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Business 2
Properties 15
Legal Proceedings 15
Market for Stock 20
Selected Financial Data 21
Management's Discussion 21
Financial Statements 21
Disagreements 21
Directors and Officers 22
Executive Compensation 23
Security Ownership 23
Certain Relationships 23
Exhibits, Financial Statement Schedules 23
Signatures 27
Differences Letter F-47
FORM 10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
(x) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1993 Commission file number 1-35
or
( ) Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------- --------
GENERAL ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
New York 14-0689340
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3135 Easton Turnpike, Fairfield, CT 06431-0001 203/373-2459
(Address of principal executive offices) (Zip Code) (Telephone No.)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on
which registered
Common stock, par value $0.63 per share New York Stock Exchange
Boston Stock Exchange
There were 853,832,790 shares of common stock with a par value of
$0.63 outstanding at March 5, 1994. These shares, which constitute all of
the voting stock of the registrant, had an aggregate market value on
March 7, 1994, of $90.3 billion. Affiliates of the Company beneficially
own, in the aggregate, less than one-tenth of one percent of such shares.
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. x
---
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement relating to the registrant's Annual Meeting
of Share Owners, to be held April 27, 1994, is incorporated by reference in
Part III to the extent described therein.
(1)
PART I
Item 1. Business
General
Unless otherwise indicated by the context, the terms "GE," "GECS" and
"GE Capital Services" are used on the basis of consolidation described in note
1 to the consolidated financial statements on page 45 of the 1993 Annual
Report to Share Owners of General Electric Company. Where appropriate for
clarification or emphasis, GE is also referred to as "GE except GECS." The
financial section of such Annual Report to Share Owners (pages 25 through 64
of that document) is set forth in Part IV Item 14 (a) (1) of this 10-K Report
and is an integral part hereof. References in Parts I and II of this 10-K
Report are to the page numbers of the 1993 Annual Report to Share Owners
included in Part IV of this 10-K Report. Also, unless otherwise indicated by
the context, "General Electric" means the parent Company, General Electric
Company.
General Electric's address is 1 River Road, Schenectady, NY 12345-6999;
the Company also maintains executive offices at 3135 Easton Turnpike,
Fairfield, CT 06431-0001.
The "Company" (General Electric Company and consolidated affiliates) is
one of the largest and most diversified industrial corporations in the world.
From the time of General Electric's incorporation in 1892, the Company has
engaged in developing, manufacturing and marketing a wide variety of products
for the generation, transmission, distribution, control and utilization of
electricity. Over the years, development and application of related and new
technologies have broadened considerably the scope of activities of the
Company and its affiliates. The Company's products include, but are not
limited to, lamps; major appliances for the home; industrial automation
products and components; motors; electrical distribution and control
equipment; locomotives; power generation and delivery products; nuclear
reactors, nuclear power support services and fuel assemblies; commercial and
military aircraft jet engines; materials, including engineered plastics,
silicones and cutting materials; and a wide variety of high technology
products, including products used in defense and medical diagnostic
applications. GE's Aerospace business segment, its subsidiary GE Government
Services, Inc., and a component of GE that operated Knolls Atomic Power
Laboratory under contract with the U.S. Department of Energy were transferred
on April 2, 1993, to a new company controlled by the shareholders of Martin
Marietta Corporation. The businesses transferred provided high-technology
products and services such as automated test systems, electronics, avionic
systems, computer software, armament systems, military vehicle equipment,
missile system components, simulation systems, spacecraft, communication
systems, radar, sonar and systems integration, and a variety of specialized
services for government customers. Accordingly, the businesses that were
transferred have been classified as discontinued operations in the 1993 Annual
Report to Share Owners and throughout this report.
The Company also offers a broad variety of services including product
support services; electrical product supply houses; electrical apparatus
installation, engineering, repair and rebuilding services; and computer-
related information services. Through a wholly owned subsidiary, General
(2)
Electric Capital Services, Inc., (GECS) and its three principal subsidiaries,
the Company engages in a broad spectrum of financial services including
consumer financing, commercial and industrial financing, real estate
financing, asset management and leasing, specialty insurance, reinsurance, and
investment banking and brokerage services. Other services offered include
U.S. satellite communications furnished by GE Americom. Another wholly owned
subsidiary, National Broadcasting Company, Inc. ("NBC"), is engaged
principally in furnishing network television services, in operating television
stations, and in providing cable programming and distribution services in the
United States, Europe and Latin America. The Company also licenses patents
and provides technical know-how related to products it developed, but such
activities are not material to the Company.
Aggressive and able competition, often highly concentrated and global,
is encountered in virtually all of the Company's business activities. In many
instances, the competitive climate is characterized by changing technology
requiring continuing research and development commitments, and by capital-
intensive needs to meet customer requirements. With respect to manufacturing
operations, it is believed that, in general, GE has a leadership position
(i.e., number one or two) in most major markets served. The NBC Television
Network is one of four competing major national commercial broadcast
television networks. It also competes with certain cable and satellite
television programming activities. The businesses in which GE Capital
Services engages are subject to vigorous competition from various types of
financial institutions, including commercial banks and brokerage firms,
investment banks, credit unions, leasing companies, consumer loan companies,
independent finance companies, finance companies associated with
manufacturers, and insurance and reinsurance companies.
GE has substantial export sales from the United States. In addition,
the Company has majority and minority or other joint venture interests in a
number of non-U.S. companies engaged primarily in manufacturing and
distributing products and providing nonfinancial services similar to those
sold within the United States. GECS' financial services operations outside of
the United States have expanded considerably over the past several years.
Industry Segments
The Company's operations are highly decentralized. The basic
organization of GE's continuing operations consists of twelve key businesses
which contain management units of differing sizes. For industry segment
reporting purposes, the businesses are aggregated by the principal industries
in which the Company participates. This aggregation is on a worldwide basis,
which means that multi-industry non-U.S. affiliates' operations are classified
by appropriate industry segment.
Financial information on consolidated industry segments is presented on
page 35 of the 1993 Annual Report to Share Owners in two parts: one for GE
that includes GECS in the All Other segment on a one-line basis in accordance
with the equity method of accounting, and one for GECS as a separate entity.
For GE, four of the 12 key businesses (Aircraft Engines, Appliances,
Industrial and Power Systems and NBC) represent individual segments (namely,
Aircraft Engines, Appliances, Power Systems and Broadcasting, respectively).
Except for "All Other," the remaining
(3)
businesses are aggregated by the three industry segments in which they
participate (Industrial, Materials and Technical Products and Services). The
All Other segment consists primarily of GECS' earnings discussed above and
revenues derived from licensing use of GE know-how and patents to others. For
GECS, revenues and operating profit are presented separately by the three
industry segments in which it conducts its business (Financing, Specialty
Insurance and Securities Broker-Dealer). There is appropriate elimination of
the net earnings of GECS and the immaterial effect of transactions between GE
and GECS segments to arrive at total consolidated data.
Additional financial data and commentary on recent operating results for
industry segments are reported on pages 33-38 of the 1993 Annual Report to
Share Owners. Further details can be found in note 29 (pages 60 and 61 of
that Report) to the consolidated financial statements. These data and
comments are for General Electric Company's continuing operations, except as
otherwise indicated, and should be referred to in conjunction with the summary
description of each of the industry segments which follows.
Aircraft Engines
Aircraft Engines (10.9%, 12.9% and 14.2% of consolidated revenues in
1993, 1992 and 1991, respectively) produces and sells a single class of
products - aircraft engines and related replacement parts - for use in
military and commercial aircraft, in naval ships for propulsion, and as
industrial power sources. GE's military engines are used in a wide variety of
aircraft that includes fighters, bombers, tankers and helicopters. GE's CFM56
and CF6 engines power aircraft in all categories of commercial aircraft:
short, medium and long range. Applications for GE's CFM56 engine, produced
jointly by GE and SNECMA of France, include: Boeing's 737-300/-400/-500
series and the new 737-300X; Airbus Industrie's A319, A320, A321 and A340
series; and military aircraft such as the KC-135R/
C-135FR, E/KE-3 and E-6. GE's CF6 family of engines powers intermediate and
long-range aircraft such as Boeing's 747 and 767 series, Airbus Industrie's
A300, A310 and A330 series, and McDonnell Douglas' DC-10 and MD-11 series. GE
also produces jet engines for executive aircraft and regional commuter
aircraft, and aircraft engine derivatives used for marine propulsion,
mechanical drives and industrial power generation sources. GE also provides
maintenance and repair services for many models of jet engines, including
engines manufactured by competitors.
The worldwide competition in aircraft jet engines is intense and highly
concentrated. Both U.S. and export markets are important. Product
development cycles are long and product quality and efficiency are critical to
success. Research and development expenditures, both customer-financed and
internally funded, are also important in this segment. In cooperation with
partners SNECMA, IHI, and Fiat, Aircraft Engines is currently developing the
GE90 engine to power Boeing's new 777 twin-engine aircraft. The GE90 broke an
industry record on its initial ground testing in 1993, reaching thrust levels
in excess of 105,000 pounds. It also flew on a 747 testbed in the engine's
first flight and subsequently demonstrated the lowest fuel consumption ever
achieved by a large high-bypass turbofan engine. Plans are to certify the
engine in 1994 with introduction into active airline service in 1995.
Potential sales for any engine are limited by its technological lifetime,
which may vary considerably depending upon the rate of advance in the state of
the art, by the small number of potential customers and by the limited number
of airframes. Sales of
(4)
replacement parts and services are an important part of the business.
Aircraft engine orders tend to follow military and airline procurement cycles,
although patterns for military and commercial engine procurements are
different. U.S. procurements of military jet engines are affected by the
government's response to changes in the global political and economic outlook.
In line with industry practice, sales of commercial jet aircraft engines
often involve long-term financing commitments to customers. In making such
commitments, it is GE's general practice to require that it have, or be able
to establish, a secured position in the aircraft being financed. Under such
airline financing programs, GE had issued loans and guarantees (principally
guarantees) amounting to $1.2 billion at year-end 1993, and had entered into
commitments totaling $1.4 billion to provide financial assistance on future
aircraft engine sales. Estimated fair values of the aircraft securing these
receivables and guarantees exceeded the related account balances or guaranteed
amounts at December 31, 1993.
For current information about Aircraft Engines orders and backlogs, see
page 34 of the 1993 Annual Report to Share Owners.
Appliances
Appliances (9.2%, 9.3% and 9.6% of consolidated revenues in 1993, 1992
and 1991, respectively) manufactures and/or markets a single class of product
- - major appliances - including kitchen and laundry equipment such as
refrigerators, ranges, microwave ovens, freezers, dishwashers, clothes washers
and dryers, and room air conditioners. These are sold under GE, Hotpoint,
RCA, Monogram and Profile brands as well as under private brands for
retailers. GE microwave ovens and room air conditioners are mainly sourced
from Asian suppliers while investment in Company-owned U.S. facilities is
focused on refrigerators, dishwashers, ranges (primarily electric, but some
gas) and home laundry equipment. A large portion of appliance sales is for
the replacement market. Such sales are through a variety of retail outlets.
The other principal market consists of residential building contractors who
install appliances in new dwellings. GE has a U.S. service network that
supports GE's appliance business.
Appliances is increasing its operating presence in the global business
arena and participates in numerous manufacturing and distribution joint
ventures around the world. This increase included the start-up of Godrej-GE,
a joint venture with India's largest appliance manufacturer, Godrej & Boyce
Ltd., in 1993. GE and Toshiba established a joint venture in 1991 to
cooperate in marketing GE, Hotpoint and Creda products in Japan through
Toshiba's distribution network. A 1990 joint venture in Mexico, MABE,
produces high-quality gas ranges for the Mexican and U.S. markets. In 1993,
MABE completed a new top-mount refrigerator facility and opened a new
technology center. European market participation was expanded significantly
in 1989 with the formation of a joint venture with General Electric Company
plc (GEC), an unrelated corporation in the United Kingdom.
Markets for appliances are influenced by economic trends such as
increases or decreases in consumer disposable income, availability of credit,
and housing construction. Competition is very active in all products and
comes from a relatively small number of principal manufacturers and suppliers.
An important factor is cost, and considerable
(5)
competitive emphasis is placed on minimizing manufacturing and distribution
costs, and on reducing cycle time from order to product delivery. Other
significant factors include quality, features offered, innovation, customer
responsiveness and appliance service capability. A number of processes, such
as Quick Response, New Product Introduction and Quick Market Intelligence,
have been implemented to improve GE's competitiveness in these areas. Another
example of a significant initiative is "Save the Park," a joint initiative
between management and unions, which was implemented during 1993 at Appliance
Park in Louisville, KY. to streamline processes, improve quality, realize
significant savings and, ultimately, to prevent relocation to alternative
sites.
Broadcasting
Broadcasting (5.1%, 5.9% and 5.7% of consolidated revenues in 1993, 1992
and 1991, respectively) consists primarily of the National Broadcasting
Company (NBC). NBC's principal businesses are the furnishing within the
United States of network television services to affiliated television
stations, the production of live and recorded television programs, and the
operation, under licenses from the Federal Communications Commission (FCC), of
six VHF television broadcasting stations. The NBC Television Network is one
of the competing major U.S. commercial broadcast television networks and
serves more than 200 regularly affiliated stations within the United States.
The television stations NBC owns and operates are located in Chicago; Denver;
Los Angeles; Miami; New York; and Washington, D.C. Broadcasting operations,
including the NBC Television Network and owned stations, are subject to FCC
regulation. NBC's operations include investment and programming activities in
cable television, principally through its ownership of CNBC and equity
investments in Arts and Entertainment, Court TV, American Movie Classics,
Bravo, Prime Network and regional Sports Channels across the United States.
In 1993, NBC acquired control of Super Channel, the largest pan-European
satellite-delivered general program service. It also launched Canal de
Noticias NBC, a new 24-hour Spanish-language channel delivered by satellite in
Latin America. The cable television and network broadcast programming
environments are highly competitive.
Industrial
Industrial (12.2%, 12.1% and 12.4% of consolidated revenues in 1993,
1992 and 1991, respectively) encompasses lighting products, electrical
distribution and control equipment for industrial and commercial
construction, transportation systems, motors, industrial automation
products and GE Supply. No "similar" class of products or services within
the segment approached 10% of any year's consolidated revenues during the
three years ended December 31, 1993. Customers for many of these products
and services include electrical distributors, original equipment
manufacturers and industrial end users. Lighting products include a wide
variety of lamps - incandescent, fluorescent, high intensity discharge,
halogen and specialty - as well as wiring devices and quartz products.
Markets and customers are principally in the United States, although
international markets continue to increase in importance. In 1993, the
Lighting business agreed to form a joint venture in China, GE Jiabao
Lighting Company, Ltd. to manufacture, distribute and sell a full line of
lighting products. GE has also strengthened its position in Japan with the
start-up of Hitachi GE Lighting Ltd., a joint venture that was established
in 1992 to sell and
(6)
distribute lighting products in the significant Japanese lighting market.
Another GE Lighting venture, GE Apar Lighting Private Ltd., continued to
expand during 1993 with investments in new facilities and in the only
"ribbon" glassmaking equipment in India or Southeast Asia. In addition,
the 1993 acquisition of Lumalampan AB's well-regarded Luma brand
strengthened Lighting's position in Scandinavia. The 1990 acquisition of a
majority interest in Tungsram Company, Ltd. of Hungary (now wholly owned)
and the early 1991 acquisition of the light source business of Thorn EMI of
the United Kingdom are fully integrated into European operations. Markets
for lighting products are extremely varied, ranging from household
consumers to commercial and industrial end users and original equipment
manufacturers. Electrical distribution and control equipment is sold for
installation in commercial, industrial and residential facilities. GE
Electrical Distribution and Control (ED&C) and Honeywell's MICRO SWITCH
division formed a venture, GE/MICRO SWITCH Controls, Inc., during 1992
through which both businesses jointly sell and distribute complementary
factory control products in the United States. European operations were
expanded with the 1989 establishment of a joint venture, Power Controls
B.V. (formerly Eurolec). To bolster European market share and global
competitiveness, GE signed a letter of intent in 1993 under which Power
Controls will acquire a majority interest in the low-voltage business of
Germany's AEG. Power Controls had acquired both Lemag and Agut S.A. of
Spain during 1992, enhancing product offerings in residential distribution
and industrial control markets. Transportation systems include diesel-
electric and electric locomotives, transit propulsion equipment, motors for
drilling devices and motorized wheels for off-highway vehicles such as
those used in mining operations. Locomotives are sold worldwide,
principally to railroads, while markets for other products include state
and urban transit authorities and industrial users. Motors and motor-
related products serve the appliance, commercial, industrial, heating, air
conditioning and automotive markets. Motor products are used within GE and
also are sold externally. Industrial automation products cover a broad
range of electrical and electronic products with emphasis on manufacturing
and advanced engineering automation applications. (See the discussion of
GE Fanuc on the following page.) GE Supply operates a U.S. network of
electrical supply houses and through its subsidiary, GE Supply Mexico,
operates three supply houses in Mexico.
Markets for industrial products generally lag overall economic
slowdowns as well as subsequent recoveries. U.S. industrial markets are
undergoing significant structural changes reflecting, among other factors,
international competition and pressures to modernize productive capacity.
Additional information about certain of GE's industrial businesses follows.
Competition for lighting products comes from a relatively small number
of major firms and is based principally on price, distribution and product
innovation. The nature of lighting products and market diversity make the
lighting business somewhat less sensitive to economic cycles than other
businesses in this segment.
Electrical distribution and control equipment is sold to distributors,
electrical contractors, large industrial users, and original equipment
manufacturers. Markets are affected principally by levels of (and cycles in)
residential and non-residential construction as well as domestic industrial
plant and equipment expenditures. Competitors include
(7)
other large manufacturers, with international competition in U.S. markets
increasing. GE Supply offers products of General Electric and other
manufacturers to electrical contractors and industrial, commercial, and
utility customers.
In transportation systems, demand is historically cyclical. There is
strong worldwide competition from major firms for transportation equipment.
External sales of motors and related products are principally to
manufacturers of original equipment, distributors, and industrial users.
Competition includes other motor and component producers, integrated
manufacturers, and customers' own in-house capability. Markets for these
products are price competitive, putting emphasis on economies of scale and
manufacturing technology. Other market factors include energy-driven
technology changes and the cyclical nature of the consumer end-user market.
Through a 50-50 joint venture (GE Fanuc Automation Corporation) which
has two operating subsidiaries (one in North America and the other in Europe),
GE offers a wide range of high-technology industrial automation systems and
equipment, including computer numerical controls and programmable logic
controls. Competition in industrial automation is intense and comes from a
number of U.S. and international sources.
Materials
Materials (8.3%, 8.5% and 8.7% of consolidated revenues in 1993, 1992
and 1991, respectively) includes high-performance engineered plastics used in
applications such as substitutes for metal and glass in automobiles, and as
housings for computers and other business equipment; silicones; superabrasives
such as man-made diamonds; and laminates. Materials also includes ABS resins,
a family of thermoplastic resins used by custom molders and major original
equipment manufacturers for use in a variety of applications, including
fabrication of automotive parts, computer enclosures, major appliance parts
and construction materials. Market opportunities for many of these products
are created by functional replacement which provides customers with an
improved material at lower cost. These materials are sold to a diverse
worldwide customer base (mainly manufacturers). Materials has a significant
operating presence around the world and participates in numerous manufacturing
and distribution joint ventures.
The business is characterized by technological innovation and heavy
capital investment. Being competitive requires a strong emphasis on efficient
manufacturing process implementation and strong market and application
development. Competitors include large, technically oriented suppliers of the
same, as well as functionally equivalent, materials. Adequate capacity to
satisfy demand and anticipation of new product or material performance
requirements are key factors affecting this competition. The business is
cyclical and, during periods of economic slowdown is subject to pricing
pressures from competitors because of, among other things, industry excess
capacity.
Materials also included Ladd Petroleum Corporation, an oil and natural
gas developer and supplier with operations mainly in the United States, until
December 21, 1990, when it was sold to Amax Oil and Gas, Inc., a subsidiary of
Amax, Inc.
(8)
Power Systems
Power Systems (11.0%, 11.2% and 11.3% of consolidated revenues in 1993,
1992 and 1991, respectively) serves utility, industrial and governmental
customers worldwide with products for the generation, transmission and
distribution of electricity, and with related installation, engineering and
repair services. Worldwide competition continues to be intense. For
information about current developments, and orders and backlogs, see pages 34
and 36 of the 1993 Annual Report to Share Owners. Steam turbine-generators
are sold to the electric utility industry, to the U.S. Navy and, for
cogeneration, to private industrial customers. Marine steam turbines and
propulsion gears also are sold to the U.S. Navy. Gas turbines, which for the
past several years has been the fastest growing part of this segment, are used
principally as packaged power plants for electric utilities, and for
industrial cogeneration and mechanical drive applications. Through a joint
venture with GEC Alsthom of France, GE has access to the European gas turbine
market. Centrifugal compressors are sold for application in gas reinjection,
pipeline services and such process applications as refineries and ammonia
plants. In 1993 an agreement was reached by a GE-led consortium including
Dresser Industries and Ingersoll Rand to acquire 69% of Nuovo Pignone, an
Italian electrical equipment maker. This move further strengthens the
Company's position in Europe, North Africa, the Middle East and Asia, and
particularly in Russia, where Nuovo Pignone recently received commitments for
$1.6 billion in pipeline equipment. There have been no nuclear plant orders
in the United States since the mid-1970s and international activity has been
very low. GE continues to invest in advanced technology development and to
focus its resources on refueling and servicing its installed boiling-water
reactors. Power delivery products include transformers, electricity meters,
relays, capacitors and arresters, principally for electric utilities, and
drive systems for industrial applications. Installation, engineering and
repair services include management and technical expertise for large projects,
such as power plants; maintenance, inspection, repair and rebuilding of
electrical apparatus produced by GE and others; on-site engineering and
upgrading of already installed products sold by GE and others; and
environmental systems for utilities.
Products and services differ in contribution to sales and earnings,
market position and production cycle. No "similar" class of products or
services within the segment approached 10% of any year's consolidated revenues
during the three years ended December 31, 1993. As discussed in the previous
paragraph, there is intense worldwide competition for power systems products
and services. The markets for most power systems products and services are
worldwide and as a result are sensitive to the economic and political
environment of each country in which the business participates. In the United
States many power systems markets are sensitive to the financial condition of
the electric utility industry as well as the electric power conservation
efforts by power users. Internationally, the influence of oil prices on a
country's economy has a large impact on its markets. GE's drive systems
business is a leading supplier of customized controls and drives for metal and
paper processing, for mining, for utilities and for marine applications.
Competition in drive systems comes from a variety of businesses throughout the
world.
(9)
Technical Products and Services
Technical products and services (6.9%, 8.2% and 8.6% of consolidated
revenues in 1993, 1992 and 1991, respectively) consists of technology
operations providing products, systems and services to a variety of customers.
Businesses in this segment include medical systems and services,
communications and information services and certain other specialized
services. Medical systems include magnetic resonance (MR) scanners, computed
tomography (CT) scanners, x-ray, nuclear imaging, ultrasound, and other
diagnostic equipment and supporting services sold to hospitals and medical
facilities worldwide. Medical Systems has a significant operating presence in
Europe and Asia, including the operations of its affiliates GE CGR (France),
Yokogawa Medical Systems (Japan) and WIPRO GE Medical Systems (India).
Acquisitions and joint ventures continue to expand GE's medical systems
activities in world markets. Continued globalization increased Medical
Systems' presence in Asia during 1993, where it purchased an x-ray
manufacturer in Japan, announced plans to enlarge manufacturing facilities in
China, and established new sales and service joint ventures in Taiwan and
Thailand. Additionally, its presence continued to expand in Latin America
with new facilities in Argentina, Brazil and Mexico. Information services are
provided both to internal and external customers by GE Information Services
(GEIS). These include enhanced computer-based communications services, such
as data network services, electronic messaging and electronic data
interchange, which are offered to commercial and industrial customers through
a worldwide network; application software packaging; and custom system design
and programming services. During 1993, the Company signed an agreement under
which Ameritech Corporation, a leading telecommunications company, will invest
$472 million in GEIS that will convert, when U.S. law permits, to a 30% equity
position in that business. GEIS also acquired International Network Services,
Ltd. in 1993, a leading European supplier of electronic data interchange
services and software. GE's mobile communications business (primarily mobile
radios) was placed into a joint venture with Ericsson of Sweden's digital
cellular technology in 1989. The venture was realigned in 1992 so that GE now
holds preferred stock. Principal competition is from well-established
manufacturers. This segment included GE Americom and GE Computer Services
until they were transferred to GE Capital Corporation at the end of 1989 and
mid-1992, respectively. See page 12 for further information. GE Consulting
Services (custom system design and programming services) was sold to Keane,
Inc. on January 1, 1993.
Serving a diversity of customers for special needs (which are rapidly
changing in certain areas such as medical and information systems), businesses
in this segment compete against a variety of both U.S. and non-U.S.
manufacturers or service operations including, in certain situations, customer
in-house capability. Technological competence and innovation, excellence of
design, high product performance, quality of service, and competitive pricing
are among the key factors affecting competition in the markets for these
products and services. Throughout the world, demands on health care providers
to control costs have become much more important. Medical Systems is
responding with cost-effective technologies that improve operating efficiency
and clinical productivity. See page 36 of the 1993 Annual Report to Share
Owners for information about orders and backlog of Medical Systems' products.
(10)
All Other GE
All Other GE consists mostly of earnings of and investment in General
Electric Capital Services, Inc. (GECS), a wholly owned consolidated affiliate,
which are accounted for on a one-line basis in accordance with the equity
method of accounting but are eliminated in consolidation. Other ongoing
operations (0.4%, 0.4% and 0.5% of consolidated revenues in 1993, 1992 and
1991, respectively) mainly involve licensing the use of GE's know-how and
patents to others. A separate discussion of segments within GECS appears
below.
GECS Segments
The business of GECS consists of the ownership of three principal
affiliates that, together with their affiliates and other investments,
constitute General Electric Company's principal financial services activities.
GECS owns all of the common stock of General Electric Capital Corporation (GE
Capital or GECC), Employers Reinsurance Corporation (ERC) and Kidder, Peabody
Group Inc. (Kidder, Peabody). Prior to August 10, 1990, twenty percent of
Kidder, Peabody had been owned by or on behalf of certain Kidder, Peabody
officers.
For industry segment purposes, Financing (20.5%, 18.5% and 18.4% of
consolidated revenues in 1993, 1992 and 1991, respectively) consists solely of
noninsurance activities of GE Capital; Specialty Insurance (8.0%, 6.8% and
5.5% of consolidated revenues in 1993, 1992 and 1991, respectively) consists
of the activities of ERC as well as the activities of insurance entities owned
by GE Capital; Securities Broker-Dealer (8.0%, 7.0% an 6.1% of consolidated
revenues in 1993, 1992 and 1991, respectively) consists entirely of Kidder,
Peabody's operations; and All Other is GECS corporate activities not
identifiable with specific industry segments.
Additional information follows.
Financing activities of GE Capital, none of which individually
constitutes as much as 10% of consolidated revenues, comprise the following:
* Consumer services - private-label and bank credit card loans, time
sales and revolving credit and inventory financing for retail
merchants, auto leasing and inventory financing and mortgage
servicing, and annuities;
* Specialized financing - loans and financing leases for major
capital assets, including aircraft, industrial facilities and
equipment and energy-related facilities; commercial and
residential real estate loans and investments; and loans to and
investments in highly leveraged management buyouts and corporate
recapitalizations;
* Equipment management - leases, loans and asset management services
for portfolios of commercial and transportation equipment,
including aircraft, trailers, auto fleets, modular space units,
railroad rolling stock, data processing equipment, satellites and
ocean-going containers; and
(11)
* Mid-market financing - loans and financing and operating leases
for middle-market customers, including manufacturers, distributors
and end users, for a variety of equipment, including data
processing equipment, medical and diagnostic equipment, and
equipment used in construction, manufacturing, office applications
and telecommunications activities.
