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Show GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS(Continued) 6. SHORT-TERM BORROWINGS The average balance of short-term borrowings, excluding the current portion of long-term borrowings, was $573.7 million during 1975 and $558.5 million during the first six months of 1976 (calculated by averaging all month-end balances for the periods). The maximum balance included in the 1975 calculations was $641.0 million at the end of February 1975 and the maximum balance included in the 1976 calculation was $583.9 million at the end of January, 1976. The average interest rate was 11.3% and 13.6% for 1975 and the first six months of 1976, respectively. These average rates were computed by dividing total short-term interest expense for 1975 and annualized short-term interest expense for the six months ended June 30, 1976 by the average monthly balance outstanding. Parent borrowings are from U.S. sources. Borrowings of consolidated affiliated companies, most of which are foreign, are primarily from sources outside of the U.S. Current portion of long-term borrowings at December 31, 1975 includes General Electric 3 1/2% Debentures ($84.3 million) retired in May 1976. Although the total unused credit available to the Company through banks and commercial credit markets is not readily quantifiable, informal credit lines in excess of $1 billion had been extended by approximately 130 U.S. banks at December 31, 1975 and June 30, 1976. 7. LONG-TERM BORROWINGS Long-term borrowing amounts are after deduction of the face value of securities held in the treasury as shown below. December 31, June 30, 1975 1976 (in millions) General Electric Company: 5.30% Debentures...................................................... $36.7 $31.1 7 1/2% Debentures........................................................ 14.7 18.0 General Electric Overseas Capital Corporation: 4 1/4% Bonds................................................................. 6.9 6.9 During 1975 General Electric 5.30% Debentures having a face value of $10.0 million ($10.0 million for six months ended June 30, 1976) and a reacquired cost of $8.4 million ($8.3 million for six months ended June 30, 1976) were retired in accordance with sinking fund provisions, and General Electric 5 3/4% Notes having a value of $6.3 million were retired during 1975 in accordance with prepayment provisions. Borrowings of General Electric Overseas Capital Corporation (a wholly-owned consolidated affiliate) are unconditionally guaranteed by General Electric as to payment of principal, premium if any, and interest. This Corporation primarily assists in financing capital requirements of foreign companies in which General Electric has an equity interest as well as financing certain customer purchases. The Corporation's 4 1/4% Guaranteed Bonds due in 1985 were convertible through November 1975 into General Electric common stock at $65.50 a share. Bonds having a face value of $11.2 million were converted in 1975. Borrowings also include 4 1/4% Guaranteed Debentures due in 1987, which are convertible until June 15, 1987 into General Electric common stock at $80.75 a share; and 5 1/2% Sterling/Dollar Guaranteed Loan Stock due in 1993 in the amount of 3.6 million ($7.3 million at December 31, 1975 and $6.4 million at June 30, 1976), convertible from October 1976 into General Electric common stock at $73.50 a share. Other long-term borrowings were largely by foreign affiliates with various interest rates and maturities. Long-term borrowings at December 31, 1975 and June 30, 1976, including the portion classified as current, mature as follows during the next five years: Years ending_ December 31 June 30 1976................................................................................... $144.1 $- 1977.................................................................................... 28.9 34.9 1978.................................................................................... 33.5 21.6 1979 ................................. 168.9 13.5 1980........................................................................... 31.9 135.8 1981.................................................................................... 7 F-112 GENERAL ELECTRIC COMPANY AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS(Continued) 8. Common Stock At December 31, 1975, 184,358,652 common shares (184,672,780 at June 30, 1976) were outstanding after deducting 3,361,732 common shares (3,543,384 at June 30, 1976) held in treasury. Included in common stock held in treasury were 1,386,845 shares at December 31, 1975 (1,421,557 at June 30, 1976) for the deferred compensation provisions of incentive compensation plans. These shares are carried at market value at the time of allotment which amounted to $66.2 million at December 31, 1975 ($68.9 million at June 30, 1976). The liability is recorded under Other liabilities. The remaining common stock held in treasury is carried at cost. Other common shares in treasury (1,974,887 at December 31, 1975 and 2,121,827 at June 30, 1976) are held for future corporate requirements, including distributions under employee savings plans, incentive compensation awards and possible conversion of General Electric Overseas Capital Corporation convertible indebtedness. The maximum number of shares required for conversions was 737,725 at December 31, 1975 and June 30, 1976. Such corporate requirements may be met either from unissued shares or from shares in treasury. 9. Retained Earnings Retained earnings at year-end 1975 included approximately $188.7 million ($215.5 million at June 30, 1976) representing the excess of earnings of General Electric Credit Corporation over dividends received from this affiliate since its formation. In addition, retained earnings have been reduced by $3.2 million ($3.3 million at June 30, 1976), which represents the change in equity in associated companies since acquisition. 10. Commitments and Contingent Liabilities Lease commitments and contingent liabilities, consisting of guarantees, pending litigation, taxes and other claims, in the opinion of management, are not considered to be material in relation to the Company's financial position. 11. Pensions General Electric and its affiliates have a number of pension plans, the total General Electric cost of which was $97.3 million in 1971, $107.6 million in 1972, $135.5 million in 1973, $167.8 million in 1974, $189.6 million in 1975 and $94.8 million and $109.8 million for the first six months of 1975 and 1976, respectively. Substantially all General Electric employees in the United States whose date of employment preceded January 1, 1976 participate in the General Electric Pension Plan ("the Pension Plan"). Pensions are related to length of service and earnings, with guaranteed minimums for retirees having 10 or more years of pension qualification service. Participants contribute 3 per cent on compensation in excess of $6,600 a year. The normal retirement age under the Plan is 65, with optional retirement permitted up to five years earlier. A closed group of long-service employees may retire optionally as early as age 55. Pensions payable to participants who retire optionally before age 62 and after attainment of age 60 are reduced by one-half (one quarter after June 30, 1976) of one per cent for each month by which retirement precedes attainment of age 62. There is also provision for a pension in case of total and permanent disability after 15 years of pension qualification service. The Plan also provides for vested rights after 10 years of service, survivorship options, and pre-retirement death benefits. The limit described under Pensions in Note 1 for recognizing programmed appreciation on the common stock portfolio was not exceeded at December 31, 1975 or June 30, 1976. The earnings of the General Electric Pension Trust, including the programmed recognition of appreciation, as a percentage of book value of the portfolio were 6.8% for 1971, 6.6% for 1972, 6.5% for 1973, 6.7% for 1974 and 6.6% for 1975, and 6.6% for the first six months of 1976 on an annualized basis. F-13 |