Cleanup costs

26 February 2018 By Tom Buerkle Follow @tombuerkle

The $125 bln conglomerate keeps finding skeletons in its closets. A $4.2 bln charge to better account for service contracts was expected; less so are revelations GE Capital inflated its earnings. CEO John Flannery’s overdue cleanup is exposing flaws throughout the weakened giant.

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General Electric on Feb. 26 announced three new candidates for the company’s board for 2018, including Lawrence Culp, the former chief executive of Danaher; Thomas Horton, former chairman and CEO of American Airlines parent AMR; and Leslie Seidman, former chair of the Financial Accounting Standards Board.

On Feb. 23, the company said it would restate earnings for 2016 and 2017 to reflect new accounting standards for treating long-term service contracts. The change will result in a non-cash charge against retained earnings of approximately $4.2 billion as of Jan. 1, 2016, and reduce earnings per share by about 13 cents for calendar 2016 and 16 cents for 2017. Last month GE reported a loss of $6.2 billion or $0.72 a share for 2017.

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