<PAGE> 1
Filed Pursuant to Rule 424(b)(5)
File No. 333-37513
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED NOVEMBER 4, 1997)
$200,000,000
PACIFIC BELL
6 1/8% NOTES DUE FEBRUARY 15, 2008
Interest on Pacific Bell's (the "Company") 6 1/8% Notes due February 15,
2008 (the "Notes") is payable on February 15 and August 15 of each year,
commencing August 15, 1998. The Notes are not redeemable prior to maturity. See
"Description of the Notes".
The Notes will be represented by one or more Global Notes registered in the
name of the nominee of The Depository Trust Company ("DTC"). Beneficial
interests in the Global Notes will be shown on, and transfers thereof will be
effected only through, records maintained by DTC and its participants. Except as
described herein, Notes in definitive form will not be issued. The Notes will be
issued only in denominations of $1,000 and integral multiples thereof. See
"Description of the Notes".
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note............................... 99.417% .650% 98.767%
- ------------------------------------------------------------------------------------------------------------------
Total.................................. $198,834,000 $1,300,000 $197,534,000
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from February 13, 1998 to the date of
delivery.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $100,000 payable by the Company.
------------------------------
The Notes offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that the Notes
will be ready for delivery in book-entry form only through the facilities of DTC
in New York, New York, on or about February 13, 1998.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
The date of this Prospectus Supplement is February 10, 1998.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS AND THE IMPOSITION
OF PENALTY BIDS. SEE "UNDERWRITING."
USE OF PROCEEDS
The net proceeds from the sale of the Notes are to be used to provide funds
in connection with the redemption of $175,000,000 aggregate principal amount of
the Company's Thirty-Six Year 7 1/4% Debentures due February 1, 2008 and to
provide funds for general corporate purposes.
S-2
<PAGE> 3
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the Prospectus as the "Debt Securities") supplements and,
to the extent inconsistent therewith, replaces, insofar as such description
relates to the Notes, the description of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
The Notes will be limited to $200,000,000 aggregate principal amount and
will mature on February 15, 2008. The Notes will bear interest from February 13,
1998 at the rate per annum shown on the cover page of this Prospectus
Supplement. Such interest will be payable on February 15 and August 15 of each
year, commencing August 15, 1998, to the persons in whose name the Notes were
registered at the close of business on the preceding February 1 and August 1,
respectively.
The Notes are not redeemable prior to maturity.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will be represented by one or more global notes
(the "Book-Entry Notes"). Each global note representing Book-Entry Notes will be
deposited with, or on behalf of, The Depository Trust Company, as Depository
(the "Depository"), and registered in the name of a nominee of the Depository.
Book-Entry Notes will not be exchangeable at the option of the holder for
certificated Notes and, except under the circumstances described in the
Prospectus under "Description of Debt Securities -- Book-Entry Securities", will
not otherwise be issuable in definitive form.
The Depository has advised the Company and the Underwriters as follows: The
Depository is a limited-purpose trust company organized under the Banking Law of
the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of section 17A of the
Securities Exchange Act of 1934. The Depository was created to hold securities
of its participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depository's participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depository. Access to the
Depository's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
A further description of the Depository's procedures with respect to global
notes representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities -- Book-Entry Securities".
SETTLEMENT AND PAYMENT
Settlement for the Notes will be made in immediately available funds. So
long as the Notes are represented by global notes, all payments of principal and
interest thereon will be made by the Company in immediately available funds.
So long as the Notes are represented by global notes registered in the name
of the Depository or its nominee and its procedures so permit, the Notes will
trade in the Depository's settlement system, and secondary market trading
activity in the Notes will therefore be required by the Depository to settle in
immediately available funds.
S-3
<PAGE> 4
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the
principal amount of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT
----------- ----------------
<S> <C>
Bear, Stearns & Co. Inc..................................... $ 50,000,000
Goldman, Sachs & Co......................................... 50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... 50,000,000
Morgan Stanley & Co. Incorporated........................... 50,000,000
------------
Total............................................. $200,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters propose to offer the Notes in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of .40% of the principal amount of the Notes. The Underwriters
may allow, and such dealers may reallow, a concession not to exceed .25% of the
principal amount of the Notes to certain brokers and dealers. After the Notes
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.
