-----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, gHfDf50PSMPGUxOKI0wUPEOtzrp1+yl1WdjE1GDmRWIBT2ozXAZ4vISJoJEZSKxj QygA6k9tQl+17iNCpdGllg== 0000950123-94-001770.txt : 19941104 0000950123-94-001770.hdr.sgml : 19941104 ACCESSION NUMBER: 0000950123-94-001770 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941103 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CAPITAL CORP ET AL 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: 94557469 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 GE CAPITAL CORP. FORM 10-Q - 10/01/94 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 OCTOBER 1, 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 (Zip Code) (Address of principal executive offices) (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 19, 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. 7 PART II -- OTHER INFORMATION. Item 1. Legal Proceedings. 8 Item 2. Changes in Securities. 8 Item 3. Defaults Upon Senior Securities. 8 Item 4. Submission of Matters to a Vote of Security Holders. 8 Item 5. Other Information. 8 Item 6. Exhibits and Reports on Form 8-K. 8 Signatures. 9 Index to Exhibits. 10 Exhibit 27. Financial Data Schedule
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 FOR THE NINE MONTHS ENDED ------------------------------------ ------------------------------------ (In millions) OCTOBER 1, 1994 SEPTEMBER 25, 1993 OCTOBER 1, 1994 SEPTEMBER 25, 1993 --------------- ------------------ --------------- ------------------ EARNED INCOME $4,306 $3,668 $12,096 $10,153 ------ ------ ------- ------- EXPENSES Interest 1,098 871 3,139 2,515 Operating and administrative 1,222 1,104 3,799 3,230 Insurance losses and policyholder and annuity benefits 575 381 1,218 822 Provision for losses on financing receivables 186 200 607 747 Depreciation and amortization of buildings and equipment and equipment on operating leases 425 375 1,191 1,079 Minority interest in net earnings of consolidated affiliates 18 48 79 83 ----- ------ ------- ------- 3,524 2,979 10,033 8,476 ----- ------ ------- ------- EARNINGS Earnings before income taxes 782 689 2,063 1,677 Provision for income taxes 234 291 630 573 ----- ------ ------- ------- NET EARNINGS 548 398 1,433 1,104 Dividends paid (198) (315) (485) (476) Retained earnings at beginning of period 7,606 6,557 7,008 6,012 ----- ------ ------- ------- RETAINED EARNINGS AT END OF PERIOD $7,956 $6,640 $ 7,956 $ 6,640 ====== ====== ======= =======
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
OCTOBER 1, 1994 DECEMBER 31, 1993 (In millions) --------------- ----------------- (UNAUDITED) ASSETS Cash and equivalents $ 878 $ 1,049 Investment securities 19,748 20,577 Financing receivables: Time sales and loans, net of deferred income 45,327 40,748 Investment in financing leases, net of deferred income 27,182 24,930 -------- -------- 72,509 65,678 Allowance for losses on financing receivables (1,910) (1,730) -------- -------- Financing receivables -- net 70,599 63,948 Other receivables -- net 3,259 4,046 Equipment on operating leases (at cost), less accumulated amortization of $3,815 and $3,238 12,204 10,650 Other assets 15,592 17,669 -------- -------- TOTAL ASSETS $122,280 $117,939 ======== ======== LIABILITIES AND EQUITY Notes payable within one year $ 50,447 $ 52,903 Senior notes payable after one year 32,406 25,112 Subordinated notes payable after one year 697 697 Insurance reserves and annuity benefits 16,593 16,585 Other liabilities 5,686 6,216 Deferred income taxes 5,418 5,630 -------- -------- Total liabilities 111,247 107,143 -------- -------- Minority interest in equity of consolidated affiliates 674 426 -------- -------- Capital stock 769 769 Additional paid-in capital 2,172 2,172 Retained earnings 7,956 7,008 Other (538) 421 -------- -------- Total equity 10,359 10,370 -------- -------- TOTAL LIABILITIES AND EQUITY $122,280 $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 NINE MONTHS ENDED ---------------------------------------- (In millions) OCTOBER 1, 1994 SEPTEMBER 25, 1993 --------------- ------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 1,433 $ 1,104 Adjustments to reconcile net earnings to cash provided from operating activities: Provision for losses on financing receivables 607 747 Depreciation and amortization of buildings and equipment and equipment on operating leases 1,191 1,079 Other -- net (368) 1,294 --------- -------- Cash provided from operating activities 2,863 4,224 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Increase in loans to customers (17,811) (19,456) Principal collections from customers 14,428 17,840 Investment in assets on financing leases (7,175) (4,351) Principal collections on financing leases 5,062 4,599 Net change in credit card receivables (839) 415 Buildings, equipment, and equipment on operating leases -- additions (3,625) (2,734) -- dispositions 2,125 1,319 Payments for principal businesses purchased, net of cash acquired (1,309) (2,046) Purchases of investment securities by insurance and annuity affiliates (4,697) (4,712) Dispositions and maturities of investment securities by insurance and annuity affiliates 3,855 2,754 Other 3,373 911 --------- -------- Cash used for investing activities (6,613) (5,461) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in borrowings (less than 90-day maturities) (4,931) (3,631) Newly issued debt -- short-term (91-365 days) 2,354 2,763 -- long-term senior 15,088 8,123 Repayments and other reductions -- short-term (7,469) (5,688) -- long-term senior (854) (108) Proceeds from sales of investment and annuity contracts 585 417 Redemption of investment and annuity contracts (713) (385) Principal payments -- non-recourse, leveraged lease debt (246) (230) Proceeds -- non-recourse, leveraged lease debt -- 53 Dividends paid (475) (476) Issuance of preferred stock by consolidated affiliate 240 -- --------- -------- Cash provided from financing activities 3,579 838 --------- -------- DECREASE IN CASH AND EQUIVALENTS (171) (399) CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,049 1,240 --------- -------- CASH AND EQUIVALENTS AT END OF PERIOD $ 878 $ 841 ========= ========
