United States
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: January 25, 2000
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
January 25, 2000 announcing fourth quarter and annual earnings for 1999.
Item 7. Financial Statements and Exhibits
99 January 25, 2000 Press Release-SBC Reports Strong Revenue and Earnings
Growth for Fourth Quarter, Full-Year 1999
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EXHIBIT INDEX
Exhibit Number
99 January 25, 2000 Press Release-SBC Reports Strong Revenue and Earnings
Growth for Fourth Quarter, Full-Year 1999
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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/ Robert B. Pickering
-------------------------
Robert B. Pickering
Senior Vice President-Finance
(Corporate)
January 25, 2000
Exhibit 99
SBC REPORTS STRONG REVENUE AND EARNINGS GROWTH
FOR FOURTH QUARTER, FULL-YEAR 1999
1999 earnings grow 12.5 percent to $7.4 billion and
fourth-quarter revenues increase 7.9 percent, before one-time items
Data services, wireless and international operations drive results
SAN ANTONIO, Jan. 25, 2000 - SBC Communications Inc. (NYSE: SBC) today
announced that increased demand for its data services and wireless operations
helped fuel strong fourth-quarter and full-year growth. For the full year 1999,
earnings before one-time items, extraordinary items and accounting changes, grew
12.5 percent to $7.4 billion, from $6.6 billion in 1998, and diluted earnings
per share increased 12.0 percent to $2.15, compared with $1.92 in 1998.
Full-year revenues grew 8.0 percent to $49.0 billion, before one-time items.
Fourth-quarter revenues increased 7.9 percent to $12.9 billion, before
one-time items. Earnings for the quarter grew 8.2 percent, before one-time items
and extraordinary items, to $1.9 billion, from $1.7 billion a year ago, and
diluted earnings per share increased 8.0 percent to $0.54, compared with $0.50
in the fourth quarter of 1998.
"As reflected by our fourth-quarter results, SBC continues to generate
strong revenue growth, expand its business and create shareowner value while
launching major growth initiatives to strengthen its role as an industry
leader," said Edward E. Whitacre Jr., chairman and chief executive officer.
"During the final three months of 1999 we completed the acquisition of
Ameritech, launched our national expansion plan and got off to a fast start with
Project Pronto, our $6 billion initiative to dramatically accelerate the rollout
of high-speed Internet access to most of our 53 million customers," Whitacre
added. "We're delivering value to customers today while entering new markets and
expanding our fastest-growing product lines to extend our leadership role
tomorrow.
"We are moving closer to our goal of becoming the only communications
company our customers will ever need," Whitacre said. "Once we receive federal
regulatory approval, SBC will add long distance to its comprehensive
communications solutions which today include local, wireless, high-speed
Internet access and satellite television."
Major Growth Drivers
During the fourth quarter, SBC achieved rapid progress in major business
lines and initiatives that the company expects will drive its growth over the
next several years. Based on the success of these initiatives and cost savings
from merger integration, SBC expects to deliver earnings growth of at least 15
percent, and double-digit revenue growth beginning in 2001. Fourth-quarter
growth driver highlights included the following:
o Data Services: Fourth-quarter data services revenues increased 44.0
percent to $1.6 billion. Growth was fueled by continued strong demand for
high-speed data transport services and by rapid growth in SBC's data
communications services, which include applications, network integration
services and Internet services. To further accelerate data services growth,
SBC is deploying Project Pronto, an initiative to transform its local
network into a next-generation, high-speed Internet access platform. Project
Pronto, designed to enable SBC to deliver Digital Subscriber Line (DSL)
broadband service to more than 80 percent of its local telephone customers
by the end of 2002, has already made good progress. SBC sold DSL service to
70,000 customers during the fourth quarter, and 169,000 for the full year.
At the end of 1999, SBC had deployed nearly half of the 1,300 wire centers
targeted by the project, and more than 10 million customer locations were
DSL-capable. The company expects 16 million customer locations to be
DSL-capable by year-end.
o Wireless: In the fourth quarter, SBC's domestic wireless operations
achieved a net gain of 458,000 subscribers, its strongest internal growth
rate in several years. Total subscriber revenues increased 25.2 percent
compared with the fourth quarter a year ago. Over the past year, SBC's
domestic wireless subscribers increased 28.4 percent to 11.2 million,
including strategic acquisitions made during the third quarter. SBC's
domestic wireless operations include nine of the United States' 10 largest
metropolitan areas and a total population of about 117 million. In
November, SBC announced plans to further expand its wireless operations by
acquiring Radiofone, which serves 200,000 wireless customers in markets
covering approximately 2.4 million people in Louisiana and Michigan. SBC
expects to complete the transaction during the second quarter of 2000.
