<PAGE> 1
================================================================================
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 period ended
September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 33-44946
RAILCAR TRUST NO. 1992 - 1
(Exact name of Registrant as specified in its charter)
Delaware 36-3822700
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
c/o Wilmington Trust Company
Rodney Square North
1100 N. Market St.
Wilmington, Delaware 19890
(Address of principal executive offices and ZIP code)
Registrant's telephone number, including area code: (302) 651-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
------------------------
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
--- ---
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
RAILCAR TRUST NO. 1992-1
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents ............................... $ 454 $ 448
Restricted cash ......................................... 1,446 18,885
Rent receivable from GE Capital Railcar Associates, Inc. 12,753 12,753
Prepaid expenses and other .............................. 1,061 1,234
--------- ---------
Total current assets ............................. 15,714 33,320
Rental equipment ........................................ 875,271 912,607
Deferred financing fees ................................. 3,293 4,075
--------- ---------
Total assets ............................................ $ 894,278 $ 950,002
========= =========
LIABILITIES AND TRUST DEFICIT
Accrued interest and other expenses ..................... $ 7,090 $ 8,621
Current maturities of long-term debt .................... 84,859 79,844
--------- ---------
Total current liabilities ........................ 91,949 88,465
Long-term debt:
Trust notes .......................................... 737,311 795,498
Secured indebtedness ................................. 48,192 70,255
--------- ---------
Total long-term debt ............................. 785,503 865,753
Minority interest in Partnership ........................ 10,285 10,784
Trust (deficit) equity:
Capital distributions in excess of contributions ..... (68,605) (68,605)
Cumulative net earnings .............................. 75,146 53,605
--------- ---------
Net trust (deficit) equity ....................... 6,541 (15,000)
--------- ---------
Total liabilities and trust (deficit) equity ............ $ 894,278 $ 950,002
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
1
<PAGE> 3
RAILCAR TRUST NO. 1992-1
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTH PERIODS NINE MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Rental revenue from GE Capital Railcar
Associates, Inc. ......................... $ 38,259 $ 37,682 $ 114,776 $ 114,199
--------- --------- --------- ---------
Operating expenses:
Depreciation .......................... (12,445) (12,445) (37,336) (37,336)
General, administrative and other ..... (102) (119) (348) (392)
--------- --------- --------- ---------
Total operating expenses .......... (12,547) (12,564) (37,684) (37,728)
--------- --------- --------- ---------
Operating income ......................... 25,712 25,118 77,092 76,471
Interest expense ......................... (17,906) (19,573) (54,891) (60,015)
Minority interest ........................ (220) (214) (660) (653)
--------- --------- --------- ---------
Net income ............................... $ 7,586 $ 5,331 $ 21,541 $ 15,803
========= ========= ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE> 4
RAILCAR TRUST NO. 1992-1
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTH PERIODS ENDED
SEPTEMBER 30,
1996 1995
-------- --------
<S> <C> <C>
Operating activities:
Net income ..................................................... $ 21,541 $ 15,803
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation ............................................... 37,336 37,336
Amortized discount on debt and deferred financing fees ..... 1,011 1,151
Income of minority interest ................................ 660 653
Changes in assets and liabilities, net:
Restricted cash .......................................... 17,439 18,319
Rent receivable from GE Capital Railcar Associates, Inc. . -- 577
Other .................................................... (1,476) (1,573)
-------- --------
Net cash provided by operating activities .................. 76,511 72,266
Financing activities:
Borrowings ..................................................... -- --
Principal payments on borrowings ............................... (75,347) (71,171)
Distribution to beneficiaries .................................. -- --
Cash contributed ............................................... -- --
Distributions to minority interest ............................. (1,158) (1,158)
-------- --------
Net cash used in financing activities ...................... (76,505) (72,329)
-------- --------
Net increase (decrease) in cash ................................... 6 (63)
Cash and equivalents at beginning of the period ................... 448 472
-------- --------
Cash and equivalents at end of the period ......................... $ 454 $ 409
======== ========
Supplemental cash flow information:
Interest paid during the period .............................. $ 55,637 $ 60,705
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE> 5
RAILCAR TRUST NO. 1992-1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A BASIS OF PRESENTATION
Railcar Trust No. 1992-1 (the Trust) holds a majority interest in Railcar
Associates, LP, a limited partnership (the Partnership). The Partnership leases
approximately 59,000 railcars within the United States. GE Railcar Associates,
Inc. (the Lessee) is the sole lessee of the railcars. The leases mature in 2004
with quarterly fixed rental payments totaling approximately $153 million
annually. These rental payments are guaranteed by General Electric Capital
Corporation. The Lessee has an option to purchase all, but not less than all, of
the railcars under lease for approximately $500 million at the end of the lease.
