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 GE said on Wednesday the deal would reduce fourth-quarter and 2013
earnings by $1 billion and earnings per share by 9 cents, noting
that the settlement affected last year's results because the
agreement was reached before the company filed its annual financial
statements.
Operating earnings remain unchanged and the agreement will not
affect first-quarter or 2014 results, GE said.
GE reported a fourth-quarter net profit of $4.2 billion, or 41 cents
per share. Adjusted profit was 53 cents per share.
Shinsei said the agreement was not expected to have any impact on
its earnings.
GE sold its Japanese consumer finance business to Shinsei for $5.4
billion after the government passed a law cutting maximum interest
rates and ordered lenders to repay charges on outstanding loans that
were deemed to have breached the limit.
General Electric Capital Corp and Shinsei had agreed to a
loss-sharing arrangement for potential claims on loans with interest
rates of 20-29 percent, with a buyout option to end the obligation
in the first quarter of 2014.
Daniel Holland, an analyst with Morningstar, said the Shinsei
obligations had been a lingering issue for GE's earnings.
"It's good to finally get it cleaned up and done," Holland said. "As
investors, we didn't really have the visibility of what the
magnitude could be."
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GE is putting the Shinsei obligations behind it as it nears the
expected initial public offering of GE Capital's North American
retail finance business, which is expected by the end of next month.
The IPO is expected to be the first of a two-stage process, in which
as much as 20 percent of the business could be offered this year.
GE shares rose about 0.2 percent to $25.32 in morning trading on the
New York Stock Exchange, nearly in line with the increase in the
broader U.S. markets.
(Reporting by Chris Peters in Bangalore
and Lewis Krauskopf in New York; Editing by Gopakumar Warrier, Ted
Kerr and Jonathan Oatis)
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