SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 23, 1997
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 1-9157 06-1157778
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
227 Church Street, New Haven, Connecticut 06510
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 771-5200
Not Applicable
(Former name or former address, if changed since last report)
- 1 -
Item 5. Other events.
The registrant announced today that first quarter net income was
$42.4 million or $0.64 per share compared with $52.2 million or $0.80 per
share in first-quarter 1996. The 1997 figures include an extraordinary
after-tax charge of $3.7 million or $0.06 per share for redeeming debt.
Income before the extraordinary charge was $46.1 million or $0.70 per
share, down 12.5 percent from the 1996 quarter.
Consolidated revenues and sales for the first quarter were up 1.8 percent
to $482.7 million.
The news release providing the announcement is filed as an exhibit
hereto and is incorporated herein by reference.
Item 7. Financial Statements, Pro forma Financial
Information and Exhibits.
Exhibit 20. News release issued April 23, 1997.
- 2 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
SOUTHERN NEW ENGLAND
TELECOMMUNICATIONS CORPORATION
Dated: April 23, 1997 By: /s/Madelyn M. DeMatteo
Madelyn M. DeMatteo
Secretary
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SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
FORM 8-K
EXHIBIT INDEX
Exhibit
Number
20 News release issued April 23, 1997.
SNET News Release
227 Church Street
New Haven, Connecticut 06510
April 23, 1997
For more information analysts contact: Jim Magrone
(203) 771-4662
SNET First Quarter EPS $0.70 Before Extraordinary Charge
NEW HAVEN, Conn., April 23, Southern New England
Telecommunications Corporation (SNET) (NYSE: SNG)
announced today that first quarter net income was $42.4
million or $0.64 per share compared with $52.2 million
or $0.80 per share in first-quarter 1996. The 1997
figures include an extraordinary after-tax charge of
$3.7 million or $0.06 per share for redeeming debt.
Income before the extraordinary charge was $46.1 million
or $0.70 per share, down 12.5 percent from the 1996
quarter.
"In the first quarter of 1997, we saw a significant
increase in competitive activity for wireline and
wireless customers. We in turn have significantly
increased our emphasis on sales and marketing campaigns
to leverage our broad array of products and our
knowledge of our customers," said Daniel J. Miglio, SNET
Chairman and Chief Executive Officer.
He added, "The competitive arena in Connecticut has
changed since the first quarter of 1996 when our results
were strengthened by unusually severe winter weather
that stimulated calling. Since then, the entire state
has been converted to equal access, and we
-more-
have added people to our workforce to ensure that customer
service is top notch. We also established the cornerstone of
our entertainment business by launching SNET americast,
our exciting cable-TV entrant. We have an aggressive
rollout planned for our statewide cable-TV franchise."
Revenues
Consolidated revenues and sales for the quarter were
up 1.8 percent to $482.7 million.
Revenues in the wireline business grew 2.6 percent
to $396.0 million. Interstate/international toll
revenues increased 69.4 percent as the company continued
to demonstrate its success in the long-distance market.
In-state toll revenues declined 19.6 percent. This
reflected the full impact of equal-access implementation
combined with aggressive promotions from competitors,
and it also reflected exceptionally high revenues in
1996 from severe weather that caused many people to stay
inside and on the phone. Access lines continued to grow
at record levels, increasing 4.8 percent or about
100,000 lines from the first quarter last year. This,
along with continued growth in vertical services like
SNET SmartLink[R] increased local-service revenue by 2.9
percent. Network access revenues grew 5.8 percent.
Revenues for SNET's wireless business were up 7.4
percent to $50.9 million with improved margins. A 16.0
percent increase in the customer base offset lower
roaming revenues.
Revenues from the company's Information and
Entertainment business were flat.
-more-
Expenses
Consolidated operating expenses for the first
quarter increased 4.8 percent to $281.6 million.
Approximately $3 million of that went toward beginning
to reprogram computers for the Year 2000.
Operating and maintenance expenses in the wireline
business increased 9.8 percent or $21.5 million with
almost half of that going to support continued growth in
SNET's interstate and international long-distance
business. In addition, there were higher employee-
related and contract-service costs to meet strong demand
that began in the second half of 1996 and continues
today. The first-quarter 1996 comparison period also
included the effect of a major, early retirement offer.
Fees for network software and wireline bad-debt expenses
rose from first-quarter 1996.
Expenses in the wireless business decreased 17.0
percent or $7.6 million primarily because of lower
customer-acquisition costs.
