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): January 21, 1997
THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 1-6654 06-0542646
(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 -
Southern New England Telecommunications Corporation ("SNET"), parent
of the registrant, announced that fourth quarter net income was $44.3
million or $0.67 per share compared with a net loss for the fourth quarter
1995 of $(646.4) million or $(9.92) per share after an extraordinary
non-cash charge related to the adoption of an accounting methodology used
by companies in competitive environments. Fourth quarter 1995 operating
earnings before that charge were $0.62 per share. Consolidated revenues and
sales for the fourth quarter 1996 were up 6.1 percent to $491.9 million.
Net income for 1996 was $192.8 million or $2.94 per share compared
with a net loss for 1995 of $(518.3) million or $(7.99) per share after the
extraordinary charge and previously announced special items. Operating
earnings for 1995 before that charge and special items were $2.72 per
share. Consolidated revenues and sales for the year were up 6.9 percent
to $1,941.9 million. Wireline revenues increased 6.1 percent as
interstate/international long distance revenues more than doubled, access
lines grew 4.3 percent or a record 90,000 lines in 1996 and SNET
had strong growth in vertical services like SNET SmartLink. The increase
in access lines resulted from higher centrex demand from business customers
as well as second residential lines. Wireless revenues climbed 26.6
percent to $219.2 million, partly due to cellular acquisitions. Information
and Entertainment revenues were up 1.8 percent to $184.2 million.
SNET also announced that it is conducting a detailed examination of
Year 2000 implications for its computer data systems and business processes
and estimates that related expenses will be in the $15-$20 million range
for 1997.
The news release providing these announcements 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 January 21, 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.
THE SOUTHERN NEW ENGLAND
TELEPHONE COMPANY
Dated: January 22, 1997 By: /s/Madelyn M. DeMatteo
Madelyn M. DeMatteo
Secretary
- 3 -
THE SOUTHERN NEW ENGLAND TELEPHONE COMPANY
FORM 8-K
EXHIBIT INDEX
Exhibit
Number
20 News release issued January 21, 1997.
SNET News Release
227 Church Street
New Haven, Connecticut 06510
January 21, 1997
For more information analysts contact: Kevin Moore
203-771-2136
SNET Earnings Per Share Are $0.67 For The Fourth
Quarter And $2.94 for 1996
NEW HAVEN, Conn., January 21, Southern New England
Telecommunications Corporation (SNET) (NYSE: SNG)
announced today that fourth quarter net income was
$44.3 million or $0.67 per share compared with a net
loss for fourth-quarter 1995 of $(646.4) million or
$(9.92) per share after an extraordinary non-cash
charge the company took as it adopted an accounting
methodology used by companies in competitive
environments. Fourth quarter 1995 operating earnings
before that charge were $0.62 per share.
"This is our third consecutive year and twelfth
consecutive quarter of growth," said Daniel J. Miglio,
SNET's chairman and chief executive officer. He added,
"Strong revenues for the quarter and year reflect our
ability to capitalize on growth opportunities in long
distance and wireless. In 1996, we led the industry in
introducing billing to the nearest second, and we
initiated a very effective campaign promoting the
advantages of our single bill, which enabled us to
capture a substantial share of the long-distance
market. We achieved double-digit growth in wireless,
-more-
while significantly improving operating margins. And
access lines grew at a healthy clip.
"These are dramatically changing times for this
industry. We are poised to take full advantage of the
growth opportunities that change offers, and I am
enthusiastic about our upcoming cable TV offering,
which we are preparing for launch in the Spring."
Consolidated revenues and sales for the fourth
quarter were up 6.1 percent to $491.9 million.
Revenues in the wireline business increased 7.7 percent
to $400.3 million as revenues from SNET's
interstate/international long-distance business
continued their climb by more than doubling over last
year. Instate toll dropped 9.8 percent because of
lower volume and discounted pricing plans resulting
from increasing competition. Local-service revenues
were up 4.7 percent, and access revenues rose 7.0
percent. Revenues for the wireless business grew 13.8
percent to $58.7 million as the customer base increased
21 percent. Information and Entertainment revenues
were up 2.0 percent to $46.1 million.
Consolidated operating expenses for the quarter
were up 9.5 percent. Continuing the trend from the
third quarter, wireline expenses were up 26.4 percent
or $54.5 million, reflecting higher expenses to serve
SNET's expanding interstate/international long-distance
customer base, higher employee-related costs to meet
-more-
strong service demand as well as higher bad-debt
expenses. Wireless had lower distribution and fraud
costs and expenses declined 11.0 percent. Information
and Entertainment expenses were flat.
For the fourth quarter and the year, SNET benefited
from lower state taxes due mainly to tax true-ups and
tax credits.
1996 Results
Net income for 1996 was $192.8 million or $2.94 per
share compared with a net loss for 1995 of $(518.3)
million or $(7.99) after the extraordinary charge and
previously announced special items. Operating earnings
for 1995 before that charge and special items were
$2.72 per share. Consolidated revenues and sales for
the year were up 6.9 percent to $1,941.9 million.
