SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) June 28, 1996
GENERAL ELECTRIC CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 1-6461 13-1500700
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
260 LONG RIDGE ROAD, STAMFORD, CT 06927
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 357-4000
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
General Electric Capital Corporation's common stock is wholly owned by General
Electric Capital Services, Inc., all of whose common stock is in turn wholly
owned by General Electric Company. During the year ended December 31, 1995,
General Electric Capital Corporation and its consolidated affiliates ("GE
Capital") completed several business acquisitions, and entered into definitive
agreements to consummate other business acquisitions, none of which, on a stand
alone basis, were deemed significant for purposes of Regulation S-X. In
aggregate, however, GE Capital's completed and probable acquisitions are
significant as defined by Regulation S-X. The acquisitions, described below,
represent GE Capital's principal completed and probable acquisitions
(collectively called the "Acquired Companies" or "Acquisitions") for the year
ended December 31, 1995. The Acquisitions involve expansion of GE Capital's
existing lines of business. GE Capital operates in four financing industry
segments and a specialty insurance industry segment. The segments most affected
by the 1995 acquisitions are mid-market financing, consumer services, equipment
management and specialty insurance.
GE Capital acquired a majority of the issued and outstanding common shares of a
major French financial services company. The company, operating principally in
France, its territories and certain other European countries, is a
multi-platform finance organization providing auto financing, consumer and
commercial loans, and insurance products. This acquisition, although primarily a
consumer business, contains a mix of financial products applicable to all of GE
Capital's segments.
Mid-market financing acquired the equipment finance and small business finance
businesses from a large multinational financial corporation. Separately,
mid-market financing acquired the equipment finance business from a large bank
based in New Jersey. The equipment finance businesses provide financing for
customers to purchase or lease capital assets, whereas the small business
finance business is the second largest non-bank lender under the Small Business
Administration's Section 7(a) loan program.
Equipment management acquired a fleet management business in the United Kingdom,
expanding its market penetration in Europe.
Two other acquisitions were completed jointly by mid-market financing and
consumer services as the activities acquired contain a mix of financial products
applicable to both segments. The first acquisition resulted in the purchase of
GE Capital's joint venture partner's ownership share of a Hong Kong restricted
license bank whose business consists of deposit taking and installment finance,
including personal loans, leasing, business loans, property financing,
residential mortgages and related types of financing. The second acquisition
involved the purchase of a family owned business with half of its portfolio
invested in retail auto point-of-sale financing and the other half invested in
light equipment (e.g., copiers, security systems) and heavy equipment (e.g.,
factory equipment) financing. This business operates exclusively in France and
its territories.
Other acquisitions that relate solely to the consumer services segment include
the purchase of a private label credit card business from Australia's largest
retail corporation, the purchase of a majority interest in an automobile leasing
business in Italy, the purchase of a U.S.-based life insurance company providing
long-term care, long-term disability, corporate owned life and other group
insurance (primarily accidental death insurance), and the purchase of a
U.S.-based life insurance company providing various annuity and life insurance
products.
Specialty insurance acquired an entity that is licensed in all 50 states in the
U.S., the District of Columbia and all provinces of Canada to provide
supplemental life, accident and health, and credit insurance products. These
products are primarily marketed to affinity groups (i.e., large associations and
major issuers of credit cards), financial institutions and other associations
and employee groups.
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<PAGE>
Pro Forma Financial Information
- -------------------------------
The accompanying unaudited pro forma condensed, combined financial information
gives effect to the Acquired Companies described above.
The unaudited pro forma condensed, combined statement of operations for the year
ended December 31, 1995 combines the historical consolidated statement of
operations of GE Capital and all Acquisitions as if the transactions had been
effective on January 1, 1995.
The unaudited pro forma condensed, combined financial information has been
prepared by GE Capital based upon the principles of purchase accounting assuming
an aggregate estimated purchase price of $6.2 billion, including acquisition
costs and estimable purchase price adjustments as described in the accompanying
notes. Under this method of accounting, which is required by generally accepted
accounting principles, assets and liabilities of the Acquired Companies are
adjusted to their estimated fair values.
GE Capital continues to obtain detailed information in order to appropriately
allocate the cost of its investments to the fair values of the Acquired
Companies' assets and liabilities. The allocation of the cost of the investments
reflected in the pro forma data has been made based on available information or
assumptions management believes to be reasonable. The excess of the purchase
price over the estimated fair value of the net assets acquired has been treated
as goodwill. Actual adjustments may differ based on the results of further
evaluation of the fair values of the assets and liabilities of the Acquired
Companies.
