SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____ to ____
Commission file number 1-35
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
NEW YORK 14-0689340
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3135 EASTON TURNPIKE, FAIRFIELD, CT 06431-0001
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (203) 373-2211
-------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
There were 3,258,023,410 shares with a par value of $0.16 per share
outstanding at March 31, 1998.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED STATEMENT OF EARNINGS
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
<TABLE>
<CAPTION>
(DOLLARS, EXCEPT PER-SHARE AMOUNTS, IN MILLIONS)
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
--------------------------------------------------------------------------------
CONSOLIDATED GE GECS
------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Sales of goods $ 9,616 $ 8,620 $ 7,991 $ 7,705 $ 1,626 $ 916
Sales of services 3,359 2,785 3,417 2,817 - -
Earnings of GECS - - 881 754 - -
GECS revenues from services 9,484 8,593 - - 9,525 8,628
Other income 167 159 175 158 - -
----------- ----------- ----------- ---------- ----------- -----------
Total revenues 22,626 20,157 12,464 11,434 11,151 9,544
----------- ----------- ----------- ---------- ----------- -----------
Cost of goods sold 7,063 6,342 5,582 5,535 1,482 808
Cost of services sold 2,402 1,985 2,460 2,017 - -
Interest and other financial charges 2,212 1,931 207 158 2,025 1,783
Insurance losses and policyholder and annuity benefits 2,213 2,244 - - 2,213 2,244
Provision for losses on financing receivables 332 312 - - 332 312
Other costs and expenses 5,433 4,729 1,648 1,467 3,814 3,286
Minority interest in net earnings of consolidated
affiliates 56 55 23 25 33 30
----------- ----------- ----------- ---------- ----------- -----------
Total costs and expenses 19,711 17,598 9,920 9,202 9,899 8,463
----------- ----------- ----------- ---------- ----------- -----------
Earnings before income taxes 2,915 2,559 2,544 2,232 1,252 1,081
Provision for income taxes (1,024) (882) (653) (555) (371) (327)
----------- ----------- ----------- ---------- ----------- -----------
Net earnings $ 1,891 $ 1,677 $ 1,891 $ 1,677 $ 881 $ 754
=========== =========== =========== ========== =========== ===========
Net earnings per share
Basic $ 0.58 $ 0.51
Diluted $ 0.57 $ 0.50
Dividends declared per share $ 0.30 $ 0.26
<FN>
See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and "GECS." Transactions between
GE and GECS have been eliminated from the "consolidated" columns.
</FN>
</TABLE>
<PAGE>
CONDENSED STATEMENT OF FINANCIAL POSITION
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
CONSOLIDATED GE GECS
------------------------- ------------------------ -------------------------
3/31/98 12/31/97 3/31/98 12/31/97 3/31/98 12/31/97
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Cash and equivalents $ 5,419 $ 5,861 $ 749 $ 1,157 $ 4,670 $ 4,904
Investment securities 71,952 70,621 298 265 71,654 70,356
Current receivables 8,039 8,924 8,171 9,054 - -
Inventories 5,975 5,895 5,167 5,109 808 786
GECS financing receivables - net 103,387 103,799 - - 103,387 103,799
Other GECS receivables 18,433 17,655 - - 19,084 18,332
Property, plant and equipment (including equipment
leased to others) - net 32,727 32,316 11,043 11,118 21,684 21,198
Investment in GECS - - 17,983 17,239 - -
Intangible assets 19,675 19,121 8,965 8,755 10,710 10,366
Other assets 44,147 39,820 16,607 14,729 28,186 25,667
----------- ----------- ----------- ---------- ----------- -----------
Total assets $ 309,754 $ 304,012 $ 68,983 $ 67,426 $ 260,183 $ 255,408
=========== =========== =========== ========== =========== ===========
Short-term borrowings $ 104,170 $ 98,075 $ 4,830 $ 3,629 $ 99,949 $ 95,274
Accounts payable 10,791 10,407 4,538 4,779 7,103 6,490
Other GE current liabilities 12,177 12,186 12,113 12,058 - -
Long-term borrowings 43,781 46,603 785 729 43,130 45,989
Insurance liabilities, reserves and annuity benefits 68,647 67,270 - - 68,647 67,270
All other liabilities 22,699 22,700 11,580 11,539 11,019 11,067
Deferred income taxes 8,957 8,651 (175) (315) 9,132 8,966
----------- ----------- ----------- ---------- ----------- -----------
Total liabilities 271,222 265,892 33,671 32,419 238,980 235,056
