Exhibit 99-a
Unaudited Pro Forma Condensed Financial Statements
SBC Communications Inc.
In April 2000, SBC Communications Inc. (SBC) and BellSouth Corporation
(BellSouth) announced an agreement to combine their domestic wireless
operations. Assuming that all of the assets are contributed as provided for in
the agreement, ownership in the new company will be 60% for SBC and 40% for
BellSouth with control shared equally. SBC expects to account for its interest
under the equity method of accounting. SBC expects that the basis of its
investment will be approximately the same as the book value of SBC's domestic
wireless assets. The new wireless company will be managed independently with a
four-seat board of directors (two seats from each company). The transaction
requires the approval of the Federal Communications Commission as well as the
review of the United States Department of Justice. Divestitures of some
overlapping properties will be required. The pending acquisitions of properties
to be included in the joint venture along with the pending dispositions of
properties that overlap with BellSouth are not expected to have a material
effect on SBC's domestic wireless operations. We expect to close the transaction
by the end of 2000.
The unaudited pro forma condensed financial statements and notes thereto are
presented for purposes of displaying the effect of the wireless joint venture on
the financial statements of SBC assuming the joint venture had been consummated
on the dates indicated and for the periods presented. The unaudited pro forma
condensed balance sheets reflect the historical balance sheets of SBC and its
domestic wireless operations at June 30, 2000, March 31, 2000 and
December 31, 1999. The unaudited pro forma condensed statements of income
reflect the historical operating results of SBC and its domestic wireless
operations for the six months ended June 30, 2000, the three months ended
March 31, 2000 and the years ended December 31, 1999 and 1998. The unaudited
pro forma condensed statements of income assume that SBC's 60% equity in net
income from the joint venture would be materially the same as its historical
earnings from its domestic wireless operations.
The unaudited pro forma condensed financial statements do not reflect pro forma
results of other SBC acquisitions and dispositions which occurred during the
periods presented. The unaudited pro forma condensed financial statements are
not necessarily indicative of the results of operations or financial position
that actually would occur had the joint venture been consummated on the dates
indicated or that may be obtained in the future. The information set forth in
the unaudited pro forma condensed financial statements should be read in
conjunction with the historical consolidated financial statements and notes
thereto and other information included in (a) SBC's 1999 Annual Report to
Shareowners, which is incorporated by reference into SBC's Annual Report on Form
10-K for 1999, and (b) SBC's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.
<PAGE>
<TABLE>
<CAPTION>
SBC Communications Inc.
Unaudited Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 2000
Historical Pro Forma SBC
SBC Adjustments Pro Forma
------------------------- ------------
(in millions, except per share data)
<S> <C> <C> <C> <C>
Total operating revenues $ 25,783 (3,929) $ 21,854
Total operating expenses 19,709 (3,081) 16,628
-----------------------------------------------------------------------------------------
Operating Income 6,074 (848) 5,226
-----------------------------------------------------------------------------------------
Interest Expense (772) 8 (764)
Equity in net income of affiliates 389 761 2a 1,150
Other income (expense) - net 183 79 262
-----------------------------------------------------------------------------------------
Income Before Income Taxes 5,874 - 5,874
-----------------------------------------------------------------------------------------
Income taxes 2,201 - 2,201
-----------------------------------------------------------------------------------------
Net Income $ 3,673 - $ 3,673
=========================================================================================
Earnings Per Common Share-Basic:
Net Income $ 1.08 $ 1.08
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,396 3,396
-----------------------------------------------------------------------------------------
Earnings Per Common Share-Assuming Dilution:
Net Income $ 1.07 $ 1.07
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,435 3,435
-----------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these unaudited pro forma
condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SBC Communications Inc.
