ML20205G235
| ML20205G235 | |
| Person / Time | |
|---|---|
| Site: | Vallecitos Nuclear Center, 07000754, 07001113, 05000000, Vallecitos |
| Issue date: | 12/31/1986 |
| From: | Bossidy L, Hood E, Welch J GENERAL ELECTRIC CO. |
| To: | Cunningham R NRC OFFICE OF NUCLEAR MATERIAL SAFETY & SAFEGUARDS (NMSS) |
| References | |
| 28031, NUDOCS 8703310406 | |
| Download: ML20205G235 (63) | |
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7 r. OperatirnalHighlights The singular events of 1986 underscored GE's continuing strategy to be a world leader in technology and services while maintaining a strong base of core manufacturing businesses, RCA merger in the biggest nonmil merger in completed history, GE paid $6.4 billion for ..
^
RCA Corporation. The merger, com- w ' pleted inJune 1986, gives GE a lead- .M ership role in broadcasting and con- ,S 4 V j sumer electronics and strengthens c j!! our position in aerospace technoh>- gies and in communications and services. Strategicalliances GE accelerated the use of joint ven-increased tures and other alliances to open or expand market opputunities. Our Factory Automation busmess fonned p , an alliance with FANUC LTD of Japan; Plastics and PPG Industries, Inc. created Azdel, Inc.; and Medical # systems increased its investment in a 'in. Japanese joint venture - Yokogawa ' 991[p ; { Medical systems. k ik ,
-4 UDFengine A major milestone in aircraft engine W
#ight-tested history was reached in August whea ND, %+'Nh,ZW e:gg[j';Y our new UDF2 engm, e successfully Isen,g ~
passed its first flight tests. The UDF ;m f engine ofTers the potential of up to a
-W, Je ""'Ml :
407 fuel savings over curretit turbo-fan engines. 1
TO OurShare Owners 1 Syalmost anyineasure, f 986 We have also accelerated the
- We absorbed restructuring costs was a strong yearforyour use of alliances and joint ventures; for plant consolidation and em-j Company- record sales, record 12 of them were either started or ployee assistance without taking earnings, several successful acquisi- expanded in 1986 alone. We view any one-time restructuring charges tions and excellent positioning for alliances as a means to expand of a size that could have broken our the future. But to put 1986 in full product lines, to open new mar- string of steady earnings increases.
perspective, one has to go back to kets, to become more competitive 1981 when we first enunciated with existing products in existing The acquisition ofRCA in the strategy that has guided GE markets, and to reduce the invest- 1986 was a signi#cantstepin through the 1980s. ment and time it takes to bring the continuation ofour strategy. In 1981, we said that the world good ideas to our customers. RCA has been a member of the GE was going to get much more com- Our acquisitions- the most family sinceJune, and GE and petitive, characterized by slower visible being Employers Reinsur. RCA managers, working together, growth with more companies after ance Corporation, RCA and have accomplished much: a smaller pie. That analysis became Kidder, Peabody-plus internal
- We have added to GE an impor-the cornerstone of what we set out growth during the past six years tant new business in NBC, an en-to do. It led to the strategy of have helped shift the overall GE terprise with $3 billion in annual being number one or number two mix toward faster-growing services revenues and a leadership position in our large key businesses, which and technology businesses. In in the broadcasting industry.
we have grouped into technology, 1986, 70% of our key business
- In several business areas where services and core manufacturing. net earnings were in technology GE already participated -aero-Within that framework, we and services compared to 50% in space and defense, communications sold or exited businesses and prod- 1981. Significantly, this shift was and services, consumer electronics, uct lines that weren't central to our accomplished while earnings grew and semiconductor-integration strategy, and became much more 30% in core manufacturing over plans have been defined, manage-cost-effective in what we own by these years, ment teams put in place and ac-consolidating facilities, where tions initiated that will obtain the needed, and by investing $11.6 Ourpositioning forthe future greatest advantage from our com-billion in our businesses ta develop has alsoproducedsigni# cant bined strengths.
new products and improve growth for investors. For example: e RCA's record company, carpet productivity.
- Earnings have risen 9% a year business and insurance firm, none At the same time, we reduced compounded since 1981,32 % of which fit GE's long-term strat-our work force by more than faster than the GNP over the egy, and notes from RCA's 1984 100,000, but the strength of our period. sale of CIT were sold for a total of balance sheet allowed us to do so in
- Our stock, through appreciation more than $1.3 billion.
ways that were fair and compas- and yield, has grown 29% a year
- Corporate staffs have been com-sionate to those involved. Lengthy compounded. And we have moved bined and streamlined, making notification periods, equitable sev- from number 10 in market value sure that qualified people in both erance packages, retraining and among all U.S. corporations to organizations were retained.
placement centers were used when- number three. RCA added 14 cents per share ever business realities caused us to to GE's earnings in 1986, even close a plant or exit a business. after allowing for all acquisition costs. And we expect the RCA contribution to increase in 1987. 2
"As we look to the future, we see a growing confidence within GE. Confidence in the prospects of the key businesses and confidence in the men and women who run these businesses." Looking at GE's three groups afkeybusinesses at the end of 1986, we believe we have ac-complished much of what we set out to do in 1981 -developir.g one of the most competitive and winning sets of businesses in the world by the end of the decade. GE's five technology busi-nesses- Aircraft Engine, Aero-space, Plastics, Medical Systems and Factory Automation-all have the ability to reach beyond today's boundaries and to antici- g' pate tomorrow's needs. During the 1981-86 period, earnings in these businesses grew at an aver-age annual rate of 26%. For the future, the combination of GE and RCA in Aerospace creates a formidable competitor in the in-dustry. Our other technology businesses are all using alliances to add significantly to their al-ready strong worldwide posi-tions. Some of these alliances are Aircraf t f agine's long-term alli-ance with SNECMA of France and newer alliances involving Plastics with PPG Industries and others, Medical Systems with Yokogawa ofJapan, and Factory Automation with FANUC ofJapan. The mix of our services busi- crnma nesses has changed markedly since chainnanandchief r 1981, and they have grown from g"'Ig providing 20% of key busmess (center), Vice chair-earnings it the start of the period man andExecutive to 29% in 1986. NBC brings to officerEdwardE. GE its role as a premier provider of Udy# #Exl f, d ' u-TV programming and its current five OfficerLawrence A.Bossidy(right).
' l 1
l cere m R& Din 1986 wm Centerin Schenec-ahnedmainiyatad- tady, N.L helpedde-vencingaircraften- velopanionproved gine, aerospace, approach, nowin plastics, onedicalsys- cNnicaltrials, that tems andfactoryau- uses the GESigna* tornation technolo- MRscannerfordiag-Forexsonple, Dr. nosingdiseases L DuonouNn Nnkedto arterioscle-(below)of theR&D resisandstroke. I I l Corporate Trading Operations and v , g International-also help GE businesses to win in world mar-
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kets. In the international arena, Canadian General Electric, for ex- l
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> ample, has posted strong gains in
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an important national market and
*~ continues to develop unique prod-y a ucts to serve global markets.
l Looking specificaHyat 1986
- V
^ A( ' . :
performance, sorne of our businesses had excellent years, but y
"4 a number of our key markets were characterized by severe global com-
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x petition and sluggish growth. Overall, net earnings were $2.492 billion, an increase of 9% from
$2.277 billion in 1985. Earnings ,
position as the top network. struction Equipment, Transporta- per share were $5.46 for 1986 GE hnancial Services has been tion Systems and Motor- have compared to $5.00 for 1985. Sales strengthened by the addition of maintained commanding or lead- for 1986, which reflect RCA for Kidder, Peabody to an already ing market positions by striving t the last seven months, were strong kneup includmg General become the low-cost, high-quahty $35.21 billion, about 24% more Electric Credit Corporation global competitors. Smce 1981, than 1985's $28.29 billion. (GECC) and Employers Reinsur-earnings of these businesses as a Our strong performance has ance Corporation, which we ac- group have increased at an average been accompanied by continuing quired in 1984. In just six annual rate of 8%, while invest-investment in the future ofour months, Kidder, Peabody added ments of more than $2.6 billion businesses. Research and develop- , 4 cents per share to GE's earnmgs, have been made to help ensure
, ment expenditures in 1986, ex-after accounting for acquisition continued strength into the next cluding RCA, were $2.9 billion, costs, and is an excellent fit with decade.
up 14% from 1985. Expenditures GECC in several areas, such as pro- Among our support businesses, for plant and equipment were viding distribution capability for Consumer Electromcs combines about $2 billion. l GECCs growing nationwide origi- RCA and GE operations to pro- Several key businesses had ex-nation capability. Communica- vide a leadership position in a very cellent years. Aerospace, Aircraft tions and Services combines several visible, but difficult, market. A
~ Engine, Financial Services, Major RCA and GE operations to form a talented busmess team in the Appliance, Medical Systems, NBC business with almost $2 bilhon m, GE/RCA Consumer Electronics and Plastics, for example, all annual revenues. business has the Company's full l achieved double-digit growth in Our six core manufacturing support as it undertakes a con- earnings. On the other hand, ex-businesses-Major Appliance, certed effort to succeed m a volatile tremely diflicult markets in Power Lighting, Power Systems, Lon- worldwide environment. Our other support businesses -
Semiconductor, Ladd Petroleum, 4
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, uc Representi en in- BurkviHe, Ala.itia ww vestmento 5 GE'slatgestsingle Y ~W
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minion, this new investmentin the Lexan*polycarbon- Plasticsbusiness. ate manufactu, ring [ facdot isneanng com etion at GE also participated in an in- inextricably to their ability to trade dustry initiative that produced a freely in world markets, set of six principles of business eth- Protectionist trade legislation ics and conduct for the defense in- will again be debated in 1987. It is dustry. These principles were in- our view that open, free trade is corporated into the final report one of the main engines ofeco-given to the President by the blue- nomic growth, prosperity and
; ribbon commission headed by jobs. While we strongly support Systems, Motor, Construction David Packard, former deputy the government's efforts to im-Equipment and Transportation secretary of defense, which was prove exports through a more com-Systems have caused these busi_ charged with suggesting reforms petitive dollar and other export ini-nesses to consolidate operations and for the nation's defense procure- tiatives, we oppose measures that to redesign products to become ment system. To date, 37 compa- endanger the international trading even more cost-competitive in an_ nies representing about halfofall system and ultimately drive up the ticipation ofa time when demand defense procurement dollars spent cost ofdomestic manufacturing.
rises. In Power Systems, a sharp have pledged to implement these principles. We are optimistic that As welook to the future, we downturn in shipments in what historically had been one of GE's the work of the Packard Commis- see a growing confidence sion will result in a more cost- within GE. Confidence m the most profitable businesses resulted effective, less adversarial system of prospects of the key businesses that in a negative earnings swing of more than $150 million in 1986, meeting the nation's defense needs. will carry us forward and confi-dence m the men and women who but the growth ofother GE busi_ nesses allowed the Company to Ouroutlook forthe economy run these businesses. have a record year. during the nextcouple of Iradership at GE means creat-In 1986, GE continued its com, ye rs is for modest growth in the ing a vision for, and within, each mitment to ensuring ethical be- GNP. business. It means articulating that Our businesses are positioned to vision so clearly that an entire or-havior by all employees in business d well m such an environment. ganization can rally around it and, dealings with the government. New policies and procedures insti. We expect eight of them- Aero- more important still, achieve its space, Aircraft E,ngine, Factory goals. tuted in 1985 -including estab-lishment ofa Compliance Review Aut m ti n, FinancialServices, This kind ofleadership-vision Board and an ombudsman -were Major Appliance, MedicalSys- plus achievement-is not reserved tems, NBC and Plastics - to for only those businesses doing emphasized with Companywide communication and training. We gr w f ster than the GNP over the well. In some cases, the people in next five years. And we anticipate our most beleaguered businesses continue our policy of volunt cry disclosure of problems to appropri. they will account for about 80% of understand the realities of their ate governmental authorities, and ur earnings by 199I - up from markets even better than those in the government continues to coop. 73% in 1986. We expect the re-erate in our efforts to ensure com- m inder of our key busu. esses, those in more difficult markets, to pliance in the complex area ofgov-ernment contracting. gr w at about the GNP rate. The competitiveness of many of our businesses -and indeed much of American industry-is linked 5
f e m-- m At GE'anCanegement executivescre hs!p-Developmentinsti- ingassure the eucel-tutain Ossining, N.Y, lence ofGE'sinaute newfacilities andex- leaders.
, pendedcurricula for i newmanagerslike thosebelowas well as forexperienced In summary, GE is a unique set ofdifferent businesses run by l a unique group ofpeople with different talents-united by the Company's shared values and strengthened by its human, tech-nical and financial resources.
Whether it is Financial Services' ability to adapt to its market en-vironment, or Medical Systems' technology leadership, or Aircraft Engine's and Plastics' use of crea-tive alliances, GE's key businesses
, are all leaders in the markets x~, y in which they participare. We be-lieve your Company has a future unmatched anywhere in the world.
& - \ M And the people of GE are com-While we derive strength mitted t seizing that future.
businesses that, for the present, are growing rapidly. froin the diversityof GE's Iradership is also not restricted businesses, we are also proud that to any one level of the Company. the men and women who lead . It's an engineer in our Aerospace them share a strong set of values: business seizing an opportunity for . They accept that change is a John F. Welch, Jr. l new business, gathering a team constant and that success is meas- Chairman and and pursuing the order-poten- ured by how well we shape Chief Executive Officer rially more than a $1 billion order tomorrow.
- until it is won. It's a production . They recognize that customers' worker who shuts down a Major needs, not internal bureaucracy, Appliance production line upon are the real drivers ofour activities. .
sidy spotting a potential quality prob- . They practice open, candid, in- wr{eA;y lem. It s a Power Systems manager teractive, continuous communica- . who makes the difficult, but neces- Emutive Officer tion up, down and sideways in sary, decision to close a marginal our organizations-and externally / ,r
; operation and who then uses the to all our publics-convinced b6 financial strength of the Company that this is the only way to gain to soften the landings for those trust and commitment. Edward E. Hocd,Jr.
affected. . They understand that moral, Vice Chairman and legal and ethical behavior at all Executive Officer levels is a fundamental prerequisite for working at GE. February 13, 1987 6
StrategicBusin:ss:s GE has a unique set of 14 key businesses businesses that provide strong market leadership in technology, in services and in core manufacturing. Technology 8 Our 6ve technology businesses - Businesses Ainraft Engine, Aerospace, Plastics, . AfedicalSystems, Factory Automation
- form a significant thrust into l the global market for advanced 4 technology.
Services 13 Our three services businesses - Businesses GE FinancialServices, six National . _ . -6 Bmadcasting Company, Communications andServices -give GE a major posi- ,.'s ~ tion in the fastest-growing segment of the economy. h WA . . s Core
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18 our six core manufacturing busi- 7-Manufacturing nesses - Afajor Appliance, Lighting, Businesses PourrSystems, Construction Equipment, .. TransportationSystems, A1otor-aim -
. , j to be the low-cost, high-quality .p
g global competitors.
s Support 23 our five support operations - g y y sq g;j g Operations Cansumer Elertronscs, International, Corporate Trading, ladd Petroleum, _; * , Semiamductor- enhance the ability ofour 14 key businesses to compete successfully in domestic and foreign ? markets. ,
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TechnologyBusinesses Our growth in technology is linked with our ability to spread ideas and innovations around the globe, to reach beyond today's boundaries and to anticipate tomorrow's needs. The worldwide expansion of year of production in 1986, continued ourtechnologybusinesses to win a major share of the U.S. Air continued during the year. Force's requirements for F-16 6ghter e Aircraft Engine set record sales. engines. The F110 engine was also se-e Aerospace combined the strengths lected to power F-16s for the Greek of GE and RCA. air force, its third overseas application. e Plastics added new partners and A signi6 cant sign of the future was plants. the successful flight-testing of GE's e hiedical Systems increased its revolutionary UDFS engine. global efforts. With its thin, highly curved fan e Factory Automation formed an im- blades, the UDF engine is expected to portant international alliance. give airlines up to a 40% fuel savings These 6ve businesses, which have over current commercial turbofan en-grown earnings at an average annual gines. Airframe manufacturers are rate of 26% during the 1981-86 evaluating its use on medium-size air-period, form a signi6 cant thrust into craft expected to k in airline service the global market for advanced in the 1990s. technology. The newcombination of For the second yearin a row, GEAerospace andRCA the AircraftEngine business Aerospace and Defense businesses set a record for commercial engine makes the Company an industry sales. leader in designing, developing and Overall sales reached an all-time integrating electronic systems for de- - high, too, with 2,552 jet engines fense, space and aviation needs. GEleadershipin air- shipped to commercial, military, ma- GE Aerospace, for example, re-craft engme technol- rine and industrial customers. ceived a major contract award from
$ysrein y ,, o al On the commercial side, the big the U.S. Navy to develop CASS - a ofcommercialen. seller was the CFhtS6-3 engine. One consolidated automated support sys-gines, such as the of a family ofengines marketed by tem for avionics testing aboard air-CFAf56-3modelon CFht International (a joint company craft carriers. The initial awtrd, this newLufthansa ofGE and SNEChfA of France), the worth more than $100 million, could * '" " Fr " "
Germa y a CFhtS6-3 has gained worldwide pop- lead to future contracts of more than bythe first flight ularity on the Boemg 737-300 and $1 bilhon. tests of the revolu- 737-400, with 120 of these GE- RCA Aerospace and Defense con-tionary UDF2 engine equipped aircraft delivered in 1986. tinued to build on its success w.;th the below. The CF6-80C2, the Company's Aegis air fleet defense system. Now in most advanced high-bypass turbofan its 19th year, Aegis is a computer-
, engine, captured more than halfof the controlled weapons system designed s engine orders for nrdium- and large- to protect America's fleet. During the size aircraft in 1986. Since its market year, the fourth and fifth Aegis-introduction in 1983, the CF6-80C2 equipped cruisers, the USS Valley has reached $1.2 billion in orders, Forge and USS BunkerIlill, were com-most of which have been for export. missioned. Current Navy plans call
~+. hiilitary engine sales were out- for another 22 cruisers arxl 29 de-standing as well. The Company's stroyers, all equipped with Aegis, to F110 engine, which was in its first full 9
l Technician 3 Gene inzide thi2 thermal VanKirk(top)and vacuum chamberat Clarence Negner the Company's (bottom)checka Astro-Space facility new GSTAR HIcom- in East Windsor, N.J. munications satellite afteritspent30 days
" weathering"the simulatedouter space environment of,~C K ., N "~? 7ti C ! be built for the U.S. fleet by 1998. In rials continued to replace metal in Rw. M- addition, both NATO andJapan have housings for computers and business t .A' - M~,d ~; shown interest in using Aegis-type equipment, in appliances and con-i{d q-f.n- j
.gf systems on new classes ofships.
The Company received other signif-icant defense contracts in 1986 to de-sumer products, and in building and construction applications. The Company also added to its sign a combat control system for sub- product lineup during the year by in-marines, to build communications troducing a family of technopolymer security equipn.ent for the U.S. Army structures manufactured by Azdel, and to construct an over-the-horizon Inc., a 1986 joint venture ofGE and radar system on the West Coast. It PPG Industries. This is a further also opened an advanced airmanship thrust by thermoplastics into the au-center that uses a GE flight simulator tomotive market forlarge exterior to train F-5 pilots, parts currently made from metal. The combined resources of GE and Azdel was just one of many part-
* - RCA make the Company a leader in nerships entered into by the Plastics w__
the design and manufacture ofsatel- business in 1986. It also formed joint lite systems. ventures with Circuit Wise to pro-A total of 60 satellites - for com- duce injection-molded circuit boards, munications, meteorology, science or with Huntsman Chemical to manu-defense purposes -are currently in facture special grades of Neryl* res-nummmmmmmis design, assembly or test by the newly ins, and with Mitsui Petrochemical Designerslike Bi#Loh formed Astro-Space Division. In- Industries to build a bisphenol A (left with co-op Steve cluded are the Upper Atmosphere Re- plant inJapan-further expanding C its role as a global supplier. More than g ts [ search Satellite (UARS)and the Ad-crecreatingnew vanced Communications Technology 40% of Plastics
- sales are outside the w;ys for technopoly- Satellite (AC'I3), an in-orbit experi- United States.
merstructures to re- ment and demonstration of tomor- During the year, the Plastics busi-place metalin vehi- row's communications satellite tech- ness also expanded its Ultem* resin h*",d}he , tas n I gy. In addition, three satellites production facility in Indiana, started up a Geloy* resin plant in New York Lcxan* resin (below) were successfully launched in 1986, ha2become apopu. bringing to 112 the number ofsatel- and neared completion of a $325 mil-i;rreplacement for lites built by GE and RCA over the lica lexan* polycarbonate plant in metalandothertradi- years and placed into orbit. Alabama. tionalmaterials. Another 1986 highlight came in Launching newideas has packaging, where GE Plastics helped helpedmake the Company Stouffer Fuods develop plastic trays a world leader in engineering plastics that can go directly from the freezer
, and other materials. into a microwave or conventional O In the automotive market, for ex- oven.
