SBC Cleans Its Sheets

SBC Communications Inc. filed a document with the U.S. Securities and Exchange Commission (SEC) today revising its March 31 and June 30 balance sheets to correct the misclassification of some of its short-term debt as long-term debt.

According to the document, the two balance sheets categorized $750 million in debt maturing in February 2003 as long-term. The debt should have been classified as debt maturing within one year, the SEC filing states.

The changes made to the balance sheets do not reflect any change in the total debt of the company, Larry Solomon, an SBC spokesperson, said today. “This is a completely insignificant item that doesn’t change total debt or debt ratios."

The company had been doing some account reconciliation prior to filing its latest quarterly report with the SEC and realized that what used to be long-term debt had passed the 12-month mark. “It was an inadvertent error,” Solomon says.

"Another clerical error?" asks Craig Johnson, an independent analyst based in Portland, Ore. "Clerical baloney! It's not clerical -- it's the way they were running their business." He says that booking short-term debt as long-term debt has been a widespread technique companies have used to get better tax conditions, or simply to make balance sheets look better.

Other observers say the revision is just symptomatic of the cleanup going on in the industry. “I would expect to see every company taking a close look at what they’ve been doing and be more conservative about it,” says Jeff Kagan, an independent analyst based in Georgia. “We’re going to see more of this… which is healthy.”

— Eugénie Larson, Reporter, Light Reading
http://www.lightreading.com