Unaudited Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1999
Historical Pro Forma SBC
SBC Adjustments Pro Forma
------------------------- ------------
(in millions, except per share data)
<S> <C> <C> <C> <C>
Total operating revenues $ 49,489 (7,450) $ 42,039
Total operating expenses 37,891 (6,041) 31,850
-----------------------------------------------------------------------------------------
Operating Income 11,598 (1,409) 10,189
-----------------------------------------------------------------------------------------
Interest Expense (1,430) 18 (1,412)
Equity in net income of affiliates 912 1,194 2a 2,106
Other income (expense) - net (227) 197 (30)
-----------------------------------------------------------------------------------------
Income Before Income Taxes, Extraordinary Gain
and Cumulative Effect of Accounting Change 10,853 - 10,853
-----------------------------------------------------------------------------------------
Income taxes 4,280 - 4,280
-----------------------------------------------------------------------------------------
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Change 6,573 - 6,573
-----------------------------------------------------------------------------------------
Extraordinary gain, net of tax 1,379 - 2b 1,379
Cumulative effect of accounting change, net of tax 207 - 207
-----------------------------------------------------------------------------------------
Net Income $ 8,159 - $ 8,159
=========================================================================================
Earnings Per Common Share-Basic:
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Change $ 1.93 $ 1.93
Net Income $ 2.39 $ 2.39
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,409 3,409
-----------------------------------------------------------------------------------------
Earnings Per Common Share-Assuming Dilution:
Income Before Extraordinary Gain and Cumulative
Effect of Accounting Change $ 1.90 $ 1.90
Net Income $ 2.36 $ 2.36
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,458 3,458
-----------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these unaudited pro forma
condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SBC Communications Inc.
Unaudited Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1998
Historical Pro Forma SBC
SBC Adjustments Pro Forma
-------------------------- ------------
(in millions, except per share data)
<S> <C> <C> <C> <C>
Total operating revenues $ 46,207 (6,519) $ 39,688
Total operating expenses 34,984 (5,335) 29,649
-----------------------------------------------------------------------------------------
Operating Income 11,223 (1,184) 10,039
-----------------------------------------------------------------------------------------
Interest Expense (1,605) 5 (1,600)
Equity in net income of affiliates 613 944 2a 1,557
Other income (expense) - net 1,884 235 2,119
-----------------------------------------------------------------------------------------
Income Before Income Taxes, Extraordinary Loss
and Cumulative Effect of Accounting Change 12,115 - 12,115
-----------------------------------------------------------------------------------------
Income taxes 4,380 - 4,380
-----------------------------------------------------------------------------------------
Income Before Extraordinary Loss and Cumulative
Effect of Accounting Change 7,735 - 7,735
-----------------------------------------------------------------------------------------
Extraordinary loss, net of tax (60) - (60)
Cumulative effect of accounting change, net of tax 15 - 15
-----------------------------------------------------------------------------------------
Net Income $ 7,690 - $ 7,690
=========================================================================================
Earnings Per Common Share-Basic:
Income Before Extraordinary Loss and Cumulative
Effect of Accounting Change $ 2.27 $ 2.27
Net Income $ 2.26 $ 2.26
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,406 3,406
-----------------------------------------------------------------------------------------
Earnings Per Common Share-Assuming Dilution:
Income Before Extraordinary Loss and Cumulative
Effect of Accounting Change $ 2.24 $ 2.24
Net Income $ 2.23 $ 2.23
-----------------------------------------------------------------------------------------
Weighted Average Number of
Common Shares Outstanding 3,450 3,450
-----------------------------------------------------------------------------------------
<FN>
The accompanying notes are an integral part of these unaudited pro forma
condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SBC Communications Inc.
