-----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, haFKV4dWbEsFrE7SNv7eWS1Wux5e/QiXIdX07tj6jscZy1bm2dzZxnbzzIGCx+z4 HuuRUstJTokjEiVr9sPUcw== 0000040545-94-000018.txt : 19940816 0000040545-94-000018.hdr.sgml : 19940816 ACCESSION NUMBER: 0000040545-94-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL ELECTRIC CO CENTRAL INDEX KEY: 0000040545 STANDARD INDUSTRIAL CLASSIFICATION: 3600 IRS NUMBER: 140689340 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00035 FILM NUMBER: 94544240 BUSINESS ADDRESS: STREET 1: 3135 EASTON TURNPIKE STREET 2: C/O BANK OF NEW YORK CITY: FAIRFIELD STATE: CT ZIP: 06431 BUSINESS PHONE: 2033732816 10-Q 1 FORM 10-Q 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 June 30, 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 1-35 ---- GENERAL ELECTRIC COMPANY ---------------------------------------------------- (Exact name of registrant as specified in its charter) New York 14-0689340 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3135 Easton Turnpike, Fairfield, CT 06431-0001 ----------------------------------- ------------ (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (203) 373-2459 -------------- --------------------------------------------------- (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 --- --- There were 1,712,367,373 shares with a par value of $0.32 per share outstanding at June 30, 1994. 2 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) Second quarter ended June 30 (Unaudited) -------------------------------------------------------------------------- Consolidated GE GECS ---------------------- ---------------------- ---------------------- 1994 1993 1994 1993 1994 1993 --------- ---------- ---------- ---------- ---------- ---------- Sales of goods $7,542 $7,258 $7,548 $7,262 $ - $ - Sales of services 2,478 2,200 2,490 2,206 - - Net earnings of GECS - - 463 414 - - GECS revenues from operations 5,998 5,108 - - 6,023 5,129 Other income 178 195 179 196 - - -------- ---------- ---------- ---------- ---------- ---------- Total revenues 16,196 14,761 10,680 10,078 6,023 5,129 -------- ---------- ---------- ---------- ---------- ---------- Cost of goods sold 5,534 5,967 5,541 5,971 - - Cost of services sold 1,742 1,829 1,754 1,835 - - Interest and other financial charges 2,252 1,729 104 149 2,153 1,585 Insurance losses and policyholder and annuity benefits 779 692 - - 779 692 Provision for losses on financing receivables 251 292 - - 251 292 Other costs and expenses 3,353 3,245 1,207 1,311 2,166 1,951 Minority interest in net earnings of consolidated affiliates 56 29 6 3 50 26 -------- ---------- ---------- ---------- ---------- ---------- Total costs and expenses 13,967 13,783 8,612 9,269 5,399 4,546 -------- ---------- ---------- ---------- ---------- ---------- Earnings from continuing operations before income taxes 2,229 978 2,068 809 624 583 Provision for income taxes (707) (322) (546) (153) (161) (169) -------- ---------- ---------- ---------- ---------- ---------- Earnings from continuing operations 1,522 656 1,522 656 463 414 Gain on transfer of discontinued operations (net of income taxes of $752) - 678 - 678 - - --------- ---------- ---------- ---------- ---------- ---------- Net earnings $1,522 $1,334 $1,522 $1,334 $463 $414 ======== ========== ========== ========== ========== ========== Net earnings per share -a) Continuing operations $0.89 $0.38 Discontinued operations - 0.40 -------- ---------- Net earnings per share $0.89 $0.78 ======== ========== Dividends declared per share -a) $0.36 $0.315 -------- ---------- (a- 1993 data have been adjusted to reflect the two-for-one stock split effective on April 28, 1994. See notes to Condensed Consolidated Financial Statements. 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 Earnings General Electric Company and consolidated affiliates
(Dollars, except per-share amounts, in millions) Six months ended June 30 (Unaudited) --------------------------------------------------------------------------- Consolidated GE GECS ----------------------- ---------------------- ---------------------- 1994 1993 1994 1993 1994 1993 ---------- ---------- ---------- ---------- ---------- ---------- Sales of goods $13,718 $13,343 $13,730 $13,351 $ - $ - Sales of services 4,553 4,075 4,572 4,085 - - Net earnings of GECS - - 793 865 - - GECS revenues from operations 11,768 9,848 - - 11,816 9,892 Other income 339 351 341 355 - - ---------- ---------- ---------- ---------- ---------- ---------- Total revenues 30,378 27,617 19,436 18,656 11,816 9,892 ---------- ---------- ---------- ---------- ---------- ---------- Cost of goods sold 9,974 10,404 9,986 10,412 - - Cost of services sold 3,272 3,278 3,291 3,288 - - Interest and other financial charges 4,531 3,298 195 301 4,344 3,007 Insurance losses and policyholder and annuity benefits 1,472 1,237 - - 1,472 1,237 Provision for losses on financing receivables 421 547 - - 421 547 Other costs and expenses 6,874 6,223 2,454 2,432 4,462 3,829 Minority interest in net earnings of consolidated affiliates 87 49 13 4 74 45 ---------- ---------- ---------- ---------- ---------- ---------- Total costs and expenses 26,631 25,036 15,939 16,437 10,773 8,665 ---------- ---------- ---------- ---------- ---------- ---------- Earnings from continuing operations before income taxes and accounting change 3,747 2,581 3,497 2,219 1,043 1,227 Provision for income taxes (1,157) (840) (907) (478) (250) (362) ---------- ---------- ---------- ---------- ---------- ---------- Earnings from continuing operations before accounting change 2,590 1,741 2,590 1,741 793 865 ---------- ---------- ---------- ---------- ---------- ---------- Earnings from discontinued operations (net of income taxes of $44) - 75 - 75 - - Gain on transfer