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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 11-K
[X] Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
or
[_] Transition Report Pursuant to Section 15(d) of theSecurities Exchange Act
of 1934
For the transition Commission file number
period from __ to ___ 1-8607
BellSouth Savings and
Security Plan
BELLSOUTH CORPORATION
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
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BELLSOUTH SAVINGS AND SECURITY PLAN
TABLE OF CONTENTS
ITEM PAGE
---- ----
1. Financial Statements.............................................. 2
Report of Independent Accountants................................. 2
Consent of Independent Accountants................................ 3
Statement of Net Assets Available for Plan Benefits With Fund
Information as of December 31, 1996.............................. 4
Statement of Net Assets Available for Plan Benefits With Fund
Information as of December 31, 1995.............................. 5
Statement of Changes in Net Assets Available for Plan Benefits
With Fund
Information for the Year ended December 31, 1996................. 6
Statement of Changes in Net Assets Available for Plan Benefits
With Fund
Information for the Year ended December 31, 1995................. 7
Statement of Changes in Net Assets Available for Plan Benefits
With Fund
Information for the Year ended December 31, 1994................. 8
Notes to Financial Statements..................................... 9
2. Supplemental Schedules
Item 27a--Schedule of Assets Held for Investment Purposes......... S-1
1
REPORT OF INDEPENDENT ACCOUNTANTS
Management Savings Plan Committee of the
BellSouth Savings and Security Plan:
We have audited the accompanying statements of net assets available for plan
benefits with fund information of the BellSouth Savings and Security Plan as
of December 31, 1996 and 1995, and the related statements of changes in net
assets available for plan benefits with fund information for each of the three
years in the period ended December 31, 1996. 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 audits.
We conducted our audits 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 audits provide 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 plan benefits of the
Plan as of December 31, 1996 and 1995, and the changes in net assets available
for plan benefits for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets
Held for Investment Purposes is presented for the purpose of additional
analysis and is not a required part of the basic financial statements. The
fund information in the statements of net assets available for plan benefits
and the statements 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 changes in net assets available for
plan benefits of each fund. The supplemental schedule and fund information
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Coopers & Xxxxxxx L.L.P.
Atlanta, Georgia
June 25, 1997
2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements
of BellSouth Corporation on Form S-8 (File Nos. 33-30772 and 33-38265) of our
report dated June 25, 1997, on our audits of the financial statements of the
BellSouth Savings and Security Plan as of December 31, 1996 and 1995, and for
each of the three years in the period ended December 31, 1996, and the
accompanying financial statement schedule as of December 31, 1996, which
report is included in this Annual Report on Form 11-K.
Coopers & Xxxxxxx L.L.P.
Atlanta, Georgia
June 25, 1997
3
BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1996
(IN THOUSANDS)
EMPLOYEE STOCK
BELLSOUTH INDEXED INTEREST OWNERSHIP PLAN
STOCK BOND STOCK INCOME BALANCED MUTUAL FUND LOAN ---------------------
FUND FUND FUND FUND FUND INVESTMENTS FUND OTHER ALLOCATED UNALLOCATED TOTAL
ASSETS --------- ------ -------- -------- -------- ----------- ------- ------ --------- ----------- ----------
Allocated share of
trust net assets.. $948,885 $6,997 $102,271 $328,749 $15,011 $54,263 $17,906 $1,974 $ -- $ -- $1,476,056
Investment in
BellSouth Savings
and Security
Employee Stock
Ownership Plan
Trust:
Shares of
BellSouth common
stock allocated
to participants.. -- -- -- -- -- -- -- -- 385,762 -- 385,762
Shares of
BellSouth common
stock held for
future
allocation ...... -- -- -- -- -- -- -- -- -- 234,722 234,722
Temporary cash
investments...... -- -- -- -- -- -- -- -- 4,513 8,055 12,568
-------- ------ -------- -------- ------- ------- ------- ------ -------- -------- ----------
Total
Investments..... 948,885 6,997 102,271 328,749 15,011 54,263 17,906 1,974 390,275 242,777 2,109,108
Contributions
receivable........ 1,537 35 425 1,300 76 154 1,694 -- 5,221
Fund, BellSouth
Retirement Savings
Plan and other
transfers
receivable--net... -- -- 448 1,530 1 984 27 -- 125 -- 3,115
-------- ------ -------- -------- ------- ------- ------- ------ -------- -------- ----------
Total Assets.... 950,422 7,032 103,144 331,579 15,088 55,401 17,933 1,974 392,094 242,777 2,117,444
-------- ------ -------- -------- ------- ------- ------- ------ -------- -------- ----------
LIABILITIES
Distributions
payable........... 1,288 19 -- 190 3 25 200 1,879 119 -- 3,723
Fund, BellSouth
Retirement Savings
Plan and other
transfers
payable--net...... 2,798 35 -- -- -- -- -- -- -- -- 2,833
Notes payable..... -- -- -- -- -- -- -- -- -- 199,757 199,757
-------- ------ -------- -------- ------- ------- ------- ------ -------- -------- ----------
Total
Liabilities..... 4,086 54 -- 190 3 25 200 1,879 119 199,757 206,313
-------- ------ -------- -------- ------- ------- ------- ------ -------- -------- ----------
Net Assets
Available for Plan
Benefits.......... $946,336 $6,978 $103,144 $331,389 $15,085 $55,376 $17,733 $ 95 $391,975 $ 43,020 $1,911,131
======== ====== ======== ======== ======= ======= ======= ====== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
4
BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION
DECEMBER 31, 1995
(IN THOUSANDS)
EMPLOYEE STOCK
BELLSOUTH INDEXED INTEREST MUTUAL OWNERSHIP PLAN
STOCK BOND STOCK INCOME BALANCED FUND LOAN ---------------------
FUND FUND FUND FUND FUND INVESTMENTS FUND ALLOCATED UNALLOCATED TOTAL
ASSETS ---------- ------ ------- -------- -------- ----------- ------ --------- ----------- ----------
Allocated share of
trust net assets...... $1,042,539 $6,674 $54,968 $332,900 $7,846 $12,079 $9,619 $ -- $ -- $1,466,625
Investment in
BellSouth Savings and
Security Employee
Stock Ownership Plan
Trust:
Shares of BellSouth
common stock
allocated to
participants......... -- -- -- -- -- -- -- 328,519 -- 328,519
Shares of BellSouth
common stock held for
future allocation ... -- -- -- -- -- -- -- -- 293,103 293,103
Temporary cash
investments.......... -- -- -- -- -- -- -- 38,046 5,201 43,247
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Total Investments... 1,042,539 6,674 54,968 332,900 7,846 12,079 9,619 366,565 298,304 2,131,494
Contributions
receivable............ 6,621 121 1,521 4,408 279 -- 155 3,427 -- 16,532
Fund, BellSouth
Management Savings and
Employee Stock
Ownership Plan,
BellSouth Enterprises
Retirement Savings
Plan and other
transfers receivable--
net................... 7,249 -- 340 -- 249 469 237 -- -- 8,544
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Total Assets........ 1,056,409 6,795 56,829 337,308 8,374 12,548 10,011 369,992 298,304 2,156,570
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
LIABILITIES
Distributions payable. 5,120 56 187 2,672 14 25 43 1,186 -- 9,303
Fund, BellSouth
Management Savings and
Employee Stock
Ownership Plan,
BellSouth Enterprises
Retirement Savings
Plan and other
transfers payable--
net................... -- 9 -- 5,347 -- -- -- 85 -- 5,441
Notes payable......... -- -- -- -- -- -- -- -- 219,467 219,467