Very little of the financing by GE Capital involves products that are
manufactured by GE. Beginning in 1990, this segment includes GE Americom, a
leading U.S. satellite carrier. Beginning in the second half of 1992, the
segment also includes GE Computer Services, which provides independent
maintenance and rental/leasing services for minicomputers and microcomputers,
electronic test instruments and data communications equipment. These
components had been included in GE's Technical Products and Services segment
prior to their transfer to the Financing segment. GE Capital also is an equity
investor in a retail organization and certain other service and financial
services organizations. GE Capital continues to experience broad growth. In
1993 its Consumer services operations acquired GNA Corporation from
Weyerhauser Company and Weyerhauser Financial Services, Inc. and United
Pacific Life Insurance Company from Reliance Insurance Company and its parent,
Reliance Group Holdings, Inc. Together these two acquisitions constitute
GECS' annuity business, a business that writes and markets tax-deferred
annuities and sells proprietary and third-party mutual funds through
independent agents and financial institutions. Other 1993 acquisitions
expanded GECS' financial services activities in Europe, Scandinavia and
Canada. GE Capital had previously increased its presence in Europe with the
1992 acquisition of Avis Europe's vehicle leasing and fleet management
business, following 1991 and 1990 acquisitions of private-label credit card
operations of major U.K. retailers.
GE Capital's activities are subject to a variety of federal and state
regulations including, at the federal level, the Consumer Credit Protection
Act, the Equal Credit Opportunity Act and certain regulations issued by the
Federal Trade Commission. A majority of states have ceilings on rates
chargeable to customers in retail time sales transactions, installment loans
and revolving credit financing. GECS' international operations are also
subject to regulation in their respective jurisdictions. To date such
regulations have not had a material adverse effect on GE Capital's volume of
financing operations or profitability. Common carrier services of GE Americom
are subject to regulation by the Federal Communications Commission.
On March 28, 1991, GE entered into an agreement to make payments to GE
Capital, constituting additions to pre-tax income, to the extent necessary to
cause the ratio of earnings to fixed charges of GE Capital and consolidated
affiliates (determined on a consolidated basis) to be not less than 1.10 for
the period, as a single aggregation, of each GE Capital fiscal year commencing
with fiscal year 1991. The agreement can only be terminated by written notice
and termination is not effective until the third anniversary of the date of
such notice. GE Capital's ratios of earnings to fixed charges for the years
1993, 1992 and 1991, respectively, were 1.62, 1.44 and 1.34, substantially
above the level at which payments would be required.
Specialty Insurance includes ERC, a multiple line property and casualty
reinsurer that writes all lines of reinsurance other than title and annuities
and other insurance activities of GE Capital. ERC reinsures
(12)
property and casualty risks written by more than 1,000 U.S. and non-U.S.
insurers, and has subsidiaries located in the United Kingdom and Denmark. By
means of other subsidiaries ERC writes property and casualty reinsurance
through brokers and provides reinsurance brokerage services. ERC also writes
certain specialty lines of insurance on a direct basis, principally excess
workers' compensation for self-insurers, libel and allied torts and errors and
omissions coverage for insurance agents and brokers. It is licensed in all
states of the United States, the District of Columbia, certain provinces of
Canada and in other jurisdictions. The other insurance activities of GECS
consist of GE Capital affiliates that provide various forms of insurance.
Financial Guaranty Insurance Company provides financial guaranty insurance,
principally on municipal bonds and structured finance issues. GE Capital's
mortgage insurance operations are engaged primarily in providing private
mortgage insurance. Other affiliates provide life reinsurance, creditor
insurance for international retail borrowers and, for GE Capital customers,
credit life and certain types of property and casualty insurance. Businesses
in the Specialty Insurance segment are generally subject to regulation by
various insurance regulatory agencies.
Securities Broker-Dealer represents Kidder, Peabody, which is a full-
service investment bank and securities broker. Principal businesses include
securities underwriting; sales and trading of equity and fixed income
securities; financial futures activities; advisory services for mergers,
acquisitions and other corporate finance matters; merchant banking; research
services; and asset management. These services are provided in the United
States and internationally to business entities, governments, government
agencies, and individual and institutional investors. Kidder, Peabody is a
member of the principal securities and commodities exchanges and is a primary
dealer in U.S. government securities. Kidder, Peabody and its affiliates are
subject to the rules and regulations of various federal, state and industry
regulatory agencies that apply to securities broker-dealers, including the
U.S. Securities and Exchange Commission, U.S. Commodity Futures Trading
Commission, New York Stock Exchange, National Association of Securities
Dealers and the Chicago Board of Trade, as well as various international
regulatory agencies.
Geographic Segments, Exports from the U.S. and Total International Operations
Financial data for geographic segments (based on the location of the
Company operation supplying goods or services and including exports from the
U.S. to unaffiliated customers) are reported in note 30 to consolidated
financial statements on page 62 of the 1993 Annual Report to Share Owners.
Additional financial data about GE's exports from the U.S. and total
international operations are on page 38 of the 1993 Annual Report to Share
Owners.
Orders Backlog
See pages 34, 36 and 42 of the 1993 Annual Report to Share Owners for
information about GE's backlog of unfilled orders.
(13)
Research and Development
Total expenditures for research and development were $1,955 million in
1993. Total expenditures had been $1,896 million in 1992 and $1,866 million
in 1991. Of these amounts, $1,297 million in 1993 was GE-funded ($1,353
million in 1992 and $1,196 million in 1991) and $658 million in 1993 ($543
million in 1992 and $670 million in 1991) was funded by others, principally
the U.S. government. Aircraft Engines accounts for the largest share of GE's
R&D expenditures from both Company and customer funds. Other significant
expenditures of Company and customer research and development funds were for
Medical Systems, Plastics and Power Systems.
Approximately 9,100 person-years of scientist and engineering effort
were devoted to research and development activities in 1993 with about 73% of
the time involved primarily in GE-funded activities.
Environmental Matters
See page 42 of GE's 1993 Annual Report to Share Owners for a discussion
of environmental matters.
Employee Relations
At year-end 1993, General Electric Company and consolidated affiliates
employed 222,000 persons, of whom approximately 163,000 were in the United
States. For further information about employees, see page 43 of the 1993
Annual Report to Share Owners.
Approximately 44,250 GE manufacturing, engineering and service employees
in the United States are represented for collective bargaining purposes by a
total of approximately 150 different local collective bargaining groups. A
majority of such employees is represented by union locals which are affiliated
with, and bargain in conjunction with, the International Union of Electronic,
Electrical, Salaried, Machine and Furniture Workers (AFL-CIO). During 1991,
General Electric Company negotiated three-year contracts with unions
representing a substantial majority of those United States employees who are
represented by unions. Most of these contracts will terminate in June 1994.
NBC is party to approximately 100 labor agreements covering about 2,000 staff
employees (and a large number of freelance employees) in the United States.
These agreements are with various labor unions, expire at various dates, and
are generally for a term of three to four years. Contracts covering a
majority of NBC's staff employees will expire at different times during 1994.
Executive Officers
See Part III, Item 10 of this 10-K Report for information about
Executive Officers of the Registrant.
Other
Because of the diversity of the Company's products and services, as well
as the wide geographic dispersion of its productive facilities, the Company
uses numerous sources for the wide variety of raw materials needed for its
operations. The Company has not been adversely affected by inability to
obtain raw materials.
(14)
The Company owns, or holds licenses to use, numerous patents. New
patents are continually being obtained through the Company's research and
development activities as existing patents expire. Patented inventions are
used both within the Company and licensed to others, but no industry segment
is substantially dependent on any single patent or group of related patents.
About 5% of consolidated revenues in 1993 (7% of GE revenues) were from
sales of goods and services to agencies of the U.S. government, which is the
Company's largest single customer. About 4% of consolidated revenues in 1993
(6% of GE revenues) were defense-related sales of aircraft engine goods and
services.
About 6% of consolidated revenues in 1992 (8% of GE revenues) were from
sales of goods and services to agencies of the U.S. government. About 4% of
consolidated revenues in 1992 (6% of GE revenues) were defense-related sales
of aircraft engine goods and services.
In 1991, about 7% of consolidated revenues (10% of GE revenues) were
from sales of goods and services to agencies of the U.S. government.
Approximately 5% of consolidated revenues (7% of GE revenues) were defense-
related sales of aircraft engine goods and services.
Item 2. Properties
Manufacturing operations are carried on at approximately 146
manufacturing plants located in 30 states in the United States and Puerto Rico
and some 114 manufacturing plants located in 24 other countries.
Item 3. Legal Proceedings
General
- -------
As previously reported, on August 21, 1991, a suit was filed against the
Company in Federal District Court for the Northern District of Ohio by
Cleveland Electric Illuminating Company and four other utilities which own the
Perry nuclear power plant. The suit related to the contract under which the
Company furnished the nuclear steam supply system and related equipment and
services for the Perry plant. It sought to recover unspecified damages
related to the modification of the containment system and alleged breach of
contract, fraud, negligence, deceptive practices, and violations of the
federal Racketeer Influenced and Corrupt Organizations Act and similar state
statutes. On January 28, 1994, the Company reached a settlement with the
plaintiffs and the case was dismissed. Under the terms of the settlement,
over a period of years, the Company will provide discounts on certain future
purchases and make cash payments to the plaintiffs.
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)
(15)
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. Plaintiffs have appealed, and that appeal is
pending. The defendants believe that the appeal is without merit.
As previously reported, the directors (other than Messrs. Calloway,
Gonzalez and Warner) and certain officers are defendants in a civil suit
purportedly brought on behalf of the Company as a shareholder derivative
action by Leslie McNeil, Harold Sachs, Arun Shingala and Paul and Harriet Luts
(the McNeil action) in New York State Supreme Court on November 19, 1991. The
suit alleges the Company was negligent and engaged in fraud in connection with
the design and construction of containment systems for nuclear power plants
and contends that, as a result, GE has incurred significant financial
liabilities and is potentially exposed to additional liabilities from claims
brought by the Company's customers. The suit alleges breach of fiduciary duty
by the defendants and seeks unspecified compensatory damages and other relief.
The defendants believe these claims are without merit. On March 31, 1992, the
defendants filed motions to dismiss the suit. On September 28, 1992, the
court denied the motions as premature but ruled that they may be renewed after
the completion of limited discovery. Defendants moved for reconsideration of
that order, and on April 3, 1993, the court granted defendants' motion for
reconsideration and directed that discovery be stayed pending the filing of an
amended complaint.
As previously reported, on September 15, 1992, Evelyn Benfield filed a
shareholder derivative action in U.S. District Court in Cincinnati, Ohio
purportedly on behalf of the Company, seeking compensatory damages and
equitable relief arising out of the alleged failure to implement effective
internal controls to prevent government contract fraud. The complaint names
as defendants all of the current directors (except Messrs. Gonzalez and
Warner), certain former directors, a former officer, and a former employee of
the Company. Plaintiff claims, in substance, that various defendants breached
their fiduciary duties to the Company under state law by either participating
in or failing to prevent government contract fraud. Plaintiff's claims are
based primarily upon the fact that, in July 1992, the Company pled guilty to
four federal felony counts and settled a related federal False Claims Act
civil suit, all of which were related to diversions of funds in connection
with the Company's sale of military
(16)
aircraft engines to Israel. The Company paid a fine of $9.5 million and
simultaneously agreed to pay $59.5 million to settle the False Claims Act
suit. On December 3, 1993, the court approved a settlement of the derivative
action. Under the terms of the settlement, the Company will receive a payment
of $19.5 million from an insurance policy it maintains to cover officers'
liability, less plaintiff's counsel fees and expenses awarded by the court.
The defendants have denied all allegations of wrongdoing, and all parties to
the action have agreed that the settlement is premised upon the litigation
risks associated with the claims that a single former officer non-willfully
failed to implement effectively the Company's compliance policies and
procedures. In agreeing to resolve this matter, plaintiff did not contest the
director-defendants' position that they had lawfully discharged their duties
to GE and that the Company, at all relevant times, has had in existence
detailed plans and procedures designed to promote and enforce compliance with
relevant laws. One share owner has appealed the District Court's order
approving the settlement. The defendants believe the appeal is without merit.
The directors and certain former directors are defendants in a civil
suit purportedly brought on behalf of the Company as a share owner derivative
action (the Bildstein action) which was commenced in New York State Supreme
Court in January 1994. The suit seeks compensatory damages arising out of the
purported failure of the defendants to prevent alleged government contract
fraud and alleged violations of the Foreign Corrupt Practices Act in
connection with U.S. government-funded sales of military equipment to Egypt by
a unit of the Company's former GE Aerospace component. GE Aerospace was
transferred to a new corporation controlled by the stockholders 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.
The suit is in an early stage and the Company plans to move to dismiss the
complaint based on the plaintiff's failure to make a pre-litigation demand,
among other reasons.
As previously reported, on March 12, 1993, a complaint was filed in
United States District Court for the District of Connecticut by ten
employees of the Company's Aerospace business, purportedly on behalf of all
GE Aerospace employees whose GE employment status is or was affected by the
then planned transfer of GE Aerospace to a new company controlled by the
stockholders of Martin Marietta. The complaint sought to clarify and
enforce the plaintiff's claimed rights to pension benefits in accordance
with, and rights to assets then held in, the GE Pension Plan (the "Plan").
The complaint names the Company, the trustees of the GE Pension Trust
("Trust"), and Martin Marietta Corporation and one of its former plan
administrators as defendants. The complaint alleged that the Company's
planned transfer of certain assets of the Trust to a Martin Marietta
pension trust, in connection with the transfer of the Aerospace business,
violated the rights of the plaintiffs under the Plan and applicable
provisions of the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code. The complaint sought equitable and declaratory
relief, including an injunction against transfer of the Plan assets except
under circumstances and protections, if any, approved by the court, an
order that the Company disgorge all profits allegedly received by it as a
result of any such transfer and the making of restitution to the Trust for
alleged investment losses resulting from the Company's treatment of Plan
assets in connection with the transaction or alternatively the transfer of
additional assets from the
(17)
Trust to a new Martin Marietta pension trust, and an order requiring Martin
Marietta to continue to offer transferred employees all accrued pension-
related benefits for which they were eligible under the Plan as of the
closing date of the transfer of the GE Aerospace business to Martin
Marietta.
On March 23, 1993, the Company and Martin Marietta Corporation filed
motions to dismiss the complaint on the basis that the complaint does not
state any claim upon which relief can be granted as a matter of law. This
motion remains pending. On April 2, 1993, the transfer of the Aerospace
business occurred, and on June 7, 1993, the court issued an order denying
plaintiffs' request for injunctive relief.
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 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 intends to vigorously contest them.
It believes that none of these cases will have a material adverse effect on
the Company or its business.
Environmental
- -------------
As previously reported, on May 12,1989, the U.S. Environmental
Protection Agency ("EPA") issued an administrative complaint against the
Company alleging violation of regulations issued by EPA under the Toxic
Substances Control Act ("TSCA") relating to disposal and processing of
polychlorinated biphenyls ("PCBs"). The complaint seeks civil penalties of
$225,000. The Company filed an answer denying the alleged violations. On
February 2, 1992, an administrative Law Judge issued a decision assessing a
$40,000 penalty. EPA's Appeals Board lowered the penalty to $25,000. The
Company has filed an appeal.
Also as previously reported, on February 12, 1990, EPA issued an
administrative complaint against the Company alleging violations of
regulations promulgated by EPA under TSCA relating to disposal and storage of
PCBs. The complaint sought a civil penalty of $205,500. EPA has subsequently
issued an amended complaint adding additional allegations of unlawful use of
PCBs, bringing the total civil penalty sought to $365,500.
(18)
The Company has filed answers denying all alleged violations and settlement
discussions are underway. This case presents the same issues as the case
discussed in the preceding paragraph.
As previously reported, EPA has filed five administrative complaints
against GE alleging that GE's use of a system developed by GE for cleaning
PCBs from electrical equipment violated a requirement of TSCA that such
systems be authorized by an EPA permit. Three of the complaints include
counts relating to other alleged violations of EPA regulations applicable to
handling and storage of PCBs. The GE facilities which received the
administrative complaints, the dates the complaints were filed, and the
amounts of civil penalties sought are as follows: Houston Apparatus Service
Center, September 15, 1990, $185,000; Philadelphia Apparatus Service Center,
September 20, 1990, $772,000; Cleveland Apparatus Service Center,
September 25, 1990, $968,000; Chicago Apparatus Service Center, September 25,
1990, $1,107,925; Cincinnati Apparatus Service Center, September 25, 1990,
$1,023,750. The Company has filed an answer denying the alleged violations
and settlement discussions are underway. These cases present the same issues
as the cases discussed in the preceding two paragraphs of this environmental
section.
As previously reported, in June of 1992, EPA issued an administrative
complaint against the Company alleging violations of regulations issued under
TSCA at its Anaheim facility, including improper storage and disposal of PCBs.
The complaint sought penalties of $205,000. On March 9, 1993, EPA amended the
complaint to increase the amount of the penalties being sought to $353,000.
Settlement discussions are underway.
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 seeks $1,039,435 in penalties.
Settlement discussions are underway.
As previously reported, in November of 1992, the New Jersey Department
of Environmental Protection and Energy initiated a proceeding against the
Company seeking $142,000 in penalties for violations of the Clean Water Act at
the Camden facility, including permit violations. The matter was settled in
December 1993 for $88,310.
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. Settlement discussions are underway.
As previously reported, in September of 1993, EPA notified the
Company that it was seeking at least $600,000 in penalties for alleged
violations of the Clean Air Act at its Lynn, Massachusetts Aircraft Engines
facility. The allegations include the failure to undergo required permit
reviews. The Company has supplied information to the Agency, and is
conducting ongoing settlement discussions.
In February of 1994, EPA issued a simultaneous administrative
complaint and consent agreement addressing violations at the Company's Mt.
Vernon, Indiana facility, which included violations of permitted
(19)
conditions for a boiler/industrial furnace burning hazardous waste. The
matter was resolved in February for a penalty of $450,000.
In March of 1994, EPA issued an administrative complaint against the
Company seeking $125,000 in penalties for violations of the Clean Water Act
at its Palmer, Puerto Rico facility, including permit violations.
- -------------------------------
It is the view of management that none of the above described
proceedings will have a material effect upon the Company's earnings, liquidity
or competitive position.
For further information regarding environmental matters, see page 14 of
this Report.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
With respect to "Stock Exchange Information", in the United States,
GE common stock is listed on the New York Stock Exchange (its principal
market) and on the Boston Stock Exchange. GE common stock also is listed
on certain foreign exchanges, including The Stock Exchange, London and the
Tokyo Stock Exchange. Trading, as reported on the New York Stock Exchange,
Inc., Composite Transactions Tape, and dividend information follows:
- ------------------------------------------------------------------------
Common stock market price
------------------------- Dividends
(In dollars) High Low declared
- ------------------------------------------------------------------------
1993
Fourth quarter $107 $92 3/4 $.72
Third quarter 100 7/8 94 1/2 .63
Second quarter 96 3/8 88 1/4 .63
First quarter 91 80 7/8 .63
1992
Fourth quarter 87 1/2 73 1/8 .63
Third quarter 79 3/4 73 .59
Second quarter 79 5/8 72 3/4 .55
First quarter 80 3/4 73 5/8 .55
- ------------------------------------------------------------------------
As of December 31, 1993, there were about 457,000 share owner
accounts of record.
(20)
Item 6. Selected Financial Data
Reported as data for revenues; earnings from continuing operations,
earnings from continuing operations per share; earnings from discontinued
operations, earnings before accounting changes; net earnings; net earnings
per share; dividends declared per share; long-term borrowings; and total
assets appearing on page 43 of the Annual Report to Share Owners for the
fiscal year ended December 31, 1993.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Reported on pages 32-43 (and graphs on pages 25, 32, 33, 37, 38, 39,
40, 41 and 42) of the Annual Report to Share Owners for the fiscal year
ended December 31, 1993.
Item 8. Financial Statements and Supplementary Data
See index under item 14.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
(21)
PART III
Item 10. Directors and Executive Officers of Registrant
Executive Officers of the Registrant (As of March 11, 1994)
Date assumed
Executive Officer
Name Position Age position
- ---- -------- --- ----------------
John F. Welch, Jr. Chairman of the Board and Chief
Executive Officer 58 April 1981
James R. Bunt Vice President and Treasurer 52 January 1993
William J. Conaty Senior Vice President, Human Resources 48 October 1993
Dennis D. Dammerman Senior Vice President, Finance 48 March 1984
Frank P. Doyle Executive Vice President 63 September 1981
Lewis S. Edelheit Senior Vice President, Research and
Development 51 November 1992
Paolo Fresco Vice Chairman and Executive Officer 60 October 1987
Dale F. Frey Vice President and President, GE Investment
Corporation 61 January 1993
David C. Genever-Watling Senior Vice President, GE Industrial
and Power Systems 48 September 1990
Benjamin W. Heineman, Jr. Senior Vice President, General Counsel
and Secretary 50 September 1987
W. James McNerney, Jr. Senior Vice President, GE Asia-Pacific 44 January 1992
Eugene F. Murphy Senior Vice President, GE Aircraft Engines 58 October 1986
Robert L. Nardelli Vice President, GE Transportation Systems 45 February 1992
Robert W. Nelson Vice President, Financial Planning
and Analysis 53 September 1991
John D. Opie Senior Vice President, GE Lighting 56 August 1986
Gary M. Reiner Vice President - Business Development 39 January 1991
Gary L. Rogers Senior Vice President, GE Plastics 49 December 1989
James W. Rogers Vice President, GE Motors 43 May 1991
Brian H. Rowe Chairman, GE Aircraft Engines 62 October 1979
Hellene S. Runtagh Vice President, GE Information Services 45 March 1992
J. Richard Stonesifer Senior Vice President, GE Appliances 57 January 1992
John M. Trani Senior Vice President, GE Medical Systems 48 September 1986
Lloyd G. Trotter Vice President, GE Electrical Distribution
and Control 48 November 1992
All Executive Officers are elected by the Board of Directors for an
initial term which continues until the first Board meeting following the
next annual statutory meeting of share owners and thereafter are elected
for one-year terms or until their successors have been elected.
All Executive Officers have been executives of GE for the last five
years except Robert L. Nardelli, Gary M. Reiner and Lewis S. Edelheit. Mr.
Nardelli, who was an employee of GE from June 1971 through June 1988, was
Executive Vice President and General Manager of J. I. Case, a manufacturer
of construction equipment and farm machinery, from July 1988 to May 1991,
and thereafter President of Camco, a Canadian subsidiary of GE that
manufactures, distributes, sells and services appliances, until February
1992. Mr. Reiner was a Vice President of Boston Consulting Group,
strategic planners and designers, prior to joining GE in 1991. Dr.
Edelheit, who was an employee of GE from 1969 through 1985, was President
and CEO of Quantum Medical Systems, Inc. (Quantum) from 1986 to August
1991, and thereafter Manager - Electronic Systems Research Center, GE
Corporate Research and Development Laboratory, until November 1992.
Quantum is a venture capital-backed medical ultrasound company which was
acquired by Siemens A.G. in July 1990.
(22)
The remaining information called for by this item is incorporated by
reference to "Election of Directors" in the definitive proxy statement
relating to the registrant's Annual Meeting of Share Owners to be held
April 27, 1994.
Item 11. Executive Compensation
Incorporated by reference to "Board of Directors and Committees,"
"Summary Compensation Table," "Stock Appreciation Rights and Stock
Options," and "Retirement Benefits" in the definitive proxy statement
relating to the registrant's Annual Meeting of Share Owners to be held
April 27, 1994.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated by reference to "Information relating to Directors,
Nominees and Executive Officers" in the registrant's definitive proxy
statement relating to its Annual Meeting of Share Owners to be held
April 27, 1994.
Item 13. Certain Relationships and Related Transactions
Incorporated by reference to "Certain Transactions" in the
registrant's definitive proxy statement relating to its Annual Meeting of
Share Owners to be held April 27, 1994.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)1. Financial statements applicable to General Electric Company and
consolidated affiliates and contained on the page(s) indicated in
the GE Annual Report to Share Owners for the fiscal year ended
December 31, 1993.
Annual 10-K
Report Report
Page(s) Page(s)
------- -------
Statement of earnings for the years
ended December 31, 1993, 1992 and 1991 26 F-2
Statement of financial position at
December 31, 1993 and 1992 28 F-4
Statement of cash flows for the years
ended December 31, 1993, 1992 and 1991 30 F-6
Independent Auditors' Report 44 F-20
Other financial information:
Notes to consolidated financial
statements 45-64 F-21 to F-40
Industry segment information 33-38, F-9 to F-14
60-61 F-36 to F-37
Geographic segment information 62 F-38
Operations by quarter (unaudited) 64 F-40
(a)2. Financial Statement Schedules for General Electric Company and
consolidated affiliates.
(23)
Schedule Page
-------- ----
II Amounts Receivable from Related Parties and F-41
Underwriters, Promoters and Employees Other
than Related Parties
VIII Valuation and Qualifying Accounts F-42
IX Short-Term Borrowings F-43 to F-45
X Supplementary Income Statement Information F-46
The schedules listed in Reg. 210.5-04, except those listed above,
have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
(a)3. Exhibit Index
(3) Restated Certificate of Incorporation, as amended, and By-
laws, as amended, of General Electric Company. (i)
(4) Agreement to furnish to the Securities and Exchange
Commission upon request a copy of instruments defining the
rights of holders of certain long-term debt of the
registrant and consolidated subsidiaries.*
(10) All of the following exhibits consist of Executive
Compensation Plans or Arrangements:
(a) General Electric Incentive Compensation Plan as
amended effective July 1, 1991.(ii)
(b) General Electric 1983 Stock Option-Performance Unit
Plan. (iii)
(c) General Electric Supplementary Pension Plan as
amended effective July 1, 1991.(iv)
(d) Amendment to General Electric Supplementary Pension
Plan dated May 22, 1992.(v)
(e) Amendment to General Electric Supplementary Pension
Plan dated September 10, 1993.*
(f) General Electric Deferred Compensation Plan for
Directors as amended May 25, 1990.(vi)
(g) General Electric Insurance Plan for Directors.(vii)
(h) General Electric Financial Planning Program, as
amended through September 1993.*
(i) General Electric Supplemental Life Insurance
Program, as amended February 8, 1991.(viii)
(j) General Electric Directors' Retirement and Optional
Life Insurance Plan.(ix)
(24)
(k) General Electric 1987 Executive Deferred Salary
Plan.(x)
(l) General Electric 1989 Stock Option Plan for Non-
Employee Directors.(xi)
(m) General Electric 1990 Long-Term Incentive Plan.(xii)
(n) General Electric 1991 Executive Deferred Salary
Plan. (xiii)
(o) General Electric 1994 Executive Deferred Salary
Plan. *
(p) General Electric Directors' Charitable Gift Plan, as
amended through May 1993. *
(q) Restated Employment Agreement, dated January 2,
1992, and Restated U.K. Employment Agreement, dated
January 3, 1992, in each case between the registrant
and P. Fresco, an Executive Officer and Director of
the registrant.(xiv)
(r) General Electric Leadership Life Insurance Program,
effective January 1, 1994. *
(11) Statement re Compilation of Per Share Earnings.*
(12) Computation of Ratio of Earnings to Fixed Charges.*
(21) Subsidiaries of Registrant.*
(23) Consent of independent auditors incorporated by reference
in each Prospectus constituting part of the Registration
Statements on Form S-3 (Registration Nos. 33-29024,
33-3908, 2-82072, 33-37106, 33-35922, 33-44593, 33-39596,
33-39596-01, 33-47181, 33-47085 and 33-50639) and on Form
S-8 (Registration Nos. 33-4239, 33-23441,
33-24679, 2-84145, 33-47500 and 33-49053).*
(24) Power of attorney.*
(99)(a)Income Maintenance Agreement, dated March 28, 1991,
between the registrant and General Electric Capital
Corporation.(xv)
(b)Undertaking for Inclusion in Registration Statements on
Form S-8 of General Electric Company. (xvi)
Notes to Exhibits
- -----------------
(i) Incorporated by reference to Exhibit of the same number to
General Electric Quarterly Report on Form 10-Q (Commission file number
1-35) for the quarter ended June 30, 1993.
