SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number 1-35 GENERAL ELECTRIC COMPANY (Exact name of registrant as specified in its charter) NEW YORK 14-0689340 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3135 EASTON TURNPIKE, FAIRFIELD, CT 06431-0001 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (203) 373-2211 ------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- There were 3,258,023,410 shares with a par value of $0.16 per share outstanding at March 31, 1998.
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONDENSED STATEMENT OF EARNINGS GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES <TABLE> <CAPTION> (DOLLARS, EXCEPT PER-SHARE AMOUNTS, IN MILLIONS) THREE MONTHS ENDED MARCH 31 (UNAUDITED) -------------------------------------------------------------------------------- CONSOLIDATED GE GECS ------------------------- ------------------------ ------------------------- 1998 1997 1998 1997 1998 1997 ----------- ----------- ----------- ---------- ----------- ----------- <S> <C> <C> <C> <C> <C> <C> Sales of goods $ 9,616 $ 8,620 $ 7,991 $ 7,705 $ 1,626 $ 916 Sales of services 3,359 2,785 3,417 2,817 - - Earnings of GECS - - 881 754 - - GECS revenues from services 9,484 8,593 - - 9,525 8,628 Other income 167 159 175 158 - - ----------- ----------- ----------- ---------- ----------- ----------- Total revenues 22,626 20,157 12,464 11,434 11,151 9,544 ----------- ----------- ----------- ---------- ----------- ----------- Cost of goods sold 7,063 6,342 5,582 5,535 1,482 808 Cost of services sold 2,402 1,985 2,460 2,017 - - Interest and other financial charges 2,212 1,931 207 158 2,025 1,783 Insurance losses and policyholder and annuity benefits 2,213 2,244 - - 2,213 2,244 Provision for losses on financing receivables 332 312 - - 332 312 Other costs and expenses 5,433 4,729 1,648 1,467 3,814 3,286 Minority interest in net earnings of consolidated affiliates 56 55 23 25 33 30 ----------- ----------- ----------- ---------- ----------- ----------- Total costs and expenses 19,711 17,598 9,920 9,202 9,899 8,463 ----------- ----------- ----------- ---------- ----------- ----------- Earnings before income taxes 2,915 2,559 2,544 2,232 1,252 1,081 Provision for income taxes (1,024) (882) (653) (555) (371) (327) ----------- ----------- ----------- ---------- ----------- ----------- Net earnings $ 1,891 $ 1,677 $ 1,891 $ 1,677 $ 881 $ 754 =========== =========== =========== ========== =========== =========== Net earnings per share Basic $ 0.58 $ 0.51 Diluted $ 0.57 $ 0.50 Dividends declared per share $ 0.30 $ 0.26 <FN> See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns. </FN> </TABLE>
CONDENSED STATEMENT OF FINANCIAL POSITION GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES <TABLE> <CAPTION> (DOLLARS IN MILLIONS) CONSOLIDATED GE GECS ------------------------- ------------------------ ------------------------- 3/31/98 12/31/97 3/31/98 12/31/97 3/31/98 12/31/97 ----------- ----------- ----------- ---------- ----------- ----------- <S> <C> <C> <C> <C> <C> <C> Cash and equivalents $ 5,419 $ 5,861 $ 749 $ 1,157 $ 4,670 $ 4,904 Investment securities 71,952 70,621 298 265 71,654 70,356 Current receivables 8,039 8,924 8,171 9,054 - - Inventories 5,975 5,895 5,167 5,109 808 786 GECS financing receivables - net 103,387 103,799 - - 103,387 103,799 Other GECS receivables 18,433 17,655 - - 19,084 18,332 Property, plant and equipment (including equipment leased to others) - net 32,727 32,316 11,043 11,118 21,684 21,198 Investment in GECS - - 17,983 17,239 - - Intangible assets 19,675 19,121 8,965 8,755 10,710 10,366 Other assets 44,147 39,820 16,607 14,729 28,186 25,667 ----------- ----------- ----------- ---------- ----------- ----------- Total assets $ 309,754 $ 304,012 $ 68,983 $ 67,426 $ 260,183 $ 255,408 =========== =========== =========== ========== =========== =========== Short-term borrowings $ 104,170 $ 98,075 $ 4,830 $ 3,629 $ 99,949 $ 95,274 Accounts payable 10,791 10,407 4,538 4,779 7,103 6,490 Other GE current liabilities 12,177 12,186 12,113 12,058 - - Long-term borrowings 43,781 46,603 785 729 43,130 45,989 Insurance liabilities, reserves and annuity benefits 68,647 67,270 - - 68,647 67,270 All other liabilities 22,699 22,700 11,580 11,539 11,019 11,067 Deferred income taxes 8,957 8,651 (175) (315) 9,132 8,966 ----------- ----------- ----------- ---------- ----------- ----------- Total liabilities 271,222 265,892 33,671 32,419 238,980 235,056 ----------- ----------- ----------- ---------- ----------- ----------- Minority interest in equity of consolidated affiliates 3,813 3,682 593 569 3,220 3,113 ----------- ----------- ----------- ---------- ----------- ----------- Unrealized gains on investment securities 2,460 2,138 2,460 2,138 2,396 2,135 Foreign currency translation adjustments (951) (798) (951) (798) (227) (185) ----------- ----------- ----------- ---------- ----------- ----------- Accumulated