ML20249B501
| ML20249B501 | |
| Person / Time | |
|---|---|
| Site: | 07001113 |
| Issue date: | 06/18/1998 |
| From: | Murray S GENERAL ELECTRIC CO. |
| To: | Astwood H NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM), NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| Shared Package | |
| ML20249B502 | List: |
| References | |
| NUDOCS 9806230230 | |
| Download: ML20249B501 (30) | |
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GENuclearEnergy Gener llEiectrw Company a
PO Bat 7by Waltmngton, NCIMU2 910 675 5000 June 18,1998 Document Control Desk U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 l
l Attention:
Ms. H. M. Astwood Licensing Branch, NMSS U.S. Nuclear Regulatory Commission Mail Stop T 8-D-14 Washington, DC 20555-001
Subject:
Request for Non-proprietary Information J
Dear Ms.' Astwood:
I GE's Nuclear Energy Production (NEP) facility in Wilmington, N.C., hereby transmits the two non-proprietary documents requested by you during your visit of June 4-5,1998.
~ Please contact me on (910) 675-5050, if you have any questions or would like to discuss this matter further.
Sincerely, i
GE NUCLEAR ENERGY l
1.
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I Scott P. Murr
/
jl Manager Facility Licensing
. /zb enclosures 0
l' cc:
SPM-98-016 9906230230 990618 PDR ADOCK 07001113 C
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.20549 FORM 10-K (Mark One)
Ei( Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31,1997 Commission file number 1-35 or O 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 otherjurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
3135 Easton Turnpike Fairfield,CT 06431 0001 203/373 2211 (Address of principal executive ofUces)
(Zip Code)
(Telephone No.)
Szcurities Rs ~ red Pursuant to Section 12(b) of the Act Title of cach class Name of each exchange on which registered Common stock, par value $0.16 per share NewYork Stock Exchange Boston Stock Exchange There were 3,260,410,586 shares of common stock with a par value of $0.16 outstanding at March 1, 1998. These shares, which constitute all of the outstanding common equity of the registrant, had an aggre-gate market value on March 2,1998, of $251.6 billion. AfIlliates 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) c,f the Securities Exchange Act of1934 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 1 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 Ill of this Form 10-K or any amendment to this Form 10-K. A D:cuments incorporated by Reference The definitive proxy statement relating to the registrant's Annual Meeting of Share Owners, to be held April 22,1998, is incorporated by reference in Part III to the extent described therein.
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Parti l
item 1. Business l
General Unless otherwise indicated by the context, the terms *GE," "GECS" and "GE Capital Senices" are used on the basis of consolidation described in note 1 to the consolidated financial statements on page 47 of the 1997 Annual Report to Share Owners of General Electric Company. The financial sect'on of such Annual Report to Share Owners (pages 25 through 66 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 1997 Annual Report to Share Owners included in Part IV of this 10-K Report. Also, unless
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otherwise indicated by the context, " General Electric" means the parent company, General Electric
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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.
i 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 elecnicity. 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 and other lighting products; major appliances for the home; industrial automation products and components; motors; elecui-cal distribudon and control equipment; locomotives; power generauon and delivery products; nuclear reac-tors, nuclear power support senices and fuel assemblies; commercial and military aircraftjet engines; mate-rials, including plastics, silicones and superabrasive industrial diamonds; and a wide variety of high-technol-ogy products, including products used in medical diagnostic applications.
The Company also offers a wide variety of senices, including product senices; electrical product supply houses; electrical apparatus installation, engineering, repair and rebuilding senices; and computer-related information senices. The National Broadcasting Company, Inc. (NBC), a wholly-owned afIlliate,is engaged principally in furnishing network television services, in operating television stations, and in providing cable programming and distribution senices in the United States, Europe and Asia. Through another wholly-owned affiliate, General Electric Capital Senices, Inc. (GECS), and its two principal subsidiaries, the Company offers a broad array of financial senices including consumer financing, commercial and industrial financing, real estate financing, asset management and leasing, mortgage senices, consumer sasings and insurance senices, specialty insurance and reinsurance. Other senices offered by GECS include satellite communications furnished by its affiliate, GE Americom. Inc. The Company also licenses patents and pro-vides technical senices related to products it has developed, but such activities are not material.
Aggressive and able competition is encountered worldwide in virtually all of the Company's business activities. In many instances, the competitive climate is characterized by changing technology that requires continuing research and development commitments, and by capital-intensive needs to meet customer l
requirements. With respect to manufacturing operations, management believes that, in general, GE has a
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leadenhip position (i.e., number one or number two) in most major markets sened. The NBC Telesision l
Network is one of four major U.S. commercial broadcast television networks. It also competes with two rela-tively new commercial broadcast networks, syndicated broadcast television programming and cable and (2)
satellite television programming actisities. The businesses in which GE Capital Senices engages are subject to competition from various types of financial institutions, including commercial banks, thrifts, investment banks, broker-dealers, 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, minority or otherjoint venture interests in a number of non-U.S. companies engaged primarily in manufacturing and distributing products and providing nonfinancial senices similar to those sold within the United States.
GECS financial senices operations outside the United States have expanded considerably over the past several years.
Industry Segments The Company's operations are highly decentralized. The basic organizadon of the Company's opera-tions consim of " 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 partici-pates. Thi, gregation is on a worldwide basis, which means that the operations of multi industry non-U.S.
affiliates are clas3ed by ai propriate industry segment.
Financialinformanon oc msolidated industry segments is presented on page 35 of the 1997 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, five of the 12 key businesses (Aircraft Engines, Appliancea, Power Syuems, Plastics and NBC) represent indi-vidual segments (namely, Aircraft Engines, Appliances Power Generation, Materials and Broadcasting, respectively). Except for "All Other,' the remaining businesses are aggregated by the two industry segments in which they participate (Industrial Products and Systems, and Technical Products and Senices). The All Other segment consists primarily of GECS earnings, discussed above, and revenues derived from licensing use of GE technology to others. For GECS, revenues and operating profit are presented separately by the two industry segments in which it conducts its business (Financing and Specialty Insurance). There is appropri-ate 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 indusuy segments are report-ed on pages 34 38 of the 1997 Annual Report to Share Owners. Further details can be found in note 28 (pages 62 and 63 of that Report) to the consolidated financial statements. These data and comments are for General Electric Company's operations, except as otherwise indicated, and should be referred to in conjunc-tion with the summary description of each of the industry segments which follows.
Aircraft Engines Aircraft Engines (8.6%,8.0% and 8.7% of consolidated revenues in 1997,1996 and 1995, respectively) produces, sells and senicesjet engines, turboprop and turboshaft engines, and related replacement parts for use in military and commercial aircraft. GE's military engines are used in a wide variety of aircraft that includes fighters, bombers, tankers, helicopters and suneillance aircraft. The CFM56, produced by CFMI, a companyjointly owned by GE and Snecma of France, and GE's CF6 engines power aircraft in all categories oflarge commercial aircraft: short/ medium, intermediate and long-range. Applications for the CFM56 engine include: Boeing's 737-300/-400/-500 series, the next generation 737-f 00X/-700/-800/-900 series, and the 737 businessjet; Airbus Industrie's A319, A320, A321 and A340 series; and military aircraft such as the KC-135R, E/KE-3 and E-6. The CF6 family of engines powers intermediate and long-range aircraft such (3)
as Boeing's 747 and 767 series, Airbus Industric's A300, A310 and A330 series, and McDonnell Douglas' DC-10 and MD-11 series. The GE90 engine is used to power Boeing's 777 series twin-engine aircraft. The business also producesjet engines for executive aircraft and regional commuter aircraft, and aircraft engine derivatives used for marine propulsion, mechanical drives and industrial power generation sources.
