UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the fiscal year ended December 31, 1996.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period from to .
Commission File Number 1-9157
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Connecticut 06-1157778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
227 Church Street, New Haven, CT 06510
(Address of principal executive offices) (Zip Code)
(203) 771-5200
(Registrant's telephone number,
including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common stock-par value $1 New York and Pacific Stock Exchanges
per share
Rights to purchase common stock New York and Pacific Stock Exchanges
(Currently traded with
common stock)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X. No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
At February 28, 1997, 65,793,847 common shares were outstanding.
At February 28, 1997, the aggregate market value of the voting stock
held by non-affiliates was $2,383,418,614.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's combined 1996 Annual Report to Shareholders
and Proxy Statement dated March 20, 1997 issued in connection with the
1997 Annual Meeting of Shareholders [Part II and Part III]
1
TABLE OF CONTENTS
Item Page
PART I
1. Business.......................................................... 3
2. Properties........................................................ 11
3. Legal Proceedings................................................. 12
4. Submission of Matters to a Vote of Security Holders............... 12
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters............................................ 14
6. Selected Financial Data.......................................... 14
7. Management's Discussion and Analysis of Financial Condition
and Operating Results........................................... 14
8. Financial Statements and Supplementary Data...................... 14
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure............................. 14
PART III
10. Directors and Executive Officers of the Registrant............... 14
11. Executive Compensation........................................... 14
12. Security Ownership of Certain Beneficial Owners and Management... 14
13. Certain Relationships and Related Transactions................... 14
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K.. 15
See page 13 for "Executive Officers of the Registrant"
2
PART I
Item 1. Business
GENERAL
Southern New England Telecommunications Corporation
("Corporation") was incorporated in 1986 under the laws of the
State of Connecticut and has its principal executive offices at
227 Church Street, New Haven, Connecticut 06510 (telephone number
(203) 771-5200). The Corporation is a holding company engaged
through its subsidiaries in operations principally in Connecticut
with expanded cellular services in Rhode Island and certain areas
in Massachusetts. The Corporation has business units in the
following telecommunications product groups: wireline; wireless;
and information and entertainment. Wireline includes The
Southern New England Telephone Company's telecommunications
services; SNET America, Inc. (providing national and
international long-distance services to Connecticut customers);
and SNET Diversified Group, Inc. (providing premium
telecommunications services and the selling and leasing of
communications equipment to residential and business customers).
Wireless includes SNET Cellular, Inc., SNET Mobility, Inc. and,
prior to 1996, SNET Paging, Inc. (providing cellular (wholesale
and retail), personal communications, equipment sales and paging
resale services). Information and entertainment includes
publishing, internet and SNET Personal Vision, Inc. (providing
cable television service starting in 1997). Other activities
include SNET Real Estate, Inc. (engaging in leasing commercial
real estate) and the holding company (engaging in financial and
strategic planning).
WIRELINE
The Southern New England Telephone Company's Telecommunications
Services
The Southern New England Telephone Company ("Telephone Company"),
a local exchange carrier ("LEC"), was incorporated in 1882 under
the laws of the State of Connecticut and is engaged in providing
telecommunications services in Connecticut, subject to various
forms of regulation. These telecommunications services include:
local and intrastate toll services; network access service, which
links customers' premises to the facilities of other carriers;
and other services such as digital transmission of data and
transmission of radio and television programs, packet switched
data network and private line services.
In 1996, approximately 68% of the Corporation's consolidated
revenues and sales were derived from the Telephone Company's
telecommunications services and approximately 11% were derived
from wireless sales. The remainder was derived principally from
directory publishing operations, national and international long-
distance services, the Corporation's other subsidiaries, and
activities associated with the provision of facilities and non-
access services to interexchange carriers. About 70% of the
operating revenues from the Telephone Company's
telecommunications services were attributable to intrastate
operations, with the remainder attributable to interstate access
services.
The Telephone Company's access lines in service grew to 2,163,000
at December 31, 1996 from 2,073,000 at December 31, 1995, an
increase of 4.3%. The increase resulted primarily from growth in
Centrex business lines and second residential lines. The network
access lines provided by the Telephone Company to customers'
premises can be interconnected with the access lines of other
telephone
3
companies in the United States and with telephone systems in most
other countries. The following table sets forth, for the
Telephone Company, the number of network access lines in service
at the end of each year:
Network Access Lines in
Service (thousands): 1996 1995 1994 1993 1992
Residence 1,444 1,415 1,379 1,355 1,340
Business 719 658 630 609 597
Total 2,163 2,073 2,009 1,964 1,937
The Telephone Company is subject to the jurisdiction of the
Federal Communications Commission ("FCC") with respect to
interstate rates, services, access charges and other matters,
including the prescription of a uniform system of accounts. The
FCC also prescribes the principles and procedures (referred to as
"separations procedures") used to separate investments, revenues,
expenses, taxes and reserves between the interstate and
intrastate jurisdictions. In addition, the FCC has adopted
accounting and cost allocation rules for the separation of costs
of regulated from non-regulated telecommunications services for
interstate ratemaking purposes. The Telephone Company's
interstate access services have been subject to price cap
regulation since January 1991. Price caps are a form of
incentive regulation to limit prices and improve productivity.
The price cap plan sets maximum limits on prices and requires
LECs to share with customers earnings in excess of authorized
levels.
