- Krispy Kreme coming to Cape Girardeau (12/14/17)2
- Light and music show: Jackson family goes high-tech with Christmas display (12/11/17)
- Former Wimpy's Drive-In owner Freeman Lewis dies (12/9/17)2
- Cape schools to get two new principals, assistant superintendent (12/13/17)1
- Feds ask judge to impose $6.5 million punishment for Cape surgeon (12/7/17)9
- Pedestrian struck on Broadway (12/11/17)4
- Kelso resident brings home $60K in lottery winnings (12/14/17)
- Makeover at the movies: Transformation complete inside Cape theater (12/8/17)4
Firms hurry to deadline for reporting accounting
From wire reports
Executives of most large U.S. companies vouched for their businesses' financial results Wednesday, meeting a much-anticipated deadline set by federal regulators.
The declarations by top managers helped to stoke a stock market rally, as a feared wave of earnings restatements by major companies did not materialize ahead of the deadline.
Executives of a relative few companies said they found accounting problems that prevented them from certifying their results, but most appeared to be at businesses whose financial reports already were under investigation internally or by regulators.
The unprecedented requirement was designed to restore confidence in corporate America that was shattered by the scandals at Enron, WorldCom, Adelphia and many other big companies, and the downfall of accounting giant Arthur Andersen.
In a major revision Wednesday, Household International Inc., the nation's No. 2 consumer finance concern, disclosed that it earned $386 million less than previously reported over the past nine years. Investors were unperturbed, boosting Household's stock by 29 cents to $38.09 by the close of trading on the New York Stock Exchange.
The company, which issues MasterCard and Visa credit cards and makes home equity and car loans, said the restatement came after its new auditors reviewed its accounting for "complex" credit-card contracts.
The market was unruffled, however, by the restatements -- fewer than a dozen companies made them as of Wednesday afternoon -- and staged a late-day rally sending the Dow Jones industrials up about 260 points.
The SEC rule required top managers at 695 U.S. companies to file their documents by 5:30 p.m. Wednesday. The rest of the companies on the list face deadlines in the next few months. The dates were staggered based on companies' fiscal reporting periods.
By late Wednesday, about 475 of the total 947 companies had filed their certifications, according to the SEC's Web site. It appeared that dozens of others also complied but had not yet made it into the official tally.
The SEC said it may not release a complete list of companies that filed until Monday. Companies had until the deadline Wednesday to request automatic five-day filing extensions.
Also, the SEC said it won't know until next week whether the certifications met the exact wording requirements it demanded.
Executives were required to sign forms stating that to the best of their knowledge their companies' recent financial results were correct. The certifications were expected to cover 2001 results and results of this year's first half.
The certification requirement set off a scramble in corporate America since late June, as executives were forced to redouble efforts to check accounting procedures and the accuracy of their financial reports.
Analysts suggested many investors may have gained confidence from the certifications coming into the Securities and Exchange Commission.
Chief executive officers and chief financial officers who falsely certify their company reports could be prosecuted and imprisoned. The SEC order does not spell out what would happen to companies that miss either the deadline or the five-day extension.
William Lerach, an attorney who has sued Enron, Andersen, WorldCom and other companies embroiled in accounting failures on behalf of shareholders, sounded a note of caution.
"There's so much wiggle room in the language of the certification that we may not be getting what we think we're getting. ... I'm just afraid that we may get a false sense of confidence," he said.
In response to the accounting scandals of recent months, the SEC in late June ordered 947 companies -- all with annual revenues exceeding $1.2 billion -- to submit the sworn statements. About 250 of them have deadlines later this year because they operate on a fiscal year rather than a calendar year.
No longer can CEOs blame the company's auditors or say they were unfamiliar with its finances, as former Enron chief executive Jeffrey Skilling did in testimony to Congress earlier this year.
"We'll enforce the law," President Bush said in a speech in Milwaukee. "And Americans can be confident ... that if somebody cheats them, there's going to be a consequence." "But by far, the vast majority of our corporate leaders are honest and decent and honorable people," Bush said.
The company that started a season of scandals, collapsed energy-trader Enron Corp., certified Wednesday the accuracy of the financial reports it filed since entering bankruptcy proceedings in December. But the company said it could not vouch for any reports before then.
Given the numerous investigations and lawsuits, limited resources and the absence of an independent auditor, "a restatement of prior reported financial information is not feasible and will not be completed," Stephen Cooper, Enron's interim CEO, said in a statement filed with the SEC.
Telecom giant WorldCom Inc., which became the biggest corporate bankruptcy in U.S. history on July 21, a month after disclosing it had falsely inflated profits by nearly $4 billion, is not certifying its reports. Last week, WorldCom said it had found another $3.3 billion in improper accounting, bringing the total to $7.15 billion. Qwest Communications, under investigation for its accounting of $1.1 billion in revenue, also was not certifying its reports.
Energy company Nicor Inc. missed Wednesday's deadline, saying its executives were unable to certify its statements because of uncertainties involving results of its natural gas distribution business. Nicor said it was restating first- and second-quarter earnings amid investigations, including an informal inquiry by the SEC.
Also not certifying: bankrupt steelmaker LTV Corp., CMS Energy Corp. and Dynegy Inc., which had proposed to buy Enron in a rescue merger for $8.4 billion last year before it slid into bankruptcy. The federal government is investigating trades by CMS, Dynegy and Enron as part of a probe into allegations that energy traders manipulated power markets in California in 2000 and 2001.
Capital One Financial Corp., a big credit-card issuer, said it will restate its 2001 net income to $545 million from the previously reported $597 million to reflect the cost of stock options given to its executives.
In its restatement, convenience-store retailer The Pantry Inc. said it had found an inadvertent $8 million accounting error in its reports for the first and second quarters.
Interpublic Group of Cos., a major advertising business, said it had identified $68.5 million in expenses that had not been properly accounted for. The company is restating its earnings back to 1997 to reflect the overlooked expenses, mostly incurred in its European operations.
The sworn statements from the executives -- beginning with "To the best of my knowledge" -- are meant to attest to the accuracy of reports for the quarter ended June 30 or any other second quarter for companies not on a calendar-year system.
The statements and earnings reports will be filed to the SEC on a rolling basis. Companies that use a calendar year for reporting results were required to submit them by Wednesday. The rest, using fiscal-year reporting, must file on the first date they normally would be required to submit their annual or quarterly reports -- from mid-September through December.
The Associated Press and Los Angeles Times contributed to this report.