Posted on: Saturday, May 7, 2005

GE restates earnings following inside audit

By John Christoffersen
Associated Press

STAMFORD, Conn. — General Electric Co. restated financial results for several years yesterday, boosting earnings by $381 million from 2001 through the first quarter of 2005.

While federal regulators are informally investigating accounting issues related to the restatement, GE said its revision was sparked by an internal audit.

The diversified industrial, finance and media company also announced plans to sell a business that provides liability insurance for physicians and dentists to a unit of Berkshire Hathaway Inc. for $825 million. And it boosted its earnings forecast for the second quarter, while reaffirming its full-year forecast.

GE shares were unchanged at $35.85 in trading yesterday on the New York Stock Exchange. Its shares have traded in a range of $29.55 to $37.75 over the past year.

GE said that during a regular audit staff review, it concluded that it had improperly accounted for financial instruments used to protect the company's financial services businesses from changes in interest rates and currency exchange rates.

The company said the $381 million noncash restatement represents less than six-tenths of one percent of GE's earnings over this period. The restatement covers the years 2002 through 2004, certain financial information for the year 2001 and each quarter in 2003 and 2004.

In a filing with the Securities and Exchange Commission, GE said that after it began work for an internal audit, the company received a letter dated Jan. 20, 2005 from the Boston District Office of the SEC, indicating that it was conducting an informal investigation and requesting that GE voluntarily provide documents and information with respect to the accounting practice in question. GE said it will continue to cooperate with the SEC.