,209 1,735
Provision for income taxes (note 9) (1,882) (1,310) (1,432) (864) (642) (404)
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGE 5,915 4,184 4,137 2,085 1,567 1,331
EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS (note 2) (1,189) 993 588 (1,189) 240 168
------- ------- ------- ------- ------- -------
EARNINGS BEFORE ACCOUNTING CHANGE 4,726 5,177 4,725 896 1,807 1,499
Cumulative effect of accounting change (note 20) - (862) - - - -
------- ------- ------- ------- ------- -------
Net earnings $ 4,726 $ 4,315 $ 4,725 $ 896 $ 1,807 $ 1,499
======= ======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
In the consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the consolidated financial
statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions
between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates" columns on page 26.
</TABLE>
<PAGE>
F-4
Annual Report Page 28
<TABLE>
Statement of Financial Position
<CAPTION>
General Electric Company
and consolidated affiliates
------------------------------
At December 31 (In millions) 1994 1993
----------------------------------------------------------------------- ------------------------------
<S> <C> <C>
ASSETS
Cash and equivalents $ 2,591 $ 3,056
Investment securities (note 10) 30,965 26,811
Current receivables (note 11) 7,527 8,195
Inventories (note 12) 3,880 3,824
GECS financing receivables (investment in time sales, loans and
financing leases) - net (note 13) 76,357 63,948
Other GECS receivables 5,763 5,018
Property, plant and equipment (including equipment leased
to others) - net (note 14) 23,465 21,153
Investment in GECS - -
Intangible assets (note 15) 11,373 10,052
All other assets (note 16) 23,950 24,356
Assets of discontinued securities broker-dealer operations (note 2) 8,613 85,093
-------- --------
TOTAL ASSETS $194,484 $251,506
======== ========
----------------------------------------------------------------------- ------------------------------
LIABILITIES AND EQUITY
Short-term borrowings (note 17) $ 57,781 $ 57,375
Accounts payable, principally trade accounts 6,766 5,467
Progress collections and price adjustments accrued 2,065 2,608
Dividends payable 699 615
All other GE current costs and expenses accrued (note 18) 5,543 6,414
Long-term borrowings (note 17) 36,979 28,194
Insurance liabilities, reserves and annuity benefits (note 19) 29,438 22,909
All other liabilities (note 20) 12,906 11,567
Deferred income taxes (note 21) 5,205 5,182
Liabilities of discontinued securities broker-dealer operations (note 2) 8,868 83,695
-------- --------
Total liabilities 166,250 224,026
-------- --------
Minority interest in equity of consolidated affiliates (note 22) 1,847 1,656
-------- --------
Common stock (1,857,013,000 shares issued) 594 584
Unrealized gains (losses) on investment securities (810) 848
Other capital 1,122 550
Retained earnings 30,793 28,613
Less common stock held in treasury (5,312) (4,771)
-------- --------
Total share owners' equity (notes 23 and 24) 26,387 25,824
-------- --------
TOTAL LIABILITIES AND EQUITY $194,484 $251,506
======== ========
-----------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement. Data for
1993 have been reclassified to state separately the assets and liabilities of the discontinued securities
broker-dealer operations. Share data have been adjusted for the 2-for-1 stock split in April 1994.
</TABLE>
<PAGE>
F-5
Annual Report Page 29
<TABLE>
<CAPTION>
GE GECS
-------------------- --------------------
1994 1993 1994 1993
------------------------------------------------------------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and equivalents $ 1,373 $ 1,536 $ 1,218 $ 1,520
Investment securities (note 10) 93 19 30,872 26,792
Current receivables (note 11) 7,807 8,561 - -
Inventories (note 12) 3,880 3,824 - -
GECS financing receivables (investment in time sales, loans and
financing leases) - net (note 13) - - 76,357 63,948
Other GECS receivables - - 6,012 5,201
Property, plant and equipment (including equipment leased
to others) - net (note 14) 9,525 9,542 13,940 11,611
Investment in GECS 9,380 10,809 - -
Intangible assets (note 15) 6,336 6,466 5,037 3,586
All other assets (note 16) 12,419 10,377 11,531 13,979
Assets of discontinued securities broker-dealer operations (note 2) - - 8,613 85,093
------- ------- -------- --------
TOTAL ASSETS $50,813 $51,134 $153,580 $211,730
======= ======= ======== ========
------------------------------------------------------------------------ -------------------- --------------------
LIABILITIES AND EQUITY
Short-term borrowings (note 17) $ 906 $ 2,391 $ 57,087 $ 55,243
Accounts payable, principally trade accounts 3,141 2,331 3,777 3,396
Progress collections and price adjustments accrued 2,065 2,608 - -
Dividends payable 699 615 - -
All other GE current costs and expenses accrued (note 18) 5,798 6,414 - -
Long-term borrowings (note 17) 2,699 2,413 34,312 25,809
Insurance liabilities, reserves and annuity benefits (note 19) - - 29,438 22,909
All other liabilities (note 20) 8,468 8,482 4,316 3,087
Deferred income taxes (note 21) 268 (299) 4,937 5,481
Liabilities of discontinued securities broker-dealer operations (note 2) - - 8,868 83,695
------- ------- -------- --------
Total liabilities 24,044 24,955 142,735 199,620
------- ------- -------- --------
Minority interest in equity of consolidated affiliates (note 22) 382 355 1,465 1,301
------- ------- -------- --------
Common stock (1,857,013,000 shares issued) 594 584 1 1
Unrealized gains (losses) on investment securities (810) 848 (821) 812
Other capital 1,122 550 2,006 1,784
Retained earnings 30,793 28,613 8,194 8,212
Less common stock held in treasury (5,312) (4,771) - -
------- ------- ------- -------
Total share owners' equity (notes 23 and 24) 26,387 25,824 9,380 10,809
------- ------- -------- --------
TOTAL LIABILITIES AND EQUITY $50,813 $51,134 $153,580 $211,730
======= ======= ======== ========
-----------------------------------------------------------------------------------------------------------------------
<FN>
In the consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the consolidated
financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated
affiliates" columns on page 28.
</TABLE>
<PAGE>
F-6
Annual Report Page 30
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
General Electric Company
and consolidated affiliates
-----------------------------------
For the years ended December 31 (In millions) 1994 1993 1992
-------------------------------------------------------------- -----------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,726 $ 4,315 $ 4,725
Adjustments for discontinued operations 1,189 (993) (588)
Adjustments to reconcile net earnings to cash provided
from operating activities
Cumulative effect of accounting change - 862 -
Depreciation, depletion and amortization 3,207 3,223 2,785
Earnings retained by GECS - continuing operations - - -
Deferred income taxes 1,228 548 642
Decrease (increase) in GE current receivables 668 (571) 135
Decrease (increase) in GE inventories (56) 750 820
Increase (decrease) in accounts payable 697 639 342
Increase in insurance liabilities, reserves and annuity benefits 1,624 1,479 703
Provision for losses on financing receivables 873 987 1,056
All other operating activities (2,399) 782 (1,172)
-------- -------- --------
Cash from continuing operations 11,757 12,021 9,448
Cash from (used for) discontinued operations 1,635 (1,834) 801
-------- -------- --------
CASH PROVIDED FROM OPERATING ACTIVITIES 13,392 10,187 10,249
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (7,492) (4,727) (4,804)
Dispositions of property, plant and equipment 2,506 1,139 1,795
Net increase in GECS financing receivables (9,525) (4,164) (4,683)
Payments for principal businesses purchased (2,606) (2,090) (2,013)
All other investing activities 372 (6,518) (3,753)
-------- -------- --------
Cash used for investing activities - continuing operations (16,745) (16,360) (13,458)
Cash from (used for) investing activities - discontinued operations 334 779 64
-------- -------- --------
CASH USED FOR INVESTING ACTIVITIES (16,411) (15,581) (13,394)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) (2,784) 2,406 3,418
Newly issued debt (maturities more than 90 days) 23,239 15,468 13,084
Repayments and other reductions (maturities more than 90 days) (13,098) (11,851) (9,007)
Disposition of GE shares from treasury (mainly for employee plans) 771 406 425
Purchase of GE shares for treasury (1,124) (770) (1,206)
Dividends paid to share owners (2,462) (2,153) (1,925)
All other financing activities 181 (69) -
-------- -------- --------
Cash from (used for) financing activities - continuing operations 4,723 3,437 4,789
Cash from (used for) financing activities - discontinued operations (2,169) 2,017 (367)
-------- -------- --------
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES 2,554 5,454 4,422
-------- -------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR (465) 60 1,277
Cash and equivalents at beginning of year 3,056 2,996 1,719
-------- -------- --------
Cash and equivalents at end of year $ 2,591 $ 3,056 $ 2,996
======== ======== ========
--------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $ (4,524) $ (3,754) $ (4,081)
Cash paid during the year for income taxes (1,777) (1,644) (1,033)
--------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement. Data
for 1993 and 1992 have been reclassified to state results of the securities broker-dealer as a
discontinued operation.
</TABLE>
<PAGE>
F-7
Annual Report Page 31
<TABLE>
<CAPTION>
GE GECS
-------------------------------- --------------------------------
1994 1993 1992 1994 1993 1992
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,726 $ 4,315 $ 4,725 $ 896 $ 1,807 $ 1,499
Adjustments for discontinued operations 1,189 (993) (588) 1,189 (240) (168)
Adjustments to reconcile net earnings to cash provided
from operating activities
Cumulative effect of accounting change - 862 - - - -
Depreciation, depletion and amortization 1,545 1,631 1,483 1,662 1,592 1,302
Earnings retained by GECS - continuing operations (1,181) (957) (831) - - -
Deferred income taxes 575 120 675 653 428 (33)
Decrease (increase) in GE current receivables 754 (625) 68 - - -
Decrease (increase) in GE inventories (56) 750 820 - - -
Increase (decrease) in accounts payable 810 114 (43) (222) 540 424
Increase in insurance liabilities, reserves and
annuity benefits - - - 1,624 1,479 703
Provision for losses on financing receivables - - - 873 987 1,056
All other operating activities (2,291) (16) (1,736) 140 770 500
------- ------- ------- -------- -------- -------
Cash from continuing operations 6,071 5,201 4,573 6,815 7,363 5,283
Cash from (used for) discontinued operations - 76 741 1,635 (1,910) 60
------- ------- ------- -------- -------- -------
CASH PROVIDED FROM OPERATING ACTIVITIES 6,071 5,277 5,314 8,450 5,453 5,343
------- ------- ------- -------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (1,743) (1,588) (1,445) (5,749) (3,139) (3,359)
Dispositions of property, plant and equipment 86 55 46 2,420 1,084 1,749
Net increase in GECS financing receivables - - - (9,525) (4,164) (4,683)
Payments for principal businesses purchased (575) - - (2,031) (2,090) (2,013)
All other investing activities 14 298 (13) 176 (6,793) (3,688)
------- ------- ------- -------- -------- -------
Cash used for investing activities - continuing operations (2,218) (1,235) (1,412) (14,709) (15,102) (11,994)
Cash from (used for) investing activities
- discontinued operations - 886 (93) 334 (107) 157
------- ------- ------- -------- -------- -------
CASH USED FOR INVESTING ACTIVITIES (2,218) (349) (1,505) (14,375) (15,209) (11,837)
------- ------- ------- -------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) (566) 46 (763) (2,261) 2,404 4,221
Newly issued debt (maturities more than 90 days) 766 215 1,331 22,473 15,253 11,753
Repayments and other reductions (maturities more than 90 days) (1,399) (2,325) (1,528) (11,699) (9,526) (7,479)
Disposition of GE shares from treasury (mainly for
employee plans) 771 406 425 - - -
Purchase of GE shares for treasury (1,124) (770) (1,206) - - -
Dividends paid to share owners (2,462) (2,153) (1,925) (904) (610) (500)
All other financing activities (2) - - 183 (69) -
------- ------- ------- -------- -------- -------
Cash from (used for) financing activities
- continuing operations (4,016) (4,581) (3,666) 7,792 7,452 7,995
Cash from (used for) financing activities
- discontinued operations - - - (2,169) 2,017 (367)
------- ------- ------- -------- -------- -------
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES (4,016) (4,581) (3,666) 5,623 9,469 7,628
------- ------- ------- -------- -------- -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR (163) 347 143 (302) (287) 1,134
Cash and equivalents at beginning of year 1,536 1,189 1,046 1,520 1,807 673
------- ------- ------- -------- -------- -------
Cash and equivalents at end of year $ 1,373 $ 1,536 $ 1,189 $ 1,218 $ 1,520 $ 1,807
======= ======= ======= ======== ======== =======
-----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $ (374) $ (473) $ (570) $ (4,150) $ (3,281) $(3,511)
Cash paid during the year for income taxes (1,456) (1,455) (936) (321) (189) (97)
-----------------------------------------------------------------------------------------------------------------------------------
<FN>
In the consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the consolidated financial
statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions
between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates" columns on page 30.
</TABLE>
<PAGE>
F-8
Annual Report Page 32
MANAGEMENT'S DISCUSSION OF OPERATIONS
OVERVIEW
General Electric Company's consolidated financial statements represent the
combination of the Company's manufacturing and nonfinancial services
businesses ("GE") and the accounts of General Electric Capital Services, Inc.
("GECS"). See note 1 to the consolidated financial statements, which explains
how the various financial data are presented.
Management's Discussion of Operations is presented in four parts:
Consolidated Operations, GE Continuing Operations, GECS Continuing Operations
and International Operations.
CONSOLIDATED OPERATIONS
1994 was a year in which the General Electric Company overcame significant
challenges to achieve record results. In the highly competitive global
marketplace, the Company's diversified portfolio of businesses achieved an 8%
increase in revenues from continuing operations. All of its businesses
contributed to the increase except, as expected, Aircraft Engines. Five
businesses - GE Capital Services, Motors and Industrial Systems (Motors),
Transportation Systems, Plastics and Information Services - achieved double-
digit growth rates.
CONSOLIDATED EARNINGS were $4.726 billion ($2.77 per share), up 10% from
1993's $4.315 billion ($2.52 per share) and the same as 1992's $4.725 billion
($2.75 per share). Three factors are important to these comparisons -
discontinued operations of the GECS securities broker-dealer and GE's
Aerospace businesses; 1993 restructuring provisions; and the effect of an
accounting change in 1993. Each is discussed separately below. Without these
items, 1994 earnings would have been $5.915 billion, up 22% from $4.862
billion in 1993, which was up 18% from $4.137 billion in 1992.
* DISCONTINUED OPERATIONS for all three years reflected results of
the GECS securities broker-dealer, Kidder, Peabody Group Inc. (Kidder,
Peabody). In 1993 and 1992, results of the discontinued GE Aerospace
businesses also were included. See note 2 to the financial statements for
details of these discontinued operations. The loss of $1.2 billion in 1994
included provision of $868 million for exit costs expected to be incurred in
connection with the liquidation of Kidder, Peabody. Management expects this
liquidation will be largely complete by the end of 1995 and that no further
associated costs will be incurred.
* RESTRUCTURING PROVISIONS in 1993 amounted to $678 million after
taxes. These provisions covered costs of a plan that will enhance the
Company's global competitiveness. The plan included explicit programs that
resulted in the closing, downsizing and streamlining of certain production,
service and administration facilities worldwide. Costs included, among other
things, asset write-offs, lease terminations and severance benefits.
Essentially all expenditures for the restructuring programs were completed by
the end of 1994. See Industry Segments beginning on page 33 for further
information on restructuring.
* THE 1993 ACCOUNTING CHANGE represented the adoption of Statement
of Financial Accounting Standards (SFAS) No. 112, Employers' Accounting for
Postemployment Benefits (see note 20). The transition effect of the accounting
change decreased net earnings by $862 million ($0.51 per share), with a
corresponding decrease in share owners' equity.
PRINCIPAL NEW ACCOUNTING STANDARDS are SFAS No. 114, Accounting by Creditors
for Impairment of a Loan, and the related SFAS No. 118, which together modify
the accounting and disclosure that applies when it is probable that all
amounts due under contractual terms of a commercial loan will not be
collected. Had these standards been adopted for 1994, there would have been no
effect on earnings or financial position, and management does not foresee any
significant future effect following adoption on January 1, 1995.
DIVIDENDS DECLARED totaled $2.546 billion in 1994. Per-share dividends of
$1.49 were up 14% from the previous year, following a 13% increase from the
year before. The 1994 increase marks the 19th consecutive year of dividend
growth. Even though substantial dividends were paid, the Company retained
sufficient earnings to invest in new plant and equipment for a wide variety of
capital expenditure projects, particularly those which increase productivity,
and to provide adequate financial resources for internal and external growth
opportunities.
GE CONTINUING OPERATIONS
GE TOTAL REVENUES were $42.5 billion in 1994, compared with $40.1 billion in
1993 and 1992.
* GE's sales of goods and services were $39.6 billion in 1994, an
increase of 5% from 1993, which was unchanged from 1992. Overall, volume was
about 6% higher in 1994 than in 1993, with significant increases in Plastics,
Power Systems, Appliances and Transportation Systems. Only Aircraft Engines
had a reduced level of shipments in 1994. Lower 1994 selling prices in many
businesses, particularly Power Systems and Medical Systems, partially offset
the volume increase. Overall, volume was about 2% higher in 1993 than in 1992,
but the increased volume was essentially offset by lower selling prices.
* GE's other income, earned from a wide variety of sources, was $783
million in 1994, $730 million in 1993 and $812 million in 1992. Details of
GE's other income are provided in note 3.
<PAGE>
F-9
Annual Report Page 33
* Earnings of GECS from continuing operations were up 33% in 1994,
following an 18% increase the year before. See page 36 for an analysis of
these earnings.
PRINCIPAL COSTS AND EXPENSES FOR GE are those classified as costs of goods and
services sold, and selling, general and administrative expenses.
* Operating margin is sales of goods and services less the costs of
goods and services sold, and selling, general and administrative expenses. In
1994, GE's operating margin rose to a record 13.6% of sales, an improvement of
1.1 percentage points from 12.5% (before restructuring provisions) in 1993,
which in turn was up from a comparable 11.5% in 1992. Including restructuring
provisions, operating margins were 9.9% and 11.1% in 1993 and 1992,
respectively. Appliances, NBC, Power Systems and Transportation Systems
increased their margin rates by one point or more in 1994. In 1993, all
businesses except Aircraft Engines increased their margin rates before
restructuring provisions by one to five points.
* Total cost productivity (sales in relation to costs on a constant
dollar basis) was 3.2% in 1994 compared with 3.8% in 1993 and 4.3% in 1992.
Cost savings provided by such productivity improvements more than offset the
impact of inflation in all three years. Aircraft Engines, because of declining
volume over the three-year period, has adversely affected consolidated
productivity performance. Total cost productivity in GE businesses other than
Aircraft Engines was 4.4% in 1994, compared with 5.3% and 4.8% in 1993 and
1992, respectively.
GE INTEREST EXPENSE in 1994 was $410 million, down 22% from $525 million in
1993. The lower interest expense was attributable principally to a decrease in
the average level of borrowings, partially offset by higher interest rates.
Interest expense decreased 32% in 1993 compared with 1992, primarily because
of lower borrowings and, to a lesser extent, lower interest rates.
ENTERING 1995 with excellent cash flows and a strong balance sheet, the
Company continues to be well positioned to deliver strong results to share
owners in an uncertain global economic environment.
GE INDUSTRY SEGMENT REVENUES AND OPERATING PROFIT for the past five years
are shown in the table on page 35. The industry segment data for prior years
related to the Power Generation and the Industrial Products and Systems
segments have been reclassified. For additional information, including a
description of the products and services included in each segment, see
note 26.