(25)
(ii) Incorporated by reference to Exhibit of the same number to
General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1991.
(iii) Incorporated by reference to Exhibit of the same number to
General Electric Annual Report on Form 10-K (Commission file number 1-35)
for the fiscal year ended December 31, 1988.
(iv) Incorporated by reference to Exhibit 10(e) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1991.
(v) Incorporated by reference to Exhibit 10(d) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1992.
(vi) Incorporated by reference to Exhibit 10(f) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1990.
(vii) Incorporated by reference to Exhibit 10(i) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1980.
(viii) Incorporated by reference to Exhibit 10(i) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1990.
(ix) Incorporated by reference to Exhibit 10(j) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1986.
(x) Incorporated by reference to Exhibit 10(k) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1987.
(xi) Incorporated by reference to Exhibit A to the General Electric
Proxy Statement for its Annual Meeting of Share Owners held on April 26,
1989.
(xii) Incorporated by reference to Exhibit A to the General Electric
Proxy Statement for its Annual Meeting of Share Owners held April 25, 1990.
(xiii) Incorporated by reference to Exhibit 10(n) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1990.
(xiv) Incorporated by reference to Exhibit 10(o) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1992.
(xv) Incorporated by reference to Exhibit 28(a) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1990.
(26)
(xvi) Incorporated by reference to Exhibit 99(b) to General Electric
Annual Report on Form 10-K (Commission file number 1-35) for the fiscal
year ended December 31, 1992.
* Filed electronically herewith.
(b) Reports on Form 8-K during the quarter ended December 31, 1993.
There were no reports on Form 8-K filed by the registrant during the
fourth quarter of 1993.
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities and
Exchange Act of 1934, the registrant has duly caused this annual report on
Form 10-K for the fiscal year ended December 31, 1993, to be signed on its
behalf by the undersigned, and in the capacities indicated, thereunto duly
authorized in the Town of Fairfield and State of Connecticut on the 11th
day of March 1994.
General Electric Company
(Registrant)
By Dennis D. Dammerman
-----------------------------
Senior Vice President-Finance
(Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signer Title Date
------ ----- ----
Dennis D. Dammerman
- ---------------------------
Senior Vice President-Finance Principal Financial March 11, 1994
Officer
Philip D. Ameen
- ---------------------------
Comptroller Principal Accounting March 11, 1994
Officer
John F. Welch, Jr.* Chairman of the Board of Directors
(Principal Executive Officer)
H. Brewster Atwater, Jr.* Director
D. Wayne Calloway* Director
Silas S. Cathcart* Director
Lawrence E. Fouraker* Director
Paolo Fresco* Director
Claudio X. Gonzalez* Director
Henry H. Henley, Jr.* Director
David C. Jones Director
Robert E. Mercer* Director
Gertrude G. Michelson* Director
Barbara Scott Preiskel* Director
Frank H. T. Rhodes* Director
Andrew C. Sigler* Director
Douglas A. Warner III* Director
A majority of the Board of Directors
*By Benjamin W. Heineman, Jr.
--------------------------------
Attorney-in-fact
March 11, 1994
(27)
Annual Report Page 25
--------------------------------------------------------------------------
|
| FINANCIAL SECTION
--------------------------------------------------------------------------
|
| CONTENTS
Independent Auditors' Report 44
Audited Financial Statements
Earnings 26
Financial Position 28
Cash Flows 30
Notes to Consolidated Financial Statements 45
Management's Discussion
Operations
Consolidated Operations 32
GE Operations 33
Industry Segments 33
GECS Operations 36
International Operations 38
Financial Resources and Liquidity 39
Selected Financial Data 42
Financial Responsibility 44
- ------------------------------------------------------------------------------------------------------------
CHART: REVENUES (In billions)
1989 1990 1991 1992 1993
$49.135 $52.619 $54.629 $57.073 $60.562
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
CHART: EARNINGS PER SHARE BEFORE ACCOUNTING CHANGES (In dollars)
1989 1990 1991 1992 1993
$4.36 $4.85 $5.10 $5.51 $6.06
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
CHART: DIVIDENDS PER SHARE (In dollars)
1989 1990 1991 1992 1993
$1.70 $1.92 $2.08 $2.32 $2.61
- ------------------------------------------------------------------------------------------------------------
F-1
Annual Report Page 26
--------------------------------------------------------------------------
|
|STATEMENT OF EARNINGS
General Electric Company
and consolidated affiliates
-----------------------------------
For the years ended December 31 (In millions) 1993 1992 1991
- -------------------------------------------------------------- -----------------------------------
REVENUES
Sales of goods $29,509 $29,575 $29,434
Sales of services 8,268 8,331 8,062
Other income (note 3) 735 799 792
Earnings of GECS before accounting change - - -
GECS revenues from operations (note 4) 22,050 18,368 16,341
------- ------- -------
Total revenues 60,562 57,073 54,629
------- ------- -------
COSTS AND EXPENSES (note 5)
Cost of goods sold 22,606 22,107 21,498
Cost of services sold 6,308 6,273 6,373
Interest and other financial charges (note 7) 6,989 6,860 7,401
Insurance losses and policyholder and annuity benefits 3,172 1,957 1,623
Provision for losses on financing receivables (note 8) 987 1,056 1,102
Other costs and expenses 13,774 12,494 10,834
Minority interest in net earnings of consolidated
affiliates 151 53 72
------- ------- -------
Total costs and expenses 53,987 50,800 48,903
------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
ACCOUNTING CHANGES 6,575 6,273 5,726
Provision for income taxes (note 9) (2,151) (1,968) (1,742)
------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGES 4,424 4,305 3,984
------- ------- -------
Earnings from discontinued operations, net of income taxes
of $44, $248 and $259, respectively (note 2) 75 420 451
Gain on transfer of discontinued operations, net
of income taxes of $752 678 - -
------- ------- -------
EARNINGS FROM DISCONTINUED OPERATIONS 753 420 451
------- ------- -------
EARNINGS BEFORE ACCOUNTING CHANGES 5,177 4,725 4,435
Cumulative effects of accounting changes (notes 6 and 22) (862) - (1,799)
------- ------- -------
Net earnings $ 4,315 $ 4,725 $ 2,636
======= ======= =======
- -------------------------------------------------------------- -----------------------------------
NET EARNINGS PER SHARE (in dollars)
Continuing operations before accounting changes $ 5.18 $ 5.02 $ 4.58
Discontinued operations before accounting changes 0.88 0.49 0.52
------- ------- -------
Earnings before accounting changes 6.06 5.51 5.10
Cumulative effects of accounting changes (1.01) - (2.07)
------- ------- -------
Net earnings per share $5.05 $5.51 $3.03
======= ======= =======
- -------------------------------------------------------------- ------------------------------------
DIVIDENDS DECLARED PER SHARE (in dollars) $2.61 $2.32 $2.08
- --------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement.
F-2
Annual Report Page 27
- ---------------------------------------------------------------------------
GE GECS
------------------------------- -----------------------------
For the years ended December 31 (In millions) 1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------- ------------------------------ -----------------------------
REVENUES
Sales of goods $29,533 $29,595 $29,446 $ - $ - $ -
Sales of services 8,289 8,348 8,075 - - -
Other income (note 3) 730 812 798 - - -
Earnings of GECS before accounting change 1,807 1,499 1,275 - - -
GECS revenues from operations (note 4) - - - 22,137 18,440 16,399
------- ------- ------- ------- ------- -------
Total revenues 40,359 40,254 39,594 22,137 18,440 16,399
------- ------- ------- ------- ------- -------
COSTS AND EXPENSES (note 5)
Cost of goods sold 22,630 22,127 21,510 - - -
Cost of services sold 6,329 6,290 6,386 - - -
Interest and other financial charges (note 7) 525 768 893 6,473 6,122 6,536
Insurance losses and policyholder and annuity benefits - - - 3,172 1,957 1,623
Provision for losses on financing receivables (note 8) - - - 987 1,056 1,102
Other costs and expenses 5,124 5,319 5,422 8,723 7,230 5,448
Minority interest in net earnings of consolidated
affiliates 17 13 39 134 40 33
------- ------- ------- ------- ------- -------
Total costs and expenses 34,625 34,517 34,250 19,489 16,405 14,742
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND
ACCOUNTING CHANGES 5,734 5,737 5,344 2,648 2,035 1,657
Provision for income taxes (note 9) (1,310) (1,432) (1,360) (841) (536) (382)
------- ------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE ACCOUNTING CHANGES 4,424 4,305 3,984 1,807 1,499 1,275
------- ------- ------- ------- ------- -------
Earnings from discontinued operations, net of income taxes
of $44, $248 and $259, respectively (note 2) 75 420 451 - - -
Gain on transfer of discontinued operations, net
of income taxes of $752 678 - - - - -
------- ------- ------- ------- ------- -------
EARNINGS FROM DISCONTINUED OPERATIONS 753 420 451 - - -
------- ------- ------- ------- ------- -------
EARNINGS BEFORE ACCOUNTING CHANGES 5,177 4,725 4,435 1,807 1,499 1,275
Cumulative effects of accounting changes (notes 6 and 22) (862) - (1,799) - - (19)
------- ------- ------- ------- ------- -------
NET EARNINGS $ 4,315 $ 4,725 $ 2,636 $ 1,807 $ 1,499 $ 1,256
======= ======= ======= ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
In the supplemental consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the
consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates"
columns on page 26.
F-3
Annual Report Page 28
--------------------------------------------------------------------------
|
|STATEMENT OF FINANCIAL POSITION
General Electric Company
and consolidated affiliates
-------------------------------
At December 31 (In millions) 1993 1992
- --------------------------------------------------------------------- -------------------------------
ASSETS
Cash and equivalents $ 3,218 $ 3,129
GECS trading securities (note 10) 30,165 24,154
Investment securities (note 11) 26,811 11,256
Securities purchased under agreements to resell 43,463 26,788
Current receivables (note 12) 8,195 7,150
Inventories (note 13) 3,824 4,574
GECS financing receivables (investment in time sales, loans and
financing leases) - net (note 14) 63,948 59,388
Other GECS receivables 15,616 8,025
Property, plant and equipment (including equipment leased
to others) - net (note 15) 21,228 20,387
Investment in GECS - -
Intangible assets (note 16) 10,364 9,510
All other assets (note 17) 24,674 16,625
Net assets of discontinued operations - 1,890
-------- --------
TOTAL ASSETS $251,506 $192,876
======== ========
- --------------------------------------------------------------------- -------------------------------
LIABILITIES AND EQUITY
Short-term borrowings (note 18) $ 62,135 $ 56,389
Accounts payable, principally trade accounts 11,956 8,245
Securities sold under agreements to repurchase 56,669 36,014
Securities sold but not yet purchased, at market (note 19) 15,332 11,413
Progress collections and price adjustments accrued 2,608 2,150
Dividends payable 615 539
All other GE current costs and expenses accrued (note 20) 6,414 5,725
Long-term borrowings (note 18) 28,270 25,376
Insurance reserves and annuity benefits (note 21) 22,909 7,948
All other liabilities (note 22) 12,009 9,734
Deferred income taxes (note 23) 5,109 4,540
-------- --------
Total liabilities 224,026 168,073
-------- --------
Minority interest in equity of consolidated affiliates (note 24) 1,656 1,344
-------- --------
Common stock (926,564,000 shares issued) 584 584
Other capital 1,398 755
Retained earnings 28,613 26,527
Less common stock held in treasury (4,771) (4,407)
-------- --------
Total share owners' equity (notes 25 and 26) 25,824 23,459
-------- --------
TOTAL LIABILITIES AND EQUITY $251,506 $192,876
======== ========
- -----------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement.
F-4
Annual Report Page 29
- ---------------------------------------------------------------------------
GE GECS
--------------------- -----------------------
At December 31 (In millions) 1993 1992 1993 1992
- ----------------------------------------------------------------------- --------------------- -----------------------
ASSETS
Cash and equivalents $ 1,536 $ 1,189 $ 1,682 $ 1,940
GECS trading securities (note 10) - - 30,165 24,154
Investment securities (note 11) 19 32 26,792 11,224
Securities purchased under agreements to resell - - 43,463 26,788
Current receivables (note 12) 8,561 7,462 - -
Inventories (note 13) 3,824 4,574 - -
GECS financing receivables (investment in time sales, loans and
financing leases) - net (note 14) - - 63,948 59,388
Other GECS receivables - - 15,799 8,476
Property, plant and equipment (including equipment leased
to others) - net (note 15) 9,542 9,932 11,686 10,455
Investment in GECS 10,809 8,884 - -
Intangible assets (note 16) 6,466 6,607 3,898 2,903
All other assets (note 17) 10,377 7,505 14,297 9,196
Net assets of discontinued operations - 1,890 - -
------- ------- -------- --------
TOTAL ASSETS $51,134 $48,075 $211,730 $154,524
======= ======= ======== ========
- ----------------------------------------------------------------------- --------------------- -----------------------
LIABILITIES AND EQUITY
Short-term borrowings (note 18) $ 2,391 $ 3,448 $ 60,003 $ 53,183
Accounts payable, principally trade accounts 2,331 2,217 9,885 6,624
Securities sold under agreements to repurchase - - 56,669 36,014
Securities sold but not yet purchased, at market (note 19) - - 15,332 11,413
Progress collections and price adjustments accrued 2,608 2,150 - -
Dividends payable 615 539 - -
All other GE current costs and expenses accrued (note 20) 6,414 5,725 - -
Long-term borrowings (note 18) 2,413 3,420 25,885 21,957
Insurance reserves and annuity benefits (note 21) - - 22,909 7,948
All other liabilities (note 22) 8,482 7,096 3,529 2,638
Deferred income taxes (note 23) (299) (329) 5,408 4,869
------- ------- -------- --------
Total liabilities 24,955 24,266 199,620 144,646
------- ------- -------- --------
Minority interest in equity of consolidated affiliates (note 24) 355 350 1,301 994
------- ------- -------- --------
Common stock (926,564,000 shares issued) 584 584 1 1
Other capital 1,398 755 2,596 1,868
Retained earnings 28,613 26,527 8,212 7,015
Less common stock held in treasury (4,771) (4,407) - -
------- ------- -------- --------
Total share owners' equity (notes 25 and 26) 25,824 23,459 10,809 8,884
------- ------- -------- --------
TOTAL LIABILITIES AND EQUITY $51,134 $48,075 $211,730 $154,524
======= ======= ======== ========
- --------------------------------------------------------------------------------------------------------------------------------
In the supplemental consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the
consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates"
columns on page 28.
F-5
Annual Report Page 30
--------------------------------------------------------------------------
|
| STATEMENT OF CASH FLOWS
General Electric Company
and consolidated affiliates
------------------------------------
For the years ended December 31 (In millions) 1993 1992 1991
- --------------------------------------------------------------- ------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,315 $ 4,725 $ 2,636
Less earnings from discontinued operations (753) (420) (451)
Adjustments to reconcile net earnings to cash provided
from operating activities
Cumulative effects of accounting changes 862 - 1,799
Depreciation, depletion and amortization 3,261 2,818 2,654
Earnings retained by GECS - - -
Deferred income taxes 461 707 826
Decrease (increase) in GE current receivables (571) 135 (215)
Decrease in GE inventories 750 820 378
Increase (decrease) in accounts payable 3,345 57 1,151
Increase in insurance reserves 1,479 703 725
Provision for losses on financing receivables 987 1,056 1,102
Net change in certain broker-dealer accounts 382 1,018 (1,548)
All other operating activities (4,407) (2,111) (1,952)
-------- -------- --------
Net cash from continuing operations 10,111 9,508 7,105
Net cash from discontinued operations 76 741 392
-------- -------- --------
CASH PROVIDED FROM OPERATING ACTIVITIES 10,187 10,249 7,497
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (4,739) (4,824) (4,870)
Dispositions of property, plant and equipment 1,155 1,793 1,090
Net increase in GECS financing receivables (4,164) (4,683) (7,254)
Payments for principal businesses purchased (2,090) (2,013) (3,769)
Proceeds from principal business dispositions - 90 604
All other investing activities (6,639) (3,823) (2,045)
-------- -------- --------
Cash for investing activities - continuing operations (16,477) (13,460) (16,244)
Cash from (used for) investing activities
- discontinued operations 886 (93) (117)
-------- -------- --------
CASH USED FOR INVESTING ACTIVITIES (15,591) (13,553) (16,361)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) 4,464 3,092 6,126
Newly issued debt (maturities more than 90 days) 15,468 13,084 15,374
Repayments and other reductions (maturities more
than 90 days) (11,853) (9,008) (10,158)
Disposition of GE shares from treasury (mainly for
employee plans) 406 425 410
Purchase of GE shares for treasury (770) (1,206) (1,112)
Dividends paid to share owners (2,153) (1,925) (1,780)
All other financing activities (69) - -
-------- -------- --------
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES 5,493 4,462 8,860
-------- -------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR 89 1,158 (4)
Cash and equivalents at beginning of year 3,129 1,971 1,975
-------- -------- --------
Cash and equivalents at end of year $ 3,218 $ 3,129 $ 1,971
======== ======== ========
- --------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $ (6,689) $ (6,477) $ (7,145)
Cash paid during the year for income taxes (1,644) (1,033) (1,244)
- --------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement.
F-6
Annual Report Page 31
- ---------------------------------------------------------------------------
GE GECS
------------------------------- ------------------------------
For the years ended December 31 (In millions) 1993 1992 1991 1993 1992 1991
- --------------------------------------------------------- ------------------------------- ------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,315 $ 4,725 $ 2,636 $ 1,807 $ 1,499 $ 1,256
Less earnings from discontinued operations (753) (420) (451) - - -
Adjustments to reconcile net earnings to cash provided
from operating activities
Cumulative effects of accounting changes 862 - 1,799 - - 19
Depreciation, depletion and amortization 1,631 1,483 1,429 1,630 1,335 1,225
Earnings retained by GECS (1,197) (999) (925) - - -
Deferred income taxes 120 675 271 341 32 555
Decrease (increase) in GE current receivables (625) 68 (109) - - -
Decrease in GE inventories 750 820 378 - - -
Increase (decrease) in accounts payable 114 (43) (203) 3,246 139 1,391
Increase in insurance reserves - - - 1,479 703 725
Provision for losses on financing receivables - - - 987 1,056 1,102
Net change in certain broker-dealer accounts - - - 382 1,018 (1,548)
All other operating activities (16) (1,736) (1,199) (4,419) (439) (754)
------- ------- ------- ------- ------- -------
Net cash from continuing operations 5,201 4,573 3,626 5,453 5,343 3,971
Net cash from discontinued operations 76 741 392 - - -
------- ------- ------- ------- ------- -------
CASH PROVIDED FROM OPERATING ACTIVITIES 5,277 5,314 4,018 5,453 5,343 3,971
------- ------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (1,588) (1,445) (2,126) (3,151) (3,379) (2,744)
Dispositions of property, plant and equipment 55 46 61 1,100 1,747 1,029
Net increase in GECS financing receivables - - - (4,164) (4,683) (7,254)
Payments for principal businesses purchased - - (933) (2,090) (2,013) (2,836)
Proceeds from principal business dispositions - 90 327 - - 277
All other investing activities 298 (103) (60) (6,914) (3,668) (2,125)
------- ------- ------- ------- ------- -------
Cash for investing activities - continuing operations (1,235) (1,412) (2,731) (15,219) (11,996) (13,653)
Cash from (used for) investing activities
- discontinued operations 886 (93) (117) - - -
------- ------- ------- ------- ------- -------
CASH USED FOR INVESTING ACTIVITIES (349) (1,505) (2,848) (15,219) (11,996) (13,653)
------- ------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less) 46 (763) 483 4,462 3,895 5,641
Newly issued debt (maturities more than 90 days) 215 1,331 2,136 15,253 11,753 13,238
Repayments and other reductions (maturities more
than 90 days) (2,325) (1,528) (1,573) (9,528) (7,480) (8,585)
Disposition of GE shares from treasury (mainly for
employee plans) 406 425 410 - - -
Purchase of GE shares for treasury (770) (1,206) (1,112) - - -
Dividends paid to share owners (2,153) (1,925) (1,780) (610) (500) (350)
All other financing activities - - - (69) - -
------- ------- ------- ------- ------- -------
CASH PROVIDED FROM (USED FOR) FINANCING ACTIVITIES (4,581) (3,666) (1,436) 9,508 7,668 9,944
------- ------- ------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING YEAR 347 143 (266) (258) 1,015 262
Cash and equivalents at beginning of year 1,189 1,046 1,312 1,940 925 663
------- ------- ------- ------- ------- -------
Cash and equivalents at end of year $ 1,536 $ 1,189 $ 1,046 $ 1,682 $ 1,940 $ 925
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION
Cash paid during the year for interest $ (473) $ (570) $ (761) $(6,216) $(5,907) $(6,384)
Cash paid during the year for income taxes (1,455) (936) (1,343) (189) (97) 99
- -----------------------------------------------------------------------------------------------------------------------------
In the supplemental consolidating data on this page, "GE" means the basis of consolidation as described in note 1 to the
consolidated financial statements; "GECS" means General Electric Capital Services, Inc. and all of its affiliates and associated
companies. Transactions between GE and GECS have been eliminated from the "General Electric Company and consolidated affiliates"
columns on page 30.
F-7
Annual Report Page 32
--------------------------------------------------------------------------
|
| MANAGEMENT'S DISCUSSION OF OPERATIONS
OVERVIEW
General Electric Company's consolidated financial statements represent the
combination of the Company's manufacturing and nonfinancial services
businesses ("GE") and the accounts of General Electric Capital Services, Inc.
("GECS"). See note 1 to the consolidated financial statements, which explains
how the various financial data are presented.
Management's Discussion of Operations is in four parts: Consolidated
Operations, GE Operations, GECS Operations and, on page 38, International
Operations.
CONSOLIDATED OPERATIONS
1993 WAS ANOTHER SUCCESSFUL YEAR for the General Electric Company in a
difficult global economy, reflecting solid operating performance in all of the
businesses in its diversified portfolio except, as expected, Aircraft Engines.
Consolidated revenues increased 6% to $60.6 billion, led by GE Capital
Services, Power Systems, Transportation Systems, Appliances, and Electrical
Distribution and Control.
CONSOLIDATED EARNINGS were $4.315 billion compared with $4.725 billion in 1992
and $2.636 billion in 1991. Three important factors should be considered in
evaluating the Company's 1993 operations - restructuring provisions,
discontinued operations and the effect of an accounting change. Each of these
factors is discussed separately below. Without these items, 1993 earnings
would have been $5.102 billion, up 16% from the comparable 1992 level.
Particularly good results were reported in GE Capital Services, NBC, Plastics
and Power Systems.
* Restructuring provisions in 1993 amounted to $678 million after
taxes. These provisions cover costs of a plan that will enhance the Company's
global competitiveness. The approved plan includes explicit programs that will
result in the closing, downsizing and streamlining of certain production,
service and administration facilities worldwide. Costs include, among other
things, asset write-offs, lease terminations and severance benefits. See
Industry Segments beginning on page 33 for further information on
restructuring.
* Discontinued operations reported earnings of $753 million ($.88
per share), up $333 million from 1992. The increase included a gain of $678
million ($.79 per share) resulting from transfer of the Aerospace businesses
at the beginning of the second quarter, which was partially offset by the
absence of nine months of 1992 earnings ($326 million) and lower first-quarter
1993 earnings ($19 million).
* Accounting changes included the 1993 adoption of Statement of
Financial Accounting Standards (SFAS) No. 112, Employers' Accounting for
Postemployment Benefits. The transition effect of this accounting change
decreased net earnings by $862 million ($1.01 per share), with a corresponding
decrease in share owners' equity. See note 22 for a further discussion of SFAS
No. 112.
The 1991 accounting change, adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, had the transition
effect of reducing net earnings by $1,799 million ($2.07 per share), with a
corresponding decrease in share owners' equity.
As a result of these noncash charges, the return on average share
owners' equity was reduced to 17.5% in 1993 and 12.2% in 1991, compared with
20.9% in 1992.
NEW ACCOUNTING STANDARDS include SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, which modifies the accounting that applies when it is
probable that all amounts due under contractual terms of a loan will not be
collected. Management does not believe that this Statement, required to be
adopted no later than the first quarter of 1995, will have a material effect
on the Company's financial position or results of operations, although such
effect will depend on the facts at the time of adoption.
DIVIDENDS DECLARED totaled $2.229 billion in 1993. Per-share dividends of
$2.61 were up 13% from the previous year's $2.32 per share, marking the 18th
consecutive year of dividend growth. Dividends declared per share increased
12% in 1992 over 1991, following an 8% increase the year before. Even though
substantial dividends were paid, the Company retained sufficient earnings to
invest in new plant and equipment for a wide variety of capital expenditure
projects, particularly those which increase productivity, and to provide
adequate financial resources for internal and external growth opportunities.
- ------------------------------------------------------------------------------------------------------
CHART: EARNINGS BEFORE ACCOUNTING CHANGES (In billions)
1989 1990 1991 1992 1993
Continuing operations $3.503 $3.889 $3.984 $4.305 $4.424
Discontinued operations 0.436 0.414 0.451 0.420 0.753
- ------------------------------------------------------------------------------------------------------
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GE OPERATIONS
GE TOTAL REVENUES of $40.4 billion in 1993 were about the same as 1992's
revenues, which were up about 2% from $39.6 billion in 1991.
* GE's sales of goods and services were essentially unchanged during
the three-year period, with the sales effects of changes in volume and prices
differing markedly among its businesses. Overall, volume was about 2% higher
in 1993 than in 1992, with good increases in Plastics, Transportation Systems,
Appliances and Power Systems that were partially offset by reduced shipments
in Aircraft Engines and lower advertising revenues in NBC, principally because
there was no counterpart to the 1992 Summer Olympics. Lower 1993 selling
prices in many businesses, particularly Plastics, Medical Systems and
Lighting, offset the net volume increase. Sales in 1992 were up about 1% from
1991 because of the effect of about 2% higher shipment volume, approximately
one-half of which was offset by lower selling prices.
* GE's other income from a wide variety of sources was $730 million in
1993, $812 million in 1992 and $798 million in 1991. Details of GE's other
income are in note 3.
* Earnings of GECS were up 21% in 1993 following an 18% increase the
year before. See page 36 for details of these earnings.