The Lessee is responsible for maintenance, taxes, insurance and other expenses
involved with operating the railcars. The Lessee has an annual obligation to
make certain contingent rental payments to the Partnership. No contingent rental
payment was required in 1995 or 1994.
The accompanying consolidated financial statements should be read in conjunction
with the consolidated financial statements included in the Trust's Annual Report
on Form 10-K for the year ended December 31, 1995. The consolidated financial
information furnished herein reflects all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary for a
fair presentation of the consolidated statements for the periods shown.
The partnership has the following partners:
PARTNER INTEREST (%)
Railcar Trust No. 1992-1 98.99 %
GE Railcar Associates, Inc. 1.00 %
GE Railcar Leasing Associates, Inc. 0.01 %
The Partners share in profits or losses and distributions in accordance with a
specific formula, as defined in the Amended and Restated Agreement of the
Limited Partnership.
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The consolidated financial statements include the
financial results of the Trust and the Partnership. All inter-entity
transactions have been eliminated.
Use of Estimates: The preparation of financial statements requires management to
make estimates of assumptions that affect amounts reported in the financial
statements and accompanying notes. Such estimates and assumptions could change
in the future as more information becomes known which could impact the amounts
reported and disclosed herein.
4
<PAGE> 6
Cash, Cash Equivalents, and Restricted Cash: The Trust considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents. Due to the short maturity of these instruments, the carrying amount
approximates fair value. Restricted cash balances represent short-term
investments held by GECC. The investments are restricted as to the availability
to the Partnership and are available only to service principal and interest
payments on the Partnership's debt.
Rental Equipment: Rental equipment (railcars) are carried at cost, which is
based upon the historical cost of the contributing partners. Railcars are
depreciated to estimated residual value using the straight-line method over the
term of the leases.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Rail cars (at cost) ..................... $ 1,388,582 $ 1,388,582
Accumulated depreciation ................ (513,311) (475,975)
----------- -----------
Net Book Value .......................... $ 875,271 $ 912,607
=========== ===========
</TABLE>
Income Taxes: The Trust does not provide for income taxes as the liability for
such taxes is that of the beneficial owners of the Trust.
NOTE C DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Trust notes $ 798,834 $ 855,483
Secured indebtedness 71,528 90,114
--------- ---------
Total debt 870,362 945,597
Less: Current maturities (84,859) (79,844)
--------- ---------
Long-term debt $ 785,503 $ 865,753
========= =========
</TABLE>
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Financial Liquidity and Capital Resources
Substantially all of the physical property of the Trust, consisting primarily of
railcars, was contributed to the Partnership of which the Trust is a 98.99%
partner. At such time, the Partnership assumed the Assumed Indebtedness. The
Partnership then leased to the Lessee all of the property contributed by the
Trust, along with other railcars it received as a contribution from its other
partners. Financing of the Trust was accomplished by issuance of $998 million of
Trust Notes secured by the Trust's ownership interest in the Partnership. No new
borrowings have occurred during 1996.
Debt Maturities and Repayments
Current maturities of long-term debt of $84.9 million at September 30, 1996
represent debt which is being serviced from the cash flow from the leases.
Results of Operations
Fixed rental receipts by the Partnership under the Leases are used to service
the Assumed Indebtedness and other expenses of the Partnership. Remaining
Partnership available cash is distributed to the partners, the Trust's share of
which must be used by the Trust to service the Trust Notes.
During the first nine months of 1996 and 1995, on a consolidated basis the Trust
received rental revenues of $114.8 and $114.2 million, respectively, pursuant to
the Leases. Operating income was $77.1 and $76.5 million for the first nine
months of 1996 and 1995, respectively. Interest expense, net, was $54.9 million
and $60.0 million for the first nine months of 1996 and 1995, respectively. The
reduction of interest expense was due to scheduled repayments of Trust Notes and
Assumed Indebtedness. Consolidated net income of the Trust was $21.5 million and
$15.8 million for the first nine months of 1996 and 1995, respectively.
