<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 September 27, 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,
STAMFORD, CONNECTICUT 06927
(Address of principal executive offices) (Zip Code)
(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 October 23, 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 NINE MONTHS ENDED
-------------------- --------------------
SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
(In millions) 27, 1997 28, 1996 27, 1997 28, 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EARNED INCOME .................. $ 10,182 $ 8,449 $ 29,043 $ 23,151
-------- -------- -------- --------
EXPENSES
Interest ....................... 1,919 1,756 5,564 5,280
Operating and administrative ... 4,022 3,110 10,926 7,661
Insurance losses and
policyholder and annuity
benefits ...................... 1,980 1,553 6,236 4,713
Provision for losses on
financing receivables ......... 371 254 1,020 695
Depreciation and amortization of
buildings and equipment and
equipment on operating leases . 628 559 1,765 1,579
Minority interest in net
earnings of consolidated
affiliates .................... 33 38 84 120
-------- -------- -------- --------
8,953 7,270 25,595 20,048
-------- -------- -------- --------
EARNINGS
Earnings before income taxes ... 1,229 1,179 3,448 3,103
Provision for income taxes ..... (291) (363) (958) (954)
-------- -------- -------- --------
NET EARNINGS ................... 938 816 2,490 2,149
Dividends ...................... (374) (284) (994) (748)
Retained earnings at beginning
of period ..................... 12,286 10,387 11,354 9,518
-------- -------- -------- --------
RETAINED EARNINGS AT END OF
PERIOD ........................ $ 12,850 $ 10,919 $ 12,850 $ 10,919
======== ======== ======== ========
</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
SEPTEMBER DECEMBER
(In millions) 27, 1997 31, 1996
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and equivalents ................................... $ 3,341 $ 3,234
Investment securities .................................. 66,694 59,872
Financing receivables:
Time sales and loans, net of deferred income ......... 61,320 62,832
Investment in financing leases, net of deferred income 38,391 39,575
-------- --------
99,711 102,407
Allowance for losses on financing receivables ........ (2,624) (2,693)
-------- --------
Financing receivables - net ........................ 97,087 99,714
Other receivables - net ................................ 17,027 15,962
Equipment on operating leases (at cost), less
accumulated amortization of $5,726 and $5,625 ......... 18,102 16,134
Intangible assets ...................................... 8,777 8,640
Other assets ........................................... 26,745 23,863
-------- --------
TOTAL ASSETS ..................................... $237,773 $227,419
======== ========
LIABILITIES AND EQUITY
Short-term borrowings .................................. $ 82,864 $ 77,945
Long-term borrowings:
Senior ............................................... 44,876 46,680
Subordinated ......................................... 996 996
Insurance liabilities, reserves and annuity benefits ... 64,702 61,327
Other liabilities ...................................... 16,459 15,925
Deferred income taxes .................................. 8,448 7,740
-------- --------
Total liabilities ................................ 218,345 210,613
-------- --------
Minority interest in equity of consolidated affiliates . 2,592 2,530
-------- --------
Capital stock .......................................... 11 11
Additional paid-in capital ............................. 2,325 2,316
Retained earnings ...................................... 12,850 11,354
Unrealized gains on investment securities .............. 1,851 668
Foreign currency translation adjustments ............... (201) (73)
-------- --------
Total equity ..................................... 16,836 14,276
-------- --------
TOTAL LIABILITIES AND EQUITY ..................... $237,773 $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)
NINE MONTHS ENDED
--------------------
SEPTEMBER SEPTEMBER
(In millions) 27, 1997 28, 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ........................................... $ 2,490 $ 2,149
Adjustments to reconcile net earnings to cash provided
from operating activities:
Provision for losses on financing receivables ........ 1,020 695
Depreciation and amortization of buildings and
equipment and equipment on operating leases ......... 1,765 1,579
Other - net .......................................... 168 1,962
-------- --------
Cash provided from operating activities .......... 5,443 6,385
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers ......................... (38,386) (38,262)
Principal collections from customers ................... 36,328 39,080
Investment in assets on financing leases ............... (9,943) (9,249)
Principal collections on financing leases .............. 11,559 8,345
Net decrease (increase) in credit card receivables ..... 2,335 (950)
Buildings and equipment and equipment on
operating leases:
- additions ........................................ (4,641) (4,075)
- dispositions ..................................... 1,867 683
Payments for principal businesses purchased, net of
cash acquired ......................................... (1,532) (2,329)
Purchases of investment securities by insurance
affiliates and annuity businesses ..................... (13,296) (11,264)
Dispositions and maturities of investment securities
by insurance affiliates and annuity businesses ........ 12,102 10,454
Other - net ............................................ (4,037) (3,544)
-------- --------
