-----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, YzNTFIKt/Q7175bgP1ei+71u69IZNzbb1CSpfART+0MBeXLGnqhx4PFRUp+0xe4b FHN9cRpueWX6NbYd+EGx+w== 0000040545-94-000025.txt : 19941104 0000040545-94-000025.hdr.sgml : 19941104 ACCESSION NUMBER: 0000040545-94-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940930 FILED AS OF DATE: 19941103 SROS: BSE SROS: CBOE SROS: MSE SROS: NYSE 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: 94557446 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 GENERAL ELECTRIC COMPANY THIRD QUARTER 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 SEPTEMBER 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 1,709,660,247 shares of common stock, par value of $0.32 per share, outstanding at September 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)
Third quarter ended September 30 (Unaudited) -------------------------------------------------------------------------- Consolidated GE GECS ----------------------- ---------------------- --------------------- 1994 1993 1994 1993 1994 1993 ---------- ---------- ---------- ---------- ---------- --------- Sales of goods $7,414 $6,906 $7,419 $6,909 $ - $ - Sales of services 1,952 1,865 1,965 1,870 - - Net earnings of GECS - - 526 493 - - GECS revenues from operations 6,597 5,898 - - 6,618 5,919 Other income 190 189 188 191 - - ---------- ---------- ---------- ---------- ---------- ---------- Total revenues 16,153 14,858 10,098 9,463 6,618 5,919 ---------- ---------- ---------- ---------- ---------- ---------- Cost of goods sold 5,532 5,222 5,537 5,225 - - Cost of services sold 1,393 1,351 1,406 1,356 - - Interest and other financial charges 2,595 2,016 121 125 2,476 1,896 Insurance losses and policyholder and annuity benefits 1,089 809 - - 1,089 809 Provision for losses on financing receivables 186 200 - - 186 200 Other costs and expenses 3,387 3,288 1,243 1,178 2,161 2,128 Minority interest in net earnings of consolidated affiliates 33 62 8 9 25 53 ---------- ---------- ---------- ---------- ---------- ---------- Total costs and expenses 14,215 12,948 8,315 7,893 5,937 5,086 ---------- ---------- ---------- ---------- ---------- ---------- Earnings before income taxes 1,938 1,910 1,783 1,570 681 833 Provision for income taxes (570) (704) (415) (364) (155) (340) ---------- ---------- ---------- ---------- ---------- ---------- Net earnings $1,368 $1,206 $1,368 $1,206 $526 $493 ========== ========== ========== ========== ========== ========== Net earnings per share -a) $0.80 $0.71 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. Consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
3 Condensed Statement of Earnings General Electric Company and consolidated affiliates
(Dollars, except per-share amounts, in millions) Nine months ended September 30 (Unaudited) -------------------------------------------------------------------------- Consolidated GE GECS ----------------------- ---------------------- --------------------- 1994 1993 1994 1993 1994 1993 ---------- ---------- ---------- ---------- ---------- --------- Sales of goods $21,132 $20,249 $21,149 $20,260 $ - $ - Sales of services 6,505 5,940 6,537 5,955 - - Net earnings of GECS - - 1,319 1,358 - - GECS revenues from operations 18,365 15,746 - - 18,434 15,811 Other income 529 540 529 546 - - ---------- ---------- ---------- ---------- ---------- --------- Total revenues 46,531 42,475 29,534 28,119 18,434 15,811 ---------- ---------- ---------- ---------- ---------- --------- Cost of goods sold 15,506 15,626 15,523 15,637 - - Cost of services sold 4,665 4,629 4,697 4,644 - - Interest and other financial charges 7,126 5,314 316 426 6,820 4,903 Insurance losses and policyholder and annuity benefits 2,561 2,046 - - 2,561 2,046 Provision for losses on financing receivables 607 747 - - 607 747 Other costs and expenses 10,261 9,511 3,697 3,610 6,623 5,957 Minority interest in net earnings of consolidated affiliates 120 111 21 13 99 98 ---------- ---------- ---------- ---------- ---------- --------- Total costs and expenses 40,846 37,984 24,254 24,330 16,710 13,751 ---------- ---------- ---------- ---------- ---------- --------- Earnings from continuing operations before income taxes and accounting change 5,685 4,491 5,280 3,789 1,724 2,060 Provision for income taxes (1,727) (1,544) (1,322) (842) (405) (702) ---------- ---------- ---------- ---------- ---------- --------- Earnings from continuing operations before accounting change 3,958 2,947 3,958 2,947 1,319 1,358 ---------- ---------- ---------- ---------- ---------- --------- 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 3,958 3,700 3,958 3,700 1,319 1,358 Accounting change - cumulative effect to January 1, 1993, of postemployment benefits - (862) - (862) - - ---------- ---------- ---------- ---------- ---------- --------- Net earnings $3,958 $2,838 $3,958 $2,838 $1,319 $1,358 ========== ========== ========== ========== ========== ========= Net earnings per share -a) Continuing operations $2.32 $1.73 Discontinued operations - 0.44 ---------- ---------- Earnings before accounting change 2.32 2.17 Cumulative effect of change in accounting for postemployment benefits - (0.51) ---------- ---------- Net earnings per share $2.32 $1.66 ========== ========== Dividends declared per share -a) $1.08 $0.945 ========== ========== (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. Consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns.
