-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IEUtFVWhTZ2PSOIYsuJVMH0dugf9iqgXaTQhvkF/UtW6olkdvLGVYDxczwGn7YaS u6Y8kzjlMqQOJ0j1SUI/Hw== 0000950123-01-501081.txt : 20010425 0000950123-01-501081.hdr.sgml : 20010425 ACCESSION NUMBER: 0000950123-01-501081 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010424 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010424 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SBC COMMUNICATIONS INC CENTRAL INDEX KEY: 0000732717 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 431301883 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08610 FILM NUMBER: 1609204 BUSINESS ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-4 CITY: SAN ANTONIO STATE: TX ZIP: 78205 BUSINESS PHONE: 2108214105 MAIL ADDRESS: STREET 1: 175 E HOUSTON STREET 2: ROOM 9-4 CITY: SAN ANTONIO STATE: TX ZIP: 78205 FORMER COMPANY: FORMER CONFORMED NAME: SOUTHWESTERN BELL CORP DATE OF NAME CHANGE: 19920703 8-K 1 y48249e8-k.txt SBC COMMUNICATIONS INC. 1 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 (Date of earliest event reported) April 24, 2001 --------------------------- SBC Communications Inc. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-8610 43-1301883 - -------------------------------------------------------------------------------- (State or Other Jurisdiction of (Commission (IRS Employer Incorporation) File Number) Identification No.) 175 E. Houston, San Antonio, Texas 78205 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (210) 821-4105 -------------------------- - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) 2 ITEM 5. OTHER EVENTS. - ---------------------- First Quarter 2001 Earnings On April 23, 2001, SBC announced earnings for the first quarter of 2001. See Exhibit 99-1 for a summarized copy of the related press release. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. - ------------------------------------------- (c) Exhibits Exhibit No. 99-1 Summary of Press Release - First Quarter 2001 Earnings 99-2 SBC Communications Inc. Unaudited Consolidated Financial Statements 3 EXHIBIT INDEX Exhibit Number 99-1 Summary of Press Release - First Quarter 2001 Earnings 99-2 SBC Communications Inc. Unaudited Consolidated Financial Statements 4 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. By: /s/ Donald E. Kiernan ------------------------------ Donald E. Kiernan Senior Excecutive Vice President and Chief Financial Officer April 24, 2001 EX-99.1 2 y48249ex99-1.txt SUMMARY OF PRESS RELEASE 1 EXHIBIT 99-1 San Antonio, Texas, April 23, 2001 SBC Communications Inc. (NYSE: SBC) today reported that its primary growth drivers - data, wireless and long distance - performed strongly during the first quarter. Highlights included: o 39.9 percent growth in data revenues o A net gain of 854,000 subscribers at Cingular, SBC's nationwide wireless joint venture with BellSouth Corporation o 2.2 million long-distance lines in Texas, Oklahoma and Kansas; SBC entered the Texas long-distance market in July 2000 and the other two states in March of this year As expected, the timing of SBC's investments in its growth initiatives during 2000 impacted first-quarter expense and earnings comparisons. The slowing U.S. economy also dampened growth. First-quarter earnings were $1.7 billion, or $0.51 per diluted share, on a normalized basis before one-time items, compared with $1.9 billion, or $0.56 per diluted share, in the first quarter a year ago. Operating revenues for the quarter, including results from Cingular, increased 4.7 percent to $13.1 billion. First-quarter revenue growth was also adversely impacted by SBC's sale of Ameritech's security-monitoring business. Excluding results from this divestiture as well as shifts in directory publishing dates and the pro forma effect on the year-ago quarter of the Cingular venture, first-quarter revenues increased 6.7 percent. "The economy is having a greater impact on our business than we projected," said Edward E. Whitacre Jr., SBC chairman and CEO. "We handled the first-quarter revenue shortfall well, thanks to very disciplined expense management. Going forward, we are determined not to lose sight of our larger strategic mission - including fully developing our broadband capabilities and obtaining long-distance relief in our states as quickly as possible - and we will not compromise our long-term future to preserve near-term projections". SBC has experienced the impacts of a slower economy across its regions, with impacts in February and March being more severe than in the previous months and more severe than the company had anticipated. Across the company, inward call volumes to service centers declined with access line growth trends, particularly in residential markets. Broader economic trends - including housing starts, layoffs and bankruptcies - mirror SBC's business indicators. In California, the largest state in SBC's in-regions territory, the macroeconomic impact on access line growth was exacerbated by California's energy crisis and the failure of many dot-com and high-tech startups. Highlights of SBC's first quarter include: o DATA: SBC's data revenues increased 39.9 percent to $2.1 billion, compared with $1.5 billion in the year-ago quarter. The company's data revenue stream has nearly doubled in the past two years. SBC added 187,000 new DSL (Digital Subscriber Line) customers during the first quarter, for a total of 954,000 DSL subscribers, as strong demand continues for high-speed Internet access and bandwidth-hungry