Exhibit 99-e
Form 10-K for 1998
File No. 1-8610
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-8610
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
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 Street, San Antonio, Texas 78205-2233
Form 11-K SBC Communications Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employees' Benefit Committee has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
SNET MANAGEMENT RETIREMENT SAVINGS
PLAN
By Benefit Plan Committee
By /s/ Karen Jennings
--------------------------
(Karen Jennings, Chairman)
June 28, 1999
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
TABLE OF CONTENTS
Report of Independent Auditors
Statement of Net Assets Available for Plan Benefits with Fund Information as of
December 31, 1998.
Statement of Net Assets Available for Plan Benefits with Fund Information as of
December 31, 1997.
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the Year Ended December 31, 1998.
Statement of Changes in Net Assets Available for Plan Benefits with Fund
Information for the Year Ended December 31, 1997.
Notes to Financial Statements.
ITEM 27a - Schedule of Assets Held for Investment Purposes as of
December 31,1998.
ITEM 27d - Schedule of Reportable Transactions for the Year Ended
December 31,1998.
Report of Independent Auditors
To the Benefit Plan Committee of the
SNET Management Retirement Savings Plan
We have audited the accompanying statement of net assets available for plan
benefits of the SNET Management Retirement Savings Plan as of December 31, 1998,
and the related statement of changes in net assets available for plan 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. The financial statements of the SNET
Management Retirement Savings Plan for the year ended December 31, 1997, were
audited by other auditors whose report dated June 5, 1998, expressed an
unqualified opinion on those statements.
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 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, 1998, and the changes in its net assets available for benefits for
the year then ended, in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the 1998
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1998, 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 Fund Information in the statement of net assets available
for plan benefits and the statement of changes in net assets available for plan
benefits is presented for purposes of additional analysis rather than to present
the net assets available for plan benefits and the changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to auditing procedures applied in our audit of
the 1998 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
Stamford, Connecticut
May 26, 1999
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1998
(in Thousands)
ESOP Common Interest Domestic International
Shares Shares Income Equity Balanced Equity Participant
ASSETS Fund Fund (a) Fund (a) Fund (a) Fund (a) Fund (a) Loan Fund Total
- ---------------------------------- ---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Investments, at fair value:
Common shares $ 189,437 $ 91,962 $ 281,399
Fixed income securities $ 105,711 105,711
Barclays Equity Funds $ 145,302 $ 16,797 $ 8,394 170,493
Barclays Debt Fund 9,461 9,461
Barclays Tactical Asset
Allocations Fund 6,876 6,876
Participant loans receivable $ 9,077 9,077
Temporary cash investments 1,415 3,559 1,744 6,718
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Total Investments 190,852 95,521 107,455 145,302 33,134 8,394 9,077 589,735
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Employee contributions and employer
contributions receivable 5,199 56 5,255
Due from broker 249 97 23 369
Fund, plan and other transfers
receivable-net 1,444 93 1,537
Dividends and interest receivable 6 14 13 33
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Total Assets 196,057 96,979 107,468 145,700 33,231 8,417 9,077 596,929
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
LIABILITIES
- ----------------------------------
Fund, plan and other transfers
payable-net 1,386 102 15 34 1,537
ESOP loans payable 20,216 20,216
Interest payable on ESOP loans 944 944
Administrative expenses payable 7 6 2 1 16
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Total Liabilities 21,160 - 1,393 6 104 16 34 22,713
---------- ---------- --------- ---------- ---------- ---------- ---------- ----------
