FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1996
or
|_| Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
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
SBC Communications Inc. hereby amends the following exhibits of its Annual
Report for the year ended December 31, 1996 on Form 10-K as set forth in the
pages attached hereto:
(1) Exhibit 99.a Annual Report on Form 11-K for the SBC Savings
Plan for the year 1996.
(2) Exhibit 99.b Annual Report on Form 11-K for the SBC Savings
and Security Plan for the year 1996.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized on the 24th day of June, 1997.
SBC COMMUNICATIONS INC.
By /s/ Donald E. Kiernan
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer
June 24, 1997
EX-99.a
Form 10-K for 1996
File No. 1-8610
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 11-K
ANNUAL REPORT
-------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 1-8610
-------------
SBC SAVINGS PLAN
-------------
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
<PAGE>
Financial Statements, Supplemental Schedules and Exhibits
Table of Contents
Page
Report of Independent Auditors................................................1
Financial Statements:
Statement of Net Assets Available for Plan Benefits as of December 31, 1996..2
Statement of Net Assets Available for Plan Benefits as of December 31, 1995..4
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1996.................................................6
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1995.................................................8
Notes to Financial Statements...............................................10
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes..................14
Item 27b - Schedule of Loans and Fixed Income Obligations...................16
Item 27d - Schedule of Reportable Transactions..............................17
Exhibits:
23.a Consent of Ernst & Young LLP
<PAGE>
1
REPORT OF INDEPENDENT AUDITORS
Benefit Plan Committee of the
SBC Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of the SBC Savings Plan (the Plan) as of December 31, 1996 and 1995,
and the related statements of changes in net assets available for plan benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes and of loans or fixed income obligations
as of December 31, 1996, and reportable transactions for the year then ended,
are presented for purposes of complying with Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic financial
statements. The fund information in the statements of net assets available for
plan benefits and the statements of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in our audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
San Antonio, Texas
June 18, 1997
<PAGE>
<TABLE>
============================================================================================================================
SBC SAVINGS PLAN
============================================================================================================================
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
----------- ------ ------ ---------- ------ ------- ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
SBC common shares:
allocated $ 315,139 $ - $ - - - $ - $ - $ - $315,139
unallocated 206,162 - - - - - - - 206,162
other - 553,531 - - - - - - 553,531
BZW Barclays Government/
Corporate Bond Index Fund E - - 32,632 - - - - - 32,632
BZW Barclays Equity Index Fund E - - - 312,963 - - - - 312,963
Contracts with insurance companies
and other financial institutions - - - - 212,053 - - - 212,053
BZW Barclays U.S. Tactical Asset
Allocation Fund E - - - - - 14,744 - - 14,744
BZW Barclays U.S. Equity
Market Fund E - - - - - - 27,061 - 27,061
BZW Barclays EAFE Equity
Index Fund E - - - - - - 8,049 - 8,049
Loans to plan participants - - - - - - - 76,885 76,885
Temporary cash investments 8,461 (1,438) 5 13 12,021 1 2 - 19,065
------- ------ ------- --------- -------- ------- -------- --------- ---------
Total Investments 529,762 552,093 32,637 312,976 224,074 14,745 35,112 76,885 1,778,284
------- ------ ------- --------- -------- ------- -------- --------- ---------
Contributions receivable:
Participant - 1 - - - - - - 1
Employer 1,095 - - - - - - - 1,095
------- ------ ------- --------- -------- ------- -------- --------- ---------
Total Contributions Receivable 1,095 1 - - - - - - 1,096
------- ------ ------- --------- -------- ------- -------- --------- ---------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- -------------------------------------------------------------------------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock Diversified Interest Asset Global
Ownership SBC Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
----------- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Dividends and interest receivable 39 14 1 3 13 - 2 37 109
Transfers receivable from other
funds and plans - - 30 994 1,995 124 624 - 3,767
Receivable for investments sold - 4,965 41 - - - - - 5,006
------- ------- ------- ------- -------- ------- -------- -------- --------
Total Assets 530,896 557,073 32,709 313,973 226,082 14,869 35,738 76,922 1,788,262
------- ------- ------- ------- -------- ------- -------- -------- --------
LIABILITIES
Transfers payable to other
funds and plans - 3,856 2 - 16 - - 174 4,048
Payable for investments purchase - - - 61 1,102 70 509 - 1,742
Administrative expenses 32 59 6 43 29 3 5 - 177
Interest payable 6,902 - - - - - - - 6,902
Current portion of long-term debt 34,594 - - - - - - - 34,594
Other Payables 1 - 1 - - - - - 2
Long-term debt 111,243 - - - - - - - 111,243
------- ------- ------- ------- -------- ------- -------- -------- --------
Total Liabilities 152,772 3,915 9 104 1,147 73 514 174 158,708
------- ------- ------- ------- -------- ------- -------- -------- --------
Net Assets Available for Plan
Benefits $378,124 $553,158 $32,700 $313,869 $224,935 $14,796 $35,224 $76,748 $1,629,554
======= ======= ====== ======= ======== ======= ======== ======== ========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
====================================================================================================================
SBC SAVINGS PLAN
====================================================================================================================
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
---------- -------- ---------- --------- --------- ---------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
SBC common shares:
allocated $ 313,154 $ - $ - $ - $ - $ - $ - $ - $313,154
unallocated 274,684 - - - - - - - 274,684
other - 590,738 - - - - - - 590,738
BZW Barclays Government/
Corporate Bond Index Fund E - - 36,556 - - - - - 36,556
BZW Barclays Equity Index Fund E - - - 235,829 - - - - 235,829
Contracts with insurance companies
and other financial institutions - - - - 241,440 - - - 241,440
BZW Barclays U.S. Tactical Asset
Allocation Fund E - - - - - 9,162 - - 9,162
BZW Barclays U.S. Equity
Market Fund E - - - - - - 10,796 - 10,796
BZW Barclays EAFE Equity
Index Fund E - - - - - - 3,455 - 3,455
Loans to plan participants - - - - - - - 70,492 70,492
Temporary cash investments 8,696 3,688 109 910 1,774 38 65 - 15,280
------- ------- ------- ------- ------- ------- ------- ------- ---------
Total Investments 596,534 594,426 36,665 236,739 243,214 9,200 14,316 70,492 1,801,586
------- ------- ------- ------- ------- ------- ------- ------- ---------
Contributions receivable:
Participant - 57 - 3 - - - - 60
Employer - - - - - - - - -
------- ------- ------- ------- ------- ------- ------- ------- ---------
Total Contributions Receivable - 57 - 3 - - - - 60
------- ------- ------- ------- ------- ------- ------- ------- ---------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- ------------------------------------------------------------------------------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
--------- -------- ------- -------- ------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Dividends and interest receivable 45 13 4 11 12 - - 36 121
