FORM l0-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X| Annual Report Pursuant to Section 13 or15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
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 l-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, 1997 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 1997.
(2) Exhibit 99.b Annual Report on Form 11-K for the SBC Savings and Security
Plan for the year 1997.
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 23rd day of June, 1998.
SBC COMMUNICATIONS INC.
By /s/ Donald E. Kiernan
------------------------------
Donald E. Kiernan
Senior Vice President, Treasurer
and Chief Financial Officer
June 23, 1998
EX-99.a
Form 10-K for 1997
File No. 1-8610
UNITED STATES
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, 1997
Commission File Number l-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, 1997...................................................... 2
Statement of Net Assets Available for Plan Benefits as of
December 31, 1996...................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1997........................................... 6
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1996........................................... 8
Notes to Financial Statements.......................................... 10
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes............. 14
Item 27d - Schedule of Reportable Transactions......................... 16
Exhibits:
23.b Consent of Ernst & Young LLP
<PAGE>
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, 1997 and 1996,
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, 1997 and 1996, 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 as of December 31, 1997, 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 19, 1998
<PAGE>
<TABLE>
SBC SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
(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 $ 488,259 $ - $ - $ - $ - $ - $ - $ - $ 488,259
Unallocated 231,694 - - - - - - - 231,694
Other - 682,750 - - - - - - 682,750
Barclays Global
Investors Government/
Corporate Bond Index Fund F - - 36,626 - - - - - 36,626
Barclays Global
Investors Equity
Index Fund F - - - 469,666 - - - - 469,666
Contracts with insurance
companies and other
financial institutions - - - - 224,452 - - - 224,452
Barclays Global Investors
U.S. Tactical Asset
Allocation Fund F - - - - - 30,653 - - 30,653
Barclays Global Investors
U.S. Equity Market Fund F - - - - - - 50,326 - 50,326
Barclays Global Investors
EAFE Equity Index Fund E - - - - - - 13,005 - 13,005
Loans to plan participants - - - - - - - 80,927 80,927
Temporary cash
investments 8,956 17,590 11 142 25,008 9 19 3 51,738
------- ------- ------ -------- ------- ------- ------ ------- -------
Total Investments 728,909 700,340 36,637 469,808 249,460 30,662 63,350 80,930 2,360,096
------- ------- ------ -------- ------- ------- ------ ------- -------
Contributions receivable:
Employer 1,065 - - - - - - - 1,065
------- ------- ------ -------- ------- ------- ------ ------- -------
Total Contributions
Receivable 1,065 - - - - - - - 1,065
------- ------- ------ -------- ------- ------- ------ ------- -------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
(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 44 88 - 4 10 - - - 146
Transfers receivable
from other
funds and plans - 1,971 - - - 189 - 30 2,190
Receivable for
investments sold - - 661 1,442 - - 559 - 2,662
-------- ------- ------ -------- ------ -------- ------ ------ --------
Total Assets 730,018 702,399 37,298 471,254 249,470 30,851 63,909 80,960 2,366,159
-------- ------- ------ -------- ------ -------- ------ ------ --------
LIABILITIES
Transfers payable to
other funds and plans - 37 605 1,062 446 - 43 - 2,193
Payable for investments
purchased - 9,571 - - 1,362 180 500 - 11,613
Administrative expenses 27 41 3 36 19 7 8 - 141
Interest payable 4,935 - - - - - - - 4,935
Current portion of
long-term debt 37,701 - - - - - - - 37,701
Other payables 90 305 - - - - - - 395
Long-term debt 84,042 - - - - - - - 84,042
-------- ------- ------ -------- ------ -------- ------ ------ --------
Total Liabilities 126,795 9,954 608 1,098 1,827 187 551 - 141,020
-------- ------- ------ -------- ------ -------- ------ ------ --------
Net Assets Available
for Plan Benefits $603,223 $692,445 $36,690 $470,156 $247,643 $ 30,664 $63,358 $80,960 $2,225,139
======== ======= ====== ======== ====== ======== ====== ====== ========
See Notes to Financial Statements.