TOTAL COSTS AND EXPENSES FOR GE were virtually flat for the three-year period,
despite much higher restructuring provisions in 1993. Principal elements of
these costs and expenses are costs of goods and services sold; selling,
general and administrative expense; and interest expense.
* Operating margin is sales of goods and services less the costs of
goods and services sold and selling, general and administrative expenses.
After restructuring provisions, operating margin was 9.9% of sales in 1993
compared with 11.1% in 1992 and 11.2% in 1991. Before such provisions, GE's
operating margins were 12.5% in 1993 compared with 11.5% in 1992 and 1991. In
1993, all businesses other than Aircraft Engines increased their margin rates
before restructuring by one to five full points. Strong 1992 operating margin
improvements in Power Systems, NBC and Medical Systems were offset by the
effects of reduced volume at Aircraft Engines and pricing pressures at both
Plastics and Aircraft Engines.
* Total cost productivity (sales in relation to costs on a constant
dollar basis) was 3.8% in 1993 compared with 4.3% in 1992 and 3.9% in 1991,
and it more than offset the impact of inflation on the Company in all three
years. Lower volume at Aircraft Engines more than explained the 1993 decline.
Excluding Aircraft Engines, productivity was 5.3% in 1993 compared with 4.8%
in 1992.
- ------------------------------------------------------------------------------------------------------
CHART: GE/S&P DIVIDENDS PER SHARE INCREASE COMPARED WITH 1988
1989 1990 1991 1992 1993
GE 16.4% 31.5% 42.5% 58.9% 78.8%
S&P 500 13.6 24.4 25.4 27.2 30.6
- ------------------------------------------------------------------------------------------------------
* Interest expense in 1993 was $525 million, down 32% from $768 million
in 1992. The lower interest expense was attributable to a decrease in the
average level of borrowings and, to a lesser extent, lower interest rates.
Interest expense decreased 14% in 1992 compared with 1991, primarily because
of lower rates.
GE enters 1994 on a strong note, with excellent cash flows and a strong
balance sheet. The Company continues to be well positioned to capitalize on
both global growth opportunities and gradual improvement in the U.S. economy
in the coming year.
GE INDUSTRY SEGMENT REVENUES AND OPERATING PROFIT for the last five years are
shown in the table on page 35. Revenues include income from sales of goods and
services to customers and other income. Sales from one Company component to
another generally are priced at equivalent commercial selling prices.
Intersegment revenues are shown in note 29. Operating profit includes
provisions for restructuring actions. Corporate items not traceable to
segments includes provision of $80 million to cover costs associated with
rationalization of corporate facilities.
* AIRCRAFT ENGINES revenues were down 11% from the 1992 level, which
was 5% lower than in 1991. The decreases reflected the continuing weakness in
shipments of engines and spare parts in both the military and commercial
markets, which were only partially offset by higher sales of aeroderivative
engines for marine and industrial applications and, in 1993, by consolidation
of a recently acquired overhaul facility in the United Kingdom. Even with
these market conditions, 1993 operating profit totaled $798 million, a 37%
decline from 1992 following an 8% decrease the year before. The decreases were
largely due to lower volume discussed above and, in 1993, provisions for
restructuring of $267 million covering incremental costs associated with
closing and relocating certain manufacturing
F-9
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- ---------------------------------------------------------------------------
and warehousing facilities to reduce the cost structure of the business in
line with lower volume.
About $2.4 billion of 1993 revenues were from sales to the U.S.
government, about the same as 1992 but down from $3.0 billion in 1991.
Revenues associated with development of the F414 engine for the U.S. Navy's
top-priority fighter offset declines in other diversified programs.
Firm orders received during 1993 totaled $5.7 billion compared with $5.9
billion in 1992 and $6.3 billion in 1991. The firm order backlog declined to
$7.7 billion at the end of 1993 from $9.5 billion at the end of 1992,
reflecting a $0.9 billion excess of revenues over new orders and cancellations
of $0.9 billion. Approximately 34% of the backlog was scheduled for delivery
in 1994.
The dual impact of declining military sales and weakness in commercial
airline markets worldwide makes it unlikely that revenues and operating profit
will rebound to levels of the early 1990s until, at the earliest, the 1996 to
1997 time frame. Management has taken aggressive actions over the past three
years to respond to these market realities, reducing the work force by about
13,000 employees through layoffs and attrition, and it will continue to
monitor the changing business conditions closely.
* APPLIANCES revenues were up 4% from 1992, with volume improvement in
all core appliance lines, mostly as a result of continued improvement in U.S.
markets and slightly higher share. A 4% decrease in 1993 operating profit
resulted principally from $136 million of restructuring provisions covering
costs associated with closing, downsizing and consolidating consumer service
and production facilities to enhance productivity. Benefits from 1993
productivity gains partially offset the effect of these provisions. Revenues
were up 2% in 1992, reflecting increased demand in U.S. markets, particularly
for refrigerators and ranges. A 4% decrease in 1992 operating profit resulted
principally from lower selling prices, cost increases and significant
investment in new products and services, the combination of which more than
offset the higher volume and productivity gains.
* BROADCASTING revenues were down 8% in 1993, primarily because there
was no counterpart to the 1992 Summer Olympic Games. Operating profit,
however, increased 29% despite $81 million of restructuring provisions to
cover lease terminations, associated asset write-offs and other incremental
costs to enhance productivity. The increase resulted mainly from absence of a
counterpart to the programming costs associated with the Olympic Games and
generally lower 1993 overhead costs. Cable operations posted significant gains
in both revenues and operating profit. Operating profit declined 2% in 1992
from the prior year on an 8% increase in revenues. The decline was caused by
the lack of a counterpart to the 1991 gain on the sale of NBC's interest in
the RCA Columbia Home Video joint venture and the negative impact of the
Summer Olympics, both of which were substantially offset by cost-control
measures, double-digit profit increases at five of NBC's six owned-and-
operated television stations and NBC Cable's first full year of operating
profit.
* INDUSTRIAL revenues in 1993 were 7% higher than in 1992, mainly
because of significantly higher locomotive shipments. Operating profit
declined 12%, however, largely because of restructuring provisions of $211
million to cover incremental costs of downsizing and consolidating production
and logistical operations worldwide, and because of weak prices in most
businesses. Both of these factors were only partially offset by very good
productivity across the segment and substantially improved Lighting operations
in Europe. In 1992, operating profit was about the same as in 1991 on slightly
higher revenues, reflecting pricing pressures, cost increases and lower
locomotive shipments, which were about offset by strong productivity
throughout the segment and by higher revenues and operating profit in the
Lighting business, including the effect of the 1992 consolidation of Thorn.
* MATERIALS revenues increased 4% in 1993, primarily as a result of
double-digit volume growth in U.S. and Asian markets, which was partially
offset by worldwide price declines. Operating profit was 13% higher than in
1992 as substantial productivity improvements, material cost decreases and
favorable exchange gains much more than offset the lower prices, the impact of
inflation and $52 million of restructuring provisions for equipment write-offs
and downsizing of European operations. Revenues increased 2% in 1992,
principally because of a higher physical volume of shipments. Operating
profit, however, decreased 8% because the combination of significant price
erosion and cost inflation exceeded productivity gains.
* POWER SYSTEMS revenues increased by 5% in 1993 as higher levels of
gas turbine shipments, increased sales of nuclear fuel and volume increases in
the Industrial Systems and Services business more than offset lower sales in
Power Delivery. Operating profit increased 10% over 1992, principally on the
strength of gas turbine revenues and productivity, the combination of which
more than offset restructuring provisions of $124 million to cover,
principally, incremental costs of facility demolitions, associated asset write-
offs and downsizing of the apparatus service business. Operating profit was
18% higher in 1992 than in 1991 on 3% higher revenues, mainly reflecting Power
Generation's volume growth in the gas turbine business and productivity gains.
Power Systems orders totaled $7.0 billion for 1993 compared with the very
strong $7.5 billion and $8.0 billion in 1992 and 1991, respectively. The Power
Systems backlog was $9.9 billion at the end of 1993, down
F-10
Annual Report Page 35
--------------------------------------------------------------------------
|
|SUMMARY OF INDUSTRY SEGMENTS
General Electric Company and consolidated affiliates
-------------------------------------------------------------------
For the years ended December 31 (In millions) 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------------
REVENUES
GE
Aircraft Engines $ 6,580 $ 7,368 $ 7,777 $ 7,504 $ 6,862
Appliances 5,555 5,330 5,225 5,592 5,358
Broadcasting 3,102 3,363 3,121 3,236 3,392
Industrial 7,379 6,907 6,783 6,644 6,689
Materials 5,042 4,853 4,736 5,140 4,944
Power Systems 6,692 6,371 6,189 5,600 5,104
Technical Products and Services 4,174 4,674 4,686 4,259 4,049
All Other 2,043 1,749 1,545 1,369 1,246
Corporate items and eliminations (208) (361) (468) (285) (433)
------- ------- ------- ------- -------
Total GE 40,359 40,254 39,594 39,059 37,211
------- ------- ------- ------- -------
GECS
Financing 12,399 10,544 10,069 9,000 7,333
Specialty Insurance 4,862 3,863 2,989 2,853 2,710
Securities Broker-Dealer 4,861 4,022 3,346 2,923 2,897
All Other 15 11 (5) (2) 5
------- ------- ------- ------- -------
Total GECS 22,137 18,440 16,399 14,774 12,945
------- ------- ------- ------- -------
Eliminations (1,934) (1,621) (1,364) (1,214) (1,021)
------- ------- ------- ------- -------
CONSOLIDATED REVENUES $60,562 $57,073 $54,629 $52,619 $49,135
======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT
GE
Aircraft Engines $ 798 $ 1,274 $ 1,390 $ 1,253 $ 1,050
Appliances 372 386 400 435 386
Broadcasting 264 204 209 477 603
Industrial 782 888 885 910 847
Materials 834 740 800 1,010 1,055
Power Systems 1,143 1,037 882 666 471
Technical Products and Services 706 912 693 538 538
All Other 2,036 1,717 1,513 1,295 1,103
------- ------- ------- ------- -------
Total GE 6,935 7,158 6,772 6,584 6,053
------- ------- ------- ------- -------
GECS
Financing 1,727 1,366 1,327 1,267 1,152
Specialty Insurance 770 641 501 457 361
Securities Broker-Dealer 439 300 119 (54) (53)
All Other (288) (272) (290) (275) (322)
------- ------- ------- ------- -------
Total GECS 2,648 2,035 1,657 1,395 1,138
------- ------- ------- ------- -------
Eliminations (1,794) (1,485) (1,259) (1,073) (903)
------- ------- ------- ------- -------
CONSOLIDATED OPERATING PROFIT 7,789 7,708 7,170 6,906 6,288
GE interest and financial charges, net of eliminations (529) (752) (881) (941) (715)
GE items not traceable to segments (685) (683) (563) (480) (552)
------- ------- ------- ------- -------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND ACCOUNTING CHANGES $ 6,575 $ 6,273 $ 5,726 $ 5,485 $ 5,021
======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
The notes to consolidated financial statements on pages 45-64 are an integral part of this statement. "GE" means the basis of
consolidation as described in note 1 to the consolidated financial statements; "GECS" means General Electric Capital Services, Inc.
and all of its affiliates and associated companies. Operating profit of GE segments excludes interest and other financial charges;
operating profit of GECS includes interest and discount expense, which is the largest element of GECS' operating costs.
F-11
Annual Report Page 36
- ---------------------------------------------------------------------------
4% from December 31, 1992, mainly because of the transfer of a component that
procured materials for the U.S. Navy. Approximately 40% of the 1993 backlog
was scheduled for shipment during 1994.
* TECHNICAL PRODUCTS AND SERVICES revenues were down 11% in 1993,
principally because of 1992 transfers, dispositions and realignment of the
former Communications and Services businesses (other than GE Information
Services). Increased physical volume of 1993 Medical Systems sales, up about
4% because of international sales, was largely offset by continuing pricing
pressures worldwide. Segment operating profit in 1993 was down sharply, mainly
because there was no counterpart to the 1992 gain on realignment of the equity
position of GE and Ericsson in their mobile communications joint venture and
because of restructuring provisions of $60 million to downsize manufacturing
and services operations worldwide. Both of these factors were only partially
offset by productivity gains and substantially improved Medical Systems
operations in Europe. Operating profit was up 32% in 1992 over 1991 on flat
revenues, primarily because of the aforementioned gain, strong productivity
and much improved results in GE Information Services. Orders received by
Medical Systems in 1993 were down slightly from 1992's strong performance. A
decline in U.S. equipment markets more than offset growth in international
orders. The backlog of unfilled orders at year-end 1993 was $1.7 billion ($1.8
billion at the end of 1992), about 80% of which was scheduled to be shipped in
1994.
* ALL OTHER consists primarily of GECS' earnings, which are discussed
below. Also included are revenues derived from licensing use of GE know-how to
others.
GECS OPERATIONS
GECS conducts its business in three segments. Financing segment includes
financing operations of GE Capital Corporation (GE Capital). Specialty
Insurance segment includes operations of Employers Reinsurance Corporation
(ERC) and the insurance businesses of GE Capital described on page 61.
Securities Broker-Dealer segment includes operations of Kidder, Peabody Group
Inc. (Kidder, Peabody).
GECS' EARNINGS were $1.807 billion in 1993, 21% higher than 1992's earnings,
which were 18% more than comparable 1991 earnings. The 1993 increase reflected
strong performance in the Financing segment, mainly as a result of a favorable
interest-rate environment, asset growth and improved asset quality. Earnings
in GECS' Securities Broker-Dealer and Specialty Insurance segments also were
substantially higher in 1993, following sharp improvements in 1992.
GECS' PRINCIPAL COST IS FOR INTEREST on borrowings. Interest expense in 1993
was $6.5 billion, 6% higher than in 1992, which was 6% lower than in 1991. The
1993 increase was a result of funding increased security positions in the
Securities Broker-Dealer segment, partially offset by substantially lower
rates on higher average borrowings in the Financing segment. The 1992 decrease
reflected substantially lower interest rates, which more than offset the
effects of higher average borrowings. The composite interest rate on GECS'
borrowings was 4.96% in 1993 compared with 5.78% in 1992 and 7.46% in 1991.
GECS' OTHER COSTS AND EXPENSES increased to $8.7 billion in 1993 from $7.2
billion in 1992 and $5.4 billion in 1991, reflecting higher investment levels
and acquisitions of businesses and portfolios.
GECS' INDUSTRY SEGMENT REVENUES AND OPERATING PROFIT for the past five years
are shown in the table on page 35. Revenues from operations (earned income)
are detailed in note 4.
* FINANCING segment operating profit of $1.727 billion in 1993 was up
26% from 1992, which was 3% higher than in 1991. Asset growth and increased
financing spread, the excess of yield (rates earned) over interest rates on
borrowings, were significant factors in both years. Assets grew 30% during
1993 and 10% in 1992 because of acquisitions of businesses and portfolios,
including the 1993 annuity business acquisitions, and because of higher
origination volume. During both years, the effects of declining interest rates
on borrowings resulted in increased financing spreads. Yields on assets were
essentially flat in 1993 compared with 1992, following a decline from 1991.
Other costs and expenses increased in 1993 and 1992, mainly because of asset
growth.
The portfolio of financing receivables, $63.9 billion and $59.4 billion
at the end of 1993 and 1992, respectively, is the Financing segment's largest
asset and the primary source of its revenues. Related allowances for losses at
the end of 1993 aggregated $1.7 billion (2.63% of receivables - the same level
as 1992) and are, in management's judgment, appropriate given the risk profile
of the portfolio. A discussion about the quality of certain elements of the
Financing segment investment portfolio follows. Further details are included
in note 14.
Consumer loans receivable, primarily retailer and auto receivables, were
$17.3 billion and $14.8 billion at the end of 1993 and 1992, respectively.
GECS' investment in consumer auto finance lease receivables was $5.6 billion
and $4.8 billion at the end of 1993 and 1992, respectively. Nonearning
receivables, 1.7% of total loans and leases (2.1% at the end of 1992),
amounted to $391 million at the end of 1993. The provision for losses on
retailer and auto financing receivables was $469 million in 1993, a 19%
F-12
Annual Report Page 37
- ---------------------------------------------------------------------------
decrease from $578 million in 1992, reflecting reduced consumer delinquencies
and intensified collection efforts, particularly in Europe. Most nonearning
receivables were private-label credit card receivables, the majority of which
were subject to various loss-sharing arrangements that provide full or partial
recourse to the originating retailer.
Commercial real estate loans classified as finance receivables by GE
Capital's Commercial Real Estate business were $10.9 billion at December 31,
1993, up $0.4 billion from the end of 1992. In addition, the investment
portfolio of GECS' annuity business, acquired during 1993, included $1.1
billion of commercial property loans. Commercial real estate loans are
generally secured by first mortgages. In addition to loans, Commercial Real
Estate's portfolio also included in other assets $2.2 billion of assets that
were purchased for resale from Resolution Trust Corporation (RTC) and other
institutions and $1.4 billion of investments in real estate joint ventures. In
recent years, GECS has been one of the largest purchasers of assets from RTC
and others, growing its portfolio of properties acquired for resale by $1.1
billion in 1993. To date, values realized on these assets have met or exceeded
expectations at the time of purchase. Investments in real estate joint
ventures have been made as part of original financings and in conjunction with
loan restructurings where management believes that such investments will
enhance economic returns.
Commercial Real Estate's foreclosed properties at the end of 1993
declined to $110 million from $187 million at the end of 1992.
At December 31, 1993, Commercial Real Estate's portfolio included loans
secured by and investments in a variety of property types that were well
dispersed geographically. Property types included apartments (36%), office
buildings (32%), shopping centers (14%), mixed use (8%) and industrial and
other (10%). These properties were located mainly across the United States as
follows - Mid-Atlantic (21%), Northeast (20%), Southwest (19%), West (15%),
Southeast (12%), Central (8%) - with the remainder (5%) across Canada and
Europe. Nonearning and reduced earning receivables declined to $272 million in
1993 from $361 million in 1992, reflecting proactive management of delinquent
receivables as well as write-offs. Loss provisions for Commercial Real
Estate's investments were $387 million in 1993 ($248 million related to
receivables and $139 million to other assets) compared with $299 million and
$213 million in 1992 and 1991, respectively, as the portfolio continued to be
adversely affected by the weakened commercial real estate market.
Highly leveraged transaction (HLT) portfolio represents financing
provided for highly leveraged management buyouts and corporate
recapitalizations. The portion of those
- ---------------------------------------------------------------------------------
CHART: GECS' REVENUES (In billions)
1989 1990 1991 1992 1993
$12.945 $14.774 $16.399 $18.440 $22.137
- ---------------------------------------------------------------------------------
investments classified as financing receivables was $3.3 billion at the end of
1993 compared with $5.3 billion at the end of 1992, as substantial repayments
reduced this liquidating portfolio. The year-end balance of amounts that had
been written down to estimated fair value and carried in other assets as a
result of restructuring or in-substance repossession aggregated $544 million
at the end of 1993 and $513 million at the end of 1992 (net of allowances of
$244 million and $224 million, respectively).
Nonearning and reduced earning receivables declined to $139 million at
the end of 1993 from $429 million the prior year. Loss provisions for HLT
investments were $181 million in 1993 ($80 million related to receivables and
$101 million to other assets) compared with $573 million in 1992 and $328
million in 1991. Nonearning and reduced earning receivables as well as loss
provisions were favorably affected by the stronger economic climate during
1993 as well as by the successful restructurings implemented during the past
few years.
Other financing receivables, approximately $26 billion, consisted
primarily of a diverse commercial, industrial and equipment loan and lease
portfolio. This portfolio grew approximately $2 billion during 1993, while
nonearning and reduced earning receivables decreased $46 million to $98
million at year end.
GECS had loans and leases to commercial airlines, as discussed in note
17, that aggregated about $6.8 billion at the end of 1993, up from $6 billion
at the end of 1992. At year-end 1993, GECS' commercial aircraft positions
included conditional commitments to purchase aircraft at a cost of $865
million and financial guaranties and funding commitments amounting to $450
million. These purchase commitments are subject to the aircraft having been
placed on lease under agreements, and with carriers, acceptable to GECS prior
to delivery. Expenses associated with redeployment and refurbishment of owned
aircraft
F-13
Annual Report Page 38
- ---------------------------------------------------------------------------
totaled $112 million in 1993 compared with nominal amounts in prior years.
GECS' increasing investment demonstrates its continued long-term commitment to
the airline industry.
* SPECIALTY INSURANCE operating profit of $770 million in 1993 was 20%
higher than in 1992, following an increase of 28% from 1991. The 1993 results
reflected higher premium volume from bond refunding in the financial guaranty
insurance business as well as reduced claims expense in the creditor insurance
business. Higher volume and investment income at GECS' private mortgage and
financial guaranty insurance businesses were the principal factors
contributing to 1992's increase.
* SECURITIES BROKER-DEALER (Kidder, Peabody) operating profit was $439
million in 1993, up 46% from 1992's record $300 million, which was $181
million higher than in 1991. Strong performances in both years reflected
higher investment income from trading and investment banking activities.
Favorable market conditions were an important factor in both years. Higher
interest expense in both years reflected costs associated with funding
increased security positions. Operating and administrative expenses increased
in both years, primarily because of the revenue growth and, in 1992, because
of costs associated with certain litigation settlements.
ENTERING 1994, management believes that the diversity and strength of GECS'
assets, along with vigilant attention to risk management, position it to deal
effectively with a global and changing competitive and economic landscape.
INTERNATIONAL OPERATIONS
Estimated results of international operations include all exports from the
United States plus the results of GE's and GECS' operations located outside
the United States. International revenues were $18.5 billion (31% of
consolidated revenues) compared with $18.0 billion in 1992 and $16.9 billion
in 1991. In 1993, about 40% of GE's sales of goods and services were
international, approximately the same as in the previous two years. The chart
below left shows the growth in international revenues in relation to total
revenues over the past five years. International operating profit was $2.4
billion (31% of consolidated operating profit) in 1993, $2.3 billion in 1992
and $2.4 billion in 1991.
The accompanying financial results reported in U.S. dollars are
unavoidably affected by currency exchange. A number of techniques are used to
manage the effects of currency exchange, including selective borrowings in
local currencies and selective hedging of significant cross-currency
transactions. Also, international activity is diverse, as shown for revenues
in the chart at the bottom of this column, and not concentrated in any single
currency.
GE's export sales by major world areas are as follows.
- ----------------------------------------------------------------------------
GE'S EXPORTS FROM THE UNITED STATES TO EXTERNAL CUSTOMERS
(In millions) 1993 1992 1991
- ----------------------------------------------------------------------------
Pacific Basin $2,645 $2,696 $2,408
Europe 2,320 2,018 2,342
Americas 981 1,126 1,008
Other 1,039 1,079 1,094
------ ------ ------
$6,985 $6,919 $6,852
====== ====== ======
- ----------------------------------------------------------------------------
Exports from GE operations in the United States to their affiliates
totaled $1.513 billion in 1993, $1.281 billion in 1992 and $1.246 billion in
1991.
GE made a positive 1993 contribution of more than $5.1 billion to the
U.S. balance of trade. Total exports in 1993 were $8.5 billion, including
exports from the United States to both external customers and affiliates.
Imports from GE affiliates were $1.0 billion, and direct imports from external
suppliers were $2.4 billion.
- ------------------------------------------------------------------------------------------------------
CHART: CONSOLIDATED REVENUES (In billions)
1989 1990 1991 1992 1993
UNITED STATES $36.479 $37.736 $37.771 $39.056 $42.015
INTERNATIONAL 12.656 14.883 16.858 18.017 18.547
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
CHART: CONSOLIDATED INTERNATIONAL REVENUES (In billions)
1989 1990 1991 1992 1993
EUROPE $5.815 $7.299 $8.124 $8.830 $9.268
PACIFIC BASIN 3.061 3.131 4.084 4.403 4.581
AMERICAS 2.784 3.268 3.194 3.346 3.256
OTHER 0.996 1.185 1.456 1.438 1.442
- ------------------------------------------------------------------------------------------------------
F-14
Annual Report Page 39
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|
| MANAGEMENT'S DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY
OVERVIEW
THIS DISCUSSION OF FINANCIAL RESOURCES AND LIQUIDITY focuses on the Statement
of Financial Position (page 28) and the Statement of Cash Flows (page 30).
Throughout the discussion, it is important to differentiate between the
businesses of GE and GECS. Although GE's manufacturing and nonfinancial
services activities involve a variety of different businesses, their
underlying characteristics are the development, the preparation for market and
the sale of tangible goods and services. Risks and rewards are directly
related to the ability to manage and finance those activities.
GECS' principal businesses provide financing, insurance and broker-
dealer services to third parties. The underlying characteristics of these
businesses involve the management of financial risk. GECS' risks and rewards
stem from the abilities of its businesses to continue on a selective basis to
design and provide a wide range of financial services in a competitive
marketplace and to receive adequate compensation for such services. GECS is
not a "captive finance company" or a vehicle for "off-balance-sheet financing"
for GE; very little of GECS' business is directly related to other GE
operations.
Despite the different business profiles of GE and GECS, the global
commercial airline industry is one significant example of an important source
of business for both. GE assumes financing positions primarily in support of
engine sales whereas GECS is a significant source of lease and loan financing
for the industry (see details in note 17). Even during the current difficult
period in this historically cyclical industry, management believes that the
financing positions are reasonably protected by collateral values and by its
ability to control assets, either by ownership or by security interests.
The fundamental differences between GE and GECS are reflected in the
measurements commonly used by investors, rating agencies and financial
analysts. These differences will become clearer in the discussion that follows
with respect to the more significant items in the two financial statements.
CASH FLOWS AND LIQUIDITY OF DISCONTINUED OPERATIONS are displayed in the
accompanying financial statements separately from data on continuing
operations. Discontinued operations generated $962 million, $648 million and
$275 million of cash in 1993, 1992 and 1991, respectively. The 1993 cash flows
were principally those associated with amounts received on transfer of the
Aerospace businesses.
STATEMENT OF FINANCIAL POSITION
* GECS' TRADING SECURITIES comprise the market-making, investing and
trading portfolio of Kidder, Peabody. The
- -------------------------------------------------------------------------------
CHART: CONSOLIDATED TOTAL ASSETS (In billions)
1989 1990 1991 1992 1993
$126.121 $152.000 $166.508 $192.876 $251.506
- -------------------------------------------------------------------------------
increase to $30.2 billion at the end of 1993 from $24.2 billion at the end of
1992 principally reflected higher levels of government securities held in
connection with Kidder, Peabody's trading and market-making activities.
* INVESTMENT SECURITIES for each of the past two years were mainly
investment-grade debt securities held by GECS' Specialty Insurance and annuity
businesses in support of obligations to policyholders and annuitants. The
increase of $15.6 billion during 1993 was principally related to annuity
business acquisitions and adoption of SFAS No. 115 (see notes 1 and 11).
* SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (reverse repurchase
agreements) are related to the liability account titled "Securities sold under
agreements to repurchase" (repurchase agreements). The former typically
represent highly liquid, short-term investments of excess funds; the latter,
borrowing of such funds from others. The balances at the end of 1993 and 1992
(both assets and liabilities) were solely those of Kidder, Peabody in
connection with its broker-dealer activities. The current-year increase of
$16.7 billion primarily reflected the use of these agreements in increased
"matched-book" transactions as well as to cover increased short inventory
positions in similar securities.
