<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 27, 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 July 30, 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 SIX MONTHS ENDED
-------------------- --------------------
JUNE 27, JUNE 28, JUNE 27, JUNE 28,
(In millions) 1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Revenues from services ......................................... $ 9,908 $ 8,256 $ 19,433 $ 16,884
Sales of goods ................................................. 1,893 1,061 3,519 1,977
-------- -------- -------- --------
11,801 9,317 22,952 18,861
-------- -------- -------- --------
EXPENSES
Interest ....................................................... 2,187 1,862 4,212 3,645
Operating and administrative ................................... 3,221 2,450 6,379 5,166
Cost of goods sold ............................................. 1,728 930 3,210 1,738
Insurance losses and policyholder and annuity benefits ......... 2,400 2,012 4,613 4,256
Provision for losses on financing receivables .................. 409 337 741 649
Depreciation and amortization of buildings
and equipment and equipment on operating leases ............... 604 567 1,260 1,137
Minority interest in net earnings of consolidated affiliates ... 33 21 66 51
-------- -------- -------- --------
10,582 8,179 20,481 16,642
-------- -------- -------- --------
EARNINGS
Earnings before income taxes ................................... 1,219 1,138 2,471 2,219
Provision for income taxes ..................................... (286) (340) (657) (667)
-------- -------- -------- --------
NET EARNINGS ................................................... 933 798 1,814 1,552
Dividends ...................................................... (376) (320) (879) (620)
Retained earnings at beginning of period ....................... 13,329 11,808 12,951 11,354
-------- -------- -------- --------
RETAINED EARNINGS AT END OF PERIOD ............................. $ 13,886 $ 12,286 $ 13,886 $ 12,286
======== ======== ======== ========
</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 27, DECEMBER 31,
(In millions) 1998 1997
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and equivalents ................................................................... $ 3,023 $ 4,904
Investment securities .................................................................. 73,858 70,356
Financing receivables:
Time sales and loans, net of deferred income ......................................... 65,977 64,832
Investment in financing leases, net of deferred income ............................... 43,641 41,769
-------- --------
109,618 106,601
Allowance for losses on financing receivables ........................................ (2,884) (2,802)
-------- --------
Financing receivables - net ........................................................ 106,734 103,799
Other receivables - net ................................................................ 21,244 18,332
Equipment on operating leases (at cost), less accumulated amortization
of $6,368 and $6,126 .................................................................. 19,783 18,689
Intangible assets ...................................................................... 11,096 10,366
Inventories ............................................................................ 764 786
Other assets ........................................................................... 32,702 28,176
-------- --------
TOTAL ASSETS ..................................................................... $269,204 $255,408
======== ========
LIABILITIES AND EQUITY
Short-term borrowings .................................................................. $101,786 $ 95,274
Long-term borrowings:
Senior ............................................................................... 47,129 44,993
Subordinated ......................................................................... 996 996
Insurance liabilities, reserves and annuity benefits ................................... 69,849 67,270
Other liabilities ...................................................................... 17,947 17,557
Deferred income taxes .................................................................. 9,411 8,966
-------- --------
Total liabilities ................................................................ 247,118 235,056
-------- --------
Minority interest in equity of consolidated affiliates ................................. 3,372 3,113
-------- --------
Unrealized gains on investment securities .............................................. 2,559 2,135
Foreign currency translation adjustments ............................................... (222) (185)
-------- --------
Accumulated non-owner changes in equity ................................................ 2,337 1,950
Capital stock .......................................................................... 11 11
Additional paid-in capital ............................................................. 2,480 2,327
Retained earnings ...................................................................... 13,886 12,951
-------- --------
Total equity ..................................................................... 18,714 17,239
-------- --------
TOTAL LIABILITIES AND EQUITY ..................................................... $269,204 $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)
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 28,
(In millions) 1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ........................................................................... $ 1,814 $ 1,552
Adjustments to reconcile net earnings to cash provided from operating activities:
Provision for losses on financing receivables ........................................ 741 649
Depreciation and amortization of buildings and equipment and
equipment on operating leases ....................................................... 1,260 1,137
Other - net .......................................................................... 1,074 1,418
-------- --------
Cash provided from operating activities ............................................ 4,889 4,756
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers ......................................................... (30,376) (21,757)
Principal collections from customers ................................................... 28,864 20,571
Investment in assets on financing leases ............................................... (8,867) (7,407)