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Total Liabilities... 5,120 65 187 8,019 14 25 43 1,271 219,467 234,211
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Net Assets Available
for Plan Benefits..... $1,051,289 $6,730 $56,642 $329,289 $8,360 $12,523 $9,968 $368,721 $ 78,837 $1,922,359
========== ====== ======= ======== ====== ======= ====== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
5
BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
EMPLOYEE STOCK
BELLSOUTH INDEXED INTEREST OWNERSHIP PLAN
STOCK BOND STOCK INCOME BALANCED MUTUAL FUND LOAN ----------------------
FUND FUND FUND FUND FUND INVESTMENTS FUND OTHER ALLOCATED UNALLOCATED TOTAL
---------- ------ -------- -------- -------- ----------- ------- ----- --------- ----------- ----------
Net Assets
Available for Plan
Benefits,
December 31, 1995. $1,051,289 $6,730 $ 56,642 $329,289 $ 8,360 $12,523 $ 9,968 $-- $368,721 $78,837 $1,922,359
---------- ------ -------- -------- ------- ------- ------- ---- -------- ------- ----------
Employee
Contributions..... 43,544 1,206 10,683 28,475 2,262 1,162 -- -- -- -- 87,332
Transfer of
participants'
balances--net..... (54,318) (773) 24,124 (18,290) 3,560 37,448 7,423 -- -- -- (826)
Employing company
contributions..... -- -- -- -- -- -- -- -- 17,906 -- 17,906
Supplemental
contributions..... -- -- -- -- -- -- -- -- -- 25,322 25,322
Allocation of
shares to
participants...... -- -- -- -- -- -- -- -- 33,075 (33,075) --
Transfer of loan
repayment......... -- -- -- -- -- -- -- -- (4,693) 4,693 --
---------- ------ -------- -------- ------- ------- ------- ---- -------- ------- ----------
Total
Contributions,
Allocations and
Transfers......... (10,774) 433 34,807 10,185 5,822 38,610 7,423 -- 46,288 (3,060) 129,734
Allocated share of
Trust investment
activities........ (37,102) 254 15,610 20,060 1,467 4,693 612 95 (11,084) (13,164) (18,559)
---------- ------ -------- -------- ------- ------- ------- ---- -------- ------- ----------
Total Additions... (47,876) 687 50,417 30,245 7,289 43,303 8,035 95 35,204 (16,224) 111,175
---------- ------ -------- -------- ------- ------- ------- ---- -------- ------- ----------
Less:
Distributions to
Participants...... 57,077 439 3,915 28,145 564 450 270 -- 11,950 -- 102,810
Interest on
Notes Payable... -- -- -- -- -- -- -- -- -- 19,593 19,593
---------- ------ -------- -------- ------- ------- ------- ---- -------- ------- ----------
Net Assets
Available for Plan
Benefits,
December 31, 1996. $ 946,336 $6,978 $103,144 $331,389 $15,085 $55,376 $17,733 $ 95 $391,975 $43,020 $1,911,131
========== ====== ======== ======== ======= ======= ======= ==== ======== ======= ==========
The accompanying notes are an integral part of these financial statements.
6
BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLEFOR PLAN BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
EMPLOYEE STOCK
BELLSOUTH INDEXED INTEREST MUTUAL OWNERSHIP PLAN
STOCK BOND STOCK INCOME BALANCED FUND LOAN ----------------------
FUND FUND FUND FUND FUND INVESTMENTS FUND ALLOCATED UNALLOCATED TOTAL
---------- ------ ------- -------- -------- ----------- ------ --------- ----------- ----------
Net Assets Available
for Plan Benefits,
December 31, 1994..... $ 646,155 $5,113 $32,245 $313,647 $3,975 $ 5,218 $5,935 $199,491 $(28,813) $1,182,966
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Employee
Contributions......... 37,421 1,235 7,008 31,484 1,243 -- 155 -- -- 78,546
Transfer of
participants'
balances--net......... (3,835) (55) 6,132 (13,087) 1,900 5,884 3,555 -- -- 494
Employing company
contributions......... -- -- -- -- -- -- -- 23,397 -- 23,397
Supplemental
contributions......... -- -- -- -- -- -- -- -- 24,861 24,861
Allocation of shares
to participants....... -- -- -- -- -- -- -- 26,904 (26,904) --
Transfer for loan
repayment............. -- -- -- -- -- -- -- (5,381) 5,381 --
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Total Contributions,
Allocations and
Transfers............. 33,586 1,180 13,140 18,397 3,143 5,884 3,710 44,920 3,338 127,298
Allocated share of
Trust investment
activities............ 414,437 799 13,156 21,737 1,354 1,444 508 132,087 125,572 711,094
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Total Additions....... 448,023 1,979 26,296 40,134 4,497 7,328 4,218 177,007 128,910 838,392
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Less: Distributions to
Participants.......... 42,889 362 1,899 24,492 112 23 185 7,777 -- 77,739
Interest on Notes
Payable............. -- -- -- -- -- -- -- -- 21,260 21,260
---------- ------ ------- -------- ------ ------- ------ -------- -------- ----------
Net Assets Available
for Plan Benefits,
December 31, 1995..... $1,051,289 $6,730 $56,642 $329,289 $8,360 $12,523 $9,968 $368,721 $ 78,837 $1,922,359
========== ====== ======= ======== ====== ======= ====== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
7
BELLSOUTH SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLEFOR PLAN BENEFITS WITH FUND
INFORMATION
YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
EMPLOYEE STOCK
BELLSOUTH INDEXED INTEREST MUTUAL OWNERSHIP PLAN
STOCK BOND STOCK INCOME BALANCED FUND LOAN ----------------------
FUND FUND FUND FUND FUND INVESTMENTS FUND ALLOCATED UNALLOCATED TOTAL
--------- ------ ------- -------- -------- ----------- ------ --------- ----------- ----------
Net Assets Available
for Plan Benefits,
December 31, 1993..... $643,944 $5,097 $29,022 $290,728 $ -- $ -- $4,248 $162,222 $ (5,117) $1,130,144
-------- ------ ------- -------- ------ ------ ------ -------- -------- ----------
Employee
Contributions......... 36,310 1,480 6,692 32,308 1,201 -- -- -- -- 77,991
Transfer of
participants'
balances--net......... 7,566 (1,155) (2,759) (11,440) 2,884 5,223 1,515 -- -- 1,834
Employing company
contributions......... -- -- -- -- -- -- -- 25,178 -- 25,178
Supplemental
contributions......... -- -- -- -- -- -- -- -- 23,364 23,364
Allocation of shares
to participants....... -- -- -- -- -- -- -- 24,402 (24,402) --
Transfer for loan
repayment............. -- -- -- -- -- -- -- (3,041) 3,041 --
-------- ------ ------- -------- ------ ------ ------ -------- -------- ----------
Total Contributions,
Allocations and
Transfers............. 43,876 325 3,933 20,868 4,085 5,223 1,515 46,539 2,003 128,367
Allocated share of
Trust investment
activities............ (13,460) 3 452 19,869 (35) -- 172 (6,708) (2,938) (2,645)
-------- ------ ------- -------- ------ ------ ------ -------- -------- ----------
Total Additions....... 30,416 328 4,385 40,737 4,050 5,223 1,687 39,831 (935) 125,722
-------- ------ ------- -------- ------ ------ ------ -------- -------- ----------
Less: Distributions to
Participants.......... 28,205 312 1,162 17,818 75 5 -- 2,562 -- 50,139
Interest on Notes
Payable............. -- -- -- -- -- -- -- -- 22,761 22,761
-------- ------ ------- -------- ------ ------ ------ -------- -------- ----------
Net Assets Available
for Plan Benefits,
December 31, 1994..... $646,155 $5,113 $32,245 $313,647 $3,975 $5,218 $5,935 $199,491 $(28,813) $1,182,966
======== ====== ======= ======== ====== ====== ====== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
8
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
1. PLAN DESCRIPTION (WHOLE DOLLARS)
GENERAL
The following description of the BellSouth Savings and Security Plan (the
Plan) provides only general information. For additional information,
participants should refer to the Plan Prospectus/Summary Plan Description, as
supplemented (SPD). A copy of the SPD can be obtained by calling the BellSouth
Participant Service Center at 0-000-000-0000 or 0-000-000-0000 via company
telephone. In addition, copies of the Plan agreement and other related
documents which include details of the Plan can be obtained by writing to:
Secretary, BellSouth Savings Plan Committee, Room 13C09, 0000 Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000.