of discontinued operations (net of income taxes of $752) - 678 - 678 - - ---------- ---------- ---------- ---------- ---------- ---------- Earnings from discontinued operations - 753 - 753 - - ---------- ---------- ---------- ---------- ---------- ---------- Earnings before accounting change 2,590 2,494 2,590 2,494 793 865 Accounting change - cumulative effect to January 1, 1993, of postemployment benefits - (862) - (862) - - ---------- ---------- ---------- ---------- ---------- ---------- Net earnings $2,590 $1,632 $2,590 $1,632 $793 $865 ========== ========== ========== ========== ========== ========== Net earnings per share -a) Continuing operations $1.52 $1.02 Discontinued operations - 0.44 ---------- ---------- Earnings before accounting change 1.52 1.46 Cumulative effect of change in accounting for postemployment benefits - (0.51) ---------- ---------- Net earnings per share $1.52 $0.95 ========== ========== Dividends declared per share -a) $0.72 $0.63 ---------- ---------- (a- 1993 data have been adjusted to reflect the two-for-one stock split effective on April 28, 1994. See notes to Condensed Consolidated Financial Statements. 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.
4 Condensed Statement of Financial Position General Electric Company and consolidated affiliates
(Dollars in millions) Consolidated GE GECS ----------------------- ---------------------- ---------------------- 6/30/94 12/31/93 6/30/94 12/31/93 6/30/94 12/31/93 ---------- ---------- ---------- ---------- ---------- ---------- Cash and equivalents $3,371 $3,218 $1,591 $1,536 $1,780 $1,682 GECS trading securities 22,781 30,165 - - 22,781 30,165 Investment securities 24,822 26,811 74 19 24,748 26,792 Securities purchased under agreements to resell 57,559 43,463 - - 57,559 43,463 Current receivables 7,993 8,195 8,320 8,561 - - Inventories 4,500 3,824 4,500 3,824 - - GECS financing receivables - net 68,678 63,948 - - 68,678 63,948 Other GECS receivables 15,788 15,616 - - 15,873 15,799 Property, plant and equipment (including equipment leased to others) - net 22,095 21,228 9,523 9,542 12,572 11,686 Investment in GECS - - 10,235 10,809 - - Intangible assets 10,757 10,364 6,340 6,466 4,417 3,898 All other assets 23,559 24,674 11,751 10,377 11,808 14,297 ---------- ---------- ---------- ---------- ---------- ---------- Total assets $261,903 $251,506 $52,334 $51,134 $220,216 $211,730 ========== ========== ========== ========== ========== ========== Short-term borrowings $60,186 $62,135 $2,813 $2,391 $57,583 $60,003 Accounts payable 12,791 11,956 2,436 2,331 10,525 9,885 Securities sold under agreements to repurchase 59,321 56,669 - - 59,321 56,669 Securities sold but not yet purchased, at market 19,559 15,332 - - 19,559 15,332 Other GE current liabilities 9,255 9,637 9,255 9,637 - - Long-term borrowings 32,631 28,270 2,915 2,413 29,746 25,885 Insurance reserves and annuity benefits 22,739 22,909 - - 22,739 22,909 All other liabilities 12,263 12,009 8,153 8,482 4,112 3,529 Deferred income taxes 4,852 5,109 15 (299) 4,837 5,408 ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities 233,597 224,026 25,587 24,955 208,422 199,620 ---------- ---------- ---------- ---------- ---------- ---------- Minority interest in equity of consolidated affiliates 1,922 1,656 363 355 1,559 1,301 ---------- ---------- ---------- ---------- ---------- ---------- Common stock (1,853,128,000 shares issued) -a) 593 584 593 584 1 1 Other capital 535 1,398 535 1,398 1,503 2,596 Retained earnings 29,971 28,613 29,971 28,613 8,731 8,212 Less common stock held in treasury (4,715) (4,771) (4,715) (4,771) - - ---------- ---------- ---------- ---------- ---------- ---------- Total share owners' equity 26,384 25,824 26,384 25,824 10,235 10,809 ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities and equity $261,903 $251,506 $52,334 $51,134 $220,216 $211,730 ========== ========== ========== ========== ========== ========== (a- Reflects the two-for-one stock split effective on April 28, 1994. See notes to Condensed Consolidated Financial Statements. June data are unaudited. Consolidating data are shown supplementally for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
5 Condensed Statement of Cash Flows General Electric Company and consolidated affiliates
(Dollars in millions) Six months ended June 30 (Unaudited) ----------------------------------------------------------------------------- Consolidated GE GECS ----------------------- ---------------------- ---------------------- 1994 1993 1994 1993 1994 1993 ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from operating activities - ------------------------------------ Net earnings $2,590 $1,632 $2,590 $1,632 $793 $865 Less earnings from discontinued operations - (753) - (753) - - Adjustments to reconcile net earnings to cash from (used for) continuing operating activities Cumulative effect of accounting change - 862 - 862 - - Depreciation, depletion and amortization 1,521 1,442 736 716 785 726 Earnings retained by GECS - - (519) (715) - - Deferred income taxes 755 (244) 316 (76) 439 (168) Decrease (increase) in GE current receivables 202 32 241 (204) - - Decrease (increase) in GE inventories (676) (409) (676) (409) - - Increase (decrease) in accounts payable 345 (303) 105 (123) 150 17 Increase (decrease) in insurance reserves (86) 771 - - (86) 771 Provision for losses on financing receivables 421 547 - - 421 547 Net change in certain broker-dealer accounts 167 1,998 - - 167 1,998 All other operating activities (1,628) (1,825) (1,275) 192 (261) (2,018) ---------- ---------- ---------- ---------- ---------- ---------- Net cash from continuing operations 3,611 3,750 1,518 1,122 2,408 2,738 Net cash from discontinued operations - 76 - 76 - - ---------- ---------- ---------- ---------- ---------- ---------- Cash from operating activities 3,611 3,826 1,518 1,198 2,408 2,738 ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities - ------------------------------------ Property, plant and equipment (including equipment leased to others) - additions (2,449) (2,547) (727) (620) (1,722) (1,927) Net (increase) decrease in GECS financing receivables (3,748) (228) - - (3,748) (228) Payments for principal businesses purchased (1,484) (1,197) (431) - (1,053) (1,197) All other investing activities 3,631 915 (55) 95 3,692 908 ---------- ---------- ---------- ---------- ---------- ---------- Cash used for investing activities - continuing operations (4,050) (3,057) (1,213) (525) (2,831) (2,444) Cash from investing activities - discontinued operations - 1,230 - 1,230 - - ---------- ---------- ---------- ---------- ---------- ---------- Cash from (used for) investing activities (4,050) (1,827) (1,213) 705 (2,831) (2,444) ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities - ------------------------------------ Net change in borrowings (maturities 90 days or less) (2,962) (2,604) 896 1,011 (3,905) (3,663) Newly issued debt (maturities more than 90 days) 10,946 6,864 520 109 10,426 6,755 Repayments and other reductions (maturities more than 90 days) (6,374) (5,103) (492) (1,387) (5,882) (3,716) Disposition of GE shares from treasury 343 184 343 184 - - Purchase of GE shares for treasury (287) (389) (287) (389) - - Dividends paid to share owners (1,230) (1,078) (1,230) (1,078) (274) (150) All other financing activities 156 (14) - - 156 (14) ---------- ---------- ---------- ---------- ---------- ---------- Cash from (used for) financing activities 592 (2,140) (250) (1,550) 521 (788) ---------- ---------- ---------- ---------- ---------- ---------- Increase (decrease) in cash and cash equivalents 153 (141) 55 353 98 (494) Cash and cash equivalents at beginning of year 3,218 3,129 1,536 1,189 1,682 1,940 ---------- ---------- ---------- ---------- ---------- ---------- Cash and equivalents at June 30 $3,371 $2,988 $1,591 $1,542 $1,780 $1,446 ========== ========== ========== ========== ========== ========== 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.
6 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-half 1994 net earnings included a $210 million ($350 million before tax) first-quarter charge resulting from the discovery of false trading profits created 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 $143 million ($238 million before tax) of the charge related to periods prior to 1994. The United States 7 Securities and Exchange Commission, the United States Attorney for the Southern District of New York, and the New York Stock Exchange are conducting investigations relating to the false trading profits. The Company also completed and released a report on its internal investigation of the matter. See Legal Proceedings beginning on page 15 for information concerning Kidder-related litigation. 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 second quarter of 1994 and 1993 were 1,710,380,465 and 1,707,931,566, respectively. Average shares outstanding for the first six months of 1994 and 1993 were 1,709,354,523 and 1,708,907,316, respectively. 7. GE's inventories consisted of the following:
(Dollars in millions) As of ------------------------- 6/30/94 12/31/93 ------- -------- Raw materials and work in process $ 3,326 $ 2,983 Finished goods 2,521 2,314 Unbilled shipments 176 156 Revaluation to LIFO (1,523) (1,629) ------- ------- Total inventories $ 4,500 $ 3,824 ======= =======
8. Property, plant and equipment, including equipment leased to others, consisted of the following:
(Dollars in millions) As of ------------------------- 6/30/94 12/31/93 ------- -------- Original cost - GE $22,928 $22,441 - GECS 17,159 15,738 ------- ------- Total 40,087 38,179 ------- ------- Accumulated depreciation and amortization - GE 13,405 12,899 - GECS 4,587 4,052 ------- ------- Total 17,992 16,951 ------- ------- Net - GE 9,523 9,542 - GECS 12,572 11,686 ------- ------- Total $22,095 $21,228 ======= ======= 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION A. RESULTS OF OPERATIONS - SECOND QUARTER OF 1994 COMPARED WITH SECOND QUARTER OF 1993 General Electric Company's net earnings for the second quarter of 1994 were $1.522 billion, or $0.89 per share, up 14% from the $1.334 billion, or $0.78 per share, reported in the same quarter last year. These were the highest quarterly earnings in the Company's history. Consolidated revenues were $16.20 billion in 1994's second quarter, an increase of 10% from the prior year's $14.76 billion. Sales of goods and services increased 6%. The sales growth was led by Power Systems, Appliances, Plastics, Transportation Systems, Motors, and GE Information Services, each of which had double-digit increases. GECS' revenues from operations increased 17%. Operating margin in the second quarter of 1994 was a record 15.3% of sales, up more than a full percentage point from last year's comparable (that is, excluding 1993 restructuring provisions) 14.2%. Eight of GE's eleven manufacturing and nonfinancial services businesses increased their comparable margin rates, with five businesses - Power Systems, Transportation Systems, Medical Systems, Appliances, and Motors - - improving by more than one percentage point. As discussed in note 2 to the condensed consolidated financial statements, the Company transferred the discontinued Aerospace businesses during the second quarter of 1993 to a new company controlled by the shareholders of Martin Marietta Corporation, resulting in a net gain of $678 million, or $0.40 per share. The Aerospace gain was included in "earnings from discontinued