Net Assets Available for Plan
Benefits $ 174,897 $ 96,979 $ 106,075 $ 145,694 $ 33,127 $ 8,401 $ 9,043 $ 574,216
========== ========== ========= ========== ========== ========== ========== ==========
(a) Participant directed investment fund
See Notes to Financial Statements
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1997
(in Thousands)
ESOP Common Interest Domestic International
Shares Shares Income Equity Balanced Equity Participant
ASSETS Fund Fund (a) Fund (a) Fund (a) Fund (a) Fund (a) Loan Fund Total
- ---------------------------------- ---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Investments, at fair value:
Common shares $ 103,911 $ 46,937 $ 150,848
Fixed income securities $ 99,674 99,674
Barclays Equity Funds $ 125,096 $ 11,601 $ 7,582 144,279
Barclays Debt Fund 6,419 6,419
Barclays Tactical Asset
Allocations Fund 4,527 4,527
Participant loans receivable $ 9,713 9,713
Temporary cash investments 1,460 3,078 2,532 7,070
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Total Investments 105,371 50,015 102,206 125,096 22,547 7,582 9,713 422,530
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Employee contributions and employer
contributions receivable 5,154 7 7 8 5,176
Due from broker 4 37 14 55
Fund, plan and other transfers
receivable-net 102 60 162
Dividends and interest receivable 913 424 9 1,346
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Total Assets 111,442 50,439 102,317 125,163 22,591 7,604 9,713 429,269
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
LIABILITIES
- ----------------------------------
Due to broker 4 53 57
Fund, plan and other transfers
payable-net 13 17 68 64 162
ESOP loans payable 28,936 28,936
Interest payable on ESOP loans 1,352 1,352
Administrative expenses payable 8 7 3 1 19
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Total Liabilities 30,288 17 8 60 20 69 64 30,526
---------- ---------- ---------- ---------- --------- ---------- ---------- ---------
Net Assets Available for Plan
Benefits $ 81,154 $ 50,422 $ 102,309 $ 125,103 $ 22,571 $ 7,535 $ 9,649 $ 398,743
========== ========== ========== ========== ========= ========== ========== =========
(a) Participant directed investment fund
See Notes to Financial Statements
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
(in Thousands)
ESOP Common Interest Domestic International
Shares Shares Income Equity Balanced Equity Participant
Fund Fund (a) Fund (a) Fund (a) Fund (a) Fund (a) Loan Fund Total
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net Assets Available for
Plan Benefits, December 31, 1997 $ 81,154 $ 50,422 $ 102,309 $ 125,103 $ 22,571 $ 7,535 $ 9,649 $ 398,743
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Employee contributions 2,998 3,990 8,438 2,389 1,155 18,970
Employer contributions 8,320 8,320
Transfers of participants'
balances-net 472 4,023 4,055 (8,174) 4,174 (1,304) 164 3,410
Loans to Participants (1,044) (1,052) (1,801) (366) (168) 4,431 -
Participants' Loan Repayments 1,203 1,505 2,322 546 190 (5,766) -
Participants' Loans Settled as
Withdrawals (269) (269)
Interest on participant loans 834 834
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Total contributions, transfers
and loan activity 8,792 7,180 8,498 785 6,743 (127) (606) 31,265
Investment income:
Dividends 2,686 1,306 3,992
Interest 51 126 6,449 6,626
Net appreciation in fair value
of investments 89,369 42,465 27,442 5,634 1,390 166,300
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Total net additions
(deductions) 100,898 51,077 14,947 28,227 12,377 1,263 (606) 208,183
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Less: Distributions to
participants 5,103 4,508 11,013 7,398 1,724 375 30,121
Interest expense on
ESOP loans 2,051 2,051
Administrative expenses 1 12 168 238 97 22 538
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net increase (decrease) 93,743 46,557 3,766 20,591 10,556 866 (606) 175,473
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net Assets Available for
Plan Benefits, December 31, 1998 $ 174,897 $ 96,979 $ 106,075 $ 145,694 $ 33,127 $ 8,401 $ 9,043 $ 574,216
========== ========== ========== ========== ========= ========== ========== ==========
(a) Participant directed investment fund
See Notes to Financial Statements
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
(in Thousands)
ESOP Common Interest Domestic International
