-----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, Wtp+Qu0OBIAK0dqLD5ccgT4vkCbh2gNXWYJJ0TYKqlpKsXzHrFqbVsGd72AZ9Z7P J8Iwy0gPArj4l3PA4mN9UQ== 0000040554-99-000114.txt : 19991027 0000040554-99-000114.hdr.sgml : 19991027 ACCESSION NUMBER: 0000040554-99-000114 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990925 FILED AS OF DATE: 19991026 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: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-22265 FILM NUMBER: 99734025 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 FORM 10Q 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 25, 1999 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 26, 1999, 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. 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 ....... 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K .................. 11 Signatures ...................................................... 12 Index to Exhibits................................................ 13 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 SEPTEMBER SEPTEMBER SEPTEMBER 25, 26, 25, 26, (In millions) 1999 1998 1999 1998 -------- -------- -------- -------- REVENUES Revenues from services ......................................... $ 9,401 $ 8,529 $ 27,119 $ 24,495 Sales of goods ................................................. 2,352 1,806 5,953 5,325 -------- -------- -------- -------- 11,753 10,335 33,072 29,820 -------- -------- -------- -------- EXPENSES Interest ....................................................... 2,189 2,076 6,342 6,129 Operating and administrative ................................... 3,398 2,817 9,573 8,167 Cost of goods sold ............................................. 2,124 1,681 5,441 4,891 Insurance losses and policyholder and annuity benefits ......... 1,419 1,418 4,156 4,127 Provision for losses on financing receivables .................. 225 304 1,044 1,044 Depreciation and amortization of buildings and equipment and equipment on operating leases ................... 786 663 2,279 1,913 Minority interest in net earnings of consolidated affiliates ... 16 14 49 35 -------- -------- -------- -------- 10,157 8,973 28,884 26,306 -------- -------- -------- -------- EARNINGS Earnings before income taxes ................................... 1,596 1,362 4,188 3,514 Provision for income taxes ..................................... (435) (432) (1,090) (991) -------- -------- -------- -------- NET EARNINGS ................................................... 1,161 930 3,098 2,523 Dividends ...................................................... (505) (341) (1,350) (867) Retained earnings at beginning of period ....................... 15,432 12,928 14,340 11,861 -------- -------- -------- -------- RETAINED EARNINGS AT END OF PERIOD ............................. $ 16,088 $ 13,517 $ 16,088 $ 13,517 ======== ======== ======== ========
See Notes to Condensed, Consolidated Financial Statements. 1 ITEM 1. FINANCIAL STATEMENTS (Continued)
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES CONDENSED STATEMENT OF FINANCIAL POSITION SEPTEMBER DECEMBER 25, 31, (In millions) 1999 1998 -------- -------- (Unaudited) ASSETS Cash and equivalents ................................................................... $ 4,676 $ 3,080 Investment securities .................................................................. 56,671 57,275 Financing receivables: Time sales and loans, net of deferred income ......................................... 84,105 76,794 Investment in financing leases, net of deferred income ............................... 46,099 47,536 -------- -------- 130,204 124,330 Allowance for losses on financing receivables ........................................ (3,429) (3,272) -------- -------- Financing receivables - net ...................................................... 126,775 121,058 Other receivables - net ................................................................ 20,015 17,837 Inventories ............................................................................ 1,376 744 Equipment on operating leases (at cost), less accumulated amortization of $7,700 and $7,021 ..................................................................... 22,226 20,941 Intangible assets ...................................................................... 12,762 12,033 Other assets ........................................................................... 42,281 36,082 -------- -------- TOTAL ASSETS ..................................................................... $286,782 $269,050 ======== ======== LIABILITIES AND SHARE OWNER'S EQUITY Short-term borrowings .................................................................. $112,722 $107,419 Long-term borrowings: Senior ............................................................................... 63,663 57,486 Subordinated ......................................................................... 697 697 Insurance liabilities, reserves and annuity benefits ................................... 58,147 54,435 Other liabilities ...................................................................... 20,833 17,908 Deferred income taxes .................................................................. 7,366 8,899 -------- -------- Total liabilities ................................................................ 263,428 246,844 -------- -------- Minority interest in equity of consolidated affiliates ................................. 1,734 1,137 -------- -------- Accumulated unrealized gains (losses) on investment securities - net ................... (447) 1,167 Accumulated foreign currency translation adjustments ................................... (197) (141) -------- -------- Accumulated non-owner changes in share owner's equity .................................. (644) 1,026 Capital stock .......................................................................... 771 770 Additional paid-in capital ............................................................. 5,405 4,933 Retained earnings ...................................................................... 16,088 14,340 -------- -------- Total share owner's equity ....................................................... 21,620 21,069 -------- -------- TOTAL LIABILITIES AND SHARE OWNER'S EQUITY ....................................... $286,782 $269,050 ======== ========