Maintenance, overhaul and component repair senices are prcnided for many models of engines, including engines manufactured by competitors. The business further expanded its product senices operations through the acquisition of Greenwich Air Senices/UNC in 1997 and Celma, an engine overhaul operation in Brazil,in 1996.
The worldwide competition in aircraftjet engines is intense. Both U.S. and export markets are impor-tant. 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. Potential sales for any engine are limited by, among other things,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 applicable airframe applicadons. Sales of product senices (replacement parts and senices) are an important part of the business. Aircraft engine orders tend to follow military and airline procurement cycles, although cycles for military and commercial engine procurement are different. Procurement of militaryjet engines are affected by changes in global political and economic factors.
In line with industry practice, sales of commercialjet 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 pro-grams, GE had issued loans and guarantees (principally guarantees) amounting to $1.6 billion at year-end 1997, and had entered into commitments totaling $1.8 billion to provide financial assistance on future air-craft engine sales. Estimated fair values of the aircraft securing these recehables and associated guarantees exceeded the related account balances and guaranteed amounts at December 31,1997.
For current information about Aircraft Engines orders and backlog, see page 34 of the 1997 Annual Report to Share Owners.
Appliances Appliances (7.4%,8.1% and 8.5% of consolidated revenues in 1997,1996 and 1995, respectively) manu-factures and/or markets a single class of product - major appliances - that includes refrigerators, electric and gas ranges, microwave ovens, freezers, dishwashers, clothes washers and dryers, water-softening and fil-tering products, and room air conditioning equipment. These are sold under GE, Hotpoint, RCA, Monogram, Profile and Profile Performance brands as well as under private brands for retailers and others.
GE microwave ovens, room air conditioners, water softening and filtering products, and freezers are sourced from 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 replacement ofinstalled units. Such sales are through a variety of retail outlets. The other principal channel consists of residential building contractors who install appliances in r.ew dwellings. GE has an exten-sive U.S. product senices network that provides repair senices, expanded senice plans, warranty administra-tion and risk management senices.
Appliances continues to increase its operating presence in the global business arena and participates in numerous manufacturing and distributionjoint ventures around the world. In 1996, Appliances acquired a 73% interest in DAKO S.A., Brazil's leading gas range manufacturer.
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Demand for appliances is 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 number of principal manufacturers and suppliers. An important factor is cost; consider-able competitive emphasis is placed on minimizing manufacturing and distribution costs and on reducing cycle time from order to product delivery. Other significant factors include brand recognition, quality, fea-tures ofrered, innovation, customer responsiveness and appliance senice capability. A number of processes, l
such as Quick Response, New Product Introduction and Quick hfarket Intelligence, have been implemented to improve GE's competitiveness in these areas. For example, the Six Sigma quality initiative will enable the business to improve the quality of products, reduce waste and provide better product senices. In 1997, the business added GE SmartWater filtration and water softening systems to its product line, launched a new line of dishwashers, introduced the Profile Performance brand in the high-end market segment, and corr-pleted ajoint venture with National Tech Team to further broaden its product senices offerings.
Broadcasting Broadcasting (5.7%,6.6% and 5.6% of consolidated revenues in 1997,1996 and 1995, respectively) con-sists primarily of the National Broadcasting Company (NBC). NBC's principal businesses are the furnishing within the United States of network television senices to affiliated telesision stations, the production oflive and recorded television programs, the operation, under licenses from the Federal Communications Commission (FCC), of telesision broadcasting stations, the operation of four cable / satellite networks around the world, and investment and programming activities in multimedia and cable television. The NBC Television Network is one of four major U.S. commercial broadcast television networks and senes more than 200 affiliated stations within the United States. At December 31,1997, NBC owned and operated 12 VHF and UHF televisic,n stations located in Birmingham, Ala.; Chicago, Ill.; Columbus, Ohio Hartford, Conn.;
Los Angeles, Calif.; hilami, Fla.; New York, N.Y.; Philadelphia, Pa.; Providence, R.I.; Raleigh-Durham, N.C.;
San Diego, Calif.; 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, NBC Super Channel, and CNBC Asia, as well as equity investments in Arts and Entertainment, Court TV, American hiovie Classics, Bravo, Prime Network and regional Sports Channels across the United States. In 1997, the business entered into a strategic alliance with DowJones that will merge the European and Asian business news senices of Dow Jones with those of CNBC and use DowJones editorial resources in the United States. The business also entered into long-term arrangements with the National Basketball Association (NBA) and the United States Golf Association (USGA) that give NBC exclusive national over-the-air broadcast rights to NBA games through the 2002 season and to the USGA's major golf championships through the year 2003.1998 marked the end of a 33 year affiliation with the National Football League. In 1996, NBC and hiicrosoft Corporation entered into ajoint venture that provides information to users through two separate but related sources:
hfSNBC Cable, a 24 hour2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> news and information cable channel; and hfSNBC Interactive, a comprehensive interactive on-line news and information senice. NBC contributed the assets of America's Talking and NBC Desktop to thejoint ventures. In 1995, NBC launched CNBC Asia, the first 24-hour business news channel to be broadcast live from three continents, and secured United States television rights to the 2000,2002,2004, 2006 and 2008 Olympics.
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Industrial Products and Systems Industrial Products and Systems (12.1%,13.1% and 14.6% of consolidated revenues in 1997,1996 and 1995, respectively) encompasses the following businesses: Lighting, Electrical Distribution and Control, Transportation Systems, Industrial Control Systems, and GE Supply. No "similar" class of products or senices within the segment approached 10% of any year's consolidated revenues during the three years ended December 31,1997. Customen for many of these products and senices include electrical distributors, origi-nal equipment manufacturers and industrial end users.
Lighting includes a wide variety of lamps - incandescent, fluorescent, high intensity discharge, halogen and specialty-as well as outdoor lighting fixtures, wiring devices and quartz products. Markets and cus-tomers are global. In 1997, the business acquired certain assets of Flame Electrical Ltd., a lighting products distributor in South Africa, and entered into an agreement with MagneTek, Inc. that provides GE exclusive sales responsibility for electronic ballasts in North America. In 1996, the business acquired the remaining interest in GE Apar Lighting Private Ltd. in India, increased its ownership interest in GEJiabao Lighting Co.,
Inc., ajoint venture in China, and acquired PT Sinar Baru Electric in Indonesia. Previously in 1995, the Lighting business had acquired from its partner the remaining interest in P.T. GE Angkasa Lighting.
Customers for lighting products are extremely diverse, ranging from household consumers to commercial and industrial end users and original equipment manufacturers.
Electrical Distribution and Control includes power delivery and control products such as circuit break-en, transformers, electricity meters, relays, capacitors and arresters sold for installation in commercial, industrial and residential facilities. In 1995, to bolster European sales and global competitiveness, Electrical Distribution and Control (ED&C) acquired the low voltage business of AEG, a European manufacturer. Also in 1995, GE acquired the remaining interest in the GE Power Controlsjoint venture in Europe and Multilin, a leading manufacturer of electronics in Canada.