* GE'S CURRENT RECEIVABLES are mainly amounts due from customers ($5.7
billion at December 31, 1993, and $5.3 billion at December 31, 1992). As a
measure of asset utilization, receivables turnover was 7.0 in 1993 compared
with 6.9 in 1992. Management believes that the overall condition of customer
receivables was satisfactory at the end of 1993. Current receivables other
than amounts owed by customers are amounts that did not originate from sales
of GE goods or services, such as advances to suppliers in connection with
large contracts.
F-15
Annual Report Page 40
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* INVENTORIES were $3.8 billion at December 31, 1993, down about $0.8
billion from the end of 1992. Inventory turnover was 6.0 in 1993 compared with
5.3 in 1992 and 4.7 in 1991. As with receivables turnover, inventory turnover
is a measurement of efficient use of resources. About two-thirds of the
inventory decrease in 1993 was achieved in Aircraft Engines as a result of
reduced manufacturing cycle times and lower volume. Turnover improved more
than one turn in Appliances, Motors and Transportation Systems. Last-in, first-
out (LIFO) revaluations decreased $179 million in 1993 compared with decreases
of $204 million in 1992 and $141 million in 1991. Included in these changes
were decreases of $101 million, $183 million and $111 million (1993, 1992 and
1991, respectively) resulting from lower inventory levels. There were modest
overall cost decreases in all three years.
* GECS' FINANCING RECEIVABLES of $63.9 billion at year-end 1993 were
$4.5 billion higher than at December 31, 1992. These receivables are discussed
on page 36 and in note 14.
* PROPERTY, PLANT AND EQUIPMENT (including equipment leased to others)
was $21.2 billion at December 31, 1993, up $0.8 billion. GE's property, plant
and equipment consists of investments for its own productive use, whereas the
largest element of GECS' investment is in equipment that is provided to third
parties on operating leases. Details by category of investment can be found in
note 15.
GE's total expenditures for new plant and equipment during 1993 were
$1.6 billion, slightly higher than $1.4 billion in 1992. Total expenditures
for the past five years were $9.4 billion, of which 25% was to increase
capacity; 24% was to increase productivity; 12% was to replace and renew older
equipment; 12% was to support new business start-ups; and 27% was for such
other purposes as to improve research and development facilities and to
provide for safety and environmental protection.
GECS added $3.1 billion to its equipment leased to others during 1993.
* INTANGIBLE ASSETS were $10.4 billion at year-end 1993. The majority
of this consolidated total was GE's intangibles, which were $6.5 billion,
about the same as the end of 1992. GECS' intangibles increased $1.0 billion,
most of which was related to acquisitions in the annuity and mortgage-
servicing businesses.
* ALL OTHER ASSETS totaled $24.7 billion at year-end 1993, up $8.0
billion from the end of 1992. The principal reason for GE's increase of $2.9
billion was the investment in the convertible preferred stock of and
receivables due from Martin Marietta Corporation in connection with transfer
of the Aerospace businesses. GECS' increase of $5.1 billion related
principally to assets acquired for resale, including mortgages held for resale
associated with the mortgage-servicing businesses and purchases of real estate
assets from Resolution Trust Corporation and other institutions.
* TOTAL BORROWINGS on a consolidated basis aggregated $90.4 billion at
December 31, 1993, compared with $81.8 billion at the end of 1992. The major
debt-rating agencies evaluate the financial condition of GE and of GE Capital
(GECS' major public borrowing entity) differently because of their distinct
business characteristics. Using criteria appropriate to each and considering
their combined strength, those major rating agencies continue to give the
highest ratings to debt of both GE and GE Capital.
GE has agreed to make payments to GE Capital to the extent necessary to
cause GE Capital's consolidated ratio of earnings to fixed charges to be not
less than 1.10. For the years 1993, 1992 and 1991, such ratios were 1.62, 1.44
and 1.34, respectively, substantially above the level at which payout would be
required. Three years advance notice is required to terminate this agreement.
GE's total borrowings were $4.8 billion at year-end 1993 ($2.4 billion
short-term, $2.4 billion long-term), a decrease of about $2.1 billion from
year-end 1992. The decrease was possible as a result of cash provided from
continuing operating activities as well as from transfer of the Aerospace
businesses. GE's total debt at the end of 1993 equaled 15.5% of total capital,
down 6.9 points from the end of 1992.
GECS' total borrowings were $85.9 billion at December 31, 1993, of which
$60.0 billion was due in 1994 and $25.9 billion was due in subsequent years.
Comparable amounts at the end of 1992 were: $75.1 billion total; $53.2 billion
due within one year; and $21.9 billion due thereafter. GECS' composite
interest rates are discussed on page 36. Individual GECS borrowings are
structured within overall asset/liability interest rate and currency risk
management strategies. Interest rate and currency swaps form an integral part
of the Company's goal of achieving the lowest
- ------------------------------------------------------------------------------
CHART: GE BORROWINGS AS A PERCENT OF TOTAL CAPITAL INVESTED
1989 1990 1991 1992 1993
21.04% 23.55% 26.18% 22.39% 15.50%
- ------------------------------------------------------------------------------
F-16
Annual Report Page 41
- ---------------------------------------------------------------------------
borrowing costs for particular funding strategies. Counterparty credit risk is
closely monitored - approximately 90% of the notional amount of swaps
outstanding at December 31, 1993, was with counterparties having credit
ratings of Aa/AA or better. A large portion of GECS' borrowings was commercial
paper ($46.3 billion and $42.2 billion at the end of 1993 and 1992,
respectively). Most of this commercial paper is issued by GE Capital. The
average remaining terms and interest rates of GE Capital's commercial paper
were 35 days and 3.39% at the end of 1993 compared with 34 days and 3.57% at
the end of 1992. GE Capital's ratio of debt to equity (leverage) was 7.59 to 1
at the end of 1993 compared with 7.91 to 1 at the end of 1992. Excluding net
unrealized gains on investment securities included in equity, GE Capital's
leverage was 7.96 to 1 at the end of 1993.
STATEMENT OF CASH FLOWS
Because cash management activities of GE and GECS are separate and distinct,
it is more useful to review cash flows statements separately.
GE
GE's cash and equivalents aggregated $1.5 billion at the end of 1993, higher
by $0.3 billion than at the end of 1992. During 1993, GE generated $5.2
billion in cash from its continuing operating activities and $1.0 billion from
discontinued operations. This provided resources to pay $2.2 billion in
dividends to share owners, to reduce total debt by $2.1 billion and to invest
$1.6 billion in new plant and equipment. Management continually evaluates
financing alternatives. Because of attractive short-term interest rates, it
elected to maintain relatively high short-term debt levels, resulting, as in
the previous two years, in an excess of current liabilities over current
assets.
Operating activities are the principal source of GE's cash flows from
continuing operations. Over the past three years, operating activities have
provided more than $13.4 billion of cash. Principal ongoing applications are
payment of dividends to share owners ($5.9 billion total over the past three
years) and investment in new plant and equipment ($5.2 billion total over the
past three years). In addition, the Company repurchased and placed into
treasury $3.1 billion of its common stock during the past three years. GE
concluded its major share repurchase program at $5.0 billion, but it continues
to acquire shares to meet benefit and compensation plan needs (about $0.4
billion annually). Expenditures for new plant and equipment are expected to
total about $1.6 billion for 1994 as the need for additional manufacturing
capacity is mitigated by continuing reductions in cycle times. Cash outlays
associated
- ------------------------------------------------------------------------------------
CHART: TOTAL ASSETS OF GECS (In billions)
1989 1990 1991 1992 1993
$90.928 $115.095 $127.814 $154.524 $211.730
- ------------------------------------------------------------------------------------
with 1993 restructuring programs are expected to be about $0.3 billion in
1994.
Based on past performance and current expectations, in combination with
the financial flexibility that comes with a strong balance sheet and the
highest credit ratings, management believes that GE is in a sound position to
continue making long-term investments for future growth, including selective
acquisitions and investments in joint ventures, to reduce current debt levels
and to grow dividends in line with earnings.
GECS
GECS' primary source of cash is financing activities involving the continued
rollover of short-term borrowings and appropriate addition of borrowings with
a reasonable balance of maturities. Over the past three years, GECS'
borrowings with maturities of 90 days or less have increased by $14.0 billion.
New borrowings of $40.2 billion having maturities longer than 90 days were
added during those years, while $25.6 billion of such longer-term borrowings
were retired. GECS also has generated significant cash from operating
activities, a total of $14.8 billion during the past three years.
GECS' principal use of cash has been investing in assets to grow its
businesses. Of $40.9 billion that GECS invested over the past three years,
$16.1 billion was used for additions to financing receivables, $9.3 billion
was used to invest in new equipment, principally for lease to others, and $6.9
billion was for acquisitions of new businesses.
With the financial flexibility that comes with excellent credit ratings,
management believes GECS is well positioned to meet the global needs of its
customers for capital and to continue providing GE share owners with good
returns.
F-17
Annual Report Page 42
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|
| MANAGEMENT'S DISCUSSION OF SELECTED FINANCIAL DATA
SELECTED FINANCIAL DATA summarizes on the opposite page some data frequently
requested about General Electric Company. The data are divided into three
sections: upper portion - consolidated data; middle portion - GE data that
reflect various conventional measurements for industrial enterprises; and
lower portion - GECS data that reflect key information pertinent to capital
services.
GE'S TOTAL RESEARCH AND DEVELOPMENT expenditures were $1,955 million in 1993,
up $59 million from 1992. Of the 1993 expenditures, $1,297 million was from
GE's own funds, a slight decrease($56 million) from 1992, reflecting lower
spending for two mature programs in Aircraft Engines. Expenditures from funds
provided by customers (mainly the U.S. government) were $658 million in 1993,
$115 million more than the year before. The Aircraft Engines, Medical Systems,
Plastics and Power Systems businesses account for the largest share of GE's
research and development expenditures from both Company and customer funds.
GE'S TOTAL BACKLOG of firm unfilled orders at the end of 1993 was $22.9
billion, down $2.5 billion from year-end 1992. The decrease was more than
explained by orders related to transferred businesses and, as discussed on
page 34, Aircraft Engines. Orders constituting this backlog may be canceled or
deferred by customers, subject in certain cases to cancellation penalties. See
Industry Segments beginning on page 33 for further discussion on unfilled
orders of relatively long-cycle manufacturing businesses. About 42% of the
total unfilled orders at the end of 1993 was scheduled to be shipped in 1994,
with most of the remainder to be shipped in the two years after that. For
comparison, about 43% of the 1992 backlog was expected to be shipped in 1993.
REGARDING ENVIRONMENTAL MATTERS, the operations of the Company, like those of
other companies engaged in similar businesses, involve the use, disposal and
cleanup of substances regulated under environmental protection laws.
In 1993, GE had capital expenditures of about $140 million for projects
related to the environment. The comparable amount in 1992 was about $110
million. These amounts exclude expenditures for remediation actions, which are
principally expensed and discussed below. Capital expenditures for
environmental purposes have included pollution control devices such as
wastewater treatment plants, groundwater monitoring devices, air strippers or
separators, and incinerators at new and existing facilities constructed or
upgraded in the normal course of business. Consistent with policies stressing
environmental responsibility, average annual capital expenditures other than
for remediation projects are presently expected to range between $100 million
and $150 million over the next two years. This level is in line with existing
levels for new or expanded programs to build facilities or modify
manufacturing processes to minimize waste and reduce emissions.
The Company also is involved in a sizable number of remediation actions
to clean up hazardous wastes as required by federal and state laws. Such
statutes require that responsible parties fund remediation actions regardless
of fault, legality of original disposal or ownership of a disposal site.
Expenditures for site remediation actions amounted to approximately $80
million in 1993 compared with $85 million in 1992. It is presently expected
that remediation actions will require average annual expenditures in the range
of $80 million to $110 million over the next two years. Liabilities for
remediation costs are based on management's best estimate of future costs;
when there appears to be a range of possible costs with equal likelihood,
liabilities are based on the lower end of such range. Possible insurance
recoveries are not considered in estimating liabilities.
It is difficult to estimate with any meaning the annual level of future
remediation expenditures because of the many uncertainties, including
uncertainties about the status of the law, regulation, technology and
information related to individual sites. Subject to the foregoing, management
believes that capital expenditures and remediation actions to comply with the
present laws governing environmental protection will not have a material
effect upon the Company's earnings, liquidity or competitive position. In
making this determination, management considered the fact that, if remediation
expenditures were to continue at the 1993 level, liabilities recorded at the
end of 1993 would be sufficient to cover expenditures through the end of the
century, and the probability of incurring more than nominal expenditures
beyond 2015 is remote. Of course, lower annual expenditures could be incurred
over a longer period without increasing the total expenditures.
- ------------------------------------------------------------------------------------------------------
CHART: CONSOLIDATED EMPLOYMENT OF CONTINUING OPERATIONS AT YEAR END (In thousands)
1989 1990 1991 1992 1993
United States 192 188 178 173 163
Other countries 48 62 62 58 59
- ------------------------------------------------------------------------------------------------------
F-18
Annual Report Page 43
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|
|SELECTED FINANCIAL DATA
---------------------------------------------------------------
(Dollar amounts in millions; per-share amounts in dollars) 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------------
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
Revenues $ 60,562 $ 57,073 $ 54,629 $ 52,619 $ 49,135
Earnings from continuing operations 4,424 4,305 3,984 3,889 3,503
Earnings from discontinued operations 753 420 451 414 436
Earnings before accounting changes 5,177 4,725 4,435 4,303 3,939
Net earnings 4,315 4,725 2,636 4,303 3,939
Dividends declared 2,229 1,985 1,808 1,696 1,537
Earned on average share owners' equity 17.5% 20.9% 12.2% 20.2% 20.0%
Per share
Earnings from continuing operations $ 5.18 $ 5.02 $ 4.58 $ 4.38 $ 3.88
Earnings from discontinued operations 0.88 0.49 0.52 0.47 0.48
Earnings before accounting changes 6.06 5.51 5.10 4.85 4.36
Net earnings 5.05 5.51 3.03 4.85 4.36
Dividends declared 2.61 2.32 2.08 1.92 1.70
Stock price range 107-80 7/8 87 1/2-72 3/4 78 1/8-53 75 1/2-50 64 3/4-43 1/2
Total assets 251,506 192,876 166,508 152,000 126,121
Long-term borrowings 28,270 25,376 22,681 21,043 16,110
Shares outstanding - average (in thousands) 853,990 857,198 868,931 887,552 904,223
Share owner accounts - average 464,000 481,000 495,000 506,000 526,000
Employees at year end
United States 163,000 173,000 178,000 188,000 192,000
Other countries 59,000 58,000 62,000 62,000 48,000
Discontinued operations (primarily U.S.) - 37,000 44,000 48,000 52,000
-------- -------- -------- -------- --------
Total employees 222,000 268,000 284,000 298,000 292,000
======== ======== ======== ======== ========
- ---------------------------------------------------------------------------------------------------------------------------------
GE DATA
Short-term borrowings $ 2,391 $ 3,448 $ 3,482 $ 2,721 $ 1,696
Long-term borrowings 2,413 3,420 4,332 4,048 3,947
Minority interest 355 350 353 288 283
Share owners' equity 25,824 23,459 21,683 21,680 20,890
-------- -------- -------- -------- --------
Total capital invested $ 30,983 $ 30,677 $ 29,850 $ 28,737 $ 26,816
======== ======== ======== ======== ========
Return on average total capital invested 15.2% 16.9% 11.1% 17.4% 17.0%
Borrowings as a percentage of total capital invested 15.5% 22.4% 26.2% 23.6% 21.0%
Working capital $ (419) $ (822) $ (231) $ 813 $ 2,125
Property, plant and equipment additions 1,588 1,445 2,164 2,102 2,073
Year-end orders backlog 22,861 25,434 26,049 25,195 22,473
- ---------------------------------------------------------------------------------------------------------------------------------
GECS DATA
Earnings before accounting change $ 1,807 $ 1,499 $ 1,275 $ 1,094 $ 927
Net earnings 1,807 1,499 1,256 1,094 927
Share owner's equity 10,809 8,884 7,758 6,833 6,069
Borrowings from others 85,888 75,140 66,420 57,400 47,905
Ratio of debt to equity (GE Capital) 7.59:1 7.91:1 7.80:1 7.77:1 7.80:1
Total assets of GE Capital $117,939 $ 92,632 $ 80,528 $ 70,385 $58,696
Reserve coverage on financing receivables 2.63% 2.63% 2.63% 2.63% 2.63%
Insurance premiums written $ 3,956 $ 2,900 $ 2,155 $ 1,981 $ 1,819
Securities broker-dealer earned income 4,861 4,022 3,346 2,923 2,897
- ---------------------------------------------------------------------------------------------------------------------------------
See notes 6 and 22 to the consolidated financial statements for information about the accounting changes in 1991 and 1993,
respectively. "GE" means the basis of consolidation as described in note 1 to the consolidated financial statements; "GECS" means
General Electric Capital Services, Inc. and all of its affiliates and associated companies. Transactions between GE and GECS have
been eliminated from the "consolidated information."
F-19
Annual Report Page 44
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|
| MANAGEMENT'S DISCUSSION OF FINANCIAL RESPONSIBILITY
The financial data in this report, including the audited financial
statements, have been prepared by management using the best available
information and applying judgment. Accounting principles used in preparing
the financial statements are those that are generally accepted in the
United States.
Management believes that a sound, dynamic system of internal
financial controls that balances benefits and costs provides the best
safeguard for Company assets. Professional financial managers are
responsible for implementing and overseeing the financial control system,
reporting on management's stewardship of the assets entrusted to it by
share owners and maintaining accurate records.
GE is dedicated to the highest standards of integrity, ethics and
social responsibility. This dedication is reflected in written policy
statements covering, among other subjects, environmental protection,
potentially conflicting outside interests of employees, compliance with
antitrust laws, proper business practices, and adherence to the highest
standards of conduct and practices in transactions with the U.S.
government. Management continually emphasizes to all employees that even
the appearance of impropriety can erode public confidence in the Company.
Ongoing education and communication programs and review activities such as
those conducted by the Company's Policy Compliance Review Board are
designed to create a strong compliance culture - one that encourages
employees to raise their policy questions and concerns and prohibits
retribution for doing so.
KPMG Peat Marwick provide an objective, independent review of
management's discharge of its obligations relating to the fairness of
reporting operating results and financial condition. Their report for 1993
appears below.
The Audit Committee of the Board (consisting solely of Directors
from outside GE) maintains an ongoing appraisal - on behalf of share owners
- - of the activities and independence of the Company's independent auditors,
the activities of its internal audit staff, financial reporting process,
internal financial controls and compliance with key Company policies.
John F. Welch, Jr. Dennis D. Dammerman
Chairman of the Board and Senior Vice President
Chief Executive Officer Finance
February 11, 1994
--------------------------------------------------------------------------
|
| INDEPENDENT AUDITORS' REPORT
TO SHARE OWNERS AND BOARD OF DIRECTORS OF
GENERAL ELECTRIC COMPANY
We have audited the financial statements of General Electric Company and
consolidated affiliates as listed in Item 14(a)(1) on page 23. In
connection with our audits of the consolidated financial statements, we
also have audited the financial statement schedules as listed in Item
14(a)(2) on page 23. These consolidated financial statements and financial
statement schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the aforementioned financial statements present fairly, in
all material respects, the financial position of General Electric Company
and consolidated affiliates at December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1993, in conformity with generally accepted
accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
As discussed in notes 1 and 22 to the consolidated financial statements,
the Company in 1993 adopted required changes in its methods of accounting
for investments in certain securities and for postemployment benefits. As
discussed in note 6, the Company in 1991 adopted a required change in its
method of accounting for postretirement benefits other than pensions.
KPMG Peat Marwick
Stamford, Connecticut
February 11, 1994
F-20
Annual Report Page 45
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|
| NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION. The consolidated financial statements represent the adding
together of all affiliates - companies that General Electric directly or
indirectly controls, either through majority ownership or otherwise.
Results of associated companies - companies that are not controlled but are
20% to 50% owned - are included in the financial statements on a "one-line"
basis.
FINANCIAL STATEMENT PRESENTATION. Financial data and related measurements
are presented in the following categories.
* GE. This represents the adding together of all affiliates other
than General Electric Capital Services, Inc. ("GECS"), which is presented
on a one-line basis.
* GECS. This affiliate owns all of the common stock of General
Electric Capital Corporation (GE Capital), Employers Reinsurance
Corporation (ERC) and Kidder, Peabody Group Inc. (Kidder, Peabody). These
affiliates and their respective affiliates are consolidated in the GECS
columns and constitute its business.
* CONSOLIDATED. These data represent the adding together of GE and
GECS.
The effects of transactions among related companies within and
between each of the above-mentioned groups are eliminated. Transactions
between GE and GECS are not material.
SALES OF GOODS AND SERVICES. A sale is recorded when title passes to the
customer or when services are performed in accordance with contracts.
GECS' REVENUES FROM OPERATIONS ("EARNED INCOME"). Income on all loans is
recognized on the interest method. Accrual of interest income is suspended
when collection of an account becomes doubtful, generally after the account
becomes 90 days delinquent.
Financing lease income, which includes residual values and investment
tax credits, is recorded on the interest method so as to produce a level
yield on funds not yet recovered. Unguaranteed residual values included in
lease income are based primarily on periodic independent appraisals of the
values of leased assets remaining at expiration of the lease terms.
Operating lease income is recognized on a straight-line basis over
the terms of underlying leases.
Origination, commitment and other nonrefundable fees related to
fundings are deferred and recorded in earned income on the interest method.
Commitment fees related to loans not expected to be funded and line-of-
credit fees are deferred and recorded in earned income on a straight-line
basis over the period to which the fees relate. Syndication fees are
recorded in earned income at the time related services are performed unless
significant contingencies exist.
Premiums on short-duration insurance contracts are reported as earned
income over the terms of the related reinsurance treaties or insurance
policies. In general, earned premiums are calculated on a pro rata basis or
are determined based on reports received from reinsureds. Premium
adjustments under retrospectively rated reinsurance contracts are recorded
based on estimated losses and loss expenses, including both case and
incurred-but-not-reported reserves. Revenues on long-duration insurance
contracts are reported as earned when due. Premiums received under annuity
contracts are not reported as revenues but as annuity benefits - a
liability - and are adjusted according to terms of the respective policies.
Kidder, Peabody's proprietary securities and commodities
transactions, unrealized gains and losses on open contractual commitments
(principally financial futures), forward contracts on U.S. government and
federal agency securities and when-issued securities are recorded on a
trade-date basis. Customer transactions and related revenues and expenses,
investment banking revenues from management fees, sales concessions and
underwriting fees are recorded on a settlement-date basis. Advisory fees
are recorded as revenues when services are substantially completed and the
revenue is reasonably determinable.
DEPRECIATION AND AMORTIZATION. The cost of most of GE's manufacturing plant
and equipment is depreciated using an accelerated method based primarily on
a sum-of-the-years digits formula. If manufacturing plant and equipment is
subject to abnormal economic conditions or obsolescence, additional
depreciation is provided.
The cost of GECS' equipment leased to others on operating leases is
amortized, principally on a straight-line basis, to estimated net salvage
value over the lease term or over the estimated economic life of the
equipment. Depreciation of property and equipment for GECS' own use is
recorded on either a sum-of-the-years digits formula or a straight-line
basis over the lives of the assets.
RECOGNITION OF LOSSES ON FINANCING RECEIVABLES AND INVESTMENTS. GE Capital
maintains an allowance for losses on financing receivables at an amount
that it believes is sufficient to provide adequate protection against
future losses in the portfolio. When collateral is formally or
substantively repossessed in satisfaction of a loan, the receivable is
written down against the allowance for losses to estimated fair value and
transferred to other assets. Subsequent to such transfer, these assets are
carried at the lower of cost or estimated current fair value. This
accounting has been employed principally for highly leveraged transactions
(HLT) and real estate loans.
F-21
Annual Report Page 46
- ---------------------------------------------------------------------------
See note 8 for further information on GECS' allowance for losses on
financing receivables.
CASH EQUIVALENTS. Marketable securities with original maturities of three
months or less are included in cash equivalents unless held for trading or
investment.
INVESTMENT AND TRADING SECURITIES. On December 31, 1993, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which
requires that investments in debt securities and marketable equity
securities be designated as trading, held-to-maturity or available-for-
sale. Trading securities are reported at fair value, with changes in fair
value included in earnings. Investment securities include both available-
for-sale and held-to-maturity securities. Available-for-sale securities are
reported at fair value, with net unrealized gains and losses that would be
available to share owners included in equity. Held-to-maturity debt
securities are reported at amortized cost. See notes 10 and 11 for a
discussion of the classification and reporting of these securities at
December 31, 1992. For all investment securities, unrealized losses that
are other than temporary are recognized in earnings.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (REPURCHASE AGREEMENTS) AND
SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL (REVERSE REPURCHASE
AGREEMENTS). Repurchase and reverse repurchase agreements are entered into
by Kidder, Peabody and treated as financing transactions, carried at the
contract amount at which the securities subsequently will be resold or
reacquired. Repurchase agreements relate either to marketable securities,
which are carried at market value, or to securities obtained pursuant to
reverse repurchase agreements. It is Kidder, Peabody's policy to take
possession of securities subject to reverse repurchase agreements, to
monitor the market value of the underlying securities in relation to the
related receivable, including accrued interest, and to obtain additional
collateral when appropriate.
INVENTORIES. Virtually all of GE's U.S. inventories are stated on a last-
in, first-out (LIFO) basis; other inventories are primarily stated on a
first-in, first-out (FIFO) basis. None of the inventories exceed realizable
values.
INTANGIBLE ASSETS. Goodwill is amortized over its estimated period of
benefit and other intangible assets over their estimated lives. The
amortization period does not exceed 40 years, and amortization is generally
on a straight-line basis. Goodwill in excess of associated expected
operating cash flows is considered to be impaired and is written down to
fair value.
DEFERRED INSURANCE ACQUISITION COSTS. For the property and casualty
business, deferred insurance acquisition costs are amortized pro rata over
the contract periods in which the related premiums are earned. For the life
insurance business, these costs are amortized over the premium-paying
periods of the contracts in proportion either to anticipated premium income
or to gross profit, as appropriate. For certain annuity contracts, such
costs are amortized on the basis of anticipated gross profits. For other
lines of business, acquisition costs are amortized over the life of the
related insurance contracts. Deferred insurance acquisition costs are
reviewed for recoverability; for short-duration contracts, anticipated
investment income is considered in making recoverability evaluations.
NOTE 2 DISCONTINUED OPERATIONS
On April 2, 1993, General Electric Company transferred 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 to a new company controlled by the
shareholders of Martin Marietta Corporation in a transaction valued at $3.3
billion. The transfer resulted in a gain of $678 million after taxes of
$752 million. Net assets of discontinued operations at December 31, 1992,
have been segregated in the Statement of Financial Position. Summary
operating results of discontinued operations, excluding the above gain, are
as follows.