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ample, GE Plastics and the Compa- The Company also is a leader in ny's R&D Center hase been pioneers silicones and superabrasives. GE Sili- 1 in developing high-performance sub- cones, with its broad line ofsealants,
*' , , stitutes for metal and glass, allowing fluids, elastomers and encapsulants, is GE to outperform the nearest compet- developing new markets in coatings Itor (Wo to one.
GE Plastics made major inroads in other key markets, too, as its mate-10
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i l M ThanzwCTMzxt system from GEMed-icalSystemsplaces advanced CTcapabil-ities within the reach
\ ofsmallerhospitals y -
andclinics. 1 1 1 l l The Company also maintained its leading share of the U.S. market for diagnostic x-ray equipment, made significant advances in ultrasound equipment, boosted its worldwide or- i ders for nuclearimaging systems and j increased its equipment service pros- , pects by acquiring certain assets from l Johnson & Johnson. < The anostsigniRcantevent JA - - ' forthe FactoryAutornation el . 1 business in 1986 was the formation j ; ; ofa joint venture with FANUC of 3' . Japan.
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The 50-50 joint venture is de-signed to improve the worldwide competitiveness of both companies and to help GE expand this young i business into European and Asian j to protect plastics and other sub- in Yokogawa hiedical Systems from markets. strates. hian4 fade
- industrial dia- 51% to 75%, further integrating this Called GE Fanuc Automation Cor-i monds, which GE invented, are Japanese joint venture into GE's poration, the new company has three widely used in cutting granite tiles worldwide business plans. A new operating subsidiaries: one in the and concrete slabs for the construction manufacturing center was opened by United States, one in Europe, the industry. Samsung Afedical Systems, the Com- third in Asia. It ofTers a full range of pany's South Korean joint venture. high-tech factory automation systems Tha worldwide need for Sales in Europe improved substan- and equipment, including numerical betterhealth care has helped tially, especially in the United controls and programmable controllers.
spark the growth of GE hiedical Sys- Kingdom and Italy. In the Drive Systems business, GE l l tems despite continuing cost pressures During the year, GE strengthened improved its standing as the world's l in the health care field. its leadership position in computed leading supplier ofcustomized con-With strong sales increases over the tomography by introducing the trols and drives for metal and paper last five pars, Afedical Systems today CT Af ax5 system. The price and per- processing, for mining, for utilities is among the world leaders in medical formance of this new CT scanner and for marine applications. It also diagnostic imaging equipment - make GE the first supplier to place signed important technology transfer providing hospitals and clinics with advanced CT capabilities within the agreements in India and South Korea. l' such advanced technologies as com- reach of smaller hospitals and clinics. puted tomography, magnetic reso- GE made other gains in magnetic nance, nuclear imaging, ultrasound resonance, its most advanced imaging and x-ray systems. technology. The number of the Com-About one-fifth of hiedical Sys- pany's hf R systems installed world-l tems' sales currently are in the inter- wide increased to more than 200. In national area - an area where GE addition, the Signa
- hiR system has increased its presence in 1986. Ibr ex- clearly established a pre-eminent posi-l ample, the Company raised its stake tion in brain and spine studies and in '
l the development ofcardiovascular
- applications.
12
Sarviccs Businassos Our success in services is tied directly to the creativity and added value we offer whether it be in financing, in broadcasting or in communications and other services. J w W 3 i f ., - f" . 4-y- g . .-
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smw ~ umuunnum The size, scope andsuccess National Broadcasting Company, and A $30 millian com- ofourservices businesses Communications and services - pro-mercialreatestate increased dramatically during 1986. b
# vided 29% of our kef usiness earn-fQ'Q',dbyfdfi- With the addition of RCA, NBC ings in 1986 and give GE a major nznce renovations to and Kidder, Peabody, GE has become: position in services, the largest and Philadelphia's his- e a major participant in investment fastest-growing segment of the toric PackardBuild- banking, complementing our strong economy. ' which houses position in other fmancial services; f,gd yyy aMank e the acknowledged leader in Tv ForGEFinancialServices broadcasting; aral (GEFS),it was another year e a leading force in communications of growth and expansion.
and services for government, business GEFs, which now has assets ex-and industry, urding $50 billion, acquired an 80'X
'Ibgether, our three services busi- stake in Kidder, Pealuly during the nesses - GE Financial services, the 13
Purch::ing andstil- Kiddsr's trading ingtecuritiesis an desksin 1986 han-important financial diedmore than $6.2 steviceperformedby billion in transac-Kidder, Peabodypro- tions-dally. fe:tionalslikeJack TsylorandSuzanne Ferris. Theyandmore th1n 500 otherpro-fas:ionals staffing of North American Car Company, M. V _ making GECC the largest U.S. railcar leasing company.
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- ERC, the third arm of GEFS, con-tinual to grow. Acquired in 1984, s ERC is the second largest property and casualty reinsurer in the United year. One of Wall Street's oldest in- ing in more than 90 such transactions States. In 1986, it recorded a 59%
vestment banking 6rms, Kidder joins involving $23 billion in 1986. increase in net written premiums and General Electric Credit Corporation Kidder adds value to the Com- contributed $105 million to GEFS (GECC)and Employers Reinsurance pany's 6nancial portfolio in other earnings. Corporation (ERC) to form three ways. It gives GECC access to a valu-strong participants in the nation's able new distribution network in ad- The National 8roadcasting
$11 trillion fmancial services market. dicion to helping create and market Company retainedits No.1 GECC, for example, is among the new securities. And, by introducing ranking in network television.
nation's leading finance companies its clients to GECC, it can pave the At the end of 1986, NilC-TV was with $25.2 billion in net earning as- way for creative financings that com- first in prime-time ratings, first in j sets. It is a leader in equipment leas- bine the talents of both groups. late-night programming atxl first in j ing, with a portfolio that includes Kidder, however, wadt the only Saturday morning children's pro-ships, railcars, airplanes, motor vehi- 1986 addition to financial services. grams. It also improved its daytime cles, computers and other machinery. As part ofits ongoing raove hito performance and the performance of it is a leader in 6nancing private-label owning and operating assets, instead its regularly schedulal news programs. credit cards (br clients like tilM, of just financing them, GECC ac- Throughout the year, NilC shows Apple, Xerox and a host oflocal and quired an 817 interest in Polaris Air- were big winners. "The Cosby Show" regional retailers. It is a leader in le- craft Irasing Corporation, which op- remained the highest-rated series for veraged buyuuts, helping to finance crates or leases 108 commercial the second straight year, attracting an the acquisition of more than 75 com- aircraft, giving GECC a total of more average audience of almost 27 million panics over the gust three >rars. than 250 commercial aircraft under househohls every week. At the end of Irveraged buyouts, in fact, repre- management. GECC also acquired the year, NilC had nine of the 20 sent one area where the synergy be- 95% of Genstar Container Corpora- most-viewal series, including "Fam-tween Kidder and GECC can be tion, lessor of more than 75,000 sea- ily Ties," " Cheers," "The Golden realized since Kidder is a leader in going containers; six auto auction Girls" and " Night Court." mergers and acquisitions, participar- companies, expanding its national NilC's dominance in creative auto remarketing network to eight; prime time programs carried over to and 35,000 railcars and other assets 11 L________ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __ ._ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .-
m NBC ' La Y's o en nato a:9,,':"'I;'lS;'l,'to "** Mle' h.r,ia."s':"? Ll""'i,""'::n"; ;A%;;7"";;1"" ing NBC's winning "NBC Nightiy News
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The giant helium- this andotherradar-9 fiNedsurveillance equippedaerostats balloon atrightis op- to a newdruginter-R' eratedandmain- diction centerin Flor-tained forthe United ida. The satellite an-States by GEGovern- tonnas on theleftare V ment Services, which partofAmericom's
- expandedits opera- extensivesatellite tionsin 1986 by fur- trackingandcontrol nishingdata from facilities.
other parts ofits schedule. Since the in Communications and care and international trade areas in start of 1986, the "Today" show Services, the Companyhas 1986. A new contract with four Scan-moved into first place in early morn- combined several GE and RCA units dinavian shipping companies, for ex-ing news and "NBC Nightly News into a nearly $2 billion a year business ample, allows them to electronically with Tom Brokaw" moved ahead of that provides communications equip- manage 14 shipping lines and its competition in the fourth quarter ment and services, information serv- 150,000 containers from anywhere for the lead in early evening news. ices, and installation and maintenance around the globe, at any time of night "The Tonight Show Starring for government, business and industry, or day. Johnny Carson" continued to domi- Nr example, RCA American Com- A fourth unit, GE Consulting nate late-night viewing, while " Late munications(Americom) pioneered Services, helps customers design, de-Night with David Irtterman" commercial satellite services in the velop and implement information achieved its highest ratings ever. United States and currently operates systems. NBC came out a decisive winner in seven communications satellites, Another unit, RCA Global Com-sports, too. Its telecast of the 1986 more than any other carrier. Its Sat- munications (Globcom), is the lead-World Series drew a total audience of com K-1 and K-2 are the two most ing international record (non-voice) 68 million viewers per game, with a powerful domestic communications carrier. Globcom provides telex, tele-baseball broadcasting record of an es- satellites in orbit. A third and more gram, leased communications and timated 80 million tuned in to the powerful one, Satcom K-3, was or- other services over an extensive net-seventh game between the New York dered from RCA by an RCA Commu- work ofinternational satellites and Mets and Boston Red Sox. NLIC nications/HBO joint venture in 1986 undersea cable facilities. Sports also signed an agreement to for launch in 1989. Mcbile Communications, mean-televise the 1988 Summer Olympics The largest satellite carrier ofTV while, provides businesses and local, l from South Korea. and national network radio program- state and federal agencies with mobile Being "best" as well as "first" is ming, Americom also has more than and hand-carried two-way radios, cel-another NBC goal, one that was 60 earth station antennas, stretching f ular telephones, pagers, secure voice clearly achieved in 1986. The net- from Greenland to Hawaii, dedicated encryption systems and two-way radio work's programs and personalities re- to its government services network. communications networks. i ceived 391 industry awards, includ- A second unit, GE Computer Serv- In addition, Government Services ing 34 Emmy Awards-more than ice, offers independent maintenance provides support for a wide range of the other networks combined. and rental / leasing services for many programs run by federal, state and NBC, which covers the entire brands of minicomputers and micro- foreign governments. Er example, it country through its five owned and computers, electronic test instru- operates and maintains tracking operated TV stations and more than ments and data communications ranges and surveillance systems for 200 affiliated TV stations, also in- equipment. It provides single-scurce the U.S. Navy and Air Nrce. It added creased its lead in regular stereo pro- maintenance to a growing list oflarge a new dimension in 1986 when data gramming, delivering 19 prime-time national accounts. from its tethered balloon radar sys-shows in stereo sound in addition, A third unit, GE Information tems were used by the U.S. Customs the network is the industry leader in Services Company (GEISCO), helps Service to locate drug smugglers. satellite distribution and in network businesses process and exchange During the year, this business also ex-newsgathering through the RCA Sat- information via GE's worldwide tele- panded systems engineering activities com Ku-band system and Skycom. processing network, one of the largest inJapan and Turkey. The three NBC Radio networks, commercially available networks ofits I which serve more than 600 affiliated kind in the world. stations, also maintained their com- Emphasizing network-based serv-petitive gusitions during the Far. ices with added value, such as elec- ; tronic data interchange, GEISCO l expanded its activities in the manu- I facturing, retail, banking, health 16 m.
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l Core Manufacturing Bu:inessa3 Our six core manufacturing businesses continued their drive to be the low-cost, high-quality global competitors. i l Among our core businesses, gest refrigerator ever offeral by GE. MajorAppliance hadan It also features a refreshment center, exceptionally strong performance automatic icemaker and dispenser, as it increased its presence- and im- larger doors for more accessible stor-age - with consumers. age and an electronic control center Our other core businesses - which that tells users if the appliance is also face intensifying world competi- working properly. tion - responded strongly to the An industry pacesetter in appliance realities of their markets. Ibr example: innovation, GE also unveiled a new e Lighting intensified product inno- line of built-in appliances called varion, productivity and marketing. Monogram in 1986. The line is aimal e Power Systems consolidated at upscale consumers who want to operations. build dream kitchens. In addition, e Construction Equipment further the Company introduced a fullline of automated its plants. Hotpoint* gas ranges to accompany e Transportation Systems emphasized the new GE gas range line that, in its new technologies for locomotives and very first year, captured a significant other products. share of the market.
- Motor focused on improved cus- Consumer service goes hand-in-tomer relations. hand with product innovation to These six core businesses, as a make GE the market leader. The group, have increased earnings 87 Company's quality of service, as meas-The Afa/orAppliance annually since 1981 as they have con- ured by consumers, reached a record business continued tinued their drive to be the low-cost, high of 92% during the year. The GE Answer Center
- service, available toll-hTt the Space Center 27 ing high-quality global competitors.
free (800-626-2000) all day and every electronic refrigere- By focusing on consumer day, and the self-help Quick-Fix* sys-tor, with the rettesh- needs, the Major Appliance tem remainal popular with con-mentcenterend business has maintained its No.1 po- sumers nationwide.
'~ *N[,*ndh" ing , siti n among m j r appliance manu- Major Appliance is further toits new#neup of facturers m the Umted States - de- strengthenm, g its ability to serve con-gas ranges. spite continual consolidation within sumers by combining its appliance the industry. service and parts operation with l
f g GE's strategy to be a leader in meet-ing consumer demmds for cost and RCA's consumer service units, which provide RCA television and tele-l quality competitiveness is paying off, phone systems and services to the U.S.
~) Investment - some $1 billion over a five-year stretch - is giving the hotr !/ motel industry. The new organ-ization Ibrms one of the largest and i
Comp.my advantages in pnxluctivity, most widespread consumer service
/ N in cost efficiencies, in pnxluct design organizations in the nation.
and in features that consumers want. The Space Center 27 electronic re-frigerator, for example, was intre-duced in 1986 in response to con-sumer preferences for ample and convenient storage space. It's the big-l i i9 l
um When shopping for line nowavailablein lightingproducts, supermarkets, mass consumers can finda merchandisers, hard-a fullline of GEquality werestoresand lightbulbs, including otherretailoutlets
%p the recentiyintro- throughoutthe w ducedReaderLightD country.
The Lighting business power generation systems, with nearly when operational, will bring to 72 Improvedits ability to sneet 12,000 steam and gas turbines operat- the number of GE-type BWRs in intensifying world competition with a ing worldwide. Yet the total market service worldwide. realigned organization structured to for new systems has dwindled to 40% GE concentrated its Construction generate cost and productivity gains of what it was five years ago. And and Engineering Services on the most and to enhance product quality and there are 11 steam and 15 gas turbine promising international and domestic customer service. manufacturers fighting intensely for targets. One is repair services, where Recognizing the need to counteract every order today. GE shown!its leadership by perform-the flow ofimports-which has To improve cost-competitiveness in ing, in Algeria, the first on-site re-nearly doubled in the pasc four years such an ongoing price-slashing envi- bucketing of steam turbine rotors.
- Lighting since 1982 has invested ronment, the Turbine business further Another is the design, construction, more than $570 million in plant and streamlined operations in 1986. operation and maintenance of refuse-equipment. This financial commit- Turbine also continued to work to-energy power plants, where GE has ment to improve productivity is re- with its foreign associates, with more than $310 million in ongoing inforced with programs that involve whom it forms manufacturing or projects throughout the United increasing numbers ofemplo>res on marketing alliances to participate in States.
the factory floor in decision-making offshore markets. It now has 22 major processes. associates in 15 countries. The Construction Equipinent Lighting is also focusing its tech- In addition, Turbine continued to businessisin theiniddle of a nological resources on the devel >p- emphasize plant upgrades and techno- five-year, $300 million investment i ment and introduction ofinnovative, logical innovation as ways to serve plan designed to keep GE a !cading high-value lamps, such as the com- customer needs and maintain a strong supplier of products that distribute, pact, energy-efficient fluorescent and position fbr the expected market up- protect arxlcontrol the flow of halogen products recently added to swing in the 19('Os. electricity. the GE line fbr the commercial and Also mmlklared organizationally The consolidation and automation industrial market, and the Reader are the Power Iklivery, Nuclear En- ofits panelboard pnxluction in a l Light 2 line introduced in the con- ergy, and Construction arxl Engineer. North Carolina plant, for example, sumer market. And, while GE is di- ing Services operations, all of which was completed in 1986, significantly vesting its battery business, Lighting trimmal back their operations in improving GE's cost- and pnxluct-did retain - and will continue to de- 1986 because of market conditions. competitiveness in this pnxluct line. velop - the marketing of GE-brand Power Delivery, fb "xample, an- Other recent automation projects have consumer rechargeable batteries. nounced it will ch>se the hrge trans- resulted in significantly improved Finally, Lighting's new marketing Ibrmer pnxiuct line, wiu market cost-competitiveness Ihr circuit break-and sales organization is positioned to has deteriorated more than 75% since ers and h>ad centers for the residential compete aggressively in the industry's the early 1970s. construction market. diversitini markets and channels, sup- In Nuclear Energy, GE continued Ile>und improved pnxluctivity and ported by strong customer-oriented to fbcus resources on supplying fuel quality, the Construction Equipment inventory and distribution programs. and services fbr loiling water reactors investment program is resulting in in-(llWRs). The Company completed a novative pnxluct advances. Five new Across the boardin Power $26 million addition to its fuel manu- pnxlucts were inenxluced in 1986, Systerns, Gels facing the facturing facility in North Carolina. including the revolutionary Epic realities of a shrinking marketplace Customer services were expaixled, as MicroVersaTrip* system. It's an elec-and stifTer competition ihr pieces of a were the number of state of the-art tronic switchgear package that re-smaller pie. pnxiucts fbr the control, measurenx nt places numerous relays arxl meters, GE's Turbine business, tbr exam- arxl surveillance of nuclear [mwer ple, is the world's leading supplier of plants. In addition, four new IlWR power I stations lo.uled fuel during 1986 and, 20
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- 1 providing the first prepackaged way GE's Motorbusiness, the
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to monitor and control every breaker world'sleading supplier of g# in a low-voltage switchgear electric motors, increased its focus on installation. helping customers win against foreign In addition, Construction Equip- competition - as a way to shape its ment opened a national customer world instead ofletting the world y service center in Connecticut during shape it.
;k 1986 to provide personalized service Key to that strategy in 1986 was
, N, for distributors and other sales the implementation of a comprehen-
[ outlets. sive customer service operation that i J; combines telesales, technical service, Transportation Systems, transportation, inventory control and despite the downturnin product service in a single organiza-s locomctive orders, turned up a winner tion. The operation is aimed at sub-u$, in several other markets. stantially improving customer satis-6;j A leading supplier of transit sys- faction through faster response on tems, GE outbid both foreign and do- quotations, better efficiency on orders mestic competition on major 1986 and quicker resolution of problems. contracts to provide propulsion equip- Another goal is more long-term __ _ ment for more than 900 New York partnerships with major manufactur-City subway cars. To date, GE has re- ers in the appliance, automotive,
- ceived more than $100 million in or- computer and other key markets.
