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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-35
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GENERAL ELECTRIC COMPANY
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(Exact name of registrant as specified in its charter)
New York 14-0689340
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3135 Easton Turnpike, Fairfield, CT 06431-0001
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(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (203) 373-2459
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
After adjusting to reflect the two-for-one stock split of April 28,
1994, there were 1,710,386,995 shares with a par value of $0.32 per share
outstanding at May 8, 1994.
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Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Statement of Earnings
General Electric Company and consolidated affiliates
(Dollars, except per-share amounts, in millions)
Three months ended March 31 (Unaudited)
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Consolidated GE GECS
----------------------- ---------------------- ---------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ---------
Sales of goods $6,176 $6,085 $6,182 $6,089 $ - $ -
Sales of services 2,075 1,875 2,082 1,879 - -
Net earnings of GECS - - 330 451 - -
GECS revenues from operations 5,770 4,740 - - 5,793 4,763
Other income 161 156 162 159 - -
---------- ---------- ---------- ---------- ---------- ---------
Total revenues 14,182 12,856 8,756 8,578 5,793 4,763
---------- ---------- ---------- ---------- ---------- ---------
Cost of goods sold 4,440 4,437 4,445 4,441 - -
Cost of services sold 1,530 1,449 1,537 1,453 - -
Interest and other financial charges 2,279 1,569 91 152 2,191 1,422
Insurance losses and policyholder and annuity
benefits 693 545 - - 693 545
Provision for losses on financing receivables 170 255 - - 170 255
Other costs and expenses 3,521 2,978 1,247 1,121 2,296 1,878
Minority interest in net earnings of consolidated
affiliates 31 20 7 1 24 19
---------- ---------- ---------- ---------- ---------- ---------
Total costs and expenses 12,664 11,253 7,327 7,168 5,374 4,119
---------- ---------- ---------- ---------- ---------- ---------
Earnings from continuing operations before
income taxes and accounting change 1,518 1,603 1,429 1,410 419 644
Provision for income taxes (450) (518) (361) (325) (89) (193)
---------- ---------- ---------- ---------- ---------- ---------
Earnings from continuing operations before
accounting change 1,068 1,085 1,068 1,085 330 451
Earnings from discontinued operations (net of
income taxes of $44) - 75 - 75 - -
---------- ---------- ---------- ---------- ---------- ---------
Earnings before accounting change 1,068 1,160 1,068 1,160 330 451
Accounting change - cumulative effect to
January 1, 1993, of postemployment benefits - (862) - (862) - -
---------- ---------- ---------- ---------- ---------- ---------
Net earnings $1,068 $298 $1,068 $298 $330 $451
========== ========== ========== ========== ========== =========
Net earnings per share -a)
Continuing operations $0.62 $0.63
Discontinued operations - 0.05
---------- ----------
Earnings before accounting change 0.62 0.68
Cumulative effect of change in accounting
for postemployment benefits - (0.51)
---------- ----------
Net earnings per share $0.62 $0.17
========== ==========
Dividends declared per share -a) $0.36 $0.315
---------- ----------
<FN>
(a- Adjusted to reflect the two-for-one stock split on April 28, 1994.
Supplemental consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been
eliminated from the "consolidated" columns. See note 1 to the consolidated financial statements in the 1993
Annual Report to Share Owners for further information about consolidation matters.
