-----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, JCCai+ZqemLi/V3EDkIztVpq4vPmlSMOvw3BQgAfMvNGeSkzTBqo9vcia1jdjVtE 8/ijetPKjDkIt/JEcFppcg== 0000040554-95-000325.txt : 19951119 0000040554-95-000325.hdr.sgml : 19951119 ACCESSION NUMBER: 0000040554-95-000325 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP CENTRAL INDEX KEY: 0000040554 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE LESSORS [6172] IRS NUMBER: 131500700 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06461 FILM NUMBER: 95589563 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 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 10-Q ---------- SECURITIES EXCHANGE ACT OF 1934 /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 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 October 27, 1995, 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. 2 TABLE OF CONTENTS PART I - FINANCIAL INFORMATION
Page ----- Item 1. Financial Statements....................................... 1 Item 2. Management's Discussion and Analysis of Results of Operations.................................................... 5 Exhibit 12. Computation of Ratio of Earnings to Fixed Charges and Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.................................... 8 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K........................... 9 Signatures......................................................... 10 Index to Exhibits.................................................. 11
3 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 Nine Months Ended --------------------------- -------------------------- September 30, October 1, September 30, October 1, (In millions) 1995 1994 1995 1994 ------------- ---------- ------------- ---------- Earned Income...................................... $ 5,395 $ 4,306 $ 15,354 $ 12,096 -------- -------- -------- -------- Expenses Interest........................................... 1,662 1,098 4,793 3,139 Operating and administrative....................... 1,456 1,222 4,400 3,799 Insurance losses and policyholder and annuity benefits................................. 445 575 1,447 1,218 Provision for losses on financing receivables...... 352 186 710 607 Depreciation and amortization of buildings and equipment and equipment on operating leases...... 487 425 1,426 1,191 Minority interest in net earnings of consolidated affiliates.......................... 15 18 48 79 -------- -------- -------- -------- 4,417 3,524 12,824 10,033 -------- -------- -------- -------- Earnings Earnings before income taxes....................... 978 782 2,530 2,063 Provision for income taxes......................... (330) (234) (837) (630) -------- -------- -------- -------- Net earnings....................................... 648 548 1,693 1,433 Dividends.......................................... (260) (198) (521) (485) Retained earnings at beginning of period........... 9,105 7,606 8,321 7,008 -------- -------- -------- -------- Retained earnings at end of period................. $ 9,493 $ 7,956 $ 9,493 $ 7,956 ======== ======== ======== ======== See Notes to Condensed, Consolidated Financial Statements.
1 4 Item 1. Financial Statements (Continued). GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Condensed Statement of Financial Position
September 30, December 31, (In millions) 1995 1994 ------------- ------------ (Unaudited) Assets Cash and equivalents................................................ $ 1,200 $ 712 Investment securities............................................... 24,056 22,208 Financing receivables: Time sales and loans, net of deferred income...................... 55,879 50,021 Investment in financing leases, net of deferred income............ 33,870 28,398 --------- --------- 89,749 78,419 Allowance for losses on financing receivables..................... (2,360) (2,062) --------- --------- Financing receivables - net.................................... 87,389 76,357 Other receivables - net............................................. 3,925 3,624 Equipment on operating leases (at cost), less accumulated amortization of $4,513 and $4,029..................... 13,291 12,851 Other assets........................................................ 17,323 15,152 --------- --------- Total assets........................................................ $ 147,184 $ 130,904 ========= ========= Liabilities and equity Notes payable within one year....................................... $ 52,767 $ 54,579 Senior notes payable after one year................................. 46,777 33,615 Subordinated notes payable after one year........................... 697 697 Insurance liabilities, reserves and annuity benefits................ 18,665 18,593 Other liabilities................................................... 7,622 6,998 Deferred income taxes............................................... 6,750 5,267 --------- --------- Total liabilities.......................................... 133,278 119,749 --------- --------- Minority interest in equity of consolidated affiliates.............. 718 615 --------- --------- Capital stock....................................................... 769 769 Additional paid-in capital.......................................... 2,697 2,172 Retained earnings................................................... 9,493 8,321 Unrealized gains (losses) on investment securities.................. 285 (655) Currency translation adjustments.................................... (56) (67) --------- --------- Total equity............................................... 13,188 10,540 --------- --------- Total liabilities and equity........................................ $ 147,184 $ 130,904 ========= ========= See Notes to Condensed, Consolidated Financial Statements.