Shares Shares Income Equity Balanced Equity Participant
Fund Fund (a) Fund (a) Fund (a) Fund (a) Fund (a) Loan Fund Total
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net Assets Available for
Plan Benefits, December 31, 1996 $ 48,384 $ 42,835 $ 112,320 $ 87,495 $ 12,702 $ 6,795 $ 8,513 $ 319,044
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Employee contributions 2,070 4,565 7,207 1,921 1,211 16,974
Employer contributions 11,105 11,105
Transfers of participants'
balances-net 529 (5,207) (7,143) 9,890 5,225 7 218 3,519
Loans to participants (933) (2,153) (2,157) (307) (250) 5,800 -
Participants' loan repayments 853 1,767 2,129 361 236 (5,346) -
Participants' loans settled as
withdrawals (357) (357)
Interest on participant loans 821 821
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Total contributions, transfers
and loan activity 11,634 (3,217) (2,964) 17,069 7,200 1,204 1,136 32,062
Investment income:
Dividends 3,585 1,750 5,335
Interest 55 82 6,490 1 6,628
Net appreciation in fair value
of investments 23,352 10,881 28,062 3,689 191 66,175
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Total net additions 38,626 9,496 3,526 45,132 10,889 1,395 1,136 110,200
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Less: Distributions to
participants 3,006 1,897 13,351 7,327 955 635 27,171
Interest expense on
ESOP loans 2,849 2,849
Administrative expenses 1 12 186 197 65 20 481
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net increase (decrease) 32,770 7,587 (10,011) 37,608 9,869 740 1,136 79,699
---------- ---------- ---------- ---------- --------- ---------- ---------- ----------
Net Assets Available for
Plan Benefits, December 31, 1997 $ 81,154 $ 50,422 $ 102,309 $ 125,103 $ 22,571 $ 7,535 $ 9,649 $ 398,743
========== ========== ========== ========== ========= ========== ========== ==========
(a) Participant directed investment fund
See Notes to Financial Statements
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
1. Merger of Plan Sponsor
On October 26, 1998, SBC Communications Inc. ("SBC") and Southern New
England Telecommunications Corporation ("SNET") merged, resulting in SNET
becoming a wholly-owned subsidiary of SBC. As a result of the merger, each
share of SNET common stock issued and outstanding prior to the merger was
converted into 1.7568 shares of SBC common stock.
2. Description of the Plan
The SNET Management Retirement Savings Plan ("Plan") is a defined
contribution plan under the Employee Retirement Income Security Act of 1974
("ERISA"). Its purpose is to encourage employees to adopt a regular savings
program and to provide additional security for retirement. The Plan is
available to regular, temporary and provisionally regular management
employees of SNET and any of its subsidiaries participating in the Plan
(collectively referred to as the "Company") with at least three months of
service.
The Plan is funded by contributions from employees and the Company. Eligible
management employees may authorize an allotment of any whole percentage from
1% to 16% of their annual basic salary rate adjusted for certain incentives
("Salary"), subject to the maximum contributions available under Section 415
of the Internal Revenue Code ("Code"). There are two types of allotments
available to eligible employees which are as follows:
(a) SAVINGS PLUS - A tax deferred agreement to defer from 1% to 16% of
Salary as a Savings Plus Allotment, but not to exceed the Code limit (as
adjusted for increases in the consumer price index) in a calendar year.
(b) REGULAR SAVINGS - 1% to 16% of Salary as an after-tax Regular Savings
Allotment.
In no event can any combination of employee allotments exceed the lesser of
16% of an employee's Salary or the maximum contributions available under
Section 415 of the Code. An employee may voluntarily suspend allotments for
one or more pay periods ("Voluntary Suspensions").
Company matching contributions are an amount equal to 80% of the first 6% of
Salary contributed by each participating employee for such time as the
Employee Stock Ownership Plan ("ESOP") is in effect. During any period of
time in which the ESOP is not in effect, matching contributions shall revert
to 66 2/3% of the first 6% of Salary contributed to the Plan. Company
matching contributions are made in the form of ESOP shares, supplemented as
necessary by cash as directed under the terms of the ESOP.
