SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: October 15, 1998
SBC COMMUNICATIONS INC.
A Delaware Corporation
Commission File No. 1-8610
IRS Employer No. 43-1301883
175 E. Houston, San Antonio, Texas 78205
Telephone Number (210) 821-4105
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Item 5. Other Events
Attached as an exhibit is a press release issued by SBC Communications Inc. on
October 15, 1998 announcing earnings for the third quarter of 1998.
Item 7. Financial Statements and Exhibits
(c) Exhibits
99 Press Release - Third Quarter 1998 Earnings
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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 thereunto duly authorized.
SBC Communications Inc.
/s/ Randall Stephenson
Randall Stephenson
Vice President and Controller
October 15, 1998
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EXHIBIT INDEX
Exhibit
Number
99 Press Release - Third Quarter 1998 Earnings
EXHIBIT 99
SBC Communications Inc.
News Release
LOGO
For more information, contact:
Larry L. Solomon
Tel: 210/351-3990
Fax: 210/351-2903
Internet: [email protected]
SBC THIRD-QUARTER EARNINGS PER SHARE INCREASE 17.8 PERCENT
Solid core businesses, data and vertical services drive results
SAN ANTONIO, Oct. 15, 1998 - SBC Communications Inc. (NYSE: SBC)
today announced third-quarter results, reporting a 17.8 percent
increase in earnings per share to $0.53 on a diluted basis from
$0.45 in the third quarter of 1997 (excluding one-time gains in 1998
and merger related costs in 1997). Solid core business performance and
strong growth in data and vertical services drove SBC's third-quarter
results.
Earnings for the third quarter increased 19.6 percent to $988
million, before one-time gains resulting from the sale of certain
non-core businesses, compared with third-quarter 1997 results of
$826 million, after excluding one-time expenses for strategic
initiatives resulting from the Pacific Telesis merger. On a reported
basis, SBC's quarterly earnings were $1.2 billion, or $0.65 per diluted
share, compared with $816 million during the third quarter of 1997.
Third-quarter revenues increased 7.1 percent to $6.8 billion from
$6.3 billion last year.
"I'm very proud of the way our company performed this quarter,
both for our customers and our shareowners," said Edward E. Whitacre
Jr., chairman and chief executive officer. "Our strong third-quarter
performance shows that our strategies, our management team and our
employees are right on track.
"As expected, we're realizing the benefits from our merger with
Pacific Telesis, and we're seeing positive contributions from across
the company, which is a testament to SBC's ability to integrate
distinct businesses so that they perform as a single, unified team,"
Whitacre said.
Highlights of the quarter include:
Data Services: Data services revenues exceeded $550 million for
the quarter, an increase of 33 percent over the same quarter a year
ago, reflecting strong customer demand for high-speed dedicated and
switched transport services.
Vertical Services: Vertical services revenues increased over
20 percent, largely driven by increases in Caller ID subscribers.
Pacific Bell reached its 1 millionth residential Caller ID
subscriber, increasing penetration in the consumer segment to
11.5 percent from 3 percent in the same quarter last year.
Southwestern Bell's Caller ID penetration exceeded 49 percent, the
highest in the industry.
Access Lines: SBC added 388,000 access lines during the quarter
and 1.5 million over the last 12 months, resulting in access line
growth during the last 12 months of 4.7 percent for SBC's switched
services. Line growth on a voice-grade equivalent basis, which
includes the impact of both switched services and non-switched
high-speed data services such as DS1s and DS3s, was 9.2 percent for
the last 12 months. This increase better reflects total line growth
as data services play an increasingly important role in
telecommunications.
Wireless: SBC added 151,000 net wireless subscribers during the
quarter, driven by strong PCS growth in California. Overall, SBC
added 754,000 net subscribers over the last 12 months, increasing
the total number of subscribers 14.4 percent during that period.
Wireline Operations
Revenues at SBC's wireline operations continued to show strong
growth. Southwestern Bell Telephone and Pacific Bell quarterly
revenues grew 7.2 percent and 8.5 percent over third-quarter 1997
revenues to $2.8 billion and $2.4 billion, respectively.
Revenue growth was largely driven by high demand for data and
vertical services. Data revenues at Southwestern Bell and Pacific Bell
grew 35 percent and 27 percent, respectively. Southwestern Bell
increased its vertical feature penetration in the third quarter to
2.48 features per line compared with 2.34 features per line in the same
quarter last year. Pacific Bell increased feature penetration to 1.04
from .74 features per line over the same period last year.
At Southwestern Bell, earnings increased 6.6 percent to
$403 million from a normalized $378 million in the same quarter last
year. Pacific Bell reported earnings growth of 37.3 percent to
$320 million from a normalized $233 million in last year's third
quarter. Normalized results in 1997 exclude one-time expenses for
strategic initiatives resulting from the Pacific Telesis merger. On a
reported basis, earnings at Southwestern Bell and Pacific Bell
increased 7.8 percent and 38.5 percent over third-quarter 1997
respective earnings of $374 million and $231 million.