-3-
Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
(Dollars in millions)
Consolidated GE GECS
----------------------- ---------------------- ----------------------
3/31/94 12/31/93 3/31/94 12/31/93 3/31/94 12/31/93
---------- ---------- ---------- ---------- ---------- ----------
Cash and equivalents $2,524 $3,218 $1,289 $1,536 $1,235 $1,682
GECS trading securities 33,731 30,165 - - 33,731 30,165
Investment securities 24,376 26,811 96 19 25,030 26,792
Securities purchased under agreements to resell 60,068 43,463 - - 60,068 43,463
Current receivables 7,587 8,195 8,012 8,561 - -
Inventories 4,333 3,824 4,333 3,824 - -
GECS financing receivables - net 65,997 63,948 - - 65,997 63,948
Other GECS receivables 15,094 15,616 - - 15,196 15,799
Property, plant and equipment (including equipment
leased to others) - net 21,810 21,228 9,432 9,542 12,378 11,686
Investment in GECS - - 10,071 10,809 - -
Intangible assets 10,683 10,364 6,424 6,466 4,259 3,898
All other assets 23,887 24,674 11,111 10,377 12,776 14,297
---------- ---------- ---------- ---------- ---------- ----------
Total assets $270,090 $251,506 $50,768 $51,134 $230,670 $211,730
========== ========== ========== ========== ========== ==========
Short-term borrowings $62,697 $62,135 $2,544 $2,391 $61,105 $60,003
Accounts payable 13,482 11,956 2,329 2,331 11,448 9,885
Securities sold under agreements to repurchase 63,470 56,669 - - 63,470 56,669
Securities sold but not yet purchased, at market 25,152 15,332 - - 25,152 15,332
Other GE current liabilities 9,455 9,637 9,455 9,637 - -
Long-term borrowings 29,326 28,270 2,409 2,413 26,945 25,885
Insurance reserves and annuity benefits 22,862 22,909 - - 22,862 22,909
All other liabilities 11,613 12,009 8,457 8,482 3,158 3,529
Deferred income taxes 4,765 5,109 (160) (299) 4,925 5,408
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 242,822 224,026 25,034 24,955 219,065 199,620
---------- ---------- ---------- ---------- ---------- ----------
Minority interest in equity of consolidated
affiliates 1,873 1,656 339 355 1,534 1,301
---------- ---------- ---------- ---------- ---------- ----------
Common stock (1,853,128,000 shares issued) -a) 584 584 584 584 1 1
Other capital 545 1,398 545 1,398 1,715 2,596
Retained earnings 29,066 28,613 29,066 28,613 8,355 8,212
Less common stock held in treasury (4,800) (4,771) (4,800) (4,771) - -
---------- ---------- ---------- ---------- ---------- ----------
Total share owners' equity 25,395 25,824 25,395 25,824 10,071 10,809
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and equity $270,090 $251,506 $50,768 $51,134 $230,670 $211,730
========== ========== ========== ========== ========== ==========
<FN>
(a- Reflects the two-for-one stock split on April 28, 1994.
See notes to Condensed Consolidated Financial Statements. March data are unaudited. Consolidating data are shown
supplementally for "GE" and "GECS". Transactions between GE and GECS have been eliminated from the "consolidated"
columns.
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Condensed Statement of Cash Flows
General Electric Company and consolidated affiliates
(Dollars in millions)
Three months ended March 31 (Unaudited)
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Consolidated GE GECS
----------------------- ---------------------- ----------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from operating activities
- - ------------------------------------
Net earnings $1,068 $298 $1,068 $298 $330 $451
Less earnings from discontinued operations - (75) - (75) - -
Adjustments to reconcile net earnings to cash
provided from (used for) continuing operating
activities
Cumulative effect of accounting change - 862 - 862 - -
Depreciation, depletion and amortization 734 708 340 358 394 350
Earnings retained by GECS - - (143) (301) - -
Deferred income taxes 51 144 195 135 (144) 9
Decrease in GE current receivables 608 500 549 294 - -
Decrease (increase) in GE inventories (509) (441) (509) (441) - -
Increase (decrease) in accounts payable 1,052 298 (2) (36) 1,089 180
Increase in insurance reserves 41 111 - - 41 111
Provision for losses on financing
receivables 170 255 - - 170 255
Net change in certain broker-dealer accounts (3,551) (943) - - (3,551) (943)
All other operating activities (5) (311) (901) (494) 940 187
---------- ---------- ---------- ---------- ---------- ----------
Net cash provided from (used for) continuing
operations (341) 1,406 597 600 (731) 600
Net cash provided from discontinued operations - 57 - 57 - -