----------- ----------- ----------- ---------- ----------- -----------
Minority interest in equity of consolidated
affiliates 3,813 3,682 593 569 3,220 3,113
----------- ----------- ----------- ---------- ----------- -----------
Unrealized gains on investment securities 2,460 2,138 2,460 2,138 2,396 2,135
Foreign currency translation adjustments (951) (798) (951) (798) (227) (185)
----------- ----------- ----------- ---------- ----------- -----------
Accumulated non-owner changes in equity 1,509 1,340 1,509 1,340 2,169 1,950
Common stock (3,714,026,000 shares issued) 594 594 594 594 1 1
Other capital 4,842 4,434 4,842 4,434 2,484 2,337
Retained earnings 44,252 43,338 44,252 43,338 13,329 12,951
Less common stock held in treasury (16,478) (15,268) (16,478) (15,268) - -
----------- ----------- ----------- ---------- ----------- -----------
Total share owners' equity 34,719 34,438 34,719 34,438 17,983 17,239
----------- ----------- ----------- ---------- ----------- -----------
Total liabilities and equity $ 309,754 $ 304,012 $ 68,983 $ 67,426 $ 260,183 $ 255,408
=========== =========== =========== ========== =========== ===========
<FN>
See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and"GECS." March data are
unaudited. Transactions between GE and GECS have been eliminated from the "consolidated" columns.
</FN>
</TABLE>
<PAGE>
CONDENSED STATEMENT OF CASH FLOWS
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
THREE MONTHS ENDED MARCH 31 (UNAUDITED)
--------------------------------------------------------------------------------
CONSOLIDATED GE GECS
------------------------- ------------------------ -------------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 1,891 $ 1,677 $ 1,891 $ 1,677 $ 881 $ 754
Adjustments to reconcile net earnings to cash
provided from (used for) operating activities
Depreciation and amortization 1,077 952 421 382 656 570
Earnings retained by GECS - - (378) (454) - -
Deferred income taxes 174 329 106 40 68 289
Decrease in GE current receivables 704 636 706 666 - -
Decrease (increase) in inventories (126) (672) (130) (672) 4 -
Increase (decrease) in accounts payable 295 (165) (35) 11 316 (240)
Increase in insurance reserves 1,161 655 - - 1,161 655
Provision for losses on financing receivables 332 312 - - 332 312
All other operating activities (1,901) (1,281) (1,073) (342) (739) (754)
----------- ----------- ----------- ---------- ----------- -----------
Cash from operating activities 3,607 2,443 1,508 1,308 2,679 1,586
----------- ----------- ----------- ---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment (including
equipment leased to others) - additions (1,921) (1,742) (361) (457) (1,560) (1,285)
Net decrease (increase) in GECS financing receivables (246) 1,385 - - (246) 1,385
Payments for principal businesses purchased (1,438) (46) (752) (19) (686) (27)
All other investing activities (769) (967) (134) 206 (712) (1,291)
----------- ----------- ----------- ---------- ----------- -----------
Cash used for investing activities (4,374) (1,370) (1,247) (270) (3,204) (1,218)
----------- ----------- ----------- ---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) 8,445 2,732 1,768 242 6,477 2,457
Newly issued debt (maturities more than 90 days) 5,651 4,810 86 147 5,565 4,663
Repayments and other reductions (maturities
more than 90 days) (11,625) (8,026) (590) (148) (11,035) (7,878)
Net purchase of GE shares for treasury (954) (681) (954) (681) - -
Dividends paid to share owners (979) (855) (979) (855) (503) (300)
All other financing activities (213) 377 - - (213) 377
----------- ----------- ----------- ---------- ----------- -----------
Cash from (used for) financing activities 325 (1,643) (669) (1,295) 291 (681)
----------- ----------- ----------- ---------- ----------- -----------
Decrease in cash and equivalents (442) (570) (408) (257) (234) (313)
Cash and equivalents at beginning of year 5,861 4,191 1,157 957 4,904 3,234
----------- ----------- ----------- ---------- ----------- -----------
Cash and equivalents at March 31 $ 5,419 $ 3,621 $ 749 $ 700 $ 4,670 $ 2,921
=========== =========== =========== ========== =========== ===========
<FN>
See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and "GECS." Transactions between
GE and GECS have been eliminated from the "consolidated" columns.