The Telephone Company, in providing telecommunications services
in Connecticut, is subject to regulation by the Connecticut
Department of Public Utility Control ("DPUC"), which has
jurisdiction with respect to intrastate rates and services and
other matters such as the approval of accounting procedures and
the issuance of securities. The DPUC has adopted accounting and
cost allocation rules for intrastate ratemaking purposes, similar
to those adopted by the FCC, for the separation of costs of
regulated from non-regulated activities. The Telephone Company's
intrastate services have been subject to the traditional rate of
return regulation. Effective April 1, 1996, the DPUC replaced
traditional rate of return regulation with alternative (price
based) regulation to be employed during the transition to full
competition [see State Regulatory Initiatives].
Competition
As a result of legislative and regulatory reform, the
Corporation continues to experience an increasingly competitive
environment with respect to telecommunications services in
Connecticut. Competitors include interexchange carriers and
competitive access providers with respect to the wireline's
(Telephone Company's) existing services. In 1996, major carriers
intensified their marketing efforts to sell intrastate long-
distance services with full implementation of intrastate equal
access. In addition, providers began offering local exchange
service to businesses in certain areas of the state. Management
supports bringing to customers the benefit of competition and
affording all competitors the opportunity to compete fairly under
reduced regulation. The competitive environment also provides
opportunities for the Corporation to continue to grow its
interstate and international long-distance service and to launch
its cable television service in 1997.
The Telephone Company's currently regulated services are subject
to competition from companies and carriers, including competitive
access providers, that construct and operate their own
communications systems and networks, as well as from companies
that resell the telecommunications systems and networks of
underlying carriers. Since the introduction of intrastate long-
distance toll competition, in excess of 170 telecommunications
providers have received approval from the DPUC to offer
intrastate
4
long-distance services. In addition, over 50 companies
have filed for initial certificates of public convenience
and necessity in order to offer intrastate long-distance
services and are awaiting DPUC approval. The reduction
in intrastate toll rates, and the increasingly competitive
intrastate toll market continue to place significant downward
pressure on intrastate toll revenues.
To provide competitive toll products, wireline led the industry
in 1996 by introducing the option of one-second rating for all
toll calls so customers only pay for the time they talk.
Wireline also successfully promoted the one bill feature of SNET
All Distance[R], a seamless toll service product line which
provides discount calling plans that include intrastate,
interstate and international calling. The migration of
Connecticut customers to wireline's bundled calling plans
resulted in significant growth for interstate and international
long-distance services.
Concerning competition for local exchange service, seventeen
telecommunications providers have been granted certificates of
public convenience and necessity for local service and one
additional application is pending before the DPUC. With only a
few smaller companies offering local service in 1996, including a
cable television company, competition did not have the impact on
local service revenues as originally anticipated. Local service
competition is expected to grow significantly in 1997; however,
the financial impact cannot be predicted at this time. Based on
existing state and federal regulations, the Telephone Company
expects that many competitors will resell the Telephone Company's
network and that increased network access revenues will offset a
significant portion of local service revenues lost to
competition.
The Corporation's ability to compete is dependent upon regulatory
reform that will allow pricing flexibility to meet competition
and provide a level playing field with similar regulation for
similar services and with reduced regulation to reflect an
emerging competitive marketplace.
Regulatory Matters
Federal Regulatory Initiatives
On February 8, 1996, Congress passed the Telecommunications Act
of 1996 ("Act"). The Act was designed to overhaul U.S.
Telecommunication policy by removing barriers to local
competition. The Federal Communications Commission's ("FCC")
First and Second Report and Order ("Order"), adopted August 1,
1996, implements the Act and contains numerous provisions
regarding the interconnection of the Telephone Company's network
with those of its competitors. Significant changes to network
and data systems will be required for the Telephone Company to
comply with the Order. In addition, the Order would require
fundamental changes in the development of the prices that the
Telephone Company would charge competitors for purchasing
regulated network products and services. These decisions are the
first of three major rule makings to carry out the Act. Future
decisions will include universal service and access charge
reform, discussed below. The Order, as well as universal service
and access charge reform, could have a material negative impact
on the Telephone Company.
The Order was appealed and a stay was requested by various local
telephone companies, including the Telephone Company, the
National Association of Regulatory Utility Commissioners and
individual state regulatory commissions. On October 15, 1996,
the Eighth Circuit Court of Appeals ("Eighth Circuit") issued a
partial stay of the Order, delaying the effectiveness of the
pricing provisions and the rule allowing competitors to "pick and
choose" isolated terms out of negotiated interconnection
agreements. The FCC appealed the Eighth Circuit's decision to
stay these rules to the Supreme Court. The Supreme Court,
however, subsequently declined to hear the appeal. Oral
arguments on the Order were heard by the Eighth Circuit on
January 17, 1997. A decision is expected in the first half of
1997. In the
5
meantime, the Telephone Company has proceeded to negotiate several
interconnection agreements with other carriers in accordance with
the FCC's directives not affected by the Eighth Circuit's stay.
In accordance with the Act, the Federal-State Joint Board adopted
a Recommended Decision on Universal Service on November 7, 1996.
The recommendation addresses the universal service provisions of
the Act and proposes that one federal fund be established to
provide support for universal service. The proposal calls for
interstate telecommunications service providers to contribute to
the fund based on their telecommunications revenue, net of
payments to other carriers. The revenue to be assessed may
either be total interstate and intrastate revenue, or interstate
revenue only. By May 1997, the FCC is required to issue an order
implementing the universal service section of the Act.
On December 24, 1996, the FCC also released a Notice For Proposed
Rule Making, seeking comments on proposed changes to the way the
Telephone Company recovers interstate access charges from
interstate toll providers, including SNET America, Inc.
Implications of the FCC's proposal indicate that the industry
could experience reduced access revenues. The Telephone Company
provided comments to the FCC proposal on January 27, 1997. A
decision from the FCC regarding this matter is expected in April
or May 1997.