Transfers receivable from other
funds and plans 21 - - 33 - 196 162 213 625
--------- -------- ------- -------- ------- -------- -------- ------- --------
Total Assets 596,600 594,496 36,669 236,786 243,226 9,396 14,478 70,741 1,802,392
--------- -------- ------- -------- ------- -------- -------- ------- --------
LIABILITIES
Transfers payable to other
funds and plans - 290 58 - 253 - - - 601
Payable for investments purchased - - 203 812 1,237 155 102 - 2,509
Administrative expenses 28 54 8 41 28 4 3 - 166
Interest payable 6,412 - - - - - - - 6,412
Current portion of long-term debt 31,906 - - - - - - - 31,906
Long-term debt 135,837 - - - - - - - 135,837
--------- -------- ------- -------- ------- -------- -------- ------- --------
Total Liabilities 174,183 344 269 853 1,518 159 105 - 177,431
--------- -------- ------- -------- ------- -------- -------- ------- --------
Net Assets Available for Plan
Benefits $ 422,417 $ 594,152 $ 36,400 $ 235,933 $241,708 $ 9,237 $ 14,373 $70,741 $1,624,961
========= ======== ======= ======== ======= ======== ======== ======= ========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
====================================================================================================================
SBC SAVINGS PLAN
====================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
-------- --------- -------- ---------- --------- --------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Plan
Benefits, December 31, 1995 $ 422,417 $ 594,152 $ 36,400 $ 235,933 $ 241,708 $ 9,237 $14,373 $70,741 $1,624,961
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 29,351 2,242 20,134 10,276 1,184 2,637 - 65,824
Employer contributions 20,124 - - - - - - - 20,124
Transfers of participants'
balances - net - (5,667) (5,070) 17,707 (26,260) 3,207 15,551 1,525 993
Forfeitures 578 - - - - - - - 578
Proceeds from debt refinancing 10,000 - - - - - - - 10,000
Loan transfer 31,906 - - - - - - - 31,906
-------- --------- -------- ---------- --------- --------- -------- ------- --------
62,608 23,684 (2,828) 37,841 (15,984) 4,391 18,188 1,525 129,425
-------- --------- -------- ---------- --------- --------- -------- ------- --------
Investment income:
Dividends on SBC common shares 17,321 18,321 - - - - - - 35,642
Other dividends - - - - - - - - -
Interest 292 243 5 26 13,232 2 5 6,205 20,010
-------- --------- -------- ---------- --------- --------- -------- ------- --------
17,613 18,564 5 26 13,232 2 5 6,205 55,652
-------- --------- -------- ---------- --------- --------- -------- ------- --------
Net appreciation (depreciation) in
value of investments (55,405) (56,847) 852 55,640 - 1,488 3,865 - (50,407)
-------- --------- -------- ---------- --------- --------- -------- ------- --------
Total Net Additions 24,816 (14,599) (1,971) 93,507 (2,752) 5,881 22,058 7,730 134,670
-------- --------- -------- ---------- --------- --------- -------- ------- --------
</TABLE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- ---------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
--------- -------- --------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Deductions from Net Assets:
Administrative expenses 312 584 62 421 268 42 47 - 1,736
Forfeitures 578 - - - - - - - 578
Interest expense 13,803 - - - - - - - 13,803
Loan payment-principal 31,906 - - - - - - - 31,906
Refinanced long-term debt 10,000 - - - - - - - 10,000
Distributions to participants 12,510 25,811 1,667 15,150 13,753 280 1,160 1,723 72,054
--------- -------- --------- --------- -------- -------- -------- -------- --------
Total Deductions 69,109 26,395 1,729 15,571 14,021 322 1,207 1,723 130,077
--------- -------- --------- --------- -------- -------- -------- -------- --------
Net Assets Available for Plan
Benefits, December 31, 1996 $ 378,124 $ 553,158 $ 32,700 $313,869 $ 224,935 $14,796 $35,224 $76,748 $1,629,554
========= ======== ========= ========= ======== ======== ======== ======== ========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
========================================================================================================================
SBC SAVINGS PLAN
========================================================================================================================
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
--------- ------- ------- ---------- --------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Plan
Benefits, December 31, 1994 $ 234,751 $ 429,601 $ 32,373 $ 158,090 $241,330 $ - $ - $54,094 $1,150,239
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 27,299 2,632 17,132 12,337 317 557 - 60,274
Employer contributions 19,219 - - - - - - - 19,219
Transfers of participants'
balances - net - (27,986) (2,638) 9,711 (10,136) 8,313 12,803 13,358 3,425
Forfeitures 423 - - - - - - - 423
Proceeds from debt refinancing 7,500 - - - - - - - 7,500
Loan transfer 29,580 - - - - - - - 29,580
-------- ------- ------ --------- -------- -------- --------- -------- ---------
56,722 (687) (6) 26,843 2,201 8,630 13,360 13,358 120,421
-------- ------- ------ --------- -------- -------- --------- -------- ---------
Investment income:
Dividends on SBC common shares 16,932 17,031 - - - - - - 33,963
Other dividends - - - 1,702 - - - - 1,702
Interest 307 247 884 - 15,040 1 1 4,308 20,788
-------- ------- ------ --------- -------- -------- --------- -------- ---------
17,239 17,278 884 1,702 15,040 1 1 4,308 56,453
-------- ------- ------ --------- -------- -------- --------- -------- ---------
Net appreciation (depreciation) in
value of investments 174,432 175,696 5,231 59,323 - 658 1,075 - 416,415
-------- ------- ------ --------- -------- -------- --------- -------- ---------
Total Net Additions 248,393 192,287 6,109 87,868 17,241 9,289 14,436 17,666 593,289
-------- ------- ------ --------- -------- -------- --------- -------- ---------
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- ----------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
--------- ------- ------- ---------- --------- ------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Deductions from Net Assets:
Administrative expenses 240 476 54 264 259 13 12 - 1,318
Forfeitures 423 - - - - - - - 423
Interest expense 14,107 - - - - - - - 14,107
Loan payment -principal 29,580 - - - - - - - 29,580
Refinanced long-term debt 7,500 - - - - - - - 7,500
Distributions to participants 8,877 27,260 2,028 9,761 16,604 39 51 1,019 65,639
--------- ------- ------- ---------- --------- ------- --------- -------- --------
Total Deductions 60,727 27,736 2,082 10,025 16,863 52 63 1,019 118,567
--------- ------- ------- ---------- --------- ------- --------- -------- --------
Net Assets Available for Plan
Benefits, December 31, 1995 $ 422,417 $ 594,152 $36,400 $ 235,933 $241,708 $ 9,237 $14,373 $70,741 $1,624,961
========= ======= ======= ========== ========= ======= ========= ======== ========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
================================================================================
SBC SAVINGS PLAN
================================================================================
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
1. Plan Description - The SBC Savings Plan (Plan) was established by SBC
Communications Inc. (SBC) to provide a convenient way for eligible
employees to save for retirement on a regular and long-term basis. The
following description of the Plan provides only general information. The
Plan has detailed provisions covering participant eligibility, participant
allotments from pay, participant withdrawals, participant loans, employer
contributions and related vesting and Plan expenses. The Plan text and
prospectus include complete descriptions of these and other Plan
provisions.
During 1995, participants could invest their contributions in the SBC
Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the Interest
Income Fund or among selected funds. Beginning in mid-1995, participants
were able to invest their contributions in these funds and two new funds,
the Asset Allocation Fund and the Global Equity Fund, in 1% increments.