</FN>
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed quarterly financial statements represent the
consolidation of General Electric Company and all companies which it directly or
indirectly controls, either through majority ownership or otherwise. Reference
is made to note 1 to the consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. That
note discusses consolidation and financial statement presentation. As used in
this Report and in the Report on Form 10-K, "GE" represents the adding together
of all affiliated companies except General Electric Capital Services, Inc.
("GECS"), which is presented on a one-line basis; GECS consists of General
Electric Capital Services, Inc. and all of its affiliates; and "consolidated"
represents the adding together of GE and GECS with the effects of transactions
between the two eliminated.
2. The condensed consolidated quarterly financial statements are unaudited.
These statements include all adjustments (consisting of normal recurring
accruals) considered necessary by management to present a fair statement of the
results of operations, financial position and cash flows. The results reported
in these condensed consolidated financial statements should not be regarded as
necessarily indicative of results that may be expected for the entire year.
3. Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING
COMPREHENSIVE INCOME, was adopted as of January 1, 1998. This Statement requires
reporting of changes in share owners' equity that do not result directly from
transactions with share owners. An analysis of these changes follows:
THREE MONTHS ENDED
------------------
(DOLLARS IN MILLIONS) 3/31/98 3/31/97
------- -------
Net earnings $ 1,891 $ 1,677
Unrealized gains (losses) on investment securities - net 322 (488)
Foreign currency translation adjustments - net (153) (404)
------- -------
Total $ 2,060 $ 785
======= =======
4. Inventories consisted of the following:
AT
-----------------------
(DOLLARS IN MILLIONS) 3/31/98 12/31/97
------- --------
GE
Raw materials and work in process $ 3,082 $ 3,070
Finished goods 2,921 2,895
Unbilled shipments 246 242
Revaluation to LIFO (1,082) (1,098)
------- -------
5,167 5,109
======= =======
GECS
Finished goods 808 786
------- -------
Total $ 5,975 $ 5,895
======= =======
5. Property, plant and equipment (including equipment leased to others) --
net, consisted of the following:
AT
---------------------
(DOLLARS IN MILLIONS) 3/31/98 12/31/97
------- --------
ORIGINAL COST
- - GE $27,021 $26,855
- - GECS 29,770 28,802
------- -------
Total 56,791 55,657
------- -------
ACCUMULATED DEPRECIATION AND AMORTIZATION
- - GE 15,978 15,737
- - GECS 8,086 7,604
------- -------
Total 24,064 23,341
------- -------
PROPERTY, PLANT AND EQUIPMENT -- NET
- - GE 11,043 11,118
- - GECS 21,684 21,198
------- -------
Total $32,727 $32,316
======= =======
6. GE's authorized common stock consisted of 4,400,000,000 shares having a
par value of $0.16 each. Information related to the calculation of earnings per
share follows.
THREE MONTHS ENDED
---------------------------------
(DOLLAR AMOUNTS AND SHARES IN MILLIONS; 3/31/98 3/31/97
--------------- ---------------
PER-SHARE AMOUNTS IN DOLLARS) BASIC DILUTED BASIC DILUTED
----- ------- ------ -------
CONSOLIDATED OPERATIONS
Net earnings available to common
share owners $1,891 $1,891 1,677 $1,677
Dividend equivalents-- net of tax -- 3 -- 3
------ ------ ----- ------
Net earnings available for per-share
calculation $1,891 $1,894 $1,677 $1,680
------ ------ ----- ------
AVERAGE EQUIVALENT SHARES
Shares of GE common stock 3,269 3,269 3,285 3,285
Employee compensation-related shares,
including stock options -- 66 -- 69
------ ------ ------ ------
Total average equivalent shares 3,269 3,335 3,285 3,354
------ ------ ------ ------
Net earnings per share $ 0.58 $ 0.57 $ 0.51 $ 0.50
====== ====== ====== ======
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A. RESULTS OF OPERATIONS -- FIRST QUARTER OF 1998 COMPARED WITH FIRST QUARTER
OF 1997
General Electric Company's earnings per share increased 14% to $.57, up
from last year's $.50, and earnings increased 13% to $1.891 billion. Both
earnings per share and earnings were records for the quarter. Earnings per share
grew faster than earnings, reflecting the impact of shares repurchased under a
five-year, $17 billion share repurchase program initiated in December 1994.