In order to facilitate the offering, the Underwriters participating in the
offering may engage in transactions that stabilize, maintain or otherwise affect
the price of the Notes during and after the offering. Specifically, the
Underwriters may over-allot or otherwise create a short position in the Notes
for their own account by selling more Notes than have been sold to them by the
Company. The Underwriters may elect to cover any such short position by
purchasing Notes in the open market. In addition, the Underwriters may stabilize
or maintain the price of the Notes by bidding for or purchasing Notes in the
open market and may impose penalty bids, under which selling concessions allowed
to syndicate members or other broker-dealers participating in the offering are
reclaimed if Notes previously distributed in the offering are repurchased in
connection with stabilization transactions or otherwise. The effect of these
transactions may be to stabilize or maintain the market price of the Notes at a
level above that which might otherwise prevail in the open market. The
imposition of a penalty bid may also affect the price of the Notes to the extent
that it discourages resales thereof. No representation is made as to the
magnitude or effect of any such stabilization or other transactions. Such
transactions, if commenced, may be discontinued at any time.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes but they are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
From time to time, each of the Underwriters has provided various investment
banking services to the Company and/or its parent, SBC Communications Inc. and
its subsidiaries and affiliates.
S-4
<PAGE> 5
LEGAL OPINIONS
The validity of the Notes offered hereby will be passed upon for the
Company by T. Michael Payne, General Counsel of the Company, and for the
Underwriters by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell
will rely as to matters of California law on the opinion of T. Michael Payne. As
of January 31, 1998, Mr. Payne owned, and held options to purchase, less than
.1% of the outstanding shares of common stock of SBC Communications Inc.
Sullivan & Cromwell from time to time performs legal services for SBC
Communications Inc.
S-5
<PAGE> 6
PROSPECTUS
U.S. $1,750,000,000
PACIFIC BELL
DEBT SECURITIES
---------------------
Pacific Bell (the "Company") may offer, in one or more series, debt
securities ("Debt Securities") in an aggregate principal amount (or net proceeds
in the case of debt securities issued at an original issue discount) of not more
than U.S. $1,750,000,000 or the equivalent thereof in one or more currencies or
currency units on terms to be determined at the time such Debt Securities are
offered for sale. As used herein, Debt Securities shall include securities
denominated in U.S. dollars or, at the option of the Company and if so specified
in the applicable Prospectus Supplement, in any other currency, including
composite currencies such as the European Currency Unit.
When a particular series of Debt Securities is offered, a prospectus
supplement ("Prospectus Supplement") together with this Prospectus will be
delivered setting forth the terms of the Debt Securities, including, where
applicable, the specific designation, aggregate principal amount, currency or
currencies in which the principal, premium, if any, and interest are payable,
denominations, maturity, rate or rates of any interest, any index, price or
formula to be used for determining the amount of any payment of principal,
premium, if any, or interest, any interest payment dates, whether the Debt
Securities are issuable in registered form, in bearer form, or in the form of
one or more global securities or a combination thereof, any redemption
provisions, the initial public offering price, the names of any underwriters,
dealers or agents, any compensation to such underwriters, dealers or agents and
any other specific terms in connection with the offering and sale of the Debt
Securities.
The Company may sell Debt Securities to or through underwriters, and may
also sell Debt Securities directly to other purchasers or through agents. See
"Plan of Distribution."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is November 4, 1997.
<PAGE> 7
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS AND THE
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
("SEC"). Such reports, and other information filed by the Company can be
inspected and copied at the public reference facilities of the SEC, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at the
following SEC Regional Offices: Seven World Trade Center, Suite 1300, New York,
NY 10048 and Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, IL 60661. Copies can be obtained from the SEC by mail at prescribed
rates. Requests should be directed to the SEC's Public Reference Section, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549. In
addition, the SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the SEC. The address of such site is
http://www.sec.gov. Such material can also be inspected at the New York and
Pacific Stock Exchanges on which certain of the Company's debt securities are
listed.