operations." Also in the second quarter of 1993, the Company adopted explicit restructuring programs to enhance the Company's global competitiveness. The one-time restructuring charges ($0.40 per share after tax) were included in "earnings from continuing operations." SEGMENT ANALYSIS: Comments that follow compare revenues and operating profit by industry segment for the second quarters of 1994 and 1993. * Aircraft Engines operating profit was sharply higher in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit in the 1994 quarter was much lower on considerably lower revenues, reflecting continued weakness in both commercial engine and military markets. * Appliances operating profit was sharply higher in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, 1994 operating profit was still sharply higher as a result of continued productivity and a good increase in revenues. Higher shipments across all product lines much more than offset pricing pressures in refrigeration products. 9 * Broadcasting operating profit was sharply higher in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was down somewhat on modestly higher revenues. An increase in advertising sales related to sporting events, particularly the NBA playoffs, more than offset the lack of a counterpart to revenues from the final episode of "Cheers" in the second quarter of 1993. Higher 1994 programming costs and absence of 1993's profitable "Cheers" episode were the principal reasons for the lower 1994 operating profit. * GECS' net earnings in the second quarter of 1994 were 12% ahead of last year's quarter, with excellent improvements in the Consumer Services, Specialty Insurance and Equipment Management segments much more than offsetting a $29 million net loss at Kidder, Peabody. The poor performance at Kidder, Peabody was principally attributable to mortgage- backed securities market conditions. GECS was not affected by 1993 provisions for restructuring. * Industrial operating profit was sharply higher in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was considerably higher in the second quarter of 1994, primarily due to sharply improved results in the Motors and Transportation Systems businesses and European Lighting Operations. Revenues were somewhat higher in the current-year's quarter, principally because of a strong increase in Transportation Systems' shipments of locomotives. * Materials operating profit was up sharply in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was up considerably in the current period on a good increase in revenues. Increased volume in all businesses and reductions in the cost of materials in the plastics business, coupled with continued productivity, much more than offset generally lower selling prices. * Power Systems operating profit was up sharply in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was still up sharply, reflecting the performance of Power Generation which was well ahead of last year, principally because of a favorable mix of large gas and steam turbine shipments and productivity, the combination of which was only partially offset by lower prices. * Technical Products and Services operating profit was sharply higher in the second quarter of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was considerably higher in this year's quarter on slightly higher revenues. Both GE Information Services and Medical Systems reported strong productivity which more than offset general price erosion. 10 * All Other operating profit, which was unaffected by 1993 restructuring, was up sharply on somewhat higher revenues. The improvement was primarily attributable to income associated with licensing the use of GE know-how to others. B. RESULTS OF OPERATIONS - FIRST HALF OF 1994 COMPARED WITH FIRST HALF OF 1993 Consolidated revenues from continuing operations for the first six months of 1994 aggregated $30.4 billion, up 10% from the comparable $27.6 billion in 1993's first half. GE's sales of goods and services were 5% higher in the first half of the current year as Appliances, Plastics, Power Systems and Transportation Systems improved by double- digits, and more than offset much lower sales of aircraft engine goods and services. Overall, the volume of goods and services sold was up about 8%, approximately one-third of which was offset by lower selling prices. GECS' revenues from operations were up 19%, principally reflecting a higher average level of invested assets from both the acquisitions of portfolios and new businesses and increased volume in established businesses. Net earnings for the first half of 1994 were $2.590 billion, or $1.52 per share, compared with $1.632 billion, or $0.95 per share, in the first half of 1993. Four important factors, all of which have been disclosed previously, should be considered in comparing the Company's first-half operations. These factors are discussed separately in the following paragraphs: * As discussed in note 5, current-year earnings included a one- time charge of $210 million ($350 million before tax), recorded in the first quarter, resulting from the discovery of false trading profits created by the then head U.S. government securities trader at Kidder, Peabody. Approximately $143 million ($238 million before tax) of the charge related to periods prior to 1994. * The year-earlier half included restructuring provisions ($678 million after tax) recorded in the second quarter as discussed above. * The first six months of 1993 included $753 million, or $0.44 per share, of net earnings related to the discontinued Aerospace businesses, as discussed in note 2 to the condensed consolidated financial statements. Such net earnings comprised $678 million from the gain on transfer of the discontinued businesses