Cash used for investing activities ............... (7,644) (11,111)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) .. 7,157 7,607
Newly issued debt - short-term (maturities 91-365 days) 3,240 3,693
- long-term senior .................. 12,099 13,553
Proceeds - non-recourse, leveraged lease debt .......... 129 505
Repayments and other reductions:
- short-term (maturities 91-365 days) (18,486) (17,682)
- long-term senior .................. (861) (780)
Principal payments - non-recourse, leveraged lease debt (262) (227)
Proceeds from sales of investment and annuity contracts 3,532 2,154
Redemption of investment and annuity contracts ......... (3,346) (1,901)
Dividends paid ......................................... (994) (748)
Issuance of variable cumulative preferred stock by
consolidated affiliate ................................ 100 125
-------- --------
Cash provided from financing activities .......... 2,308 6,299
-------- --------
INCREASE IN CASH AND EQUIVALENTS ....................... 107 1,573
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............ 3,234 1,949
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................. $ 3,341 $ 3,522
======== ========
</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). 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, in management's judgment, 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 nine months of 1997 were $2,490 million, a $341
million (16%) increase over the first nine months 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. Earnings for these businesses were impacted by
higher losses associated with the Corporation's equity investment in Montgomery
Ward Holding Corp. ("MWHC") (refer to Other Matters below), as well as increased
residual losses on automobiles. These impacts were more than offset by gains
recognized on sales of assets, including $284 million (net of tax) from a
transaction which included the reduction of the Corporation's investment in the
common stock of Paine Webber Group Inc. ("PWG") (discussed below). 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 $5,892 million (25%) to $29,043 million
for the first nine months of 1997, compared with $23,151 million for the first
nine months of 1996.
Earned income from the equipment management, consumer services, mid-market
financing, and specialized financing businesses increased $4,665 million (27%)
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 also impacted by higher losses associated with the Corporation's equity
investment in MWHC, as well as increased residual losses on automobiles. These
impacts were offset by gains recognized on securitizations and other sales of
assets, including a transaction, the net effect of which was the reduction of
the Corporation's investment in the common stock of PWG from 21.5 million shares
to 15.5 million shares. The gain on the PWG transaction included the direct
result of the transaction as well as the valuation of securities received by the
Corporation.
Earned income of the Specialty Insurance segment increased $862 million (15%) to
$6,722 million for the first nine months of 1997 compared with the first nine
months 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.
INTEREST EXPENSE for the first nine months of 1997 was $5,564 million, 5% higher
than for the first nine months 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 nine months of 1997 was 6.05% compared with 6.26% in
the first nine months of 1996.
OPERATING AND ADMINISTRATIVE EXPENSES were $10,926 million for the first nine
months of 1997, a 43% increase over the first nine months 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 32% to $6,236
million for the first nine months of 1997, compared with $4,713 million for the
first nine months of 1996. The increase primarily reflected the consumer savings
and insurance businesses acquired in 1996 and growth in origination volume.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS (Continued).
PROVISION FOR LOSSES ON FINANCING RECEIVABLES increased to $1,020 million for
the first nine months of 1997 from $695 million for the first nine months 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 reflected higher average receivable balances
as well as increased delinquencies in the consumer portfolio, consistent with
industry experience.
DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON
OPERATING LEASES increased $186 million (12%) to $1,765 million for the first
nine months of 1997 compared with $1,579 million for the first nine months 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 $958 million for the first nine months of 1997
(an effective tax rate of 27.8%), compared with $954 million for the first nine
months of 1996 (an effective tax rate of 30.7%). The lower effective tax rate
primarily reflected increased non-taxable income and decreased taxes on foreign
earnings.
PORTFOLIO QUALITY
THE PORTFOLIO OF FINANCING RECEIVABLES, before allowance for losses, decreased
to $99.7 billion at September 27, 1997 from $102.4 billion at the end of 1996,
principally as a result of securitizations of consumer receivables. Financing
receivables are the financing segment's largest asset and its primary source of
revenues. Related allowances for losses at September 27, 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 $43.4 billion at September 27, 1997, a decrease of $2.8 billion
from the end of 1996. Nonearning receivables increased to $1,010 million at
September 27, 1997, from $926 million at December 31, 1996. Write-offs of
consumer receivables increased to $912 million for the first nine months of
1997, compared with $622 million for the first nine months 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 $11.8
billion at September 27, 1997, compared with $12.1 billion at year-end 1996.