The Plan was established by BellSouth Corporation (BellSouth) to provide a
convenient way for non-salaried employees to save for their retirement on a
long-term basis and to acquire an ownership interest in BellSouth. The Plan
consists of two parts: one is a profit sharing plan which includes a qualified
cash or deferred arrangement and which is intended to qualify as such under
sections 401(a), 401(k) and 401(m) and related sections of the Internal
Revenue Code of 1986, as amended (the Code); the second part is an employee
stock ownership plan (ESOP) which is designed as a stock bonus plan to invest
primarily in shares of BellSouth common stock and which is intended to qualify
under Sections 401(a), 401(m) and 4975(e)(7) and related sections of the Code.
The Plan covers all non-management employees who are active, regular full-time
or part-time employees of a BellSouth company participating in the Plan. The
Plan is subject to the Employee Retirement Income Security Act of 1974, as
amended (ERISA).
PLAN AMENDMENT AND RESTATEMENT
Effective July 1, 1996, the Plan document was amended and restated.
Significant changes included a change in investment valuation methods (see
below) and changes to various service functions provided by Bankers Trust
Company, the Plan's service provider.
MASTER TRUST
For investment purposes, the assets of the Plan are held in the BellSouth
Master Savings Trust (the Master Savings Trust). In addition, the Master
Savings Trust also holds all assets of the BellSouth Retirement Savings Plan
(formerly the BellSouth Management Savings and Employee Stock Ownership Plan
and the BellSouth Enterprises Retirement Savings Plan).
At December 31, 1996, the Plan's assets were comprised of the following
investment vehicles: BellSouth Stock Fund, Bond Fund, Indexed Stock Fund,
Interest Income Fund, Balanced Fund and Mutual Fund Investments which include
the Xxxxxx 100 Fund, DFA International Value II Fund, DFA U.S. Large Cap Value
II Fund, DFA U.S. Small Cap Value II Fund, American Century/Twentieth Century
Growth Investors Fund, and Fidelity Growth and Income Portfolio.
At December 31, 1996 and 1995, the Plan's assets are significantly
concentrated in shares of BellSouth common stock which is subject to industry
and economic fluctuations.
Effective July 8, 1996, all investments are valued on a daily basis. Prior
to this date, all Plan investment funds other than the mutual fund investments
were valued on a monthly basis. Since they were added as investment options,
the mutual fund investments have been valued on a daily basis.
Prior to July 8, 1996, the assets of the Xxxxxx 100 Fund, American
Century/Twentieth Century Growth Investors Fund, and the three DFA Funds were
contained within a Mutual Fund Window account. In conjunction with the
conversion of investment valuation to a daily basis, these mutual funds were
established as separate investment funds. For further discussion, see Note 3.
Also, on July 8, 1996, the Fidelity Growth and Income Portfolio was added as a
new investment option.
9
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
1. PLAN DESCRIPTION (CONTINUED)--
VESTING
Participant contributions vest immediately. Employing company matching
contributions vest upon a participant's completion of three years service. One
year of vesting service is earned upon a participant's completion of 1,000
work hours during any year.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to
the lesser of $50,000 or 50 percent of their before-tax account balance as
defined by the Plan document and any amounts rolled over to the Plan from
another qualified plan. Loan balances are secured by the balance in the
participant's account and bear interest at various rates which ranged from
7.0% to 12.05% at December 31, 1996. Principal and interest is paid ratably
through periodic payroll deductions.
SERVICE PROVIDER
Bankers Trust Company is the Trustee for the Master Savings Trust. Bankers
Trust Company also serves as the recordkeeper and service center provider for
the Plan.
2. ACCOUNTING POLICIES
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles under the accrual method of
accounting. Such financial statements include estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities and the amounts of revenues and expenses.
Actual results could differ from those estimates. Certain amounts in prior
period financial statements have been reclassified to conform to the current
year's presentation.
With respect to the statements of changes in net assets available for plan
benefits for the years presented, allocated share of Trust investment
activities includes the sum of realized gains, net of realized losses, the net
change in unrealized appreciation/(depreciation) on the fair value of the
investments, interest income, dividends, and investment manager fees paid by
the Master Savings Trust.
The values of investments in the Master Savings Trust are determined as
follows:
. Shares of BellSouth common stock and other securities listed on a
national stock exchange are valued on the basis of the closing price per
share on December 31, 1996 and December 31, 1995, as reported on the New
York Stock Exchange composite tape or, if no sales were made on that
date, at the closing price on the next preceding day on which sales were
made;
. Over-the-counter securities and government obligations are valued based
on the bid prices on December 31, 1996 and 1995 from published sources
where available and, if not available, from other sources considered
reliable; and
. Contracts with insurance companies are valued at principal plus
reinvested interest.
Purchases and sales of securities are reflected as of the trade date.
Realized gains and losses on sales of investments are determined on the
basis of average cost.
Dividend income is recognized on the ex-dividend date. Interest earned on
investments is recognized on the accrual basis.
10
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
3. MUTUAL FUND INVESTMENTS
MUTUAL FUND WINDOW
During 1994, the Xxxxxx 100 fund, the American Century/Twentieth Century
Growth Investors Fund, and the three DFA mutual funds were established as
investment options. Amounts could only be directed to these mutual fund
investments through transfers from the other core funds. Liquidation of these
mutual funds as a result of changing investment elections, transfers or
participant withdrawals could occur on any day. However, the five core funds
in the Plan (BellSouth Stock Fund, Bond Fund, Indexed Stock Fund, Interest
Income Fund, and Balanced Fund), were still valued on a monthly basis. As a
result a "Mutual Fund Window" or MFW was established. The MFW consisted of the
five mutual funds and a temporary holding account into which any funds,
generated as the result of mutual fund liquidations during a month, would be
placed and held until the end of the month. At the end of the month, transfers
out of the MFW would be effected with the five core funds, valued and recorded
according to the month-end unit value of the core fund(s).
As discussed in Note 1, on July 8, 1996 the Plan converted to a daily
valuation basis for all of its investment options. This allowed transactions
between the mutual funds and the five core funds to be effected and recorded
on the same day at any time during the month. As a result, subsequent to that
date, the MFW was eliminated and separate investment accounts for each mutual
fund were maintained. With the elimination of the MFW, participants were
allowed to make contributions directly to the mutual fund investments. Assets
held in the MFW and subsequently in these individual fund accounts are
collectively included in "Mutual Fund Investments" in the accompanying
financial statements of the Plan. Also, on July 8, 1996, the Fidelity Growth
and Income Portfolio was added as a new investment option.
