Risk & Compliance

Despite Pressures, Fewer Firms File Late

The number of large comanies missing 2008 annual-report deadlines has fallen to 121 from 184, Glass Lewis report says.
Stephen TaubMarch 17, 2009

At least 121 large companies have missed the deadline for filing their 2008 annual reports, a decline from 184 missed deadlines at the same period of the 2007 filing year, and 250 for the 2006 year, says the corporate-governance research firm Glass Lewis & Co..

Today — March 17 — is the deadline for companies with $75 million to $700 million in market capitalization to file their annual reports. March 2 was the deadline for the largest companies — those surveyed in the Glass Lewis report — to file their 10-K’s while the smallest companies must file by the end of the month.

Companies that can’t meet the filing deadline may file with the Securities and Exchange Commission.  for a 15-day extension. Many of the companies that delayed their filings may not meet the 15-day filing extension. If this occurs, they will no longer be in compliance with SEC regulations and therefore may default on bank loans and be subject to delisting from their exchange. They also can’t use a short form shelf registration for one year.

The number of companies needing more time this year pales in comparison with the nearly 300 companies that sought extensions to complete their 2004 year-end results, the first year that large companies were required to meet the requirements of Sarbanes-Oxley.

The reasons for delaying a filing vary from company to company. These days, many more companies cite debt refinancing, impairments, or bankruptcies.

For example, AbitibiBowater Inc. said that it needed additional time to finalize its accounting for certain transactions and to complete its accounting analysis, primarily related to goodwill impairment and long-lived asset impairment. It also said it needs more time to more accurately reflect the outcome of a significant pending debt refinancing in its Form 10-K. 

Insurance company Conseco Inc. said that it required additional time to complete analysis and disclosure related to its investment portfolio, citing “unprecedented market conditions.” It said its auditor told it that without additional information and analysis to satisfy concerns over liquidity and debt covenant margins — primarily those that could be impacted by additional realized investment-portfolio losses — the audit opinion will include an explanatory paragraph commenting on Conseco’s ability to continue as a going concern.

Citadel Broadcasting said expected continuing declines in first-half radio revenues, and resulting declines in operating profits, create uncertainty about its ability to comply with  debt covenants under its senior credit facility through 2009. The company said it is working with lenders to obtain a waiver or amendment related to its senior credit facility, but it warned that without them it likely would default on the facility. Because talks with lenders are being conducted, “the company expects to include additional information about its liquidity and financial position in its Form 10-K,” it said, although it added that it expects to complete its filing by March 31.

Sirius XM Radio noted that it is seeking additional time to file its annual report that senior management has been focused on recent refinancing transactions and needs additional time to complete its 10-K. The company said that it would file for more time as well on behalf of XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc.