-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RtY+Ujo+5c4glxs8ELhZ0BAe2KOIqkCT+Knkiq+MfmcowM9x8/GSfcYBSr9SUOCI HGiBn6Whw2QhPtuySqO1Ww== 0000040554-01-500033.txt : 20010724 0000040554-01-500033.hdr.sgml : 20010724 ACCESSION NUMBER: 0000040554-01-500033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP CENTRAL INDEX KEY: 0000040554 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 131500700 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-22265 FILM NUMBER: 1686058 BUSINESS ADDRESS: STREET 1: 260 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06927 BUSINESS PHONE: 2033574000 MAIL ADDRESS: STREET 1: 260 LONG RIDGE ROAD CITY: STAMFORD STATE: CT ZIP: 06927 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL ELECTRIC CREDIT CORP DATE OF NAME CHANGE: 19871216 10-Q 1 gecc2q01asc.txt GECC FORM 10Q FOR PERIOD ENDED 6-30-01 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 30, 2001 ------------- 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) Delaware 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 July 23, 2001, 3,837,825 shares of common stock with a par value of $0.01 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. 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
1 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Condensed Statement of Current and Retained Earnings (Unaudited)
Three Months Ended Six Months Ended -------------------------------- -------------------------------- June 30, July 1, June 30, July 1, (In millions) 2001 2000 2001 2000 --------------- --------------- --------------- --------------- Revenues Revenues from services .......................... $ 10,718 $ 11,327 $ 21,728 $ 22,399 Sales of goods .................................. 960 2,405 2,028 4,638 --------------- --------------- --------------- --------------- 11,678 13,732 23,756 27,037 --------------- --------------- --------------- --------------- Expenses Interest ........................................ 2,512 2,660 5,256 5,084 Operating and administrative .................... 3,165 3,983 6,579 8,047 Cost of goods sold .............................. 866 2,238 1,827 4,308 Insurance losses and policyholder and annuity benefits ..................................... 2,113 2,166 4,053 3,694 Provision for losses on financing receivables ... 447 406 907 914 Depreciation and amortization of buildings and equipment and equipment on operating leases ... 791 665 1,578 1,601 Minority interest in net earnings of consolidated affiliates .................................... 17 21 47 40 --------------- --------------- --------------- --------------- 9,911 12,139 20,247 23,688 --------------- --------------- --------------- --------------- Earnings Earnings before income taxes and cumulative effect of changes in accounting principle .. 1,767 1,593 3,509 3,349 Provision for income taxes ...................... (341) (391) (743) (940) --------------- --------------- --------------- --------------- Earnings before cumulative effect of changes in accounting principle..................... 1,426 1,202 2,766 2,409 Cumulative effect of changes in accounting principle.................................... - - (158) - --------------- --------------- --------------- --------------- Net Earnings .................................... 1,426 1,202 2,608 2,409 Dividends ....................................... (531) (474) (1,060) (945) Retained earnings at beginning of period ........ 20,347 17,747 19,694 17,011 --------------- --------------- --------------- --------------- Retained earnings at end of period .............. $ 21,242 $ 18,475 $ 21,242 $ 18,475 =============== =============== =============== ===============
See Notes to Condensed, Consolidated Financial Statements. GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Condensed Statement of Financial Position
June 30, December 31, (In millions) 2001 2000 -------------- -------------- (Unaudited) Assets Cash and equivalents ............................................................. $ 5,589 $ 5,819 Investment securities ............................................................ 73,456 70,282 Financing receivables: Time sales and loans, net of deferred income .................................. 95,522 93,540 Investment in financing leases, net of deferred income ........................ 51,534 50,930 -------------- -------------- 147,056 144,470 Allowance for losses on financing receivables ................................. (3,912) (3,970) -------------- -------------- Financing receivables - net ............................................... 143,144 140,500 Insurance receivables - net....................................................... 10,489 12,060 Other receivables - net .......................................................... 14,400 14,308 Inventories ...................................................................... 319 666 Equipment on operating leases (at cost), less accumulated amortization of $8,571 and $7,900 .............................................. 25,358 24,145 Intangible assets ................................................................ 12,885 13,216 Other assets ..................................................................... 52,220 51,640 -------------- -------------- Total assets ............................................................. $ 337,860 $ 332,636 ============== ============== Liabilities and share owners' equity Short-term borrowings ............................................................ $ 122,669 $ 117,482 Long-term borrowings: Senior ........................................................................ 74,621 78,078 Subordinated .................................................................. 