The Telephone Company's 1996 annual interstate access tariff
filing included a 4.0% productivity factor and allowed a 12.25%
interstate rate of return. The filing is anticipated to decrease
interstate network access rates by $2.3 million for the period
July 1, 1996 to June 30, 1997. Management expects this decrease
to be offset by increased demand. As of December 31, 1996, the
Telephone Company's interstate rate of return was below the
12.25% threshold.
The Telephone Company's 1995 annual interstate access tariff
filing under price cap regulation incorporated rate reductions of
approximately $10 million in decreased interstate network access
revenues for the period August 1, 1995 to June 30, 1996. The
decrease was offset by increased demand. The calendar year 1995
interstate rate of return of 11.58%, which was below the 12.25%
threshold, was reported to the FCC.
The Telephone Company will file its 1997 annual interstate access
tariff in April 1997 to become effective July 1, 1997. The
filing will adjust interstate access rates for an experienced
rate of inflation, the FCC's productivity target and exogenous
cost changes, if any. The Telephone Company does not anticipate
changing its 4.0% productivity factor election.
Since January 1, 1988, the Telephone Company has utilized an FCC
approved, company-specific Cost Allocation Manual ("CAM"), which
apportions costs between regulated and non-regulated activities,
and describes the nature of the transactions between the
Telephone Company and its affiliates. In addition, the FCC
requires larger LECs, including the Telephone Company, to undergo
an annual independent audit to determine whether the LEC is in
compliance with its approved CAM. The Telephone Company has
received audit reports for 1988 through 1995 indicating it is in
compliance with its CAM, and is currently undergoing an audit for
the year 1996.
State Regulatory Initiatives
In compliance with the Act, the Telephone Company has filed with
the DPUC numerous cost studies supporting its proposed wholesale
(i.e., resale) and unbundled rates for interconnection services.
In light of the Order, on March 4, 1997, the DPUC issued a
second draft decision setting a 17.8% discount rate for local
residence service. A final decision is expected in late March
1997.
6
The DPUC's review of the Telephone Company's cost studies related
to unbundled elements is still pending. Hearings were held the
first week in February 1997, with a final decision expected in
April 1997. This decision is expected to address the Telephone
Company's offerings of unbundled elements of its facilities and
associated interconnection arrangements.
In March 1996, the DPUC replaced traditional rate of return
regulation with alternative (price based) regulation, effective
April 1, 1996, during the transition to full competition. The
decision contains the following major items: price cap
regulation for non-competitive services; a five year monitoring
period on financial results; and a price cap formula on services
categorized as non-competitive (utilizing an inflation factor, a
5% productivity offset, a narrowly defined exogenous factor, a
potential service quality adjustment and various pricing bands).
In addition, basic local service rates for residence, business
and coin may not be raised above current levels until January 1,
1998, at which time the price cap formula becomes effective for
these services, unless they have been reclassified into the
emerging competitive or competitive categories. The decision
also authorized a rate of return on the Telephone Company's
common equity of 11.90% during the monitoring period. The impact
of these changes on the Telephone Company's operating results
will depend on the timing of classifying the various products and
services into categories (non-competitive, emerging competitive
and competitive) for pricing (banding) changes. As of December
31, 1996, the Telephone Company's rate of return was 7.95%.
On November 27, 1996, the DPUC granted the Telephone Company's
request to reclassify message toll and calling card services from
the non-competitive category to competitive in its entire service
territory. Reclassification provides the Telephone Company with
the opportunity to gain additional promotional and pricing
flexibility for its products and services, and to operate under
regulatory guidelines similar to its competitors.
On January 24, 1997, the Corporation filed a proposal with the
DPUC outlining steps to structure its wireline business,
including the Telephone Company, into separate retail and
wholesale subsidiaries. Under the proposal, the new retail
organization, a competitive local exchange carrier, will compete
under the same regulations as all other retail telecommunications
providers in the state and will bring innovative packages of
products and services to the consumer. The LEC, primarily the
Telephone Company's wholesale business, will provide network
services and functionality to retail providers, including the
Corporation's new retail business, on neutral terms. The
directory publishing operations will also be structured as a
separate subsidiary of the Corporation. A decision is expected
in late June 1997.
SNET America, Inc.
SNET America, Inc. ("SNET America") was incorporated in 1993
under the laws of the State of Connecticut. SNET America resells
a complete range of interstate and international long-distance
services to Connecticut customers, including calling card and
"800" service, along with volume discount plans such as SNET All
Distance Simple Solutions, a calling plan for small business and
residence customers.
SNET America and the Telephone Company jointly sell toll
services. This enables the Corporation to satisfy its
customers' long-distance calling needs with a single point of
contact through SNET All Distance, a seamless toll service
product line which provides discount calling plans that include
intrastate, interstate and international calling. The joint
marketing as SNET All Distance has produced such features as one-
second rating and one bill for all toll calls. [See Competition].
7
SNET Diversified Group, Inc.
SNET Diversified Group, Inc. ("Diversified") was incorporated in
1986 under the laws of the State of Connecticut in order to
identify and develop new, non-regulated business opportunities.
The majority of Diversified's activities is the offering of
premium services, such as information and enhanced network-
related services. Another activity is leasing and selling
customer premises equipment ("CPE") to residential and small
business customers. Key telephone systems and related products
are offered and maintained which are complementary to the
Telephone Company's central office-based solutions.
Diversified faces significant competition from numerous
department store, discount store and business equipment retailers
that carry CPE. Diversified has differentiated its product line
from its competitors by offering a wide array of quality products
including leasing options.
WIRELESS
The Corporation provides cellular (wholesale and retail),
personal communications, equipment sales and paging resale
services in Connecticut, Rhode Island and certain areas in
Massachusetts, through its subsidiaries SNET Cellular, Inc.
("Cellular"), SNET Mobility, Inc. ("Mobility") and, prior to
1996, SNET Paging, Inc. ("Paging").
SNET Cellular, Inc.
Cellular was incorporated in 1985 under the laws of the State of
Connecticut. In 1990, Cellular formed the Springwich Cellular
Limited Partnership ("Springwich") with four other partners.
Springwich is authorized to provide wholesale cellular radio
telecommunications services in the Hartford, New Haven, New
London, and Fairfield, Connecticut New England County
Metropolitan Areas ("NECMAs") and in the Springfield,
Massachusetts NECMA. Springwich also is licensed to provide
cellular wholesale service in three Rural Service Areas, Windham
and Litchfield Counties in Connecticut and Franklin County in
Massachusetts.
In July 1995, Cellular purchased from Bell Atlantic Corporation
("Bell Atlantic"), NYNEX Corporation ("NYNEX") and Richmond
Telephone Company, for approximately $456 million in aggregate,
certain cellular properties in Rhode Island and New Bedford and
Pittsfield, Massachusetts, and an increased interest in
Springwich. In total, these acquisitions expanded Cellular's
service area by approximately 2.3 million POPs (population
equivalents) to approximately 5.5 million POPs along the Boston
to New York corridor. Under the new partnership structure,
Cellular holds a 98.6% partnership interest in Springwich.
Cellular has "roamer agreements" with other carriers which allow
the carriers' subscribers access to Cellular's network and allow
Cellular's subscribers access to other networks throughout the
United States and Canada.
Cellular is currently subject to FCC jurisdiction. In November
1996, the DPUC opened an investigation to determine whether
wireless service was a replacement for landline telephone
service. The DPUC will review number administration, Connecticut
market conditions, intrastate land line local and toll usage, and
cellular intrastate usage. If wireless service is determined to
be a replacement for land line service, the DPUC plans to
petition the FCC for rate regulation authority.
During 1994, the FCC issued a spectrum plan allocating radio
spectrum to be licensed for the provision of new personal
communications services ("PCS"). As a result of the plan,
licenses for separate blocks of spectrum were auctioned to
potential PCS providers in geographic areas of the United States
through
8
1996. Various telecommunications groups, including primarily
all the nation's largest telephone companies, competed for licenses
to offer PCS in markets including Cellular's coverage area.
These blocks of spectrum could be used to provide a range of
wireless services including advanced paging, wireless data services
and two-way voice communications. The Corporation did not participate
in these auctions since it had adequate spectrum to provide
competitive services.
In July 1995, Bell Atlantic and NYNEX completed the merger of
their cellular service properties. This combination created the
largest wireless service provider on the East Coast and the
second largest provider in the United States.
Cellular expects increasing competition from new alliances and
the impact from auctions of PCS licenses. A purchaser of PCS
spectrum is expected to launch the first digital service in
Connecticut during 1997, creating a third major wireless provider
in the state. Cellular has made and will continue to make
investments in network expansion and enhancements.
SNET Mobility, Inc.
Mobility was incorporated in 1985 under the laws of the State of
Connecticut under its predecessor's name SNET MobileCom, Inc.
Mobility purchases wholesale cellular communications service from
Springwich and resells cellular communications service to the
retail market under the registered trademark LINX[R] in Springwich's
service area.
During 1996, Mobility launched SNET Personal Phone Service[SM], a
Local Service Area concept where subscribers may choose their
county of service at a favorable rate in contrast to traditional
cellular service, which is made available at peak and offpeak
rates for entire cellular markets. Mobility is the first
provider of this service in its franchise area.
Mobility markets its services through its internal sales force
and through agreements with third-party distributors and dealers.
Mobility anticipates continuing competition from local, regional
and national resellers. Over the past few years, intense
competition for new subscribers has led to increases in the
market and increases in selling and promotional costs. In
response to this competition, Mobility continues to evaluate the
quality of its distribution channels, price aggressively, bundle
with other telecommunications services and introduce both
creative customer acquisition programs and differentiated value-
added services.
SNET Paging, Inc.
Paging was incorporated in February 1990 under the laws of the
State of Connecticut and launched service on April 1, 1991. On
June 30, 1995, Paging and a subsidiary completed the sale of
substantially all of its paging network assets and the
subsidiary's reseller accounts, to Paging Network of New York,
Inc. Paging was merged into Mobility on May 30, 1996, with
Mobility retaining the Paging retail accounts and continuing, as
a reseller, to market paging services under the Page 2000[R] brand
name.
INFORMATION AND ENTERTAINMENT
Publishing Operations
The Telephone Company's publishing operations produces and
distributes traditional paper products including White and Yellow
Pages directories throughout Connecticut and adjacent
communities. To strategically widen its business focus and
position itself for the future, the publishing operations
9
introduced electronic publishing services, such as SNET Access[SM],
Consumer Tips and Electronic Yellow Pages.
The Connecticut advertising marketplace is undergoing major
structural changes and is becoming increasingly more fragmented
and competitive. The publishing division faces increased
competition from traditional directory publishers and non-
traditional services such as on-line services, desktop
publishing, electronic shopping services, CD-ROM and the
expansion of cable television. Furthermore, additional
competition may arise from the Regional Bell Operating Companies'
ability to offer information services.
SNET Personal Vision, Inc.