<TABLE>
CHART:
GE/S&P DIVIDENDS PER SHARE INCREASE COMPARED WITH 1989
<CAPTION>
1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GE 12.9% 22.4% 36.5% 53.5% 75.3%
S&P 500 9.5 10.4 12.0 13.8 19.3
------------------------------------------------------------------------------
</TABLE>
* AIRCRAFT ENGINES revenues were down 13% from the 1993 level,
following an 11% decrease the year before, reflecting primarily the continuing
downturn in the military and commercial markets that began about four years
ago. Operating profit increased 17% during 1994, principally because there was
no counterpart to 1993 restructuring provisions ($267 million) to cover
incremental costs associated with closing and relocating certain manufacturing
and warehousing facilities to reduce the cost structure of the business in
line with lower volume. Excluding 1993 restructuring provisions, operating
profit decreased 12% in 1994, following a 16% decline in 1993, both of which
were largely attributable to the lower volume.
About $1.8 billion of 1994 revenues were from sales to the U.S.
government, down about 25% from $2.4 billion in 1993, which was about the same
as in 1992. The lower revenues were primarily attributable to declines in
sales for the F110 jet and T700 helicopter programs.
Firm orders received during 1994 totaled $5.5 billion, down slightly
from $5.7 billion in 1993. The firm orders backlog at year-end 1994 was $7.6
billion ($7.7 billion at the end of 1993), approximately 32% of which was
scheduled for delivery in 1995.
Management has taken aggressive actions over the past four years to
respond to the dual impact of declining military sales and weakness in
worldwide commercial airline markets, reducing the work force by about 16,000
employees, or 40% of its work force, through layoffs and attrition.
* APPLIANCES revenues were up 7% from 1993, which was 4% higher than
in 1992, on considerably higher shipments. For U.S. operations, revenues
increased 12% on a good increase in unit volume, reflecting the combination of
improved markets and slightly higher share. Operating profit was up 84% in
1994, in part because there was no counterpart to provisions for restructuring
of $136 million in 1993 that covered costs associated with closing, downsizing
<PAGE>
F-10
Annual Report Page 34
and consolidating consumer service and production facilities. Operating profit
declined 4% in 1993, primarily as a result of restructuring provisions.
Excluding 1993 restructuring provisions, operating profit increased by 34% in
1994 and by 32% in 1993. The improved performance was primarily attributable
to strong productivity as well as higher volume.
* BROADCASTING revenues increased 8% in 1994 as a result of stronger
advertising revenues in sports, prime-time entertainment, the owned-and-
operated stations, and CNBC. 1993 revenues were 8% lower than 1992's,
primarily because there was no counterpart to the 1992 Summer Olympic Games.
Operating profit increased sharply in 1994, following a 29% increase in 1993.
The 1994 increase reflected the impact of higher prices for advertising,
improved ratings performance and substantially improved CNBC operations.
Trends over the three-year period were affected by 1993 restructuring
provisions of $81 million to cover lease terminations, associated asset write-
offs and other incremental costs to enhance productivity. Excluding 1993
restructuring provisions, 1994 operating profit was up 45% from 1993, which
was 69% higher than in 1992. The improvement in 1993 was attributable
primarily to the absence of a counterpart to the programming costs associated
with the Olympic Games and generally lower 1993 overhead costs.
* INDUSTRIAL PRODUCTS AND SYSTEMS (principally the former Industrial
segment) revenues rose 10% in 1994, following a 4% increase in 1993. The
improvements in revenues were largely attributable to significantly higher
shipments of locomotives in Transportation Systems in both years and much
higher Motors volume in 1994. Operating profit increased 47% in 1994, after a
16% decline in 1993, reflecting primarily the $253 million of restructuring
provisions in 1993 for incremental costs of downsizing and consolidating
production and logistical operations worldwide. Absent 1993 restructuring
provisions, operating profit increased 15% from 1993, which was 8% higher than
in 1992. The 1994 increase was attributable to continuing productivity
improvements in Lighting's European operations and a combination of higher
volume and productivity in Motors and Transportation Systems. The 1993
increase resulted primarily from improved productivity across the segment and
substantially improved Lighting operations in Europe.
Transportation Systems orders were $2.8 billion in 1994, up 50% from
1993. The backlog at year-end 1994 was $3.5 billion ($2.0 billion at the end
of 1993), about 37% of which was scheduled for shipment in 1995.
* MATERIALS revenues were up 13% in 1994, primarily because of
increased shipments across all major product groups. Operating profit rose 16%
in 1994, in part because there was no counterpart to $52 million of
restructuring provisions in 1993 for equipment write-offs and downsizing of
European operations. Excluding 1993 restructuring provisions, operating profit
increased 9% as a result of ongoing productivity and improved volume, which
more than offset the impact of lower selling prices and much higher material
costs. Revenues increased 4% in 1993, primarily as a result of higher volume
in U.S. and Asian markets, which was partially offset by worldwide price
declines. Operating profit was 13% higher than in 1992 as substantial
productivity improvements, material cost decreases and favorable exchange
gains much more than offset the lower prices, the impact of inflation and
restructuring provisions.
* POWER GENERATION (principally the former Power Systems segment)
revenues increased 7% in 1994 as a result of considerably higher shipments of
large gas turbines and combined-cycle units, offset in part by lower selling
prices. Operating profit was 21% ahead of 1993, reflecting the lack of a
counterpart to 1993 restructuring provisions of $82 million that covered the
incremental costs of facility demolitions and associated asset write-offs.
Adjusting for 1993 restructuring provisions, operating profit increased 12%,
primarily as a result of lower material costs and volume improvements that
more than offset lower selling prices. Revenues increased 8% in 1993,
principally as a result of higher levels of gas turbine shipments and
increased sales of nuclear fuel. Operating profit increased 20% over 1992,
principally on the strength of gas turbine revenues and productivity, the
combination of which more than offset the impact of restructuring provisions.
Power Generation orders were $5.7 billion for 1994, compared with $5.6
billion in 1993. The backlog of unfilled orders at year-end 1994 was $9.4
billion (about the same as at the end of 1993), with 54% of it scheduled to be
shipped in 1995.
* TECHNICAL PRODUCTS AND SERVICES revenues were up 3% in 1994,
primarily the result of slightly higher volume partially offset by lower
selling prices. For Medical Systems, the impact of a difficult U.S. health
care market was more than offset by strength in European and Asian markets.
Segment operating profit rose 11% in 1994, in part because of 1993
restructuring provisions of $60 million to downsize manufacturing and services
operations worldwide. Excluding such provisions, operating profit was 3% ahead
of 1993, principally reflecting productivity and volume improvements in excess
of price declines in both Medical Systems and Information Services. Strength
in European and Asian markets more than offset the negative effects of U.S.
market conditions. Segment revenues were down 11% in 1993, principally because
of 1992 transfers, dispositions and realignments. Segment operating profit in
<PAGE>
F-11
Annual Report Page 35
<TABLE>
<CAPTION>
SUMMARY OF INDUSTRY SEGMENTS
General Electric Company and consolidated affiliates
--------------------------------------------------------
For the years ended December 31 (In millions) 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
GE
Aircraft Engines $ 5,714 $ 6,580 $ 7,368 $ 7,777 $ 7,504
Appliances 5,965 5,555 5,330 5,225 5,592
Broadcasting 3,361 3,102 3,363 3,121 3,236
Industrial Products and Systems 9,406 8,575 8,210 8,248 8,239
Materials 5,681 5,042 4,853 4,736 5,140
Power Generation 5,933 5,530 5,106 4,813 4,071
Technical Products and Services 4,285 4,174 4,674 4,686 4,259
All Other 2,348 1,803 1,581 1,485 1,401
Corporate items and eliminations (195) (242) (399) (538) (352)
------- ------- ------- ------- -------
Total GE 42,498 40,119 40,086 39,553 39,090
------- ------- ------- ------- -------
GECS
Financing 14,932 12,399 10,544 10,069 9,000
Specialty Insurance 4,926 4,862 3,863 2,989 2,853
All Other 17 15 11 (5) (2)
------- ------- ------- ------- -------
Total GECS 19,875 17,276 14,418 13,053 11,851
------- ------- ------- ------- -------
Eliminations (2,264) (1,694) (1,453) (1,323) (1,245)
------- ------- ------- ------- -------
CONSOLIDATED REVENUES $60,109 $55,701 $53,051 $51,283 $49,696
======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
GE
Aircraft Engines $ 935 $ 798 $ 1,274 $ 1,390 $ 1,253
Appliances 683 372 386 400 435
Broadcasting 500 264 204 209 477
Industrial Products and Systems 1,328 901 1,071 1,088 1,098
Materials 967 834 740 800 1,010
Power Generation 1,238 1,024 854 679 478
Technical Products and Services 787 706 912 693 538
All Other 2,403 1,796 1,549 1,453 1,327
------- ------- ------- ------- -------
Total GE 8,841 6,695 6,990 6,712 6,616
------- ------- ------- ------- -------
GECS
Financing 2,662 1,727 1,366 1,327 1,267
Specialty Insurance 589 770 641 501 457
All Other (302) (288) (272) (290) (275)
------- ------- ------- ------- -------
Total GECS 2,949 2,209 1,735 1,538 1,449
------- ------- ------- ------- -------
Eliminations (2,072) (1,554) (1,317) (1,199) (1,105)
------- ------- ------- ------- -------
CONSOLIDATED OPERATING PROFIT 9,718 7,350 7,408 7,051 6,960
GE interest and financial charges, net of eliminations (417) (529) (752) (881) (941)
GE items not traceable to segments (640) (685) (683) (563) (480)
------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND ACCOUNTING CHANGES $ 8,661 $ 6,136 $ 5,973 $ 5,607 $ 5,539
======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------
<FN>
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement. "GE" means
the basis of consolidation as described in note 1 to the consolidated financial statements; "GECS" means General
Electric Capital Services, Inc. and all of its affiliates and associated companies. Operating profit of GE segments
excludes interest and other financial charges; operating profit of GECS includes interest and discount expense,
which is the largest element of GECS' operating costs. Data for prior periods have been reclassified to reflect the
securities broker-dealer segment as a discontinued operation and to conform to the 1994 grouping of products and
services in the Industrial Products and Systems and the Power Generation segments (see note 26).
</TABLE>
<PAGE>
F-12
Annual Report Page 36
1993 was down sharply, mainly because there was no counterpart to the 1992
gain on realignment of the equity position of GE and Ericsson in their mobile
communications joint venture and because of restructuring provisions.
Orders received by Medical Systems in 1994 were down slightly from 1993.
A decline in U.S. medical equipment markets more than offset orders growth in
the rest of the world. The backlog of unfilled orders at year-end 1994 was
$1.5 billion ($1.7 billion at the end of 1993), about 93% of which was
scheduled to be shipped in 1995.
* ALL OTHER consists primarily of GECS' earnings, which are
discussed below. Also included are revenues derived from licensing use of GE
know-how to others.
GECS CONTINUING OPERATIONS
GECS conducts its business in two segments. The Financing segment includes
financing operations of General Electric Capital Corporation (GE Capital). The
Specialty Insurance segment includes operations of Employers Reinsurance
Corporation (ERC) and the other insurance businesses described on page 61.
GECS REVENUES FROM OPERATIONS were $19.9 billion in 1994, up 15% from 1993,
which was up 20% from 1992.
GECS EARNINGS from continuing operations were $2.085 billion in 1994, up 33%
from 1993, which was up 18% from 1992. The 1994 increase reflected a very
strong performance in the Financing segment, resulting primarily from asset
growth, increased financing spreads and improved asset quality. Earnings in
the Specialty Insurance segment declined in 1994 due to higher insurance
losses. The 1993 earnings increase reflected substantially higher earnings in
the Financing segment, mainly as a result of the favorable 1993 interest rate
environment, asset growth and improved asset quality. Earnings in the
Specialty Insurance segment also increased substantially in 1993 over 1992.
GECS' PRINCIPAL COST IS FOR INTEREST on borrowings in the Financing segment.
Interest expense in 1994 was $4.5 billion, 28% higher than in 1993, which was
5% lower than in 1992. The 1994 increase reflected the effects of higher
average borrowings used to finance asset growth as well as the effects of
higher interest rates. The 1993 decrease was a result of substantially lower
interest rates on higher average borrowings. The composite interest rate on
GECS' borrowings was 5.47% in 1994, compared with 4.96% in 1993 and 5.78% in
1992.
GECS' OTHER COSTS AND EXPENSES increased to $7.9 billion in 1994 from $7.2
billion in 1993 and $5.9 billion in 1992, reflecting higher investment levels
and costs associated with acquired businesses and portfolios.
GECS INDUSTRY SEGMENT REVENUES AND OPERATING PROFIT for the past five years
are shown in the table on page 35. Revenues from operations (earned income)
are detailed in note 4.
* FINANCING segment revenues from operations were $14.9 billion in
1994, up 20% from 1993, which was up 18% from 1992. Asset growth and increased
yields (interest rates earned) were significant factors in both years.
Operating profit was $2.7 billion in 1994, up 54% from 1993, which was
26% higher than in 1992, primarily as a result of asset growth and increased
financing spreads, the excess of yield over interest rates on borrowings.
Improved asset quality also contributed to increased operating profit in 1994
and, to a lesser extent, in 1993. Assets grew 14% during 1994 and 30% during
1993 because of higher origination volumes and acquisitions of businesses and
portfolios, including the 1993 acquisition of the annuity business. Yields on
assets increased in 1994 after holding essentially flat in 1993 and 1992.
Financing spreads increased during 1994, as the improvement in yields outpaced
increases in borrowing rates. Financing spreads increased to a greater extent
in 1993, when borrowing rates declined substantially. The provision for losses
on financing receivables declined in both 1994 and 1993 as the quality of the
portfolio improved. Other costs and expenses increased in both years,
primarily as a result of asset growth.
The portfolio of financing receivables, which was $76.4 billion at the
end of 1994 and $63.9 billion at the end of 1993, is the Financing segment's
largest asset and its primary source of revenues. Related allowances for
losses at the end of 1994 aggregated $2.1 billion (2.63% of receivables - the
same level as 1993 and 1992) and are, in management's judgment, appropriate
given the risk profile of the portfolio. A discussion about the quality of
certain elements of the Financing segment investment portfolio follows.
CONSUMER LOANS RECEIVABLE, primarily retailer and auto receivables, were
$23.1 billion and $17.3 billion at the end of 1994 and 1993, respectively. In
addition, GECS' investment in consumer auto finance lease receivables was $7.5
billion and $5.6 billion at the end of 1994 and 1993, respectively. Nonearning
receivables, which were 1.4% of total loans and leases (1.7% at the end of
1993), aggregated $422 million at the end of 1994. The provision for losses on
retailer and auto financing receivables was $502 million in 1994, a 7%
increase from $469 million in 1993, reflecting growth in the portfolio of
receivables. Most nonearning receivables were private-label credit card
receivables, the majority of which were subject to various loss-sharing
arrangements that provide full or partial recourse to the originating
retailer.
COMMERCIAL REAL ESTATE LOANS classified as financing receivables by
the Commercial Real Estate business were $11.9 billion at December 31,
1994, up $1.0 billion from the end of 1993. In addition, the investment
portfolio
<PAGE>
F-13
Annual Report Page 37
of the annuity business included $1.4 billion of commercial property
loans at December 31, 1994, up $0.3 billion from the end of 1993. Commercial
real estate loans are generally secured by first mortgages. In addition to
loans, the commercial real estate portfolio included, in other assets, $2.1
billion ($2.2 billion in 1993) of assets acquired for resale from various
financial institutions, including the Resolution Trust Corporation. Values
realized on sales of these assets and the pace of such sales continue to meet
or exceed expectations at the time of purchase. Also included in other assets
were investments in real estate ventures at year-end 1994 totaling $1.4
billion, the same as at year-end 1993. Those investments are made as a part of
original financings and in conjunction with loan restructurings where
management believes that such investments will enhance economic returns.
Commercial Real Estate's foreclosed properties at the end of 1994
declined to $20 million from $110 million at the end of 1993, primarily
because of sales.
At December 31, 1994, Commercial Real Estate's portfolio included loans
secured by and investments in a variety of property types that continued to be
well dispersed geographically. Nonearning and reduced-earning receivables
declined to $179 million in 1994 from $272 million in 1993, reflecting write-
offs and proactive management of delinquent receivables in a stabilized
commercial real estate market. Sustaining the 1994 improvements depends on
many factors, including interest rates and various local market conditions.
The loss provision for Commercial Real Estate's investments was $287 million
in 1994 ($244 million related to receivables and $43 million related to other
assets), compared with $387 million and $299 million in 1993 and 1992,
respectively. The 1994 decrease resulted from lower provisions related to real
estate ventures and foreclosed properties. Loss provisions in 1993 increased
as the portfolio was adversely affected by a weakened commercial real estate
market.
<TABLE>
CHART:
<CAPTION>
GECS REVENUES FROM CONTINUING OPERATIONS
(In billions) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$11.851 $13.053 $14.418 $17.276 $19.875
------------------------------------------------------------------------------
</TABLE>
OTHER FINANCING RECEIVABLES, $32.5 billion at December 31, 1994,
consisted primarily of a diverse commercial, industrial and equipment loan
and lease portfolio. This portfolio grew $3.5 billion during 1994, while
nonearning and reduced-earning receivables decreased to $165 million at year-
end 1994 from $237 million at year-end 1993. Included in other financing
receivables are financings provided for highly leveraged management buyouts
and corporate recapitalizations. The portion of those investments classified
as financing receivables was $2.4 billion at the end of 1994, compared with
$3.3 billion at the end of 1993, as repayments continued to reduce this
liquidating portfolio. The year-end balance of highly leveraged transactions
included amounts that had been written down to estimated fair value and
carried in other assets as a result of restructuring or in-substance
repossession. These balances aggregated $336 million at the end of 1994 and
$544 million at the end of 1993 (net of allowances of $224 million and $244
million, respectively).
GECS had loans and leases to commercial airlines, as discussed in note
16, that aggregated about $7.6 billion at the end of 1994, up from $6.8
billion at the end of 1993. At year-end 1994, GECS' commercial aircraft
positions included financial guaranties and funding commitments amounting to
$506 million (compared with $450 million in 1993) and conditional
commitments to purchase aircraft at a cost of $81 million ($865 million at
December 31, 1993). The decline in purchase commitments resulted from 1994
purchases of aircraft.
* Specialty Insurance revenues from operations were $4.9 billion in
1994, essentially the same as 1993, which was up 26% from 1992. The increase
in 1993 reflected higher premium and investment income as well as the impact
of a full year of the creditor insurance business, which was consolidated
during 1992. Operating profit declined from $770 million in 1993 to $589
million in 1994 as a result of an operating loss in the private mortgage
insurance business. The 1994 operating loss resulted from adverse loss
development in private mortgage pool insurance, the result of poor economic
conditions and housing value declines in southern California. These losses
more than offset operating profit increases in other parts of the segment,
including primary mortgage insurance. Based on conditions at December 31,
1994, management believes that loss development should diminish in 1995 and in
subsequent years. However, future economic conditions and housing values in
southern California are uncertainties that could affect that outlook. The 1993
<PAGE>
F-14
Annual Report Page 38
operating profit was 20% higher than the $641 million recorded in 1992,
reflecting higher premium volume from bond refunding in the financial guaranty
insurance business as well as reduced claims expense in the creditor insurance
business.
ENTERING 1995, management believes that vigilant attention to risk management,
along with the diversity and strength of GECS' resources, position it to deal
effectively with increasing competition in an ever-changing global economy.
INTERNATIONAL OPERATIONS
Estimated results of international operations include all exports from the
United States plus the results of GE's and GECS' operations located outside
the United States. International revenues were $20.0 billion (33% of
consolidated revenues), compared with $18.2 billion in 1993 and $17.8 billion
in 1992. In 1994, about 40% of GE's sales of goods and services were
international, approximately the same as in the previous two years. The chart
below left shows the growth in international revenues in relation to total
revenues over the past five years. International operating profit was $2.6
billion (27% of consolidated operating profit) in 1994, $2.3 billion in 1993
and $2.2 billion in 1992.