4 Condensed Statement of Financial Position General Electric Company and consolidated affiliates
(Dollars in millions) Consolidated GE GECS ----------------------- ---------------------- ---------------------- 9/30/94 12/31/93 9/30/94 12/31/93 9/30/94 12/31/93 ---------- ---------- ---------- ---------- ---------- ---------- Cash and equivalents $3,343 $3,218 $1,745 $1,536 $1,598 $1,682 GECS trading securities 19,971 30,165 - - 19,971 30,165 Investment securities 27,010 26,811 138 19 26,872 26,792 Securities purchased under agreements to resell 45,569 43,463 - - 45,569 43,463 Current receivables 7,829 8,195 8,047 8,561 - - Inventories 4,670 3,824 4,670 3,824 - - GECS financing receivables - net 70,599 63,948 - - 70,599 63,948 Other GECS receivables 18,447 15,616 - - 18,560 15,799 Property, plant and equipment (including equipment leased to others) - net 22,806 21,228 9,552 9,542 13,254 11,686 Investment in GECS - - 10,386 10,809 - - Intangible assets 10,794 10,364 6,298 6,466 4,496 3,898 All other assets 23,835 24,674 12,225 10,377 11,610 14,297 ---------- ---------- ---------- ---------- ---------- ---------- Total assets $254,873 $251,506 $53,061 $51,134 $212,529 $211,730 ========== ========== ========== ========== ========== ========== Short-term borrowings $59,879 $62,135 $3,368 $2,391 $56,755 $60,003 Accounts payable 13,732 11,956 2,811 2,331 11,099 9,885 Securities sold under agreements to repurchase 49,773 56,669 - - 49,773 56,669 Securities sold but not yet purchased, at market 16,021 15,332 - - 16,021 15,332 Other GE current liabilities 8,723 9,637 8,723 9,637 - - Long-term borrowings 35,810 28,270 2,675 2,413 33,165 25,885 Insurance reserves and annuity benefits 24,817 22,909 - - 24,817 22,909 All other liabilities 12,159 12,009 8,033 8,482 4,005 3,529 Deferred income taxes 5,147 5,109 188 (299) 4,959 5,408 ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities 226,061 224,026 25,798 24,955 200,594 199,620 ---------- ---------- ---------- ---------- ---------- ---------- Minority interest in equity of consolidated affiliates 1,936 1,656 387 355 1,549 1,301 ---------- ---------- ---------- ---------- ---------- ---------- Common stock (1,853,128,000 shares issued) -a) 593 584 593 584 11 1 Other capital 447 1,398 447 1,398 1,309 2,596 Retained earnings 30,723 28,613 30,723 28,613 9,066 8,212 Less common stock held in treasury (4,887) (4,771) (4,887) (4,771) - - ---------- ---------- ---------- ---------- ---------- ---------- Total share owners' equity 26,876 25,824 26,876 25,824 10,386 10,809 ---------- ---------- ---------- ---------- ---------- ---------- Total liabilities and equity $254,873 $251,506 $53,061 $51,134 $212,529 $211,730 ========== ========== ========== ========== ========== ========== (a- Adjusted to reflect the two-for-one stock split effective on April 28, 1994. See notes to Condensed Consolidated Financial Statements. September data are unaudited. Consolidating data are shown 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) Nine months ended September 30 (Unaudited) ------------------------------------------------------------------------- Consolidated GE GECS ----------------------- ---------------------- ---------------------- 1994 1993 1994 1993 1994 1993 ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from operating activities - ------------------------------------ Net earnings $3,958 $2,838 $3,958 $2,838 $1,319 $1,358 Less earnings from discontinued operations - (753) - (753) - - 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 2,324 2,230 1,106 1,122 1,218 1,108 Earnings retained by GECS - - (864) (898) - - Deferred income taxes 1,015 (55) 497 132 518 (187) Decrease (increase) in GE current receivables 366 141 514 (393) - - Decrease (increase) in GE inventories (846) (180) (846) (180) - - Increase (decrease) in accounts payable 1,196 1,617 480 (97) 634 2,162 Increase in insurance reserves 687 1,196 - - 687 1,196 Provision for losses on financing receivables 607 747 - - 607 747 Net change in certain broker-dealer accounts 1,881 (3,145) - - 1,881 (3,145) All other operating activities (4,348) 483 (2,235) (72) (2,151) 628 ---------- ---------- ---------- ---------- ---------- ---------- Net cash provided from continuing operations 6,840 5,981 2,610 2,561 4,713 3,867 Net cash provided from discontinued operations - 76 - 76 - - ---------- ---------- ---------- ---------- ---------- ---------- Cash provided from operating activities 6,840 6,057 2,610 2,637 4,713 3,867 ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from investing activities - ------------------------------------ Property, plant and equipment (including equipment leased to others) - additions (4,777) (3,750) (1,115) (990) (3,662) (2,760) Net (increase) decrease in GECS financing receivables (6,335) (953) - - (6,335) (953) Payments for principal businesses purchased (1,874) (2,046) (560) - (1,314) (2,046) All other investing activities 3,733 (815) (3) 102 3,721 (831) ---------- ---------- ---------- ---------- ---------- ---------- Cash provided from (used for) investing activities - Continuing operations (9,253) (7,564) (1,678) (888) (7,590) (6,590) - Discontinued operations - 1,230 - 1,230 - - ---------- ---------- ---------- ---------- ---------- ---------- Cash provided from (used for) investing activities (9,253) (6,334) (1,678) 342 (7,590) (6,590) ---------- ---------- ---------- ---------- ---------- ---------- Cash flows from financing activities - ------------------------------------ Net change in borrowings (maturities 90 