GE'c Construction ders as a result of New York City's Although it announced plans to Equipmentbusiness extensive subway rebuilding close down its Phoenix $ line oflarge
%s itch,near, program. industrial motors due to depressed ctherelectrical Transportation Systems also built markets, the Motor business did so-equipmentin 1986 on its leadership in electric drive sys- lidify its position as a leader in motor forthe computercen- tems for large off-the-road mining ve- technology during the year by intro-terabove thatis the hicles - an especially important in- ducing a new line ofelectronically 8f
,,, [*" , ternational market. During the >rar, commutated motors for central air ervation system. In it mnpleted its largest smgle order conditionmg. These variable-speed addition, the Com- ever: 107 motorized wheel systems for motors establish new standards in air pany's Communica- use in the China-Pingshuo mine. It conditioning comfort and efficiency tions andServices won other major orders for systems in and, together with such other recent wit Australi , llrazil and Colombia. introductions as precision motors for a)nalnfn e ,
ma/orityof the equip- Although hromotive pnxluction ngid disk drives and new water . mentutilfredbythe was down,131 hromotives were pumpmg motors, represent sigmfi-SABREsystem. shipped to China, completing a 200- cant growth opportunities for the hacomotive onfer. To date, a total of Motor business. 421 hromotives have been manufac-tured and shipped to China from the Erie, Pa , plant. In addition, the Company delivered a total of 72 ofits new thsh 8 h comotives to Conrail i afkl Norfolk Southern, further estab-lishing GE leadership in computer-i controlled hromotives. -l 22
Suppsrt Opsrations Our ability to compete successfully in both domestic and foreign markets is enhanced by the actions and resources of our five support operations.
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numannaam GE's support operations play The ConsumerElectronics Discovering a com- important roles in its success. business, by marketing both fortable cornerin a e Consumer Electronics maintains a RCA and GE brands, pmvides the
*" th h*f],,/n Ggd strong brand identity for both GE and Company with a winning combina-RCA in the marketplace. tion in the very visible video and au-RCA consumerelec.
tronics, a youngster
- International strengthens the Com- dio electronics marketplace.
tunesin to the NSC pany's presence around the globe. The RCA brand is the U.s. market show "Alf." e Corporate Trading supports GE's leader in both color televisions and purchasing and sales activities. video cassette recorders. The GE e Ladd Petroleum provides a backup brand also has a strong presence in supply of pernxhemical finistock fi>r luth pnxluct areas as well as in the GE's Plastics business. audio market. e Semiconductor supplies Company To further improve competitiveness busimsses with state-of-the-art micro- and market leadership, Consumer electronics technology. Electronics began combining RCA n
Ths Georgs R.Pacrksa builtby Cenzdizn Kndother Canadian GeneralElectricand Coast Guardice- available forsale brezkers are being worIdwide. propelledbya new cycloconverterma-nnspropulsion sys-t:m designedand GESCO, a major distributor ofGE and non-GE products, expanded its 7 ' product line, renewal parts operation and national accounts program. ig/l . GETC supported more than
$350 million in GE export orders in
'9 1986 by undertaking and fulfilling 7 the countertrade, offset and barter ob-w , ligations that are a condition of sales 3 c 7g p; ,
.~ in many world markets.
3* LaddPetroleumis one of a :
- theleading U.S. Independent
** (non-major) oil and gas producers.
Its reserve growth and lower-than-average 6nding and developing costs were counteracted in 1986 by falling oil prices. In view of the uncertain outlook for future oil and gas prices, GE switched from the " full cost" and GE manufacturing, marketing, the Company identify and act quickly method of accounting for oil and gas sales and engineering resources in on new busitrss opportunities in such properties to the more conservative 1986. markets as China, Korea, Taiwan, " successful efTorts" method. It also increased its image among India, Saudi Arabia and Turkey. During the year, Ladd expanded its consumers. Ihr the 6rst time ever, the Canadian General Electric provides marketing program for natural gas, RCA brand was displayed in Sears additional leverage in the interna- which now accounts for three-fourths stores - a potentially signi6 cant ex- tional marketplace. One of the largest ofits production and reserves. In-pansion for color TV sales. In addi- industrial companies in Canada, it is a cluded were signi6 cant spot-market tion, the RCA brand became a sales major exporter of heavy electrical ap- sales and several contracts with GE leader in the important new category paratus and machinery to third-world businesses. ofcamcorders and was the 6rst in the countries. 1 United States co market a VCR capa- The Semiconductorbusiness ble ofshowing two separate programs Corporate Trading Operations was realignedin 1986into simultaneously on the same screen, combines the resources of the two distinct areas: one geared toward General Electric Trading Company serving the commercial market; the int:rnationalsupports GE's (GETC), General Electric Supply other focused on GE and RCA inter-clm to be a globalcompetitor Company (GESCO)and Corporate nal needs. by promoting business development Sourcing to help GE businesses win The commercial business manufac-in key foreign markets and by estab- in today's competitive marketplace. tures and sells application-speci6c in-lishing strong relationships with in- Corporate Sourcing, for example, tegrated circuits, power transistors, ternational customers and partners. improved GE cost-competitiveness microprocessors and peripherals, and A country management organiza- through development of a computer other devices. tion of 25 national executives is in coding system that identi6es 25,000 The internal business supports the place around the globe to integrate types of materials, goods and services Company's requirements for advanced the activities ofdifferent GE busi- Companywide. This in turn enables semiconductor technology in its nesses operating within each country GE to combine purchases from dif- electronics-intensive systems and and to represent GE with its various ferent businesses to gain volume pnxlucts. hical constituencies. It also has helped discounts. 21 I
FincncialSectizn Ccntents GE/S&P400 annualearningspershare 37 Statement of 6nancial lacrease/ decrease compared to 1987 responsibility
- 37 Report ofindependent certi6ed public accountants ,,
Ccnagement's discussion of. 26 Earnings 28 Financial position 2 30 Changes in 6nancial position 32 Selected 6nancial data , og 34 Industry segments a sana,a a w.
~*
Audited Gnancialstatements 4* i"'uunal' -
"*"""""d' 27 Earnings Financial position - 40 29 19M2 1983 1984 1985 1986 31 Changes in 6nancial position 35 Summary ofindustry segments 38-53 Notes to 6nancial statements Employee productivlty (Constant dollar sales per employee; in thousands)
$110 19M2 1984 1984 1985 1986 Research and development expense as a percentage ofsales 10<> ;
)
19M2 19M4 19M4 1985 1986 25
ManagementDDiscussion cfEarnings The Statement of Earnings summarizes GE's Toshiba Corporation (gains from such sales had been about operating performance over the last three years in a format level in 1984 and 1985), and from increased income from which reflects the growing importance to the Company's short-term investments (such income had been lower in businesses of transactions other than those primarily in- 1985 than 1984). volving sales of tangible products. Operating results for e Total costs and expenses were up 28% in 1986 fol-1986 mclude RCA for the last seven months of the year. I wm.g a 1% incre se in 1985. This means that GE's 1986 net earnings included Cost ofgoods sold m, creased at about the same rate as $233 million from RCA before acquisition costs and ,
. ... the related sales increase m both 1986 and 1985. The
$66 million, or 14 cents per share, after acquisition costs. increase (71%) in cost of services sold in 1986 from 1985 There was no counterpart to these amounts m 1985. Com-what higher than the related sales increase (64%) ments below on certain items in the Statement of Earnings but in line with the RCA cost structure. Selling, general take the effect of RCA into account where appropriate. and administrative expense was up $1.4 billion in 1986, Many of the Company,s businesses had good improve-principally reflecting the increase in the size of the Com-ments in revenues and operating profit in 1986, although pany due to the acquisition of RCA as well as growth in one industry segment - power systems - had sigmficant certain other businesses. decreases. The Summary of Industry Segments (pages 34-Costs included expenditures for research and develop-
- 36) presents mformation and aualysis about the principal ment of $3.3 billion in 1986, of which $1.3 billion was businesses.
from Company funds. These expenditures, which serve o Totai revenues were up 26% in 1986 from 1985 after future growth, were 14% more than 1985's level before a 1% increase from 1984. Of the $4.2 billion increase in including RCA operations and up 31% on a total basis. sales ofgoods in 1986, RCA operations accounted for The bottom chart on page 25 depicts the Company's about $3.2 billion. Of the $2.7 billion increase in sales of steady and significant increase in R&D as a percentage of services, RCA accounted for $2.5 billion, $1.8 billion rep- sales over the past five years while GE still maintained resenting seven months' sales by the National Broadcast- earnings growth, ing Company. In other businesses that had sales increases, Costs in 1986 also included a newly required change in volume was the principal contributing factor as selling pension accounting that favorably afTected 1986 net earn-prices were generally softer than in prior Fars. ings by about 18 cents per share. Pension actuarial as-Net earnings of General Electric Financial Services, Inc. sumption changes also benefited 1986 net earnings by (GEFS) were up 22% in 1986, including amounts equal about 17 cents per share. to 4 cents per share from Kidder, Peabody Group Inc., Unusual items consist of a number of events, most of after a 26% increase the year before. GEFS results are which are related to major changes made or being made to discussed in more detail in the Summary ofindustry position the Company for future growth by shifting the Segments. business mix to one compatible with long-tcrm strategic Other sources ofincome were up $457 million in 1986 objectives and to reorganize and restructure ongoing opera-after declining 15% the year before. RCA accounted for tions. Unusual gains from sales of assets during the last almt half of the 1986 increase, much ofit from licensing three years aggregated $1.185 billion, mostly from dispo-ar.d technical agreements. Other current-year increases sitions of Utah International, the housewares business, and came mainly from $140 million of higher gains from con- virtually all of GE's former broadcasting and cablevision rinuing sales ofGE's long-held passive investment in operations. Provisions for business restructuring activities
- principally devoted to rationalizing, reorganizing and Revenues and earnings percentage lncrease/ decrease improving selected production activities; reducing foreign from 198f and domestic risk exposures; and phasing out or otherwise
, concluding other business activities - amounted to
$1.394 billion in 1984-86. The net earnings impact of n all unusual items had been negligible in 1984 and 1985, but in 1986 the aggregate effect fbr the year, after provi-
-~-~~-- - -
w sion for income taxes, was to reduce net earnings by about 28 cents per share. Note 7 to the financial statements _ _ _n shows annual details of unusual items, and note 24 shows the impact on operating profit by industry segment. 0[ma= e Interest and other financial charges increased $264 million in 1986 from 1985, compared with an increase of i982 eisi ris i n>ss em /6
StatementofEamings Gctrral Electric Company armi consolidated afTdiates fi>r the years ended December 3 I (In millions) 1986 1985 1984 Revenues Sales ofgtxxis $28,139 $23,963 $23,646 Sales of services 7,072 4,323 4,301 Net earnings of General Electric Financial Services, Inc. (note 14) 504 413 329 Other income (note 5) 1,010 553 652
'li>tal revenues 36,725 29,252 28,93i Costs andexpenses Cost ofg(xxis sold 20,757 17,672 17,332 Cost of services sold 5,430 3,171 3,069 Selling, general and administrative expense 5,963 4,594 4,770 Interest and other financial charges (note 6) 625 361 335 Unusual items (note 7)
(Gains) from sales of assets (50) (518) (617) Provisions for business restructuring activities 311 4 17 636 Si rcial paynrnt to non-exempt and hourly employees - 93 - Revaluation ofgoodwill and intangibles - - 126
'lbtal costs atxl expenses 33,036 25,820 25,65I Earnings before income taxes and minority Interest 3,689 3,432 3,280 Provision for income taxes (note 8) (1,200) (1,143) (1,030)
Minority interest in earnings of consolidated affiliates 3 (12) (1I) Not earnings $ 2,492 $ 2,277 $ 2,239 Net earnings per share (in dollars) $ 5.46 $ 5.00 $ 4.94 Dividends declared per share (in dollars) $ 2.37 $ 2.23 $ 2.05
'Ihe rmres to financial statenrnts on pages 38-53 are an integral part of this statement. Financial information for 1986 irx tudes RCA results from Jurr I,1986 Information for prior )rars has txen restated for ihe thange in aaounting ihr oil aral gas properties in 1986 to ahe " successful cfTorts" nrelaxi from the " full mst" rnethimi lbrnrrly used. Pnor->rar presentations have tren ret tassified to conform with the 1986 presentation.
Dee note I to the financial statenrnts.)
$26 million in 1985 from 1984. The 1986 increase was amortization ofinvestment tax credits that were eartrd in due to a higher aserage level of borrowings to acquire prior years but deferred o er the lives ofihe assets in.
RCA, gurtially ofTset by lower average interest rates. volved. With respect to liquidity, it is presently expected u tax ha M o The prowlsion forincome taxes was equal to 32.5% of par lown mesofwW appmdmately try due t repeal the investnrnt tax crec dset @ht and slower before-tax carnings in 1986(33.3% in 1985 and 31.4% in 1984). In 1986, changes were made in United States ** I*"5 ' "8 "I ""'" "' tax laws that will atTect the Company's federal income tax position. While the impact of the new law is very com-plex, managenrnt expects that the overall c&ct on GE's financial reporting during the next one-to-three >vars will be generally favorable mainly treause oflower rates. GE's tre earnings will continue to be a&cted favorably by 17
ManagementU Discussion cf Financial Position GE's balance sheet - the Statement of Financial hand (excluding RCA) was 151, or 12 days less than at Pbsition -grew substantially in 1986. At year end, total December 31,1985, assets were $34.6 billion, up $8.4 billion from the end of 'Ihere was a net favorable last.in Erst-out (LIFO) inven-1985. About $6.4 billion of he increase came from the tory adjustment to cost ofsales of $104 million in 1986 acquisition of RCA, whose assets at acquisition were in- compared with similar favorable adjustmems of $171 mil-cluded at fair value. lion in 1985 and $125 million in 1984. These anmunts o cash and marketable securities clasilled as current at
"' "'N"5I" #"'d .
* " I" '
December 31,1986, amounted to $1.9 billion, down $128 milhon m 1985 and $125 milh.on m 1984) because
$638 million from the erx! of 1985, in addition to cash of reduced inventory lesels, mainly in power systems busi-and current marketable securities, funds held for business nesses. Also, in 1984, the housewares business disposition development ($397 million at the end of 1986, down from included LIFO reserves of $32 rdllion.
$726 million at year-end 1985) consist ofinvestments e otherinvestmenteincreased by $764 million during equally as liquid as current marketable securities. 1986 to $3.9 billion at year end. Most of the increase was higher investment in General Electric Financial Services, o current receivables are mainly amounts due from cus-tomers ($5.7 billion at December 31,1986; $4.6 billion I"'" ma nly fmm gmwth m a, s retamal earnings.
at December 31,1985). The increase in total receivabks e intangible assets were $3.6 billion at December 31, arxl customer receivables was more than accounted for by 1986, up from $222 million a year earlier. Most of the the addition of RCA. tower customer receivables (before current balance results from the RCA acquisition. Using
; inclusion of RCA and despite higher saks activity) was the the " purchase" accounting method, the amount paid by result of vigorous receivabics management throughout GE ($6.4 billion) for RCA is assigned to the various assets 1986. At year end, customer receivables as measured by and liabilities purchami tused on independent expert ap-number of days billing outstanding were 38 days twfore praisal of fair values. (This appraisal work is complex and RCA, compared with 42 days at December 31,1985, the will not be completed until 1987. Accordingly, estimates previous low for many years. Other customer receivables and assumptions about values have been used to record the measurements, such as delinquency ratios and amounts transaction thus far ) Tmgible assets nach as plant and past due, also improved. The overall condition of customer equipment and inventories have tren recorded based on receivables remained excellent at the end of the year. Cur- estim ,tes of their fair valuer., and the resulting effect on rent re civables other than those owed by customers in. earnings is reflected in depreciation or as goods are sold clude amounts due from several types of transactions, from inventory. Some acquired assets are "intanpble," i I
such as advances to suppliers in connection with major e.g., certain licenses granted to others for use of a compa-contracts. ny's technology. Esemated Nr values assigned to specific intangible assets or classes cfassets will be amortized to o inventories of $5.2 billion at Decemtwr 31,1986,
**P'"*enppmpdatm s f thne, such as the were $1.2 billion more than at the end of 1985. More than ,
half of the increase was from adding RCA, and most of the length of h. cme hves. The remaining int:mgible asset is the larges > ,goalwdl,, which amounted to an esti-remainder was twcause of the high level of actual and planned aircraft engine business activity. Close atten- mated $2.8 billion at the end of 1986. The estimated tion to inventory control was emphasized throughout GE value of this intangible asset, moct cf which applies to the National llroadcastmg Company, is being amortized to in 1986, arut at year end the number of days output on expense evenly over 40 pars, 1986 borrowings as a percentage of totalcapitallavested e Other assets of $2.6 billion at year crxl 1986 (up from
$1.6 billion at the end of 1985) included $461 million of y National linxulcasting Cempany television program costs.
- Totalborrowings at December 31,1986, amounted to u $6.2 billion compared with $2.1 billion at December 31, 1985. Of the > var-etxl 1986 lurrowings, $1.8 billion was
" short term, i.e., due in less than one > var, arul $4.4 billion was due later.
GE's total debt equated 28.7Cf of total capital at the
" cial of 1986, up from the very low 12.9'!f a year earlicr.
[ As depicted on the chart, GEidebt to capital ratio graked I g at 38.5?f inJune immediattly after the RCA acquisition, stayed at the s.une level for one qu. uter, and has since been wem,i. % em,u. 9 ,a vem,n n,emo, em, EN
StatementofFinancialPosition Gerrral Elettric Company and consolidated affiliates At themtwr 31 (In millions) 1986 1985 Assets Cash (note 9) $ 1,698 $ 1,606 hlarketable securities (note 9) 221 951 Current receivables (note 10) 7,208 6,040 inventories (note 1I) 5,161 3,9 19 Current assets 14,288 12,546 Property, plant atxl equipment - net (note 12) 9,841 7,900 Futx!s held for business development (note 13) 397 726 Other investments (note 14) 3,914 3,150 Intangible assets (note 15) 3,581 222 Other assets (note 16) 2,570 1,618 Totalassets $34,591 $26,162- \ Liabilities and equity Short-term borrowings (note 17) $ 1,813 $ 1,297 Accounts payable (note 18) 2,594 2,201 Progress collections and price adjustments accrued 2,273 2,257 Dividends payable 287 261 Taxes accrued I,153 751 Other costs and expenses accrued (note 19) 3,341 2,146 Current liabilities 11,461 8,919 long-tcrm borrowings (note 20) 4,351 753 Other liabilities 3,481 2,693
'Ibral liabilities 19,293 12,365 hiinority interest in equity ofconsolidated af filiates 189 126 Common stot k (463,282,000 shares issued) 579 579 Other capital 733 611 Retairni carnings 14,172 12,761 Irss common stock held in treasury 075) 0 10)
'lbtal share owners' equity (notes 21 and 22) 15,109 13,671 Totalliabilities and equity $34,591 $26,162 Commitments and contingent liabilities (note 23)
'the notes to 6nancial statements on pges 38-53 are an integral prt of this sarement. Financial information for 1986 indudes RCA results from Juer 1,1986. Information for prior 3rars has twen rescated for the thange in auuunting for oil armi gas properties in 1986 to the "sucussful etIbrts" nrtlwal from ihe " full ont" nrttux! fornrriy used. 'Ihe 1985 prenntarion has lxen redassified to conform with the 1986 presentation.
(See note I to the 6nantial statenrnts.) reduced sharply. The major debt-rating agencies continue ratings supplemented by bank credit lines, are believed to to evaluate GE's debt as being of the highest standing, be entirely adequate to: e Provide for seasonal working capital needs during 1987.
'l ta ement of Changes in l'inancial Ibsition atxl relatetl comments on pages 30 atxi 3 I present additional e Pay for new plant and equipment expenditures that are information alxmt changes in the balance sheet in 1986 as expected to be about $ 1.7 billion during 1987. Estimated well as comparative data for prior yars. future plant expenditures already approved aggregated
$ 1.2 billion at the end of 1986, of which approximately in summary, GE's balance sheet changed substantially 687c is planned to be spent m 1987.
during 1986 and the Company's financial condition re-mains strong. GE's financial resources and liquidity, in- e Enable GE to continue a high level of programuni ex-ciuding highly liquid cash and marketables of all types of xnses as well as to support other internal and external
$2.3 billion, total assets of $34.6 billion, share owners' ausiness growth activities and opportunities.
equity of $ 15, I billion and the highest possible credit n
m Managementh Discussion af Changes in Financi:1 Position The Statement of Changes in Financial businesses, and $704 million ofinternal funds then on Position summarizes the main sources ofGE's funds hand. and the uses made of those funds. The Statement's format e RCA financing transactions since acquisition date has been modified to portray certain significant aspects of included proceeds from sales of RCA's interests in records, financing the purchase of RCA. A separate section of the life insurance and carpets - businesses which do not fit Statement summarizes transactions at the closmg date. An GE's long-term strategies. In addition, notes receivable additmnal section of the statement summarizes major fi-that RCA had received as partial payment for a 1984 busi-nancial transactions related to xCA since acquisition. ness disposition were sold in December 1986. These four Clunges in RCA assets and liabihties smce acquisition are transactions were all for cash and aggregated more than mcluded m,other portions of the Statement.