On September 6, 1996, SNET Personal Vision, Inc. ("Personal
Vision") received an 11 year license from the DPUC to operate a
community antenna television system that will serve the entire
state of Connecticut. Personal Vision also became a partner in
the americast joint venture with The Walt Disney Company,
Ameritech Corporation, BellSouth Corporation, SBC Communications
Inc. and GTE Corporation. The partnership will provide a full
range of americast[TM] programming and marketing services and access
to the joint venture's innovative technology. Personal Vision
will launch its cable service, SNET americast, in the spring of
1997.
Internet Service
On January 31, 1996, the Corporation launched SNET Internet[SM]
access service, which allows all subscribers in the state of
Connecticut to access the Internet with a local phone call.
OTHER SERVICES
SNET Real Estate, Inc.
SNET Real Estate, Inc. ("Real Estate") was incorporated in 1983
under the laws of the State of Connecticut. Real Estate is the
owner of commercial property which it leases under operating
leases and is a 99% partner in a limited liability company that
also leases commercial property. Currently, Real Estate is
managing its existing portfolio and is not actively pursuing
additional real estate investments.
Real Estate faces a risk that real estate markets in which its
properties are located, primarily Connecticut, may deteriorate
from their current value. This risk is minimized by the
conservative nature of Real Estate's portfolio, a majority of
which is leased to affiliates.
Holding Company
On February 15, 1995, the DPUC provided the Corporation greater
flexibility to diversify into new markets by lifting to 40% a
nine-year-old restriction that prevented the Corporation from
investing more than 25% of its total assets in unregulated
diversified activities without approval of the DPUC. In January
1997, the Corporation requested the DPUC to completely lift the
restriction. A decision is expected in late June 1997.
EMPLOYEE RELATIONS
The Corporation and its subsidiaries employed approximately 9,350
persons at February 28, 1997, of whom approximately 65% are
represented by the Connecticut Union of Telephone Workers, Inc.
("CUTW"), an unaffiliated union.
10
On April 12, 1995, a new labor contract was ratified by members
of the Connecticut Union of Telephone Workers, Inc. ("CUTW"). As
part of the new contract, a voluntary Early Out Offer, which
provided incentives in the form of enhanced pension benefits, was
available to bargaining-unit employees during July 1995.
Approximately 2,700 bargaining-unit employees accepted the offer
at that time and left the Corporation by June 1996. CUTW members
who remained with the Corporation received a combination of basic
wage and lump sum increases to their wages or cash balance
pension plan account totaling 4.0% in January 1996 and 3.0% in
January 1997. In January 1998, they will receive a combination
of basic wage and lump sum increases totaling 3.0%. In addition,
the contract also provided a sign-on bonus and health benefit and
pension enhancements. The new labor agreement will expire on
August 8, 1998. The contract is intended to keep layoffs to a
minimum while enabling the Corporation to position itself to meet
increasing competition.
Item 2. Properties
The principal properties of the Corporation do not lend
themselves to a detailed description by character and location.
The majority of telecommunications property, plant and equipment
of the Corporation is owned by the Telephone Company. Of the
Corporation's investment in telecommunications property, plant
and equipment at December 31, 1996, central office equipment
represented 41%; connecting lines not on customers' premises, the
majority of which are over or under public roads, highways or
streets and the remainder over or under private property,
represented 35%; land and buildings (occupied principally by
central offices) represented 12%; telephone instruments and
related wiring and equipment, including private branch exchanges,
substantially all of which are on the premises of customers,
represented 1%; and other, principally vehicles and general
office equipment, represented 11%.
Substantially all of the central office equipment installations
and administrative offices are located in Connecticut in
buildings owned by the Telephone Company situated on land which
it owns in fee. Many garages, service centers and some
administrative offices are located in rented quarters.
The Corporation has a significant investment in the properties,
facilities and equipment necessary to conduct its business with
the overwhelming majority of this investment relating to
telephone operations. Management believes that the Corporation's
facilities and equipment are suitable and adequate for the
business.
Capital Expenditures
The Corporation has been making, and expects to continue to make,
significant capital expenditures to meet the demand for
telecommunications services and to further improve such services.
The total gross investment in property, plant and equipment
increased from approximately $4.0 billion at December 31, 1991 to
approximately $4.7 billion at December 31, 1996, after giving
effect to retirements, but before deducting accumulated
depreciation at either date. Since 1992, cash expended for
capital additions was as follows:
Dollars in Millions, 1996 1995 1994 1993 1992
For the Years Ended
Cash Expended for
Capital Additions $367 $354 $282 $267 $290
In 1996, the Corporation funded its cash expenditures for capital
additions entirely through cash flows from operations. In 1997,
capital additions are expected to be approximately $435 million,
including
11
estimated additions of $262 to the wireline network. The Corporation
expects to fund substantially all of its 1997 capital additions through
cash flows from operations.
The buildout of I-SNET, a $4.5 billion investment, is expected to
be completed by 2007. I-SNET, a statewide telephony and
information superhighway, is an advanced network capable of
delivering voice, video and a full range of information and
interactive multimedia services. I-SNET passed approximately
234,000 households by December 1996 and is expected to pass
approximately 334,000 households by December 1997. The Telephone
Company plans to support this investment primarily through
increased productivity from the new technology deployed, ongoing
cost-reduction initiatives and customer demand for the new
services offered, including SNET americast.
Item 3. Legal Proceedings
The Corporation and certain of its subsidiaries are involved in
various claims and lawsuits that arise in the normal conduct of
their business. In the opinion of management, upon advice of
counsel, these claims will not have a material adverse effect on
the financial position, operating results or cash flows of the
Corporation or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders in the
fourth quarter of the fiscal year covered by this report.