non-owner changes in equity 1,509 1,340 1,509 1,340 2,169 1,950 Common stock (3,714,026,000 shares issued) 594 594 594 594 1 1 Other capital 4,842 4,434 4,842 4,434 2,484 2,337 Retained earnings 44,252 43,338 44,252 43,338 13,329 12,951 Less common stock held in treasury (16,478) (15,268) (16,478) (15,268) - - ----------- ----------- ----------- ---------- ----------- ----------- Total share owners' equity 34,719 34,438 34,719 34,438 17,983 17,239 ----------- ----------- ----------- ---------- ----------- ----------- Total liabilities and equity $ 309,754 $ 304,012 $ 68,983 $ 67,426 $ 260,183 $ 255,408 =========== =========== =========== ========== =========== =========== <FN> See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and"GECS." March data are unaudited. Transactions between GE and GECS have been eliminated from the "consolidated" columns. </FN> </TABLE>
CONDENSED STATEMENT OF CASH FLOWS GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES <TABLE> <CAPTION> (DOLLARS IN MILLIONS) THREE MONTHS ENDED MARCH 31 (UNAUDITED) -------------------------------------------------------------------------------- CONSOLIDATED GE GECS ------------------------- ------------------------ ------------------------- 1998 1997 1998 1997 1998 1997 ----------- ----------- ----------- ---------- ----------- ----------- <S> <C> <C> <C> <C> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net earnings $ 1,891 $ 1,677 $ 1,891 $ 1,677 $ 881 $ 754 Adjustments to reconcile net earnings to cash provided from (used for) operating activities Depreciation and amortization 1,077 952 421 382 656 570 Earnings retained by GECS - - (378) (454) - - Deferred income taxes 174 329 106 40 68 289 Decrease in GE current receivables 704 636 706 666 - - Decrease (increase) in inventories (126) (672) (130) (672) 4 - Increase (decrease) in accounts payable 295 (165) (35) 11 316 (240) Increase in insurance reserves 1,161 655 - - 1,161 655 Provision for losses on financing receivables 332 312 - - 332 312 All other operating activities (1,901) (1,281) (1,073) (342) (739) (754) ----------- ----------- ----------- ---------- ----------- ----------- Cash from operating activities 3,607 2,443 1,508 1,308 2,679 1,586 ----------- ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Property, plant and equipment (including equipment leased to others) - additions (1,921) (1,742) (361) (457) (1,560) (1,285) Net decrease (increase) in GECS financing receivables (246) 1,385 - - (246) 1,385 Payments for principal businesses purchased (1,438) (46) (752) (19) (686) (27) All other investing activities (769) (967) (134) 206 (712) (1,291) ----------- ----------- ----------- ---------- ----------- ----------- Cash used for investing activities (4,374) (1,370) (1,247) (270) (3,204) (1,218) ----------- ----------- ----------- ---------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net change in borrowings (maturities 90 days or less) 8,445 2,732 1,768 242 6,477 2,457 Newly issued debt (maturities more than 90 days) 5,651 4,810 86 147 5,565 4,663 Repayments and other reductions (maturities more than 90 days) (11,625) (8,026) (590) (148) (11,035) (7,878) Net purchase of GE shares for treasury (954) (681) (954) (681) - - Dividends paid to share owners (979) (855) (979) (855) (503) (300) All other financing activities (213) 377 - - (213) 377 ----------- ----------- ----------- ---------- ----------- ----------- Cash from (used for) financing activities 325 (1,643) (669) (1,295) 291 (681) ----------- ----------- ----------- ---------- ----------- ----------- Decrease in cash and equivalents (442) (570) (408) (257) (234) (313) Cash and equivalents at beginning of year 5,861 4,191 1,157 957 4,904 3,234 ----------- ----------- ----------- ---------- ----------- ----------- Cash and equivalents at March 31 $ 5,419 $ 3,621 $ 749 $ 700 $ 4,670 $ 2,921 =========== =========== =========== ========== =========== =========== <FN> See notes to condensed consolidated financial statements. Consolidating data are shown for "GE" and "GECS." Transactions between GE and GECS have been eliminated from the "consolidated" columns. </FN> </TABLE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying condensed quarterly financial statements represent the consolidation of General Electric Company and all companies which it directly or indirectly controls, either through majority ownership or otherwise. Reference is made to note 1 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. That note discusses consolidation and financial statement presentation. As used in this Report and in the Report on Form 10-K, "GE" represents the adding together of all affiliated companies except General Electric Capital Services, Inc. ("GECS"), which is presented on a one-line basis; GECS consists of General Electric Capital Services, Inc. and all of its affiliates; and "consolidated" represents the adding together of GE and GECS with the effects of transactions between the two eliminated. 