FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended June 30, 1995
or
_ Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 1-8610
SBC COMMUNICATIONS INC.
Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 43-1301883
175 E. Houston, San Antonio, Texas 78205
Telephone Number: (210) 821-4105
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
At July 31, 1995, 609,372,964 common shares were outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SBC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions except per share amounts
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
Operating Revenues
Local service $ 1,625.0 $ 1,435.1 $ 3,164.9 $ 2,799.3
Network access 766.6 705.7 1,509.9 1,387.2
Long-distance service 208.8 229.7 419.0 453.3
Directory advertising 118.6 123.3 233.6 242.8
Other 269.7 270.8 539.0 528.2
Total operating revenues 2,988.7 2,764.6 5,866.4 5,410.8
Operating Expenses
Cost of services and products 881.8 867.0 1,749.3 1,706.5
Selling, general and administrative 805.3 739.3 1,564.0 1,455.6
Depreciation and amortization 539.3 504.5 1,071.5 996.5
Total operating expenses 2,226.4 2,110.8 4,384.8 4,158.6
Operating Income 762.3 653.8 1,481.6 1,252.2
Other Income (Expense)
Interest expense (126.2) (117.2) (260.0) (232.7)
Equity in net income of affiliates 43.1 67.4 47.6 137.4
Other expense - net (11.0) (17.8) (16.8) (31.7)
Total other income (expense) (94.1) (67.6) (229.2) (127.0)
Income Before Income Taxes 668.2 586.2 1,252.4 1,125.2
Income Taxes
Federal 200.1 175.8 370.8 334.8
State and local 26.1 24.9 44.4 47.2
Total income taxes 226.2 200.7 415.2 382.0
Net Income $ 442.0 $ 385.5 $ 837.2 $ 743.2
Earnings Per Common Share $ 0.73 $ 0.64 $ 1.38 $ 1.24
Weighted Average Number of Common
Shares Outstanding (in millions) 608.2 601.3 607.9 601.6
Dividends Declared Per Common $ 0.4125 $ 0.3950 $ 0.8250 $ 0.7900
Share
See Notes to Consolidated Financial Statements.
<TABLE>
SBC COMMUNICATIONS INC.
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 647.3 $ 364.6
Accounts receivable - net of allowances for uncollectibles of
$118.3 and $130.4 2,035.7 2,204.6
Material and supplies 152.6 141.8
Prepaid expenses 181.6 162.0
Deferred charges 255.0 240.1
Deferred income taxes 178.2 180.7
Other 251.7 199.5
Total current assets 3,702.1 3,493.3
Property, Plant and Equipment - at cost 29,891.9 29,256.4
Less: Accumulated depreciation and amortization 12,520.0 11,939.8
Property, Plant and Equipment - Net 17,371.9 17,316.6
Intangible Assets - Net of Accumulated Amortization of
$488.7 and $427.6 2,685.9 2,648.9
Investments in Equity Affiliates 2,024.0 1,748.0
Other Assets 747.3 798.5
Total Assets $26,531.2 $ 26,005.3
Liabilities and Shareowners' Equity
Current Liabilities
Debt maturing within one year $ 1,952.3 $ 1,668.6
Accounts payable and accrued liabilities 3,115.4 3,281.4
Dividends payable 251.0 240.8
Total current liabilities 5,318.7 5,190.8
Long-Term Debt 5,679.2 5,848.3
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 2,426.7 2,319.7
Postemployment benefit obligation 2,611.7 2,707.2
Unamortized investment tax credits 345.8 369.8
Other noncurrent liabilities 1,506.2 1,213.9
Total deferred credits and other noncurrent liabilities 6,890.4 6,610.6
Shareowners' Equity
Common shares issued ($1 par value) 620.5 620.5
Capital in excess of par value 6,288.1 6,286.1
Retained earnings 2,934.3 2,593.5
Guaranteed obligations of employee stock ownership plans (290.2) (314.7)
Foreign currency translation adjustment (425.4) (366.5)
Treasury shares (at cost) (484.4) (463.3)
Total shareowners' equity 8,642.9 8,355.6
Total Liabilities and Shareowners' Equity $26,531.2 $ 26,005.3
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
SBC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions, increase (decrease) in cash and cash equivalents
(Unaudited)