In 1989, SBC's Board of Directors authorized the establishment of a
leveraged Employee Stock Ownership Plan (ESOP), which became a part of the
existing Plan effective September 1, 1989. Company matching contributions
are made solely in the form of shares of SBC's common stock held in the
ESOP.
The Plan prefunded the ESOP by borrowing $290.0 million through the
issuance of 8.49% Guaranteed Salaried Employees' ESOP Notes due 2000, the
repayment of which is guaranteed by SBC. Funds borrowed by the Plan were
used to purchase shares of SBC's common stock held in the open market
(Financed Shares), which act as collateral for reimbursement to SBC for
any payments it makes under its guarantee of the ESOP Notes. Dividends on
Financed Shares and employer cash contributions are used by the Plan to
make the required principal and interest payments on the ESOP Notes. As
the ESOP Notes are paid down, the Financed Shares are released from the
collateral. The Financed Shares are allocated to participants' accounts in
the form of a company matching contribution. In lieu of dividends on
Financed Shares previously allocated to participants, additional Financed
Shares are allocated to participants' accounts. Effective January 1, 1993,
the interest rate on the ESOP Notes was reduced from 8.49% to 8.41% as a
result of a change in the federal tax rate.
On July 1, 1996 and July 1, 1995, the Plan refinanced $10 million and $7.5
million, respectively, of the outstanding balance of the ESOP Notes
described above. The refinanced notes are payable to SBC annually at 7.50%
and 6.79%, until July 2005 and July 2004, respectively.
To the extent insufficient shares have been released through payments on
outstanding notes net of amounts refinanced, additional employer
contributions are made to the ESOP to purchase shares necessary to meet
any shortfall in the company match or in the shares issued in lieu of
dividends. Dividends on these shares are used to acquire additional shares
which are allocated to participants' accounts in the ESOP. Should shares
released exceed the required company matching contribution, the excess is
considered an additional employer contribution and is allocated to
participants' accounts based on each participant's proportionate share of
actual plan year ESOP contributions.
Bankers Trust Company is the Trustee for the Plan.
Effective June 1995, the valuation of the Plan funds went from a monthly
valuation to a daily valuation. Concurrent with this change, income earned
on the underlying investments in BZW Barclays (formerly Wells Fargo)
investment funds are no longer reported separately but are
<PAGE>
SBC SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
reflected through increases in the unit values of these funds. Such
increases are included in appreciation in the value of investments on the
Statement of Changes in Net Assets Available for Plan Benefits.
Although it has not expressed any intent to do so, SBC has the right under
the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA). In the event that the Plan is terminated, subject to
the conditions set forth by ERISA, the account balances of all
participants shall be 100% vested.
2. Accounting Policies - The values of investments are determined as follows:
SBC common shares on the basis of the last published sales prices as
reported on the composite tape of the New York Stock Exchange and other
exchanges; contracts with insurance companies and other financial
institutions at principal plus reinvested interest which approximates fair
value; BZW Barclays: Equity Index Funds, Government/Corporate Bond Index
Funds, U.S. Tactical Asset Allocation Fund E, U.S. Equity Market Fund E
and EAFE Equity Index Fund E at net asset values per share obtained from
published sources; and temporary cash investments at cost which
approximates fair value.
Purchases and sales of securities are reflected as of the trade date.
Dividend income is recognized on the ex-dividend date. Interest earned on
investments is recognized on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
3. Participant Interest in the Plan - During 1995, the Plan was amended to
change the interest of a participant in the ESOP fund from shares to
units. The interest of a participant in each of the other funds in the
Plan, except for the Loan Fund, is represented by units (as described in
the Plan text). The number of participants, number of units and the value
per unit for each of these funds as of December 31 were:
<TABLE>
<CAPTION>
1996 1995
------------------------------------------------------------------
Number of Number of Value per Number of Number of Value per
Participants Units Unit Partcipants Units Unit
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ESOP 15,431 261,943,145 $1.2086 15,549 243,915,356 $ 1.2909
SBC Shares Fund 12,768 57,078,272 $9.6912 12,928 57,339,073 $10.3620
Bond Fund 2,539 3,134,457 $10.4322 2,673 3,581,330 $10.1639
Diversified Equity Portfolio 9,527 19,116,915 $16.4184 8,715 17,645,244 $13.3709
Interest Income Fund 7,018 45,557,880 $ 4.9373 7,951 51,996,414 $ 4.6485
Asset Allocation Fund 1,172 11,869,604 $ 1.2465 675 8,317,923 $ 1.1105 $
Global Equity Fund 2,391 26,393,499 $ 1.3346 1,052 12,628,919 $ 1.1381 $
<FN>
The total number of participants in the Plan was less than the sum of the
number of participants shown above because many participants were in more
than one fund.
</FN>
</TABLE>
SBC SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
4. Investments - Investments representing 5% or more of Plan net assets at
either December 31, 1996 or 1995 were:
1996 1995
-------- -------
Employee Stock Ownership Plan
SBC common shares:
allocated $ 315,139 $ 313,154
unallocated $ 206,162 $ 274,684
SBC Shares Fund
SBC common shares $ 553,531 $ 590,738
Diversified Equity Portfolio
BZW Barclays Equity Index Fund E $ 312,963 $ 235,829
For the years ended December 31, 1996 and 1995, the average interest rates
earned on the Interest Income Fund's investments in contracts with
insurance companies and other financial institutions were 6.00% and 6.20%,
respectively. At December 31, 1996 and December 31, 1995, the crediting
interest rates on these contracts ranged from 4.66% to 7.85%.
The Interest Income fund includes an investment in a synthetic guaranteed
investment contract with Cassie Des Depots et Consignations (CDC) whereby
the Plan owns a bond held in trust and has entered into a contract with
CDC which guarantees the return on the bond. At December 31, 1996, the
fair value of the bond and associated cash was $25,087 and the fair value
of the guarantee was $2,302. The investment contract is recorded at
contract value of $27,389 which approximates fair value.
5. Long-Term Debt - Long-term debt consists of the ESOP Notes issued in
connection with the ESOP and the refinancing notes (as discussed in note
1). At December 31, 1996, the aggregate principal amounts of long-term
debt scheduled for repayment for the years 1997 through 2001 were $34,594,
$36,676, $38,927, $21,917 and $3,048, respectively. The carrying amount
and the estimated fair value of the ESOP and refinancing notes as of
December 31 were:
1996 1995
--------- ---------
Carrying Amount $ 145,837 $ 167,743
========= =========
Fair Value $ 152,785 $ 180,126
========= =========
The fair values of the ESOP Notes were estimated based on quoted prices.
The fair value of the refinancing notes were estimated based on discounted
future cash flows using current interest rates.
6. Tax Status -The Internal Revenue Service issued a determination letter on
November 4, 1996, stating that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC).
The Plan has been amended since the determination letter was received. The
Plan Administrator believes that the Plan is currently designed and is
operating in compliance with the applicable requirements of the IRC.
