1
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, 1995
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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
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There were 1,693,877,732 shares with a par value of $0.32 per
share outstanding at March 31, 1995.
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
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1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
Sales of goods $7,096 $6,176 $7,098 $6,182 $ - $ -
Sales of services 2,159 2,075 2,180 2,082 - -
Net earnings of GECS - - 559 481 - -
GECS revenues from operations 5,693 4,370 - - 5,754 4,393
Other income 178 161 180 162 - -
---------- ---------- ---------- ---------- ---------- ----------
Total revenues 15,126 12,782 10,017 8,907 5,754 4,393
---------- ---------- ---------- ---------- ---------- ----------
Cost of goods sold 5,157 4,440 5,158 4,445 - -
Cost of services sold 1,532 1,530 1,553 1,537 - -
Interest and other financial charges 1,662 1,098 126 91 1,543 1,010
Insurance losses and policyholder and annuity benefits 1,091 693 - - 1,091 693
Provision for losses on financing receivables 79 170 - - 79 170
Other costs and expenses 3,484 3,053 1,353 1,247 2,188 1,828
Minority interest in net earnings of consolidated
affiliates 39 31 12 7 27 24
---------- ---------- ---------- ---------- ---------- ----------
Total costs and expenses 13,044 11,015 8,202 7,327 4,928 3,725
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations before income taxes 2,082 1,767 1,815 1,580 826 668
Provision for income taxes (710) (548) (443) (361) (267) (187)
---------- ---------- ---------- ---------- ---------- ----------
Earnings from continuing operations 1,372 1,219 1,372 1,219 559 481
---------- ---------- ---------- ---------- ---------- ----------
Loss from discontinued operations, net of income
tax benefit of $98 - (151) - (151) - (151)
---------- ---------- ---------- ---------- ---------- ----------
Net earnings $1,372 $1,068 $1,372 $1,068 $559 $330
========== ========== ========== ========== ========== ==========
Net earnings per share
Continuing operations $0.81 $0.71
Discontinued operations - (0.09)
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Net earnings per share $0.81 $0.62
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Dividends declared per share $0.41 $0.36
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<FN>
See notes to Condensed Consolidated Financial Statements. Data for 1994 have been reclassified to state the results of Kidder,
Peabody Group Inc., the securities broker-dealer subsidiary of GECS, as a discontinued operation. Consolidating data are shown for
"GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
Condensed Statement of Financial Position
General Electric Company and consolidated affiliates
(Dollars in millions) Consolidated GE GECS
----------------------- ---------------------- ----------------------
3/31/95 12/31/94 3/31/95 12/31/94 3/31/95 12/31/94
---------- ---------- ---------- ---------- ---------- ----------
Cash and equivalents $2,757 $2,591 $1,161 $1,373 $1,596 $1,218
Investment securities 32,366 30,965 72 93 32,294 30,872
Current receivables 7,204 7,527 7,501 7,807 - -
Inventories 5,294 3,880 5,294 3,880 - -
GECS financing receivables - net 81,450 76,357 - - 81,450 76,357
Other GECS receivables 6,114 5,763 - - 6,377 6,012
Property, plant and equipment (including equipment
leased to others) - net 24,180 23,465 9,949 9,525 14,231 13,940
Investment in GECS - - 10,482 9,380 - -
Intangible assets 11,886 11,373 6,624 6,336 5,262 5,037
All other assets 24,372 23,950 12,528 12,419 11,844 11,531
Assets of discontinued broker-dealer operations 2,397 8,613 - - 2,397 8,613
---------- ---------- ---------- ---------- ---------- ----------
Total assets $198,020 $194,484 $53,611 $50,813 $155,451 $153,580
========== ========== ========== ========== ========== ==========
Short-term borrowings $56,596 $57,781 $2,041 $906 $54,768 $57,087
Accounts payable 6,707 6,766 3,330 3,141 3,620 3,777
Other GE current liabilities 8,371 8,307 8,561 8,562 - -
Long-term borrowings 45,570 36,979 2,756 2,699 42,848 34,312
Insurance reserves and annuity benefits 29,850 29,438 - - 29,850 29,438
All other liabilities 13,183 12,906 8,732 8,468 4,331 4,316
Deferred income taxes 5,770 5,205 338 268 5,432 4,937