See Notes to Condensed, Consolidated Financial Statements. 2 ITEM 1. FINANCIAL STATEMENTS (Continued)
GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES CONDENSED STATEMENT OF CASH FLOWS (Unaudited) NINE MONTHS ENDED -------------------- SEPTEMBER SEPTEMBER 25, 26, (In millions) 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings ........................................................................... $ 3,098 $ 2,523 Adjustments to reconcile net earnings to cash provided from operating activities: Provision for losses on financing receivables ........................................ 1,044 1,044 Depreciation and amortization of buildings and equipment and equipment on operating leases ................................................................. 2,279 1,913 Other - net .......................................................................... 4,585 2,749 -------- -------- Cash from operating activities ................................................... 11,006 8,229 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Increase in loans to customers ......................................................... (66,557) (48,057) Principal collections from customers - loans ........................................... 57,230 43,711 Investment in equipment for financing leases ........................................... (12,503) (13,886) Principal collections from customers - financing leases ................................ 12,998 11,911 Net change in credit card receivables .................................................. 2,156 3,307 Buildings and equipment and equipment on operating leases: - additions .......................................................................... (7,536) (4,010) - dispositions ....................................................................... 4,399 2,021 Payments for principal businesses purchased, net of cash acquired ...................... (6,437) (8,294) Purchases of securities by insurance and annuity businesses ............................ (12,609) (11,845) Dispositions and maturities of securities by insurance and annuity businesses .......... 10,967 8,669 Other - net ............................................................................ (2,554) (4,868) -------- -------- Cash used for investing activities ............................................... (20,446) (21,341) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in borrowings (maturities 90 days or less) .................................. (5,268) 5,718 Newly issued debt - short-term (maturities 91-365 days) ............................... 3,515 4,126 - long-term (longer than one year) .................................. 22,674 26,158 Proceeds - non-recourse, leveraged lease debt .......................................... 559 971 Repayments and other reductions: - short-term (maturities 91-365 days) ............................... (8,205) (17,992) - long-term (longer than one year) .................................. (1,302) (4,298) Principal payments - non-recourse, leveraged lease debt ................................ (248) (333) Proceeds from sales of investment contracts ............................................ 5,664 3,284 Redemption of investment contracts ..................................................... (5,403) (3,765) Dividends paid ......................................................................... (1,350) (867) Issuance of preferred stock in excess of par value ..................................... 300 70 Issuance of variable cumulative preferred stock by consolidated affiliate .............. 100 100 -------- -------- Cash from financing activities ................................................... 11,036 13,172 -------- -------- INCREASE IN CASH AND EQUIVALENTS ....................................................... 1,596 60 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD ............................................ 3,080 4,648 -------- -------- CASH AND EQUIVALENTS AT END OF PERIOD .................................................. $ 4,676 $ 4,708 ======== ========
See Notes to Condensed, Consolidated Financial Statements. 3 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. In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (the "Statement"). The Statement requires that, upon adoption, all derivative instruments (including certain derivative instruments embedded in other contracts) be recognized in the balance sheet at fair value, and that changes in such fair values be recognized in earnings unless specific hedging criteria are met. Changes in the values of derivatives that meet these hedging criteria will ultimately offset related earnings effects of the hedged items; effects of certain changes in fair value are recorded in equity pending recognition in earnings. In June 1999, the FASB delayed the required effective date of the new standard to January 1, 2001. The impact of adoption will be determined by several factors, including the specific hedging instruments in place and their relationships to hedged items, as well as market conditions. Management has not estimated the effect of adoption as it believes that such determination will not be meaningful until closer to the adoption date. 4. A summary of changes in share owner's equity that do not result directly from transactions with share owners is provided below.
