<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 26, 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 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 November 6, 1998, 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 .................................... 6
Exhibit 12. Computation of Ratio of Earnings to Fixed Charges
and Computation of Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends ...... 9
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K ................. 10
Signatures ..................................................... 11
Index to Exhibits .............................................. 12
<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
26, 27, 26, 27,
(In millions) 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Revenues from services ......................................... $ 10,210 $ 9,000 $ 29,643 $ 25,884
Sales of goods ................................................. 1,806 1,182 5,325 3,159
-------- -------- -------- --------
12,016 10,182 34,968 29,043
-------- -------- -------- --------
EXPENSES
Interest ....................................................... 2,188 1,919 6,400 5,564
Operating and administrative ................................... 3,311 2,959 9,690 8,125
Cost of goods sold ............................................. 1,681 1,063 4,891 2,801
Insurance losses and policyholder and annuity benefits ......... 2,239 1,980 6,852 6,236
Provision for losses on financing receivables .................. 306 371 1,047 1,020
Depreciation and amortization of buildings and equipment
and equipment on operating leases ............................. 669 628 1,929 1,765
Minority interest in net earnings of consolidated affiliates ... 38 33 104 84
-------- -------- -------- --------
10,432 8,953 30,913 25,595
-------- -------- -------- --------
EARNINGS
Earnings before income taxes ................................... 1,584 1,229 4,055 3,448
Provision for income taxes ..................................... (502) (291) (1,159) (958)
-------- -------- -------- --------
NET EARNINGS ................................................... 1,082 938 2,896 2,490
Dividends ...................................................... (433) (374) (1,312) (994)
Retained earnings at beginning of period ....................... 13,886 12,286 12,951 11,354
-------- -------- -------- --------
RETAINED EARNINGS AT END OF PERIOD ............................. $ 14,535 $ 12,850 $ 14,535 $ 12,850
======== ======== ======== ========
</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
26, 31,
(In millions) 1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and equivalents ................................................................... $ 5,035 $ 4,904
Investment securities .................................................................. 74,702 70,356
Financing receivables:
Time sales and loans, net of deferred income ......................................... 71,552 64,832
Investment in financing leases, net of deferred income ............................... 45,444 41,769
-------- --------
116,996 106,601
Allowance for losses on financing receivables ........................................ (3,078) (2,802)
-------- --------
Financing receivables - net ........................................................ 113,918 103,799
Other receivables - net ................................................................ 21,915 18,332
Equipment on operating leases (at cost), less accumulated amortization
of $6,716 and $6,126 .................................................................. 20,209 18,689
Intangible assets ...................................................................... 11,904 10,366
Inventories ............................................................................ 729 786
Other assets ........................................................................... 34,633 28,176
-------- --------
TOTAL ASSETS ..................................................................... $283,045 $255,408
======== ========
LIABILITIES AND EQUITY
Short-term borrowings .................................................................. $103,431 $ 95,274
Long-term borrowings:
Senior ............................................................................... 55,806 44,993
Subordinated ......................................................................... 996 996
Insurance liabilities, reserves and annuity benefits ................................... 71,196 67,270
Other liabilities ...................................................................... 19,676 17,557
Deferred income taxes .................................................................. 9,402 8,966
-------- --------
Total liabilities ................................................................ 260,507 235,056
-------- --------
Minority interest in equity of consolidated affiliates ................................. 3,398 3,113
-------- --------
Unrealized gains on investment securities .............................................. 2,375 2,135
Foreign currency translation adjustments ............................................... (261) (185)
-------- --------
Accumulated non-owner changes in equity ................................................ 2,114 1,950
Capital stock .......................................................................... 11 11
Additional paid-in capital ............................................................. 2,480 2,327
Retained earnings ...................................................................... 14,535 12,951
-------- --------
Total equity ..................................................................... 19,140 17,239
-------- --------
TOTAL LIABILITIES AND EQUITY ..................................................... $283,045 $255,408
======== ========
</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
26, 27,