Transportation Systems includes locomotives, transit propnision and control equipment, motorized wheels for off-highway vehicles such as those used in mining operations, motors for drilling devices and parts and product senices for the foregoing. Locomotives are sold worldwide, principally to railroads, while customers for other products include state and urban transit authorities and industrial users. An increasingly important product line is the alternating current (AC) locomotive, which was first introduced in 1994. More than 1,400 of the 4,400 horsepower AC units are now in senice on three railroads. A new 6,000 horsepower AC unit has been developed and will enter full-scale production in 1998. In 1995, the business formed a joint venture with Harris Corporation, GE-Harris Railway Electronics, L.L.C., that expanded its senice offer-ings to include communications and logistics systems for locomotive, train and fleet control. Further infor-mation about Transportation Systems orders and backlog is provided on page 34 of the 1997 Annual Report to Share Owners.
Industrial Control Systems includes electric motors and related products, and engineering senices for the appliance, commercial, industrial, heating, air conditioning, automotive and utility markets. Electrical and electronic industrial automation products, including drive systems, are customized controls and drives for metal and paper processing, mining, utilities and marine applications. Engineering senices include management and technical expertise for power plants and other large projects; maintenance, inspection, repair and rebuilding of electrical apparatus produced by GE and others; and on-site engineering and upgrading of already installed products sold by GE and others. Other product senices include the integra-tion of software with hardware (principally motors, drives and programmable controls) into customized systems solutions for customers in the semiconductor, water treatment, pulp and paper, and petroleum (6)
industries. In 1997, the business expanded its presence in this emerging market segment through several small acquisitions. Motor products are used within GE and also are sold externally. In 1995, GE formed a joint venture with Fuji Electric ofJapan tojointly pursue global sales of standard drives. Industrial automa-tion products cover a broad range of electrical and electronic products with emphasis on manufacturing and advanced engineering automation applications. 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 offen a wide range of high-technology industrial automation systems and equipment, including computer numerical controls and programmable logic controls.
GE Supply operates a U.S. network of electrical supply houses and through its affiliate, GE Supply Mexico, operates three supply houses in Mexico. GE Supply offers products of General Electric and other manufacturers to electrical contractors and to industrial, commercial and utility customers.
Markets for industrial products generally lag overall economic slowdowns as well as subsequent recover-ies. 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 number of global firms as well as from smaller regional competitors and is based principally on brand awareness, price, distribution and product innovation. The nature oflighting products and market diversity make the lighting business somewhat less sensitive to eco-nomic cycles than other businesses in this segment.
Electrical Distribution and Control sells to distributors, electrical contractors, utilities, large industrial users and original equipment manufacturers. Demand is affected principally by levels of (and cycles in) resi-dential and non-residential construction as well as domestic industrial plant and equipment expenditures.
Competitors include other large manufacturers, with international competition increasing.
In Transportation Systems, demand is historically cyclical. There is strong worldwide competition from major firms engaged in the sale of transportation equipment.
Industrial Control Systems sells 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. Demand for these products is price competitive, putting emphasis on economies of scale and manufacturing technology. Other market factors include energy-driven techno-logical changes and the cyclical nature of consumer demand. Competition in industrial automation is intense and comes from a number of U.S. and international sources.
Materials Materials (7.4%,8.2% and 9.5% of consolidated revenues in 1997,1996 and 1995, respectively) includes high-performance plastics used by compounders, molders and major original equipment manufacturers for use in a variety of applications, including fabrication of automotive parts, computer enclosures, major appli-ance parts and construction materials. Products also include ABS resins, silicones, superabrasive industrial diamonds and laminates. Market opportunities for many of these products are created by substituting resins for other materials, which prosides customers with productivity through improved material performance at lower cost. These materials are sold to a diverse worldwide customer base, mainly manufacturers. The busi-ness has a signi6 cant operating presence around the world and participates in numerous manufacturing and (7)
distributionjoint ventures. In 1996, the business completed the first stage ofits new polycarbonate manufac-turing facility in Spain. The plant. which is scheduled to be completed in early 1999, will add crpacity of 130,000 tons per year.
The materials business emironment is characterized by technological innovation and heavy capital investment. Being competitive requires emphasis on efficient manufacturing process implementation and sig-nificant resources devoted to market and application development. Competitors include large, technology-driven supplien of the same, as well as other functionally equivalent, materials. The business is cyclical and is subject to variations in price and in the availability of raw materials, such as cumene, benzene and methanol.
Adequate capacity to satisfy growing demand and anticipation of new product or material performance requirements are key factors affecting competition.
Power Generation Power Generation (8.3%,9.2% and 9.3% of consolidated revenues in 1997,1996 and 1995, respectively) senes utility, industrial and governmental customers worldwide with elecuicity generating products, senices and energy management systems. Worldwide competition continues to be intense. Gas turbines are used principally in power plants for generation of electricity and for industrial cogeneration and mechanical drive applications. In 1997, the business announced the acquisition of the gas turbine division of Stewart and Stevenson Senices, Inc., which further expands its product and product senices offerings to the industrial power generation market. Centrifugal compressors are sold for application in gas reinjection, pipeline ser-vices and such process applications as refineries and ammonia plants. Steam turbine-generators are sold to the electric utility industry and to private industrial customers for cogeneration applications. Nuclear reac-tors, fuel and support senices for both new and installed boiling water reactors are also a part of this seg-ment. There have been no nuclear power plant orders in the United States since the mid-1970s. However, the business is currently participating in the constmction of nuclear power plants inJapan and Taiwan. The business continues to invest in advanced technology development and to focus its resources on refueling and senicing its installed boiling-water reactors.
Worldwide competition for power generation products and senices continues to be intense. Demand for most power generation products and senices is worldwide and as a result is sensitive to the economic and political emironment of each country in which the business participates. In the United States, demand for power generation equipment is sensitive to the financial condition of the electric utility industry as well as the elecuic power consenation efforts by power users. Internationally, the influence of petroleum and relat-ed prices has a large impact on demand. For information about orders and backlog, see page 36 of the 1997 Annual Report to Share Owners.
Technical Products and Senices Technical Products and Senices (5.4%,5.9% and 6.3% of consolidated revenues in 1997,1996 and 1995, respectively) consists of technology operations providing products, systems and senices to a variety of customers. Principal businesses included in this segment are Medical Systems and Information Senices.
Medical Systems include magnetic resonance (hiR) scanners, computed tomography (CT) scanners, x-ray, nuclear imaging, ultrasound, and other diagnostic and therapy equipment, and product senices sold to hospitals and medical facilities worldwide. GE Medical Systems has a significant operating presence in Europe and Asia, including the operations ofits affiliates, GE Medical Systems S.A. (France), GE Yokogawa Medical Systems (Japan) and WIPRO GE Medical Systems (India). Acquisitions andjoint ventures continue to expand GE Medical Systems global activities. In 1997, the business acquired Lockheed Martin Medical (8)
Systems and a 20% stake in ALI, a leader in ultrasouH image archiving. In 1995, the business expanded its service offerings by entering into an agreement w ' Jolumbia/HCA, the largest multi-hospital system in the United States, to manage all of its diagnostic imaging equipment senice. In 1996, the range of senices pro-vided under the agreement was expanded to include biomedical equipment senice.
l Business-to-business electronic commerce solutions are provided to over 40,000 trading partners around the world by GE Information Senices (GEIS). Its global networked-based solutions include Electronic Data Interchange and messaging senices,internet,intranet and systems integration senices, and a line of applications that help customers to lower their costs, reduce cgle times, and improve quality in purchasing, logistics, and supplier and distribution channel management.
Sening a range of customers with special needs (which are rapidly changing in 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 senices operations. Technologiatl competence and innontion, excellence in design, high product performance, quality of senices and competitive pricing are among the key factors affecting compe-tition for these products and senices. 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 1997 Annual Report to Shara Owners for infonnation about orders and backlog of GE Medical Systems.