</TABLE>
<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
Barclays Global
Investors Government/
Corporate Bond Index Fund E - - 32,632 - - - - - 32,632
Barclays Global
Investors Equity
Index Fund E - - - 312,963 - - - - 312,963
Contracts with
insurance companies and other
financial institutions - - - - 212,053 - - - 212,053
Barclays Global
Investors U.S. Tactical
Asset Allocation Fund E - - - - - 14,744 - - 14,744
Barclays Global
Investors U.S. Equity
Market Fund E - - - - - - 27,061 - 27,061
Barclays Global
Investors 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 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 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
purchased - - - 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
======== ====== ====== ======== ====== ======= ====== ======= =======
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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, 1996 $378,124 $553,158 $32,700 $313,869 $224,935 $14,796 $35,224 $76,748 $1,629,554
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 28,357 1,954 25,850 9,577 1,784 5,001 - 72,523
Employer contributions 18,876 - - - - - - - 18,876
Transfers of participants'
balances - net - (80,210) 748 39,407 17,394 10,500 14,804 (675) 1,968
Forfeitures 551 - - - - - - - 551
Proceeds from debt
refinancing 10,500 - - - - - - - 10,500
Loan transfer 34,594 - - - - - - - 34,594
-------- ------ ------ -------- ------ -------- ------- ------ -------
64,521 (51,853) 2,702 65,257 26,971 12,284 19,805 (675) 139,012
-------- ------ ------ -------- ------ -------- ------- ------ -------
Investment Income:
Dividends on SBC
common shares 17,685 18,140 - - - - - - 35,825
Other dividends - - - - - - - - -
Interest 301 751 4 35 14,769 2 6 6,664 22,532
-------- ------ ------ -------- ------ -------- ------- ------ -------
17,986 18,891 4 35 14,769 2 6 6,664 58,357
-------- ------ ------ -------- ------ -------- ------- ------ -------
Net appreciation in
value of investments 212,080 211,407 3,055 109,619 - 4,380 9,988 - 550,529
-------- ------ ------ -------- ------ -------- ------- ------ -------
Total Net Additions 294,587 178,445 5,761 174,911 41,740 16,666 29,799 5,989 747,898
-------- ------ ------ -------- ------ -------- ------- ------ -------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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 epenses 309 498 36 400 224 68 79 - 1,614
Forfeitures 551 - - - - - - - 551
Interest expense 9,393 - - - - - - - 9,393
Loan payment-principal 34,594 - - - - - - - 34,594
Refinanced long-term debt 10,500 - - - - - - - 10,500
Distributions to
participants 14,141 38,660 1,735 18,224 18,808 730 1,586 1,777 95,661
-------- ------ ------ -------- ------ ------- ------- ------ -------
Total Deductions 69,488 39,158 1,771 18,624 19,032 798 1,665 1,777 152,313
-------- ------ ------ -------- ------ ------- ------- ------ -------
Net Assets Available for
Plan Benefits,
December 31, 1997 $ 603,223 $692,445 $36,690 $470,156 $247,643 $30,664 $ 63,358 $ 80,960 $2,225,139
======== ====== ====== ======== ====== ======= ======= ====== =======
See Notes to Financial Statements.
</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
======== ======= ====== ======== ====== ======= ======= ======= =======
See Notes to Financial Statements.
</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 1997 and 1996, participants could invest their contributions in the
SBC Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the
Interest Income Fund, the Asset Allocation Fund, the Global Equity Fund or
among selected funds, 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, 1997 and July 1, 1996, the Plan refinanced $10.5 million and
$10.0 million, respectively, of the outstanding balance of the ESOP Notes
described above. The refinanced notes are payable to SBC annually at 6.95%
and 7.50%, respectively, until July 2005.
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 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 Barclays Global Investors (formerly
BZW Barclays) 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.
Effective January 1, 1997, dividends on shares in the SBC Shares Fund
(Fund) were paid into a separate fund known as a Dividend Fund Account
(DFA). The DFA fund activity and balances as of December 31, 1997 are
included in the SBC Shares Fund. At the end of the year, dividends held in
the DFA are paid out to the participant. Prior to the amendment, dividends
paid with respect to SBC Shares in the
<PAGE>
SBC SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
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. During 1997, Plan participants elected to receive
$10.7 million in dividend distributions. 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; Barclays Global Investors: Equity Index Funds, Government/Corporate
Bond Index Funds, U.S. Tactical Asset Allocation Fund F, U.S. Equity Market
Fund F 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.
No participant loans were in default or classified as uncollectible at
December 31, 1997. No loans were renegotiated during the year.
