EX 99-c
Form 10-K for 1999
File No. 1-8610
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 11-K
ANNUAL REPORT
------------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1999
Commission File Number l-8610
-------------------
A. Full title of the plan and the address of the
plan, if different from that of the issuer
named below:
Ameritech Savings
Plan for Salaried
Employees
-------------------
B. Name of issuer of the securities held pursuant
to the plan and the address of its
principal executive office:
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
Financial Statements, Supplemental Schedules and Exhibits
Table of Contents
Page
Report of Independent Auditors: Ernst & Young LLP........................1
Report of Independent Public Accountants: Arthur Andersen LLP............2
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998...........................................3
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1999.................................4
Notes to Financial Statements........................................5
Supplemental Schedules:
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes at End of Year.............................................10
Schedule H, Line 4j - Schedule of Reportable Transactions...........12
Exhibits:
23-a Consent of Ernst & Young LLP
23-b Consent of Arthur Andersen LLP
REPORT OF INDEPENDENT AUDITORS
Ameritech Corporation, Plan Administrator
for the Ameritech Savings Plan for Salaried Employees
We have audited the accompanying statement of net assets available for benefits
of the Ameritech Savings Plan for Salaried Employees as of December 31, 1999,
and the related statement of changes in net assets available for benefits for
the year then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1999, and the changes in its net assets available for benefits for
the year then ended, in conformity with accounting principles generally accepted
in the United States.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes at end of year as of December 31, 1999 and
reportable transactions for the year then ended are presented for purpose of
additional analysis and are not a required part of the financial statements, but
are supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to auditing
procedures applied in our audit of the financial statements, and in our opinion,
are fairly stated in all material respects in relation to the financial
statements taken as a whole.
ERNST & YOUNG LLP
Chicago, Illinois
June 15, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Ameritech Corporation, Plan Administrator
for the Ameritech Savings Plan for Salaried Employees
We have audited the accompanying statement of net assets available for benefits
of the Ameritech Savings Plan for Salaried Employees as of December 31, 1998.
This financial statement is the responsibility of the Plan's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
April 22, 1999
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
--------------------------
1999 1998
----------- ----------
ASSETS
Investments (See Note 4) $ 4,352,100 $ 4,592,634
Allotments and contributions receivable 8,761 7,575
Dividends and interest receivable 1,707 15,520
Transfers receivable-net 2,048 -
Receivable for investments sold 63,986 1,391
----------- ----------
Total Assets 4,428,602 4,617,120
----------- ----------
LIABILITIES
Transfers payable-net - 1,775
Payable for investments purchased 51,026 -
Administrative expenses payable 768 883
Interest payable 988 3,032
Long-term debt
Ameritech 114,118 94,494
Other 24,735 75,948
----------- ----------
Total Liabilities 191,635 176,132
----------- ----------
Net Assets Available for Benefits $ 4,236,967 $ 4,440,988
=========== ==========
<FN>
See Notes to Financial Statements.
</FN>
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1999
(Dollars in Thousands)
Net Assets Available for Benefits,
December 31, 1998 $ 4,440,988
Additions to Net Assets:
Contributions and transfers:
Participant contributions 132,933
Employer contributions 16,388
Transfers of participants' balances - net 19,220
-----------
168,541
-----------
Investment Income:
Dividends 42,947
Interest 37,610
-----------
80,557
-----------
Net appreciation in value of investments 111,053
-----------
Total Additions 360,151
-----------
Deductions from Net Assets:
Administrative expenses 4,977
Interest expense 9,676
Distributions to participants 549,519
-----------
Total Deductions 564,172
-----------
Net Assets Available for Benefits,
December 31, 1999 $ 4,236,967
=============
<FN>
See Notes to Financial Statements.
