<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-Q
-------------
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1997
-------------
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 0-14804
---------------------
GENERAL ELECTRIC CAPITAL SERVICES, INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1109503
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
260 LONG RIDGE ROAD, 06927
STAMFORD, CONNECTICUT (Zip Code)
(Address of principal executive offices)
(203) 357-4000
(Registrant's telephone number, including area code)
---------------------
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 | |
At July 28, 1997, 101 shares of common stock with a par value of $10,000 were
outstanding.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE
FORMAT.
<PAGE>
TABLE OF CONTENTS
PAGE
--------
PART I - FINANCIAL INFORMATION.
Item 1. Financial Statements ................................ 1
Item 2. Management's Discussion and Analysis of Results
of Operations ....................................... 5
Exhibit 12. Computation of Ratio of Earnings to Fixed Charges
and Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends ......... 8
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K .................... 9
Signatures ........................................................ 10
Index to Exhibits ................................................. 11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF CURRENT AND RETAINED EARNINGS
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
(In millions) 1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EARNED INCOME .................. $ 9,317 $ 7,457 $ 18,861 $ 14,702
-------- -------- -------- --------
EXPENSES
Interest ....................... 1,862 1,789 3,645 3,524
Operating and administrative ... 3,380 2,366 6,904 4,551
Insurance losses and
policyholder and annuity
benefits ..................... 2,012 1,558 4,256 3,160
Provision for losses on
financing receivables ........ 337 228 649 441
Depreciation and amortization of
buildings and equipment and
equipment on operating leases 567 527 1,137 1,020
Minority interest in net
earnings of consolidated
affiliates ................... 21 38 51 82
-------- -------- -------- --------
8,179 6,506 16,642 12,778
-------- -------- -------- --------
EARNINGS
Earnings before income taxes ... 1,138 951 2,219 1,924
Provision for income taxes ..... (340) (268) (667) (591)
-------- -------- -------- --------
NET EARNINGS ................... 798 683 1,552 1,333
Dividends ...................... (320) (239) (620) (464)
Retained earnings at beginning
of period .................... 11,808 9,943 11,354 9,518
-------- -------- -------- --------
RETAINED EARNINGS AT END
OF PERIOD .................... $ 12,286 $ 10,387 $ 12,286 $ 10,387
======== ======== ======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
1
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued).
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF FINANCIAL POSITION
JUNE 28, DECEMBER 31,
(In millions) 1997 1996
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and equivalents ................................... $ 3,011 $ 3,234
Investment securities .................................. 64,140 59,872
Financing receivables:
Time sales and loans, net of deferred income ......... 61,446 62,832
Investment in financing leases, net of deferred income 39,199 39,575
-------- --------
100,645 102,407
Allowance for losses on financing receivables ........ (2,647) (2,693)
-------- --------
Financing receivables - net ........................ 97,998 99,714
Other receivables - net ................................ 16,756 15,962
Equipment on operating leases (at cost), less
accumulated amortization of $5,392 and $5,625 ........ 17,093 16,134
Intangible assets ...................................... 8,517 8,640
Other assets ........................................... 25,176 23,863
-------- --------
TOTAL ASSETS ..................................... $232,691 $227,419
======== ========
LIABILITIES AND EQUITY
Short-term borrowings .................................. $ 81,133 $ 77,945
Long-term borrowings:
Senior ............................................... 44,168 46,680
Subordinated ......................................... 996 996
Insurance liabilities, reserves and annuity benefits ... 63,795 61,327
Other liabilities ...................................... 16,091 15,925
Deferred income taxes .................................. 8,426 7,740
-------- --------
Total liabilities ................................ 214,609 210,613
-------- --------
Minority interest in equity of consolidated affiliates . 2,596 2,530
-------- --------
Capital stock .......................................... 11 11
Additional paid-in capital ............................. 2,325 2,316
Retained earnings ...................................... 12,286 11,354
Unrealized gains on investment securities .............. 1,025 668
Foreign currency translation adjustments ............... (161) (73)
-------- --------
Total equity ..................................... 15,486 14,276
-------- --------
TOTAL LIABILITIES AND EQUITY ..................... $232,691 $227,419
======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued).
