Telephone and Data Systems, Inc. said it will restate its financials for 2004 and 2005, quarterly information for 2005 and 2006, and certain selected financial data for 2003 and 2002 to correct its accounting for share repurchases by its U.S. Cellular subsidiary.
TDS, which owns more than 80 percent of U.S. Cellular, explained it should have applied step acquisition accounting to share repurchases by U.S. Cellular, primarily in 2000 and 2001. The company said it does not expect the adjustments to affect cash, revenues, or operating data. It also said there is no need for U.S. Cellular to restate its financial statements.
TDS and U.S. Cellular have been audited by PriceWaterhouseCoopers since the spring of 2002, when the two companies stopped using long-time auditor Arthur Andersen.
As a result of the revisions, TDS warned it will not file its 2006 annual report by April 24, or its March 31 quarterly report by its May 15 deadline. It also said it will reschedule its May 10 annual meeting until after it files its annual report.
TDS also said it received a notice from the American Stock Exchange indicating that it was not in compliance with the exchange’s listing requirements as a result of its failure to file its 2006 annual report on time. TDS, which has been a chronic late filer, added that the AMEX had approved a plan that calls for it to be in compliance with listing requirements by no later than May 18. However, due to the restatement and the further delay in the filing of its annual report, TDS said it now expects that the report will not be filed by May 18.
TDS also warned that it expects to delay the filing of its March 31 quarterly report and that it is unable to distribute its 2006 annual report to shareholders by April 30, as required by AMEX listing requirements.
As a result, the company has asked for more time to meet AMEX listing requirements, which it expects it will be able to do once when it completes its restatement, files its 2006 annual and quarterly reports and distributes it 2006 annual report to shareholders.
Meanwhile, TDS warned that the restatements and delays in filing quarterly and annual reports resulted in defaults under revolving credit agreements between TDS and certain lenders and under certain forward contracts between subsidiaries of the companies and a counterparty. It noted that previous waivers of defaults were extended, on the condition that the company filed its 2006 annual report by April 24 and its March 31 quarterly within 45 days after filing its annual report.
TDS also said it has received waivers from its lenders to extend the filing date of its 2006 annual report to June 30 and waivers to file its quarterly report within 45 days of filing its annual report.