$1.3 billion. Also, certain long-term borrowings which o Funds provided from operations as depicted in the RCA had at the acquisition date were subsequently repaid.
top section of the Statement were about the same in 1986 Total reductions in consolidated long-term debt applicable as in 1985. These funds from operations are after leaving to RCA amounted to $490 million in the second halfof $506 million of net earnings of the nonconsolidated finan- 1986. cial services affiliates in those businesses to help them fi-e investment transactions other than those related to nance their own contmued growth. acquisition of RCA involve inflows and outflows of funds o Working capital can' be either a provider or user of for other lo,g-term objectives. Additions to property, funds. Proper management of working capital assets so as plant and equipment have been GE's principal long-term to minimize unnecessary lock-up of funds while at the use offunds for many years, ranging between $2.0 billion same time ensuring adequate resources for growth of GE's and $2.4 billion in each of the last three pars. (Plant businesses is a major focus of management. Comments expenditures shown in the Statement include RCA ex-(on page 28) about receivables and inventory measure- penditures since acquisition.) j ments explain current results ofGE's working capital man- Dispositions of property, plant and equipment were a agement programs. considerable source of funds in 1984, principally because they included the efrect ofselling the mineral properties of o Purchase of RCA was the major funds transaction in Utah International. 1986. As shown in the Statement, on the closing date GE paid $6.4 billion for the ownership of RCA, thus acquir- e Financial transactions other than specific borrowings ing all ofits assets and liabilities. Those assets and liabili- related to acquisition of RCA have not been a significant ties included funds (cash and marketable securities) imme- GE need in recent years. It is possible clut, depending on diately available for use by the combined entity. They also financial market conditions in 1987, GE might add to included other current assets such as receivables and inven- long-term borrowings to replace some of the current short-tories; long-term assets such as plant and equipment; and term debt. With its excellent credit rating, GE is in a liabilities such as short-term borrowings, payables and position to take maximum advantage of financial markct long-term debt. To pay for the net assets acquired at clos- opportunities. ing, GE used a combination of new long-term borrowings e Dividends paid totaled $1.058 billion in 1986. Divi-($3.4 billion), short-term borrowings ($2.0 billion) over dends paid during 1986 total-d $2.32 per share. The in-and above the seasonal short-term needs for GE s other crease of 9% in the fourth-quarter dividend marked the 11th consecutive year of dividend growth while at the same time retaining suflicient earnings to support er-fornings retained for growth and used for dividends hanced productive capability and providing adequate fi-(DoNarsper share) nancial resources for m.ternal and external growth
$6.00 opportunities.
In summary, during 1986 the Company continued to gen-erate significant amounts of funds from operations which, 16o when combined with the financial flexibility that comes from top credit ratings, enabled GE to finance a major M4.so 2.40 acquisition on favorable economic terms, continue other Dggfasm*th long-term investtnents for growth and again increase divi-i.20 dends to share owners. 0 1982 1981 1984 1985 1986 30
Statement cf Changes in Financial Position Fundsprovided(used) Gerrral Electric Company and consolidatal affiliates Ibr the 3rars ended December 31 (in millions) 1986 1985 1981 Fundsprovided from operations Net earnings S 2,492 S 2,277 $ 2,239 Adjustments for items not representing current fund usage: Depreciation, depletion and amortization 1,460 1,249 1,103 Earnings retained by nonconsolidated financial services affiliates (506) (411) (330) Income tax timing difTerences (158) 128 (206) All other operating items 77 12 11 Funds provided from operations 3,365 3,255 2,817 Funds provided from (used for) changes in working capital Decrease (increase)in inventories (317) (279) (512) Decrease (increase)in current receivables 629 (531) (260) Increase (decrease) in current liabilities (except short-term borrowings) (400) 62 (l12) Net funds provided from (used for) working capital (88) (748) (884) Total funds provided from operations and working capital 3,277 2,507 1.933 Funds used at acquisition date to purchase RCA Purchase price (6,406) - - Iess RCA cash and marketable Sxurities 296 - - New borrowings to acquire RCA -long-term 3,366 - -
- short-term 2,040 - -
Net reduction of funds at acquisition date (704) - - RCA financing transactions since acquisition date Proceeds from sales of assets 1,367 - - kepayments and other reductions in RCA long-term borrowings (490) - - Net addition to funds since acquisition date 877 - - Funds provided from (used in) investment and other long-term transactions Additions to property, plant and equipment (2,042) (1,953) (2,4 19) Dispositions of property, plant and equipment 275 142 1,346 Use of(additions to) funds held for business development 329 88 (359) Additional investments in nonconsolidated financial services affiliates (50) - - All other transactions - net 152 153 436 i Net investment transactions (1,336) (1,570) (996) Funds provided from (used in) financial transactions Disposition of GE shares from treasury 283 286 254 l Purchase ofGE shares for treasury (348) (283) (284) New issues and other increases in long-term borrowings 21 17 1 80 l t Repayments and other decreases in long-term borrowings (67) (171) (242) Net financial transactions (111) 3 (192) Funds used fordividendspaid (1,058) (1,006) (908) Netincrease (decrease)in funds S 945 S (66) $ (163) Analysis ofnet changein funds increase (decrease) in cash and marketable securities S (638) $ 184 S (132) Decrease (increase)in short-term borrowings (excluding acquisition of RCA) 1,583 (250) (31) , Increase (decrease)in funds S 945 S (66) S (163) i The notes to financial statements on pages 38-53 are an integral part of this statement. Financial information for 1986 includes RCA results from June 1,1986. Information for prior 3rars has been restated for the change in accounting for oil and gas properties in 1986 to the " successful etTorts" method from the " full cost" method formerly used. Prior->rar presentations have been rnlassified and restated to conform with the 1986 presentation. (Sm note I to the financial statementsJ l Al
l Management'a Di:cussion cf Selected Finanzial Data l Selected Financial Data provides both a handy increase productivity; 14% was to support new business reference for some data frequently requested about GE start-ups; 12% was to replace and renew older equipment; and a record that may be useful in reviewing trends. Of and 18% was for projects involving such other activities as course, as with information elsewhere in this Report,1986 improving R&D facilities and safety and environmental data generally include RCA, so care should be taken in un- protection. derstanding differences generated by the acquisition. The
, e GE's worldwide employment at the end of 1986 of followmg comments provide additional perspective on some of these selected data.
359 000 Wp inM E000 Wp b RCA. The steady increase in employee productivity each o CE's not earnings have increased at an average annual year from 1982 through 1986 is portrayed in the second rate of 9% over the last five years. The minor effect of chart on page 25. During these years, constant dollar sales restating for the change in accounting for oil and gas prop- rose from about $82,000 per emplo>re to about $ 104,000 erties discussed in note I to the financial statements has per employre. virtually no impact on the growth rate. Also, the inclusion e The backlog of unfilled orders at the end of 1986 was of RCA for only seven months of 1986 had no appreciable
$23.9 billion. Orders constituting the Company's backlog impact on the long-term growth rate to date may be canceled or deferred by customers (subject in cer-GE's earnings 3;rowth has come durmg years which have rain cases to cancellation penalties),
seen major shifts m domest c and international economic The significance of backlogs in understanding the Com-arenas and a major internal redirection for the Company pany's businesses has changed. Total revenues in 1986 itself as reviewed m the Letter to Share Owners begmnmg were 32% more than five years earlier (1981), but the on page 2 of this Report. Despite these internal and exter-orders backlog at year-end 1986 was only 14% higher. nal factors, GE's earnings growth has significantly out-The principal reason for the smaller increase in backlogs is paced the earnings changes for the aggregate of the 400 that businesses where order-to-shipment cycles are short, companies makmg up Standard & Poors Index of U.S. and large backlogs are not standard, have been the source mdustnal firms. GE's net earnings in 1986 were 51%
, of much of GE's recent growth. This includes businesses more than they were in 1981, while earnings of the S&P such as major appliance, plastics and numerous services 400 were about 5% lower than the aggregate for 1981.
puati ns. The top chart on page 25 shows GE's consistent camings The types of products and services making up the Com-improvement during the last five years while the S&P 400 has been lower than the base period in four of the five pang orpers backlog have changed considerably in recent years m hne with changes m GE's businesses. At the end of Inilation has not been a significant factor in the Com- 1981, about 48% pf the backlog was for power systems j
. and 20% was for aircraft engmes. These are the two prm- i pany's earnings growth in recent 3rars because of the rela- '
cipal industry segments where long order-to-shipment tively slow rate of price increases in the Uruted States cycles are inherent in operations. By the end of 1986,
- " "U aircraft engines and power systems each accounted for the o Property, plant and equipment additions other than same percentage of the total backlog - about 31%.
additions by acquisition from RCA were $2.0 billion in Approximately 60% of the total backlog at December 1986, making the total for the last five years $9.6 billion. 31,1986, is scheduled to be shipped in 1987. Ibr com-Of that total,30% was to increase capacity; 26% was to parison, 51% of the backlog at the end of 1985 was ex-GEstock price range Share owners'equityper share-December 31(In dollars) 8100 s55 88 % 73 % 80 2H 58 % 59 % 60 21 w <g <ss 48W
- m. -
40 14 45h 27W 20 7 0 . 0 1982 1983 1984 1985 1986 1982 1985 1981 1985 1986 il
SelectedFinancialDate Geretal Electric Company and consolidated afhliates (Dollar amounts in millions; per-share amounts in dollars) 1986 1985 1984 1983 1982 Revenues $ 36,725 $ 29,252 $ 28,931 $ 27,677 $ 27,189 Earnings before income taxes and minority interest 3,689 3,432 3,280 2,993 2,702 Net earnings 2,492 2,277 2,239 2,002 1,790 Net earnings per share $ 5.46 $ 5.00 $ 4.94 $ 4.40 $ 3.94 Dividends declared per share $ 2.37 $ 2.23 $ 2.05 $ 1.875 $ 1.675 Earned on average share owners' equity 17.3 % 17.5 % 19.0 % 18.9 % 18.7 % Dividends declared $ 1,081 $ 1,020 $ 930 $ 852 $ 760 Shares outstanding - average (in thousands) 456,297 455,381 453,680 454,768 454,078 Share owner accounts-average 492,000 506,000 520,000 501,000 502,000 Short-term borrowings $ 1,813 $ 1,297 $ 1,G17 $ 1,016 $ 1,037 long-term borrowings 4,351 753 753 915 1,015 Minority interest in equity ofconsolidated affiliates 189 126 128 167 165 Share owners' equity 15,109 13,671 12.398 11,137 10,086 Total capitalinvested $ 21,462 $ 15,847 $ 14,326 $ 13,235 $ 12,303 Return on average total capital invested 13.9 % 16.2 % 17.6 % 17.4 % 16.9 % Total assets $ 34,591 $ 26,162 $ 24,555 $ 23,017 $ 21,409 Property, plant and equipment additions other than additions by acquisition from RCA $ 2,042 $ 1,953 $ 2,419 $ 1,671 $ 1,555 Worldwide employment -year end 359,000 292,000 316,000 335,0(X) 342,0(X) Year-end orders backlog $ 23,943 $ 23,117 $ 22,577 $ 20,589 $ 19,723 Financialinformation for 1986 includes RCA results fromJune 1,1986, unless stated otherwise. Information for prior >rars has Exen restated for the change in accounting for oil and gas properties in 1986 to the " successful efforts" method from the " full cost" metixxl formerly used. Prior-year presentations have Exrn reclassified to conform with the 1986 presentation. (See note I to fmancial statements.) Share data have been adjusted for the 2-for-l split in April 1983. pected to be shipped in 1986. Virtually all of the 1986 power systems' cost-competitiveness and to adapt products aircraft engine backlog is scheduled to be shipped in the and marketing to the changing environment, next five 3 rats. Included in the power systems backlog at Unfilled orders for export of all types of products and December 31,1986, were: $1.3 billion for steam-turbine services from the United States were $4.2 billion at De-generators ($2.0 billion the year before) and $3.0 billion cember 31,1986, down from $4.7 billion the 3rar before. for nuclear fuel, services and products (the same as the year The backlog of aircraft engine orders for export increased before). Approximately $200 million and $1.8 billion of in dollar value from 1985 to 1986, and aircraft engines the December 31,1986, steam turbine and nuclear back- made up more than halfof the year-end 1986 unfilled logs, respectively, were scheduled for shipment five years export order backlog. or more in the future. Although GE remains a leader in most power systems products, domestic and foreign mar-kets have been declining in recent 3rars and worldwide competition has become intense. New order rates are quite low by long-term historical standards and backlogs for virtually all power systems products are declining. Com-pany management continues vigorous efforts to improve u I _ _ _ . _ . _ _ _ _ . _ _ _ _ _ . _ . _ . _ _ _ _ _ . _ _ . _ _ _ _ _ _ _ . _ . _ _ _ . _ _ . . _ _ . _ _ ._. ._ _..)
Managementh Di:cussion cfIndustry Segments The Summary of industry Segments groups e Aircraft engines revenues in 1986 were up 27% to GE's various businesses by the principal industries in about $6 billion and operating profit increased by 29%. which they participate. These differ from the groupings The principal reason for the continued improvement in presented earlier in this Report, which focus on key busi- 1986 results was higher volume. Sales of GE engines for nesses in terms of strategy considerations involving re- commercial and military aircraft have risen steadily since source allocation and long-term goals. 1980. Higher operating profit has been achieved consis-The classification of businesses by segment was modi-e e and resead ad Mopmem costs fied for the 1986 presentation because of the acquisition of I" ** *"S ""'I and investment in the plant improve-ments and capacity expansion necessary to provide and up-RCA. Although information for RCA is included only for grade production efTiciency and in the advanced technol-the last seven months of the current year, in certain cases, ogy required by all aircraft engine customers. mamly where GE and RCA operations are in the process of being integrated, prior-year classifications have been mod- e consumer products revenues reached $4.7 billion in ified to improve comparability with current segment clas- 1986, a 45% increase, with operating profit up 36% to sifications. The more significant modifications include: $577 million. The principal businesses in this segment are separate reporting of aerospace, formerly included in the GE's and RCA's consumer electronics operations (mainly technical products and services segment; and inclusion of video and audio products) and GE's lighting business. mobile communications, formerly part of the consumer Most of the increase in 1986 segment revenues came from products segment, with technical products and services. theJune addition of RCA's consumer electronics business, The presentation has also been modified to stress oper- although the contribution to improved operating profit ating profit rather than net earnings, which involve nu- from the addition was relatively less important. GE's con-merous accounting allocations. In addition, certain sumer electronics business had somewhat higher sales and, amounts included as " unusual items" in the Statement of because of much better cost performance, made a positive Earnings are now also included in determination of cur- contribution to 1986 operating profit following a loss in rent- and prior-year operating profit. 1985. Sales ofGE's lighting business in 1986 were Ihr a description of the businesses in each segment and slightly below 1985 but operating profit improved. Oper-for additional details, see note 24 to the financial ating profit in 1986 also includes significant amounts statements. from RCA's licensing income, which is heavily oriented to c nsumer electr nics technology. In recent years, there has o A rospace revenues were 40% higher in 1986 than in 1985 and operating profit was up 39%. Addition of "".E 5itive imp ct n this segment's operating profit, RCA's aerospace and defense business to this segment for fmm sigmficam unusual gaiys fmm sales of assets (prmci-pally housewares, broadcastmg and cablevision) m 1983-the last seven months of 1986 accounted for about three-85, partly fFset by restructuring provisions focused on fourths of the increase in segment revenues and slightly I more than halfof the increase in operating profit. Aero . "8**"E" I*E*****"'8 I".c nsumer electr nics and lighting. In 1986, this condition reversed and unusual space revenues and operating profit have grown sharply in charges to expense exceeded gains from asset sales. recent years on increasing volume, particularly on pro-grams and projects involving electronic systems for de- e Financial services operating profit is more than ac-fense, space and aviation needs, and on good cost counted for by the net earnings of General Electric Finan-performance. cial Services, Inc. (GEFS), which reached a new high of
$504 million in 1986. (Smaller financial services affiliates, including a venture capital company which operated at a '
u.s. exports to enternalcustomers loss in 1986, make up the difference in segment opera- "" "" "'I tions.) Within GEFS, Employers Reinsurance Corpora-s4 o tion's 1986 earnings (including acquisition costs) reached
$105 million, up from $36 million in 1985, on strong 4 . A u volume increases, excellent investment portfolio perform-d 4 DM%M 24 ance and good underwriting experience. Kidder, Pea-body had a positive impact of 4 cents (including acquisi-
$W p. %@N 7 tion costs) on GE's 1986 net earnings per share for the six l+
yM i6 months subsequent to GEFS' acquisition of an 80% inter-o inu%i fY 3 .k N est in the investment banking firm. General Electric o swa nums a k w hnonn M i ' '
- Credit Corporation (GECC), the third GEFS affiliate, had p 4 net earnings of $379 million in 1986, slightly more than 1982 1983 1984 1985 1986 on oM Cadngs b M. mm " eau u
SummerysfIndustrySegments Gerrral Electric Company arxi consolidated affiliates Ibr the years ended December 31 (In millions) 1986 1985 1984 1983 1982 Revenues Aerospace $ 4,318 $ 3,085 $ 2,622 $ 2,084 $ 1,935 Aircraft engines 5,977 4,712 3,835 3,495 3,14 0 Consumer products 4,654 3,220 3,466 3,422 3,558 Financial services 585 499 448 397 286 Industrial 4,711 4,762 4,495 4,509 4,949 Major appliances 4,107 3,617 3,650 3,078 2,751 Materials 2,331 2,119 2,280 1,885 1,593 National Broadcasting Company 1,817 - - - - Power systems 5,262 5,824 6,289 5,981 6,229 Technical products and services 3,266 2,3 17 2,402 2,154 2,086 All other 774 - 434 1,419 1,410 Corporate items and eliminations (1,077) (903) (990) (747) (748) Total $36,725 $29,252 $28,931 $27,677 $27,189 Operatingprofit Aerospace $ 608 $ 437 $ 332 $ 201 $ 192 Aircraft engines 869 673 460 395 344 Consumer products 577 425 553 309 306 Financial services 488 420 355 290 216 Industrial 182 252 79 94 311 Major appliances 462 399 381 383 166 Materials 424 330 446 314 233 National Broadcasting Company 203 - - - - Power systems 354 740 549 695 685 Technical products and services 112 22 (8) 166 204 All other 31 370 632 452 474 Total $ 4,310 $ 4,068 $ 3,779 $ 3,299 $ 3,131
'Ihe notes to financial statements on pages 38-53 are an integral part of this statement. Financial information for 1986 includes RCA results from June 1,1986. Information for prior 3 rats has been restated for the change in accounting for oil and gas properties in 1986 to the " successful efforts" method from the " full cost" method formerly used. Prior->rar presentations have been reclassified to conform with the 1986 presentation.
