SBC Communications Posts Strong Third-Quarter Results: Substantial Margin Expansion, Record Gain in DSL Lines, Double-Digit Data Revenue Growth and Further Advances at Cingular Wireless.SAN ANTONIO San Antonio (săn ăntō`nēō, əntōn`), city (1990 pop. 935,933), seat of Bexar co., S central Tex., at the source of the San Antonio River; inc. 1837. -- Note: SBC's third-quarter earnings conference call will be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Oct. 20, 2005, at www.sbc.com/investor_relations. --Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.38 on a reported basis, $0.47 before merger- and hurricane-related costs at Cingular Wireless --19.0 percent consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. margin, up 250 basis points versus the year-earlier third quarter; 15.5 percent operating income growth --528,000 net increase in DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary lines, best-ever quarterly result; 6.5 million lines in service --10.1 percent growth in wireline data revenues, driven by strength in broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and business services --Sixth consecutive quarter of growth in wireline revenues, with consumer revenues up 3.4 percent and business revenues up 2.3 percent --Further margin expansion at Cingular Wireless combined with solid customer growth; 52.3 million subscribers at quarter's end --$3.3 billion cash from operations plus $1.4 billion in cash from Cingular in the third quarter --Share repurchases of $507 million in the third quarter, with at least an additional $1 billion targeted for the fourth quarter SBC Communications Inc. (NYSE NYSE See: New York Stock Exchange : SBC) today reported strong third-quarter results with expanded margins, robust growth in DSL and data services, and continued merger integration progress at Cingular Wireless, the United States' largest wireless provider, which is 60 percent owned by SBC. SBC's third-quarter earnings totaled $1.2 billion, or $0.38 per diluted share, on a reported basis and $1.5 billion, or $0.47 per diluted share, before merger- and hurricane-related costs at Cingular Wireless. "SBC continues to execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution well, and the fundamentals of our business are strong," said Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide E. Whitacre Jr., SBC chairman and chief executive officer. "DSL gains accelerated. Cingular Wireless' results are trending better than we had projected. Productivity initiatives have helped reduce costs and expand margins. And cash from operations continues to be strong, which has allowed us to increase activity in our share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program. "Our results demonstrate excellent focus ahead of our planned merger with AT&T," Whitacre added. "In addition to substantial synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. opportunities, AT&T brings world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. IP networks, advanced product sets and a premier reputation for innovation and quality service. Planning for integration has been thorough. We will be ready to move quickly to deliver a seamless See seamless integration. experience for customers as soon as we receive final approvals, which we expect in the fourth quarter." Consolidated Third-Quarter Financial Results Results for the quarter ended Sept. 30, 2005, included: (1) SBC's portion of Cingular Wireless' $637 million of merger integration and noncash intangible amortization costs, which amounted to $0.08 per diluted share; and (2) SBC's portion of Cingular's $96 million in costs associated with Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita, which amounted to $0.01 per diluted share. --On a reported basis, SBC's third-quarter earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the totaled $1.2 billion, or $0.38 per diluted share. --Excluding the items noted above, SBC's third-quarter earnings from continuing operations would have totaled $1.5 billion, or $0.47 per diluted share. --These results compare with third-quarter 2004 earnings from continuing operations of $1.2 billion, or $0.38 per diluted share. During the third quarter of 2004, SBC sold its interest in directory operations covering 129 directories in Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. and northwest Indiana Northwest Indiana, also known as The Calumet Region, or just The Region, is comprised of Lake, Porter, LaPorte, Newton, and Jasper counties in Indiana. This region neighbors Chicago, Illinois and Lake Michigan, and is also the Indiana component of the Chicago , resulting in an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $827 million, or $0.25 per share. Third-quarter comparisons are based on results from continuing operations, which exclude this gain as well as results from the sold directory business in both periods. SBC's third-quarter 2005 revenues totaled $10.3 billion, up 0.3 percent versus the year-earlier quarter. Wireline revenues totaled $9.4 billion, up 0.4 percent from the third quarter of 2004. The third quarter of 2005 was SBC's sixth consecutive quarter of growth in business, consumer and total wireline revenues. Wireline consumer revenues grew 3.4 percent, and business revenues increased 2.3 percent, partially offset by expected declines in wholesale revenues due to a reduction in UNE-P UNE-P Unbundled Network Element - Platform access lines. Third-quarter 2004 results included a net increase in revenues of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $60 million from regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and other matters, including a September September: see month. 2004 California Public Utilities Commission The California Public Utilities Commission (CPUC; also often commonly referred to as simply the PUC) [1] is a state Public Utilities Commission which regulates privately-owned utilities in the state of California, including electric power, decision on UNE-P rates. Third-quarter 2005 operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. totaled $8.4 billion, down 2.7 percent from the third quarter of 2004, reflecting progress with productivity initiatives and force reductions. SBC's total workforce declined by approximately 3,100 in the third quarter and by approximately 8,200 over the first three quarters of 2005. SBC expects its force reduction for the full year to approach 10,000. SBC's third-quarter operating income was $2.0 billion, up 15.5 percent versus the year-earlier quarter, and its operating income margin expanded to 19.0 percent, versus 16.5 percent in the year-earlier quarter. In the second quarter of 2005, SBC's operating income margin was 14.7 percent on a reported basis and 17.0 percent excluding a $236 million charge to terminate Terminate (terminat.exe) was a shareware modem terminal and host program for MS-DOS and compatible operating systems developed from the early to the late 1990s by the Dane Bo Bendtsen. The last release (5. agreements with WilTel Communications WilTel Communications (formerly known as Williams Communications, which was formerly part of The Williams Companies, Inc) is a telco and Tier 2 Internet Service Provider with its own MPLS-enabled OC-192 optical wave division multiplexing backbone network. . Excluding the WilTel charge, SBC has now posted three straight quarters with both year-over-year and sequential One after the other in some consecutive order such as by name or number. margin expansion. SBC generated $3.3 billion in cash from operations in the third quarter and received an additional $1.4 billion in cash from Cingular Wireless. Year to date through the third quarter, SBC generated $8.4 billion in cash from operations and received an additional $2.6 billion in cash from Cingular Wireless. During the third quarter, SBC used $507 million of cash to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. 