GECS' international revenues were $3.7 billion in 1994 on year-end
assets of about $21.5 billion. These revenues, which were derived primarily
from operations in Europe, Canada and the Pacific Basin, almost doubled from
1992's $2.0 billion. Expansion of GECS' operations into the international
marketplace is expected to continue in 1995 and beyond.
The accompanying financial results reported in U.S. dollars are
unavoidably affected by currency exchange. A number of techniques are used to
manage the effects of currency exchange, including selective borrowings in
local currencies and selective hedging of significant cross-currency
transactions. International activity is diverse, as shown for revenues in the
chart at the bottom right of this page. Principal currencies include those of
countries in the European Monetary Union, the Japanese yen and the Canadian
dollar. The 1994 devaluation of the Mexican peso had virtually no effect on
the Company's 1994 financial position or results of operations, and management
does not expect a significant future effect.
GE's export sales by major world areas follow.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
GE'S TOTAL EXPORTS FROM THE UNITED STATES
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Pacific Basin $3,260 $2,645 $2,696
Europe 1,319 2,320 2,018
Americas 1,027 981 1,126
Other 821 1,039 1,079
------ ------ ------
Exports to external customers 6,427 6,985 6,919
Exports from U.S. to affiliates 1,683 1,513 1,281
------ ------ ------
Total exports $8,110 $8,498 $8,200
====== ====== ======
----------------------------------------------------------------------------
</TABLE>
GE made a positive 1994 contribution of approximately $4.4 billion to
the U.S. balance of trade. Total exports in 1994 were $8.1 billion; imports
from GE affiliates were $1.2 billion; and direct imports from external
suppliers were $2.5 billion.
<TABLE>
CHART:
CONSOLIDATED REVENUES FROM CONTINUING OPERATIONS
<CAPTION>
(In billions) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United States $34.915 $34.631 $35.228 $37.471 $40.064
International 14.781 16.652 17.823 18.230 20.045
------------------------------------------------------------------------------
</TABLE>
<TABLE>
CHART:
CONSOLIDATED INTERNATIONAL REVENUES FROM CONTINUING OPERATIONS
<CAPTION>
(In billions) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Europe $7.235 $7.972 $8.721 $9.042 $9.116
Pacific Basin 3.093 4.030 4.349 4.531 5.997
Americas 3.268 3.194 3.315 3.215 3.763
Other 1.185 1.456 1.438 1.442 1.169
------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-15
Annual Report Page 39
MANAGEMENT'S DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY
OVERVIEW
This discussion of financial resources and liquidity focuses on the
Statement of Financial Position (page 28) and the Statement of Cash Flows
(page 30).
Throughout the discussion, it is important to understand the differences
between the businesses of GE and GECS. Although GE's manufacturing and
nonfinancial services activities involve a variety of different businesses,
their underlying characteristics are the development, the preparation for
market and the sale of tangible goods and services. Risks and rewards are
directly related to the ability to manage and finance those activities.
GECS' principal businesses provide financing, asset management and
insurance to third parties. The underlying characteristics of these businesses
involve the management of financial risk. GECS' risks and rewards stem from
the abilities of its businesses to continue on a selective basis to design and
provide a wide range of services, including financial services, in a
competitive marketplace, and to receive adequate compensation for such
services. GECS is not a "captive finance company" or a vehicle for "off-
balance-sheet financing" for GE; very little of GECS' business is directly
related to other GE operations.
Despite the different business profiles of GE and GECS, the global
commercial airline industry is one significant example of an important source
of business for both. GE assumes financing positions primarily in support of
engine sales, whereas GECS is a significant source of lease and loan financing
for the industry (see details in note 16). Even during the current difficult
period in this historically cyclical industry, management believes that the
financing positions are reasonably protected by collateral values and by its
ability to control assets, either by ownership or by security interests.
The fundamental differences between GE and GECS are reflected in the
measurements commonly used by investors, rating agencies and financial
analysts. These differences will become clearer in the discussion that
follows with respect to the more significant items in the financial
statements.
DISCONTINUED OPERATIONS are displayed in the accompanying financial statements
separately from data on continuing operations. Details of assets and
liabilities of the GECS securities broker-dealer at December 31, 1994, are
shown in note 2. The assets of $8.6 billion included $1.5 billion of
collateralized mortgage obligations (CMOs). A plan announced on October 6,
1994, to transfer $6.7 billion of CMOs to GE Capital was not executed in light
of the later agreement to transfer certain assets and operations to Paine
Webber Group Inc. (PaineWebber). On January 31, 1995, total assets of Kidder,
Peabody had been reduced to $5.5 billion and investment in CMOs to $0.6
billion. Management does not expect to incur any additional costs in
connection with liquidation of these assets.
<TABLE>
CHART:
CONSOLIDATED ASSETS - CONTINUING OPERATIONS
<CAPTION>
(In billions) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
$111.004 $123.115 $135.472 $166.413 $185.871
------------------------------------------------------------------------------
</TABLE>
Discontinued operations used $200 million of cash from continuing
operations in 1994. In 1993 and 1992, cash provided by discontinued operations
totaled $962 million and $498 million, respectively. The 1993 cash provided
was principally associated with amounts received on transfer of GE's Aerospace
businesses.
STATEMENT OF FINANCIAL POSITION
* INVESTMENT SECURITIES for each of the past two years were mainly
investment-grade debt securities held by GECS' Specialty Insurance and annuity
businesses in support of obligations to policyholders and annuitants. The
increase of $4.1 billion at GECS during 1994 was principally related to
acquisitions, partially offset by declines in fair value resulting from rising
interest rates during the year.
* GE'S CURRENT RECEIVABLES were $7.8 billion and $8.6 billion at the
end of 1994 and 1993, respectively, and included $5.7 billion due from
customers at the end of both years. As a measure of asset utilization,
customer receivables turn-over was 6.9 in 1994, compared with 7.0 in 1993.
Current receivables other than amounts owed by customers are amounts that did
not originate from sales of GE goods or services, such as advances to
suppliers in connection with large contracts.
* INVENTORIES were $3.9 billion at December 31, 1994, up slightly
from the end of 1993. As a measure of inventory utilization, turnover was 6.9
in 1994, compared with 6.0 in 1993, and has been improving dramatically over
the past several years (see chart on page 40). Inventory turnover improved by
more than one turn in Plastics, Motors, Electrical Distribution and Control,
and Transportation Systems in 1994. Last-in, first-out (LIFO) revaluations
decreased $197 million in 1994, compared with decreases of $179 million in
1993 and $204 million in 1992. Included in these changes were decreases of $72
million, $101 million and $183 million (1994, 1993 and 1992, respectively)
<PAGE>
F-16
Annual Report Page 40
resulting from lower inventory levels. In each of the last three years, there
was a net current-year cost decrease.
* GECS FINANCING RECEIVABLES were $76.4 billion at year-end 1994, an
increase of $12.4 billion over 1993. These receivables are discussed on page
36 and in note 13.
* PROPERTY, PLANT AND EQUIPMENT (including equipment leased to
others) was $23.5 billion at December 31, 1994, up $2.3 billion from 1993.
GE's property, plant and equipment consists of investments for its own
productive use, whereas the largest element of GECS' investment is in
equipment provided to third parties on operating leases. Details by category
of investment can be found in note 14.
GE's total expenditures for new plant and equipment during 1994 totaled
$1.7 billion, up slightly from $1.6 billion in 1993. Total expenditures for
the past five years were $9.0 billion, of which 25% was to increase
productivity; 22% was to increase capacity; 13% was to support new business
start-ups; 12% was to replace and renew older equipment; and 28% was for such
other purposes as improvement of research and development facilities and
safety and environmental protection.
GECS added $5.6 billion to its equipment leased to others during 1994.
* INTANGIBLE ASSETS were $11.4 billion at year-end 1994. GE's
intangibles were $6.3 billion, about the same as the end of 1993. GECS'
intangibles increased $1.5 billion, most of which was related to acquisitions.
* ALL OTHER ASSETS totaled $24.0 billion at year-end 1994, down $0.4
billion from the end of 1993. The principal reasons for GE's increase of $2.0
billion were the acquisition of Nuovo Pignone, an Italian electrical equipment
manufacturer, which will be consolidated effective January 1, 1995, and the
increase in the prepaid pension asset. GECS' decrease of $2.4 billion related
principally to a decrease in mortgages held for resale associated with the
mortgage servicing businesses, partially offset by PaineWebber securities
received in exchange for certain assets of Kidder, Peabody (see note 2).
* CONSOLIDATED BORROWINGS aggregated $94.8 billion at December 31,
1994, compared with $85.6 billion at the end of 1993. The major debt-rating
agencies evaluate the financial condition of GE and of GE Capital (GECS' major
public borrowing entity) differently because of their distinct business
characteristics. Using criteria appropriate to each and considering their
combined strength, those major rating agencies continue to give the highest
ratings to debt of both GE and GE Capital.
GE has agreed to make payments to GE Capital to the extent necessary to
cause GE Capital's consolidated ratio of earnings to fixed charges to be not
less than 1.10. For the years 1994, 1993 and 1992, such ratios were 1.63, 1.62
and 1.44, respectively, substantially above the level at which payout would be
required. Three years advance notice is required to terminate this agreement.
GE's total borrowings were $3.6 billion at year-end 1994 ($0.9 billion
short-term, $2.7 billion long-term), a decrease of about $1.2 billion from
year-end 1993. A significant portion of this decrease was attributable to
record cash from operating activities arising from continuing improvements in
working capital management. GE's total debt at the end of 1994 equaled 11.9%
of total capital, down 3.6 points from the end of 1993.
GECS' total borrowings were $91.4 billion at December 31, 1994, of which
$57.1 billion was due in 1995 and $34.3 billion was due in subsequent years.
Comparable amounts at the end of 1993 were $81.1 billion total, $55.3 billion
due within one year, and $25.8 billion due thereafter. GECS' composite
interest rates are discussed on page 36. A large portion of GECS' borrowings
was commercial paper ($43.7 billion and $46.3 billion at the end of 1994 and
1993, respectively). Most of this commercial paper is issued by GE Capital.
The average remaining terms and interest rates of GE Capital's commercial
paper were 45 days and 5.90%, respectively, at the end of 1994, compared with
35 days and 3.39% at the end of 1993. GE Capital's ratio of debt to equity
(leverage) was 8.43 to 1 at the end of 1994, compared with 7.59 to 1 at the
end of 1993. Excluding net unrealized gains and losses on investment
securities, GE Capital's leverage was 7.94 to 1 at the end of 1994, compared
with 7.96 to 1 at the end of 1993.
INTEREST RATE AND CURRENCY RISK MANAGEMENT
Both GE and GECS are exposed to various types of risk, although the nature of
their activities means that the respective risks are different. The
multinational nature of GE's operations and its relatively low level of
borrowings means that currency management is more important than managing
exposure to changes in interest rates.
<TABLE>
CHART:
INVENTORY ANNUAL TURNOVER
<CAPTION>
1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
4.63 4.71 5.26 5.97 6.86
------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-17
Annual Report Page 41
On the other hand, changes in interest rates are the more significant
exposure for GECS because of the potential effects of such changes on
financing spreads.
The correlation between interest rate changes and financing spreads is
subject to many factors and cannot be forecasted with reliability. Although
not necessarily relevant to future effects, management estimates that, all
else constant, an increase of 100 basis points in interest rates for all of
1994 would have reduced GECS net earnings by approximately $90 million.
GE and GECS use various financial instruments, particularly interest
rate, currency and basis swaps, but also options and currency forwards, to
manage their respective risks. GE and GECS are exclusively end users of these
instruments, which are commonly referred to as derivatives; neither GE nor
GECS engages in trading, market-making or other speculative activities in the
derivatives markets. Established practices require that derivative financial
instruments relate to specific asset, liability or equity transactions or to
currency exposures.
The total exposure of GE and GECS to credit risk associated with changes
in the market value of swaps at December 31, 1994, was $39 million and $412
million, respectively. Management does not anticipate any loss from this
exposure.
More detailed information regarding these financial instruments, as well
as the strategies and policies for their use, is contained in notes 1, 17, and
28.
STATEMENT OF CASH FLOWS
Because cash management activities of GE and GECS are separate and distinct,
it is more useful to review their cash flows statements separately.
GE
GE's cash and equivalents aggregated $1.4 billion at the end of 1994, slightly
lower than at the end of 1993. During 1994, GE generated a record $6.1 billion
in cash from continuing operating activities. This provided resources to pay
$2.5 billion in dividends to share owners, to invest $1.7 billion in new plant
and equipment and to reduce total debt by $1.2 billion.
Operating activities are the principal source of GE's cash flows from
continuing operations. Over the past three years, operating activities have
provided more than $15.8 billion of cash. Principal applications were payment
of dividends to share owners ($6.5 billion), investment in new plant and
equipment ($4.8 billion) and reduction of debt ($4.2 billion). In addition,
the Company repurchased and placed into treasury $3.1 billion of its common
stock during the past three years.
<TABLE>
CHART:
GE BORROWINGS AS A PERCENT OF TOTAL CAPITAL INVESTED
<CAPTION>
1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
23.55% 26.18% 22.39% 15.50% 11.87%
------------------------------------------------------------------------------
</TABLE>
In December 1994, GE's Board of Directors authorized the repurchase of
up to $5 billion of the Company's common stock over the next two years. This
program is a direct result of GE's solid financial condition and cash-
generating capability, and it was authorized after evaluating various
alternatives to enhance long-term share owner value.
Based on past performance and current expectations, in combination with
the financial flexibility that comes with a strong balance sheet and the
highest credit ratings, management believes that GE is in a sound position to
complete the two-year share repurchase program, to grow dividends in line with
earnings and to continue making long-term investments for future growth,
including selective acquisitions and investments in joint ventures.
Expenditures for new plant and equipment in 1995 are expected to be about the
same as in 1994.
GECS
GECS' primary source of cash is financing activities involving the continued
rollover of short-term borrowings and appropriate addition of borrowings with
a reasonable balance of maturities. Over the past three years, GECS'
borrowings with maturities of 90 days or less have increased by $4.4 billion.
New borrowings of $49.5 billion having maturities longer than 90 days were
added during those years, while $28.7 billion of such longer-term borrowings
were retired. GECS also generated $19.5 billion from continuing operating
activities.
GECS' principal use of cash has been investing in assets to grow its
businesses. Of the $41.8 billion that GECS invested over the past three years,
$18.4 billion was used for additions to financing receivables, $12.2 billion
was used to invest in new equipment, principally for lease to others, and $6.1
billion was for acquisitions of new businesses.
With the financial flexibility that comes with excellent credit ratings,
management believes GECS is well positioned to meet the global needs of its
customers for capital and to continue providing GE share owners with good
returns.
<PAGE>
F-18
Annual Report Page 42
MANAGEMENT'S DISCUSSION OF SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA summarizes on the opposite page some data frequently
requested about General Electric Company. The data are divided into three
sections: upper portion - consolidated data; middle portion - GE data that
reflect various conventional measurements for industrial enterprises; and
lower portion - GECS data that reflect key information pertinent to financial
services.
GE'S TOTAL RESEARCH AND DEVELOPMENT (R&D) expenditures were $1,741 million in
1994, down $214 million or 11% from 1993. In 1994, expenditures of $1,176
million were from GE's own funds, down 9% from 1993. This decrease was more
than accounted for by a decline at Aircraft Engines as two major development
programs were completed and the engines certified, and by completion of GE's
obligation to the Sarnoff laboratory. The remaining businesses had a modest
1994 increase in R&D expenditures, reflecting continuation of new product
programs such as the AC locomotive, ultrasound, high-efficiency lighting and
the next generation of gas turbines. Expenditures from funds provided by
customers (mainly the U.S. government) were $565 million in 1994, down $93
million, reflecting principally the completion of certain development work on
Aircraft Engines programs.
GE'S TOTAL BACKLOG of firm unfilled orders at the end of 1994 was $24.3
billion, up $1.5 billion from the 1993 level, principally because of strong
growth in international orders for locomotives. Orders constituting this
backlog may be canceled or deferred by customers, subject in certain cases to
cancellation penalties. See Industry Segments beginning on page 33 for further
discussion on unfilled orders of relatively long-cycle manufacturing
businesses. About 50% of total unfilled orders at the end of 1994 was
scheduled to be shipped in 1995, with most of the remainder to be shipped in
the two years after that. For comparison, about 42% of the 1993 backlog was
expected to be shipped in 1994.
REGARDING ENVIRONMENTAL MATTERS, the Company's operations, like operations of
other companies engaged in similar businesses, involve the use, disposal and
cleanup of substances regulated under environmental protection laws.
In 1994, GE had capital expenditures of about $63 million for projects
related to the environment. The comparable amount in 1993 was about $140
million. These amounts exclude expenditures for remediation actions, which are
principally expensed and discussed below. Capital expenditures for
environmental purposes have included pollution control devices - such as
wastewater treatment plants, groundwater monitoring devices, air strippers or
separators, and incinerators - at new and existing facilities constructed or
upgraded in the normal course of business. Consistent with policies stressing
environmental responsibility, average annual capital expenditures other than
for remediation projects are presently expected to be about $100 million over
the next two years. This level is in line with existing levels for new or
expanded programs to build facilities or modify manufacturing processes to
minimize waste and reduce emissions.
GE also is involved in a sizable number of remediation actions to clean
up hazardous wastes as required by federal and state laws. Such statutes
require that responsible parties fund remediation actions regardless of fault,
legality of original disposal or ownership of a disposal site. Expenditures
for site remediation actions amounted to approximately $98 million in 1994
compared with $80 million in 1993. It is presently expected that remediation
actions will require average annual expenditures in the range of $80 million
to $110 million over the next two years. Liabilities for remediation costs are
based on management's best estimate of future costs; when there appears to be
a range of possible costs with equal likelihood, liabilities are based on the
lower end of such range. Possible insurance recoveries are not considered in
estimating liabilities.
It is difficult to estimate with any meaning the annual level of future
remediation expenditures because of the many uncertainties, including
uncertainties about the status of the law, regulation, technology and
information related to individual sites. Subject to the foregoing, management
believes that capital expenditures and remediation actions to comply with the
present laws governing environmental protection will not have a material
effect on consolidated earnings, liquidity or competitive position. In making
this determination, management considered the fact that, if remediation
expenditures were to continue at the 1994 level, liabilities recorded at the
end of 1994 would be sufficient to cover expenditures through the end of the
century, and the probability of incurring more than nominal expenditures
beyond 2015 is remote. Of course, lower annual expenditures could be incurred
over a longer period without increasing the total expenditures.