(See note I to the financial statements.) income" was above 1985 principally because of a higher income taxes were provided at tax rates in effect when the level of" earning assets." Also, the change in tax rates differences arose. The planned reductions in federal tax because of the Tax Reform Act of 1986 required that, in rates mean that as timing differences reverse the resulting accordance with generally accepted accounting principles, taxable income will be subject to the lower rates scheduled investment in GECC's leveraged lease portfolio be recalcu- to apply in these periods. lated with a net favorable effect on earnings. Unfavorable e industrial revenues in 1986 were about the same as factors were investment write-downs and loss provisions 1985 while operating profit was down 28%. Sales and related prmcipally to the distressed energy-related markets operating profits were essentially flat or down for principal served by GECC. In addition, GECC reserves were replen- businesses except factory automation, which had improved ished to provide a record amount of protection against results from a year ago. GE's semiconductor business's op-I"*""ISS*S' erating loss increased during the year. Addition of RCA s The 1986 tax act contains numerous provisions that solid-state business had no significant effect on segment will affect GEFS and its afTiliates. Among these provisions "S"I'S' is a reduction in corporate tax rates from 46% to 40<7c in 1987 and to 34% in 1988 and subsequent years. GEFS had e Major appliances revenues increased 14% from 1985 l I provided deferred income taxes aggregating $3.8 billion at and operating profit rose 16%. There was strong volume December 31,1986, for the tax effects of transactions that in 1986 in core appliance lines such as refrigerators and are recognized in different periods for financial statement ranges through both retail and contract sales channels. ! than for tax purposes (timing differences). Deferred Provisions for restructuring were down considerably in n
1986 from 1985 and 1984 levels.1-mgrams such as those e All other results for 1986 consists ofcertain other RCA undertaken in recent years to improve productivity and operations, including carpets and records that were sold by reduce in-warranty service costs thmugh excellent product >rar end. Ii>r years prior to 1986, all other consists of gains quality are benefiting current results. on sales and/or operations of Utah International in mining activities while part of GE. e Msterials revenues and operating profit were 107c and 28% higher, respectively, in 1986 than in 1985. Plastics e GE's exports to external customers totaled $3.7 bil-led the improvement in profitability on strong volume lion in 1986, up from 1985's $3.3 billion. The chart on gains. Silicone and specialty materials operating profits page 34 shows the major contributors to GE's exports for improved, particularly from productivity gains.12dd the past five years. Aircraft engines have grown substan-Petroleum had a lower operating loss in 1986 than the tially in importance since 1982, while power systems restated loss for 1985. products have declined since the peak in 1983. Export e National Broadcasting Company revenues of $1.8 bil- earnings overall have been declining due to the continued lion and operating profit of $203 million for the last seven imp ct f the non-competitive U.S. dollar vis-a-vis many months of 1986 had no counterpart in GE's results for "C'" *"d 5orldwide c mpetiti n f r tod ys b"'8".'"'"d s phisucaw tonological offerings. bpon sals h ma-1985. Operating profit for 1986 includes the negative ef-j r world are s can be found on page 53. fect of $29 million ofgoodwill amortization which was partly offset by other acquisition accounting adjustments. GE s total internanonal opemtions kxpons phys EMgn a tesHqd revenues of $8.3 bilh.on and operating profit li>r all of 1986, NBC's sales and earnings before acquisi-of $ 1.3 bilhon in 1986, compared with revenues of $7.1 tion costs set new records. billion and operating profit of $897 million in 1985.
- Powersystemsoperating profit dropped 52% in 1986 on 10% lower revenues. With continuation of the long-term downward trend in domestic and international mar-kets for heavy electrical apparatus, turbine and nuclear operating profits were sharply lower than the previous 3rar. Power delivery's somewhat better profitability from improved productivity more than ofTset lower sales vol-ume. Domestic apparatus and engineering services operat-ing profit improved in 1986 but international engineering and construction operations results were considerably be-low those of a year ago. Management is continuing its already substantial long-term efTorts to downsize, stream-line and better position power systems businesses for the future.
- Technical products operating profit of $112 million in 1986 was $90 million more than in 1985 on 41% higher revenues. The increases in operating profit were mostly accounted for by lower Calma Company losses, improved mobile communications profitability, fewer unusual ex-pense provisions, and the addition of RCA's communica-tions and services businesses for the last seven months of 1986. Higher sales were mainly due to the addition of RCA's communications and services businesses. Medical systems sales also were up, partly from acquisitions, al-though operating profit did not keep pace. GE's informa-tion services business (which is being integrated with RCA communications and services) had lower sales and operating profit.
v, l __
Statamsnt of Financial Rcsponsibility To Share Owners of General Electric Company trust laws and proper domestic and international business The financial information in this Report, including the practices. GE is committed to maintaining the highest audited financial statements, has been prepared by GE standards ofconduct and practices with respect to transac-management. Preparation of these statements and data in- tions with the United States government. This commit-volves estimates and the use of judgment. Accounting ment includes continuing emphasis to all employees, in-principles used in preparing the financial statements are cluding RCA, that even the appearance ofimpropriety can those which are generally accepted in the United States. erode public confidence in the Company and in the gov-These principles are consistent with standards issued by ernment procurement process. Ongoing education, com-the International Accounting Standards Cc nmittee except munication and review programs are designed to create a for information about the effects of changing prices, which strong compliance environment and to make it clearly is no longer required by United States accounting princi- understood that deviation from Company policies will not ples. In a few important instances, which are commented be tolerated. on in note 1 on page 38, where there is no single spedfied Peat, Marwick, Mitchell & Co. provide an objective, accounting principle or standard, management makes a independent review of management's discharge ofits obli-choice from reasonable, accepted alternatives, using meth- gations relating to the fairness of reported operating results ods which it believes are prudent for GE. and financial condition. Their report for 1986 again took To safeguard Company assets, it is important to have a no exceptions to the Company's financial statements. sound but dynamic system ofinternal financial controls The Audit Committee of the Board (consisting solely and procedures that balances benefits and costs. One of the of Directors from outside GE) maintains an ongoing ap-key elements of GE's internal financial controls has been praisal, on behalf of share owners, of the effectiveness of the Company's success in recruiting, selecting, training the independent public accountants, the Company's staff and developing professional financial managers. Their re- ofcorporate auditors and GE management, with respect to sponsibilities include implementing and overseeing the fi- preparation of financial statements, and of the adequacy of nancial control system, reporting management's steward- internal financial controls. The committee also reviews the ship of the assets entrusted to it by share owners, and Company's accounting policies, internal accounting con-performing accurate.nd proper maintenance of the trols, and the Annual Report and proxy material. accounts. Management has long recognized its responsibility for conducting the Company's affairs in an ethical and socially -A MW responsible manner. The commitment to this responsi- Dennis D. Dammerman John E Welch,Jr. bility is reflected in key written policy statements. These Senior Vice President Chairman of the Board and cover, among other subjects, potentially conflicting out- Finance Chief Executive Officer side business interests of employees, compliance with anti-libruary 13, 1987 Report ofIndependent CertiRed Public Accountants To Share Owners and Board of Directors of In our opinion, the aforementioned financial statements GeneralElectric Company appearing on pages 27, 29, 31, 35 and 3h ; present We have examined the statement of financial position of fairly the financial position of General Ela t ric Company General Electric Company and consolidated affiliates as of and consolidated afliliates at December 31.1986 and December 31,1986 and 1985, and the related statements 1985, and the results of their operations and the changes of earnings and changes in financial position for each of the in their financial position for each of the years in the three-years in the three-year period ended December 31,1986. year period ended December 31,1986, in conformity with Our examinations were made in accordance with generally generally accepted accounting principles applied on a con-accepted auditing standards and, accordingly, included sistent basis. such tests of the accounting records and such other audit-ing procedures as we considered necessary in the circumstances. [ /// //[ k
, gg 345 Park Avenue, New York, N.Y.10154 libruary 13, 1987 n
Notes to FinancialStatements . v v= a === = ====x : z -
, == = = =.s y
Sumanaryofsigni#cantaccounting Investment tamedit qTC).The ITC was repealed, with some transitional exceptions, effectiveJanuary 1,1986. policies. However, for financial reporting purposes, GE has deferred Financial statement presentation. In 1986, the Com. recognition of the ITC each year and continues to amor-pany changed the format ofcertain ofits financial state- tize ITC as a reduction of the provision for income taxes ments. The Statement of Earnings has been revised to over the lives of the facilities to which the credit applies. reflect (1) the growing importance of revenues and re- Pensions and other retirement benefits. In 1986, the lated costs and expenses from transactions other than Company adopted new pension accounting procedures sales of tangible products, and (2) a recent U.S. Securi- prescribed by the Financial Accounting Standards Board. ties and Exchange Commission release with respect to Accounting policies for pensions, including the effect of cost classifications. Also, the Statement of Changes in adopting the new procedures, as well as policies for other Financial Position has been modified to portray certain retirement benefits, are discussed in note 4. significant aspects ofpurchasing RCA. Prior-year amounts shown in the statements and related notes have inventories.The values of most inventories are deter-also been reclassified as appropriate to conform with the mined on a last-in first-out, or LIFO, basis and do not 1986 presentation. Additionally, prior-year amounts exceed realizable values. have been restated for the change in accounting for costs Depreciation, depletion and amortization.The cost of associated with oil and gas production, as discussed most manufacturing plant and equipment, other than that separately in this note, and industry segment data have acquired in the purchase of RCA Corporation (RCA) in been revised as presented in the Summary ofIndustry 1986, is depreciated using an accelerated mcthod based Segments, which is explained more fully in note 24 to primarily on a sum-of-the-years digits formula. Plant and the financial statements. equipment of RCA operations continues to be depreciated Consolidation.The financial statements represent the on a straight-line basis. If manufacturing plant and equip-adding together of General Electric Company and all com_ ment is subject to abnormal economic conditions or obso-panies, except financial services companies, which GE lescence, additional depreciation is provided. Mming controls through a majority interest or otherwise (affiliated Properties, which were sold in 1984 and 1985, were de-companies). The effect of transactions among related com. preciated, depleted or amortized mainly by the unit-of-panies is eliminated. production method. Mining exploration costs were The principal financial services affiliate is General charged directly to expense until development of a specific Electric Financial Services, Inc. (GEFS), a wholly owned mineral deposit was likely to be economically feasible. company which in turn owns all of the stock of General After such determination, all related development costs Electric Credit Corporation and Employers Reinsurance were capitalized and subsequently amortized over the pro-Corporation and 80% of the stock of Kidder, Peabody ductive life of the property, commencing with the start-up Group Inc. These financial services companies are so dif- fproduction. ferent from the other GE companies that GE's financial Restatement of prior years' financial statements for statements are more understandable if financial services the change in method of accounting for oil and gas affiliates' statements are shown separately. Therefore, sepa- properties. In 1986, the Company changed its method of rate condensed statements of GEFS are shown in note 14 accounting for oil and gas p operties from the " full cost" and the nonconsolidated financial services affiliates are in- method to the " successful efforts" method. Management cluded on the equity basis as "one line" in other invest- considers this change prudent in view of the weakness of ments in the Statement of Financial Position and in the oil and gas prices and the uncertain outlook for prices in Statement of Earnings. the industry. Itwer costs are capitalized under the "suc-Companies in which GE owns between 20% and 50% cessful efforts" method than under the " full cost" method, (associated companies) are also included on a "one line" thus reducing the risk of non-recovery of asset values. basis. This change in method must be applied retroactively. Sales. A sale is recorded principally when title passes to Acc rdingly, previously reported net earnings have been customers or when services are performed in accordance restated downward by $59 million (13 cents per share) for with contracts. 1985 and $41 million (9 cents per share) for 1984. The balance of retained earnings atJanuary 1,1984, has been restated downward by $133 million (29 cents per share) for the cumulative effect on operations of years before 1984. n
resm m=ra m uc miz z - rarm 2 mL w n mmrna= :a M g gg The pro forma consolidated results ofoperations shown g above are based on assumptions concernmg a financing structure in effect after repayment of most interim short-
. . term financing with medium- and long-term borrowings.
On June 9,1986, GE acquired RCA Corporation and its
, Ibr purposes of calculating pro forma interest expense as it subsidianes (RCA) m a transaction for which the total might have been for the year 1986 if the merger had oc-consideration to former RCA shareholders was $6.406 bil- curredJanuary 1,1986 (as shown above), the weightal hon m cash. RCA businesses include the manufacture and average interest rate used was 8.94% and was representa-sale of a wide range of electronic products and related rive of rates GE would have experienced on the basis of the research and services for consumer, commercial, military assumed final mix of short , medium- and long-term debt and space applications; the National Broadcasting Com- in place atJanuary 1,1986. Similarly, assuming the same pany's (NBC) radio and television stations and network fmancing structure and consummation of the merger at broadcasting services; and domestic and international mes- January 1,1985, the weighted average interest rate used sage and data communications services. for the year 1985 shown above was 11.lW. A change of The acquisition was accounted for as a purchase, and the one percentage point in the interest rate assumption would operating results of RCA have been consolidated with change annual interest expense (or income) by approxi-those of GE sinceJune 1,1986. In preparing 1986 finan- mately $64 million before taxes or $35 million after taxes cial information, tne purchase pnce ($6.426 bilhon, in- (8 cents per share) cluding an estimated $20 million of related costs) has been In accordance with agreements with agencies of the allocated to the assets and liabihn,es of RCA based on United States government, GE is required to sell estimates of fair market values. The excess of purchase its military vidicon business (which sale was completed in price over the estimate of fair values of net assets acquired 1986) and five radio stations owned by NBC. Also, in (goodwill) was $2.7 bilhon, which is bemg amortized on a December 1986, GE sold RCA businesses involving audio straight-line bas,s i over 40 years. The final purchase price tapes and records, carpets and an insurance subsidiary, allocation may difTer from estimates as a result of changes which are not consistent with GE's long-range strategic due to appraisals and evaluations of RCA's assets and ha! plans. These required or completed dispositions have no bihties. Completion of these appraisals and evaluations is significant effect on the pro forma sales and net earnings not expected until sometime in 1987. presented above.
Unaudited pro forma consolidated results ofoperations It is possible that further evaluation will result in other for the years 1986 and 1985, assummg RCA had been
, dispositions of businesses or assets, but no such disposi-acquired at the begmning of each period, are shown tions are reflected in the pro forma information inasmuch as management presently has no plans that it expects Pro forma conso#datedoperations would result in any material non-recurring charges or (Ikilar amounts in millions; per-share amounts credits to earnings arising directly from acquisition in dollars) 1986 1985 of RCA.
Sales $38,997 $37,258 Net earnings 2,471 2,143 Net earnings per share 5.42 4.71 These pro forma results are not necessarily indicative of the consolidated results which would have been reported if the RCA acquisition had actually occurred at the beginning of each respective period presented, or which may be re-ported in the future. Sources of funds to pay RCA shareholders at the closing date included: net proceeds from 11 public debt offerings in domestic and foreign markets aggregating $3.366 bil-lion at varying rates (weighted average borrowing cost to the Company of 7.4%) and maturities (ranging from 1989 to 2016); short-term borrowings aggregating $2.040 bil-lion; and cash and cash equivalents of GE in the amount of
$ 1.0 billion.
39
The RCA Retirement Plan (RCA P1ar) covers substan-Su' pplernental cost details (cxcluding . taally all RCA emplopes m the Um,ted States. Generally, unusualiterns) benefits are based on the greater of a formula recognizing career earnings or a formula recognizing length of service Supplemental cost details are shown in the table below. and final average earnings. RCA Plan benefits are funded through the RCA Retirement Plan Master Trust (RCA Supplementalcost details Trust). At the end of 1986, approximately 44,700 em-un millions) 1986 1983 198 : ployees were covered by the RCA Plan, approximately Employe comp nsation- 28,100 former employees with vested rights were entitled 8 ' 8 "A 8 8 '939 t future benefits and approximately 15,700 retirees or Ihr at , $1 rion and . amortization 1,460 1,219 1,103 beneficiaries were receivmg benefits. do nr 1,300 1,069 1,038 The General Electric Supplementary Pension Plan is an Maintenance and repairs 803 692 744 unfunded plan providing supplementary retirement bene-Sccial saurity taxes 725 626 616 fits pnmarily to higher-level, longer-service GE manage-AJvertising 481 367 356 ment and professional ~nployees in the United States. At Taxes,excen s aialsuuriry the end of 1986, approximately 3,800 employees were and those on inmme 288 217 2M eligible for this plan and approximately 3,600 retirees or beneficiaries were receiving benefits. Other pension plans are sponsored by domestic and foreign Pemions and otherretiree benents affiliates, but these are not considered to be significant individually or in the aggregate to GE's financial position. l GE and its afiiliates sponsor a number of pension and other GE adopted Statement of Financial Accounting Stan- ) retiree benefit plans. This note summarizes important fi- dards No. 87 (SFAS 87) for pension accounting effective nancial aspects of GE's obligations for these plans. Meas- January 1,1986. SFAS 87 requires use of the projected urements ofobligations and costs are based on actuarial unit credit cost method to determine the projected benefit calculations involving various assumptions as to future obligation and plan cost. The projected benefit obligation events. is the actuarial present value of the portion of projected
. future benefits that is attributed to employee service to o Pr.incipal pension plans: date. The benefit cost for service during the year is the The General Electric Pension Plan (GE Plan) covers sub- portion of the projected benefit obligation that is attrib-stantially all employees in the United States except RCA uted to employee service during the year. This cost employees. Generally, benefits are based on the greater of a method recognizes the effect of future compensation and formula recognizing career earnings or a formula recogniz- service in projecting the future benefits, and it had been ing length of service and final average earnings. GE Plan used for the GE Plan and RCA Plan before adoption of benefits are funded through the General Electric Pension SFAS 87.
Trust (GE Trust). The information shown herein for the In addition, SFAS 87 requires calculation of a "transi-GE Plan and GE Trust includes amounts related to two tion gain" that is the excess atJanuary 1,1986, of the pension plans covering certain employees at government- current fair market value of plan assets over the plan's owned, GE-operated facilities. These plans were estab- projected benefit obligation. This trar.sition gain is being lished in 1986 subject to government and other approvals amortized over 15 years, except that the net transition gain and contain the same benefit formulas as the GE Plan. At for the RCA Plan has been recognized as an asset in ac-the end of 1986, approximately 213,300 employees were counting for the RCA acquisition. covered by the GE Plan, approximately 67,000 former Changes in pension benefits which are allocable to pre-employees with vested rights were entitled to future bene- vious service of employees will be amortized over the aver-fits and approximately 119,900 retirees or beneficiaries age future-service period ofemployees. Gains and losses were receiving benefits. that occur because actual experience differs from that as-sumed will be amortized in the same manner. Actuarial assumptions for the principal pension plans include 8.5% for both the assumed discount rate used to determine the present value of future benefits and the ex-pected long-term rate of return on plan assets (the GE Plan used 87c in 1985 and 7.57c in 1984, excluding the effect of a dedicated portfolio in those years). The 1986 assumed rate of average future increases in pension benefit compen-sation was 6.5% (the GE Plan used 7c4 in 1985 and 1984). m
l Employer costs for principal pension plans were $143 mil- A schedule reconciling the projected lunclit obligation lion in 1986, $479 million m 1985 and $582 million in for principal pnsion plans with GE's recorded pension 1984. GE Plan costs were lower in 1986 because of the liability is shown below. adoption of SFAS 87 and changes in the assumed discount and benefit compensation increase rates. The impact of 8""*I88 tion of rojected P bene #t obligation with these lower costs, after recognizing income tax efTects and ["*I"$""fi[mIiPrincipalpension plans 1986 gosernment cost reimbursement, was equal to $81 million (18 cents per share) from the adoption of SFAS 87 and $79 F*i"'""*"di"'MF 'i"" 5I48" million (17 cents per share) from the rate changes. Causes C""l'j'i I s '"$" $ of the cost reduction from 1984 to 1985 mcluded a change RCA Plan valuation adjustment for future tax effats in the assumed discount rate, the full-year impact of a and government cost reimbursenrnt 162 dedicated portfolio and amortization ofcontinued favora- Other unrecognized net experience gains 2,538 ble GE Trust income experience. Recor&st prepaid gwnsion assets 218 Details of 1986 cost for the principal pension plans are Recorati pension liabdity $ 371 shown in the next table. The portion of the December 31,1986, projected lwnefit Cost forprincipalpensionplans li>r the year (in millions) 1986 obligation representing the accumulated benefit obligation was $ 12,258 million and the vested benefit obligation was
$11,958 million. These amounts are based onty on com-t t t j t ! fit bl gation 1,( 7 (2,739) pensation and service to date. Other unrecogm, zed net ex-Actual return on plan assets Amount deferral to future perials 1,672 perience gains resulted principally from favorable invest-Ruognized return on plan assets 0,067) ment performance and the changes in assumed discount Net amortization (213) and benefit compensation increase rates.
