<PAGE>
424(b)(5) Registration
Statement #33-49967
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 18, 1993)
$450,000,000
SOUTHWESTERN BELL TELEPHONE COMPANY
$150,000,000
6.25% NOTES DUE 2002
$300,000,000
7.20% DEBENTURES DUE 2026
---------------
Interest on the 6.25% Notes due October 15, 2002 (the "2002 Notes") and the
7.20% Debentures due October 15, 2026 (the "2026 Debentures") (collectively, the
"Securities") is payable on April 15 and October 15 of each year, commencing
April 15, 1996. The 2002 Notes are not redeemable prior to maturity. The 2026
Debentures are not redeemable prior to October 15, 2005, and on and after such
date will be redeemable at the option of Southwestern Bell Telephone Company
(the "Telephone Company"), as a whole or in part, on at least 30 days notice.
See "Description of the Securities" herein. The Securities will be issued only
in registered, book-entry form in denominations of $1,000 and integral multiples
thereof. Settlement for the Securities will be made in immediately available
funds. The Securities will trade in The Depository Trust Company's Same-Day
Funds Settlement System until maturity and secondary market trading activity in
the Securities will therefore settle in immediately available funds. See
"Description of the Securities -- Book-Entry System."
------------------------
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>
PROCEEDS TO THE
PRICE TO UNDERWRITING TELEPHONE
PUBLIC (1) DISCOUNT COMPANY (1)(2)
<S> <C> <C> <C>
Per 2002 Note..................... 99.91% .6% 99.31%
Total............................. $149,865,000 $900,000 $148,965,000
Per 2026 Debenture................ 99.875% .875% 99%
Total............................. $299,625,000 $2,625,000 $297,000,000
</TABLE>
(1) Plus accrued interest from October 15, 1995 to date of delivery.
(2) Before deducting estimated expenses of $160,000 payable by the Telephone
Company.
------------------------
The Securities are offered subject to receipt and acceptance by the
Underwriters, to prior sale and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Securities will be made through the
facilities of The Depository Trust Company on or about October 26, 1995.
------------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
------------------
The date of this Prospectus Supplement is October 18, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE TELEPHONE COMPANY
The Telephone Company was incorporated in 1882 under the laws of the State
of Missouri. The Telephone Company's principal services include local services,
network access and long distance services which are provided in the states of
Arkansas, Kansas, Missouri, Oklahoma and Texas. The Telephone Company is a
wholly-owned subsidiary of SBC Communications Inc. ("Corporation"), formerly
known as Southwestern Bell Corporation, which was incorporated in 1983 under the
laws of the State of Delaware. The Telephone Company was a wholly-owned
subsidiary of AT&T Corp. ("AT&T") until January 1, 1984, when it was divested by
AT&T pursuant to a court-ordered reorganization of the Bell System
("divestiture"). AT&T accomplished the divestiture by contributing its 100
percent interest in the Telephone Company to the Corporation and then
distributing its ownership in the Corporation to its shareholders effective
January 1, 1984.
The Telephone Company's principal executive offices are located at One Bell
Center, St. Louis, Missouri 63101-3099 (telephone 314-235-9800).
USE OF PROCEEDS
The Telephone Company intends to use the net proceeds to the Telephone
Company from the sale of the Securities, together with the proceeds from the
sale of other long- and short-term debt and internally generated funds, to repay
the Telephone Company's 8.25% Debentures due March 1, 2014 and 8.25% Debentures
due April 1, 2017, at an aggregate redemption price of approximately
$465,040,000, and for other general corporate purposes.
RECENT DEVELOPMENTS
On October 18, 1995, the Telephone Company announced the following results
of operations for the three and nine months ended September 30, 1995:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1995 1994 1995 1994
---------- --------- ---------- ---------
(DOLLARS IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenues................................... $ 2,240.4 $ 2,101.0 $ 6,593.6 $ 6,202.4
Operating expenses................................... $ 1,678.6 $ 1,600.2 $ 4,920.6 $ 4,684.1
Income before extraordinary loss..................... $ 305.5 $ 278.5 $ 912.8 $ 833.1
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
</TABLE>
On September 29, 1995, the Corporation announced that the Telephone Company
was discontinuing the use of Statement of Financial Accounting Standards No. 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.
S-2
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of the
Telephone Company for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
- -------------------- -----------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
6.09 5.42 5.14 4.49 4.04 3.69 3.81
</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 THE SECURITIES
The following description of the particular terms of the Securities 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 Securities, the description of the Debt Securities set forth in
the Prospectus, to which description reference is hereby made.
GENERAL
The 2002 Notes will be limited to $150,000,000 aggregate principal amount
and will mature on October 15, 2002. The 2026 Debentures will be limited to
$300,000,000 aggregate principal amount and will mature on October 15, 2026. The
Securities will bear interest at the rates per annum shown on the cover page of
this Prospectus Supplement payable on April 15 and October 15 of each year,
commencing April 15, 1996, to the person in whose name the Securities were
registered at the close of business on the preceding April 1 and October 1,
respectively.
The 2002 Notes are not redeemable prior to maturity.