All Other GE All Other GE consist, mostly of earnings of and investment in GECS, a wholly-owned consolidated affili-ate, which is accounted for on a one-line basis in accordance with the equity method of accounting. Other ongoing operations (0.3% of consolidated revenues in 1997, and 0.4% of consolidated revenues in 1996 and 1995) mainly involve licensing the use of GE technology and patents to others. A separate discussion of seg-ments within GECS appears below.
GECS Segments GECS consists of the ownership of two principal affiliates that, together with their affiliates and other investments, constitute General Electric Company's principal financial senices activities. GECS owns all of the common stock of General Electric Capital Corporation (GE Capital or GECC) and GE Global Insurance Holding Corporation (GE Global Insurance or GIH), the principal affiliate of which is Employers Reinsurance Corporation (ERC), GE Capitalis an equity mvestor in Montgomery Ward Holding Corp.
(MWHC), a retail organization, and certain other senice and financial senices organizations. As discussed on page 38 of the 1997 Annual Report to Share Owners, MWHC filed a bankruptcy petition for reorganiza-tion in 1997.
For industry segment purposes, Financing (34.3%,31.0% and 27.8% of consolidated revenues in 1997, 1996 and 1995, respectively) includes the financing and consumer savings and insurance operations of GE Capital; Specialty Insurance (9.7%,10.3% and 10.1% of consolidated revenues in 1997,1996 and 1995, respectively) consists of the activities of GIH as well as the activities of other insurance entities discussed on page 63 of the 1997 Annual Report to Share Owners; and All Other represents GECS corporate activities not identifiable with specific industry segments.
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Additionalinformation follows.
Financing activities of GE Capital are summarized below. Verylittle of the financing provided by GE Capital involves products that are manufactured by GE.
- Consumer Services-private-label and bank credit card loans, personal loans, time sales and revohing credit and inventory financing for retail merchants, auto leasing and inventory financing, mortgage senic-ing, and consumer savings and insurance senices. Insurance senices, previously included within the Specialty Insurance segment, has been combined with the consumer savings and insurance operations in this segment. Prior-year information has been reclassified to reflect this change.
- Speciali:ed Financing-loans and financing leases for major capital assets, induding industrial facilities and equipment, and energy-related facilities; commercial and residential real estate loans and investments; and loans to and investments in management buyouts, including those with high leverage, and corporate recapitalizations.
- Equipment Management-leases, loans, sales and asset management senices for portfolios of commer-cial and transportation equipment, including aircraft, trailers, auto fleets, modular space units, railroad rolling stock, data processing equipment, containers used on ocean-going vessels, and satellites.
- Afid. market Financing-loans and financing and operating leases for middle-market customers, including manufacturers, distributors and end users, for a variety of equipment that includes data processing equipment, medical and diagnostic equipment, and equipment used in construction, manufacturing, office applications and telecommunications activities.
GE Capital continues to experience broad growth from both internal sources and through acquisitions.
Following is a discussion of certain larger financing acquisitions over the past three years. In 1997, the Consumer Senices operation acquired Woodchester, an automobile and equipment lessor based in Ireland; Colonial Penn, a direct marketer of personal lines of automobile insurance; and Bank Aufina, a Swiss bank that provides consumer lending products and auto financing leases. In 1996, GE Capital's Equipment Management operations acquired Ameridata Technologies Inc., an international provider of distributed computer products and senices as well as business and technology consulting senices; and CompuNet Computer AG, a provider of distributed computing and communications technologies based in Germany.
Also in 1996, GE Capital's Consumer Senices operations acquired the Life Insurance Company of Virginia, First Colony Corporation and Union Fidelity Life Insurance Company, further expanding and enhancing its offerings oflife and health insurance and annuity products. In 1995, Consumer Senices operations acquired SOVAC SA and Credit de l'Est (France), the Australian Retail Financial Network (Australia), the Pallas Group (United Kingdom), and the purchase of the remainmg interest in United Merchants Finance Ltd.
(Hong Kong).
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 revohing credit financing. Common carrier senices of GE Americom are subject to regulation by the Federal Communications Commission. Certain GECS consoli-dated affiliates are restricted from remitting funds to GECS in the form of dhidends or loans by a variety of regulations, the purpose of which is to protect affected insurance policyholders, depositors or investors.
GECS' international operations are also subject to regulation in their respectivejurisdictions. To date, com-pliance with such regulations has not had a material adverse effect on GE Capital's financial position or results of operations.
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On March 28,1991, GE entered into an agreement to make payments to GE Capital, constituting addi-tions 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 cond lated 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 undt the third anniversary of the date of such notice. GE Capital's ratios of earnings to fixed charges for the years 1997,1996 and 1995, respectively, were 1.48,1.53 and 1.51, substantially above the level at which payments would be required. Under a sepa-rate agreemen*, GE has committed to make a capital contribution to GE Capitalin the event certain GE O pital preferred stock is redeemed and such redemption were to cause the GE Capital debt-to-equity ratio, excluding from equity all net unrealized gains and losses on investment securities, to exceed 8 to 1.
Specialty Insurance includes both GIH which, together with its afilliates, writes substantially all lines of reinsurance, as well as other insurance activities of GE Capital. ERC, GIH's principal affiliate, together with its subsidiaries, reinsures property and casualty risks written by more than 1,000 insuren around the world, and also writes certain specialty lines ofinsurance on a direct basis, principally excess workers' compensation for self-insurers, errors and omissions coverage for insurance and real estate agents and brokers, excess indemnity for self-insurers of medical benefits, and libel and allied torts. Other property and casualty affili-ates write excess and surplus lines insurance, and provide reinsurance brokerage semces. GlH also is engaged in the reinsurance oflife insurance and investment products, including term, whole and universal life, annuities, group long-term health products and the provision of financial reinsurance to life insurers. In 1995, GIH, through its ERC affiliate, acquired a majority of two German reinsunnce businesses, Frankona Reinsurance Group and Aachen Reinsurance Group, both located in Germany. These businesses together with other ERC affiliates located in Denmark and the United Kingdom write property and casualty and life reinsurance, principally in Europe and elsewhere throughout the world. GlH and certain afliliates are licensed in all states of the United States, the District of Columbia, certain provinces of Canada and in other jurisdictions - such business is written on both a direct basis and through brokers. The other insurance activities of GECS consist of GE Capital affiliates that provide various forms of insurance. Financial Guaranty Insurance Company (FGIC) provides financial guaranty insurance, principally on municipal bonds and structured finance issues. In 1997, FGIC acquired Coregis Group Inc., a property and casualty insurer. GE Capital's mortgage insurance operations are engaged in providing primary and, on a limited basis, pooled private mortgage insurance. Other atTiliates provide payment protection insurance for international borrow-en. Businesses in the Specialty Insurance segment are generally subject to regulation by various insurance regulatorv agencies.
Geographie Segments, Exports from the U.S. and Total International Operations F~ ancial data for geographic segments (based on the location of the Company operation supplying m
goods or services and including exports from the U.S. to unafIlliated customers) are reported in note 29 to consolidated financial statements on page 64 of the 1997 Annual Report to Share Ownen.
Additional financial data about GE's exports from the U.S. and total international operations are on
~
page 39 of the 1997 Annual Report to Share Owners.
Orders Backlog See pages 34,36 and 44 of the 1997 Annual Repon to Share Owners for information about GE's back-log of unfilled orders.