Net gwnsion cost $ 143 GE Trust and RCA Trust assets, which are not consoli-dated with those of GE, consist mainly ofcommon stock Recognized return on plan assets is determined by apply- and fixed income investments. GE common stock held by ing the expected long-term rate of return to the market- these Trusts totaled $105 million at the end of 1986. A related value of assets. The market-related value of assets is summary ofchanges in net assets of the GE Trust follows. based on amortized cost plus recognition over five years of market appreciation and depreciation in the portfolio. GE Trust- change in net assets at current fair market value The funding policy for the GE Plan and RCA Plan is to li>r the irar (in millions) 1986 1985 1986 contribute amounts sudicient to meet minimum funding Net assets atJanuary I $14,362 $l1,350 $ 9,886 requirements set fi)rth in U.S. employee benefit and tax Emplo>rr contributions 94 4 41 501 laws plus such additional amounts as GE may determine Emphyte contributions 94 107 101 to be appropriate from time to time. Covered employees Investment income induding market also make contributions toward funding of the plans. arrraiation 2,700 2,968 1,281 A measure of the funding status for an ongoing plan Bendits raid (579) N97) 0 211 Compares the market-relatal value of assets with the pro- Net assets at Iktemtwr 31 $16,671 $11.m2 $11,Mo jected benefit obligation. GE believes the market-related value of assets is more realistic than current fair market The current fair market value of RCA Trust net assets was value because the market-related value reduces the impact $2,876 million at December 31,1986. of short-term market ductuations. A summary fbr the GE e Principal retiree health care and life insurance plans: Plan fbliows. GE and its a0iliates have a number of plans providing GE Plan- funding status retiree health care and life insurance benefits. GE's aggre-IXtemler 31 (In mdlions) 1986 1985 1984 gate cost for the principal GE and RCA plans was $8 'l mil-Market-related value of assets $13.311 $10,924 $ 9,701 lion in 1986, $74 million in 1985 and $ 138 million in Prointal tenefit obligation i 1,%5 11,598 11,116 1981 Tk i i W8b is ibmbk m in Market-related values were increased by $659 million at sion of RCA plans, otTset partially by an increase in the January 1,1986, to comply with SFAS 87. Changes in assumed discount rate used to determine the present value interest rate assumptions reduced projected benefit obliga- of future benefits. A reduction in life insurance reserve tions by $210 million and $699 million in 1986 and requirements attributable to an updating of mortality as-1985, respectively. sumptions was the primary cause of the 1985 decrease. Ibr the RCA Plan, the projected benefit obligation was Generally, GE and RCA employees who retire or termi-
$2,586 million and the market-related value of assets was nate after qualifying for optional early retirement under
$2,330 million at the end of 1986. the GE Plan or RCA Plan are eligible to participate in the corresponding retiree health care and life insurance plans.
Health care benefits fbr eligible retirees under age 65 and 61
eligible dependents are included in costs as covered ex- o Unusua/ gains in 1985 amsefrom penses are actually incurred. Ihr eligible retirees and (1) Sale of the 15.5% interest in Australian coal properties spouses over age 65, health care benefits are funded or which had been retained at the time of the disposition in accrued and included m costs m the year the retiree be-1984 of most of Utah International Inc. (Utah). The comes eligible for benefits. The present value oflife insur-15.5% interest was sold to three buyers for cash amount-ance benefits for eligible retirees is funded and included in ing to $387 million and occurred in the second and third ccrts in the year of retirement. quarters. The gain from these three transactions was Most retirees outside the Um.ted States are covered by
$247 million before taxes. The contribution to GE's oper-government programs and GE s cost for such retiree health ating results from these interests during the portion of care and life msurance is not sigmficant.
1985 prior to their disposition was not significant.
, , (2) Disposition of the remaining 37% of GE's interest in the cablevision company into which GE's former cablevi-
,Otherincome sion operations had been merged in 1984. The 1985 trans-
'~ l action was completed in December for a pretax gain of I On millions) 1986 1985 19&t $132 million. Payment included $43 million in cash and a Marketable suurities and bank non-interest-bearing note due one year from closing. Eam-deposits $ 316 $258 $323 ings from this investment prior to disposition were an Royalty and technical agreements 232 78 83 insignificant portion of GE's total 1985 results.
Gastomer financing 78 66 75 Asscciated companies 42 37 33 (3) Other transactions resulting from adjustments to pre-l Other investments: Interest 62 23 19 vious unusual disposition provisions. These aggregated Dividends 1I II 11 $139 million before taxes in 1985.
*'""0""
e Unusualgains in 1984 induded: (1) Sale of most of Utah to The Broken Hill Proprietary Income from royalty and technical agreements increased Company Limited in a transaction valued at $2.4 billion, substantially in 1986 from the acquisition of RCA. Other representing the cash proceeds from the sale as well as the sundry items included gains of $178 million, $38 million value of the 15.5% interest in several Australian coal and $39 million in 1986,1985 and 1984, respectively, properties which the Company acquired and retained and from sales of portions of the Company's long-held passive subsequently sold in 1985. (GE also retained Ladd Petro-investment in equity securities of Toshiba Corporation. leum Corporation, formerly a wholly owned Utah affili-ate.) GE's share of the total asscts of new and retained properties at December 31,1984, is shown as"all other"in n te 24. GE's revenues and net earnings for 1984 included Antorest and other Knancialcharges
$373 milhon and $70 million, respectively, from Utah for the first quarter, while "all other" results for the remainder Interest capitalized on major property, plant and equip- of 1984 are only for the properties owned subsequent to ment and real estate development projects was $38 million the sale. The 1984 gain from the Utah transaction was in 1986, $32 million in 1985 and $20 million in 1984. $500 million before taxes and after providing for future contractual obligations.
(2) Sale of GE's small household appliance operations, Unusualitems both domestically and abroad, to The Black and Decker Manufacturing Company (B&D) in April. Small appliance Unusual items include pretax gains from certain asset sales perati ns acc unted for less than 2% of GE's consolidated and pretax expense provisions for costs of several different s les. This transaction did not include any of GE s other types of transactions. Gains from sales of assets which c nsumer products lines. GE received cash, three milhon management has determined are not complementary to the shares of B&D stock (one-half of which was subsequently , Company's future business focus (other than sales of certain s Id inJanuary 1986) and approximately $50 milh,on in a assets acquired from RCA) were $50 rnillion in 1986, three-year note. GE has agreed not to sell the remaining B&D stock, except in certain circumstances, nor to pur-
$318 million in 1985 and $617 million in 1984. Total ,,
unusual expenses aggregated $311 million in 1986,$540 chase additional B&D stock until 1987. The note was interest-free for the first year and bears interest of 9% million in 1985 and $7'62 million in 1984. Details of these unusual gains and expenses foLow.
*"""#II Y thereafter. The gam from this disposition was
$28 milh.on before taxes and after providmg for future o Unusualgains in 1986 arosefrom the sale of a small for- contractual obligations.
eign afliliate ($12 million) and adjustments to previous unusual disposirion provisions ($38 million). 12
l (3) Merger of General Electric Cablevision Corporation in o Provision has been made for U.S. federal income taxes to the fourth quarter of 1984 into a subsidiary of United be paid on that portion of the undistributed earnings of Artists Cablesystems Corporation (Cablesystems). In this affiliates and associated companies expected to be remitted transaction, GE received cash and 37% of the stock of to the parent company. Undistributed earnings intended Cablesystems. Cablevision operations were minor in rela- to be reinvested indefinitely in affiliates and associated tion to GE's total results. The gain on this transaction was companies totaled $1,063 million at the end of 1986,
$89 million before taxes and after providing for future $946 million at the end of 1985 and $883 million at the contractual obligations. end of 1984.
o Unusualcostsindudedefo//oring e General Electric Financial Services, Inc. (GEFS) is a
. nonconsolidated affiliate for financial reporting but is in-Expense provisions to cover corporate restructunngs - $311 nulhon m 1986, $447 milhon m 1985 and $636 cluded in GE's consolidated U.S. federal income tax re-turn. Taxes payable by the consolidated companies shown milh,on m 1984. These represent the provisions for ex-in the preceding table exclude the effect of significant tax penses of refocusing a wide variety of busmess and market-credits and deductions of GEFS, which arise primarily mg activines and reducing foreign and domesuc risk expo-from leasing activities. GE and GEFS together had net sures. These provisions include costs of rationahzing and taxes payable for 1986,1985 and 1984. Existing leases of improving a large number of production facihnes, re . GEFS will generate taxable income in future years, which arrangmg production activities among a number ofexist-is provided for in the deferred income taxes of GEFS mg plants, and reorganizmg, phasing out or otherwise (see note 14). At December 31,1986,1985 and 1984, tax concludmg other acuvities no longer considered essential credit carryforwards totaling $275 million, $358 million to the conduct of the Company's business.
and $92 million, respectively, were recorded by GEFS as a Special cash payment to certain employees in 1985 - partial offset to deferred taxes. Ibr financial reporting pur-
$93 million. The payment was equal to 3% of normal poses, investment tax credit carryforward amounts are am-straight-time annual earnings inJuly 1985 to hourly ortized to earned income over lease periods (as are invest-union employees, in accordance with new union contracts, ment tax credits currently usable). Ibr tax purposes, they and also to certain other hourly and non-exempt salaried will be offset against taxes payable in the future.
employees. The total payment aggregated $103 million Some items are reported in financial statements in different r rr n s t o a oun r n t gd n s a expense when the inventories are sold. Revaluations ofEoodwill and intangibles. In 1984, good- "*""'"8d**"***"**d' Income taxes will and intangibles were revalued downward by $126 m.l- i Increase (decrease)in provision lion to recognize the rapid changes occurring in certain for income taxes (in millions) 1986 1985 1984 technology businesses. Tax over book depreciation 5 87 $ 124 $ 168 Margin on installment sales (33) 48 28 pm Provision for warranties (27) 23 24 Phnrision forincome faires Provision for pensions (52) (171) (47) g Other - net go) 66 0 31)
$_(95) $ 90 $(161)
(In millions) 1986 1985 1984 us. fateral income taxes: Other- net reflects a number ofindividual timing difTer-Estimatal amount payable $1,062 $ 842 $1,051 ences, including those related to various portions of trans-Etlht of timing ditTerences (95) 90 (161) actions involving business dispositions, restructuring ex-Investment cralir deferral (amortned)- net pense provisions and, in 1984, reductions ofintangibles. (38) 35 41 929 967 931 e The U.S. investment tax credit (lTC) was repealed, with Foreign inmme taxes: some transitional exceptions, effectiveJanuary 1,1986. Estinutal amount guyable 198 135 143 ITC in 1986,1985 and 1984 aggregated $49 million, Ellhe of timing differences (24) (4) (88) 174 131 55 Other(prin(igully state and local income taxes) 97 45 44
$1,200 $ 1.143 $1,030 All GE consolidated U.S. federal income ta : returns have been closed through 1972.
u
$111 million and $110 million, respectively. In 1986, inveries
$87 milhon was mcluded in net earnings, compared with ,
$76 million in 1985 and $69 million in 1984. At the end of 1986, the amount deferred which will be included in December 31 On millions) 1986 1985 net earnings in future years was $376 million. Raw materials and work in process S 4,305 $3,618 Finished goods 2,379 1,926 Reconclilation from statutory to eHoctive Unbilled shipments 229 261 incom tax rates 6,913 5*805 1986 1985 1984 less revaluation to IJFO (1,752) (1,856)
U.S. federal statutory rate 46.0 % 46.0% 46.0 % I.lFO value ofinventories $ 5,161 $3,949 Reduction in taxes resulting from: Wrying tax rates of consolidated affdiates (including DISC and FSC) (2.2) (3.6) (3.9) About 80% of total inventories is valued using the LIFO Inclusion of G EFS earnings in before-tax method ofinventory accounting. income on an after-tax basis (6.3) (5.5) (4.5) Investment credit (2.3) (2.2) (2.1) e LIFO revaluations decreased by $104 milhon, $171 Unusual items (varying tax rates) (0.4) (0.6) (2.4) million and $125 million during 1986,1985 and 1984, income tax at capital gains rate (1.4) (0.2) (0.3) respectively. Included in these decreases were $51 million, Other - net (0.9) (0.6) (1.4) $128 m:dion and $125 million(1986,1985 and 1984, DTective tax rate 32.5 % 33.3% 31.4 % respe.tively) due to lower inventory levels, mainly in power systems. Also, in 1986 and 1985, there were net o 13ased on the h> cation of the component furnishing current-year price decreases. In 1984, $32 million of the g(xxis or services, domestic income before taxes was total decrease was due to business dispositions partly offset
$3,081 million in 1986($3,232 million in 1985 and by higher current-year prices.
$2,956 million in 1984). The corresponding amounts for foreign-based operations were $608 million, $200 million and $324 million in each of the last three years, respec- Property, plant andequipment rively. Provision for income taxes is determined on the basis of the jurisdiction imposing the tax liability. There-an mdu ns) 1986 1985 fore, U.S. and foreign taxes shown previously do not com-pare directly with these segregations. Major classes at thember 31:
Manufacturing plant and equipment land and improvements $ 27I $ 178 lluildings, structures and relatcd Cash and marketable securities equipment 4,087 3.4 19 O Machinery and equipment 12,061 10,218 Irasehold costs and manufacturing plant Deposits restricted as to usage and withdrawal or used as under construction 1,140 906 partial compensation for short-term borrowing arrange. Oil and gas properties 815 955 ments were not material. $18.374 $15,706 Carrying value of marketable securities was substan- Cost atJanuary I $15,706 $ 11,458 tially the same as market value at year-end 1986 and Additions - acquirn! with RCA 1,638 - 1985. Equity securities in the portfolio were carried at a - , her 2,M2 1,953 cost of $48 million and $206 million at December 31, Dispositions 0,011) (678) Other changes 0) (27) 1986 and 1985, respectively. Cost at December 31 $18,374 $15,706 Accumulated depreciation, depletion andamortization Current receivables nalance atJanuary 1 5 7,806 $ 7,089
"^
Current-year provision 1,460 1,249 Dispositi ns (736) (536) December 31 (In millions) 1986 1985 Receivable from: $ 8,533 $ 7,806 Balance at December 31 Custonus $5,748 $4,571 Associated companies 178 114 Property, piant and equipment Nonconsohdated a$liates 13 15 less depreciation, depletion and Others 1,425 1,4 34 amrtization at December 37 $ 9,841 $ 7.900 7,3M 6,131 less allowan(e for losses (156) (94)
$7,208 $6.n10 in
e Gznzrcl Electric Finznclzl Scrvicss, Inc. and Fungh:Id forbuzin::a d:v:lapm:nt consolidatedsfRIsates Currentandretainedearnings Funds held for longer-term future business development Fur the year (in millions) 1986 1985 1984 are invested in a variety ofsecurities, principally state, Earned income: county and municipal bonds and corporate preferred Earned income from operations $5,976 $3,805 $2,933 stocks. Estimated realizable value of these investments was Effect on investment in leveraged leases about the same as cost at December 31,1986 and 1985, fchange in tauate assunprions (172) - - Sale of stock by nonmnson, dated affiliate 10 - - Total earned income 5,814 3,805 2,933 Expenses: Otherinvestments Interest and discount expense 2,063 1,339 1,123 Operating and administrative expense 1,402 768 602 losses and policyholder benefits of December 31 (In millions) 1986 1985 insurance affdiates 1,439 876 583 Nonconsolidated financial services affiliates (a) $3,054 $2,311 Provision for losses on financing Associated companies (a) 414 293 p[*;gn f losses on other assets Miscellaneous investments (at cost)(b): Depreciation and amortization 403 2to 161, Government and govemment-guaranteed Total expenses 5,875 3,381 2.579 secunties 177 158 Other 258 344 Eamings (loss) More income taxes (61) 424 3M 435 50, Provision for income taxes: Marketable equity securities (c) 74 81 operat (173) 1I 25 Irss allowance for losses (63) (37) Effect on income taxes of change in tax
$3,914 $ 3,150 rate assumptions for leveraged leases (392) - -
Total provision (credit) for income (a) Includes advances at December 31,1986, of $24 million (non. taxes (565) I1 25 consolidated financial services affiliates) and $ 13 million (associ- Net earnings SM 413 329 ated companies). Retained earnings at beginning of period I,139 726 397 (b) Estimated realizable value about the same as cost at year end. Retained eamings at end of period $1,M3 $1,139 $ 726 (c) Carried at cost. Aggregate market value was $65 million atxl
$209 million at year-end 1986 and 1985, respectively. Gross un. Financialposition realized gains were $ 16 million and gross unrealized losses were December 31 (In millions) 1986 1985
$25 million at December 31,1986. Financing receivables:
Time sales and loans, net ofdeferred income $14,930 $11,854 o Investment in nonconsolidated financial services affili- Investment in financing leases 8,347 7,267 ates represents predominately GE's investment in General Total financing receivables 23,277 19,121 Electric Financial Services, Inc. (GEFS). GEFS includes Allowance for losses (603) (492) wholly owned General Electric Credit Corporation Financing receivables - net 22,674 18,629 (GECC) and Employers Reinsurance Corporation (ERC), Cash and short-term investments 405 509 and an 80% interest in Kidder, Peabody Group Inc. Marketable securities at cost 3,680 2,746 (Kidder). The investment in Kidder was acquired by [h,'i u7 ur d r a ements to resell I', GEFS in June 1986 and was accounted for as a purchase. Other receivables - net 4,325 938 During the normal course of business, GEFS and its affili- Equipment on operating ! cases - net 1,726 1,113 ates have minor transactions with GE and certain ofits Other assets 2,406 1.539 consolidated affiliates. Virtually all products financed by Total assets $53,823 $25,MO GECC are manufactured by companies other than GE. Notes payable: GEFS is included in GE's consolidated U.S. federal income Duc within one irar $17,741 $ 11,563 tax return. Condensed consolidated financial statements [g'""d under agreements to repurchase 1 ,' for GEFS follow, which mclude operations of Kidder and Securities sold but not 3rt purchased at market 3,525 - ERC from their dates of acquisition. Reserves ofinsurance afliliates 2,880 2,048 Pro forma net earnings of GEFS for the years 1986 and Other liabilities 4,076 1,265 1985, assuming acquisition of Kidder had been completed Total liabilities 46,948 19,706 at the beginning of each of those year 3, would not have Deferred income taxes 3,838 3,581 been significantly different from amounts actually Deferred investment tax credits 43 5I reported. Capital stock I I More information abot.t GEFS is in its annual report, Additional paid-in capital 1,347 1,152 which may be obtained from General Electric Financial Retained earnings 1,M3 1,139 Services, Inc., P.O. Box S300, Stamford, Conn. 06904. Other 3 10 Equity 2.994 2,302 . Total liabilities, deferred tax items and equity $53,823 $25.M0 45
Intangible assets Short-term borrowings
.. t .
December 31 (in millions) 1986 1985 December 31 (in millions) 1986 1985 Guxiwill $2,793 $117 Average Average 788 rate at rate at Other intangibles 105
$3,581
^" " "'
- 3I ^" * "' "" 3 I
$222 General Electric Company:
Notes t t Accumulated amortization ofgoodwill was $147 million $ 359 6.4% $ 301 7.5% and $111 million at December 31,1986 and 1985, respec- Commercial paper 897 6.2 50 7.9 tively. Accumulated amortization ofother intangibles was Consolidated affiliate
$308 million and $239 million at December 31,1986 and bank borrowings 334 29.6 601 31.6 1985, respectively. Goodwill and other intangibles at Other, including current ,
I ycar-end 1986 were mainly from the RCA acquisition, for ponion oflong. term b rr wings 223 342 which goodwill is being amortized on a straight-line basis $1,813 $1,297 over 40 3rars. Other intangibles and goodwill are being amortized over shorter periods as appropriate, ranging
- Other borrowings at December 31,1986, included from Gye to 20 years.
amounts from nonconsolidated affiliates of $146 million ($89 million at December 31,1985). Other borrowings at December 31,1985,also included $170 million of repur-Wherassets chase agreements. These agreements represented a loan by GE of U.S. Treasury Notes (classified as current market-December 31 (In millions) 1986 1985 able securities of $162 million) in connection with the
$ 549 borrowings.
l Inng-term raeivables $ 555 l Television program costs 461 - e The average balance of short-term borrowings, exclud-ing the current portion oflong-term borrowings, was g e Yc t$ 405 422
$3,200 milhon m 1986(calculated by averaging month- <
Deferred charges 318 122 Deferred income taxes 180 160 end balances for the year), compared with an average bal-Real estate development projetts 169 181 ance of $1,391 million in 1985. The maximum balances Customer financing 79 91 in these calculations were $4,742 million and $1,813 mil-Other 403 90 lion at the end of September 1986 and 1985, respectively.