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
--------------------
JUNE 28, JUNE 29,
(In millions) 1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ........................................... $ 1,552 $ 1,333
Adjustments to reconcile net earnings to cash provided
from operating activities:
Provision for losses on financing receivables ....... 649 441
Depreciation and amortization of buildings and
equipment and equipment on operating leases ........ 1,137 1,020
Other - net ......................................... 1,418 93
-------- --------
Cash provided from operating activities ........... 4,756 2,887
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers ......................... (21,757) (23,954)
Principal collections from customers ................... 20,571 25,186
Investment in assets on financing leases ............... (7,407) (5,958)
Principal collections on financing leases .............. 7,382 5,319
Net decrease (increase) in credit card receivables ..... 1,700 (602)
Buildings and equipment and equipment on operating
leases:
- additions ........................................ (2,929) (2,658)
- dispositions ..................................... 1,119 530
Payments for principal businesses purchased, net of
cash acquired ........................................ (581) (1,708)
Purchases of investment securities by insurance
affiliates and annuity businesses .................... (9,469) (6,638)
Dispositions and maturities of investment securities
by insurance affiliates and annuity businesses ....... 8,055 6,175
Other - net ............................................ (2,364) (1,740)
-------- --------
Cash used for investing activities ................ (5,680) (6,048)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) .. 6,203 3,381
Newly issued debt - short-term (maturities 91-365 days) 2,098 2,473
- long-term senior .................. 7,039 10,480
Proceeds - non-recourse, leveraged lease debt .......... -- 429
Repayments and other reductions:
- short-term (maturities 91-365 days) (13,456) (11,294)
- long-term senior .................. (495) (627)
Principal payments - non-recourse, leveraged lease debt (186) (152)
Proceeds from sales of investment and annuity contracts 2,028 852
Redemption of investment and annuity contracts ......... (2,010) (1,466)
Dividends paid ......................................... (620) (464)
Issuance of variable cumulative preferred stock by
consolidated affiliate ............................... 100 --
-------- --------
Cash provided from financing activities ........... 701 3,612
-------- --------
(DECREASE) INCREASE IN CASH AND EQUIVALENTS ............ (223) 451
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............ 3,234 1,949
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................. $ 3,011 $ 2,400
======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
3
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued).
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
NOTES TO CONDENSED, CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying condensed quarterly financial statements represent
the adding together of General Electric Capital Services, Inc. and all
majority-owned and controlled affiliates (collectively called "the
Corporation" or "GECS"). All significant transactions among the parent
and consolidated affiliates have been eliminated. Certain prior period
data have been reclassified to conform to the current period
presentation.
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. The Corporation has adopted Statement of Financial Accounting
Standards ("SFAS") No. 125, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. Among other
things, this Statement distinguishes transfers of financial assets
that are sales from transfers that are secured borrowings, based on
control of the transferred assets. SFAS No. 125 applies to all
transactions occurring after December 31, 1996; thus, adoption did not
have an effect on the financial position or results of operations of
the Corporation.
4. The Corporation has a noncontrolling investment in the common stock of
Montgomery Ward Holding Corp. ("MWHC"), which, together with its
wholly-owned subsidiary, Montgomery Ward & Co., Incorporated ("MWC"),
is engaged in retail merchandising and direct response marketing
(conducted primarily through Signature Financial/Marketing, Inc.
("Signature"), which markets consumer club and insurance products). At
June 28, 1997, MWHC and certain of its affiliates were in negotiations
with lenders to restructure debt and to obtain additional financing.
On July 7, 1997, MWHC, MWC and certain of their affiliates (excluding
Signature), filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code. As a result, loans to MWHC and affiliates became
"impaired" loans, as defined by generally accepted accounting
principles, because, due to the automatic stay in bankruptcy, the
Corporation is not receiving current interest payments on its loans
and it is therefore probable that the Corporation will be unable to
collect all amounts due according to original contractual terms of the
loan agreements (refer to Management's Discussion and Analysis of
Results of Operations, Other Matters).
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.
OVERVIEW
Net earnings for the first half of 1997 were $1,552 million, a $219 million
(16%) increase over the first half of 1996.
Earnings of the lending, leasing and equipment management businesses are
significantly influenced by the level of invested assets, the related financing
spreads (the excess of rates earned -- yields -- over rates on borrowings) and
the quality of those assets. The increase in net earnings for these businesses
principally resulted from a higher average level of invested assets as well as
increased financing spreads, reflecting both higher yields and lower borrowing
rates. Earnings growth from the consumer savings and insurance operations also
contributed to the increase in net earnings, principally reflecting the effects
of acquisitions during 1996.