<TABLE>
CHART:
CONSOLIDATED EMPLOYMENT AT YEAR END - CONTINUING OPERATIONS
<CAPTION>
------------------------------------------------------------------------------
(In thousands) 1990 1991 1992 1993 1994
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
United States 183 173 168 157 156
Other countries 62 63 58 59 60
------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-19
Annual Report Page 43
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
--------------------------------------------------------------
(Dollar amounts in millions; per-share amounts in dollars) 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
Revenues $ 60,109 $55,701 $53,051 $51,283 $ 49,696
Earnings from continuing operations 5,915 4,184 4,137 3,943 3,920
Earnings (loss) from discontinued operations (1,189) 993 588 492 383
Earnings before accounting changes 4,726 5,177 4,725 4,435 4,303
Net earnings 4,726 4,315 4,725 2,636 4,303
Dividends declared 2,546 2,229 1,985 1,808 1,696
Earned on average share owners' equity 18.1% 17.5% 20.9% 12.2% 20.2%
Per share
Earnings from continuing operations $ 3.46 $ 2.45 $ 2.41 $ 2.27 $ 2.21
Earnings (loss) from discontinued operations (0.69) 0.58 0.34 0.28 0.21
Earnings before accounting changes 2.77 3.03 2.75 2.55 2.42
Net earnings 2.77 2.52 2.75 1.51 2.42
Dividends declared 1.49 1.305 1.16 1.04 0.96
Stock price range 54 7/8-45 53 1/2-40 3/8 43 3/4-36 3/8 39-26 1/2 37 3/4-25
Total assets 194,484 251,506 192,876 166,508 152,000
Long-term borrowings 36,979 28,194 25,298 22,602 20,886
Shares outstanding - average (in thousands) 1,708,738 1,707,979 1,714,396 1,737,863 1,775,104
Share owner accounts - average 458,000 464,000 481,000 495,000 506,000
Employees at year end
United States 156,000 157,000 168,000 173,000 183,000
Other countries 60,000 59,000 58,000 62,000 62,000
Discontinued operations (primarily U.S.) 5,000 6,000 42,000 49,000 53,000
-------- -------- -------- -------- --------
Total employees 221,000 222,000 268,000 284,000 298,000
======== ======== ======== ======== ========
-----------------------------------------------------------------------------------------------------------------------
GE DATA
Short-term borrowings $ 906 $ 2,391 $ 3,448 $ 3,482 $ 2,721
Long-term borrowings 2,699 2,413 3,420 4,332 4,048
Minority interest 382 355 350 353 288
Share owners' equity 26,387 25,824 23,459 21,683 21,680
-------- -------- -------- -------- --------
Total capital invested $ 30,374 $ 30,983 $30,677 $29,850 $ 28,737
======== ======== ======== ======== ========
Return on average total capital invested 15.9% 15.2% 16.9% 11.1% 17.4%
Borrowings as a percentage of total capital invested 11.9% 15.5% 22.4% 26.2% 23.6%
Working capital $544 $(419) $(822) $(231) $ 813
Property, plant and equipment additions 1,743 1,588 1,445 2,164 2,102
Year-end orders backlog 24,324 22,861 25,434 26,049 25,195
-----------------------------------------------------------------------------------------------------------------------
GECS DATA
Revenues $ 19,875 $ 17,276 $14,418 $13,053 $11,851
Earnings from continuing operations 2,085 1,567 1,331 1,221 1,125
Earnings (losses) from discontinued operations (1,189) 240 168 54 (31)
Net earnings 896 1,807 1,499 1,256 1,094
Share owner's equity 9,380 10,809 8,884 7,758 6,833
Minority interest 1,465 1,301 994 865 923
Borrowings from others 91,399 81,052 72,360 63,313 55,378
Ratio of debt to equity at GE Capital (a) 7.94:1 7.96:1 7.91:1 7.80:1 7.77:1
Total assets of GE Capital $130,904 $117,939 $92,632 $80,528 $70,385
Reserve coverage on financing receivables 2.63% 2.63% 2.63% 2.63% 2.63%
Insurance premiums written $3,962 $3,956 $ 2,900 $2,155 $ 1,981
(a) Equity excludes unrealized gains and losses on investment securities.
-----------------------------------------------------------------------------------------------------------------------
<FN>
Prior-period data have been reclassified, when necessary, to reflect classification of securities broker-dealer
activities as a discontinued operation. See note 20 to the consolidated financial statements for information about
the 1993 accounting change. The 1991 accounting change represented the adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions. "GE" means the basis of consolidation as described in
note 1 to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its
affiliates and associated companies. Transactions between GE and GECS have been eliminated from the "consolidated
information." Share data reflect the 2-for-1 stock split in April 1994.
</TABLE>
<PAGE>
F-20
Annual Report Page 44
MANAGEMENT'S DISCUSSION OF FINANCIAL RESPONSIBILITY
The financial data in this report, including the audited financial statements,
have been prepared by management using the best available information and
applying judgment. Accounting principles used in preparing the financial
statements are those that are generally accepted in the United States.
Management believes that a sound, dynamic system of internal financial
controls that balances benefits and costs provides the best safeguard for
Company assets. Professional financial managers are responsible for
implementing and overseeing the financial control system, reporting on
management's stewardship of the assets entrusted to it by share owners and
maintaining accurate records.
GE is dedicated to the highest standards of integrity, ethics and social
responsibility. This dedication is reflected in written policy statements
covering, among other subjects, environmental protection, potentially
conflicting outside interests of employees, compliance with antitrust laws,
proper business practices and adherence to the highest standards of conduct
and practices in transactions with the U.S. government. Management continually
emphasizes to all employees that even the appearance of impropriety can erode
public confidence in the Company. Ongoing education and communication programs
and review activities, such as those conducted by the Company's Policy
Compliance Review Board, are designed to create a strong compliance culture -
one that encourages employees to raise their policy questions and concerns and
that prohibits retribution for doing so.
KPMG Peat Marwick LLP provide an objective, independent review of
management's discharge of its obligations relating to the fairness of
reporting operating results and financial condition. Their report for 1994
appears below. The Audit Committee of the Board (consisting solely of
Directors from outside GE) maintains an ongoing appraisal - on behalf of share
owners - of the activities and independence of the Company's independent
auditors, the activities of its internal audit staff, financial reporting
process, internal financial controls and compliance with key Company policies.
John F. Welch, Jr. Dennis D. Dammerman
Chairman of the Board and Senior Vice President
Chief Executive Officer Finance
February 10, 1995
INDEPENDENT AUDITORS' REPORT
TO SHARE OWNERS AND BOARD OF DIRECTORS OF
GENERAL ELECTRIC COMPANY
We have audited the financial statements of General Electric Company and
consolidated affiliates as listed in Item 14(a)(1) on page 23. In
connection with our audits of the consolidated financial statements, we
also have audited the financial statement schedule as listed in Item
14(a)(2) on page 23. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of General Electric Company
and consolidated affiliates at December 31, 1994 and 1993, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1994, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
As discussed in notes 20 and 23 to the consolidated financial statements,
the Company in 1993 adopted required changes in its methods of accounting
for postemployment benefits and for investments in certain securities.
KPMG Peat Marwick LLP
Stamford, Connecticut
February 10, 1995
<PAGE>
F-21
Annual Report Page 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION. The consolidated financial statements represent the adding
together of all affiliates - companies that General Electric directly or
indirectly controls, either through majority ownership or otherwise. Results
of associated companies - generally companies that are 20% to 50% owned and
over which GE, directly or indirectly, has significant influence - are
included in the financial statements on a "one-line" basis.
FINANCIAL STATEMENT PRESENTATION. Financial data and related measurements are
presented in the following categories.
* GE. This represents the adding together of all affiliates other
than General Electric Capital Services, Inc. ("GECS"), whose continuing
operations are presented on a one-line basis.
* GECS. This affiliate owns all of the common stock of General
Electric Capital Corporation (GE Capital), Employers Reinsurance Corporation
(ERC) and Kidder, Peabody Group Inc. (Kidder, Peabody). GE Capital, ERC and
their respective affiliates are consolidated in the GECS columns and
constitute its business. In 1994, Kidder, Peabody was classified as a
discontinued operation (see note 2). Prior-period data shown in the financial
statements and the related notes have been reclassified, as appropriate, to
reflect this change.
* CONSOLIDATED. These data represent the adding together of GE
and GECS.
The effects of transactions among related companies within and between
each of the above-mentioned groups are eliminated. Transactions between GE and
GECS are not material.
SALES OF GOODS AND SERVICES. A sale is recorded when title passes to the
customer or when services are performed in accordance with contracts.
GECS REVENUES FROM OPERATIONS ("EARNED INCOME"). Income on all loans is
recognized on the interest method. Accrual of interest income is suspended at
the earlier of the time at which collection of an account becomes doubtful or
the account becomes 90 days delinquent.
Financing lease income, which includes residual values and investment
tax credits, is recorded on the interest method so as to produce a level yield
on funds not yet recovered. Unguaranteed residual values included in lease
income are based primarily on periodic independent appraisals of the values of
leased assets remaining at expiration of the lease terms.
Operating lease income is recognized on a straight-line basis over the
terms of underlying leases.
Origination, commitment and other nonrefundable fees related to fundings
are deferred and recorded in earned income on the interest method. Commitment
fees related to loans not expected to be funded and line-of-credit fees are
deferred and recorded in earned income on a straight-line basis over the
period to which the fees relate. Syndication fees are recorded in earned
income at the time related services are performed unless significant
contingencies exist.
Premiums on short-duration insurance contracts are reported as earned
income over the terms of the related reinsurance treaties or insurance
policies. In general, earned premiums are calculated on a pro rata basis or
are determined based on reports received from reinsureds. Premium adjustments
under retrospectively rated reinsurance contracts are recorded based on
estimated losses and loss expenses, including both case and incurred-but-not-
reported reserves. Revenues on long-duration insurance contracts are reported
as earned when due. Premiums received under annuity contracts are not reported
as revenues but as annuity benefits - a liability - and are adjusted according
to terms of the respective policies.
DEPRECIATION AND AMORTIZATION. The cost of most of GE's manufacturing plant
and equipment is depreciated using an accelerated method based primarily on a
sum-of-the-years digits formula. If manufacturing plant and equipment is
subject to abnormal economic conditions or obsolescence, additional
depreciation is provided.
The cost of GECS' equipment leased to others on operating leases is
amortized, principally on a straight-line basis, to estimated net salvage
value over the lease term or over the estimated economic life of the
equipment. Depreciation of property and equipment for GECS' own use is
recorded on either a sum-of-the-years digits formula or a straight-line basis
over the lives of the assets.
RECOGNITION OF LOSSES ON FINANCING RECEIVABLES AND INVESTMENTS. GE Capital
maintains an allowance for losses on financing receivables at an amount that
it believes is sufficient to provide adequate protection against future losses
in the portfolio. When collateral is repossessed in satisfaction of a loan,
the receivable is written down against the allowance for losses to estimated
fair value, transferred to other assets and subsequently carried at the lower
of cost or estimated fair value. This accounting has been employed principally
for specialized financing transactions.
See note 8 for further information on GECS' allowance for losses on
financing receivables.
CASH EQUIVALENTS. Marketable securities with original maturities of three
months or less are included in cash equivalents.
INVESTMENT SECURITIES. The Company has designated its investments in debt
securities and marketable equity securities as available-for-sale. Those
securities are reported at fair value, with net unrealized gains and losses
<PAGE>
F-22
Annual Report Page 46
included in equity, net of applicable taxes. Unrealized losses that are other
than temporary are recognized in earnings.
INVENTORIES. All inventories are stated at the lower of cost or realizable
values. Cost for virtually all of GE's U.S. inventories is stated on a last-
in, first-out (LIFO) basis; cost of other inventories is primarily determined
on a first-in, first-out (FIFO) basis.
INTANGIBLE ASSETS. Goodwill is amortized over its estimated period of benefit
on a straight-line basis; other intangible assets are amortized on appropriate
bases over their estimated lives. No amortization period exceeds 40 years.
Goodwill in excess of associated expected operating cash flows is considered
to be impaired and is written down to fair value.
DEFERRED INSURANCE ACQUISITION COSTS. For the property and casualty business,
deferred insurance acquisition costs are amortized pro rata over the contract
periods in which the related premiums are earned. For the life insurance
business, these costs are amortized over the premium-paying periods of the
contracts in proportion either to anticipated premium income or to gross
profit, as appropriate. For certain annuity contracts, such costs are
amortized on the basis of anticipated gross profits. For other lines of
business, acquisition costs are amortized over the life of the related
insurance contracts. Deferred insurance acquisition costs are reviewed for
recoverability; for short-duration contracts, anticipated investment income is
considered in making recoverability evaluations.
INTEREST RATE AND CURRENCY RISK MANAGEMENT. As a matter of policy, neither GE
nor GECS engages in derivatives trading or market-making activities.
Generally, payments and receipts associated with financial instruments used to
manage interest rate and currency risk are recognized along with the effects
of associated transactions. If, however, an instrument is designated but is
ineffective as a hedge, the instrument is marked to market and recognized in
operations immediately.
NOTE 2 DISCONTINUED OPERATIONS
A summary of discontinued operations follows.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings (loss) from GECS securities
broker-dealer $(1,189) $240 $168
Earnings from GE Aerospace - 753 420
------- ---- ----
Earnings (loss) from discontinued
operations $(1,189) $993 $588
======= ==== ====
----------------------------------------------------------------------------
</TABLE>
GECS SECURITIES BROKER-DEALER. In November 1994, GE elected to terminate the
operations of Kidder, Peabody, the GECS securities broker-dealer, by
initiating an orderly liquidation of its assets and liabilities. As part of
the liquidation plan, GE received securities of Paine Webber Group Inc. valued
at $657 million in exchange for certain broker-dealer assets and operations.
Summary operating results of the discontinued broker-dealer operations follow.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 4,578 $ 4,861 $ 4,022
======= ======= =======
Earnings (loss) before income taxes $ (551) $ 439 $ 300
Provision (benefit) for income taxes (230) 199 132
------- ------- -------
Earnings (loss) from discontinued
operations (321) 240 168
Provision for loss, net of income tax
benefit of $266 (868) - -
------- ------- -------
Earnings (loss) from GECS securities
broker-dealer $(1,189) $ 240 $ 168
======= ======= =======
----------------------------------------------------------------------------
</TABLE>
A summary of Kidder, Peabody's assets and liabilities at December 31,
1994, which are expected to be substantially liquidated in 1995, follows.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions)
----------------------------------------------------------------------------
<S> <C>
Assets at liquidation values
Trading securities <F1> $2,808
Securities purchased under agreements to resell 2,400
Trade receivables 2,934
Other 471
------
$8,613
======
Liabilities at settlement values
Short-term borrowings $2,869
Trade accounts payable 2,019
Securities sold under agreements to repurchase 2,231
Other 1,749
------
$8,868
======
----------------------------------------------------------------------------
<FN>
<F1> Trading securities included $1.5 billion of collateralized mortgage
obligations (CMOs).
----------------------------------------------------------------------------
</TABLE>
<PAGE>
F-23
Annual Report Page 47
GE AEROSPACE. In April 1993, General Electric Company transferred GE's
Aerospace business segment, GE Government Services, Inc., and an operating
component of GE that operated Knolls Atomic Power Laboratory under a contract
with the U.S. Department of Energy to a new company controlled by the
shareholders of Martin Marietta Corporation in a transaction valued at $3.3
billion. Summary operating results of discontinued aerospace operations
follow.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1993 1992
----------------------------------------------------------------------------
<S> <C> <C>
Revenues $996 $5,231
==== ======
Earnings before income taxes $119 $ 668
Provision for income taxes 44 248
----- ------
Earnings from discontinued operations 75 420
Gain on transfer, net of income taxes of $752 678 -
----- ------
Earnings from GE Aerospace $753 $ 420
==== ======
----------------------------------------------------------------------------
</TABLE>
NOTE 3 GE OTHER INCOME
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Royalty and technical agreements $395 $371 $384
Associated companies 115 65 195
Marketable securities and
bank deposits 77 75 73
Customer financing 28 29 40
Other investments
Dividends 62 50 18
Interest 21 21 22
Other sundry items 85 119 80
---- ---- ----
$783 $730 $812
==== ==== ====
----------------------------------------------------------------------------
</TABLE>
NOTE 4 GECS REVENUES FROM OPERATIONS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Time sales, loan, investment
and other income $ 9,709 $ 7,997 $ 7,136
Financing leases 2,539 2,315 2,151
Operating lease rentals 3,802 3,267 2,444
Premium and commission income of insurance
affiliates 3,825 3,697 2,687
------- ------- -------
$19,875 $17,276 $14,418
======= ======= =======
----------------------------------------------------------------------------
</TABLE>
Included in earned income from financing leases were gains on the sale
of equipment at lease completion of $180 million in 1994, $145 million in 1993
and $126 million in 1992.
NOTE 5 SUPPLEMENTAL COST DETAILS
Total expenditures for research and development were $1,741 million, $1,955
million and $1,896 million in 1994, 1993 and 1992, respectively. The Company-
funded portion aggregated $1,176 million in 1994, $1,297 million in 1993 and
$1,353 million in 1992.
Rental expense under operating leases was as follows.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(In millions) 1994 1993 1992
-----------------------------------------------------------------------------
<S> <C> <C> <C>
GE $514 $635 $683
GECS 468 413 276
-----------------------------------------------------------------------------
</TABLE>
At December 31, 1994, minimum rental commitments under noncancelable
operating leases aggregated $2,496 million and $3,427 million for GE and GECS,
respectively. Amounts payable over the next five years are as follows.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
(In millions) 1995 1996 1997 1998 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GE $341 $257 $217 $192 $147
GECS 403 370 341 321 299
-----------------------------------------------------------------------------
</TABLE>
GE's selling, general and administrative expense totaled $5,211 million,
$5,124 million and $5,319 million in 1994, 1993 and 1992, respectively.
NOTE 6 PENSION AND OTHER RETIREE BENEFITS
GE and its affiliates sponsor a number of pension, retiree health and life
insurance and other retiree benefit plans. Principal plans are discussed
below; other plans are not significant individually or in the aggregate.
PRINCIPAL PENSION PLANS are the GE Pension Plan and the GE Supplementary
Pension Plan.
The GE Pension Plan covers substantially all GE em-ployees and 55% of
GECS employees in the United States. Generally, benefits are based on the
greater of a formula recognizing career earnings or a formula recognizing
length of service and final average earnings. Benefit provisions are subject
to collective bargaining. At the end of 1994, the GE Pension Plan covered
approximately 459,000 participants, including 139,000 employees, 143,000
former employees with vested rights to future benefits and 177,000 retirees
and beneficiaries receiving benefits.
The GE Supplementary Pension Plan is an unfunded plan providing
supplementary retirement benefits primarily to higher-level, longer-service
U.S. employees.
<PAGE>
F-24
Annual Report Page 48
PRINCIPAL RETIREE BENEFIT PLANS generally provide health and life insurance
benefits to employees who retire under the GE Pension Plan with 10 or more
years of service. Benefit provisions are subject to collective bargaining. At
the end of 1994, these plans covered approximately 248,000 retirees and
dependents.
TRANSFER OF AEROSPACE BUSINESSES in 1993 resulted in associated transfers of
GE Pension Plan assets of $1,169 million and projected benefit obligations of
$979 million to new pension plans. The 1993 gain on transfer of discontinued
operations included pension plan curtailment/settlement losses of $125 million
before income taxes and retiree health and life plan curtailment/settlement
gains of $245 million before income taxes.
Pension, retiree health and life insurance benefits of the discontinued
securities broker-dealer were not significant.
ACTUARIAL ASSUMPTIONS used to determine benefit obligations for principal
plans at December 31, 1994, included a discount rate of 8.5% (7.25% at
December 31, 1993) and an average rate of future increases in benefit
compensation of 5.5% (4.25% at December 31, 1993).
The assumed rate of future increases in per capita cost of health care
benefits (the health care cost trend rate) was 9.5% for 1994, decreasing to
9.0% for 1995 and gradually decreasing to 5.0% after the year 2022. Increasing
the health care cost trend rates by one percentage point would increase the
December 31, 1994, accumulated postretirement benefit obligation by $54
million and would increase annual aggregate service and interest costs by $5
million.
Recognized return on plan assets was determined by applying the expected
long-term rate of return of 9.5% to the market-related value of assets.
Gains and losses that occur because actual experience differs from
actuarial assumptions are amortized over the average future service period of
employees. Amounts allocable to prior service for plan amendments are
amortized in a similar manner.
EMPLOYER COSTS for principal pension and retiree health and life insurance
benefit plans follow.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
COST (INCOME) FOR PENSION PLANS
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Benefit cost for service during
the year - net of employee
contributions $ 496 $ 452 $ 494
Interest cost on benefit obligation 1,491 1,486 1,502
Actual return on plan assets (316) (3,221) (1,562)
Unrecognized portion of return (1,951) 1,066 (584)
Amortization (294) (352) (436)
------- ------- --------
Pension plan cost (income) $ (574) $ (569)<F1> $ (586)<F1>
======= ======= ========
----------------------------------------------------------------------------
<FN>
<F1> Amounts excluding discontinued Aerospace operations were $(555) million
for 1993 and $(494) million for 1992.