2. The condensed consolidated quarterly financial statements are unaudited. These statements include all adjustments (consisting of normal recurring accruals) considered necessary by management to present a fair statement of the results of operations, financial position and cash flows. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. 3. Statement of Financial Accounting Standards (SFAS) No. 130, REPORTING COMPREHENSIVE INCOME, was adopted as of January 1, 1998. This Statement requires reporting of changes in share owners' equity that do not result directly from transactions with share owners. An analysis of these changes follows: THREE MONTHS ENDED ------------------ (DOLLARS IN MILLIONS) 3/31/98 3/31/97 ------- ------- Net earnings $ 1,891 $ 1,677 Unrealized gains (losses) on investment securities - net 322 (488) Foreign currency translation adjustments - net (153) (404) ------- ------- Total $ 2,060 $ 785 ======= ======= 4. Inventories consisted of the following: AT ----------------------- (DOLLARS IN MILLIONS) 3/31/98 12/31/97 ------- -------- GE Raw materials and work in process $ 3,082 $ 3,070 Finished goods 2,921 2,895 Unbilled shipments 246 242 Revaluation to LIFO (1,082) (1,098) ------- ------- 5,167 5,109 ======= ======= GECS Finished goods 808 786 ------- ------- Total $ 5,975 $ 5,895 ======= ======= 5. Property, plant and equipment (including equipment leased to others) -- net, consisted of the following: AT --------------------- (DOLLARS IN MILLIONS) 3/31/98 12/31/97 ------- -------- ORIGINAL COST - - GE $27,021 $26,855 - - GECS 29,770 28,802 ------- ------- Total 56,791 55,657 ------- ------- ACCUMULATED DEPRECIATION AND AMORTIZATION - - GE 15,978 15,737 - - GECS 8,086 7,604 ------- ------- Total 24,064 23,341 ------- ------- PROPERTY, PLANT AND EQUIPMENT -- NET - - GE 11,043 11,118 - - GECS 21,684 21,198 ------- ------- Total $32,727 $32,316 ======= ======= 6. GE's authorized common stock consisted of 4,400,000,000 shares having a par value of $0.16 each. Information related to the calculation of earnings per share follows. THREE MONTHS ENDED --------------------------------- (DOLLAR AMOUNTS AND SHARES IN MILLIONS; 3/31/98 3/31/97 --------------- --------------- PER-SHARE AMOUNTS IN DOLLARS) BASIC DILUTED BASIC DILUTED ----- ------- ------ ------- CONSOLIDATED OPERATIONS Net earnings available to common share owners $1,891 $1,891 1,677 $1,677 Dividend equivalents-- net of tax -- 3 -- 3 ------ ------ ----- ------ Net earnings available for per-share calculation $1,891 $1,894 $1,677 $1,680 ------ ------ ----- ------ AVERAGE EQUIVALENT SHARES Shares of GE common stock 3,269 3,269 3,285 3,285 Employee compensation-related shares, including stock options -- 66 -- 69 ------ ------ ------ ------ Total average equivalent shares 3,269 3,335 3,285 3,354 ------ ------ ------ ------ Net earnings per share $ 0.58 $ 0.57 $ 0.51 $ 0.50 ====== ====== ====== ====== ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION A. RESULTS OF OPERATIONS -- FIRST QUARTER OF 1998 COMPARED WITH FIRST QUARTER OF 1997 General Electric Company's earnings per share increased 14% to $.57, up from last year's $.50, and earnings increased 13% to $1.891 billion. Both earnings per share and earnings were records for the quarter. Earnings per share grew faster than earnings, reflecting the impact of shares repurchased under a five-year, $17 billion share repurchase program initiated in December 1994. Revenues for the first quarter of 1998, including acquisitions, rose to a record $22.6 billion, 12% higher than last year's quarter, driven primarily by increased global activities and higher sales of spare parts and services by GE's equipment businesses. Seven of GE's twelve businesses reported higher revenues for the first quarter, with four, led by GE Capital Services, Aircraft Engines and Transportation Systems, achieving double-digit increases. GE's sales of goods and services were $11.4 billion for the first three months of 1998, an increase of 8% from 1997. Volume increased by 11%, reflecting broad growth across most businesses. Overall, selling prices were down slightly, with most businesses experiencing selling price decreases. There also was a minor negative effect on selling prices arising from the effects of currency exchange rate changes on the translation of sales denominated in other than U.S. dollars. GE's first-quarter operating margin increased to 15.1% of sales, up from last year's 14.3%, and was a record for the quarter. The first-quarter increase demonstrates the increasing benefits from GE's product services and Six Sigma quality initiatives. Ten of GE's twelve businesses reported higher operating profit for the first quarter, with eight, led by GE Capital Services, Aircraft Engines and Medical Systems, achieving double-digit increases. GE Capital Services' first-quarter earnings rose to $881 million, 17% higher than last year's $754 million. The record results reflected the globalization and diversity of GE Capital's 28 businesses and were led by strong double-digit increases in its specialty insurance, equipment management and mid-market financing activities. Cash generated from GE's operating activities was $1.5 billion in the first quarter, up 15% from 1997 due to improvements in earnings and working capital management. As part of the $17 billion share repurchase program, GE purchased $873 million of its stock during the first quarter to reach $10.8 billion -- 255 million shares -- purchased since December 1994. SEGMENT ANALYSIS The comments that follow compare revenues and operating profit by industry segment for the first quarters of 1998 and 1997. o AIRCRAFT ENGINES reported sharply higher revenues and operating profit compared with the first quarter of 1997. The revenue and operating profit increases both resulted from strong volume growth in product services, including the contribution from the acquisition of Greenwich Air Services/UNC, and in commercial engines. o APPLIANCES revenues were much lower than the previous year's first quarter, largely as a result of the first-quarter deconsolidation of a European distribution affiliate. Operating profit was slightly higher reflecting effects of productivity which more than offset lower selling prices. o BROADCASTING revenues were considerably higher compared with last year's first quarter, primarily as a result of NBC's broadcast of the January 1998 Superbowl. Operating profit was also much higher as Superbowl coverage and improved prime time pricing more than offset higher license fees for certain prime-time programs that were renewed. o GE CAPITAL SERVICES net earnings increased by 17% to $881 million, reflecting strong double-digit increases in specialty insurance, equipment management and mid-market financing activities. The growth in earnings from specialty insurance activities primarily reflected higher investment income, the result of continued growth in the investment portfolios and higher gains on investment securities, as well as improved earnings in the mortgage insurance business, the result of improved market conditions. Earnings of the lending, leasing and equipment management businesses reflected increases from a higher average level of invested assets, partially offset by decreased earnings from consumer services activities attributable to increased losses and lower volumes for U.S. private-label credit cards and increased automobile residual losses. Financing spreads decreased slightly, reflecting both lower yields and higher borrowing rates. o INDUSTRIAL PRODUCTS AND SYSTEMS reported a good increase in operating profit on somewhat higher revenues. The revenue increase resulted from volume increases across all businesses in the segment, particularly at Transportation, partially offset by lower selling prices. The improvement in operating profit was attributable to productivity throughout the segment, particularly at Electrical Distribution and Control and Industrial Control Systems. o MATERIALS revenues were slightly higher than a year ago, as volume increases were partially offset by lower selling prices and adverse currency exchange rates. Operating profit was considerably higher than last year, primarily as a result of productivity and higher volume. o POWER GENERATION operating profit increased somewhat on revenues that were somewhat lower compared with last year's first quarter. The decline in revenues was primarily attributable to completion in 1997 of certain large contracts at Nuovo Pignone and lower volume in gas turbines. The increase in operating profit was primarily the result of productivity and strong growth in product services which more than offset the effects of lower selling prices. o TECHNICAL PRODUCTS & SERVICES revenues were about the same as the first quarter of 1997, as volume increases were largely offset by lower selling prices. Operating profit was sharply higher, primarily as a result of strong productivity across the segment and the absence of a current year counterpart to a 1997 provision for patent litigation at Medical Systems. o ALL OTHER revenues and operating profit, principally related to the licensing of GE technology to others, were considerably lower. B. FINANCIAL CONDITION With respect to the Condensed Statement of Financial Position, consolidated assets were $309.8 billion at March 31, 1998, compared with $304.0 billion at December 31, 1997. GE assets were $69.0 billion at March 31, 1998, an increase of $1.6 billion from December 31, 1997. The increase was primarily attributable to increases in other assets, reflecting the acquisition of Stewart and Stevenson's gas turbine unit which was not consolidated in the first quarter, as well as numerous small changes. The increase in other assets was partially offset by a