Unaudited Pro Forma Condensed Balance Sheet
As of June 30, 2000
Historical Pro Forma SBC
SBC Adjustments Pro Forma
-------------------------- ------------
(in millions)
<S> <C> <C> <C><C>
Assets
Current Assets
Cash and cash equivalents $ 813 $ (102) $ 711
Accounts receivable - net 9,538 (897) 8,641
Other current assets 2,122 3,932 2d 6,054
------------------------------------------------------------------------------------------
Total current assets 12,473 2,933 15,406
------------------------------------------------------------------------------------------
Property, Plant and Equipment - Net 48,045 (4,296) 43,749
------------------------------------------------------------------------------------------
Intangible Assets - Net 11,067 (6,420) 4,647
------------------------------------------------------------------------------------------
Investments in Equity Affiliates 10,918 3,174 2c 14,092
------------------------------------------------------------------------------------------
Other Assets 8,688 (194) 8,494
------------------------------------------------------------------------------------------
Total Assets $ 91,191 $ (4,803) $ 86,388
==========================================================================================
Liabilities and Shareowners' Equity
Current Liabilities
Debt maturing within one year $ 9,812 $ (39) $ 9,773
Other current liabilities 15,747 (1,566) 14,181
------------------------------------------------------------------------------------------
Total current liabilities 25,559 (1,605) 23,954
------------------------------------------------------------------------------------------
Long-Term Debt 15,927 (240) 15,687
------------------------------------------------------------------------------------------
Postemployment benefit obligation 9,781 (115) 9,666
------------------------------------------------------------------------------------------
Other noncurrent liabilities 10,549 (2,843) 7,706
------------------------------------------------------------------------------------------
Corporation-obligated mandatorily redeemable
preferred securities of subsidiary trusts* 1,000 - 1,000
------------------------------------------------------------------------------------------
Shareowners' Equity
Common shares 3,433 - 3,433
Capital in excess of par value 12,471 - 12,471
Retained earnings 15,764 - 15,764
Guaranteed obligations of employee stock
ownership plans (46) - (46)
Deferred compensation - LESOP (66) - (66)
Treasury shares (at cost) (1,887) - (1,887)
Accumulated other comprehensive income (1,294) - (1,294)
------------------------------------------------------------------------------------------
Total shareowners' equity 28,375 - 28,375
------------------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $ 91,191 $ (4,803) $ 86,388
==========================================================================================
<FN>
* The trusts contain assets of $1,030 in principal amount of the Subordinated
Debentures of Pacific Telesis Group.
The accompanying notes are an integral part of these unaudited pro forma
condensed financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SBC Communications Inc.
Unaudited Pro Forma Condensed Balance Sheet
As of December 31, 1999
Historical Pro Forma SBC
SBC Adjustments Pro Forma
------------------------- ------------
(in millions)
<S> <C> <C> <C><C>
Assets
Current Assets
Cash and cash equivalents $ 495 $ (59) $ 436
Accounts receivable - net 9,378 (897) 8,481
Other current assets 2,057 899 2d 2,956
------------------------------------------------------------------------------------------
Total current assets 11,930 (57) 11,873
------------------------------------------------------------------------------------------
Property, Plant and Equipment - Net 46,571 (4,231) 42,340
------------------------------------------------------------------------------------------
Intangible Assets - Net 6,796 (5,684) 1,112
------------------------------------------------------------------------------------------
Investments in Equity Affiliates 10,648 4,808 2c 15,456
------------------------------------------------------------------------------------------
Other Assets 7,270 (298) 6,972
------------------------------------------------------------------------------------------
Total Assets $ 83,215 $ (5,462) $ 77,753
==========================================================================================
Liabilities and Shareowners' Equity
Current Liabilities
Debt maturing within one year $ 3,374 $ (37) $ 3,337
Other current liabilities 15,939 (2,709) 13,230
------------------------------------------------------------------------------------------
Total current liabilities 19,313 (2,746) 16,567
------------------------------------------------------------------------------------------
Long-Term Debt 17,475 (262) 17,213
------------------------------------------------------------------------------------------
Postemployment benefit obligation 9,612 (103) 9,509
------------------------------------------------------------------------------------------
Other noncurrent liabilities 9,089 (2,351) 6,738
------------------------------------------------------------------------------------------
Corporation-obligated mandatorily redeemable
preferred securities of subsidiary trusts* 1,000 - 1,000
------------------------------------------------------------------------------------------
Shareowners' Equity
Common shares 3,433 - 3,433
Capital in excess of par value 12,453 - 12,453
Retained earnings 13,798 - 13,798
Guaranteed obligations of employee stock
ownership plans (106) - (106)
Deferred compensation - LESOP (73) - (73)
Treasury shares (at cost) (1,717) - (1,717)
Accumulated other comprehensive income (1,062) - (1,062)
------------------------------------------------------------------------------------------
Total shareowners' equity 26,726 - 26,726
------------------------------------------------------------------------------------------
Total Liabilities and Shareowners' Equity $ 83,215 $ (5,462) $ 77,753
==========================================================================================
<FN>
* The trusts contain assets of $1,030 in principal amount of the Subordinated
Debentures of Pacific Telesis Group.
