Diluted earnings per share, before one-time items, increased 8.9 percent to $0.61, or $2.1 billion, up from $0.56, or $1.9 billion, in the second quarter a year ago. Revenues, together with proportionate revenues from Cingular Wireless, SBC’s national wireless joint venture with BellSouth Corporation, grew 3.0 percent to $13.6 billion. The modest revenue growth reflects the ongoing impact of a weak U.S. economy, increased competition and the sale of nonstrategic assets, including a security-monitoring business.

Second-quarter highlights include:

28 percent growth in data revenues to $2.2 billion, up from $1.7 billion in the year-ago quarter.

A 701,000 net gain in wireless customers at Cingular, bringing its total to 21.2 million.

2.8 million long-distance lines – an increase of 27 percent since the first quarter of this year – in Texas, Kansas and Oklahoma, which are SBC’s newest long-distance markets.

More than 1 million Digital Subscriber Lines (DSL) in service at the end of the quarter, further extending SBC’s position as a leading DSL provider.

The weak U.S. economy created many challenges in the quarter, but we took appropriate steps to produce solid results while continuing to invest in our growth drivers, said Edward E. Whitacre Jr., chairman and CEO. Going forward, we will remain focused on expanding our high-potential growth platforms, continually improving customer relationships and maintaining a disciplined approach to expense management.

SBC continues its cautious outlook on the rest of 2001, particularly as it relates to the U.S. economy. The company expects third- and fourth-quarter results to be marked by continued modest revenue growth balanced with consistent expense management and continues to target full-year earnings per share before one-time items to be in the $2.35-to-$2.40 range.

Data: SBC’s total data revenues of $2.2 billion represents 21.5 percent of SBC’s total second-quarter wireline revenues, up from 13.7 percent just two years ago. Demand continues to be steady for high-capacity transport that frequently is used to carry advanced, bandwidth-hungry applications. For example, revenue from SBC’s advanced Internet-based and network integration services, used primarily by large businesses, increased 42.3 percent during the second quarter. DSL service was available to 23 million customer locations, or more than 55 percent of the company’s metropolitan-area wireline customer locations, up from 14.7 million locations a year ago. Total DSL sales and installations were in line with the two previous quarters, net additions of 83,000 during the quarter were reduced by independent Internet Service Providers that resold SBC’s DSL service ceasing operations, and by database reconciliations. Excluding the impact of ISP failures and the database reconciliations, net DSL additions for the quarter would have totaled approximately 170,000.

Wireless: Cingular Wireless, which began formal operations in October 2000 and of which SBC owns 60 percent, grew its customer base 16.9 percent during the quarter, compared with year-ago pro forma totals, to 21.2 million. Total revenues, which include sales of equipment, grew 13.6 percent to $3.6 billion. Cingular also expanded operating margins during the quarter due in part to continued synergies from integration of SBC’s and BellSouth’s formerly separate wireless operations. For example, Cingular is consolidating its call centers into regional mega-centers and its centralized distribution functions into one centrally located, high-capacity facility.

Long Distance: SBC added nearly 600,000 in-service long-distance lines in Texas, Kansas and Oklahoma during the second quarter, bringing to 2.8 million the total long-distance lines in service in those three recently entered markets. Demand for service bundles that include long distance continued during the quarter as more than a third of service bundles sold to small businesses in Texas, Kansas and Oklahoma included long-distance service. SBC has long-distance applications still pending before regulators in California, Nevada and Arkansas, and the company is making good progress on systems-testing required before SBC can apply for long-distance approvals in its Ameritech region. In June, SBC announced that it will refile its application to provide long-distance service in Missouri so that SBC can provide updated data and additional information to the Federal Communications Commission.

Including one-time items, SBC’s reported net income for the second quarter of 2001 was $2.1 billion, or $0.61 diluted earnings per share, compared with $1.9 billion, or $0.54 per share, in the second quarter of 2000.

Reported net income for the second quarter of 2001 includes the following one-time items: pension settlement gains of $189 million related to management employees, primarily resulting from a voluntary retirement program net of costs associated with that program; impairment of the value of certain investments of $261 million; and a reduction of a bad debt allowance of $78 million on a note receivable.

SOURCE: COMPANY PRESS RELEASE