The 2026 Debentures are not redeemable prior to October 15, 2005. On or
after October 15, 2005 and prior to maturity, the Telephone Company, at its
option, may redeem all or from time to time any part of the 2026 Debentures upon
not less than 30 days but not more than 60 days notice at the following
redemption prices (expressed as a percentage of the principal amount) during the
12-month periods beginning October 15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2005............................................................................. 103.5375%
2006............................................................................. 103.1838
2007............................................................................. 102.8300
2008............................................................................. 102.4763
2009............................................................................. 102.1225
2010............................................................................. 101.7688
2011............................................................................. 101.4150
2012............................................................................. 101.0613
2013............................................................................. 100.7075
2014............................................................................. 100.3538
</TABLE>
and thereafter at 100% of the principal amount thereof, in each case together
with accrued interest to the redemption date.
BOOK-ENTRY SYSTEM
Upon issuance, the 2002 Notes and the 2026 Debentures each will be
represented by one or more global securities (the "Book-Entry Securities"). Each
global security representing Book-Entry Securities will be deposited with, or on
behalf of, The Depository Trust Company, as Depository (the "Depository"), and
S-3
<PAGE>
registered in the name of a nominee of the Depository. Book-Entry Securities
will not be exchangeable at the option of the Holder for certificated Securities
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 Telephone 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
securities representing Book-Entry Securities is set forth in the Prospectus
under "Description of Debt Securities--Book-Entry Securities".
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Securities will be made in immediately available funds.
So long as the Securities are represented by global securities, all payments of
principal and interest thereon will be made by the Telephone Company in
immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. So long as the Securities
are represented by global securities registered in the name of the Depository or
its nominee and its procedures so permit, the Securities will trade in the
Depository's Same-Day Funds Settlement System, and secondary market trading
activity in the Securities will therefore be required by the Depository to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on the trading
activity in the Securities.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Telephone 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 Securities set forth opposite its name below:
<TABLE>
<CAPTION>
2002 NOTES 2026 DEBENTURES
UNDERWRITERS PRINCIPAL AMOUNT PRINCIPAL AMOUNT
- ------------------------------------------------------------------- ---------------- ----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................. $ 30,000,000 $ 60,000,000
Bear, Stearns & Co. Inc............................................ 30,000,000 60,000,000
Goldman, Sachs & Co................................................ 30,000,000 60,000,000
Morgan Stanley & Co. Incorporated.................................. 30,000,000 60,000,000
Salomon Brothers Inc............................................... 30,000,000 60,000,000
---------------- ----------------
Total.................................................... $ 150,000,000 $ 300,000,000
---------------- ----------------
---------------- ----------------
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Securities, if any are
taken.
The Underwriters propose to offer the Securities in part directly to retail
purchasers at the public offering prices set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such prices
less a concession of .35% of the principal amount of the 2002 Notes and .5% of
the
S-4
<PAGE>
principal amount of the 2026 Debentures. The Underwriters may allow, and such
dealers may reallow, a concession not to exceed .25% of the principal amount of
each of the 2002 Notes and 2026 Debentures to certain brokers and dealers. After
the Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Underwriters.
The Securities are a new issue of securities with no established trading
market. The Telephone Company has been advised by the Underwriters that they
intend to make a market in the Securities 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 Securities.
The Telephone 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 Telephone Company and/or its parent, SBC Communications
Inc., and its subsidiaries and affiliates.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Telephone Company by Mr. T. Michael Payne, Vice President and Associate General
Counsel of the Telephone Company, and for any underwriters, dealers or agents by
Sullivan & Cromwell, New York, New York. Sullivan & Cromwell will rely as to
matters of Missouri law on the opinion of Mr. T. Michael Payne. As of August 31,
1995, Mr. Payne owned 13,108 shares of SBC Communications Inc. stock and options
to purchase 75,799 shares of such stock. Sullivan & Cromwell from time to time
performs legal services for SBC Communications Inc.
EXPERTS
The financial statements and financial statement schedules of Southwestern
Bell Telephone Company appearing in the Telephone Company's Annual Report (Form
10-K) for the year ended December 31, 1994 have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included therein
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.
S-5
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE TELEPHONE COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS 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 TELEPHONE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS ARE NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
The Telephone Company.......................... S-2
Use of Proceeds................................ S-2
Recent Developments............................ S-2
Ratio of Earnings to Fixed Charges............. S-3
Description of the Securities.................. S-3
Underwriting................................... S-4
Validity of Securities......................... S-5
Experts........................................ S-5
PROSPECTUS
Available Information.......................... 2
Incorporation of Documents by Reference........ 2
The Telephone Company.......................... 3
Use of Proceeds................................ 3
Ratio of Earnings to Fixed Charges............. 3
Description of Debt Securities................. 3
Plan of Distribution........................... 9
Validity of Debt Securities.................... 10
Experts........................................ 10
</TABLE>
$450,000,000
SOUTHWESTERN BELL
TELEPHONE COMPANY
$150,000,000
6.25% NOTES DUE 2002
$300,000,000
7.20% DEBENTURES DUE 2026
-------------------
PROSPECTUS SUPPLEMENT
-------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
OCTOBER 18, 1995
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