days or less) (4,472) (1,459) 1,238 727 (5,723) (2,259) Newly issued debt (maturities more than 90 days) 18,118 11,111 676 172 17,442 10,939 Repayments and other reductions (maturities more than 90 days) (9,258) (7,619) (675) (1,592) (8,583) (6,027) Disposition of GE shares from treasury 441 260 441 260 - - Purchase of GE shares for treasury (557) (622) (557) (622) - - Dividends paid to share owners (1,846) (1,616) (1,846) (1,616) (455) (460) All other financing activities 112 32 - - 112 32 ---------- ---------- ---------- ---------- ---------- ---------- Cash provided from (used for) financing activities 2,538 87 (723) (2,671) 2,793 2,225 ---------- ---------- ---------- ---------- ---------- ---------- Increase (decrease) in cash and cash equivalents 125 (190) 209 308 (84) (498) Cash and cash equivalents at beginning of year 3,218 3,129 1,536 1,189 1,682 1,940 ---------- ---------- ---------- ---------- ---------- ---------- Cash and equivalents at September 30 (Unaudited) $3,343 $2,939 $1,745 $1,497 $1,598 $1,442 ========== ========== ========== ========== ========== ========== 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.
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 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. Net earnings for the first nine months of 1994 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 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. 7 6. GE's inventories consisted of the following:
(Dollars in millions) As of ------------------------- 9/30/94 12/31/93 ------- -------- Raw materials and work in process $ 3,513 $ 2,983 Finished goods 2,419 2,314 Unbilled shipments 224 156 Revaluation to LIFO (1,486) (1,629) ------- ------- Total inventories $ 4,670 $ 3,824 ======= =======
7. Property, plant and equipment (including equipment leased to others) - net consisted of the following:
(Dollars in millions) As of ------------------------- 9/30/94 12/31/93 ------- -------- Original cost - GE $23,274 $22,441 - GECS 18,072 15,738 ------- ------- Total 41,346 38,179 ------- ------- Accumulated depreciation and amortization - GE 13,722 12,899 - GECS 4,818 4,052 ------- ------- Total 18,540 16,951 ------- ------- Net - GE 9,552 9,542 - GECS 13,254 11,686 ------- ------- Total $22,806 $21,228 ======= ======= 8. GE's authorized common stock consisted of 2,200,000,000 shares having a par value of $0.32 each. Average shares outstanding for the third quarter of 1994 and 1993 were 1,711,013,810 and 1,707,082,600, respectively. Average shares outstanding for the first nine months of 1994 and 1993 were 1,709,430,954 and 1,708,148,224, respectively. The number of shares outstanding for 1993 have been adjusted to reflect the 2-for-1 stock split effective on April 28, 1994. 9. On October 17, 1994, the Company entered into an agreement with Paine Webber Group Inc. (PaineWebber) under which PaineWebber may acquire certain Kidder, Peabody assets and businesses. The agreement also provides that GE will retain Kidder, Peabody's other businesses, which PaineWebber has the right to review and acquire. The transaction is subject to the completion of due diligence and approval by various regulatory authorities. 8 ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION A. Results of Operations - Third quarter of 1994 compared with third quarter of 1993 General Electric Company's net earnings for the third quarter of 1994 were $1.368 billion, an increase of 13% from $1.206 billion in the comparable 1993 period. Net earnings per share were $0.80 in the third quarter of 1994, up 13% from $0.71 in 1993's comparable period. Consolidated revenues were $16.15 billion in 1994's third quarter, an increase of 9% from the prior year's $14.86 billion. Sales of goods and services increased 7%. The sales growth was led by Plastics, Power Systems, Transportation Systems, and Appliances. GECS' revenues from operations increased 12%. Operating margin in the third quarter of 1994 was a third-quarter record 12.8% of sales, up 1.2 percentage points from last year's 11.6%. This was the second consecutive quarter of an improvement of more than 1 percentage point. Segment Analysis: Comments that follow compare revenues and operating profit by industry segment for the third quarters of 1994 and 1993. * Aircraft Engines revenues and operating profit in the 1994 quarter were considerably lower, reflecting continued weakness in both commercial engine and military markets. * Appliances operating profit was sharply higher in the third quarter of 1994 as a result of continued productivity and somewhat higher revenues. In connection with the latter, increases in the volume of shipments across most product lines much more than offset pricing pressures, which particularly affected refrigerator products. * Broadcasting operating profit was sharply ahead of the third quarter last year on slightly higher revenues. The favorable results reflected principally improved prime-time performance and pricing and continued strength in the local markets served by NBC's owned-and-operated television stations. * GECS' net earnings in the third quarter of 1994 were 7% ahead of last year's quarter, with particularly strong performance in the Consumer Services business. This, coupled with improved results in the Middle Market business and no current-year counterpart to the unfavorable effects of the 1993 increase in the federal tax rate from 34% to 35%, more than offset an $89 million net loss ($85 million before amortization of goodwill) at Kidder, Peabody and lower earnings in the Specialty Insurance segment. The poor performance at Kidder, Peabody was largely attributable to mortgage-backed securities market conditions and reduced underwritings. The lower earnings in the Specialty Insurance Segment were attributable to the effects of poor economic conditions and housing value declines in southern California. 