-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, mO5jhiM8eu8aXRzHVXqIYXO9IElUT/n91PjIpC/7IZo3VCd3B9a/8HJcxHoAdbPs cxoE3YIp3dLUW3eOccCqJA== 0000950123-94-000889.txt : 19940518 0000950123-94-000889.hdr.sgml : 19940518 ACCESSION NUMBER: 0000950123-94-000889 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940402 FILED AS OF DATE: 19940511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP CENTRAL INDEX KEY: 0000040554 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94527178 BUSINESS ADDRESS: STREET 1: 260 LONG RIDGE RD CITY: STAMFORD STATE: CT ZIP: 06927 BUSINESS PHONE: 2033574000 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL ELECTRIC CREDIT CORP DATE OF NAME CHANGE: 19871216 10-Q 1 FORM 10-Q FOR GECC 4/02/94 1 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 APRIL 2, 1994 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, 06927 CONNECTICUT (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 April 20, 1994, 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
PAGE ---- PART I -- FINANCIAL INFORMATION. Item 1. Financial Statements. 1 Item 2. Management's Discussion and Analysis of Results of Operations. 5 Exhibit 12. Computation of Ratio of Earnings to Fixed Charges and Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends. 8 PART II -- OTHER INFORMATION. Item 1. Legal Proceedings. 9 Item 2. Changes in Securities. 9 Item 3. Defaults Upon Senior Securities. 9 Item 4. Submission of Matters to a Vote of Security Holders. 9 Item 5. Other Information. 9 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)
FOR THE THREE MONTHS ENDED -------------------------------- (In millions) APRIL 2, 1994 MARCH 27, 1993 ------------- -------------- EARNED INCOME $ 3,808 $3,131 ------------- ------- EXPENSES Interest 985 779 Operating and administrative 1,265 1,048 Insurance losses and policyholder and annuity benefits 351 169 Provision for losses on financing receivables 170 255 Depreciation and amortization of buildings and equipment and equipment on operating leases 384 340 Minority interest in net earnings of consolidated affiliates 18 15 ------------- ------- 3,173 2,606 ------------- ------- EARNINGS Earnings before income taxes 635 525 Provision for income taxes 191 154 ------------- ------- NET EARNINGS 444 371 Cash dividends paid (193) (155) Retained earnings at beginning of period 7,008 6,012 ------------- ------- RETAINED EARNINGS AT END OF PERIOD $ 7,259 $6,228 ------------- ------- ------------- -------
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
APRIL 2, 1994 DECEMBER 31, (In millions) (UNAUDITED) 1993 -------------- ------------ ASSETS Cash and equivalents $ 629 $ 1,049 Investment securities 19,077 20,577 Financing receivables: Time sales and loans, net of deferred income 41,989 40,748 Investment in financing leases, net of deferred income 25,794 24,930 -------------- ------------ 67,783 65,678 Allowance for losses on financing receivables (1,786) (1,730) -------------- ------------ Financing receivables--net 65,997 63,948 Other receivables--net 4,166 4,046 Equipment on operating leases (at cost), less accumulated amortization of $3,439 and $3,238 11,337 10,650 Other assets 16,635 17,669 -------------- ------------ TOTAL ASSETS $117,841 $117,939 -------------- ------------ -------------- ------------ LIABILITIES AND EQUITY Notes payable within one year $ 52,622 $ 52,903 Senior notes payable after one year 26,186 25,112 Subordinated notes payable after one year 697 697 Insurance reserves and annuity benefits 16,534 16,585 Other liabilities 5,795 6,216 Deferred income taxes 5,336 5,630 -------------- ------------ Total liabilities 107,170 107,143 -------------- ------------ Minority interest in equity of consolidated affiliates 659 426 -------------- ------------ Capital stock 769 769 Additional paid-in capital 2,172 2,172 Retained earnings 7,259 7,008 Other (188) 421 -------------- ------------ Total equity 10,012 10,370 -------------- ------------ TOTAL LIABILITIES AND EQUITY $117,841 $117,939 -------------- ------------ -------------- ------------
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)
FOR THE THREE MONTHS ENDED --------------------------------- (In millions) APRIL 2, 1994 MARCH 27, 1993 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 444 $ 371 Adjustments to reconcile net earnings to cash provided from operating activities: Provision for losses on financing receivables 170 255 Depreciation and amortization of buildings and equipment and equipment on operating leases 384 340 Other--net (395) 62 -------------- --------------- Cash provided from operating activities 603 1,028 -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Increase in loans to customers (6,387) (6,738) Principal collections from customers 5,412 6,705 Investment in assets on financing leases (1,348) (1,215) Principal collections on financing leases 1,176 1,638 Net change in credit card receivables 247 627 Buildings, equipment, and equipment on operating leases -- additions (887) (717) -- dispositions 41 298 Payments for principal businesses purchased, net of cash acquired (565) -- Purchases of investment securities by insurance and annuity affiliates (1,410) (1,015) Dispositions and maturities of investment securities by insurance and annuity affiliates 1,701 825 Other 939 1,520 -------------- --------------- Cash provided from (used for) investing activities (1,081) 1,928 -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in borrowings (less than 90-day maturities) (526) (4,317) Newly issued debt -- short-term (91-365 days) 762 846 -- long-term senior 3,429 2,147 Repayments and other reductions -- short-term (3,194) (1,748) -- long-term senior (273) (156) Proceeds from sales of investment and annuity contracts 146 -- Redemption of investment and annuity contracts (234) -- Principal payments -- non-recourse, leveraged lease debt (99) (97) Proceeds -- non-recourse, leveraged lease debt -- 35 Dividends paid (193) (155) Issuance of preferred stock by consolidated affiliate 240 -- -------------- --------------- Cash provided from (used for) financing activities 58 (3,445) -------------- --------------- DECREASE IN CASH AND EQUIVALENTS (420) (489) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,049 1,240 -------------- --------------- CASH AND EQUIVALENTS AT END OF PERIOD $ 629 $ 751 -------------- --------------- -------------- ---------------