<PAGE>
SBC SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
7. Reconciliation of Financial Statements to Form 5500 - The following is a
reconciliation of net assets available for plan benefits per the financial
statements to the Form 5500 as of December 31:
1996 1995
---------- ----------
Net assets available for plan
benefits per the financial $ 1,629,554 $ 1,624,961
statements
Less: Distributions payable to 2,155 1,804
participants
========== ==========
Net assets available for plan
benefits per the Form 5500 $ 1,627,399 $ 1,623,157
========== ==========
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31,
1996:
1996
----------
Distributions to participants per
the financial statements $ 72,054
Add: Distributions payable to
participants at December 31, 1996 2,155
Less: Distributions payable to
participants at December 31, 1995 1,804
----------
Distributions to participants per
the Form 5500 $ 72,405
==========
Distributions payable to participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
8. Subsequent Event - Effective January 1, 1997, dividends on shares in the
SBC Shares fund will be paid into a separate fund known as a Dividend Fund
Account (DFA). At the end of the year, dividends held in the DFA will be
paid out to the participant.
Prior to the amendment, dividends paid with respect to SBC Shares in the
Fund, were reinvested in the Fund, which increased the value of the
participants units. Under the amendment, the dividends will be paid to the
participant, but the participant may elect reinvestment and have the
special Deferred-Tax Allotment offset the payout through the purchase of
additional units. Interest earned on dividends held in the DFA will be
paid into the SBC Shares Fund.
<PAGE>
<TABLE>
==================================================================================================================
==================================================================================================================
SBC SAVINGS PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
(Dollars in Thousands)
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
- --------------------------------------- ---------------------- -------- ---------
<S> <C> <C> <C>
Employee Stock Ownership Plan * SBC common shares:
allocated 6,074,964 shares $ 169,527 $ 315,139
unallocated 3,974,200 shares 109,804 206,162
* Bankers Trust Company temporary cash investment 8,461 8,461
-------- ---------
Total Employee Stock Ownership Plan 287,792 529,762
-------- ---------
SBC Shares Fund
* SBC common shares 10,670,491 shares 289,674 553,531
* Bankers Trust Company temporary cash investment (1,438) (1,438)
------- -------
Total SBC Shares Fund 288,236 552,093
-------- ---------
Bond Fund
* BZW Barclays Government/Corporate
Bond Index Fund E 2,550,796 units 29,447 32,632
* Bankers Trust Company temporary cash investment 5 5
-------- ---------
Total Bond Fund 29,452 32,637
-------- ---------
Diversified Equity Portfolio
* BZW Barclays Equity Index Fund E 14,092,617 units 226,081 312,963
* Bankers Trust Company temporary cash investment 13 13
-------- ---------
Total Diversified Equity Portfolio 226,094 312,976
-------- ---------
Interest Income Fund (a)
Metropolitan Life Insurance 7.85 % 38,623 38,623
Company
John Hancock 4.85% - 6.64% 24,740 24,740
Principal Mutual 6.35 % 55,114 55,114
Cassie Des Depots et Consignations 4.66 % 27,389 27,389
The Prudential Insurance Company
of America 6.82% 38,566 38,566
Continental Assurance
Company 6.01 % - 6.40% 27,621 27,621
-------- ---------
212,053 212,053
* Bankers Trust Company temporary cash investment 12,021 12,021
-------- ---------
Total Interest Income Fund 224,074 224,074
-------- ---------
</TABLE>
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- ------------------------------------------------------------------------------------
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
(Dollars in Thousands)
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
- --------------------------------------- --------------------- --------- --------
<S> <C> <C> <C>
Asset Allocation Fund
* BZW Barclays U.S. Tactical Asset
Allocation Fund E 772,901 units 12,883 14,744
* Bankers Trust Company temporary cash investment 1 1
--------- --------
Total Asset Allocation Fund 12,884 14,745
--------- --------
Global Equity Fund
* BZW Barclays U.S. Equity Market 1,651,768 units 22,912 27,061
Fund E
* BZW Barclays EAFE Equity Index 533,702 units 7,590 8,049
Fund E
* Bankers Trust Company temporary cash investment 2 2
--------- --------
Total Global Equity Fund 30,504 35,112
--------- --------
Loan Fund
Loans to Plan Participants 9.25 % - 9.50 % 76,885
-
--------- --------
TOTAL $ 1,099,036$ 1,778,284
========= ========
<FN>
*Party-in-Interest
(a)Investments in this fund consist of guaranteed investment contracts
with insurance companies and similar contracts with other financial
institutions which provide for the payment of principal plus accrued
interest and are collateralized by obligations of other organizations. The
average interest rate earned on these investment contracts during 1996 was
6.00%.
</FN>
</TABLE>
<PAGE>
<TABLE>
===========================================================================================================
SBC SAVINGS PLAN
===========================================================================================================
Item 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
For the year ended December 31, 1996
<CAPTION>
Detail
Name & 1996 1996 Unpaid Description
Address Original Amount Principal Interest Balance at of Principal Interest
(Identity) of Loan Paid Paid Year End Loan Overdue Overdue
- --------------- ------------- ---------- --------- ----------- ------------------------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Carter $14,900.00 $1,482.39 $494.68 $10,072.65 12/31/91 Original Loan Date $10,072.65 $ -
Jefferson, AR 01/31/97 Maturity Date
9.00% Interest Rate
Secured by non-LESOP
account
T. Sikes $21,514.00 $ - $ - $16,587.45 09/30/92 Original Loan Date $16,587.45 $ -
San Antonio, TX 10/31/97 Maturity Date
8.00% Interest Rate
Secured by non-LESOP
account
E. R. Smith $12,000.00 $1,112.71 $149.29 $3,093.33 07/31/91 Original Loan Date $ 3,093.33 $ -
Kansas City, MO 08/31/96 Maturity Date
9.50% Interest Rate
Secured by non-LESOP
account
<FN>
NOTE: None of the participant loans in default or classified as uncollectible were with a party-in-interest. No
loans were renegotiated during the year. All loans are secured by the participant's account. The company will collect overdue
amounts upon a distributable event.
</FN>
</TABLE>
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
SBC SAVINGS PLAN
- ---------------------------------------------------------------------------------------------------------------------
Item 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1996
(Dollars in Thousands)
<CAPTION>
Current
Value
of Asset
Description of Purchase Selling Cost of Transaction Net gain
Identity of Party Involved Assets Price Price Asset Date or (loss)
- ----------------------- ---------------------------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) transactions:
Bankers Trust Bankers Trust Directed $ 281,518 $ - $ 281,518 $ 281,518 $ -
Account Cash Fund
Bankers Trust Bankers Trust Directed $ - $ 276,279 $ 276,279 $ 276,279 $ -
Account Cash Fund
Bankers Trust SBC Communications Inc. $ 55,465 $ - $ 55,465 $ 55,465 $ -
Common Stock
Bankers Trust SBC Communications Inc. $ - $ 45,302 $ 24,468 $ 45,302 $ 20,834
Common Stock
<FN>
There were no category (i), (ii) or (iv) transactions.