The Trust generated $76.5 million in cash from operating activities during the
first nine months of 1996. Those amounts were used to repay the Assumed
Indebtedness and the Trust Notes as payments became due. Of the net cash from
operating activities, $75.3 million was used in order to reduce borrowings and
$1.2 million was distributed to the minority interests in the Partnership. The
principal amount outstanding under the Assumed Indebtedness was decreased by
$18.6 million to a total of $71.5 million at quarter-end, and the principal
amount outstanding under the Trust Notes was decreased by $56.8 million to a
total amount of $799.6 million at quarter-end.
During the first nine months of 1996, no distributions were made to the holders
of the Beneficial Interests in the Trust.
6
<PAGE> 8
PART II
ITEM 5. OTHER INFORMATION
The Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996 for General Electric Capital Corporation is
hereby incorporated by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
28.1 Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996 for General Electric Capital
Corporation.
(b) Reports on Form 8-K
none
7
<PAGE> 9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
November 14, 1996 RAILCAR TRUST NO. 1992-1
By: /s/ David A. Vanaskey, Jr.
--------------------------
David A. Vanaskey, Jr.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
Signature Date
--------- ----
/s/ David A. Vanaskey, Jr. 11/14/96
----------------------------------------- --------------------
David A. Vanaskey, Jr.
Senior Financial Services Officer
/s/ Bruce L. Bisson 11/14/96
----------------------------------------- --------------------
Bruce L. Bisson
Vice President
8
<PAGE> 10
EXHIBIT INDEX
Exhibit
No. Description
- - ------- -----------
28.1 Quarterly Report on Form 10-Q for the quarter ended
September 28, 1996 for General Electric Capital
Corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 454
<SECURITIES> 0
<RECEIVABLES> 12,753
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,714
<PP&E> 1,388,582
<DEPRECIATION> 513,311
<TOTAL-ASSETS> 894,278
<CURRENT-LIABILITIES> 91,949
<BONDS> 785,503
0
0
<COMMON> 0
<OTHER-SE> 6,541
<TOTAL-LIABILITY-AND-EQUITY> 894,278
<SALES> 0
<TOTAL-REVENUES> 114,776
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 37,684
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,891
<INCOME-PRETAX> 21,541
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,541
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT-28.1
GENERAL ELECTRIC CAPITAL CORP. FORM 10-Q
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 28, 1996
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 1-6461
----------------------
GENERAL ELECTRIC CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 13-1500700
(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 8, 1996, 3,837,825 shares of common stock with a par value of $200
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> 2
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 .................................... 7
PART II - OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K .......................... 8
Signatures ........................................................ 9
Index to Exhibits ................................................. 10
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF CURRENT AND RETAINED EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------- ---------------------
(In millions) SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER
28, 1996 30, 1995 28, 1996 30, 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
EARNED INCOME .................................................. $ 7,008 $ 5,395 $ 18,696 $ 15,354
-------- -------- -------- --------
EXPENSES
Interest ....................................................... 1,685 1,662 5,075 4,793
Operating and administrative ................................... 2,583 1,456 6,205 4,400
Insurance losses and policyholder and annuity benefits ......... 821 445 2,213 1,447
Provision for losses on financing receivables .................. 254 352 695 710
Depreciation and amortization of buildings and equipment and
equipment on operating leases ................................. 556 487 1,569 1,426
Minority interest in net earnings of consolidated affiliates ... 17 15 59 48
-------- -------- -------- --------
5,916 4,417 15,816 12,824
-------- -------- -------- --------
EARNINGS
Earnings before income taxes ................................... 1,092 978 2,880 2,530
Provision for income taxes ..................................... (344) (330) (900) (837)
-------- -------- -------- --------
NET EARNINGS ................................................... 748 648 1,980 1,693
Dividends ...................................................... (272) (260) (746) (521)
Retained earnings at beginning of period ....................... 9,695 9,105 8,937 8,321
-------- -------- -------- --------
RETAINED EARNINGS AT END OF
PERIOD ......................................................... $ 10,171 $ 9,493 $ 10,171 $ 9,493
======== ======== ======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
1
<PAGE> 4
ITEM 1. FINANCIAL STATEMENTS (Continued).
