What is the primary reason for this 8-K filing?

The primary reason is to announce that GE is restating its financial statements for the years 2001 through 2004 and specific quarterly periods within 2003 and 2004 due to accounting errors related to certain derivative transactions managed by GE Capital Corporation (GECC).

What specific accounting standards are involved?

The accounting errors relate to the application of Statement of Financial Accounting Standards No. 133 (SFAS 133), 'Accounting for Derivative Instruments and Hedging Activities,' as amended. This includes issues with hedge accounting for interest rate and currency swaps.

What is the financial impact of this restatement?

GE states that the effect of the restatement on its statement of financial position at the end of the reported periods is immaterial. Importantly, the restatement has no effect on the company's cash flows.

What should investors do with previously issued GE financial information?

Investors should no longer rely on previously filed financial statements and other financial information for the years 2001, 2002, 2003, and 2004, nor on previously announced results for the first quarter of 2005. GE is filing amended financial statements to reflect the corrections.

Is GE facing any regulatory scrutiny?

Yes, GE disclosed that it received a letter from the SEC's Boston District Office indicating an informal investigation into GE and GECC's use of hedge accounting for derivatives. GE is voluntarily providing information and cooperating fully with the investigation.

GE 8-K: Earnings & Results, Financial Events & More

Summary

General Electric Company (GE) filed an 8-K on May 6, 2005, to announce a restatement of its financial statements and related audit reports for the years 2004, 2003, 2002, and 2001, as well as for the quarters within 2004 and 2003. This restatement primarily concerns the accounting for certain derivative transactions, specifically interest rate and currency swaps, managed by General Electric Capital Corporation (GECC) under Statement of Financial Accounting Standards No. 133 (SFAS 133). The company identified errors related to the accounting for fees at inception of these swaps and the effectiveness testing of hedges for assets consolidated under FIN 46. Consequently, readers are advised no longer to rely on previously issued financial statements and previously announced results for the first quarter of 2005. The restatement's impact on GE's statement of financial position is noted as immaterial, with no effect on cash flows. GE is also cooperating with an informal investigation by the SEC's Boston District Office regarding these derivative accounting practices.

Key Highlights

1GE is restating financial statements for 2001-2004 and selected quarters due to errors in derivative accounting.
2The restatement impacts accounting for interest rate and currency swaps at GE Capital Corporation (GECC) under SFAS 133.
3Previously issued financial statements for 2001-2004 and Q1 2005 results should no longer be relied upon.
4The company's internal audit identified the accounting errors.
5The impact of the restatement on the statement of financial position is immaterial, and there is no impact on cash flows.
6GE is cooperating with an SEC informal investigation into its derivative accounting practices.

GENERAL ELECTRIC CO 8-K Report, Financial Results (May 6, 2005)

Summary

Key Highlights

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