- ----------------------------------------------------------------------------
(In millions) 1993 1992 1991
- ----------------------------------------------------------------------------
Revenues $996 $5,231 $5,631
Earnings before income taxes 119 668 710
Provision for income taxes 44 248 259
Net earnings from discontinued
operations 75 420 451
- ----------------------------------------------------------------------------
NOTE 3 GE OTHER INCOME
- -----------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -----------------------------------------------------------------------------
Royalty and technical
agreements $371 $384 $394
Marketable securities and bank
deposits 75 73 78
Associated companies 65 195 156
Customer financing 29 40 71
Other investments
Dividends 50 18 3
Interest 21 22 18
Other sundry items 119 80 78
---- ---- ----
$730 $812 $798
==== ==== ====
- -----------------------------------------------------------------------------
F-22
Annual Report Page 47
- ---------------------------------------------------------------------------
NOTE 4 GECS REVENUES FROM OPERATIONS
- ----------------------------------------------------------------------------
(In millions) 1993 1992 1991
- ----------------------------------------------------------------------------
Time sales, loan, investment
and other income $11,999 $10,464 $9,790
Financing leases 2,315 2,151 1,836
Operating lease rentals 3,267 2,444 2,205
Premium and commission
income of insurance affiliates 3,697 2,687 2,008
Commissions and fees of
securities broker-dealer 859 694 560
-------- -------- --------
$22,137 $18,440 $16,399
======== ======== ========
- ----------------------------------------------------------------------------
Included in earned income from financing leases were gains on the
sale of equipment at lease completion of $145 million in 1993, $126 million
in 1992 and $147 million in 1991.
Noncancelable future rentals due from customers for equipment on
operating leases as of December 31, 1993, totaled $6,133 million and are
due as follows: $2,036 million in 1994; $1,455 million in 1995; $879
million in 1996; $458 million in 1997; $316 million in 1998; and $989
million thereafter.
NOTE 5 SUPPLEMENTAL COST DETAILS
Total expenditures for research and development were $1,955 million, $1,896
million and $1,866 million in 1993, 1992 and 1991, respectively. The
Company-funded portion aggregated $1,297 million in 1993, $1,353 million in
1992 and $1,196 million in 1991.
Rental expense under operating leases was as follows.
- ---------------------------------------------------------------------------
(In millions) 1993 1992 1991
- ---------------------------------------------------------------------------
GE $635 $683 $675
GECS 498 331 169
- ---------------------------------------------------------------------------
At December 31, 1993, minimum rental commitments under noncancelable
operating leases aggregated $2,380 million and $3,579 million for GE and
GECS, respectively. Amounts payable over the next five years are as
follows.
- ---------------------------------------------------------------------------
(In millions) 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------
GE $364 $274 $182 $144 $134
GECS 404 364 340 319 296
- ---------------------------------------------------------------------------
GE's selling, general and administrative expense totaled $5,124
million, $5,319 million and $5,422 million in 1993, 1992 and 1991,
respectively.
NOTE 6 PENSION AND OTHER RETIREE BENEFITS
GE and its affiliates sponsor a number of pension, retiree health and life
insurance and other retiree benefit plans. Principal plans are discussed
below; other plans are not significant individually or in the aggregate.
Effective January 1, 1991, the Company adopted SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions,
using the immediate recognition transition option. The transition effect of
this accounting change was a reduction in 1991 net earnings of $1,799
million ($2.07 per share).
PRINCIPAL PENSION PLANS are the GE Pension Plan and the GE Supplementary
Pension Plan.
The GE Pension Plan covers substantially all GE employees in the
United States and approximately 45% of GECS employees. Generally, benefits
are based on the greater of a formula recognizing career earnings or a
formula recognizing length of service and final average earnings. Benefit
provisions are subject to collective bargaining. At the end of 1993, the GE
Pension Plan covered approximately 457,000 participants, including 143,000
employees, 139,000 former employees with vested rights to future benefits
and 175,000 retirees and beneficiaries receiving benefits.
The GE Supplementary Pension Plan is an unfunded plan providing
supplementary retirement benefits primarily to higher-level, longer-service
U.S. employees.
PRINCIPAL RETIREE BENEFIT PLANS generally provide health and life insurance
benefits to employees who retire under the GE Pension Plan with 10 or more
years of service. Benefit provisions are subject to collective bargaining.
At the end of 1993, these plans covered approximately 246,000 retirees and
dependents.
TRANSFER OF AEROSPACE BUSINESSES in 1993 resulted in associated transfers
of GE Pension Plan assets of $1,169 million and projected benefit
obligations of $979 million to new pension plans. The 1993 gain on transfer
of discontinued operations included pension plan curtailment/settlement
losses of $125 million before income taxes and retiree health and life plan
curtailment/settlement gains of $245 million before income taxes.
F-23
Annual Report Page 48
- ---------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS used during the past three years to determine costs
and benefit obligations for principal plans are shown below.
- -------------------------------------------------------------------------
ACTUARIAL ASSUMPTIONS
1993 1992 1991
- -------------------------------------------------------------------------
Determination of cost/income
for the year
Discount rate 8.5% 9.0% 9.0%
Compensation increases 5.5 6.0 6.0
Return on assets 9.5 9.5 9.5
Health care cost trend (a) 12.0 12.5 13.0
Determination of benefit obligation
at year end
Discount rate 7.25 9.0 9.0
Compensation increases 4.25 6.0 6.0
Health care cost trend 9.5 (b) 12.0 (a) 12.5 (a)
- -------------------------------------------------------------------------
(a) Gradually declining to 6.6% after 2049.
(b) Gradually declining to 5.0% after 2022.
- -------------------------------------------------------------------------
Increasing the health care cost trend rates by one percentage point
would increase the accumulated postretirement benefit obligation by $23
million and would increase annual aggregate service and interest costs by
$3 million.
Gains and losses that occur because actual experience differs from
actuarial assumptions are amortized over the average future service period
of employees. Amounts allocable to prior service for plan amendments are
amortized in a similar manner.
EMPLOYER COSTS for principal pension and retiree health and life insurance
benefit plans follow.
- -------------------------------------------------------------------------
COST (INCOME) FOR PENSION PLANS
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------
Benefit cost for service during
the year - net of employee
contributions $ 452 $ 494 $ 446
Interest cost on benefit obligation 1,486 1,502 1,400
Actual return on plan assets (3,221) (1,562) (4,331)
Unrecognized portion of return 1,066 (584) 2,272
Amortization (352) (436) (483)
------- ------- --------
Pension plan cost (income) (a) $ (569) $ (586) $ (696)
======= ======= ========
- -------------------------------------------------------------------------
(a) Pension plan cost (income) for continuing operations was $(555)
million for 1993, $(494) million for 1992 and $(576) million for
1991.
- -------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
COST (INCOME) FOR RETIREE HEALTH AND LIFE PLANS
(In millions) 1993 1992 1991
- ---------------------------------------------------------------------------------
Retiree health plans
Benefit cost for service during
the year $ 49 $ 62 $ 65
Interest cost on benefit obligation 192 203 214
Actual return on plan assets (3) (4) (9)
Unrecognized portion of return 1 - 5
Amortization (26) (40) (33)
---- ---- ----
Retiree health plan cost 213 221 242
---- ---- ----
Retiree life plans
Benefit cost for service during
the year 21 24 23
Interest cost on benefit obligation 111 110 104
Actual return on plan assets (152) (78) (129)
Unrecognized portion of return 42 (20) 39
Amortization 7 2 -
---- ---- ----
Retiree life plan cost 29 38 37
---- ---- ----
Total (a) $242 $259 $279
==== ==== ====
- --------------------------------------------------------------------------------
(a) Retiree health and life plan cost for continuing operations was $224
million for 1993, $213 million for 1992 and $218 million for 1991.
- --------------------------------------------------------------------------------
FUNDING POLICY for the GE Pension Plan is to contribute amounts sufficient
to meet minimum funding requirements set forth in employee benefit and tax
laws plus such additional amounts as GE may determine to be appropriate
from time to time. GE has not made contributions since 1987 because the
fully funded status of the GE Pension Plan precludes current tax deduction
and because any Company contribution would require the Company to pay
annual excise taxes. Subject to tax laws, the present value of future life
insurance benefits for each eligible retiree is funded in the year of
retirement. In general, retiree health benefits are paid as covered
expenses are incurred.
The following table compares the market-related value of assets with
the present value of benefit obligations, recognizing the effects of future
compensation and service. The market-related value of assets is based on
cost plus recognition of market appreciation and depreciation in the
portfolio over five years, a method that reduces the short-term impact of
market fluctuations.
- ---------------------------------------------------------------------------------
FUNDED STATUS OF PRINCIPAL PLANS
(In millions) 1993 1992 1991
- ---------------------------------------------------------------------------------
Pension plans
Market-related value of assets $24,532 $24,204 $23,192
Projected benefit obligation 20,796 17,999 17,355
Retiree health and life plans
Market-related value of assets 1,252 1,220 1,124
Accumulated postretirement
benefit obligation 4,120 3,743 3,675
- ---------------------------------------------------------------------------------
Assets in trust consist mainly of common stock and fixed-income
investments. GE common stock represents less than 2% of trust assets and is
held in part in an indexed portfolio.
Schedules reconciling the benefit obligations for principal plans
with GE's recorded liabilities in the Statement of Financial Position are
shown on the following page.
F-24
Annual Report Page 49
- ---------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF BENEFIT OBLIGATION
WITH RECORDED LIABILITY Pension plans Retiree health plans Retiree life plans
--------------------- ---------------------- ----------------------
December 31 (In millions) 1993 1992 1993 1992 1993 1992
- ------------------------------------------------------------------------------------------------------------------
Benefit obligation $20,796 $17,999 $2,586 $2,416 $1,534 $1,327
Fair value of trust assets (27,193) (26,466) (13) (32) (1,317) (1,221)
Unamortized balances
SFAS No. 87 transition gain 1,077 1,231 - - - -
Experience gains (losses) 2,371 4,939 (654) (394) (206) (21)
Plan amendments (395) (518) 580 764 - -
Recorded prepaid asset 3,840 3,310 - - - -
------- ------- ------ ------- ------ ------
Recorded liability $ 496 $ 495 $2,499 $2,754 $ 11 $ 85
======= ======= ====== ======= ====== ======
- ------------------------------------------------------------------------------------------------------------------
The portion of the projected benefit obligation representing the
accumulated benefit obligation for pension plans was $19,890 million and
$16,975 million at the end of 1993 and 1992, respectively. The vested
benefit obligation for pension plans was $19,732 million and $16,799
million at the end of 1993 and 1992, respectively.
Details of the accumulated postretirement benefit obligation are
shown below.
- ------------------------------------------------------------------------
ACCUMULATED POSTRETIREMENT
BENEFIT OBLIGATION
December 31 (In millions) 1993 1992
- ------------------------------------------------------------------------
Retiree health plans
Retirees and dependents $2,017 $1,789
Employees eligible to retire 119 137
Other employees 450 490
------ ------
$2,586 $2,416
====== ======
Retiree life plans
Retirees and dependents $1,147 $907
Employees eligible to retire 79 83
Other employees 308 337
------ ------
$1,534 $1,327
====== ======
- ------------------------------------------------------------------------
NOTE 7 INTEREST AND OTHER FINANCIAL CHARGES
GE. Interest capitalized, principally on major property, plant and
equipment projects, was $21 million in 1993, $29 million in 1992 and $33
million in 1991.
GECS. Interest and discount expense reported in the Statement of Earnings
is net of interest income on temporary investments of excess funds ($42
million, $48 million and $54 million in 1993, 1992 and 1991, respectively)
and capitalized interest ($5 million, $6 million and $8 million in 1993,
1992 and 1991, respectively).
NOTE 8 GECS ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
GECS allowance for losses on financing receivables represented 2.63% of
total financing receivables at year-end 1993 and 1992. The allowance for
small-balance receivables is determined principally on the basis of actual
experience during the preceding three years. Further allowances are
provided to reflect management's judgment of additional loss potential. For
other receivables, principally the larger loans and leases, the allowance
for losses is determined primarily on the basis of management's judgment of
net loss potential, including specific allowances for known troubled
accounts. The table below shows the activity in the allowance for losses on
financing receivables during each of the past three years.
- -------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------
Balance at January 1 $1,607 $1,508 $1,360
Provisions charged to
operations 987 1,056 1,102
Net transfers related to
companies acquired or sold 126 52 135
Amounts written off - net (990) (1,009) (1,089)
------ ------ ------
Balance at December 31 $1,730 $1,607 $1,508
====== ====== ======
- -------------------------------------------------------------------------
All accounts or portions thereof deemed to be uncollectible or to
require an excessive collection cost are written off to the allowance for
losses. Small-balance accounts are progressively written down (from 10%
when more than three months delinquent to 100% when 9-12 months delinquent)
to record the balances at estimated realizable value. If at any time during
that period an account is judged to be uncollectible, such as in the case
of a bankruptcy, the uncollectible balance is written off. Large-balance
accounts are reviewed at least quarterly, and those accounts that are more
than three months delinquent are written down, if necessary, to record the
balances at estimated realizable value. Amounts written off in 1993 were
approximately 1.46% of average financing receivables outstanding during the
year, compared with 1.58% and 1.87% of average financing receivables
outstanding during 1992 and 1991, respectively.
F-25
Annual Report Page 50
- ---------------------------------------------------------------------------
NOTE 9 PROVISION FOR INCOME TAXES
- --------------------------------------------------------------------------
(In millions) 1993 1992 1991
- --------------------------------------------------------------------------
GE
Estimated amounts payable $1,207 $ 697 $1,088
Deferred tax expense from
temporary differences 120 762 311
Investment credit deferred
(amortized) - net (17) (27) (39)
------ ------ ------
1,310 1,432 1,360
------ ------ ------
GECS
Estimated amounts payable
(recoverable) 507 374 (192)
Deferred tax expense from
temporary differences 341 167 555
Investment credit deferred
(amortized) - net (7) (5) 19
------ ------ ------
841 536 382
------ ------ ------
CONSOLIDATED
Estimated amounts payable 1,714 1,071 896
Deferred tax expense from
temporary differences 461 929 866
Investment credit deferred
(amortized) - net (24) (32) (20)
------ ------ ------
$2,151 $1,968 $1,742
====== ====== ======
- --------------------------------------------------------------------------
GE includes GECS in filing a consolidated U.S. federal income tax
return. GECS' provision for estimated taxes payable (recoverable) includes
its effect on the consolidated return.
Estimated consolidated amounts payable includes amounts applicable to
non-U.S. jurisdictions of $328 million, $294 million and $254 million in
1993, 1992 and 1991, respectively.
SFAS No. 109, Accounting for Income Taxes, was adopted effective
January 1, 1992. The effect of adopting this new standard was not material.
Deferred income tax balances reflect the impact of temporary
differences between the carrying amount of assets and liabilities and their
tax bases and are stated at enacted tax rates expected to be in effect when
taxes are actually paid or recovered. See note 23 for details.
Except for certain earnings that GE intends to reinvest indefinitely,
provision has been made for the estimated U.S. federal income tax
liabilities applicable to undistributed earnings of affiliates and
associated companies.
Based on location (not tax jurisdiction) of the business providing
goods and services, consolidated U.S. income before taxes was $5,924
million in 1993, $5,639 million in 1992 and $5,034 million in 1991. The
corresponding amounts for non-U.S. based operations were $651 million in
1993, $634 million in 1992 and $692 million in 1991.
- --------------------------------------------------------------------------------------------------------------------------------
RECONCILIATION OF U.S. FEDERAL Consolidated GE GECS
STATUTORY RATE TO ACTUAL TAX RATE ------------------------- ----------------------- --------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
Statutory U.S. federal income tax rate 35.0% 34.0% 34.0% 35.0% 34.0% 34.0% 35.0% 34.0% 34.0%
---- ---- ---- ---- ---- ---- ---- ---- ----
Increase (reduction) in rate resulting from:
Inclusion of after-tax earnings of GECS
in before-tax earnings of GE - - - (11.0) (8.9) (8.1) - - -
Rate increase - deferred taxes 1.5 - - (0.2) - - 4.3 - -
Amortization of goodwill 1.5 1.3 1.4 1.1 0.9 1.0 1.2 1.4 1.6
Tax-exempt income (2.8) (2.6) (2.9) - - - (6.8) (8.1) (10.1)
Foreign Sales Corporation tax benefits (1.2) (1.1) (1.1) (1.4) (1.2) (1.2) - - -
Dividends received not fully taxable (0.7) (0.3) (0.4) (0.3) - - (1.0) (1.0) (1.3)
All other - net (0.6) 0.1 (0.6) (0.4) 0.2 (0.3) (0.9) - (1.1)
---- ---- ---- ---- ---- ---- ---- ---- ----
(2.3) (2.6) (3.6) (12.2) (9.0) (8.6) (3.2) (7.7) (10.9)
---- ---- ---- ---- ---- ---- ---- ---- ----
Actual income tax rate 32.7% 31.4% 30.4% 22.8% 25.0% 25.4% 31.8% 26.3% 23.1%
==== ==== ==== ==== ==== ==== ==== ==== ====
- --------------------------------------------------------------------------------------------------------------------------------
NOTE 10 GECS TRADING SECURITIES
- ------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- ------------------------------------------------------------------------
U.S. government and federal agency
securities $19,543 $16,172
Corporate stocks, bonds and non-U.S.
securities 8,969 5,960
Mortgage loans 1,292 974
State and municipal securities 361 1,048
------- -------
$30,165 $24,154
======= =======
- ------------------------------------------------------------------------
The balance of GECS' trading securities at December 31, 1992,
included investments in equity securities held by insurance affiliates at a
fair value of $1,505 million, with unrealized pretax gains of $94 million
(net of unrealized pretax losses of $37 million) included in equity. At
December 31, 1993, equity securities held by insurance affiliates were
classified as investment securities (see note 11).
A significant portion of GECS' trading securities at December 31,
1993, was pledged as collateral for bank loans and repurchase agreements in
connection with securities broker-dealer operations.
F-26
Annual Report Page 51
- ---------------------------------------------------------------------------
NOTE 11 INVESTMENT SECURITIES
GE's investment securities were classified as available-for-sale at year-
end 1993 and 1992. Carrying value was substantially the same as fair value
at both year ends.
At December 31, 1993, GECS' investment securities were classified as
available-for-sale and reported at fair value, including net unrealized
gains of $1,261 million before taxes. At December 31, 1992, investment
securities of $9,033 million were classified as available-for-sale and were
reported at the lower of aggregate amortized cost or fair value. The
balance of the 1992 investment securities portfolio was carried at
amortized cost.
A summary of GECS' investment securities follows.
- -----------------------------------------------------------------------------------
GECS INVESTMENT SECURITIES
Estimated Gross Gross
Amortized fair unrealized unrealized
(In millions) cost value gains (a) losses (a)
- -----------------------------------------------------------------------------------
DECEMBER 31, 1993
Corporate, non-U.S.
and other $11,448 $11,595 $ 206 $ (59)
State and municipal 8,859 9,636 786 (9)
Mortgage-backed 2,487 2,507 31 (11)
Equity 1,517 1,826 393 (84)
U.S. government and
federal agency 1,220 1,228 15 (7)
------- ------- ------- -----
$25,531 $26,792 $ 1,431 $(170)
======= ======= ======= =====
DECEMBER 31, 1992
Corporate, non-U.S.
and other $ 4,097 $ 4,167 $ 70 $ -
State and municipal 6,626 6,951 339 (14)
Mortgage-backed 246 252 7 (1)
U.S. government and
federal agency 255 264 10 (1)
------- ------- ------- -----
$11,224 $11,634 $ 426 $ (16)
======= ======= ======= =====
- -----------------------------------------------------------------------------------
(a) December 31, 1992, amounts include gross unrealized gains and losses
of $32 million and $5 million, respectively, on investment securities
carried at amortized cost.
- -----------------------------------------------------------------------------------
Contractual maturities of debt securities, other than mortgage-backed
securities, at December 31, 1993, are shown below.
- ------------------------------------------------------------------
GECS CONTRACTUAL MATURITIES
(EXCLUDING MORTGAGE-BACKED SECURITIES) Estimated
Amortized fair
(In millions) cost value
- ------------------------------------------------------------------
Due in
1994 $ 2,665 $ 2,696
1995-1998 4,326 4,476
1999-2003 4,316 4,429
2004 and later 10,220 10,858
- ------------------------------------------------------------------
It is expected that actual maturities will differ from contractual
maturities because borrowers have the right to call or prepay certain
obligations, sometimes without call or prepayment penalties. Proceeds from
sales of investment securities in 1993 were $6,112 million ($3,514 million
in 1992 and $2,814 million in 1991). Gross realized gains were $173 million
in 1993 ($171 million in 1992 and $106 million in 1991). Gross realized
losses were $34 million in 1993 ($4 million in 1992 and $9 million in
1991).
NOTE 12 GE CURRENT RECEIVABLES
- -----------------------------------------------------------------
December 31 (In millions) 1993 1992
- -----------------------------------------------------------------
Aircraft Engines $1,860 $2,047
Appliances 456 446
Broadcasting 431 463
Industrial 1,161 1,150
Materials 1,060 719
Power Systems 2,083 1,389
Technical Products and Services 548 696
All Other 243 232
Corporate 889 498
------ ------
8,731 7,640
Less allowance for losses (170) (178)
------ ------
$8,561 $7,462
====== ======
- -----------------------------------------------------------------
Of the total receivables balances at December 31, 1993 and 1992,
$5,719 million and $5,284 million, respectively, were from sales of goods
and services to customers, and $292 million and $170 million, respectively,
were from transactions with associated companies.
Current receivables of $402 million at year-end 1993 and $256 million
at year-end 1992 arose from sales, principally of aircraft engine goods and
services, on open account to various agencies of the U.S. government, which
is GE's largest single customer (about 8%, 9% and 10% of GE's sales of
goods and services were to the U.S. government in 1993, 1992 and 1991,
respectively). Current receivables from sales on open account of aircraft
engine goods and services to airline industry customers were $418 million
and $651 million at December 31, 1993 and 1992, respectively.
To reduce political and credit risks, certain long-term international
medical equipment customer receivables are sold with partial credit
recourse. Proceeds from such sales were $89 million, $71 million and $13
million in 1993, 1992 and 1991, respectively; balances outstanding were
$146 million and $82 million at December 31, 1993 and 1992, respectively.
F-27
Annual Report Page 52
- ---------------------------------------------------------------------------
NOTE 13 GE INVENTORIES
- -----------------------------------------------------------------
December 31 (In millions) 1993 1992
- -----------------------------------------------------------------
Raw materials and work in process $2,983 $3,598
Finished goods 2,314 2,596
Unbilled shipments 156 188
------ ------
5,453 6,382
Less revaluation to LIFO (1,629) (1,808)
------ ------
$3,824 $4,574
====== ======
- -----------------------------------------------------------------
LIFO revaluations decreased $179 million in 1993 compared with
decreases of $204 million and $141 million in 1992 and 1991, respectively.
Included in these changes were decreases of $101 million, $183 million and
$111 million (1993, 1992 and 1991, respectively) resulting from lower
inventory levels. There were modest cost decreases in 1993, 1992 and 1991.
At December 31, 1993, GE is obligated to acquire, under take-or-pay or
similar arrangements, about $250 million per year of raw materials at
market prices through 1998.
NOTE 14 GECS FINANCING RECEIVABLES (INVESTMENT IN TIME SALES, LOANS AND
FINANCING LEASES)
- -----------------------------------------------------------------
December 31 (In millions) 1993 1992
- -----------------------------------------------------------------
TIME SALES AND LOANS
Specialized financing $17,138 $18,725
Consumer services 18,732 15,267
Mid-market financing 5,514 3,952
Equipment management 438 71
------- -------
41,822 38,015
Deferred income (1,074) (945)
------- -------
Time sales and loans - net 40,748 37,070
------- -------
INVESTMENT IN FINANCING LEASES
Direct financing leases 22,063 20,890
Leveraged leases 2,867 3,035
------- -------
Investment in financing leases 24,930 23,925
------- -------
65,678 60,995
------- -------
Less allowance for losses (1,730) (1,607)
------- -------
$63,948 $59,388
======= =======
- -----------------------------------------------------------------
Time sales and loans represents transactions in a variety of forms,
including time sales, revolving charge and credit, mortgages, installment
loans, intermediate-term loans and revolving loans secured by business
assets. The portfolio includes time sales and loans carried at the
principal amount on which finance charges are billed periodically, and time
sales and loans acquired on a discount basis carried at gross book value,
which includes finance charges. At year-end 1993 and 1992, specialized
financing and consumer services loans included $11,887 million and $10,526
million, respectively, for commercial real estate loans and $3,293 million
and $5,262 million, respectively, for highly leveraged transactions. Note
17 contains information on airline loans and leases.
At December 31, 1993, contractual maturities for time sales and loans
over the next five years and after were: $16,287 million in 1994; $6,286
million in 1995; $4,350 million in 1996; $4,104 million in 1997; $3,112
million in 1998; and $7,683 million in 1999 and later - aggregating $41,822
million. Experience has shown that a substantial portion of receivables
will be paid prior to contractual maturity. Accordingly, the maturities of
time sales and loans are not to be regarded as forecasts of future cash
collections.
Financing leases consists of direct financing and leveraged leases of
aircraft, railroad rolling stock, autos, other transportation equipment,
data processing equipment, medical equipment, and other manufacturing,
power generation, mining and commercial equipment and facilities.
As the sole owner of assets under direct financing leases and as the
equity participant in leveraged leases, GECS is taxed on total lease
payments received and is entitled to tax deductions based on the cost of
leased assets and tax deductions for interest paid to third-party
participants. GECS generally is entitled to any investment tax credit on
leased equipment and to any residual value of leased assets.
Investment in direct financing and leveraged leases represents unpaid
rentals and estimated unguaranteed residual values of leased equipment,
less related deferred income. Because GECS has no general obligation for
principal and interest on notes and other instruments representing third-
party participation related to leveraged leases, such notes and other
instruments have not been included in liabilities but have been offset
against the related rentals receivable. GECS' share of rentals receivable
on leveraged leases is subordinate to the share of its other participants
who also have a security interest in the leased equipment.
GECS' investment in financing leases is shown on the following page.
F-28
Annual Report Page 53
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT IN FINANCING LEASES Total financing leases Direct financing leases Leveraged leases
--------------------- ----------------------- -------------------
December 31 (In millions) 1993 1992 1993 1992 1993 1992
- -----------------------------------------------------------------------------------------------------------------------------
Total minimum lease payments receivable $38,080 $38,172 $26,584 $25,390 $11,496 $12,782
Less principal and interest on third-party
nonrecourse debt (8,398) (9,446) - - (8,398) (9,446)
------- ------- ------- ------- ------- -------
Rentals receivable 29,682 28,726 26,584 25,390 3,098 3,336
Estimated unguaranteed residual value of leased assets 4,490 4,352 3,323 3,115 1,167 1,237
Less deferred income (a) (9,242) (9,153) (7,844) (7,615) (1,398) (1,538)
------- ------- ------- ------- ------- -------
INVESTMENT IN FINANCING LEASES (as shown on the
previous page) 24,930 23,925 22,063 20,890 2,867 3,035
Less amounts to arrive at net investment
Allowance for losses (538) (560) (464) (481) (74) (79)
Deferred taxes arising from financing leases (4,917) (4,553) (2,157) (1,986) (2,760) (2,567)
------- ------- ------- ------- ------- -------
NET INVESTMENT IN FINANCING LEASES $19,475 $18,812 $19,442 $18,423 $ 33 $ 389
======= ======= ======= ======= ======= =======
- -----------------------------------------------------------------------------------------------------------------------------
(a) Total financing lease deferred income is net of deferred initial direct costs of $83 million and $73 million for 1993 and
1992, respectively.
- -----------------------------------------------------------------------------------------------------------------------------
At December 31, 1993, contractual maturities for rentals receivable
over the next five years and after were: $6,417 million in 1994; $5,426
million in 1995; $3,919 million in 1996; $2,570 million in 1997; $1,720
million in 1998 and $9,630 million in 1999 and later - aggregating $29,682
million. As with time sales and loans, experience has shown that a portion
of receivables will be paid prior to contractual maturity and these amounts
should not be regarded as forecasts of future cash flows.