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(In millions) SEPTEMBER 28, DECEMBER 31,
1996 1995
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and equivalents ................................... $ 2,777 $ 1,316
Investment securities .................................. 33,623 26,991
Financing receivables:
Time sales and loans, net of deferred income ....... 59,902 59,591
Investment in financing leases, net of
deferred income ................................... 37,269 36,200
-------- --------
97,171 95,791
Allowance for losses on financing receivables ...... (2,556) (2,519)
-------- --------
Financing receivables - net .................... 94,615 93,272
Other receivables - net ................................ 6,988 6,408
Equipment on operating leases (at cost), less
accumulated amortization of $5,336 and $4,670 ......... 15,813 13,793
Other assets ........................................... 25,361 19,045
-------- --------
TOTAL ASSETS ........................................... $179,177 $160,825
======== ========
LIABILITIES AND EQUITY
Short-term borrowings .................................. $ 68,371 $ 59,264
Long-term borrowings:
Senior ............................................. 45,636 47,794
Subordinated ....................................... 697 697
Insurance liabilities, reserves and annuity benefits ... 31,637 22,401
Other liabilities ...................................... 9,926 9,202
Deferred income taxes .................................. 7,121 6,562
-------- --------
Total liabilities .................................. 163,388 145,920
-------- --------
Minority interest in equity of consolidated affiliates . 769 703
-------- --------
Capital stock .......................................... 770 770
Additional paid-in capital ............................. 4,024 4,022
Retained earnings ...................................... 10,171 8,937
Unrealized gains on investment securities .............. 141 543
Foreign currency translation adjustments ............... (86) (70)
-------- --------
Total equity ....................................... 15,020 14,202
-------- --------
TOTAL LIABILITIES AND EQUITY ........................... $179,177 $160,825
======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
2
<PAGE> 5
ITEM 1. FINANCIAL STATEMENTS (Continued).
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------
(In millions) SEPTEMBER SEPTEMBER
28, 1996 30, 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings ........................................... $ 1,980 $ 1,693
Adjustments to reconcile net earnings to cash provided
from operating activities:
Provision for losses on financing receivables ...... 695 710
Depreciation and amortization of buildings and
equipment and equipment on operating leases ....... 1,569 1,426
Other - net ........................................ 1,758 1,686
-------- --------
Cash provided from operating activities .......... 6,002 5,515
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers ......................... (38,262) (33,141)
Principal collections from customers ................... 39,080 31,415
Investment in assets on financing leases ............... (9,249) (10,703)
Principal collections on financing leases .............. 8,345 5,968
Net increase in credit card receivables ................ (950) (1,067)
Buildings and equipment and equipment on
operating leases:
- additions ......................................... (4,058) (4,208)
- dispositions ...................................... 677 2,074
Payments for principal businesses purchased, net of
cash acquired ......................................... (2,320) (2,433)
Proceeds from principal business dispositions .......... -- 575
Purchases of investment securities by insurance
affiliates and annuity businesses ..................... (5,396) (4,970)
Dispositions and maturities of investment securities
by insurance affiliates and annuity businesses ........ 5,203 4,717
Other - net ............................................ (3,702) (1,680)
-------- --------
Cash used for investing activities ............... (10,632) (13,453)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) .. 7,312 (7,538)
Newly issued debt
- short-term (maturities 91-365 days) ............... 3,693 1,862
- long-term senior .................................. 12,998 26,506
Proceeds - non-recourse, leveraged lease debt .......... 505 257
Repayments and other reductions
- short-term (maturities 91-365 days) ............... (17,082) (11,336)
- long-term senior .................................. (780) (597)
Principal payments - non-recourse, leveraged lease debt. (227) (235)
Proceeds from sales of investment and annuity contracts. 1,982 976
Redemption of investment and annuity contracts ......... (1,689) (1,593)
Dividends paid ......................................... (746) (521)
Issuance of preferred stock in excess of par value ..... -- 525
Issuance of variable cumulative preferred stock by
consolidated affiliate ................................ 125 120
-------- --------
Cash provided from financing activities .......... 6,091 8,426
-------- --------
INCREASE IN CASH AND EQUIVALENTS ....................... 1,461 488
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............ 1,316 712
-------- --------
CASH AND EQUIVALENTS AT END OF PERIOD .................. $ 2,777 $ 1,200
======== ========
</TABLE>
See Notes to Condensed, Consolidated Financial Statements.
3
<PAGE> 6
ITEM 1. FINANCIAL STATEMENTS (Continued).