Six months ended
June 30,
1995 1994
Operating Activities
Net income $ 837.2 $ 743.2
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,071.5 996.5
Undistributed earnings from investments
in equity affiliates (7.7) (88.8)
Provision for uncollectible accounts 68.5 60.4
Amortization of investment tax credits (24.0) (29.9)
Pensions and other postemployment benefits (50.2) (27.0)
Deferred income tax expense 68.2 65.0
Other - net (45.8) (11.6)
Total adjustments 1,080.5 964.6
Net Cash Provided by Operating Activities 1,917.7 1,707.8
Investing Activities
Construction and capital expenditures (1,041.4) (1,054.0)
Investments in affiliates (16.0) -
Purchase of short-term investments (200.3) (78.1)
Proceeds from short-term investments 134.8 191.2
Acquisitions (434.4) (773.9)
Net Cash Used in Investing Activities (1,557.3) (1,714.8)
Financing Activities
Net change in short-term borrowings with original
maturities of three months or less 25.0 620.1
Issuance of other short-term borrowings 60.0 7.5
Repayment of other short-term borrowings - (5.0)
Issuance of long-term debt 408.9 150.7
Repayment of long-term debt (60.3) (403.6)
Issuance of common shares - 20.9
Purchase of treasury shares (105.8) (117.3)
Issuance of treasury shares 32.9 13.3
Dividends paid (438.4) (414.0)
Net Cash Used in Financing Activities (77.7) (127.4)
Net increase (decrease) in cash and cash equivalents 282.7 (134.4)
Cash and cash equivalents beginning of year 364.6 618.4
Cash and Cash Equivalents End of Period $ 647.3 $ 484.0
Cash paid during the six months ended June 30 for:
Interest $ 262.3 $ 250.5
Income taxes $ 403.6 $ 425.7
See Notes to Consolidated Financial Statements.
<TABLE>
SBC COMMUNICATIONS INC.
CONSOLIDATED STATEMENTS OF SHAREOWNERS' EQUITY
Dollars in millions
(Unaudited)
<CAPTION>
Guaranteed
Obligations Foreign
Capital in of Employee Currency
Common Excess of Retained Stock Owner- Translation Treasury
Shares Par Value Earnings ship Plans Adjustment Shares
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993 $ 602.7 $ 5,577.0 $ 1,891.4 $ (352.9) $ (40.2) $ (109.6)
Net income - - 743.2 - - -
Dividends to shareowners (475.8) - - -
Reduction of debt associated
with Employee Stock Ownership
Plans - - - 23.2 - -
Foreign currency translation
adjustment - - - - (97.3) -
Issuance of common shares:
Dividend Reinvestment Plan 1.8 70.1 - - - -
Other issuances 0.7 26.5 - - - -
Purchase of treasury shares - - - - - (117.6)
Issuance of treasury shares - 4.1 - - - 92.7
Other - - 3.2 - - -
Balance, June 30, 1994 $ 605.2 $ 5,677.7 $ 2,162.0 $ (329.7) $ (137.5) $ (134.5)
Balance, December 31, 1994 $ 620.5 $ 6,286.1 $ 2,593.5 $ (314.7) $ (366.5) $ (463.3)
Net income - - 837.2 - - -
Dividends to shareowners - - (501.1) - - -
Reduction of debt associated
with Employee Stock Ownership
Plans - - - 24.5 - -
Foreign currency translation
adjustment - - - - (58.9) -
Purchase of treasury shares - - - - - (105.8)
Issuance of treasury shares:
Dividend Reinvestment Plan - 5.6 - - - 58.5
Other issuances - (3.6) - - - 26.2
Other - - 4.7 - - -
Balance, June 30, 1995 $ 620.5 $ 6,288.1 $ 2,934.3 $ (290.2) $ (425.4) $ (484.4)
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
* * * *
SELECTED FINANCIAL AND OPERATING DATA
At June 30, or for the six months then ended: 1995 1994
Return on weighted average shareowners' equity. . . 19.74% 18.92%
Debt ratio . . . . . . . . . . . . . . . . . . . . .. 46.89% 47.84%
Network access lines in service (000) # . . . . . . . 13,899 13,366
Access minutes of use (000,000) . . . . . . . . . . . 26,145 23,540
Long-distance messages billed (000) # . . . . . . . . 497,493 512,100
Cellular customers (000) # . . . . . . . . . . . . . . 3,243 2,432
Number of employees . . . . . . . . . . . . . . . . 58,550 59,360
# 1994 amounts have been revised to reflect the most current information
available.
