Why is General Electric filing an amended 10-Q report?

General Electric is filing an amended 10-Q report (10-Q/A) to restate its previously issued financial statements and other financial information for the three and six months ended June 30, 2006, and 2005. This restatement is necessary due to adjustments in the accounting for interest rate swap transactions related to a portion of the commercial paper issued by its subsidiaries, GECC and GECS. The company identified a material weakness in internal control over financial reporting related to the specificity required for designating hedged commercial paper transactions under SFAS No. 133.

What is the impact of the restatement on GE's financial performance?

The restatement primarily affects the accounting for interest rate swaps and resulted in a change to how certain financial charges and earnings were recognized. For the six months ended June 30, 2006, the restatement increased earnings from continuing operations by $229 million and net earnings by $226 million. While the restatement involves a correction of a material weakness, the company reported strong underlying operational performance, with significant increases in revenues and earnings from continuing operations year-over-year.

How did GE's different business segments perform during the second quarter of 2006?

Overall, GE experienced strong performance. The Infrastructure segment saw revenues increase by 11%, and segment profit by 10%. The Industrial segment's revenues grew by 6% with a 15% increase in segment profit. Healthcare revenues were up 10% with an 18% rise in operating profit. NBC Universal's revenues remained flat year-over-year but segment profit declined 10%. Commercial Finance revenues increased 12% and net earnings 21%. Consumer Finance revenues grew 7% and net earnings 20%. Notably, five of the six segments contributed double-digit earnings growth for the quarter.

What significant strategic actions did GE undertake during this period?

GE completed the sale of its property and casualty insurance and reinsurance businesses and European life and health operations of GE Insurance Solutions to Swiss Re in June 2006. In March 2006, it completed the sale of its remaining 18% investment in Genworth Financial. Additionally, GE initiated a plan to sell its U.K.-based life insurance operation, GE Life, with an anticipated sale by March 31, 2007. The company also continued its share repurchase program.

GE 10-Q Quarterly Report Q2 FY2006 — Revenue, Net Income, EPS

Summary

General Electric Company (GE) filed an amended Quarterly Report (10-Q/A) for the period ending June 29, 2006, on January 19, 2007. The primary focus of this amendment is the restatement of financial statements for the three and six months ended June 30, 2006, and 2005, due to an accounting adjustment related to interest rate swap transactions for commercial paper issued by its subsidiaries, GECC and GECS. This restatement corrects the accounting for hedge activities under SFAS No. 133 and has been identified as a material weakness in internal control over financial reporting. Despite the restatement, GE reported strong performance for the period. Consolidated revenues increased by 10% to $40.0 billion for the quarter and to $78.1 billion for the six months. Earnings from continuing operations showed a significant rise, up 17% to $4.948 billion for the quarter and 14% to $9.125 billion for the six months. This growth was driven by solid performance across most of its segments, including Infrastructure, Industrial, Healthcare, Commercial Finance, and Consumer Finance, with five of the six segments achieving double-digit earnings growth. Significant divestitures, including the completion of the sale of GE Insurance Solutions to Swiss Re and the remaining stake in Genworth, are ongoing as part of GE's strategic focus. The company also highlighted its ongoing share repurchase program and its strong financial flexibility, positioning it for continued dividend growth and selective investments.

Key Highlights

1Restatement of financial statements for the three and six months ended June 30, 2006, and 2005, due to accounting for interest rate swaps on commercial paper, identified as a material weakness in internal controls.
2Consolidated revenues increased 10% to $40.0 billion for Q2 2006 and 10% to $78.1 billion for the first six months of 2006.
3Earnings from continuing operations increased 17% to $4.948 billion for Q2 2006 and 14% to $9.125 billion for the first six months of 2006.
4Diluted EPS from continuing operations rose 20% to $0.48 for Q2 2006 and 16% to $0.87 for the first six months of 2006.
5Completed the sale of GE Insurance Solutions to Swiss Re and the remaining investment in Genworth Financial, impacting discontinued operations.
6Five out of six operating segments (Infrastructure, Industrial, Healthcare, Commercial Finance, Consumer Finance) reported double-digit earnings growth for the quarter.
7The company continues its $25 billion share repurchase program, with approximately $13.9 billion remaining authorization as of June 30, 2006.

GENERAL ELECTRIC CO Quarterly Report (Amendment) for Q2 Ended Jun 30, 2006

Summary

Key Highlights

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