Employee contributions, Company contributions and the earnings on these
contributions are 100% vested immediately and cannot be forfeited.
2. Description of the Plan (continued)
Employees may direct their allotments to be invested in 1% increments
totaling 100% in any one or more of the following funds:
(a) Common Shares Fund;
(b) Interest Income Fund;
(c) Domestic Equity Fund;
(d) Balanced Fund; and
(e) International Equity Fund.
Boston Safe Deposit and Trust Company ("Trustee") is the Trustee under the
Plan, including the ESOP portion of the Plan. PRIMCO Capital Management,
Inc. serves as Investment Manager of the Plan's Interest Income Fund.
Barclays Global Investors, N.A. ("Barclays") serves as Investment Manager
with respect to the Domestic Equity Fund, Balanced Fund and International
Equity Fund. All assets are held by the Trustee; however, at the Company's
direction, the Trustee has entered into an agreement with Barclays under
which Barclays, as agent for the Trustee, has custody of certain Plan assets
in order to effect investment in one or more of the collective investment
funds maintained by Barclays.
Fees pertaining to the Trustee, Investment Management and basic
recordkeeping and account reconciliation services of the SNET Management
Retirement Savings Plan portion of the Trust are paid from the Trust Fund
assets. Expenses of administering the ESOP, including the fees and expenses
of the Trustee, are paid by the Company.
A loan feature is available to employees which permits borrowing up to 50%
of the current vested amount (less any ESOP balance and earnings on Savings
Plus prior to December 31, 1988) up to $50,000, subject to certain other
limits under the Code.
The above is a brief description of the Plan and is provided for general
information purposes only. Participants should refer to the Plan documents
for more complete information.
3. Summary of Significant Accounting Policies
The Common Shares of SBC and SNET held in the Common Shares Fund and in the
ESOP Shares Fund are valued on the basis of the last published sales prices
on December 31, 1998 and December 31, 1997, respectively, on the composite
tapes of the New York Stock Exchange.
3. Summary of Significant Accounting Policies (continued)
The Plan's fully benefit-responsive investment contracts (i.e., the Interest
Income Fund) are carried at the contract value of $105,711,000 (principal
plus reinvested interest less distributions to participants). Using quoted
market prices when available and a discounted cash flow model for all
others, the fair market value of these contracts is $107,733,000 as of
December 31, 1998. For the years ended December 31, 1998 and 1997,
respectively, the average interest rates earned on these contracts were
6.46% and 6.29%, respectively. At December 31, 1998, the fixed crediting
interest rates on these contracts ranged from 4.12% to 14.40%. At December
31, 1997, the fixed crediting interest rates on these contracts ranged from
3.67% to 9.75%.
Barclays Fund units are valued and certified on December 31, 1998 and
December 31, 1997 by Barclays. Barclays determines the unit values on the
valuation date by dividing the total closing market value of the fund by the
number of units outstanding on the valuation date.
A Master Trust is maintained in order to consolidate the investment of
assets of this Plan and the assets of the SNET Bargaining Unit Retirement
Savings Plan. The Trustee maintains separate accounts to reflect the
beneficial interest of each of the participating plans in the net assets of
the Master Trust.
The preparation of financial statements in conformity with 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.
4. Employee Stock Ownership Plan
In January 1990, an ESOP was established within the Plan. The ESOP borrowed
$72 million to acquire 1,851,330 shares of common stock of SNET at market
value which will be used to meet the Company's contributions to the Plan
from September 1990 through the year 2000. Additionally, $6 million was
borrowed from SNET to buy shares. The Company will also make annual cash
contributions to the ESOP which, when combined with dividends on the ESOP
Shares, will be sufficient to repay the loans plus interest. Additional
contributions will be made by SNET when share allocations are less than
SNET's obligation.
