Yesterday was D-Day for corporate America - deadline day for chief executives and chief financial officers of many of the nation's largest corporations to swear under oath that their firms' financial statements are accurate.
The oaths are required by the U.S. Securities and Exchange Commission and by the new Sarbanes-Oxley Act as a means of assuring worried investors that not all companies are going to end up like Enron or WorldCom.
All seven northwest Ohio and southeast Michigan corporations in the Fortune 1,000 met the deadline, and none restated its earnings.
Nationally, officers' pledges flooded the SEC offices, but few companies restated results.
The chief executives and chief financial officers of the nation's top 942 companies must sign certifications of accuracy of their firm's past financial statements, although only about 700 had to do so by yesterday.
The others, each with at least $1.2 billion in annual revenue, have to do so in the next several weeks.
By last night, officers of at least 620 firms had submitted their sworn statements, Reuters reported.
The top brass of some firms, such as Worldcom, Adelphia, and Enron, declined to certify most or all of their financial reports.
The chief financial officer of energy trader CMS Energy Corp. of Michigan told investors last week he could not certify its books until they were restated to account for $4 billion worth of sham trades.
Still, investors generally reacted well yesterday, with the major stock indexes pushing strongly higher. The Dow Jones industrial average jumped 261 points to 8,743, and the broader Standard & Poor's 500 index climbed 35 points to 920.
Even the stock of Household International, Inc., the nation's No. 2 consumer finance concern, increased 29 cents to $38.09 a share yesterday after the credit card and car and home loan company restated its earnings. It disclosed that it earned $386 million less than reported over the past nine years.
The unprecedented SEC requirement was complied with first locally by Tecumseh Products Co., the Michigan compressor and small-engine manufacturer, which filed last week.
La-Z-Boy, Inc., based in Monroe, beat its deadline by nearly a month. The maker of recliner chairs and other furniture was not required to file for nearly a month because its fiscal year ends in April.
But its top officers wanted to make a statement and did so by meeting the Aug. 14 deadline for most firms and announcing it yesterday at the Michigan company's annual shareholders meeting.
At the shareholders meeting La-Z-Boy chairman Patrick Norton bemoaned the ``nonexistent” ethics at other firms that dictated the written oaths and led to increased distrust by investors. He promised the furniture maker would never be involved in accounting deceit.
``With us, you will get the bad news the same as the good news, but certainly not doctored figures,'' Mr. Norton promised.
Others locally filing by yesterday were top executives of Dana Corp., Owens-Illinois, Inc., Owens Corning, and Manor Care, Inc., all based in Toledo, and Cooper Tire & Rubber Co. of Findlay.
The SEC is expected soon to mandate similar certifications be filed by all 13,000 to 14,000 publicly held corporations, a group that includes 14 other companies in northwest Ohio and southeast Michigan.
Sonny Ariss, interim dean of business at the University of Toledo, said the new certifications are a good first step to restore public confidence in the scandal-ridden stock market.
“Is it a panacea?” he asked.
“I doubt it. Will a lock stop a thief from stealing? No, but it's a lock.”
Some legal experts questioned the value of the new rule that requires each CEO and chief financial officer to vouch for the financial statements to the “best of my knowledge.”
“Clever lawyers can find a lot of wiggle room in the `the best of my knowledge, information and belief,'” said William Lerach, partner of Milberg Weiss Bershad Hynes & Lerach LLP, the law firm suing Enron and WorldCom on behalf of investors. “I'm just afraid that we may get a false sense of confidence.”
In late June, after the debacles of Enron, Arthur Andersen, Global Crossing, and a number of other big companies, the SEC ordered the certifications. It set yesterday as the deadline for 80 percent of the firm's largest corporations.
The SEC's action was strengthened late last month by the Sarbanes-Oxley Act, named for Sen. Paul Sarbanes, a Maryland Democrat, and Findlay's own Rep. Michael Oxley, a Republican who heads the House's powerful Financial Services Committee.
Bipartisan support grew from the bankruptcies of WorldCom and Adelphia Communications as well as investigations into the accounting of companies such as Tyco International, AOL Time Warner, Qwest Communications, and CitiGroup.
The act, signed into law by President Bush July 30, requires CEOs and CFOs to certify the accuracy of annual and quarterly reports, proxy statements, and several other types of SEC disclosures.
The penalty for failure to certify includes fines up to $1 million and imprisonment for up to 10 years. The penalty for a false certification is up to $5 million and up to 20 years.
As of yesterday, 334 certification notices were posted on the SEC's Web site (www.sec.gov), or about 45 percent of those required to file by this week. However, the SEC has been running a day or two behind, trying to cope with the flood of data.
Each CEO and CFO must file a separate certification on a standard SEC form. If unable to certify a company's latest 10-K annual report and subsequent 10-Q quarterly and other statements, the officer must tell the SEC why under oath. Companies also could request a five-day extension to file the certifications.
The sworn statements - 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 with the SEC on a rolling basis.
“We think it's disgusting it has come to this,” said Mark Stegeman, La-Z-Boy's treasurer. But he added his company had no problem certifying its financials. “We're about as straightforward as you can get,” he remarked.
Among the firms that restated results or did not submit sworn statements:
wWorldCom and Adelphia Communications declined to certify their results, saying they could not, given bankruptcy proceedings, government investigations, and other problems. Enron Corp. executives certified their post-bankruptcy financials but declined to sign off on others.
wAOL Time Warner, Inc.: Executives of the embattled Internet and entertainment giant certified its quarterly results, but admitted it inappropriately accounted for $49 million in revenue over six quarters.
wDynegy, Inc.: Newly appointed executives of the Houston-based energy trader said they couldn't certify some of its reports, in part because the company plans to restate its 2001 financials.
wQwest Communications, under investigation for its accounting of $1.1 billion in revenue, did not certify its reports.
The Blade's wire services contributed to this report.
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