12
Executive Officers of the Registrant (1)
(as of February 28, 1997)
Executive
Officer
Name Age(2) Position Since
Daniel J. Miglio 56 Chairman, President and
Chief Executive Officer 1/86
Jean M. LaVecchia 44 Senior Vice President-
Organization Development 8/94
Fred T. Page 50 Senior Vice President-
Network Services 2/96
Ronald M. Serrano 41 Senior Vice President-
Communication, Information
and Entertainment Group 1/93
Donald R. Shassian 41 Senior Vice President and
Chief Financial Officer 12/93
(1) Executive officers subject to Section 16 of the Securities
Exchange Act of 1934.
(2) As of December 31, 1996.
Mr. Miglio, Ms. LaVecchia and Mr. Page have held high level
managerial positions with the Corporation or its subsidiaries for
more than the past five years. Mr. Serrano was a Vice President
of Mercer Management Consulting, Inc., (formerly Strategic
Planning Associates) for more than five years prior to joining
the Corporation. Mr. Shassian was a partner with Arthur Andersen
& Co., independent accountants, for more than five years prior to
joining the Corporation.
13
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The common stock of the Corporation is listed on the New York and
Pacific stock exchanges and the number of holders of record,
computed on the basis of registered accounts, was 50,458 as of
February 28, 1997. Information with respect to the quarterly
high, low and closing sales price for the Corporation's common
stock and quarterly cash dividends declared is included in the
registrant's Annual Report to Shareholders on page 30 under the
caption "Market and Dividend Data" and is incorporated herein by
reference pursuant to General Instruction G(2).
Items 6 through 8.
Information required under Items 6 through 8 is included in the
registrant's combined 1996 Annual Report to Shareholders and
Proxy Statement dated March 20, 1997 on pages 6 through 29 in
their entirety and is incorporated herein by reference pursuant
to General Instruction G(2).
The Corporation will adopt Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share," in fiscal year
1998. SFAS No. 128 establishes standards for computing and
presenting earnings per share. Management does not expect the
adoption of SFAS No. 128 to have a material impact on the
earnings per share calculation.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
No changes in or disagreements with accountants on any accounting
or financial disclosure occurred during the period covered by
this report.
PART III
Items 10 through 13.
Information required under Items 10 through 13 is included in the
registrant's combined 1996 Annual Report to Shareholders and
1997 Proxy Statement dated March 20, 1997 on pages 35 through 44.
Such information is incorporated herein by reference pursuant
to General Instruction G(3).
Information regarding executive officers of the registrant
required by Item 401(b) and (e) of Regulation S-K is included in
Part I of this Annual Report on Form 10-K, following Item 4.
14
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(a) Documents filed as part of the report: Page
(1) Report of Management *
Report of Independent Accountants *
Consolidated Financial Statements:
Consolidated Statements of Income (Loss) - for the
years ended December 31, 1996, 1995 and 1994 *
Consolidated Balance Sheets - as of
December 31, 1996 and 1995 *
Consolidated Statements of Changes in Shareholders'
Equity - for the years ended December 31, 1996,
1995 and 1994 *
Consolidated Statements of Cash Flows - for the
years ended December 31, 1996, 1995 and 1994 *
Notes to Consolidated Financial Statements *
(2) Consolidated Financial Statement Schedule for the year
ended December 31, 1996
Report of Independent Accountants 20
II - Valuation and Qualifying Accounts 21
Schedules other than those listed above have been omitted
because the required information is contained in the
financial statements and notes thereto, or because such
schedules are not applicable.
* Incorporated herein by reference to the appropriate portions
of the registrant's combined 1996 Annual Report to Shareholders
and 1997 Proxy Statement dated March 20, 1997 [see Part II].
15
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto.
Exhibits numbered 10(iii)(A)1 through 10(iii)(A)16 are management
contracts or compensatory plans required to be filed as exhibits
pursuant to Item14(c) of Form 10-K.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990 (Exhibit
3-A to Form SE dated 3/15/91, File No. 1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated December 11, 1996 between
Southern New England Telecommunications
Corporation and State Street Bank and Trust
Company, as Rights Agent (Exhibit 4 to Form 8-K
dated 12/11/96, File No. 1-9157).
4b Indenture dated December 13, 1993 between The
Southern New England Telephone Company and Fleet
National Bank of Connecticut, Trustee, issued in
connection with the sale of $200,000,000 of 6 1/8%
Medium-Term Notes, Series C, due December 15, 2003
and $245,000,000 of 7 1/4% Medium-Term Notes,
Series C, due December 15, 2033 (Exhibit 4b to
1994 Form 10-K dated 3/10/95, File No. 1-9157).
4c Indenture dated July 10, 1991 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$100,000,000 of 6 1/2% Medium-Term Notes, Series
2, due August 15, 2000 and $200,000,000 of 7%
Medium-Term Notes, Series 2, due August 15,
2005 (Exhibit 4c to 1995 Form 10-K dated 3/20/96,
File No. 1-9157).
10(iii)(A)1 SNET Short Term Incentive Plan as amended February
8, 1995 (Exhibit 10(iii)(A)1 to 1994 Form 10-K
dated 3/10/95, File No. 1-9157).
10(iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10(iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
16
(3) Exhibits (continued):
Exhibit
Number
10(iii)(A)5 SNET Pension Benefit Plan as amended November 1,
1991 (Exhibit 10-A to Form SE dated 3/20/92, File
No. 1-9157). Amendment dated December 8, 1993
(Exhibit 10(iii)(A)5 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 8, 1995 (Exhibit 10(iii)(A)5 to 1994 Form
10-K dated 3/10/95, File No. 1-9157). Amendments
effective December 13, 1995 and January 1, 1996
(Exhibit 10(iii)(A)5 to 1995 Form 10-K dated
3/20/96, File No. 1-9157).