Liabilities of discontinued broker-dealer operations 2,645 8,868 - - 2,645 8,868
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities 168,692 166,250 25,758 24,044 143,494 142,735
---------- ---------- ---------- ---------- ---------- ----------
Minority interest in equity of consolidated
affiliates 2,049 1,847 574 382 1,475 1,465
---------- ---------- ---------- ---------- ---------- ----------
Common stock (1,857,013,000 shares issued) 594 594 594 594 1 1
Unrealized losses on investment securities (99) (810) (99) (810) (112) (821)
Other capital 1,360 1,122 1,360 1,122 2,033 2,006
Retained earnings 31,469 30,793 31,469 30,793 8,560 8,194
Less common stock held in treasury (6,045) (5,312) (6,045) (5,312) - -
---------- ---------- ---------- ---------- ---------- ----------
Total share owners' equity 27,279 26,387 27,279 26,387 10,482 9,380
---------- ---------- ---------- ---------- ---------- ----------
Total liabilities and equity $198,020 $194,484 $53,611 $50,813 $155,451 $153,580
========== ========== ========== ========== ========== ==========
<FN>
See notes to Condensed Consolidated Financial Statements. March data are unaudited. Consolidating data are shown
for "GE" and "GECS". Transactions between GE and GECS have been eliminated from the "consolidated" columns.
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
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1995 1994 1995 1994 1995 1994
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Cash flows from operating activities
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Net earnings $1,372 $1,068 $1,372 $1,068 $559 $330
Adjustments for discontinued operations - 151 - 151 - 151
Adjustments to reconcile net earnings to cash
provided from (used for) continuing operating activities
Depreciation, depletion and amortization 862 725 410 340 452 385
Earnings retained by GECS-continuing operations - - (366) (294) - -
Deferred income taxes (27) 91 66 195 (93) (104)
Decrease in GE current receivables 899 608 882 549 - -
Increase in GE inventories (743) (509) (743) (509) - -
Decrease in accounts payable (835) (705) (176) (2) (617) (668)
Increase in insurance reserves 615 41 - - 615 41
Provision for losses on financing
receivables 79 170 - - 79 170
All other operating activities (517) (481) (949) (901) 402 464
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from continuing operations 1,705 1,159 496 597 1,397 769
Cash provided from (used for) discontinued operations 949 (1,500) - - 949 (1,500)
---------- ---------- ---------- ---------- ---------- ----------
Cash from (used for) operating activities 2,654 (341) 496 597 2,346 (731)
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from investing activities
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Property, plant and equipment (including
equipment leased to others) - additions (1,617) (1,209) (307) (320) (1,310) (889)
Net increase in financing receivables (2,189) (900) - - (2,189) (900)
Payments for principal businesses purchased (1,627) (565) - - (1,627) (565)
All other investing activities (52) 1,035 38 (29) (88) 1,101
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) investing activities
- continuing operations (5,485) (1,639) (269) (349) (5,214) (1,253)
- discontinued operations 227 104 - - 227 104
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Cash used for investing activities (5,258) (1,535) (269) (349) (4,987) (1,149)
---------- ---------- ---------- ---------- ---------- ----------
Cash flows from financing activities
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Net change in borrowings (maturities 90 days or less) (3,262) (92) 867 503 (4,126) (652)
Newly issued debt (maturities more than 90 days) 12,796 4,207 268 17 12,528 4,190
Repayments and other reductions (maturities
more than 90 days) (3,970) (3,937) (159) (371) (3,811) (3,566)
Disposition of GE shares from treasury 222 134 222 134 - -
Purchase of GE shares for treasury (938) (163) (938) (163) - -
Dividends paid to share owners (699) (615) (699) (615) (193) (187)
All other financing activities (203) 152 - - (203) 152
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) financing activities
- continuing operations 3,946 (314) (439) (495) 4,195 (63)
- discontinued operations (1,176) 1,396 - - (1,176) 1,396
---------- ---------- ---------- ---------- ---------- ----------