during the second quarter of 1993 and $75 million from first-quarter 1993 operations. The one-time gain from the transfer and first-quarter 1993 operating results were classified as "earnings from discontinued operations." * The year-earlier period also included a one-time charge of $862 million, or $0.51 per share, to first quarter's earnings for an accounting change associated with the adoption of Statement of Financial Accounting Standards (SFAS) No. 112, Employers' Accounting for 11 Postemployment Benefits. See note 3 to the condensed consolidated financial statements. Operating margin in the first half of 1994 was 14.0% of sales, up substantially from last year's comparable margin rate of 13.2%. Six of GE's manufacturing and nonfinancial services businesses - Appliances, Aircraft Engines, Medical Systems, Motors, NBC and Transportation Systems - improved their comparable rates by one percentage point or more. GE generated $1.5 billion of cash from operating activities in the first six months of 1994, exceeding last year's cash provided from operating activities by more than $300 million. This record performance resulted principally from improvement in earnings, coupled with the continuing success in reducing order-to-remittance cycle times throughout the Company. SEGMENT ANALYSIS: The following comments compare revenues and operating profit by industry segment for the first half of 1994 with the same period of 1993. * Aircraft Engines operating profit was up sharply in the first half of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, operating profit was considerably lower in 1994 on much lower revenues. The impact of the lower revenues, which resulted principally from reduced shipments to both commercial and military customers, was offset somewhat by lower costs and expenses. * Appliances operating profit was up sharply in the first half of 1994 largely because of the impact of restructuring provisions in the comparable 1993 period. Excluding such provisions, the segment still reported sharply higher operating profit on considerably higher revenues. Good productivity and much higher volume across all product lines were the principal reasons for the improved results. * Broadcasting operating profit was sharply higher in the first half of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was much higher, principally because of somewhat higher revenues and continued success in lowering overhead costs, factors that more than offset the negative effect on operating profit of the lack of a counterpart to 1993's final episode of "Cheers" and 1994's higher programming costs. * GECS' earnings of $793 million were 8% lower than the comparable earnings of $865 million a year ago, reflecting the aforementioned one- time, after-tax charge of $210 million at Kidder, Peabody during the first quarter. Kidder, Peabody's net loss amounted to $183 million for the first half of 1994 compared with reported net earnings of $115 million in the same period last year. Excluding estimated effects of the false trading profits from both periods, Kidder, Peabody's net loss 12 amounted to $40 million for the first half of 1994 (compared with net earnings of $81 million for the first six months of 1993) principally due to mortgage-backed securities market conditions. The poor performance at Kidder, Peabody was substantially offset by higher earnings in GECS' Financing Segment, reflecting a higher average level of invested assets and reduced provisions for losses on highly leveraged transaction investments. GECS was not affected by 1993 provisions for restructuring. * Industrial operating profit was sharply higher in the first half of 1994 because of the impact of restructuring provisions recorded during the comparable 1993 period. Excluding such restructuring provisions, operating profit was well ahead of the year-earlier half on a good increase in revenues. The favorable performance in both operating profit and revenues was led by Motors and Transportation Systems. In addition, European Lighting Operations improved sharply, largely because of strong productivity gains. * Materials operating profit was much higher in the first half of 1994, primarily because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was somewhat higher in the current period on a good increase in revenues. The effects of productivity and a much higher level of shipments were partially offset by unexpected costs and inefficiencies during the first quarter of 1994 and lower selling prices throughout the first half of the year. * Power Systems operating profit was sharply higher during the first half of 1994 because of the impact of restructuring provisions during the comparable 1993 period. Excluding such provisions, operating profit was down slightly, despite a good increase in revenues, as favorable volume and productivity failed to offset lower selling prices. * Technical Products and Services operating profit was sharply higher in the first half of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was considerably higher, reflecting strong productivity in both GE Information Services and Medical Systems, and slightly higher revenues. In connection with the latter, about one-half of the effect of a higher level of shipments was offset by lower selling prices. * All Other operating profit, which was unaffected by restructuring, was up sharply on somewhat higher revenues. The improvement was primarily attributable to income related to licensing the use of GE know-how to others. C. FINANCIAL CONDITION With respect to the Condensed Statement of Financial Position, consolidated assets of $261.9 billion were $10.4 billion higher at June 30, 1994, than the $251.5 billion at December 31, 1993. GECS' assets