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Show GENERAL ELECTRIC CREDIT CORPORATION AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS-(Continued) Long-term borrowing maturities during the five years beginning June 26, 1976 are: 1976-1977, none; 1977-1978, $363.0 million (including $203.0 million of notes having a rolling 13-month maturity); 1978-1979, $79.7 million; 1979-1980, $80.8 million; and 1980-1981, $125.0 million. At June 26, 1976, the Company and its subsidiaries had established credit lines aggregating $1,093.5 million with 119 banks. The Company generally maintains average compensating balances with banks equal to 10% of the credit line. These compensating balances are generally increased by 10% of any loans outstanding under such arrangements. 7. EQUITY CAPITALCapital stock totaled $309.2 million at December 31, 1975 and June 26, 1976, and was owned entirely by General Electric. There were no shares reserved for options, warrants, conversions or other rights. Changes in capital stock during the five years ended December 31, 1975 consisting of shares sold to General Electric were as follows: Class of Year Stock Shares Amount (Amounts in millions) 1971 Preferred 175,000 $35.0 1972 Preferred 100,000 20.0 1973 Common 250,000 50.0 1974 Common 170,000 34.0 1975 Common 208,500 41.7 An additional $73.5 million of common stock (at par value) was issued in 1974 to the General Electric Company for a consideration consisting of 100% participation in certain receivables held by General Electric having an aggregate unpaid principal balance of $85.0 million. The Company has recourse against General Electric with respect to such participation. The difference ($11.5 million) between the unpaid principal balance of the receivables and the $73.5 million of common stock issued has been reflected on the accompanying consolidated balance sheet as additional paid-in capital. 8. EARNED INCOMEResidual values for leased equipment recorded in earned income in 1973, 1974 and 1975 aggregated $3.2 million, $5.6 million and $6.3 million, respectively. During the six months ended June 26, 1976 $4.9 million of residual values were recorded (see Note 1Methods of Recording Earned Income). 9. INTEREST AND DISCOUNT EXPENSE included in the consolidated statement of current and retained earnings is net of small amounts of interest income on temporary investments of excess funds. Interest and other financial charges applicable to long-term borrowings were $33.2 million in 1971, $48.5 million in 1972, $68.2 million in 1973, $81.8 million in 1974, $95.2 million in 1975 and $52.1 million for the six months ended June 26, 1976. Other interest and financial charges aggregated $66.6 million in 1971, $60.0 million in 1972, $122.0 million in 1973, $202.0 million in 1974, $128.4 million in 1975 and $53.7 million for the six months ended June 26, 1976. 10. PROVISION FOR INCOME TAXES for 1971 through 1975 and the six months ended June 28, 1975 and June 26, 1976 is summarized in the following table: Estimated Effects of Investment taxes payable timing tax credit Year ended (recoverable) differences deferred Total (Amounts in millions) December 31, 1971.................................................................$ (2.1) $21.1 $ 6.8 $25.8 1972 ................................................................. (38.3) 62.5 8.1 32.3 1973 ................................................................. (65.5) 65.5 29.3 29.3 1974................................................................. (69.2) 70.4 24.5 25.7 1975 ................................................................. ( 116.9) 93.1 51.9 28.1 Six months ended June 28, 1975................................................... (32.7) 30.9 16.9 15.1 June 26, 1976................................................... (55.4) 49.5 18.2 12.3 F-26 GENERAL ELECTRIC CREDIT CORPORATION AND CONSOLIDATED AFFILIATES NOTES TO FINANCIAL STATEMENTS-(Concluded) General Electric files a consolidated federal income tax return which includes the General Electric Credit Corporation. The provision for estimated taxes recoverable represents the effect of the Company and its subsidiaries on the consolidated tax. The principal types of timing differences are shown in the following analysis of the increase (decrease) in the provisions for U.S. federal income taxes in 1973, 1974 and 1975 and for the six months ended June 28, 1975 and June 26, 1976. Six months ended June 28, June 26, 1973 1974 1975 1975 1976 (Amounts in millions) Lease income..................................................... $65.9 $76.0 $95.6 $35.8 $57.9 Receivable loss provision.................................. 0.2 (5.7) 0.8 (6.0) (7.1) Othernet......................................................... (0.6) 0.1 (3.3) 1.1 (1.3) $65.5 $70.4 $93.1 $30.9 $49.5 Provision for income taxes as a percentage of income before taxes was 45.5% in 1971, 44.0% in 1972, 41.3% in 1973, 37.6% in 1974, 35.0% in 1975 and 37.4% and 31.5% for the six-month periods ended June 28, 1975 and June 26, 1976, respectively. A reconciliation of these effective tax rates to the U. S. federal statutory rate of 48.0% is shown in the table below: Six months ended June 28, June 26, 1971 1972 1973 1974 1975 1975 1976 U. S. Federal statutory rate................. 48.0% 48.0% 48.0% 48.0% 48.0% 48.0% 48.0% Reduction in taxes resulting from: Inclusion in earned income of amortized investment tax credits not taxable.................... (2.6) (3.7) (6.9) (8.4) (10.1) (8.3) (14.2) Dividends received which are not fully taxable....................... (1.7) (2.5) (2.5) (2.6) Othernet.................................... _0.1 (03) _02 (0.3) (0.4) 0.2 0.3 Effective tax rate.................................. 45.5% 44.0% 41.3% 37.6% 35.0% 37.4% 31.5% 11. COMMITMENTS AND CONTINGENT LIABILITIESIn March and June 1975 the Company issued guarantees of indebtedness, not to exceed an aggregate principal amount of $46.3 million, of real estate companies partially owned either directly or indirectly by General Electric Real Estate Credit Corporation, a subsidiary of General Electric. At June 26, 1976, the outstanding indebtedness to which such guarantees relate was approximately $41.8 million. At December 31, 1975 and June 26, 1976, there were no other known contingent liabilities which would have a material effect on the Company and no material commitments outside the normal course of the Company's business. 12. QUARTERLY FINANCIAL DATA (Unaudited)Summarized quarterly financial data for the first six months of 1976 is as follows: Three months ended March 27, June 26, 1976 1976 (Amounts in millions) Earned income................................................. $138.2 $149.8 Net earnings.................................................... $ 12.5 $ 14.3 F-27 |