698 698 Insurance liabilities, reserves and annuity benefits ............................. 79,245 79,933 Other liabilities ................................................................ 24,960 20,764 Deferred income taxes ............................................................ 7,534 8,264 -------------- -------------- Total liabilities ........................................................ 309,727 305,219 -------------- -------------- Minority interest in equity of consolidated affiliates ........................... 1,321 1,344 -------------- -------------- Accumulated gains/(losses) - net Investment securities....................................................... (206) (139) Currency translation adjustments ........................................... (477) (600) Derivatives qualifying as hedges............................................ (865) - -------------- -------------- Accumulated non-owner changes in share owners' equity ........................... (1,548) (739) Capital stock .................................................................... 771 771 Additional paid-in capital ....................................................... 6,347 6,347 Retained earnings ................................................................ 21,242 19,694 -------------- -------------- Total share owners' equity ............................................... 26,812 26,073 -------------- -------------- Total liabilities and share owners' equity ............................... $ 337,860 $ 332,636 ============== ============== See Notes to Condensed, Consolidated Financial Statements.
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Condensed Statement of Cash Flows (Unaudited)
Six Months Ended ------------------------------ June 30, July 1, (In millions) 2001 2000 -------------- -------------- Cash Flows From Operating Activities Net earnings ..................................................................... $ 2,608 $ 2,409 Adjustments to reconcile net earnings to cash provided from Operating activities: Cumulative effect of changes in accounting principle......................... 158 - Provision for losses on financing receivables ............................... 907 914 Depreciation and amortization of buildings and equipment and equipment on operating leases ............................................. 1,578 1,601 Other - net ................................................................. 4,250 (3,439) -------------- -------------- Cash from operating activities ........................................... 9,501 1,485 -------------- -------------- Cash Flows From Investing Activities Increase in loans to customers ................................................... (62,855) (47,977) Principal collections from customers - loans ..................................... 60,242 45,046 Investment in equipment for financing leases ..................................... (7,832) (9,159) Principal collections from customers - financing leases .......................... 8,185 7,211 Net change in credit card receivables ............................................ 1,234 (717) Buildings and equipment and equipment on operating leases: - additions ................................................................. (6,372) (5,191) - dispositions .............................................................. 3,497 3,189 Payments for principal businesses purchased, net of cash acquired ................ (3,280) (315) Purchases of securities by insurance and annuity businesses ...................... (16,015) (12,059) Dispositions and maturities of securities by insurance and Annuity businesses ............................................................ 12,673 7,568 Other - net ...................................................................... (680) 1,553 -------------- -------------- Cash used for investing activities ....................................... (11,203) (10,851) -------------- -------------- Cash Flows From Financing Activities Net change in borrowings (maturities 90 days or less) ............................ 395 521 Newly issued debt - short-term (maturities 91-365 days) ........................ 2,333 3,859 - long-term (longer than one year) .......................... 8,848 14,756 Proceeds - non-recourse, leveraged lease debt .................................... 856 383 Repayments and other reductions: - short-term (maturities 91-365 days) ........................ (5,895) (16,896) - long-term (longer than one year) ........................... (3,878) (1,555) Principal payments - non-recourse, leveraged lease debt .......................... (170) (118) Proceeds from sales of investment contracts ...................................... 3,551 4,057 Cash received upon assumption of Toho Mutual Life Insurance Company Insurance liabilities........................................................ - 13,177 Redemption of investment contracts ............................................... (3,506) (4,549) Dividends paid ................................................................... (1,062) (945) -------------- -------------- Cash from financing activities ........................................... 1,472 12,690 -------------- -------------- Increase (Decrease) in Cash and Equivalents ...................................... (230) 3,324 Cash and Equivalents at Beginning of Period ...................................... 5,819 6,505 -------------- -------------- Cash and Equivalents at End of Period ............................................ $ 5,589 $ 9,829 ============== ============== See Notes to Condensed, Consolidated Financial Statements.
