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Cingular Alters Accounting For Operating Leases
Cingular Wireless said today it has changed its accounting for operating leases -- primarily on cell sites -- to conform to generally accepted accounting principles.
As a consequence, the company will revise its previously announced annual financial results for 2004, restate annual results for 2000 through 2003, and restate quarterly results for the first three quarters of 2004. These actions will result in a cumulative reduction in pre-tax earnings for 2000 through 2004 of $171 million. (While management believes that the impact of this change is not material to any previously issued financial statements, it has determined that the cumulative adjustment required to make this correction was material to its 2004 financial results.)
This change has no effect on cash flows, revenue, net subscriber additions, or subscriber churn, the company said.
A variety of companies, including others in the wireless industry, have announced similar changes in their accounting and corresponding restatements of their financial results in the wake of recent clarifications by the Office of the Chief Accountant of the Securities and Exchange Commission of certain issues related to lease accounting, Cingular noted.
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