9 * Industrial operating profit was considerably higher in the third quarter of 1994 on a good increase in revenues. Strong productivity in the Lighting and Motors businesses and significantly higher shipments of locomotives in Transportation Systems were the primary reasons for the favorable performance. * Materials operating profit was up substantially in the third quarter of 1994 on much higher revenues. Increased volume of shipments in all businesses and strong productivity much more than offset generally lower selling prices and increases in the cost of materials. * Power Systems revenues and operating profit were considerably higher in the third quarter of 1994. The increased volume, which was principally attributable to sales associated with the Tokyo Electric Power Company advanced boiling water reactor project, reduced material costs and productivity more than offset lower selling prices. * Technical Products and Services operating profit was slightly higher in the third quarter of 1994 on a modest increase in revenues. Both GE Information Services and Medical Systems reported good productivity which about offset erosion in selling prices. * All Other operating profit and revenues were up sharply, reflecting higher income associated with licensing the use of GE know-how to others. B. Results of Operations - First nine months of 1994 compared with first nine months of 1993 Consolidated revenues from continuing operations for the first nine months of 1994 aggregated $46.53 billion, up 10% from the comparable $42.48 billion in 1993's first nine months. GE's sales of goods and services were 6% higher in the first nine months of the current year as Plastics, Appliances, 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 shipments was about 8% higher in the first nine months of 1994, however the effect on sales was partially offset by lower selling prices. GECS' revenues from operations were up 17%, principally reflecting a higher average level of invested assets from both the acquisition of portfolios and new businesses and increased volume in established businesses. Net earnings for the first nine months of 1994 were $3.958 billion, or $2.32 per share, compared with $2.838 billion, or $1.66 per share, in the first nine months of 1993. Four important factors to consider in comparing the Company's nine months operations 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. 10 * The year-earlier nine months included in "earnings from continuing operations" one-time restructuring charges ($678 million after tax) recorded in the second quarter to cover explicit programs to enhance the Company's global competitiveness. * The first nine 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 Postemployment Benefits. See note 3 to the condensed consolidated financial statements. Operating margin in the first nine months of 1994 was 13.6% of sales, up almost one percentage point from last year's comparable (that is, excluding 1993 restructuring provisions) margin rate of 12.7%, led by improvements at Appliances and NBC. GE generated $2.6 billion of cash from operating activities in the first nine months of 1994, equaling last year's record performance. Important factors were higher earnings and the continued improvement in inventory turnover, offset partially by lower 1994 progress collections. Segment Analysis: The following comments compare revenues and operating profit by industry segment for the first nine months of 1994 with the same period in 1993. * Aircraft Engines operating profit was up sharply in the first nine months of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such restructuring provisions, there was a considerable decrease in operating profit in 1994 on much lower revenues, reflecting, as expected, the continuing weakness in both commercial and military markets. * Appliances operating profit was up sharply in the first nine months 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 nine months of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was substantially higher. The favorable results included the effect of somewhat higher revenues, particularly sales associated with sporting events such as the NBA playoffs; strength in the operating results of NBC's owned-and-operated television stations; and continued success in lowering overhead costs. 11 * GECS' earnings of $1.319 billion were 3% lower than the comparable earnings of $1.358 billion 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 $272 million for the first nine months of 1994 compared with reported net earnings of $186 million in the same period last year. Excluding estimated effects of the false trading profits from both periods, Kidder, Peabody's net loss amounted to $129 million for the first nine months of 1994 (compared with net earnings of $99 million for the first nine months of 1993) attributable principally to mortgage-backed securities market conditions and reduced underwritings. 