applications. Revenue from data products and services accounted for 21 percent of SBC's first-quarter total wireline revenues, compared with 16 percent in the year-ago period. The company's DSL initiative continues to roll out, making DSL available to 21.7 million of SBC's metro-area wireline customer locations, up from 12.9 million a year ago. SBC's core data transport products, including SONET, DS3s, and ATM, also showed strong first- 2 quarter growth that was driven by enterprise customers whose increased use of sophisticated applications requires significantly more bandwidth. o WIRELESS: A net gain of 854,000 wireless subscribers at Cingular Wireless during the first quarter brings the company's subscriber total to 20.5 million at the end of the first quarter. Cingular's wireless services revenues increased 14.8 percent to $3.1 billion compared with pro forma levels in the year-ago quarter. Cingular also added 84,000 new subscribers to its Cingular Interactive operation, which includes two-way messaging and other wireless data services. Cingular successfully launched its nationwide brand in January with the support of a national advertising campaign. Also during the first quarter, Cingular expanded its geographic reach to the Seattle and Spokane markets where the company has an all-digital GSM (global system for mobile communications) operation supported by 50 retail stores. o LONG DISTANCE: SBC's long-distance business expanded during the first quarter as the company on March 7 began offering long-distance service to customers in Kansas and Oklahoma. At the end of the first quarter, the company had 2.2 million long-distance lines in Texas, Kansas and Oklahoma. SBC has filed an application at the Federal Communications Commission to enter the long-distance market in Missouri, and the company expects a decision in the coming weeks. Also, the company has applications pending with regulators in California, Nevada and Arkansas. o CORE: In the first quarter, SBC's core operations - which include wireline voice, switched access, vertical services, directory and wholesale services - delivered essentially flat revenue growth, reflecting a weakened U.S. economy and declines in access revenues largely due to slightly reduced minutes of use and regulatory mandated price decreases. Access lines served were 61,254,000 and access minutes of use were 69,388,000,000 at March 31, 2001, compared with 61,154,000 and 69,474,000,000, respectively, at March 31, 2000. First-quarter core revenues exclude the impacts of shifts in directory publication dates as well as the sale of Ameritech's security monitoring business. Results including one-time items Including one-time items, SBC's reported net income for the first quarter of 2001 was $1.9 billion, or $0.54 diluted earnings per share, compared with $1.8 billion, or $0.53 per share, in the first quarter of 2000. Reported net income for the first quarter of 2001 includes the following one-time items: pension settlement gains of $330 million related to management employees, primarily resulting from a previously announced voluntary retirement program net of costs associated with that program; and combined charges of $205 million related to impairment of the company's cable operations. Compared with the first quarter a year ago, cash operating expenses increased 9.9 percent, reflecting the timing of investments in major growth drivers in 2000. However, from fourth-quarter 2000 levels, cash operating expenses declined 7.1 percent. Cautionary language concerning forward-looking statements 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. EX-99.2 3 y48249ex99-2.txt UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1 EXHIBIT 99-2 - -------------------------------------------------------------------------------- FINANCIAL DATA SBC COMMUNICATIONS INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME Dollars in millions except per share amounts - -------------------------------------------------------------------------------- Unaudited Three Months Ended ---------------------------------- 3/31/01 3/31/00 % Change - -------------------------------------------------------------------------------- OPERATING REVENUES Landline local service $ 5,568 $ 5,124 8.7% Wireless subscriber 54 1,500 -- Network access 2,603 2,665 -2.3% Long distance service 793 803 -1.2% Directory advertising 830 882 -5.9% Other 1,342 1,579 -15.0% - -------------------------------------------------------------------------------- TOTAL OPERATING REVENUES 11,190 12,553 -10.9% - -------------------------------------------------------------------------------- OPERATING EXPENSES Operations and support 6,083 7,214 -15.7% - -------------------------------------------------------------------------------- EBITDA * 5,107 5,339 -4.3% - -------------------------------------------------------------------------------- Depreciation and amortization 2,448 2,263 8.2% - -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 8,531 9,477 -10.0% - -------------------------------------------------------------------------------- OPERATING INCOME 2,659 3,076 -13.6% - -------------------------------------------------------------------------------- INTEREST EXPENSE 459 356 28.9% - -------------------------------------------------------------------------------- INTEREST INCOME 178 24 -- - -------------------------------------------------------------------------------- EQUITY IN NET INCOME OF AFFILIATES 401 200 -- - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 