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 - The interest of a participant in each of
the 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>
1997 1996
<CAPTION>
---------- ------------ -- -------- ---------- ------------ -- --------
Number of Number of Value Number of Number of Value
Participants Units per Unit Participants Units per Unit
---------- ------------ -- -------- ---------- ------------ -- --------
<S> <C> <C> <C> <C> <C> <C>
ESOP 16,249 278,103,764 $ 1.7574 15,431 261,943,145 $ 1.2086
SBC Shares Fund 13,163 50,741,521 $ 13.6396 12,768 57,078,272 $ 9.6912
Bond Fund 2,587 3,207,692 $ 11.4381 2,539 3,134,457 $ 10.4322
Diversified Equity 11,271 21,485,630 $ 21.8824 9,527 19,116,915 $ 16.4184
Interest Income Fund 6,747 47,121,539 $ 5.2554 7,018 45,557,880 $ 4.9373
Asset Allocation Fund 1,843 20,004,398 $ 1.5329 1,172 11,869,604 $ 1.2465
Global Equity Fund 3,813 38,241,589 $ 1.6568 2,391 26,393,499 $ 1.3346
<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>
<PAGE>
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, 1997 or 1996 were:
1997 1996
---------- ----------
Employee Stock Ownership Plan
SBC common shares:
allocated $ 487,195 $ 315,139
unallocated $ 232,758 $ 206,162
SBC Shares Fund
SBC common shares $ 682,750 $ 553,531
Diversified Equity Portfolio
Barclays Global Investors Equity
Index Fund $ 469,666 $ 312,963
For the years ended December 31, 1997 and 1996, the average interest rates
earned on the Interest Income Fund's investments in contracts with
insurance companies and other financial institutions were 6.53% and 6.00%
respectively. At December 31, 1997, the fixed crediting interest rates on
these contracts ranged from 4.87% to 7.85%. At December 31, 1996, the fixed
crediting interest rates on these contracts ranged from 4.66% to 7.85%.
For the year ended December 31, 1996, the Interest Income fund included an
investment in a synthetic guaranteed investment contract with Cassie Des
Depots et Consignations (CDC) whereby the Plan owned a bond held in trust
and entered into a contract with CDC which guaranteed the return on the
bond. The CDC contract matured on June 30, 1997. 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 was recorded at
contract value of $27,389, which approximates fair value at December 31,
1996.
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, 1997, the aggregate principal amounts of long-term debt
scheduled for repayment for the years 1998 through 2002 were $37,701,
$40,024, $23,090, $4,302 and $4,616, respectively. The carrying amount and
the estimated fair value of the ESOP and refinancing notes as of December
31 were:
1997 1996
--------- ---------
Carrying Amount $ 121,743 $ 145,837
========= =========
Fair Value $ 126,254 $ 152,785
========= =========
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 case 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:
1997 1996
----------- -----------
Net assets available for plan benefit
per the financial statements $ 2,225,139 $ 1,629,554
Less: Distribution payable to participants 1,308 2,155
----------- -----------
Net assets available for plan benefits
per the Form 5500 $ 2,223,831 $ 1,627,399
=========== ===========
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1997:
1997
--------
Distributions to participants per the
financial statements $ 95,661
Add: Distributions payable to participants
at December 31, 1997 1,308
Less: Distributions payable to participants
at December 31, 1996 2,155
--------
Distributions to participants per the
Form 5500 $ 94,814
========
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 Events - Effective July 1, 1998, the assets and liabilities of
Pacific Telesis Group's (PAC), a wholly-owned subsidiary of SBC,
Supplemental Retirement and Savings Plan for Salaried Employees will be
transferred to the Plan. In addition, the assets attributable to the
accounts of nonbargained employees of PAC in the Pacific Telesis Group
Supplemental Retirement and Savings Plan for Salaried and Nonsalaried
Employees (Leveraged ESOP) will be transferred to the Plan, together with a
proportionate amount of the unallocated SBC common shares and the remaining
liability under the loan agreement.