(In millions) 1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ........................................................................... $ 2,896 $ 2,490
Adjustments to reconcile net earnings to cash provided from operating activities:
Provision for losses on financing receivables ........................................ 1,047 1,020
Depreciation and amortization of buildings and equipment and equipment on
operating leases .................................................................... 1,929 1,765
Other - net .......................................................................... 2,126 168
-------- --------
Cash provided from operating activities ............................................ 7,998 5,443
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers ......................................................... (48,120) (38,386)
Principal collections from customers ................................................... 43,711 36,328
Investment in assets on financing leases ............................................... (13,886) (9,943)
Principal collections on financing leases .............................................. 11,878 11,559
Net decrease in credit card receivables ................................................ 3,307 2,335
Buildings and equipment and equipment on operating leases:
- additions ....................................................................... (4,050) (4,641)
- dispositions .................................................................... 2,031 1,867
Payments for principal businesses purchased, net of cash acquired ...................... (8,444) (1,532)
Purchases of investment securities by insurance affiliates and annuity businesses ...... (16,437) (13,296)
Dispositions and maturities of investment securities by insurance affiliates and
annuity businesses .................................................................... 13,263 12,102
Other - net ............................................................................ (5,220) (4,037)
-------- --------
Cash used for investing activities ................................................. (21,967) (7,644)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) .................................. 7,050 7,157
Newly issued debt - short-term (maturities 91-365 days) ............................... 4,126 3,240
- long-term senior .................................................. 26,159 12,099
Proceeds - non-recourse, leveraged lease debt .......................................... 971 129
Repayments and other reductions:
- short-term (maturities 91-365 days) ............................... (17,992) (18,486)
- long-term senior .................................................. (4,298) (861)
Principal payments - non-recourse, leveraged lease debt ................................ (333) (262)
Proceeds from sales of investment and annuity contracts ................................ 3,464 3,532
Redemption of investment and annuity contracts ......................................... (3,905) (3,346)
Dividends paid ......................................................................... (1,312) (994)
Issuance of variable cumulative preferred stock by consolidated affiliate .............. 170 100
-------- --------
Cash provided from financing activities ............................................ 14,100 2,308
-------- --------
INCREASE IN CASH AND EQUIVALENTS ....................................................... 131 107
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............................................ 4,904 3,234
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................................................. $ 5,035 $ 3,341
======== ========
</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. 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 owner's equity that do not result
directly from transactions with share owners. An analysis of these changes
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
SEPTEMBER SEPTEMBER
26, 27,
(In millions) 1998 1997
-------- --------
<S> <C> <C>
Net earnings ........................................... $ 1,082 $ 938
Unrealized gains (losses) on investment securities - net (184) 826
Foreign currency translation adjustments ............... (39) (40)
-------- --------
Total .................................................. $ 859 $ 1,724
======== ========
NINE MONTHS ENDED
--------------------
SEPTEMBER SEPTEMBER
26, 27,
1998 1997
-------- --------
Net earnings ........................................... $ 2,896 $ 2,490
Unrealized gains on investment securities - net ........ 240 1,183
Foreign currency translation adjustments ............... (76) (128)
-------- --------
Total .................................................. $ 3,060 $ 3,545
======== ========
</TABLE>
4
<PAGE>
ITEM 1. FINANCIAL STATEMENTS (Continued).
4. In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities (the
"Statement"). The Statement requires that, upon adoption, all derivative
instruments (including certain derivative instruments embedded in other
contracts) be recognized in the balance sheet at fair value, and that
changes in such fair values be recognized in earnings unless specific
hedging criteria are met. Changes in the values of derivatives that meet
these hedging criteria will ultimately offset related earnings effects of
the hedged items; effects of certain changes in fair value are recorded in
other comprehensive income pending recognition in earnings. The
Corporation will not adopt the Statement until required to do so on
January 1, 2000.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.
OVERVIEW
Net earnings for the first nine months of 1998 were $2,896 million, a $406
million (16%) increase over the first nine months of 1997. The results reflected
the globalization and diversity of the Corporation's businesses and were led by
double-digit increases in Specialized Financing, Consumer Services, Specialty
Insurance and Mid-Market Financing activities.