increased $8.5 billion; GE's assets were up $1.2 billion; eliminations between the two groups were $0.7 billion lower, principally because of 13 lower investment in GECS which was more than explained by the mark-to- market adjustment of investment securities. GECS' assets increased $8.5 billion from the end of last year, representing the net result of changes in several accounts. Increases included an increase in securities purchased under agreements to resell (reverse repurchase agreements) of $14.1 billion at Kidder, Peabody, principally attributable to the use of these agreements to cover higher levels of short inventory positions and "matched-book" transactions. GE Capital Corporation's financing receivables, which net of reserves aggregated $68.7 billion at the end of the first half of 1994, increased $4.7 billion from the year-end 1993. Management believes that GE Capital's reserves of $1.9 billion (2.63% of the receivables balance at June 30, 1994 - the same percent as year end 1993) are appropriate given the strength and diversity of the portfolio, and current economic circumstances. A number of GECS' businesses added a total of $0.9 billion to equipment leased to others during the first six months of 1994. Partially offsetting the higher balances in these accounts were a decrease in GECS' trading securities (entirely Kidder, Peabody) of $7.4 billion, reflecting principally reduced activity in the fixed-income business as a result of the current interest-rate environment; a decrease in other assets of $2.5 billion, primarily a reduction in mortgages acquired for resale; and a decrease in investment securities of $2.0 billion, resulting principally 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. An increase of $1.2 billion in GE's assets from year end 1993 consisted of numerous relatively small changes, the largest of which resulted from normal seasonal increases of inventories ($0.7 billion). Consolidated liabilities of $233.6 billion at June 30, 1994, were $9.6 billion higher than the year-end 1993 balance of $224.0 billion. GECS' liabilities increased $8.8 billion; GE's liabilities were up $0.6 billion. The GECS' liabilities increase of $8.8 billion was, as with assets, the net result of changes in several accounts. Increases included (1) higher securities sold but not yet purchased (short sales) of $4.2 billion, primarily because of a shift in the mix of financial instruments used to effect hedging strategies at Kidder, Peabody, (2) an increase of $2.7 billion in securities sold under agreements to repurchase (repurchase agreements) at Kidder, Peabody, reflecting principally the net changes in trading securities, reverse purchase agreements and short sales discussed previously, (3) higher borrowings of $1.4 billion (long-term borrowings up $3.8 billion; short-term borrowings down $2.4 billion), primarily at GE Capital, reflecting a change in the mix of borrowings to finance its asset growth, and (4) higher accounts payable and all other liabilities of $0.6 billion each, comprising the net result of numerous, relatively small changes. These increases were partially offset by a $0.6 billion reduction in the balance of deferred income taxes, primarily deferred tax benefits associated with unrealized losses on investment securities. 14 GE's liabilities increased $0.6 billion during the first six months of 1994, which was more than explained by an increase of $0.9 billion in the level of borrowings (short-term up $0.4 billion; long- term up $0.5 billion) primarily to fund additional cash requirements during the period, including acquisition of a majority interest in Nuovo Pignone, an Italian electrical equipment maker. GE's total borrowings were $5.7 billion ($2.8 billion short-term and $2.9 billion long-term) at June 30, 1994. The Company's ratio of total debt to capital at the end of the first half of 1994 was 17.6% compared with 15.5% at the end of last year and 21.5% at June 30, 1993. With respect to cash flows, consolidated cash and cash equivalents were 3.4 billion at June 30, 1994, $0.2 billion higher than December 31, 1993. Cash and cash equivalents were $3.0 billion at June 30, 1993, $0.1 billion below December 31, 1992. GE's cash and equivalents increased $0.1 billion to $1.6 billion at June 30, 1994, compared with $1.5 billion at year end 1993. During the first half of 1994, cash from operating activities totaled $1.5 billion, despite the use of (a) $1.3 billion for "all other activities," which consisted of the net result of numerous changes (none of which was significant) in all other assets and other current and noncurrent liabilities, and (b) $0.7 billion for normal seasonal increases in inventories 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 ($1.2 billion) primarily was attributable to investments in new plant and equipment for a wide variety of projects to reduce costs and improve efficiencies, and for acquisition of a majority interest in Nuovo Pignone. Cash used for financing activities ($0.3 billion) included $1.2 billion for dividends paid to share owners, representing a 14% increase in the per-share dividend rate compared with the first half of last year, which was offset partially by cash from higher borrowings of $0.9 billion. GE's cash and equivalents increased $0.3 billion to $1.5 billion at June 30, 1993, compared with $1.2 billion at year end 1992. During the first half of 1993, cash from continuing operating activities totaled $1.1 billion, despite the use of cash for normal seasonal increases in inventories ($0.4 billion) from inventory levels which were much lower at the end of 1992 than they had been at the end of 1991. Cash used for continuing investing activities ($0.5 billion) was more than explained