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 October 1, 1994, the statement of cash flows for the nine-month interim periods ended October 1, 1994, and September 25, 1993, and the results of operations for the three-month and nine-month interim periods ended October 1, 1994, and September 25, 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 and nine month periods ended October 1, 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 1.65 for the nine months ended October 1, 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 1.63 for the nine months ended October 1, 1994. 4 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS. OVERVIEW Net earnings for the first nine months of 1994 were $1,433 million, a $329 million (30%) increase over the first nine months 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 $1,413 million, a $325 million (30%) increase over the comparable 1993 period. The Corporation's increase in net earnings principally resulted from a higher average level of invested assets, lower provision for losses in the specialized financing businesses and no current year counterpart to the unfavorable effects of the 1993 increase in the federal income tax rate from 34% to 35%. These increases were offset in part by increased insurance losses and policyholder and annuity benefits. The spread between average financing yields and interest rates paid on borrowings increased slightly compared with the prior year period. OPERATING RESULTS EARNED INCOME during the first nine months of 1994 increased $1,943 million (20%) over the first nine months of 1993. Earned income from the Corporation's specialized financing, mid-market financing, consumer services and equipment management businesses increased $1,931 million (22%) 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. INTEREST EXPENSE for the first nine months of 1994 increased $624 million (25%) from the first nine months of the prior year. The increase principally reflected the effects of additional borrowings required to finance the higher level of invested assets. The Corporation's composite interest rate for the first nine months of 1994 was 5.23%, compared with 5.02% for the first nine months of 1993. OPERATING AND ADMINISTRATIVE EXPENSES were $3,799 million in the first nine months of 1994, up 18% over the first nine months of 1993. This increase principally 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 $1,218 million for the first nine months of 1994, up 48% over the first nine months of 1993, principally as a result of annuity benefits credited to customers of the annuity business which was acquired in 1993, and adverse loss development in the private mortgage insurance business, particularly related to the effects of poor economic conditions and housing value declines in southern California. These increases were partially offset by lower policyholder benefits in the life reinsurance business resulting from the recapture of reinsurance treaties during 1994 and reduced assumed volume. PROVISION FOR LOSSES ON FINANCING RECEIVABLES during the first nine months of 1994 was $607 million, $140 million (19%) lower than during the comparable prior year period, principally reflecting lower provisions for losses in the specialized financing businesses. DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON OPERATING LEASES was $1,191 million in the first nine months of 1994, $112 million higher than in the first nine months 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 nine months of 1994 was $630 million (an effective tax rate of 31%) compared with $573 million (34%) for the comparable prior year period. The higher provision for income taxes was primarily attributable to significantly higher earnings before taxes partially offset by the effect of the 1993 increase in federal tax rates from 34% to 35% for which there was no 1994 counterpart. PORTFOLIO QUALITY The portfolio of financing receivables is the Corporation's largest financing asset and primary source of revenues. The portfolio, net of reserves, aggregated $70.6 billion at October 1, 1994, an increase of $6.7 billion (10%) from year-end 1993. Related reserves were $1.9 billion (2.63% of receivables -- the same percentage 5 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS (Continued). as at the 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 $19.7 billion at October 1, 1994, an increase of $2.4 billion from the end of 1993, reflecting both origination volume and business and portfolio acquisitions. In addition, the Corporation's investment in consumer auto finance leases was $7.1 billion at October 1, 1994, an increase of $1.5 billion from the end of 1993, reflecting origination volume. Nonearning receivables were $423 million at October 1, 1994, compared with $391 million at December 31, 1993. The provision for losses on retailer and auto financing receivables was $342 million for the first nine months of 