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
COST (INCOME) FOR RETIREE HEALTH AND LIFE PLANS
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
RETIREE HEALTH PLANS
Benefit cost for service during the year $ 78 $ 49 $ 62
Interest cost on benefit obligation 191 192 203
Actual return on plan assets - (3) (4)
Unrecognized portion of return (1) 1 -
Amortization (3) (26) (40)
---- ---- ----
Retiree health plan cost 265 213 221
---- ---- ----
RETIREE LIFE PLANS
Benefit cost for service during the year 24 21 24
Interest cost on benefit obligation 105 111 110
Actual return on plan assets (2) (152) (78)
Unrecognized portion of return (120) 42 (20)
Amortization 8 7 2
---- ---- ----
Retiree life plan cost 15 29 38
---- ---- ----
Total $280 $242 <F1> $259 <F1>
==== ==== ====
----------------------------------------------------------------------------
<FN>
<F1>Amounts excluding discontinued Aerospace operations were $224 million for
1993 and $213 million for 1992.
----------------------------------------------------------------------------
</TABLE>
FUNDING POLICY for the GE Pension Plan is to contribute amounts sufficient to
meet minimum funding requirements set forth in employee benefit and tax laws
plus such additional amounts as GE may determine to be appropriate from time
to time. GE has not made contributions since 1987 because the fully funded
status of the GE Pension Plan precludes current tax deduction and because any
Company contribution would require the Company to pay annual excise taxes.
Subject to limits imposed by tax laws, GE funds the present value of future
life insurance benefits for retirees. In general, retiree health benefits are
paid as covered expenses are incurred.
The following table compares the market-related value of assets with the
present value of benefit obligations, recognizing the effects of future
compensation and service. The market-related value of assets is based on cost
plus recognition of market appreciation and depreciation in the portfolio over
five years, a method that reduces the short-term impact of market
fluctuations.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
FUNDED STATUS OF PRINCIPAL PLANS
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
PENSION PLANS
Market-related value of assets $25,441 $24,532 $24,204
Projected benefit obligation 19,334 20,796 17,999
RETIREE HEALTH AND LIFE PLANS
Market-related value of assets 1,346 1,252 1,220
Accumulated postretirement
benefit obligation 3,701 4,120 3,743
----------------------------------------------------------------------------
</TABLE>
Trust assets consist mainly of common stock and fixed-income
investments. GE common stock represents less than 3% of trust assets and is
held in part in an indexed portfolio.
Schedules reconciling the benefit obligations for principal plans with
GE's recorded liabilities in the Statement of Financial Position are shown on
the following page.
<PAGE>
F-25
Annual Report Page 49
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
RECONCILIATION OF BENEFIT OBLIGATION
WITH RECORDED LIABILITY Pension plans Retiree health plans Retiree life plans
----------------- ------------------- -----------------
December 31 (In millions) 1994 1993 1994 1993 1994 1993
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Benefit obligation $ 19,334 $ 20,796 $2,386 $2,586 $ 1,315 $ 1,534
Fair value of trust assets (26,166) (27,193) - (13) (1,323) (1,317)
Unamortized balances
SFAS No. 87 transition gain 923 1,077 - - - -
Experience gains (losses) 2,548 2,371 (112) (654) (198) (206)
Plan amendments (602) (395) 188 580 130 -
Recorded prepaid asset 4,489 3,840 - - 76 -
-------- -------- ------ ------ ------- -------
Recorded liability $ 526 $ 496 $2,462 $2,499 $ - $ 11
======== ======== ====== ====== ======= =======
-----------------------------------------------------------------------------------------------------------
</TABLE>
The portion of the projected benefit obligation representing the
accumulated benefit obligation for pension plans was $18,430 million and
$19,890 million at the end of 1994 and 1993, respectively. The vested benefit
obligation for pension plans was $18,305 million and $19,732 million at the
end of 1994 and 1993, respectively.
Details of the accumulated postretirement benefit obligation are shown
below.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
ACCUMULATED POSTRETIREMENT BENEFIT OBLIGATION
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
RETIREE HEALTH PLANS
Retirees and dependents $1,858 $2,017
Employees eligible to retire 101 119
Other employees 427 450
------ ------
$2,386 $2,586
====== ======
RETIREE LIFE PLANS
Retirees $1,099 $1,147
Employees eligible to retire 55 79
Other employees 161 308
------ ------
$1,315 $1,534
====== ======
----------------------------------------------------------------------------
</TABLE>
NOTE 7 INTEREST AND OTHER FINANCIAL CHARGES
GE. Interest capitalized, principally on major property, plant and equipment
projects, was $21 million in 1994 and 1993, and $29 million in 1992.
GECS. Interest and discount expense reported in the Statement of Earnings is
net of interest income on temporary investments of excess funds ($45 million,
$42 million and $48 million in 1994, 1993 and 1992, respectively) and
capitalized interest ($9 million, $5 million and $6 million in 1994, 1993 and
1992, respectively).
NOTE 8 GECS ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
GECS allowance for losses on financing receivables represented 2.63% of total
financing receivables at year-end 1994 and 1993. The allowance for small-
balance receivables is determined principally on the basis of actual
experience during the preceding three years. Further allowances are provided
to reflect management's judgment of additional loss potential. For other
receivables, principally the larger loans and leases, the allowance for losses
is determined primarily on the basis of management's judgment of net loss
potential, including specific allowances for known troubled accounts. The
table below shows the activity in the allowance for losses on financing
receivables during each of the past three years.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $1,730 $1,607 $ 1,508
Provisions charged to operations 873 987 1,056
Net transfers related to
companies acquired or sold 199 126 52
Amounts written off - net (740) (990) (1,009)
------ ------ -------
Balance at December 31 $2,062 $1,730 $ 1,607
====== ====== =======
----------------------------------------------------------------------------
</TABLE>
All accounts or portions thereof deemed to be uncollectible or to
require an excessive collection cost are written off to the allowance for
losses. Generally, small-balance accounts are progressively written down (from
10% when more than three months delinquent to 100% when 9-12 months
delinquent) to record the balances at estimated realizable value. If at any
time during that period an account is judged to be uncollectible, such as in
the case of a bankruptcy, the uncollectible balance is written off. Large-
balance accounts are reviewed at least quarterly, and those accounts that are
more than three months delinquent are written down, if necessary, to record
the balances at estimated realizable value. Amounts written off in 1994 were
approximately 0.91% of average gross financing receivables outstanding during
the year, compared with 1.46% and 1.58% of average gross financing receivables
outstanding during 1993 and 1992, respectively.
<PAGE>
F-26
Annual Report Page 50
NOTE 9 PROVISION FOR INCOME TAXES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
GE
Estimated amounts payable $1,305 $1,207 $ 697
Deferred tax expense from
temporary differences 592 120 762
Investment credit deferred
(amortized) - net (15) (17) (27)
------ ------ ------
1,882 1,310 1,432
------ ------ ------
GECS
Estimated amounts payable 447 221 307
Deferred tax expense from
temporary differences 431 428 102
Investment credit deferred
(amortized) - net (14) (7) (5)
------ ------ ------
864 642 404
------ ------ ------
CONSOLIDATED
Estimated amounts payable 1,752 1,428 1,004
Deferred tax expense from
temporary differences 1,023 548 864
Investment credit deferred
(amortized) - net (29) (24) (32)
------ ------ ------
$2,746 $1,952 $1,836
====== ====== ======
----------------------------------------------------------------------------
</TABLE>
GE includes GECS in filing a consolidated U.S. federal income tax
return. GECS' provision for estimated taxes payable includes its effect on the
consolidated return.
Estimated consolidated amounts payable includes amounts applicable to
non-U.S. jurisdictions of $453 million, $302 million and $257 million in 1994,
1993 and 1992, respectively.
Deferred income tax balances reflect the impact of temporary differences
between the carrying amount of assets and liabilities and their tax bases and
are stated at enacted tax rates expected to be in effect when taxes are
actually paid or recovered. See note 21 for details.
Except for certain earnings that GE intends to reinvest indefinitely,
provision has been made for the estimated U.S. federal income tax liabilities
applicable to undistributed earnings of affiliates and associated companies.
Based on location (not tax jurisdiction) of the business providing goods
and services, consolidated U.S. income before taxes was $7,491 million in
1994, $5,611 million in 1993 and $5,410 million in 1992. The corresponding
amounts for non-U.S. based operations were $1,170 million in 1994, $525
million in 1993 and $563 million in 1992.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF U.S. FEDERAL CONSOLIDATED GE GECS
STATUTORY RATE TO ACTUAL TAX RATE ---------------------- ---------------------- ----------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Statutory U.S. federal income tax rate 35.0% 35.0% 34.0% 35.0% 35.0% 34.0% 35.0% 35.0% 34.0%
---- ---- ---- ---- ---- ---- ---- ---- ----
Increase (reduction) in rate
resulting from:
Inclusion of after-tax earnings
of GECS in before-tax
earnings of GE - - - (9.4) (10.0) (8.1) - - -
Rate increase - deferred taxes - 1.6 - - (0.2) - - 5.2 -
Amortization of goodwill 1.1 1.5 1.3 0.8 1.2 0.9 1.0 1.2 1.4
Tax-exempt income (2.4) (2.9) (2.8) - - - (6.9) (8.3) (9.6)
Foreign Sales Corporation tax benefits (1.1) (1.3) (1.2) (1.2) (1.5) (1.3) - - -
Dividends received, not fully taxable (0.5) (0.7) (0.3) (0.3) (0.3) - (0.8) (1.2) (1.1)
All other - net (0.4) (1.4) (0.3) (0.8) (0.4) 0.2 1.0 (2.8) (1.4)
---- ---- ---- ---- ---- ---- ---- ---- ----
(3.3) (3.2) (3.3) (10.9) (11.2) (8.3) (5.7) (5.9) (10.7)
---- ---- ---- ---- ---- ---- ---- ---- ----
Actual income tax rate 31.7% 31.8% 30.7% 24.1% 23.8% 25.7% 29.3% 29.1% 23.3%
==== ==== ==== ==== ==== ==== ==== ==== ====
----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-27
Annual Report Page 51
NOTE 10 GECS INVESTMENT SECURITIES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
Gross Gross
Amortized Estimated unrealized unrealized
(In millions) cost fair value gains losses
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Corporate and other $10,883 $10,124 $ 4 $ (763)
State and municipal 9,193 8,947 146 (392)
Mortgage-backed 4,927 4,789 82 (220)
Non-U.S. 3,892 3,836 20 (76)
Equity 2,147 2,168 201 (180)
U.S. government and federal agency 1,185 1,008 - (177)
------- ------- ------ -------
$32,227 $30,872 $ 453 $(1,808)
======= ======= ====== =======
DECEMBER 31, 1993
Corporate and other $ 9,972 $10,047 $ 124 $ (49)
State and municipal 8,859 9,636 786 (9)
Mortgage-backed 2,487 2,507 31 (11)
Non-U.S. 1,476 1,548 82 (10)
Equity 1,517 1,826 393 (84)
U.S. government and federal agency 1,220 1,228 15 (7)
------- ------- ------ -------
$25,531 $26,792 $1,431 $ (170)
======= ======= ====== =======
-----------------------------------------------------------------------------------------
</TABLE>
At December 31, 1994, contractual maturities of debt securities, other
than mortgage-backed securities, were as follows.
<TABLE>
<CAPTION>
-------------------------------------------------------------------
GECS CONTRACTUAL MATURITIES
(EXCLUDING MORTGAGE-BACKED SECURITIES)
Amortized Estimated
(In millions) cost fair value
-------------------------------------------------------------------
<S> <C> <C>
Due in
1995 $1,792 $1,797
1996-1999 7,021 6,811
2000-2004 5,732 5,408
2005 and later 10,608 9,899
-------------------------------------------------------------------
</TABLE>
It is expected that actual maturities will differ from contractual
maturities because borrowers have the right to call or prepay certain
obligations, sometimes without call or prepayment penalties. Proceeds from
sales of investment securities in 1994 were $5,821 million ($6,112 million in
1993 and $3,514 million in 1992). Gross realized gains were $281 million in
1994 ($173 million in 1993 and $171 million in 1992). Gross realized losses
were $112 million in 1994 ($34 million in 1993 and $4 million in 1992).
NOTE 11 GE CURRENT RECEIVABLES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
Aircraft Engines $1,183 $1,860
Appliances 499 456
Broadcasting 493 431
Industrial Products and Systems 1,503 1,379
Materials 1,256 1,060
Power Generation 1,925 1,866
Technical Products and Services 603 548
All Other 282 242
Corporate 268 889
8,012 8,731
Less allowance for losses (205) (170)
------ ------
$7,807 $8,561
====== ======
----------------------------------------------------------------------------
</TABLE>
Of the total receivables balances at December 31, 1994 and 1993, $5,668
million and $5,719 million, respectively, were from sales of goods and
services to customers, and $196 million and $292 million, respectively, were
from transactions with associated companies.
Current receivables of $387 million at year-end 1994 and $402 million at
year-end 1993 arose from sales, principally of aircraft engine goods and
services, on open account to various agencies of the U.S. government, which is
GE's largest single customer (about 6%, 8% and 9% of GE's sales of goods and
services were to the U.S. government in 1994, 1993 and 1992, respectively).
NOTE 12 GE INVENTORIES
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
Raw materials and work in process $2,933 $2,983
Finished goods 2,165 2,314
Unbilled shipments 214 156
------ ------
5,312 5,453
Less revaluation to LIFO (1,432) (1,629)
------ ------
$3,880 $3,824
====== ======
----------------------------------------------------------------------------
</TABLE>
LIFO revaluations decreased $197 million in 1994, compared with
decreases of $179 million and $204 million in 1993 and 1992, respectively.
Included in these changes were decreases of $72 million, $101 million and $183
million (1994, 1993 and 1992, respectively) resulting from lower inventory
levels. There were net cost decreases in 1994, 1993 and 1992. As of December
31, 1994, GE is obligated to acquire, under take-or-pay or similar
arrangements, about $200 million per year of raw materials at market prices
through 1999.
<PAGE>
F-28
Annual Report Page 52
NOTE 13 GECS FINANCING RECEIVABLES (INVESTMENT IN TIME SALES, LOANS AND
FINANCING LEASES)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
TIME SALES AND LOANS
Consumer services $25,906 $18,770
Specialized financing 17,988 17,028
Mid-market financing 5,916 4,693
Equipment management 1,516 1,331
------- -------
51,326 41,822
Deferred income (1,305) (1,074)
------- -------
Time sales and loans - net 50,021 40,748
------- -------
INVESTMENT IN FINANCING LEASES
Direct financing leases 25,916 22,063
Leveraged leases 2,482 2,867
------- -------
Investment in financing leases 28,398 24,930
------- -------
78,419 65,678
Less allowance for losses (2,062) (1,730)
------- -------
$76,357 $63,948
======= =======
----------------------------------------------------------------------------
</TABLE>
Time sales and loans represents transactions in a variety of forms,
including time sales, revolving charge and credit, mortgages, installment
loans, intermediate-term loans and revolving loans secured by business assets.
The portfolio includes time sales and loans carried at the principal amount on
which finance charges are billed periodically, and time sales and loans
acquired on a discount basis carried at gross book value, which includes
finance charges. At year-end 1994 and 1993, specialized financing and consumer
services loans included $13,282 million and $11,887 million, respectively, for
commercial real estate loans. Note 16 contains information on airline loans
and leases.
At December 31, 1994, contractual maturities for time sales and loans
over the next five years and after were: $20,147 million in 1995; $7,466
million in 1996; $5,708 million in 1997; $4,047 million in 1998; $4,115
million in 1999; and $9,843 million in 2000 and later - aggregating $51,326
million. Experience has shown that a substantial portion of receivables will
be paid prior to contractual maturity. Accordingly, the maturities of time
sales and loans are not to be regarded as forecasts of future cash
collections.
Financing leases consists of direct financing and leveraged leases of
aircraft, railroad rolling stock, autos, other transportation equipment, data
processing equipment, medical equipment, and other manufacturing, power
generation, mining and commercial equipment and facilities.
As the sole owner of assets under direct financing leases and as the
equity participant in leveraged leases, GECS is taxed on total lease payments
received and is entitled to tax deductions based on the cost of leased assets
and tax deductions for interest paid to third-party participants. GECS
generally is entitled to any residual value of leased assets and to any
investment tax credit on leased equipment.
Investment in direct financing and leveraged leases represents unpaid
rentals and estimated unguaranteed residual values of leased equipment, less
related deferred income. Because GECS has no general obligation for principal
and interest on notes and other instruments representing third-party
participation related to leveraged leases, such notes and other instruments
have not been included in liabilities but have been offset against the related
rentals receivable. GECS' share of rentals receivable on leveraged leases is
subordinate to the share of other participants who also have security
interests in the leased equipment.
GECS' investment in financing leases is shown on the following page.
<PAGE>
F-29
Annual Report Page 53
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Investment in financing leases Total financing leases Direct financing leases Leveraged leases
---------------------- ----------------------- ------------------
December 31 (In millions) 1994 1993 1994 1993 1994 1993
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total minimum lease payments receivable $39,968 $38,080 $30,338 $26,584 $ 9,630 $11,496
Less principal and interest on third-party
nonrecourse debt (7,103) (8,398) - - (7,103) (8,398)
------- ------- ------- ------- ------ -------
Rentals receivable 32,865 29,682 30,338 26,584 2,527 3,098
Estimated unguaranteed residual value of
leased assets 4,889 4,490 3,767 3,323 1,122 1,167
Less deferred income <F1> (9,356) (9,242) (8,189) (7,844) (1,167) (1,398)
------- ------- ------- ------- ------ -------
INVESTMENT IN FINANCING LEASES (as shown
on the previous page) 28,398 24,930 25,916 22,063 2,482 2,867
Less amounts to arrive at net investment
Allowance for losses (570) (538) (471) (464) (99) (74)
Deferred taxes arising from financing leases (5,075) (4,917) (2,470) (2,157) (2,605) (2,760)
------- ------- ------- ------- ------ -------
NET INVESTMENT IN FINANCING LEASES $22,753 $19,475 $22,975 $19,442 $ (222) $ 33
======= ======= ======= ======= ======= =======
------------------------------------------------------------------------------------------------------------------
<FN>
<F1> Total financing lease deferred income is net of deferred initial direct costs of $93 million and $83 million
for 1994 and 1993, respectively.
------------------------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1994, contractual maturities for rentals receivable over
the next five years and after were: $7,409 million in 1995; $6,235 million in
1996; $5,148 million in 1997; $3,050 million in 1998; $2,096 million in 1999;
and $8,927 million in 2000 and later - aggregating $32,865 million. As with
time sales and loans, experience has shown that a portion of receivables will
be paid prior to contractual maturity and these amounts should not be regarded
as forecasts of future cash flows.
Nonearning consumer time sales and loans, primarily private-label credit
card receivables, amounted to $422 million and $391 million at December 31,
1994 and 1993, respectively. A majority of these receivables were subject to
various loss-sharing arrangements that provide full or partial recourse to the
originating private-label entity. Nonearning and reduced-earning receivables
other than consumer time sales and loans were $346 million and $509 million at
year-end 1994 and 1993, respectively. Earnings of $4 million and $11 million
realized in 1994 and 1993, respectively, were $27 million and $41 million
lower than would have been reported had these receivables earned income in
accordance with their original terms.
NOTE 14 PROPERTY, PLANT AND EQUIPMENT (INCLUDING EQUIPMENT LEASED TO OTHERS)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
ORIGINAL COST
GE
Land and improvements $ 416 $ 395
Buildings, structures and related equipment 5,547 5,370
Machinery and equipment 15,847 15,420
Leasehold costs and manufacturing
plant under construction 1,073 1,170
Other 24 86
------- -------
22,907 22,441
------- -------
GECS
Buildings and equipment 1,875 1,542
Equipment leased to others
Aircraft <F1> 4,601 3,677
Vehicles 4,542 3,568
Marine shipping containers 3,333 2,985
Railroad rolling stock 1,605 1,498
Other 2,807 2,160
------- -------
18,763 15,430
------- -------
$41,670 $37,871
======= =======
ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION
GE $13,382 $12,899
GECS
Buildings and equipment 794 581
Equipment leased to others 4,029 3,238
------- -------
$18,205 $16,718
======= =======
----------------------------------------------------------------------------
<FN>
<F1> Includes $226 million and $244 million of commercial aircraft off-
lease in 1994 and 1993, respectively.
