GE Releases a More Detailed Annual Report
General Electric Co., responding to concern that its accounting lacks transparency, released a more detailed annual report, including additional specifics about the GE Capital finance unit.
GE, the world’s largest company by market value, listed sales and operating profit from 26 of its main industrial and finance businesses, compared with a dozen last year. The company also highlighted information on its special purpose entities, often used to package credit-card loans and other receivables that are sold to investors.
Some investors have been critical of the limited details that were provided on the businesses that make up GE Capital, which accounts for 40% of the company’s profit.
GE Chief Executive Jeffrey Immelt pledged to provide more information as investors began to question the accounting practices of many companies after the collapse of Enron Corp.
Shares of Fairfield.-based General Electric, a component of the Dow Jones industrial average, fell 33 cents to $40.62 on the New York Stock Exchange.
The company gave details of restrictions on the entities and why it uses them. None are allowed to hold General Electric stock. Some of Enron’s special entities were capitalized with the company’s stock. That helped to speed Enron’s demise when the shares plunged as losses masked by the entities were disclosed.
“Great companies are built on the foundation of accurate financial information and compliance with the law,” Immelt wrote in the introduction to the financial section.
Some analysts who signed confidentiality agreements were briefed on the financial information ahead of time, said spokesman David Frail. The pacts prohibited them from acting on the information.
GE also said it would take a first-quarter write-down of about $1 billion to comply with a new accounting rule that changes the way it must account for goodwill from acquisitions. GE said it completed or announced almost $23 billion in acquisitions in 2001.
General Electric had $43 billion in off-balance-sheet assets in special purpose entities at the end of last year. That’s 39% more than the $31 billion in 2000.
