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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, 1998
or
[_] Transition Report Pursuant to Section 15(d)
of the Securities Exchange Act of 1934
For the transition Commission file
period from __ to ___ number 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
Report of Independent Accountants....................................... 2
Consent of Independent Accountants...................................... 3
Statement of Net Assets Available for Benefits With Fund
Information as of December 31, 1998.................................... 4
Statement of Net Assets Available for Benefits With Fund
Information as of December 31, 1997.................................... 6
Statement of Changes in Net Assets Available for Benefits With Fund
Information for the Year ended December 31, 1998....................... 8
Statement of Changes in Net Assets Available for Benefits With Fund
Information for the Year ended December 31, 1997....................... 10
Statement of Changes in Net Assets Available for Benefits With Fund
Information for the Year ended December 31, 1996....................... 12
Notes to Financial Statements........................................... 14
2. Supplemental Schedule
Item 27a--Schedule of Assets Held for Investment Purposes............... S-1
1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
The BellSouth Savings and Security Plan:
In our opinion, the accompanying statements of net assets available for
benefits and the related statements of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the BellSouth Savings and Security Plan (the "Plan") at
December 31, 1998 and 1997, and the changes in net assets available for
benefits for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. 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 of these statements in accordance with generally accepted
auditing standards which 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, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted 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 but is
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. The fund information in the statements of net assets
available for benefits and the statements of changes in net assets available
for benefits is presented for purposes of additional analysis rather than to
present the net assets available for benefits and changes in net assets
available for benefits of each fund. This supplemental schedule and fund
information are the responsibility of the Plan's management. 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.
PricewaterhouseCoopers LLP
Atlanta, Georgia
June 25, 1999
2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-38265) of BellSouth Corporation of our report
dated June 25, 1999 relating to the financial statements of the BellSouth
Savings and Security Plan, which appears in this Form 00-X.
XxxxxxxxxxxxxxxXxxxxxx XXX
Xxxxxxx, Xxxxxxx
June 25, 1999
3
BELLSOUTH SAVINGS
STATEMENT OF NET ASSETS AVAILABLE
December
(In Tho
Fidelity
BellSouth Indexed Interest Growth
Stock Stock Income Bond Balanced & Income
Fund Fund Fund Fund Fund Portfolio
ASSETS ---------- -------- -------- ------ -------- ---------
Allocated share of Trust
net assets............. $2,035,771 $184,669 $340,629 $8,980 $23,904 $67,786
Investment in BellSouth
Savings and Security
Employee Stock
Ownership Plan Trust:
Shares of BellSouth
common stock allocated
to participants....... -- -- -- -- -- --
Shares of BellSouth
common stock held for
future allocation..... -- -- -- -- -- --
Temporary cash
investments........... -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Investments...... 2,035,771 184,669 340,629 8,980 23,904 67,786
Contributions
receivable............. 1,673 448 676 33 69 167
Fund, BellSouth
Retirement Savings Plan
and other transfers
receivable--net........ 20,762 -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Assets........... 2,058,206 185,117 341,305 9,013 23,973 67,953
---------- -------- -------- ------ ------- -------
LIABILITIES
Distributions payable... 167 2 126 -- -- 7
Fund, BellSouth
Retirement Savings Plan
and other transfers
payable--net........... -- 992 18,938 355 77 110
Notes payable........... -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Liabilities...... 167 994 19,064 355 77 117
---------- -------- -------- ------ ------- -------
Net Assets Available for
Benefits............... $2,058,039 $184,123 $322,241 $8,658 $23,896 $67,836
========== ======== ======== ====== ======= =======
The accompanying notes are an integ
4
AND SECURITY PLAN
FOR BENEFITS WITH FUND INFORMATION
31, 1998
usands)
Vanguard
Index X. Xxxx DFA U.S. DFA Employee Stock
Trust DFA U.S. Price Large Cap International Ownership Plan
Growth 6-10 Value Mid-Cap Value II Value II Participant ----------------------
Portfolio Portfolio II Growth Fund Fund Loans Other Allocated Unallocated Total
--------- ------------ ------- --------- ------------- ----------- ------ ---------- ----------- ----------
$45,761 $13,460 $14,114 $10,564 $4,473 $29,927 $3,699 $ -- $ -- $2,783,737
-- -- -- -- -- -- -- 1,075,796 -- 1,075,796
-- -- -- -- -- -- -- -- 410,315 410,315
-- -- -- -- -- -- -- 8,418 7,677 16,095
------- ------- ------- ------- ------ ------- ------ ---------- -------- ----------
45,761 13,460 14,114 10,564 4,473 29,927 3,699 1,084,214 417,992 4,285,943
124 48 44 26 15 -- -- -- -- 3,323
-- -- 17 -- -- 99 -- -- -- 20,878
------- ------- ------- ------- ------ ------- ------ ---------- -------- ----------
45,885 13,508 14,175 10,590 4,488 30,026 3,699 1,084,214 417,992 4,310,144
------- ------- ------- ------- ------ ------- ------ ---------- -------- ----------
4 -- 4 -- -- -- 2,400 126 -- 2,836
252 67 -- 272 318 -- 1,299 21 -- 22,701
-- -- -- -- -- -- -- -- 153,896 153,896
------- ------- ------- ------- ------ ------- ------ ---------- -------- ----------
256 67 4 272 318 -- 3,699 147 153,896 179,433
------- ------- ------- ------- ------ ------- ------ ---------- -------- ----------
$45,629 $13,441 $14,171 $10,318 $4,170 $30,026 $ -- $1,084,067 $264,096 $4,130,711
======= ======= ======= ======= ====== ======= ====== ========== ======== ==========
ral part of these financial statements.
