GENERAL ELECTRIC CAPITAL SERVICES INC/CT - 10-Q Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


	FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 0-14804

GENERAL ELECTRIC CAPITAL SERVICES, INC.

(Exact name of registrant as specified in its charter)

Delaware		06-1109503
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

260 Long Ridge Road, Stamford, CT		06927
(Address of principal executive offices)		(Zip Code)

(Registrant’s telephone number, including area code) (203) 357-4000

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

At May 6, 2005, 1,064 shares of voting common stock, which constitutes all of the outstanding common equity, with a par value of $1,000 per share were outstanding.

REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.

(1)

General Electric Capital Services, Inc.

Part I - Financial Information		Page

Item 1. Financial Statements
Condensed Statement of Current and Retained Earnings		3
Condensed Statement of Financial Position		4
Condensed Statement of Cash Flows		5
Notes to Condensed, Consolidated Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition		12
Item 4. Controls and Procedures		21

Part II - Other Information

Item 1. Legal Proceedings		22
Item 6. Exhibits		23
Signatures		24

Forward-Looking Statements

This document contains “forward-looking statements” - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” or “will.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties arise from the behavior of financial markets, including fluctuations in interest rates and commodity prices; from future integration of acquired businesses; from future financial performance of major industries which we serve including, without limitation, the air and rail transportation, energy generation, real estate and healthcare industries; from unanticipated loss development in our insurance businesses; and from numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive or regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

2005 Restatement

As described in our Annual Report on Form 10-K/A for the year ended December 31, 2004, we have restated our financial statements and other information.

For further discussion of the effects of the 2005 restatement see Part 1, Item 1. Financial Statements, note 1 of Notes to Condensed, Consolidated Financial Statements (Unaudited), Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition and Item 4. Controls and Procedures.

(2)

Part I. Financial Information

Item 1. Financial Statements

General Electric Capital Services, Inc. and consolidated affiliates

Condensed Statement of Current and Retained Earnings

(Unaudited)

	Three months ended
	March 31
(In millions)	2005				2004 (Restated)

Revenues
Revenues from services (note 3)	$		18,307		$	16,609
Sales of goods			674			576

Total revenues			18,981			17,185

Costs and expenses
Interest			3,520			2,704
Operating and administrative			5,268			5,296
Cost of goods sold			635			551
Insurance losses and policyholder and annuity benefits			4,059			3,624
Provision for losses on financing receivables			902			955
Depreciation and amortization			1,645			1,440
Minority interest in net earnings of consolidated affiliates			129			46

Total costs and expenses			16,158			14,616

Earnings before income taxes			2,823			2,569
Provision for income taxes			(555	)		(598	)

Net earnings			2,268			1,971
Dividends			(224	)		(380	)
Retained earnings at beginning of period			35,976			30,694
Retained earnings at end of period	$	38,020			$	32,285

See “Notes to Condensed, Consolidated Financial Statements.”

(3)

General Electric Capital Services, Inc. and consolidated affiliates

Condensed Statement of Financial Position

(In millions)	March 31, 2005				December 31, 2004
	(Unaudited)
Assets
Cash and equivalents		$	11,567			$	12,367
Investment securities			135,344				135,152
Financing receivables - net (note 4)			282,915				282,699
Insurance receivables - net			25,376				25,971
Other receivables			16,592				14,134
Inventories			196				189
Buildings and equipment, less accumulated amortization of $20,745
and $20,630			47,525				46,578
Intangible assets - net (note 5)			29,065				28,520
Other assets			70,767				72,894
Total assets		$	619,347			$	618,504

Liabilities and equity
Borrowings (note 6)		$	359,569			$	360,799
Accounts payable			16,741				17,104
Insurance liabilities, reserves and annuity benefits			140,139				140,902
Other liabilities			24,454				25,572
Deferred income taxes			11,245				11,153
Total liabilities			552,148				555,530

Minority interest in equity of consolidated affiliates			10,866				8,682

Capital stock			11				11
Accumulated gains (losses) - net
Investment securities			1,646				2,345
Currency translation adjustments			5,338				5,104
Cash flow hedges			(895	)			(1,354	)
Minimum pension liabilities			(156	)			(150	)
Additional paid-in capital			12,369				12,360
Retained earnings			38,020				35,976
Total shareowner’s equity			56,333				54,292
Total liabilities and equity		$	619,347			$	618,504

The sum of accumulated gains (losses) on investment securities, currency translation adjustments, cash flow hedges and minimum pension liabilities constitutes “Accumulated nonowner changes other than earnings,” and was $5,933 million and $5,945 million at March 31, 2005, and December 31, 2004, respectively.

See “Notes to Condensed, Consolidated Financial Statements.”

(4)

General Electric Capital Services, Inc. and consolidated affiliates

Condensed Statement of Cash Flows

(Unaudited)

	Three months ended
	March 31
(In millions)	2005			2004 (Restated)		^(a)

Cash flows - operating activities
Net earnings	$	2,268		$	1,971
Adjustments to reconcile net earnings to cash provided from operating activities
Depreciation and amortization of buildings and equipment		1,645			1,440
Increase (decrease) in accounts payable		(668	)		366
Increase in insurance liabilities, reserves and annuity benefits		304			1,155
Provision for losses on financing receivables		902			955
All other operating activities		2,773			320
Cash from operating activities		7,224			6,207

Cash flows - investing activities
Increase in loans to customers		(76,307	)		(62,583	)
Principal collections from customers - loans		74,482			63,641
Investment in equipment for financing leases		(5,221	)		(4,192	)
Principal collections from customers - financing leases		5,873			5,255
Net change in credit card receivables		1,923			1,697
Additions to buildings and equipment		(2,529	)		(2,043	)
Dispositions of buildings and equipment		1,814			854
Payments for principal businesses purchased		(4,631	)		(12,119	)
Purchases of securities by insurance and annuity businesses		(7,388	)