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) operating activities (341) 1,463 597 657 (731) 600
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from investing activities
- - ------------------------------------
Property, plant and equipment (including
equipment leased to others) - additions (1,218) (1,032) (320) (310) (898) (722)
Net (increase) decrease in GECS financing receivables (900) 1,017 - - (900) 1,017
Payments for principal businesses purchased (565) - - - (565) -
Proceeds from principal business dispositions - - - - - -
All other investing activities 1,148 1,155 (29) 155 1,214 1,430
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) investing activities
- continuing operations (1,535) 1,140 (349) (155) (1,149) 1,725
- discontinued operations - (11) - (11) - -
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) investing activities (1,535) 1,129 (349) (166) (1,149) 1,725
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from financing activities
- - ------------------------------------
Net change in borrowings (maturities 90 days or less) 1,417 (3,127) 503 535 857 (3,736)
Newly issued debt (maturities more than 90 days) 4,207 3,108 17 80 4,190 3,028
Repayments and other reductions (maturities
more than 90 days) (3,950) (2,174) (371) (173) (3,579) (2,001)
Disposition of GE shares from treasury 134 63 134 63 - -
Purchase of GE shares for treasury (163) (228) (163) (228) - -
Dividends paid to share owners (615) (539) (615) (539) (187) (150)
All other financing activities 152 - - - 152 -
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) financing activities 1,182 (2,897) (495) (262) 1,433 (2,859)
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in cash and equivalents (694) (305) (247) 229 (447) (534)
Cash and equivalents at beginning of year 3,218 3,129 1,536 1,189 1,682 1,940
---------- ---------- ---------- ---------- ---------- ----------
Cash and equivalents at March 31 (unaudited) $2,524 $2,824 $1,289 $1,418 $1,235 $1,406
========== ========== ========== ========== ========== ==========
<FN>
See notes to Condensed Consolidated Financial Statements. Consolidating data are shown supplementally for "GE" and
GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed quarterly financial statements represent
the consolidation of General Electric Company and all companies in which
it directly or indirectly has a majority ownership or otherwise
controls. Reference is made to note 1 to the consolidated financial
statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1993. That note discusses consolidation and
financial statement presentation. As used in this Report and in the
Report on Form 10-K, "GE" represents the adding together of all
affiliated companies except General Electric Capital Services, Inc.
("GECS"), which is presented on a one-line basis; GECS consists of
General Electric Capital Services, Inc. and all of its affiliates; and
"consolidated" represents the adding together of GE and GECS with the
effects of transactions between the two eliminated. Consolidating data
are shown supplementally for GE and GECS.
2. On April 2, 1993, General Electric Company transferred to a new
company, controlled by the shareholders of Martin Marietta Corporation,
GE's Aerospace business segment; GE Government Services, Inc.; and an
operating component of GE that operated Knolls Atomic Power Laboratory
under a contract with the U.S. Department of Energy. As part of the
transaction, GE also transferred the assets and business of the Lakeland
Accounting Center. Results of the businesses which were transferred
have been classified as discontinued operations in the 1993 Condensed
Statement of Earnings and Condensed Statement of Cash Flows.
3. Statement of Financial Accounting Standards (SFAS) No. 112,
Employers' Accounting for Postemployment Benefits, was adopted during
the second quarter of 1993, effective January 1, 1993. SFAS No. 112
requires that employers expense the costs of postemployment benefits (as
distinct from postretirement pension, medical and life insurance
benefits, accounting for which is covered by SFAS Nos. 87, 88 and 106)
over the working lives of employees. The principal effect for GE was to
change the method of accounting for severance benefits. Under the
Company's previous accounting policy, the total cost of severance
benefits was expensed when the severance event occurred. This
accounting change was reflected by a first-quarter 1993 charge to net
earnings of $862 million ($0.51 per share), with a corresponding
decrease in share owners' equity.