5
BELLSOUTH SAVINGS
STATEMENT OF NET ASSETS AVAILABLE
December
(In Tho
Fidelity
BellSouth Indexed Interest Growth
Stock Stock Income Bond Balanced & Income
Fund Fund Fund Fund Fund Portfolio
ASSETS ---------- -------- -------- ------ -------- ---------
Allocated share of Trust
net assets............. $1,162,928 $181,838 $349,378 $7,754 $22,155 $62,019
Investment in BellSouth
Savings and Security
Employee Stock Owner-
ship Plan Trust:
Shares of BellSouth
common stock allocated
to participants ...... -- -- -- -- -- --
Shares of BellSouth
common stock held for
future allocation..... -- -- -- -- -- --
Temporary cash invest-
ments................. -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Investments...... 1,162,928 181,838 349,378 7,754 22,155 62,019
Contributions receiv-
able................... 1,625 496 1,133 39 72 159
Fund, BellSouth
Retirement Savings Plan
and other transfers
receivable--net........ 2,424 39 433 -- 142 183
---------- -------- -------- ------ ------- -------
Total Assets........... 1,166,977 182,373 350,944 7,793 22,369 62,361
---------- -------- -------- ------ ------- -------
LIABILITIES
Distributions payable... 165 48 94 -- -- 97
Fund, BellSouth
Retirement Savings Plan
and other transfers
payable--net........... -- -- -- 30 -- --
Notes payable .......... -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Liabilities...... 165 48 94 30 -- 97
---------- -------- -------- ------ ------- -------
Net Assets Available for
Benefits............... $1,166,812 $182,325 $350,850 $7,763 $22,369 $62,264
========== ======== ======== ====== ======= =======
The accompanying notes are an integ
6
AND SECURITY PLAN
FOR BENEFITS WITH FUND INFORMATION
31, 1997
usands)
Vanguard
Index X. Xxxx DFA U.S. DFA Employee Stock
Trust DFA U.S. Price Large Cap International Ownership Plan
Growth 6-10 Value Mid-Cap Value II Value II Participant ---------------------
Portfolio Portfolio II Growth Fund Fund Loans Other Allocated Unallocated Total
--------- ------------ ------- --------- ------------- ----------- ------ --------- ----------- ----------
$19,712 $24,737 $11,154 $13,583 $4,725 $23,121 $6,222 $ -- $ -- $1,889,326
-- -- -- -- -- -- -- 582,136 -- 582,136
-- -- -- -- -- -- -- -- 279,149 279,149
-- -- -- -- -- -- -- 5,727 7,897 13,624
------- ------- ------- ------- ------ ------- ------ -------- -------- ----------
19,712 24,737 11,154 13,583 4,725 23,121 6,222 587,863 287,046 2,764,235
56 67 33 37 18 -- -- 4,504 -- 8,239
154 233 -- 59 -- 19 -- -- -- 3,686
------- ------- ------- ------- ------ ------- ------ -------- -------- ----------
19,922 25,037 11,187 13,679 4,743 23,140 6,222 592,367 287,046 2,776,160
------- ------- ------- ------- ------ ------- ------ -------- -------- ----------
-- -- -- -- -- -- 3,720 89 -- 4,213
-- -- 118 -- 32 -- 2,502 -- -- 2,682
-- -- -- -- -- -- -- -- 177,959 177,959
------- ------- ------- ------- ------ ------- ------ -------- -------- ----------
-- -- 118 -- 32 -- 6,222 89 177,959 184,854
------- ------- ------- ------- ------ ------- ------ -------- -------- ----------
$19,922 $25,037 $11,069 $13,679 $4,711 $23,140 $ -- $592,278 $109,087 $2,591,306
======= ======= ======= ======= ====== ======= ====== ======== ======== ==========
ral part of these financial statements.