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 in the Specialized Financing business. GECS was not affected by 1993 provisions for restructuring. * Industrial operating profit was sharply higher in the first nine months of 1994 because of the impact of restructuring provisions recorded during the comparable 1993 period. Excluding such restructuring provisions, operating profit was considerably ahead of the year-earlier period on a good increase in revenues. The favorable performance in both operating profit and revenues was led by Motors and Transportation Systems, with a significantly higher level of shipments of locomotives in Transportation Systems and much higher shipments and improved productivity in Motors. In addition, European Lighting Operations improved sharply, largely because of strong productivity gains. * Materials operating profit increased substantially in the first nine months of 1994, primarily because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was considerably higher in the current period on a good increase in revenues. The effects of a much higher level of shipments and productivity were partially offset by lower selling prices. * Power Systems operating profit was sharply higher during the first nine months of 1994 because of the impact of restructuring provisions during the comparable 1993 period. Excluding such provisions, operating profit was up slightly on a good increase in revenues, as lower selling prices offset most of the favorable effects of higher volume, productivity and lower material costs. * Technical Products and Services operating profit was sharply higher in the first nine months of 1994 because of the impact of restructuring provisions recorded in the comparable 1993 period. Excluding such provisions, operating profit was somewhat higher, reflecting strong productivity in both GE Information Services and Medical Systems, and slightly higher revenues. * All Other operating profit, which was unaffected by restructuring, was up sharply on a good increase in revenues. The improvement was primarily attributable to income related to licensing the use of GE know- how to others. 12 C. Financial Condition With respect to the Condensed Statement of Financial Position, consolidated assets of $254.9 billion were $3.4 billion higher at September 30, 1994, than the $251.5 billion at December 31, 1993. GECS' assets increased $0.8 billion; GE's assets were up $2.0 billion; eliminations between the two were $0.6 billion lower, principally because of lower investment in GECS which was more than explained by the mark-to-market adjustment of investment securities. GECS' assets increased $0.8 billion from the end of last year, representing the net result of changes in several accounts. GE Capital Corporation's (GE Capital) financing receivables, which net of reserves aggregated $70.6 billion at the end of the first nine months of 1994, increased $6.7 billion from year-end 1993 as a result of both origination volume and acquisitions of portfolios and businesses. Management believes that GE Capital's reserves of $1.9 billion (2.63% of the receivables balance at September 30, 1994 - the same percent as year end 1993) are appropriate given the strength and diversity of the portfolio, and current economic circumstances. Other GECS receivables increased $2.8 billion, principally as a result of the gross-up of certain accounts 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. Securities purchased under agreements to resell (reverse repurchase agreements) at Kidder, Peabody increased $2.1 billion principally because of the implementation of FIN 39 discussed above and use of these agreements to cover higher levels of short inventory positions, partially offset by a reduction in the level of "matched-book" transactions. A number of GECS' businesses added equipment leased to others during the first nine months of 1994 resulting in a net increase of $1.6 billion. The higher balances in these accounts were partially offset by decreases of $10.2 billion in GECS' trading securities (entirely Kidder, Peabody), reflecting principally reduced activity in the fixed-income business as a result of the current interest-rate environment, and $2.7 billion in all other assets, primarily a reduction in mortgages acquired for resale. An increase of $2.0 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 ($0.8 billion). Consolidated liabilities were $226.1 billion at September 30, 1994, compared with $224.0 billion at year end 1993. GECS' liabilities increased $1.0 billion; GE's liabilities were up $0.9 billion; eliminations between the two were $0.2 billion lower. The GECS' liabilities increase of $1.0 billion was, as with assets, the net result of changes in several accounts. The largest increase consisted of higher borrowings of $4.0 billion (long-term borrowings up $7.3 billion; short-term borrowings down $3.3 billion), primarily at GE Capital, reflecting a change in the mix of borrowings to finance its asset growth. The change also included higher levels of reserves of insurance affiliates ($1.9 billion), accounts payable ($1.2 billion) and securities sold but not yet purchased (short sales) ($0.7 billion). These increases were partially offset by a $6.9 billion reduction in the balance of securities sold under agreements to repurchase (repurchase agreements) at 13 Kidder, Peabody. This reduction was in response to the net changes in trading securities, reverse repurchase agreements and short sales, and was partially offset by the gross-up of this account as required by FIN No. 39 discussed previously. GE's liabilities increased $0.9 billion during the first nine months of 1994, which was more than explained by an increase of $1.2 billion in the level of borrowings (short-term up $1.0 billion; long-term up $0.2 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 $6.0 billion ($3.3 billion short-term and $2.7 billion long-term) at September 30, 1994. GE's ratio of total debt to capital at the end of the first nine months of 1994 was 18.1% compared with 15.5% at the end of last year and 20.0% at September 30, 1993. With respect to cash flows, consolidated cash and cash equivalents were $3.3 billion at September 30, 1994, $0.1 billion higher than December 31, 1993. Cash and cash equivalents were $2.9 billion at September 30, 1993, $0.2 billion below December 31, 1992. GE's cash and equivalents increased $0.2 billion to $1.7 billion at September 30, 1994, compared with $1.5 billion at year-end 1993. During the first nine months of 1994, cash provided from operating activities equaled last year's comparable $2.6 billion, despite the use of $2.2 billion for "all other activities," which was the net result of numerous, relatively small changes in all other assets and other current and noncurrent liabilities. Cash used for investing activities ($1.7 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 ($0.7 billion) included $1.8 billion for dividends paid to share owners, representing a 14% increase in the per-share dividend rate compared with the first nine months of last year, and $0.1 billion for net repurchases of GE shares for treasury. The combination of these two items was offset partially by cash provided from higher borrowings of $1.2 billion. GE's cash and equivalents were $1.5 billion at September 30, 1993, up $0.3 billion from $1.2 billion at year-end 1992. During the first three quarters of 1993, cash provided from continuing operating activities totaled $2.6 billion, a record performance. Cash used for continuing investing activities ($0.9 billion) was more than explained by 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 ($2.7 billion) included $1.6 billion for dividends paid to share owners, representing a 15% increase in per-share dividends compared with the first nine months of 1992, $0.7 billion to reduce borrowings and $0.4 billion for net repurchases of the Company's common stock for treasury. Cash provided from discontinued operations totaled $1.3 billion, principally cash received upon transfer of GE's Aerospace business. GECS' cash and equivalents decreased $0.1 billion during the first nine months of 1994. Cash was used primarily for investing activities: to fund GE Capital's growth in financing receivables ($6.3 billion); for additions to equipment that is provided to third parties on operating 14 leases ($3.7 billion); and for acquisitions of businesses ($1.3 billion), the largest of which was Northern Telecom Financial Corporation. Cash of $3.7 billion was provided by "all other investing activities," principally as a result of dispositions of GE Capital's equipment leased to others ($2.0 billion) and a reduced level of other assets ($1.6 billion) which was largely attributable to a reduced level of mortgages acquired for resale. Cash provided by operating activities totaled $4.7 billion. Included in this category was cash used for "all other operating activities" of $2.2 billion which was more than explained by changes in GECS' all other receivables associated with Kidder Peabody's trading activities. Cash provided from "net change in broker-dealer accounts" consisted of $10.2 billion provided from reductions of trading securities and $0.7 billion from higher short sales, both of which were offset by cash used for the increased levels of repurchase and reverse repurchase agreements ($9.0 billion). Funds provided from increased borrowings during the first nine months of 1994 aggregated $3.1 billion. GECS' cash and equivalents decreased $0.5 billion during the first nine months of 1993. Cash was used primarily for additions to equipment that is provided to third parties on operating leases ($2.8 billion), for acquisitions of businesses ($2.0 billion), and to increase financing receivables ($1.0 billion). These uses were mostly funded by cash provided from operating activities ($3.9 billion) and by increased borrowings ($2.7 billion). Included in the operating activities category was cash used for "net change in broker-dealer accounts" of $3.1 billion. This consisted of cash usage of $5.5 billion for an increase in marketable securities held for trading and $0.3 billion for the net change in repurchase and reverse repurchase agreements, partially offset by cash of $2.7 billion provided from the change in securities sold but not yet purchased (short sales). Cash used for "all other investing activities" ($0.8 billion) was more than explained by an increase in marketable securities held by GECS' finance and specialty insurance businesses ($1.4 billion). D. Other Matters As discussed in Note 9 to the condensed consolidated financial statements, the Company has entered into an agreement with Paine Webber Group Inc. (PaineWebber) under which PaineWebber may acquire certain Kidder, Peabody assets and businesses. The agreement also provides that GE will retain Kidder, Peabody's other businesses, which PaineWebber has the right to review and acquire. The transaction is subject to the completion of due diligence and approval by various regulatory authorities. If the transaction is consummated, the Company estimates that the 1994 net loss with respect to Kidder, Peabody will range from $850 to $950 million ($.50 to $.56 per share), which includes the previously discussed $272 million net loss through the first nine months of 1994. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS General - ------- As previously reported, the directors and certain former directors are defendants in a civil suit purportedly brought on behalf of the Company 15 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. On September 30, 1994, the court dismissed the complaint. Also as previously reported, on April 24, 1991, Philip M. Stern, a Company shareholder, served an amended complaint naming the directors (other than Messrs. Atwater, Calloway, Fresco, Gonzalez, Jones and Warner) as defendants in a civil suit brought purportedly on behalf of the Company as a shareholder derivative action (the Stern action) in the U.S. District Court in New York City. The amended complaint relates to the Non-Partisan Political Support Committee For General Electric Company Employees (PAC) and alleges that it was a waste of corporate assets to provide Company funds to establish and operate the PAC for GE employees because the PAC is allegedly used to attempt to buy favor and influence with incumbent members of Congress and because solicitation and administration costs were allegedly excessive. In related proceedings, the Federal Elections Commission and two federal courts held that the political contributions made by the PAC were lawful and proper under federal election law. The complaint includes allegations of bad faith, fraud, negligence and breach of fiduciary duty under state law and seeks to require the defendants to pay to the Company all amounts spent by the Company to establish, administer and maintain the PAC as well as punitive damages. On March 12, 1992, the plaintiff filed a motion to amend the complaint to add a claim that the defendants allegedly violated the Federal Regulation of Lobbying Act, and thereby breached their fiduciary duty to shareholders by failing to report lobbying expenses as required by that statute. On June 2, 1992, plaintiff's motion was denied. On September 4, 1992, Henry D. Sedgwick Stern and Walter B. Slocombe, Personal Representatives of the Estate of Philip M. Stern, were substituted as the plaintiffs in this case, following the death of Philip Stern. On November 16, 1993, the court granted summary judgment for all defendants on all claims. Following plaintiffs' appeal, the United States Court of Appeals for the Second Circuit affirmed the District Court's judgment, and the United States Supreme Court subsequently denied plaintiffs' petition for a writ of certiorari. Also as previously reported, allegations of various federal law violations, including alleged antitrust violations involving the Company and DeBeers Consolidated Mines, Ltd. in the industrial diamonds industry, were made in a wrongful termination action brought by a former vice president of the Company. Various allegations of antitrust violations concerning industrial diamonds are also the subject of two previously reported civil suits against the Company purportedly brought on behalf of classes of industrial diamond purchasers and an additional civil suit against the Company brought on behalf of two corporations engaged in the manufacture and sale of industrial diamonds. On February 16, 1994, the 16 wrongful termination action was dismissed with prejudice and the former officer filed a sworn statement conceding that he had no personal knowledge of any wrongdoing by Company personnel and that he had become aware that the Company had removed him based on its view of his performance, not because he was a "whistleblower." On February 17, 1994, an indictment was returned in the United States District Court in Columbus, Ohio, following the previously reported grand jury investigation by the United States Department of Justice, charging the Company and one European employee of the Company's superabrasives business, and other unrelated parties, with entering into an anti-competitive agreement in violation of federal antitrust laws. The Company denies the charges and is vigorously contesting them. Trial of the criminal charges began on October 25, 1994. The Company believes that none of these cases will have a material adverse effect on the Company or its business. Environmental - ------------- As previously reported, in June of 1992, the State of New York issued a complaint alleging violations of the state Clean Air Act and Clean Water Act (unpermitted emissions and discharges in excess of permit limits) at the Company's Schenectady facility. The complaint sought penalties of $1,039,435. The State and the Company agreed to settle the matter in October 1994 for $495,000. As previously reported, in January of 1993, the State of Indiana notified the Company that it would be seeking penalties for violations of the state Clean Air Act for failing to install required control equipment at its Ft. Wayne facility. In July of 1993, the State issued a penalty demand of $150,000. The State and the Company agreed to settle the matter in August 1994 for $35,000. As previously reported, in April of 1994, the U.S. Environmental Protection Agency issued an administrative complaint to the Company alleging violations of the Toxic Substances Control Act at its Schenectady Research and Development facility, including improper manufacturing, handling and disposal of PCBs from 1989-1991. The complaint sought a penalty of $139,875. The matter was settled in October 1994 for $70,000. 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 September 30, 1994. No reports on Form 8-K were filed during the quarter ended September 30, 1994. 17 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) November 3, 1994 Philip D. Ameen - ----------------- -------------------------------------------------- Date Vice President and Comptroller Duly Authorized Officer and Principal Accounting Officer