$2,570 $1,618 The average worldwide effective interest rate for the year 1986 was 8% and for 1985 was 15%. These average rates The National Ilroadcasting Company capitalizes program represent total short-term interest incurred divided by the costs (including rights to broadcast) when paid or when a average balance outstanding.
program is ready for broadcast, if earlier. These costs are e Although the total unused credit available to the Com-amortized based tipon projected revenues or expensed
, , pany through banks and commercial credit markets is not when a program is determined to have no value. readily quantifiable, confirmed credit lines of approxi-mately $1.4 billion had been extended by about 49 banks at year-end 1986. Substantially all of these lines are also available for use by GECC and General Electric Financial Services, Inc. in addition to their own credit lines.
Accounts payable December 31 (in millions) 1986 1985 Trade accounts $1,972 $ 1,757 Collected for the account ofothers 342 180 Due to nonconsolidated afliliates 280 267
$2,594 $2,201 m
Othercostacndcxpens:s cccru:d Sh:re cwnsts'cquity The balances at year-end 1986 and 1985 includal com- Preferral stock up to 2,000,000 shares ($ 1.00 par value) pensation and benefit costs accrued o1'$1,067 million and is authorized, but no such shares have been issual. Com- $756 million, respectively. mon stock (par value $ 1.25) shares authorized total 550,000,000. Shares of common stock Long-terrn borrowings thember 31 On thousands) 1986 1985 19 &1 IssuedJanuary 1 463,282 462,928 462,928 Outstanding December 31 On millions) Shares for pooling ofinterests - 354 - 1986 1985 ssu tem 1 ,282 W,M M2,W8 7 %7 Notes Due 1989 $ 500 $- In treasury (7,387) (7,306) (8,052) 6%7 Notes Due 1989 500 - 12 %% Australian Dollar Notes Due 1989 (a) 103 - Outstanding 455,895 455,976 451,876 16%% Notes Due 1987-1989 (b) 85 - 11 %7 Notes Due 1990 (b) 75 - Share owners' equity 5 %% Notes Due 1972-1991 25 32 On milli ns) 1986 1985 1984 6%% Notes Due 1991 500 - Common stockissued 7 %% Eun -dollar Notes Due 1991 300 - ItalanceJeuary I and Decemtwr 31 $ 579 $ 579 $ 579 5.30% Sinking Fund Iktrntures Due 1973-1992 34 34 12%7 Notes Due 1992 (b) 100 - Othercapital 5 %7 Euro-yrn Notes Due 1993 (c) 191 - 13alancejanuary 1 $ 6(1 $ 610 $ 657 4 %7 Euro-dollar Discount Notes Due 1993 200 - li> reign currency translation 77 Euro-dollar Extendible Notes Due 1998 (d)(g) 200 - adjustments 75 08) 00) 8%% Debentures Due 1985-2001 217 217 Unrealized gains (losses) on snurities 87 Euro-dollar Extendible Notes Due 2006 (e)(g) 300 - held by insurance atTiliates (6) 15 (5) 7 %% Euro-dollar Extendible Notes Due 2006 (f)(g) 300 - Gain (loss)on treasury stock 8%9 Sinking linxl Dtbentures Due 2016 300 - dispositions 23 1 (2) Industrial development bonds 248 251 Italance Decemtwr 31 $ 733 $ 611 $ 610 All other 165 219
$4,351
$753 BalanceJanuary I $ 12,761 $11,493 $10,317 Adjustments -
11 (133) (a) 'Ihe Company has entered into certain contracts which result in a Net earnings 2,492 2,277 2,239 fixed U.S. dollar interest cost of 7.677. Dividends declared (1,08 D (1,020) (9 30) (b) Ikht originally mcurral by RCA but for which GE is now the obligor. Balance Dnember 31 $I4,172 $12,761 $ 11,493 (c) Notes are 3rn 35 billion at a fixed exchange rate of>rn 180.41 = Common stock heldin treasury
$ U.S. 1.00. Balancejanuary 1 $ 310 $ 313 $ 283 (d) Interest rate subject to annual adjustment at the Company's option Purchases 348 283 281 beginning in 1989. Dispositions:
(e) Interest rate subint to annual adjustnrnt at the Company's option Emplo>re savings p!ans (109) (113) (133) beginning in 1993. Stock options and appreciation (f) Interest rate subject to annual adjustment at the Company's optior, rights (71) (61) (39) beginning in 1991. Employw stock ownership plan (4 I) (l3) (37) (g) At annual rate adjustment dates, notes are redeemable in six>le or Dividend reinvestment arxl in part at the option of the Company or repayable at the option of share purthase plan (33) (29) (26) the holders. G,intnbution to GE IVnsion Trust (26) (22) - e All other long-term borrowings include original issue Conversion of GEOCC long-term premium and discounts, an adjustment to bring RCA debt (7) (25) (1I) borrowings at acquisition date to fair market value and a Incentive c mpensation plans 4 10 20 Exchange for GE h>ng-term debt - - (20) variety of borrowings by affiliates and parent components with various interest rates and maturities. Amounts due to U"'i"" 9"i'i'i""' - - nonconsolidated affiliates were $6 million at the end of Bal nce December 31 $ 375 $ 310 $ 313 1986 and 1985. The current Proxy Statement ir.cludes a proposal recom-e long-term borrowing maturities during the next five mended by the lhurd of Directors on Rbruary 13, 1987, years, including the portion classified as current, are which, if approved by share owners, would (a) increase $66 million in 1987, $30 million in 1988, $1,305 mil- the number of authorized shares of common stock lion in 1989, $137 million in 1990 and $821 million in from 550,000,000 shares eac h with a par value of S 1.25 1991. Tl ese amounts are after deducting debentures to 1,100,000,000 shares each with a par value of S.63; which have been reacquired for sinking-fund needs. (b) spht each presently issued common share, induding c
shares held in treasury, into two shares of common stock number of shares available for granting additional options each with a par value of $.63; and (c) increase the number at the end of 1986 was 9,274,996 (12,111,642 at the end of authorized shares of preferred stock from 2,000,000 of 1985). shares with a par value to $ 1.00 per share to 50,000,000 Requirements for shares of stock for incentive compen-shares with a par value of $ 1.00 per share. sation p*aus as describal in the Company's Pruxy State-The beginning balance of retained earnings for 1984 ment may be met within certain restrictions either from as previously reportal has been revisal downward by unissued shares or from shares in treasury.
$133 million to reflect the cumulative effect on years be- As of December 31,1986, approximately 3,973 indi-fore 1984 of the Company's change during 1986 from the viduals were eligible to receive allotments under incentive " full cost" method to the " successful efforts" method of compensation plan rules. Allotments were made for serv-accounting for oil and gas properties. Net earnings for ices rendered during 1986 to 3,628 employees.
1984 and 1985 have been restated to reflect this change. In December 1985, GE issual 354,000 new shares of - stock having a value of $24 million for an acquisition Cosnmitments and contingent liabilities I accounted for as a pooling ofinterests. The begmn,ng i e l n2 , 1985 balance of retainal earnings was increased by
$11 million for this transaction but prior years have not At December 31,1986, the Company had minimum been restated because the acquisition was insignificant to rental commitments under non-cancelable operating leases GIPS operations and financial condition. aggregating $2,333 million. Amounts payable over the Ilusiness activities of most foreign alTiliates are mainly next five years are: 1987 - $449 million; 1988 - $510 based on the U.S. dollar, and the effect, which is not mate- million; 1989-$288 million; 1990-$241 million; rial, of translating their financial statements is included in and 1991 - $207 million.
current-year earnings. However, the functional currency Also at year-end 1986, NBC had approximately $1.19 for a few affiliates is other than the U.S. doller, and the billion of commitments to acquire broadcast material or l effects of translating their financial statements are included the rights to broadcast television programs that require as a raluction in other capital. payments over the next five years. Other commitments and contingent liabilities, consist-ing of guarantees, pending litigation, taxes and other ( C "5id Otherstock-relatedinformation 'I3i"5'be eral to I" d* P "i " m i material f 'D' " " Ec""' relation " sCompany." financial to the y position. Stock option plans, appreciation rights and perfbrmance units are described in the Company's current Proxy State-ment. Requirements fbr stock option shares may be met within certain restrictions tither from unissued or treasury shares. During 1986, options were granted to 1,043 em- { ployees. As of December 31,1986, approximately 505 i l individuals were eligible to receive options and 1,528 per-sons held options exercisable then or in the future. Stock option information Average per slure Stures subjett Option Market (Stures in thousarxis) to option price price llalance at January 1,1986 9,179 $ 19.3 4 $72.75 Options grantet! 3.013 79.78 79.78 Options excrosetl (803) 35.13 75.60 Options surrerxleretl on exertisc of appraiation tights (153) 37.36 71.29 Options terminarct! (177) 62.96 - Italance at thember 31,1986 10,759 59.23 86.00 Outstanding options and rights expire, and the award pe-ried fbr outstanding perfbrmance units ends, on various dates from January 1,1987, to November 21,1996. The a
IndristrysegmentdetaHs L , u Revenues include income from all sources, i.e., both sales nearly as practical to equivalent commercial selling prices. of products and services to customers and other income. Slightly less than one-fourth of external sales in 1986 were Details of revenues for industry segment reporting are to agencies of the U.S. government, GE's largest single shown below. In general, it is GE policy to price sales customer. Most of these sales were aerospace and aircraft from one component within the Company to another as engine products arxl services. Revenues (in millions) Ibr the years ended Dcrember 31 Total revenues Intersegmenc revenues External revenues 1986 1985 1984 1986 1985 1984 1986 1985 1984 Aerospace $ 4,318 $ .2,085 $ 2,622 $ 73 $ 33 $ 37 $ 4,245 $ 3,052 $ 2,585 Aircraft engines 5,977 4,712 3,835 57 87 IG4 5,920 4,625 3,731 Consumer products 4,654 3,220 3,466 180 131 129 4,474 3,089 3,337 Financial services 585 499 448 - - - 585 499 418 Industrial 4,711 4,762 4,495 596 561 322 4,115 4,201 4,173 htjor appliances 4,107 3,617 3,650 - - - 4,107 3,617 3,650 Materials 2,331 2,119 2,280 35 37 51 2,2% 2,082 2,229 National Broadcasting Company 1,817 - - 2 - - 1,815 - - Pbwer systems 5,262 5,824 6,289 185 243 289 5,077 5,581 6,000 Technical products and services 3,266 2,317 2,402 160 113 112 3,106 2,20. 2,290 All other 774 - 434 2 - - 772 - 434 Corporare items & eliminations (1,077) (903) (990) (1,290) (1,205) (1,044) 213 302 54 Total $36,725 $29,252 $28,931 $ - $ - $ - $36,725 $29,252 $28,931 Assets Proporty, plantand equipment (In millions) At December 31 lbr the years ended December 31 Depreciation, depletion Additions and amortization 1986 1985 1984 1986 1985 1984 1986 1985 1984 Aerospace $ 2,175 $ 1,367 $ 1,182 $ 311 $ 157 $ 151 $ 111 $ 81 $ 61 Aircraft engines 4,665 4,031 3,328 332 333 356 194 161 136 Consumer products 3,530 2,199 2,178 429 171 236 155 107 121 Financial services 3,455 2,734 2,311 - - - - - - Industrial 3,141 2,896 2,927 258 213 271 196 179 161 Major appliances 1,448 1,509 1,437 101 14 6 111 95 78 75 Materials 3,602 3,276 2,928 608 551 696 262 244 194 National Broadcasting Company 3,385 - - 385 - - 28 - - Ibwer systems 3,589 3,668 3,713 127 183 307 173 290 213 Technical pnxlucts and services 3,251 1,706 1,795 859 107 158 185 60 95 All other 231 - - 95 - 14 8 - 11 Corporate items & eliminations 2,i19 2,773 2,756 175 92 119 53 49 33 Total $34,591 $26,162 $24,555 $3,680 $ 1,953 $2,419 $1,460 $1,249 $1,103 A reconciliation of totalindustry segment operating Property, plant and equipment additions for 1986 in-profit shown on page 35 with earnings before income cluded $1,638 million acquired with RCA. taxes and minority interest is shown below. The presentation of industry segments was modified in Reconcl#ation of operating prost with earnings 1986 to reflect the acquisition of RCA during the > var. before income taxes and minority laterest Industry segments in which there are no changes because (in milhons) 1986 1985 1984 of the RCA acquisition are: aircraft engines, financial serv-Totalindustry segment operatir.g ices, major appliances, materials and power systems. As profit $4,310 $4,068 $3,779 discussed below, the other segments include portions of Interest and other fir;ancial (harges (625) (361) (335) RCA operations commencing withJune 1,1986. Al-se nt and7nt rse r though the RCA acquisition directly affects only 1986 eliminations ( (275) (161) amounts, presentation ofindustry segments for pnor }rars Earnings before taxes and minority has been revised in certain instances to improve compara-interest $3,689 $ 3,4 32 $ 4,280 bility. These revisions include: separate reporting of aero-space, formerly included in the technical products and 49
services segment; and inclusion of mobile communications, Douglas MD-11. Of growing importance is the CFM56 formerly part of the consumer products segment, in the engine family produced by the joint company of GE and technical products and services segment. SNECMA of France. Applications include the Boeing Prior->rar amounts have been restatal for the 1986 737-300 and 737-400, the re-engined McDonnell Doug-change in accounting for oil and gas properties from the las DC-8 Super 70s and the re-engined Boeing KC-135 " full cost" method to the " successful cfTorts" method, and military tanker. Advanced CFM56 engine models are used oil and gas results previously included in the all other for the Airbus Industrie A320 and will be offered on the segment fcc 1982-84 are now reflected in those years in long-range Airbus Industrie A340. GE also produces jet the materials segment. engines for executive aircraft and regional commuter The presentation of operations by industry segment has airlines. also been modified to stress operating profit rather than e consumer products is mainly video, audio and light-net earnings, which myolve numerous accountmg alloca-ing products. Video products include black-and-white and tu ns and are no longer bemg presented. In accordance color television receivers and video cassette recorders and with a release issued in 1986 by the U.S. Securities and cameras sold using both the GE and RCA brand names. Exchange Commission, certam unusual items (see note 7) Audio products include radios, tape recorders, citizens are now mcluded m the determmatmn ofoperatmg profit band radios and household telephone products using GE by mdustry segment. Prior 3rars have been revised accord-brand names. Video and audio products are sold primarily mgly. Unusual items, mcludmg the net pretax impact of through independent distributors to retail dealers. This unusual gams (costs), as mcluded m operatmg profit are segment also inclades considerable royalty income origi-summarized below. nating from RCA's worldwide licensing agreements. Unusualitems includedin operating pro #t Lighting products include a wide variety oflamps: incan-(In millions) 1986 1985 1984 descent, fluorescent, high-intensity, halogen and specialty Aerospace 5 (4) $ (4) $- as well as wiring devices, lighting fixtures and ballasts, Aircraft engines 4 (3) (50) rechargeable batteries and quartz products. Markets and I Consumer pnxlucts (35) 40 91 customers are wotidwide and extremely varied, ranging l Financial services - - - from household consumers to commercial and industrial Industrial (72) (80) (147) end users and original equipment manufacturers. One Wjor appliances (20) (68) (81) television station (in Denver) is also included in this seg-daterials - (15) (28) rnent, which in prior years included certain former GE ii ucts and services nterests in cabision and Mcasting as weH as Ms ( All other 15 370 500 f rmer household appliance operations (see note 7). Corporate 24 (131) (40) e Financial services includes a wholly owned, noncensol-Net redaction in operating profit $(261) $ (22) $(145) idated afEliate, General Electric Financial Services, Inc. (GEFS), which in turn owns all of the stock of General A summary description ofeach of the industry seg- Electric Credit Corporation (GECC) and Employers Rein-ments follows. surance Corporation (ERC) and 80% of the stock of Kid-o Aerospace products and services span space sciences, der, Peabody Group Inc. (Kidder). GECC primarily en-radar systems, electronics and microelectronics, ordnance gages directly or through afEhates m distnbution sales systems, avionics, computer software, space satellites, and fin ncmg, c mmerc al and industrial financing, and real simulation and control systems. RCA aerospace and de- estate financing. Although leasmg has been a major factor fense businesses complement and add to GE's spectrum of in GECCs growth in recent years, GECC has been actively aerospace activities. Most aerospace sales are to agencies changmg its investment portfoho to place greater empha-of the United Stata government, principally the Depart. sis n asset management. ERC is s major participant m the ment of Defense and the National Aeronautics and Space pr perty/ casualty remsurancc busmess m the United Administration. States. Kidder is an investment bankmg firm whose capa-bilities are expected to complement GECC. Other finan-o Alecraft engines and replacement parts are manufac- cial services activities include two consolidated afliliates: tured and sold by GE for use in military and commercial General Electric Venture Capital Corporation provides aircraft, for use in naval ships and for use as industrial venture capital, primarily to new or existing high-power sources. GE's military engines are used in a wide technology companies; General Electric Real Estate Credit variety of aircraft that includes fighters, bombers, . rans- Corporation is an equity investor in selected real estate ports and helicopters. CF6 engines are used in the development projects. McDonnell Douglas DC-10, the Airbus Industrie A300 and the Boeing 747. More advanced CF6 engine models have been selected to power the Boeing 747 and 767, the Airbus Industrie A310 and A300-600 and the McDonnell so
o industrial encompasses factory automation products, and three standard AM and five FM radio bnudcasting semiconductors (which have been considerably augmented stations. The NBC Television Network is one of three by RCA operations), motors, electrical equipment for in- competing major national commercial bnudcast television dustrial and commercial construction, GE Supply Com- networks and serves more than 200 regularly affiliated sta-pany Division and transportation systems. Customers for tions within the United States. The television stations these products generally include electrical distributors, NBC owns and operates are located in Chicago, Cleveland, original equipment manufacturers and industrial end Los Angeles, New York and Washington, D.C. NBC's users. Factory automation products cover a broad range of three radio networks compete with several major national electrical and electronic products, including drive sys- commercial radio networks. The three NBC radio net-tems, with increasing emphasis on manufacturing and works serve more than 600 regularly afEliated radio sta-advanced engineering automation applications. Semicon- tions within the United States. The eight radio baudcast-ductor operations provide the latest in semiconductor ing stations NBC owns and operates are located in technologies to other GE operations as well as to external Chicago, Boston, New York, San Francisco end Washing-customers. An afliliate (Intersil)is a supplier of advanced ton, D.C. Broadcasting operations are subject to FCC reg-integrated circuits and data acquisition products to the ulation and station licensing. The FCC order approving merchant market as well as a source ofintegrated circuits GE's acquisition of RCA includes the requirement for di-for GE's diversified product lines. Motors and motor- vestiture within 18 months of the AM station in New related products consist mainly of appliance motors and York and the AM station in Chicago and three FM stations controls but also include larger sizes of motors for a broad -one each in New York, Chicago and Washington. range ofindustrial users. Motor products are used within These divestitures are not expected to have a material ef-GE and are also sold externally. Electrical construction fect on GE's business, operations or financial condition. equipment focuses on electrical distribution and circuit e Power systems serves worldwide utility, industrial and protecnon equipment needed for installation in commer-governmental customers with products for the generation, cial, mdustnal and resalennal buildings. GE Supply . . .. . . transmissi n and distnbun.on ofelectncity; mdustnal Company Division operates a nationwide network of elec-drives; and related construction, instalianon, engm, een,ng trical supply houses. Transportation systems include and repair services. Although GE remains a leader in most diesel-electric and electric k>comotives, transit propulsion p wer systems pr ducts, domesnc and foreign markets equipment, motorized wheels for off-highway vehicles, have been declining in recent years and worldw ide compe-such as those used in mining operations, and drilling , on n has konstense. New order rates are quite low drives. Locomotives are sold principally to domestic and , by long-term histoncal standards and backlogs for vir-foreign railnuds, while markets for other products include tu lly all pnxlucts are dechnmg. Company management state and urban transit authorities and industrial users. continues vigorous efforts to improve cost-competitiveness o Major appliances includes both GE and Hotpoint and to adapt products and marketing to the changing en-brands of kitchen and laundry equipment, such as refriger- vironment. Steam turbine-generators are sold to the elec-ators, ranges, microwave ovens, freezers, dishwashers, tric utility industry, to the U.S. Navy and, for cogenera-clothes washers and dryers, and room air conditioners. tion, to private industrial customers. Marine steam A major partion of major appliance sales is to a variety of turbines and propulsion gears are also sold to the U.S. retail outlets. The other principal market consists of resi- Navy. Gas turbines are used principally as packaged power dential buildmg contractors who install major appliances plants for electric utilities and for industrial cogeneration in new dwellings. and mechanical drive applications. Centrifugal compres-s rs are s Id f r applic ti n in g s reinjection, pipeline o Materials includes high-performance engineering plas-tics, sihcones, industrial cutting materials, laminates and ceramics that are sold to a diverse customer base (mainly manufacturers) in the United States and abnud. Materials also includes 12dd Petroleum Corporation, an oil and nat-ural gas developer and supplier with operations mainly in the United States. o National Broadcasting Company (NBC) is the current leader in network television. NBC's principal businesses are the furnishing within the United States of network television and radio services to afTiliated television and ra-dio stations, the production oflive and recorded television and radio programs, and the ownership and operation, under licenses from the lideral Communications Commis-sion (FCC), of five VHF television bnudcasting stations 51
service and such process applications as refineries and am- interchange and automated clearinghouse services, which monia plants. Nuclear operations have become increas- are otTered to commercial and industrial customers ingly oriented toward plant support services and fuel as- through a worldwide network; application software pack-semblies with considerably less effort devoted to new ages; custom systems design and programming services; boiling-water-type power reactors, inasmuch as there have and independent maintenance and rental / leasing services been no nuclear plant orders in the United States since the for minicomputers and microcomputers, electronic test in-mid-1970s and activity in international markets is very struments and data communications equipment. The low. Power delivery products include transformers, relays, Calma Company designs, manufactures and sells interac- , electric load management systems, power conversion sys- tive graphics systems for computer-aided design and tems and meters, principally for electric utilities. Con- manufacturing. struction and engirgring services include management e All other for 1986 includes RCA's joint venture inter-and techmcal expertise for large projects, such as transtnis-ests in audio records and tapes and a carpet manufacturer. sion lmes; mamtenance, mspecnon, repair and rebuildmg Both of these businesses were sold to third parties in De-of electncal apparatus produced by GE and others; on-site . cember 1986. Also,1986 results mclude small RCA oper-engineering and upgradm.g of already m. stalled products . ti ns eng ged m. developing and sellm.g certam new prod-sold by GE end others; and environmental systems fbr ucts. In prior years, the all other segment through the first unh..nes. quarter of 1984 includes mining activities of Utah Inter-
- Tschnical products and services consists of technol- national Inc., most of which were disposed ofin 1984 and ogy operations providing products, systems and services to 1985 (see note 7).
