Why is GE filing an amended report (10-Q/A) and restating its financial statements?

GE is filing an amended report to restate its financial statements for the three and nine months ended September 30, 2006, and 2005. This restatement is 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. This adjustment was necessary after the SEC's Office of Chief Accountant expressed concerns about GE's application of SFAS 133, leading to a determination that there was a material weakness in internal controls over financial reporting regarding the specificity required for designating hedged commercial paper transactions.

What was the financial impact of the restatement?

The restatement had immaterial effects on GE's financial position and liquidity. However, it did result in adjustments to previously reported earnings. For example, for the nine months ended September 30, 2006, earnings from continuing operations were restated to $14.1 billion (from $13.955 billion previously reported) and net earnings to $14.3 billion (from $14.121 billion previously reported). The restatement also changed the presentation of the 'GECS commercial paper interest rate swap adjustment' line item.

How did GE's business segments perform during the nine months ended September 30, 2006?

GE's segments showed varied performance. Infrastructure revenues grew 13% driven by Energy and Aviation. Industrial revenues increased 5% driven by Consumer & Industrial and Plastics. Healthcare revenues were up 10% with strong volume and acquisitions. NBC Universal revenues increased 14%, benefiting from the Olympic broadcasts and film/cable improvements, though segment profit declined. Commercial Finance revenues grew 10% with strong core growth and acquisitions. GE Money revenues increased 10% with growth from acquisitions and securitizations.

Are there any significant ongoing legal or regulatory matters mentioned?

Yes, the New Jersey Department of Environmental Protection (DEP) issued an Administrative Order in August 2006 seeking a $142,000 penalty for alleged Clean Air Act violations at GE Capital Corporation's Linden, New Jersey facility. GE Capital Corporation has requested a hearing to contest the fine. Additionally, the SEC investigation into GE's application of SFAS 133 and hedge accounting is continuing.

GE 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

General Electric (GE) filed an amendment to its 2006 third-quarter 10-Q report, primarily to restate its financial statements for the three and nine months ended September 30, 2006, and 2005. This restatement was due to an adjustment in accounting for certain interest rate swap transactions related to commercial paper issued by its subsidiaries, GECC and GECS, impacting the period from January 1, 2001. While the restatement had immaterial effects on financial position and liquidity, it resulted from a material weakness in internal controls related to the specificity required under SFAS 133 for designating hedged commercial paper transactions. Financially, for the nine months ended September 30, 2006, GE reported consolidated revenues of $118.8 billion, a 10% increase year-over-year. Earnings from continuing operations were $14.1 billion, up 10%, with diluted EPS of $1.35. Net earnings were $14.3 billion, an increase of 5% year-over-year. The company highlighted strong organic revenue growth across its segments, particularly in Infrastructure and Industrial, while also noting the impact of several strategic acquisitions during the period.

Key Highlights

1Restatement of prior period financial statements (Q3 2006, 2005) due to accounting adjustments for interest rate swaps on commercial paper, stemming from a material weakness in internal controls.
2Consolidated revenues for the nine months ended September 30, 2006, increased 10% to $118.8 billion compared to the prior year.
3Earnings from continuing operations for the nine months ended September 30, 2006, rose 10% to $14.1 billion, with diluted EPS of $1.35.
4Net earnings for the nine months ended September 30, 2006, were $14.3 billion, a 5% increase from the prior year.
5The company divested significant portions of its insurance businesses (GE Insurance Solutions, Genworth, GE Life) during the period, reclassifying them as discontinued operations.
6Acquisitions in Healthcare (IDX Systems), NBC Universal (iVillage), Infrastructure (ZENON), Commercial Finance, and GE Money contributed to revenue growth.
7The Infrastructure segment showed strong growth with revenues up 13% for the nine months, driven by Energy and Aviation businesses.

GENERAL ELECTRIC CO Quarterly Report (Amendment) for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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