Summary
General Electric Company (GE) has filed an 8-K report to disclose the commitment to exit its Japanese personal loan business, known as Lake. This decision stems from regulatory limitations on interest charges in Japan, which GE determined would prevent the business from achieving an acceptable return. The company is actively seeking a buyer and anticipates completing the sale by the end of the third quarter of 2008. This exit is expected to result in a significant after-tax loss for GE in the third quarter of 2007, estimated to be between $0.8 billion and $1.0 billion, reflecting the difference between the net book value and the projected sale price. The total costs associated with this exit plan are projected to be between $0.9 billion and $1.1 billion. Furthermore, GE also announced that its U.S. mortgage business, WMC, will be reported as a discontinued operation in the third quarter of 2007, as it is part of a previously disclosed plan to sell this division. The results of both the Lake and WMC businesses will be presented as discontinued operations in the upcoming quarterly filing, providing a clearer view of GE's ongoing operational performance.
Key Highlights
- 1GE has committed to exiting its Japanese personal loan business (Lake).
- 2The exit is due to Japanese regulatory limits on interest charges preventing acceptable returns.
- 3The sale of the Lake business is expected to be completed by the end of Q3 2008.
- 4An after-tax loss of $0.8 billion to $1.0 billion is anticipated in Q3 2007 for the Lake exit.
- 5Total costs for the Lake exit plan are estimated between $0.9 billion and $1.1 billion.
- 6GE's U.S. mortgage business (WMC) will also be reported as a discontinued operation in Q3 2007.
- 7Both Lake and WMC results will be classified as discontinued operations in GE's Q3 2007 financial statements.