General Electric restates 2017, 2016 earnings due to accounting change
In a regulatory filing, the company said, "As previously disclosed in our Form 10-K for the year ended December 31, 2017, we were required to adopt several new accounting standards effective as of January 1, 2018. In addition, we voluntarily changed one accounting principle. Except as noted below, each of the accounting changes either required or provided the option to present the change on a retrospective basis. Therefore, our financial statements beginning in the first quarter of 2018 will reflect both current and historical comparable periods on this new basis reflective of these retrospective accounting changes. The new revenue standard requires companies to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time based on when control of goods and services transfers to a customer. As a result of the adoption of the standard, we recorded significant changes in the timing of revenue recognition and in the classification between revenues and costs. The new standard does not impact cash or the economics of our underlying customer contracts. As a result of the adoption of the new revenue standard, our previously reported retained earnings as of January 1, 2016 decreased by $4,243 million and our previously reported revenues and earnings (loss) from continuing operations decreased by $2,224 million and $2,668 million (or $1,558 million before impact of U.S. tax reform), respectively, for the year ended December 31, 2017 and by $220 million and $1,182 million, respectively, for the year ended December 31, 2016. The effect on our statement of financial position was principally comprised of changes to our contract assets, inventories, deferred taxes, deferred income and progress collections balances resulting in an $8,317 million decrease to previously reported total assets as of December 31, 2017. In our Form 10-K for the year ended December 31, 2017 we estimated that our 2016 and 2017 earnings per share would be lower by approximately $0.13 and $0.16 (before impact of U.S. tax reform), respectively, and we indicated that our estimates were still being finalized. Upon completion of our implementation effort, our 2016 and 2017 earnings per share is lower by $0.13 and $0.17, respectively (before impact of U.S. tax reform). The changes to our previously reported earnings had a significant impact on our deferred tax balances, which were reflected at the tax rates in effect in the period the activity was recorded. As a result of the enactment of U.S. tax reform, we recorded $1,110 million of additional deferred income tax to reflect the restated income and deferred tax positions at the lower rate in effect in the fourth quarter of 2017, which further reduced 2017 earnings per share by $0.13." The as restated (unaudited) figures for 2017 are as follows: (99c) for continuing diluted EPS and $118.243B for revenue. This compares to as reported figures of (68c) for EPS and $122.092B for revenue. For 2016, the as restated figures are 85c and $119.469B compared to as reported of $1.00 and $123.693B.