20.8 million of its common shares. SBC expects to buy back at least an additional $1 billion in shares during the fourth quarter of 2005, with continuing repurchases in 2006. Wireline Operational Highlights SBC's third-quarter wireline metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. reflect solid operational progress. DSL -- SBC added 528,000 DSL lines in the third quarter, its best-ever quarterly increase and 31 percent better than its net gain of 402,000 in the third quarter a year ago. Over the past four quarters, SBC has added 1.8 million DSL lines and ended September with 6.5 million in service, No. 1 among U.S. telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. providers. DSL/Internet revenues grew 22.8 percent versus the third quarter of 2004 and were up 6.0 percent versus the second quarter of this year. Data Revenues -- Wireline data revenues grew 10.1 percent versus results in the year-earlier quarter to $3.0 billion, driven by DSL/Internet growth, along with solid results in transport and integration services for businesses. SBC ranks No. 1 among its immediate peers in total data revenues. Long Distance -- SBC's total long distance lines increased by 554,000 to 23.3 million in service, up 18.0 percent from the third quarter of 2004, and long distance revenues grew 9.7 percent versus the year-earlier quarter. At the end of the third quarter, 62 percent of SBC's retail consumer lines and 45 percent of its retail business voice lines included long distance service. Consumer Retail Connections -- The third quarter was SBC's fifth straight quarter with a net increase in consumer retail connections -- retail access lines, DSL lines and video subscribers. SBC achieved a net increase in these connections of 306,000 in the quarter and 1.1 million over the past four quarters. Access Lines -- SBC's retail business line base declined by less than 2,000 in the third quarter, compared with a decline of 168,000 in the third quarter a year ago. Consumer retail primary lines declined by 114,000, versus 119,000 in the third quarter of 2004. Additional lines declined by 119,000, versus a decline of 140,000 in the third quarter of 2004. As expected, SBC's switched wholesale line total declined by 556,000 -- versus a decline of 213,000 in the third quarter of 2004 -- due to a 643,000 decline in UNE-P lines. SBC ended the third quarter of 2005 with 50.2 million total switched access lines. Cingular Wireless Results As required by Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) for joint ventures, SBC reflects Cingular Wireless' results in the Equity in Net Income of Affiliates line of its Consolidated Statements of Income rather than in consolidated revenues and expenses. Cingular's detailed financial results are shown in SBC's Statements of Segment Income. In the third quarter, Cingular Wireless achieved significant improvement in operating income, reflecting progress across a range of integration initiatives while sustaining solid subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. growth. During the quarter, gross subscriber additions totaled 4.4 million. Cingular has now posted more than 4 million gross adds in each of the four quarters following its acquisition of AT&T Wireless. Cingular's third-quarter net subscriber gain was 867,000, bringing its total to 52.3 million. Average monthly subscriber churn churn: see butter. in the third quarter was 2.3 percent, compared with 2.2 percent in the second quarter of this year and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma churn of 3.2 percent for the year-earlier third quarter. Third-quarter churn among Cingular's postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. subscribers was 2.0 percent, compared with 1.8 percent in the second quarter of 2005. Cingular's churn results reflect school-year seasonal patterns and a relatively high number of contract expirations during the quarter. ("Pro forma" results, which are provided to help compare current and prior-period results, reflect acquisitions and dispositions, including the acquisition of AT&T Wireless, as if they had occurred on Jan. 1, 2003.) Cingular's third-quarter revenues totaled $8.7 billion, up 6.2 percent versus pro forma revenue of $8.2 billion for the third quarter of 2004 and up 1.6 percent versus the second quarter of this year. Cingular's third-quarter reported operating expenses totaled $8.1 billion, essentially unchanged from the second quarter of this year. Reported operating income totaled $657 million, up 30.4 percent from $504 million in the second quarter of this year. Cingular's third-quarter operating expenses included $241 million of direct merger integration costs and $96 million in hurricane-related costs. Excluding these costs, operating income would have totaled $994 million, up 40.4 percent from a comparable $708 million in the preceding quarter. Excluding an additional $396 million of noncash expenses for the amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. that were acquired as part of Cingular's merger with AT&T Wireless, third-quarter operating income would have been $1.4 billion, up from a comparable $1.2 billion in the second quarter of 2005. Agreement to Acquire AT&T On June June: see month. 30, 2005, the shareholders of AT&T Corp. voted to approve the merger agreement with SBC. The planned transaction will combine AT&T's global systems capabilities, business and government customers, and fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive Internet Protocol See Internet and TCP/IP. (networking) Internet Protocol - (IP) The network layer for the TCP/IP protocol suite widely used on Ethernet networks, defined in STD 5, RFC 791. IP is a connectionless, best-effort packet switching protocol. (IP)-based business with SBC's local exchange, broadband and wireless capabilities. The acquisition is subject to approval by regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities and other customary closing conditions. The companies have cleared regulatory hurdles in 33 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). . Three states with approval authority remain to be completed. Federal and international reviews are also under way. SBC expects approvals to be completed to allow closing by late 2005. SBC Communications Inc. is a Fortune 50 company whose subsidiaries, operating under the SBC brand, provide a full range of voice, data, networking, e-business (Electronic-BUSINESS) Doing business online. The term is often used synonymously with e-commerce, but e-business is more of an umbrella term for having a presence on the Web. , directory publishing and advertising, and related services to businesses, consumers and other telecommunications providers. SBC holds a 60 percent ownership interest in Cingular Wireless, which serves more than 52 million wireless customers. SBC companies provide high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. DSL Internet access See how to access the Internet. lines to more American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of consumers than any other provider and are among the nation's leading providers of Internet services. SBC companies also offer satellite TV service. Additional information about SBC and SBC products and services is available at www.sbc.com. Cautionary Language Concerning Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. 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. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.sbc.com/investor_relations.