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. Financing
spreads were essentially the same in both periods, reflecting slightly lower
yields offset by lower borrowing rates. Earnings for these businesses were also
impacted by lower losses associated with the Corporation's equity investment in
Montgomery Ward Holding Corp. ("MWHC"). This impact was offset by lower gains
recognized on sales of assets, primarily no counterpart to the 1997 transaction
that included the reduction of the Corporation's investment in the common stock
of Paine Webber Group Inc. ("PWG").
Within the Specialty Insurance segment, GE Global Insurance Holding
Corporation's net earnings increased over the prior year reflecting growth in
origination volume, including fee income generated from investment-related life
reinsurance products and financial reinsurance transactions, and higher
investment income resulting from continued growth in the investment portfolios
and a higher level of gains on investment securities. Improved earnings in the
mortgage insurance business, the result of improved market conditions, as well
as increases in other insurance businesses also contributed to the increase.
OPERATING RESULTS
TOTAL REVENUES from all sources increased $5,925 million (20%) to $34,968
million for the first nine months of 1998, compared with $29,043 million for the
first nine months of 1997.
Revenues from the equipment management, consumer services, mid-market financing
and specialized financing businesses increased $5,153 million (23%) over the
comparable prior-year period. A significant portion of the increase arose from
sales of goods by the computer equipment distribution businesses, reflecting
both acquisition and core growth. The increase also reflected a higher average
level of invested assets, resulting principally from acquisitions of portfolios
and businesses, as well as increased premiums related to the acquisition of
consumer savings and insurance businesses in 1997 and 1998. Revenues were also
impacted by lower losses associated with the Corporation's equity investment in
MWHC. This impact was offset by lower gains recognized on sales of assets,
primarily no counterpart to the 1997 transaction that included the reduction of
the Corporation's investment in the common stock of PWG.
Revenues of the Specialty Insurance segment increased $932 million (14%) to
$7,647 million for the first nine months of 1998 compared with the first nine
months of 1997. The increase primarily reflected growth in origination volume
and higher investment income resulting from continued growth in the investment
portfolios and a higher level of gains on investment securities.
INTEREST EXPENSE for the first nine months of 1998 was $6,400 million, 15%
higher than for the first nine months of 1997. The increase reflected the
effects of higher average borrowings used to finance asset growth, slightly
offset by the effects of lower average interest rates. The composite interest
rate on the Corporation's borrowings for the first nine months of 1998 was 5.99%
compared with 6.05% in the first nine months of 1997.
OPERATING AND ADMINISTRATIVE EXPENSES were $9,690 million for the first nine
months of 1998, a 19% increase over the first nine months of 1997. The increase
primarily reflected costs associated with businesses and portfolios acquired
over the past year and higher investment levels.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased $616 million to
$6,852 million for the first nine months of 1998, compared with the first nine
months of 1997. The increase primarily reflected the acquisitions of the
consumer savings and insurance businesses and higher origination volume,
partially offset by improved market conditions in the mortgage insurance
business.
PROVISION FOR LOSSES ON FINANCING RECEIVABLES increased to $1,047 million for
the first nine months of 1998 from $1,020 million for the first nine months of
1997. These provisions principally related to private-label and bank credit
cards in the Consumer Services segment that are discussed below under Portfolio
Quality.
DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON
OPERATING LEASES increased $164 million to $1,929 million for the first nine
months of 1998 compared with $1,765 million for the first nine months of 1997.
The increase was principally the result of higher levels of equipment on
operating leases, primarily reflecting acquisition growth.
PROVISION FOR INCOME TAXES was $1,159 million for the first nine months of 1998
(an effective tax rate of 28.6%), compared with $958 million for the first nine
months of 1997 (an effective tax rate of 27.8%). The higher provision for income
taxes primarily reflected increased pre-tax earnings subject to statutory rates.
PORTFOLIO QUALITY
FINANCING RECEIVABLES are the financing segment's largest asset and its primary
source of revenues. The portfolio of financing receivables, before allowance for
losses, increased to $117.0 billion at September 26, 1998, from $106.6 billion
at the end of 1997, primarily reflecting acquisition growth and higher
origination volume, partially offset by securitizations of receivables and other
decreases in the credit card portfolios. Related allowances for losses at
September 26, 1998, aggregated $3.1 billion (2.63% of receivables - the same as
at the end of 1997) and, in management's judgment, are 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 (or for which
collection has otherwise become doubtful) and "reduced-earning" receivables are
commercial receivables whose terms have been restructured to a below-market
yield. The following discussion of the nonearning and reduced-earning receivable
balances and write-off amounts excludes amounts related to Montgomery Ward
Holding Corp. and affiliates, which are separately discussed below.
