GE books $4.2b charge, restates earnings
NEW YORK (Agencies): General Electric Co said on Friday it took a $4.24 billion (Dh15.5 billion) equity charge and reduced earnings for the last two years by 30 cents a share, figures in line with expectations the company set earlier this year when it said it would comply with new accounting standards.
The maker of power plants, jet engines, medical devices and other industrial goods had estimated the after-tax, non-cash impact would be about $4.2 billion, plus reduced earnings for 2016 and 2017 of about 29 cents a share. The accounting change prompted GE to recast two years of past financial statements to reflect lower income and asset values under the new standard, and those will be reflected when GE reports first-quarter results on April 20.
The value of GE’s contract assets are being written down, but that does not change the value of the long-term contracts GE has, nor does it affect GE’s cash flow or earnings estimates for 2018, GE said. The adjustments appear within expectations, Edward Jones analyst Jeff Windau said. “Now the focus moves to next Friday’s earnings.”
The figures suggest GE executives have gotten to the bottom of some accounting issues and bolster confidence in Chief Executive Officer John Flannery after a series of financial surprises, including underestimating the impact of insurance policies that prompted a $6.2 billion charge in the fourth quarter, analysts said.