GE 2007 Annual Report Download - page 107

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ge 2007 annual report 105
Note 30
Immaterial Corrections
As previously reported, we are conducting an internal review of
revenue recognition matters in connection with an ongoing SEC
investigation. In the course of that review, we have identifi ed
certain immaterial non-cash items that we have corrected from
amounts in previous annual reports. These items are as follows:
Cut-off
This adjustment corrected instances in which we recorded rev-
enues upon shipment before we suffi ciently transferred risks of
transit loss, risks that we retained sometimes through retention
of a layer of insurance risk and sometimes as a consequence of
making voluntary customer concessions. In February 2008, during
our ongoing review we identifi ed errors in corrections recorded
for cut-off. Like any error of comparable insignifi cance discovered
at a comparable point in closing, these were not adjusted in the
accompanying fi nancial statements. These amounts are included
2006 Year
Increase (decrease) (In millions) First quarter Second quarter Third quarter Fourth quarter Total 2005 2004 2003(a)
GE CONSOLIDATED
Revenues
As reported $35,314 $37,228 $37,880 $41,837 $152,259 $136,722 $124,016 $104,669
Cut-off 293 (128) 10 (536) (361) (177) 59 (15)
Contract cost (25) (10) (24) (76) (135) (78) (19) (31)
Spare parts profi t 21 15 (9) 34 61 163 152 (39)
Contract estimates — — — — — — (12) (1)
Not adjusted (13) 6 8 18 19 (50) (20) 41
Adjusted $35,590 $37,111 $37,865 $41,277 $151,843 $136,580 $124,176 $104,624
Earnings from continuing operations
before accounting changes
As reported $ 3,925 $ 4,712 $ 4,750 $ 6,079 $ 19,466 $ 17,343 $ 15,574 $ 13,319
Cut-off 81 (36) 8 (115) (62) (46) (12) (15)
Contract cost (9) (2) (11) (45) (67) (30) (6) (14)
Spare parts profi t 13 9 (5) 21 38 102 96 (25)
Contract estimates — — — — — — (8) —
Not adjusted (4) 2 2 5 5 (15) (6) 12
Adjusted $ 4,006 $ 4,685 $ 4,744 $ 5,945 $ 19,380 $ 17,354 $ 15,638 $ 13,277
Net earnings
As reported $ 4,440 $ 4,946 $ 4,867 $ 6,576 $ 20,829 $ 16,711 $ 17,160 $ 15,561
Cut-off 79 (34) 8 (116) (63) (48) (14) (16)
Contract cost (9) (2) (11) (45) (67) (30) (6) (14)
Spare parts profi t 13 9 (5) 21 38 102 96 (25)
Contract estimates — — — — — — (8) —
Not adjusted (4) 2 2 5 5 (15) (6) 12
Adjusted $ 4,519 $ 4,921 $ 4,861 $ 6,441 $ 20,742 $ 16,720 $ 17,222 $ 15,518
(a) Amounts for 2003 have been revised to correct an error in the spare parts profi t adjustments previously reported in our fi ling on Form 8-K dated January 18, 2008. This correc-
tion decreased 2003 net earnings by $202 million, correcting an adjustment of the same amount previously attributed to one correction in 2002.
below, but removed under the caption, “Not adjusted.” Amounts
not corrected would have increased 2007 revenues by $39 million
and earnings from continuing operations and net earnings by
$12 million.
Contract cost
This adjustment corrected instances in our Aviation product ser-
vices agreements in which we attributed excess credit to services
contracts for profi ts on refurbished spare parts.
Spare parts profit
This adjustment corrected effects of a 2002 and subsequent over-
estimate of contract-to-date profi tability on spare parts related
to certain long-term product services agreements.
Contract estimates
This adjustment corrected effects of an error in applying revenue
measurement principles in certain Infrastructure businesses subject
to AICPA Statement of Position 81-1, Accounting for Performance
of Construction-Type and Certain Production-Type Contracts.
Note 31
Subsequent Event
On February 4, 2008, we acquired most of Merrill Lynch and Co.,
Inc.’s wholly-owned middle-market commercial fi nance business,
Merrill Lynch Capital. This acquisition of over $12 billion in assets
expands our Commercial Finance business, and was primarily
funded through the issuance of debt by GECS in the fi rst quarter
of 2008.