10(iii)(A)6 SNET Management Pension Plan as amended March 31,
1995. Amendments effective December 20, 1995
through April 1, 1996 (Exhibit 10(iii)(A)6 to 1995
Form 10-K dated 3/20/96, File No. 1-9157). Amendments
effective April 1, 1996 through December 18, 1996.
10(iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form 10-K
dated 3/23/93, File No. 1-9157).
10(iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendment dated December 8,
1993 (Exhibit 10 (iii)(A)8 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10(iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10(iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993
(Exhibit 10(iii)(A)12 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 14, 1996.
10(iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055 on Form S-8, File No. 1-9157).
10(iii)(A)14 Description of SNET Executive Retirement Savings
Plan (Exhibit 10(iii)(A)14 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)15 SNET 1995 Stock Incentive Plan (Exhibit 4.4 to
Registration No. 33-64975, File No. 1-9157).
10(iii)(A)16 SNET Non-Employee Director Stock Plan effective
June 1, 1996 (Exhibit 4.2 to Registration No. 333-
05757 on Form S-8, File No. 1-9157).
17
(3) Exhibits (continued):
Exhibit
Number
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 6 through 30 of the registrant's 1996 Annual
Report to Shareholders for the fiscal year ended
December 31, 1996.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
24a Powers of Attorney.
24b Board of Directors' Resolution.
27 Financial Data Schedule.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1996 for the SNET Management
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1997.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1996 for the SNET Bargaining Unit
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1997.
The Corporation will furnish, without charge, to a shareholder
upon request a copy of the combined 1996 Annual Report to
Shareholders and Proxy Statement, portions of which are
incorporated by reference, and will furnish any other exhibit at
cost.
(b) Reports on Form 8-K:
On October 22, 1996, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated October 22, 1996
announcing the Corporation's financial results for the third
quarter of 1996. The Corporation's Form 8-K also announced
the acquisition of Woodbury Telephone Company [see Note 2].
On December 13, 1996, the Corporation filed a report on Form 8-K,
dated December 11, 1996 announcing the renewal of the
existing shareholder rights plan and declaring a dividend of
one preference share purchase right for each outstanding share
of the Corporation's common stock [see Note 12].
On January 21, 1997, the Corporation and the Telephone Company
filed, separately, reports on Form 8-K, dated January 21,
1997, announcing the Corporation's 1996 financial results.
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By /s/ Donald R. Shassian
Donald R. Shassian, Senior Vice President
and Chief Financial Officer March 20, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date
indicated.
PRINCIPAL EXECUTIVE OFFICER:
Daniel J. Miglio*
Chairman, President, Chief Executive Officer and Director
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
Donald R. Shassian By /s/ Donald R. Shassian
Senior Vice President (Donald R. Shassian, as attorney-
and Chief Financial Officer in fact and on his own behalf)
DIRECTORS:
William F. Andrews*
Richard H. Ayers*
Zoe Baird*
Robert L. Bennett*
Barry M. Bloom* March 20, 1997
Frank J. Connor*
William R. Fenoglio*
Claire L. Gaudiani*
James R. Greenfield*
Ira D. Hall*
Burton G. Malkiel*
Frank R. O'Keefe, Jr.* * by power of attorney
19
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of
Southern New England Telecommunications Corporation:
Our report on the consolidated financial statements of Southern
New England Telecommunications Corporation has been incorporated
by reference in this Form 10-K from the combined Proxy Statement
and 1996 Annual Report to Shareholders of Southern New England
Telecommunications Corporation on page 13 therein. In connection
with our audits of such financial statements, we have also audited
the related financial statement schedule for each of the three
years in the period ended December 31, 1996 listed in Item 14 (a) (2)
of this Form 10-K.
In our opinion, the financial statement schedule referred to
above, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information required to be included
therein.
Hartford, Connecticut COOPERS & LYBRAND L.L.P.
January 21, 1997
20
SOUTHERN NEW ENGLAND TELECOMMUNICATIONS CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Balance
beginning of Charged to Charged to at end
Description period expense other accounts Deductions of period
Allowance for Uncollectible
Accounts Receivable:
Year 1996 $34.2 $42.6 $5.1 (a) $54.5 (b) $27.4
Year 1995 29.8 23.1 3.6 (a) 22.3 (b) 34.2
Year 1994 27.9 20.7 7.5 (a) 26.3 (b) 29.8
Allowance for Uncollectible
Direct-Financing Lease Notes Receivable:
Year 1996 $ 9.7 $ 1.8 $ - $ 0.5 (b) $11.0
Year 1995 8.4 1.4 - 0.1 (b) 9.7
Year 1994 11.7 1.7 - 5.0 (b) 8.4
Restructuring Charge:
Year 1996 $ 77.0 $ - $ - $ 45.5 (c) $ 31.5
Year 1995 264.9 - - 187.9 (c) 77.0
Year 1994 355.0 - - 90.1 (c) 264.9
(a) Includes amounts previously written off that were credited directly to
this account when recovered and miscellaneous amounts.
(b) Includes amounts written off as uncollectible. 1996 also includes fully
reserved amounts written off of $17.8 as a result of a revised procedure
to write off uncollectible accounts receivable within a shorter time
frame.
(c) Includes non-cash net pension and postretirement settlement gain charged
against the restructuring reserve of $65.1 in 1996 and curtailment
losses of $102.2 and $14.2 in 1995 and 1994, respectively.
21
EXHIBIT INDEX
Exhibits identified in parentheses below, on file with the SEC,
are incorporated herein by reference as exhibits hereto.
Exhibit
Number
3a Amended and Restated Certificate of Incorporation
of the registrant as filed June 14, 1990 (Exhibit
3-A to Form SE dated 3/15/91, File No. 1-9157).