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R esearch and Development Total expenditures for research and development were $1,891 million in 1997. Total expenditures had been $1,886 million in 1996 and $1,892 million in 1995. Of these amounts, $1,480 million in 1997 was GE-funded ($1,421 million in 1996 and $1,299 million in 1995); and $411 million in 1997 was funded by cus-tomers ($465 million in 1996 and $593 million in 1995), principally the U.S. go 'ernment. Aircraft Engines accounts for the largest share of GE's research and development e) penditures from both Company and cus-taer funds. Other significant expenditures of Company and customer research and development funds were made by hiedical Systems, Power Systems, and Pla.< tics.
Approximately 8,000 penon-years of scientist and engineering effort were devoted to research and deve'ooment activitica in 1997, with about 84% of the time involved primarily in GE-funded activities.
Environmental hiatters See pages 44 and 58 of GE's 1997 Annual Report to Share Owners for a discussion of emironmemal matten.
Employee Relations At year-end 1997, General Electric Company and consolidated affiliates employed 276,000 persons, of whom approximately 165,000 were in the United States. For further information about employees, see page 45 of the 1997 Annual Report to Share Owners.
Approximately 40,000 GE manufacturing, engineering and service employees in the Diited States are represented for collective bargaining purposes by a total of approximnely 170 different local collective bar-g ining groups. A majority of such employees are represented by union locals that are afIlliated with, vid barg:in in conjunction with, the International Union of Electronic, Electrical, Salaried, hiachine and Furniture Workers (IUE-AFL-CIO). During 1997, General Electric Company negotiated three-year coniracts with unions representing a substantial majority of those United States employees wl.o are represented by unions. hiost of these contracts will terminate inJune 2000. NBC is party to approximately 100 labor agree-ments covering about 2,000 staff employees (and a large number of freelance employees) in the United States. The sc agreements are with various labor unions, expire at various dates and are generally for a term ranging from thice to five yean.
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 senices, as well as the wide geographic disper-sion ofits production facilities, the Company uses numerous sources for the wide variety of raw materials needed for its operations. The Company has not been advenely affected byinability to obtain raw materials.
The Company owns, or holds licenses to use, rwmerous patents. New patents are continuously 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.
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Agencies of the U.S. Government constitute GE's largest single customer. An analysis of sales of goods and services as a percentage of revenues follows:
% of Consolidated Revenues
% of GE Revenues 1997 1996 1995 1997 1996 1995 Total sales to U.S. Gaarnment Agenci s 2%
3% 3%
3%
4%
4%
2 2
2 3
3 3
Aircraft Engines defense-related sales item 2. Properties Manufacturing operations are carried out at approximately 130 manufacturing plants located in 30 states in the United States and Puerto Rico and at some 139 manufacturing plants located in 25 other countries.
Item 3. Legal Proceedings General 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 former 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 cornpany controlled by the stockholders of Martin Marietta Corporation.
The complaint sought to clarify and enforce the plaintiffs
- claimed rights tc 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 Martir. Marietta Corporation and one ofits former plan administrators as defendants. The complaint alleged primarily that the Company's planned transfer of certain assets of the Trust to a Martin Marietra pension trust,in connection with the tran<rer 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 Cwie. The complaint sought equitable and declaratory relief, including an injunction against transfer of the Plan assets except under cir cumstances and projections,if any, approved by the cova, 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 alleg investment losses rerulting from the Company's treatment of Plan assets in connection with the transaction or rJternatively the transfer of additiond assets from the Trust to a new Martin Marietta pension trust, and an order requiring Manin 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 oflaw. On April 2,1993, the transfer of the Aerospace business occurred, and onJune 7,1993, the court issued an order denying plaintiffs' request for injunctive relief. On September 26,1996, the District Court granted defendant,' motion to dismiss those claims which were b on allegations that the transfer of plan assets was unlawful, and ordered discovery on the remaining claims.
As previously reported, the directors (other than Messrs. Calloway, Cash, Gonzalez, Murphy, Nunn, Opie, Penske and Warner) and certain officers are defendants in a civil suit purportedly brought on beh of the Company as a shareholder derivative action by Leslie McNeil, Harold Sachs, Arun Shingala and Paul and Harriet Luts (the McNeil action) in NewYork Mate Supreme Court on November 19,1991. The suit alleges the Company was negligent and engaged in fraud in connection with the design and construction containment systems for nuclear power plants and contends that, as a result, GE has incurred significant (13)
financial liabilities and is potentially exposed to additional liabilities from claims brought by the Company's customers. The suit alleges breach of fiduciaq duty by the defendants and seeks unspecified compensation damages and other relief. On hiarch 31,1992, the defendants filed modons 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 oflimited discovery. Defendants moved for reconsideration of that order, and on April 3, 1993, the court granted defendants' motion for reconsideration and directed that discoveg be stayed pend-ing the filing of an amended complaint. Plaintiffs filed an amended complaint on March 18,1494, alleging breach of fiduciary duty, waste and indemnification claims. The defendants' time for responding to the amended consplaint has been extended until 30 days following the completion of discovery. The defendants believe the plaintiffs' claims are without merit.
As previously reported, following the Company's announcement on April 17,1994, of a $210 million charge to net earnings based upon its discovey of false trading profits at its mdirect subsidiary, Kidder, Peabody & Co., Incorporated (" Kidder"), the United States Securities and Exchange Commission ("SEC"),
the United States Attorney for the Southern District of NewYork, and the NewYork Stock Exchange initiat-ed investigations relating to the false trading profits. OnJanuary 9,1996, the SEC initiated administrative enforcement proceedings against the former head of Kidder's government securities trading desk, Joseph Jett, alleging that he engaged in securities fraud and other violations and against two of his former supeni-sors for failure to supervise. Also, two ci il suits purpNtedly brought on behalf of the Company as sharehold-er derivative actions were filed in NewYork State Supreme Coun in NewYork County. Both suits claimed that the Company's directors breached their fiduciary duties to the Company by failing to adequately super-vise and control the Kidder employee responsible for the irregular trading. One suit, claiming damages of over $350 million, was filed on May 10,1994, by the Teachers' Retirement System of Louisiana against the Company, its directors (other than Messrs. Cash, Dammerman, Murphy, Nunn, Opie and Penske), Kidder, its parent, Kidder, Peabody Group Inc., and certain of Kidder's former officers and directors. The other suit was filed onJune 3,1994, by Wilham Schrank and others against the Company's directors claiming unspeci-fled damages and other relief. Both suits were consolidated in an amended complaint filed on March 6, 1995. On May 19,1995, the Company and the director defendants moved to dismiss the amended consoli-dated complaint for failure to make a pre-litigation demand, among other reasons. On April 16,1996, the court dismissed the amended consolidated complaint for failure to make a pre-litigation demand. On November 18,1997, a four-judge panel of the New York Supreme Court, Appellate Dhision, First Department, unanimously affirmed the dismissal of the suits, and, onJanuary 27,1998, denied plaintiffs motion for leave to appeal to the NewYork Court of Appeals. In addition, various shareholders of the Company have filed two purported class action suits claiming that the Company and Kidder, and certain of Kidder's former officers and employees, allegedly violated federal securities laws by issuing statements con-cerning the Compuiy's financial condition that included the false trading profits at Kidder, and seeking compensatory damages for shareholders who purchased the Company's stock beginning as early asJanuaq 1993. The defendants filed motions to dismiss these purported class action suits. On October 4,1995, the court dismissed the complaint against the Company, but denied the motion to dismiss the complaint against Kidder. On November 3,1995, the plaintiffs in the case against the Company appealed the trial court's dis-missal of their complaint to the Second Circuit Court of Appeals, which affirmed the lower court decision.