<PAGE>
<TABLE>
SBC SAVINGS PLAN
EIN 43-1301883, PLAN NO. 002
Item 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(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 # 6,665,655 shares $ 186,619 $ 488,259
unallocated # 3,163,052 shares 87,130 231,694
*Bankers Trust Company temporary cash 8,956 8,956
investment
--------- ---------
Total Employee Stock Ownership Plan 282,705 728,909
--------- ---------
SBC Shares Fund
* SBC common shares: # 9,320,815 shares 287,146 682,750
* Bankers Trust Company temporary cash 17,590 17,590
investment
--------- ---------
Total SBC Shares Fund 304,736 700,340
--------- ---------
Bond Fund
* Barclays Global Investors 3,427,291 units 34,597 36,626
Government/Corporate
Bond Index Fund F
* Bankers Trust Company temporary cash 11 11
investment
--------- ---------
Total Bond Fund 34,608 36,637
--------- ---------
Diversified Equity Portfolio
* Barclays Global Investors 38,256,361 units 427,171 469,666
Equity Index Fund F
* Bankers Trust Company temporary cash 142 142
investment
--------- ---------
Total Diversified Equity Portfolio 427,313 469,808
--------- ---------
Interest Income Fund (a)
Metropolitan Life Insurance 7.85%, 12/31/98 19,344 19,344
Company
John Hancock 4.87%-6.82%, 64,922 64,922
1/02/98-1/02/01
Principal Mutual 6.35%, 6/29/99 33,247 33,247
Jackson National Life 6.93%, 12/29/00 22,623 22,623
The Prudential Insurance Company 6.64%-6.89%, 48,053 48,053
of America 6/30/98-6/30/00
Continental Assurance Company 6.01%-6.40%, 36,263 36,263
7/01/99-12/31/00
--------- ---------
224,452 224,452
* Bankers Trust Company temporary cash 25,008 25,008
investment
--------- ---------
Total Interest Income Fund 249,460 249,460
--------- ---------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS PLAN
EIN 43-1301883, PLAN NO. 002
Item 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(Dollars in Thousands)
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
------------------------------------- ----------------------- --------- ---------
<S> <C> <C> <C>
Asset Allocation Fund
* Barclays Global Investors U.S. 2,556,399 units 28,002 30,653
Tactical Asset Allocation
Fund F
* Bankers Trust Company temporary cash 9 9
investment
--------- ---------
Total Asset Allocation Fund 28,011 30,662
--------- ---------
Global Equity Fund
* Barclays Global Investors U.S. 2,337,661 units 45,739 50,326
Equity Market Fund F
* Barclays Global Investors EAFE 849,879 units 12,734 13,005
Equity Index Fund E
* Bankers Trust Company temporary cash 19 19
investment
--------- ---------
Total Global Equity Fund 58,492 63,350
--------- ---------
Loan Fund
Loans to Plan Participants 9.25%-9.50% - 80,927
* Bankers Trust Company temporary cash 3 3
investment
--------- ---------
Total Loan Fund 3 80,930
--------- ---------
TOTAL $ 1,385,328 $2,360,096
========= =========
<FN>
* Party-in-Interest
# Amounts do not reflect two-for-one stock split declared in the first
quarter of 1998.
(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 1997 was 6.53%.
</FN>
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS PLAN
EIN 43-1301883, PLAN NO. 002
Item 27d-SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1997
<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 $ 500,443 $ - $ 500,443 $ 500,443 $ -
Directed Account
Cash Fund
Bankers Trust Bankers Trust $ - $ 469,224 $ 469,224 $ 469,224 $ -
Directed Account
Cash Fund
Bankers Trust Barclays Global $ 509,365 $ - $ 509,365 $ 509,365 $ -
Investors Equity
Index Fund
Bankers Trust Barclays Global $ - $ 462,281 $ 308,275 $ 462,281 $ 154,006
Investors Equity
Index Fund
Bankers Trust SBC Communications $ 74,978 $ - $ 74,978 $ 74,978 $ -
Inc. Common Stock
Bankers Trust SBC Communications $ - $ 172,993 $ 83,064 $ 172,993 $ 89,929
Inc. Common Stock
There were no category (i), (ii) or (iv) transactions.
</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 23, 1998
<PAGE>
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
23-a Consent of Independent Auditors Ernst & Young LLP.
<PAGE>
EX-23.a
Form 11-K for 1997
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8, No. 33-54309 and 333-24295) pertaining to the SBC
Savings Plan of our report dated June 19, 1998, 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,
1997.