Borrowings of the ESOP are evidenced by loans issued as follows:
Maturity Principal Outstanding as of
Interest Date December 31, 1998 December 31, 1997
-------- -------- ----------------- -----------------
Loan 1 9.35% July 1, 2000 $ 1.7 million $ 2.4 million
Loan 2 9.35% January 1, 2000 $ 18.5 million $ 26.5 million
4. Employee Stock Ownership Plan (continued)
Payment of debt over the next two years is as follows:
Principal Amount
Year (in Thousands)
-------- -------------------
1999 9,555
2000 10,661
----------
$ 20,216
==========
During 1998, the payment of debt released 180,960 SNET shares which were
allocated to participants, leaving 635,824 unallocated SBC shares in the
ESOP Shares Fund at December 31, 1998. The value of these unallocated shares
was $34.1 million. The Plan has pledged, as collateral for these loans, the
investments in the unallocated ESOP Shares. SNET has guaranteed all
principal and interest payments on these loans in the event of default by
the Plan.
5. Tax Status
The Internal Revenue Service issued a determination letter on March 13,
1997, stating that the Plan and related trust are designed in compliance
with applicable sections of the Internal Revenue Code. The Plan has been
amended since receiving the determination letter. The Plan administrator has
indicated that it will take the necessary steps, if any, to maintain the
Plan's qualified status.
6. Master Trust Allocation
The Master Trust was established January 1, 1993. The Plan's interest in the
assets of the Master Trust is included in the accompanying statements of net
assets available for plan benefits with fund information. A summary of the
net assets of the Master Trust at December 31 is as follows:
1998 1997
(in Thousands) (in Thousands)
--------------- ---------------
Investments:
Common Shares Fund $ 156,890 $ 81,573
Interest Income Fund 162,912 157,346
Domestic Equity Fund 183,993 157,780
Balanced Fund 44,478 30,326
International Equity Fund 11,335 10,174
--------------- ---------------
559,608 437,199
Total receivables 2,724 1,106
Total liabilities (2,336) (461)
--------------- ---------------
Total net assets of the
Master Trust $ 559,996 $ 437,844
=============== ===============
6. Master Trust Allocation (continued)
Allocations of net assets of the Master Trust to participating plans are as
follows:
December 31, 1998 December 31, 1997
Amount Percent Amount Percent
---------- --------- ---------- ---------
SNET Management
Retirement Savings Plan $ 390,276 69.69% $ 307,940 70.33%
SNET Bargaining Unit
Retirement Savings Plan 169,720 30.31% 129,904 29.67%
---------- --------- ---------- ---------
$ 559,996 100.00% $ 437,844 100.00%
========== ========= ========== =========
At December 31, 1998 and 1997, the following individual investments had a
fair value exceeding 5% of the net assets of the Master Trust:
1998 1997
(in Thousands) (in Thousands)
--------------- ---------------
Common Shares of SBC Corporation $ 151,115
Common Shares of SNET Corporation $ 79,241
Barclays US Equity Market Fund 183,993 157,780
The changes in the assets of the Master Trust are as follows:
1998 1997
(in Thousands) (in Thousands)
--------------- ---------------
Net Assets Available-Beginning $ 437,844 $ 374,732
Employee Contributions 31,381 28,111
Transfers of participants' 1,247 348
balances-net
Loans to Participants (10,514) (10,671)
Participants' Loan Repayments 10,084 9,338
--------------- ---------------
Total contributions, transfers
and loan activity 32,198 27,126
Investment Income:
Dividends 2,114 2,806
Interest 10,140 10,199
Net appreciation in fair
value of investments 112,914 57,953
--------------- ---------------
Total net additions 157,366 98,084
--------------- ---------------
Less: Distributions to
Participants 34,369 34,213
Administrative expenses 845 759
--------------- ---------------
Change in Net Assets 122,152 63,112
--------------- ---------------
Net Assets Available-Ending $ 559,996 $ 437,844
=============== ===============
6. Master Trust Allocation (continued)
Master Trust income allocated to the participating plans is as follows:
1998 1997
(in Thousands) (in Thousands)
--------------- ---------------
Income on Common Shares Fund $ 2,322 $ 2,925
Income on Interest Income Fund 9,932 10,079
Income on Domestic Equity Fund 1
Net appreciation in fair value
of investments 112,914 57,953
--------------- ---------------
Net investment income $ 125,168 $ 70,958
=============== ===============
The net appreciation/(depreciation) in fair value of investments in the
Master Trust by major investment category is as follows:
1998 1997
(in Thousands) (in Thousands)
--------------- ---------------
Common Shares Fund $ 69,105 $ 17,692
Domestic Equity Fund 34,390 34,986
Balanced Fund 7,574 5,000
International Equity Fund 1,845 275
--------------- ---------------
$ 112,914 $ 57,953
=============== ===============
ESOP shares are held in a separate trust ("ESOP Trust") which was
established January 22, 1990. The Plan's interest in the assets of this
trust is included in the accompanying statements of net assets available for
plan benefits with fund information.
