8-KEarnings & ResultsFinancial EventsRegulation FD+1

GENERAL ELECTRIC CO 8-K Report, Financial Results (Jan 19, 2007)

Filed January 19, 2007For Securities:GE

Summary

General Electric Company (GE) filed an 8-K on January 19, 2007, to disclose a restatement of its financial statements for the years 2001 through 2005 and the first three quarters of 2006. The restatement pertains to the accounting of interest rate swap transactions related to a portion of commercial paper issued by its subsidiaries, GE Capital Corporation and GE Capital Services, Inc. This restatement is a result of concerns raised by the SEC's Office of Chief Accountant regarding GE's application of Statement of Financial Accounting Standards (SFAS) No. 133 concerning derivative instruments and hedging activities. Specifically, the SEC staff believed the structure of GE's commercial paper hedging program did not meet the required specificity under SFAS 133 for hedge accounting. Despite the restatement, GE emphasized that the adjustments are immaterial to its financial position and have no impact on its cash flows or liquidity. The company also stated that its hedge positions were consistent with its risk management policies. GE has since modified its commercial paper hedging program and adopted new documentation to comply with SFAS 133 requirements and has remediated the related internal control weakness. The SEC investigation into the matter is ongoing, and GE continues to cooperate fully.

Key Highlights

  • 1GE is restating financial statements for 2001-2005 and Q1-Q3 2006 due to accounting for interest rate swaps.
  • 2The restatement is a result of SEC concerns regarding the specificity of GE's commercial paper hedging program under SFAS 133.
  • 3The company states the restatement's impact on financial position is immaterial and has no effect on cash flows or liquidity.
  • 4GE has modified its hedging program and documentation as of January 1, 2007, to comply with SFAS 133.
  • 5A material weakness in internal control over financial reporting related to the designation of hedged transactions has been identified and remediated.
  • 6The SEC investigation into GE's application of SFAS 133 and hedge accounting is ongoing.

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