ERNST & YOUNG LLP
San Antonio, Texas
June 19, 1998
EX-99.b
Form 10-K for 1997
File No. 1-8610
UNITED STATES
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, 1997
Commission File Number l-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, 1997...................................................... 2
Statement of Net Assets Available for Plan Benefits as of
December 31, 1996...................................................... 4
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1997........................................... 6
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 1996........................................... 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, 1997
and 1996, 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, 1997 and 1996, 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, 1997, 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 19, 1998
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
(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 $ 428,507 $ - $ - $ - $ - $ - $ - $ - $ 428,507
Unallocated 122,189 - - - - - - - 122,189
Other - 701,288 - - - - - - 701,288
Barclays Global
Investors Government/
Corporate Bond Index F - - 4,672 - - - - - 4,672
Barclays Global Investors
Equity Index Fund F - - - 111,746 - - - - 111,746
Contracts with insurance
companies and other
financial institutions - - - - 161,250 - - - 161,250
Barclays Global Investors
U.S. Tactical Asset
Allocation Fund F - - - - - 4,710 - - 4,710
Barclays Global Investors
U.S. Equity Market Fund F - - - - - - 8,446 - 8,446
Barclays Global Investors
EAFE Equity Index Fund E - - - - - - 2,327 - 2,327
Loans to plan participants - - - - - - - 89,538 89,538
Temporary cash investments 7,049 13,645 3 62 10,801 2 6 14 31,582
------- ------- ------ -------- ------- ------- ------ ------- -------
Total Investments 557,745 714,933 4,675 111,808 172,051 4,712 10,779 89,552 1,666,255
------- ------- ------ -------- ------- ------- ------ ------- -------
Contributions
receivable:
Employer 4,770 - - - - - - - 4,770
------- ------- ------ -------- ------- ------- ------ ------- -------
Total Contributions
Receivable 4,770 - - - - - - - 4,770
------- ------- ------ -------- ------- ------- ------ ------- -------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
(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 34 75 - 1 6 - - - 116
Transfers receivable from
other funds and plans - 572 26 - - 47 - 110 755
Receivable for
investments sold 110 802 - 57 - - 1 - 970
-------- ------- ------ -------- ------ -------- ------ ------ --------
Total Assets 562,659 716,382 4,701 111,866 172,057 4,759 10,780 89,662 1,672,866
-------- ------- ------ -------- ------ -------- ------ ------ --------
LIABILITIES
Transfers payable
to other funds and plans - 96 1 33 647 1 - - 778
Payable for
investments purchased - 3,046 23 - 891 46 - - 4,006
Administrative expenses 53 93 1 16 27 1 2 - 193
Interest payable 2,750 - - - - - - - 2,750
Current portion of
long-term debt 23,469 - - - - - - - 23,469
Other payables - 76 - - - - - - 76
Long-term debt 40,402 - - - - - - - 40,402
-------- ------- ------ -------- ------ -------- ------ ------ --------
Total Liabilities 66,674 3,311 25 49 1,565 48 2 - 71,674
-------- ------- ------ -------- ------ -------- ------ ------ --------
Net Assets Available
for Plan Benefits $495,985 $713,071 $4,676 $ 111,817 $170,492 $ 4,711 $10,778 $89,662 $1,601,192
======== ======= ====== ======== ====== ======== ====== ====== ========
See Notes to Financial Statements.