The Company has filed with the SEC a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended ("Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information, reference is made
to the Registration Statement.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the SEC (File
No. 1-1414) and are hereby incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1997.
3. The Company's Current Reports on Form 8-K, dated April 4, 1997, October
22, 1997 and October 23, 1997.
ALL DOCUMENTS FILED BY THE COMPANY PURSUANT TO SECTION 13(a), 13(c), 14 OR
15(d) OF THE EXCHANGE ACT SUBSEQUENT TO THE DATE OF THIS PROSPECTUS AND PRIOR TO
THE TERMINATION OF THE OFFERING OF THE DEBT SECURITIES SHALL BE DEEMED TO BE
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND TO BE PART HEREOF FROM THE DATE
OF FILING OF SUCH DOCUMENTS. ANY STATEMENT CONTAINED IN A DOCUMENT INCORPORATED
OR DEEMED TO BE INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED
OR SUPERSEDED FOR PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A STATEMENT
CONTAINED HEREIN OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS
DEEMED TO BE INCORPORATED BY REFERENCE HEREIN OR IN ANY PROSPECTUS SUPPLEMENT
MODIFIES OR SUPERSEDES SUCH
2
<PAGE> 8
STATEMENT. ANY SUCH STATEMENT SO MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED,
EXCEPT AS SO MODIFIED OR SUPERSEDED, TO CONSTITUTE A PART OF THIS PROSPECTUS.
Copies of the above documents (other than exhibits to such documents) may
be obtained upon request without charge from the Company's Investor Services
office, 130 Kearny Street, Suite 2926, San Francisco, California 94108
(telephone number (415) 394-3078).
THE COMPANY
Pacific Bell (the "Company") was incorporated in 1906 under the laws of the
State of California. It has its principal executive offices at 140 New
Montgomery Street, San Francisco, California 94105 (telephone number (415)
542-9000). Through December 31, 1983, the Company was an associated company of
the Bell System and a subsidiary of AT&T Corp. ("AT&T"). Effective January 1,
1984, the Company became a subsidiary of Pacific Telesis Group ("PAC"), one of
the seven regional holding companies formed by AT&T in connection with the
divestiture from AT&T of its 22 wholly owned operating telephone companies
pursuant to a consent decree approved by the United States District Court for
the District of Columbia. On April 1, 1997, SBC Communications Inc. ("SBC") and
PAC completed the merger of an SBC subsidiary with PAC, in a transaction in
which each outstanding share of PAC common stock was exchanged for 0.73145 of a
share of SBC common stock (equivalent to approximately 313 million shares).
Through the merger, PAC became a wholly-owned subsidiary of SBC. The transaction
was accounted for by SBC as a pooling of interests and a tax-free
reorganization.
The Company and its subsidiaries provide a wide variety of communications
services in California including local exchange and toll service, network access
and directory advertising, as well as wireless services in both California and
Nevada.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net proceeds
from the sale of the Debt Securities are to be used to provide funds to repay
long- and short-term debt and for the general corporate purposes of the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(0.52) 5.62 5.15 4.51 4.53 0.92 4.51
</TABLE>
For the purpose of calculating this ratio, earnings consist of income
before income taxes, extraordinary loss, cumulative effect of changes in
accounting principles and fixed charges. Fixed charges include interest on
indebtedness and one-third of rental expense (the portion of rentals
representative of the interest factor).
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth certain general
terms and provisions of the Debt Securities of any series to which any
Prospectus Supplement may relate. The particular terms and provisions of the
series of Debt Securities offered by a Prospectus Supplement, and the extent to
which such general terms and provisions described below may apply thereto, will
be described in the Prospectus Supplement relating to such series of Debt
Securities.
