~~Table~~UNITED ~~of Contents~~STATES

~~UNITED STATES~~ 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

~~April~~June 292, 2003 ~~Date of report (Date of Earliest Event Reported)~~

~~MTS,~~Date ~~INCORPORATED (Exact Name~~ of ~~Registrant~~report as(Date ~~Specified~~of inEarliest ~~its~~Event ~~Charter~~Reported)

~~Commission~~MTS, ~~File Number~~INCORPORATED ~~333-54035~~

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

(Exact Name of Registrant as Specified in its Charter)

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

~~916~~333-~~373-2500~~54035 ~~(Registrant’s Telephone Number, Including Area Code)~~

TABLE OF CONTENTS


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

~~ITEM~~2500 5.Del ~~OTHER~~Monte ~~EVENTS SIGNATURE~~Street

~~Table~~West ofSacramento, ~~Contents~~CA 95691

~~ITEM~~(Address 5.of ~~OTHER~~Principal ~~EVENTS~~Executive Offices)

~~MTS, Incorporated (the “Company”) has elected to take advantage of the 30~~916-day “grace period” provided for in the indenture (the “Indenture”) with respect to the payment of interest on its 9 3/8% Senior Subordinated Notes due 2005 (the “Notes”). The regularly scheduled payment 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 non373-~~payment of interest constitutes an event of default under the Indenture.~~2500 ~~The Company intends to utilize the 30-day “grace period” to consider its~~ ~~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 to make the interest payment on the Notes before the end of the grace period, the cross-default provisions of the Company’s credit facility and term loan agreements would be triggered, resulting in an event of default under these agreements as well.

~~The~~(Registrant’s ~~Company~~Telephone has been in discussions with the senior lenders under its credit facility and term loan agreements. The Company anticipates further discussions with its senior lenders as well as with its other major creditors and stakeholdersNumber, ~~including~~Including ~~major~~Area ~~holders of the Notes, concerning various~~Code) ~~strategic alternatives.~~

~~The~~ITEM ~~Company has appointed E~~5. ~~Allen~~OTHER ~~Rodriguez as Chief Executive Officer of the~~EVENTS ~~Company effective April 26, 2003. From 1997 to 2002, Mr. Rodriguez was an~~ ~~officer of Univision Communications Inc., a Spanish-language broadcaster in Los~~ Angeles, California, where he held the positions of Executive Vice President and Vice President. Prior to joining Univision, Mr. Rodriguez served as a vice president of Prudential Capital, where he was employed for eight years.

~~This~~MTS, ~~Form 8-K~~Incorporated ~~contains certain forward-looking statements. These forward-looking statements generally can be identified by~~ (the ~~context~~“Company”) ofhas ~~the statement~~determined orthat ~~the~~it ~~use~~will ofnot ~~words~~make ~~such as~~ the ~~Company or its management “believes,”~~ ~~“anticipates~~$5,~~” “intends~~156,”250 ~~“expects,”~~payment ~~“plans,” or words~~ of ~~similar~~interest ~~meaning. Similarly,~~due ~~statements~~on ~~that describe the Company’s future plans~~May 1, ~~objectives, strategies~~2003 oron ~~goals~~its ~~are~~9 ~~forward-looking~~3/8% ~~statements. Although the management of~~Senior ~~the~~Subordinated ~~Company~~Notes ~~believes~~due ~~that~~2005 (the ~~assumptions~~“Notes”) ~~underlying~~at the ~~forward-looking statements~~expiration ~~are~~of ~~reasonable, these assumptions and~~ the ~~forward~~30-~~looking statements~~day ~~are~~“grace ~~subject~~period” tofor ~~various~~such ~~factors,~~payment ~~risks~~provided ~~and~~for ~~uncertainties,~~in ~~many of which are beyond~~ the ~~control~~indenture of (the ~~Company, including, but not limited to: (i~~“Indenture”) ~~the~~ ~~outcome~~for ofthe ~~discussions~~Notes. ~~with~~The ~~the~~ Company’s ~~lenders~~failure ~~under~~to ~~its~~make ~~credit facility and term loan agreements regarding~~ the ~~Company’s~~interest ~~strategic~~payment ~~alternatives;~~before ~~(ii)~~ the ~~outcome~~end of ~~discussions with holders of~~ the ~~Company’s~~grace ~~subordinated~~period ~~notes~~constitutes ~~and other~~an ~~significant~~event ~~creditors~~of ~~regarding~~default ~~the~~under ~~Company’s strategic alternatives; (iii)~~ the ~~risks associated with negotiating a restructuring of the Company’s~~Indenture. ~~debt,~~As ~~including the risks associated with commencement of~~ a ~~bankruptcy proceeding~~result ~~under Chapter 11~~ of the ~~Bankruptcy~~event ~~Code; (iv) the ability~~ of ~~the Company to comply with its obligations~~default, ~~including~~ the ~~ongoing~~trustee ~~monthly affirmative and negative covenants, as prescribed~~ under the ~~Company’s~~Indenture ~~credit facility and term loan agreements;~~ (v) the ~~ability of the Company to continue~~ ~~to service its subordinated notes; (vi~~“Trustee”) ~~consumer~~ ~~demand~~or ~~for~~ the ~~Company’s products,~~holders ~~which is believed to be related to a number~~ of ~~factors,~~at ~~including overall~~least ~~consumer~~25% ~~spending patterns, weather conditions and new releases available from suppliers; (vii) an increase~~ in ~~competition,~~aggregate ~~including~~principal ~~Internet competition~~amount ~~and competition resulting from electronic or other alternative methods~~ of ~~delivery of music and other products to consumers, or unanticipated~~the ~~margin~~Notes orcould ~~other~~take ~~disadvantages~~certain ~~relative~~actions to ~~competitors;~~cause ~~(viii)~~ the ~~continued availability~~Notes ~~and cost of adequate capital~~ to ~~fund~~become ~~the~~immediately ~~Company’s operations;~~due ~~(ix) higher~~and ~~than~~payable. ~~anticipated interest~~Although, ~~occupancy,~~as ~~labor,~~of ~~distribution and inventory shrinkage costs; (x)~~ the ~~ability~~date of ~~the~~this ~~Company~~report, toneither ~~successfully defend itself in ongoing and future litigation and~~ the ~~expenses~~Trustee ~~associated with~~nor such ~~litigation;~~holders ~~(xi) higher~~have ~~than~~taken ~~anticipated~~such ~~costs~~actions, ~~associated with~~ the ~~implementation~~ ~~of the~~ Company’s ~~existing~~can ~~restructuring~~make ~~plans~~no ~~and/or~~assurance ~~lower than~~that ~~anticipated~~they ~~resulting~~will ~~operations~~not ~~and~~do ~~cash~~so ~~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 its annual report on Form 10-Kfuture. ~~Accordingly, actual results could~~ ~~differ from those contemplated by the forward-looking statements contained in~~ ~~this Form 8-K.~~

~~SIGNATURE~~The Company, with the assistance of its financial advisor, Jefferies & Company, Inc., has made a proposal to an ad hoc committee of the holders of the Notes relating to a restructuring of the outstanding debt represented by the Notes and is in discussions with representatives of the committee concerning such restructuring. No understanding or agreement has been reached with the committee as of the date of this report, and the Company can make no assurance that any understanding or agreement will be reached.

~~Pursuant~~The tooccurrence of an event of default under the ~~requirements~~Indenture triggers the cross-default provisions of the ~~Securities~~Company’s ~~Exchange~~credit ~~Act~~facility and term loan agreements and results in an event of ~~1934,~~default ~~the~~under such agreements. The ~~Registrant~~Company has ~~duly~~received ~~caused~~an ~~this~~interim ~~report~~forbearance toagreement befrom ~~signed~~the onsenior lenders under its ~~behalf~~credit facility agented by ~~the undersigned~~The ~~hereunto~~CIT ~~duly~~Group/Business ~~authorized~~Credit, Inc., pursuant to which such senior lenders have agreed not to exercise their default rights under the Company’s credit facility relating to the

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

above-referenced default. The Company is in discussions with its senior lenders concerning an extended forbearance agreement and amendments to its credit facility. The Company’s senior lenders are continuing to provide funding to the Company under its credit facility. The Company can make no assurance that the senior lenders will continue to provide liquidity or that the Company will be able to obtain an extended forbearance agreement or amendments to its credit facility.

The Company’s board of directors appointed DeVaughn D. Searson as Chief Financial Officer and Executive Vice President of the Company effective May 20, 2003. Mr. Searson had previously served in those capacities until November of 2002 and has served continuously as a director of the Company since 1998.

This 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 the Company’s lenders under its credit facility and term loan agreements regarding the Company’s strategic alternatives; (ii) the outcome of discussions with holders of the 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; (v) the ability of the Company to continue to service the Notes; (vi) consumer demand for the Company’s products, which is believed to be related to a number of factors, including overall consumer spending patterns, weather conditions and new releases available from suppliers; (vii) an increase in competition, including Internet 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 its annual report on Form 10-K. Accordingly, actual results could differ from those contemplated by the forward-looking statements contained in this Form 8-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: June 2, 2003


		By:		/s/ E. Allen Rodriguez

				E. Allen Rodriguez, Chief Executive Officer

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