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Financial Data
SBC Communications Inc.
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Consolidated Statements of Income
Dollars in millions except per share amounts
----------------------------------------------------------------------
Unaudited Three Months Ended
--------------------------------
9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Operating Revenues
Voice $ 4,929 $ 5,286 -6.8%
Data 3,009 2,733 10.1%
Long-distance voice 949 865 9.7%
Directory advertising 961 948 1.4%
Other 472 460 2.6%
------------------------------------- ---------- ---------- ----------
Total Operating Revenues 10,320 10,292 0.3%
------------------------------------- ---------- ---------- ----------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization
shown separately below) 4,352 4,319 0.8%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 2,203 2,386 -7.7%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 1,803 1,889 -4.6%
------------------------------------- ---------- ---------- ----------
Total Operating Expenses 8,358 8,594 -2.7%
------------------------------------- ---------- ---------- ----------
Operating Income 1,962 1,698 15.5%
------------------------------------- ---------- ---------- ----------
Interest Expense 349 238 46.6%
------------------------------------- ---------- ---------- ----------
Interest Income 82 140 -41.4%
------------------------------------- ---------- ---------- ----------
Equity in Net Income of Affiliates 219 210 4.3%
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - net (70) 45 -
------------------------------------- ---------- ---------- ----------
Income Before Income Taxes 1,844 1,855 -0.6%
------------------------------------- ---------- ---------- ----------
Income Taxes 598 610 -2.0%
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Income From Continuing Operations 1,246 1,245 0.1%
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Income From Discontinued Operations,
net of tax - 849 -
----------------------------------------------------------------------
Net Income $ 1,246 $ 2,094 -40.5%
======================================================================
Basic Earnings Per Share:
Income from Continuing Operations $ 0.38 $ 0.38 -
Net Income $ 0.38 $ 0.63 -39.7%
Weighted Average Common
Shares Outstanding (000,000) 3,296 3,314 -0.5%
Diluted Earnings Per Share:
Income from Continuing Operations $ 0.38 $ 0.38 -
Net Income $ 0.38 $ 0.63 -39.7%
Weighted Average Common
Shares Outstanding with Dilution
(000,000) 3,306 3,325 -0.6%
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Financial Data
SBC Communications Inc.
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Consolidated Statements of Income
Dollars in millions except per share amounts
----------------------------------------------------------------------
Unaudited Nine Months Ended
--------------------------------
9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Operating Revenues
Voice $ 14,989 $ 15,704 -4.6%
Data 8,830 8,107 8.9%
Long-distance voice 2,772 2,429 14.1%
Directory advertising 2,856 2,869 -0.5%
Other 1,449 1,391 4.2%
------------------------------------- ---------- ---------- ----------
Total Operating Revenues 30,896 30,500 1.3%
------------------------------------- ---------- ---------- ----------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization
shown separately below) 13,176 12,902 2.1%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 7,247 7,244 -
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 5,437 5,700 -4.6%
------------------------------------- ---------- ---------- ----------
Total Operating Expenses 25,860 25,846 0.1%
------------------------------------- ---------- ---------- ----------
Operating Income 5,036 4,654 8.2%
------------------------------------- ---------- ---------- ----------
Interest Expense 1,051 705 49.1%
------------------------------------- ---------- ---------- ----------
Interest Income 291 376 -22.6%
------------------------------------- ---------- ---------- ----------
Equity in Net Income of Affiliates 342 1,171 -70.8%
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - net 11 862 -98.7%
------------------------------------- ---------- ---------- ----------
Income Before Income Taxes 4,629 6,358 -27.2%
------------------------------------- ---------- ---------- ----------
Income Taxes 1,498 2,067 -27.5%
------------------------------------- ---------- ---------- ----------
Income From Continuing Operations 3,131 4,291 -27.0%
------------------------------------- ---------- ---------- ----------
Income From Discontinued Operations,
net of tax - 908 -
------------------------------------- ---------- ---------- ----------
Net Income $ 3,131 $ 5,199 -39.8%
======================================================================
Basic Earnings Per Share:
Income from Continuing Operations $ 0.95 $ 1.30 -26.9%
Net Income $ 0.95 $ 1.57 -39.5%
Weighted Average Common
Shares Outstanding (000,000) 3,300 3,311 -0.3%
Diluted Earnings Per Share:
Income from Continuing Operations $ 0.95 $ 1.29 -26.4%
Net Income $ 0.95 $ 1.57 -39.5%
Weighted Average Common
Shares Outstanding with Dilution
(000,000) 3,311 3,324 -0.4%
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Financial Data
SBC Communications Inc.