3
<PAGE> 9
The Debt Securities are to be issued under an Indenture dated as of October
7, 1997 ("Indenture"), from the Company to The Bank of New York, as Trustee
("Trustee"). The following summaries of certain provisions of the Debt
Securities and the Indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Indenture, including the definitions therein of certain terms. Particular
sections of the Indenture which are relevant to the discussion are cited
parenthetically. Wherever particular sections or defined terms of the Indenture
are referred to, it is intended that such sections or defined terms shall be
incorporated herein by reference. "Principal" when used herein includes, when
appropriate, the premium, if any, on the Debt Securities.
GENERAL
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder, and additional debt securities may be issued thereunder up to
the aggregate principal amount which may be authorized from time to time by, or
pursuant to, a resolution of the Company's Board of Directors. Reference is made
to the Prospectus Supplement for the following terms of the particular series of
Debt Securities being offered hereby: (i) the title of the Debt Securities of
the series; (ii) if other than U.S. dollars, the currency or currencies (which
may include composite currencies such as the European Currency Unit) of payment
of principal of and interest on the Debt Securities of the series; (iii) any
limit upon the aggregate principal amount of the Debt Securities of the series;
(iv) the date or dates on which the principal of the Debt Securities of the
series will mature; (v) the rate or rates (or manner of calculation thereof), if
any, at which the Debt Securities of the series will bear interest, the date or
dates from which any such interest will accrue and on which such interest will
be payable, and, with respect to Debt Securities of the series in registered
form, the record date for the interest payable on any interest payment date and
the extent to which, or the manner in which, any interest payable on a global
security on an interest payment date will be paid if other than in the manner
described under "-- Book-Entry Securities"; (vi) the place or places where the
principal of and interest on the Debt Securities of the series will be payable;
(vii) any redemption or sinking fund provisions; (viii) if other than the
principal amount thereof, the portion of the principal amount of Debt Securities
of the series which will be payable upon declaration of acceleration of the
maturity thereof; (ix) whether the Debt Securities of the series will be
issuable in registered or bearer form or both, whether any such Debt Securities
are to be issuable initially in temporary global form and whether any such Debt
Securities are to be issuable in permanent global form with or without coupons
and, if so, whether beneficial owners of interests in any such permanent global
Debt Security may exchange such interests for Debt Securities of like tenor of
any authorized form and denomination and the circumstances under which any such
exchange may occur, any restrictions applicable to the offer, sale or delivery
of Debt Securities in bearer form ("Bearer Debt Securities") and whether, and
the terms upon which, Bearer Debt Securities will be exchangeable for Debt
Securities in registered form ("Registered Debt Securities") and vice versa; (x)
whether and under what circumstances the Company will pay additional amounts on
the Debt Securities of the series held by a person who is not a U.S. person (as
defined below) in respect of taxes or similar charges withheld or deducted and,
if so, whether the Company will have the option to redeem such Debt Securities
rather than pay such additional amounts; (xi) any index, price or formula used
to determine the amount of payments of principal of, premium, if any, and
interest on the Debt Securities of the series; and (xii)any additional
provisions or other special terms not inconsistent with the provisions of the
Indenture, including any terms which may be required by or advisable under
United States laws or regulations or advisable in connection with the marketing
of Debt Securities of such series. (Sections 2.01 and 2.02.)
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of the Company and will rank on a parity with the Company's other
unsecured and unsubordinated indebtedness.
Debt Securities of any series may be issued as Registered Debt Securities
or Bearer Debt Securities or both, or in the form of one or more global
securities, as specified in the terms of the series. Unless otherwise indicated
in the Prospectus Supplement, Debt Securities will be issued in denominations of
U.S. $1,000 and integral multiples thereof. Bearer Debt Securities will be
offered, sold and delivered only outside the United States to non-U.S. persons
and to offices located outside the United States of certain U.S. financial
institutions. For purposes of this Prospectus, "United States" means the United
States of America, including
4
<PAGE> 10
the states and the District of Columbia, its territories, its possessions and
all other areas subject to its jurisdiction. "U.S. person" means a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or a political
subdivision thereof, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source. Any special
federal income tax considerations applicable to Bearer Debt Securities will be
described in the Prospectus Supplement relating thereto.