Net assets available for plan benefits by fund for Mutual Fund Investments
at December 31, 1996 are as follows:
AMERICAN
CENTURY/
TWENTIETH
CENTURY FIDELITY
DFA DFA DFA GROWTH GROWTH & MUTUAL FUND
XXXXXX 100 INTERNATIONAL U.S. LARGE CAP U.S. SMALL CAP INVESTORS INCOME INVESTMENTS
FUND VALUE II FUND VALUE II FUND VALUE II FUND FUND PORTFOLIO OTHER TOTAL
---------- ------------- -------------- -------------- --------- --------- ----- -----------
ASSETS
Allocated share of
trust net assets...... $13,498 $3,122 $5,916 $7,120 $5,761 $18,808 $38 $54,263
Contributions
receivable............ 30 8 10 21 10 75 -- 154
Fund, BellSouth
Retirement Savings
Plan and other
transfers receivable--
net................... 104 100 38 220 9 497 16 984
------- ------ ------ ------ ------ ------- --- -------
Total Assets......... 13,632 3,230 5,964 7,361 5,780 19,380 54 55,401
------- ------ ------ ------ ------ ------- --- -------
LIABILITIES
Distributions payable.. -- -- -- -- -- 3 22 25
Fund, BellSouth
Retirement Savings
Plan and other
transfers payable--
net................... -- -- -- -- -- -- -- --
------- ------ ------ ------ ------ ------- --- -------
Total Liabilities.... -- -- -- -- -- 3 22 25
------- ------ ------ ------ ------ ------- --- -------
Net Assets Available
for Plan Benefits..... $13,632 $3,230 $5,964 $7,361 $5,780 $19,377 $32 $55,376
======= ====== ====== ====== ====== ======= === =======
11
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
3. MUTUAL FUND INVESTMENTS (CONTINUED)--
Net assets available for plan benefits by fund for Mutual Fund Investments at
December 31, 1995 are as follows:
AMERICAN CENTURY/
DFA DFA DFA TWENTIETH CENTURY MUTUAL FUND
XXXXXX 100 INTERNATIONAL U.S. LARGE CAP U.S. SMALL CAP GROWTH INVESTORS INVESTMENTS
FUND VALUE II FUND VALUE II FUND VALUE II FUND FUND TOTAL
---------- ------------- -------------- -------------- ----------------- -----------
ASSETS
Allocated share of trust
net assets............. $6,013 $857 $1,462 $1,235 $2,512 $12,079
Contributions
receivable............. -- -- -- -- -- --
Fund, BellSouth
Management Savings and
Employee Stock
Ownership Plan,
BellSouth Enterprises
Retirement Savings Plan
and other transfers
receivable--net........ 8 115 79 86 181 469
------ ---- ------ ------ ------ -------
Total Assets.......... 6,021 972 1,541 1,321 2,693 12,548
------ ---- ------ ------ ------ -------
LIABILITIES
Distributions payable... 18 4 -- -- 3 25
Fund, BellSouth
Management Savings and
Employee Stock
Ownership Plan,
BellSouth Enterprises
Retirement Savings Plan
and other transfers
payable--net........... -- -- -- -- -- --
------ ---- ------ ------ ------ -------
Total Liabilities..... 18 4 -- -- 3 25
------ ---- ------ ------ ------ -------
Net Assets Available for
Plan Benefits.......... $6,003 $968 $1,541 $1,321 $2,690 $12,523
====== ==== ====== ====== ====== =======
12
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
3. MUTUAL FUND INVESTMENTS (CONTINUED)--
Changes in net assets available for plan benefits by fund for Mutual Fund
Investments for the year ended December 31, 1996 are as follows:
AMERICAN CENTURY/ FIDELITY
DFA DFA DFA TWENTIETH CENTURY GROWTH & MUTUAL FUND
XXXXXX 100 INTERNATIONAL U.S. LARGE CAP U.S. SMALL CAP GROWTH INVESTORS INCOME INVESTMENTS
FUND VALUE II FUND VALUE II FUND VALUE II FUND FUND PORTFOLIO OTHER TOTAL
---------- ------------- -------------- -------------- ----------------- --------- ----- -----------
Net Assets
Available for Plan
Benefits, December
31, 1995.......... $ 6,003 $ 968 $1,541 $1,321 $2,690 $ -- -- $12,523
------- ------ ------ ------ ------ ------- --- -------
Employee
Contributions..... 267 59 78 139 69 550 -- 1,162
Transfer of
participants'
balances--net..... 6,014 2,056 3,822 4,918 2,629 17,970 39 37,448
------- ------ ------ ------ ------ ------- --- -------
Total
Contributions,
Allocations and
Transfers......... 6,281 2,115 3,900 5,057 2,698 18,520 39 38,610
Allocated share of
Trust investment
activities........ 1,455 154 577 1,043 438 1,008 18 4,693
------- ------ ------ ------ ------ ------- --- -------
Total Additions.... 7,736 2,269 4,477 6,100 3,136 19,528 57 43,303
------- ------ ------ ------ ------ ------- --- -------
Less: Distributions
to Participants... 107 7 54 60 46 151 25 450
------- ------ ------ ------ ------ ------- --- -------
Net Assets
Available for Plan
Benefits, December
31, 1996.......... $13,632 $3,230 $5,964 $7,361 $5,780 $19,377 $32 $55,376
======= ====== ====== ====== ====== ======= === =======
13
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
3. MUTUAL FUND INVESTMENTS (CONTINUED)--
Changes in net assets available for plan benefits by fund for Mutual Fund
Investments for the year ended December 31, 1995 are as follows:
AMERICAN CENTURY/
DFA DFA DFA TWENTIETH CENTURY MUTUAL FUND
XXXXXX 100 INTERNATIONAL U.S. LARGE CAP U.S. SMALL CAP GROWTH INVESTORS INVESTMENTS
FUND VALUE II FUND VALUE II FUND VALUE II FUND FUND TOTAL
---------- ------------- -------------- -------------- ----------------- -----------
Net Assets Available for
Plan Benefits, December
31, 1994............... $3,009 $582 $ 224 $ 458 $ 945 $ 5,218
------ ---- ------ ------ ------ -------
Employee Contributions.. -- -- -- -- -- --
Transfer of
participants'
balances--net.......... 2,185 308 1,156 697 1,538 5,884
------ ---- ------ ------ ------ -------
Total Contributions,
Allocations and
Transfers.............. 2,185 308 1,156 697 1,538 5,884
Allocated share of Trust
investment activities.. 826 81 161 166 210 1,444
------ ---- ------ ------ ------ -------
Total Additions......... 3,011 389 1,317 863 1,748 7,328
------ ---- ------ ------ ------ -------
Less: Distributions to
Participants........... 17 3 -- -- 3 23
------ ---- ------ ------ ------ -------
Net Assets Available for
Plan Benefits, December
31, 1995............... $6,003 $968 $1,541 $1,321 $2,690 $12,523
====== ==== ====== ====== ====== =======
Changes in net assets available for plan benefits by fund for Mutual Fund
Investments for the year ended December 31, 1994 are as follows:
AMERICAN CENTURY/
DFA DFA DFA TWENTIETH CENTURY MUTUAL FUND
XXXXXX 100 INTERNATIONAL U.S. LARGE CAP U.S. SMALL CAP GROWTH INVESTORS INVESTMENTS
FUND VALUE II FUND VALUE II FUND VALUE II FUND FUND TOTAL
---------- ------------- -------------- -------------- ----------------- -----------
Net Assets Available for
Plan Benefits, December
31, 1993............... $ -- $-- $-- $-- $-- $ --
------ ---- ---- ---- ---- ------
Employee Contributions.. -- -- -- -- -- --
Transfer of
participants'
balances--net.......... 3,010 582 224 462 945 5,223
------ ---- ---- ---- ---- ------
Total Contributions,
Allocations and
Transfers.............. 3,010 582 224 462 945 5,223
Allocated share of Trust
investment activities.. -- -- -- -- -- --
------ ---- ---- ---- ---- ------
Total Additions......... 3,010 582 224 462 945 5,223
------ ---- ---- ---- ---- ------
Less: Distributions to
Participants........... 1 -- -- 4 -- 5
------ ---- ---- ---- ---- ------
Net Assets Available for
Plan Benefits, December
31, 1994............... $3,009 $582 $224 $458 $945 $5,218
====== ==== ==== ==== ==== ======
14
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
4. UNITS OF THE PLAN (WHOLE DOLLARS)
Participants in the Plan can direct their contributions among 11 investment
options as described in Note 1. The interest of a participant in each type of
investment of the Plan is represented by units as described in Section 8 of
the Plan document. The units of the BellSouth Stock Fund, Bond Fund, Indexed
Stock Fund and Interest Income Fund were reunitized or restated on January 1,
1994. Each fund was given a "new start" beginning with a unit value of
$1.0000. At the same date the number of units credited to the participants'
accounts was increased, so that the number of units owned equaled the dollar
amount invested. In addition, the Balanced Fund was added as an investment
option on January 1, 1994 and given a unit value of $1.0000.
Prior to July 8, 1996, participant accounts and the related unit values for
investments other than mutual funds were valued on a monthly basis. As
previously discussed in Notes 1 and 3, the plan converted to a daily unit
valuation method for all participant accounts and investments on July 8, 1996.