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Notes to Condensed, Consolidated Financial Statements (Unaudited) 1. The accompanying condensed quarterly financial statements represent the consolidation 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. The Financial Accounting Standards Board ("FASB") issued, then subsequently amended, Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, which became effective for the Corporation on January 1, 2001. Under SFAS No. 133, as amended, all derivative instruments (including certain derivative instruments embedded in other contracts) are recognized in the balance sheet at their fair values and changes in fair value are recognized immediately in earnings, unless the derivatives qualify as hedges of future cash flows. For derivatives qualifying as hedges of future cash flows, the effective portion of changes in fair value is recorded temporarily in equity, then recognized in earnings along with the related effects of the hedged items. Any ineffective portion of a hedge is reported in earnings as it occurs. The nature of the Corporation's business activities necessarily involves the management of various financial and market risks, including those related to changes in interest rates, equity prices, currency exchange rates, and commodity prices. As discussed more fully in notes 1, 10 and 20 of the 2000 Form 10-K, the Corporation uses derivative financial instruments to mitigate or eliminate certain of those risks. The January 1, 2001, accounting change described above affected only the pattern and timing of non-cash accounting recognition. At January 1, 2001, the Corporation's financial statements were adjusted to record a cumulative effect of adopting this accounting change, as follows: (In millions) Earnings Equity ------- ------- Adjustment to fair value of derivatives (a) ........ $ (60) $(1,315) Income tax effects ................................. 22 505 ------- ------- Total .............................................. $ (38) $ (810) ======= ======= (a) For earnings effect, amount shown is net of adjustment to hedged item. A reconciliation of current period changes for the first six months of 2001, net of applicable income taxes, in the separate component of share owners' equity labeled "derivatives qualifying as hedges" follows. (In millions) Transition adjustment as of January 1, 2001 .................... $(810) Declines in fair value - net ................................... (143) Reclassifications to earnings - net ............................ 88 ----- Balance at June 30, 2001 ....................................... $(865) ===== The cumulative effect on share owners' equity was primarily attributable to marking to market forward and swap contracts used to hedge variable-rate borrowings. Decreases in the fair values of these instruments were attributable to declines in interest rates since inception of the hedging arrangements. As a matter of policy, the Corporation ensures that funding, including the effect of derivatives, of its lending and other financing asset positions are substantially matched in character (e.g., fixed vs. floating) and duration. As a result, declines in the fair values of these effective derivatives are offset by unrecognized gains on the related financing assets and hedged items, and future net earnings will not be subject to volatility arising from interest rate changes. 4. In November 2000, the Emerging Issues Task Force of the FASB reached a consensus on impairment accounting for retained beneficial interests ("EITF 99-20"). Under this consensus, impairment on certain beneficial interests in securitized assets must be recognized when (1) the asset's fair value is below its carrying value, and (2) there has been an adverse change in estimated cash flows. Previously, impairment on such assets was recognized when the asset's carrying value exceeded estimated cash flows discounted at a risk free rate of return. The effect of adopting EITF 99-20 at January 1, 2001, was a one-time reduction of net earnings of $120 million, net of income taxes of $64 million. This accounting change did not involve cash, and management expects that it will have no more than a modest effect on future results. 5. A summary of increases/(decreases) in share owners' equity that do not result directly from transactions with share owners, net of income taxes, is provided below.