The directors, other than Messrs. Cash, Murphy and Nunn, were defendan :.s in a ci il 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, NewYork County, on September 18,1996. The suit was based upon the Company's solicitation,in the 1996 proxf 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 (14)
grantert annually to each of the Company's non-employee directors through 2003. Each annual grant enti-ties 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 cd 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.iis-closed. The suit also claimed that the directors breached their fiduciary duties because the 1996 proxy state-ment did not state that the options would have such an alleged, estimated value to the directors when grant-ed. The suit sought compensatory damages and imalidation 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 diretors 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 reason-able 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 hiay 14,1997, the court granted the Company's motion to dismiss the suit for failure to state a cause of action, and onJanuary 27,1998, a four-judge panel of the New York Supreme Court, Appellate Division, First Department, unanimously aflirmed the dismissal of the suit. On Febniary 27,1998, plaintiff filed a motion with that court for reargument and for leave to appeal to the NewYork Court of Appeals.
Emironmental As previously reported, in February 1997, the New York State Department of Emironmental Conservation provided a draft complaint to the Company seeking $254,000 in penalties and alleging siola-tions of the state's hazardous waste, clean water and spill acts at the Company's Waterford, NewYork facility.
InJanuary 1998, the matter was settled for $234,000.
As previously reported,in April 1997, the United States Emironmental Protection Agency informed the Company that it was consideria.g issuing a complaint against the Company seeking $241,000 in penalties and alleging viohtions of the Emergency Planning and Community Rigl't-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 has been tentatively settled for a $92,000 penalty and
$113,000 worth of donations to local emergency response organizations.
As previously reported,in August of 1996 the Florida Department of Emironmental Protection informed Greenwich Air Senices that it was seeking penalties of $278,555 for siolations of the state's haz-ardous waste law at its hiiami facility (the facility was subsequently acquired as a portion of GE's purchase of Greenwich which was consummated in September 1997). The matter has been tentatively settled for $36,270 plus a supplemental wastewater tr-atment project.
For further information regarding emironmental matters, see pages 44 and 58 of GE's 1997 Amal Report to Share Owners.
It is the view of management that none of the above described proceedings wiU have a material effect on the Company's consolidated earnings, liquidity or competitive position.
Item 4. Submission of Matters to a Vote of Security H-Min Not applicable.
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l Partil hem 5. Maeket for the Registrant's Commen Equity and Related Stockholder Matters L,.
With respect to " Stock Exchange Information", in the United States, GE common stock is listed on the NewYork Stock Exchange (its principal market) and on the Boston Stock Exchange. GE common stock also is listed on The Stock Exchange, London. Trading, as reported on the New York Stock Exchange, Inc.,
Composite Transactions Tape, and dividend information follows:
Ceaunen stock merket price Dividends (in doliers)
High Low doctored 1997 Fourth quarter
$76 6
$59
$.30 Third quarter 74 %
61 W '
.26 Second quarter 68 %
48
.26 First quarter (a) 54 h 47$&
.26 1996 Fourth quarter (a)
$53
$45%
$.26 Third quarter (a) 46 38ik
.23 Second quarter (a) 44 Ma 37 Mo
.23 First quarter (a) 40 %
34 %
.23 (a) Per share amounts have been adjusted to reficct the 2-for.1 stock split effective on April 28.1997.
As of December 31,1997, there were about 527,000 share owner accounts of record.
hem 6. Selected FinancialData Reported as data for revenues; earnings from continuing operations; earnings from continuing opera-tions per share; earnings (loss) from discontinued operations; effect of accounting change; net earnings; net earnings per share (basic and diluted); diviunds declared; dividends declared per share; long-term borrow-ings; and total assets of continuing operations appearing on page 45 of the 1997 Annual Report to Share Owners.
Item 7. Management's Discussion and Analysis of Financial Condition and Roselts of Operations Reported on pages 32-34 and 36-44 (and graphs en pages 25,32, SS,36,37,39,40,41,42 and 44) of the Annual Report to Share Owners for the fiscal year ended December 31,1997.
Item 7A. Quanti:stive and Qualitative Disclosures About Market Risk Reported on page 42 of the Annual Report to Share Owners for the fiscal year ended December 31, 1997.
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Item 8. Financial Statements and Supplementary Data l
See index under item 14.'
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable.
PartlH ltem 10. Directors and Executive Officers of Registrant Executive Officers of the Registrant (As of March 27,1998)
Dete essweed Executive Officer 1
,,e.e Pos o.
~e
- e.
q john F. Welch,Jr.......... Chairman of the Board and Chief Executive Officer..,..
- 62..,. April 1981
. 50.... April 1994 Philip D. Ameen.......... Vice President and Comptroller..
James R. Bunt........... Vice President and Treasurer.
......... 56..... January 1993 David L Cathoun.......... Senior Vice President. GE ughting.
........ 40..
. June 1995 WilliamJ. Conaty........ Senior Vice President. Human Resources.....,
..... 52.... October 1993.
.... 45.
.. June 1996
~ David M. Cote...
. Senior Vice President. GE Appliances...
Dennis D. Dammerman...... Senior Vice President. Finance. and Chief Financial Officer. 52.
. March 1984 Lewis S. Edelheit....
... Senior Vice President, Research and Development...... 55.... November 1992 Paolo Fresco............Vice Chairman of the Boatti and Executive Officer..... 64.
... October 1987 Benjamin W. Heineman.jr... Senior Vice President, General Counsel and Secretary.... 54..... September 1987 Jeffrey R. Immelt...
...... Senior Vice President. GE Medical Systems........
. 42..... January 1997 Williamj. Lansing........ Vice President. Busines: Development.
.......... 39.
.. October 1996 Goran S. Malm.,......... Senior Vice President. GE Asia-Pacific............... 51.... October 1997 W. James McNerney,Jr...... Senior Vice President. GE Aircraft Engines.....
48...
. January 1992 Eugene F. Murphy........ Vice Chairman of the Board and Executive Officer...
.. 62... October 1986 Robert L Nardelli.....
... Senior Vice President. GE Power Systems...
....... 49.
.. February 1992 Robert W. Nelson....... Vice President. Tmancial Planning and Analysis...
. 57...... September 1991 John D. Opie............Vice Chairman of the Board and Executive Officer..... 60.... August 1986 Gary M. Reiner............ Senior Vice President. Chief Information Officer........
- 43.... January 1991
.... Vice President. GE Transportation.......
- 41.... September 1997 John G. Rice....
Gary L Rogers.
.. Senior Vice President. GE Plastics.
. 55..... December 1989 James W. Rogers......... Senior Vice President. GE Industrial Control Systems....
- 47.... May 1991 Uoyd G. Trotter......... Vice President. GE Electrical Distribution and Control.... 52..... November 1992 l
l l
(l'T)
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 meedng of share owners and thereafter are elected for one-year terms or until their successors have been elected.
J l
All Executive Officers have been executives of GE for the last five years except WdliamJ. Lansing.
Mr. Lansingjoined GE from Prodigy, Inc., where he was Chief Operating OfIlcer. Prior tojoining Prodigy in January of 19'36, he had been with McKinsey & Company for nine years, most recently as a partner in the Stamford, Conn., office where his experience encompassed a variety ofindustries with a particular concen-tration in communications and technology. He also has practiced securities law at Davis Polk & Wardwell.