SBC COMMUNICATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. PREPARATION OF INTERIM FINANCIAL STATEMENTS - The consolidated
financial statements have been prepared by SBC Communications Inc.
(SBC) pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC) and, in the opinion of management, include
all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the results for the interim periods shown.
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such
SEC rules and regulations. Management believes that the disclosures
made are adequate to make the information presented not misleading.
Certain reclassifications have been made to the 1994 consolidated
financial statements to conform with the 1995 presentation. The
results for the interim periods are not necessarily indicative of
results for the full year. The financial statements contained herein
should be read in conjunction with the consolidated financial
statements and notes thereto included in SBC's 1994 Annual Report to
Shareowners.
CONSOLIDATION - The consolidated financial statements include the
accounts of SBC and its majority-owned subsidiaries. Southwestern
Bell Telephone Company (Telephone Company) is SBC's largest
subsidiary. All significant intercompany transactions are eliminated
in the consolidation process. Investments in companies in which SBC
owns 20% to 50% of the voting common stock or otherwise exercises
significant influence over operating and financial policies of the
company are accounted for under the equity method. Earnings from
foreign investments accounted for under the equity method are included
for periods ended within three months of the date of SBC's
Consolidated Statements of Income.
SBC COMMUNICATIONS INC.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Dollars in millions except per share amounts
RESULTS OF OPERATIONS
SBC Communications Inc. (SBC) reported net income of $442.0, or $.73
per share, for the second quarter of 1995 and net income of $837.2, or
$1.38 per share, for the first six months of 1995. Financial results
for the second quarters and first six months of 1995 and 1994 are
summarized as follows:
Second Quarter Six-Month Period
Percent Percent
1995 1994 Change 1995 1994 Change
Operating $ 2,988.7 $ 2,764.6 8.1% $ 5,866.4 $ 5,410.8 8.4%
revenues
Operating $ 2,226.4 $ 2,110.8 5.5% $ 4,384.8 $ 4,158.6 5.4%
expenses
Net income $ 442.0 $ 385.5 14.7% $ 837.2 $ 743.2 12.6%
The primary factors contributing to the increase in net income during
the second quarter and first six months of 1995 were growth in demand
for services and products at Southwestern Bell Telephone Company
(Telephone Company) and Southwestern Bell Mobile Systems (Mobile
Systems). Results for the first six months of 1995 also reflect the
effects of the decline in value of the Mexican peso on SBC's earnings
from its equity affiliate, Telefonos de Mexico, S.A. de C.V. (Telmex).
SBC's operating revenues in the second quarter and first six months of
1995 increased $224.1, or 8.1%, and $455.6, or 8.4%, over the second
quarter and first six months of 1994, respectively. Components of
operating revenues for the second quarters and first six months of
1995 and 1994 are as follows:
Second Quarter Six-Month Period
Percent Percent
1995 1994 Change 1995 1994 Change
Local service
Landline $ 1,070.5 $ 1,000.8 7.0% $ 2,107.7 $ 1,992.3 5.8%
Wireless 554.5 434.3 27.7 1,057.2 807.0 31.0
Network
access
Interstate 510.8 460.9 10.8 1,008.2 915.8 10.1
Intrastate 255.8 244.8 4.5 501.7 471.4 6.4
Long-distance 208.8 229.7 (9.1) 419.0 453.3 (7.6)
service
Directory 118.6 123.3 (3.8) 233.6 242.8 (3.8)
advertising
Other 269.7 270.8 (0.4) 539.0 528.2 2.0
Total $ 2,988.7 $ 2,764.6 8.1% $ 5,866.4 $ 5,410.8 8.4%
Landline local service revenues increased in the second quarter
and first six months of 1995 due primarily to increases in
demand, including 4.0% growth in the number of access lines since
June 30, 1994 and increased demand for enhanced services,
including Caller ID.
