<PAGE> 1
Filed pursuant to Rule 424(b)(5)
Registration No. 33-49967
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 18, 1993
$400,000,000
SOUTHWESTERN BELL TELEPHONE COMPANY
$250,000,000
6 5/8% NOTES DUE 2007
$150,000,000
7 3/8% DEBENTURES DUE 2027
------------------------
Interest on the 6 5/8% Notes due July 15, 2007 (the "Notes") and the 7
3/8% Debentures due July 15, 2027 (the "Debentures") (collectively, the
"Securities") is payable on January 15 and July 15 of each year, commencing
January 15, 1998. The Notes are not redeemable prior to maturity. The
Debentures are not redeemable prior to July 15, 2007, 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
at the redemption prices set forth herein. See "Description of the Securities".
The Notes and Debentures will each be represented by one or more Global
Securities registered in the name of the nominee of The Depository Trust Company
("DTC"). Beneficial interests in the Global Securities will be shown on, and
transfers thereof will be effected only through, records maintained by DTC and
its participants. Except as described herein, Notes and Debentures in definitive
form will not be issued. The Notes and Debentures will be issued only in
denominations of $1,000 and integral multiples thereof. See "Description of the
Securities".
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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.
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<TABLE>
<CAPTION>
PROCEEDS TO
THE
INITIAL PUBLIC UNDERWRITING TELEPHONE
OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3)
----------------- ------------ -------------
<S> <C> <C> <C>
Per Note........................................... 99.746% 0.650% 99.096%
Total.............................................. $249,365,000 $1,625,000 $247,740,000
Per Debenture...................................... 99.555% 0.875% 98.680%
Total.............................................. $149,332,500 $1,312,500 $148,020,000
</TABLE>
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(1) Plus accrued interest, if any.
(2) The Telephone 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 Telephone
Company.
------------------------
The Notes and Debentures 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 and Debentures will be ready for delivery in book-entry form only
through the facilities of DTC in New York, New York, on or about July 11, 1997,
against payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
MORGAN STANLEY DEAN WITTER
SALOMON BROTHERS INC
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The date of this Prospectus Supplement is July 8, 1997.
<PAGE> 2
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES AND
DEBENTURES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH NOTES AND DEBENTURES, AND THE IMPOSITION OF A PENALTY BID,
IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING".
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 from the sale of the
Securities to provide funds in connection with the repayment of short-term debt
of the Telephone Company and for other general corporate purposes. As of July 7,
1997, the Telephone Company had approximately $1.2 billion principal amount of
short-term debt outstanding with average maturities of 44 days and an effective
annual interest rate of approximately 5.56%. The short-term debt of the
Telephone Company was incurred for working capital and for other general
corporate purposes.
RECENT DEVELOPMENTS
The Telephone Company will record one-time charges (on an after-tax basis)
of approximately $250 million in 1997 relating to consolidation of
administrative and support functions and regulatory rulings. Approximately $125
million of these charges will be recorded in the second quarter.
The Telephone Company also anticipates incurring approximately $1.2 billion
in capital costs and expenses associated with number portability and
interconnection. The net income impact of these costs is expected to total
approximately $25 million in the second quarter, an additional $110 million in
the remainder of 1997 and $290 million after 1997.
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<PAGE> 3
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>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
- -------------- -----------------------------------------
1997 1996 1996 1995 1994 1993 1992
- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
7.34 6.77 6.64 5.61 5.14 4.49 4.04
</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 Notes will be limited to $250,000,000 aggregate principal amount and
will mature on July 15, 2007. The Debentures will be limited to $150,000,000
aggregate principal amount and will mature on July 15, 2027. The Securities will
bear interest from July 11, 1997 at the rates per annum shown on the cover page
of this Prospectus Supplement. Such interest will be payable on January 15 and
July 15 of each year, commencing January 15, 1998, to the person in whose name
the Securities were registered at the close of business on the preceding January
1 and July 1, respectively.
The Notes are not redeemable prior to maturity.
The Debentures are not redeemable prior to July 15, 2007. On or after July
15, 2007 and prior to maturity, the Telephone Company, at its option, may redeem
all or from time to time any part of the Debentures upon not less than 30 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 July
15:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---------------------------------------------------------------- ----------
<S> <C>
2007............................................................ 103.465%
2008............................................................ 103.119
2009............................................................ 102.772
2010............................................................ 102.426
2011............................................................ 102.079
2012............................................................ 101.733
2013............................................................ 101.386
2014............................................................ 101.040
2015............................................................ 100.693
2016............................................................ 100.347
</TABLE>
and thereafter at 100% of the principal amount thereof, in each case together
with accrued interest to the redemption date.
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<PAGE> 4
BOOK-ENTRY SYSTEM
Upon issuance, the Notes and the 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 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.
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.
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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>
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
UNDERWRITER OF NOTES OF DEBENTURES
---------------------------------------------------- ------------ ---------------
<S> <C> <C>
Goldman, Sachs & Co................................. $ 84,000,000 $ 50,000,000
Morgan Stanley & Co. Incorporated................... 83,000,000 50,000,000
Salomon Brothers Inc................................ 83,000,000 50,000,000
------------ ------------
Total..................................... $250,000,000 $ 150,000,000
============ ============
</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 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 0.40% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% 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.
The Underwriters propose to offer the Debentures 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 0.50% of the principal amount of the Debentures. The
Underwriters may allow, and such dealers may reallow, a concession not to exceed
0.25% of the principal amount of the Debentures to certain brokers and dealers.
After the Debentures 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 connection with the offering, the Underwriters may purchase and sell the
Securities in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters in connection with the offering. Stabilizing transactions consist
of certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of the Securities; and short positions created by
the Underwriters involve the sale by the Underwriters of a greater number of
Securities than they are required to purchase from the Telephone Company in the
offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to broker-dealers in respect of the Securities sold in the
offering may be reclaimed by the Underwriters if such Securities are repurchased
by the Underwriters in stabilizing or covering transactions. These activities
may stabilize, maintain or otherwise affect the market price of the Securities,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be discontinued at any time.
These transactions may be effected in the over-the-counter market or otherwise.
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.
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<PAGE> 6
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. The Underwriters have agreed to
reimburse the Telephone Company for certain expenses incurred in connection with
the offering of the Securities.
VALIDITY OF SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Telephone Company by Alfred G. Richter Jr., General Counsel of the Telephone
Company, and for the Underwriters by Sullivan & Cromwell, New York, New York.
Sullivan & Cromwell will rely as to matters of Missouri law on the opinion of
Alfred G. Richter Jr. As of June 30, 1997, Mr. Richter owned 8,367 shares of SBC
Communications Inc. stock and options to purchase 88,894 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, 1996 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.
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