General Electric’s already awful performance just got worse.
The struggling conglomerate plans to restate the last two years of results, it said in a filing on Friday night.
GE( said the restated results will slash its 2016 profits by about 13 cents per share and last year’s profits by approximately 16 cents per share. )
The move comes as GE adopts a new accounting standard that changes the way companies are allowed to measure the timing and impact of long-term contracts with customers. GE, which makes everything from jet engines to power plants, earns a lot of money on service contracts with clients.
The SEC has been investigating GE for, among other things, how the company reports long-term service agreements.
GE emphasized that the new accounting standard won’t hurt its cash flow, which has been alarmingly low in recent quarters.
“The new standard will have no cash impact and, as such, does not affect the economics of our underlying customer contracts,” GE said in the filing.
GE said it is “difficult to estimate” how the new standard will impact future results.
Last month, when GE disclosed that the SEC has been investigating the company, it said it planned to restate two years of earnings.
Friday’s filing details how in late November the staff of the Boston SEC office notified the company of an investigation into its revenue recognition practices and internal controls over long-term service agreements.
The SEC expanded its probe in January after GE shocked Wall Street by revealing a $ 6.2 billion charge on a portfolio of long-term care insurance policies it held. GE said the SEC is investigating the charge and the “process leading” up to it.
“We are providing documents and other information requested by the SEC staff, and we are cooperating with their ongoing investigation,” GE said on Friday.
GE’s poor financial performance, underlined by shrinking cash flows, drove the stock price down by nearly half in 2017 even as the rest of the stock market boomed.
To preserve cash, GE slashed its dividend for only the second time since the Great Depression, slashed 12,000 power jobs and put long-held businesses like its railroad and light bulb divisions up for sale.