----------------------------------------------------------------------------
</TABLE>
Current-year amortization of GECS' equipment leased to others was $1,435
million, $1,395 million and $1,133 million in 1994, 1993 and 1992,
respectively. Noncancelable future rentals due from customers for equipment on
operating leases at year-end 1994 totaled $7,329 million and are due as
follows: $2,306 million in 1995; $1,628 million in 1996; $1,015 million in
1997; $663 million in 1998; $477 million in 1999; and $1,240 million
thereafter.
<PAGE>
F-30
Annual Report Page 54
NOTE 15 INTANGIBLE ASSETS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
GE
Goodwill $ 5,605 $ 5,713
Other intangibles 731 753
------- -------
6,336 6,466
------- -------
GECS
Goodwill 2,513 1,840
Mortgage servicing rights 1,351 832
Other intangibles 1,173 914
------- -------
5,037 3,586
------- -------
$11,373 $10,052
======= =======
----------------------------------------------------------------------------
</TABLE>
GE's intangible assets are shown net of accumulated amortization of
$2,049 million in 1994 and $1,760 million in 1993. GECS' intangible assets are
net of accumulated amortization of $988 million in 1994 and $781 million in
1993.
NOTE 16 ALL OTHER ASSETS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
GE
Investments
Associated companies <F1> $ 1,945 $ 1,336
Government and government-
guaranteed securities 273 293
Other 1,713 1,639
------- -------
3,931 3,268
Prepaid pension asset 4,489 3,840
Other 3,999 3,269
------- -------
12,419 10,377
------- -------
GECS
Investments
Assets acquired for resale 3,867 8,141
Associated companies <F2> 2,098 1,574
Real estate ventures 1,400 1,374
Other 1,652 887
------- -------
9,017 11,976
Deferred insurance acquisition costs 1,290 987
Foreclosed real estate properties 108 213
Other 1,116 803
------- -------
11,531 13,979
------- -------
$23,950 $24,356
======= =======
----------------------------------------------------------------------------
<F1> Includes advances of $234 million and $131 million at December 31,
1994 and 1993, respectively.
<F2> Includes advances of $949 million and $688 million at December 31,
1994 and 1993, respectively.
----------------------------------------------------------------------------
</TABLE>
GECS' assets acquired for resale declined $4.3 billion during 1994,
primarily due to sales of mortgages associated with the mortgage servicing
business.
In line with industry practice, sales of commercial jet aircraft engines
often involve long-term customer financing commitments. In making such
commitments, it is GE's general practice to require that it have or be able to
establish a secured position in the aircraft being financed. Under such
airline financing programs, GE had issued loans and guaranties (principally
guaranties) amounting to $1,260 million at year-end 1994 and $1,201 million at
year-end 1993; and it had entered into commitments totaling $1.1 billion and
$1.4 billion at year-end 1994 and 1993, respectively, to provide financial
assistance on future aircraft engine sales. Estimated fair values of the
aircraft securing these receivables and associated guaranties exceeded the
related account balances and guaranteed amounts at December 31, 1994. GECS
acts as a lender and lessor to the commercial airline industry. At December
31, 1994 and 1993, the balance of such GECS loans, leases and equipment leased
to others was $7,571 million and $6,776 million, respectively. In addition,
GECS had issued financial guaranties and funding commitments of $506 million
at December 31, 1994 ($450 million at year-end 1993) and had conditional
commitments to purchase aircraft at a cost of $81 million ($865 million at
year-end 1993).
At year-end 1994, the National Broadcasting Company had $3,818 million
of commitments to acquire broadcast material or the rights to broadcast
television programs and commitments under long-term television station
affiliation agreements that require payments through the year 2004.
In connection with numerous projects, primarily power generation bids
and contracts, GE had issued various bid and performance bonds and guaranties
totaling $2,229 million at year-end 1994 and $1,124 million at year-end 1993.
<PAGE>
F-31
Annual Report Page 55
NOTE 17 BORROWINGS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS 1994 1993
------------------ ------------------
December 31 Average Average
(In millions) Amount rate <F1> Amount rate <F1>
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE
Payable to banks $ 353 8.21% $ 588 6.41%
Notes to trust
departments 53 5.52 102 3.03
Commercial paper - 708 3.36
Other <F2> 500 993
------- -------
906 2,391
------- -------
GECS
Commercial paper 43,697 5.90 46,298 3.39
Payable to banks 984 2.46 197 3.25
Notes to trust
departments 1,793 5.66 1,882 3.10
Other <F2> 10,613 6,866
------- -------
57,087 55,243
------- -------
ELIMINATIONS (212) (259)
------- -------
$57,781 $57,375
======= =======
--------------------------------------------------------------------------------------
<FN>
<F1> Includes the effects of associated interest rate and currency swaps which are
summarized in the notes to the long-term borrowings table.
<F2> Includes the current portion of long-term debt.
--------------------------------------------------------------------------------------
</TABLE>
Confirmed credit lines of approximately $3.1 billion had been extended
to GE by 40 banks at year-end 1994. Substantially all of GE's credit lines are
available to GE Capital and GECS in addition to their own credit lines.
At year-end 1994, GE Capital had committed lines of credit aggregating
$20.8 billion with 131 banks, including $7.0 billion of revolving credit
agreements pursuant to which GE Capital has the right to borrow funds for
periods exceeding one year. A total of $2.6 billion of GE Capital's credit
lines is available for use by GECS; $1.8 billion is available for use by GE.
During 1994, GE, GE Capital and GECS did not borrow under any of these
credit lines. Each compensates banks for credit facilities either in the form
of fees or a combination of balances and fees as agreed to with each bank.
Compensating balances and commitment fees were immaterial in each of the past
three years.
Aggregate amounts of long-term borrowings that mature during the next
five years are as follows.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1995 1996 1997 1998 1999
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GE $ 243 $ 623 $ 522 $ 999 $ 87
GECS 9,695 10,394 6,556 4,507 3,417
----------------------------------------------------------------------------
</TABLE>
Outstanding balances in long-term borrowings were as follows.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
LONG-TERM BORROWINGS
Weighted
December 31 average interest
(In millions) rate <F1> Maturities 1994 1993
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GE
Notes <F2> 7.44% 1996-1998 $ 1,480 $ 1,694
Industrial development/
pollution control
bonds <F2> 3.09 1996-2019 261 272
Other <F2><F3> 958 447
------- -------
2,699 2,413
------- -------
GECS
Senior notes
Notes <F2><F4> 6.41 1996-2054 31,332 22,028
Zero coupon/deep discount notes 13.58 1996-2001 936 1,407
Reset or remarketed notes <F5> 8.25 2007-2018 1,025 1,500
Floating rate notes <F6> 1996-2053 521 521
Less unamortized discount/premium (199) (344)
------- -------
33,615 25,112
Subordinated notes <F7> 8.04 2006-2012 697 697
------- -------
34,312 25,809
------- -------
ELIMINATIONS (32) (28)
------- -------
$36,979 $28,194
======= =======
--------------------------------------------------------------------------------------
<FN>
<F1> Includes the effects of associated interest rate and currency swaps.
<F2> At December 31, 1994, GE and GECS had agreed with others to exchange
currencies on principal amounts equivalent to U.S. $393 million and $12,183
million, respectively, and related interest payments. GE and GECS also had entered
into interest rate swaps with others related to interest on $89 million and $24,129
million, respectively. At December 31, 1993, GE and GECS had agreed with others to
exchange currencies on principal amounts equivalent to U.S. $498 million and $8,101
million, respectively, and related interest payments. GE and GECS also had entered
into interest rate swaps with others relating to interest on $610 million and
$13,224 million, respectively.
<F3> Includes original issue premium and discount and a variety of obligations
having various interest rates and maturities, including borrowings by parent
operating components and all affiliate borrowings.
<F4> At December 31, 1993, counterparties held options under which GECS could be
caused to execute interest rate swaps associated with interest payments on $500
million.
<F5> Interest rates are reset at the end of the initial and each subsequent
interest period. At each rate-reset date, GECS may redeem notes in whole or in part
at its option. Current interest periods range from May 1996 to March 1997.
<F6> The rate of interest payable on each note is a variable rate based on the
commercial paper rate each month. Interest is payable either monthly or
semiannually at the option of GECS.
<F7> Guaranteed by GE.
--------------------------------------------------------------------------------------
</TABLE>
INTEREST RATE AND CURRENCY SWAPS are employed by GE and GECS to achieve the
lowest cost of funds for a particular funding strategy. For GECS, optimizing
funding costs is central to maintaining satisfactory financing spreads (the
difference between the yield on financial assets and borrowing costs). GECS
enters into interest rate swaps and currency swaps (including non-U.S.
currency and cross-currency interest rate swaps) to modify interest rates
<PAGE>
F-32
Annual Report Page 56
and/or currencies of specific debt instruments. For example, to fund U.S.
operations, GE Capital may issue fixed-rate debt denominated in a currency
other than the U.S. dollar and simultaneously enter into a currency swap to
create synthetic fixed-rate U.S. dollar debt with a lower yield than could be
achieved directly. Virtually all GE and GECS interest rate and currency swaps
have been designated as modifying interest rates, currencies, or both. Other
swaps and forward contracts have been designated as hedges of non-U.S. dollar
monetary assets or net investments (see note 28). Neither GE nor GECS engages
in derivatives trading or market-making activities.
Each party in a swap transaction relies on its counterparty to make
contractual payments. Given the ways in which GE and GECS use swaps,
associated market risk is meaningful only as it relates to how changes in the
market value affects credit exposure to individual swap counterparties. To
manage counterparty credit exposure, all swap activities are carried out
within the following credit policy constraints:
* At inception, counterparties must be rated, at a minimum, Aa3/AA-
for swaps of five years or less and AAA for swaps in excess of five years.
* Credit exposure is limited to a market value of $50 million for
counterparties rated AA and $75 million for those rated AAA.
* All swaps are executed under master swap agreements containing
mutual credit downgrade provisions that provide the ability to require
assignment or termination in the event either party is downgraded below A3
or A-.
NOTE 18 GE ALL OTHER CURRENT COSTS AND EXPENSES ACCRUED
At year-end 1994 and 1993, this account included taxes accrued of $1,238
million and $1,664 million, respectively, and compensation and benefit
accruals of $1,191 million and $1,311 million, respectively. Also included are
amounts for product warranties, estimated costs on shipments billed to
customers and a variety of sundry items.
NOTE 19 INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS
Insurance liabilities, reserves and annuity benefits represents policyholders'
benefits, unearned premiums and provisions for policy losses in GECS'
insurance and annuity businesses. The estimated liability for insurance losses
and loss expenses consists of both case and incurred-but-not-reported
reserves. Where GECS' experience is not sufficient to determine reserves,
industry averages are used. Estimated amounts of salvage and subrogation
recoverable on paid and unpaid losses are deducted from outstanding losses.
The insurance subsidiaries of GECS have no significant permitted statutory
accounting practices that differ from either statutorially prescribed or
generally accepted accounting principles.
Activity in the liability for unpaid claims and claims adjustment
expenses is summarized as follows.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 - gross $ 6,405 $ 5,484 $4,565
Less reinsurance recoverables (1,142) (1,191) (688)
------- ------- ------
Balance at January 1 - net 5,263 4,293 3,877
Claims and adjustments incurred
Current year 2,016 2,051 1,679
Prior years 558 359 117
Claims and adjustments paid
Current year (543) (378) (464)
Prior years (1,432) (1,048) (967)
Other 86 (14) 51
------- ------- ------
Balance at December 31 - net 5,948 5,263 4,293
Add reinsurance recoverables 1,084 1,142 1,191
------- ------- ------
Balance at December 31 - gross $ 7,032 $ 6,405 $5,484
======= ======= ======
----------------------------------------------------------------------------
</TABLE>
The liability for future policy benefits of the life insurance
affiliates has been computed mainly by a net-level-premium method based on
assumptions for investment yields, mortality and terminations that were
appropriate at date of purchase or at the time the policies were developed,
including provisions for adverse deviations. Average yields used in these
computations ranged from 4.0% to 9.1% in 1994 and 6.2% to 10.1% in 1993.
<PAGE>
F-33
Annual Report Page 57
Financial guaranties of insurance affiliates are summarized below.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
Guaranties, principally on municipal
bonds and structured finance issues $106,726 $101,352
Reinsurance on bonds/finance issues (18,954) (17,287)
Mortgage insurance risk in force
(GE Capital Mortgage Insurance) 31,463 27,022
Other 191 84
-------- --------
$119,426 $111,171
======== ========
----------------------------------------------------------------------------
</TABLE>
NOTE 20 GE ALL OTHER LIABILITIES
This account includes noncurrent compensation and benefit accruals at year-end
1994 and 1993 of $4,632 million and $4,507 million, respectively. Other
noncurrent liabilities include amounts for deferred incentive compensation,
product warranties, deferred income and a variety of sundry items.
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 112, Employers' Accounting for Postemployment Benefits, effective as of
January 1, 1993. This Statement requires that employers recognize over the
service lives of employees the costs of postemployment benefits if certain
conditions are met. The principal effect for GE was to change the method of
accounting for severance benefits. Under the previous accounting policy, the
total cost of severance benefits was expensed when the severance event
occurred. The cumulative effect of the accounting change as of January 1,
1993, amounted to $1,306 million before taxes ($862 million, or $0.51 per
share, after taxes).
NOTE 21 DEFERRED INCOME TAXES
Aggregate deferred tax amounts are summarized below.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
GE $ 3,313 $ 3,547
GECS 2,642 2,097
------- -------
5,955 5,644
------- -------
LIABILITIES
GE 3,581 3,248
GECS 7,579 7,578
------- -------
11,160 10,826
------- -------
NET DEFERRED TAX LIABILITY $ 5,205 $ 5,182
======= =======
----------------------------------------------------------------------------
</TABLE>
Principal components of the net deferred tax liability balances for GE
and GECS are as follows.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
December 31 (In millions) 1994 1993
----------------------------------------------------------------------------
<S> <C> <C>
GE
Provisions for expenses $(2,015) $(2,219)
Retiree insurance plans (835) (879)
GE pension 1,387 1,170
Depreciation 860 890
Other - net 871 739
------ ------
268 (299)
------ ------
GECS
Financing leases 5,075 4,917
Operating leases 1,234 966
Tax transfer leases 338 340
Net unrealized gains (losses) on securities (468) 438
Provision for losses (876) (831)
Insurance reserves (460) (370)
Other - net 94 21
------ ------
4,937 5,481
------ ------
NET DEFERRED TAX LIABILITY $5,205 $5,182
====== ======
----------------------------------------------------------------------------
</TABLE>
NOTE 22 MINORITY INTEREST IN EQUITY OF CONSOLIDATED AFFILIATES
Minority interest in equity of consolidated GECS affiliates included 8,750
shares of $100 par value variable cumulative preferred stock issued by GE
Capital, with a liquidation preference value of $875 million, and 2,400 shares
of $0.01 par value variable cumulative preferred stock issued in 1994 by a
subsidiary of GE Capital, with a liquidation preference value of $240 million.
Dividend rates on the preferred stock ranged from 2.3% to 4.9% during 1994 and
from 2.3% to 2.8% during 1993.
<PAGE>
F-34
Annual Report Page 58
NOTE 23 SHARE OWNERS' EQUITY
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
(In millions) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK ISSUED
Balance at January 1 $ 584 $ 584 $ 584
Adjustment for stock split 9 - -
Newly issued stock 1 - -
------- ------- -------
Balance at December 31 $ 594 $ 584 $ 584
======= ======= =======
UNREALIZED GAINS (LOSSES) ON
INVESTMENT SECURITIES $ (810) $ 848 $ 36
======= ======= =======
OTHER CAPITAL
Balance at January 1 $ 550 $ 719 $ 932
Currency translation adjustments 180 (279) (209)
Gains (losses) on treasury
stock dispositions 215 110 (4)
Newly issued stock 186 - -
Adjustment for stock split (9) - -
------- ------- -------
Balance at December 31 $ 1,122 $ 550 $ 719
======= ======= =======
RETAINED EARNINGS
Balance at January 1 $28,613 $26,527 $23,787
Net earnings 4,726 4,315 4,725
Dividends declared (2,546) (2,229) (1,985)
------- ------- -------
Balance at December 31 $30,793 $28,613 $26,527
======= ======= =======
COMMON STOCK HELD IN TREASURY
Balance at January 1 $ 4,771 $ 4,407 $ 3,626
Purchases 1,124 770 1,206
Dispositions (583) (406) (425)
------- ------- -------
Balance at December 31 $ 5,312 $ 4,771 $ 4,407
======= ======= =======
----------------------------------------------------------------------------
</TABLE>
In December 1994, GE's Board of Directors authorized the repurchase of
up to $5 billion of Company common stock over a two-year period with funds
generated largely from free cash flow. A total of 1.3 million shares having an
aggregate cost of $69 million had been repurchased under the program and
placed in treasury as of December 31, 1994.
In April 1994, share owners authorized (a) an increase in the number of
authorized shares of common stock from 1.1 billion shares each with a par
value of $0.63 to 2.2 billion shares each with a par value of $0.32 and (b)
the split of each unissued and issued common share, including shares held in
treasury, into two shares of common stock each with a par value of $0.32. All
share data have been adjusted to reflect this change.
Common shares issued and outstanding are summarized in the table below.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
SHARES OF GE COMMON STOCK
December 31 (In thousands) 1994 1993 1992
----------------------------------------------------------------------------
<S> <C> <C> <C>
Issued 1,857,013 1,853,128 1,853,128
In treasury (151,046) (145,826) (142,270)
--------- --------- ---------
Outstanding 1,705,967 1,707,302 1,710,858
========= ========= =========
----------------------------------------------------------------------------
</TABLE>
GE has 50 million authorized shares of preferred stock ($1.00 par
value), but no such shares have been issued.
The effects of translating to U.S. dollars the financial statements of
non-U.S. affiliates whose functional currency is the local currency are
included in other capital. Asset and liability accounts are translated at year-
end exchange rates, while revenues and expenses are translated at average
rates for the period. Cumulative currency translation adjustments were
reductions of other capital of $66 million and $246 million at December 31,
1994 and 1993, respectively, and a cumulative addition to other capital of $33
million at December 31, 1992.
On December 31, 1993, the Company adopted SFAS No. 115, Accounting
for Investments in Certain Debt and Equity Securities. As a result of adopting
this statement, changes in the fair value of investment securities are
reflected, net of tax, in share owners' equity. At December 31, 1994,
unrealized losses on investment securities amounted to $810 million, a
reduction in equity of $1,658 million from year-end 1993. The decrease was
primarily attributable to the effect of increases in market interest rates on
the fair value of the securities.
NOTE 24 OTHER STOCK-RELATED INFORMATION
Stock option plans, stock appreciation rights (SARs), restricted stock and
restricted stock units are described in the Company's current Proxy Statement.
With certain restrictions, the Company can meet requirements for stock option
shares from either unissued or treasury shares.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
STOCK OPTION INFORMATION Average per share
--------------------
Shares subject Option Market
(Shares in thousands) to option price price
----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1, 1994 59,354 $36.50 $52.44
Options granted 15,134 50.66 50.66
Replacement options 340 36.44 36.44
Options exercised (4,163) 30.35 50.58
Options terminated (1,167) 44.04 -
------
Balance at December 31, 1994 69,498 39.82 51.00
======
----------------------------------------------------------------------------
</TABLE>
The replacement options replaced canceled SARs and have identical terms
thereto. At December 31, 1994, there were 8.1 million SARs exercisable at an
average price of $40.52. There were 3.5 million restricted stock shares and
restricted stock units outstanding at December 31, 1994.