Under arrangements with customers, GE Capital has committed to lend
funds ($2,131 million and $1,794 million at December 31, 1993 and 1992,
respectively) and has issued sundry financial guarantees and letters of
credit ($1,863 million and $1,693 million at December 31, 1993 and 1992,
respectively). The above commitments and guarantees exclude those related
to commercial aircraft (see note 17). Note 21 discusses financial
guaranties of insurance affiliates.
At December 31, 1993 and 1992, GE Capital was conditionally obligated
to advance $2,244 million and $2,236 million, respectively, principally
under performance-based standby lending commitments. GE Capital also was
obligated for $2,946 million and $2,147 million at year-end 1993 and 1992,
respectively, under standby liquidity facilities related to third-party
commercial paper programs, although management believes that the prospects
of being required to fund under such standby facilities are remote.
Nonearning consumer time sales and loans, primarily private-label
credit card receivables, amounted to $391 million and $444 million at
December 31, 1993 and 1992, respectively. A majority of these receivables
were subject to various loss-sharing arrangements that provide full or
partial recourse to the originating private-label entity. Nonearning and
reduced earning receivables other than consumer time sales and loans were
$509 million and $934 million at year-end 1993 and 1992, respectively.
Earnings of $11 million and $30 million realized in 1993 and 1992,
respectively, were $41 million and $75 million lower than would have been
reported had these receivables earned income in accordance with their
original terms.
NOTE 15 PROPERTY, PLANT AND EQUIPMENT
(INCLUDING EQUIPMENT LEASED TO OTHERS)
- ---------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- ---------------------------------------------------------------------------
ORIGINAL COST
GE
Land and improvements $ 395 $ 375
Buildings, structures and related
equipment 5,370 5,398
Machinery and equipment 15,420 14,936
Leasehold costs and manufacturing
plant under construction 1,170 1,183
Other 86 86
------- -------
22,441 21,978
------- -------
GECS
Buildings and equipment 1,850 1,733
Equipment leased to others
Aircraft 3,677 2,850
Marine shipping containers 2,985 2,584
Vehicles 3,568 2,274
Railroad rolling stock 1,498 1,478
Other 2,160 2,758
------- -------
15,738 13,677
------- -------
$38,179 $35,655
======= =======
ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION
GE $12,899 $12,046
GECS
Buildings and equipment 814 673
Equipment leased to others 3,238 2,549
------- -------
$16,951 $15,268
======= =======
- ---------------------------------------------------------------------------
Included in GECS' equipment leased to others at year-end 1993 was
$244 million of commercial aircraft off-lease ($94 million in 1992).
Current-year amortization of GECS' equipment leased to others was
$1,395 million, $1,133 million and $1,055 million in 1993, 1992 and 1991,
respectively.
F-29
Annual Report Page 54
- ---------------------------------------------------------------------------
Note 16 Intangible Assets
- -----------------------------------------------------------------
December 31 (In millions) 1993 1992
- -----------------------------------------------------------------
GE
Goodwill $ 5,713 $ 5,873
Other intangibles 753 734
------- -------
6,466 6,607
------- -------
GECS
Goodwill 2,133 1,841
Other intangibles 1,765 1,062
------- -------
3,898 2,903
------- -------
$10,364 $ 9,510
======= =======
- -----------------------------------------------------------------
GE's intangible assets are shown net of accumulated amortization of
$1,760 million in 1993 and $1,476 million in 1992. GECS' intangible assets
are net of accumulated amortization of $878 million in 1993 and $646
million in 1992.
NOTE 17 ALL OTHER ASSETS
- -----------------------------------------------------------------------
December 31 (In millions) 1993 1992
- -----------------------------------------------------------------------
GE
Investments
Associated companies (a) $ 1,336 $ 1,301
Government and government-
guaranteed securities 293 274
Other 1,639 390
------- -------
3,268 1,965
Prepaid pension asset 3,840 3,310
Other 3,269 2,230
------- -------
10,377 7,505
------- -------
GECS
Investments
Assets acquired for resale 8,141 3,388
Associated companies (b) 2,079 1,720
Other 1,756 2,216
------- -------
11,976 7,324
Deferred insurance acquisition costs 987 720
Foreclosed real estate properties 213 304
Other 1,121 848
------- -------
14,297 9,196
------- -------
ELIMINATIONS - (76)
------- -------
$24,674 $16,625
======= =======
- -----------------------------------------------------------------------
(a) Includes advances of $131 million and $196 million at December 31,
1993 and 1992, respectively.
(b) Includes advances of $1,159 million and $687 million at December 31,
1993 and 1992, respectively.
- -----------------------------------------------------------------------
In line with industry practice, sales of commercial jet aircraft
engines often involve long-term customer financing commitments. In making
such commitments, it is GE's general practice to require that it have, or
be able to establish, a secured position in the aircraft being financed.
Under such airline financing programs, GE had issued loans and guarantees
(principally guarantees) amounting to $1,201 million at year-end 1993 and
$974 million at year-end 1992; and it had entered into commitments totaling
$1.4 billion and $2.3 billion at year-end 1993 and 1992, respectively, to
provide financial assistance on future aircraft engine sales. Estimated
fair values of the aircraft securing these receivables and guarantees
exceeded the related account balances or guaranteed amounts at December 31,
1993. GECS acts as a lender and lessor to the commercial airline industry.
At December 31, 1993 and 1992, the aggregate amount of such GECS loans,
leases and equipment leased to others was $6,776 million and $5,978
million, respectively. In addition, GECS had issued financial guarantees
and funding commitments of $450 million at December 31, 1993 ($645 million
at year-end 1992) and had conditional commitments to purchase aircraft at a
cost of $865 million. These purchase commitments are subject to the
aircraft having been placed on lease under agreements, and with carriers,
acceptable to GECS prior to delivery.
At year-end 1993, the National Broadcasting Company had $3,011
million of commitments to acquire broadcast material or the rights to
broadcast television programs that require payments through the year 2000.
GECS' other investments included $75 million and $275 million at
December 31, 1993 and 1992, respectively, of in-substance repossessions at
the lower of cost or estimated fair value previously included in financing
receivables. GECS' mortgage-servicing activities include the purchase and
resale of mortgages. GECS had open commitments to purchase mortgages
totaling $5,935 million and $2,963 million at December 31, 1993 and 1992,
respectively, as well as open commitments to sell mortgages totaling $6,426
million and $1,777 million, respectively, at year-end 1993 and 1992. At
December 31, 1993 and 1992, mortgages sold with full or partial recourse to
GECS aggregated $2,526 million and $3,876 million, respectively.
F-30
Annual Report Page 55
- ---------------------------------------------------------------------------
NOTE 18 BORROWINGS
- ------------------------------------------------------------------------------------------------
SHORT-TERM BORROWINGS 1993 1992
-------------------------- ----------------------
December 31 Average Average
(In millions) Amount rate Amount rate
- ------------------------------------------------------------------------------------------------
GE
Commercial paper $ 708 3.36% $ 1,175 3.53%
Payable to banks
(principally non-U.S.) 588 6.41 456 8.73
Notes to trust
departments 102 3.03 269 3.14
Other (a) 993 1,548
------- -------
2,391 3,448
------- -------
GECS
Commercial paper 46,298 3.39 42,168 3.57
Payable to banks 4,957 3.59 4,516 4.20
Notes to trust
departments 1,882 3.10 1,659 3.54
Other (a) 6,866 4,840
------- -------
60,003 53,183
------- -------
ELIMINATIONS (259) (242)
------- -------
$62,135 $56,389
======= =======
- ------------------------------------------------------------------------------------------------
(a) Includes the current portion of long-term debt.
- ------------------------------------------------------------------------------------------------
Confirmed credit lines of approximately $3.1 billion had been
extended to GE by 40 banks at year-end 1993. Substantially all of GE's
credit lines are available to GE Capital and GECS in addition to their own
credit lines.
At year-end 1993, GE Capital had committed lines of credit
aggregating $19.0 billion with 134 banks, including $6.0 billion of
revolving credit agreements pursuant to which GE Capital has the right to
borrow funds for periods exceeding one year. A total of $4.6 billion of GE
Capital's credit lines is available for use by GECS; $1.8 billion is
available for use by GE.
During 1993, neither GE nor GECS borrowed under any of these credit
lines. Both compensate banks for credit facilities either in the form of
fees or a combination of balances and fees as agreed to with each bank.
Compensating balances and commitment fees were immaterial in each of the
past three years.
Kidder, Peabody had established credit lines of $6.1 billion at
December 31, 1993, including $3.1 billion available on an unsecured basis.
Borrowings from banks were primarily unsecured demand obligations, at
interest rates approximating broker call loan rates, to finance inventories
of securities and to facilitate the securities settlement process.
Aggregate amounts of long-term borrowings that mature during the next
five years, after deducting debt reacquired for sinking-fund needs, are as
follows.
- -----------------------------------------------------------------------
(In millions) 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------
GE $ 819 $ 258 $ 627 $ 511 $ 584
GECS 6,421 6,204 4,868 2,971 3,566
- -----------------------------------------------------------------------
Outstanding balances in long-term borrowings at December 31, 1993 and
1992, were as follows.
- -----------------------------------------------------------------------------------------------------
LONG-TERM BORROWINGS
Weighted
December 31 average
(In millions) interest rate Maturities 1993 1992
- -----------------------------------------------------------------------------------------------------
GE
Notes (a) 7.13% 1995-1998 $ 1,694 $ 2,298
Debentures/sinking-
fund debentures - - - 300
Deep discount notes - - - 150
Industrial development/
pollution control
bonds (a) 3.09 1995-2019 272 272
Other (a) (b) 447 400
------- -------
2,413 3,420
------- -------
GECS
Senior notes
Notes (a) (c) 6.03 1995-2012 22,042 18,087
Zero coupon/deep
discount notes 13.72 1995-2001 1,407 1,578
Reset or remarketed
notes (d) 8.39 2007-2018 1,500 1,500
Floating rate notes (e) 1995-2053 521 496
Less unamortized
discount/premium (344) (464)
------- -------
25,126 21,197
Subordinated notes (f) 8.12 2006-2012 759 760
------- -------
25,885 21,957
------- -------
ELIMINATIONS (28) (1)
------- -------
$28,270 $25,376
======= =======
- -----------------------------------------------------------------------------------------------------
(a) At December 31, 1993, GE and GECS had agreed with others to exchange
currencies on principal amounts equivalent to U.S. $498 million and
$8,101 million, respectively, and related interest payments. GE and
GECS also had entered into interest rate swaps with others related to
interest on $610 million and $13,224 million, respectively. At
December 31, 1992, GE and GECS had agreed with others to exchange
currencies on principal amounts equivalent to U.S. $1,224 million and
$6,499 million, respectively, and related interest payments. GE and
GECS also had entered into interest rate swaps with others relating
to interest on $2,352 million and $8,549 million, respectively.
(b) Includes original issue premium and discount and a variety of
obligations having various interest rates and maturities, including
borrowings by parent operating components and all affiliate
borrowings.
(c) At December 31, 1993 and 1992, counterparties held options under
which GECS can be caused to execute interest rate swaps associated
with interest payments through 1999 on $500 million and $625 million,
respectively.
(d) Interest rates are reset at the end of the initial and each
subsequent interest period. At each rate-reset date, GECS may redeem
notes in whole or in part at its option. Current interest periods
range from March 1994 to May 1996.
(e) The rate of interest payable on each note is a variable rate based on
the commercial paper rate each month. Interest is payable either
monthly or semiannually at the option of GECS.
(f) Includes $700 million at December 31, 1993 and 1992, guaranteed by GE.
- -----------------------------------------------------------------------------------------------------
F-31
Annual Report Page 56
- ---------------------------------------------------------------------------
NOTE 19 GECS SECURITIES SOLD BUT NOT
YET PURCHASED, AT MARKET
- --------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- --------------------------------------------------------------------------
U.S. government $12,789 $ 9,570
Corporate stocks, bonds and non-U.S.
securities 2,528 1,802
State and municipal securities 15 41
------- -------
$15,332 $11,413
======= =======
- --------------------------------------------------------------------------
NOTE 20 GE ALL OTHER CURRENT COSTS
AND EXPENSES ACCRUED
At year-end 1993 and 1992, this account included taxes accrued of $1,664
million and $1,460 million, respectively, and compensation and benefit
accruals (including the current portion of postretirement and
postemployment benefit accruals) of $1,311 million and $1,000 million,
respectively. Also included are amounts for product warranties, estimated
costs on shipments billed to customers and a wide variety of sundry items.
NOTE 21 INSURANCE RESERVES AND ANNUITY BENEFITS
Insurance reserves and annuity benefits represents policyholders' benefits,
unearned premiums and provisions for policy losses in GECS' insurance and
annuity businesses. The estimated liability for insurance losses and loss
expenses consists of both case and incurred-but-not-reported reserves.
Where experience is not sufficient, industry averages are used. Estimated
amounts of salvage and subrogation recoverable on paid and unpaid losses
are deducted from outstanding losses.
The liability for future policy benefits of the life insurance
affiliates has been computed mainly by a net-level-premium method based on
assumptions for investment yields, mortality and terminations that were
appropriate at date of purchase or at the time the policies were developed,
including provisions for adverse deviations.
Interest rates credited to annuity contracts in 1993 ranged from 3.7%
to 9.7%. For most annuities, interest rates to be credited are redetermined
by management on an annual basis.
SFAS No. 113, Accounting and Reporting for Reinsurance of Short-
Duration and Long-Duration Contracts, was adopted during 1993. The
principal effect of this Statement was to report reinsurance receivables
and prepaid reinsurance premiums, a total of $1,818 million at December 31,
1993, as assets. Such amounts were reported as reductions of insurance
reserves at the end of 1992.
Financial guaranties, principally by GE Capital's Financial Guaranty
Insurance Company, were $101.4 billion and $81.3 billion at year-end 1993
and 1992, respectively, before reinsurance of $17.3 billion and $13.7
billion, respectively. Mortgage insurance risk in force of GE Capital's
mortgage insurance operations aggregated $27.0 billion and $21.3 billion at
December 31, 1993 and 1992, respectively.
NOTE 22 GE ALL OTHER LIABILITIES
(INCLUDING POSTEMPLOYMENT BENEFITS)
This account includes noncurrent compensation and benefit accruals at year-
end 1993 and 1992 of $4,507 million and $3,743 million, respectively. Other
noncurrent liabilities include amounts for product warranties, deferred
incentive compensation, deferred income and a wide variety of sundry items.
The Company adopted SFAS No. 112, Employers' Accounting for
Postemployment Benefits, effective as of January 1, 1993. This Statement
requires that employers recognize over the service lives of employees the
costs of postemployment benefits if certain conditions are met. The
principal effect for GE was to change the method of accounting for
severance benefits. Under the previous accounting policy, the total cost of
severance benefits was expensed when the severance event occurred.
The cumulative effect of the accounting change as of January 1, 1993,
amounted to $1,306 million before taxes ($862 million, or $1.01 per share,
after taxes). Aside from the one-time effect of the adjustment, adoption of
SFAS No. 112 was not material to 1993 earnings, and there was no 1993 cash
flow impact.
F-32
Annual Report Page 57
- ---------------------------------------------------------------------------
NOTE 23 DEFERRED INCOME TAXES
Aggregate deferred tax amounts are summarized below.
- --------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- --------------------------------------------------------------------------
Assets
GE $ 3,547 $ 2,864
GECS 2,204 1,810
------- -------
5,751 4,674
------- -------
Liabilities
GE 3,248 2,535
GECS 7,612 6,679
------- -------
10,860 9,214
------- -------
Net deferred tax liability $ 5,109 $ 4,540
======= =======
- --------------------------------------------------------------------------
Principal components of the net deferred tax liability balances are
shown below for GE and GECS.
- --------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- --------------------------------------------------------------------------
GE
Provisions for expenses $(2,219) $(1,491)
Retiree insurance plans (879) (965)
GE pension 1,170 957
Depreciation 890 829
Other - net 739 341
------ ------
(299) (329)
------ ------
GECS
Financing leases 4,917 4,553
Operating leases 966 811
Net unrealized gains on securities 437 19
Tax transfer leases 340 329
Provision for losses (831) (715)
Insurance reserves (370) (344)
AMT credit carryforwards - (200)
Other - net (51) 416
------ ------
5,408 4,869
------ ------
Net deferred tax liability $5,109 $4,540
====== ======
- --------------------------------------------------------------------------
Deferred taxes were determined under SFAS No. 109, Accounting for
Income Taxes, which was adopted effective January 1, 1992.
NOTE 24 MINORITY INTEREST IN EQUITY
OF CONSOLIDATED AFFILIATES
Minority interest in equity of consolidated GECS affiliates includes 8,750
shares of $100 par value variable cumulative preferred stock issued by GE
Capital with a liquidation preference value of $875 million. Dividend rates
on this preferred stock ranged from 2.33% to 2.79% during 1993 and from
2.44% to 3.49% during 1992.
NOTE 25 SHARE OWNERS' EQUITY
- -------------------------------------------------------------------------
(In millions) 1993 1992 1991
- -------------------------------------------------------------------------
COMMON STOCK ISSUED
Balance at January 1 and
December 31 $ 584 $ 584 $ 584
======= ======= =======
OTHER CAPITAL
Balance at January 1 $755 $938 $1,061
Currency translation
adjustments (279) (209) (175)
Unrealized gains on
securities 812 30 45
Gains (losses) on treasury
stock dispositions 110 (4) 7
------- ------- -------
Balance at December 31 $ 1,398 $ 755 $ 938
======= ======= =======
RETAINED EARNINGS
Balance at January 1 $26,527 $23,787 $22,959
Net earnings 4,315 4,725 2,636
Dividends declared (2,229) (1,985) (1,808)
------- ------- -------
Balance at December 31 $28,613 $26,527 $23,787
======= ======= =======
COMMON STOCK HELD IN
TREASURY
Balance at January 1 $ 4,407 $ 3,626 $ 2,924
Purchases 770 1,206 1,112
Dispositions (406) (425) (410)
------- ------- -------
Balance at December 31 $ 4,771 $ 4,407 $ 3,626
======= ======= =======
- -------------------------------------------------------------------------
Authorized shares of common stock (par value $0.63) total
1,100,000,000 shares. Common shares issued and outstanding are summarized
in the table below.
- ------------------------------------------------------------------------
SHARES OF GE COMMON STOCK
December 31 (In thousands) 1993 1992 1991
- ------------------------------------------------------------------------
Issued 926,564 926,564 926,564
In treasury (72,913) (71,135) (62,442)
------- ------- -------
Outstanding 853,651 855,429 864,122
======= ======= =======
- ------------------------------------------------------------------------
The current Proxy Statement includes a proposal recommended by the
Board of Directors on December 17, 1993, which, if approved by share
owners, would (a) increase the number of authorized shares of common stock
from 1,100,000,000 shares each with a par value of $0.63 to 2,200,000,000
shares each with a par value of $0.32 and
F-33
Annual Report Page 58
- ---------------------------------------------------------------------------
(b) split each unissued and issued common share, including shares held in
treasury, into two shares of common stock each with a par value of $0.32.
GE has 50,000,000 authorized shares of preferred stock ($1.00 par
value), but no such shares have been issued.
The effects of translating to U.S. dollars the financial statements
of non-U.S. affiliates whose functional currency is the local currency are
included in other capital. Asset and liability accounts are translated at
year-end exchange rates, while revenues and expenses are translated at
average rates for the period. The cumulative currency translation
adjustment was a $246 million reduction of other capital at December 31,
1993, compared with cumulative additions to other capital of $33 million
and $242 million at December 31, 1992 and 1991, respectively.
NOTE 26 OTHER STOCK-RELATED INFORMATION
Stock option plans, stock appreciation rights (SARs), restricted stock and
restricted stock units are described in the Company's current Proxy
Statement. With certain restrictions, the Company can meet requirements for
stock option shares from either unissued or treasury shares.
- -----------------------------------------------------------------------
STOCK OPTION INFORMATION Average per share
---------------------
Shares subject Option Market
(Shares in thousands) to option price price
- ------------------------------------------------------------------------
Balance at January 1, 1993 24,082 $64.37 $85.50
Options granted 8,790 91.80 91.80
Replacement options 441 57.19 57.19
Options exercised (3,036) 56.65 95.14
Options terminated (600) 73.67 -
------
Balance at December 31, 1993 29,677 72.99 104.88
======
- ------------------------------------------------------------------------
The replacement options replaced canceled SARs and have identical
terms thereto. At December 31, 1993, there were 3,529,125 SARs exercisable
at an average price of $75.32. There were 1,836,050 restricted stock shares
and restricted stock units outstanding at December 31, 1993.
At December 31, 1993 and 1992, respectively, there were 8,069,046 and
8,755,078 shares available for grants of options, SARs, restricted stock
and restricted stock units. Under the 1990 Long-Term Incentive Plan, 0.95%
of the Company's issued common stock (including treasury shares) as of the
first day of each calendar year during which the Plan is in effect become
available for granting awards in such year. Any unused portion, in
addition to shares allocated to awards that are canceled or forfeited, is
available for later years.
Outstanding options and rights expire on various dates through
December 17, 2003. Restricted stock grants vest on various dates up to
normal retirement of grantees.
NOTE 27 GECS' BROKER-DEALER POSITIONS
- --------------------------------------------------------------------------
December 31 (In millions) 1993 1992
- --------------------------------------------------------------------------
INCLUDED IN GECS' OTHER RECEIVABLES
Securities failed to deliver $2,315 $218
Deposits paid for securities borrowed 1,944 1,976
Clearing organizations and other 3,207 930
------ ------
$7,466 $3,124
====== ======
INCLUDED IN GECS' ACCOUNTS PAYABLE
Securities failed to receive $1,701 $193
Deposits received for securities loaned 1,390 1,051
Clearing organizations and other 275 100
------ ------
$3,366 $1,344
====== ======
- --------------------------------------------------------------------------
Kidder, Peabody, in conducting its normal operations, employs a wide
variety of financial instruments in order to balance its investment
positions. Management believes that the most meaningful measures of these
positions for a broker-dealer are the values at which the positions are
presented in the Statement of Financial Position in accordance with
securities industry practices.
The following required supplemental disclosures of gross contract
terms are indicators of the nature and extent of such broker-dealer
positions and are not intended to portray the much smaller credit or
economic risk.
At December 31, 1993, open commitments to sell mortgage-backed
securities amounted to $18,539 million ($17,191 million in 1992); open
commitments to purchase mortgage-backed securities amounted to $14,637
million ($13,131 million in 1992); interest rate swap agreements were open
for interest on $4,084 million ($6,038 million in 1992); commitments
amounting to $10,837 million ($6,711 million in 1992) were open under
options written to cover price changes in securities; the face amount of
open interest rate futures and forward contracts for currencies as well as
money market and other instruments amounted to $30,506 million ($10,936
million in 1992); contracts establishing limits on counterparty exposure to
interest rates were outstanding for interest on $1,610 million ($2,722
million in 1992); and firm underwriting commitments for the purchase of
stock or debt amounted to $3,311 million ($4,094 million in 1992).
F-34
Annual Report Page 59
- ---------------------------------------------------------------------------
Note 28 Supplemental Cash Flows Information
Changes in operating assets and liabilities are net of acquisitions and
dispositions of businesses. "Payments for principal businesses purchased"
in the Statement of Cash Flows is net of cash acquired and includes debt
assumed and immediately repaid in acquisitions.
"All other operating activities" in the Statement of Cash Flows
consists principally of adjustments to current and noncurrent accruals of
costs and expenses, amortization of premium and discount on debt, and
adjustments to assets such as amortization of goodwill and intangibles.
The Statement of Cash Flows excludes certain noncash transactions
that had no significant effects on the investing or financing activities of
GE or GECS.
Certain supplemental information for GECS' cash flows is shown below.
- -----------------------------------------------------------------------------------------------------------------------------
For the years ended December 31 (In millions) 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
CERTAIN BROKER-DEALER ACCOUNTS
Trading securities $ (7,517) $ (5,966) $ (5,463)
Securities purchased under agreements to resell (16,675) (7,386) 4,006
Securities sold under agreements to repurchase 20,655 7,841 349
Securities sold but not yet purchased 3,919 6,529 (440)
-------- -------- --------
$ 382 $ 1,018 $ (1,548)
======== ======== ========
FINANCING RECEIVABLES
Increase in loans to customers $(30,002) $(27,069) $(25,030)
Principal collections from customers 27,571 25,136 25,289
Investment in equipment for financing leases (7,204) (7,758) (8,829)
Principal collections on financing leases 6,812 5,338 3,726
Net change in credit card receivables (1,341) (330) (2,410)
-------- -------- --------
$ (4,164) $ (4,683) $ (7,254)
======== ======== ========
ALL OTHER INVESTING ACTIVITIES
Purchases of securities by insurance and annuity businesses $(10,488) $ (6,865) $ (6,002)
Dispositions and maturities of securities by insurance and annuity businesses 7,698 6,200 5,415
Other (4,124) (3,003) (1,538)
-------- -------- --------
$ (6,914) $ (3,668) $ (2,125)
======== ======== ========
NEWLY ISSUED DEBT HAVING MATURITIES MORE THAN 90 DAYS
Short-term (91-365 days) $ 4,315 $4,456 $ 4,863
Long-term (over one year) 10,885 6,699 6,317
Long-term subordinated - 450 250
Proceeds - nonrecourse, leveraged lease debt 53 148 1,808
-------- -------- --------
$ 15,253 $ 11,753 $ 13,238
======== ======== ========
REPAYMENTS AND OTHER REDUCTIONS OF DEBT HAVING MATURITIES MORE THAN 90 DAYS
Short-term (91-365 days) $ (9,008) $ (6,474) $ (6,504)
Long-term (over one year) (208) (658) (1,769)
Long-term subordinated - (76) (32)
Principal payments - nonrecourse, leveraged lease debt (312) (272) (280)
-------- -------- --------
$ (9,528) $ (7,480) $ (8,585)
======== ======== ========
ALL OTHER FINANCING ACTIVITIES
Proceeds from sales of investment and annuity contracts $ 509 $ - $ -
Redemption of investment and annuity contracts (578) - -
-------- -------- --------
$ (69) $ - $ -
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------
F-35
Annual Report Page 60
- ---------------------------------------------------------------------------
NOTE 29 INDUSTRY SEGMENTS
- ----------------------------------------------------------------------------------------------------------------------------
REVENUES
(In millions) For the years ended December 31
- ----------------------------------------------------------------------------------------------------------------------------
Total revenues Intersegment revenues External revenues
---------------------------- ---------------------------- ------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
GE
Aircraft Engines $ 6,580 $ 7,368 $ 7,777 $ 59 $ 57 $ 29 $ 6,521 $ 7,311 $ 7,748
Appliances 5,555 5,330 5,225 3 3 4 5,552 5,327 5,221
Broadcasting 3,102 3,363 3,121 - - 1 3,102 3,363 3,120
Industrial 7,379 6,907 6,783 264 267 327 7,115 6,640 6,456
Materials 5,042 4,853 4,736 50 51 51 4,992 4,802 4,685
Power Systems 6,692 6,371 6,189 246 272 265 6,446 6,099 5,924
Technical Products and
Services 4,174 4,674 4,686 18 68 99 4,156 4,606 4,587
All Other 2,043 1,749 1,545 - - - 2,043 1,749 1,545
Corporate items and
eliminations (208) (361) (468) (640) (718) (776) 432 357 308
------- ------- ------- ------- ------- ------- ------- ------- -------
Total GE 40,359 40,254 39,594 - - - 40,359 40,254 39,594
------- ------- ------- ------- ------- ------- ------- ------- -------
GECS
Financing 12,399 10,544 10,069 - - - 12,399 10,544 10,069
Specialty Insurance 4,862 3,863 2,989 - - - 4,862 3,863 2,989
Securities Broker-Dealer 4,861 4,022 3,346 - - - 4,861 4,022 3,346
All Other 15 11 (5) - - - 15 11 (5)
------- ------- ------- ------- ------- ------- ------- ------- -------
Total GECS 22,137 18,440 16,399 - - - 22,137 18,440 16,399
------- ------- ------- ------- ------- ------- ------- ------- -------
Eliminations (1,934) (1,621) (1,364) - - - (1,934) (1,621) (1,364)
------- ------- ------- ------- ------- ------- ------- ------- -------
Consolidated revenues $60,562 $57,073 $54,629 $ - $ - $ - $60,562 $57,073 $54,629
======= ======= ======= ======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------
"All Other" GE revenues consists primarily of GECS' earnings.