4. 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.
5. First quarter 1994 net earnings included a $210 million ($350 million
before tax) charge resulting from the discovery of an irregular scheme
engaged in by the then head U.S. government securities trader at Kidder,
Peabody & Co. Incorporated, a subsidiary within the Company's securities
broker-dealer business, Kidder, Peabody Group Inc. (Kidder, Peabody).
Approximately $139 million of the charge related to periods prior to
1994.
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6. On April 27, 1994, the share owners of General Electric Company
authorized the amendment of its Restated Certificate of Incorporation to
change and increase the Company's authorized common stock from
1,100,000,000 shares, par value $0.63 per share, to 2,200,000,000
shares, par value $0.32 per share, and in so doing to split the common
stock (including outstanding shares) on a 2-for-1 basis. Such split
became effective April 28, 1994, and is reflected in all references to
the number of common shares and per-share amounts in this report.
Average shares outstanding for the first quarter of 1994 and 1993, after
adjusting for the stock split, were 1,707,848,098 and 1,709,213,850,
respectively.
7. GE's inventories consisted of the following:
(Dollars in millions) At
-------------------------
3/31/94 12/31/93
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Raw materials and work in process $ 3,320 $ 2,983
Finished goods 2,421 2,314
Unbilled shipments 175 156
Revaluation to LIFO (1,583) (1,629)
------- -------
Total inventories $ 4,333 $ 3,824
======= =======
8. Property, plant and equipment, including equipment leased to others,
consisted of the following:
(Dollars in millions) At
-------------------------
3/31/94 12/31/93
------- --------
Original cost
- GE $22,560 $22,441
- GECS 16,717 15,738
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Total 39,277 38,179
------- -------
Accumulated depreciation and amortization
- GE 13,128 12,899
- GECS 4,339 4,052
------- -------
Total 17,467 16,951
------- -------
Net
- GE 9,432 9,542
- GECS 12,378 11,686
------- -------
Total $21,810 $21,228
======= =======
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
A. Results of Operations - First quarter 1994 compared with first
quarter of 1993
General Electric Company's earnings from continuing operations for
the first quarter of 1994 were $1,068 million, or $0.62 per share, down
2% from the previous year's comparable earnings of $1,085 million, or
$0.63 per share. The current-year earnings included a one-time charge
of $210 million ($350 million before tax) resulting from the discovery
of an irregular scheme engaged in by the then head U.S. government
securities trader at Kidder, Peabody & Co. Incorporated, a subsidiary
within the Company's securities broker-dealer business, Kidder, Peabody
Group Inc. (Kidder, Peabody). Approximately $139 million of the charge
related to periods prior to 1994. The scheme had the effect of
recording fictitious unrealized net profits which exceeded certain
actual losses, thereby misrepresenting the real operating results of
certain U.S. government securities trading activities. The scheme was
conducted within Kidder, Peabody and did not involve any customer or
counterparty. Kidder, Peabody reported the discovery of this scheme to
the Securities and Exchange Commission and the New York Stock Exchange,
and is fully cooperating with related investigations. In addition,
Kidder, Peabody has commenced its own comprehensive investigation into
the matter, led by outside counsel, to recommend steps to prevent
recurrence.
Net earnings of $1,068 million, or $.62 per share in the first
quarter of 1994 compared with net earnings of $298 million, or $0.17 per
share, in 1993's first quarter. The year-earlier quarter included $75
million, or $0.05 per share, of first-quarter 1993 net earnings related
to the discontinued Aerospace businesses which were transferred on April
2, 1993, to a new company controlled by the shareholders of Martin
Marietta Corporation. Also, that quarter included a one-time charge of
$862 million, or $0.51 per share, associated with the adoption of
Statement of Financial Accounting Standards No. 112, Employers'
Accounting for Postemployment Benefits.