by investments in new plant and equipment for a wide variety of projects. Cash used for financing activities ($1.6 billion) included $1.1 billion for dividends paid to share owners, representing a 15% increase in the per-share dividend rate compared with the first half of 1992, $0.3 billion to reduce borrowings and $0.2 billion for net repurchases of the Company's common stock for treasury. Cash from discontinued operations totaled $1.3 billion, principally cash received upon transfer of GE's Aerospace businesses. GECS' cash and equivalents increased $0.1 billion during the first half of 1994. Cash was used primarily to fund GE Capital's growth in financing receivables ($3.7 billion), for additions to equipment that is provided to third parties on operating leases ($1.7 billion), and for acquisitions of businesses ($1.1 billion), the largest of which was Northern Telecom Financial Corporation. Cash provided by operating activities totaled $2.4 billion. Cash of $3.7 billion was provided by "all other investing activities," principally because of a decrease in 15 other assets ($1.5 billion), largely attributable to a reduced level of mortgages acquired for resale, and because of a net decrease ($1.8 billion) in GE Capital's other receivables and equipment leased to others. Funds provided from increased borrowings during the first six months of 1994 aggregated $0.6 billion. GECS' cash and equivalents decreased $0.5 billion during the first half of 1993. Cash was used primarily for additions to equipment that is provided to third parties on operating leases ($1.9 billion), for acquisitions of businesses ($1.2 billion), including GNA Corporation, and to reduce borrowings ($0.6 billion). These uses were mostly funded by cash provided from operating activities ($2.7 billion). Included in this category was cash provided from "net change in broker-dealer accounts" ($2.0 billion) which consisted of $8.7 billion from repurchase and reverse repurchase agreements and $3.7 billion from short sales, partially offset by cash usage of $10.4 billion for marketable securities. Cash used for "all other operating activities" ($2.0 billion) consisted primarily of changes in GECS' all other receivables associated with Kidder's increased trading activities. Cash provided from "all other investing activities" of $0.9 billion was generated principally from disposition of equipment leased to others ($1.1 billion). PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS GENERAL - ------- Following the Company's announcement on April 17, 1994, of a $210 million charge to net earnings based upon its discovery of false trading profits at its indirect subsidiary, Kidder, Peabody & Co., Incorporated ("Kidder"), two civil suits purportedly brought on behalf of the Company as shareholder derivative actions were filed in New York State Supreme Court in New York County. Both suits claim that the Company's directors breached their fiduciary duties to the Company by failing to adequately supervise and control the Kidder employee responsible for the irregular trading. One suit, claiming damages of over $350 million, was filed on May 10, 1994, by the Teachers' Retirement System of Louisiana against the Company, its directors, Kidder, its parent, Kidder, Peabody Group Inc., and certain of Kidder's former officers and directors. The other suit was filed on June 3, 1994, by William Schrank and others against the Company's directors claiming unspecified damages and other relief. In addition, various shareholders of the Company have filed purported class action suits claiming that the Company, and certain of its directors and officers, among others, allegedly violated federal securities laws by issuing statements concerning the Company's financial condition that included the false trading profits at Kidder, and seeking compensatory damages for shareholders who purchased the Company's stock beginning as early as January 1993. 16 ENVIRONMENTAL - ------------- As previously reported, 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 the U.S. Environmental Protection Agency (EPA) TSCA Inventory at its Waterford facility. The complaint seeks a penalty of $137,250. EPA has since agreed 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 discussions are underway. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The annual meeting of Share Owners of General Electric Company was held on April 27, 1994. (b) All director nominees were elected. (c) Certain matters voted upon at the meeting and the votes cast with respect to such matters are as follows: PROPOSALS AND VOTE TABULATIONS
Votes Cast ------------------- Broker For Against Abstain Non-votes --- ------- ------- --------- MANAGEMENT PROPOSALS Approval of appointment of independent auditors 703,678,011 2,158,047 5,767,000 0 Amendment of Certificate of Incorporation regarding 2-for-1 stock split and increase in number of authorized shares 704,911,164 3,858,321 2,833,573 0 SHARE OWNER PROPOSALS (1) Relating to political contributions 25,057,359 556,189,579 53,854,476 76,501,644 (2) Relating to economic conversion 23,911,743 545,069,554 66,120,115 76,501,646 (3) Relating to NBC programming 38,991,672 537,982,577 58,127,163 76,501,646 (4) Relating to the CERES principles 38,441,249 544,610,793 52,049,370 76,501,646
17 ELECTION OF DIRECTORS
Director Votes Received Votes Withheld H. Brewster Atwater, Jr. 704,867,216 6,735,842 D. Wayne Calloway 704,779,839 6,823,219 Silas S. Cathcart 704,717,111 6,885,947 Lawrence E. Fouraker 703,923,653 7,679,405 Paolo Fresco 704,794,001 6,809,057 Claudio X. Gonzalez 704,655,748 6,947,310 Henry H. Henley, Jr. 704,231,474 7,371,584 David C. Jones 703,657,795 7,945,263 Robert E. Mercer 704,705,627 6,897,431 Gertrude G. Michelson 704,533,416 7,069,642 Barbara Scott Preiskel 704,470,653 7,132,405 Frank H. T. Rhodes 704,658,994 6,944,064 Andrew C. Sigler 703,692,307 7,910,751 Douglas A. Warner III 704,846,506 6,756,552 John F. Welch, Jr. 704,299,898 7,303,160