</FN>
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Merger of Plan Sponsor - In October 1999, Ameritech Corporation (Ameritech)
and a wholly-owned subsidiary of SBC Communications Inc. (SBC) merged,
resulting in Ameritech becoming a wholly-owned subsidiary of SBC (the
merger). As a result of the merger, each share of Ameritech common stock held
by the Ameritech Savings Plan for Salaried Employees (the Plan) was
automatically converted to 1.316 shares of SBC common stock. The conversion
did not represent a Plan transaction and no gain or loss was recognized.
2. Plan Description - The Plan was established by Ameritech to provide a
convenient way for eligible salaried employees of participating Ameritech
companies to save for retirement on a regular and long-term basis. The
following description of the Plan provides only general information. The Plan
has detailed provisions covering participant eligibility, participant
allotments from pay, participant withdrawals, participant loans, employer
contributions and related vesting of contributions and Plan expenses. The
Plan is summarized in the Summary Plan Description, which has been
distributed to all participants. Participants should refer to the official
Plan documents for a more complete description of the Plan's provisions.
During 1999, participants could invest in various combinations of eight
funds: the Company Stock Fund, the Large Cap Value Equity Fund, the Fixed
Income Fund, the Balanced Fund, the Large Cap Growth Equity Fund, the Mid Cap
Equity Fund, the International Equity Fund and the Diversified Telephone
Portfolio (DTP) Fund. The DTP Fund was eliminated effective April 1, 1999.
Balances that were not withdrawn or transferred from the DTP Fund before
April 1, 1999 were automatically transferred to the Large Cap Value Equity
Fund.
Company matching contributions are made solely in the form of shares of
common stock (Ameritech common stock prior to the merger, SBC common stock
post merger) held in a leveraged Employee Stock Ownership Plan (ESOP).
The Plan prefunded the ESOP by borrowing $425 million of ten and one-half
year notes (ESOP Notes) payable in semi-annual installments through the year
2000, at 8.1% interest, the repayment of which is guaranteed by the
Ameritech. Funds borrowed by the Plan were used to purchase shares of
Ameritech's common stock held by Ameritech in its treasury (Financed Shares),
which act as collateral for reimbursement to Ameritech for any payments it
makes under its guarantee of the ESOP Notes. The interest rate on this debt
decreased to 8.03% effective January 1, 1993 due to the increased Federal
income tax rate.
In 1994 and 1996, the Plan entered into separate agreements with Ameritech to
lend the Plan up to $99.0 and $24.2 million (Refinancing Notes),
respectively. As of December 31, 1999 and 1998, the Plan had borrowed $92.3
million and $77.7 million under the 1994 agreement, respectively, and $21.8
million and $16.8 million under the 1996 agreement, respectively, at interest
rates ranging from 5.6% to 8.4%.
Dividends on Financed Shares, interest, employer cash contributions and loans
from Ameritech are used by the Plan to make the required principal and
interest payments on the ESOP and Refinancing Notes. As the notes are paid
down, the Financed Shares are released from the collateral. The Financed
Shares are allocated to participants' accounts in the form of a company
matching contribution. In lieu of dividends on Financed Shares previously
allocated to participants, additional Financed Shares are allocated to
participants' accounts.
To the extent insufficient shares have been released through payments on
outstanding notes net of amounts refinanced, additional employer
contributions are made to the ESOP to purchase shares necessary to meet any
shortfall in company matching contributions or in the shares issued in lieu
of dividends. Dividends on these shares are used to acquire additional
shares, which are allocated to participants' accounts in the ESOP. Should
shares released exceed the required company matching contribution, the excess
is considered an additional employer contribution and is allocated to
participants' accounts based on each participant's proportionate share of
actual plan year company matching contributions.
Although it has not expressed any intent to do so, Ameritech has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of the Employee Retirement Income Security
Act of 1974 (ERISA), as amended. In the event that the Plan is terminated,
subject to conditions set forth in ERISA, the Plan provides that the net
assets will be distributed to participants whose employment has terminated in
an amount equal to their respective interests in such assets; assets
attributable to participants whose employment has not terminated will remain
in the Plan until such employment terminates.