Wireless Operations
SBC's wireless subscriber revenues increased 10.7 percent over
the same quarter last year to $911 million, driven by PCS subscriber
growth in California. During the third quarter, SBC added a net
100,000 PCS customers in California and Nevada, and 51,000 customers in
its cellular markets.
As a result of strong margin growth in SBC's traditional cellular
markets and continued improvement in the profitability of the company's
PCS operations, subscriber cash margins increased to 40.5 percent in
the quarter compared with 30.7 percent in the third quarter last year.
International Operations
SBC's international investments performed well in the third
quarter, with contributions coming from investments such as Telmex in
Mexico and Telkom South Africa. SBC also received its first cash
dividend from Telkom South Africa during the quarter. The
international wireless businesses in which SBC has invested doubled
their number of subscribers during the past 12 months, raising total
wireless subscribers to 7 million.
During the quarter, SBC signed a construction and maintenance
agreement to participate in building a state-of-the-art undersea
communications pipeline linking the United States and Japan. SBC will
be one of 12 initial parties with an ownership stake. The network is
scheduled to be operational in late 2000.
SBC Communications Inc. is a global leader in the
telecommunications industry, with more than 34.5 million access lines
and over 5.9 million wireless customers across the United States, as
well as investments in telecommunications businesses in 11 countries.
Under the Southwestern Bell, Pacific Bell, Nevada Bell and Cellular One
brands, SBC, through its subsidiaries, offers a wide range of
innovative services, including local and long-distance telephone
service, wireless communications, paging, Internet access, and
messaging, as well as telecommunications equipment, and directory
advertising and publishing. SBC (www.sbc.com) has more than 118,000
employees and reported 1997 revenues of nearly $25 billion. SBC's
equity market value of $81 billion as of September 30, 1998, ranks it
as one of the largest telecommunications companies in the world.
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SBC Communications Inc.
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
(unaudited)
-- THIRD-QUARTER RESULTS --
EXCLUDING SPECIAL ITEMS 1998 1997 CHANGE
Operating revenues $6,776 $6,329 7.1%
Operating expenses $4,986 $4,841 2 3.0%
Earnings $988 1 $826 2 19.6%
Diluted earnings per share $0.53 1 $0.45 2 17.8%
AS REPORTED
Operating revenues $6,776 $6,329 7.1%
Operating expenses $4,986 $4,857 2.7%
Earnings $1,207 $816 47.9%
Diluted earnings per share $0.65 $0.44 47.7%
Weighted average common
shares outstanding (in millions) 1,835 1,829 0.3%
Weighted average common shares
outstanding with dilution
(in millions) 1,859 1,844 0.8%
1 Adjusted earnings for the third quarter of 1998 excludes after-tax
gains of $219, or $0.12 per share, for gains on sales of certain
non-core businesses, which is principally the required disposition of
SBC's MTN investment in South Africa due to SBC's investment in Telkom
South Africa.
2 Third quarter 1997 adjusted information excludes one-time expenses
related to strategic initiatives resulting from the merger integration
process with Pacific Telesis Group.
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SBC Communications Inc.
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
(unaudited)
-- NINE MONTHS RESULTS --
EXCLUDING SPECIAL ITEMS 1998 1997 CHANGE
Operating revenues $19,791 $18,411 2 7.5%
Operating expenses $14,633 $14,029 2 4.3%
Earnings $2,866 1 $2,401 2 19.4%
Diluted earnings per share $1.54 1 $1.31 2 17.6%
AS REPORTED
Operating revenues $19,791 $18,223 8.6%
Operating expenses $14,633 $16,098 (9.1)%
Earnings $3,085 $886 -
Diluted earnings per share $1.66 $0.48 -
Weighted average common
shares outstanding (in millions) 1,837 1,826 0.6%
Weighted average common shares
outstanding with dilution
(in millions) 1,862 1,841 1.1%
1 Adjusted earnings for the first nine months of 1998 excludes
after-tax gains of $219, or $0.12 per share, for gains on sales of
certain non-core businesses, which is principally the required
disposition of SBC's MTN investment in South Africa due to SBC's
investment in Telkom South Africa.
2 The 1997 adjusted information excludes one-time costs related to
strategic initiatives resulting from the merger integration process
with Pacific Telesis Group, the impact of several second quarter 1997
regulatory rulings, and the first quarter 1997 settlement gain at
Pacific Telesis Group associated with lump sum pension payments that
exceeded the projected service and interest costs for 1996 retirements.
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SBC Communications Inc.
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
(unaudited)
The following is provided as supplemental information relating to the
overall reported results of SBC Communications Inc. as of or for the
nine months ended:
09/30/98 09/30/97
Operating revenues $19,791 $18,223
Income from continuing operations 3,085 886
Income from continuing operations per common
share - basic 1.68 .48
Income from continuing operations per common
share - assuming dilution 1.66 .48
Total assets 42,529 42,056
Long-term debt 11,217 11,636
Dividends per common share 0.70125 0.67125
Book value per common share 6.29 5.21
Network access lines (000) 34,598 33,050