Expenses for the Information and Entertainment
business increased $2.0 million to support SNET's
growing Internet access customer base and the rollout of
SNET americast, SNET's cable-TV product.
Depreciation and amortization expenses rose 2.7
percent for the first quarter as a result of more plant,
property and equipment as SNET continues to build its
broadband network. The category "other income" declined
because of a 1996 gain on the sale of wireless equipment
and lower interest income.
SNET is a Connecticut-based company reaching beyond its
-more-
traditional borders to offer wireline, wireless and
information and entertainment services, including its
new cable-TV product called SNET americast; local,
national, and international calling; mobile
communications; and publishing, information and
advertising. The company is building I-SNET[SM], a
statewide, information superhighway that brings to
customers a full array of information, communications,
and entertainment services.
##
SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended March 31, 1997
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 3 Months Ended Percent
March 31, Change
1997 1996
INCOME STATEMENT
Revenues and Sales $482.7 $474.0 1.8%
Costs and Expenses:
Operating and maintenance 281.6 268.7 4.8%
Depreciation
and amortization 91.6 89.2 2.7%
Taxes other than income 13.1 14.0 (6.4%)
Total Costs and Expenses 386.3 371.9 3.9%
Operating Income 96.4 102.1 (5.6%)
Interest expense 22.7 22.6 .4%
Other income, net .1 3.7
Income Before Income Taxes 73.8 83.2 (11.3%)
Income taxes 27.7 31.0 (10.6%)
Income Before
Extraordinary Charge 46.1 52.2 (11.7%)
Extraordinary Charge,
Net of Tax (3.7) -
Net Income $42.4 $52.2 (18.8%)
Weighted Average Common Shares
Outstanding (thousands) 65,844 65,384 .7%
EARNINGS PER SHARE
Income Before
Extraordinary Charge $0.70 $0.80 (12.5%)
Extraordinary Charge,
Net of Tax (0.06) -
Net Income $0.64 $0.80 (20.0%)
STATISTICS
Access Lines in Service
(thousands) 2,190 2,090 4.8%
Interstate Minutes of Use
(millions) 2,048 1,972 3.9%
SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended March 31, 1997
(Dollars in Millions)
(Unaudited)
For the 3 Months Ended Percent
March 31, Change
1997 1996
REVENUES AND SALES
Wireline
Local Service $169.4 $164.7 2.9%
Network Access 102.6 97.0 5.8%
Intrastate Toll 53.4 66.4 (19.6%)
Interstate and
International Toll 30.5 18.0 69.4%
Premium Services and
Equipment Sales 27.7 25.6 8.2%
Other 12.4 14.4 (13.9%)
Total Wireline 396.0 386.1 2.6%
Wireless 50.9 47.4 7.4%
Information and Entertainment 46.7 46.0 1.5%
Other * (10.9) (5.5)
Total Revenues and Sales $482.7 $474.0 1.8%
OPERATING CASH FLOW (EBITDA)
Wireline $143.9 $154.3 (6.7%)
Wireless 13.0 2.0
Information and Entertainment 25.3 26.7 (5.2%)
Other * 5.8 8.3
Total Operating Cash Flow $188.0 $191.3 (1.7%)
* Includes Real Estate and Holding Company
operations and eliminations.
SNET
Preliminary Operating and Financial Statistics
(Unaudited)
Percent
At March 31, Change
1997 1996
Access Lines in Service
(thousands) 2,190 2,090 4.8%
Second Access Lines in Service
(thousands) 106 81 30.9%
Interstate & International Toll
Access Line Subscribers
(thousands) 768 440 74.5%
Cellular Subscribers
(thousands) 399 344 16.0%
Telephone Company
Wireline Employees 8,233 7,792 5.7%
Total Employees 9,265 8,981 3.2%
Shareholders' Equity
(millions) $485.6 $385.3 26.0%
Common Shares Outstanding
(thousands) 65,800 65,264 .8%
Debt Outstanding (millions):
Short-term $189.1 $201.0 (5.9%)
Long-term $1,180.3 $1,174.3 .5%
SNET
Preliminary Operating and Financial Statistics
(Unaudited)
For the 3 Months Ended Percent
March 31, Change
1997 1996
Minutes of Use (millions):
Interstate Access 2,048 1,972 3.9%
Intrastate Access 341 220 55.0%
Intrastate Message Volume (thousands):
Toll 86,153 102,394 (15.9%)
WATS 18,149 19,268 (5.8%)
Weighted Average Common Shares
Outstanding (thousands) 65,844 65,384 .7%