The Specialty Insurance segment, principally GE Global Insurance Holding
Corporation, added to the increase in net earnings primarily due to increased
premium and investment income resulting from origination volume and continued
growth in the investment portfolios, in addition to a higher level of net
realized gains on investment sales. These increases were partially offset by
increases in reserves for insurance losses, primarily related to the
corresponding increase in premium income.
OPERATING RESULTS
EARNED INCOME from all sources increased $4,159 million (28%) to $18,861 million
for the first half of 1997, compared with $14,702 million for the first half of
1996.
Earned income from the equipment management, consumer services, mid-market
financing, and specialized financing businesses increased $3,570 million (33%)
over the comparable prior-year period. A significant portion of this increase
was the contribution provided by the computer equipment businesses and the
consumer savings and insurance businesses acquired during 1996. The increase
also reflected a higher average level of invested assets, resulting from both
origination volume and acquisitions of portfolios and businesses. Earned income
was impacted by higher losses associated with the Corporation's equity
investment in Montgomery Ward Holding Corp. ("MWHC"), including the write-off of
the Corporation's remaining common stock investment in MWHC (refer to Other
Matters below). This impact was largely offset by a gain recognized on the sale
of an investment in the stock of a publicly traded company.
Earned income of the Specialty Insurance segment increased $637 million (16%) to
$4,548 million for the first half of 1997 compared with the first half of 1996.
The increase primarily reflected increased premium and investment income
resulting from origination volume and continued growth in the investment
portfolios, in addition to a higher level of net realized gains on investment
sales in the second quarter of 1997.
INTEREST EXPENSE for the first half of 1997 was $3,645 million, 3% higher than
for the first half of 1996. The increase reflected the effects of higher average
borrowings used to finance asset growth, offset by the effects of lower average
interest rates. The composite interest rate on the Corporation's borrowings for
the first half of 1997 was 6.00% compared with 6.35% in the first half of 1996.
OPERATING AND ADMINISTRATIVE EXPENSES were $6,904 million for the first half of
1997, a 52% increase over the first half of 1996. The increase primarily
reflected the inclusion of costs of sales and services of the computer equipment
businesses acquired in the third quarter of 1996. The remainder of the increase
primarily resulted from other costs associated with businesses and portfolios
acquired over the past year and higher investment levels.
INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased 35% to $4,256
million for the first half of 1997, compared with $3,160 million for the first
half of 1996. The increase primarily reflected the consumer savings and
insurance businesses acquired in 1996 and growth in origination volume.
PROVISION FOR LOSSES ON FINANCING RECEIVABLES increased to $649 million for the
first half of 1997 from $441 million for the first half of 1996. These
provisions principally related to private-label and bank credit cards in the
Consumer Services segment which are discussed below under Portfolio Quality. The
increase principally reflects higher average receivable balances as well as
increased delinquencies in the consumer portfolio, consistent with industry
experience.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON
OPERATING LEASES increased $117 million (11%) to $1,137 million for the first
half of 1997 compared with $1,020 million for the first half of 1996. The
increase was principally the result of higher levels of equipment on operating
leases, primarily reflecting a shift in auto lease volume from financing leases
to operating leases as well as origination volume and acquisition growth.
PROVISION FOR INCOME TAXES was $667 million for the first half of 1997 (an
effective tax rate of 30.1%), compared with $591 million for the first half of
1996 (an effective tax rate of 30.7%). The higher provision for income taxes
reflected increased pre-tax earnings subject to statutory rates.
PORTFOLIO QUALITY
THE PORTFOLIO OF FINANCING RECEIVABLES, before allowance for losses, decreased
to $100.6 billion at June 28, 1997, from $102.4 billion at the end of 1996.
Financing receivables are the financing segment's largest asset and its primary
source of revenues. Related allowances for losses at June 28, 1997, aggregated
$2.6 billion (2.63% of receivables - the same as at the end of 1996) and are, in
management's judgment, appropriate given the risk profile of the portfolio. A
discussion about the quality of certain elements of the portfolio of financing
receivables follows. "Nonearning" receivables are those that are 90 days or more
delinquent and "reduced earning" receivables are commercial receivables whose
terms have been restructured to a below-market yield. Refer to Other Matters for
a discussion of receivables related to MWHC and affiliates. The nonearning and
reduced earning receivable balances and the write-off amounts discussed below
exclude amounts related to MWHC and affiliates.