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 June 30, 1994. Report on Form 8-K (Items 5 and 7) filed on April 28, 1994, regarding amendment of the Company's 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 split the common stock (including outstanding shares) on a 2- for-1 basis. 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) August 15, 1994 Philip D. Ameen - --------------- ---------------------------------------------------- Date Vice President and Comptroller Duly Authorized Officer and Principal Accounting Officer EX-11 2 EXHIBIT 11 (1) EXHIBIT 11 GENERAL ELECTRIC COMPANY COMPUTATION OF PER SHARE EARNINGS -a) (Shares in thousands, dollar amounts, except earnings per share, in millions)
Fully Earnings Primary diluted per common earnings earnings Second quarter ended June 30, 1994 share per share per share - ---------------------------------- ---------- --------- --------- Net earnings applicable to common stock $1,522 $1,522 $1,522 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - - - --------- --------- --------- Earnings for per-share calculations $1,522 $1,522 $1,522 --------- --------- --------- Average number of shares outstanding 1,710,380 1,710,380 1,710,380 Average number of deferred incentive compensation shares - 8,607 8,607 Average stock option shares - 8,917 8,917 Average number of restricted stock units - 1,084 1,084 --------- --------- --------- Shares for earnings calculation 1,710,380 1,728,988 1,728,988 --------- --------- --------- Earnings per share $0.89 $0.88 $0.88 - ------------------ ========= ========= ========= Second quarter ended June 30, 1993 - ---------------------------------- Net earnings applicable to common stock $1,334 $1,334 $1,334 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 4 4 --------- --------- --------- Earnings for per-share calculations $1,334 $1,338 $1,338 --------- --------- --------- Average number of shares outstanding 1,707,932 1,707,932 1,707,932 Average number of deferred incentive compensation shares - 8,778 8,778 Average stock option shares - 10,888 11,660 --------- --------- --------- Shares for earnings calculation 1,707,932 1,727,598 1,728,370 --------- --------- --------- Earnings per share $0.78 $0.77 $0.77 - ------------------ ========= ========= ========= (a- Adjusted to reflect the two-for-one stock split effective on April 28, 1994.
(2) EXHIBIT 11 GENERAL ELECTRIC COMPANY COMPUTATION OF PER SHARE EARNINGS -a) (Shares in thousands, dollar amounts, except earnings per share, in millions)
Fully Earnings Primary diluted per common earnings earnings Six months ended June 30, 1994 share per share per share - ---------------------------------- ---------- --------- --------- Net earnings applicable to common stock $ 2,590 $ 2,590 $ 2,590 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 2 2 --------- --------- --------- Earnings for per-share calculations $ 2,590 $ 2,592 $ 2,592 --------- --------- --------- Average number of shares outstanding 1,709,355 1,709,355 1,709,355 Average number of deferred incentive compensation shares - 8,557 8,557 Average stock option shares - 10,679 10,679 Average number of restricted stock units - 1,119 1,119 --------- --------- --------- Shares for earnings calculation 1,709,355 1,729,710 1,729,710 --------- --------- --------- Earnings per share $1.52 $1.50 $1.50 - ------------------ ========= ========= ========= Six months ended June 30, 1993 - ------------------------------ Net earnings applicable to common stock $ 1,632 $ 1,632 $ 1,632 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 4 4 --------- --------- --------- Earnings for per-share calculations $ 1,632 $ 1,636 $ 1,636 --------- --------- --------- Average number of shares outstanding 1,708,908 1,708,908 1,708,908 Average number of deferred incentive compensation shares - 8,578 8,578 Average stock option shares - 9,804 11,636 --------- --------- --------- Shares for earnings calculation 1,708,908 1,727,290 1,729,122 --------- --------- --------- Earnings per share $0.95 $0.95 $0.95 - ------------------ ========= ========= ========= (a- Adjusted to reflect the two-for-one stock split effective on April 28, 1994.
EX-12 3 EXHIBIT 12 EXHIBIT 12 GENERAL ELECTRIC COMPANY RATIO OF EARNINGS TO FIXED CHARGES (Dollars in millions) Six months ended June 30, 1994 ----------------- GE except GECS - --------------- "Earnings" -a) $3,510 Less: Equity in undistributed earnings of General Electric Capital Services, Inc. -b) (519) Plus: Interest and other financial charges included in expense 195 One-third of rental expense -c) 106 ------- Adjusted "earnings" $3,292 ======= Fixed Charges: Interest and other financial charges $195 Interest capitalized 8 One-third of rental expense -c) 106 ------- Total fixed charges $309 ======= Ratio of earnings to fixed charges 10.65 ======= General Electric Company and consolidated affiliates - ---------------------------------------------------- "Earnings" -a) $3,834 Plus: Interest and other financial charges included in expense 4,551 One-third of rental expense -c) 190 ------- Adjusted "earnings" $8,575 ======= Fixed Charges: Interest and other financial charges $4,551 Interest capitalized 13 One-third of rental expense -c) 190 ------- Total fixed charges $4,754 ======= Ratio of earnings to fixed charges 1.80 ======= (a- Earnings before income taxes and minority interest. (b- Earnings after income taxes. (c- Considered to be representative of interest factor in rental expense. -----END PRIVACY-ENHANCED MESSAGE-----