Nonearning and reduced earning receivables increased to $198 million at
September 27, 1997, from $158 million at December 31, 1996. Write-offs of
commercial real estate loans were $21 million for the first nine months of 1997,
compared with $33 million for the first nine months of 1996. At September 27,
1997, the commercial real estate portfolio also included, in other assets, $1.5
billion of assets acquired for resale from various financial institutions ($1.6
billion at year-end 1996) and $2.4 billion of investments in real estate
ventures ($2.5 billion at year-end 1996).
OTHER FINANCING RECEIVABLES, totaling $44.5 billion at September 27, 1997 ($44.1
billion at December 31, 1996), consisted of a diverse commercial, industrial and
equipment loan and lease portfolio. Related nonearning and reduced-earning
receivables were $219 million at September 27, 1997, compared with $313 million
at year-end 1996.
The Corporation held loans and leases to commercial airlines amounting to $8.4
billion at September 27, 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). 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 nine months of 1997, and
the Corporation's share of such losses was $582 million before income taxes. The
Corporation recorded its share of losses by reducing its investments in MWHC,
resulting in the writing off of its investments in MWHC common and preferred
stock. In addition to those stock investments, the Corporation has other
investments, primarily inventory financing, that resulted from ordinary course
of business transactions with MWHC and its affiliates. Such investments, after
reduction for the Corporation's share of losses as discussed above, amounted to
approximately $833 million at September 27, 1997. No impairment writedown was
considered necessary for these remaining investments as of September 27, 1997,
although the Corporation has suspended income recognition on these investments.
Management continues to monitor these investments carefully 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 to cover other
costs. The Corporation has syndicated a majority of the commitment.
Approximately $71 million of the commitment, which has an administrative
priority in bankruptcy, was utilized as of September 27, 1997.
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 $4,294 million at September 27, 1997,
including $1,718 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
NINE MONTHS ENDED SEPTEMBER 27, 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 ........................................... $ 2,490 $ 2,490
Provision for income taxes ............................. 958 958
Minority interest in net earnings of consolidated
affiliates ............................................ 84 84
-------- --------
Earnings before provision for income taxes and
minority interest ..................................... 3,532 3,532
-------- --------
Fixed charges:
Interest ............................................. 5,645 5,645
One-third of rentals ................................. 173 173
-------- --------
Total fixed charges .................................... 5,818 5,818
-------- --------
Less interest capitalized, net of amortization ......... 38 38
-------- --------
Earnings before provision for income taxes and minority
interest, plus fixed charges .......................... $ 9,312 $ 9,312
======== ========
Ratio of earnings to fixed charges ..................... 1.60
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings .......................................... 1.38
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 5,818
--------
Total fixed charges and preferred stock dividend
requirements .......................................... $ 5,818
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................. 1.60
========
</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: October 24, 1997 By: /s/ J.A. Parke
---------------------------------------
J.A. Parke,
Senior Vice President, Finance
(Principal Financial Officer)
Date: October 24, 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
NINE MONTHS ENDED SEPTEMBER 27, 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 ........................................... $ 2,490 $ 2,490
Provision for income taxes ............................. 958 958
Minority interest in net earnings of consolidated
affiliates ............................................ 84 84
-------- --------
Earnings before provision for income taxes and
minority interest ..................................... 3,532 3,532
-------- --------
Fixed charges:
Interest ............................................. 5,645 5,645
One-third of rentals ................................. 173 173
-------- --------
Total fixed charges .................................... 5,818 5,818
-------- --------
Less interest capitalized, net of amortization ......... 38 38
-------- --------
Earnings before provision for income taxes and minority
interest, plus fixed charges .......................... $ 9,312 $ 9,312
======== ========
Ratio of earnings to fixed charges ..................... 1.60
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings .......................................... 1.38
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 5,818
--------
Total fixed charges and preferred stock dividend
requirements .......................................... $ 5,818
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................. 1.60
========
</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 SEPTEMBER 27, 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-27-1997
<CASH> 3,341
<SECURITIES> 66,694
<RECEIVABLES> 99,711
<ALLOWANCES> 2,624
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 27,540
<DEPRECIATION> 7,150
<TOTAL-ASSETS> 237,773
<CURRENT-LIABILITIES> 0
<BONDS> 45,872
0
10
<COMMON> 1
<OTHER-SE> 16,825
<TOTAL-LIABILITY-AND-EQUITY> 237,773
<SALES> 0
<TOTAL-REVENUES> 29,043
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,926
<LOSS-PROVISION> 1,020
<INTEREST-EXPENSE> 5,564
<INCOME-PRETAX> 3,448
<INCOME-TAX> 958
<INCOME-CONTINUING> 2,490
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,490
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