Three Months Ended ------------------------------------------- (In millions) June 30, 2001 July 1, 2000 --------------------- --------------------- Net earnings ..................................................... $ 1,426 $ 1,202 Investing securities .............................................. (809) (496) Currency translation adjustments .................................. (11) (12) Derivatives qualifying as hedges................................... 339 - --------------------- --------------------- Total ............................................................. $ 945 $ 694 ===================== ===================== Six Months Ended ------------------------------------------- June 30, 2001 July 1, 2000 --------------------- --------------------- Net earnings ..................................................... $ 2,608 $ 2,409 Investing securities .............................................. (67) (695) Currency translation adjustments .................................. 123 (105) Derivatives qualifying as hedges................................... (55) - Cumulative effect on share owners' equity of adopting FAS 133..... (810) - --------------------- --------------------- Total ............................................................. $ 1,799 $ 1,609 ===================== =====================
6. Revenues and net earnings before accounting changes of the Corporation, by operating segment, for the three and six months ended June 30, 2001, and July 1, 2000, can be found in the table on page 7 of this report. Item 2. Management's Discussion and Analysis of Results of Operations. Overview The Corporation's net earnings before cumulative effect of changes in accounting principle (discussed in notes 3 and 4 to the condensed, consolidated financial statements) for the first six months of 2001 were $2,766 million, a $357 million (15%) increase over the first six months of 2000. The results reflected the globalization and diversity of the Corporation's businesses, with strong double-digit increases in the Equipment Management and Consumer Services segments. Operating Results Total revenues decreased $3,281 million (12%) to $23,756 million for the first six months of 2001, compared with $27,037 million for the first six months of 2000. This decrease primarily resulted from the deconsolidation of Montgomery Wards, LLC ("Wards"), volume declines in the information technology products and services businesses, reduced asset gains at GE Equity as the business was realigned, and the planned transition of restructured insurance policies from Toho Mutual Life Insurance Company ("Toho") in the consumer savings and insurance business. These factors were partially offset by growth in origination volume in the Mid-Market Financing, Specialty Insurance and Specialized Financing segments. Interest expense on borrowings for the first six months of 2001 was $5,256 million, 3% higher than for the first six months of 2000. The increase reflected the effects of higher average borrowings used to finance asset growth, partially offset by the effects of lower average interest rates. The average composite interest rate on the Corporation's borrowings for the first six months of 2001 was 5.59% compared with 5.64% in the first six months of 2000. Operating and administrative expenses were $6,579 million for the first six months of 2001, an 18% decrease from the first six months of 2000. The decrease primarily reflected productivity gains in the Consumer Services and Equipment Management segments and the deconsolidation of Wards. Cost of goods sold is associated with activities of the Corporation's computer equipment distribution business and former retail operations. This cost amounted to $1,827 million for the first six months of 2001, compared with $4,308 million for the first six months of 2000. The decrease primarily reflected volume declines at the information technology products and services businesses and the deconsolidation of Wards. Insurance losses and policyholder and annuity benefits increased $359 million to $4,053 million for the first six months of 2001, compared with the first six months of 2000. The increase primarily reflected the effects of growth in premium volume throughout the period and business acquisitions. Provision for losses on financing receivables was $907 million for the first six months of 2001 compared with $914 million for the first six months of 2000. This provision principally related to credit cards and personal loans in the Consumer Services segment, which are discussed below under Portfolio Quality. Depreciation and amortization of buildings and equipment and equipment on operating leases decreased to $1,578 million for the first six months of 2001 compared with $1,601 million for the first six months of 2000. The decrease was principally the result of the deconsolidation of Wards and reduced asset write-downs. Provision for income taxes was $743 million for the first six months of 2001 (an effective tax rate of 21.2%), compared with $940 million for the first six months of 2000 (an effective tax rate of 28.1%). The lower effective tax rate primarily reflected one-time tax benefits with respect to the Equipment Management segment. Operating Segments Revenues and net earnings before cumulative effect of changes in accounting principle of the Corporation, by operating segment, for the three and six months ended June 30, 2001, and July 1, 2000, are summarized and discussed below.