Certain amounts relating to the unaudited pro forma condensed, combined
financial information of the Acquired Companies have been reclassified to
conform to GE Capital's presentation. It is possible that a more detailed
evaluation of the Acquired Companies may result in additional reclassifications
or adjustments of accounts or result in changes to accounting principles of the
Acquired Companies.
For purposes of preparing the accompanying unaudited pro forma condensed,
combined financial information, it is assumed that the Acquisitions were
initially financed through commercial paper and long-term borrowings. However,
the actual structure of the permanent financing for the Acquisitions may vary
from that assumed.
The unaudited pro forma condensed, combined financial information does not
purport to be indicative of the results of operations of GE Capital that would
actually have resulted had the Acquisitions occurred on January 1, 1995 and are
not indicative of the results that will be obtained in the future.
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<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
AND ACQUIRED COMPANIES
UNAUDITED PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In millions)
<TABLE>
<CAPTION>
PRO FORMA
GE ACQUIRED ADJUSTMENTS PRO FORMA
CAPITAL COMPANIES (NOTE 2) COMBINED
-------- ------- ----- --------
<S> <C> <C> <C> <C>
EARNED INCOME ................................ $ 21,179 $ 2,352 $ 10 (A) $ 23,541
-------- ------- ----- --------
EXPENSES
Interest ..................................... 6,455 252 237 (B) 6,944
Operating and administrative ................. 6,243 673 65 (C) 6,981
Insurance losses and policyholder and annuity
benefits ..................................... 2,031 976 -- 3,007
Provision for losses on financing receivables 1,117 31 -- 1,148
Depreciation and amortization of buildings and
equipment and equipment on operating leases .. 2,001 29 (3) (D) 2,027
-------- ------- ----- --------
Earnings before income taxes ................. 3,332 391 (289) 3,434
Provision for income taxes ................... (1,071) (140) 101 (E) (1,110)
-------- ------- ----- --------
Net earnings ................................. $ 2,261 $ 251 $(188) $ 2,324
======== ======= ===== ========
See accompanying notes to Unaudited Pro Forma Condensed, Combined Statement of Operations.
</TABLE>
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<PAGE>
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
AND ACQUIRED COMPANIES
NOTES TO UNAUDITED PRO FORMA CONDENSED, COMBINED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Note 1: The basis of presentation for the unaudited pro forma
condensed, combined statement of operations is contained on
page 2 of this Form 8-K and should be read in conjunction with
the notes hereto.
Note 2: Pro forma adjustments and eliminations are as follows:
YEAR ENDED
DECEMBER 31, 1995
(IN MILLIONS)
-----------------
<S> <C> <C> <C>
(A) Elimination of net losses on sales of securities realized by the
Acquired Companies. Such gains and losses would not have been
recognized if the Acquisitions had taken place on January 1, 1995, as
such investments would have been recorded at fair value as a result
of purchase business combination accounting. Gains or losses, if any,
that would have been realized under GE Capital's ownership
are not determinable. $ 12
Elimination of investment income of the Acquired Companies as a
result of recording investments at fair value assuming
the Acquisitions took place on January 1, 1995. (2)
--------
$ 10
========
(B) Interest expense on assumed additional borrowings
required to finance the Acquired Companies. $ 333
Less: Elimination of interest expense associated with the
refinancing of the Acquired Companies' debt by GE Capital. (96)
--------
$ 237
========
(C) Amortization of goodwill from the Acquisitions,
assumed to be over 15-20 years. $ 51
Estimated costs, principally certain salaries, bonuses and
employee benefits, that the Acquired Companies would not have
incurred had the Acquisitions taken place on January 1, 1995. (2)
Elimination of amortization of deferred acquisition costs which
would not have been expensed during 1995 as a result of purchase
business combination accounting had the Acquisitions taken
place on January 1, 1995. (128)
Assumed net amortization of PVFP. 144
--------
$ 65
========
</TABLE>
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<PAGE>
Note 2: Pro forma adjustments and eliminations (continued):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
(IN MILLIONS)
-----------------
<S> <C> <C> <C>
(D) Reduction of depreciation expense resulting from the buildings
and equipment of the Acquired Companies being recorded at fair
value under purchase business combination accounting. $ (3)
========
(E) Provisions for income taxes are based on the statutory rate of
35%. The rate was applied to the pre-tax income effects of pro
forma adjustments for the year ended December 31, 1995.
</TABLE>
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<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 CAPITAL CORPORATION
(Registrant)
Date: June 28, 1996 By: /s/ J. A. Parke
-------------------------------------------
J. A. Parke, Senior Vice President, Finance
(Principal Financial Officer)
Date: June 28, 1996 By: /s/ J. C. Amble
-------------------------------------------
J. C. Amble, Vice President and Controller
(Principal Accounting Officer)
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