Allocations of net assets of the ESOP Trust to participating plans are as
follows:
December 31, 1998 December 31, 1997
Amount Percent Amount Percent
---------- --------- ---------- ---------
SNET Management
Retirement Savings Plan $ 174,897 62.78% $ 81,154 63.28%
SNET Bargaining Unit
Retirement Savings Plan 103,678 37.22% 47,096 36.72%
---------- --------- ---------- ---------
$ 278,575 100.00% $ 128,250 100.00%
========== ========= ========== =========
7. Reconciliation to Form 5500
As of December 31, 1998 and 1997, the Plan had approximately $332,000 and
$295,000, respectively, of pending distributions to participants who elected
to withdraw from the Plan. These amounts are recorded as a liability in the
Plan's Form 5500; however, in accordance with generally accepted accounting
principles, these amounts are not recorded as a liability in the
accompanying financial statements.
The following is a reconciliation of net assets available for plan benefits
per the financial statements to the Form 5500:
December 31,
1998 1997
------------- -------------
(in Thousands)
Net assets available for plan benefits
per the financial statements $ 574,216 $ 398,743
Less: Distributions due to participants (332) (295)
------------- -------------
Net assets available for plan benefits
per the Form 5500 $ 573,884 $ 398,448
============= =============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
December 31,
1998 1997
------------- -------------
(in Thousands)
Benefits paid to participants and
Participants' loans settled as withdrawals
per the financial statements $ 30,390 $ 27,528
Add: Distributions due to participants -
current year 332 295
Less: Distributions due to participants -
prior year (295) (333)
------------- -------------
Benefits paid to participants per the
Form 5500 $ 30,427 $ 27,490
============= =============
8. Modification and Termination of Plan
Although it has not expressed any intent to do so, SNET has the right under
the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
9. Significant Plan Amendments
Woodbury Telephone Company shall be a Participating Company and its
management employees are eligible to commence participation in the plan
beginning as soon as administratively feasible on or after January 1, 1999.
Effective for employees who reach age 70 1/2 after December 31, 1998, the
Plan shall not commence distribution of their accounts while they are
actively employed by SNET.
10. Subsequent Event
The Company intends to merge the Plan into the SBC Savings Plan in October
1999.
.
11. Year 2000 (Unaudited)
The Company has developed a plan to modify its internal information
technology to be ready for the year 2000 and has begun converting critical
data processing systems. The project also includes determining whether third
party service providers have reasonable plans in place to become year 2000
compliant. The Company currently expects the project to be substantially
complete in 1999. The Company does not expect this project to have a
significant effect on plan operations.