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Statements of Segment Income
Dollars in millions
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Unaudited Three Months Ended
--------------------------------
Wireline 9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Segment Operating Revenues
Voice $ 4,929 $ 5,286 -6.8%
Data 3,009 2,733 10.1%
Long-distance voice 949 865 9.7%
Other 465 430 8.1%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Revenues 9,352 9,314 0.4%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of sales 4,098 4,090 0.2%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative
Selling 1,531 1,633 -6.2%
General and administrative 477 645 -26.0%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 2,008 2,278 -11.9%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 1,775 1,857 -4.4%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 7,881 8,225 -4.2%
------------------------------------- ---------- ---------- ----------
Segment Income $ 1,471 $ 1,089 35.1%
======================================================================
Cingular (a)
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Segment Operating Revenues
Service revenues $ 7,721 $ 3,873 -
Equipment sales 1,025 419 -
------------------------------------- ---------- ---------- ----------
Total Segment Operating Revenues 8,746 4,292 -
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of services and equipment
sales 3,667 1,692 -
Selling, general and administrative 2,881 1,567 -
Depreciation and amortization 1,541 573 -
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 8,089 3,832 -
------------------------------------- ---------- ---------- ----------
Segment Operating Income 657 460 42.8%
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - Net (331) (318) -4.1%
------------------------------------- ---------- ---------- ----------
Segment Income $ 326 $ 142 -
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(a) Results reflect 100% of Cingular Wireless' actual results
Directory
----------------------------------------------------------------------
Segment Operating Revenues $ 932 $ 935 -0.3%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of sales 271 251 8.0%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative
Selling 64 35 82.9%
General and administrative 90 95 -5.3%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 154 130 18.5%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 1 2 -50.0%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 426 383 11.2%
------------------------------------- ---------- ---------- ----------
Segment Operating Income 506 552 -8.3%
------------------------------------- ---------- ---------- ----------
Equity in Net Income (Loss) of
Affiliates - - -
------------------------------------- ---------- ---------- ----------
Segment Income $ 506 $ 552 -8.3%
======================================================================
International
----------------------------------------------------------------------
Segment Operating Revenues $ 3 $ 6 -50.0%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses 2 1 -
------------------------------------- ---------- ---------- ----------
Segment Operating Income (Loss) 1 5 -80.0%
------------------------------------- ---------- ---------- ----------
Equity in Net Income of Affiliates 85 112 -24.1%
------------------------------------- ---------- ---------- ----------
Segment Income $ 86 $ 117 -26.5%
======================================================================
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Financial Data
SBC Communications Inc.
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Statements of Segment Income
Dollars in millions
----------------------------------------------------------------------
Unaudited Nine Months Ended
--------------------------------
Wireline 9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Segment Operating Revenues
Voice $ 14,989 $ 15,704 -4.6%
Data 8,830 8,107 8.9%
Long-distance voice 2,772 2,429 14.1%
Other 1,427 1,341 6.4%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Revenues 28,018 27,581 1.6%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of sales 12,418 12,202 1.8%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative
Selling 4,774 4,940 -3.4%
General and administrative 1,950 1,839 6.0%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 6,724 6,779 -0.8%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 5,355 5,618 -4.7%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 24,497 24,599 -0.4%
------------------------------------- ---------- ---------- ----------
Segment Income $ 3,521 $ 2,982 18.1%
======================================================================
Cingular (a)
----------------------------------------------------------------------
Segment Operating Revenues
Service revenues $ 22,859 $ 11,289 -
Equipment sales 2,725 1,157 -
------------------------------------- ---------- ---------- ----------
Total Segment Operating Revenues 25,584 12,446 -
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of services and equipment
sales 10,629 4,672 -
Selling, general and administrative 8,835 4,402 -
Depreciation and amortization 4,845 1,691 -
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 24,309 10,765 -
------------------------------------- ---------- ---------- ----------
Segment Operating Income 1,275 1,681 -24.2%
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - Net (996) (981) -1.5%
------------------------------------- ---------- ---------- ----------
Segment Income $ 279 $ 700 -60.1%
======================================================================
(a) Results reflect 100% of Cingular Wireless' actual results
Directory
----------------------------------------------------------------------
Segment Operating Revenues $ 2,786 $ 2,806 -0.7%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses
Cost of sales 826 764 8.1%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative
Selling 192 153 25.5%
General and administrative 283 294 -3.7%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 475 447 6.3%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 4 7 -42.9%
------------------------------------- ---------- ---------- ----------
Total Segment Operating Expenses 1,305 1,218 7.1%
------------------------------------- ---------- ---------- ----------
Segment Operating Income 1,481 1,588 -6.7%
------------------------------------- ---------- ---------- ----------
Equity in Net Income (Loss) of
Affiliates (1) - -
------------------------------------- ---------- ---------- ----------
Segment Income $ 1,480 $ 1,588 -6.8%
======================================================================
International
----------------------------------------------------------------------
Segment Operating Revenues $ 8 $ 17 -52.9%
------------------------------------- ---------- ---------- ----------
Segment Operating Expenses 13 19 -31.6%
------------------------------------- ---------- ---------- ----------
Segment Operating Income (Loss) (5) (2) -
------------------------------------- ---------- ---------- ----------
Equity in Net Income of Affiliates 247 713 -65.4%
------------------------------------- ---------- ---------- ----------
Segment Income $ 242 $ 711 -66.0%
======================================================================
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Financial Data
SBC Communications Inc.