Wireless local service revenues increased in the second quarter
and first six months of 1995 due primarily to a 33.3% increase in
cellular customers since June 30, 1994 (27.0% increase excluding
acquisitions), offset partially by a decline in average revenue
per customer.
Interstate network access revenues increased in the second
quarter and first six months of 1995 due primarily to an increase
in demand for access services and growth in end user charges
attributable to an increasing access line base. Results for the
second quarter of 1994 also reflect a retroactive billing
adjustment that decreased interstate revenues while increasing
intrastate revenues.
Intrastate network access revenues increased in the second
quarter and first six months of 1995 due primarily to increases
in demand, including usage by alternative intraLATA toll
carriers. Revenues for the second quarter of 1994 also include
the billing adjustment noted above.
Long-distance service revenues decreased in the second quarter
and first six months of 1995 due to competition related decreases
in residential message volumes. Competition from interexchange
carriers has continued to increase through advertising and usage
of "10xxx" and "1-800" access numbers. The decrease in long-
distance service revenues is partially offset by higher access
revenues, as discussed above.
Other operating revenues were flat in the second quarter of 1995
as the increased demand for the Telephone Company's non-regulated
services and products, including Caller ID equipment, was offset
by the decrease in equipment sales revenues at Mobile Systems.
For the first six months of 1995, the demand increases exceeded
the decline in equipment sales.
SBC's operating expenses in the second quarter and first six months of
1995 increased $115.6, or 5.5%, and $226.2, or 5.4%, over the second
quarter and first six months of 1994, respectively. Components of
operating expenses for the second quarters and first six months of
1995 and 1994 are as follows:
Second Quarter Six-Month Period
Percent Percent
1995 1994 Change 1995 1994 Change
Cost of
services and $ 881.8 $ 867.0 1.7% $ 1,749.3 $ 1,706.5 2.5%
products
Selling,
general and 805.3 739.3 8.9 1,564.0 1,455.6 7.4
administrative
Depreciation
and 539.3 504.5 6.9 1,071.5 996.5 7.5
amortization
Total $ 2,226.4 $ 2,110.8 5.5% $ 4,384.8 $ 4,158.6 5.4%
Cost of services and products increased for the second quarter
and first six months of 1995 due to demand related increases for
enhanced services at the Telephone Company and annual
compensation increases. These increases were partially offset by
the absence of expenses associated with United Kingdom cable
television operations, which were changed to the equity method of
accounting in the fourth quarter of 1994, decreased equipment
costs at Mobile Systems and a decrease in switching system
software license fees at the Telephone Company.
Selling, general and administrative expenses increased in the
second quarter and first six months of 1995 due to growth in
cellular operations, higher benefit expenses, increased
advertising and contracted services, and costs associated with
damage from the Oklahoma City bombing.
Depreciation and amortization increased in the second quarter and
first six months of 1995 due primarily to a growth in plant level
and changes in plant composition, primarily at Mobile Systems and
the Telephone Company, and, to a lesser extent, the effect of
depreciation represcription.
Interest expense increased $9.0, or 7.7%, and $27.3, or 11.7%, in the
second quarter and first six months of 1995 due primarily to debt
issued to finance growth and acquisitions at Mobile Systems. Interest
expense for the first six months of 1995 also reflects debt issued for
acquisitions in France and Chile.
Equity in net income of affiliates decreased $24.3, or 36.1%, and
$89.8, or 65.4%, in the second quarter and first six months of 1995,
respectively. The second quarter decrease is primarily due to the
inclusion in 1995 of losses on United Kingdom cable operations, which
were changed to the equity method of accounting in the fourth quarter
of 1994 due to decreased ownership percentage, and the investments in
France and Chile made in late 1994 and early 1995, respectively.
These investments also affected the six-month results.