</FN>
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Benefit Plan Committee has duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
SBC SAVINGS PLAN
By Benefit Plan Committee
By /s/ Cassandra C. Carr
Cassandra C. Carr, Chairman
Date: June 24, 1997
<PAGE>
EX-23.a
Form 11-K for 1996
File No. 1-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 33-54309 and 333-24295) pertaining to the SBC Savings Plan of our
report dated June 18, 1996, with respect to the financial statements and
supplemental schedules of the SBC Savings Plan included in this Annual Report
(Form 11-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
San Antonio, Texas
June 18, 1997
EX-99.b
Form 10-K for 1996
File No. 1-8610
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 11-K
ANNUAL REPORT
-------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 1-8610
-------------
SBC SAVINGS AND SECURITY PLAN
-------------
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
<PAGE>
Financial Statements, Supplemental Schedules and Exhibits
Table of Contents
Page
Report of Independent Auditors..............................................1
Financial Statements:
Statement of Net Assets Available for Plan Benefits as of
December 31,1996......................................................2
Statement of Net Assets Available for Plan Benefits as of
December 31,1995......................................................4
Statement of Changes in Net Assets Available for Plan Benefits for
the Year Ended December 31, 1996......................................6
Statement of Changes in Net Assets Available for Plan Benefits for
the Year Ended December 31, 1995......................................8
Notes to Financial Statements........................................10
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes. .........14
Item 27b - Schedule of Loans and Fixed Income Obligations... ........16
Item 27d - Schedule of Reportable Transactions............... .......17
Exhibits:
23.b Consent of Ernst & Young LLP
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Benefit Plan Committee of the
SBC Savings and Security Plan
We have audited the accompanying statements of net assets available for plan
benefits of the SBC Savings and Security Plan (the Plan) as of December 31, 1996
and 1995, and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes and of loans or fixed income obligations
as of December 31, 1996, and reportable transactions for the year then ended are
presented for purposes of complying with Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974, and are not a required part of the basic financial
statements. The fund information in the statements of net assets available for
plan benefits and the statements of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and changes in net assets available
for plan benefits of each fund. The supplemental schedules and fund information
have been subjected to the auditing procedures applied in our audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ERNST & YOUNG LLP
San Antonio, Texas
June 18, 1997
<PAGE>
<TABLE>
===========================================================================================================================
SBC SAVINGS AND SECURITY PLAN
===========================================================================================================================
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
--------- -------- -------- --------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
SBC common shares:
allocated $273,646 $ - $ - $ - $ - $ - $ - $ - $ 273,646
unallocated 126,625 - - - - - - - 126,625
other - 530,221 - - - - - - 530,221
BZW Barclays Government/
Corporate Bond Index Fund E - - 3,221 - - - - - 3,221
BZW Barclays Equity Index - - - 57,670 - - - - 57,670
Fund E
Contracts with insurance
companies
and other financial - - - - 168,002 - - - 168,002
institutions
BZW Barclays U.S. Tactical
Asset
Allocation Fund E - - - - - 1,448 - - 1,448
BZW Barclays U.S. Equity
Market Fund E - - - - - - 2,536 - 2,536
BZW Barclays EAFE Equity
Index Fund E - - - - - - 843 - 843
Loans to plan participants - - - - - - - 74,394 74,394
Temporary cash investments 6,360 2,903 1 8 1,057 - 1 9 10,339
--------- -------- ------- -------- ------- ------- -------- --------- --------
Total Investments 406,631 533,124 3,222 57,678 169,059 1,448 3,380 74,403 1,248,945
--------- -------- ------- -------- ------- ------- -------- --------- --------
Contributions receivable:
Participant - - - - - - - - -
Employer 4,294 - - - - - - - 4,294
--------- -------- ------- -------- ------- ------- -------- --------- --------
Total Contributions 4,294 - - - - - - - 4,294
Receivable
--------- -------- ------- -------- ------- ------- -------- --------- --------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
-------- -------- --------- -------- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Dividends and interest receivable 30 21 - 1 8 - 1 536 597
Transfers receivable from other
funds and plans - - 1 109 324 - 67 - 501
Receivable for investments sold 200 - - 11 - 1 - - 212
-------- -------- --------- -------- --------- -------- --------- --------- --------
Total Assets 411,155 533,145 3,223 57,799 169,391 1,449 3,448 74,939 1,254,549
-------- -------- --------- -------- --------- -------- --------- --------- --------
LIABILITIES
Transfers payable to other
funds and plans - 733 - - - - - 178 911
Payable for investments purchased - - - - 819 - 3 - 822
Administrative expenses 39 86 1 6 31 - - - 163
Interest payable 3,707 - - - - - - - 3,707
Current portion of long-term debt 22,281 - - - - - - - 22,281
Other payables - - 1 2 3
Long-term debt 63,870 - - - - - - - 63,870
-------- -------- --------- -------- --------- -------- --------- --------- --------
Total Liabilities
89,897 819 2 8 850 - 3 178 91,757
-------- -------- --------- -------- --------- -------- --------- --------- --------
Net Assets Available for Plan
Benefits $ 321,258 $ 532,326 $ 3,221 $ 57,791 $ 168,541 $ 1,449 $ 3,445 $ 74,761 $1,162,792
======== ======== ========= ======== ========= ======== ========= ========= ========
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest
Ownership Shares Bond Equity Income Loan
Plan Fund Fund Portfolio Fund Fund Total
--------- ---------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
SBC common shares:
allocated $ 269,847 $ - $ - $ - $ - $ - $ 269,847
unallocated 180,355 - - - - - 180,355
other - 588,472 - - - - 588,472
BZW Barclays Government/
Corporate Bond Index Fund - - 3,103 - - - 3,103
BZW Barclays Equity Index Fund - - - 27,890 - - 27,890
Contracts with insurance companies
and other financial institutions - - - - 173,663 - 173,663
Loans to plan participants - - - - - 48,499 48,499
Temporary cash investments 6,085 6,742 166 1,671 406 - 15,070
--------- ---------- --------- --------- --------- ---------- ---------
Total Investments 456,287 595,214 3,269 29,561 174,069 48,499 1,306,899
--------- ---------- --------- --------- --------- ---------- ---------
Contributions receivable:
Participant - 1,809 - 331 16 - 2,156
Employer 4,594 - - - - - 4,594
--------- ---------- --------- --------- --------- ---------- ---------
Total Contributions Receivable 4,594 1,809 - 331 16 - 6,750
--------- ---------- --------- --------- --------- ---------- ---------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest
Ownership Shares Bond Equity Income Loan
Plan Fund Fund Portfolio Fund Fund Total
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Dividends and interest receivable 30 26 17 57 3 996 1,129
Transfers receivable from other
funds and plans - - - 770 - 3,067 3,837