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 April 2, 1994, the statement of cash flows for the three-month interim periods ended April 2, 1994, and March 27, 1993, and the results of operations for the three-month interim periods ended April 2, 1994, and March 27, 1993, 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 footnotes necessary to constitute a complete and detailed presentation in conformity with annual reporting requirements. 2. The results of operations for the three months ended April 2, 1994, 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 1.63 for the three months ended April 2, 1994. 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 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 1.61 for the three months ended April 2, 1994. 4 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS. OVERVIEW Net earnings for the first quarter of 1994 were $444 million, a $73 million (20%) increase over the first quarter of 1993. The Corporation's contribution to its parent, General Electric Capital Services, Inc., after payment of dividends on its variable cumulative preferred stock, was $438 million, a $72 million (20%) increase over the comparable 1993 period. The Corporation's increase in net earnings principally resulted from a higher average level of invested assets and reduced provisions for losses on highly leveraged transaction (HLT) investments. The spread between average financing yields and interest rates paid on borrowings was approximately the same as in the comparable prior year period. OPERATING RESULTS EARNED INCOME during the first quarter of 1994 increased $677 million (22%) over the same period in the prior year. Earned income from the Corporation's specialized financing, mid-market financing, consumer services and equipment management businesses increased $621 million (23%) 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. Approximately $230 million of the increase was generated by the Corporation's annuity business, formed through acquisitions during the second and third quarters of 1993. Earned income from the Corporation's specialty insurance businesses increased $56 million (14%) over the first quarter of 1993 primarily reflecting growth in premium and investment income in the private mortgage insurance business. INTEREST EXPENSE for the first quarter of 1994 increased $206 million (26%) from the first quarter of last year. The increase reflected the effects of additional borrowings required to finance the higher level of invested assets. The Corporation's composite interest rate for the first quarter of 1994 was 4.88%, compared with 4.90% for the first quarter of 1993. OPERATING AND ADMINISTRATIVE expenses were $1,265 million in the first quarter of 1994, up 21% over the first quarter of 1993. 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 $351 million for the first quarter of 1994, double that of the first quarter of 1993, principally as a result of annuity benefits credited to customers of the annuity business which was acquired in 1993. PROVISION FOR LOSSES ON FINANCING RECEIVABLES during the first quarter of 1994 was $170 million, $85 million (33%) lower than during the comparable prior year period, principally reflecting lower provisions for losses on HLT receivables. DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON OPERATING LEASES was $384 million in the first quarter of 1994, $44 million higher than in the first quarter of 1993, reflecting higher levels of equipment on operating leases as a result of portfolio growth and acquisitions. PROVISION FOR INCOME TAXES for the first quarter of 1994 was $191 million (an effective tax rate of 30%) compared with $154 million (29%) for the comparable prior year period. The higher provision for income taxes was primarily attributed to increased pre-tax earnings subject to regular tax rates and the 1% increase in the federal income tax rate. PORTFOLIO QUALITY Financing revenues are directly related to the largest financing asset, the portfolio of financing receivables. The portfolio, net of reserves, aggregated $66.0 billion at April 2, 1994, an increase of $2.1 billion (3%) from year-end 1993. Related reserves were $1.8 billion (2.63% of receivables--the same level as at the 5 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued). end of 1993) and are, 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. CONSUMER LOANS RECEIVABLE, primarily retailer and auto, were $17.6 billion at April 2, 1994, an increase of $0.3 billion from the end of 1993. The Corporation's investment in consumer auto finance lease receivables was $6.1 billion at April 2, 1994, compared with $5.6 billion at December 31, 1993. Nonearning receivables were $384 million at April 2, 1994, compared with $391 million at December 31, 1993. The provision for losses on retailer and auto financing receivables was $113 million for the first quarter of 1994, approximately the same as for the first quarter of 1993. COMMERCIAL REAL ESTATE LOANS classified as financing receivables by the Commercial