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Consolidated Balance Sheets
Dollars in millions except per share amounts 09/30/05 12/31/04
------------------------------------------------ ---------- ----------
Unaudited
Assets
Current Assets
Cash and cash equivalents $ 433 $ 760
Accounts receivable - net of allowances for
uncollectibles of $832 and $881 5,229 5,480
Prepaid expenses 1,132 746
Deferred income taxes 555 566
Other current assets 753 989
------------------------------------------------ ---------- ----------
Total current assets 8,102 8,541
------------------------------------------------ ---------- ----------
Property, plant and equipment - at cost 138,139 136,177
Less: accumulated depreciation and
amortization 89,699 86,131
------------------------------------------------ ---------- ----------
Property, Plant and Equipment - Net 48,440 50,046
------------------------------------------------ ---------- ----------
Goodwill 1,723 1,625
Investments in Equity Affiliates 1,828 1,798
Investments in and Advances to Cingular Wireless 31,117 33,687
Other Assets 12,894 13,147
------------------------------------------------ ---------- ----------
Total Assets $ 104,104 $ 108,844
======================================================================
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 5,386 $ 5,734
Accounts payable and accrued liabilities 9,205 10,038
Accrued taxes 2,645 1,787
Dividends payable 1,060 1,065
Liabilities of discontinued operations - 310
------------------------------------------------ ---------- ----------
Total current liabilities 18,296 18,934
------------------------------------------------ ---------- ----------
Long-Term Debt 17,822 21,231
------------------------------------------------ ---------- ----------
Deferred Credits and Other Noncurrent
Liabilities
Deferred income taxes 14,941 15,621
Postemployment benefit obligation 9,340 9,076
Unamortized investment tax credits 171 188
Other noncurrent liabilities 3,355 3,290
------------------------------------------------ ---------- ----------
Total deferred credits and other noncurrent
liabilities 27,807 28,175
------------------------------------------------ ---------- ----------
Stockholders' Equity
Common shares issued ($1 par value) 3,433 3,433
Capital in excess of par value 13,001 13,350
Retained earnings 28,742 28,806
Treasury shares (at cost) (4,418) (4,535)
Additional minimum pension liability
adjustment (190) (190)
Accumulated other comprehensive income (389) (360)
------------------------------------------------ ---------- ----------
Total stockholders' equity 40,179 40,504
------------------------------------------------ ---------- ----------
Total Liabilities and Stockholders' Equity $ 104,104 $ 108,844
======================================================================
----------------------------------------------------------------------
Financial Data
SBC Communications Inc.
----------------------------------------------------------------------
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
----------------------------------------------------------------------
Unaudited Nine Months Ended
9/30/05 9/30/04
------------------------------------------------ ---------- ----------
Operating Activities
Net income $ 3,131 $ 5,199
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,437 5,700
Undistributed earnings from investments in
equity affiliates (285) (856)
Provision for uncollectible accounts 561 549
Amortization of investment tax credits (17) (22)
Deferred income tax (benefit) expense (315) 1,596
Net gain on sales of investments (104) (900)
Income from discontinued operations, net of
tax - (908)
Retirement benefit funding - (2,232)
Changes in operating assets and liabilities:
Accounts receivable (309) (75)
Other current assets (249) 5
Accounts payable and accrued liabilities 73 (1,104)
Stock-based compensation tax benefit (3) (2)
Other - net 463 583
------------------------------------------------ ---------- ----------
Total adjustments 5,252 2,334
------------------------------------------------ ---------- ----------
Net Cash Provided by Operating Activities 8,383 7,533
------------------------------------------------ ---------- ----------
Investing Activities
Construction and capital expenditures (3,743) (3,462)
Receipts from (investments in) affiliates - net 2,603 -
Purchases of held-to-maturity securities - (134)
Maturities of held-to-maturity securities 98 393
Dispositions 126 5,283
Acquisitions (169) (9)
Proceeds from note repayment 37 50
------------------------------------------------ ---------- ----------
Net Cash (Used in) Provided by Investing
Activities (1,048) 2,121
------------------------------------------------ ---------- ----------
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less (1,656) (610)
Issuance of long-term debt - 1,487
Repayment of long-term debt (2,123) (623)
Purchase of treasury shares (742) -
Issuance of treasury shares 362 151
Dividends paid (3,196) (3,105)
Stock-based compensation tax benefit 3 2
------------------------------------------------ ---------- ----------
Net Cash Used in Financing Activities (7,352) (2,698)
------------------------------------------------ ---------- ----------
Net increase (decrease) in cash and cash
equivalents from continuing operations (17) 6,956
------------------------------------------------ ---------- ----------
Net increase (decrease) in cash and cash
equivalents from discontinued operations (310) 1,528
------------------------------------------------ ---------- ----------
Net increase (decrease) in cash and cash
equivalents (327) 8,484
------------------------------------------------ ---------- ----------
Cash and cash equivalents beginning of year 760 4,806
------------------------------------------------ ---------- ----------
Cash and Cash Equivalents End of Period $ 433 $ 13,290
======================================================================
Financial Data
SBC Communications Inc.