</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>
ASSETS
Investments:
SBC common shares:
Allocated $ 273,646 $ - $ - $ - $ - $ - $ - $ - $ 273,646
Unallocated 126,625 - - - - - - - 126,625
Other - 530,221 - - - - - - 530,221
Barclays Global
Investors Government/
Corporate Bond Index
Fund E - - 3,221 - - - - - 3,221
Barclays Global
Investors Equity
Index Fund E - - - 57,670 - - - - 57,670
Contracts with insurance
companies and other
financial institutions - - - - 168,002 - - - 168,002
Barclays Global
Investors U.S. Tactical - - - - - 1,448 - - 1,448
Asset Allocation Fund E
Barclays Global
Investors U.S. Equity - - - - - - 2,536 - 2,536
Market Fund E
Barclays Global
Investors EAFE Equity - - - - - - 843 - 843
Index Fund E
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
Receivable 4,294 - - - - - - - 4,294
------- ------ ------- -------- ------ ------- ------- ------ -------
</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
======== ====== ====== ======== ====== ======= ====== ======= =======
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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, 1996 $ 321,258 $532,326 $3,221 $ 57,791 $168,541 $1,449 $ 3,445 $ 74,761 $1,162,792
Additions to Net Assets:
Contributions and transfers:
Participant contributions - 32,716 652 10,759 14,669 519 1,443 - 60,758
Employer contributions 17,309 - - - - - - - 17,309
Transfers of
participants'
balances - net - (33,456) 750 24,675 (8,390) 2,278 4,924 9,606 387
Forfeitures 62 - - - - - - - 62
Loan transfer 22,281 - - - - - - - 22,281
-------- ------ ------ -------- ------ -------- ------- ------ -------
39,652 (740) 1,402 35,434 6,279 2,797 6,367 9,606 100,797
-------- ------ ------ -------- ------ -------- ------- ------ -------
Investment Income:
Dividends on SBC
common shares 13,533 17,729 - - - - - - 31,262
Other dividends - - - - - - - - -
Interest 254 544 1 13 10,616 1 2 6,920 18,351
-------- ------ ------ -------- ------ -------- ------- ------ -------
13,787 18,273 1 13 10,616 1 2 6,920 49,613
-------- ------ ------ -------- ------ -------- ------- ------ -------
Net appreciation in
value of investments 162,066 209,642 350 22,484 - 624 1,331 - 396,497
-------- ------ ------ -------- ------ -------- ------- ------ -------
Total Net Additions 215,505 227,175 1,753 57,931 16,895 3,422 7,700 16,526 546,907
-------- ------ ------ -------- ------ -------- ------- ------ -------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
(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 488 865 6 146 266 12 17 - 1,800
Forfeitures 62 - - - - - - - 62
Interest expense 5,979 - - - - - - - 5,979
Loan payment-principal 22,281 - - - - - - - 22,281
Distributions to
participants 11,968 45,565 292 3,759 14,678 148 350 1,625 78,385
-------- ------ ------ -------- ------ ------- ------- ------ -------
Total Deductions 40,778 46,430 298 3,905 14,944 160 367 1,625 108,507
-------- ------ ------ -------- ------ ------- ------- ------ -------
Net Assets Available
for Plan Benefits,
December 31, 1997 $ 495,985 $713,071 $4,676 $ 111,817 $170,492 $ 4,711 $ 10,778 $ 89,662 $1,601,192
======== ====== ====== ======== ====== ======= ======= ====== =======
See Notes to Financial Statements.
</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 transfer 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
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 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 3,985 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
======== ======= ====== ======== ====== ======= ======= ======= =======
See Notes to Financial Statements.
</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 1997 and 1996, participants could invest their contributions in the
SBC Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the
Interest Income Fund, the Asset Allocation Fund, the Global Equity Fund or
among selected funds, in 1% increments. The Asset Allocation Fund and the
Global Equity Fund were established as investment options in mid-1996.
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
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 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 Barclays Global Investors (formerly
BZW Barclays) 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.
Effective March 24, 1997, dividends on shares in the SBC Shares Fund (Fund)
were paid into a separate fund known as a Dividend Fund Account (DFA). The
DFA fund activity and balances as of December 31, 1997 are included in the
SBC Shares Fund. At the end of the year, dividends held in the DFA are paid
out to the participant. Prior to the amendment, dividends paid with respect
to SBC Shares in the
<PAGE>
SBC SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
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. During 1997, Plan participants elected to receive
$7.6 million in dividend distributions.
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; Barclays Global Investors: Equity Index Funds, Government/Corporate
Bond Index Funds, U.S. Tactical Asset Allocation Fund F, U.S. Equity Market
Fund F 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 - The interest of a participant in each of
the 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>
1997 1996
<CAPTION>
---------- ------------ -- -------- ---------- ------------ -- --------
Number of Number of Value Number of Number of Value
Participants Units per Unit Participants Units per Unit
---------- ------------ -- -------- ---------- ------------ -- --------
<S> <C> <C> <C> <C> <C> <C>
ESOP 33,243 230,000,263 $ 1.5237 32,887 217,177,993 $ 1.0485
SBC Shares Fund 28,324 49,413,198 $ 14.3459 28,055 52,615,557 $ 10.1173
Bond Fund 1,460 2,602,546 $ 1.7966 1,257 1,964,204 $ 1.6399
Diversified Equity
Portfolio 11,087 31,810,231 $ 3.5151 7,936 21,896,132 $ 2.6393
Interest Income Fund 18,575 31,277,546 $ 5.4510 20,074 32,870,617 $ 5.1274
Asset Allocation Fun 1,170 3,575,519 $ 1.3175 460 1,350,373 $ 1.0727
Global Equity Fund 2,691 7,942,641 $ 1.3569 991 3,133,880 $ 1.0992
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.
