Dozens of firms delay filings

Wednesday, May 18, 2005 | 9:03 a.m.

WASHINGTON -- Dozens of companies delayed filing their financial reports for the most recent quarter, continuing an already sharp increase in late filings this year as new corporate-governance regulations take hold.

At least 77 companies with market capitalizations of more than $100 million recently notified the SEC they would need more time to finish their quarterly reports -- more than double the 36 companies of that size with delays in the first quarter of 2004, according to a tally by Glass Lewis & Co., a San Francisco research and proxy-advisery firm.

Many of the late companies are "repeat offenders" that have missed other filing deadlines, and more than half delayed their financials because of internal control issues or financial restatements, according to Glass Lewis.

The recent surge in late quarterly reports follows a previous flood of delayed annual reports for 2004. Hundreds of companies missed the annual deadline earlier this year as new accountability requirements became effective under the Sarbanes-Oxley Act of 2002. Quarterly reports were due May 10 for most larger companies with quarters ended March 31.

"To have all these companies say they are still working on their internal controls shows Sarbanes-Oxley is having a big impact," said Leah Townsend, a research analyst at Glass Lewis.

Sarbanes-Oxley requires companies to determine, and certify, whether their internal financial controls are sound enough to prevent fraud. Some businesses have complained about the costs of complying with the regulation. On Monday, the SEC and Public Company Accounting Oversight Board issued new guidance to auditors that urged more flexibility in applying the rule.

"Sarbanes-Oxley as it was initially implemented went too far and caused too many burdens on companies," said David Chavern, director of the corporate governance initiative at the U.S. Chamber of Commerce, which has been a vocal critic of the law. "You have had a number of companies (for which) the burden of getting this all done and figuring it out delayed getting information to the investor."

Some 14 larger companies said they would delay their quarterly financials this month because they were still working on their internal control reviews for 2004 or they were fixing problems found during those reviews. While some have since filed, others in the group have yet to do so, including Interpublic Group of Cos. and Crown Media Holdings Inc., both of which are also delinquent with their annual reports.

A number of companies also postponed filing their quarterly reports because they were in the process of, or just finished, restating past financials. At least 29 companies -- including BearingPoint Inc., Delphi Corp., Fannie Mae and Hollinger International Inc. -- fell into this group as of last Wednesday, up from 10 companies delaying for restatements a year ago, according to Glass Lewis.