3b By-Laws of the registrant as amended and restated
through October 10, 1990 (Exhibit 3 to Form 8-K
dated 10/10/90, File No. 1-9157).
4a Rights Agreement dated December 11, 1996 between
Southern New England Telecommunications
Corporation and State Street Bank and Trust
Company, as Rights Agent (Exhibit 4 to Form 8-K
dated 12/11/96, File No. 1-9157).
4b Indenture dated December 13, 1993 between The
Southern New England Telephone Company and Fleet
National Bank of Connecticut, Trustee, issued in
connection with the sale of $200,000,000 of 6 1/8%
Medium-Term Notes, Series C, due December 15, 2003
and $245,000,000 of 7 1/4% Medium-Term Notes,
Series C, due December 15, 2033 (Exhibit 4b to
1994 Form 10-K dated 3/10/95, File No. 1-9157).
4c Indenture dated July 10, 1991 between the
registrant and Fleet National Bank of Connecticut,
Trustee, issued in connection with the sale of
$100,000,000 of 6 1/2% Medium-Term Notes, Series
2, due August 15, 2000 and $200,000,000 of 7%
Medium-Term Notes, Series 2, due August 15,
2005 (Exhibit 4c to 1995 Form 10-K dated 3/20/96,
File No. 1-9157).
10(iii)(A)1 SNET Short Term Incentive Plan as amended February
8, 1995 (Exhibit 10(iii)(A)1 to 1994 Form 10-K
dated 3/10/95, File No. 1-9157).
10(iii)(A)2 SNET Long Term Incentive Plan as amended March 1,
1993 (Exhibit 10(iii)(A)2 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)3 SNET Financial Counseling Program as amended
January 1987 (Exhibit 10-D to Form SE dated
3/23/87-1, File No. 1-9157).
10(iii)(A)4 Group Life Insurance Plan and Accidental Death and
Dismemberment Benefits Plan for Outside Directors
of SNET as amended July 1, 1986 (Exhibit 10-E to
Form SE dated 3/23/87-1, File No. 1-9157).
10(iii)(A)5 SNET Pension Benefit Plan as amended November 1,
1991 (Exhibit 10-A to Form SE dated 3/20/92, File
No. 1-9157). Amendment dated December 8, 1993
(Exhibit 10(iii)(A)5 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 8, 1995 (Exhibit 10(iii)(A)5 to 1994 Form
10-K dated 3/10/95, File No. 1-9157). Amendments
effective December 13, 1995 and January 1, 1996
(Exhibit 10(iii)(A)5 to 1995 Form 10-K dated
3/20/96, File No. 1-9157).
10(iii)(A)6 SNET Management Pension Plan as amended March 31,
1995. Amendments effective December 20, 1995
through April 1, 1996 (Exhibit 10(iii)(A)6 to 1995
Form 10-K dated 3/20/96, File No. 1-9157). Amendments
effective April 1, 1996 through December 18, 1996.
10(iii)(A)7 SNET Incentive Award Deferral Plan as amended
March 1, 1993 (Exhibit 10(iii)(A)7 to 1992 Form 10-K
dated 3/23/93, File No. 1-9157).
10(iii)(A)8 SNET Mid-Career Pension Plan as amended November
1, 1991 (Exhibit 10-D to Form SE dated 3/20/92,
File No. 1-9157). Amendment dated December 8,
1993 (Exhibit 10 (iii)(A)8 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)9 SNET Deferred Compensation Plan for Non-Employee
Directors as amended January 1, 1993 (Exhibit
10(iii)(A)9 to 1992 Form 10-K dated 3/23/93, File
No. 1-9157).
10(iii)(A)10 Change-in-Control Agreements (Exhibit 10-F to Form
SE dated 3/15/91, File No. 1-9157).
10(iii)(A)11 SNET 1986 Stock Option Plan as amended March 1,
1993 (Exhibit 10(iii)(A)11 to 1992 Form 10-K dated
3/23/93, File No. 1-9157).
10(iii)(A)12 SNET Retirement and Disability Plan for Non-
Employee Directors as amended April 14, 1993
(Exhibit 10(iii)(A)12 to 1993 Form 10-K dated
3/23/94, File No. 1-9157). Amendment dated
February 14, 1996.
10(iii)(A)13 SNET Non-Employee Director Stock Plan effective
January 1, 1994 (Exhibit 4.4 to Registration No.
33-51055 on Form S-8, File No. 1-9157).
10(iii)(A)14 Description of SNET Executive Retirement Savings
Plan (Exhibit 10(iii)(A)14 to 1993 Form 10-K dated
3/23/94, File No. 1-9157).
10(iii)(A)15 SNET 1995 Stock Incentive Plan (Exhibit 4.4 to
Registration No. 33-64975, File No. 1-9157).
10(iii)(A)16 SNET Non-Employee Director Stock Plan effective
June 1, 1996 (Exhibit 4.2 to Registration No. 333-
05757 on Form S-8, File No. 1-9157).
12 Computation of Ratio of Earnings to Fixed Charges.
13 Pages 6 through 30 of the registrant's 1996 Annual
Report to Shareholders for the fiscal year ended
December 31, 1996.
21 Subsidiaries of the Corporation.
23 Consent of Independent Accountants.
24a Powers of Attorney.
24b Board of Directors' Resolution.
27 Financial Data Schedule.
99a Annual Report on Form 11-K for the plan year ended
December 31, 1996 for the SNET Management
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1997.
99b Annual Report on Form 11-K for the plan year ended
December 31, 1996 for the SNET Bargaining Unit
Retirement Savings Plan will be filed as an
amendment prior to June 30, 1997.