Cash provided from (used for) financing activities 2,770 1,082 (439) (495) 3,019 1,333
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Increase (decrease) in cash and equivalents 166 (794) (212) (247) 378 (547)
Cash and equivalents at beginning of year 2,591 3,056 1,373 1,536 1,218 1,520
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Cash and equivalents at March 31 $2,757 $2,262 $1,161 $1,289 $1,596 $973
========== ========== ========== ========== ========== ==========
<FN>
See notes to Condensed Consolidated Financial Statements. Consolidating data are shown for "GE" and
"GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying condensed quarterly financial statements represent
the consolidation of General Electric Company and all companies which it
directly or indirectly controls, either through majority ownership or
otherwise. 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, 1994. 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.
2. In November 1994, GE elected to terminate the operations of Kidder,
Peabody Group Inc. (Kidder, Peabody), the GECS securities broker-dealer, by
initiating an orderly liquidation of its assets and liabilities. The
financial results of Kidder, Peabody are shown as a discontinued operation
in the condensed financial statements.
3. GE adopted Statement of Financial Accounting Standards (SFAS) No.
114, Accounting by Creditors for Impairment of a Loan, and the related SFAS
No. 118, Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures, on January 1, 1995. The adoption of these
Statements had no effect on earnings or financial position as the same level
of allowance for losses was appropriate under both the previous accounting
policy and the newly-adopted policy.
4. 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. GE's inventories consisted of the following:
(Dollars in millions) At
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3/31/95 12/31/94
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Raw materials and work in process $ 3,880 $ 2,933
Finished goods 2,601 2,165
Unbilled shipments 234 214
Revaluation to LIFO (1,421) (1,432)
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Total inventories $ 5,294 $ 3,880
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6. Property, plant and equipment, including equipment leased to
others, consisted of the following:
(Dollars in millions) At
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3/31/95 12/31/94
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Original cost
- GE $24,216 $22,907
- GECS 19,369 18,763
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Total 43,585 41,670
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Accumulated depreciation, depletion
and amortization
- GE 14,267 13,382
- GECS 5,138 4,823
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Total 19,405 18,205
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Net
- GE 9,949 9,525
- GECS 14,231 13,940
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Total $24,180 $23,465
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
A. Results of Operations -- First quarter 1995 compared with first
quarter of 1994
General Electric Company's earnings from continuing operations for the
first quarter of 1995 were $1,372 million, up 13% from the previous year's
comparable earnings of $1,219 million. Earnings per share from continuing
operations increased 14% to $0.81 from last year's comparable $0.71.
Net earnings of $1,372 million in the first quarter of 1995 were up
28% compared with net earnings of $1,068 million in 1994's first quarter.
Earnings per share increased 31% to $0.81 from $0.62.
Revenues from continuing operations for the first quarter of 1995
totaled $15,126 million, up 18% from $12,782 million in the first quarter of
last year. All twelve of GE's businesses reported revenue increases during
the quarter, including strong double-digit increases by General Electric
Capital Services, Inc. (GECS), Plastics and Transportation.
Ten of GE's businesses reported improved operating profit, with six
reporting double-digit improvements, led by Plastics, NBC and Appliances.
Earnings from continuing operations at GE Capital Services were $559
million, a 16% increase over 1994's comparable $481 million.
Good cash flow performance continued during the first quarter of 1995,
with cash generated from GE's operating activities reaching $500 million.