Three Months Ended Six Months Ended -------------------------------- -------------------------------- June 30, July 1, June 30, July 1, (In millions) 2001 2000 2001 2000 --------------- --------------- --------------- --------------- Revenues Consumer Services ................................ $ 5,688 $ 6,165 $ 11,437 $ 11,575 Equipment Management ............................. 2,866 3,652 5,949 7,370 Mid-Market Financing ............................. 1,495 1,307 2,930 2,563 Specialized Financing ............................ 1,100 1,368 2,408 3,049 Specialty Insurance .............................. 458 424 905 835 All other ........................................ 71 816 127 1,645 --------------- --------------- --------------- --------------- Total revenues ................................... $ 11,678 $ 13,732 $ 23,756 $ 27,037 =============== =============== =============== =============== Net earnings before accounting changes Consumer Services ................................ $ 532 $ 333 $ 1,090 $ 609 Equipment Management ............................. 317 167 577 318 Mid-Market Financing ............................. 156 147 311 299 Specialized Financing ............................ 228 406 452 998 Specialty Insurance .............................. 137 124 257 243 All other ........................................ 56 25 79 (58) --------------- --------------- --------------- --------------- Total net earnings ............................... $ 1,426 $ 1,202 $ 2,766 $ 2,409 =============== =============== =============== ===============
Consumer Services revenues decreased 1% while net earnings increased 79% for the first six months of 2001 compared with the first six months of 2000. Revenues decreased as a result of the planned transition of restructured insurance policies from Toho and the divestiture of the Mortgage Services business, offset by volume growth in the U.S. consumer credit card business and a combination of acquisition and asset growth in the consumer savings and insurance business. The increase in net earnings was led by volume growth in the U.S. consumer credit card, non-U.S. consumer finance and the consumer savings and insurance businesses, reduced residual losses in the U.S. auto finance business, and the divestiture of the Mortgage Services business, which had experienced losses in 2000. Equipment Management revenues decreased 19% for the first six months of 2001, primarily as a result of volume declines in the information technology products and services businesses, partially offset by revenues associated with a contract cancellation fee and volume growth in the satellite service business, and asset gains and volume growth in the aviation services business. Net earnings increased 81% for the first six months of 2001, primarily attributable to tax benefits from a restructuring at Penske, improved performance in the information technology products and services businesses, a contract cancellation fee at the satellite service business, and asset gains and volume growth in the aviation services business. Mid-Market Financing revenues grew 14% in the first six months of 2001, principally reflecting the combination of origination growth and asset gains. Net earnings increased 4% in the first six months of 2001, primarily from increased asset growth from originations, partially offset by reduced asset gains. Specialized Financing revenues decreased 21% and net earnings decreased 55% in the first six months of 2001, principally reflecting the impact of reduced asset gains on equity investments at GE Equity, partially offset by the combination of higher asset gains and origination growth at Commercial Real Estate and Commercial Finance and origination growth at the Structured Finance Group. Specialty Insurance revenues grew 8% in the first six months of 2001, compared with the corresponding period in 2000, primarily as a result of increased premium income. Net earnings increased 6% in the first six months of 2001, compared with the corresponding period in 2000, primarily reflecting the effects of increased investment income. All Other decline in revenues and increase in net earnings in the first six months of 2001, were primarily the result of the deconsolidation of Wards. Portfolio Quality Financing receivables are the financing businesses' largest asset and their primary source of revenues. The portfolio of financing receivables, before allowance for losses, increased to $147.1 billion at June 30, 2001, from $144.5 billion at the end of 2000, primarily reflecting the effects of higher origination volume and acquisition growth, partially offset by securitizations, the liquidating U.S. auto finance business portfolio, and foreign currency translation on Japanese and European financing receivables. The related allowance for losses at June 30, 2001, amounted to $3.9 billion ($4.0 billion at the end of 2000) and represents management's best estimate of probable losses inherent in 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. Consumer financing receivables, primarily credit card and personal loans and auto loans and leases, were $42.1 billion at June 30, 2001, a decrease of $4.7 billion from year-end 2000. Nonearning consumer receivables at June 30, 2001 were $1.1 billion, about 2.5% of outstandings, compared with $1.0 billion, about 2.3% of outstandings at December 31, 2000. Write-offs of consumer receivables increased to $0.8 billion for the first six months of 2001 compared with $0.6 billion for the first six months of 2000. This increase is primarily driven by the increase in delinquencies in the liquidating Wards credit card portfolio consistent with management's expectations. Other financing receivables, which totaled $105.0 billion at June 30, 2001 ($97.7 billion at December 31, 2000), consisted of a diverse commercial, industrial and equipment loan and lease portfolio. Related nonearning and reduced-earning receivables were $1.3 billion, about 1.2% of outstandings at June 30, 2001, compared with $0.9 billion, about 1.0% of outstandings at year-end 2000. The increase is primarily the result of several large bankruptcies and restructurings, events that have been considered in establishing the allowance for losses. Forward Looking Statements This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global economic, business, competitive market and regulatory factors. 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 Six Months Ended June 30, 2001 (Unaudited)