decrease in receivables resulting from improved asset management. GECS assets increased by $4.8 billion from the end of 1997. Investment securities increased $1.3 billion, principally as a result of core growth in the insurance businesses and increases in fair value. GECS other assets increased $2.5 billion, primarily reflecting higher investments in and advances to non-consolidated affiliates, increases in assets acquired for resale, primarily residential mortgages, and increased "separate accounts," which are investments controlled by policy holders. Property, plant and equipment, which consists primarily of equipment leased to others on operating leases, increased $0.5 billion principally as a result of acquisitions in the trailer leasing business and new aircraft volume. GE Capital Corporation's financing receivables, which, net of allowance for losses, aggregated $103.4 billion at the end of the first quarter, decreased $0.4 billion from the year-end 1997 level of $103.8 billion. The decrease resulted principally from the combination of normal seasonal declines in credit card receivables partially offset by acquisitions and new volume. Management believes that GE Capital's allowance for losses of $2.8 billion (2.63% of the receivables balance at March 31, 1998 -- the same as year end 1997) is appropriate given the strength and diversity of the portfolio and current economic circumstances. Consolidated liabilities of $271.2 billion at March 31, 1998, were $5.3 billion higher than the year-end 1997 balance of $265.9 billion. GE liabilities increased by $1.3 billion; GECS' liabilities increased by $3.9 billion. GE borrowings were $5.6 billion ($4.8 billion short-term and $0.8 billion long-term) at March 31, 1998, an increase of $1.3 billion from December 31, 1997. GE's ratio of debt to total capital at the end of March 1998 was 13.7% compared with 11.1% at the end of last year and 12.3% at March 31, 1997. Other changes in GE's liabilities comprised numerous, relatively small items. GECS liabilities increased by $3.9 billion, principally reflecting increased financing needs resulting from the asset growth described previously. Short-term borrowings increased $4.7 billion from year-end 1997, while long-term borrowings decreased by $2.9 billion. Insurance liabilities increased $1.4 billion from year-end 1997 reflecting primarily additions to reserves related to core growth and increases in separate accounts. With respect to cash flows, consolidated cash and equivalents were $5.4 billion at March 31, 1998, a decrease of about $0.4 billion during the quarter. Cash and equivalents were $3.6 billion at March 31, 1997, a decrease of about $0.6 billion during last year's first quarter. GE cash and equivalents decreased $0.4 billion from year-end 1997 to $0.7 billion at March 31, 1998. During the first quarter of 1998, operating cash flows increased to $1.5 billion, an increase of 15% over the first quarter of 1997. Cash used for investing activities ($1.2 billion) principally represented acquisitions and investments in new plant and equipment for a wide variety of capital expenditure projects to reduce costs and improve efficiencies. Cash used for financing activities ($0.7 billion) included $1.0 billion for dividends paid to share owners, representing a 15% increase in the per-share dividend rate compared with first quarter of last year, and $0.9 billion for repurchases of the Company's common stock under the share repurchase program. The dividends and share repurchase were partially offset by $1.3 billion provided from higher borrowings. GE cash and equivalents decreased $0.3 billion to $0.7 billion at March 31, 1997, compared with $1.0 billion at year end 1996. During the first quarter of 1997, operating cash flows increased to $1.3 billion, compared with $1.2 billion in the first quarter of 1996. Cash used for investing activities ($0.3 billion) principally represented acquisitions and investments in new plant and equipment for a wide variety of capital expenditure projects to reduce costs and improve efficiencies. Cash used for financing activities ($1.3 billion) included $0.9 billion for dividends paid to share owners, representing a 13% increase in the per-share dividend rate compared with first quarter of last year, and $0.8 billion for repurchases of the Company's common stock under the share repurchase program. The dividends and share repurchase were partially offset by $0.2 billion provided from higher borrowings. GECS cash and equivalents decreased $0.2 billion during the first quarter of 1998, when $2.7 billion of cash was provided from operating activities. The principal use of GECS cash during the period was for investing activities ($3.2 billion), a majority of which was attributable to additions to equipment that is provided to third parties on operating leases ($1.6 billion), payments for principal businesses purchased ($0.7 