EX 99-d
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 and
Security Plan for Non-
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 and Security Plan for Non-Salaried Employees
We have audited the accompanying statement of net assets available for benefits
of the Ameritech Savings and Security Plan for Non-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 and Security Plan for Non-Salaried Employees
We have audited the accompanying statement of net assets available for benefits
of the Ameritech Savings and Security Plan for Non-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 AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
--------------------------
1999 1998
----------- ----------
ASSETS
Investments (See Note 5) $ 2,969,747 $ 3,233,358
Allotments and contributions receivable 6,613 6,614
Dividends and interest receivable 2,171 14,256
Receivable for investments sold 14,560 -
----------- ----------
Total Assets 2,993,091 3,254,228
----------- ----------
LIABILITIES
Transfers payable-net 10,939 5,036
Administrative expenses payable 307 473
Interest payable 479 1,504
Long-term debt 12,000 37,680
----------- ----------
Total Liabilities 23,725 44,693
----------- ----------
Net Assets Available for Benefits $ 2,969,366 $ 3,209,535
=========== ==========
<FN>
See Notes to Financial Statements.
</FN>
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-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 $ 3,209,535
Additions to Net Assets:
Contributions:
Participant contributions 87,059
Employer contributions 14,482
-----------
101,541
-----------
Investment Income:
Dividends 39,835
Interest 20,262
-----------
60,097
-----------
Net appreciation in value of investments 38,118
-----------
Total Additions 199,756
-----------
Deductions from Net Assets:
Administrative expenses 3,463
Interest expense 981
Transfers of participants' balances - net 18,848
Distributions to participants 416,633
-----------
Total Deductions 439,925
-----------
Net Assets Available for Benefits,
December 31, 1999 $ 2,969,366
===========
<FN>
See Notes to Financial Statements.
</FN>
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-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 and Security Plan for Non-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 non-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 five funds:
the Company Shares Fund, the Equities Market Plus Fund, the Fixed Income
Fund, the Balanced Fund and the Diversified Telephone Portfolio (DTP) Fund,
or for members of the International Brotherhood of Electrical Workers (IBEW)
only, in the Union-Sponsored International Brotherhood of Electrical Workers
Locals Savings and Retirement Trust Fund (IBEW Fund - see Note 4). In
addition, Communications Workers of America (CWA) members could elect to
contribute to the CWA Savings and Retirement Trust Fund (CWA Fund). Such
contributions are made by the employee directly to the fund, rather than by
payroll deduction. The CWA Fund is not part of the Plan's financial
statements.
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 $240 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.
Dividends on Financed Shares, interest and employer cash contributions are
used by the Plan to make the required principal and interest payments on the
ESOP 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, 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, and any applicable collective bargaining
agreements. 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 7);
common/collective trusts and other group trusts 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. IBEW Fund - In order to allow eligible employees to participate in the IBEW
Fund investment option, the Plan adopted the provisions of the IBEW Savings
and Retirement Group Trust (IBEW Group Trust) effective January 1, 1988, for
the limited purpose of and for specifically complying with the requirements
of Revenue Ruling 81-100 related to group trusts. The Plan, by agreement,
participates in the IBEW Group Trust with respect to participant eligibility,
contribution, distribution, and withdrawal requirements as administered by
Ameritech (the Participating Employer), and with respect to maintaining
participant records and IBEW Fund accounting through the Trustee. The Plan's
equitable interest in the IBEW Group Trust at December 31, 1999 and 1998 was
5.40% and 7.12%, respectively, of the net assets available for benefits of
the IBEW Group Trust. The Plan's interest is valued on a per unit basis,
changes in which represent periodic investment income, net of expenses
related to administration of the IBEW Group Trust and investment management
services.
5. 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 $ 650,032 $ -
Unallocated $ 36,959 $ -
Ameritech common shares:
Allocated $ - $ 649,800
Unallocated $ - $ 117,475
Company Shares Fund
SBC common shares $ 1,643,557 $ -
Ameritech common shares $ - $ 1,809,222
1999 1998
--------- ----------
Diversified Telephone Portfolio Fund
------------------------------------
SBC common shares $ 39,543 $ 27,464
Ameritech common shares $ - $ 21,868
Equities Market Plus Fund
-------------------------
IRT Ameritech Collective Equity Fund $ 150,450 $ 168,486
* 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 $38,118 as follows:
Common Stock $ 27,963
Common Collective Trusts 10,155
----------
Total $ 38,118
==========
6. 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 $ 650,032 $ -
Unallocated 36,959 -
Ameritech common shares:
Allocated - 649,800
Unallocated - 117,475
Temporary cash investments 13,545 12,715
Dividends and interest receivable 64 3,899
--------- ---------
Total Assets 700,600 783,889
--------- ---------
Liabilities
Transfers payable-net 2,388 615
Administrative expenses payable 27 15
Interest payable 479 1,504
Long-term debt - unallocated 12,000 37,680
--------- ---------
Total Liabilities 14,894 39,814
--------- ---------
Net Assets Available for Benefits $ 685,706 $ 744,075
========= =========
1999
---------
Net Assets Available for Benefits,
December 31, 1998 $ 744,075
Contributions 14,482
Dividends and interest 11,402
Net appreciation in value of investments 6,016
Transfers of participants' balances - net (5,200)
Administrative expenses (107)
Interest expense (981)
Distributions to participants (83,981)
---------
(58,369)
---------
Net Assets Available for Benefits,
December 31, 1999 $ 685,706
=========
7. 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 $ 165,826 $ 185,782
========== ==========
Fair Value $ 162,142 $ 189,945
========== ==========
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 5.97%. At December 31, 1999 the fixed
crediting interest rates on these contracts ranged from 5.26% to 6.61%. At
December 31, 1998, the fixed crediting interest rates on these contracts
ranged from 4.13% to 8.10%. No valuation reserves were recorded to adjust
contract amounts as of December 31, 1999 and 1998.