The number and value of units for investments other than the Mutual Fund
Investments as of December 31, 1996 and December 31, 1995 were as follows:
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------------------ ------------------------------
TYPE OF INVESTMENT NUMBER OF UNITS VALUE PER UNIT NUMBER OF UNITS VALUE PER UNIT
------------------ --------------- -------------- --------------- --------------
BellSouth Stock Fund.... 601,614,144 $1.5659 646,120,050 $1.6271
Bond Fund............... 5,801,441 1.1971 5,846,822 1.1512
Indexed Stock Fund...... 60,033,796 1.7112 40,738,848 1.3904
Interest Income Fund.... 271,398,023 1.2177 288,269,045 1.1423
Balanced Fund........... 10,572,766 1.4196 6,661,087 1.2551
The number and value of units by month for each investment other than the
Mutual Fund Investments during 1996 were as follows:
BELLSOUTH STOCK FUND BOND FUND
-------------------- ------------------
NUMBER OF VALUE NUMBER OF VALUE
1996 UNITS PER UNIT UNITS PER UNIT
---- ----------- -------- --------- --------
January................................. 644,828,044 1.6174 6,034,304 1.1573
February................................ 645,429,859 1.5060 6,120,183 1.1439
March................................... 645,754,539 1.3989 6,204,398 1.1379
April................................... 642,722,356 1.5232 6,154,031 1.1339
May..................................... 640,904,021 1.5472 6,216,925 1.1332
June.................................... 637,846,178 1.6146 6,022,158 1.1451
July.................................... 634,139,303 1.5779 5,963,964 1.1493
August.................................. 633,546,921 1.3972 5,910,632 1.1477
September............................... 633,862,773 1.4257 5,874,914 1.1655
October................................. 623,886,659 1.5821 5,737,559 1.1887
November................................ 612,526,643 1.5679 5,803,695 1.2067
December................................ 601,614,144 1.5659 5,801,441 1.1971
15
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
4. UNITS OF THE PLAN (WHOLE DOLLARS) (CONTINUED)--
INDEXED STOCK FUND INTEREST INCOME FUND
------------------- --------------------
NUMBER OF VALUE NUMBER OF VALUE
1996 UNITS PER UNIT UNITS PER UNIT
---- ---------- -------- ----------- --------
January................................ 42,450,664 1.4386 282,116,228 1.1485
February............................... 44,049,807 1.4515 276,952,846 1.1544
March.................................. 46,015,904 1.4657 272,301,842 1.1608
April.................................. 47,725,581 1.4875 271,455,669 1.1670
May.................................... 48,706,022 1.5247 269,997,938 1.1733
June................................... 49,403,169 1.5308 268,890,143 1.1795
July................................... 49,116,915 1.4644 267,796,382 1.1857
August................................. 51,089,206 1.4945 267,819,724 1.1919
September.............................. 52,197,287 1.5790 265,462,423 1.1985
October................................ 53,101,942 1.6231 266,309,608 1.2049
November............................... 57,692,942 1.7461 267,648,814 1.2109
December............................... 60,033,796 1.7112 271,398,023 1.2177
BALANCED FUND
-------------------
NUMBER OF VALUE
1996 UNITS PER UNIT
---- ---------- --------
January................................ 7,403,935 1.2850
February............................... 7,703,945 1.2756
March.................................. 8,437,117 1.2764
April.................................. 8,909,598 1.2791
May.................................... 9,015,683 1.2917
June................................... 9,017,900 1.3049
July................................... 9,050,471 1.2784
August................................. 9,242,232 1.2897
September.............................. 9,414,832 1.3382
October................................ 9,685,966 1.3729
November............................... 10,128,566 1.4392
December............................... 10,572,766 1.4196
The values of mutual fund investments, all of which are traded on a national
securities exchange, are based on published daily closing net asset values as
reported by the respective securities exchange.
16
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
4. UNITS OF THE PLAN (CONTINUED)--
At December 31, 1996, the number of participants currently contributing to
the Plan by investment direction as described in Section 7 of the Plan
document was as follows:
NO.
FUND DESCRIPTION PARTICIPANTS
---------------- ------------
Entirely in BellSouth Stock Fund............................... 13,810
Entirely in Indexed Stock Fund................................. 1,940
Entirely in Interest Income Fund............................... 10,787
Entirely in Balanced Fund...................................... 243
Entirely in Fidelity Growth and Income Fund.................... 176
Equally in BellSouth Stock Fund and Bond Fund.................. 187
Equally in BellSouth Stock Fund and Indexed Stock Fund......... 1,917
Equally in BellSouth Stock Fund and Interest Income Fund....... 6,095
Equally in BellSouth Stock Fund and Balanced Fund.............. 190
Equally in Bond Fund and Indexed Stock Fund.................... 118
Equally in Indexed Stock Fund and Interest Income Fund......... 468
Equally in Indexed Stock Fund and Balanced Fund................ 314
Equally in Indexed Stock Fund and Fidelity Growth and Income
Fund.......................................................... 232
Equally in BellSouth Stock Fund, Bond Fund and Indexed Stock
Fund.......................................................... 145
Equally in BellSouth Stock Fund, Indexed Stock Fund and
Interest Income Fund.......................................... 342
Equally in BellSouth Stock Fund, Indexed Stock Fund and
Balanced Fund................................................. 291
Equally in BellSouth Stock Fund, Bond Fund, Indexed Stock Fund
and
Interest Income Fund.......................................... 216
Various Fund combinations*..................................... 2,232
------
Total Participants........................................... 39,703
======
--------
* Includes all other investment directions having less than 100 participants.
Since all employing company contributions are made to the ESOP, all
employees currently contributing to the Plan are participants in the ESOP.
5. CONTRIBUTIONS
Employee contributions to the Plan are recorded based upon authorized basic
and supplemental contributions. The maximum basic contribution rate was $55
and $50 for 1996 and 1995, respectively. Participants may contribute up to 15%
(12% prior to January 1, 1996) of their eligible compensation to the Plan on a
before-tax basis. Total before-tax and after-tax contributions may not exceed
15% of compensation.
As discussed in Section 3 of the Plan document, participants may also
rollover amounts into the Plan from other qualified plans.
The employing company makes contributions to the ESOP in respect of each
participant's authorized basic contribution. Employing company matching
contributions will vest upon a participant's completion of three years
service. One year of vesting service is earned upon a participant's completion
of 1,000 work hours during any year. The rate of the employing company
matching contribution remains in effect for a twelve month period from April 1
through March 31. Employing company matching contribution rates for the three
years ended December 31, 1996 were as follows:
1996 1995 1994
---- ---- ----
January-March............................................. 69% 76%* 59%
April-December............................................ 76% 69% 76%*
--------
* 71% for participating employees of BellSouth Advertising and Publishing
Corporation.
17
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
6. PLAN EXPENSES
Each participant of the Plan is charged a flat annual fee for Plan
administrative expenses, including record keeping, trustee, and other expenses
considered reasonable by the Plan administrator. The fee is divided on a pro
rata basis among each investment option of the participant. The per-
participant fee for 1996, 1995 and 1994 was $26.40, $22.00 and $22.00,
respectively. Additional fees are also charged to individual participants for
various services provided by the Plan's recordkeeper and the BellSouth
Participant Service Center.
Investment manager fees are paid by the Master Savings Trust. Investment
manager fees included in allocated share of Trust investment activities in the
statements of changes in net assets available for plan benefits for the years
presented, were as follows:
1996 1995 1994
---- ---- ----
Bond Fund........................................................ $ 21 $ 14 $ 13
Indexed Stock Fund............................................... 16 11 9
Interest Income Fund............................................. 146 142 145
Balanced Fund.................................................... 12 6 3
---- ---- ----
$195 $173 $170
==== ==== ====
For the Mutual Fund Investments, investment manager fees are not paid
directly from the Master Savings Trust. However, these investments are subject
to "expense ratios" which reduce the overall return of the respective mutual
fund. Expense ratios, expressed in percentage terms, which were assessed
against mutual fund investments by their respective managers during 1996 were
as follows:
FOR THE
YEAR ENDED
DECEMBER 31, 1996
-----------------
Xxxxxx 100 Fund............................................... 1.42%
DFA International Value II Fund............................... 0.86%
DFA U.S. Large Cap Value II Fund.............................. 0.82%
DFA U.S. Small Cap Value II Fund.............................. 0.85%
American Century/Twentieth Century Growth Investors Fund...... 1.00%
Fidelity Growth & Income Portfolio............................ 0.74%
For the three years ended December 31, 1996, no fees were paid to investment
managers for management of the BellSouth Stock Fund.
7. TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated November 22, 1995, that the Plan and related trust meet the
requirements of Section 401(a) of the Code, and are exempt from federal income
taxes under Section 501(a) of the Code.
As discussed in Note 1, the Plan document was amended and restated in July
of 1996. BellSouth is currently in the process of requesting a new
determination letter and believes that the Plan, in its current form, will
maintain its tax exempt status. Therefore, no provision for income taxes has
been included in the Plan's financial statements.
18
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
7. TAX STATUS (CONTINUED)
For information on the federal income tax effects on the employee with
respect to the Plan, participants should refer to the SPD.
8. TERMINATION PRIORITIES
BellSouth intends to continue the Plan indefinitely but reserves the right
to terminate or amend it. In the event the Plan is terminated, subject to
conditions set forth in ERISA, participants will receive written notification
of plan termination at least 30 days in advance. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
The participant may then elect to leave all units in his/her account until
they leave the Company or take a lump sum distribution of the value of his/her
units.
9. INTEREST IN BELLSOUTH MASTER SAVINGS TRUST
The assets of the Plan are held in the Master Savings Trust and are
commingled with the assets of the BellSouth Retirement Savings Plan. Prior to
April 1, 1996, the Plan's assets were also commingled with the assets of the
BellSouth Enterprises Retirement Savings Plan, which was merged with and into
the BellSouth Retirement Savings Plan on April 1, 1996. The assets of the
BellSouth Employee Stock Ownership Plan (PAYSOP) are held in a sub-trust of
the Master Savings Trust. This sub-trust is not included in the following
Master Savings Trust information.
The Plan's allocated share of the total net assets of all funds in the
Master Savings Trust at December 31, 1996 and 1995 was 32.2428% and 33.0476%,
respectively. The Plan's allocated share of the net assets of each fund in the
Master Savings Trust at December 31, 1996 and 1995 were as follows:
1996 1995
--------- ---------
BellSouth Stock Fund.................................... 46.91167% 46.29514%
Bond Fund............................................... 5.50809% 4.62267%
Indexed Stock Fund...................................... 11.87296% 8.68148%
Interest Income Fund.................................... 28.94570% 27.82033%
Balanced Fund........................................... 15.46374% 12.20172%
Xxxxxx 100 Fund......................................... 27.85832% 17.12916%
DFA International Value II Fund......................... 10.13969% 5.26158%
DFA U.S. Large Cap Value II Fund........................ 22.27917% 18.72441%
DFA U.S. Small Cap Value II Fund........................ 15.50804% 8.04448%
American Century/Twentieth Century Growth Investors
Fund................................................... 27.84984% 18.40317%
Fidelity Growth & Income Portfolio...................... 25.27740% --
Loan Fund............................................... 23.52051% 16.21847%
Other................................................... 23.33251% --
19
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
9. INTEREST IN BELLSOUTH MASTER SAVINGS TRUST (CONTINUED)--
The financial position of the Master Savings Trust at December 31, 1996 and
1995 was as follows:
1996 1995
---- ----
Assets: Investment at value:
BellSouth Stock Fund:
Shares of BellSouth common stock...................... $2,009,039 $2,216,148
Temporary cash investments............................ 490 33,313
Bond Fund:
Securities............................................ 121,647 139,775
Temporary cash investments............................ 4,223 2,302
Indexed Stock Fund:
Equity Index Fund..................................... 862,465 630,335
Temporary cash investments............................ 86 3,035
Interest Income Fund:
Contracts............................................. 1,088,329 1,182,614
Temporary cash investments............................ 46,790 14,514
Balanced Fund:
Securities............................................ 86,837 36,043
Temporary cash investments............................ 10,116 28,185
Xxxxxx 100 Fund*:
Securities............................................ 55,121 34,304
Temporary cash investments............................ 8 --
DFA International Value II Fund*:
Securities............................................ 31,884 16,020
DFA U.S. Large Cap Value II Fund*:
Securities............................................ 26,424 7,801
DFA U.S. Small Cap Value II Fund*:
Securities............................................ 48,291 15,151
Temporary cash investments............................ 2 --
American Century/Twentieth Century Growth Investors
Fund*:
Securities............................................ 20,883 12,920
Fidelity Growth & Income Portfolio
Securities............................................ 75,746 --
Temporary cash investments............................ 2 --
Mutual Fund Window:
Temporary cash investments............................ 856 1,800
Loan Fund:
Loans to participants................................. 73,981 59,432
Temporary cash investments............................ 141 39
Contribution Account+
Temporary cash investments............................ 123 --
Distribution Account+
Temporary cash investments............................ 6,831 --
Expense Account+
Temporary cash investments............................ 1,505 --
Distributable shares................................... 397 3,004
Dividends and interest income receivable............... 2,346 2,516
Receivable for investments sold........................ 14,806 4,752
Variation margin receivable............................ 18 33
---------- ----------
$4,589,387 $4,444,036
Liabilities:
Payable for investments purchased...................... 7,182 4,741
Variation margin payable............................... 95 --
Administrative fees payable............................ 1,040 648
---------- ----------
Trust net assets (excluding ESOP Trusts)............... 4,581,070 4,438,647
20
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT UNIT VALUES AND AS NOTED)
9. INTEREST IN BELLSOUTH MASTER SAVINGS TRUST (CONTINUED)--
1996 1995
---- ----
Investment in ESOP Trusts:
Shares of BellSouth common
stock allocated to partici-
pants....................... 835,717 773,185
Distributable shares......... 37 845
Shares of BellSouth common
stock held for future allo-
cation...................... 707,649 871,871
Temporary cash investments... 30,035 65,498
---------- ----------
Total investments............ 6,154,508 6,150,046
Liabilities:
Payable for investments pur-
chased...................... -- 19,031
Notes payable................ 594,334 647,311
---------- ----------
Trust net assets............. $5,560,174 $5,483,704
========== ==========
Investments at cost.......... $4,329,557 $4,091,362
========== ==========
--------
*Prior to 1996, this fund was included within the Mutual Fund Window.
+ These accounts are included as "Other" in the accompanying financial
statements.
Distributions payable in shares at year end are reclassed from BellSouth
common stock and ESOP--BellSouth common stock held for future allocation to
the respective "Distributable Shares" line.
See Item 27a, BellSouth Master Savings Trust Schedule of Assets Held for
Investment Purposes.
Assets in the BellSouth Stock Fund, Bond Fund, Indexed Stock Fund, Mutual
Fund Investments and some of the assets in the Balanced Fund are invested in
securities which fluctuate in market value, and the values of the units
fluctuate daily.
Assets in the Interest Income Fund are invested in a number of investment
contracts with diversified groups of high quality financial institutions. The
value of the Interest Income Fund is based upon the principal invested and the
interest credited, and the value of the units should increase as of the end of
each day. Some of these contracts are unsecured, general obligations of such
companies. Their security is subject to the ability of the insurance companies
or other financial institutions to repay their debts generally as they come
due. Other contracts are backed specifically by high quality, fixed income
assets. Therefore, many of the new investment contracts have the underlying
assets held in a separate account of an insurance company or in a trust fund.
These assets are protected from the general creditors of the contract issuer.
The contracts held by the Trust in the Interest Income Fund are considered
fully benefit-responsive in accordance with AICPA Statement of Position 94-4.
A fully benefit-responsive investment contract provides a liquidity guarantee
by a financially responsible third party of principal and previously accrued
interest for liquidations, transfers, loans or hardship withdrawals initiated
by plan participants exercising their rights to withdraw, borrow or transfer
funds under the terms of the ongoing plan. The fair value of these investment
contracts as of December 31, 1996 and 1995 was $1,098,227 and $1,202,906,
respectively.
The crediting interest rate at December 31, 1996 and 1995, was 6.57% and
6.75%, respectively. The average yield for the years ended December 31, 1996
and 1995, was 6.52% and 6.82%, respectively. Interest rates are reset on a
semi-annual, quarterly, or monthly basis, whereby, such rates are reset to
move the current book value of these investments toward the projected future
market value over the life of the contract.