SBC's second quarter earnings from its investment in Telmex were flat
compared to the second quarter of 1994. The effects of the decline in
the value of the Mexican peso since the second quarter of 1994 were
largely offset by operational growth at Telmex, indicated by increases
in access lines and long-distance usage. Comparisons to 1994 are also
affected by the recording in the second quarter of 1994 of exchange
losses resulting from declines in the value of the peso.
Results for the first six months of 1995 also reflect the effects of
the decline in the value of the peso on SBC's earnings from its
investment in Telmex during the first quarter of 1995. First quarter
earnings decreased equally from exchange losses on Telmex's non-peso
denominated debt and reductions in the translated amount of U.S.
dollar earnings from Telmex's operations. There were no exchange
losses on non-peso denominated debt during the second quarter of 1995
due to the stabilization of the peso during the quarter.
SBC's investment in Telmex is recorded under U.S. generally accepted
accounting principles, which exclude inflation adjustments and include
adjustments for the purchase method of accounting.
Absent any further changes in the value of the peso during the
remainder of 1995, it is anticipated that SBC's earnings from Telmex
in 1995 will decline from 1994 levels due to the decline in the peso's
value compared to 1994.
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
COMPETITIVE ENVIRONMENT
Legislative Developments
In Texas, House Bill 2128 facilitating telecommunications reform was
signed into law on May 26, 1995, to be effective September 1, 1995.
Following are major provisions of the new legislation.
The bill allows the Telephone Company and other local exchange
carriers (LEC) to elect to move from rate of return regulation to
price regulation, with elimination of earnings sharing. Basic network
service rates will be capped at existing levels for four years.
Pricing flexibility is provided for other services according to their
classification as "discretionary" (e.g., Call Waiting, Call Return,
ISDN, 1 plus intraLATA toll, etc.) or "competitive" (e.g., WATS, 800
services, private lines, special access, etc.) The Texas Public
Utility Commission (TPUC) is prohibited from reducing access rates
charged to interexchange carriers for a four-year period.
Rather than establish a specific infrastructure dollar commitment,
LECs electing price regulation will commit to end-result
infrastructure goals, including expansion of digital switching and
advanced high speed services to qualifying public institutions such as
schools, libraries and hospitals requesting the services. An
infrastructure grant fund will also be established for use by public
institutions in upgrading their communications and computer
technology. The fund will assess $150 annually on all
telecommunications providers in Texas for a ten year period, half of
which will be paid by the cellular industry. SBC's annual payment, in
total, is currently estimated to be approximately $60.
The bill establishes local exchange competition by allowing multiple
providers of local exchange services to be certified by the TPUC,
subject to certain buildout requirements, resale restrictions and
minimum service requirements. The Telephone Company will remain the
default carrier of intraLATA "1 plus" traffic until all LECs are
allowed to carry interLATA long-distance.
The specific financial impacts of this legislation cannot be
reasonably estimated until required filings are completed by the
Telephone Company and other companies intending to provide local
service.
At the federal level, the Senate and House of Representatives have
each passed their own versions of legislation intended to address
various aspects of competition within, and regulation of, the
telecommunications industry. Among other things, these bills would
define the conditions under which SBC could offer interLATA
long-distance service and establish certain terms and conditions
intended to promote competition for the Telephone Company's local
exchange services. It is expected that a joint Congressional
conference committee will reconcile differences between the two bills
when Congress reconvenes in September, after which a final bill will
go back to both the House and Senate for a final vote.
Regulatory Accounting
SBC currently accounts for the economic effects of regulation in
accordance with Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" (Statement
No. 71). Statement No. 71 requires depreciation of telephone plant
using rates set by regulators which are usually lower than those
established by unregulated companies, and deferral of certain costs
and obligations based on regulatory actions (regulatory assets and
liabilities).
Continued application of Statement No. 71 is appropriate only if it is
reasonable to assume that rates designed to recover the costs of
providing service can be charged to and collected from customers.