SEGMENT ANALYSIS:
The comments that follow compare revenues and operating profit by
industry segment for the first quarters of 1995 and 1994.
* Aircraft Engines operating profit was considerably higher than last
year's first quarter on about the same revenues. The increase in operating
profit was attributable to the combination of strong productivity and higher
volume in commercial spares which more than offset price declines.
* Appliances reported much higher operating profit on a modest
increase in revenues from 1994's first quarter. The favorable performance
in operating profit was attributable primarily to productivity gains.
* Broadcasting had a sharp increase in operating profit on higher
revenues, primarily as a result of strong advertising revenues in prime time
entertainment, the owned-and-operated stations and CNBC, the combination of
which more than offset lower revenues and operating profit in sports which
were attributable to the absence of a 1995 counterpart to broadcast of the
1994 Superbowl.
* GECS' net earnings from continuing operations were $559 million, an
increase of 16% over the comparable $481 million in 1994's first quarter.
The Financing segment had strong earnings growth, principally in the
Consumer Services and Equipment Management businesses. Earnings of the
Specialty Insurance segment were essentially flat, as strong earnings growth
in property and casualty reinsurance was offset by lower earnings in
mortgage insurance.
* Revenues in Industrial Products and Systems were considerably higher
on volume in Transportation and Lighting. Operating profit improved
somewhat on good productivity across the segment.
* Materials operating profit and revenues were up sharply as higher
prices, volume growth and good productivity more than offset higher
materials costs.
* Power Generation revenues increased substantially from a year ago,
as a result of the second quarter 1994 acquisition of Nuovo Pignone, an
Italian electrical equipment manufacturer, which was consolidated as of
January 1, 1995. Operating profit was somewhat higher, due in part to the
Nuovo Pignone acquisition and in part to the absence of any counterpart to a
first quarter 1994 litigation charge. Excluding the effects of those items,
operating profit declined due to pricing and cost pressures and expenses
associated with continued downsizing of the business.
* Technical Products & Services operating profit was slightly lower on
a slight increase in revenues. Operating Profit decreased at Medical
Systems as price declines and cost inflation more than offset the
combination of productivity improvements and volume growth. Information
Services operating profit increased slightly, principally as a result of
improved volume.
* All other operating profit and revenues were much higher, reflecting
increased income 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 $198.0 billion were $3.5 billion higher than the
$194.5 billion at December 31, 1994.
GE's assets were $53.6 billion at March 31, 1995, an increase of $2.8
billion from December 31, 1994. The increase was principally attributable
to (1) increased investment in GECS ($1.1 billion), primarily as a result of
GECS earnings, net of dividends, and the effect of a $0.7 billion, after-
tax, mark-to-market increase in the value of GECS marketable securities; and
(2) higher inventories ($1.4 billion), reflecting principally the effect of
the consolidation of Nuovo Pignone and normal seasonal increases in several
other GE businesses.
GECS' assets from continuing operations increased by $8.1 billion from
the end of 1994, principally as a result of growth in financing receivables
and increases in investment securities. GE Capital Corporation's financing
receivables, which net of reserves aggregated $81.5 billion at the end of
the first quarter, increased $5.1 billion from the year-end 1994 level of
$76.4 billion. The increase resulted from acquisitions of businesses ($3.2
billion) and portfolios as well as origination volume. Management believes
that GE Capital's reserves of $2.2 billion (2.63% of the receivables balance
at March 31, 1995 - the same as year end 1994) are appropriate given the
strength and diversity of the portfolio and current economic circumstances.
Investment securities increased $1.4 billion during the quarter, largely the
result of increases in the market value of GECS marketable securities
previously discussed. The remainder of the change ($1.6 billion) was
attributable to numerous small increases in other asset categories, none of
which exceeded $0.4 billion.
