Earnings Recast

DEFINITION of 'Earnings Recast'

An earnings recast is the act of amending and re-releasing a previously released earnings statement, with specified intent. Some of the most typical reasons for recasting earnings are to show the impact of a discontinued business or to separate out earnings-related events that are deemed to be non-recurring or otherwise non-representative of normal business earnings.

Also known as an "earnings restatement."

BREAKING DOWN 'Earnings Recast'

An earnings recast or restatement is usually done to several years of income statements, depending on how far back the recasting goes. This benefits investors by making the earnings statement more useful for research and analysis. Information regarding any earnings recast released by a publicly traded company should be stated in the footnotes for the earnings report.

Example of an Earnings Recast

As an example of an earnings restatement, General Electric announced in February 2018 that it will restate its earnings for 2016 and 2017 as it complies with a new accounting standard issued four years ago by the Financial Accounting Standards Board, according to a regulatory filing. The updated accounting standard, which will address account revenue from long-term service contracts, will result in a 13-cent cut in reported earnings per share for 2016 and a cut of 16 cents per share for 2017, according to the company’s filing. GE also reduced its revenue by $220 million for 2016 and $2.2 billion for 2017. In the 8k filing, GE noted as a result of adopting the new accounting standard, the company recorded significant changes in the timing of revenue recognition and in the classification between revenues and costs for long-term service contracts. The new standard does not impact cash or the economics of our underlying customer contracts.