</TABLE>
<PAGE>
SBC SAVINGS AND SECURITY 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, 1997 or 1996 were:
1997 1996
---------- ----------
Employee Stock Ownership Plan
SBC common shares:
allocated $ 423,737 $ 273,646
unallocated $ 126,959 $ 126,625
SBC Shares Fund
SBC common shares $ 701,288 $ 530,221
Diversified Equity Portfolio
Barclays Global Investors
Equity Index Fund $ 111,746 $ 57,670
Loan Fund
Loans to Plan Participants $ 89,538 $ 74,394
For the years ended December 31, 1997 and 1996, the average interest rates
earned on the Interest Income Fund's investments in contracts with
insurance companies and other financial institutions were 6.33% and 6.00%
respectively. At December 31, 1997, the fixed crediting interest rates on
these contracts ranged from 4.85% to 7.91%. At December 31, 1996, the fixed
crediting interest rates on these contracts ranged from 4.66% to 7.91%.
For the year ended December 31, 1996, the Interest Income fund included an
investment in a synthetic guaranteed investment contract with Cassie Des
Depots et Consignations (CDC) whereby the Plan owned a bond held in trust
and entered into a contract with CDC which guaranteed the return on the
bond. The CDC contract matured on June 30, 1997. 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 was recorded at
contract value of $13,695, which approximates fair value at December 31,
1996.
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, 1997, the aggregate principal amounts of long-term debt
scheduled for repayment for the years 1998 through 2000 were $23,469,
$24,546 and $15,856, respectively. The carrying amount and the estimated
fair value of the ESOP and refinancing notes as of December 31 were:
1997 1996
--------- ---------
Carrying Amount $ 63,871 $ 86,151
========= =========
Fair Value $ 66,494 $ 91,102
========= =========
The fair values of the 8.41% ESOP Notes were estimated based on quoted
prices and the fair value of the 9.40% ESOP notes were estimated based on
discounted future cash flows using current interest rates.
<PAGE>
SBC SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except per Unit Amounts)
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:
1997 1996
----------- -----------
Net assets available for plan benefit
per the financial statements $ 1,601,192 $ 1,162,792
Less: Distribution payable to participants 258 1,039
----------- -----------
Net assets available for plan benefits
per the Form 5500
$ 1,600,934 $ 1,161,753
=========== ===========
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 1997:
1997
--------
Distributions to participants per the
financial statements $ 78,385
Add: Distributions payable to participants
at December 31, 1997 258
Less: Distributions payable to
participants at December 31, 1996 1,039
--------
Distributions to participants per the
Form 5500 $ 77,604
========
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.
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
EIN 43-1301883, PLAN NO. 004
Item 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(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 # 5,849,926 shares $ 166,344 $ 428,507
unallocated # 1,668,102 shares 46,223 122,189
*Bankers Trust Company temporary cash 7,049 7,049
investment
--------- ---------
Total Employee Stock Ownership Plan 219,616 557,745
--------- ---------
SBC Shares Fund
* SBC common shares: # 9,573,897 shares 251,802 701,288
* Bankers Trust Company temporary cash 13,645 13,645
investment
--------- ---------
Total SBC Shares Fund 265,447 714,933
--------- ---------
Bond Fund
* Barclays Global Investors 437,204 units 4,453 4,672
Government/Corporate Bond
Index Fund F
* Bankers Trust Company temporary cash 3 3
investment
--------- ---------
Total Bond Fund 4,456 4,675
--------- ---------
Diversified Equity Portfolio
* Barclays Global Investors 9,102,176 units 102,395 111,746
Equity Index Fund F
* Bankers Trust Company temporary cash 62 62
investment
--------- ---------
Total Diversified Equity Portfolio 102,457 111,808
--------- ---------
Interest Income Fund (a)