o International: SBC's broad international portfolio continues to be a
powerful contributor to earnings growth. Fourth-quarter pre-tax income from
SBC's international investments increased 22.8 percent over the comparable
quarter a year ago. On a proportionate ownership basis, 1999 total revenues
reported by SBC's international holdings increased 39 percent to $6.8
billion. Major growth contributors included the second-quarter investment
in Bell Canada, and SBC's ongoing relationships with Tele Danmark and
Telmex. SBC further strengthened its relationship with Telmex, the premier
communications provider in Mexico, during the quarter by completing Telmex's
acquisition of a 50-percent equity stake in Cellular Communications of
Puerto Rico, and by investing with Telmex in Brazilian wireless provider
Algar Telecom Leste, whose service area includes 17 million people; that
transaction was completed earlier this month. SBC now has investments in
23 countries beyond the U.S., is the largest non-European investor in
European telecommunications, and has an international portfolio with a
current market value estimated at more than $25 billion.
o National Expansion: SBC has quickly made progress in its national expansion
into 30 new metropolitan area markets. As part of the expansion launched in
concert with the October 1999 acquisition of Ameritech, SBC expects to
introduce service in nine new markets in 2000, and another 21 during the
following two years. The company expects the initiative to add an
incremental $1 billion in revenue by 2002.
o Long Distance: Earlier this month, SBC filed with the Federal Communications
Commission for authority to provide long-distance service in Texas. In
December, Texas regulators voted unanimously to endorse SBC's entry into the
long-distance business. The company believes that gaining FCC approval to
enter long distance in all states where it provides local communications
services should enable the company to double its existing $3 billion in
long-distance revenues over the next three years.
Ameritech Integration
SBC this month completed detailed integration plans following its
acquisition of Ameritech. SBC originally projected $1.4 billion in net income
from merger synergies in 2003. Integration initiatives are ahead of schedule,
and based on progress to date the company expects to achieve greater benefits
and realize them sooner than projected.
Results including one-time items
SBC's fourth-quarter earnings before one-time items exclude a number of
items, including costs related to the Ameritech merger integration process;
details are found in this news release's accompanying Financial Summaries and
Comparisons. Including one-time items, SBC's reported net income for the fourth
quarter of 1999 was $3.1 billion, or $0.90 diluted earnings per share, compared
with $1.5 billion, or $0.44 per share, in the fourth quarter of 1998.
Net income for the fourth quarter 1999 also includes an extraordinary
gain of $1.4 billion on the sale of overlapping wireless properties; net income
for the fourth quarter 1998 includes an extraordinary loss of $60 million on the
early redemption of debt.
For the full year 1999, reported net income was $8.2 billion, or $2.36
diluted earnings per share, compared with $7.7 billion, or $2.23 per share, for
the full year 1998.
In addition to the fourth-quarter extraordinary items, net income in
both years includes the positive effect of changing directory accounting of $207
million in 1999, and $15 million in 1998.
Information set forth in this news release contains financial estimates and
other forward-looking statements that are subject to risks and uncertainties. A
discussion of factors that may affect future results is contained in SBC's
filings with the Securities and Exchange Commission. SBC disclaims any
obligation to update or revise statements contained in this news release based
on new information or otherwise.
SBC Communications Inc. (www.sbc.com) is a global communications leader.
Through its subsidiaries - Southwestern Bell, Ameritech, Pacific Bell, SBC
Telecom, Nevada Bell, SNET and Cellular One - and world-class network, SBC
provides local and long-distance phone service, wireless and data
communications, paging, high-speed Internet access and messaging, cable and
satellite television, security services and telecommunications equipment, as
well as directory advertising and publishing. In the United States, the company
currently has 90.4 million voice grade equivalent lines, 11.2 million wireless
customers and is undertaking a national expansion program that will bring SBC
service to an additional 30 markets. Internationally, SBC has telecommunications
investments in 23 countries. With more than 204,000 employees, SBC is the 14th
largest employer in the U.S., with annual revenues that rank it among the
largest Fortune 500 companies.
For more detailed information on SBC's fourth-quarter results, visit our web
site at http://www.sbc.com/Investor/Home.html
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<TABLE>
SBC Communications Inc.