At December 31, 1994 and 1993, there were 16.1 million shares available
for grants of options, SARs, restricted stock and restricted stock units.
Under the 1990 Long-Term Incentive Plan, 0.95% of the Company's issued common
stock (including treasury shares) as of the first day of each calendar year
during which the Plan is in effect becomes available for granting awards in
such year. Any unused portion, in addition to shares allocated to awards that
are canceled or forfeited, is available for later years.
Outstanding options and rights expire on various dates through
December 15,2004. Restricted stock grants vest on various dates up to
normal retirement of grantees.
<PAGE>
F-35
Annual Report Page 59
Note 25 Supplemental Cash Flows Information
Changes in operating assets and liabilities are net of acquisitions and
dispositions of businesses. "Payments for principal businesses purchased" in
the Statement of Cash Flows is net of cash acquired and includes debt assumed
and immediately repaid in acquisitions.
"All other operating activities" in the Statement of Cash Flows consists
principally of adjustments to current and noncurrent accruals of costs and
expenses, amortization of premium and discount on debt, and adjustments to
assets such as amortization of goodwill and intangibles.
The Statement of Cash Flows excludes certain noncash transactions that
had no significant effects on the investing or financing activities of GE or
GECS.
Certain supplemental information for GECS' cash flows is shown below.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
For the years ended December 31 (In millions) 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FINANCING RECEIVABLES
Increase in loans to customers $(36,560) $(30,002) $(27,069)
Principal collections from customers 31,264 27,571 25,136
Investment in equipment for financing leases (10,528) (7,204) (7,758)
Principal collections on financing leases 9,050 6,812 5,338
Net change in credit card receivables (2,751) (1,341) (330)
-------- -------- --------
$ (9,525) $ (4,164) $ (4,683)
======== ======== ========
ALL OTHER INVESTING ACTIVITIES
Purchases of securities by insurance and annuity businesses $ (8,663) $(10,488) $ (6,865)
Dispositions and maturities of securities by insurance and
annuity businesses 6,338 7,698 6,200
Other 2,501 (4,003) (3,023)
-------- -------- --------
$ 176 $ (6,793) $ (3,688)
======== ======== ========
NEWLY ISSUED DEBT HAVING MATURITIES MORE THAN 90 DAYS
Short-term (91 to 365 days) $ 3,214 $4,315 $ 4,456
Long-term (over one year) 19,228 10,885 6,699
Long-term subordinated - - 450
Proceeds - nonrecourse, leveraged lease debt 31 53 148
-------- -------- --------
$ 22,473 $ 15,253 $ 11,753
======== ======== ========
REPAYMENTS AND OTHER REDUCTIONS OF DEBT HAVING MATURITIES MORE THAN 90 DAYS
Short-term (91 to 365 days) $(10,460) $ (9,008) $ (6,474)
Long-term (over one year) (930) (206) (657)
Long-term subordinated - - (76)
Principal payments - nonrecourse, leveraged lease debt (309) (312) (272)
-------- -------- --------
$(11,699) $ (9,526) $ (7,479)
======== ======== ========
ALL OTHER FINANCING ACTIVITIES
Proceeds from sales of investment and annuity contracts $ 1,207 $ 509 $ -
Preferred stock issued by consolidated affiliate 240 - -
Redemption of investment and annuity contracts (1,264) (578) -
-------- -------- --------
$ 183 $ (69) $ -
======== ======== ========
-----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-36
Annual Report Page 60
NOTE 26 INDUSTRY SEGMENTS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
REVENUES
(In millions) For the years ended December 31
--------------------------------------------------------------------------------------------------------------------
Total revenues Intersegment revenues External revenues
-------------------------- ----------------------- --------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GE
Aircraft Engines $ 5,714 $ 6,580 $ 7,368 $ 43 $ 59 $ 57 $ 5,671 $ 6,521 $ 7,311
Appliances 5,965 5,555 5,330 3 3 3 5,962 5,552 5,327
Broadcasting 3,361 3,102 3,363 - - - 3,361 3,102 3,363
Industrial Products and
Systems 9,406 8,575 8,210 368 409 425 9,038 8,166 7,785
Materials 5,681 5,042 4,853 43 50 51 5,638 4,992 4,802
Power Generation 5,933 5,530 5,106 44 135 151 5,889 5,395 4,955
Technical Products and
Services 4,285 4,174 4,674 18 18 68 4,267 4,156 4,606
All Other 2,348 1,803 1,581 - - - 2,348 1,803 1,581
Corporate items and
eliminations (195) (242) (399) (519) (674) (755) 324 432 356
------- ------- ------- ----- ----- ------- ------- ------- -------
Total GE 42,498 40,119 40,086 - - - 42,498 40,119 40,086
------- ------- ------- ----- ----- ------- ------- ------- -------
GECS
Financing 14,932 12,399 10,544 - - - 14,932 12,399 10,544
Specialty Insurance 4,926 4,862 3,863 - - - 4,926 4,862 3,863
All Other 17 15 11 - - - 17 15 11
------- ------- ------- ----- ----- ------- ------- ------- -------
Total GECS 19,875 17,276 14,418 - - - 19,875 17,276 14,418
------- ------- ------- ----- ----- ------- ------- ------- -------
Eliminations (2,264) (1,694) (1,453) - - - (2,264) (1,694) (1,453)
------- ------- ------- ----- ----- ------- ------- ------- -------
Consolidated revenues $60,109 $55,701 $53,051 $ - $ - $ - $60,109 $55,701 $53,051
======= ======= ======= ===== ===== ======= ======= ======= =======
--------------------------------------------------------------------------------------------------------------------
<FN>
GE revenues include income from sales of goods and services to customers and other income. Sales from one Company
component to another generally are priced at equivalent commercial selling prices. "All Other" GE revenues consists
primarily of GECS' earnings.
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
ASSETS PROPERTY, PLANT AND EQUIPMENT
(INCLUDING EQUIPMENT LEASED TO OTHERS)
(In millions) At December 31 For the years ended December 31
--------------------------------------------------------------------------------------------------------------------
Depreciation, depletion and
Additions amortization
-------------------------- ----------------------- --------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
--------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GE
Aircraft Engines $ 4,751 $ 5,329 $ 6,153 $ 262 $ 208 $ 276 $ 268 $ 339 $ 294
Appliances 2,309 2,193 2,248 165 132 126 84 131 105
Broadcasting 3,881 3,742 3,736 86 56 52 67 98 82
Industrial Products
and Systems 5,862 5,442 5,562 452 414 340 379 346 324
Materials 8,628 8,181 8,081 419 376 255 453 417 393
Power Generation 4,887 3,875 3,035 181 216 205 148 149 117
Technical Products and
Services 2,362 2,179 2,393 155 126 118 96 89 74
All Other 9,768 11,604 9,719 - 1 1 2 3 5
Corporate items and
eliminations 8,365 8,589 5,258 23 59 72 48 59 89
-------- -------- -------- ------ ------ ------ ------ ------ ------
Total GE 50,813 51,134 46,185 1,743 1,588 1,445 1,545 1,631 1,483
-------- -------- -------- ------ ------ ------ ------ ------ ------
GECS
Financing 121,966 106,854 82,208 5,889 3,352 4,761 1,607 1,545 1,260
Specialty Insurance 22,058 18,915 14,624 62 15 17 16 9 13
All Other 943 868 2,178 44 59 118 39 38 29
-------- -------- -------- ------ ------ ------ ------ ------ ------
Total GECS 144,967 126,637 99,010 5,995 3,426 4,896 1,662 1,592 1,302
-------- -------- -------- ------ ------ ------ ------ ------ ------
Eliminations (9,909) (11,358) (9,723) - - - - - -
-------- -------- -------- ------ ------ ------ ------ ------ ------
Consolidated totals $185,871 $166,413 $135,472 $7,738 $5,014 $6,341 $3,207 $3,223 $2,785
======== ======== ======== ====== ====== ====== ====== ====== ======
--------------------------------------------------------------------------------------------------------------------
<FN>
"All Other" GE assets consists primarily of investment in GECS. Assets exclude amounts applicable to discontinued
operations ($8,613 million, $85,093 million, and $57,404 million in 1994, 1993, and 1992 respectively).
--------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
F-37
Annual Report Page 61
The industry segment data for prior years related to the Power Generation and
the Industrial Products and Systems segments have been reclassified because
the grouping of products and services for industry segment purposes was
revised in 1994 to provide a sharper focus on the markets served by those
segments. The principal changes were the transfer of industrial drive systems,
power delivery and control products, and related engineering and service
activities from the Power Generation segment to the Industrial Products and
Systems segment.
Details of operating profit by industry segment can be found on page 35
of this report. A description of industry segments for General Electric
Company and consolidated affiliates follows.
* AIRCRAFT ENGINES. Jet engines and replacement parts and repair
services for all categories of commercial aircraft (short/medium, intermediate
and long-range); a wide variety of military aircraft, including fighters,
bombers, tankers and helicopters; and executive and commuter aircraft. Sold
worldwide to airframe manufacturers, airlines and government agencies. Also,
aircraft engine derivatives used as marine propulsion and industrial power
sources.
* APPLIANCES. Major appliances such as refrigerators, freezers,
electric and gas ranges, dishwashers, clothes washers and dryers, microwave
ovens and room air conditioning equipment. Sold primarily in North America,
but also in global markets, under various GE and private-label brands.
Distributed to retail outlets, mainly for the replacement market, and to
building contractors and distributors for new installations.
* BROADCASTING. Primarily the National Broadcasting Company (NBC).
Principal businesses are furnishing of U.S. network television services to
more than 200 affiliated stations, production of television programs,
operation of six VHF television broadcasting stations, operation of three
cable/satellite networks around the world, and investment and programming
activities in multimedia and cable television.
* INDUSTRIAL PRODUCTS AND SYSTEMS. Lighting products (including a
wide variety of lamps, lighting fixtures, wiring devices and quartz products);
electrical distribution and control equipment (including power delivery and
control products such as transformers, meters, relays, capacitors and
arresters); transportation systems products (including diesel-electric
locomotives, transit propulsion equipment and motorized wheels for off-highway
vehicles); electric motors and related products; a broad range of electrical
and electronic industrial automation products, including drive systems;
installation, engineering and repair services, which includes management and
technical expertise for large projects, such as process control systems; and
GE Supply, a network of electrical supply houses. Markets are extremely
diverse. Products are sold to commercial and industrial end users, including
utilities, to original equipment manufacturers, to electrical distributors, to
retail outlets, to railways and to transit authorities. Increasingly, products
are developed for and sold in global markets.
* MATERIALS. High-performance engineered plastics used in
applications such as automobiles and housings for computers and other business
equipment; ABS resins; silicones; superabrasives such as man-made diamonds;
and laminates. Sold worldwide to a diverse customer base consisting mainly of
manufacturers.
* POWER GENERATION. Products mainly for the generation of
electricity. Markets and competition are global. Steam turbine-generators are
sold to electric utilities, to the U.S. Navy and, for cogeneration, to
industrial and other power customers. Marine steam turbines and propulsion
gears are sold to the U.S. Navy. Gas turbines are sold principally as packaged
power plants for electric utilities and for industrial cogeneration and
mechanical drive applications. Power Generation also includes nuclear reactors
and fuel and support services for GE's installed boiling water reactors.
* TECHNICAL PRODUCTS AND SERVICES. Medical systems such as magnetic
resonance (MR) and computed tomography (CT) scanners, x-ray, nuclear imaging,
ultrasound, other diagnostic equipment and related services sold worldwide to
hospitals and medical facilities. This segment also includes a full range of
computer-based information and data interchange services for internal use and
external commercial and industrial customers.
* GECS FINANCING. Operations of GE Capital, as follows:
CONSUMER SERVICES - private-label and bank credit card loans, time sales
and revolving credit and inventory financing for retail merchants, auto
leasing and inventory financing, mortgage servicing, and annuity and mutual
fund sales.
SPECIALIZED FINANCING - loans and financing leases for major capital
assets, including industrial facilities and equipment, and energy-related
facilities; commercial and residential real estate loans and investments; and
loans to and investments in highly leveraged management buyouts and corporate
recapitalizations.
EQUIPMENT MANAGEMENT - leases, loans and asset management services for
portfolios of commercial and transportation equipment, including aircraft,
trailers, auto fleets, modular space units, railroad rolling stock, data
processing equipment, ocean-going containers and satellites.
MID-MARKET FINANCING - loans and financing and operating leases for
middle-market customers, including manufacturers, distributors and end users,
for a variety of equipment that includes data processing equipment, medical
and diagnostic equipment, and equipment used in construction, manufacturing,
office applications and telecommunications activities.
Very few of the products financed by GE Capital are manufactured by
other GE segments.
* GECS SPECIALTY INSURANCE. U.S. and international multiple-line
property and casualty reinsurance, certain directly written specialty
insurance and life reinsurance; financial guaranty insurance, principally on
municipal bonds and structured finance issues; private mortgage insurance and
creditor insurance covering international customer loan repayments.
<PAGE>
F-38
Annual Report Page 62
NOTE 27 GEOGRAPHIC SEGMENT INFORMATION(CONSOLIDATED)
U.S. revenues include GE exports to external customers, and royalty and
licensing income from non-U.S. sources. Exports to international customers by
major area of the world are shown on page 38. Assets exclude amounts
applicable to discontinued operations ($8,613 million, $85,093 million, and
$57,404 million in 1994, 1993, and 1992, respectively).
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
REVENUES
(In millions) For the years ended December 31
Total revenues Intersegment revenues External revenues
---------------------------- ---------------------------- ----------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $49,920 $47,495 $44,882 $ 1,683 $ 1,513 $ 1,281 $48,237 $45,982 $43,601
Europe 7,797 6,722 6,703 579 525 497 7,218 6,197 6,206
Other areas of the world 5,493 4,171 3,879 839 649 635 4,654 3,522 3,244
Intercompany eliminations (3,101) (2,687) (2,413) (3,101) (2,687) (2,413) - - -
------- ------- ------- ------- ------- ------- ------- ------- -------
Total $60,109 $55,701 $53,051 $ - $ - $ - $60,109 $55,701 $53,051
======= ======= ======= ======= ======= ======= ======= ======= =======
-----------------------------------------------------------------------------------------------------------------------
<CAPTION>
OPERATING PROFIT ASSETS
(In millions) For the years ended December 31 At December 31
--------------------------------------------------------------------------------------------------
1994 1993 1992 1994 1993 1992
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $8,445 $6,706 $6,654 $152,151 $145,390 $116,086
Europe 673 360 412 22,464 14,257 13,729
Other areas of the world 595 307 336 11,439 6,954 5,822
Intercompany eliminations 5 (23) 6 (183) (188) (165)
------ ------ ------ -------- -------- --------
Total $9,718 $7,350 $7,408 $185,871 $166,413 $135,472
====== ====== ====== ======== ======== ========
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 28 ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS
This note contains estimated fair values of certain financial instruments to
which GE and GECS are parties. Apart from GE's and GECS' own borrowings and
certain marketable securities, relatively few of these instruments are
actively traded. Thus, fair values must often be determined by using one or
more models that indicate value based on estimates of quantifiable
characteristics as of a particular date. Because this undertaking is, by its
nature, difficult and highly judgmental, for a limited number of instruments,
alternative valuation techniques may have produced disclosed values different
from those that could have been realized at December 31, 1994 or 1993.
Moreover, the disclosed values are representative of fair values only as of
the dates indicated. Assets that, as a matter of accounting policy, are
reflected in the accompanying financial statements at fair value are not
included in the following disclosures; such assets include cash and
equivalents, investment securities and other receivables.
Values are estimated as follows:
BORROWINGS. Based on quoted market prices or market comparables. Fair values
of interest rate and currency swaps on borrowings are based on quoted market
prices and include the effects on counterparty creditworthiness.
TIME SALES AND LOANS. Based on quoted market prices, recent transactions
and/or discounted future cash flows, using rates at which similar loans would
have been made to similar borrowers.
INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIES. Based on market
comparables, recent transactions or discounted future cash flows for GECS
investments. These equity interests were generally acquired in connection with
financing transactions and, for the purpose of this disclosure, fair values
were estimated. GE's investments (aggregating $1,945 million and $1,336
million at December 31, 1994 and 1993, respectively) comprise many small
investments, many of which are located outside the United States, and
generally involve joint ventures for specific, limited objectives;
determination of fair values is impracticable.
ANNUITY BENEFITS. Based on expected future cash flows, discounted at currently
offered discount rates for immediate annuity contracts or cash surrender value
for single premium deferred annuities.
<PAGE>
F-39
Annual Report Page 63
FINANCIAL GUARANTIES. Based on future cash flows, considering expected renewal
premiums, claims, refunds and servicing costs, discounted at a market rate.
ALL OTHER INSTRUMENTS. Based on comparable transactions, market comparables,
discounted future cash flows, quoted market prices, and/or estimates of the
cost to terminate or otherwise settle obligations to counterparties.
Information about financial instruments that were not carried at fair value at
December 31, 1994 and 1993, is shown below.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
Assets (liabilities) 1994 1993
------------------------------------------- ----------------------------------------
Estimated Estimated
fair value fair value
-------------- -------------
Notional Carrying Notional Carrying
(In millions) amount amount (net) High Low amount amount (net) High Low
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GE
Borrowings and related instruments
Borrowings <F1><F2> $ <F3> $ (3,605) $ (3,530) $(3,530) $ <F3> $ (4,804) $ (4,933)$ (4,933)
Interest rate swaps 89 - 2 2 610 - - -
Currency swaps 393 - 26 26 498 - (21) (21)
Firm commitments
Currency forwards and options 3,195 - - - 1,386 (13) (13) (13)
Financing commitments 1,153 - - - 1,380 - - -
Financial guaranties 1,520 - - - 1,333 - - -
Other financial instruments <F3> 2,128 2,289 2,269 <F3> 2,105 2,281 2,261
GECS
Assets
Time sales and loans <F3> 48,529 49,496 48,840 <F3> 39,556 41,182 40,490
Investments in and advances to
associated companies <F3> 2,098 2,561 2,381 <F3> 1,574 2,320 2,156
Other cash financial instruments <F3> 1,897 2,026 1,924 <F3> 6,226 6,392 6,238
Liabilities
Borrowings and related instruments
Borrowings <F1><F2> <F3> (91,399) (89,797) (89,797) <F3> (81,052) (82,184) (82,184)
Interest rate swaps 24,129 - 135 131 13,724 - (308) (308)
Currency swaps 12,183 - 83 83 8,101 - (32) (32)
Annuity benefits <F3> (13,186) (12,788) (12,788) <F3> (8,894) (8,660) (8,660)
Financial guaranties of insurance
affiliates 119,426 (1,344) (269) (348) 111,171 (1,312) (135) (220)
Other financial guaranties 3,508 (44) (53) (53) 3,647 (42) (64) (66)
Mortgage-related positions
Mortgage purchase commitments 205 - (2) (2) 3,950 - (41) (41)
Mortgage sale commitments 1,792 - 2 2 6,426 - 49 49
Memo: mortgages held for sale <F4> <F3> 1,764 1,764 1,764 <F3> 5,963 5,983 5,972
Other financial instruments
Loan commitments 13,489 - (71) (125) 10,421 (18) (31) (34)
Foreign currency forwards and options 3,372 - 12 12 1,833 - (2) (2)
Other financial instruments 314 14 56 53 1,132 4 15 14
----------------------------------------------------------------------------------------------------------------------------
<FN>
<F1> See note 17.
<F2> Includes interest rate and currency swaps.
<F3> Not applicable.
<F4> Included in other cash financial instruments.
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOREIGN CURRENCY FORWARDS AND FOREIGN CURRENCY OPTIONS are employed by GE and
GECS to manage exposures to changes in currency exchange rates associated with
commercial purchase and sale transactions. Those financial instruments
generally are used to fix the local currency cost of purchased goods or
services or selling prices denominated in currencies other than the functional
currency. Exchange rate exposures that result from net investments in foreign
affiliates are managed principally by funding local currency denominated
assets with debt denominated in those same currencies. In certain
circumstances, net investment exposures are managed using foreign currency
forwards.