8. Long-Term Debt - Long-term debt consists of the ESOP Notes (as discussed in
Note 2). At December 31, 1999, the aggregate principal amount of long-term
debt scheduled for repayment for the year 2000 was $12,000. The carrying
amount and the estimated fair value of the ESOP Notes as of December 31 were:
1999 1998
---------- ---------
Carrying Amount $ 12,000 $ 37,680
========== =========
Fair Value $ 12,000 $ 38,018
========== =========
The fair values of the ESOP Notes were estimated based on quoted prices.
9. 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.
10.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 $ 2,969,366 $ 3,209,535
Less: Distributions payable to participants 92,100 11,345
----------- -----------
Net Assets Available for Benefits per the
Form 5500 $ 2,877,266 $ 3,198,190
=========== ===========
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 $ 416,633
Add: Distributions payable to participants at
December 31, 1999 92,100
Less: Distributions payable to participants
at December 31, 1998 11,345
-----------
Distributions to participants per the Form 5500 $ 497,388
===========
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 AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 004
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
- --------------------------------------- ----------------- --------- -----------
<C
Employee Stock Ownership Plan - Special
Stock Fund
* SBC common shares:
Allocated 13,333,989 shares $ 156,610 $ 650,032
Unallocated 758,137 shares 8,488 36,959
* State Street Bank and Trust Company Temporary cash 13,545 13,545
investments --------- -----------
Total Special Stock Fund 178,643 700,536
--------- -----------
Company Shares Fund
* SBC common shares 33,713,986 shares 1,643,557
* State Street Bank and Trust Company Temporary cash 24,300
investments --------- -----------
Total Company Shares Fund ** 1,667,857
--------- -----------
Fixed Income Fund
Allstate Life Insurance Company 5.26%, 5/15/08 10,620
Bankers Trust Company 5.95%, 12/31/03 16,227
Business Men's Assurance Company 5.75%, 11/17/03 2,129
Caisse des depots (CDC) 5.38%, 10/15/03 2,022
Continental Assurance Company 5.75%, 9/25/02 12,001
Continental Assurance Company 6.31%, 2/28/03 4,371
Continental Assurance Company 5.92%, 6/30/04 11,438
Jackson National Life Insurance 6.61%, 8/14/00 2,049
Jackson National Life Insurance 5.80%, 1/2/01 2,115
John Hancock Mutual Life Insurance Co. 6.08%, 2/1/00 6,059
John Hancock Mutual Life Insurance Co. 5.69%, 6/1/04 15,983
Mass Mutual Life Insurance Company 5.94%, 11/30/03 4,696
Monumental Life Insurance Company 6.05%, *** 28,750
Monumental Life Insurance Company 6.49%, 12/1/00 2,016
New York Life Insurance Company 6.42%, 6/2/03 2,011
The Prudential Insurance 6.03%, 8/11/03 2,165
Company of America
The Prudential Insurance 5.95%, 8/10/01 2,163
Company of America
* State Street Bank and Trust Company 6.27%, *** 33,996
UBS AG 5.99%, *** 5,015
* State Street Bank and Trust Company Temporary cash 13,223
investments --------- -----------
Total Fixed Income Fund ** 179,049
--------- -----------
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 004
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
- ---------------------------------------- ----------------- --------- -----------
Equities Market Plus Fund
IRT Ameritech Collective Equity Fund 4,905,426 units $ $ 150,450
* State Street Bank and Trust Company Temporary cash 139
investments -------- ----------
Total Equities Market Plus Fund ** 150,589
-------- ----------
Balanced Fund
Bankers Trust Pyramid Balanced Fund 299,085 units 80,536
* State Street Bank and Trust Company Temporary cash 48
investments -------- ----------
Total Balanced Fund ** 80,584
-------- ----------
Diversified Telephone Portfolio (DTP) Fund
AT&T Corporation common shares 396,473 shares 20,146
Bell Atlantic Corporation common shares 340,326 shares 20,951
BellSouth Corporation common shares 433,484 shares 20,293
* SBC common shares 811,139 shares 39,543
US West Inc. common shares 99,074 shares 7,133
* State Street Bank and Trust Company Temporary cash 4
investments -------- ----------
Total DTP Fund ** 108,070
-------- ----------
IBEW Fund
IBEW Savings/Security Master Investment 5,997,273 units 5,997
Fund
* State Street Bank and Trust Company Temporary cash 26
investments -------- ----------
Total IBEW Fund ** 6,023
-------- ----------
Loan Fund
* Loans to participants 7.0% - 11.5% 76,482
* State Street Bank and Trust Company Temporary cash 557
investments -------- ----------
Total Loan Fund ** 77,039
-------- ----------
TOTAL $ 2,969,747
==========
<FN>
* Party-in-Interest
** Participant directed investment, cost not required
*** Synthetic investment, no stated maturity
</FN>
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 004
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 AND SECURITY
PLAN FOR NON-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 and Security Plan
for Non-Salaried Employees of our report dated June 15, 2000, with respect to
the financial statements and supplemental schedules of the Ameritech Savings and
Security Plan for Non-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