UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

~~February~~April 329, 2003 Date of report (Date of Earliest Event Reported)

MTS, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)

Commission File Number
333-54035

California		94-1500342
(State of Other Jurisdiction		(I.R.S. Employer
(State of Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)
of Incorporation)		Identification No.)

2500 Del Monte Street
West Sacramento, CA 95691
(Address of Principal Executive Offices)

916-373-2500
(Registrant’s Telephone Number, Including Area Code)

TABLE OF CONTENTS

	ITEM 4. CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURE
INDEX TO EXHIBITS
EXHIBIT 16.1


	ITEM 5. OTHER EVENTS
SIGNATURE

ITEM 45. ~~CHANGES~~OTHER ~~IN REGISTRANT’S CERTIFYING ACCOUNTANT~~EVENTS

~~On January 28, 2003,~~ MTS, Incorporated (the “Company”) ~~dismissed~~has ~~KPMG~~elected ~~LLP~~to take advantage of the 30-day “grace period” provided for in the indenture (the “~~KPMG~~Indenture”) aswith respect to the ~~Company’s~~payment ~~independent~~of ~~auditor~~interest on its 9 3/8% Senior Subordinated Notes due 2005 (the “Notes”). The ~~decision~~regularly toscheduled ~~dismiss~~payment ~~KPMG~~date for interest on the Notes is May 1, 2003, on which $5,156,250 is due and payable. The Indenture provides that the Company has 30 days after the due date of an interest payment before non-payment of interest constitutes an event of default under the Indenture. The Company intends to ~~seek~~utilize athe ~~new~~30-day ~~independent~~“grace ~~auditor~~period” ~~was~~to ~~approved~~consider byits strategic options. If the Company fails to make the interest payment before the end of the grace period, an event of default under the Indenture would occur. If an event of default occurs under the Indenture due to the Company’s failure ~~board~~to make the interest payment on the Notes before the end of the grace ~~directors~~period, (the ~~“Board~~cross-default provisions of ~~Directors”)~~the Company’s credit facility and term loan agreements would be triggered, resulting in an event of default under these agreements as well.

~~KPMG~~The ~~served~~Company ashas ~~the~~been ~~Company’s~~in ~~independent~~discussions ~~auditor~~with ~~for~~ the ~~fiscal~~senior ~~year~~lenders ~~ended~~under ~~July~~its credit ~~31,~~facility ~~2002.~~and ~~KPMG’s~~term ~~report~~loan onagreements. ~~the~~The Company’s ~~financial~~anticipates ~~statements~~further ~~for the year~~discussions ~~ended~~with ~~July 31,~~its ~~2002~~senior ~~(the~~lenders ~~“Report”)~~as ~~did~~well ~~not~~as ~~contain~~with anits ~~adverse~~other ~~opinion~~major ~~or disclaimer~~creditors ~~of opinion~~ and stakeholders, ~~was~~including ~~not~~major ~~qualified~~holders orof ~~modified~~the asNotes, toconcerning ~~uncertainty,~~various ~~audit~~strategic ~~scope or accounting principles~~alternatives.

~~During~~The ~~the~~Company ~~most~~has ~~recent~~appointed ~~fiscal~~E. ~~year~~Allen ofRodriguez ~~the~~as ~~Company~~Chief ~~ended~~Executive ~~July 31,~~Officer ~~2002,~~of ~~and~~ the ~~subsequent~~Company ~~interim~~effective ~~period through January~~April 2826, 2003,. ~~there~~From ~~were~~1997 noto ~~disagreements with~~2002, ~~KPMG~~Mr. Rodriguez ~~within~~was ~~the~~an officer ~~meaning~~ of ~~Instruction~~Univision 4Communications ofInc., ~~Item 304~~a ~~of Regulation S~~Spanish-Klanguage ~~on any~~broadcaster ~~matter~~in ~~of accounting principles or practices~~Los Angeles, ~~financial statement disclosure~~California, orwhere ~~auditing~~he ~~scope~~held orthe ~~procedure,~~positions ~~which~~of ~~disagreements~~Executive ifVice ~~not resolved~~President toand ~~KPMG’s~~Vice ~~satisfaction~~President. ~~would~~Prior ~~have~~to ~~caused~~joining ~~KPMG~~Univision, toMr. Rodriguez ~~make~~served ~~reference~~as toa ~~the subject~~vice ~~matter~~president of ~~the~~Prudential ~~disagreements in connection with its Report. During the term of KPMG’s engagement~~Capital, ~~there~~where ~~were~~he nowas ~~“reportable~~employed ~~events”~~for ~~(as~~eight ~~such term is defined in Item 304(a)(1)(v) of Regulation S-K)~~years.