7
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS
Year Ended Dec
(In Tho
Fidelity
BellSouth Indexed Interest Growth
Stock Stock Income Bond Balanced & Income
Fund Fund Fund Fund Fund Portfolio
---------- -------- -------- ------ -------- ---------
Net Assets Available for
Benefits,
December 31, 1997...... $1,166,812 $182,325 $350,850 $7,763 $22,369 $62,264
---------- -------- -------- ------ ------- -------
Employee contributions.. 37,009 13,190 19,815 782 2,021 5,075
Transfer of
participants'
balances--net.......... 79,815 (46,967) (28,214) 177 (3,263) (11,553)
Employing company
contributions.......... -- -- -- -- -- --
Supplemental
contributions.......... -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Total Contributions,
Allocations and
Transfers.............. 116,824 (33,777) (8,399) 959 (1,242) (6,478)
Allocated share of Trust
investment activities.. 877,915 46,165 20,699 712 4,465 16,272
---------- -------- -------- ------ ------- -------
Total Additions......... 994,739 12,388 12,300 1,671 3,223 9,794
---------- -------- -------- ------ ------- -------
Less: Distributions to
participants...... 103,512 10,590 40,909 776 1,696 4,222
Interest on notes
payable........... -- -- -- -- -- --
---------- -------- -------- ------ ------- -------
Net Assets Available for
Benefits,
December 31, 1998...... $2,058,039 $184,123 $322,241 $8,658 $23,896 $67,836
========== ======== ======== ====== ======= =======
The accompanying notes are an integ
8
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
WITH FUND INFORMATION
ember 31, 1998
usands)
Vanguard
Index X. Xxxx DFA U.S. Employee Stock
Trust DFA U.S. Price Large Cap DFA Ownership Plan
Growth 6-10 Value Mid-Cap Value II International Participant -----------------------
Portfolio Portfolio II Growth Fund Value II Fund Loans Other Allocated Unallocated Total
--------- ------------ ------- --------- ------------- ----------- ----- ---------- ----------- ----------
$19,922 $25,037 $11,069 $13,679 $4,711 $23,140 $-- $ 592,278 $109,087 $2,591,306
------- ------- ------- ------- ------ ------- ---- ---------- -------- ----------
2,941 1,677 1,267 850 432 -- -- -- -- 85,059
12,526 (10,901) 103 (4,758) (1,211) 5,922 (688) (4,304) -- (13,316)
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- 24,413 24,413
-- -- -- -- -- -- -- 59,763 (59,763) --
-- -- -- -- -- -- -- (8,214) 8,214 --
------- ------- ------- ------- ------ ------- ---- ---------- -------- ----------
15,467 (9,224) 1,370 (3,908) (779) 5,922 (688) 47,245 (27,136) 96,156
11,780 (1,150) 2,358 1,298 604 2,141 688 476,989 197,854 1,658,790
------- ------- ------- ------- ------ ------- ---- ---------- -------- ----------
27,247 (10,374) 3,728 (2,610) (175) 8,063 -- 524,234 170,718 1,754,946
------- ------- ------- ------- ------ ------- ---- ---------- -------- ----------
1,540 1,222 626 751 366 1,177 -- 32,445 -- 199,832
-- -- -- -- -- -- -- -- 15,709 15,709
------- ------- ------- ------- ------ ------- ---- ---------- -------- ----------
$45,629 $13,441 $14,171 $10,318 $4,170 $30,026 $-- $1,084,067 $264,096 $4,130,711
======= ======= ======= ======= ====== ======= ==== ========== ======== ==========
ral part of these financial statements.
9
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS WITH
Year Ended Dec
(In Tho
Vanguard
Fidelity Index
BellSouth Indexed Interest Growth Trust
Stock Stock Income Bond Balanced & Income Growth
Fund Fund Fund Fund Fund Portfolio Portfolio
---------- -------- -------- ------ -------- --------- ---------
Net Assets Available for
Benefits,
December 31, 1996...... $ 946,336 $103,144 $331,389 $6,978 $15,085 $19,377 $ --
---------- -------- -------- ------ ------- ------- -------
Employee contributions.. 36,523 13,185 23,987 847 2,159 3,967 485
Transfer of
participants'
balances--net.......... (108,974) 33,567 14,010 (80) 2,287 30,214 18,920
Employing company
contributions.......... -- -- -- -- -- -- --
Supplemental
contributions.......... -- -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- -- --
---------- -------- -------- ------ ------- ------- -------
Total Contributions,
Allocations and
Transfers.............. (72,451) 46,752 37,997 767 4,446 34,181 19,405
Allocated share of Trust
investment activities.. 370,107 39,525 21,201 581 3,667 10,896 728
---------- -------- -------- ------ ------- ------- -------
Total Additions......... 297,656 86,277 59,198 1,348 8,113 45,077 20,133
---------- -------- -------- ------ ------- ------- -------
Less: Distributions to
participants...... 77,180 7,096 39,737 563 829 2,190 211
Interest on notes
payable........... -- -- -- -- -- -- --
---------- -------- -------- ------ ------- ------- -------
Net Assets Available for
Benefits,
December 31, 1997...... $1,166,812 $182,325 $350,850 $7,763 $22,369 $62,264 $19,922
========== ======== ======== ====== ======= ======= =======
The accompanying notes are an integ
10
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
FUND INFORMATION
ember 31, 1997
usands)
X. Xxxx DFA U.S. DFA American Employee Stock
DFA U.S. Price Large Cap International Xxxxxx Century/Twentieth Ownership Plan
6-10 Value Mid-Cap Value II Value II 100 Century Growth Participant ----------------------
Portfolio II Growth Fund Fund Fund Investors Fund Loans Other Allocated Unallocated Total
------------ ------- --------- ------------- ------- ----------------- ----------- ----- --------- ----------- ----------
$ 7,361 $ -- $ 5,964 $3,230 $13,632 $5,780 $17,733 $ 127 $391,975 $ 43,020 $1,911,131
------- ------- ------- ------ ------- ------ ------- ----- -------- -------- ----------
1,202 310 615 387 627 222 -- -- -- -- 84,516
13,600 10,672 5,029 1,405 (18,372) (7,639) 4,463 (356) (3,147) -- (4,401)
-- -- -- -- -- -- -- -- 20,053 -- 20,053
-- -- -- -- -- -- -- -- -- 23,857 23,857
-- -- -- -- -- -- -- -- 37,790 (37,790) --
-- -- -- -- -- -- -- -- (7,492) 7,492 --
------- ------- ------- ------ ------- ------ ------- ----- -------- -------- ----------
14,802 10,982 5,644 1,792 (17,745) (7,417) 4,463 (356) 47,204 (6,441) 124,025
3,508 248 2,430 (159) 4,531 1,813 1,481 239 173,364 90,257 724,417
------- ------- ------- ------ ------- ------ ------- ----- -------- -------- ----------
18,310 11,230 8,074 1,633 (13,214) (5,604) 5,944 (117) 220,568 83,816 848,442
------- ------- ------- ------ ------- ------ ------- ----- -------- -------- ----------
634 161 359 152 418 176 537 10 20,265 -- 150,518
-- -- -- -- -- -- -- -- -- 17,749 17,749
------- ------- ------- ------ ------- ------ ------- ----- -------- -------- ----------
$25,037 $11,069 $13,679 $4,711 $ -- $ -- $23,140 $ -- $592,278 $109,087 $2,591,306
======= ======= ======= ====== ======= ====== ======= ===== ======== ======== ==========
ral part of these financial statements.