Revenues for the first quarter of 1994 totaled $14.182 billion, up
10% from $12.856 billion in the first quarter of last year. The current
quarter included a 22% increase in revenues of General Electric Capital
Services, Inc. (GECS) and higher revenues at NBC, as well as the effects
of good increases in the volume of shipments by Appliances, Motors,
Plastics and Transportation. The combination of these increases was
partially offset by lower volume at Aircraft Engines, as expected, and
lower selling prices in most businesses, particularly at Plastics and
Medical Systems.
Seven of GE's businesses reported double-digit operating profit
improvements, led by NBC, Appliances, Motors, Transportation and Medical
Systems. GE Capital Corporation's reported net earnings were up 20%,
driven by Retailer Financial Services, Commercial Real Estate, Auto
Financial Services, Financial Guaranty Insurance and Commercial
Equipment Financing; however, total GECS' earnings of $330 million were
down $121 million, or 27%, reflecting the aforementioned one-time charge
at Kidder, Peabody.
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GE's operating margin improved to 12.5% in the first quarter of
1994 from the previous year's comparable 12.0%. Six businesses,
including NBC, Appliances, Motors and Electrical Distribution and
Control, improved their margin rates by more than one percentage point.
Strong cash flow performance continued during the first quarter of
1994, with cash generated from operating activities reaching almost $600
million.
SEGMENT ANALYSIS:
The comments that follow compare revenues and operating profit by
industry segment for the first quarters of 1994 and 1993.
* Aircraft Engines operating profit was slightly lower than last
year on significantly lower revenues. The impact of the lower revenues,
which resulted principally from reduced shipments to both commercial and
military customers, was substantially offset by lower costs and
expenses, including the effect of arrangements with production
associates.
* Appliances reported sharply higher operating profit this year on
considerably higher revenues and continued improvement in productivity.
* Broadcasting's operating profit was up significantly in 1994 on
much higher revenues and continuing success in its efforts to limit
overhead and programming costs.
* GECS' net earnings were down sharply, $330 million in the 1994
quarter compared with $451 million in 1993, reflecting the
aforementioned one-time charge at Kidder, Peabody. Excluding Kidder,
Peabody's results, GECS' earnings were up 22%, led by excellent
performances in Retailer Financial Services, Commercial Real Estate,
Auto Financial Services, Financial Guaranty Insurance and Commercial
Equipment Financing.
* Industrial operating profit was strongly ahead of last year on
considerably higher revenues and good productivity. The favorable
performance in both operating profit and revenues was led by Motors and
Transportation.
* Materials operating profit was slightly lower this year on
considerably higher revenues. The increased revenues were the result of
strong volume growth in all businesses, partially offset by lower
selling prices. The lower selling prices, coupled with unexpected costs
and inefficiencies arising from the ramp-up of production, were the
principal factors in the reduced operating profit.
* Power Systems operating profit was down sharply in the 1994
quarter on a slight increase in revenues, principally as a result of
abnormal and unfavorable sales mix and, to a lesser extent, a first-
quarter 1994 litigation charge.
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* Technical Products and Services reported considerably higher
operating profit in 1994, primarily as a result of good productivity and
slightly higher revenues. Somewhat higher volume in both Medical
Systems and GE Information Services was partially offset by lower
selling prices.
* All other operating profit was much higher in the first quarter
of 1994 on somewhat higher revenues associated mainly with licensing the
use of GE's know how.
B. Financial Condition
With respect to the Condensed Statement of Financial Position,
consolidated assets of $270.1 billion were $18.6 billion higher than the
$251.5 billion at December 31, 1993.