Revenues for the first quarter of 1998, including acquisitions, rose to a
record $22.6 billion, 12% higher than last year's quarter, driven primarily by
increased global activities and higher sales of spare parts and services by GE's
equipment businesses. Seven of GE's twelve businesses reported higher revenues
for the first quarter, with four, led by GE Capital Services, Aircraft Engines
and Transportation Systems, achieving double-digit increases.
GE's sales of goods and services were $11.4 billion for the first three
months of 1998, an increase of 8% from 1997. Volume increased by 11%, reflecting
broad growth across most businesses. Overall, selling prices were down slightly,
with most businesses experiencing selling price decreases. There also was a
minor negative effect on selling prices arising from the effects of currency
exchange rate changes on the translation of sales denominated in other than U.S.
dollars.
GE's first-quarter operating margin increased to 15.1% of sales, up from
last year's 14.3%, and was a record for the quarter. The first-quarter increase
demonstrates the increasing benefits from GE's product services and Six Sigma
quality initiatives.
Ten of GE's twelve businesses reported higher operating profit for the
first quarter, with eight, led by GE Capital Services, Aircraft Engines and
Medical Systems, achieving double-digit increases.
GE Capital Services' first-quarter earnings rose to $881 million, 17%
higher than last year's $754 million. The record results reflected the
globalization and diversity of GE Capital's 28 businesses and were led by strong
double-digit increases in its specialty insurance, equipment management and
mid-market financing activities.
Cash generated from GE's operating activities was $1.5 billion in the first
quarter, up 15% from 1997 due to improvements in earnings and working capital
management. As part of the $17 billion share repurchase program, GE purchased
$873 million of its stock during the first quarter to reach $10.8 billion -- 255
million shares -- purchased since December 1994.
SEGMENT ANALYSIS
The comments that follow compare revenues and operating profit by industry
segment for the first quarters of 1998 and 1997.
o AIRCRAFT ENGINES reported sharply higher revenues and operating profit
compared with the first quarter of 1997. The revenue and operating profit
increases both resulted from strong volume growth in product services, including
the contribution from the acquisition of Greenwich Air Services/UNC, and in
commercial engines.
o APPLIANCES revenues were much lower than the previous year's first
quarter, largely as a result of the first-quarter deconsolidation of a European
distribution affiliate. Operating profit was slightly higher reflecting effects
of productivity which more than offset lower selling prices.
o BROADCASTING revenues were considerably higher compared with last year's
first quarter, primarily as a result of NBC's broadcast of the January 1998
Superbowl. Operating profit was also much higher as Superbowl coverage and
improved prime time pricing more than offset higher license fees for certain
prime-time programs that were renewed.
o GE CAPITAL SERVICES net earnings increased by 17% to $881 million,
reflecting strong double-digit increases in specialty insurance, equipment
management and mid-market financing activities. The growth in earnings from
specialty insurance activities primarily reflected higher investment income, the
result of continued growth in the investment portfolios and higher gains on
investment securities, as well as improved earnings in the mortgage insurance
business, the result of improved market conditions. Earnings of the lending,
leasing and equipment management businesses reflected increases from a higher
average level of invested assets, partially offset by decreased earnings from
consumer services activities attributable to increased losses and lower volumes
for U.S. private-label credit cards and increased automobile residual losses.