EIN 06-0542646 ITEM 27a
PN 002
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31,1998
(Dollars in Thousands)
Description of Investment
Annuity
Identity of issue, borrower, Contract Maturity Rate of Current
lessor or similar party Number Date Interest Cost Value*
- ------------------------------------------------------------------------------------
INTEREST INCOME FUND
Aetna Life Insurance Co. 14608 Dec-30-01 7.93% $ 4,656 $ 4,656
Allstate Life Ins. Co. 31068 Jul-01-01 6.08% 3,752 3,752
Bankers Trust (Del) BASIC 97-891THT Dec-30-01 6.22% 11,217 11,217
Canada Life Assurance Co. 45846 May-06-99 7.05% 2,735 2,735
Continental Assurance Co. 25717-101 Jul-01-03 5.75% 5,692 5,692
Continental Assurance Co. 630-05574 Sep-01-03 5.73% 7,896 7,896
Continental Assurance Co. 630-05791 Jun-30-00 6.49% 4,538 4,538
Continental Assurance Co. 12946 Feb-01-99 5.44% 4,318 4,318
Jackson National Life 1062 Dec-30-01 5.82% 6,513 6,513
John Hancock Mutual Life 7722 May-01-07 6.30% 5,410 5,410
John Hancock Mutual Life 7722-2 Jun-30-01 4.50% 13 13
John Hancock Mutual Life 8862 Feb-01-02 4.12% 2,675 2,675
Mass Mutual Life Ins. Co. 10483 Jul-05-02 6.81% 3,523 3,523
MBL Life Assurance Corp. 9-5018-1 Jun-30-99 5.10% 474 474
MBL Life Assurance Corp. 9-5018-3 Jun-30-99 5.10% 371 371
MBL Life Assurance Corp. 6-5018-1 Jun-30-99 14.40% 3,885 3,885
MBL Life Assurance Corp. 6-5018-3 Jun-30-99 14.40% 3,041 3,041
Metropolitan Life Ins Co. 13707 Mar-15-99 6.24% 2,670 2,670
Monumental Life Ins Co. 0035TR-12 Jan-19-04 5.38% 18,909 18,909
Prudential Ins Co of Amer. 6700-3 Nov-20-00 8.30% 145 145
State Street Bank & Trust 98246 Dec-30-01 4.37% 4,700 4,700
Transamerica Life & Annuity 76550 Nov-15-04 5.96% 6,576 6,576
United of Omaha Life Ins. 11473 Dec-14-01 5.95% 2,002 2,002
--------- ---------
Total Portfolio 105,711 105,711
Temporary Cash Investments 1,744 1,744
--------- ---------
TOTAL INTEREST INCOME FUND $ 107,455 $ 107,455
--------- ---------
*Represents contract value. Using quoted market prices when available and a
discounted cash flow model for all others, the fair market value of these
contracts is $107.7 million.
EIN 06-0542646 ITEM 27a
PN 002
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
(Dollars in Thousands)
Description of Investment
---------------------------
Identity of issue, borrower, Number of Shares/Principal Current
lessor or similar party Amount or Rate of Interest Cost Value
- ----------------------------------------------------------------------------------------
ESOP SHARES FUND
Common Shares of SBC Corporation* 3,532,619 $ 77,111 $ 189,437
Temporary Cash Investments 1,415 1,415
--------- ---------
TOTAL ESOP SHARES FUND $ 78,526 $ 190,852
--------- ---------
COMMON SHARES FUND
Common Shares of SBC Corporation* 1,714,908 $ 45,124 $ 91,962
Temporary Cash Investments 3,559 3,559
--------- ---------
TOTAL COMMON SHARES FUND $ 48,683 $ 95,521
--------- ---------
DOMESTIC EQUITY FUND
Barclays US Equity Market Fund 5,480,310 $ 84,153 $ 145,302
--------- ---------
TOTAL DOMESTIC EQUITY FUND $ 84,153 $ 145,302
--------- ---------
BALANCED FUND
Barclays Equity Index Fund 440,963 $ 11,314 $ 16,797
Barclays US Debt Index Fund 565,695 8,377 9,461
Barclays Tactical Asset
Allocations Fund 230,225 4,897 6,876
--------- ---------
TOTAL BALANCED FUND $ 24,588 $ 33,134
--------- ---------
INTERNATIONAL EQUITY FUND
Barclays Europe FX UK Equity Index Fund 184,957 $ 3,034 $ 4,365
Barclays MSCI Equity Index Fund Japan 270,132 1,991 1,768
Barclays MSCI Equity Index Fund UK 79,249 1,336 1,793
Barclays Pac EX Japan Equity Index Fund 53,523 560 468
--------- ---------
TOTAL INTERNATIONAL EQUITY FUND $ 6,921 $ 8,394
--------- ---------
TOTAL PARTICIPANT LOAN FUND* 7.0% to 11.5% $ 9,077
---------
TOTAL INVESTMENTS $ 350,326 $ 589,735
========= =========
* Indicates a party-in-interest to the Plan.