CONSUMER FINANCING RECEIVABLES, primarily credit card and personal loans and
auto loans and leases, were $48.4 billion at September 26, 1998, an increase of
$0.3 billion from the end of 1997. Nonearning receivables were $1.1 billion at
September 26, 1998, 2.3% of total consumer financing receivables, compared with
$1.0 billion, 2.2% of total consumer receivables, at December 31, 1997.
Write-offs of consumer receivables increased to $1,052 million for the first
nine months of 1998, compared with $912 million for the first nine months of
1997. 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 the effects of higher delinquencies at the
end of 1997, consistent with overall industry experience.
OTHER FINANCING RECEIVABLES, totaling $68.6 billion at September 26, 1998 ($58.5
billion at December 31, 1997), consisted of a diverse commercial, industrial and
equipment loan and lease portfolio. Related nonearning and reduced-earning
receivables were $282 million at September 26, 1998, compared with $353 million
at year-end 1997.
As discussed in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1997, Montgomery Ward Holding Corp. (MWHC) filed a bankruptcy
petition for reorganization in 1997. The Corporation's recorded investment in
MWHC and affiliates at September 26, 1998, was $754 million, a decrease of $41
million from the end of 1997, and consisted primarily of inventory financing.
Income recognition had been suspended on these pre-bankruptcy petition
investments. Subsequent to the petition, the Corporation committed to provide
MWHC up to $1.0 billion in debtor-in-possession financing, subject to certain
conditions, in order to fund working capital requirements and general
corporate expenses. A majority of this facility has been syndicated; the
Corporation's loans under this facility at September 26, 1998
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
were approximately $119 million. 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 $3.4
billion at September 26, 1998, including $1.7 billion 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 bankruptcy filing. MWHC and
its affiliates, under new management since 1997, are continuing their
restructuring efforts as well as developing a plan of reorganization.
The Corporation held loans and leases to commercial airlines amounting to $9.6
billion at September 26, 1998, up from $9.0 billion at the end of 1997.
OTHER MATTERS
YEAR 2000
The inability of business processes to continue to function correctly after the
beginning of the Year 2000 could have serious adverse effects on companies and
entities throughout the world. The Corporation has undertaken a global effort to
identify and mitigate Year 2000 issues in its information systems, products and
services, facilities and suppliers as well as to assess the extent to which Year
2000 issues will impact its customers. Each business has a Year 2000 leader who
oversees a multi-functional remediation project team responsible for applying a
Six Sigma quality approach in four phases: (1) define/measure -- identify and
inventory possible sources of Year 2000 issues; (2) analyze -- determine the
nature and extent of Year 2000 issues and develop project plans to address those
issues; (3) improve -- execute project plans and perform a majority of the
testing; and (4) control -- complete testing, continue monitoring readiness and
complete necessary contingency plans. The progress of this program is monitored
at each business, and company-wide reviews with senior management are conducted
monthly. Management plans to have completed the first three phases of the
program for a substantial majority of mission-critical systems by the end of
1998 and to have nearly all significant information systems, products and
services, facilities and suppliers in the control phase of the program by
mid-1999.
The scope of the global Year 2000 effort encompasses many thousands of
applications and computer programs; products and services; facilities and
facilities-related equipment; suppliers; and, customers. Business operations are
also dependent on the Year 2000 readiness of infrastructure suppliers in areas
such as utility, communications, transportation and other services. In this
environment, there will likely be instances of failure that could cause
disruptions in business processes or that could affect customers' ability to
repay amounts owed to the Corporation. The likelihood and effects of failures in
infrastructure systems and in the supply chain cannot be estimated. However,
with respect to operations under its direct control, management does not expect,
in view of its Year 2000 program efforts and the diversity of its businesses,
suppliers and customers, that occurrences of Year 2000 failures will have a
material adverse effect on the financial position, results of operations or
liquidity of the Corporation.
