Another shelfful of retailers last week announced they would join scores of other companies that are changing their accounting for operating leases. The group included drugstore chain CVS, supermarket giant Albertson’s, and specialty retailers Dress Barn and Pacific Sunwear of California.
But one company that said it would alter its lease accounting practices isn’t doing so in relation to brick-and-mortar storefronts.
Cingular Wireless, the largest wireless carrier in the United States, reported that it has changed its accounting for operating leases, primarily on cell sites, to conform to generally accepted accounting principles.
As a result, the company — a joint venture between SBC Communications Inc. and BellSouth Corp. — will take a hit of $171 million to revise its results for 2004, restate financials for 2000 through 2003, and restate quarterly results for the first three quarters of 2004.
Cingular said the cumulative adjustment required to make this correction was material to its 2004 results. The change has no effect on cash flows, revenue, net subscriber additions, or subscriber churn, according to the company.
SBC, which owns 60 percent of Cingular, said it would reduce its fourth-quarter equity in net income of affiliates by about $105 million before taxes, or $66 million after-tax. Prior years’ financial results will not be restated because the adjustment would be immaterial to its financial results, the company added.
BellSouth, which owns 40 percent of Cingular, said it would record a $70 million pre-tax adjustment and a $43 million after-tax adjustment to reduce its equity in earnings from the joint venture.