a variety of customers. Businesses in this segment include - medical systems and services, communications and infor-marion services, and the Calma Company. Medical sys-tems include magnetic resonance (MR) scanners, com-puted tomography (CT) scanners, x-ray, nuclear imaging, ultrasound, and other diagnostic equ;pment and support-ing services sold to domestic and foreign hospitals and medical facilities. The principal communications b'isi-nesses are the furnishing ofdomestic satellite communica-tions services by RCA Americom, which operates seven domestic satellites providing distribution services for cable television, broadcast television and radio, and voice, video and wideband data services to agencies of the federal gov-ernment; and the furnishing ofinternational communica-tions services by RCA Globcom, which provides telex, telegram, leased communications and other services over an extensive network ofinternational satellites and under-sea cable facilities. Common carrier services of Americom and Globcom are subject to regulation by the FCC. GE's mobile communications pnxiucts consist mainly of mobile , and hand-carried two-way and one-way radio equipment and cellular telephones for a variety ofcommercial and government customers. A separate services component provides a variety of specialized services to government customers. Information services are provided both to inter-nal and external customers by GE Information Services Company, GE Consulting Services Corporation and the GE Computer Service operation. These include enhanced computer-based communications services, such as data network services, electronic mail, electronic data u _ _ ___ ________ . _ _ _ _ _ _ _ _ _ _ _ _______l
.,... .~ ,
Geographicsegmentinformation l Fa a Revenues (in millions) Fur the years ended Dorember 31 Total revenues Intersegment revenues External revenues 1986 1985 1984 1986 1985 1984 1986 1985 1984 United States $33,543 $26,811 $25,963 $ 639 $ 671 $ 680 $32,964 $26,140 $25,283 Far East including Australia - - 1,017 - - 440 - - 577 Other areas of the world 4,384 3,650 3,330 563 538 259 3,821 3,112 3,071 Intracompany eliminations (1,202) (1,209) (1,379) (1,202) (1,209) (1,379) - - - Total $36,725 $29,252 $28,931 $ - $ - $ - $36,725 $29,252 $28,931 OperatingproRt Assets rur the years ended December 31 At Dorember 31 1986 1985 1984 1986 1985 1984 United States $3,563 $3,622 $3,270 $30,604 $22,495 $20,723 Far East including Australia - - 159 - - 681 Other areas of the world 740 435 331 4,090 3,777 3,272 Intracompany eliminations 7 11 19 (103) (110) (121) Total $4,310 $4,068 $ 3,779 $34,591 $26,162 $24,555 Geographic segment information is based on the location $2,158 million, $116 million and $1,503 million, re-of the operation furnishing goods or services. U.S. reve- spectively, at December 31,1985; and $2,253 million, nues include exports to external customers, and royalty $118 million and $1,582 milhon, respectively, at Decem-and licensing income from foreign sources. Commencing ber 31,1984. in 1985, data for Far East including Australia have been rts to externalcustomers combined with other areas of the world. In prior years, operations of Utah International, GE's former affiliate, had (s e 1986 1985 1984 been the most significant contributor to Far East including Australia. Europe $1,634 $1,215 $ 950 Pxific basin 985 965 1,125 Revenues, operating profit and assets associated with Middle East and Africa 490 533 437 foreign operations are shown in the tables above. At 476 502 603 Americ s December 31,1986, foreign operation liabilities, minor _ Other areas 124 134 140 ity interest in equity and GE interest in equity were Total $3,709 $3,349 $ 3,255
$1,871 million, $112 million and $2,107 million, re-spectively. On a comparable basis, the amounts were g Quartertyinformation (unaudited)
Operations " successful efforts" method of accounting for oil and gas (Dollar amounts in millions; First Second %ird luurth properties. Gross profit from sales is sales of goods and per-share amounts in dollars) quarter quarter quarter quarter services less costs ofgoods and services sold. 1986: y;,gg,,g,,,g ,,,,y ,,,y,g Sales of goals and services $5,880 $7,785 $9,278 $12,268 1,605 1,945 2,386 3,088 Dividends Common stock Gross profit from sales declared market price range Net earnings 537 621 6af 730 Net earnings per share 1.18 1.36 1.32 1.60 1986 1985 1986 1985 1985: First quarter 58e 55e $79W66% $65 %-55% Sales ofgoods and services $6,197 $6,842 $6,521 $8,726 Second quarter 58 55 82W71% 62 %-58 Gross profit from sales 1,732 1,952 1,700 2,059 nird quarter 58 55 82 %-71 61 %-56 % Net earning 500 576 563 638 ruurth quarter 63 58 88 %-70 % 73 %-56 % Net earnings per share 1.10 1.26 1.24 1.40 In the United States, GE common stock is listed on the Amounts for 1985 have been restated for the Company,s New York Stock Exchange (its principal market) and on change during 1986 from the " full cost method to the the 130ston Stock Exchange. As of December 8,1986, there were about 482,000 share owners of record. 53
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Boaniof Directors, continues m e m. m - a m 1.2 - Thornton E 13radshaw, David C. Jones and William The Operationi Committa met five times, including joint French Smith - all former Directors of RCA Corporation sessions with the Audit, Finance, and Technology and - were added to GE's Ik>ard of Directors in June 1986. Science committees. It reviewed the status of the RCA Af r. liradshaw is a former chairman and chief executive integration as well as the operations of the Afajor Appli-officer of RCA. Ilefore joining RCA in 1981, he served as ance, Aircraft Engine, hiedical Systems and Plastics president of Atlantic Richfield Company for 17 years. A businesses. graduate of Harvard University, Afr.13radshaw taught at The Public Responsibilities Committa, at its two meetings, the Harvard Business School before beginning his business evaluated public issues that could have a major impact on career. GE. It also reviewed the activities of the General Electric hfr. Jones is a retired U.S. Air li>rce general and was li>undations. chairman of theJoint Chiefs ofStaff from 1978 to 1982. The Tahnology andScience Committu held two meetings, Earlier in his career, he served as commander-in-chief of both joint sessions with the Operations Committee. Its the U.S. Air li>rce in Europe and Air li>rce chiefofstaff, activities included an inspection of RCA Aerospace and hfr. Smith is a senior partner in Gibson, Dunn & Defense facilities in NewJersey. Crutcher, a Los Angeles law firm that he joined in 1946. A graduate of Harvard law School, he served as U.S. at-torney general from 1981 to 1985. Committees of the Board James G. Boswell 11, a Director since 1971, chose not to stand for re-election in 1986. Alr. Boswell provided Audit Committee Opemtions Committee R r ker, valuable counsel during his 15-year tenure, and his inter- an Henry , jllman, est in technology and his entrepreneurial spint made sig- bwrence E. Ibunker bwrence A. Bossidy, nificant contributions to the Company. Gertrude G. hiichelson Vice Chairman Bartura Stort Preiskel Thornton E Bradshaw The Ikiard, which includes the 19 Directors I3ictured Irwis I Preston Silas S. Cathcart alphabetically on the preceding pages, held 10 meetings Frank it.T Rhodes Roben E. hiercer in 1986. At its November meeting, the Board increased Barbara S< ort riciskei the quarterly dividend from $.58 per share to $.63 per Finance Committee IewisI Preston Roben E. hfener. Andrew C. Sigler slure. Cluirman William French Smith in addition to regular meetings, the Directors partici- John E Wekh,Jr., pared on the following committees that aid the Board in Vice aainnan Public Responsibilities its duties. Rkhard T. Baker Committee Charles D. Dkkey,Jr. Ilenry H. Henley,Jr., The Audit Commithe, w hich met four times, includes lienry H Henley,Jr. Chairman only Directors from outside GE. During the year,it re- D',$ L Johnt el h j , viewed the activities and independence ofGh s mdepen- w,lter B. Wriston akhard T. Baker dent public accountants and the activities of the Com- Thornton E Bradshaw pany's internal audit statT. The committee also reviewed Management bwruwe E. Fuuraker Developmentand Henry L Hillman the Company. .s mternal fmancial controls and compliance Compensaffon GenruJe G. h!k helson with key GE policies, including those related to the de- Committee Barbara Scott Preiskel [enSe procurement process. Walter B. Wristm, Andrew C. Sigler The Finance Commi/Ar examined the Company's finan- SdOSY$an cial position, its pension funding and trust operations, its Henry it. Henley Jr. Technologrand foreign investments, the impact of tax law changes on GE, Henry L Hillman Science Committee
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the fmancing of the RCA merger and other matters involv- "$nRhodes, ing large-scale utilization of Company funds. It held four Nominating Committee Edward E. Hmd.Jr., matings. Charles D. Dkkey.Jr., Vice Chairman The Alanagemtnt DatlopmentandCompensation Committa g,,fgjR,, $l,l,*gN',We', met 10 times. In addition to approving changes in GE's Henry H. Henley,Jr. Henry L Hdiman management, it reviewed the Company's exempt salary GenrudeG hh helsm David C. Jones structure and executive compensation programs. The Nominating Committa, which held three meetings,
$'(('y;'y considered candidates for the ik>ard and recommended the committee structure and membership for the following
> var. 56
M:nng: ment <xs of r h,.a,, is, i,s>> Ccrporate Executive Officers , John F. Nelch, Jr. Lawrence A. Bossidy Edward E. Nood, Jr. PaulW. Van Orden Chairman of the Board and Vice Chairman of the Board and Vice Chairman of the Board and Executive Vice President Chief Executive Officer Executive Officer Executive Officer Robert W. Speet:en Charles V. Sheehan
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mq Dennis D.Demmerman Frank P.Doyle Jack O. PeiHer Nolter L Robb Senior Vice President, Finance Senior Vke President, Relations Senior Vice President, Executive Senior Vice President, Research and Management Development
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NetterA.Schlotterbeck Roland W. Schmitt Nalter W. Will:ams Senior Vice President, General Senior Vice President and Senior Vice Prr3ident, Marketing Counsel and Secretary ChiefScientist and Sales Corporate Staff Officers NigelD.T Andrews Fred W. Garry Harry t Rein W. Roger Strolow Vke President, Business Vke President, Engineering and Presk%t and Chief Executive Vice President, Environmental Development and Planning Manufacturing Offa er, General Electric Venture Programs Dennis J. Carey Joseph Hendros b'UP"""" Leonard Vickers Vice President, Audit Staff Vice President and Deputy General .Jacques A. Robinson Vice President, Marketing
'"" ' " '"""'"""' R. Howard Annin, Jr.
Thomas R. Casey, M.D. U"5E"'" Joyce Hergonhan 'I"P"*"* Yke President, Western Regional Yke President and Medical Director Vice President, Public Relations EdwardL Scanlon Relations s J. Ca@ te P dent, Employr Yke President and Comptroller Phillips S. Peter f,n R Md J. D'Am@ Vice President, Government Vke President, Marketing and I E Relations HenryJ. Singer Sales - Customer Development p g g,, n aAcung ad Arthur V. Puccini e Pm; Chairman of the Board and , President, General Electric Yke President Emg lovec Relations Investment Corporation EdwardJ. Skiko Vice President, Information Technology 57
Operating M:n g:m:nt a,m,.a,r u. v,w T.:chnologyBusit; esses summmmmmmmmmmmmmmmmme summmmmmmmmmmmmmmmmme - nummmmmmmmmmmmmmmmumes Aerospace Aircraft Engine FactoryAutomation Plastics se t Marion S. Richardson
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Vke President, Factory Automation Y Robert P. Collins President and Chief Executive y h, s Z 4" 4, , Officer, GE-Fanuc Automation North Anrrica,Inc.
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~3 Allan J. Rosenberg N' ' " ' ' Y"" " " ' ' " " ; " " ' ' '' '"*I I" '
Vice President, Ftderal and Robert D. Desrochers - cj asdcs W Electronic Systems Vke President, Finante Thomas H. Fitzgerald Robert G. Stiber Sam Dolfi '"""" Vice President, Asionic and Vke President Human Resources '"E'"" Electronic Systems ** Robert C. Hawkins # Ladislaus W. Warrecha Vke President, Lynn Pnduct * " " ' ' """ " Yke President, Aerospue Operations Herbert G. Hammrath Resourtes Vice President, Sales Lee Kapor John M. Trani Yke President, Commercial Senior Vice President, hiedical L DonaldSimpson Engine Operations Systems Vke President, hianufacturing Azrospace and Edward C. Bavaria Robert L Stocking Uwe S. Nascher Defense Vice President, Airline Vice Presilent, hlarketing Vice President, biarketing pr , y y b'"k'""Y Joseph G. Wirth 4 p RobertJ. Smuland Vke President, Tnhnoiogy [t - - Vke President, brine & {! . ' i gi : Industrial Engines am! Serw ke fu . y W. Coorge Krall Ip 3 ( Vke President, Evemlale I! ! Pnxtuctmn Frank E. Pickering Yke President, Engmeeting and
. 1 Tahnology John D.Rittenhouse Robert C. Tarnbull Executive Vke President, Acrospue Vnc President, hiihtary Engine aml Defense - RCA Pn.;nts ami Programs Charles A. Schmidt George H. Nord Vke President, Astro-Spae Vke President, Governnwnt Pnducts Programs 58
Ccro Manufacturing Businesses - ammmmmmmmmmmmmmmmmma - mummmanummmmmmmmmma Ccnstruction MajorAppliance PowerSystems Transportation Equipment Systems Gzry L Rogers
~
CarlJ.Schlemmer Vke President. Trarcqurtation Vue President, Construtinen ' Equipnrnt Systems Dsvid M. Engelman g , yy Vke President, Sales t , Y Ughting 'l Roger W. Schipke John A. Urquhart Senior Vke President, Major Senior Vice President, Power Appliante Systems Thomas E. Dunham NeilL Felmus Yke President, Produtrion Yke President, Nuclear Energy
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.* Bruce A. Enders Bertram Wolfe Vie President, Marketing Vke President and Chief i
' " " ' ' ' "#' Y"'""
Stephen J. O'Brien Vnc President, Salo and Servke ""'"# RusseIIL Noll, Jr. Jshn D. Opio Gerald R. Cote Vite Prnident, Turbine Vke Proident, G>nsunwr Senior Vke President, l.ighting MichaelD, Lockhart Services Eugene F. Apple Vke President, Finante and Vke President Tuhnology John C. Truscott liusiness Suplvrt Vic President, Tuhnology William S. Frago DelbertL Williamson Vue Prnident, Marketing and Vne President, Marketing Sales yOtor Clyde D. Keaton Robert P. Mozgala V e Presklent, Utiliry & Vue President, Pn=lu(rion David C. Genever-Werfing industrial Sales and Ser kes Vke Proklent Motor Eugene J. Kovarik Vxe President, R>wcr Delivery Roger D. Mors, Vkc President, MarketinX J. Richard Stonesifer Vnc President, International Sales and Servkes Frank D. Kittredge Vke President, International Sales Ikvelopnwnt Giorgio Orsi Managing Dirutor, SADE/ SADEL\1l Construttion W
Operating Mcnagsmsnt, e=ntinued S:rvices Businesses Support Operations Ccmmunications and NBC ConsumerElectronics LaddPetroleum Services
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..' Chain. in of the Ikurd and Chief h_, . Executivt Of6cer,12dd Petroleum l h
E4 Mru. Corporation. Semiconductor CarlR. Turner Vice President, Semiconductor Eugene F. Murphy Robert C. Wright Richard W. Miner James E. Dykes Senior Vke President, President and Chief Executive Senior Vice President, Consumer Vice President, Business Communications and Services Offxer, National Broadcasting Electronics Development
'"P'"Y' I" D. Joseph Donahue ra.
farhon
;{ Robert C. Butler Vice President, Engineenng P "" "
Information St rvkes Company Joseph F. Fogliano Calma ( ']d p Vice President, Manufauuring Lawrence K. Grossman DanielW. McGlaughlin President, NBC News rtin President, Calma Gimpany p# . .
# * . *# ; N{an RaymondJ. Timothy Distribution Group Executive Vice
- President RichardE. James
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. Executive Vice President Jurgen F. Niffka Grry C. Wendt President and Chief Operating Of fuer, General Electric Financial
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Chairman of the ikurd and Chief Executive Of6cer, General Electric do Brasil S. A. Servius, Inc.; President and Chief 8 Exec utive Of6ter, General Elet tric PaulH. Way Credit Corporation (GECO Chairman of the Ikurd and Chief Executive Of6cer, Caribbean Lso A. Halloran Cxnetal Eluuic Gmpany, Inc. 4,,,, g, y;,y, Senior Vice President, Finance
& nior Vice President, Corporate RodgerE. Farrell Michael A. Carpenter Trading Vke President and General
[xecutive VKc President Manager, AMean G>unnies y,g, y p,,gy,, Dzn L. Hale Vice Pre <ident, GE Supply Senior Vice President, GECC Corporate Finante Scruces Charles R Piw President and Chief Executive International Jzm64 H. Oranne Offxer, GE Trading Company Executive Vke President Paolo Fresco Bruce O. Roberts VKe President, International Szrnard R Long Yne President, Sourcin8 Operations Senior Yke President, GECC Distribution Sales I inarwing Rziph D. DeNunzio Chairman and Chief Exnutive Of6cer, Kidder, ibluly Group Inc. Michael G. Fitt President and Chiet Executise Oftwer, Emplogrs Reinsurante Corluration l 60 l
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N id,] I k GENERAL $ ELECTRIC NUCLEAR ENERGY BUSINESS OPERATIONS GENERAL ELECTRIC COMPANY e VALLECTOS NUCLEAR CENTER e PLEASANTON, CALIFORNIA 94566 March 25, 1987
'U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Attention: Document Control Desk
References:
- 1) Docket 50-18
- 2) Docket 50-70 l 3) Docket 50-73
! 4) Docket 50-183 I l Gentlemen: As is customary, copies of the General Electric Annual Report are forwarded to the Commission in order to provide updated General Electric corporate and l financial information. Accordingly, copies of the 1986 Annual Report are enclosed for the referenced dockets. l Sincerely, I [ G. E. Cunnin am Senior Licensing Engineer (415) 862-4330
/ca Enclosures V I u i 1
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