In three separate transactions during 1990, the BellSouth Management Savings
and Employee Stock Ownership Plan Trust and the BellSouth Savings and Security
ESOP Trust (the "ESOP Trusts") issued medium-term notes in the amounts of $550
million and $300 million, respectively, to fund the ESOP. Assets held in each
investment fund of the Plan, other than the assets held by the ESOP Trusts
described below, are unavailable to service the ESOP debt.
Assets held by the ESOP Trusts are generally unavailable to satisfy claims
of holders of debt securities issued by the ESOP Trusts to finance the
acquisition of shares of BellSouth common stock for the benefit of ESOP
participants. The debt securities are guaranteed by and are subject to direct
recourse against BellSouth.
21
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
(IN THOUSANDS)
DECEMBER 31, 1996
-------------------------------
NUMBER OF
SHARES OR
PRINCIPAL CARRYING
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST VALUE
--------------------------------- --------- ---------- ----------
BELLSOUTH STOCK FUND
SHARES OF BELLSOUTH COMMON STOCK*#--99.9%........ 49,616 $1,125,305 $2,009,436
---------- ----------
TEMPORARY CASH INVESTMENTS--0.1%................. 256 $ 488 $ 490
---------- ----------
Total BellSouth Stock Fund--100%............... $1,125,793 $2,009,926
---------- ----------
BOND FUND
U.S. GOVERNMENT TREASURY NOTES--56.9%
U.S. Treasury Notes, 7.875%, 04/15/98........... $ 2,250 $ 2,326 $ 2,309
U.S. Treasury Notes, 8.250%, 07/15/98........... $ 475 $ 493 $ 492
U.S. Treasury Notes, 6.875%, 07/31/99........... $ 8,350 $ 8,489 $ 8,520
U.S. Treasury Notes, 7.750%, 12/31/99........... $ 950 $ 995 $ 994
U.S. Treasury Notes, 7.125%, 02/29/00........... $ 6,575 $ 7,007 $ 6,769
U.S. Treasury Notes, 6.875%, 03/31/00........... $ 7,850 $ 8,300 $ 8,027
U.S. Treasury Notes, 6.250%, 05/31/00........... $ 7,425 $ 7,684 $ 7,455
U.S. Treasury Notes, 6.125%, 07/31/00........... $ 8,400 $ 8,707 $ 8,400
U.S. Treasury Notes, 6.500%, 08/15/05........... $ 8,150 $ 7,939 $ 8,202
U.S. Treasury Notes, 8.875%, 11/15/98........... $ 2,250 $ 2,414 $ 2,367
U.S. Treasury Notes, 8.500%, 02/15/00........... $ 4,275 $ 4,770 $ 4,566
U.S. Treasury Notes, 8.875%, 05/15/00........... $ 2,550 $ 2,899 $ 2,763
U.S. Treasury Notes, 8.750%, 08/15/00........... $ 4,000 $ 4,558 $ 4,335
U.S. Treasury Notes, 5.750%, 12/31/98........... $ 6,375 $ 6,371 $ 6,360
---------- ----------
$ 72,952 $ 71,559
---------- ----------
U.S. GOVERNMENT TREASURY BONDS--18.4%
U.S. Treasury Bonds, 11.625%, 11/15/04.......... $ 600 $ 799 $ 792
U.S. Treasury Bonds, 9.375%, 02/15/06.......... $ 11,000 $ 12,334 $ 13,238
U.S. Treasury Bonds, 7.250%, 05/15/16.......... $ 7,800 $ 7,420 $ 8,236
U.S. Treasury Bonds, 7.500%, 11/15/16.......... $ 825 $ 869 $ 893
---------- ----------
$ 21,422 $ 23,159
---------- ----------
FEDERAL AGENCY OBLIGATIONS--14.2%
Federal Natl. Mtg. Assn., 5.375%, 01/13/98...... $ 1,500 $ 1,500 $ 1,492
Federal Home Ln. Bks., 6.06%, 10/02/97.......... $ 580 $ 581 $ 580
Federal Natl. Mtg. Assn., 5.92%, 04/03/98....... $ 1,400 $ 1,400 $ 1,399
Federal Natl. Mtg. Assn., 5.890%, 11/13/98...... $ 2,500 $ 2,500 $ 2,495
Government Natl. Mtg. Assn., 6.5%, 12/15/23..... $ 2,581 $ 2,418 $ 2,477
Government Natl. Mtg. Assn., 6.5%, 10/15/23..... $ 2,776 $ 2,606 $ 2,664
Government Natl. Mtg. Assn., 6.5%, 11/15/23..... $ 1,435 $ 1,329 $ 1,377
Government Natl. Mtg. Assn., 6.5%, 2/15/24...... $ 2,680 $ 2,500 $ 2,572
Government Natl. Mtg. Assn., 6.5%, 07/15/24..... $ 2,824 $ 2,688 $ 2,775
---------- ----------
$ 17,522 $ 17,831
---------- ----------
S-1
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(CONTINUED)
(IN THOUSANDS)
DECEMBER 31, 1996
---------------------------
NUMBER OF
SHARES OR
PRINCIPAL CARRYING
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST VALUE
--------------------------------- --------- -------- --------
DOMESTIC CORPORATE OBLIGATIONS--7.2%
Cleveland Elec. Illum. Co.
9.450%, 12/01/97..................................... $ 1,000 $ 1,091 $ 1,026
Philadelphia Elec. Co.
5.375%, 08/15/98..................................... $ 1,300 $ 1,287 $ 1,284
Virginia Elec. & Pwr. Co.
6.350%, 06/08/98..................................... $ 1,000 $ 1,004 $ 1,005
AMR Corp Del.
7.470%, 01/28/97..................................... $ 1,000 $ 1,014 $ 1,001
Ryder SYS Inc.
7.50%, 04/29/98...................................... $ 177 $ 180 $ 179
USX-Marathon Group Inc.
8.875%, 09/15/98..................................... $ 1,000 $ 998 $ 1,018
USX Corp
6.375% 07/15/98...................................... $ 350 $ 352 $ 349
General Mtrs. Accept. Corp.
6.900% 02/19/98...................................... $ 3,200 $ 3,233 $ 3,236
-------- --------
$ 9,159 $ 9,098
-------- --------
TEMPORARY CASH INVESTMENTS--3.3%....................... 2,208 $ 4,215 $ 4,223
-------- --------
Total Bond Fund--100.0%.............................. $125,270 $125,870
-------- --------
INDEXED STOCK FUND
BANKERS TRUST PYRAMID EQUITY INDEX FUND*--99.9%........ 507 $466,088 $862,465
-------- --------
TEMPORARY CASH INVESTMENTS*--0.1%...................... 45 $ 86 $ 86
-------- --------
Total Indexed Stock Fund--100.0%................... $466,174 $862,551
-------- --------
INTEREST INCOME FUND
ANNUITY CONTRACTS WITH INSURANCE COMPANIES--95.9%+
Aetna Life Insurance Company
(7.49%-9.81%)........................................ $ 73,201 $ 73,201 $ 73,201
Allstate Life Insurance Company
(5.74%).............................................. $ 25,228 $ 25,228 $ 25,228
BT Basic
(6.21%).............................................. $104,830 $104,830 $104,830
CDC Investment Management Corp.
(4.906%-7.61%)....................................... $ 76,622 $ 76,622 $ 76,622
Commonwealth Life Insurance Co.
(9.37%).............................................. $ 1,213 $ 1,213 $ 1,213
Hartford Life
(8.70%).............................................. $ 8,078 $ 8,078 $ 8,078
Xxxxxxx National Life
(5.8%)............................................... $ 15,050 $ 15,050 $ 15,050
Xxxx Xxxxxxx Mutual Life
(7.13%-7.71%)........................................ $146,797 $146,797 $146,797
S-2
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(CONTINUED)
(IN THOUSANDS)
DECEMBER 31, 1996
-------------------------------
NUMBER OF
SHARES OR
PRINCIPAL CARRYING
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST VALUE
--------------------------------- --------- ---------- ----------
MBL Life Assurance Corp.