Financing spreads decreased slightly, reflecting both lower yields and higher
borrowing rates.
o INDUSTRIAL PRODUCTS AND SYSTEMS reported a good increase in operating
profit on somewhat higher revenues. The revenue increase resulted from volume
increases across all businesses in the segment, particularly at Transportation,
partially offset by lower selling prices. The improvement in operating profit
was attributable to productivity throughout the segment, particularly at
Electrical Distribution and Control and Industrial Control Systems.
o MATERIALS revenues were slightly higher than a year ago, as volume
increases were partially offset by lower selling prices and adverse currency
exchange rates. Operating profit was considerably higher than last year,
primarily as a result of productivity and higher volume.
o POWER GENERATION operating profit increased somewhat on revenues that
were somewhat lower compared with last year's first quarter. The decline in
revenues was primarily attributable to completion in 1997 of certain large
contracts at Nuovo Pignone and lower volume in gas turbines. The increase in
operating profit was primarily the result of productivity and strong growth in
product services which more than offset the effects of lower selling prices.
o TECHNICAL PRODUCTS & SERVICES revenues were about the same as the first
quarter of 1997, as volume increases were largely offset by lower selling
prices. Operating profit was sharply higher, primarily as a result of strong
productivity across the segment and the absence of a current year counterpart to
a 1997 provision for patent litigation at Medical Systems.
o ALL OTHER revenues and operating profit, principally related to the
licensing of GE technology to others, were considerably lower.
B. FINANCIAL CONDITION
With respect to the Condensed Statement of Financial Position, consolidated
assets were $309.8 billion at March 31, 1998, compared with $304.0 billion at
December 31, 1997.
GE assets were $69.0 billion at March 31, 1998, an increase of $1.6 billion
from December 31, 1997. The increase was primarily attributable to increases in
other assets, reflecting the acquisition of Stewart and Stevenson's gas turbine
unit which was not consolidated in the first quarter, as well as numerous small
changes. The increase in other assets was partially offset by a decrease in
receivables resulting from improved asset management.
GECS assets increased by $4.8 billion from the end of 1997. Investment
securities increased $1.3 billion, principally as a result of core growth in the
insurance businesses and increases in fair value. GECS other assets increased
$2.5 billion, primarily reflecting higher investments in and advances to
non-consolidated affiliates, increases in assets acquired for resale, primarily
residential mortgages, and increased "separate accounts," which are investments
controlled by policy holders. Property, plant and equipment, which consists
primarily of equipment leased to others on operating leases, increased $0.5
billion principally as a result of acquisitions in the trailer leasing business
and new aircraft volume. GE Capital Corporation's financing receivables, which,
net of allowance for losses, aggregated $103.4 billion at the end of the first
quarter, decreased $0.4 billion from the year-end 1997 level of $103.8 billion.
The decrease resulted principally from the combination of normal seasonal
declines in credit card receivables partially offset by acquisitions and new
volume. Management believes that GE Capital's allowance for losses of $2.8
billion (2.63% of the receivables balance at March 31, 1998 -- the same as year
end 1997) is appropriate given the strength and diversity of the portfolio and
current economic circumstances.
Consolidated liabilities of $271.2 billion at March 31, 1998, were $5.3
billion higher than the year-end 1997 balance of $265.9 billion. GE liabilities
increased by $1.3 billion; GECS' liabilities increased by $3.9 billion.
GE borrowings were $5.6 billion ($4.8 billion short-term and $0.8 billion
long-term) at March 31, 1998, an increase of $1.3 billion from December 31,
1997. GE's ratio of debt to total capital at the end of March 1998 was 13.7%
compared with 11.1% at the end of last year and 12.3% at March 31, 1997. Other
changes in GE's liabilities comprised numerous, relatively small items.
GECS liabilities increased by $3.9 billion, principally reflecting
increased financing needs resulting from the asset growth described previously.
Short-term borrowings increased $4.7 billion from year-end 1997, while long-term
borrowings decreased by $2.9 billion. Insurance liabilities increased $1.4
billion from year-end 1997 reflecting primarily additions to reserves related to
core growth and increases in separate accounts.
With respect to cash flows, consolidated cash and equivalents were $5.4
billion at March 31, 1998, a decrease of about $0.4 billion during the quarter.
Cash and equivalents were $3.6 billion at March 31, 1997, a decrease of about
$0.6 billion during last year's first quarter.