Total Year 2000 remediation expenditures are expected to be approximately $240
million, of which two-thirds is expected to be spent by the end of 1998.
Substantially all of the remainder is expected to be spent in 1999. Most of
these costs are not likely to be incremental costs, but rather will represent
the redeployment of existing resources.
The activities involved in the Year 2000 effort necessarily involve estimates
and projections of activities and resources that will be required in the future.
These estimates and projections could change as work progresses.
8
<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 26, 1998
(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 ........................................................................... $ 2,896 $ 2,896
Provision for income taxes ............................................................. 1,159 1,159
Minority interest in net earnings of consolidated affiliates ........................... 104 104
-------- --------
Earnings before provision for income taxes and minority interest ....................... 4,159 4,159
-------- --------
Fixed charges:
Interest ............................................................................. 6,539 6,539
One-third of rentals ................................................................. 209 209
-------- --------
Total fixed charges .................................................................... 6,748 6,748
-------- --------
Less interest capitalized, net of amortization ......................................... 65 65
-------- --------
Earnings before provision for income taxes and minority interest, plus fixed charges ... $ 10,842 $ 10,842
======== ========
Ratio of earnings to fixed charges ..................................................... 1.61
========
Preferred stock dividend requirements .................................................. $ --
Ratio of earnings before provision for income taxes to net earnings .................... 1.40
Preferred stock dividend factor on pre-tax basis ....................................... --
Fixed charges .......................................................................... 6,748
--------
Total fixed charges and preferred stock dividend requirements .......................... $ 6,748
========
Ratio of earnings to combined fixed charges and preferred stock dividends .............. 1.61
========
</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.
9
<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.
10
<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: November 10, 1998 By: /s/ J.A. Parke
----------------------------------
J.A. Parke,
Senior Vice President, Finance
(Principal Financial Officer)
Date: November 10, 1998 By: /s/ J.C. Amble
----------------------------------
J.C. Amble,
Vice President and Controller
(Principal Accounting Officer)
11
<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 ......... 9
27 Financial Data Schedule (filed electronically only)
12
<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 26, 1998
(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 ........................................................................... $ 2,896 $ 2,896
Provision for income taxes ............................................................. 1,159 1,159
Minority interest in net earnings of consolidated affiliates ........................... 104 104
-------- --------
Earnings before provision for income taxes and minority interest ....................... 4,159 4,159
-------- --------
Fixed charges:
Interest ............................................................................. 6,539 6,539
One-third of rentals ................................................................. 209 209
-------- --------
Total fixed charges .................................................................... 6,748 6,748
-------- --------
Less interest capitalized, net of amortization ......................................... 65 65
-------- --------
Earnings before provision for income taxes and minority interest, plus fixed charges ... $ 10,842 $ 10,842
======== ========
Ratio of earnings to fixed charges ..................................................... 1.61
========
Preferred stock dividend requirements .................................................. $ --
Ratio of earnings before provision for income taxes to net earnings .................... 1.40
Preferred stock dividend factor on pre-tax basis ....................................... --
Fixed charges .......................................................................... 6,748
--------
Total fixed charges and preferred stock dividend requirements .......................... $ 6,748
========
Ratio of earnings to combined fixed charges and preferred stock dividends .............. 1.61
========
</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 26, 1998, 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-31-1998
<PERIOD-END> SEP-26-1998
<CASH> 5,035
<SECURITIES> 74,702
<RECEIVABLES> 116,996
<ALLOWANCES> 3,078
<INVENTORY> 729
<CURRENT-ASSETS> 0
<PP&E> 31,374
<DEPRECIATION> 8,468
<TOTAL-ASSETS> 283,045
<CURRENT-LIABILITIES> 0
<BONDS> 56,802
0
10
<COMMON> 1
<OTHER-SE> 19,129
<TOTAL-LIABILITY-AND-EQUITY> 283,045
<SALES> 5,325
<TOTAL-REVENUES> 34,968
<CGS> 4,891
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,690
<LOSS-PROVISION> 1,047
<INTEREST-EXPENSE> 6,400
<INCOME-PRETAX> 4,055
<INCOME-TAX> 1,159
<INCOME-CONTINUING> 2,896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,896
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