GECS' assets increased $18.9 billion from the end of last year
which was more than accounted for by increases in trading assets at
Kidder, Peabody. Changes in these assets included an increase of $16.6
billion in securities purchased under agreements to resell (reverse
repurchase agreements). The increase was attributed principally to (1)
the gross-up of this account, as well as the related liability account
entitled "securities sold under agreements to repurchase," as required
by Financial Accounting Standards Board Interpretation (FIN) No. 39,
Offsetting of Amounts Related to Certain Contracts, which was
implemented during the first quarter of 1994, and (2) the use of the
aforementioned agreements to cover higher short inventory positions and
for "matched-book" transactions. The increase at Kidder, Peabody also
included higher trading securities ($3.6 billion), representing
primarily higher inventories of fixed-income securities. GE Capital
Corporation's financing receivables, which net of reserves aggregated
$66.0 billion at the end of the first quarter, increased $2.1 billion
from the year-end 1993 level of $63.9 billion. The increase resulted
from both origination volume and acquisitions of portfolios and
businesses. Management believes that GE Capital's reserves of $1.8
billion (2.63% of the receivables balance at March 31, 1994 - the same
as year end 1993) are appropriate given the strength and diversity of
the portfolio, and current economic circumstances. The combination of
these items and relatively small increases in other accounts were
partially offset by decreases in (1) investment securities ($1.8
billion), resulting primarily from the before-tax, mark-to-market
adjustment under SFAS No. 115, Accounting for Certain Investments in
Equity Securities, which was implemented at the end of 1993; (2) all
other assets ($1.5 billion), principally reductions of GE Capital's
mortgages held for resale; and (3) other GECS' receivables ($0.6
billion). The change in other GECS' receivables was primarily the net
result of a $3.3 billion decrease in amounts due from brokers and
dealers reflecting the timing of settlements and a $2.6 billion increase
representing principally the gross-up of unrealized gains and losses of
off-balance sheet financial instruments as required by FIN No. 39.
-10-
GE's assets decreased $0.4 billion from December 31, 1993, as a
result of a large number of relatively small changes. The decrease
included (1) reduced investment in GECS ($0.7 billion), primarily
because of the after-tax, mark-to-market adjustment discussed above; (2)
lower receivables ($0.5 billion), reflecting principally reduced volume
at Aircraft Engines and timing of shipments at Power Systems and (3) a
decrease in cash and equivalents ($0.2 billion). These decreases were
partially offset by small increases in a wide variety of accounts in all
other assets ($0.7 billion) and normal seasonal increases of inventories
($0.5 billion).
Consolidated liabilities of $242.8 billion at March 31, 1994, were
$18.8 billion higher than the year-end 1993 balance of $224.0 billion.
GECS' liabilities increased $19.4 billion; GE's liabilities were up $0.1
billion; eliminations between the two groups were up $0.7 billion.
The GECS' liabilities increase of $19.4 billion was principally
related to the aforementioned increase in the trading positions at
Kidder, Peabody. The changes in these liabilities included (1) an
increase of $9.8 billion in securities sold but not yet purchased (short
sales), reflecting a shift in the mix of securities used for hedging
strategies, and (2) higher securities sold under agreements to
repurchase (repurchase agreements) of $6.8 billion, primarily
attributable to implementation of FIN No. 39 discussed previously.
GECS' increase also included higher borrowings of $2.2 billion (short-
term and long-term borrowings each up $1.1 billion), principally to
finance asset growth.
GE's total borrowings were $4.9 billion ($2.5 billion short-term
and $2.4 billion long-term) at March 31, 1994, an increase of $0.1
billion from December 31, 1993. Included in short-term borrowings was
$0.7 billion of commercial paper sold to GECS, which was eliminated in
consolidation of the two groups. GE's ratio of debt to total capital at
the end of March 1994 was 16.1% compared with 15.5% at the end of last
year and 23.9% at March 31, 1993. Other changes in GE's liabilities
comprised numerous, relatively small items.
With respect to cash flows, consolidated cash and cash equivalents
were $2.5 billion at March 31, 1994, reflecting a decrease of about $0.7
billion during the quarter. Cash and cash equivalents were $2.8 billion
at March 31, 1993, reflecting a decrease of approximately $0.3 billion
during last year's first quarter.