CONSUMER RECEIVABLES, primarily credit card and personal loans and auto loans
and leases, were $44.4 billion at June 28, 1997, a decrease of $1.8 billion from
the end of 1996. Nonearning receivables increased to $936 million at June 28,
1997, from $926 million at December 31, 1996. Write-offs of consumer receivables
increased to $607 million for the first half of 1997, compared with $397 million
for the first half of 1996. This increase was primarily attributable to higher
average receivable balances resulting from a combination of origination volume
and acquisitions of businesses and portfolios as well as higher delinquencies,
consistent with overall industry experience.
COMMERCIAL REAL ESTATE LOANS classified as financing receivables were $12.1
billion at June 28, 1997, the same as at year-end 1996. Nonearning and reduced
earning receivables were $165 million at June 28, 1997, compared with $158
million at December 31, 1996. Write-offs of commercial real estate loans were
$15 million for the first half of 1997, compared with $18 million for the first
half of 1996. At June 28, 1997, the commercial real estate portfolio also
included, in other assets, $1.7 billion of assets acquired for resale from
various financial institutions ($1.6 billion at year-end 1996) and $2.1 billion
of investments in real estate ventures ($2.5 billion at year-end 1996).
OTHER FINANCING RECEIVABLES, totaling $44.1 billion at June 28, 1997 (the same
as at December 31, 1996), consisted of a diverse commercial, industrial and
equipment loan and lease portfolio. Related nonearning and reduced-earning
receivables were $260 million at June 28, 1997, compared with $313 million at
year-end 1996.
The Corporation held loans and leases to commercial airlines amounting to $8.4
billion at June 28, 1997, up from $8.2 billion at the end of 1996.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
OTHER MATTERS
The Corporation has a noncontrolling investment in the common stock of
Montgomery Ward Holding Corp. ("MWHC"), which, together with its wholly-owned
subsidiary, Montgomery Ward & Co., Incorporated ("MWC"), is engaged in retail
merchandising and direct response marketing (conducted primarily through
Signature Financial/Marketing, Inc. ("Signature"), which markets consumer club
and insurance products). At June 28, 1997, MWHC and certain of its affiliates
were in negotiations with lenders to restructure debt and to obtain additional
financing. On July 7, 1997, MWHC, MWC and certain of their affiliates filed for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.
MWHC reported losses from operations during the first half of 1997, and the
Corporation's investment was reduced for its share of such losses. The
Corporation has also written off its remaining investment in MWHC common stock,
resulting in total pre-tax losses of $323 million for the first six months of
1997. In addition to the investment in MWHC common stock, the Corporation
engages in various ordinary course of business transactions with MWHC and its
affiliates. At June 28, 1997, such investments, primarily inventory financing
and preferred stock from MWHC and its affiliates, amounted to approximately
$1,060 million, an increase of $313 million from December 31, 1996, primarily
resulting from increased inventory financing. No impairment writedown was
considered necessary for these investments as of June 28, 1997; however, the
Corporation has suspended income recognition on these investments. Management
will continue to carefully monitor these investments for recoverability.
Subsequent to the MWHC bankruptcy filing, the Corporation announced a $1,000
million Debtor-In-Possession financing commitment ("the commitment"), subject to
certain conditions, to MWHC for the purchase of inventory and other costs.
Approximately $300 million of the financing, which has an administrative
priority in bankruptcy, has been approved by the bankruptcy court, with the
remainder still subject to court approval. The Corporation intends to syndicate
a substantial portion of any borrowings under the commitment.
The Corporation also provides financing to customers of MWHC and affiliates
through the Corporation's wholly-owned affiliates, Montgomery Ward Credit
Corporation and Monogram Credit Card Bank of Georgia. These receivables, which
represent revolving credit card transactions directly with customers of MWHC and
affiliates, aggregated approximately $4,559 million at June 28, 1997, including
$1,669 million that have been sold with recourse by the Corporation's
affiliates. The obligations of customers with respect to these receivables are
not affected by the Chapter 11 bankruptcy filing.
MWHC and its affiliates, under new management in 1997, are continuing their
restructuring efforts as well as developing a plan of reorganization.
Restructuring plans are likely to include the implementation of a revised
merchandising strategy and the closing and/or upgrading of selected retail
stores. Signature is not included in the Chapter 11 bankruptcy filing, and
the possibility of sale of Signature will continue to be evaluated.