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
(unaudited)
-- FOURTH-QUARTER RESULTS --
<CAPTION>
EXCLUDING ONE-TIME ITEMS: 1999 1998 CHANGE
- ------------------------- ---- ----- ------
<S> <C> <C> <C>
Operating revenues $12,896 $11,951 7.9%
Operating expenses $9,706 $9,093 6.7%
Income before extraordinary items $1,851 $1,711 8.2%
Diluted earnings per share before
extraordinary items $0.54 $0.50 8.0%
AS REPORTED
Operating revenues $12,897 $12,165 6.0%
Operating expenses $10,039 $9,638 4.2%
Income before extraordinary items $1,727 $1,591 8.5%
Net Income $3,106 $1,531 -
Diluted earnings per share before
extraordinary items $0.50 $0.46 8.7%
Diluted earnings per share $0.90 $0.44 -
Weighted average common shares
outstanding (in millions) 3,405 3,408 (0.1)%
Weighted average common shares
outstanding with dilution (in millions) 3,450 3,456 (0.2)%
</TABLE>
SBC's earnings before one-time items for the fourth quarter 1999 exclude a
number of one-time items (i) a charge of $574 resulting from costs related to
synchronizing accounting estimation techniques and valuation assumptions between
SBC and Ameritech, converting Ameritech's wireless customers to SBC's network
platform, and the merger integration process with Ameritech, (ii) $368 of
settlement gains associated with lump-sum pension payments, (iii) gains of $77
related to sale of property by an international affiliate, and (iv) incremental
operating impacts of $5 attributable to the operations of the overlapping
Ameritech wireless properties sold in the fourth quarter.
SBC's earnings before one-time items for the fourth quarter 1998 exclude $268
related to the merger integration process with SNET, a gain of $102 on the sale
of assets to Century Telephone Enterprises Inc., and incremental operating
impacts of $46 attributable to the operations of the overlapping Ameritech
wireless properties sold in the fourth quarter of 1999.
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<TABLE>
SBC Communications Inc.
Financial Summary and Comparisons
(dollars in millions, except per share amounts)
(unaudited)
-- ANNUAL RESULTS --
<CAPTION>
EXCLUDING ONE-TIME ITEMS: 1999 1998 CHANGE
- ------------------------- ---- ----- ------
<S> <C> <C> <C>
Operating revenues $48,960 $45,323 8.0%
Operating expenses $36,437 $33,836 7.7%
Income before extraordinary items and
cumulative effect of accounting change $7,439 $6,611 12.5%
Diluted earnings per share before
extraordinary items and cumulative
effect of accounting change $2.15 $1.92 12.0%
AS REPORTED
Operating revenues $49,489 $46,207 7.1%
Operating expenses $37,891 $34,984 8.3%
Income before extraordinary items and
cumulative effect of accounting change $6,573 $7,735 -15.0%
Net Income $8,159 $7,690 6.1%
Diluted earnings per share before
extraordinary items and cumulative
effect of accounting change $1.90 $2.24 -15.2%
Diluted earnings per share $2.36 $2.23 5.8%
Weighted average common shares
outstanding (in millions) 3,409 3,406 0.1%
Weighted average common shares
outstanding with dilution (in millions) 3,458 3,450 0.2%
</TABLE>
SBC's earnings before one-time items for the year ended 1999 exclude a number of
one-time items (i) a charge of $1,457 from costs related to synchronizing
accounting estimation techniques and valuation assumptions between SBC and
Ameritech, converting Ameritech's wireless customers to SBC's network platform,
the impairment of a portion of the accounting goodwill associated with
Ameritech's security business and costs associated with strategic initiatives
resulting from the merger integration process with Ameritech, (ii) $368 of
settlement gains associated with lump-sum pension payments, (iii) incremental
operating impacts of $119 attributable to the operations of the overlapping
Ameritech wireless properties sold in the fourth quarter, (iv) gains of $77
related to sale of property by an international affiliate, and (v) reduction to
a charge to cover the cost of consolidating security monitoring centers and
company-owned cellular retail stores of $27.
SBC's earnings before one-time items for the year ended 1998 exclude (i) gain of
$1,012 on sale of Telcom Corp. of New Zealand shares, (ii) charge of $268
related to the merger integration process with SNET, (iii) gain of $219 on sale
of certain non-core businesses, principally the required disposition of SBC's
interest in Mobile Telephone Networks, a South African national cellular
company, (iv) gain of $102 on sale of assets to Century Telephone Enterprises
Inc., (v) charge of $64 to cover the cost of consolidating security monitoring
centers and company-owned cellular retail stores, and (vi) incremental operating
impacts of $123 attributable to the operations of the overlapping Ameritech
wireless properties sold in the fourth quarter.