3. Accounting Policies - The financial statements of the Plan are prepared using
the accrual method of accounting. The values of investments are determined as
follows: common shares on the basis of the last published sales price as
reported on the composite tape of the New York Stock Exchange and other
exchanges; contracts with insurance companies and other financial
institutions at principal plus reinvested interest (see Note 6);
common/collective trusts and mutual funds at net asset values per share
obtained from published sources or fund manager; and temporary cash
investments and participant loans at cost, which approximates fair value.
Purchases and sales of securities are reflected as of the trade date.
Dividend income is recognized on the ex-dividend date. Interest earned on
investments is recognized on the accrual basis.
The preparation of financial statements in conformity with United States'
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
Certain prior year balances have been reclassified to conform to current year
presentation.
4. Investments - Investments representing 5% or more of Plan net assets at
either December 31, 1999 or 1998 were:
1999 1998
---------- ----------
Employee Stock Ownership Plan-Special Stock Fund*
-------------------------------------------------
SBC common shares:
Allocated $ 950,851 $ -
Unallocated $ 408,551 $ -
Ameritech common shares:
Allocated $ - $ 924,942
Unallocated $ - $ 508,398
Company Stock Fund
------------------
SBC common shares $ 1,320,001 $ -
Ameritech common shares $ - $ 1,425,470
Diversified Telephone Portfolio Fund
------------------------------------
SBC common shares $ - $ 21,313
Ameritech common shares $ - $ 16,933
Large Cap Value Equity Fund
---------------------------
IRT Ameritech Collective Equity Fund $ 733,021 $ 837,450
Balanced Fund
-------------
Bankers Trust Pyramid Balanced Fund $ 222,537 $ 220,903
* Nonparticipant Directed
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in
value by $111,053 as follows:
Common Stock $ 59,154
Common Collective Trusts 30,643
Mutual Funds 21,256
----------
Total $ 111,053
==========
5. Nonparticipant Directed Investments - Information about the net assets and
the significant components of the changes in net assets relating to the
nonparticipant directed investments (held in the ESOP within the Special
Stock Fund) as of December 31 is as follows:
1999 1998
---------- ----------
Assets
SBC common shares:
Allocated $ 950,851 $ -
Unallocated 408,551 -
Ameritech common shares:
Allocated - 924,942
Unallocated - 508,398
Temporary cash investments 19,624 18,265
Dividends and interest receivable 92 7,259
Transfers receivable-net 1,296 371
---------- ----------
Total Assets 1,380,414 1,459,235
---------- ----------
Liabilities
Administrative expenses payable 50 24
Interest payable 988 3,032
Long-term debt - unallocated 138,853 170,442
---------- ----------
Total Liabilities 139,891 173,498
---------- ----------
Net Assets Available for Benefits $ 1,240,523 $ 1,285,737
========== ==========
1999
----------
Net Assets Available for Benefits,
December 31, 1998 $ 1,285,737
Contributions 16,388
Dividends and interest 21,760
Net appreciation in value of
investments 28,898
Transfers of participants' balances
- net 2,036
Administrative expenses (193)
Interest expense (9,676)
Distributions to participants (104,427)
----------
(45,214)
----------
Net Assets Available for Benefits,
December 31, 1999 $ 1,240,523
==========
6. Contracts with Insurance Companies - The following table presents the
carrying amount and the estimated fair value of contracts with insurance
companies as of December 31:
1999 1998
---------- ----------
Carrying Amount $ 457,896 $ 485,140
========== ==========
Fair Value $ 450,332 $ 498,884
========== ==========
The fair values of contracts with insurance companies were estimated based on
a contract by contract analysis performed by the Fixed Income Fund manager.