----------------------------------------------------------------------
Supplementary Operating Data
Dollars in millions except per share amounts
----------------------------------------------------------------------
Unaudited Three Months Ended Nine Months Ended
-------------------------------------------
9/30/05 9/30/04 9/30/05 9/30/04
-------------------------- ---------- ---------- ---------- ----------
Switched Access Lines(000)
Retail Consumer -
Primary 22,922 23,279
Retail Consumer -
Additional 3,989 4,441
Retail Business 17,511 17,626
---------- ----------
Retail 44,422 45,346
---------- ----------
UNE-P 4,803 6,782
Resale 620 368
---------- ----------
Wholesale 5,423 7,150
---------- ----------
Coin (1) 372 440
---------- ----------
Total Switched Access
Lines(000) 50,217 52,936
=====================
Unbundled Loops(000) 1,598 1,558
Long Distance Lines in
Service(000) 23,330 19,763
DSL Lines in Service(000) 6,496 4,679
Net DSL Line
Additions(000) 528 402 1,392 1,164
Video Subscribers(000) 419 226
Net Video Subscriber
Additions(000) 15 105 95 226
Cingular Wireless (2)
Wireless Voice
Customers(000) 52,292 25,672
Net Customer
Additions(000) 867 657 3,186 1,639
M&A Activity,
Partitioned Customers
and Other Adjs. (17) (29) (26) 6
POPs(000,000) 294 243
----------------------------------------------------------------------
(1) Coin includes both retail and wholesale access lines.
(2) Amounts represent 100% results of Cingular Wireless.
----------------------------------------------------------------------
Non-GAAP Financial Data
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
Dollars in millions
----------------------------------------------------------------------
Unaudited Three Months Ended
------------------------------------- ---------- ---------- ----------
9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Total Operating Revenues $ 18,846 $ 14,433 30.6%
------------------------------------- ---------- ---------- ----------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization
shown separately below) 7,799 5,860 33.1%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 5,084 3,953 28.6%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 3,344 2,461 35.9%
------------------------------------- ---------- ---------- ----------
Total Operating Expenses 16,227 12,274 32.2%
------------------------------------- ---------- ---------- ----------
Operating Income 2,619 2,159 21.3%
------------------------------------- ---------- ---------- ----------
Interest Expense 582 348 67.2%
------------------------------------- ---------- ---------- ----------
Interest Income 19 51 -62.7%
------------------------------------- ---------- ---------- ----------
Minority Interest (168) (78) -
------------------------------------- ---------- ---------- ----------
Equity in Net Income (Loss) of
Affiliates 87 27 -
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - Net (68) 44 -
------------------------------------- ---------- ---------- ----------
Income Before Income Taxes 1,907 1,855 2.8%
------------------------------------- ---------- ---------- ----------
Income Taxes 661 610 8.4%
------------------------------------- ---------- ---------- ----------
Income From Continuing Operations 1,246 1,245 0.1%
Income From Discontinued Operations,
net of tax - 849 -
------------------------------------- ---------- ---------- ----------
Net Income $ 1,246 $ 2,094 -40.5%
======================================================================
----------------------------------------------------------------------
Non-GAAP Financial Data
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
Dollars in millions
----------------------------------------------------------------------
Unaudited Nine Months Ended
--------------------------------
9/30/05 9/30/04 % Chg
------------------------------------- ---------- ---------- ----------
Total Operating Revenues $ 55,873 $ 42,510 31.4%
------------------------------------- ---------- ---------- ----------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization
shown separately below) 23,198 17,122 35.5%
------------------------------------- ---------- ---------- ----------
Selling, general and administrative 16,082 11,645 38.1%
------------------------------------- ---------- ---------- ----------
Depreciation and amortization 10,282 7,389 39.2%
------------------------------------- ---------- ---------- ----------
Total Operating Expenses 49,562 36,156 37.1%
------------------------------------- ---------- ---------- ----------
Operating Income 6,311 6,354 -0.7%
------------------------------------- ---------- ---------- ----------
Interest Expense 1,768 1,036 70.7%
------------------------------------- ---------- ---------- ----------
Interest Income 84 113 -25.7%
------------------------------------- ---------- ---------- ----------
Minority Interest (208) (379) 45.1%
------------------------------------- ---------- ---------- ----------
Equity in Net Income (Loss) of
Affiliates 269 444 -39.4%
------------------------------------- ---------- ---------- ----------
Other Income (Expense) - Net 31 864 -96.4%
------------------------------------- ---------- ---------- ----------
Income Before Income Taxes 4,719 6,360 -25.8%
------------------------------------- ---------- ---------- ----------
Income Taxes 1,588 2,069 -23.2%
------------------------------------- ---------- ---------- ----------
Income From Continuing Operations 3,131 4,291 -27.0%
Income From Discontinued Operations,
net of tax - 908 -
------------------------------------- ---------- ---------- ----------
Net Income $ 3,131 $ 5,199 -39.8%
======================================================================
As required by GAAP rules for joint ventures, SBC reflects Cingular's
results in the Equity in Net Income of Affiliates line of its
Consolidated Statements of Income rather than in revenues and
expenses. To facilitate peer comparisons, and in recognition of SBC's
majority economic ownership of the nation's largest wireless provider
and Cingular's increased significance to SBC's overall operations, SBC
provides a supplemental consolidated income statement that includes
full consolidation of Cingular's operating results. This supplemental
information also includes reconciliations to SBC's Consolidated
Statements of Income on the following page.