This assumption requires, among other things, consideration of
anticipated changes in levels of demand and competition during the
recovery period for any capitalized costs. It is management's opinion
that application of Statement No. 71 to SBC remains appropriate at
this time. However, it is increasingly likely that the rapid pace of
change within the industry will invalidate this assumption in the near
future, due to anticipated increases in competition, technological
development, and changes in regulation, including the manner of
determining rates. Should SBC determine it no longer qualifies for
the provisions of Statement No. 71, it would be required to adjust the
carrying amount of its telephone plant to the extent such amount is
overstated due to longer regulator-prescribed lives or is not
recoverable, and to eliminate its regulatory assets and liabilities.
The net effect would be reflected in the financial statements as a non-
cash, extraordinary charge to income. Under most combinations of
circumstances which would cause SBC to discontinue application of
Statement No. 71, management would anticipate the after-tax amount of
the charge to be between $2.5 billion and $3.0 billion.
OTHER BUSINESS MATTERS
United Kingdom Cable Operations
In June 1995, SBC announced an agreement in principle to merge its
United Kingdom cable television operations with Tele-West, a publicly
held joint venture between Telecommunications, Inc. and U S West. The
merger will create the largest cable television operator in the United
Kingdom and is expected to close in the third quarter, pending
regulatory approvals. SBC will own approximately 15% of the new
entity and will account for its investment using the cost method of
accounting. The valuation of the transaction is contingent on many
factors, including the value of Tele-West stock at the time of the
merger.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1995, as in 1994, SBC's primary source
of funds continued to be cash provided by operating activities. Other
sources of cash used for 1995 acquisitions and affiliate investments
included proceeds from the issuance of short-term debt and sales of
short-term investments. SBC had $647.3 of cash and cash equivalents
available at June 30, 1995. SBC has entered into agreements with several
banks for lines of credit totaling $1,170.0, all of which may
be used to support commercial paper borrowings. These
lines had not been utilized as of June 30, 1995. Commercial
paper borrowings as of June 30, 1995 totaled $1,433.5.
SBC COMMUNICATIONS INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Since the close of the first quarter, nine class action lawsuits were
filed and are pending against the Telephone Company in state and
federal courts in Texas, Missouri, Oklahoma and Kansas involving the
provision by the Telephone Company of maintenance and trouble
diagnosis services covering standard telephone inside wire located on
the customer's premises. The actions allege that the Telephone
Company's sales practices in connection with these services violated
antitrust, fraud and/or deceptive trade practices statutes and seek
unspecified damages together with punitive damages and attorney's
fees. The Telephone Company believes it has several meritorious
defenses to these claims and intends to vigorously contest the
allegations. Although the outcomes of these cases are uncertain,
management believes that this litigation will not have a material
adverse impact on SBC's results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the shareowners of SBC Communications Inc.
(SBC) was held on April 28, 1995, in Houston, Texas. Shareowners
representing 489,636,086 shares of common stock were present in
person or were represented at the meeting by proxy.
(b) At the meeting, holders of common shares voted as indicated below
to elect the following persons to the Board of Directors for a
three year term:
DIRECTOR FOR WITHHELD*
Jack S. Blanton 479,878,948 9,757,138
August A. Busch III 480,087,501 9,548,585
Tom C. Frost 479,955,991 9,680,095
Jess T. Hay 480,115,874 9,520,212
Bobby R. Inman 479,414,355 10,221,731
* Includes shares represented at the meeting by proxy where
the shareowner withheld authority to vote for the indicated
director or directors, as well as shares voted in person at the
meeting where the shareowner did not vote for such director or
directors.
(c) Shareowners ratified the appointment of Ernst & Young LLP as
independent auditors to examine the consolidated financial
statements of SBC for the year ended December 31, 1995. The vote
was 482,165,180 shares FOR and 4,276,831 shares AGAINST, with
3,194,075 shares ABSTAINING.
(d) Shareowners approved the amendment to SBC's Restated
Certificate of Incorporation to change the corporation's name.
The vote was 462,589,153 shares FOR and 19,142,057 shares
AGAINST, with 7,904,876 shares ABSTAINING.
(e) Shareowners rejected the Shareowner Proposal to deny
retirement pay or pensions to future non-employee members of the
Board of Directors. The vote was 123,064,303 shares FOR and
294,382,764 shares AGAINST, with 16,517,779 shares ABSTAINING.