Except as set forth in an applicable Prospectus Supplement, interest on
Bearer Debt Securities will be payable only against presentation and surrender
of the coupons for the interest installments evidenced thereby as they mature at
a paying agency of the Company located outside of the United States. (Section
2.05(c).) The Company will maintain such an agency for a period of two years
after the principal of such Bearer Debt Securities has become due and payable.
During any period thereafter for which it is necessary in order to conform to
United States tax law or regulations, the Company will maintain a paying agent
outside the United States and its possessions to which the Bearer Debt
Securities may be presented for payment and will provide the necessary funds
therefor to such paying agent upon reasonable notice. (Section 2.04.) No payment
with respect to any Bearer Debt Securities will be made at any office or agency
in the United States or by check mailed in the United States or by transfer to
an account maintained with a bank located in the United States. Notwithstanding
the foregoing, payments on Bearer Debt Securities denominated and payable in
U.S. dollars will be made in the United States if (but only if) payment of the
full amount thereof in U.S. dollars at each office of each paying agent outside
the United States appointed and maintained by the Company is illegal or
effectively precluded by exchange controls or other similar restrictions.
(Section 2.05.)
Registration of transfer of Registered Debt Securities may be requested
upon surrender thereof at an agency of the Company maintained for such purpose
("Registrar") and upon fulfillment of all other requirements of such Registrar.
(Section 2.08(a).) Bearer Debt Securities and the coupons related thereto will
be transferable by delivery. (Section 2.08(e).)
Debt Securities may be issued under the Indenture as Original Issue
Discount Securities to be offered and sold at a substantial discount from the
principal amount thereof. Special Federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating to such Original Issue Discount Securities. "Original Issue Discount
Security" means any Debt Security which provides for an amount less than the
stated principal amount thereof to be due and payable upon declaration of
acceleration of the maturity thereof upon the occurrence of an event of default
and the continuation thereof. (Section 1.01.)
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest on Registered Debt Securities (other than a global
security) will be made at the office of such paying agent or paying agents as
the Company may designate from time to time, except that, at the option of the
Company, payment of any interest may be made (i) by check mailed to the address
of the payee entitled thereto or (ii) by wire transfer to an account maintained
by such payee. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Registered Debt Securities
will be made to the person in whose name such registered Debt Security is
registered at the close of business on the record date for such interest
payment.
If the purchase price of any of the Debt Securities is denominated in other
than U.S. dollars or if the principal of and interest on any series of Debt
Securities is payable in other than U.S. dollars, then the restrictions,
elections, general tax considerations, specific terms and other information with
respect to such issue of Debt Securities and such currency or currencies will be
set forth in the applicable Prospectus Supplement.
BOOK-ENTRY SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with or on behalf
of a Depository (the "Depository") identified in the Prospectus Supplement
relating to such series. The specific terms of the Depository arrangement with
respect to any Debt Securities of a series will be described in the Prospectus
Supplement relating to such series. The
5
<PAGE> 11
Company anticipates that the following provisions will apply to all Depository
arrangements for Registered Debt Securities.
Unless otherwise specified in an applicable Prospectus Supplement, Debt
Securities which are to be represented by a global security to be deposited with
or on behalf of a Depository will be represented by a global security registered
in the name of such Depository or its nominee. Upon issuance of a global
security in registered form, the Depository of such global security will credit,
on its book-entry registration and transfer system, the respective principal
amounts of the Debt Securities represented by such global security to the
accounts of institutions that have accounts with such Depository or its nominee
("Participants"). The accounts to be credited shall be designated by the
underwriters or agents of such Debt Securities, or by the Company if such Debt
Securities are offered and sold directly by the Company. Ownership of beneficial
interests in a global security will be limited to Participants or persons that
may hold interests through Participants. Ownership of beneficial interests in
such global securities will be shown on, and the transfer of that ownership will
be effected only through records, maintained by the Depository (with respect to
Participants' interests) or its nominee for such global security or by
Participants or persons that hold through Participants. The laws of some
jurisdictions require that certain purchasers of Debt Securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a global security.