Other 301 - - 1 - - 302
--------- --------- --------- --------- --------- --------- ---------
Total Assets 461,212 597,049 3,286 30,720 174,088 52,562 1,318,917
--------- --------- --------- --------- --------- --------- ---------
LIABILITIES
Transfers payable to other
funds and plans - 1,066 210 - 2,452 - 3,728
Payable for investments purchased - - 17 50 886 - 953
Administrative expenses 18 39 - 3 16 - 76
Interest payable 4,617 - - - - - 4,617
Current portion of long-term debt 21,174 - - - - - 21,174
Long-term debt 86,151 - - - - - 86,151
--------- --------- --------- --------- --------- --------- ---------
Total Liabilities 111,960 1,105 227 53 3,354 - 116,699
--------- --------- --------- --------- --------- --------- ---------
Net Assets Available for Plan
Benefits $ 349,252 $ 595,944 $ 3,059 $ 30,667 $ 170,734 $ 52,562 $1,202,218
========= ========= ========= ========= ========= ========= =========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest Asset Global
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
-------- --------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Plan
Benefits, December 31, 1995 $ 349,252 $ 595,944 $ 3,059 $ 30,667 $ 170,734 $ - $ - $ 52,562 $ 1,202,218
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 32,510 658 6,310 15,436 87 221 - 55,222
Employer contributions 17,428 - - - - - - - 17,428
Transfers of participants'
balances - net - (22,733) (440) 14,309 (13,798) 1,295 3,046 18,905 584
Forfeitures 85 - - - - - - - 85
Loan transfers 21,174 - - - - - - - 21,174
-------- --------- --------- -------- -------- -------- -------- -------- --------
38,687 9,777 218 20,619 1,638 1,382 3,267 18,905 94,493
-------- --------- --------- -------- -------- -------- -------- -------- --------
Investment income:
Dividends on SBC common shares 13,295 17,612 - - - - - - 30,907
Other dividends - - - - - - - - -
Interest 222 254 107 416 10,353 - 1 4,383 15,736
-------- --------- --------- -------- -------- -------- -------- -------- --------
13,517 17,866 107 416 10,353 - 1 4,383 46,643
-------- --------- --------- -------- -------- -------- -------- -------- --------
Net appreciation (depreciation) in
value of investments (42,561) (56,379) (15) 8,157 - 73 183 - (90,542)
-------- --------- --------- -------- -------- -------- -------- -------- --------
Total Net Additions 9,643 (28,736) 310 29,192 11,991 1,455 3,451 23,288 50,594
-------- --------- --------- -------- -------- -------- -------- -------- --------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Dollars in Thousands)
<CAPTION>
Employee SBC DiversifiedInterest Asset Global
Stock
Ownership Shares Bond Equity Income Allocation Equity Loan
Plan Fund Fund Portfolio Fund Fund Fund Fund Total
-------- --------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Deductions from Net Assets:
Administrative expenses 256 523 5 56 199 1 1 - 1,041
Forfeitures 85 - - - - - - - 85
Interest expense 7,867 - - - - - - - 7,867
Loan payment-principal 21,174 - - - - - - - 21,174
Distributions to participants 8,255 34,359 143 2,012 13,985 5 5 1,089 59,853
-------- --------- --------- -------- -------- -------- -------- -------- --------
Total Deductions 37,637 34,882 148 2,068 14,184 6 6 1,089 90,020
-------- --------- --------- -------- -------- -------- -------- -------- --------
Net Assets Available for Plan
Benefits, December 31, 1996 $ 321,258 $ 532,326 $ 3,221 $ 57,791 $ 168,541 $ 1,449 $ 3,445 $ 74,761 $1,162,792
======== ========= ========= ======== ======== ======== ======== ======== ========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest
Ownership Shares Bond Equity Income Loan
Plan Fund Fund Portfolio Fund Fund Total
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Assets Available for Plan
Benefits, December 31,1994 $ 199,932 $ 403,542 $ 2,210 $ 17,055 $ 158,517 $ 47,677 $ 828,933
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 31,179 702 4,688 17,559 - 54,128
Employer contributions 18,142 - - - - - 18,142
Transfers of participants'
balances-net - (1,210) (155) 2,958 (2,773) 1,361 181
Forfeitures 48 - - - - - 48
Loan transfers 19,741 - - - - - 19,741
--------- --------- --------- --------- --------- --------- ---------
37,931 29,969 547 7,646 14,786 1,361 92,240
--------- --------- --------- --------- --------- --------- ---------
Investment income:
Dividends on SBC common shares 12,931 16,381 - - - - 29,312
Other dividends - - - 598 - - 598
Interest 213 306 177 - 10,148 3,924 14,768
--------- --------- --------- --------- --------- --------- ---------
13,144 16,687 177 598 10,148 3,924 44,678
--------- --------- --------- --------- --------- --------- ---------
Net appreciation(depreciation)in
value of investments 133,301 170,760 277 6,182 - - 310,520
--------- --------- --------- --------- --------- --------- ---------
Total Net Additions 184,376 217,416 1,001 14,426 24,934 5,285 447,438
--------- --------- --------- --------- --------- --------- ---------
</TABLE>
<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
SBC SAVINGS AND SECURITY PLAN
- -------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in Thousands)
<CAPTION>
Employee Stock SBC Diversified Interest
Ownership Shares Bond Equity Income Loan
Plan Fund Fund Portfolio Fund Fund Total
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
(Continued)
Deductions from Net Assets:
Administrative expenses 118 281 3 18 125 - 545
Forfeitures 48 - - - - - 48
Interest expense 9,656 - - - - - 9,656
Loan payment - principal 19,741 - - - - - 19,741
Distributions to participants 5,493 24,733 149 796 12,592 400 44,163
--------- --------- --------- --------- --------- --------- ---------
Total Deductions 35,056 25,014 152 814 12,717 400 74,153
--------- --------- --------- --------- --------- --------- ---------
Net Assets Available for Plan
Benefits, December 31, 1995 $ 349,252 $ 595,944 $ 3,059 $ 30,667 $ 170,734 $ 52,562 $ 1,202,218
========= ========= ========= ========= ========= ========= =========
<FN>
See Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
================================================================================
SBC SAVINGS AND SECURITY PLAN
================================================================================
NOTES TO FINANCIAL STATEMENTS (Dollars in Thousands, Except per Unit Amounts)
1. Plan Description - The SBC Savings and Security Plan (Plan) was
established by SBC Communications Inc. (SBC) to provide a convenient way for
eligible employees to save for retirement on a regular and long-term basis. The
majority of eligible employees are represented by the Communications Workers of
America. The following description of the Plan provides only general
information. The Plan has detailed provisions covering participant eligibility,
participant allotments from pay, participant withdrawals, participant loans,
employer contributions and related vesting and Plan expenses. The Plan text and
prospectus include complete descriptions of these and other Plan provisions.
During 1995, participants could invest their contributions in the SBC
Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the Interest
Income Fund or equally among selected funds. Beginning in mid-1996, participants
were able to invest their contributions in these funds and two new funds, the
Asset Allocation Fund and the Global Equity Fund, in 1% increments.
In 1989, SBC's Board of Directors authorized the establishment of a
leveraged Employee Stock Ownership Plan (ESOP), which became a part of the
existing Plan effective October 1, 1989. Company matching contributions are made
solely in the form of shares of SBC's common stock held in the ESOP.