GE's cash and cash equivalents decreased $0.2 billion to $1.3
billion at March 31, 1994, compared with $1.5 billion at year end 1993.
During the first quarter of 1994, cash provided from operating
activities totaled $0.6 billion, despite the use of cash for (1) "all
other operating activities" ($0.9 billion) which represented net cash
used for a wide variety of relatively small items, and (2) normal
seasonal increases in inventories ($0.5 billion) from inventory levels
which were much lower at the end of 1993 than they had been at the end
of 1992. Cash used for investing activities ($0.3 billion) principally
represented investments in new plant and equipment, for a wide variety
of capital expenditure projects to reduce costs and improve
efficiencies. Cash used for financing activities ($0.5 billion)
-11-
included $0.6 billion for dividends paid to share owners, representing a
14% increase in the per-share dividend rate compared with first quarter
last year, and $0.2 billion for repurchases of the Company's common
stock for treasury, the combination of which was partially offset by
funds provided from higher borrowings and dispositions of GE shares from
treasury (a total of $0.3 billion).
GE's cash and cash equivalents increased $0.2 billion to $1.4
billion at March 31, 1993, compared with $1.2 billion at year end 1992.
During the first quarter of 1993, cash provided from operating
activities totaled $0.7 billion, despite the use of cash for "all other
operating activities" ($0.5 billion) which represented net cash used for
numerous, relatively small items and usage for normal seasonal increases
in inventories ($0.4 billion). Cash used for investing activities ($0.2
billion) was more than explained by investments in new plant and
equipment, for a wide variety of capital expenditure projects. Cash
used for financing activities ($0.3 billion) included $0.5 billion for
dividends paid to share owners, representing a 15% increase in the per-
share dividend rate compared with first quarter 1992, and $0.2 billion
for repurchases of the Company's common stock for treasury, both of
which were partially offset by funds provided from higher borrowings
($0.4 billion).
GECS' cash and cash equivalents decreased $0.4 billion during the
first quarter of 1994. The principal use of GECS' cash during the period
was for investing activities ($1.1 billion), which was more than
accounted for by widespread additions to equipment that is provided to
third parties on operating leases ($0.9 billion), higher financing
receivables ($0.9 billion) and payments for six business acquisitions
(aggregating $0.6 billion), the combination of which was offset by cash
provided from "all other investing activities" ($1.2 billion), primarily
from a reduction in mortgages held for resale included in other assets.
Cash used for operating activities included usage of $3.6 billion for
changes in certain broker-dealer accounts. The changes comprised cash
used for increases in Kidder, Peabody's securities purchased under
agreements to resell ($16.6 billion) and marketable securities ($3.6
billion), partially offset by cash provided from increases in short
sales ($9.8 billion) and securities sold under agreements to repurchase
($6.8 billion). Cash provided from "all other operating activities"
($0.9 billion) consisted principally of reductions in Kidder, Peabody's
other receivables ($0.7 billion). GECS generated $1.5 billion from
increasing borrowings during the quarter.
GECS' cash and cash equivalents decreased $0.5 billion during the
first quarter of 1993. Cash was used to reduce borrowings ($2.7
billion), and for widespread additions to equipment that is provided to
third parties on operating leases ($0.7 billion). In addition, usage of
$0.9 billion for "net change in broker-dealer accounts" consisted of
$13.1 billion for marketable securities and $11.2 billion for securities
purchased under agreements to resell, partially offset by cash provided
by changes in securities sold under agreements to repurchase ($20.9
billion) and short sales ($2.5 billion). To fund these cash uses, GECS
generated $1.5 billion from earnings and operating activities other than
those associated with the broker-dealer accounts, $1.0 billion from
reduced financing receivables and $1.4 billion from "all other investing
activities", principally reductions in marketable securities held by GE
Capital.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
General
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As previously reported, the directors (other than Messrs.