There were 55,671,240 broker non-votes recorded.
(f) Shareowners rejected the Shareowner Proposal to limit total
compensation to any one employee. The vote was 56,565,476 shares
FOR and 362,102,670 shares AGAINST, with 15,296,700 shares
ABSTAINING. There were 55,671,240 broker non-votes recorded.
(g) Shareowners rejected the Shareowner Proposal to alter the
reporting format for proxy votes. The vote was 61,697,806 shares
FOR and 351,707,586 shares AGAINST, with 20,559,454 shares
ABSTAINING. There were 55,671,240 broker non-votes recorded.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 12 Computation of Ratios of Earnings to Fixed
Charges.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the second quarter
ended June 30, 1995.
SIGNATURES
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.
August 8, 1995 /s/ Donald E. Kiernan
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer
<TABLE>
EXHIBIT 12
SBC COMMUNICATIONS INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in Millions
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1995 1994 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C>
Income Before Income Taxes,
Extraordinary Loss and
Cumulative Effect of Changes in
Accounting Principles* $ 1,244.7 $1,036.4 $2,300.0 $1,882.9 $1,701.2 $1,557.0 $1,541.4
Add: Interest Expense 260.0 232.7 480.2 496.2 530.0 577.7 529.7
1/3 Rental Expense 17.7 20.0 41.8 41.0 45.1 37.5 43.4
Adjusted Earnings $ 1,522.4 $1,289.1 $2,822.0 $2,420.1 $2,276.3 $2,172.2 $2,114.5
Total Interest Charges $ 260.0 $ 232.7 $ 480.2 $ 496.2 $ 530.0 $ 577.7 $ 529.7
1/3 Rental Expense 17.7 20.0 41.8 41.0 45.1 37.5 43.4
Adjusted Fixed Charges $ 277.7 $ 252.7 $ 522.0 $ 537.2 $ 575.1 $ 615.2 $ 573.1
Ratio of Earnings to Fixed Charges 5.48 5.10 5.41 4.51 3.96 3.53 3.69
<FN>
*Undistributed earnings on investments accounted for under the equity method have been excluded.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SBC COMMUNICATIONS INC. JUNE 30, 1995 CONSOLIDATED FINANCIAL STATEMENTS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 647,300
<SECURITIES> 0<F1>
<RECEIVABLES> 2,154,000
<ALLOWANCES> 118,300
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 3,702,100
<PP&E> 29,891,900
<DEPRECIATION> 12,520,000
<TOTAL-ASSETS> 26,531,200
<CURRENT-LIABILITIES> 5,318,700
<BONDS> 5,679,200
<COMMON> 620,500
0
0
<OTHER-SE> 8,022,400
<TOTAL-LIABILITY-AND-EQUITY> 26,531,200
<SALES> 0<F2>
<TOTAL-REVENUES> 5,866,400
<CGS> 0<F3>
<TOTAL-COSTS> 1,749,300
<OTHER-EXPENSES> 1,071,500
<LOSS-PROVISION> 68,500
<INTEREST-EXPENSE> 260,000
<INCOME-PRETAX> 1,252,400
<INCOME-TAX> 415,200
<INCOME-CONTINUING> 837,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 837,200
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 0
<FN>
<F1>THIS AMOUNT IS IMMATERIAL.
<F2>NET SALES OF TANGIBLE PRODUCTS IS NOT MORE THAN 10% OF TOTAL OPERATING
REVENUES AND THEREFORE HAS NOT BEEN STATED SEPARATELY IN THE FINANCIAL
STATEMENTS PURSUANT TO REGULATION S-X, RULE 5-03(B). THIS AMOUNT IS
INCLUDED IN THE "TOTAL REVENUES" TAG.
<F3>COST OF TANGIBLE GOODS SOLD IS INCLUDED IN COST OF SERVICES AND PRODUCTS
IN THE FINANCIAL STATEMETNS AND THE "TOTAL-COST" TAG, PURSUANT TO
REGULATION S-X, RULE 5-03(B).
</FN>
</TABLE>