The Plan prefunded the ESOP by borrowing $165.0 million through the
issuance of 8.49% Guaranteed Non-Salaried Employees' ESOP Notes due 2000, the
repayment of which is guaranteed by SBC. On February 27, 1990, the Plan issued
an additional $45.0 million of 9.40% Guaranteed Non-Salaried Employees' ESOP
Notes due 2000, the repayment of which is also guaranteed by SBC. Funds borrowed
by the Plan were used to purchase shares of SBC's common stock held in the open
market (Financed Shares), which act as collateral for reimbursement to SBC for
any payments it makes under its guarantee of the ESOP Notes. Dividends on
Financed Shares and employer cash contributions are used by the Plan to make the
required principal and interest payments on the ESOP Notes. As the ESOP Notes
are paid down, the Financed Shares are released from the collateral. The
Financed Shares are allocated to participants' accounts in the form of a company
matching contribution. In lieu of dividends on Financed Shares previously
allocated to participants, additional Financed Shares are allocated to
participants' accounts. Effective January 1, 1993, the interest rate on the
8.49% notes was reduced to 8.41% as a result of a change in the federal tax
rate.
To the extent insufficient shares have been released through payments on
the ESOP Notes, additional employer contributions are made to the ESOP to
purchase shares necessary to meet any shortfall in the company match or in the
shares issued in lieu of dividends. Dividends on these shares are used to
acquire additional shares which are allocated to participants' accounts in the
ESOP. Should shares released exceed the required company matching contribution,
the excess is considered an additional employer contribution and is allocated to
participants' accounts based on each participant's proportionate share of actual
plan year ESOP contributions.
Bankers Trust Company is the Trustee for the Plan.
Effective August 5, 1996, the valuation of the Plan funds went from a
monthly valuation to a daily valuation. Concurrent with this change, income
earned on the underlying investments in BZW Barclays (formerly Wells Fargo)
investment funds are no longer reported separately but are reflected through
increases in the unit values of these funds. Such increases are included in
appreciation in the value of investments on the Statement of Changes in Net
Assets Available for Plan Benefits.
Although it has not expressed any intent to do so, SBC has the right under
the Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of the Employee Retirement Income Security Act of 1974
(ERISA). In the event that the Plan is terminated, subject to the conditions set
forth by ERISA, the account balances of all participants shall be 100% vested.
2. Accounting Policies - The values of investments are determined as
follows: SBC common shares on the basis of the last published sales prices as
reported on the composite tape of the New York Stock Exchange and other
exchanges; contracts with insurance companies and other financial institutions
at principal plus reinvested interest which approximates fair value; BZW
Barclays: Equity Index Fund, Government/Corporate Bond Index Fund, U.S. Tactical
Asset Allocation Fund E, U.S. Equity Market Fund E and EAFE Equity Index Fund E
at net asset values per share obtained from published sources; and temporary
cash investments at cost which approximates fair value.
Purchases and sales of securities are reflected as of the trade date.
Dividend income is recognized on the ex-dividend date. Interest earned on
investments is recognized on the accrual basis.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Participant Interest in the Plan - During 1996, the Plan was amended to
change the interest of a participant in the ESOP fund from shares to units. The
interest of a participant in each of the other funds in the Plan, except for the
Loan Fund, is represented by units (as described in the Plan text). The number
of participants, number of units and value per unit for each of these funds as
of December 31 were: <TABLE> <CAPTION>
1996 1995
-------------------------------- ------------------------------
Number of Number of Value per Number of Number Value per
Participants Units Unit Participants of Units Unit
-------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
ESOP 32,887 217,177,993 $ 1.0485 - - -
SBC Shares Fund 28,055 52,615,557 $ 10.1173 28,266 55,124,445 $10.8108
Bond Fund 1,257 1,964,204 $ 1.6399 1,214 1,917,145 $ 1.5954
Diversified Equity Portfolio 7,936 21,896,132 $ 2.6393 5,726 14,278,407 $ 2.1477
Interest Income Fund 20,074 32,870,617 $ 5.1274 21,488 35,372,144 $ 4.8267
Asset Allocation Fund 460 1,350,373 $ 1.0727 - - -
Global Equity Fund 991 3,133,880 $ 1.0992 - - -
<FN>
<PAGE>
The total number of participants in the Plan was less than the sum of the
number of participants shown above because many participants were in more than
one fund.
</FN>
</TABLE>
4. Investments - Investments representing 5% or more of Plan net assets at
December 31, 1996 or 1995 were:
1996 1995
------- --------
Employee Stock Ownership Plan
SBC common shares:
allocated $ 273,646 269,847
unallocated $ 126,625 180,355
SBC Shares Fund
SBC common shares $ 530,221 588,472
Loan Fund
Loans to Plan Participants $ 74,394 48,499
For the years ended December 31, 1996 and 1995, the average interest rates
earned on the Interest Income Fund's investments in contracts with insurance
companies and other financial institutions were 6.00% and 6.30%, respectively.
At December 31, 1996, the crediting interest rates on these contracts ranged
from 4.66% to 7.91% and at December 31, 1995, they ranged from 4.66% to 8.06%.
The Interest Income fund includes an investment in a synthetic guaranteed
investment contract with Cassie Des Depots et Consignations (CDC) whereby the
Plan owns a bond held in trust and has entered into a contract with CDC which
guarantees the return on the bond. At December 31, 1996, the fair value of the
bond and associated cash was $12,521 and the fair value of the guarantee was
$1,174. The investment contract is recorded at contract value of $13,695 which
approximates fair value.
5. Long-Term Debt - Long-term debt consists of the ESOP Notes issued in
connection with the ESOP (as discussed in note 1). At December 31, 1996, the
aggregate principal amounts of long-term debt scheduled for repayment for the
years 1997 through 2000 were $22,281, $23,468, $24,546 and $15,856 respectively.
The carrying amount and the estimated fair value of the ESOP Notes as of
December 31 were:
1996 1995
-------- --------
Carrying Amount $ 86,151 $ 107,235
======== ========
Fair Value $ 91,102 $ 116,098
======== ========
The fair values of the 8.41% ESOP Notes were estimated based on quoted
prices and the fair values of the 9.40% ESOP Notes were estimated based on
discounted future cash flows using current interest rates.
<PAGE>
6. Tax Status - The Internal Revenue Service issued a determination letter
on March 10, 1997, stating that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The Plan
has been amended since the determination letter was received. The Plan
Administrator believes that the Plan is currently designed and is operating in
compliance with the applicable requirements of the IRC.
7. Reconciliation of Financial Statements to Form 5500 - The following is a
reconciliation of net assets available for plan benefits per the financial
statements to the Form 5500 as of December 31:ciliation of net assets available
for plan benefits per the financial statements to the Form 5500 as of December
31:
1996 1995
---------- ----------
Net assets available for plan
benefits per the financial $ 1,162,792 $ 1,202,218
statements
Less: Distributions payable to 1,039 6,300
participants
---------- ----------
Net assets available for plan
benefits per the Form 5500 $ 1,161,753 $ 1,195,918
========== ==========
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1996:
1996
----------
Distributions to participants per
the financial statements $ 59,853
Add: Distributions payable to
participants at December 31, 1996 1,039
Less: Distributions payable to
participants at December 31, 1995 6,300
----------
Distributions to participants per
the Form 5500 $ 54,592
==========
Distributions payable to participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
8. Subsequent Event - Effective March 24, 1997, dividends on shares in the
SBC Shares fund will be paid into a separate fund known as a Dividend Fund
Account (DFA). At the end of the year, dividends held in the DFA will be paid
out to the participant.
