General Electric Co restated financial results for several years on Friday, boosting earnings by US$381 million from 2001 through the first quarter of this year.
While federal regulators are informally investigating accounting issues related to the restatement, GE said that its revision was sparked by an internal audit.
The diversified industrial, finance and media company also announced plans to sell a business that provides liability insurance for physicians and dentists to a unit of Warren Buffett's Berkshire Hathaway Inc for US$825 million. It also boosted its earnings forecast for the second quarter, while reaffirming its full-year forecast.
GE shares closed unchanged at US$35.85 in Friday trading on the New York Stock Exchange. Its shares have traded in a range of US$29.55 to US$37.75 over the past year.
GE, based in Fairfield, said that during a regular audit staff review, it concluded that it had improperly accounted for financial instruments used to protect the company's financial services businesses from changes in interest rates and currency exchange rates.
The company said the US$381 million non-cash restatement represents less than six-tenths of one percent of GE's earnings over this period. The restatement covers the years 2002 through last year, certain financial information for the year 2001 and each quarter in 2003 and last year.
In a filing with the Securities and Exchange Commission (SEC), GE said that after it began work for an internal audit, the company received a letter dated Jan. 20, 2005 from the Boston District Office of the SEC, indicating that it was conducting an informal investigation and requesting that GE voluntarily provide documents and information with respect to the accounting practice in question.
GE said it intends to continue to cooperate fully with the SEC.
In a conference call, analysts asked if other areas of accounting were under scrutiny and whether more restatements were possible. GE officials noted that they had carefully reviewed the issue and filed the changes with regulators.
"We clearly wouldn't do all that if we really didn't think we've got it behind us," GE Chairman and CEO Jeff Immelt said. "We really believe strongly that we've got full risk transfer, appropriate accounting and great disclosure."
Keith Sherin, senior vice president and CFO, said in a release, "Looking back, the result of not using hedge accounting is immaterial on an annual basis. However, on a quarterly basis the impacts would be material and we decided to restate results. There is no effect economically as the company's match funding objectives were met, and there has been no effect on cash flows."
Due to the restatement, first-quarter earnings are reduced by US$78 million, or US$0.01 per share, resulting in earnings per share of US$0.37.
Lawrence Horan, research director with Parker/Hunter in Pittsburgh, said he was not worried about the restatement and was encouraged by the earnings outlook.
"Accounting has become a nightmare," Horan said. "It's immaterial. This was a mistake in judgment."
The rule in question, known as Statement 133, is highly complex, said Ed Ketz, an associate professor of accounting at Pennsylvania State University. Several other companies have also restated their financial results in recent years because of the rule, including Allied Defense Group Inc, America West Holdings Corp, mortgage giants Fannie Mae and Freddie Mac and New Brunswick Scientific Co, Ketz said.
"It would be easier for a first-grader to file a 1040 than for the average adult in this country to read a page or two from 133," Ketz said.
But Lynn Turner, former chief accountant at the SEC who is now in private practice, said he was troubled that the restatement did not come until after outside regulators gained access to the company's records.
GE said that the restatement stemmed from its own audit, not the investigation.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”