GENERAL ELECTRIC CAPITAL CORPORATION 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 Corporation and all
majority-owned and controlled affiliates (collectively called "the
Corporation" or "GECC"). 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. Two newly issued accounting standards were adopted in the first quarter of
1996 and did not have a material effect on the financial position or
results of operations of the Corporation.
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of, requires that certain long-lived assets be reviewed for
impairment when events or circumstances indicate that the carrying amounts
of the assets may not be recoverable. If such review indicates that the
carrying amount of an asset exceeds the sum of its expected future cash
flows, the asset's carrying value is written down to fair value.
Long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
SFAS No. 122, Accounting for Mortgage Servicing Rights, requires that
capitalized rights to service mortgage loans be assessed for impairment by
individual risk stratum by comparing each stratum's carrying amount with
its fair value. Strata are based on the predominant risk characteristics
of the underlying loans, which include loan type and note rate. Fair
values are estimated based on discounted anticipated future net cash flows
considering market consensus for loan prepayment predictions and other
economic factors. To the extent that the carrying value of mortgage
servicing rights exceeds fair value by individual stratum, the resulting
impairment is recognized in earnings through a valuation allowance.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.
OVERVIEW
Net earnings for the first nine months of 1996 were $1,980 million, a $287
million (17%) increase over the first nine months of 1995. The Corporation's
contribution to the earnings of its parent, General Electric Capital Services,
Inc. after payment of dividends on its variable cumulative preferred stock, was
$1,924 million, a $264 million (16%) increase over the comparable 1995 period.
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 Corporation's increase in net earnings principally
resulted from a higher average level of invested assets, partially offset by a
decrease in financing spreads as the decrease in borrowing rates was outpaced by
a decrease in yields. The specialty insurance businesses also contributed to the
increase in net earnings primarily resulting from increased premium and
investment income.
OPERATING RESULTS
EARNED INCOME from all sources increased $3,342 million (22%) to $18,696 million
for the first nine months of 1996 over the first nine months of 1995.
Earned income from the specialized financing, mid-market financing, consumer
services and equipment management businesses increased $2,786 million (20%) over
the comparable prior-year period. These increases principally reflect a higher
average level of invested assets, resulting from both origination volume and
acquisitions of portfolios and businesses, higher consumer insurance premiums
arising from acquisitions in 1995 and 1996 and increased personal computer
equipment sales associated with the acquisitions of Ameridata Technologies, Inc.
("Ameridata") and CompuNet Computer AG ("CompuNet") during the third quarter of
1996. Earned income from the specialty insurance businesses increased $556
million (36%) to $2,116 million for the first nine months of 1996 compared with
the first nine months of 1995 due to growth in premium and investment income
resulting from both origination volume and acquisitions.
INTEREST EXPENSE on borrowings for the first nine months of 1996 was $5,075
million, 6% higher than for the first nine months of 1995. The increase
reflected the effects of higher average borrowings used to finance asset growth,
partially offset by the effects of lower interest rates. The composite interest
rate on the borrowings for the first nine months of 1996 was 6.26% compared with
6.77% in the first nine months of 1995.
OPERATING AND ADMINISTRATIVE EXPENSES were $6,205 million for the first nine
months of 1996, a 41% increase over the first nine months of 1995. The increase
primarily reflected costs associated with businesses and portfolios acquired
over the past year and higher investment levels. Included in the increase are
costs of personal computer equipment sold associated with the acquisitions of
Ameridata and CompuNet during the third quarter of 1996.
INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased 53% to $2,213
million for the first nine months of 1996, compared with $1,447 million for the
first nine months of 1995. The increase primarily resulted from the acquisition
of insurance businesses in 1995 and 1996.
PROVISION FOR LOSSES ON FINANCING RECEIVABLES decreased to $695 million for the
first nine months of 1996 from $710 million for the first nine months of 1995.
These provisions principally related to private-label and bank credit cards
which are discussed below under Portfolio Quality. The decrease reflected the
effects of sales of receivables and loan repayments, partially offset by
increases for private-label and bank credit cards.
5
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS (Continued).
DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON
OPERATING LEASES increased $143 million (10%) to $1,569 million for the first
nine months of 1996 compared with $1,426 million for the first nine months of
1995. The increase principally reflected higher levels of equipment on operating
leases as a result of portfolio growth and acquisitions.