Metropolitan Life Insurance 6.32%, 12/31/00 21,422 21,422
Company
John Hancock 4.85%-6.86%, 39,311 39,311
1/02/98-6/29/01
Principal Mutual 6.35%, 6/29/99 20,553 20,553
New York Life 5.91%, 12/31/99 12,882 12,882
Jackson National Life 6.77%, 12/31/99 13,511 13,511
The Provident National Life 6.78%, 6/30/98 5,186 5,186
Insurance Company of America
The Prudential Insurance Company 6.85%-7.91%, 23,546 23,546
of America 6/30/98-12/31/98
Continental Assurance Company 6.01%-6.40%, 24,839 24,839
7/01/99-12/31/00
--------- ---------
161,250 161,250
* Bankers Trust Company temporary cash 10,801 10,801
investment
--------- ---------
Total Interest Income Fund 172,051 172,051
--------- ---------
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
EIN 43-1301883, PLAN NO. 004
Item 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(Dollars in Thousands)
<CAPTION>
Description of Current
Identity of Issue Investment Cost Value
------------------------------------- ----------------------- --------- ---------
<S> <C> <C> <C>
Asset Allocation Fund
* Barclays Global Investors U.S. 392,770 units 4,310 4,710
Tactical Asset Allocation
Fund F
* Bankers Trust Company temporary cash 2 2
investment
--------- ---------
Total Asset Allocation Fund 4,312 4,712
--------- ---------
Global Equity Fund
* Barclays Global Investors U.S. 392,334 units 7,776 8,446
Equity Market Fund F
* Barclays Global Investors EAFE 152,106 units 2,354 2,327
Equity Index Fund E
* Bankers Trust Company temporary cash 6 6
investment
--------- ---------
Total Global Equity Fund 10,136 10,779
--------- ---------
Loan Fund
Loans to Plan Participants 9.25%-9.50% - 89,538
* Bankers Trust Company temporary cash 14 14
investment
--------- ---------
Total Loan Fund 14 89,552
--------- ---------
TOTAL $ 778,489 $ 1,666,255
========= =========
<FN>
* Party-in-Interest
# Amounts do not reflect two-for-one stock split declared in the first
quarter of 1998.
(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 1997 was 6.33%.
</FN>
</TABLE>
<PAGE>
<TABLE>
SBC SAVINGS AND SECURITY PLAN
EIN 43-1301883, PLAN NO. 004
Item 27b-SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
For the year ended December 31, 1997
<CAPTION>
Name & Original 1997 1997 Unpaid Detail
Address Amount Principal Interest Balance at Description Principal Interest
(Identity) of Loan Paid Paid Year End of Loan Overdue Overdue
----------------------- ----------- --------- --------- ----------- --------------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
W. Pope $ 10,500.00 $ - $ - $ 8,534.88 6/30/95 Original $ 8,534.88 $ -
Arlington, TX Loan Date
07/31/00 Maturity Date
10.00% 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 AND SECURITY PLAN
EIN 43-1301883, PLAN NO. 004
Item 27d-SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1997
<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 $ 340,286 $ - $ 340,286 $ 340,286 $ -
Directed
Account Cash Fund
Bankers Trust Bankers Trust $ - $ 319,041 $ 319,041 $ 319,041 $ -
Directed
Account Cash Fund
Bankers Trust Barclays Global $ 130,643 $ - $ 130,643 $ 130,643 $ -
Investors
Equity Index Fund
Bankers Trust Barclays Global $ - $ 99,052 $ 79,764 $ 99,052 $ 19,288
Investors
Equity Index Fund
Bankers Trust SBC Communications $ 17,900 $ - $ 17,900 $ 17,900 $ -
Inc. Common Stock
Bankers Trust SBC Communications $ - $ 65,440 $ 28,966 $ 65,440 $ 36,474
Inc. Common Stock
There were no category (i), (ii) or (iv) transactions.
</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 AND SECURITY PLAN
By Benefit Plan Committee
By /s/ Cassandra C. Carr
------------------------
Cassandra C. Carr,
Chairman
Date: June 23, 1998
<PAGE>
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
23-a Consent of Independent Auditors Ernst & Young LLP.
<PAGE>
EX-23.a
Form 11-K for 1997
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements (Form S-8, No. 33-54309 and 333-24295) pertaining to the SBC
Savings and Security Plan of our report dated June 19, 1998, 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, 1997.
ERNST & YOUNG LLP
San Antonio, Texas
June 19, 1998