billion) and increases in "all other investing activities" ($0.7 billion), principally related to investment securities. GECS cash and equivalents decreased $0.3 billion during the first quarter of 1997, when $1.6 billion of cash was provided from operating activities. The principal use of GECS cash during the period was for investing activities ($1.2 billion), which was more than accounted for by additions to equipment that is provided to third parties on operating leases ($1.3 billion) and increases in "all other investing activities" ($1.3 billion), principally related to investment securities, partially offset by lower financing receivables ($1.4 billion). PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The directors, other than Messrs. Cash, Murphy and Nunn, were defendants in a civil suit purportedly brought on behalf of the Company as a share owner derivative and class action (the Cohen action) in New York State Supreme Court, New York County, on September 18, 1996. The suit was based upon the Company's solicitation, in the 1996 proxy statement, of share owner approval of the 1996 Non-Employee Director Stock Option Plan. Under the Plan, which the share owners approved, 6,000 stock options will be granted annually to each of the Company's non-employee directors through 2003. Each annual grant entitles the director, for a period of 10 years from the date of the grant, to purchase 6,000 shares of GE stock from the Company at the market price of GE stock on the date of grant. The suit claimed that the options would have an estimated value to the directors on the annual date of grant which should have been disclosed. The suit also claimed that the directors breached their fiduciary duties because the 1996 proxy statement did not state that the options would have such an alleged, estimated value to the directors when granted. The suit sought compensatory damages and invalidation of the Plan and all options granted under the Plan. The Company believes that the options have no value to the directors on the date of grant, that the options will have no value to the directors unless the GE stock price increases above the grant price, and that the 1996 proxy statement contained full and adequate disclosure because, among other things, any reasonable share owner would understand that the value of the options to the non-employee directors would only occur when and if the stock price rises above the grant price. On May 14, 1997, the court granted the Company's motion to dismiss the suit for failure to state a cause of action, and on January 27, 1998, a four-judge panel of the New York Supreme Court, Appellate Division, First Department, unanimously affirmed the dismissal of the suit. On April 16, 1998, the same four-judge panel denied plaintiff's motion for reargument of, or leave to appeal from, its January 27, 1998 order, and on May 7, 1998, plaintiff filed a motion with the New York Court of Appeals for leave to appeal the January 27, 1998 order. ENVIRONMENTAL As previously reported, in April 1997, the United States Environmental Protection Agency informed the Company that it was considering issuing a complaint against the Company seeking $241,000 in penalties and alleging violations of the Emergency Planning and Community Right-to-Know Act for failure to report chemical use and releases from the Company's Waterford, New York facility. The Complaint was issued in April 1997 seeking $226,000 in penalties. The matter was settled in February, 1998 for a $92,000 penalty and $113,000 worth of donations to local emergency response organizations. ITEM 2. CHANGES IN SECURITIES On February 27, 1998, GE issued to former shareholders of First Factors Corporation ("FFC"), or their agent, 1,899,858 shares of GE common stock held in GE's treasury. The issuance was in connection with the acquisition on that date of all of the outstanding stock of FFC, a private corporation, by FFC Acquisition Corporation, a wholly owned subsidiary of GE. The transaction was a private transaction exempt from registration under the Securities Act of 1933 (the "Act") pursuant to Section 4(2) of the Act. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits Exhibit 11. Computation of Per Share Earnings* Exhibit 12. Computation of Ratio of Earnings to Fixed Charges. Exhibit 27. Financial Data Schedule * Data required by Statement of Financial Accounting Standards No. 128, Earnings per Share, is provided in note 6 to the condensed consolidated financial statements in this report. b. Reports on Form 8-K during the quarter ended March 31, 1998. No reports on Form 8-K were filed during the quarter ended March 31, 1998.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. General Electric Company (Registrant) May 12, 1998 Philip D. Ameen - ------------ ---------------------------------------- Date Vice President and Comptroller Duly Authorized Officer and Principal Accounting Officer