11
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS WITH
Year Ended De
(In Tho
Fidelity
BellSouth Indexed Interest Growth DFA U.S.
Stock Stock Income Bond Balanced & Income 6-10 Value
Fund Fund Fund Fund Fund Portfolio Portfolio II
---------- -------- -------- ------ -------- --------- ------------
Net Assets Available for
Benefits,
December 31, 1995...... $1,051,289 $ 56,642 $329,289 $6,730 $ 8,360 $ -- $1,321
---------- -------- -------- ------ ------- ------- ------
Employee contributions.. 43,544 10,683 28,475 1,206 2,262 550 139
Transfer of
participants'
balances--net.......... (54,318) 24,124 (18,290) (773) 3,560 17,970 4,918
Employing company
contributions.......... -- -- -- -- -- -- --
Supplemental
contributions.......... -- -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- -- --
---------- -------- -------- ------ ------- ------- ------
Total Contributions,
Allocations and
Transfers.............. (10,774) 34,807 10,185 433 5,822 18,520 5,057
Allocated share of Trust
investment activities.. (37,102) 15,610 20,060 254 1,467 1,008 1,043
---------- -------- -------- ------ ------- ------- ------
Total Additions......... (47,876) 50,417 30,245 687 7,289 19,528 6,100
---------- -------- -------- ------ ------- ------- ------
Less: Distributions to
participants.......... 57,077 3,915 28,145 439 564 151 60
Interest on notes
payable.............. -- -- -- -- -- -- --
---------- -------- -------- ------ ------- ------- ------
Net Assets Available for
Benefits,
December 31, 1996...... $ 946,336 $103,144 $331,389 $6,978 $15,085 $19,377 $7,361
========== ======== ======== ====== ======= ======= ======
The accompanying notes are an integ
12
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
FUND INFORMATION
cember 31, 1996
usands)
DFA U.S. American Employee Stock
Large Cap DFA Xxxxxx Century/Twentieth Ownership Plan
Value II International 100 Century Growth Participant ----------------------
Fund Value II Fund Fund Investors Fund Loans Other Allocated Unallocated Total
--------- ------------- ------- ----------------- ----------- ----- --------- ----------- ----------
$1,541 $ 968 $ 6,003 $2,690 $ 9,968 $-- $368,721 $ 78,837 $1,922,359
------ ------ ------- ------ ------- ---- -------- -------- ----------
78 59 267 69 -- -- -- -- 87,332
3,822 2,056 6,014 2,629 7,423 39 -- -- (826)
-- -- -- -- -- -- 17,906 -- 17,906
-- -- -- -- -- -- -- 25,322 25,322
-- -- -- -- -- -- 33,075 (33,075) --
-- -- -- -- -- -- (4,693) 4,693 --
------ ------ ------- ------ ------- ---- -------- -------- ----------
3,900 2,115 6,281 2,698 7,423 39 46,288 (3,060) 129,734
577 154 1,455 438 612 113 (11,084) (13,164) (18,559)
------ ------ ------- ------ ------- ---- -------- -------- ----------
4,477 2,269 7,736 3,136 8,035 152 35,204 (16,224) 111,175
------ ------ ------- ------ ------- ---- -------- -------- ----------
54 7 107 46 270 25 11,950 -- 102,810
-- -- -- -- -- -- -- 19,593 19,593
------ ------ ------- ------ ------- ---- -------- -------- ----------
$5,964 $3,230 $13,632 $5,780 $17,733 $127 $391,975 $ 43,020 $1,911,131
====== ====== ======= ====== ======= ==== ======== ======== ==========
ral part of these financial statements.
13
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
1. Plan Description
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. 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.
Substantially all non-management employees who are active, regular full-time
or part-time employees of a BellSouth company participating in the Plan and
have completed one year of service are eligible to participate. The Plan is
subject to the Employee Retirement Income Security Act of 1974, as amended.
Plan Amendment and Restatement
Effective July 1, 1996, the Plan was amended and restated. Significant
changes included a change in investment valuation methods and changes to
various service functions provided by the Plan's recordkeeper and service
center provider. Subsequent amendments resulted in changes associated with the
withdrawal of funds by retired participants, the increments in which fund
transfers and investment directions may be processed and installment payment
flexibility.
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
(BRSP).
Investment Options
At December 31, 1998, the Plan's assets were comprised of the following
investment vehicles: BellSouth Stock Fund, Indexed Stock Fund, Interest Income
Fund, Bond Fund, Balanced Fund and the following mutual funds: Fidelity Growth
& Income Portfolio, Vanguard Index Trust Growth Portfolio, DFA U.S. 6-10 Value
Portfolio II, X. Xxxx Price Mid-Cap Growth, DFA U.S. Large Cap Value II Fund
and DFA International Value II Fund. All investments are valued on a daily
basis.
During 1997, the X. Xxxx Price Mid-Cap Growth and the Vanguard Index Trust
Growth Portfolio replaced the Xxxxxx 100 Fund and the American
Century/Twentieth Century Growth Investors Fund as investment options. All
participant balances in, and subsequent contributions to, the replaced funds
were reallocated according to participant direction or into the Interest
Income Fund in the absence of such direction.
