GE Reveals $5.25-Billion Pension Loss

General Electric Co. reported a $5.25-billion pension plan investment loss for 2002 in a footnote toward the end of its annual report, renewing questions about the quality of overall corporate disclosure.

In the report filed Friday, the blue-chip conglomerate said its post-retirement benefit plans contributed $806 million to pretax earnings in 2002, down 45.5% from a year earlier.

Thirty-seven pages later, the Fairfield, Conn., company reported the big pension investment loss, which was 82% higher than the $2.88-billion loss reported for 2001.

GE’s pension plan was still overfunded at year-end, showing a $4.5-billion surplus.

“They could go further,” said Brian Bruce, head of equities at PanAgora Asset Management, which has $12 billion in assets and owns GE shares. “It’s nice that they have put the information forward, but more upfront disclosure would be better.”

GE, with businesses ranging from jet engines to medical equipment, has drawn criticism for its sometimes oblique earnings reports. Investors have complained that its vast finance arm does not give enough insight into how it makes its profit.

“We disclose and discuss our pension plan and pension outlook fully,” said GE spokesman David Frail. “We discuss things in the appropriate places.”

Corporate disclosure has become a hot topic on Wall Street since accounting scandals brought down highflying companies such as Enron Corp. and WorldCom Inc.

Pension assumptions play a big role in corporate earnings because U.S. accounting rules allow companies to book pension income based on estimates of how much their plans are likely to return over the next 10 or 20 years, rather than on the actual losses or gains.

The rules were intended to prevent earnings from fluctuating each year simply because of the performance of the pension funds. The $5.25-billion loss on pension investments is amortized over time and did not affect 2002 earnings, Frail noted.