THREE MONTHS ENDED -------------------- SEPTEMBER SEPTEMBER 25, 26, (In millions) 1999 1998 -------- -------- Net earnings ........................................................................... $ 1,161 $ 930 Unrealized gains (losses) on investment securities - net ............................... (150) 130 Foreign currency translation adjustments ............................................... 6 26 -------- -------- Total ................................................................................ $ 1,017 $ 1,086 ======== ======== NINE MONTHS ENDED -------------------- SEPTEMBER SEPTEMBER 25, 26, 1999 1998 -------- -------- Net earnings ........................................................................... $ 3,098 $ 2,523 Unrealized gains (losses) on investment securities - net ............................... (1,614) 290 Foreign currency translation adjustments ............................................... (56) (7) -------- -------- Total ................................................................................ $ 1,428 $ 2,806 ======== ========
4 ITEM 1. FINANCIAL STATEMENTS (Continued) 5. Revenues and net earnings of the Corporation, by operating segment, for the three months and nine months ended September 25, 1999 and September 26, 1998 were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED -------------------- -------------------- SEPTEMBER SEPTEMBER SEPTEMBER SEPTEMBER 25, 26, 25, 26, (IN MILLIONS) 1999 1998 1999 1998 -------- -------- -------- -------- REVENUES Consumer Services .............................................. $ 4,850 $ 4,049 $ 12,920 $ 11,525 Equipment Management ........................................... 3,820 3,625 11,406 10,609 Mid-Market Financing ........................................... 1,164 988 3,319 2,630 Specialized Financing .......................................... 1,018 905 2,783 2,409 Specialty Insurance ............................................ 884 840 2,540 2,588 All other ...................................................... 17 (72) 104 59 -------- -------- -------- -------- Total revenues ............................................... $ 11,753 $ 10,335 $ 33,072 $ 29,820 ======== ======== ======== ======== NET EARNINGS Consumer Services .............................................. $ 397 $ 250 $ 820 $ 551 Equipment Management ........................................... 171 172 605 519 Mid-Market Financing ........................................... 167 132 413 330 Specialized Financing .......................................... 251 227 725 633 Specialty Insurance ............................................ 163 123 468 389 All other ...................................................... 12 26 67 101 -------- -------- -------- -------- Total net earnings ........................................... $ 1,161 $ 930 $ 3,098 $ 2,523 ======== ======== ======== ========
5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS OVERVIEW Net earnings for the first nine months of 1999 were $3,098 million, a $575 million (23%) increase over the first nine months of 1998. The results reflected the globalization and diversity of the Corporation's businesses and were led by double-digit increases in each of its five segments. The improvement in earnings was largely attributable to the effects of continued asset growth, principally from acquisitions of businesses and portfolios and higher origination volume. OPERATING RESULTS TOTAL REVENUES from all sources increased $3,252 million (11%) to $33,072 million for the first nine months of 1999, compared with $29,820 million for the first nine months of 1998. This increase primarily reflected acquisition-related growth in the Mid-Market Financing and Consumer Services segments and a combination of core and acquisition growth in the Equipment Management and Specialized Financing segments. INTEREST EXPENSE for the first nine months of 1999 was $6,342 million, 3% higher than for the first nine months of 1998. 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 composite interest rate on the Corporation's borrowings for the first nine months of 1999 was 5.13% compared with 5.95% in the first nine months of 1998. OPERATING AND ADMINISTRATIVE EXPENSES were $9,573 million for the first nine months of 1999, a 17% increase over the first nine months of 1998. The increase primarily reflected costs associated with businesses and portfolios acquired over the past year, and higher investment levels. COST OF GOODS SOLD is associated with activities of the Corporation's computer equipment distribution and retail businesses. This cost amounted to $5,441 million for the first nine months of 1999, compared with $4,891 million for the first nine months of 1998. The increase primarily reflected the consolidation of the retail operations. INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased $29 million to $4,156 million for the first nine months of 1999, compared with the first nine months of 1998. The increase primarily reflected the effects of business acquisitions