Principal collections on financing leases .............................................. 7,121 7,382
Net decrease (increase) in credit card receivables ..................................... (484) 1,700
Buildings and equipment and equipment on operating leases:
- additions ......................................................... (3,951) (2,929)
- dispositions ...................................................... 2,959 1,119
Payments for principal businesses purchased, net of cash acquired ...................... (993) (581)
Purchases of investment securities by insurance affiliates and annuity businesses ...... (12,010) (9,469)
Dispositions and maturities of investment securities by insurance affiliates
and annuity businesses ................................................................ 9,335 8,055
Other - net ............................................................................ (3,351) (2,364)
-------- --------
Cash used for investing activities ................................................. (11,753) (5,680)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) .................................. 5,294 6,203
Newly issued debt - short-term (maturities 91-365 days) ............................... 2,891 2,098
- long-term senior .................................................. 14,362 7,039
Proceeds - non-recourse, leveraged lease debt .......................................... 535 --
Repayments and other reductions:
- short-term (maturities 91-365 days) ............................... (13,142) (13,456)
- long-term senior .................................................. (3,610) (495)
Principal payments - non-recourse, leveraged lease debt ................................ (247) (186)
Proceeds from sales of investment and annuity contracts ................................ 2,154 2,028
Redemption of investment and annuity contracts ......................................... (2,445) (2,010)
Dividends paid ......................................................................... (879) (620)
Issuance of variable cumulative preferred stock by consolidated affiliate .............. 70 100
-------- --------
Cash provided from financing activities ............................................ 4,983 701
-------- --------
DECREASE IN CASH AND EQUIVALENTS ....................................................... (1,881) (223)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............................................ 4,904 3,234
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................................................. $ 3,023 $ 3,011
======== ========
</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
--------------------
JUNE 27, JUNE 28,
(Dollars in millions) 1998 1997
-------- --------
<S> <C> <C>
Net earnings ........................................... $ 933 $ 798
Unrealized gains on investment securities - net ........ 163 845
Foreign currency translation adjustments ............... 5 14
-------- --------
Total .................................................. $ 1,101 $ 1,657
======== ========
SIX MONTHS ENDED
--------------------
JUNE 27, JUNE 28,
1998 1997
-------- --------
Net earnings ........................................... $ 1,814 $ 1,552
Unrealized gains on investment securities - net ........ 424 357
Foreign currency translation adjustments ............... (37) (88)
-------- --------
Total .................................................. $ 2,201 $ 1,821
======== ========
</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 half of 1998 were $1,814 million, a $262 million
(17%) increase over the first half of 1997. The results reflected the
globalization and diversity of the Corporation's businesses and were led by
double-digit increases in Specialized Financing, 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. Net earnings for these businesses increased,
primarily from a higher average level of invested assets and a lower effective
tax rate. These increases were offset in part by decreased earnings from
Consumer Services activities, attributable to the U.S. private-label credit card
and automobile financing businesses. Financing spreads were essentially flat
compared with the prior year, reflecting slightly higher yields offset by higher
borrowing rates.
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 the other insurance businesses also contributed to the increase.
OPERATING RESULTS
TOTAL REVENUES from all sources increased $4,091 million (22%) to $22,952
million for the first half of 1998, compared with $18,861 million for the first
half of 1997.
Revenues from the equipment management, consumer services, mid-market financing
and specialized financing businesses increased $3,162 million (22%) 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
Montgomery Ward Holding Corp. This impact was largely offset by no counterpart
to a 1997 gain recognized on the sale of an investment in the stock of a
publicly traded company. Revenues of the Specialty Insurance segment increased
$562 million (12%) to $5,106 million for the first half of 1998 compared with
the first half 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 half of 1998 was $4,212 million, 16% higher than
for the first half of 1997. The increase reflected the effects of higher average
borrowings used to finance asset growth combined with the effects of higher
average interest rates. The composite interest rate on the Corporation's
borrowings for the first half of 1998 was 6.13% compared with 6.00% in the first
half of 1997.
OPERATING AND ADMINISTRATIVE EXPENSES were $6,379 million for the first half of
1998, a 23% increase over the first half of 1997. The increase primarily
reflected costs associated with businesses and portfolios acquired over the past
year and higher investment levels.
INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased $357 million to
$4,613 million for the first half of 1998, compared with the first half 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.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
PROVISION FOR LOSSES ON FINANCING RECEIVABLES increased to $741 million for the
first half of 1998 from $649 million for the first half 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 $123 million (11%) to $1,260 million for the first
half of 1998 compared with $1,137 million for the first half of 1997. The
increase was principally the result of higher levels of equipment on operating
leases, primarily reflecting acquisition growth and higher aircraft volume.