GE cash and equivalents decreased $0.4 billion from year-end 1997 to $0.7
billion at March 31, 1998. During the first quarter of 1998, operating cash
flows increased to $1.5 billion, an increase of 15% over the first quarter of
1997. Cash used for investing activities ($1.2 billion) principally represented
acquisitions and investments in new plant and equipment for a wide variety of
capital expenditure projects to reduce costs and improve efficiencies. Cash used
for financing activities ($0.7 billion) included $1.0 billion for dividends paid
to share owners, representing a 15% increase in the per-share dividend rate
compared with first quarter of last year, and $0.9 billion for repurchases of
the Company's common stock under the share repurchase program. The dividends and
share repurchase were partially offset by $1.3 billion provided from higher
borrowings.
GE cash and equivalents decreased $0.3 billion to $0.7 billion at March 31,
1997, compared with $1.0 billion at year end 1996. During the first quarter of
1997, operating cash flows increased to $1.3 billion, compared with $1.2 billion
in the first quarter of 1996. Cash used for investing activities ($0.3 billion)
principally represented acquisitions and investments in new plant and equipment
for a wide variety of capital expenditure projects to reduce costs and improve
efficiencies. Cash used for financing activities ($1.3 billion) included $0.9
billion for dividends paid to share owners, representing a 13% increase in the
per-share dividend rate compared with first quarter of last year, and $0.8
billion for repurchases of the Company's common stock under the share repurchase
program. The dividends and share repurchase were partially offset by $0.2
billion provided from higher borrowings.
GECS cash and equivalents decreased $0.2 billion during the first quarter
of 1998, when $2.7 billion of cash was provided from operating activities. The
principal use of GECS cash during the period was for investing activities ($3.2
billion), a majority of which was attributable to additions to equipment that is
provided to third parties on operating leases ($1.6 billion), payments for
principal businesses purchased ($0.7 billion) and increases in "all other
investing activities" ($0.7 billion), principally related to investment
securities.
GECS cash and equivalents decreased $0.3 billion during the first quarter
of 1997, when $1.6 billion of cash was provided from operating activities. The
principal use of GECS cash during the period was for investing activities ($1.2
billion), which was more than accounted for by additions to equipment that is
provided to third parties on operating leases ($1.3 billion) and increases in
"all other investing activities" ($1.3 billion), principally related to
investment securities, partially offset by lower financing receivables ($1.4
billion).
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The directors, other than Messrs. Cash, Murphy and Nunn, were defendants in
a civil suit purportedly brought on behalf of the Company as a share owner
derivative and class action (the Cohen action) in New York State Supreme Court,
New York County, on September 18, 1996. The suit was based upon the Company's
solicitation, in the 1996 proxy statement, of share owner approval of the 1996
Non-Employee Director Stock Option Plan. Under the Plan, which the share owners
approved, 6,000 stock options will be granted annually to each of the Company's
non-employee directors through 2003. Each annual grant entitles the director,
for a period of 10 years from the date of the grant, to purchase 6,000 shares of
GE stock from the Company at the market price of GE stock on the date of grant.
The suit claimed that the options would have an estimated value to the directors
on the annual date of grant which should have been disclosed. The suit also
claimed that the directors breached their fiduciary duties because the 1996
proxy statement did not state that the options would have such an alleged,
estimated value to the directors when granted. The suit sought compensatory
damages and invalidation of the Plan and all options granted under the Plan. The
Company believes that the options have no value to the directors on the date of
grant, that the options will have no value to the directors unless the GE stock
price increases above the grant price, and that the 1996 proxy statement
contained full and adequate disclosure because, among other things, any
reasonable share owner would understand that the value of the options to the
non-employee directors would only occur when and if the stock price rises above
the grant price. On May 14, 1997, the court granted the Company's motion to
dismiss the suit for failure to state a cause of action, and on January 27,
1998, a four-judge panel of the New York Supreme Court, Appellate Division,
First Department, unanimously affirmed the dismissal of the suit. On April 16,
1998, the same four-judge panel denied plaintiff's motion for reargument of, or
leave to appeal from, its January 27, 1998 order, and on May 7, 1998, plaintiff
filed a motion with the New York Court of Appeals for leave to appeal the
January 27, 1998 order.