2 5 Item 1. Financial Statements (Continued). GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Condensed Statement of Cash Flows (Unaudited)
Nine Months Ended ------------------------------ September 30, October 1, (In millions) 1995 1994 ------------ ----------- Cash Flows From Operating Activities Net earnings........................................................ $ 1,693 $ 1,433 Adjustments to reconcile net earnings to cash provided from operating activities: Provision for losses on financing receivables..................... 710 607 Depreciation and amortization of buildings and equipment and equipment on operating leases.................... 1,426 1,191 Other - net....................................................... 1,686 (368) --------- --------- Cash provided from operating activities......................... 5,515 2,863 --------- --------- Cash Flows From Investing Activities Increase in loans to customers...................................... (33,141) (17,811) Principal collections from customers................................ 31,415 14,428 Investment in assets on financing leases............................ (10,703) (7,175) Principal collections on financing leases........................... 5,968 5,062 Net increase in credit card receivables............................. (1,067) (839) Buildings and equipment and equipment on operating leases: - additions................................................. (4,208) (3,625) - dispositions.............................................. 2,074 2,125 Payments for principal businesses purchased, net of cash acquired... (2,433) (1,309) Proceeds from principal businesses disposed......................... 575 - Purchases of investment securities by insurance affiliates and annuity businesses................................. (4,970) (4,697) Dispositions and maturities of investment securities by insurance affiliates and annuity businesses.................... 4,717 3,855 Other - net......................................................... (1,680) 3,373 --------- --------- Cash used for investing activities.............................. (13,453) (6,613) --------- --------- Cash Flows From Financing Activities Net change in borrowings (maturities 90 days or less)............... (7,538) (4,931) Newly issued debt - short-term (maturities 91-365 days)............. 1,862 2,354 - long-term senior................................ 26,506 15,088 Repayments and other reductions - short-term (maturities 91-365 days)............... (11,336) (7,469) - long-term senior.................................. (597) (854) Proceeds - non-recourse, leveraged lease debt....................... 257 - Principal payments - non-recourse, leveraged lease debt............. (235) (246) Proceeds from sales of investment and annuity contracts............. 976 585 Redemption of investment and annuity contracts...................... (1,593) (713) Dividends paid...................................................... (521) (475) Issuance of preferred stock in excess of par value.................. 525 - Issuance of variable cumulative preferred stock by consolidated affiliate............................................ 120 240 --------- --------- Cash provided from financing activities......................... 8,426 3,579 --------- --------- Increase (Decrease) in Cash and Equivalents......................... 488 (171) Cash and Equivalents at Beginning of Period......................... 712 1,049 --------- --------- Cash and Equivalents at End of Period............................... $ 1,200 $ 878 ========= ========= See Notes to Condensed, Consolidated Financial Statements.
3 6 Item 1. Financial Statements (Continued). GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Notes to Condensed, Consolidated Financial Statements (Unaudited) 1. The condensed, consolidated financial statements represent a consolidation of General Electric Capital Corporation ("Corporation") and all majority-owned and controlled affiliates ("consolidated affiliates"). All significant transactions among the parent and consolidated affiliates have been eliminated. In the opinion of management, all adjustments of a normal recurring nature necessary to present a fair statement of financial position as of September 30, 1995, the statement of cash flows for the nine- month interim periods ended September 30, 1995, and October 1, 1994, and the results of operations for the three-month- and nine-month interim periods ended September 30, 1995, and October 1, 1994, have been included. The condensed, consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include some information and notes necessary to constitute a complete and detailed presentation in conformity with annual reporting requirements. 2. The results of operations for the three and nine months ended September 30, 1995, should not be regarded as necessarily indicative of the results that may be expected for the entire year. 3. The ratio of earnings to fixed charges was 1.52 for the nine months ended September 30, 1995. For purposes of computing the ratio, earnings consist of net earnings adjusted for provision for income taxes, minority interest and fixed charges. Fixed charges consist of interest and discount on all indebtedness and one-third of annual rentals, which the Corporation believes is a reasonable approximation of the interest factor of such rentals. The ratio of earnings to combined fixed charges and preferred stock dividends was 1.50 for the nine months ended September 30, 1995. 4. The Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, and the related SFAS No. 118, Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures, on January 1, 1995. The adoption of these Statements had no effect on earnings or financial position as the same level of allowance for losses was appropriate under both the previous accounting policy and the newly-adopted policy. 