14
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
1. Plan Description--(continued)
Concentrations of Risk
At December 31, 1998 and 1997, the Plan's assets were significantly
concentrated in shares of BellSouth Common Stock, the value of which is
subject to fluctuations related to corporate, industry and economic factors.
The Plan's other investment options include a variety of stocks, bonds,
fixed income securities, mutual funds and other investment securities.
Investment securities subject participants to various risks, such as interest
rate, market and credit risks. Due to the level of risk associated with
certain investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that
such changes could materially affect participants' account balances and the
amounts reported in the Statements of Net Assets Available for Benefits with
Fund Information.
Vesting
Participant contributions vest immediately. Employing company matching
contributions vest upon a participant's completion of three years of service.
One year of vesting service is earned upon a participant's completion of 1,000
work hours during any year.
Participant Loans (Whole Dollars)
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 balances as
defined by the Plan document and any amounts rolled over to the Plan from
other qualified plans. Loan balances are secured by the assets allocated to
the participant's accounts and bear interest at various rates which ranged
from 7.0% to 10.0% at December 31, 1998. Principal and interest are paid
ratably through periodic payroll deductions for active employees and by coupon
for nonactive employees.
Service Provider
During 1998, Bankers Trust Company served as the Trustee for the Master
Savings Trust and, through December 31, 1997, also served as the recordkeeper
and service center provider for the Plan. Effective January 1, 1998,
Metropolitan Life Insurance Company became the recordkeeper and service center
provider for the Plan. Beginning May 1, 1999, State Street Bank & Trust
Company will serve as the Trustee for the Master Savings Trust.
2. Accounting Policies
The financial statements of the Plan have been prepared in accordance with
generally accepted accounting principles. 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.
With respect to the Statements of Net Assets Available for Benefits with
Fund Information for the years presented, allocated share of Trust net assets
includes investments at fair value, accrued interest income, accrued
dividends, receivables for investments sold, payables for investments
purchased and accrued administrative expenses of the Master Savings Trust.
With respect to the Statements of Changes in Net Assets Available for
Benefits with Fund Information 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, investment
manager fees and other administrative fees paid by the Master Savings Trust.
15
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
2. Accounting Policies--(continued)
The values of investments in the Master Savings Trust are determined as
follows:
. Shares of BellSouth Common Stock and equity securities underlying the
Indexed Stock Fund are valued on the basis of the closing price per
share on December 31, 1998 and 1997 as reported on the New York Stock
Exchange or, if no sales were made on that date, at the closing price on
the next preceding day on which sales were made;
. The values of mutual funds, 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 exchanges;
. Over-the-counter securities and government obligations are valued based
on the bid prices on December 31, 1998 and 1997 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.
3. Units of the Plan
Participants in the Plan can direct their contributions among 11 investment
options as described in Note 1. The interests of participants in each type of
investment of the Plan are represented by units as described in Section 8 of
the Plan document. Unit values are based on a beginning value of $1.00 as of
January 1, 1994 and are adjusted based on the performance of the underlying
investments and the expense of the Plan in each period.
16
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
3. Units of the Plan--(continued)
The number and value of units for investments, other than mutual funds, as of
December 31, 1998 and 1997 were as follows:
December 31, 1998 December 31, 1997
------------------------------ ------------------------------
Type of Investment Number of Units Value per unit Number of Units Value per Unit
------------------ --------------- -------------- --------------- --------------
BellSouth Stock Fund.... 525,354,166 $3.9143 520,097,143 $2.2379
Indexed Stock Fund...... 62,506,348 2.9385 79,366,846 2.2833
Interest Income Fund.... 232,788,579 1.3814 268,888,234 1.2978
Bond Fund............... 6,075,607 1.4203 5,907,819 1.3023
Balanced Fund........... 11,376,691 2.0944 12,824,578 1.7313
The number and value of units by quarter for each investment, other than
mutual funds, during 1998 were as follows:
BellSouth Stock Fund Indexed Stock Fund
-------------------- -------------------
Number of Value Number of Value
1998 Units per Unit Units per Unit
---- ----------- -------- ---------- --------
March.................................. 512,473,965 $2.6895 79,007,124 $2.6008
June................................... 520,940,141 2.6744 76,409,557 2.6869
September.............................. 489,508,884 2.9872 74,066,978 2.4218
December............................... 525,354,166 3.9143 62,506,348 2.9385
Interest Income Fund Bond Fund
-------------------- -------------------
Number of Value Number of Value
1998 Units per Unit Units per Unit
---- ----------- -------- ---------- --------
March.................................. 259,864,148 $1.3184 6,591,807 $1.3200
June................................... 235,388,344 1.3393 6,075,642 1.3490
September.............................. 291,178,396 1.3606 8,185,184 1.4262
December............................... 232,788,579 1.3814 6,075,607 1.4203
Balanced Fund
--------------------
Number of Value
1998 Units per Unit
---- ----------- --------
March.................................. 12,774,142 $1.8732
June................................... 12,645,142 1.9298
September.............................. 12,509,023 1.8775
December............................... 11,376,691 2.0944
The values of mutual funds, 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 exchanges.
17
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
3. Units of the Plan--(continued)
At December 31, 1998, the number of participants currently enrolled within
the Plan by investment direction as described in Section 7 of the Plan
document was as follows:
Number of
Fund Description Participants
---------------- ------------
Entirely in BellSouth Stock Fund............................... 12,657
Entirely in Indexed Stock Fund................................. 1,492
Entirely in Interest Income Fund............................... 6,869
Equally in BellSouth Stock Fund and Indexed Stock Fund......... 1,754
Equally in BellSouth Stock Fund and Interest Income Fund....... 3,859
Equally in Indexed Stock Fund and Fidelity Growth & Income
Portfolio..................................................... 396
Various fund combinations*..................................... 7,889
------
Total Participants........................................... 34,916
======
--------
* Includes all other investment directions, each having less than 1% of
participants.