106 17 -- - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 2,885 2,961 -2.6% - -------------------------------------------------------------------------------- INCOME TAXES 1,021 1,139 -10.4% - -------------------------------------------------------------------------------- INCOME BEFORE EXTRAORDINARY ITEM 1,864 1,822 2.3% - -------------------------------------------------------------------------------- EXTRAORDINARY ITEM, NET OF TAX (10) -- -- - -------------------------------------------------------------------------------- NET INCOME $ 1,854 $ 1,822 1.8% ================================================================================ BASIC EARNINGS PER SHARE: Income Before Extraordinary Item $ 0.55 $ 0.54 1.9% Net Income $ 0.55 $ 0.54 1.9% Weighted Average Common Shares Outstanding (000,000) 3,377 3,396 -0.6% DILUTED EARNINGS PER SHARE: Income Before Extraordinary Item $ 0.55 $ 0.53 3.8% Net Income $ 0.54 $ 0.53 1.9% Weighted Average Common Shares Outstanding with Dilution (000,000) 3,413 3,432 -0.6% DILUTED EARNINGS PER SHARE BEFORE GOODWILL CHARGES: Income Before Extraordinary Item $ 0.57 $ 0.57 -- Net Income $ 0.57 $ 0.57 -- * EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization. 2 - -------------------------------------------------------------------------------- FINANCIAL DATA SBC COMMUNICATIONS INC. - -------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS Dollars in millions except per share amounts - -------------------------------------------------------------------------------- Unaudited 3/31/01 12/31/00 - -------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 551 $ 643 Accounts receivable - net of allowances for Uncollectibles of $1,008 and $1,032 9,315 10,144 Prepaid expenses 999 550 Deferred income taxes 612 671 Notes receivable from Cingular Wireless 9,138 9,568 Other current assets 1,099 1,640 - -------------------------------------------------------------------------------- Total current assets 21,714 23,216 - -------------------------------------------------------------------------------- Property, Plant and Equipment - at cost 121,365 119,753 Less: Accumulated depreciation and amortization 73,815 72,558 - -------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT - NET 47,550 47,195 - -------------------------------------------------------------------------------- INTANGIBLE ASSETS - NET OF ACCUMULATED AMORTIZATION OF $557 AND $746 5,022 5,475 INVESTMENTS IN EQUITY AFFILIATES 11,399 12,378 OTHER ASSETS 11,640 10,387 - -------------------------------------------------------------------------------- TOTAL ASSETS 97,325 $ 98,651 ================================================================================ LIABILITIES AND SHAREOWNERS' EQUITY CURRENT LIABILITIES Debt maturing within one year $ 10,643 $ 10,470 Accounts payable and accrued liabilities 13,770 15,432 Accrued taxes 2,645 3,592 Dividends payable 867 863 - -------------------------------------------------------------------------------- Total current liabilities 27,925 30,357 - -------------------------------------------------------------------------------- LONG-TERM DEBT 16,561 15,492 - -------------------------------------------------------------------------------- DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES Deferred income taxes 7,288 6,806 Postemployment benefit obligation 9,811 9,767 Unamortized investment tax credits 302 318 Other noncurrent liabilities 4,622 4,448 Total deferred credits and other noncurrent liabilities 22,023 21,339 ================================================================================ CORPORATION-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF SUBSIDIARY TRUSTS 500 1,000 - -------------------------------------------------------------------------------- SHAREOWNERS' EQUITY Common shares issued ($1 par value) 3,433 3,433 Capital in excess of par value 12,105 12,125 Retained earnings 19,333 18,341 Guaranteed obligations of employee stock ownership plans (21) (21) Deferred Compensation - LESOP (33) (37) Treasury shares (at cost) (2,933) (2,071) Accumulated other comprehensive income (1,568) (1,307) - -------------------------------------------------------------------------------- Total shareowners' equity 30,316 30,463 - -------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $ 97,325 $ 98,651 ================================================================================ 3 - -------------------------------------------------------------------------------- FINANCIAL DATA SBC COMMUNICATIONS INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENT OF CASH FLOWS Dollars in millions, increase (decrease) in cash and cash equivalents - -------------------------------------------------------------------------------- Unaudited Three months ended 3/31/01 3/31/00 - -------------------------------------------------------------------------------- OPERATING ACTIVITIES Net income $ 1,854 $ 1,822 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,448 2,263 Undistributed earnings from investments in equity affiliates 216 (152) Provision for uncollectible accounts 230 211 Amortization of investment tax credits (16) (18) Deferred income tax expense 649 352 Gain on sale of investments (129) (191) Extraordinary item, net of tax 10 -- Changes in operating assets and liabilities: Accounts receivable 574 408 Other current assets (386) (508) Accounts payable and accrued liabilities (2,468) (581) Other - net (1,032) (657) - -------------------------------------------------------------------------------- Total adjustments 96 1,127 - -------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 1,950 2,949 - -------------------------------------------------------------------------------- INVESTING ACTIVITIES Construction and capital expenditures (2,807) (2,349) Investments in affiliates 1,158 (103) Proceeds from short-term investments 510 -- Dispositions 244 215 Acquisitions -- (3,663) Other 1 1 - -------------------------------------------------------------------------------- Net Cash Used in Investing Activities (894) (5,899) - -------------------------------------------------------------------------------- FINANCING ACTIVITIES Net change in short-term borrowings with original maturities of three months or less (84) 4,867 Issuance of long-term debt 2,238 -- Repayment of long-term debt (980) (526) Early extinguishment of corporation-obligated mandatorily redeemable Preferred securities of subsidiary trusts (500) -- Purchase of treasury shares (1,065) (284) Issuance of treasury shares 90 60 Dividends paid (859) (834) Other 12 29 - -------------------------------------------------------------------------------- Net Cash Provided by (Used in) Financing Activities (1,148) 3,312 - -------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (92) 362 - -------------------------------------------------------------------------------- Cash and cash equivalents beginning of year 643 495 - -------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS END OF PERIOD $ 551 $ 857 ================================================================================ 4 - -------------------------------------------------------------------------------- FINANCIAL DATA SBC COMMUNICATIONS INC. - -------------------------------------------------------------------------------- Consolidated Statements of Income - Normalized Dollars in millions except per share amounts - -------------------------------------------------------------------------------- Unaudited Three Months Ended ----------------------------------- 3/31/01 3/31/00 % Change - -------------------------------------------------------------------------------- OPERATING REVENUES Landline local service $ 5,568 $ 5,124 8.7% Wireless subscriber 1,688 1,500 12.5% Network access 2,592 2,665 -2.7% Long distance service 793 803 -1.2% Directory advertising 830 882 -5.9% Other 1,673 1,579 6.0% - -------------------------------------------------------------------------------- TOTAL OPERATING REVENUES 13,144 12,553 4.7% ================================================================================ OPERATING EXPENSES Operations and support 7,980 7,262 9.9% - -------------------------------------------------------------------------------- EBITDA * 5,164 5,291 -2.4% - -------------------------------------------------------------------------------- Depreciation and amortization 2,408 2,192 9.9% - -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 10,388 9,454 9.9% - -------------------------------------------------------------------------------- OPERATING INCOME 2,756 3,099 -11.1% - -------------------------------------------------------------------------------- INTEREST EXPENSE 483 356 35.7% - -------------------------------------------------------------------------------- INTEREST INCOME 79 24 -- - -------------------------------------------------------------------------------- EQUITY IN NET INCOME OF AFFILIATES 188 200 -6.0% - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 136 17 -- - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 2,676 2,984 -10.3% - -------------------------------------------------------------------------------- INCOME TAXES 937 1,074 -12.8% - -------------------------------------------------------------------------------- INCOME BEFORE EXTRAORDINARY ITEM 1,739 1,910 -9.0% - -------------------------------------------------------------------------------- EXTRAORDINARY ITEM, NET OF TAX (10) -- -- - -------------------------------------------------------------------------------- NET INCOME $ 1,729 $ 1,910 -9.5% ================================================================================ BASIC EARNINGS PER SHARE: Income Before Extraordinary Item $ 0.52 $ 0.56 -7.1% Net Income $ 0.51 $ 0.56 -8.9% Weighted Average Common Shares Outstanding (000,000) 3,377 3,396 -0.6% DILUTED EARNINGS PER SHARE: Income Before Extraordinary Item $ 0.51 $ 0.56 -8.9% Net Income $ 0.51 $ 0.56 -8.9% Weighted Average Common Shares Outstanding with Dilution (000,000) 3,413 3,432 -0.6% DILUTED EARNINGS PER SHARE BEFORE GOODWILL CHARGES: Income Before Extraordinary Item $ 0.54 $ 0.58 -6.9% Net Income $ 0.53 $ 0.58 -8.6% - -------------------------------------------------------------------------------- The first quarter of 2001 reflects 60% proportional consolidation of Cingular actual results plus the residual wireless properties we hold that have not yet been contributed to Cingular. First quarter 2000 results reflect the historical results of our wireless businesses that have been or will be contributed to Cingular. * EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization. NORMALIZED 2001 NET INCOME EXCLUDED THE FOLLOWING SPECIAL ITEMS: Pension settlement gains of ($330) related to management employees, primarily resulting from a voluntary retirement program net of costs associated with that program. Combined charges of $205 related to impairment of our cable operations.. NORMALIZED 2000 NET INCOME EXCLUDED THE FOLLOWING SPECIAL ITEMS: Pension settlement gains of ($161) primarily related to employees who terminated employment during 1999. A charge of $132 related to in-process research and development from the March 2000 acquisition of Sterling. Costs of $117 associated with strategic initiatives and other adjustments resulting from the merger integration process with Ameritech. 