GE Restates Results, Raises Outlook

General Electric Co. on Friday said it was restating earnings from 2001 through the first quarter of 2005 after an internal audit found that its accounting for certain currency and interest rate derivatives did not comply with accounting standards.

GE also increased its outlook for second-quarter earnings on strong orders and the sale of an insurance business.

GE, the world’s largest company by market value, said the restatement would result in a noncash increase of $381 million for the entire period, which equates to less than six-tenths of 1% of its earnings over that time. But the restatement lowered 2005 first-quarter earnings by $78 million, or 1 cent a share, to 37 cents a share.

Tim Ghriskey, chief investment officer at Solaris Asset Management, said the restatement was a minor issue because it did not affect GE’s stated cash flow.

“The market focus seems to be on the guidance for the second quarter, which is certainly favorable, and on the company’s comments that the businesses are strong really across the board,” Ghriskey said.

GE Chief Executive Jeff Immelt, on a conference call with analysts, said he was “disappointed by the restatement, but the GE business outlook is unaffected and it remains robust.”

Immelt delivered a bullish outlook for GE’s businesses and said April orders were strong, rising 11% in the second quarter so far. GE nudged its second-quarter earnings outlook higher by a penny per share, to 43 cents to 45 cents.

Immelt said the “vast majority” of the higher guidance came from the planned sale of GE’s medical liability insurance business to Berkshire Hathaway Inc.’s National Indemnity unit.

GE maintained its earnings outlook for the full year of $1.78 to $1.83 per share.

Shares of GE closed unchanged at $35.85 on the New York Stock Exchange.