Consolidated liabilities of $168.7 billion at March 31, 1995, were
$2.4 billion higher than the year-end 1994 balance of $166.3 billion. GE's
liabilities were up $1.7 billion; GECS' liabilities increased $0.8 billion.
GE's total borrowings were $4.8 billion ($2.0 billion short-term and
$2.8 billion long-term) at March 31, 1995, an increase of $1.2 billion from
December 31, 1994. GE's ratio of debt to total capital at the end of March
1995 was 14.7% compared with 11.9% at the end of last year and 16.1% at
March 31, 1994. Other changes in GE's liabilities comprised numerous,
relatively small items.
GECS' liabilities from continuing operations increased by $7.0
billion, principally because of the additional $6.2 billion of borrowings to
finance acquisitions and asset growth. Short-term borrowings decreased by
$2.3 billion to $54.8 billion and long-term borrowings increased by $8.5
billion to $42.8 billion, reflecting a shift in the financing mix to longer-
term debt.
Assets and liabilities of discontinued securities broker-dealer
operations both decreased by $6.2 billion from year-end 1994, reflecting the
continued orderly liquidation of the remaining assets of Kidder, Peabody.
With respect to cash flows, consolidated cash and equivalents were
$2.8 billion at March 31, 1995, an increase of about $0.2 billion during the
quarter. Cash and equivalents were $2.3 billion at March 31, 1994, a
decrease of approximately $0.8 billion during last year's first quarter.
GE's cash and equivalents decreased $0.2 billion to $1.2 billion at
March 31, 1995, compared with $1.4 billion at year end 1994. During the
first quarter of 1995, cash provided from operating activities totaled $0.5
billion, despite the use of cash for (1) normal seasonal increases in
inventories ($0.7 billion), and (2) "all other operating activities" ($0.9
billion) which represented net cash used for a wide variety of relatively
small items. 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 ($0.4 billion) included $0.7 billion for
dividends paid to share owners, representing a 14% increase in the per-share
dividend rate compared with first quarter of last year, and $0.9 billion for
repurchases of the Company's common stock for treasury. The dividends and
share repurchase were partially offset by $1.2 billion provided from the
combination of higher borrowings and dispositions of GE shares from
treasury.
GE's cash and equivalents decreased 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, net of
cash used 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) represented
principally 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) included $0.6 billion for
dividends paid to share owners, representing a 14% increase in the per-share
dividend rate compared with first quarter of 1993, and $0.2 billion for
repurchases of the Company's common stock for treasury. The dividends and
share repurchase were partially offset by $0.3 billion provided from the
combination of higher borrowings and dispositions of GE shares from
treasury.
GECS' cash and equivalents increased $0.4 billion during the first
quarter of 1995, when $1.4 billion of cash was provided from operating
activities of continuing operations. The principal use of GECS' cash during
the period was for investing activities ($5.2 billion), which was more than
accounted for by widespread additions to equipment that is provided to third
parties on operating leases ($1.3 billion), higher financing receivables
($2.2 billion), and payments for the acquisitions of four businesses
(aggregating $1.6 billion).
GECS' cash and equivalents decreased $0.5 billion during the first
quarter of 1994, when $0.8 billion of cash was provided from operating
activities of continuing operations. The principal use of GECS' cash during
the period was for investing activities ($1.3 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" ($1.1 billion), primarily from a reduction in
mortgages held for resale included in other assets.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As previously reported, in November 1994, the Florida Department of
Environmental Protection indicated that it would seek $326,000 in penalties
for alleged violations of the Resource Conservation and Recovery Act. The
allegations included the unlawful disposal of hazardous waste. The matter
has been tentatively settled for $112,134.
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.
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K during the quarter ended March 31, 1995.
No reports on Form 8-K were filed during the quarter ended March
31, 1995.
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 15, 1995 Philip D. Ameen
- ------------ ---------------------------------------------------
Date Vice President and Comptroller
Duly Authorized Officer and Principal Accounting
Officer