So long as the Depository for a global security in registered form, or its
nominee, is the registered owner of such global security, such Depository or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such global security for all purposes under
the Indenture. Except as set forth below, owners of beneficial interests in such
global securities will not be entitled to have Debt Securities of the series
represented by such global security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Principal, premium, if any, and interest payments on Debt Securities
registered in the name of or held by a Depository or its nominee will be made to
the Depository or its nominee, as the case may be, as the registered owner or
the holder of the global security representing such Debt Securities. Neither the
Company, the Trustee, or any paying agent for such Debt Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global security
for such Debt Securities or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
The Company expects that the Depository for Debt Securities of a series,
upon receipt of any payments of principal or interest in respect of a global
security, will credit immediately the accounts of the related Participants with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such global security as shown on the records of such
Depository. The Company also expects that payments by Participants to owners of
beneficial interests in such global security held through such Participants will
be governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participants.
Unless and until it is exchanged in whole or in part for Debt Securities in
definitive form in accordance with the terms of the Debt Securities, a global
security may not be transferred except as a whole by the Depository for such
global security to a nominee of such Depository or by a nominee of such
Depository to such Depository or another nominee of such Depository or by such
Depository or any such nominee to a successor of such Depository or a nominee of
such successor. If a Depository for Debt Securities is at any time unwilling or
unable to continue as depository or if at any time such Depository ceases to be
a clearing agency registered under the Exchange Act, and a successor Depository
is not appointed by the Company within 90 days, the Company will issue Debt
Securities in definitive registered form in exchange for the global security
representing such Debt Securities. In addition, the Company may at any time and
in its sole discretion determine not to have any Debt Securities in registered
form represented by one or more global securities and, in such event, will issue
Debt Securities in definitive registered form in exchange for all global
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<PAGE> 12
securities representing such Debt Securities. Further, if an event of default,
or an event which, with the giving of notice or lapse of time, or both, would
constitute an event of default, under the Indenture occurs and is continuing
with respect to the Debt Securities of a series, or if the Company so specifies
with respect to the Debt Securities of a series, the Depository may exchange a
global security representing Debt Securities of such series for Debt Securities
of such series in definitive registered form. In any such instance, an owner of
a beneficial interest in a global security will be entitled to physical delivery
in definitive form of Debt Securities of the series represented by such global
security equal in principal amount to such beneficial interest and to have such
Debt Securities registered in its name.
EXCHANGE OF SECURITIES
Registered Debt Securities in definitive form may be exchanged for an equal
aggregate principal amount of Registered Debt Securities of the same series and
date of maturity in such authorized denominations as may be requested upon
surrender of the Registered Debt Securities to the Registrar and upon
fulfillment of all other requirements of such Registrar. (Section 2.08(a).)
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, Bearer Debt
Securities in definitive form may be exchanged for an equal aggregate principal
amount of registered or Bearer Debt Securities of the same series and date of
maturity in such authorized denominations as may be requested upon surrender of
the Bearer Debt Securities with all unpaid coupons relating thereto (except as
may otherwise be provided in the Debt Securities) to the Registrar (or a paying
agent if the exchange is for bearer securities) and upon fulfillment of all
other requirements of such Registrar. (Section 2.08(b).) Registered Debt
Securities may not be exchanged for Bearer Debt Securities.
LIEN ON ASSETS
If at any time the Company mortgages, pledges or otherwise subjects to any
lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, the Company will secure the
outstanding Debt Securities, and any other obligations of the Company which may
then be outstanding and entitled to the benefit of a covenant similar in effect
to this covenant, equally and ratably with the indebtedness or obligations
secured by such mortgage, pledge or lien, for as long as any such indebtedness
or obligation is so secured. The foregoing covenant does not apply to the
creation, extension, renewal or refunding of purchase-money mortgages or liens,
or to the making of any deposit or pledge to obtain the benefits of any law
relating to workers' compensation, unemployment insurance, old age pensions or
other social security, or with any court, board, commission or governmental
agency as security incident to the proper conduct of any proceeding before it.