PROVISION FOR INCOME TAXES was $657 million for the first half of 1998 (an
effective tax rate of 26.6%), compared with $667 million for the first half of
1997 (an effective tax rate of 30.1%). The lower provision for income taxes and
the decrease in the 1998 effective tax rate resulted primarily from certain
tax-advantaged transactions, increased tax credits and decreases in taxes on
non-U.S. income.
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 $109.6 billion at June 27, 1998, from $106.6 billion at the
end of 1997, primarily reflecting acquisition growth and higher origination
volume, partially offset by seasonal decreases in the credit card portfolios.
Related allowances for losses at June 27, 1998, aggregated $2.9 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 $48.6 billion at June 27, 1998, an increase of $0.5
billion from the end of 1997. Nonearning receivables were $1.1 billion at June
27, 1998, 2.2% 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 $714 million for the first half of 1998,
compared with $607 million for the first half 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 $61.0 billion at June 27, 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 $358 million at June 27, 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 June 27, 1998, was $777 million, a decrease of $18
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 June 27, 1998 were approximately $92 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 $3.6 billion at June 27, 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
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS (Continued).
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 June 27, 1998, up from $9.0 billion at the end of 1997.
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
SIX MONTHS ENDED JUNE 27, 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 ........................................... $ 1,814 $ 1,814
Provision for income taxes ............................. 657 657
Minority interest in net earnings of consolidated
affiliates ............................................ 66 66
-------- --------
Earnings before provision for income taxes and
minority interest ..................................... 2,537 2,537
-------- --------
Fixed charges:
Interest ............................................. 4,281 4,281
One-third of rentals ................................. 134 134
-------- --------
Total fixed charges .................................... 4,415 4,415
-------- --------
Less interest capitalized, net of amortization ......... 40 40
-------- --------
Earnings before provision for income taxes and minority
interest, plus fixed charges .......................... $ 6,912 $ 6,912
======== ========
Ratio of earnings to fixed charges ..................... 1.57
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings .......................................... 1.36
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 4,415
--------
Total fixed charges and preferred stock dividend
requirements .......................................... $ 4,415
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................. 1.57
========
</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: July 31, 1998 By: /s/ J.A. Parke
---------------------------------------
J.A. Parke,
Senior Vice President, Finance
(Principal Financial Officer)
Date: July 31, 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
SIX MONTHS ENDED JUNE 27, 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 ........................................... $ 1,814 $ 1,814
Provision for income taxes ............................. 657 657
Minority interest in net earnings of consolidated
affiliates ............................................ 66 66
-------- --------
Earnings before provision for income taxes and
minority interest ..................................... 2,537 2,537
-------- --------
Fixed charges:
Interest ............................................. 4,281 4,281
One-third of rentals ................................. 134 134
-------- --------
Total fixed charges .................................... 4,415 4,415
-------- --------
Less interest capitalized, net of amortization ......... 40 40
-------- --------
Earnings before provision for income taxes and minority
interest, plus fixed charges .......................... $ 6,912 $ 6,912
======== ========
Ratio of earnings to fixed charges ..................... 1.57
========
Preferred stock dividend requirements .................. $ --
Ratio of earnings before provision for income taxes to
net earnings .......................................... 1.36
Preferred stock dividend factor on pre-tax basis ....... --
Fixed charges .......................................... 4,415
--------
Total fixed charges and preferred stock dividend
requirements .......................................... $ 4,415
========
Ratio of earnings to combined fixed charges and
preferred stock dividends ............................. 1.57
========
</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 27, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-27-1998
<CASH> 3,023
<SECURITIES> 73,858
<RECEIVABLES> 109,618
<ALLOWANCES> 2,884
<INVENTORY> 764
<CURRENT-ASSETS> 0
<PP&E> 30,359
<DEPRECIATION> 7,981
<TOTAL-ASSETS> 269,204
<CURRENT-LIABILITIES> 0
<BONDS> 48,125
0
10
<COMMON> 1
<OTHER-SE> 18,703
<TOTAL-LIABILITY-AND-EQUITY> 269,204
<SALES> 3,519
<TOTAL-REVENUES> 22,952
<CGS> 3,210
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,379
<LOSS-PROVISION> 741
<INTEREST-EXPENSE> 4,212
<INCOME-PRETAX> 2,471
<INCOME-TAX> 657
<INCOME-CONTINUING> 1,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,814
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