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
EIN 06-0542646, Plan No. 002
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Dollars in Thousands)
Expense
Incurred
Number of Party Involved/ Purchase Selling Lease with Cost of Current
Transactions Security Description Price Price Rental Transaction Asset Value Net Gain
- --------------------------------------------------------------------------------------------------------------------------
Category (iii) transactions
154 Purchases Southern New England $ 21,512 $ 21,512
168 Sales Telecommunications Corp. * $ 26,969 $ 15,317 $ 26,969 $ 11,652
313 Purchases TBC Inc. Pooled Employee Fund $ 67,074 $ 67,074
232 Sales Daily Liquidity Fund $ 66,637 $ 66,637 $ 66,637
* Indicates a party-in-interest to the Plan.
There were no category (i), (ii) or (iv) transactions.
SNET MANAGEMENT RETIREMENT SAVINGS PLAN
EXHIBIT INDEX
Exhibits identified in parentheses below, on file with the SEC, are incorporated
herein by reference as exhibits hereto.
Exhibit Sequential
Number Page Number
4.1 Contract dated January 1, 1989 as supplemented by
riders dated January 5, 1989 between The Mutual
Benefit Life Insurance Company and Bankers Trust
Company, the former Trustee of the Plan (Exhibit
4-I to Form SE dated 7/30/90-1, File No. 1-9157)
4.2 Group Annuity Contract RGA-95018 effective April 29,
1994 issued by Mutual Benefit Life Insurance
Company in Rehabilitation to Boston Safe Deposit
and Trust Company as Trustee of the SNET Savings
Plan Master Trust (Exhibit 4.2 to Form 11-K for
the SNET Management Retirement Savings Plan for
the plan year ended December 31, 1995 filed as
Exhibit 99a to Form SE dated 6/6/96, File No.
1-9157).
4.3 Group Annuity Contract WGA-65018 effective April 29,
1994 issued by Mutual Benefit Life Insurance
Company in Rehabilitation to Boston Safe Deposit
and Trust Company as Trustee of the SNET Savings
Plan Master Trust (Exhibit 4.3 to Form 11-K for
the SNET Management Retirement Savings Plan for
the plan year ended December 31, 1995 filed as
Exhibit 99a to Form SE dated 6/6/96, File No.
1-9157).
23-a Consent of Ernst & Young LLP
23-b Consent of Arthur Andersen LLP
Exhibit 23-a
Form 11-K for 1998
File No. 1-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8, No. 333-66105) pertaining to the SNET Management Retirement Savings Plan of
our report dated May 26, 1999, with respect to the financial statements and
supplemental schedules of the SNET Management Retirement Savings Plan included
in this Annual Report (Form 11-K) for the year ended December 31, 1998.
ERNST & YOUNG LLP
Stamford, Connecticut
June 24, 1999
Exhibit 23-b
Form 11-K for 1998
File No. 1-8610
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated June 5, 1998 included in this SNET Management Retirement Savings
Plan Form 11-K, into SBC Communications Inc.'s previously filed Form S-8
Registration Statement No. 333-66105.
Arthur Andersen LLP
Stamford, Connecticut
June 24, 1999