Ratio of Earnings to Combined Fixed Charges and Ratio of Preferred Earnings to Stock Fixed Charges Dividends (Dollar amounts in millions) -------------- -------------- Net earnings ..................................................................... $2,608 $2,608 Provision for income taxes ....................................................... 743 743 Minority interest in net earnings of consolidated affiliates ..................... 47 47 -------------- -------------- Earnings before provision for income taxes and minority interest ................. 3,398 3,398 -------------- -------------- Fixed charges: Interest ...................................................................... 5,384 5,384 One-third of rentals .......................................................... 152 152 -------------- -------------- Total fixed charges .............................................................. 5,536 5,536 -------------- -------------- Less interest capitalized, net of amortization ................................... (56) (56) -------------- -------------- Earnings before provision for income taxes and minority interest, plus fixed charges .................................................................. $8,878 $8,878 ============== ============== Ratio of earnings to fixed charges ............................................... 1.60 ============== Preferred stock dividend requirements ............................................ 53 Ratio of earnings before provision for income taxes to net earnings .............. 1.28 Preferred stock dividend factor on pre-tax basis ................................. 68 Fixed charges .................................................................... 5,536 -------------- Total fixed charges and preferred stock dividend requirements .................... $5,604 ============== Ratio of earnings to combined fixed charges and preferred stock dividends ........ 1.58 ==============
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. 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. b. Reports on Form 8-K. A current report on Form 8-K was filed on July 3, 2001, under Item 5 to disclose that, the Registrant was reincorporated as a Delaware business corporation (the "Reincorporation"). The Reincorporation was effected by means of the merger (the "Merger") of the Registrant's existing New York corporation ("GE Capital-NY") with and into a newly-formed corporation organized under the Delaware General Corporation Law ("GE Capital-DE"). GE Capital-DE was the surviving corporation in the Merger and upon consummation of the Merger, changed its name to "General Electric Capital Corporation." As a result of the Merger, GE Capital-DE succeeded to and assumed all rights and obligations of GE Capital-NY, and immediately after the Merger GE Capital-DE had the same assets and liabilities as GE Capital-NY had immediately prior to the Merger. The directors and officers of GE Capital-NY immediately prior to the Merger became the directors and officers of GE Capital-DE upon consummation of the Merger. Apart from the change in its state of incorporation, the Merger had no effect on GE Capital-NY's business, management, employees, fiscal year, assets or liabilities, or location of its facilities (including corporate headquarters), and did not result in any relocation of management or other employees. In addition, pursuant to the Merger, GE Capital-NY's obligations under its contracts, agreements, and guarantees were assumed by GE Capital-DE. 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: July 23, 2001 By: /s/ J.A. Parke ------------------------------------------------ J.A. Parke, Vice Chairman and Chief Financial Officer (Principal Financial Officer) Date: July 23, 2001 By: /s/ J.C. Amble ------------------------------------------------ J.C. Amble, Vice President and Controller (Principal Accounting Officer) EX-12 2 gecc2q01ex12.txt GECC RATIO OF EARNINGS TO FIXED CHARGES 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 Six Months Ended June 30, 2001 (Unaudited)
Ratio of Earnings to Combined Fixed Charges and Ratio of Preferred Earnings to Stock Fixed Charges Dividends -------------- -------------- (Dollar amounts in millions) Net earnings ..................................................................... $2,608 $2,608 Provision for income taxes ....................................................... 743 743 Minority interest in net earnings of consolidated affiliates ..................... 47 47 -------------- -------------- Earnings before provision for income taxes and minority interest ................. 3,398 3,398 -------------- -------------- Fixed charges: Interest ...................................................................... 5,384 5,384 One-third of rentals .......................................................... 152 152 -------------- -------------- Total fixed charges .............................................................. 5,536 5,536 -------------- -------------- Less interest capitalized, net of amortization ................................... (56) (56) -------------- -------------- Earnings before provision for income taxes and minority interest, plus fixed charges .................................................................. $8,878 $8,878 ============== ============== Ratio of earnings to fixed charges ............................................... 1.60 ============== Preferred stock dividend requirements ............................................ 53 Ratio of earnings before provision for income taxes to net earnings .............. 1.28 Preferred stock dividend factor on pre-tax basis ................................. 68 Fixed charges .................................................................... 5,536 -------------- Total fixed charges and preferred stock dividend requirements .................... $5,604 ============== Ratio of earnings to combined fixed charges and preferred stock dividends ........ 1.58 ==============
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. -----END PRIVACY-ENHANCED MESSAGE-----