and growth in premium volume throughout the period, partially offset by improved market conditions in the mortgage insurance business. PROVISION FOR LOSSES ON FINANCING RECEIVABLES remained constant at $1,044 for the first nine months of 1999 compared to the first nine months of 1998. These provisions principally related to credit cards, personal loans and auto loans and auto leases in the Consumer Services segment, which are discussed below under Portfolio Quality. DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON OPERATING LEASES increased $366 million to $2,279 million for the first nine months of 1999 compared with $1,913 million for the first nine months of 1998. The increase was principally the result of higher levels of equipment on operating leases, primarily reflecting acquisition growth. PROVISION FOR INCOME TAXES was $1,090 million for the first nine months of 1999 (an effective tax rate of 26.0%), compared with $991 million for the first nine months of 1998 (an effective tax rate of 28.2%). The higher provision for income taxes primarily reflected increased pre-tax earnings subject to statutory rates partially offset by the lower effective tax rate caused by decreased taxes on non-U.S. earnings. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued) OPERATING SEGMENTS Revenues and net earnings of the Corporation, by operating segment, for the nine months ended September 25, 1999 and September 26, 1998 are summarized and discussed below.
NINE MONTHS ENDED -------------------- SEPTEMBER SEPTEMBER 25, 26, (In millions) 1999 1998 -------- -------- REVENUES Consumer Services ...................................................................... $ 12,920 $ 11,525 Equipment Management ................................................................... 11,406 10,609 Mid-Market Financing ................................................................... 3,319 2,630 Specialized Financing .................................................................. 2,783 2,409 Specialty Insurance .................................................................... 2,540 2,588 All other .............................................................................. 104 59 -------- -------- Total revenues ....................................................................... $ 33,072 $ 29,820 ======== ======== NET EARNINGS Consumer Services ...................................................................... $ 820 $ 551 Equipment Management ................................................................... 605 519 Mid-Market Financing ................................................................... 413 330 Specialized Financing .................................................................. 725 633 Specialty Insurance .................................................................... 468 389 All other .............................................................................. 67 101 -------- -------- Total net earnings ................................................................... $ 3,098 $ 2,523 ======== ========
Consumer Services revenues increased 12% and net earnings increased 49% for the first nine months of 1999, compared to the first nine months of 1998. The increase in revenues was led by acquisition-related and core growth in the non-U.S. consumer finance business and the consumer savings and insurance business, partially offset by the effects of asset reductions in U.S. consumer credit card and automobile financing activities. The increase in net earnings was led by a combination of acquisition-related and core growth in the non-U.S. consumer finance activities. Equipment Management revenues grew 8% and net earnings grew 17% for the first nine months of 1999, compared to the corresponding period in 1998. The increase in revenues and net earnings was primarily attributable to operational improvements in the information technology products and services business, acquisition-related growth in fleet services and structured sales of aircraft and core growth in aviation services. Mid-Market Financing revenues grew 26% and net earnings increased 25% for the first nine months of 1999, compared to the corresponding period in 1998, primarily as a result of acquisition-related growth. Specialized Financing revenues rose 16% and net earnings increased 15% in the first nine months of 1999, compared to the first nine months of 1998. The increases in revenues and net earnings principally reflected asset growth as well as the effects of asset gains, including securitizations. Specialty Insurance revenues decreased 2% in the first nine months of 1999, compared to the corresponding period in 1998, principally resulting from decreased premium volume in the U.K. credit insurance business. Net earnings increased 20% in the same period, primarily reflecting improved loss experience in the mortgage insurance business. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued) 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 $130.2 billion at September 25, 1999, from $124.3 billion at the end of 1998, primarily reflecting the effects of higher origination volume and acquisition growth, partially offset by foreign currency translation on European financing receivables. The related allowances for losses at September 25, 1999 amounted to $3.4 billion ($3.3 billion at the end of 1998) and, in management's judgment, are appropriate given the risk profile of the portfolio. A discussion about the quality of certain elements of the portfolio of financing receivables follows. "Nonearning" receivables are those that are 90 days or more delinquent (or for which collection has otherwise become doubtful) and "reduced-earning" receivables are commercial receivables whose terms have been restructured to a below-market yield. CONSUMER FINANCING RECEIVABLES, primarily credit card and personal loans and auto loans and leases, were $49.0 billion at September 25, 1999, a decrease of $2.6 billion from the end of 1998. Nonearning receivables were $0.9 billion at September 25, 1999, 1.8% of total consumer financing receivables, compared with $1.3 billion, 2.4% of total consumer receivables, at December 31, 1998. Write-offs of consumer receivables decreased to $0.9 billion for the first nine months of 1999, compared with $1.1 billion for the first nine months of 1998. This decrease was primarily attributable to the effects of lower delinquencies during the first nine months of 1999 as well as the effects of lower average receivable balances resulting from securitization and other sales of portfolios. OTHER FINANCING RECEIVABLES, totaling $81.2 billion at September 25, 1999 ($72.7 billion at December 31, 1998), consisted of a diverse commercial, industrial and equipment loan and lease portfolio. Related nonearning and reduced-earning receivables were less than 1% of total other financing receivables at September 25, 1999 and December 31, 1998. As discussed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998, Montgomery Ward Holding Corp. ("MWHC") filed a bankruptcy petition for reorganization in 1997. On August 2, 1999, MWHC emerged from bankruptcy under a plan of reorganization that was approved on July 15, 1999. As part of the restructuring, the Corporation acquired the Signature group ("Signature"), which was not in bankruptcy, for cash, $285 million of which was collected on loans to MWHC. The Corporation also acquired the equity of the reorganized retailer, Montgomery Ward, LLC ("Wards"), in exchange for the Corporation's remaining loans to MWHC. After these transactions, the Corporation's net investment in Wards and MWHC was $327 million. The financial condition at September 25, 1999, and the results of operations from August 2, 1999 to September 25, 1999, of Signature and Wards are included in the Consumer Services segment, and the increases in Sales of Goods and Cost of Goods Sold for the first nine months of 1999 as compared to the corresponding period in 1998 were substantially the result of the consolidation of Wards. The Corporation held loans and leases to commercial airlines amounting to $10.8 billion at September 25, 1999, up from $10.2 billion at the end of 1998. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued) OTHER MATTERS YEAR 2000 As discussed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 1998, the Corporation is applying a Six Sigma quality approach to identify and mitigate Year 2000 issues in its information systems, products and services, facilities and suppliers. Each business has a Year 2000 leader who oversees a multi-functional project team responsible for remediation and contingency planning, applying a Six Sigma quality approach in four phases: (1) define/measure- identify and inventory possible sources of Year 2000 issues; (2) analyze- determine the nature and extent of Year 2000 issues and develop project plans to address those issues; (3) improve- execute project plans and perform a majority of the testing; and (4) control- complete testing, continue monitoring readiness and complete necessary contingency plans. As of the end of June 1999, virtually all significant information systems, products and services, facilities, and suppliers were in the control phase. As a final step in the control phase, the Corporation has developed, tested and is prepared to implement contingency plans to minimize disruption of critical business processes. The specific actions identified in such contingency plans differ depending on circumstances, but most often include manual work-arounds, deployment of backup or secondary technologies, rearranging work schedules, and substitution of suppliers, as appropriate. While management does not expect significant disruptions of critical business processes caused by internal Year 2000 issues, the likelihood of externally-caused disruptions and the ability of the contingency plans to minimize such externally-caused disruptions is not determinable. The total estimate of Year 2000 expenditures, adjusted for increases related to acquired companies, is in line with previous projections. The activities related to Year 2000 efforts necessarily involve estimates and projections of activities and resources that will be required in the future. These estimates and projections could change as work progresses. 