Real Estate business were $11.3 billion at April 2, 1994, compared with $10.9 billion at December 31, 1993. In addition, the investment portfolio of the Corporation's annuity business included approximately $1.1 billion of commercial property loans. Commercial Real Estate's portfolio also included $2.4 billion of assets purchased from the Resolution Trust Corporation (RTC) and other institutions for resale and $1.4 billion of investments in real estate joint ventures, both of which are included in other assets. Commercial Real Estate's foreclosed properties decreased to $84 million at April 2, 1994, from $110 million at December 31, 1993. Nonearning and reduced earning receivables declined to $218 million at April 2, 1994, from $272 million at the end of 1993. Loss provisions for Commercial Real Estate loans and investments were $56 million for the first quarter of 1994, compared with $22 million for the first quarter of 1993 reflecting higher write-offs in the first quarter of 1994, compared with the first quarter of 1993. HLT PORTFOLIO INVESTMENTS classified as financing receivables totaled $3.0 billion at April 2, 1994, a decrease of $0.3 billion from the end of 1993. The April 2, 1994, balance of amounts that had been written down to estimated fair value and carried in other assets aggregated $536 million, net of allowances, a decrease of $8 million from the end of 1993. Nonearning and reduced earning receivables were $139 million at April 2, 1994, the same as at year-end 1993. As a result of a stronger economic climate and successful past actions, loss provisions for HLT investments were insignificant during the first quarter of 1994. Such provisions were $145 million in the first quarter of 1993, comprised of $114 million of receivable loss provisions and $31 million of loss provisions for other investments. OTHER FINANCING RECEIVABLES relate primarily to a diverse commercial, industrial and equipment loan and lease portfolio. Nonearning and reduced earning receivables in these portfolios were $97 million at April 2, 1994, compared with $98 million at the end of 1993. The Corporation's aggregate loans and leases to commercial airlines at April 2, 1994, increased to approximately $6.9 billion from the December 31, 1993, balance of approximately $6.8 billion, principally as a result of increased equipment on operating leases. Other Matters The Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," on December 31, 1993, and designated all of its investment securities as available-for-sale at both December 31, 1993, and April 2, 1994. Under SFAS No. 115, unrealized gains and losses, net of deferred taxes, on available-for-sale securities are included in a separate component of equity. Equity included net unrealized gains of $485 million at December 31, 1993, and net unrealized losses of $138 million at April 2, 1994. This change principally reflected the adverse effects of rising interest rates during the first quarter on the fair value of fixed income investments held by the Corporation's annuity and insurance affiliates. SFAS No. 115 does not provide for recording liabilities of these affiliates at fair value, which would have the opposite effect in a rising interest rate environment. Such affiliates purchase securities with specific maturities considering many factors, including the expected timing and amounts of payments for annuity and policyholder benefits and insurance losses. 6 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued). As 1994 progresses, management continues to believe that the diversity and strength of the Corporation's assets, along with vigilant attention to risk management, positions 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 FOR THE THREE MONTHS ENDED APRIL 2, 1994 (Unaudited)
RATIO OF EARNINGS RATIO OF TO FIXED EARNINGS CHARGES AND TO FIXED PREFERRED STOCK (Dollar amounts in millions) CHARGES DIVIDENDS -------- --------------- Net earnings $ 444 $ 444 Provision for income taxes 191 191 Minority interest in net earnings of consolidated affiliated 18 18 -------- ------- Income before provision for income taxes and minority interest 653 653 -------- ------- Fixed charges: Interest 999 999 One-third of rentals 37 37 -------- ------- Total fixed charges 1,036 1,036 -------- ------- Less interest capitalized, net of amortization 2 2 -------- ------- Earnings before provision for income taxes and minority interest plus fixed charges $1,687 $ 1,687 -------- ------- -------- ------- Ratio of earnings to fixed charges 1.63 -------- -------- Preferred stock dividend requirements $ 6 Ratio of income before provision for income taxes to net earnings 143% Preferred stock dividend factor on pre-tax basis 9 Fixed charges 1,036 ------- Total fixed charges and preferred stock dividend requirements $ 1,045 ------- ------- Ratio of earnings to combined fixed charges and preferred stock dividends 1.61 ------- -------
8 11 PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Corporation is not involved in any material pending legal proceedings. ITEM 2. CHANGES IN SECURITIES. Omitted. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Omitted. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FROM 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. 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: May 10, 1994 By: /s/ J. A. PARKE ------------------------------------------------ J. A. Parke, Senior Vice President, Finance (Principal Financial Officer) Date: May 10, 1994 By: /s/ J. P. MALFETTONE ------------------------------------------------- J. P. Malfettone, Vice President and Comptroller (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
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