7
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
SIX MONTHS ENDED JUNE 28, 1997
(Unaudited)
RATIO OF
EARNINGS
TO
COMBINED
FIXED
RATIO OF CHARGES
EARNINGS AND
TO PREFERRED
FIXED STOCK
(Dollar amounts in millions) CHARGES DIVIDENDS
-------- --------
<S> <C> <C>
Net earnings ........................................... $ 1,552 $ 1,552
Provision for income taxes ............................. 667 667
Minority interest in net earnings of consolidated
affiliates ........................................... 51 51
-------- --------
Earnings before provision for income taxes and
minority interest .................................... 2,270 2,270
-------- --------
Fixed charges:
Interest ............................................. 3,694 3,694
One-third of rentals ................................. 112 112
-------- --------
Total fixed charges .................................... 3,806 3,806
-------- --------
Less interest capitalized, net of amortization ......... 23 23
-------- --------
Earnings before provision for income taxes and
minority interest, plus fixed charges ................ $ 6,053 $ 6,053
======== ========
Ratio of earnings to fixed charges ..................... 1.59
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings ......................................... 1.43
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 3,806
--------
Total fixed charges and preferred stock dividend
requirements ......................................... $ 3,806
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................ 1.59
========
</TABLE>
For purposes of computing the ratios, fixed charges consist of interest on all
indebtedness and one-third of rentals, which management believes is a reasonable
approximation of the interest factor of such rentals.
8
<PAGE>
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. EXHIBITS.
Exhibit 12. Computation of ratio of earnings to fixed charges and
computation of ratio of earnings to combined fixed
charges and preferred stock dividends.
Exhibit 27. Financial Data Schedule (filed electronically only).
b. REPORTS ON FORM 8-K.
None.
9
<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 SERVICES, INC.
---------------------------------------
(Registrant)
Date: July 30, 1997 By: /s/ J.A. Parke
-----------------------------------
J.A. Parke,
Senior Vice President, Finance
(Principal Financial Officer)
Date: July 30, 1997 By: /s/ J.C. Amble
-----------------------------------
J.C. Amble,
Vice President and Controller
(Principal Accounting Officer)
10
<PAGE>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
INDEX TO EXHIBITS
EXHIBIT NO. PAGE
-------------- --------
12 Computation of ratio of earnings to fixed
charges and computation of ratio of earnings
to combined fixed charges and preferred stock
dividends .................................... 8
27 Financial Data Schedule (filed
electronically only)
11
<PAGE>
EXHIBIT 12
<TABLE>
<CAPTION>
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
SIX MONTHS ENDED JUNE 28, 1997
(Unaudited)
RATIO OF
EARNINGS
TO
COMBINED
FIXED
RATIO OF CHARGES
EARNINGS AND
TO PREFERRED
FIXED STOCK
(Dollar amounts in millions) CHARGES DIVIDENDS
-------- --------
<S> <C> <C>
Net earnings ........................................... $ 1,552 $ 1,552
Provision for income taxes ............................. 667 667
Minority interest in net earnings of consolidated
affiliates ........................................... 51 51
-------- --------
Earnings before provision for income taxes and
minority interest .................................... 2,270 2,270
-------- --------
Fixed charges:
Interest ............................................. 3,694 3,694
One-third of rentals ................................. 112 112
-------- --------
Total fixed charges .................................... 3,806 3,806
-------- --------
Less interest capitalized, net of amortization ......... 23 23
-------- --------
Earnings before provision for income taxes and
minority interest, plus fixed charges ................ $ 6,053 $ 6,053
======== ========
Ratio of earnings to fixed charges ..................... 1.59
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings ......................................... 1.43
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 3,806
--------
Total fixed charges and preferred stock dividend
requirements ......................................... $ 3,806
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................ 1.59
========
</TABLE>
For purposes of computing the ratios, fixed charges consist of interest on all
indebtedness and one-third of rentals, which management believes is a reasonable
approximation of the interest factor of such rentals.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 28, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000797463
<NAME> GENERAL ELECTRIC CAPITAL SERVICES, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-28-1997
<CASH> 3,011
<SECURITIES> 64,140
<RECEIVABLES> 100,645
<ALLOWANCES> 2,647
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 25,918
<DEPRECIATION> 6,773
<TOTAL-ASSETS> 232,691
<CURRENT-LIABILITIES> 0
<BONDS> 45,164
0
10
<COMMON> 1
<OTHER-SE> 15,475
<TOTAL-LIABILITY-AND-EQUITY> 232,691
<SALES> 0
<TOTAL-REVENUES> 18,861
<CGS> 0
<TOTAL-COSTS> 0
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</TABLE>
