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AT&T INC. Annual Report, Year Ended Dec 31, 1998

Filing Date
Filed March 12, 1999
Period End
December 31, 1998
Securities
TT-PCTBBT-PA
In the record · 2016–202610-K1110-Q348-K281

T filed 11 annual reports (10-K), 34 quarterly reports (10-Q) and 281 current reports (8-K) between 2016 and 2026.

  1. Deal closed8-K · Aug ’18Aug ’18
  2. Leadership change8-K · Apr ’20Apr ’20
  3. Deal closed8-K · Apr ’22Apr ’22
  4. Material agreement8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed March 12, 1999. Cited figures are marked; the original filing is the authoritative source.

SBC Communications Inc. is a holding company whose subsidiaries and affiliates operate predominantly in communications services, with 1998 operating revenues of $28.78 billiona (up from $26.68 billion in 1997) and net income of $4.02 billion, or $2.06 per share.

Wireline is the largest segment, providing about 77% of 1998 operating revenues, and the company reports approximately 37 million access lines and 6.9 million wireless customers in the United States. Results were affected by normalizing items: 1998 included $219 millionb of gains on non-core business sales and $268 million of SNET merger-related strategic charges, while 1997 included $1.9 billion of PAC merger-integration costs. Excluding these items, 1998 income before extraordinary loss and accounting change would have been $4.12 billion, 19.3% higher than 1997.

The company is pursuing its pending merger with Ameritech Corporation, expected to close in 1999 as a pooling of interests, with each Ameritech share exchanged for 1.316 SBC shares, and has agreed to acquire Comcast Cellular for $1.674 billionc in total value. Management plans a "national-local" strategy contingent on the Ameritech transaction.

Capital spending for 1999 is expected to be between $6.4 billiond and $6.8 billion, and 1998 free cash flow was $2.45 billion. Investors should note that the filing states management cannot quantify the impact of local exchange competition on 1999 business and that several regulatory matters, including reciprocal compensation for Internet traffic and the Ameritech Ohio approval, remain pending.

02—Key points

Key Highlights

  1. 1998 operating revenues of $28.78 billion, up from $26.68 billion in 1997; net income of $4.02 billion, or $2.06 per share, versus $1.67 billion in 1997.
  2. Wireline segment generated about 77% of 1998 operating revenues; landline local service made up 39% of total operating revenues and wireless subscriber 13%.
  3. Pending Ameritech merger, intended as a pooling of interests with each Ameritech share exchanged for 1.316 SBC shares (about 1,450 million shares), expected to close in 1999 subject to FCC and Ohio/Illinois approvals.
  4. Agreed to acquire Comcast Cellular for $1.674 billion in total value, including $400 million in cash and assumption of $1.274 billion of debt, expected to close in 1999.
  5. Free cash flow of $2.45 billion in 1998 and 1999 capital spending projected between $6.4 billion and $6.8 billion.
  6. Wireless customer base of 6,851,000 at year-end 1998, including 5,924,000 traditional cellular and 846,000 PCS customers.
  7. Long-term debt declined to $11.61 billion at year-end 1998 from $13.18 billion, and the debt ratio was 48.9%, down from 57.1% in 1997.

03—Questions

Frequently Asked Questions

  1. What drove the change in SBC's 1998 earnings compared with 1997?

    Reported net income rose to $4.02 billion from $1.67 billion. The 1997 results were depressed by about $1.9 billion of PAC merger-related strategic charges and other normalizing items, while 1998 included $219 million of gains on non-core business sales and $268 million of SNET-related charges. Excluding these items, the filing states 1998 income before extraordinary loss and accounting change would have been $4.12 billion, 19.3% higher than 1997.

  2. What is the status of the Ameritech merger?

    SBC announced a definitive agreement on May 11, 1998, to merge with Ameritech Corporation, with each Ameritech share converted into 1.316 SBC shares. Both boards and shareowners have approved the transaction, which is intended to be a tax-free pooling of interests. It is subject to FCC and state approvals in Ohio and Illinois and is expected to close in 1999. The filing describes a February 1999 agreement with Ohio regulatory staff and consumer groups recommending approval, which requires PUCO approval.

  3. What are the main competitive and regulatory risks the filing identifies?

    The filing notes increased competition in local service, with about 800,000 access lines served by resellers at year-end 1998, and states that management cannot quantify the 1999 impact of local exchange competition. It also cites the pending FCC ruling on reciprocal compensation for Internet traffic, uncertainty over the outcome of state regulatory proceedings, and the Telecom Act's interLATA long distance approval process. The forward-looking statements caution that these factors could cause results to differ materially.

  4. How did SBC's wireless business perform in 1998?

    Wireless operating revenues were $4.19 billion, up 13.2% from 1997 on a normalized basis, and wireless subscriber revenues were $3.78 billion. SBC Wireless served 6,851,000 customers at year-end 1998, up from 5,951,000 in 1997. The company also reported that about 78% of its traditional cellular customers had selected SBC as their long distance carrier.

04—Continue

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