Certain amounts in prior-period supplemental financial information
have been reclassified to conform to the current period's
presentation.
----------------------------------------------------------------------
Non-GAAP Financial Data Reconciliation
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
For the Three Months Ended 9/30/2005
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported
-------------------------------------- --------------- ---------------
SBC Cingular
-------------------------------------- --------------- ---------------
Total Operating Revenues $ 10,320 $ 8,746
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) 4,352 3,667
-------------------------------------- --------------- ---------------
Selling, general and administrative 2,203 2,881
-------------------------------------- --------------- ---------------
Depreciation and amortization 1,803 1,541
-------------------------------------- --------------- ---------------
Total Operating Expenses 8,358 8,089
-------------------------------------- --------------- ---------------
Operating Income 1,962 657
-------------------------------------- --------------- ---------------
Interest Expense 349 304
-------------------------------------- --------------- ---------------
Interest Income 82 8
-------------------------------------- --------------- ---------------
Minority Interest - (38)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates 219 1
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net (70) 2
-------------------------------------- --------------- ---------------
Income Before Income Taxes 1,844 326
-------------------------------------- --------------- ---------------
Income Taxes 598 104
-------------------------------------- --------------- ---------------
Net Income $ 1,246 $ 222
======================================================================
For the Three Months Ended 9/30/2004
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported
-------------------------------------- --------------- ---------------
SBC Cingular
-------------------------------------- --------------- ---------------
Total Operating Revenues $ 10,292 $ 4,292
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) 4,319 1,692
-------------------------------------- --------------- ---------------
Selling, general and administrative 2,386 1,567
-------------------------------------- --------------- ---------------
Depreciation and amortization 1,889 573
-------------------------------------- --------------- ---------------
Total Operating Expenses 8,594 3,832
-------------------------------------- --------------- ---------------
Operating Income 1,698 460
-------------------------------------- --------------- ---------------
Interest Expense 238 200
-------------------------------------- --------------- ---------------
Interest Income 140 1
-------------------------------------- --------------- ---------------
Minority Interest - (20)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates 210 (98)
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net 45 (1)
-------------------------------------- --------------- ---------------
Income Before Income Taxes 1,855 142
-------------------------------------- --------------- ---------------
Income Taxes 610 -
-------------------------------------- --------------- ---------------
Income From Continuing Operations 1,245 142
Income From Discontinued Operations,
net of tax 849 -
-------------------------------------- --------------- ---------------
Net Income $ 2,094 $ 142
======================================================================
----------------------------------------------------------------------
Non-GAAP Financial Data Reconciliation
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
For the Three Months Ended 9/30/2005
Dollars in millions
----------------------------------------------------------------------
Unaudited Non-GAAP
-------------------------------------- --------------- ---------------
Consolidating Supplemental
Adjustments Consolidated
-------------------------------------- --------------- ---------------
Total Operating Revenues $ (220) $ 18,846
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) (220) 7,799
-------------------------------------- --------------- ---------------
Selling, general and administrative - 5,084
-------------------------------------- --------------- ---------------
Depreciation and amortization - 3,344
-------------------------------------- --------------- ---------------
Total Operating Expenses (220) 16,227
-------------------------------------- --------------- ---------------
Operating Income - 2,619
-------------------------------------- --------------- ---------------
Interest Expense (71) 582
-------------------------------------- --------------- ---------------
Interest Income (71) 19
-------------------------------------- --------------- ---------------
Minority Interest (130) (168)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates (133) 87
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net - (68)
-------------------------------------- --------------- ---------------
Income Before Income Taxes (263) 1,907
-------------------------------------- --------------- ---------------
Income Taxes (41) 661
-------------------------------------- --------------- ---------------
Net Income $ (222) $ 1,246
======================================================================
For the Three Months Ended 9/30/2004
Dollars in millions
----------------------------------------------------------------------
Unaudited Non-GAAP
-------------------------------------- --------------- ---------------
Consolidating Supplemental
Adjustments Consolidated
-------------------------------------- --------------- ---------------
Total Operating Revenues $ (151) $ 14,433
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) (151) 5,860
-------------------------------------- --------------- ---------------
Selling, general and administrative - 3,953
-------------------------------------- --------------- ---------------
Depreciation and amortization (1) 2,461
-------------------------------------- --------------- ---------------
Total Operating Expenses (152) 12,274
-------------------------------------- --------------- ---------------
Operating Income 1 2,159
-------------------------------------- --------------- ---------------
Interest Expense (90) 348
-------------------------------------- --------------- ---------------
Interest Income (90) 51
-------------------------------------- --------------- ---------------
Minority Interest (58) (78)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates (85) 27
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net - 44
-------------------------------------- --------------- ---------------
Income Before Income Taxes (142) 1,855
-------------------------------------- --------------- ---------------
Income Taxes - 610
-------------------------------------- --------------- ---------------
Income From Continuing Operations (142) 1,245
Income From Discontinued Operations,
net of tax - 849
-------------------------------------- --------------- ---------------
Net Income $ (142) $ 2,094
======================================================================
----------------------------------------------------------------------
Non-GAAP Financial Data Reconciliation
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