Prior to the amendment, dividends paid with respect to SBC Shares in the
Fund, were reinvested in the Fund, which increased the value of the participants
units. Under the amendment, the dividends will be paid to the participant, but
the participant may elect reinvestment and have the special Deferred-Tax
Allotment offset the payout through the purchase of additional units. Interest
earned on dividends held in the DFA will be paid into the SBC Shares Fund.
<PAGE>
SBC SAVINGS AND SECURITY PLAN
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
- ----------------------------------- --------------------- --------- ---------
Employee Stock Ownership Plan
*SBC common shares:
allocated 5,275,090 shares $ 149,630 $ 273,646
unallocated 2,440,972 shares 67,683 126,625
*Bankers Trust Company temporary cash investment 6,360 6,360
--------- ----------
Total Employee Stock Ownership Plan 223,673 406,631
--------- ----------
SBC Shares Fund
*SBC common shares 10,221,136 shares 260,266 530,221
*Bankers Trust Company temporary cash investment 2,903 2,903
--------- ----------
Total SBC Shares Fund 263,169 533,124
--------- ----------
Bond Fund
*BZW Barclays Government/Corporate
Bond Index Fund E 251,798 units 3,057 3,221
*Bankers Trust Company temporary cash investment 1 1
--------- ----------
Total Bond Fund 3,058 3,222
--------- ----------
Diversified Equity Portfolio
*BZW Barclays Equity Index Fund E 2,596,872 units 51,516 57,670
*Bankers Trust Company temporary cash investment 8 8
-------- ----------
Total Diversified Equity Portfolio 51,524 57,678
--------- ----------
Interest Income Fund (a)
The Prudential Insurance Company
of America 6.74 % - 7.91 % 24,931 24,931
John Hancock 4.85 % - 5.18 % 10,560 10,560
Principal Mutual 6.35% 37,499 37,499
Provident National Life Insurance
Company 6.78% 10,395 10,395
Continental Assurance Company 6.40% 24,755 24,755
New York Life 5.91% 16,097 16,097
Metropolitian Contract 6.32% 16,305 16,305
Jackson National Life 6.77% 13,765 13,765
Cassie Des Depots et Consignations 4.66% 13,695 13,695
--------- ----------
168,002 168,002
*Bankers Trust Company temporary cash investment 1,057 1,057
--------- ----------
Total Interest Income Fund 169,059 169,059
--------- ----------
<PAGE>
- --------------------------------------------------------------------------------
SBC SAVINGS AND SECURITY PLAN
- --------------------------------------------------------------------------------
Item 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
(Dollars in Thousands)
Asset Allocation Fund
* BZW Daily US Asset 75,903 $ 1,379 $ 1,448
* Bankers Trust Company temporary cash investment 0 0
-------- --------
Total Asset Allocation 1,379 1,448
-------- --------
Global Equity
* BZW Barclays U.S. Equity Market 154,781 $ 2,374 $ 2,536
Fund E
* BZW Barclays U.S. EAFE Equity 55,887 826 843
Index Fund E
* Bankers Trust Company temporary cash investment 1 1
-------- --------
Total Employee Stock Ownership Plan 3,201 3,380
-------- --------
Loan Fund
Loans to Plan Participants 9.25 % - 9.50 % - 74,394
* Bankers Trust Company temporary cash investment 9 9
-------- --------
9 74,403
-------- --------
TOTAL $ 715,072 $1,248,945
======== ========
* Party-in-Interest
(a) Investments in this fund consist of guaranteed investment contracts
with insurance companies and similar contracts with other financial institutions
which provide for the payment of principal plus accrued interest and are
collateralized by obligations of other organizations. The average interest rate
earned on these investment contracts during 1996 was 6.00%.
<PAGE>
<TABLE>
=========================================================================================================
SBC SAVINGS & SECURITY PLAN
=========================================================================================================
Item 27b - SCHEDULE OF LOANS OR FIXED INCOME
OBLIGATIONS For the year ended December 31,
1996
<CAPTION>
Name & 1996 1996 Unpaid Detail Description
Address Original Amount Principal Interest Balance at of Principal Interest
(Identity) of Loan Paid Paid Year End Loan Overdue Overdue
- ----------------- ------------- ---------- --------- ---------- ---------------------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
M. Kitchens $7,400.00 $ 652.64 $ 36.15 $2,477.59 03/31/93 Original Loan Date $2,477.59 $ -
Oklahoma City, OK 04/30/95 Maturity Date
7.10% Interest Rate
Secured by non-LESOP
account
B. Johns $5,000.00 $ - $ - $1,476.58 04/30/91 Original Loan Date $1,476.58 $ -
Carrollton, TX 11/30/98 Maturity Date
9.375% Interest Rate
Secured by non-LESOP
account
G. Nolasco $8,790.00 $ 982.53 $ 168.02 $3,417.56 11/30/92 Original Loan Date $3,417.56 $ -
San Antonio, TX 12/31/97 Maturity Date
7.125% Interest Rate
Secured by non-LESOP
account
<FN>
NOTE: None of the participant loans in default or classified as uncollectible
were with a party-in-interest. No loans were renegotiated during the
year. All loans are secured by the participant's account. The company
will collect overdue amounts upon a distributable event.
</FN>
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS & SECURITY PLAN
Item 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1996
(Dollars in Thousands)
<CAPTION>
Current Value
of Asset on
Description of Purchase Selling Cost of Transaction Net gain
Identity of Party Involved Assets Price Price Asset Date or (loss)
- ----------------------- ---------------------------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Category (iii) transactions:
Bankers Trust Bankers Trust Pyramid $ 176,485 $ - $ 176,485 $ 176,485 $ -
Account Cash Fund
Bankers Trust Bankers Trust Pyramid $ - $ 181,216 $ 181,216 $ 181,216 $ -
Account Cash Fund
Bankers Trust BZW Barclays $ 58,618 $ $ 58,618 $ 58,618 $ -
Equity Index Fund
Bankers Trust BZW Barclays $ $ 37,366 $ 28,122 $ 37,366 $ 9,244
Equity Index Fund
<FN>
There were no category (i), (ii) or (iv) transactions.
</FN>
</TABLE>
<PAGE>
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of
1934, the Benefit Plan Committee has duly caused this annual report to be signed
by the undersigned thereunto duly authorized.annual report to be signed by the
undersigned thereunto duly authorized.
SBC SAVINGS AND SECURITY PLAN
By Benefit Plan Committee
By /s/ Cassandra C. Carr
Cassandra C. Carr, Chairman
Date: June 24, 1997
<PAGE>
EX-23.b
Form 11-K for 1996
File No. 1-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8, No. 33-54309 and 333-24295) pertaining to the SBC Savings and
Security Plan of our report dated June 18, 1997, with respect to the financial
statements and supplemental schedules of the SBC Savings and Security Plan
included in this Annual Report (Form 11-K) for the year ended December 31, 1996.
ERNST & YOUNG LLP
San Antonio, Texas
June 18, 1997