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 25, 1999 (Unaudited) RATIO OF EARNINGS TO COMBINED FIXED RATIO OF CHARGES EARNINGS AND TO PREFERRED FIXED STOCK (Dollar amounts in millions) CHARGES DIVIDENDS -------- -------- Net earnings ........................................... $ 3,098 $ 3,098 Provision for income taxes ............................. 1,090 1,090 Minority interest in net earnings of consolidated affiliates ............................................ 49 49 -------- -------- Earnings before provision for income taxes and minority interest ..................................... 4,237 4,237 -------- -------- Fixed charges: Interest ............................................. 6,504 6,504 One-third of rentals ................................. 249 249 -------- -------- Total fixed charges .................................... 6,753 6,753 -------- -------- Less interest capitalized, net of amortization ......... (64) (64) -------- -------- Earnings before provision for income taxes and minority interest, plus fixed charges .......................... $ 10,926 $ 10,926 ======== ======== Ratio of earnings to fixed charges ..................... 1.62 ======== Preferred stock dividend requirements .................. $ 82 Ratio of earnings before provision for income taxes to net earnings ....................................... 1.35 -------- Preferred stock dividend factor on pre-tax basis ....... 111 Fixed charges .......................................... 6,753 -------- Total fixed charges and preferred stock dividend requirements .......................................... $ 6,864 ======== Ratio of earnings to combined fixed charges and preferred stock dividends ............................. 1.59 ========
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. 10 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. 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: October 26, 1999 By: /s/ J.A. Parke --------------------------------- J.A. Parke, Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: October 26, 1999 By: /s/ J.C. Amble --------------------------------- J.C. Amble, Vice President and Controller (Principal Accounting Officer) 12 GENERAL ELECTRIC CAPITAL CORPORATION AND CONSOLIDATED AFFILIATES INDEX TO EXHIBITS EXHIBIT NO. PAGE - ----------- -------- 12 Computation of ratio of earnings to fixed charges and computation of ratio of earnings to combined fixed charges and preferred stock dividends ................ 16 27 Financial Data Schedule (filed electronically only) 13 EX-12 2 EXHIBIT 12 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 25, 1999 (Unaudited) RATIO OF EARNINGS TO COMBINED FIXED RATIO OF CHARGES EARNINGS AND TO PREFERRED FIXED STOCK (Dollar amounts in millions) CHARGES DIVIDENDS -------- -------- Net earnings ........................................... $ 3,098 $ 3,098 Provision for income taxes ............................. 1,090 1,090 Minority interest in net earnings of consolidated affiliates ............................................ 49 49 -------- -------- Earnings before provision for income taxes and minority interest ..................................... 4,237 4,237 -------- -------- Fixed charges: Interest ............................................. 6,504 6,504 One-third of rentals ................................. 249 249 -------- -------- Total fixed charges .................................... 6,753 6,753 -------- -------- Less interest capitalized, net of amortization ......... (64) (64) -------- -------- Earnings before provision for income taxes and minority interest, plus fixed charges .......................... $ 10,926 $ 10,926 ======== ======== Ratio of earnings to fixed charges ..................... 1.62 ======== Preferred stock dividend requirements .................. $ 82 Ratio of earnings before provision for income taxes to net earnings ....................................... 1.35 -------- Preferred stock dividend factor on pre-tax basis ....... 111 Fixed charges .......................................... 6,753 -------- Total fixed charges and preferred stock dividend requirements .......................................... $ 6,864 ======== Ratio of earnings to combined fixed charges and preferred stock dividends ............................. 1.59 ========
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. EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 25, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000040554 GENERAL ELECTRIC CAPITAL CORPORATION 1,000,000 9-MOS DEC-31-1999 SEP-25-1999 4,676 56,671 130,204 3,429 1,376 0 36,601 10,216 286,782 0 64,360 0 3 768 20,849 286,782 5,953 33,072 5,441 0 9,573 1,044 6,342 4,188 1,090 3,098 0 0 0 3,098 0.00 0.00
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