For the year ended December 31, 1999, the average interest rate earned on
contracts with insurance companies was 5.99%. At December 31, 1999 the fixed
crediting interest rates on these contracts ranged from 5.28% to 6.62%. At
December 31, 1998, the fixed crediting interest rates on these contracts
ranged from 4.38% to 8.29%. No valuation reserves were recorded to adjust
contract amounts as of December 31, 1999 and 1998.
7. Long-Term Debt - Long-term debt consists of the ESOP Notes and the
Refinancing Notes (as discussed in Note 2). At December 31, 1999, the
aggregate principal amounts of long-term debt scheduled for repayment for the
years 2000 through 2004 were $29,300, $25,106, $26,247, $28,529 and $29,671.
The carrying amount and the estimated fair value of the ESOP and Refinancing
Notes as of December 31 were:
1999 1998
--------- --------
Carrying Amount $ 138,853 $ 170,442
========= ========
Fair Value $ 138,338 $ 177,632
========= ========
The fair values of the ESOP Notes were estimated based on quoted prices. The
fair values of the Refinancing Notes were estimated based on discounted
future cash flows using current interest rates.
8. Tax Status - The Internal Revenue Service issued a determination letter on
April 16, 1996, stating that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (IRC). The
Plan has been amended since the determination letter was received. The Plan
Administrator believes that the Plan is currently designed and is operating
in compliance with the applicable requirements of the IRC.
9. Reconciliation of Financial Statements to Form 5500 - The following is a
reconciliation of Net Assets Available for Benefits per the financial
statements to the Form 5500 as of December 31:
1999 1998
----------- -----------
Net Assets Available for Benefits per the
Financial Statements $ 4,236,967 $ 4,440,988
Less: Distributions payable to participants 155,682 22,228
----------- -----------
Net Assets Available for Benefits per the
Form 5500 $ 4,081,285 $ 4,418,760
=========== ===========
The following is a reconciliation of distributions to participants per the
financial statements to the Form 5500 for the year ended December 31:
1999
-----------
Distributions to participants per the
Financial Statement $ 549,519
Add: Distributions payable to participants at
December 31, 1999 155,682
Less: Distributions payable to participants
at December 31, 1998 22,228
-----------
Distributions to participants per the Form 5500 $ 682,973
===========
Distributions payable to participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 003
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR
December 31, 1999
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
------------------------------------ -------------------- --------- -----------
Employee Stock Ownership Plan-
Special Stock Fund
* SBC common shares:
Allocated 19,504,622 shares $221,116 $ 950,851
Unallocated 8,380,540 shares 93,841 408,551
* State Street Bank and Trust Temporary cash 19,624 19,624
Company investments --------- ----------
Total Special Stock Fund 334,581 1,379,026
--------- ----------
Company Stock Fund
* SBC common shares 27,076,937 shares 1,320,001
* State Street Bank and Trust Temporary cash 24,483
Company investments --------- ----------
Total Company Stock Fund ** 1,344,484
--------- ----------
Fixed Income Fund
Allstate Life Insurance Company 5.28%, 5/15/08 25,308
Bankers Trust Company 5.42%, 2/28/03 15,860
Bankers Trust Company 6.24%, 12/31/03 45,844
Business Men's Assurance Company 5.75%, 11/17/03 5,322
Business Men's Assurance Company 6.02%, 1/2/02 5,455
Business Men's Assurance Company 5.41%, 5/5/03 5,338
Caisse des depots (CDC) 5.38%, 10/15/03 5,056
Continental Assurance Company 6.43%, 9/25/02 22,921
Continental Assurance Company 6.23%, 6/30/04 28,833
Jackson National Life Insurance 6.62%, 8/14/00 5,122
John Hancock Mutual Life Insurance 5.67%, 6/1/04 21,003
John Hancock Mutual Life Insurance Co. 5.83%, 3/1/00 15,066
Mass Mutual Life Insurance Company 5.94%, 11/30/03 6,921