5 - -------------------------------------------------------------------------------- FINANCIAL DATA SBC COMMUNICATIONS INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME - NORMALIZED (UNAUDITED) (Dollars in millions) Three Months Ended ----------------------------------- WIRELINE 3/31/01 3/31/00 % Change - -------------------------------------------------------------------------------- OPERATING REVENUES Local service $ 5,564 $ 5,128 8.5% Network access 2,603 2,688 -3.2% Long distance service 748 763 -2.0% Other 1,192 1,046 14.0% TOTAL OPERATING REVENUES 10,107 9,625 5.0% ================================================================================ OPERATING EXPENSES Operations and support 6,182 5,408 14.3% - -------------------------------------------------------------------------------- EBITDA * 3,925 4,217 -6.9% - -------------------------------------------------------------------------------- Depreciation and amortization 1,967 1,787 10.1% - -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 8,149 7,195 13.3% - -------------------------------------------------------------------------------- OPERATING INCOME 1,958 2,430 -19.4% - -------------------------------------------------------------------------------- INTEREST EXPENSE 333 317 5.0% - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 15 22 -31.8% - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES $ 1,640 $ 2,135 -23.2% ================================================================================ WIRELESS ** - -------------------------------------------------------------------------------- OPERATING REVENUES Subscriber Revenues $ 1,688 $ 1,500 12.5% Other 343 326 5.2% - -------------------------------------------------------------------------------- TOTAL OPERATING REVENUES 2,031 1,826 11.2% - -------------------------------------------------------------------------------- OPERATING EXPENSES Operations and support 1,455 1,173 24.0% - -------------------------------------------------------------------------------- EBITDA * 576 653 -11.8% - -------------------------------------------------------------------------------- Depreciation and amortization 287 279 2.9% - -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 1,742 1,452 20.0% - -------------------------------------------------------------------------------- OPERATING INCOME 289 374 -22.7% - -------------------------------------------------------------------------------- INTEREST EXPENSE 142 39 -- - -------------------------------------------------------------------------------- EQUITY IN NET INCOME OF AFFILIATES 7 1 -- - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 35 (35) -- - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES $ 189 $ 301 -37.2% ================================================================================ ** The first quarter of 2001 reflects 60% proportional consolidation of Cingular actual results plus the residual wireless properties we hold that have not yet been contributed to Cingular. First quarter 2000 results reflect the historical results of our wireless businesses that have been or will be contributed to Cingular. DIRECTORY - -------------------------------------------------------------------------------- OPERATING REVENUES $ 824 $ 871 -5.4% - -------------------------------------------------------------------------------- OPERATING EXPENSES Operations and support 440 482 -8.7% - -------------------------------------------------------------------------------- EBITDA * 384 389 -1.3% - -------------------------------------------------------------------------------- Depreciation and amortization 9 8 12.5% - -------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 449 490 -8.4% - -------------------------------------------------------------------------------- OPERATING INCOME 375 381 -1.6% - -------------------------------------------------------------------------------- INTEREST EXPENSE -- 3 -- - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 5 5 -- - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES $ 380 $ 383 -0.8% ================================================================================ INTERNATIONAL - -------------------------------------------------------------------------------- OPERATING REVENUES $ 70 $ 61 14.8% - -------------------------------------------------------------------------------- OPERATING EXPENSES 75 89 -15.7% - -------------------------------------------------------------------------------- OPERATING INCOME (LOSS) (5) (28) -- - -------------------------------------------------------------------------------- INTEREST EXPENSE 1 70 -98.6% - -------------------------------------------------------------------------------- EQUITY IN NET INCOME OF AFFILIATES 177 199 -11.1% - -------------------------------------------------------------------------------- OTHER INCOME (EXPENSE) - NET 107 138 -22.5% - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES $ 278 $ 239 16.3% ================================================================================ * EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization. -----END PRIVACY-ENHANCED MESSAGE-----