EX-11 2 (1) EXHIBIT 11 GENERAL ELECTRIC COMPANY COMPUTATION OF PER SHARE EARNINGS (Shares in thousands; dollar amounts, except earnings per share, in millions)
Fully Earnings Primary diluted per common earnings earnings Third quarter ended September 30, 1994 share per share per share - -------------------------------------- ---------- --------- --------- Net earnings applicable to common stock $1,368 $1,368 $1,368 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 3 3 --------- --------- --------- Earnings for per-share calculations $1,368 $1,371 $1,371 --------- --------- --------- Average number of shares outstanding 1,711,014 1,711,014 1,711,014 Average number of deferred incentive compensation shares - 8,473 8,473 Average stock option shares - 10,508 10,508 Average number of restricted stock units - 1,117 1,117 --------- --------- --------- Shares for earnings calculation 1,711,014 1,731,112 1,731,112 --------- --------- --------- Earnings per share $0.80 $0.79 $0.79 - ------------------ ========= ========= ========= Nine months ended September 30, 1994 - ------------------------------------ Net earnings applicable to common stock $3,958 $3,958 $3,958 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 5 5 --------- --------- --------- Earnings for per-share calculations $3,958 $3,963 $3,963 --------- --------- --------- Average number of shares outstanding 1,709,431 1,709,431 1,709,431 Average number of deferred incentive compensation shares - 8,547 8,547 Average stock option shares - 10,366 10,366 Average number of restricted stock units - 1,118 1,118 --------- --------- --------- Shares for earnings calculation 1,709,431 1,729,462 1,729,462 --------- --------- --------- Earnings per share $2.32 $2.29 $2.29 - ------------------ ========= ========= =========
(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 Third quarter ended September 30, 1993 share per share per share - -------------------------------------- ---------- --------- --------- Net earnings applicable to common stock $1,206 $1,206 $1,206 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - - - --------- --------- --------- Earnings for per-share calculations $1,206 $1,206 $1,206 --------- --------- --------- Average number of shares outstanding 1,707,083 1,707,083 1,707,083 Average number of deferred incentive compensation shares - 8,318 8,318 Average stock option shares - 11,766 11,776 --------- --------- --------- Shares for earnings calculation 1,707,083 1,727,167 1,727,177 --------- --------- --------- Earnings per share $0.71 $0.70 $0.70 - ------------------ ========= ========= ========= Nine months ended September 30, 1993 - ------------------------------------ Net earnings applicable to common stock $2,838 $2,838 $2,838 Dividend equivalents (net of tax) applicable to deferred incentive compensation shares - 4 4 --------- --------- --------- Earnings for per-share calculations $2,838 $2,842 $2,842 --------- --------- --------- Average number of shares outstanding 1,708,148 1,708,148 1,708,148 Average number of deferred incentive compensation shares - 8,520 8,520 Average stock option shares - 10,350 11,457 --------- --------- --------- Shares for earnings calculation 1,708,148 1,727,018 1,728,125 --------- --------- --------- Earnings per share $1.66 $1.65 $1.64 - ------------------ ========= ========= ========= (a- Adjusted to reflect the two-for-one stock split effective on April 28, 1994.
EX-12 3 EXHIBIT 12 GENERAL ELECTRIC COMPANY RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions) Nine months ended September 30, 1994 ------------------ GE except GECS - --------------- "Earnings" -a) $ 5,301 Less: Equity in undistributed earnings of General Electric Capital Services, Inc. -b) (864) Plus: Interest and other financial charges included in expense 316 One-third of rental expense -c) 159 ------- Adjusted "earnings" $ 4,912 ======= Fixed Charges: Interest and other financial charges $ 316 Interest capitalized 14 One-third of rental expense -c) 159 ------- Total fixed charges $ 489 ======= Ratio of earnings to fixed charges 10.04 ======= General Electric Company and consolidated affiliates - ---------------------------------------------------- "Earnings" -a) $5,805 Plus: Interest and other financial charges included in expense 7,155 One-third of rental expense -c) 289 ------- Adjusted "earnings" $13,249 ======= Fixed Charges: Interest and other financial charges $ 7,155 Interest capitalized 21 One-third of rental expense -c) 289 ----=-- Total fixed charges $ 7,465 ======= Ratio of earnings to fixed charges 1.77 ======= (a- Earnings before income taxes and minority interest. (b- Earnings after income taxes. (c- Considered to be representative of interest factor in rental expense.
EX-27 4
5 0000040545 GENERAL ELECTRIC COMPANY 1,000,000 9-MOS DEC-31-1994 SEP-30-1994 3,343 46,981 0 0 4,670 0 41,346 18,540 254,873 0 35,810 593 0 0 26,283 254,873 21,132 27,637 15,506 20,171 0 0 7,126 5,685 1,727 3,958 0 0 0 3,958 2.29 2.29 Trading ($19,971) and investment ($27,010)securities. Not disclosed in interim periods. Not applicable to consolidated GE. GE sales of goods ($21,132) and services ($6,505). GE cost of goods ($15,506) and services ($4,665) sold.
-----END PRIVACY-ENHANCED MESSAGE-----