4 7 Item 2. Management's Discussion and Analysis of Results of Operations. Overview Net earnings for the first nine months of 1995 were $1,693 million, a $260 million (18%) increase over the first nine months of 1994. The Corporation's contribution to its parent, General Electric Capital Services, Inc. (GECS), after payment of dividends on its variable cumulative preferred stock, was $1,660 million, a $247 million (17%) increase over the comparable 1994 period. Earnings of the Corporation's 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 spreads, as the increase in interest rates paid on borrowings exceeded the increase in yields. Operating Results Earned income from all sources of $15,354 million for the first nine months of 1995 increased $3,258 million (27%) over the first nine months of 1994. Earned income from the Corporation's specialized financing, mid-market financing, consumer services and equipment management businesses increased $3,111 million (29%) over the comparable prior-year period principally reflecting a higher average level of invested assets, resulting from both origination volume and acquisitions of portfolios and businesses, and increased yields. Earned income from the Corporation's specialty insurance businesses of $1,560 million for the first nine months of 1995 increased $147 million (10%) over the first nine months of 1994 primarily reflecting growth in premium and investment income in the property and casualty business, due to acquisition growth in the prior year. Interest expense for the first nine months of 1995 increased $1,654 million (53%) from the first nine months of the prior year. The increase reflected the effects of significantly higher interest rates and additional borrowings required to finance the higher level of invested assets. The Corporation's composite interest rate for the first nine months of 1995 was 6.77%, compared with 5.23% for the first nine months of 1994. Operating and administrative expenses were $4,400 million for the first nine months of 1995, up 16% over the first nine months of 1994. This increase reflected operating costs associated with the higher level of assets, largely the result of businesses and portfolios acquired over the past year. Insurance losses and policyholder and annuity benefits were $1,447 million for the first nine months of 1995, compared with $1,218 million during the first nine months of 1994, principally as a result of growth in annuity benefits credited to customers of the annuity business resulting from portfolios acquired in the second half of 1994. 5 8 Item 2. Management's Discussion and Analysis of Results of Operations (Continued). Provision for losses on financing receivables during the first nine months of 1995 was $710 million, $103 million higher than during the comparable prior- year period, principally reflecting growth in the Auto Financing Services and Global Consumer Finance business portfolios and higher write-offs in the domestic consumer credit card business. Depreciation and amortization of buildings and equipment and equipment on operating leases was $1,426 million in the first nine months of 1995, $235 million higher than in the first nine months of 1994, reflecting higher levels of equipment on operating leases in the equipment management segment resulting from portfolio growth and acquisitions. Provision for income taxes for the first nine months of 1995 was $837 million (33% effective tax rate) compared with $630 million (31% effective tax rate) for the comparable prior-year period. The higher provision for income taxes was primarily due to increased pre-tax earnings subject to regular tax rates. The increase in the effective tax rate was primarily attributable to proportionately lower tax-exempt income on investment securities, lower levels of earnings on leveraged leases having effective tax rates lower than statutory rates and increased taxes on foreign income. Portfolio Quality Financing revenues are directly related to the largest financing asset, the portfolio of financing receivables. The portfolio, net of the allowance for losses, aggregated $87.4 billion at September 30, 1995, an increase of $11.0 billion (14%) from year-end 1994. The related allowance for losses was $2.4 billion (2.63% of receivables -- the same level as at the end of 1994) and is, in management's judgment, appropriate given the risk profile of the portfolio. A discussion of the portfolio quality of certain elements of financing receivables and investments follows. For the purpose of this discussion, "nonearning" receivables are those that are 90 days or more delinquent and "reduced earning" receivables are those that have been restructured such that the interest rate is below market. Consumer loans receivable, primarily retailer and auto, were $26.1 billion at September 30, 1995, an increase of $3.0 billion from the end of 1994. In addition, the Corporation's investment in consumer auto finance lease receivables was $11.8 billion at September 30, 1995, an increase of $4.3 billion from the end of 1994. Nonearning receivables increased to $581 million at September 30, 1995, from $422 million at December 31, 1994, primarily related to acquisitions. Write-offs of receivables were $469 million for the first nine months of 1995, compared with $338 million for the first nine months of 1994. Commercial real estate investments were $18.8 billion at September 30, 1995, an increase of $1.9 billion from December 31, 1994. Commercial real estate loans, the largest component of the Corporation's commercial real estate investments, increased to $14.4 billion at September 30, 1995, from $13.3 billion at December, 31, 1994. Nonearning and reduced earning receivables were $203 million at September 30, 1995, compared with $179 million at the prior year end. Write-offs of commercial real estate loans were $102 million for the first nine months of 1995, compared with $170 million for the comparable prior- year period. 