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: October 18, 1995
SOUTHWESTERN BELL TELEPHONE COMPANY
A Missouri Corporation
Commission File No. 1-2346
IRS Employer Identification No. 43-0529710
One Bell Center, St. Louis, Missouri 63101-3099
Telephone Number (314) 235-9800
Item 5. Other Events
Southwestern Bell Telephone Company (Telephone Company) is filing
herewith comparative unaudited financial information as of
September 30, 1995, or the quarter then ended.
On September 29, 1995, SBC Communications Inc. (SBC) announced
that the Telephone Company was discontinuing the use of Statement
of Financial Accounting Standards No. 71 (FAS 71), which outlines
accounting standards required for public utilities and certain
other regulated companies. The change resulted in a non-cash,
extraordinary charge to net income of $2.8 billion in the third
quarter of 1995. This charge primarily represents an adjustment
to the book value of telephone plant through an increase in
accumulated depreciation. This increase reflects the effect of
adopting asset lives which are shorter than those set by
regulators and which more closely reflect the economic and
technological lives of the plant.
On October 11, 1995, SBC announced that the Telephone Company
had reached a settlement with the Oklahoma Corporation Commission
and other parties that resolves the pending court appeals of the
1992 Oklahoma rate order. Under the terms of the settlement
agreement, the Telephone Company will pay a cash settlement of
$170 million to business and residential customers, and offer
discounts with a retail value of $268 million for certain
Telephone Company services. The settlement also lowers a
previously-ordered rate reduction from $100.4 million to $84.4
million, of which $57.1 million has already been implemented.
The settlement allows the majority of the remaining $27.3
million in rate reductions to be deferred until after
December 31, 1996. The Telephone Company does not anticipate
that this settlement will have a significant impact on earnings.
<TABLE>
SOUTHWESTERN BELL TELEPHONE COMPANY
Financial Summary and Comparisons
(dollars in millions)
(unaudited)
<CAPTION>
THIRD QUARTER RESULTS NINE-MONTH RESULTS
1995 1994 Change 1995 1994 Change
<S> <C> <C> <C> <C> <C> <C>
Operating revenues $ 2,240.4 $ 2,101.0 6.6% $ 6,593.6 $ 6,202.4 6.3%
Operating expenses $ 1,678.6 $ 1,600.2 4.9% $ 4,920.6 $ 4,684.1 5.0%
Income before
extraordinary loss $ 305.5 $ 278.5 9.7% $ 912.8 $ 833.1 9.6%
Extraordinary loss
from discontinuance of
regulatory accounting,
net of tax $ (2,819.3) - - $ (2,819.3) - -
Net income (loss) $ (2,513.8) $ 278.5 - $ (1,906.5) $ 833.1 -
Return on weighted
average shareowner's
equity 27.56% (1) 20.84% 672 bp 24.09% (1) 20.78% 331 bp
<FN>
(1) Computed using income before extraordinary loss; the impact of this charge is included
in the calculation of weighted average shareowner's equity.
</TABLE>