<PAGE>
F-40
Annual Report Page 64
NOTE 29 QUARTERLY INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
First quarter Second quarter Third quarter Fourth quarter
---------------- ---------------- ---------------- ----------------
(Dollar amounts in millions;
per-share amounts in dollars) 1994 1993 1994 1993 1994 1993 1994 1993
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS
Earnings from continuing operations $1,219 $1,028 $ 1,554 $ 598 $1,457 $1,135 $ 1,685 $ 1,423
Earnings (losses) from discontinued
operations (151) 132 (32) 58 (89) 71 (49) 54
Gain on transfer of discontinued
Aerospace operations - - - 678 - - - -
Provision for loss on discontinued
securities broker-dealer operations - - - - - - (868) -
Accounting change - (862) - - - - - -
------ ------ ------ ------ ------ ------ ------ -------
Net earnings $1,068 $ 298 $1,522 $1,334 $1,368 $1,206 $ 768 $ 1,477
====== ====== ====== ====== ====== ====== ====== =======
Per share
Earnings from continuing operations $ 0.71 $ 0.60 $ 0.91 $ 0.35 $ 0.85 $ 0.67 $ 0.99 $ 0.84
Earnings (losses) from discontinued
operations (0.09) 0.08 (0.02) 0.43 (0.05) 0.04 (0.54) 0.03
Accounting change - (0.51) - - - - - -
------ ------ ------ ------ ------ ------ ------ -------
Net earnings $ 0.62 $ 0.17 $ 0.89 $ 0.78 $ 0.80 $ 0.71 $ 0.45 $ 0.87
====== ====== ====== ====== ====== ====== ====== =======
SELECTED DATA
GE
Sales of goods and services $8,264 $7,968 $10,038 $9,468 $9,384 $8,779 $11,944 $11,607
Gross profit from sales 2,282 2,074 2,743 1,662 2,441 2,198 3,115 2,929
GECS
Revenues from operations 4,393 3,710 4,730 4,001 5,097 4,340 5,655 5,225
Operating profit 668 542 684 480 857 694 740 493
-----------------------------------------------------------------------------------------------------------------------
<FN>
Quarterly data have been reclassified to state results of the securities broker-dealer as a discontinued operation.
Per-share amounts have been adjusted for the 2-for-1 stock split in April 1994. The accounting change reflects the
cumulative effect to January 1, 1993, of the change in accounting for postemployment benefits (SFAS No. 112). As
originally reported, net earnings for the first quarter of 1993 were $1,160 million, or $0.68 per share.
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
For GE, gross profit from sales is sales of goods and services less
costs of goods and services sold. For GECS, operating profit is income before
taxes.
First-quarter 1994 discontinued operations included a $210 million ($350
million before tax) charge resulting from the discovery of false trading
profits created by the then head U.S. government securities trader in the
discontinued securities broker-dealer. Approximately $143 million ($238
million before tax) of the charge related to periods prior to 1994.
Second-quarter 1993 earnings from continuing operations were reduced by
restructuring provisions of $678 million ($0.40 per share) after tax. Second-
quarter gross profit from sales was reduced by restructuring provisions of
$875 million before tax.
Earnings-per-share amounts for each quarter are required to be computed
independently and, as a result, their sum did not equal the total year
earnings-per-share amounts.
<PAGE>
F-41
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
GE allowance for losses
deducted from assets
----------------------------
Accounts
and notes
receivable Investments
---------- ----------
(Amounts in millions)
<S> <C> <C>
Balance, January 1, 1992 $191 $ 66
Provisions charged (credited) to operations 78 10
(Deductions) additions (73) (19)
---- ----
Balance, December 31, 1992 196 <F1> 57
Provisions charged (credited) to operations 51 57
(Deductions) additions (49) (5)
---- ----
Balance, December 31, 1993 198 <F1> 109
Provisions charged (credited) to operations 55 11
(Deductions) additions (10) (56)
---- ----
Balance, December 31, 1994 $243 <F1> $64
==== ====
<FN>
<F1> The year-end balance is segregated on the Statement of Financial
Position as follows:
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C <C>
Current receivables $205 $170 $178
Other assets (long-term receivables,
customer financing, etc.) 38 28 18
---- ---- ----
$243 $198 $196
==== ==== ====
<FN>
Reference is made to note 8 in Notes to Consolidated Financial
Statements appearing in the 1994 Annual Report to Share Owners which contains
information with respect to GECS allowance for losses on financing receivables
for 1994, 1993 and 1992.
</TABLE>
<PAGE>
F-42
Appendix
Differences between the Circulated
Material and the Material
in Electronic Format
The financial information included on pages F-1 through F-40
represents the financial information which appears in the 1994
General Electric Annual Report to Share Owners. That information
was prepared on typesetting software for purposes of printing the
Annual Report. The typesetting format was then converted
electronically into a word processing format which can be accepted
by the EDGAR system. Certain minor differences of graphics, layout
and appearance, as set forth below, exist between the information as
it is presented here and as it is presented in the Annual Report to
Share Owners.
1. The Annual Report is printed on dove gray colored recycled
paper in a two column per page layout.
2. For ease of reference, Annual Report page numbers have been
retained and are indicated in the upper left hand corner of the
pages in electronic format as "Annual Report page ---." The
designation does not appear in the circulated Annual Report where
page numbers are indicated by arabic numerals at the bottom of each
page.
3. On page F-1 (Annual Report page 25) the parenthetical
"(Annual Report Pages)" was added to the electronic format for the
sake of clarity, and these words do not appear in the circulated
Annual Report.
4. Pages 26-27, 28-29, and 30-31 of the Annual Report are
"spreads," with the page on the left representing line-by-line
account descriptions and numbered columns for General Electric
Company and consolidated affiliates, and with the page on the right
continuing with numbered columns for GE and GECS. For ease of
reading in this electronic filing, line-by-line descriptions have
been repeated on the equivalent right side pages, i.e., F-3, F-5 and
F-7.
5. On pages F-1, F-9, F-13, F-14, F-15, F-16, F-17 and F-18
(Annual Report pages 25, 33, 37, 38, 39, 40, 41 and 42) of the
electronic format the word "Chart:" appears in a number of instances
toward the left hand margin next to a description of the chart.
This formulation indicates that in the circulated Annual Report
there appears a colored bar graph at these locations. The numbers
which are presented at these places in the electronic format
represent the plot points which were used to construct the bar
graphs.
6. Many headings in the circulated Annual Report are in bold
face or in enlarged type or type of a special style. These have
been converted to block capitals in the electronic format. The
numbers of the Notes to Financial Statements appear as large
contrasting blue numerals in the circulated Annual Report.
7. The solid black square character which is used in the
circulated Annual Report has been replaced by an asterisk in the
electronic format.
8. On Annual Report page 44 (F-20) there are facsimile
signatures of Messrs. Welch and Dammerman of GE in the circulated
version.
9. The Accountants Report (KPMG Peat Marwick LLP) on page F-20
of this 10-K Report refers specifically to this Report on Form 10-K,
including certain financial statement schedules included herein.
KPMG Peat Marwick's Report appearing in the circulated Annual Report
to Share Owners on page 44, signed by facsimile, does not refer to
the schedules identified solely with the 10-K.
<PAGE>
Exhibit 4
March 24, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Subject: General Electric Company Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 - File No. 1-35
-----------------------------------------------------------
Dear Sirs:
Neither General Electric Company (the "Company") nor any of its
consolidated subsidiaries has outstanding any instrument with respect to
its long-term debt under which the total amount of securities authorized
exceeds 10% of the total assets of the registrant and its subsidiaries
on a consolidated basis. In accordance with paragraph (b)(4)(iii) of
Item 601 of Regulation S-K (17 CFR Sec. 229.601), the Company hereby
agrees to furnish to the Securities and Exchange Commission, upon
request, a copy of each instrument which defines the rights of holders
of such long-term debt.
Very truly yours,
GENERAL ELECTRIC COMPANY
By: James R. Bunt
------------------------------
Vice President and Treasurer
<PAGE>
Exhibit 10(f)
Amendment to the
GE Supplementary Pension Plan
The GE Supplementary Pension Plan (the "Plan") shall be amended as
follows:
1. The following sentence shall be added to the end of Section V(a)
of the Plan, effective as of July 1, 1994 regardless of whether the
participant terminated employment on, before or after such date, to read as
follows:
For purposes of this Section V(a) and any other provision of this Plan,
a former Employee will be deemed to have withdrawn his contributions
from the GE Pension Plan at such time the payment of benefits
attributable to such contributions commences, regardless of whether such
contributions are paid in the form of a lump sum or an annuity.
2. The last paragraph of Section VII of the Plan shall be amended in
its entirety, effective for distributions made on or after November 1, 1993
regardless of whether the participant terminated employment or distributions
commenced on, before or after such date, to read as follows:
For the purpose of determining the benefit conversions required to
provide the benefit payments referred to above, the interest rate
assumption shall be the immediate annuity rate published by the Pension
Benefit Guaranty Corporation at the beginning of the year in which the
Employee's death occurs for the purpose of computing the amount of
involuntary cashout distributions, and the mortality assumption shall be
based on the UP-1984 Mortality Table.
<PAGE>
1
Exhibit 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
(Dollars in millions, shares in thousands, Fully
earnings per share in dollars) Earnings Primary diluted
per common earnings earnings
share per share per share
---------- --------- ---------
<S> <C> <C> <C>
1994
----
Net earnings applicable to common stock $ 4,726 $ 4,726 $ 4,726
Dividend equivalents (net of tax)
applicable to deferred incentive
compensation shares - 8 8
------- ------- -------
Earnings for per-share calculations $ 4,726 $ 4,734 $ 4,734
------- ------- -------
Average number of shares outstanding 1,708,738 1,708,738 1,708,738
Average number of deferred incentive
compensation shares - 8,555 8,555
Average stock option shares - 9,605 10,452
Average number of restricted stock units - 1,126 1,163
------- ------- -------
Shares for earnings calculation 1,708,738 1,728,024 1,728,908
------- ------- -------
Earnings per share $2.77 $2.74 $2.74
------------------ ===== ===== =====
1993
----
Net earnings applicable to common stock $ 4,315 $ 4,315 $ 4,315
Dividend equivalents (net of tax)
applicable to deferred incentive
compensation shares - 7 7
------- ------- -------
Earnings for per-share calculations $ 4,315 $ 4,322 $ 4,322
------- ------- -------
Average number of shares outstanding 1,707,979 1,707,979 1,707,979
Average number of deferred incentive
compensation shares - 8,507 8,507
Average stock option shares - 9,234 12,048
------- ------- -------
Shares for earnings calculation 1,707,979 1,725,720 1,728,534
------- ------- -------
Earnings per share $2.52 <F1> $2.50 $2.50
------------------ ===== ===== =====
<FN>
Data have been adjusted to reflect 2-for-1 stock split in April 1994.
<F1> Rounded to $2.52 as a result of the 2-for-1 stock split in April 1994.
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
(Dollars in millions, shares in thousands, Fully
earnings per share in dollars) Earnings Primary diluted
per common earnings earnings
share per share per share
---------- --------- ---------
<S> <C> <C> <C>
1992
----
Net earnings applicable to common stock $ 4,725 $ 4,725 $ 4,725
Dividend equivalents (net of tax)
applicable to deferred incentive
compensation shares - 7 7
------- ------- -------
Earnings for per-share calculations $ 4,725 $ 4,732 $ 4,732
------- ------- -------
Average number of shares outstanding 1,714,396 1,714,396 1,714,396
Average number of deferred incentive
compensation shares - 8,681 8,681
Average stock option shares - 9,442 12,143
------- ------- -------
Shares for earnings calculation 1,714,396 1,732,519 1,735,220
--------- --------- ---------
Earnings per share $2.75 <F1> $2.73 $2.73
------------------ ===== ===== =====
<FN>
Data have been adjusted to reflect 2-for-1 stock split in April 1994.
<F1> Rounded to $2.75 as a result of the 2-for-1 stock split in April 1994.
</TABLE>
<PAGE>
<TABLE>
Exhibit 12
GENERAL ELECTRIC COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
Year ended December 31
(Dollars in millions) -----------------------------------------------
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
GE except GECS
--------------
"Earnings" <F1> $ 5,256 $ 5,329 $ 5,582 $ 5,511 $ 7,828
Less: Equity in undistributed earnings
of General Electric Capital
Services, Inc. <F2> (775) (871) (831) (957) (1,181)
Plus: Interest and other financial
charges included in expense 962 893 768 525 410
One-third of rental expense <F3> 207 225 228 212 171
------- ------- ------- ------- -------
Adjusted "earnings" $ 5,650 $ 5,576 $ 5,747 $ 5,291 $ 7,228
======= ======= ======= ======= =======
Fixed Charges:
Interest and other financial charges $ 962 $ 893 $ 768 $ 525 $ 410
Interest capitalized 26 33 29 21 21
One-third of rental expense <F3> 207 225 228 212 171
------- ------- ------- ------- -------
Total fixed charges $ 1,195 $ 1,151 $ 1,025 $ 758 $ 602
======= ======= ======= ======= =======
Ratio of earnings to fixed charges 4.73 4.84 5.61 6.98 12.01
======= ======= ======= ======= =======
General Electric Company and consolidated
affiliates
-----------------------------------------
"Earnings" <F1> $ 5,621 $ 5,679 $ 6,026 $ 6,287 $ 8,831
Plus: Interest and other financial
charges included in expense 5,397 5,270 4,512 4,096 4,994
One-third of rental expense <F3> 240 261 320 349 327
------- ------- ------- ------- -------
Adjusted "earnings" $11,258 $11,210 $10,858 $10,732 $14,152
======= ======= ======= ======= =======
Fixed Charges:
Interest and other financial charges $ 5,397 $ 5,270 $ 4,512 $ 4,096 $ 4,994
Interest capitalized 46 41 35 26 30
One-third of rental expense <F3> 240 261 320 349 327
------- ------- ------- ------- -------
Total fixed charges $ 5,683 $ 5,572 $ 4,867 $ 4,471 $ 5,351
======= ======= ======= ======= =======
Ratio of earnings to fixed charges 1.98 2.01 2.23 2.40 2.64
======= ======= ======= ======= =======
<FN>
<F1> Earnings for all years consist of earnings from continuing operations before income taxes and
minority interest. For 1991 and 1993, earnings are before cumulative effects of changes in
accounting principle.
<F2> Earnings for all years consist of earnings from continuing operations after income taxes. For
1991, earnings are from continuing operations before cumulative effect of change in
accounting principle.
<F3> Considered to be representative of interest factor in rental expense.
</TABLE>
<PAGE>
Exhibit 21
Subsidiaries of Registrant
General Electric's principal affiliates as of December 31, 1994,
are listed below. All other affiliates, if considered in the aggregate
as a single affiliate, would not constitute a significant affiliate.
Affiliates of Registrant included in Registrant's Financial Statements.
-----------------------------------------------------------------------
<TABLE>
<CAPTION>
Percentage of
voting securities State or
owned by the country of
immediate incorporation or
parent (1) organization
___________________ ________________
<S> <C> <C>
Caribe General Electric Products, Inc. 100 Delaware
General Electric Canadian Holdings Limited 100 Canada
General Electric Capital Services, Inc. 100 Delaware
General Electric Capital Corporation 100 New York
Employers Reinsurance Corporation 100 Missouri
Kidder, Peabody Group Inc. 100 Delaware
General Electric Plastics B.V. 100 Netherlands
General Electric Technical Services Company 100 Delaware
GE Chemicals Inc. 100 Delaware
GE Petrochemicals Inc. 100 Delaware
National Broadcasting Company, Inc. 100 Delaware
GE Yokogawa Medical Systems, Ltd. 75 Japan
<FN>
Notes
(1) With respect to certain companies, shares in names of nominees and
qualifying shares in names of directors are included in above
percentages.
</TABLE>
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
General Electric Company:
We consent to incorporation by reference in the registration statements
Nos. 33-29024, 33-3908, 2-82072, 33-37106, 33-35922, 33-44593, 33-39596, 33-
39596-01, 33-47181, 33-47085 and 33-50639 on Form S-3 and Nos. 33-4239, 33-
23441, 33-24679, 2-84145, 33-47500 and 33-49053 on Form S-8 of General
Electric Company of our report dated February 10, 1995, relating to the
consolidated statement of financial position of General Electric Company
and consolidated affiliates as of December 31, 1994 and 1993 and the
related consolidated statements of earnings, and cash flows for each of the
years in the three-year period ended December 31, 1994, and the related
schedule, which report appears in the December 31, 1994, annual report on
Form 10-K of General Electric Company. Our report refers to changes in 1993
in the Company's methods of accounting for postemployment benefits and for
investments in certain securities.
KPMG Peat Marwick LLP
Stamford, Connecticut
March 24, 1995
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director and/or officer or other official of General Electric Company, a New
York corporation (the "Company"), hereby constitutes and appoints John F.
Welch, Jr., Benjamin W. Heineman, Jr., Dennis D. Dammerman, and Philip D.
Ameen and each of them, his or her true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead in any and all capacities, to sign one or more
Annual Reports for the Company's fiscal year ended December 31, 1994, on Form
10-K under the Securities Exchange Act of 1934, as amended, or such other form
as such attorneys-in-fact may deem necessary or desirable, any amendments
thereto, and all additional amendments thereto each in such form as they or
any one of them may approve, and to file the same with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done so that such Annual Report shall comply
with the Securities Exchange Act of 1934, as amended, and the applicable Rules
and Regulations adopted or issued pursuant thereto, as fully and to all
intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them or their or his substitute or resubstitute, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her
hand this l0th day of March, 1995.
John F. Welch, Jr. Dennis D. Dammerman
------------------------- -------------------------
Chairman of the Board Senior Vice President -
(Principal Executive Finance (Principal
Officer and Director) Financial Officer and Director)
Philip D. Ameen
------------------------------
Vice President and Comptroller
(Principal Accounting Officer)
(Page 1 of 2)
<PAGE>
H. Brewster Atwater, Jr. David C. Jones
------------------------- -------------------------
Director Director
D. Wayne Calloway Robert E. Mercer
------------------------- -------------------------
Director Director
Silas S. Cathcart Gertrude G. Michelson
------------------------- -------------------------
Director Director
Paolo Fresco Barbara S. Preiskel
------------------------- -------------------------
Director Director
Claudio X. Gonzalez Roger S. Penske
------------------------- -------------------------
Director Director
Henry H. Henley, Jr. Frank H. T. Rhodes
------------------------- -------------------------
Director Director
Andrew C. Sigler
-------------------------
Director
Douglas A. Warner III
-------------------------
Director
A MAJORITY OF THE BOARD OF DIRECTORS
(Page 2 of 2)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1994,
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> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,591
<SECURITIES> 30,965
<RECEIVABLES> 5,668
<ALLOWANCES> 205
<INVENTORY> 3,880
<CURRENT-ASSETS> 0<F1>
<PP&E> 41,670
<DEPRECIATION> 18,205
<TOTAL-ASSETS> 194,484
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 36,979
<COMMON> 594
0
0
<OTHER-SE> 25,793
<TOTAL-LIABILITY-AND-EQUITY> 194,484
<SALES> 30,740
<TOTAL-REVENUES> 39,543<F2>
<CGS> 22,748
<TOTAL-COSTS> 28,962<F3>
<OTHER-EXPENSES> 12,987
<LOSS-PROVISION> 55
<INTEREST-EXPENSE> 4,949
<INCOME-PRETAX> 8,661
<INCOME-TAX> 2,746
<INCOME-CONTINUING> 5,915
<DISCONTINUED> (1,189)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,726
<EPS-PRIMARY> 2.74
<EPS-DILUTED> 2.74
<FN>
<F1>Not applicable to consolidated GE.
<F2>GE sales of goods ($30,740) and services ($8,803).
<F3>GE cost of goods ($22,748) and services ($6,214) sold.
</FN>
</TABLE>