PROVISION FOR INCOME TAXES was $900 million for the first nine months of 1996
(an effective tax rate of 31%), compared with $837 million for the first nine
months of 1995 (an effective tax rate of 33%). The higher provision for income
taxes reflected increased pre-tax earnings. The decrease in the 1996 effective
tax rate resulted primarily from increased tax credits and a decrease in foreign
taxes.
PORTFOLIO QUALITY
THE PORTFOLIO OF FINANCING RECEIVABLES, before allowance for losses, increased
to $97.2 billion at September 28, 1996 from $95.8 billion at the end of 1995.
Financing receivables are the Corporation's largest asset and the primary source
of revenues. Related allowances for losses at September 28, 1996, aggregated
$2.6 billion (2.63% of receivables - the same level as at the end of 1995) 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; "reduced earning receivables" are receivables whose
terms have been restructured to a below-market yield.
CONSUMER RECEIVABLES, primarily credit card and personal loans and auto loans
and leases, were $43.6 billion at September 28, 1996, an increase of $1.6
billion from the end of 1995. Nonearning and reduced earning receivables
increased to $812 million at September 28, 1996, from $671 million at December
31, 1995. Write-offs of consumer receivables increased to $622 million for the
first nine months of 1996, compared with $469 million for the first nine months
of 1995. This increase was primarily attributable to higher average receivable
balances resulting from a combination of origination volume and acquisitions of
businesses and portfolios and higher delinquencies consistent with overall
industry experience.
COMMERCIAL REAL ESTATE LOANS classified as financing receivables were $13.0
billion at September 28, 1996, a decrease of $0.4 billion from year-end 1995.
Nonearning and reduced earning receivables increased to $185 million at
September 28, 1996, from $179 million at December 31, 1995. Write-offs of
commercial real estate loans were $33 million for the first nine months of 1996,
compared with $102 million for the first nine months of 1995. At September 28,
1996, the commercial real estate portfolio also included, in other assets, $2.3
billion of assets acquired for resale from various financial institutions (the
same as at year-end 1995) and $2.0 billion of investments in real estate
ventures ($1.7 billion at year-end 1995).
OTHER FINANCING RECEIVABLES, totaling $40.6 billion at September 28, 1996 ($40.4
billion at December 31, 1995), consisted of a diverse commercial, industrial and
equipment loan and lease portfolio. Nonearning and reduced-earning receivables
were $286 million at September 28, 1996, compared with $285 million at year-end
1995.
Loans and leases to commercial airlines amounted to $8.5 billion at
September 28, 1996, up from $8.3 billion at the end of 1995.
OTHER MATTERS
As 1996 progresses, management continues to believe that vigilant attention to
risk management and controllership and a strong focus on complete satisfaction
of customer needs position it to deal effectively with the increasing
competition in an ever-changing global economy.
6
<PAGE> 9
EXHIBIT 12
GENERAL ELECTRIC CAPITAL CORPORATION 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 28, 1996
(Unaudited)
<TABLE>
<CAPTION>
RATIO OF
EARNINGS TO
COMBINED
FIXED
RATIO OF CHARGES AND
EARNINGS PREFERRED
TO FIXED STOCK
(Dollar amounts in millions) CHARGES DIVIDENDS
--------- -----------
<S> <C> <C>
Net earnings ........................................... $ 1,980 $ 1,980
Provision for income taxes ............................. 900 900
Minority interest in net earnings of consolidated
affiliates............................................. 59 59
-------- --------
Earnings before provision for income taxes and minority
interest............................................... 2,939 2,939
-------- --------
Fixed charges:
Interest ........................................... 5,121 5,121
One-third of rentals ............................... 126 126
-------- --------
Total fixed charges .................................... 5,247 5,247
-------- --------
Less capitalized interest, net of amortization ......... 26 26
-------- --------
Earnings before provision for income taxes and minority
interest plus fixed charges ........................... $ 8,160 $ 8,160
======== ========
Ratio of earnings to fixed charges ..................... 1.56
========
Preferred stock dividend requirements .................. $ 56
Ratio of earnings before provision for income taxes to
net earnings........................................... 1.45
Preferred stock dividend on pre-tax basis .............. 81
Fixed charges .......................................... 5,247
--------
Total fixed charges and preferred stock dividend
requirements........................................... $ 5,328
========
Ratio of earnings to combined fixed charges and
preferred stock dividends.............................. 1.53
========
</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.