ENVIRONMENTAL
As previously reported, in April 1997, the United States Environmental
Protection Agency informed the Company that it was considering issuing a
complaint against the Company seeking $241,000 in penalties and alleging
violations of the Emergency Planning and Community Right-to-Know Act for failure
to report chemical use and releases from the Company's Waterford, New York
facility. The Complaint was issued in April 1997 seeking $226,000 in penalties.
The matter was settled in February, 1998 for a $92,000 penalty and $113,000
worth of donations to local emergency response organizations.
ITEM 2. CHANGES IN SECURITIES
On February 27, 1998, GE issued to former shareholders of First Factors
Corporation ("FFC"), or their agent, 1,899,858 shares of GE common stock held in
GE's treasury. The issuance was in connection with the acquisition on that date
of all of the outstanding stock of FFC, a private corporation, by FFC
Acquisition Corporation, a wholly owned subsidiary of GE. The transaction was a
private transaction exempt from registration under the Securities Act of 1933
(the "Act") pursuant to Section 4(2) of the Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 11. Computation of Per Share Earnings*
Exhibit 12. Computation of Ratio of Earnings to Fixed Charges.
Exhibit 27. Financial Data Schedule
* Data required by Statement of Financial Accounting Standards No.
128, Earnings per Share, is provided in note 6 to the condensed
consolidated financial statements in this report.
b. Reports on Form 8-K during the quarter ended March 31, 1998.
No reports on Form 8-K were filed during the quarter ended March 31,
1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
General Electric Company
(Registrant)
May 12, 1998 Philip D. Ameen
- ------------ ----------------------------------------
Date Vice President and Comptroller
Duly Authorized Officer and Principal
Accounting Officer
EXHIBIT 12
GENERAL ELECTRIC COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS) THREE MONTHS ENDED
3/31/98
------------------
<S> <C>
GE EXCEPT GECS
Earnings (a) $ 2,567
Less: Equity in undistributed earnings of General Electric
Capital Services, Inc. <F2> (378)
Plus: Interest and other financial
charges included in expense 207
One-third of rental expense <F3> 45
-------
Adjusted "earnings" $ 2,441
=======
Fixed Charges:
Interest and other financial charges $ 207
Interest capitalized 9
One-third of rental expense <F3> 45
-------
Total fixed charges $ 261
=======
Ratio of earnings to fixed charges 9.35
=======
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
Earnings <F1> $ 2,971
Plus: Interest and other financial charges
included in expense 2,228
One-third of rental expense <F3> 104
-------
Adjusted "earnings" $ 5,303
=======
Fixed Charges:
Interest and other financial charges $ 2,228
Interest capitalized 21
One-third of rental expense <F3> 104
-------
Total fixed charges $ 2,353
=======
Ratio of earnings to fixed charges 2.25
=======
<FN>
<F1> Earnings before income taxes and minority interest.
<F2> Earnings after income taxes, net of dividends.
<F3> Considered to be representative of interest factor in rental expense.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements for the period ended March 31, 1998,
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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,419
<SECURITIES> 71,952
<RECEIVABLES> 0<F1>
<ALLOWANCES> 0<F1>
<INVENTORY> 5,975
<CURRENT-ASSETS> 0<F2>
<PP&E> 56,791
<DEPRECIATION> 24,064
<TOTAL-ASSETS> 309,754
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 43,781
0
0
<COMMON> 594
<OTHER-SE> 34,125
<TOTAL-LIABILITY-AND-EQUITY> 309,754
<SALES> 9,616
<TOTAL-REVENUES> 12,975<F3>
<CGS> 7,063
<TOTAL-COSTS> 9,465<F4>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 2,212
<INCOME-PRETAX> 2,915
<INCOME-TAX> 1,024
<INCOME-CONTINUING> 1,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,891
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.57
<FN>
<F1>Not disclosed in interim periods.
<F2>Not applicable to consolidated GE.
<F3>GE sales of goods ($9,616) and services ($3,359).
<F4>GE cost of goods ($7,063) and services ($2,402) sold.
</FN>
</TABLE>