Calloway, Gonzalez and Warner) and certain officers are defendants in a
civil suit purportedly brought on behalf of the Company as a shareholder
derivative action by Leslie McNeil, Harold Sachs, Arun Shingala and Paul
and Harriet Luts (the McNeil action) in New York State Supreme Court on
November 19, 1991. The suit alleges the Company was negligent and
engaged in fraud in connection with the design and construction of
containment systems for nuclear power plants and contends that, as a
result, GE has incurred significant financial liabilities and is
potentially exposed to additional liabilities from claims brought by the
Company's customers. The suit alleges breach of fiduciary duty by the
defendants and seeks unspecified compensatory damages and other relief.
On March 31, 1992, the defendants filed motions to dismiss the suit. On
September 28, 1992, the court denied the motions as premature but ruled
that they may be renewed after the completion of limited discovery.
Defendants moved for reconsideration of that order, and on April 3,
1993, the court granted defendants' motion for reconsideration and
directed that discovery be stayed pending the filing of an amended
complaint. Plaintiffs filed an amended complaint on March 18, 1994,
alleging breach of fiduciary duty, waste and indemnification claims.
The defendants' time for responding to the amended complaint has been
extended until 30 days following the completion of discovery. The
defendants believe the plaintiff's claims are without merit.
Also as previously reported, the directors and certain former
directors are defendants in a civil suit purportedly brought on behalf
of the Company as a share owner derivative action (the Bildstein action)
which was commenced in New York State Supreme Court in January 1994. The
suit seeks compensatory damages arising out of the purported failure of
the defendants to prevent alleged government contract fraud and alleged
violations of the Foreign Corrupt Practices Act in connection with U.S.
government-funded sales of military equipment to Egypt by a unit of the
Company's former GE Aerospace component. The GE Aerospace businesses
were transferred to a new company controlled by the shareholders of
Martin Marietta Corporation in 1993. The suit claims that the risk of
litigation arising from the alleged wrongdoing caused the Company to
receive less than it would have otherwise received in connection with
the transfer of GE Aerospace. On April 6, 1994, the Company and all
other defendants moved to dismiss the complaint based on the plaintiff's
failure to make a pre-litigation demand, among other reasons.
Environmental
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As previously reported, in September of 1993, the U.S.
Environmental Protection Agency ("EPA") notified the Company that it was
seeking at least $600,000 in penalties for alleged violations of the
Clean Air Act at its Lynn, Massachusetts Aircraft Engines facility,
including the failure to undergo required permit reviews. On April 26,
1994, EPA issued a draft Consent Decree addressing the violations and
seeking a penalty of $662,000. The Company has supplied information to
the Agency, and is conducting ongoing settlement discussions.
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On December 29, 1993, EPA issued an administrative complaint to
the Company alleging a violation of the Toxic Substances Control Act
("TSCA") for manufacturing a chemical not on EPA's TSCA Inventory at its
Waterford facility. The complaint seeks a penalty of $137,250. EPA has
since offered to settle the matter for $34,600. Settlement discussions
are continuing.
In April of 1994, EPA issued an administrative complaint to the
Company alleging violations of the TSCA at its Schenectady Research and
Development facility, including improper manufacturing, handling and
disposal of PCBs from 1989-1991. The complaint seeks a penalty of
$139,875. Settlement discussion are underway.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit 11. Computation of Per-Share Earnings.
Exhibit 12. Computation of Ratio of Earnings to Fixed
Charges.
b. Reports on Form 8-K during the quarter ended March 31, 1994.
No reports on Form 8-K were filed during the quarter ended
March 31, 1994.
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 Company
(Registrant)
May 13, 1994 Philip D. Ameen
- - ------------ ----------------------------------------------------
Date Vice President and Comptroller
Duly Authorized Officer and Principal Accounting
Officer