Nothing contained in the Indenture prevents a person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
the Company from mortgaging, pledging or subjecting to any lien any property or
assets, whether or not acquired from the Company. (Section 4.02.)
SUCCESSOR ENTITY
The Company may not consolidate with or merge into, or be merged into, or
transfer or lease its property and assets substantially as an entirety to,
another entity unless the successor entity is a U.S. corporation and assumes all
the obligations of the Company under the Debt Securities and any coupons related
thereto and the Indenture. Thereafter, except in the case of a lease, all such
obligations of the Company shall terminate. (Section 5.01.)
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Debt Securities: (i) default in the payment of
interest on any Debt Security of such series for 90 days; (ii) default in the
payment of the principal of any Debt Security of such series when the same
becomes due and payable at maturity, upon redemption, or otherwise; (iii)
failure by the Company for 90 days after notice to it to comply with any of its
other agreements in the Debt Securities of such series, in the Indenture, in any
supplemental
7
<PAGE> 13
indenture under which the Debt Securities of that series may have been issued
(other than covenants relating only to other series); and (iv) certain events of
bankruptcy or insolvency. (Section 6.01.) If an Event of Default occurs with
respect to the Debt Securities of any series and is continuing, the Trustee or
the holders of at least 25% in principal amount of all of the outstanding Debt
Securities of that series may declare the principal (or, if the Debt Securities
of that series are Original Issue Discount Debt Securities, such portion of the
principal amount as may be specified in the terms of that series) of, and any
accrued interest on, all the Debt Securities of that series to be due and
payable. Upon such declaration, such principal (or, in the case of Original
Issue Discount Debt Securities, such specified amount) and any accrued interest
will become due and payable immediately. (Section 6.02.)
Debt Securityholders may not enforce the Indenture or the Debt Securities,
except as provided in the Indenture. (Section 6.06.) The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Debt
Securities. (Section 7.07.) Subject to certain limitations, holders of a
majority in principal amount of the Debt Securities of each series affected may
direct the Trustee in its exercise of any trust power with respect to Debt
Securities of that series. (Section 6.05.) The Trustee may withhold from Debt
Securityholders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. (Section 7.05.)
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Debt Securities may be
amended or supplemented by the Company and the Trustee with the written consent
of the holders of a majority in principal amount of the outstanding Debt
Securities of each series affected by the amendment or supplement (with each
such series voting as a class), or compliance with any provision may be waived
with the consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series affected by such waiver (with each
such series voting as a class). However, without the consent of each Debt
Securityholder affected, an amendment or waiver may not (i) reduce the amount of
Debt Securities whose holders must consent to an amendment or waiver; (ii)
reduce the rate of or change the time for payment of interest on any Debt
Security; (iii) reduce the principal of, or change the fixed maturity of, any
Debt Security; (iv) waive a default in the payment of the principal of or
interest on any Debt Security; (v) make any Debt Security payable in currency
other than that stated in the Debt Security; or (vi) impair the right to
institute suit for the enforcement of any payment on or with respect to any Debt
Securities. (Section 9.02.)
The Indenture may be amended or supplemented without the consent of any
Debt Securityholder (i) to cure any ambiguity, defect or inconsistency in the
Indenture or in the Debt Securities of any series; (ii) to provide for the
issuance of, and establish the form, terms and conditions of, a series of Debt
Securities or to establish the form of any certifications required to be
furnished pursuant to the terms of the Indenture or any series of Debt
Securities; (iii) to secure the Debt Securities pursuant to Section 4.02 of the
Indenture; (iv) to provide for the assumption of all the obligations of the
Company under the Debt Securities and any coupons related thereto and the
Indenture in connection with a merger, consolidation or transfer or lease of the
Company's property and assets substantially as an entirety as provided for in
the Indenture; (v) to provide for uncertificated Debt Securities in addition to
or in place of certificated Debt Securities; (vi) to add to rights of Debt
Securityholders or surrender any right or power conferred on the Company; or
(vii) to make any change that does not adversely affect the rights of any Debt
Securityholder. (Section 9.01.)