For the Nine Months Ended 9/30/2005
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported
-------------------------------------- --------------- ---------------
SBC Cingular
-------------------------------------- --------------- ---------------
Total Operating Revenues $ 30,896 $ 25,584
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) 13,176 10,629
-------------------------------------- --------------- ---------------
Selling, general and administrative 7,247 8,835
-------------------------------------- --------------- ---------------
Depreciation and amortization 5,437 4,845
-------------------------------------- --------------- ---------------
Total Operating Expenses 25,860 24,309
-------------------------------------- --------------- ---------------
Operating Income 5,036 1,275
-------------------------------------- --------------- ---------------
Interest Expense 1,051 968
-------------------------------------- --------------- ---------------
Interest Income 291 44
-------------------------------------- --------------- ---------------
Minority Interest (1) (95)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates 342 4
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net 12 19
-------------------------------------- --------------- ---------------
Income Before Income Taxes 4,629 279
-------------------------------------- --------------- ---------------
Income Taxes 1,498 150
-------------------------------------- --------------- ---------------
Net Income $ 3,131 $ 129
======================================================================
For the Nine Months Ended 9/30/2004
Dollars in millions
----------------------------------------------------------------------
Unaudited Reported
-------------------------------------- --------------- ---------------
SBC Cingular
-------------------------------------- --------------- ---------------
Total Operating Revenues $ 30,500 $ 12,446
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) 12,902 4,672
-------------------------------------- --------------- ---------------
Selling, general and administrative 7,244 4,402
-------------------------------------- --------------- ---------------
Depreciation and amortization 5,700 1,691
-------------------------------------- --------------- ---------------
Total Operating Expenses 25,846 10,765
-------------------------------------- --------------- ---------------
Operating Income 4,654 1,681
-------------------------------------- --------------- ---------------
Interest Expense 705 597
-------------------------------------- --------------- ---------------
Interest Income 376 3
-------------------------------------- --------------- ---------------
Minority Interest - (88)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates 1,171 (301)
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net 862 2
-------------------------------------- --------------- ---------------
Income Before Income Taxes 6,358 700
-------------------------------------- --------------- ---------------
Income Taxes 2,067 4
-------------------------------------- --------------- ---------------
Income From Continuing Operations 4,291 696
Income From Discontinued Operations,
net of tax 908 -
-------------------------------------- --------------- ---------------
Net Income $ 5,199 $ 696
======================================================================
----------------------------------------------------------------------
Non-GAAP Financial Data Reconciliation
SBC Communications Inc.
----------------------------------------------------------------------
Supplemental Consolidated Income Statements
For the Nine Months Ended 9/30/2005
Dollars in millions
----------------------------------------------------------------------
Unaudited Non-GAAP
-------------------------------------- --------------- ---------------
Consolidating Supplemental
Adjustments Consolidated
-------------------------------------- --------------- ---------------
Total Operating Revenues $ (607) $ 55,873
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) (607) 23,198
-------------------------------------- --------------- ---------------
Selling, general and administrative - 16,082
-------------------------------------- --------------- ---------------
Depreciation and amortization - 10,282
-------------------------------------- --------------- ---------------
Total Operating Expenses (607) 49,562
-------------------------------------- --------------- ---------------
Operating Income - 6,311
-------------------------------------- --------------- ---------------
Interest Expense (251) 1,768
-------------------------------------- --------------- ---------------
Interest Income (251) 84
-------------------------------------- --------------- ---------------
Minority Interest (112) (208)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates (77) 269
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net - 31
-------------------------------------- --------------- ---------------
Income Before Income Taxes (189) 4,719
-------------------------------------- --------------- ---------------
Income Taxes (60) 1,588
-------------------------------------- --------------- ---------------
Net Income $ (129) $ 3,131
======================================================================
For the Nine Months Ended 9/30/2004
Dollars in millions
----------------------------------------------------------------------
Unaudited Non-GAAP
-------------------------------------- --------------- ---------------
Consolidating Supplemental
Adjustments Consolidated
-------------------------------------- --------------- ---------------
Total Operating Revenues $ (436) $ 42,510
-------------------------------------- --------------- ---------------
Operating Expenses
Cost of sales (exclusive of
depreciation and amortization shown
separately below) (452) 17,122
-------------------------------------- --------------- ---------------
Selling, general and administrative (1) 11,645
-------------------------------------- --------------- ---------------
Depreciation and amortization (2) 7,389
-------------------------------------- --------------- ---------------
Total Operating Expenses (455) 36,156
-------------------------------------- --------------- ---------------
Operating Income 19 6,354
-------------------------------------- --------------- ---------------
Interest Expense (266) 1,036
-------------------------------------- --------------- ---------------
Interest Income (266) 113
-------------------------------------- --------------- ---------------
Minority Interest (291) (379)
-------------------------------------- --------------- ---------------
Equity in Net Income (Loss) of
Affiliates (426) 444
-------------------------------------- --------------- ---------------
Other Income (Expense) - Net - 864
-------------------------------------- --------------- ---------------
Income Before Income Taxes (698) 6,360
-------------------------------------- --------------- ---------------
Income Taxes (2) 2,069
-------------------------------------- --------------- ---------------
Income From Continuing Operations (696) 4,291
Income From Discontinued Operations,
net of tax - 908
-------------------------------------- --------------- ---------------
Net Income $ (696) $ 5,199
======================================================================
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