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS PROPERTY, PLANT AND EQUIPMENT
(INCLUDING EQUIPMENT LEASED TO OTHERS)
(In millions) At December 31 For the years ended December 31
- ----------------------------------------------------------------------------------------------------------------------------
Depreciation, depletion and
Additions amortization
----------------------------- ----------------------------- ----------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
GE
Aircraft Engines $ 5,329 $ 6,153 $ 6,649 $ 208 $ 276 $ 371 $ 339 $ 294 $ 295
Appliances 2,193 2,248 2,503 132 126 118 131 105 106
Broadcasting 3,742 3,736 3,886 56 52 70 98 82 84
Industrial 4,909 4,983 4,824 379 299 320 310 282 262
Materials 8,181 8,081 8,340 376 255 784 417 393 369
Power Systems 4,408 3,614 3,450 251 245 267 185 159 144
Technical Products and
Services 2,179 2,393 2,629 126 118 148 89 74 98
All Other 11,604 9,719 8,750 1 1 6 3 5 5
Corporate items and
eliminations 8,589 7,148 6,119 59 73 80 59 89 66
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total GE 51,134 48,075 47,150 1,588 1,445 2,164 1,631 1,483 1,429
-------- -------- -------- ------- ------- ------- ------- ------- -------
GECS
Financing 106,854 82,207 74,554 3,352 4,761 3,688 1,545 1,259 1,161
Specialty Insurance 18,915 14,624 11,812 15 17 11 9 13 8
Securities Broker-Dealer 85,009 55,455 41,218 15 32 31 38 34 38
All Other 952 2,238 230 59 118 41 38 29 18
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total GECS 211,730 154,524 127,814 3,441 4,928 3,771 1,630 1,335 1,225
-------- -------- -------- ------- ------- ------- ------- ------- -------
Eliminations (11,358) (9,723) (8,456) - - - - - -
-------- -------- -------- ------- ------- ------- ------- ------- -------
Consolidated totals $251,506 $192,876 $166,508 $5,029 $6,373 $5,935 $3,261 $2,818 $2,654
======== ======== ======== ======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------------
"All Other" GE assets consists primarily of investment in GECS.
- ----------------------------------------------------------------------------------------------------------------------------
F-36
Annual Report Page 61
- ---------------------------------------------------------------------------
A description of industry segments for General Electric Company and
consolidated affiliates follows.
* AIRCRAFT ENGINES. Jet engines and replacement parts and repair
services for all categories of commercial aircraft (short/medium,
intermediate and long-range); a wide variety of military planes, including
fighters, bombers, tankers and helicopters; and executive and commuter
aircraft. Sold worldwide to airframe manufacturers, airlines and government
agencies. Also, aircraft engine derivatives used as marine propulsion and
industrial power sources.
* APPLIANCES. Major appliances such as refrigerators, freezers,
electric and gas ranges, dishwashers, clothes washers and dryers, microwave
ovens and room air conditioning equipment. Sold primarily in North America,
but also in global markets, under various GE and private-label brands.
Distributed to retail outlets, mainly for the replacement market, and to
building contractors and distributors for new installations.
* BROADCASTING. Primarily the National Broadcasting Company (NBC).
Principal businesses are furnishing of U.S. network television services to
more than 200 affiliated stations, production of television programs,
operation of six VHF television broadcasting stations, and investment and
programming activities in cable television.
* INDUSTRIAL. Lighting products (including a wide variety of lamps,
wiring devices and quartz products); electrical distribution and control
equipment; transportation systems products (including diesel-electric
locomotives, transit propulsion equipment and motorized wheels for off-
highway vehicles); electric motors and related products; a broad range of
electrical and electronic industrial automation products; and GE Supply, a
network of electrical supply houses. Markets are extremely varied. Products
are sold to commercial and industrial end users, original equipment
manufacturers, electrical distributors, retail outlets, railways and
transit authorities. Increasingly, products are developed for and sold in
global markets.
* MATERIALS. High-performance engineered plastics used in
applications such as automobiles and housings for computers and other
business equipment; ABS resins; silicones; superabrasives such as man-made
diamonds; and laminates. Sold worldwide to a diverse customer base
consisting mainly of manufacturers.
* POWER SYSTEMS. Products mainly for the generation, transmission
and distribution of electricity, including related installation,
engineering and repair services. Markets and competition are global. Steam
turbine-generators are sold to electric utilities, to the U.S. Navy, and,
for cogeneration, to industrial and other power customers. Marine steam
turbines and propulsion gears are sold to the U.S. Navy. Gas turbines are
sold principally as packaged power plants for electric utilities and for
industrial cogeneration and mechanical drive applications. Power Systems
also includes power delivery and control products, such as transformers,
meters, relays, capacitors and arresters for the utility industry; nuclear
reactors; and fuel and support services for GE's installed boiling water
reactors.
* TECHNICAL PRODUCTS AND SERVICES. Medical systems such as magnetic
resonance (MR) and computed tomography (CT) scanners, x-ray, nuclear
imaging, ultrasound and other diagnostic equipment sold worldwide to
hospitals and medical facilities. This segment also includes a full range
of computer-based information and data interchange services for internal
use and external commercial and industrial customers.
* GECS FINANCING. Operations of GE Capital as follows:
Consumer services - private-label and bank credit card loans, time
sales and revolving credit and inventory financing for retail merchants,
auto leasing and inventory financing, mortgage servicing, and annuity and
mutual fund sales.
Specialized financing - loans and financing leases for major capital
assets, including aircraft, industrial facilities and equipment, and energy-
related facilities; commercial and residential real estate loans and
investments; and loans to and investments in highly leveraged management
buyouts and corporate recapitalizations.
Equipment management - leases, loans and asset management services
for portfolios of commercial and transportation equipment, including
aircraft, trailers, auto fleets, modular space units, railroad rolling
stock, data processing equipment, ocean-going containers and satellites.
Mid-market financing - loans and financing and operating leases for
middle-market customers, including manufacturers, distributors and end
users, for a variety of equipment, including data processing equipment,
medical and diagnostic equipment, and equipment used in construction,
manufacturing, office applications and telecommunications activities.
Very few of the products financed by GE Capital are manufactured by
other GE segments.
* GECS SPECIALTY INSURANCE. U.S. and international multiple-line
property and casualty reinsurance and certain directly written specialty
insurance; financial guaranty insurance, principally on municipal bonds and
structured finance issues; private mortgage insurance; creditor insurance
covering international customer loan repayments; and life reinsurance.
* GECS SECURITIES BROKER-DEALER. Kidder, Peabody, a full-service
international investment bank and securities broker, member of the
principal stock and commodities exchanges and a primary dealer in U.S.
government securities. Offers services such as underwriting, sales and
trading, advisory services on acquisitions and financings, research and
asset management.
F-37
Annual Report Page 62
- ---------------------------------------------------------------------------
NOTE 30 GEOGRAPHIC SEGMENT INFORMATION (CONSOLIDATED)
U.S. revenues include GE exports to external customers, as shown by major
areas of the world on page 38, and royalty and licensing income from non-
U.S. sources.
The Company manages its exposure to currency movements by committing
to future exchanges of currencies at specified prices and dates.
Commitments outstanding at December 31, 1993 and 1992, were $1,386 million
and $1,533 million, respectively, for GE and $1,833 million and $2,084
million, respectively, for GECS, excluding Kidder, Peabody.
- ---------------------------------------------------------------------------------------------------------------------------------
REVENUES
(In millions) For the years ended December 31
- ---------------------------------------------------------------------------------------------------------------------------------
Total revenues Intersegment revenues External revenues
------------------------------- ------------------------------ --------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
United States $52,039 $48,710 $47,277 $1,513 $1,281 $1,246 $50,526 $47,429 $46,031
Other areas of the world 11,210 10,776 9,662 1,174 1,132 1,064 10,036 9,644 8,598
Intercompany eliminations (2,687) (2,413) (2,310) (2,687) (2,413) (2,310) - - -
------- ------- ------- ------ ------ ------ ------- ------- -------
Total $60,562 $57,073 $54,629 $ - $ - $ - $60,562 $57,073 $54,629
======= ======= ======= ====== ====== ====== ======= ======= =======
- ---------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT ASSETS
(In millions) For the years ended December 31 At December 31
- ---------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------------------------------------------
United States $7,019 $6,883 $6,294 $219,903 $168,797 $147,648
Other areas of the world 793 819 898 31,791 24,244 19,031
Intercompany eliminations (23) 6 (22) (188) (165) (171)
------ ------ ------ -------- -------- --------
Total $7,789 $7,708 $7,170 $251,506 $192,876 $166,508
====== ====== ====== ======== ======== ========
- ---------------------------------------------------------------------------------------------
NOTE 31 FAIR VALUES OF FINANCIAL INSTRUMENTS
As required under generally accepted accounting principles, financial
instruments are presented in the accompanying financial statements -
generally at either cost or fair value - based on both the characteristics
of and management intentions regarding the instruments. Management believes
that the financial statement presentation is the most useful for displaying
the Company's results. However, SFAS No. 107, Disclosure About Fair Value
of Financial Instruments, requires disclosure of an estimate of the fair
value of certain financial instruments. These disclosures disregard
management intentions regarding the instruments, and, therefore, management
believes that this information may be of limited usefulness.
Apart from the Company's own borrowings, certain marketable
securities and the financial instruments of Kidder, Peabody, relatively few
of the Company's financial instruments are actively traded. Thus, fair
values must often be determined by using one or more models that indicate
value based on estimates of quantifiable characteristics as of a particular
date. Because this undertaking is, by nature, difficult and highly
judgmental, for a limited number of instruments, alternative valuation
techniques indicate values sufficiently diverse that the only practicable
disclosure is a range of values. Users of the following data are cautioned
that limitations in the estimation techniques may have produced disclosed
values different from those that could have been realized at December 31,
1993 or 1992. Moreover, the disclosed values are representative of fair
values only as of the dates indicated inasmuch as interest rates,
performance of the economy, tax policies and other variables significantly
impact fair valuations. Cash and equivalents, trading securities, reverse
repurchase agreements, repurchase agreements and other receivables have
been excluded as their carrying amounts and fair values are the same, or
approximately the same.
Values were estimated as follows.
INVESTMENT SECURITIES. Based on quoted market prices or dealer quotes for
actively traded securities. Value of other such securities was estimated
using quoted market prices for similar securities.
F-38
Annual Report Page 63
- ---------------------------------------------------------------------------
TIME SALES, LOANS AND RELATED PARTICIPATIONS. Based on quoted market
prices, recent transactions, market comparables and/or discounted future
cash flows, using rates at which similar loans would have been made to
similar borrowers.
INVESTMENTS IN ASSOCIATED COMPANIES. Based on market comparables, recent
transactions and/or discounted future cash flows for GECS investments.
These equity interests were generally acquired in connection with financing
transactions and, for purposes of this disclosure, fair values were
estimated. GE's investments (aggregating $1,336 million and $1,301 million
at December 31, 1993 and 1992, respectively) comprise many small
investments, many of which are located outside the United States, and
generally involve joint ventures for specific, limited objectives;
determination of fair values is impracticable.
OTHER FINANCIAL INSTRUMENTS. Based on recent comparable transactions,
market comparables, discounted future cash flows, quoted market prices,
and/or estimates of the cost to terminate or otherwise settle obligations
to counterparties.
BORROWINGS. Based on quoted market prices or market comparables. Fair
values of interest rate and currency swaps on borrowings are based on
quoted market prices and include the effects of counterparty
creditworthiness.
ANNUITY BENEFITS. Based on expected future cash flows, discounted at
currently offered discount rates for immediate annuity contracts or cash
surrender value for single premium deferred annuities.
FINANCIAL GUARANTIES OF INSURANCE AFFILIATES. Based on future cash flows,
considering expected renewal premiums, claims, refunds and servicing costs,
discounted at a market rate.
The carrying amounts and estimated fair values of the Company's
financial instruments were as follows.
- -----------------------------------------------------------------------------------------------------------------------
ASSETS (LIABILITIES) 1993 1992
------------------------------ --------------------------------
Carrying Estimated Carrying Estimated
At December 31 (In millions) amount fair value amount fair value
- -----------------------------------------------------------------------------------------------------------------------
GE
Investment securities $ 19 $ 19 $ 32 $ 32
Other financial instruments 2,105 2,261 832 869
Borrowings (a) (4,804) (4,933) (6,868) (6,991)
GECS
Investment securities 26,792 26,792 11,224 11,634
Time sales, loans and related participations 39,678 41,410-40,685 36,131 37,420-36,240
Investments in associated companies 2,079 2,830-2,635 1,720 2,295-2,180
Other financial instruments 6,045 6,085-5,960 2,430 2,545-2,405
Annuity benefits (8,894) (8,660) - -
Borrowings (a) (b) (85,888) (87,020) (75,140) (76,400)
Financial guaranties of insurance affiliates (1,312) (135)-(220) (1,036) 200-55
- -----------------------------------------------------------------------------------------------------------------------
(a) Swap contracts are integral to the Company's goal of achieving the lowest borrowing costs for particular funding
strategies. The above fair values of borrowings include fair values of associated interest rate and currency swaps.
At December 31, 1993, the approximate settlement values of GE's and GECS' swaps were $21 million and $340 million,
respectively. Without such swaps, estimated fair values of GE's and GECS' borrowings would have been $4,912 million
and $86,680 million, respectively. Approximately 90% of the notional amount of swaps outstanding at December 31,
1993, was with counterparties having credit ratings of Aa/AA or better.
(b) Proceeds from borrowings are invested in a variety of GECS activities, including both financial instruments, shown
in the preceding table, as well as leases, for which fair value disclosures are neither required nor reasonably
estimable. When evaluating the extent to which estimated fair value of borrowings exceeds the related carrying
amount, users should consider that the fair value of the fixed payment stream for long-term leases would increase
as well.
- -----------------------------------------------------------------------------------------------------------------------
F-39
Annual Report Page 64
- ---------------------------------------------------------------------------
NOTE 32 QUARTERLY INFORMATION (UNAUDITED)
- ---------------------------------------------------------------------------------------------------------------------------
First quarter Second quarter Third quarter Fourth quarter
(Dollar amounts in millions; ----------------- ----------------- ----------------- -----------------
per-share amounts in dollars) 1993 1992 1993 1992 1993 1992 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS
Earnings from continuing operations $1,085 $ 964 $ 656 $1,130 $1,206 $ 996 $ 1,477 $ 1,215
Earnings from discontinued operations 75 94 - 86 - 114 - 126
Gain on transfer of discontinued operations - - 678 - - - - -
Accounting change (862) (a) - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------
Net earnings $ 298 $1,058 $1,334 $1,216 $1,206 $1,110 $ 1,477 $1,341
====== ====== ====== ====== ====== ====== ====== ======
Per share
Earnings from continuing operations $ 1.27 $ 1.12 $ 0.77 $ 1.32 $ 1.41 $ 1.17 $ 1.73 $ 1.42
Earnings from discontinued operations 0.09 0.11 0.79 0.10 - 0.13 - 0.15
Accounting change (1.01) (a) - - - - - - -
------ ------ ------ ------ ------ ------ ------ ------
Net earnings $ 0.35 $ 1.23 $ 1.56 $ 1.42 $ 1.41 $ 1.30 $ 1.73 $ 1.57
====== ====== ====== ====== ====== ====== ====== ======
SELECTED DATA - CONTINUING OPERATIONS
GE
Sales of goods and services $7,968 $7,996 $9,468 $9,513 $8,779 $9,242 $11,607 $11,192
Gross profit from sales 2,074 2,083 1,662 2,496 2,198 2,123 2,929 2,824
GECS
Revenues from operations 4,763 4,301 5,129 4,493 5,919 4,761 6,326 4,885
Operating profit 644 517 583 484 833 542 588 492
- ---------------------------------------------------------------------------------------------------------------------------
(a) Reflects the cumulative effect to January 1, 1993, of the change in accounting for postemployment benefits (SFAS No. 112).
As originally reported, net earnings for the first quarter were $1,160 million, or $1.36 per share.
- ---------------------------------------------------------------------------------------------------------------------------
For GE, gross profit from sales is sales of goods and services less
cost of goods and services sold. For GECS, operating profit is income
before taxes.
Second-quarter 1993 earnings from continuing operations were reduced
by restructuring provisions of $678 million ($0.79 per share) after tax.
Second-quarter gross profit from sales was reduced by restructuring
provisions of $875 million before tax.
Earnings-per-share amounts for each quarter are required to be
computed independently and, in 1992, did not equal the total year earnings-
per-share amounts.
F-40
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
(In millions)
Deductions
Balance at ----------
beginning of Amounts Balance at
Name of Debtor period Additions Collected end of period
- -------------- ------------ --------- ---------- -------------
1993:
Employees:
William J. Conaty $ - $ 0.5(a) $ - $ 0.5
====== ====== ====== ======
1992:
Employees:
Names $ - $ - $ - $ -
====== ====== ====== ======
1991:
Employees:
Names $ - $ - $ - $ -
====== ====== ====== ======
(a)In connection with the relocation of William J. Conaty, who was promoted to
the position of Senior Vice President - Human Resources in 1993, the
Company provided a $0.5 million loan to assist him in purchasing a home.
The loan is secured by a second mortgage on the home and is repayable, with
interest at the Company's commercial paper borrowing rate, in five years.
F-41
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
GE allowance for losses
deducted from assets
-----------------------
Accounts
and notes
receivable Investments
---------- ----------
(Amounts in millions)
Balance, January 1, 1991 $191 $106
Provisions charged (credited) to operations 58 10
(Deductions) additions (58) (50)
---- ----
Balance, December 31, 1991 191 (1) 66
Provisions charged (credited) to operations 78 10
(Deductions) additions (73) (19)
---- ----
Balance, December 31, 1992 196 (1) 57
Provisions charged (credited) to operations 51 57
(Deductions) additions (49) (5)
---- ----
Balance, December 31, 1993 $198 (1) $109
==== ====
- --------------------------
(1) The year-end balance is segregated on the Statement of
Financial Position as follows:
1993 1992 1991
---- ---- ----
Current receivables $170 $178 $181
Other assets (long-term receivables,
customer financing, etc.) 28 18 10
---- ---- ----
$198 $196 $191
==== ==== ====
Reference is made to note 8 in Notes to Consolidated Financial
Statements appearing in the 1993 Annual Report to Share Owners which
contains information with respect to GECS allowance for losses on
financing receivables for 1993, 1992 and 1991.
F-42
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE IX
SHORT-TERM BORROWINGS
At December 31
------- ---------- Maximum Average for year
Weighted amount ---------------------
Average outstanding Weighted
Interest at any Amount Interest
Category Balance Rate month-end Outstanding Rate (e)
- -------- ------- -------- --------- ----------- --------
1993 (Dollar amounts in millions)
- ----
GE
--
Commercial paper $ 708 3.36% $ 2,943 $ 2,591 (a) 3.11%
Bank borrowings -
affiliates
(principally
non U.S.) 588 6.41% 588 451 (b) 10.46%
Notes with trust
departments 102 3.03% 348 280 (b) 3.23%
Current portion of
long-term borrowings 819
Other 174
-------
Total GE 2,391 3,322 (c) 4.12%
-------
GECS
----
Commercial paper 46,298 3.39% 46,298 41,689 (a) 3.28%
Banks 4,957 3.59% 4,957 3,773 (a) 3.59%
Current portion
of long-term
borrowings 6,421
Notes with trust
departments 1,882 3.10% 2,317 1,895 (a) 2.97%
Passbooks and
investment
certificates 445
-------
Total GECS 60,003 47,357 (d) 3.29%
-------
Eliminations (259)
-------
Consolidated $62,135
------------ =======
(a) Average daily balance.
(b) Average balance is calculated by averaging month-end
balances for the year.
(c) Excludes current portion of long-term debt and other.
(d) Excludes current portion of long-term debt and
passbooks and investment certificates.
(e) Short-term interest expense incurred divided by the
average balance outstanding.
F-43
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE IX
SHORT-TERM BORROWINGS
At December 31
------- ---------- Maximum Average for year
Weighted amount ---------------------
Average outstanding Weighted
Interest at any Amount Interest
Category Balance Rate month-end Outstanding Rate (e)
- -------- ------- -------- --------- ----------- --------
1992 (Dollar amounts in millions)
- ----
GE
--
Commercial paper $ 1,175 3.53% $ 4,596 $ 3,921 (a) 3.77%
Bank borrowings -
affiliates
(principally
non U.S. 456 8.73% 777 680 (b) 12.55%
Notes with trust
departments 269 3.14% 376 331 (b) 3.74%
Current portion of
long-term borrowings 1,359
Other 189
-------
Total GE 3,448 4,932 (c) 4.98%
-------
GECS
----
Commercial paper 42,168 3.57% 42,168 38,816 (a) 3.94%
Banks 4,516 4.20% 5,907 3,560 (a) 4.35%
Current portion
of long-term
borrowings 4,300
Notes with trust
departments 1,659 3.54% 1,841 1,441 (a) 3.54%
Passbooks and
investment
certificates 540
-------
Total GECS 53,183 43,817 (d) 3.96%
-------
Eliminations (242)
-------
Consolidated $56,389
------------ =======
(a) Average daily balance.
(b) Average balance is calculated by averaging month-end
balances for the year.
(c) Excludes current portion of long-term debt and other.
(d) Excludes current portion of long-term debt and
passbooks and investment certificates.
(e) Short-term interest expense incurred divided by the
average balance outstanding.
F-44
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE IX
SHORT-TERM BORROWINGS
At December 31
------- ---------- Maximum Average for year
Weighted amount ---------------------
Average outstanding Weighted
Interest at any Amount Interest
Category Balance Rate month-end Outstanding Rate (e)
- -------- ------- -------- --------- ----------- --------
1991 (Dollar amounts in millions)
- ----
GE
--
Commercial paper $ 1,369 5.43% $5,095 $4,047 (a) 6.02%
Bank borrowings -
affiliates
(principally
non U.S.) 1,464 11.93% 1,464 1,015 (b) 12.69%
Notes with trust
departments 297 4.77% 396 348 (b) 5.96%
Current portion of
long-term borrowings 259
Other 93
------
Total GE 3,482 5,410 (c) 7.27%
------
GECS
----
Commercial paper 38,822 5.12% 38,822 35,768 (a) 6.15%
Banks 3,003 5.20% 4,264 3,655 (a) 6.20%
Current portion
of long-term
borrowings 4,370
Notes with trust
departments 897 4.90% 897 1,090 (a) 5.83%
Passbooks and
investment
certificates 978
-------
Total GECS 48,070 40,513 (d) 6.36%
-------
Eliminations (202)
-------
Consolidated $51,350
------------ =======
(a) Average daily balance.
(b) Average balance is calculated by averaging month-end
balances for the year.
(c) Excludes current portion of long-term debt and other.
(d) Excludes current portion of long-term debt and
passbooks and investment certificates.
(e) Short-term interest expense incurred divided by the
average balance outstanding.
F-45
GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the year ended December 31
------------------------------
(In millions) 1993 1992 1991
---- ---- ----
GE
Employee compensation, including
Social Security taxes and other
benefits $8,981 $9,258 $9,201
Maintenance and repairs 705 768 738
Advertising 332 347 344
Taxes, except payroll and income
taxes 286 249 286
GECS
Employee compensation, including
Social Security taxes and other
benefits 2,067 1,631 1,333
Advertising 111 101 97
Taxes, except payroll and income
taxes 151 97 118
Consolidated
Employee compensation, including
Social Security taxes and other
benefits 11,048 10,889 10,534
Maintenance and repairs 705 768 738
Advertising 443 448 441
Taxes, except payroll and income
taxes 437 346 404
Total employee compensation data include Social Security taxes of
$645 million in 1993, $649 million in 1992 and $651 million in 1991.
Amounts for depreciation and amortization of intangible assets, which were
less than 1% of total sales and revenues in each of the three years shown,
are included in "all other operating activities" in the Statements of Cash
Flows.
F-46
Differences between the Circulated
Material and the Material
in Electronic Format
The financial information included on pages F-1 through F-40
represents the financial information which appears in the 1993 General
Electric Annual Report to Share Owners. That information was prepared
on typesetting software for purposes of printing the Annual Report. The
typesetting format was then converted electronically into an
Officewriter format which can be accepted by the EDGAR system. Certain
minor differences of graphics, layout and appearance, as set forth
below, exist between the information as it is presented here and as it
is presented in the Annual Report to Share Owners.
1. The Annual Report is printed on dove gray colored recycled
paper in a two column per page layout.
2. For ease of reference, Annual Report page numbers have been
retained and are indicated in the upper left hand corner of
the pages in electronic format as "Annual Report page ---."
The designation does not appear in the circulated Annual
Report where page numbers are indicated by arabic numerals at
the bottom of each page.
3. On page F-1 (Annual Report page 25) the parenthetical "(Annual
Report Pages)" was added to the electronic format for the
sake of clarity, and these words do not appear in the
circulated Annual Report.
4. Pages 26-27, 28-29, and 30-31 of the Annual Report are
"spreads," with the page on the left representing line-by-
line account descriptions and numbered columns for General
Electric Company and consolidated affiliates, and with the
page on the right continuing with numbered columns for GE and
GECS. For ease of reading in this electronic filing, line-by-
line descriptions have been repeated on the equivalent right
side pages, i.e., F-3, F-5 and F-7.
5. On pages F-1, F-8, F-9, F-13, F-14, F-15, F-16, F-17 and F-18
(Annual Report pages 25, 32, 33, 37, 38, 39, 40, 41 and 42)
of the electronic format the word "Chart:" appears in a
number of instances toward the left hand margin next to a
description of the chart. This formulation indicates that in
the circulated Annual Report there appears a colored bar
graph at these locations. The numbers which are presented at
these places in the electronic format represent the plot
points which were used to construct the bar graphs.
6. Many headings in the circulated Annual Report are in bold face
or in enlarged type or type of a special style. These have
been converted to block capitals in the electronic format.
The numbers of the Notes to Financial Statements appear as
large contrasting green numerals in the circulated Annual
Report.
7. The solid black square character which is used in the
circulated Annual Report has been replaced by an asterisk in
the electronic format.
8. On Annual Report page 44 (F-20) there are facsimile signatures
of Messrs. Welch and Dammerman of GE in the circulated
version.
9. The Accountants Report (KPMG Peat Marwick) on page F-20 of
this 10-K Report refers specifically to this Report on Form
10-K, including certain financial statement schedules
included herein. KPMG Peat Marwick's Report appearing in the
circulated Annual Report to Share Owners on page 44, signed
by facsimile, does not refer to the schedules identified
solely with the 10-K.
F-47