(3.5%-5.1%).................................... $ 3,470 $ 3,470 $ 3,470
Massachusetts Mutual
(9.70%)........................................ $ 55,350 $ 55,350 $ 55,350
Metropolitan Life Insurance Co.
(5.79%-8.75%).................................. $ 97,029 $ 97,029 $ 97,029
New York Life Insurance Co.
(5.39%-8.45%).................................. $ 34,158 $ 34,158 $ 34,158
Provident Life & Accident
(6.38%)........................................ $110,372 $ 110,372 $ 110,372
Peoples Security Life Insurance Co.
(5.03%-8.57%).................................. $100,243 $ 100,243 $ 100,243
Provident National
(5.13%-8.53%).................................. $ 3,922 $ 3,922 $ 3,922
Prudential Insurance Company of America
(8.10%-9.35%).................................. $ 16,597 $ 16,597 $ 16,597
Rabobank Nederland
(6.17%-7.62%).................................. $ 75,258 $ 75,258 $ 75,258
Sun Life Association, Canada
(5.78%-5.79%).................................. $ 24,028 $ 24,028 $ 24,028
TransAmerican Life & Annuity
(7.54%)........................................ $ 66,424 $ 66,424 $ 66,424
Union Bank of Switzerland
(7.28%-8.29%).................................. $ 50,459 $ 50,459 $ 50,459
---------- ----------
$1,088,329 $1,088,329
---------- ----------
TEMPORARY CASH INVESTMENTS--4.1%................. $ 46,790 $ 46,790 $ 46,790
---------- ----------
Total Interest Income Fund--100.0%............. $1,135,119 $1,135,119
---------- ----------
LOAN FUND
LOANS TO PARTICIPANTS (7%-12.5%)--99.8%.......... $ 73,981 $ 73,981 $ 73,981
---------- ----------
TEMPORARY CASH INVESTMENTS--.2%.................. $ 141 $ 141 $ 141
---------- ----------
Total Loan Fund--100.0%........................ $ 74,122 $ 74,122
---------- ----------
BALANCED FUND
TEMPORARY CASH INVESTMENTS--10.4%................ 5,292 $ 9,994 $ 10,116
---------- ----------
U.S. TREASURY XXXX, EXP. 01/09/97--1.2%.......... $ 1,190 $ 1,137 $ 1,137
---------- ----------
BT PYRAMID BROAD MARKET BOND FUND--35.6%......... 18,820 $ 31,335 $ 34,510
---------- ----------
BT EQUITY INDEX FUND--52.8%...................... 30,115 $ 37,595 $ 51,190
---------- ----------
Total Balanced Fund--100.0%.................... $ 80,061 $ 96,953
---------- ----------
S-3
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(CONTINUED)
(IN THOUSANDS)
DECEMBER 31, 1996
-------------------------------
NUMBER OF
SHARES OR
PRINCIPAL CARRYING
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST VALUE
--------------------------------- --------- ---------- ----------
XXXXXX 100 FUND
SHARES OF XXXXXX 100--99.9%...................... 3,091 $ 54,258 $ 55,121
---------- ----------
TEMPORARY CASH INVESTMENTS--0.1%................. 4 $ 8 $ 8
---------- ----------
Total Xxxxxx 100 Fund--100.0%.................. $ 54,266 $ 55,129
---------- ----------
DFA U.S. SMALL CAP VALUE II FUND
SHARES OF DIMENSIONAL FUND ADVISORS U.S. SMALL
CAP VALUE II--99.9%............................. 3,290 $ 41,716 $ 48,291
---------- ----------
TEMPORARY CASH INVESTMENTS--0.1%................. 1 $ 2 $ 2
---------- ----------
Total DFA U.S. Small Cap Value II Fund--100.0%. $ 41,718 $ 48,293
---------- ----------
DFA INTERNATIONAL VALUE II FUND
SHARES OF DIMENSIONAL FUND ADVISORS INTERNATIONAL
VALUE II--100.0%................................ 2,906 $ 30,386 $ 31,884
---------- ----------
Total DFA International Value II Fund--100.0%.. $ 30,386 $ 31,884
---------- ----------
DFA U.S. LARGE CAP VALUE II FUND
SHARES OF DIMENSIONAL FUND ADVISORS U.S. LARGE
CAP VALUE II--100.0%............................ 1,782 $ 23,336 $ 26,424
---------- ----------
Total DFA U.S. Large Cap Value II Fund--100.0%. $ 23,336 $ 26,424
---------- ----------
AMERICAN CENTURY/TWENTIETH CENTURY GROWTH INVESTORS FUND
SHARES OF AMERICAN CENTURY/TWENTIETH CENTURY
GROWTH INVESTORS FUND--100.0%................... 954 $ 20,554 $ 20,883
---------- ----------
Total American Century/Twentieth Century Growth
Investors Fund--100.0%........................ $ 20,554 $ 20,883
---------- ----------
FIDELITY GROWTH & INCOME PORTFOLIO
SHARES OF FIDELITY GROWTH AND INCOME PORTFOLIO--
99.9%........................................... 2,465 $ 73,089 $ 75,746
---------- ----------
TEMPORARY CASH INVESTMENTS--0.1%................. 1 $ 2 $ 2
---------- ----------
Total Fidelity Growth & Income Portfolio--
100.0%........................................ $ 73,091 $ 75,748
---------- ----------
CONTRIBUTION ACCOUNT++
TEMPORARY CASH INVESTMENTS--100.0%............... 64 $ 123 $ 123
---------- ----------
Total Contribution Acct.--100.0%............... $ 123 $ 123
---------- ----------
DISTRIBUTION ACCOUNT++
TEMPORARY CASH INVESTMENTS--100.0%............... 3,573 $ 6,824 $ 6,831
---------- ----------
Total Distribution Acct.--100.0%............... $ 6,824 $ 6,831
---------- ----------
EXPENSE ACCOUNT FUND++
TEMPORARY CASH INVESTMENTS--100.0%............... 787 $ 1,487 $ 1,505
---------- ----------
Total Expense Acct.--100.0%.................... $ 1,487 $ 1,505
---------- ----------
S-4
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27A--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES--(CONTINUED)
(IN THOUSANDS)
DECEMBER 31, 1996
-------------------------------
NUMBER OF
SHARES OR
PRINCIPAL CARRYING
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST VALUE
--------------------------------- --------- ---------- ----------
EMPLOYEE STOCK OWNERSHIP PLAN
SHARES OF BELLSOUTH COMMON STOCK*#--97.2%........ 38,109 $1,040,775 $1,543,403
---------- ----------
Temporary Cash Investments--2.8%................. 7,711 $ 29,639 $ 30,035
---------- ----------
Total Employee Stock Ownership Fund--100.0%.... $1,070,414 $1,573,438
---------- ----------
MUTUAL FUND WINDOW
TEMPORARY CASH INVESTMENTS--100.0%
BT Pyramid Cash Plus Fund....................... 371 $ 693 $ 710
Cash in Transit................................. $ 139 $ 139 $ 139
Schwab Retirement Money Fund.................... $ 7 $ 7 $ 7
---------- ----------
Total Mutual Fund Window--100.0%............... $ 839 $ 856
---------- ----------
TOTAL INVESTMENTS.............................. $4,329,577 $6,145,655
========== ==========
--------
NOTES
Percentages represent the percentage of the investments of each fund of the
Master Savings Trust.
* This investment is a security issued by a party-in-interest to the Plan.
# Investment represents 5% or more of the Net Assets of the Master Savings
Trust.
+ The contracts with these insurance companies (interest rates indicated in
parentheses) guarantee the repayment of principal and the crediting of
interest resulting in a composite effective annual interest rate of 6.52%
for the year 1996. The timing of the remittance of participating employee
contributions and other participating employee-directed transactions may
cause the actual yield to vary from this rate. The composite interest rate
is subject to annual adjustment.
++These accounts are included as "other" in the Plan's Financial Statements.
S-5