6 9 Item 2. Management's Discussion and Analysis of Results of Operations (Continued). Other financing receivables relate primarily to a diverse commercial, industrial and equipment loan and lease portfolio. Nonearning and reduced earning receivables increased to $293 million at September 30, 1995, from $165 million at the prior year end. This portfolio included approximately $2.5 billion of financings provided for highly leveraged management buyouts and corporate recapitalizations at September 30, 1995, essentially unchanged from December 31, 1994. The Corporation's aggregate loans and leases to commercial airlines at September 30, 1995, increased to $8.0 billion from $7.6 billion at December 31, 1994, due to purchases of aircraft included in equipment on operating leases. Accounting Standards to Be Adopted 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, among other things, that certain long-lived assets be reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if, upon such review, the sum of expected future cash flows is less than the carrying amount of the asset. An impairment loss is measured based on the difference between the carrying amount of the asset and its fair value. The effect of adopting SFAS No. 121 is not expected to be material. Adoption is required by no later than the first quarter of 1996. SFAS No. 122, Accounting for Mortgage Servicing Rights, requires that rights to service mortgage loans be recognized when the underlying loans are sold. The standard also requires that capitalized mortgage servicing rights be assessed for impairment by individual risk stratum based on the fair value of such rights. Management is gathering information and evaluating the requirements of SFAS No. 122, but has not determined the impact of its application on the Corporation's financial position or results of operations. Adoption is required by no later than the first quarter of 1996. Other Matters As 1995 progresses, management continues to believe that the diversity and strength of the Corporation's assets, along with vigilant attention to risk management, position it to deal effectively with a changing global economic environment. 7 10 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 30, 1995 (Unaudited)
Ratio Ratio of of Earnings Earnings to Combined to Fixed Charges Fixed and Preferred (Dollar amounts in millions) Charges Stock Dividends --------- --------------- Net earnings...................................................... $ 1,693 $ 1,693 Provision for income taxes........................................ 837 837 Minority interest in net earnings of consolidated affiliates...................................................... 48 48 -------- -------- Earnings before provision for income taxes and minority interest............................................... 2,578 2,578 -------- -------- Fixed charges: Interest...................................................... 4,842 4,842 One-third of rentals.......................................... 113 113 -------- -------- Total fixed charges............................................... 4,955 4,955 -------- -------- Less capitalized interest, net of amortization.................... 13 13 -------- -------- Earnings before provision for income taxes and minority interest plus fixed charges............................ $ 7,520 $ 7,520 ======== ======== Ratio of earnings to fixed charges................................ 1.52 ======== Preferred stock dividend requirements............................. $ 33 Ratio of earnings before provision for income taxes to net earnings........................................... 1.49 -------- Preferred stock dividend on a pre-tax basis....................... 49 Fixed charges..................................................... 4,955 -------- Total fixed charges and preferred stock dividend requirements..... $ 5,004 ======== Ratio of earnings to combined fixed charges and preferred stock dividends................................................. 1.50 ========
8 11 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a. Exhibits. Exhibit 12. Computation of ratio of earnings to fixed charges and computation of ratio of earnings to combined fixed charges and preferred stock dividends. Exhibit 27. Financial Data Schedule (filed electronically only) b. Reports on Form 8-K. None. 9 12 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 10, 1995 By: /s/ J.A. Parke ------------------------------------------- J. A. Parke, Senior Vice President, Finance (Principal Financial Officer) Date: November 10, 1995 By: /s/ J.C. Amble ------------------------------------------- J. C. Amble, Vice President and Controller (Principal Accounting Officer) 10 13 GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES Index to Exhibits
Exhibit No. Page No. - ----------- -------- 12 Computation of ratio of earnings to fixed charges and computation of ratio of earnings to combined fixed charges and preferred stock dividends..................... 8 27 Financial Data Schedule (filed electronically only)
11 EX-12 2 COMPUTATION OF RATIO OF EARNINGS 1 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 30, 1995 (Unaudited)
Ratio Ratio of of Earnings Earnings to Combined to Fixed Charges Fixed and Preferred (Dollar amounts in millions) Charges Stock Dividends --------- --------------- Net earnings...................................................... $ 1,693 $ 1,693 Provision for income taxes........................................ 837 837 Minority interest in net earnings of consolidated affiliates...................................................... 48 48 -------- -------- Earnings before provision for income taxes and minority interest............................................... 2,578 2,578 -------- -------- Fixed charges: Interest...................................................... 4,842 4,842 One-third of rentals.......................................... 113 113 -------- -------- Total fixed charges............................................... 4,955 4,955 -------- -------- Less capitalized interest, net of amortization.................... 13 13 -------- -------- Earnings before provision for income taxes and minority interest plus fixed charges............................ $ 7,520 $ 7,520 ======== ======== Ratio of earnings to fixed charges................................ 1.52 ======== Preferred stock dividend requirements............................. $ 33 Ratio of earnings before provision for income taxes to net earnings........................................... 1.49 -------- Preferred stock dividend on a pre-tax basis....................... 49 Fixed charges..................................................... 4,955 -------- Total fixed charges and preferred stock dividend requirements..... $ 5,004 ======== Ratio of earnings to combined fixed charges and preferred stock dividends................................................. 1.50 ========
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000040554 GENERAL ELECTRIC CAPITAL CORPORATION 1,000,000 9-MOS DEC-31-1995 SEP-30-1995 1,200 24,056 89,749 2,360 0 0 19,771 5,407 147,184 0 47,474 768 0 1 12,419 147,184 0 15,354 0 0 4,400 710 4,793 2,530 837 1,693 0 0 0 1,693 0 0
-----END PRIVACY-ENHANCED MESSAGE-----