The remaining information called for by this item is inco porated 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 22,1998.
l Item 11. Executive Compensation l
Incorporated by reference to " Board of Directors and Committees," " Summary Corapensation Table,"
l
" Stock Options and Stock Appreciation Rights" and " Retirement Benefits" in the definitive proxy statement l
relating to the registrant's Annual Meeting of Share Owners to be held April 22,1998.
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 22,1998.
1 Item 13. Certain Relationships and Related Transactions
' Incorporated by reference to "Certain Transactions" in the registrant's definitive proxy statement relat-ing to its Annual Meeting of Share Owners to be held April 22,1998.
I
)
l (18) l w_________-_____
PartIV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)1. Financial statements applicable to General Dectric Company and consolidated afIlliates are contained on the page(s) indicated in the GE Annual Report to Share Owners for the fiscal year ended December 31,1997.
Annual 10-K Report Report Page(s)
Page(s)
Statement of earnings for the years ended December 31,1997,1996 and 1995........................ 26 F-2 Statement of financial position at December 31,1997 and 1996............................ 28 F-4 Statement of cash flows for the years ended December 31,1997,1996 and 1995....................... 30 F-6
..... 46 F-22 Independent Auditors' Report...........
Other financialinformation:
Notes to consolidated financial statements...
... 47-66 F-23 to F-42 Industry segment information........................ 34-36 F-10 to F-12 62-63 F 38 to F-39
. 64 F-40 Geographic argment information.....
Operations by quarter (unaudited)....................... 66 F-42 (a)2. F'mancial Statement Schedule for General Dectric Company and consolidated affiliates.
Schedule Page II Valuation and Qualifying Accounts................... F-43 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 consolidated financial statements or notes thereto.
(a)3. Exhibit Index (3) Restated Certificate ofIncorporation, as amended, and By-laws, as amended, of General Electric Company. (Incorporated by reference to Exhibit of the same number to General Dectric Form 8-K (Commission file number 1-35) filed with the Commission April 28,1997.)
(4) Agreement to furnish to the Securities and Exchange Commission upon request a copy ofinstruments 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 Dectric Incentive Compensation Plan, as amended effectiveJuly 1,1991.
(Incorporated by reference to Exhibit of the same number to General Dectric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1991.)
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l (b) General Electric Supplementary Pension Plan, as amended effectiveJuly 1,1991.
(Incorporated by reference to Exhibit 10(e) to General Dectric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1991.)
(c) Amendment to General Dectric Supplementary Pension Plan dated May 22,1992.
(Incorporated by reference to Exhibit 10(d) to General Electric Annual Report on l
Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,
)
1992.)
I (d) Amendment to General Electric Supplementary Pension Plan, dated September 10,1993. (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 l
December 31,1993.)
(e) Amendment to General Electric Supplementary Pension Plan, datedJuly 1,1994.
l (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, 1994.)
(f) General Electric Insurance Plan for Directors. (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.)
I (g) General Bectric Financial Planning Program, as amended through September 1993. (Incorporated by reference to Exhibit 10(h) to General Dectric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1993.)
l I
(h) General Bectric Supplemental Life Insurance Program, as amended February 8 1991. (Incorporated by reference to Exhibit 10(i) to General Electric Anrual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1990.)
(i) General Dectric Directors' Retirement and Optional Life Insurance Plan.
(incorporated by reference to Exhibit 10(1) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1986.)
(j) General Dectric 1987 Executive Deferred Salary Plan. (Incorporated by reference l
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.)
(k) General Dectric 1991 Executive Deferred Salary Plan. (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.)
(1) General Electric 1994 Executive Deferred Salary Plan. (Incorporated by reference I
to Exhibit 10(o) to General Dectric Annual Repor* on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1993.)
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~_
(m) General Dectric Directors' Charitable Gift Plan, as amended through May 1993.
(Incorporated by reference to Exhibit 10(p) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1993.)
(n) Restated Employment Agreement, datedJanuary 2,1992, and Restated U.K.
Employment Agreement, datedJanuary 3,1992,in each case between the regis-trant and P. Fresco, an Executive Officer and Director of the registrant.
(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.)
(o) General Electric Leadership Life Insurance Program, effectiveJanuary 1,1994.
(Incorporated by reference to Exhibit 10(r) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31, 1993.)
(p) General Electric 1996 Stock Option Plan for Non-Employee Directors.
(Incorporated by reference to Exhibit A to the General Electric Proxy Statement for its Annual Meeting of Share Owners held on April 24,1996.)
(q) General Electric 1995 Executive Deferred Salary Plan. (Incorporated by reference to Exhibit 10(t) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1995.)
(r) General Electric 1996 Executive Deferred Salary Plan. (Incorporated by reference i o Exhibit 10(v) to General Electric Annual Report on Fonn 10-K (Commission file number 1-35) for'the fiscal year ended December 31,1996.)
(s) Employment and Post-Retirement Consulting Agreement Between General Electric Company andJohn F. Welch,Jr. (Incorporated by reference to Exhibit 10(w) to General Electric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1996.)
(t) General Electric 1997 Executive Deferred Salary Plan.*
(u) General Electric 1990 Long Term Incentive Plan as restated and amended effective August 1,1997.*
(v) Genen! Electric Deferred Compensation Plan for Directors, as amended December 19,1997.*
(11) Statement re Computation of Per Share Earnings.**
(12) Computation of Ratio of Earnings to Fixed Charges.*
(21) Subsidiaries of Registrant.*
(23) Consent ofindependent auditors incorporated by reference in each Prospectus consti-tuting part of the Registration Statements on Form S-3 (Registration Nos. 33-29024,33-3908,33-44593,33-39596,33-39596-01,33-47085,33-50639,33-61029,33-61029-01),
on Form S-4 (Registration No. 333-01947) and on Form S-8 (Registration Nos. 2-84145, 33-35922,33-49053,333-01953,333-23767 and 333-42695).*
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(24) Power of Attorney.*
(27)(a) Financial Data Schedule,12/31/97.*
(27)(b) Restated Financial Data Schedule,9/30/97.*
(27)(c) Restated Financial Data Schedule,6/30/97.*
(27)(d) Restated Financial Data Sche.lule,3/31/97.*
(27)(e) Restated Financial Data Schedule,12/31/96.*
(27)(f) Restated Financial Data Schedule,9/30/96.*
(27)(g) Restated Financial Data Schedule,6/30/96.*
(27)(h) Restated Financial Data Schedule,3/31/96.*
(27)(i) Restated Financial Data Schedule, 12/31/95.*
(99)(a) Income Maintenance Agreement, dated March 28,1991, between the registrant and General Electric Capital Corporation. (Incorporated by reference to Exhibit 28(a) to General Dectric Annual Report on Form 10-K (Commission file number 1-35) for the fiscal year ended December 31,1990.)
(99)(b) Undertaking for Inclusion in Registration Sta'ements on Form S-8 of General Dectric Company. (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.)
(99)(c) Letter, datedJune 29,1995, from Dennis D. Dammerman of General Electric Company to Gary C. Wendt of General Dectric Capital Corporation pursuant to which General Dectric Company agrees to proside additional equity to General Electric Capital Corporation in conjunction with certain redemptions by General Electric Capital Corporation of shares ofits Variable Cumulative Preferred Stock. (Incorporated by reference to Exhibit 99(g) to General Electric Capital Corporation's Registration Statement on Form S-3, File No. 33-61257.)
Filed electronically herewith.