1994, compared with $346 million for the first nine months of 1993. COMMERCIAL REAL ESTATE LOANS classified as financing receivables by the Commercial Real Estate business were $11.8 billion at October 1, 1994, compared with $10.9 billion at December 31, 1993. In addition, the investment portfolio of the Corporation's annuity business included approximately $1.3 billion of commercial property loans. The commercial real estate portfolio also included $2.1 billion of assets purchased from the Resolution Trust Corporation and other institutions for resale and $1.5 billion of investments in real estate joint ventures, both of which are included in other assets and are essentially unchanged from December 31, 1993. Commercial Real Estate's foreclosed properties decreased to $53 million at October 1, 1994, from $110 million at December 31, 1993, primarily due to sales. Nonearning and reduced earning receivables declined to $184 million at October 1, 1994, from $272 million at the end of 1993. Loss provisions for Commercial Real Estate loans and investments were $218 million for the first nine months of 1994, compared with $194 million for the first nine months of 1993. HIGHLY LEVERAGED TRANSACTION (HLT) PORTFOLIO INVESTMENTS classified as financing receivables totaled $2.8 billion at October 1, 1994, a decrease of $0.5 billion from the end of 1993. The October 1, 1994, balance of amounts that had been written down to estimated fair value and carried in other assets aggregated $452 million, net of allowances, a decrease of $92 million from the end of 1993, reflecting investment sales. Nonearning and reduced earning receivables were $132 million at October 1, 1994, a decline of $7 million from 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 nine months of 1994. Such provisions were $126 million in the first nine months of 1993, and comprised $94 million of receivable loss provisions and $32 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 $118 million at October 1, 1994, compared with $98 million at the end of 1993. The Corporation's aggregate loans and leases to commercial airlines at October 1, 1994, increased to approximately $7.3 billion from the December 31, 1993, balance of approximately $6.8 billion, principally as a result of increased equipment on operating leases. OTHER MATTERS On December 31, 1993, the Corporation adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." All of the Corporation's investment securities were designated as available-for-sale at both October 1, 1994, and December 31, 1993. Consequently, such securities were reported at fair value, with net unrealized gains and losses included in equity, net of applicable taxes. Equity included net unrealized losses of $483 million at October 1, 1994, and net unrealized gains of $485 million at December 31, 1993, a difference primarily due to a decrease in the fair value of fixed-rate debt securities held by the Corporation's annuity and insurance affiliates, principally resulting from increased interest rates. Carrying amounts of liabilities of these affiliates are not adjusted for changes in fair value. In a rising interest rate environment, the fair value of these liabilities would be expected to decline. As 1994 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. 6 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 FOR THE NINE MONTHS ENDED OCTOBER 1, 1994 (Unaudited)
RATIO OF EARNINGS TO COMBINED FIXED RATIO OF CHARGES AND EARNINGS PREFERRED TO FIXED STOCK (Dollar amounts in millions) CHARGES DIVIDENDS -------- ----------- Net earnings $1,433 $ 1,433 Provision for income taxes 630 630 Minority interest in net earnings of consolidated affiliates 79 79 ------ ------- Income before provision for income taxes and minority interest 2,142 2,142 ------ ------- Fixed charges: Interest 3,172 3,172 One-third of rentals 114 114 ------ ------- Total fixed charges 3,286 3,286 ------ ------- Less capitalized interest, net of amortization 7 7 ------ ------- Earnings before provision for income taxes and minority interest plus fixed charges $5,421 $ 5,421 ====== ======= Ratio of earnings to fixed charges 1.65 ====== Preferred stock dividend requirements $ 20 Ratio of income before provision for income taxes to net earnings 144% Preferred stock dividend factor on before tax basis 30 Fixed charges 3,286 ------- Total fixed charges and preferred stock dividend requirements $ 3,316 ======= Ratio of earnings to combined fixed charges and preferred stock dividends 1.63 =======
7 10 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 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. b. REPORTS ON FORM 8-K. None. 8 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL ELECTRIC CAPITAL CORPORATION ------------------------------------ (Registrant) Date: November 2, 1994 By: /s/ J. A. PARKE ------------------------------------------------ J. A. Parke, Senior Vice President, Finance (Principal Financial Officer) Date: November 2, 1994 By: /s/ J. C. AMBLE ------------------------------------------------ J. C. Amble, Vice President and Controller (Principal Accounting Officer)
9 12 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 7 27 Financial Data Schedule
10 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000040554 GENERAL ELECTRIC CAPITAL CORPORATION 1,000,000 9-MOS DEC-31-1994 OCT-01-1994 878 19,748 72,509 1,910 0 0 17,650 4,527 122,280 0 33,103 768 0 1 9,590 122,280 0 12,096 0 0 3,799 607 3,139 2,063 630 1,433 0 0 0 1,433 0 0
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