CONCERNING THE TRUSTEE
The Company maintains banking relationships in the ordinary course of
business with the Trustee. The Trustee is also the trustee under other
indentures with the Company and SBC, as well as with SBC Communications Capital
Corporation, Southwestern Bell Telephone Company, Pacific Telesis Group and
PacTel Capital Resources, each of which is a wholly-owned subsidiary of SBC.
8
<PAGE> 14
PLAN OF DISTRIBUTION
GENERAL
The Company may sell Debt Securities to one or more underwriters for public
offering and sale by them or may sell Debt Securities to investors directly or
through agents. Any such underwriter or agent involved in the offer and sale of
the Debt Securities will be named in an applicable Prospectus Supplement.
Underwriters may offer and sell the Debt Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Company also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Debt
Securities upon the terms and conditions as shall be set forth in any Prospectus
Supplement. In connection with the sale of Debt Securities, underwriters may be
deemed to have received compensation from the Company in the form of
underwriting discounts or commissions and may also receive commissions from
purchasers of Debt Securities for whom they may act as agent. Underwriters may
sell Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions (which may be changed from time to time) from
the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of Debt Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Debt Securities may be
deemed to be underwriters, and any discounts and commissions received by them
and any profit realized by them on resale of the Debt Securities may be deemed
to be underwriting discounts and commissions, under the Securities Act.
Underwriters, dealers and agents may be entitled, under agreements with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act, and to
reimbursement by the Company for certain expenses.
All Debt Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Debt Securities are sold by the Company
for public offering and sale may make a market in such Debt Securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of or the trading markets for any Debt Securities.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
Underwriters participating in this offering may engage in over-allotment,
stabilizing transactions, syndicate covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the Debt Securities in the
open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when the Debt Securities originally
sold by such syndicate member are purchased in a syndicate covering transaction
to cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the Debt
Securities to be higher than it would otherwise be in the absence of such
transactions.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date or
dates. Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all
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<PAGE> 15
cases such institutions must be approved by the Company. The obligations of any
purchaser under any such contract will not be subject to any conditions except
that (a) the purchase of the Debt Securities shall not at the time of delivery
be prohibited under the laws of the jurisdiction to which such purchaser is
subject, and (b) if the Debt Securities are also being sold to underwriters, the
Company shall have sold to such underwriters the Debt Securities not sold for
delayed delivery. The underwriters, dealers and such other persons will not have
any responsibility in respect of the validity or performance of such contracts.
LEGAL OPINIONS
The validity of the Debt Securities offered hereby will be passed upon for
the Company by Counsel of the Company, and for any underwriters, dealers or
agents by Sullivan & Cromwell, New York, New York. Sullivan & Cromwell will rely
as to matters of California law on the opinion of Richard W. Odgers, Counsel of
the Company. As of October 1, 1997, Richard W. Odgers owned 1,887 shares of SBC
stock and options to purchase 108,079 shares of such stock.
EXPERTS
The financial statements and financial statement schedules of the Company
appearing in the Company's Annual Report (Form 10-K) for the year ended December
31, 1996 have been audited by Coopers & Lybrand L.L.P., independent accountants,
as set forth in their report therein dated February 27, 1997, and incorporated
herein by reference. Such financial statements and financial statement schedules
are incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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===============================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
---------------------------------
TABLE OF CONTENTS
---------------------------------
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds....................... S-2
Description of the Notes.............. S-3
Underwriting.......................... S-4
Legal Opinions........................ S-5
PROSPECTUS
Available Information................. 2
Incorporation of Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of Debt Securities........ 3
Plan of Distribution.................. 9
Legal Opinions........................ 10
Experts............................... 10
</TABLE>
===============================================================================
===============================================================================
$200,000,000
PACIFIC BELL
6 1/8% NOTES DUE
FEBRUARY 15, 2008
-----------------------------------------
PROSPECTUS SUPPLEMENT
-----------------------------------------
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
FEBRUARY 10, 1998
===============================================================================