Wireline revenues increased 6.1 percent as
interstate/international long
distance revenues more than doubled, access lines grew
4.3 percent or a record 90,000 lines in 1996 and the
company had strong growth in vertical services like
SNET SmartLink. The increase in access lines resulted
from higher centrex demand from business customers as
well as second residential lines. Wireless revenues
climbed 26.6 percent to $219.2 million, partly due to
cellular acquisitions. Information and Entertainment
revenues were up 1.8 percent to $184.2 million.
Consolidated operating expenses for the year were
up 7.9 percent. Wireline expenses increased 11.6
-more-
percent to support growth in SNET's expanding
interstate/international toll business and because of
increased expenses for marketing as well as bad debts.
Wireless expenses, even including the cellular
acquisitions, were flat for the year. Information and
Entertainment expenses were down 5.6 percent for 1996
compared with 1995 when the company was offering TV
services in its video dialtone trial.
Depreciation and amortization expenses were up 2.9
percent for the year and interest expense was up 3.3
percent.
The company also announced that it is conducting a
detailed examination of Year 2000 implications for its
computer data systems and business processes and
estimates that related expenses will be in the $15-$20
million range for 1997.
SNET is a Connecticut-based telecommunications
company reaching beyond its traditional borders to
offer wireline, wireless and information and
entertainment services, including local, national and
international calling; mobile communications; and
publishing, information and advertising. The company
is building I-SNET, Connecticut's broadband,
information superhighway to serve all its customers.
-XXX-
SNET
Preliminary Summary of Consolidated Results
For the Three Months Ended December 31, 1996
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 3 Months Ended Percent
December 31, Change
1996 1995
INCOME STATEMENT
Revenues and Sales $491.9 $463.6 6.1%
Costs and Expenses:
Operating and maintenance 299.1 273.2 9.5%
Depreciation
and amortization 90.2 90.7 (.6%)
Taxes other than income 13.2 14.0 (5.7%)
Total Costs and Expenses 402.5 377.9 6.5%
Operating Income 89.4 85.7 4.3%
Interest expense 21.5 24.6 (12.6%)
Other income, net .7 5.8
Income Before Income Taxes 68.6 66.9 2.5%
Income taxes 24.3 26.2 (7.3%)
Income Before
Extraordinary Charge 44.3 40.7 8.8%
Extraordinary Charge,
Net of Tax - (687.1)
Net Income (Loss) $44.3 $(646.4)
Weighted Average Common Shares
Outstanding (thousands) 65,738 65,150 .9%
EARNINGS (LOSS) PER SHARE
Income Before
Extraordinary Charge $0.67 $ 0.62 8.1%
Extraordinary Charge,
Net of Tax - (10.54)*
Net Income (Loss) $0.67 $(9.92)
STATISTICS
Access Lines in Service
(thousands) 2,163 2,073 4.3%
Interstate Minutes of Use
(millions) 2,016 1,878 7.3%
* Per common share is computed independently for the quarter
based on weighted average common shares outstanding for the
quarter. The independent calculations resulted in a
difference of $0.05 between loss per share for
the quarter and for the year.
SNET
Preliminary Summary of Consolidated Results
For the Twelve Months Ended December 31, 1996
(Dollars in Millions Except Per Share Amounts)
(Unaudited)
For the 12 Months Ended Percent
December 31, Change
1996 1995
INCOME STATEMENT
Revenues and Sales $1,941.9 $1,816.4 6.9%
Costs and Expenses:
Operating and maintenance 1,149.0 1,065.1 7.9%
Depreciation
and amortization 356.1 346.0 2.9%
Taxes other than income 54.6 56.5 (3.4%)
Total Costs and Expenses 1,559.7 1,467.6 6.3%
Operating Income 382.2 348.8 9.6%
Interest expense 88.7 85.9 3.3%
Other income, net 6.9 15.5
Income Before Income Taxes 300.4 278.4 7.9%
Income taxes 107.6 109.6 (1.8%)
Income Before
Extraordinary Charge 192.8 168.8 14.2%
Extraordinary Charge,
Net of Tax - (687.1)
Net Income (Loss) $192.8 $(518.3)
Weighted Average Common Shares
Outstanding (thousands) 65,589 64,888 1.1%
EARNINGS (LOSS) PER SHARE
Income Before
Extraordinary Charge $2.94 $ 2.60 * 13.1%
Extraordinary Charge,
Net of Tax - (10.59) **
Net Income (Loss) $2.94 $(7.99)
STATISTICS
Access Lines in Service
(thousands) 2,163 2,073 4.3%
Interstate Minutes of Use
(millions) 7,906 7,298 8.3%
* Excluding 1995 special items announced previously, earnings
per share would have increased to $2.72 in 1995.
** Per common share is computed independently for the year
based on weighted average common shares outstanding for
the year. The independent calculations resulted in a
difference of $0.05 between loss per share for the quarter
and for the year.