Since all employing company contributions are made to the ESOP, all
employees currently contributing to the Plan are participants in the ESOP.
4. Contributions
Employee contributions to the Plan are recorded based upon authorized basic
and supplemental contributions. The maximum basic contribution rate was $55
per week for 1998, 1997 and 1996. Participants may contribute up to 15% 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 for all
periods.
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 matching 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 of
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 and varies from company to company. The employing company
makes a matching contribution that is a percentage of the employee's basic
contribution. The range of matching contribution rates for the three years
ended December 31, 1998 were as follows:
1998 1997 1996
--------- --------- ---------
January-March............................... 76% - 86% 71% - 76% 59% - 69%
April-December.............................. 76% - 81% 76% - 86% 71% - 76%
5. Plan Expenses
Each participant in 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 1998, 1997 and 1996 was
18
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
5. Plan Expenses--(continued)
$33.00, $31.50 and $26.40, 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 Benefits with Fund
Information for the years presented, were as follows:
For the Year Ended
December 31,
--------------------
1998 1997 1996
------ ------ ------
Indexed Stock Fund......................................... $ 32 $ 25 $ 16
Interest Income Fund....................................... 141 147 146
Bond Fund.................................................. 21 22 21
Balanced Fund.............................................. 22 17 12
------ ------ ------
$ 216 $ 211 $ 195
====== ====== ======
For the mutual funds, investment manager fees are not paid directly from the
Master Savings Trust. However, these investments are subject to mutual fund
management fees which reduce the overall return of the respective mutual fund.
These fees, expressed as percentages of fund assets, which were assessed
against the mutual funds by their respective managers, were as follows:
For the
Year Ended
December 31,
-----------------
1998 1997 1996
----- ----- -----
Fidelity Growth & Income Portfolio............................ 0.71% 0.75% 0.74%
Vanguard Index Trust Growth Portfolio*........................ 0.20% 0.20% --
DFA U.S. 6-10 Value Portfolio II.............................. 0.45% 0.75% 0.85%
X. Xxxx Price Mid-Cap Growth*................................. 0.91% 1.04% --
DFA U.S. Large Cap Value II Fund.............................. 0.39% 0.75% 0.82%
DFA International Value II Fund............................... 0.55% 0.75% 0.86%
Xxxxxx 100 Fund*.............................................. -- 1.41% 1.42%
American Century/Twentieth Century Growth Investors Fund*..... -- 1.00% 1.00%
--------
* During 1997, the X. Xxxx Price Mid-Cap Growth and the Vanguard Index Trust
Growth Portfolio replaced the Xxxxxx 100 Fund and the American
Century/Twentieth Century Growth Investors Fund. For additional information,
see Note 1.
For the three years ended December 31, 1998, no fees were paid to investment
managers for management of the BellSouth Stock Fund.
6. Tax Status
The Internal Revenue Service has determined and informed BellSouth by a
favorable determination letter dated April 14, 1998 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 has been amended subsequent to the
determination letter referred to above. BellSouth 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.
The federal income tax effects on participants with respect to the Plan are
described in the SPD.
19
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
7. 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 and if BellSouth
or its subsidiaries sponsor another defined contribution plan, the
participants may elect to have their units transferred to the other plan. If
BellSouth or its subsidiaries do not sponsor such a plan, the participants
would receive a lump-sum distribution of their units.
8. 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 BRSP. The assets of the Master Savings Trust
are allocated to the Plan based upon the total of each individual plan
participant's share of the Master Savings Trust's assets. The Plan's allocated
share of the total net assets of all funds in the Master Savings Trust at
December 31, 1998 and 1997 was 35.47823% and 33.24611%, respectively. The
Plan's allocated share of the net assets of each fund in the Master Savings
Trust at December 31, 1998 and 1997 were as follows:
1998 1997
--------- ---------
BellSouth Stock Fund..................................... 47.98565% 50.28189%
Indexed Stock Fund....................................... 14.31319% 14.87323%
Interest Income Fund..................................... 26.38463% 28.11128%
Bond Fund................................................ 6.96505% 6.58568%
Balanced Fund............................................ 17.30202% 17.39634%
Fidelity Growth & Income Portfolio....................... 27.36477% 27.86083%
Vanguard Index Trust Growth Portfolio.................... 26.15788% 29.93390%
DFA U.S. 6-10 Value Portfolio II ........................ 16.55757% 19.53536%
X. Xxxx Price Mid-Cap Growth ............................ 19.81992% 21.46665%
DFA U.S. Large Cap Value II Fund......................... 25.43601% 26.40233%
DFA International Value II Fund.......................... 12.02709% 12.90886%
Participant Loans........................................ 33.46392% 27.53754%
Other.................................................... 30.19514% 30.41913%
20
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
8. Interest in BellSouth Master Savings Trust--(continued)
The financial position of the Master Savings Trust at December 31, 1998 and
1997 was as follows:
1998 1997
---- ----
Assets:
Investments at value:
BellSouth Stock Fund:
Shares of BellSouth Common Stock#..................... $4,203,286 $2,284,295
Temporary cash investments............................ 129,190 28,464
Distributable shares.................................. 84 69
Indexed Stock Fund:
Equity Index Fund#.................................... 1,287,238 1,218,854
Temporary cash investments............................ 28 50
Interest Income Fund:
Contracts............................................. 1,197,686 1,180,628
Temporary cash investments............................ 92,759 61,963
Bond Fund:
Securities............................................ 144,785 113,050
Temporary cash investments............................ 2,555 2,791
Balanced Fund:
Securities............................................ 127,085 114,364
Temporary cash investments............................ 11,050 12,927
Fidelity Growth & Income Portfolio:
Securities............................................ 247,529 222,255
Temporary cash investments............................ 6 1
Vanguard Index Trust Growth Portfolio:
Securities............................................ 174,581 66,199
Temporary cash investments............................ 4 --
DFA U.S. 6-10 Value Portfolio II:
Securities............................................ 81,518 126,866
Temporary cash investments............................ -- 1
X. Xxxx Price Mid-Cap Growth:
Securities............................................ 71,251 51,856
Temporary cash investments............................ 1 1
DFA U.S. Large Cap Value II Fund:
Securities............................................ 40,975 51,246
DFA International Value II Fund:
Securities............................................ 36,986 36,359
Temporary cash investments............................ 3 --
Participant Loans:
Loans to participants.................................. 89,430 83,956
Temporary cash investments............................. -- 99
Contribution Account+:
Temporary cash investments............................. 155 8,994
Distribution Account+:
Securities............................................. 1,075 --
Temporary cash investments............................. 8,496 10,006
Expense Account+:
Temporary cash investments............................. 2,524 1,456
Dividends and interest income receivable................ 2,206 2,236
Receivable for investments sold......................... 4,310 50,270
Other receivables....................................... 5,934 20,918
Variation margin receivable............................. -- 51
---------- ----------
7,962,730 5,750,225
Liabilities:
Payable for investments purchased....................... 115,408 67,167
Variation margin payable................................ 892 14
Administrative fees payable............................. 102 194
---------- ----------
Trust net assets (excluding ESOP Trusts)................ 7,846,328 5,682,850
21
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
8. Interest in BellSouth Master Savings Trust--(continued)
1998 1997
---- ----
Investment in ESOP Trusts:
Shares of BellSouth Common Stock allocated to partici-
pants#................................................ 2,333,414 1,245,401
Distributable shares................................... 107 77
Shares of BellSouth Common Stock held for future allo-
cation#............................................... 1,259,180 849,442
Temporary cash investments............................. 34,783 31,588
----------- ----------
Total investments...................................... 11,473,812 7,809,358
Liabilities:
Notes payable.......................................... 467,018 534,436
----------- ----------
Trust net assets....................................... $11,006,794 $7,274,922
=========== ==========
Investments at cost.................................... $ 6,453,240 $5,298,067
=========== ==========
--------
# Represents an individual investment which is 5% or more of the Net Assets of
the Master Savings Trust.
+ These accounts are included as "Other" in the accompanying financial
statements.
Distributions from the BellSouth Stock Fund and the ESOP Trusts that are
payable in shares of BellSouth Common Stock are separated from the "Shares of
BellSouth Common Stock" and "Shares of BellSouth Common Stock allocated to
participants" lines and reflected as "Distributable shares" instead.
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
funds 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 contracts
with different interest rates and maturities issued by insurance companies and
other 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 Master Savings 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, 1998 and 1997 was
$1,197,686 and $1,180,628, respectively.
The crediting interest rate at December 31, 1998 and 1997 was 6.49% and
6.65%, respectively. The average yield for the years ended December 31, 1998
and 1997 was 6.13% and 6.64%, 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.
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 aggregate amount of $850 million to fund the
purchase of BellSouth Common Stock to be utilized at later dates to fulfill
match obligations. Shares purchased with such funds are released for
allocation to participant accounts based on a prescribed schedule coinciding
with payments on the ESOP notes.
22
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
8. Interest in BellSouth Master Savings Trust--(continued)
Assets held in the Master Savings Trust are generally unavailable to service
the ESOP debt; however, the notes are guaranteed by and are subject to direct
recourse against BellSouth. BellSouth contributes to the ESOP Trusts an amount
necessary, net of ESOP dividends and interest, to service the ESOP notes. Such
contributions are classified as Supplemental Contributions in the accompanying
Statements of Changes in Net Assets Available for Benefits With Fund
Information. These contributions are subject to the claims of holders of debt
securities issued by the ESOP Trusts but are held at BellSouth and paid to the
ESOP Trusts twice yearly to fund, on a same day basis, required payments by
the ESOP Trusts on the notes. Such contributions would not remain in the ESOP
Trusts unless there was a default on the debt securities by the ESOP Trustee
after having received the required contributions from BellSouth. Therefore,
holders of the debt securities should not rely on the assets of the ESOP
Trusts in arriving at an investment decision with respect to the debt
securities.
In addition to Supplemental Contributions, BellSouth contributes amounts
necessary to purchase any additional shares required to meet the match
obligations after shares released by the ESOP Trusts have been used. Such
contributions are classified as Employing Company Contributions in the
accompanying Statements of Changes in Net Assets Available for Benefits With
Fund Information.
In lieu of receiving cash dividends earned on shares of BellSouth Common
Stock which have been allocated to participants from the ESOP Trusts,
participant accounts are credited with equivalent shares of BellSouth Common
Stock. Dividends on the related ESOP shares are transferred to the Unallocated
ESOP Fund and are applied towards the service of the ESOP notes. The transfer
of these earnings is classified as Transfer for Loan Repayment in the
accompanying Statements of Changes in Net Assets Available for Benefits With
Fund Information.