Metropolitan Life Insurance Company 6.50%, 4/2/01 12,486
Monumental Life Insurance Company 6.48%, 12/1/00 10,080
Monumental Life Insurance Company 5.72%, *** 87,380
New York Life Insurance Company 6.42%, 6/2/03 8,044
New York Life Insurance Company 6.27%, 10/16/00 7,119
The Prudential Insurance Company of 5.95%, 8/10/01 5,407
America
The Prudential Insurance Company of 6.03%, 8/11/03 5,412
America
* State Street Bank and Trust Company 6.19%, *** 82,230
UBS AG 5.99%, *** 31,689
* State Street Bank and Trust Company Temporary cash 13,886
investments --------- ----------
Total Fixed Income Fund ** 471,782
--------- ----------
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 003
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AT END OF YEAR (Continued)
December 31, 1999
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
------------------------------------ ------------------ -------- -----------
Large Cap Value Equity Fund
IRT Ameritech Collective Equity Fund 23,900,261 units $ $ 733,021
* State Street Bank and Trust Company Temporary cash 499
investments -------- ----------
Total Large Cap Value Equity Fund ** 733,520
-------- ----------
Balanced Fund
Bankers Trust Pyramid Balanced Fund 826,436 units 222,537
* State Street Bank and Trust Company Temporary cash 124
investments -------- ----------
Total Balanced Fund ** 222,661
-------- ----------
Large Cap Growth Equity Fund
Alliance Capital Institutional Premier 5,278,419 units 96,331
Growth Fund
* State Street Bank and Trust Company Temporary cash 32
investments -------- ----------
Total Large Cap Growth Equity Fund ** 96,363
-------- ----------
Mid Cap Equity Fund
PIMCO Mid Cap Growth Fund 966,703 units 25,125
* State Street Bank and Trust Company Temporary cash 26
investments -------- ----------
Total Mid Cap Equity Fund ** 25,151
-------- ----------
International Equity Fund
Lazard International Equity Portfolio 916,891 units 15,853
Institutional Fund
* State Street Bank and Trust Company Temporary cash 26
investments -------- ----------
Total International Equity Fund ** 15,879
-------- ----------
Loan Fund
* Loans to participants 6.0% - 11.5% 62,631
* State Street Bank and Trust Company Temporary cash 603
investments -------- ----------
Total Loan Fund ** 63,234
-------- ----------
TOTAL $4,352,100
==========
<FN>
* Party-in-Interest
** Participant directed investment, cost not required
*** Synthetic investment, no stated maturity
</FN>
AMERITECH SAVINGS PLAN FOR SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 003
SCHEDULE H, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1999
There were no category (i), (ii), (iii) or (iv) transactions.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator for the Plan has duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
AMERITECH SAVINGS PLAN FOR
SALARIED EMPLOYEES
By Ameritech Corporation, Plan
Administrator for the Foregoing
Plan
By /s/ Karen E. Jennings
------------------------
Karen E. Jennings
Senior Executive Vice
President-Human Resources
Date: June 27, 2000
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
-------
23-a Consent of Independent Auditors: Ernst & Young LLP.
23-b Consent of Independent Public Accountants: Arthur Andersen LLP.
EX 23-a
Form 11-K for 1999
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 333-88667) and pertaining to the Ameritech Savings Plan for Salaried
Employees of our report dated June 15, 2000, with respect to the financial
statements and supplemental schedules of the Ameritech Savings Plan for Salaried
Employees included in this Annual Report (Form 11-K) for the year ended
December 31, 1999.
ERNST & YOUNG LLP
Chicago, Illinois
June 23, 2000
EX 23-b
Form 11-K for 1999
File No. l-8610
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated April 22, 1999, included in this Annual Report on
Form 11-K for the year ended December 31, 1999, into Ameritech's previously
filed Registration Statement on Form S-8, registration number 333-88667.
ARTHUR ANDERSEN LLP
Chicago, Illinois
June 22, 2000