7
<PAGE> 10
PART II--OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS.
Exhibit 3(i). A complete copy of the Organization Certificate of the
Corporation as last amended on November 1, 1995 and currently in
effect, consisting of the following: (a) the Organization Certificate
of the Corporation as in effect immediately prior to the filing of the
Certificate of Amendment as of April 21, 1995 (Incorporated by
reference to Exhibit 3(i) to the Corporation's Form 10-K Report for the
year ended December 31, 1993); (b) a Certificate of Amendment filed in
the Office of the Superintendent of Banks of the State of New York (the
"Office of the Superintendent") as of April 21, 1995 (Incorporated by
reference to Exhibit 4(b) to the Corporation's Registration Statement
on Form S-3, File No. 33-58771); (c) a Certificate of Amendment filed
in the Office of the Superintendent as of May 11, 1995 (Incorporated by
reference to Exhibit 4(c) to the Corporation's Registration Statement
on form S-3, File No. 33-61257); (d) a Certificate of Amendment filed
in the Office of the Superintendent as of June 28, 1995 (Incorporated
by reference to Exhibit 4(d) to the Corporation's Registration
Statement on Form S-3, File No. 33-61257); (e) a certificate of
Amendment filed in the Office of the Superintendent as of July 17, 1995
(Incorporated by reference to Exhibit 4(e) to the Corporation's
Registration Statement on Form S-3, File No. 33-61257); (f) a
Certificate of Amendment filed in the Office of the Superintendent as
of November 1, 1995 (Incorporated by reference to Exhibit 3(i) to the
Corporation's Form 10-K Report for the year ended December 31, 1995);
and (g) a Certificate of Amendment filed in the Office of the
Superintendent as of September 26, 1996 (Incorporated by reference to
Exhibit 4(g) to the Corporation's Registration Statement on Form S-3,
File No. 33-13195).
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
8
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL ELECTRIC CAPITAL CORPORATION
(Registrant)
Date: November 11, 1996 By: /s/ J.A. Parke
-----------------------------------------
J.A. Parke, Senior Vice President, Finance
(Principal Financial Officer)
Date: November 11, 1996 By: /s/ J.C. Amble
-----------------------------------------
J.C. Amble, Vice President and Controller
(Principal Accounting Officer)
9
<PAGE> 12
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES
INDEX TO EXHIBITS
EXHIBIT NO. PAGE
- - ----------- ----
3(i) A complete copy of the Organization Certificate of the
Corporation as last amended on November 1, 1995 and
currently in effect, consisting of the following: (a) the
Organization Certificate of the Corporation as in effect
immediately prior to the filing of the Certificate of
Amendment as of April 21, 1995 (Incorporated by reference to
Exhibit 3(i) to the Corporation's Form 10-K Report for the
year ended December 31, 1993); (b) a Certificate of
Amendment filed in the Office of the Superintendent of Banks
of the State of New York (the "Office of the
Superintendent") as of April 21, 1995 (Incorporated by
reference to Exhibit 4(b) to the Corporation's Registration
Statement on Form S-3, File No. 33-58771); (c) a Certificate
of Amendment filed in the Office of the Superintendent as of
May 11, 1995 (Incorporated by reference to Exhibit 4(c) to
the Corporation's Registration Statement on form S-3, File
No. 33-61257); (d) a Certificate of Amendment filed in the
Office of the Superintendent as of June 28, 1995
(Incorporated by reference to Exhibit 4(d) to the
Corporation's Registration Statement on Form S-3, File No.
33-61257); (e) a certificate of Amendment filed in the
Office of the Superintendent as of July 17, 1995
(Incorporated by reference to Exhibit 4(e) to the
Corporation's Registration Statement on Form S-3, File No.
33-61257); (f) a Certificate of Amendment filed in the
Office of the Superintendent as of November 1, 1995
(Incorporated by reference to Exhibit 3(i) to the
Corporation's Form 10-K Report for the year ended December
31, 1995); and (g) a Certificate of Amendment filed in the
Office of the Superintendent as of September 26, 1996
(Incorporated by reference to Exhibit 4(g) to the
Corporation's Registration Statement on Form S-3, File No.
33-13195).
12 Computation of ratio of earnings to fixed
charges and computation of ratio of earnings
to combined fixed charges and preferred stock dividends ........ 7
27 Financial Data Schedule (filed electronically only)
10