Information required to be presented in Exhibit 11 is now presided in note 9 to the 1997 Annual Report to Share Owners in accordance with the provisions of FASB Statement of Financial Accounting Standards (SFAS) No.128, Earnings per Share.
(b) Reports on Form 8-K during the quarter ended December 31,1997.
Report on Form 8-K (Items 5 and 7) filed on November 6,1997, regarding announcement of a definitive agreernent under which 1.ockheed Martin Corporation exchanged the stock of a newly formed subsidiary containing operating businesses, an equity interest and cash to the extent necessary to equalize the value of the exchange for all of the Lockheed Martin Series A preferred stock held by GE and its subsidiaries.
(22)
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 31,1997, 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 27* day of March 1998.
General Electric Company (Registrant)
By /s/ Dennis D. Dammerman Dennis D. Dammerman Senior Vice President, Finance, and Chief Financial Officer (Principal Financial Officer)
(23)
Pmsuant 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 ytle Date l
/s/ Dennis D. Dammerman Dennis D. Dammerman Senior Vice President Finance, and Principal Financial Officer March 27,1998 Chief Financial Officer
/s/ Philip D. Ameen Philip D. Ameen Vice President and Comptroller Principal Accounting Officer h! arch 27,1998 John F. Welch,Jr.*
Chairman of the Board of Directors (Principal Executive Officer)
James I. Cash,Jr.*
Director Silas S. Cathcart*
Director Dennis D. Dammerman*
Director Paolo Fresco
- Director Claudio X. Gonzalez*
Director Gertrude G. hiichelson*
Director Eugene F. hiurphy*
Director Sam Nunn*
Director John D. Opie
- Director Roger S. Penske*
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 /s/ Benjamm W. Heineman, Jr.
Benjkmin W. Heineman,Jr.
Attorney-in-fact hiarch 27,1998 (24)
Financial Statements and Management's Discussion and Analysis filed electronically with the 10-K also appear in the 1997 General Electric Company Annual Report to Share Owmers.
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F-1 through F-42
General Electric Company and Consolidated Affiliates Schedule ll Valuation and Qualifying Accounts (Amounts in millions)
GE allowance for losses deducted from assets Accounts and notes receivable Investments Balance, January 1,1995
$243
$ 64 Provisions charged to operations 57 27 Write-offs (39)
(3)
Balance, December 31,1995
$261 (a)
$ 88 Provisions charged to Operations 99 3
Write-offs (92)
(16)
Balance, December 31,1996
$268 (a)
$ 75 Provisions charged to Operations 68 3
Write-offs (59)
(17)
Balance, December 31,1997
$277 (a)
$ 61 (a) The year-end balance is segregated on the Statement of Financial Position as follows:
1997 1996
_1_995 Current receinbles
$ 238
$ 240
$231 All other assets (long-term receivables, customer financing, etc.)
39 28 30
$ 277 S268
$261 Reference is made to note 7 to Consolidated Financial Statements appearing in the 1997 Annual Report to Share Owners, which contains information with respect to GECS allowance for losses on financing receivables for 1997,1996 and 1995.
4 F-43
Exhibit 12 General Electric Company Ratio of Earnings to Fixed Charges (Dollars in millions)
Year ended December 31 1993 1994 1995 1996 1997 GE except GECS Eamings(a)
$ 5,511
$ 7,828
$ 8,696
$ 9,677
$ 10,132 Less: Equity in undistributed earnings of General Electric Capital Services,Inc. (b)
(957)
(1,181)
(1,324)
(1,836)
(1,597)
Plus: Interest and other financial charges included in expense 525 410 649 595 797 One-third of rental expense (c) 212 171 174 171 179 Adjusted "camings"
$5.291
$ 7.228
$ 8.195
$ 8.607
$ 9.511 Fixed Charges:
Interest and other financial charges S 525
$ 410
$ 649
$ 595
$ 797 Interest capitalized 21 21 13 19 31 One-third of rental expense (c) 212 171 174 171 179 Total fixed charges S 758
$ 602
$ 836
$ 785
$ 1,007 Ratio of earnings to fixed charges 6.98 12.01 9.80 10.96 9.44 General Electric Company and consolidated affiliates Earnings (a)
$ 6,287
$ 8,831
$ 9,941
$11,075
$11,419 Plus: Interest and other financial charges included in expense 4,096 4,994 7,336 7,939 8,445 One-third of rental expense (c) 349 327 349 353 423 Adjusted "eamings"
$10.732
$14.152
$17.626
$19.367
$20.287 Fixed Charges:
Interest and other financial charges S 4,096
$ 4,994 * $ 7,336
$ 7,939
$ 8,445 Interest capitalized 26 30 34 60 83 One-third of rental expense (c) 349 327 349 353 423 Total fixed charges
$ 4.471
$ 5.351 5 7.719
$ 8 352
$ 8.951 Ratio of camings to fixed charges 2.40 2.64 2.28 2.32 2.27 (a) Earnings before income taxes and minority interest. For 1993, earnings are before cumulative effect of a change in accounting principle.
(b) Eamings atter income taxes, net of dividends.
(c) Considered to be representative ofinterest factor in rental expense.
Exhibit 21 4
Subsidiaries of Recistrant General Electric's principal affiliates as of December 3 I,1997, are listed below. All other affiliates, if considered in the aggregate as a single affiliate, would not constitute a significant affiliate.
Affili9tes of Renistrant included in Registrant's Financial Statements.
Percentage of voting securities State or directly or indirectly country of owned by incorporation or recistrant m organization Caribe General Electric Products, Inc.
100 Delaware GE Aircraft Engines Maintenance Services, Ltd. Wales 100 United Kingdom GE Appliances Parts LLC 100 Delaware GE Engine Services Distribution, LLC 100 Delaware GE Fanue Automation North America Inc.
55 Delaware GE Information Services,Inc.
100 Delaware GE Lighting Tungsram RT 100 Hungary GE Plastics Pacific Pte. Ltd.
100 Singapore GE Power Systems Licensing Inc.
100 Delaware GE Superabrasives Ireland 100 Bermuda GE Yokogawa Medical Systems, Ltd.
75 Japan General Electric Canadian Holdings Limited 100 Canada General Electric Capital Services, Inc.
100 Delaware General Electric Capital Corporation 100 New York GE Global Insurance Holding Corporation 100 Missouri General Electric Intemational, Inc.
100 Delaware General Electric Plastics B.V.
100 Netherlands Nrtional Broadcasting Company, Inc.
100 Delaware Nuovo Pignone spa 81 Italy RCA Thomson Licensing Corporation 96 Delaware Notes (1)
With respect to certain companies, shares in names of nominees and qualifying shares in names of directors are included in above percentages.
Exhibit 23 Consent ofIndependent Auditors The Board of Directors General Electric Company We consent to the incorporation by reference in the registration statements Nos. 33-29024, 33-3908,33-44593,33-39596,33-39596-01,33-47085,33-50639,33-61029 and 33-61029-01 on Form S-3; No. 333-01947 on Form S-4; and Nos. 2-84145,33-35922,33-49053,333-01953, 333-23767 and 333-42695 on Form S-8 of General Electric Company of our report dated February 13,1998, relating to the consolidated financial position of General Electric Company and consolidated affiliates as of December 31,1997 and 1996, and the related consolidated statements of eamings and cash flows for each of the years in the three-year period ended December 31,1997, and the related schedule, which report appears in the December 31,1997, annual report on Form 10-K of General Electric Company.
KPMG Peat Marwick LLP Stamford, Connecticut March 27,1998 e
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