InThis ~~accordance~~Form 8-K contains certain forward-looking statements. These forward-looking statements generally can be identified by the context of the statement or the use of words such as the Company or its management “believes,” “anticipates,” “intends,” “expects,” “plans,” or words of similar meaning. Similarly, statements that describe the Company’s future plans, objectives, strategies or goals are forward-looking statements. Although the management of the Company believes that the assumptions underlying the forward-looking statements are reasonable, these assumptions and the forward-looking statements are subject to various factors, risks and uncertainties, many of which are beyond the control of the Company, including, but not limited to: (i) the outcome of discussions with ~~Item~~the Company’s lenders under its credit facility and term loan agreements regarding the Company’s strategic alternatives; (ii) ~~304~~the outcome of discussions with holders of the Company’s subordinated notes and other significant creditors regarding the Company’s strategic alternatives; (iii) the risks associated with negotiating a restructuring of the Company’s debt, including the risks associated with commencement of a bankruptcy proceeding under Chapter 11 of the Bankruptcy Code; (iv) the ability of the Company to comply with its obligations, including the ongoing monthly affirmative and negative covenants, as prescribed under the Company’s credit facility and term loan agreements; (3v) the ability of ~~Regulation~~the Company to continue to service its subordinated notes; (vi) ~~S-K~~consumer demand for the Company’s products, which is believed to be related to a ~~letter~~number of factors, including overall consumer spending patterns, weather conditions and new releases available from ~~KPMG~~suppliers; (vii) an increase in competition, including Internet ~~addressed~~competition and competition resulting from electronic or other alternative methods of delivery of music and other products to consumers, or unanticipated margin or other disadvantages relative to competitors; (viii) the continued availability and cost of adequate capital to fund the Company’s operations; (ix) higher than anticipated interest, occupancy, labor, distribution and inventory shrinkage costs; (x) the ability of the Company to successfully defend itself in ongoing and future litigation and the expenses associated with such litigation; (xi) higher than anticipated costs associated with the implementation of the Company’s existing restructuring plans and/or lower than anticipated resulting operations and cash flow benefits; (xii) unanticipated increases in the cost of merchandise sold by the Company; (xiii) changes in foreign currency exchange rates and economic and political risks; (xiv) the adverse effects of acts or threats of war, terrorism or other armed conflict on the United States and international economies; and (xv) the other risk factors disclosed in the Company’s filings with the Securities and Exchange Commission, including isits ~~included~~annual asreport ~~Exhibit~~on Form 1610-K.1 Accordingly, actual results could todiffer ~~this~~from ~~Current~~those ~~Report~~contemplated onby the forward-looking statements contained in this Form 8-K.

The Board of Directors has appointed the firm of PricewaterhouseCoopers LLP (“PwC”) to serve as the Company’s independent auditor for the Company’s fiscal year ending July 31, 2003. PwC’s engagement commenced effective January 28, 2003. During the Company’s fiscal years ended July 31, 2002 and 2001, and the subsequent interim period through January 28, 2003, the Company did not consult with PwC regarding (i) either the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements; or (ii) any matter that was either the subject of a “disagreement” with KPMG (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event with respect to KPMG (as defined in Item 304(a)(1)(v) of Regulation S-K).

ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No.		Description
16.1		Letter from KPMG to the Securities and Exchange Commission dated February 3, 2003 pursuant to Item 304(a)(3) of Regulation S-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 3, 2003


Date: April 29, 2003
	By:	/s/ E. Allen Rodriguez

		E. Allen Rodriguez, Chief Executive Officer

By: /s/ Jim S. Bain Jim S. Bain, Chief Financial Officer

INDEX TO EXHIBITS

Exhibit No.		Description
16.1		Letter from KPMG to the Securities and Exchange Commission dated February 3, 2003 pursuant to Item 304(a)(3) of Regulation S-K.

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