The accompanying notes are an integral part of these unaudited pro forma
condensed financial statements.
</FN>
</TABLE>
<PAGE>
Notes To Unaudited Pro Forma Condensed Financial Statements
Note 1 - Basis of Presentation
The accompanying unaudited pro forma condensed financial statements include the
historical financial statements of SBC Communications Inc. (SBC) and its
domestic wireless operations and are intended to reflect the impact of the
wireless joint venture with BellSouth Corporation (BellSouth) on SBC's
historical financial statements. In April 2000, SBC and BellSouth announced an
agreement to combine their domestic wireless operations. Assuming that all of
the assets are contributed as provided for in the agreement, ownership in the
new company will be 60% for SBC and 40% for BellSouth with control shared
equally. SBC expects to account for its interest under the equity method of
accounting. SBC expects that the basis of its investment will be approximately
the same as the book value of SBC's domestic wireless assets. The new wireless
company will be managed independently with a four-seat board of directors (two
seats from each company). The transaction requires the approval of the Federal
Communications Commission as well as the review of the United States Department
of Justice. Divestitures of some overlapping properties will be required. The
pending acquisitions of properties to be included in the joint venture along
with the pending dispositions of properties that overlap with BellSouth are not
expected to have a material effect on SBC's domestic wireless operations. We
expect to close the transaction by the end of 2000.
The accompanying unaudited pro forma condensed financial statements reflect the
joint venture as if it had been in effect on January 1, 2000, 1999 and 1998. The
unaudited pro forma condensed statements of income assume that SBC's 60% equity
in net income from the joint venture would be materially the same as its
historical earnings from its domestic wireless operations. The unaudited pro
forma condensed financial statements do not reflect pro forma results of other
SBC acquisitions and dispositions which occurred during the periods presented.
The unaudited pro forma condensed financial statements are not necessarily
indicative of the results of operations or financial position that actually
would occur had the joint venture been consummated on the dates indicated or
that may be obtained in the future. The results for the interim periods are not
necessarily indicative of results for the full year. The information set forth
in the unaudited pro forma condensed financial statements should be read in
conjunction with the historical consolidated financial statements and notes
thereto and other information included in (a) SBC's 1999 Annual Report to
Shareowners, which is incorporated by reference into SBC's Annual Report on Form
10-K for 1999, and (b) SBC's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.
Note 2 - Pro Forma Adjustments
a. Equity in net income of affiliates - Equity in net income earned from the
joint venture is assumed to be the same as SBC's historical domestic
wireless earnings.
b. Extraordinary gain - The 1999 extraordinary gain on the required
disposition of 20 Midwestern cellular properties was reported as an
extraordinary item because it was a condition of the Ameritech merger and
was material to SBC.
c. Investments in Equity Affiliates - SBC's investment in the joint venture
is assumed to be the same as SBC's historical domestic wireless assets.
d. Other current assets - The intercompany borrowings that SBC's domestic
wireless operations owes to the SBC parent company will become a
receivable from the joint venture.