For the years ended December 31, 1998, 1997 and 1996, BellSouth made cash
contributions to the ESOP Trusts in the amount of $71,857, $68,393 and
$67,621, respectively, for the purpose of servicing the guaranteed debt and
cash contributions in the amount of $8,322, $21,675 and $23,539, respectively,
to purchase additional shares to meet the match obligations.
A description of each debt issue is as follows:
BellSouth Management Savings and Employee Stock Ownership Plan Trust:
Title Amount Interest Rate Due Date
----- -------- ------------- ------------
Amortizing Medium-Term Notes, Series A...... $275,000 9.125% July 1, 2003
Amortizing Medium-Term Notes, Series A...... $275,000 9.19% July 1, 2003
--------
Total..................................... $550,000
========
BellSouth Savings and Security ESOP Trust:
Title Amount Interest Rate Due Date
----- -------- ------------- ------------
Amortizing Medium-Term Notes, Series A...... $300,000 9.125% July 1, 2003
Maturities of the ESOP Trusts' long-term debt outstanding at December 31,
1998 were as follows:
1999 2000 2001 2002 2003 Total
------- ------- ------- -------- -------- --------
Maturities................... $75,589 $84,470 $94,128 $104,648 $108,183 $467,018
======= ======= ======= ======== ======== ========
23
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Unit Values and Per-Participant Amounts)
8. Interest in BellSouth Master Savings Trust--(continued)
Investment activities of the Master Savings Trust are allocated to the Plan
based upon the total of each individual Plan participant's share of the Master
Savings Trust investment activities during the period ended December 31, 1998.
The Master Savings Trust investment activities for the years ended December
31, 1998, 1997 and 1996 were as follows:
For the Year Ended
December 31,
--------------------------------
1998 1997 1996
---------- ---------- --------
Investment Activities:
Dividends on shares of BellSouth Common
Stock...................................... $ 110,822 $ 117,861 $129,554
Interest Income Fund income................. 78,395 77,381 69,519
Other interest.............................. 46,717 38,778 25,723
Net change in unrealized
appreciation/(depreciation) on investments. 2,617,133 689,077 (237,602)
Net realized gain on investments............ 1,161,504 991,088 153,494
Investment manager fees..................... (1,198) (1,308) (1,143)
Other fees.................................. (3,262) (2,960) (2,035)
---------- ---------- --------
Net investment activities.................... $4,010,111 $1,909,917 $137,510
========== ========== ========
24
BELLSOUTH MASTER SAVINGS TRUST
EMPLOYER IDENTIFICATION NUMBER: 00-0000000
ITEM 27a--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
(In Thousands)
December 31, 1998
-------------------------------
Number of
Shares or
Principal Carrying
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- ---------- ----------
BELLSOUTH STOCK FUND
Shares of BellSouth common stock*#--97.0%.......... 84,278 $2,214,809 $4,203,370
---------- ----------
Temporary Cash Investments--3.0%................... 60,757 $ 129,141 $ 129,190
---------- ----------
Total BellSouth Stock Fund--100.0%............... $2,343,950 $4,332,560
---------- ----------
INDEXED STOCK FUND
Bankers Trust Pyramid Equity Index Fund*#--99.9%... 441 $ 894,758 $1,287,238
---------- ----------
Temporary Cash Investments--0.1%................... 13 $ 27 $ 28
---------- ----------
Total Indexed Stock Fund--100.0%............... $ 894,785 $1,287,266
---------- ----------
INTEREST INCOME FUND
Annuity Contracts with Insurance Companies+--92.8%
Aetna Life Insurance Company
(6.97%).......................................... $ 50,669 $ 50,669 $ 50,669
Allstate Life Insurance
(6.39%).......................................... $ 71,544 $ 71,544 $ 71,544
Bankers Trust
(7.15%).......................................... $119,672 $ 119,672 $ 119,672
CDC Investment
(5.85%-7.61%).................................... $127,649 $ 127,649 $ 127,649
Continental Assurance
(5.57%-5.96%).................................... $108,039 $ 108,039 $ 108,039
Xxxxxxx National Life
(6.21%).......................................... $ 50,958 $ 50,958 $ 50,958
Xxxx Xxxxxxx Mutual Life
(4.45%-6.87%).................................... $192,027 $ 192,027 $ 192,027
MBL Life Assurance Corp.
(5.10%-9.75%).................................... $ 3,949 $ 3,949 $ 3,949
Massachusetts Mutual
(6.18%-6.81%).................................... $ 24,738 $ 24,738 $ 24,738
Metropolitan Life Insurance Co.
(5.79%-6.20%).................................... $ 64,523 $ 64,523 $ 64,523
Monumental Life Insurance Co.
(5.55%-6.79%).................................... $131,404 $ 131,404 $ 131,404
New York Life Insurance Co.
(5.62%-6.80%).................................... $ 25,451 $ 25,451 $ 25,451
Prudential Insurance Company of America
(8.23%-9.95%).................................... $ 8,607 $ 8,607 $ 8,607
Rabobank Nederland
(6.23%-7.58%).................................... $ 86,163 $ 86,163 $ 86,163
State Street Bank & Trust
(4.42%).......................................... $ 10,122 $ 10,122 $ 10,122
Sun Life Association, Canada
(5.78%).......................................... $ 6,615 $ 6,615 $ 6,615
TransAmerican Life & Annuity
(6.41%-6.70%).................................... $ 75,423 $ 75,423 $ 75,423
United Bank of Switzerland
(7.38%-8.30%).................................... $ 40,133 $ 40,133 $ 40,133
---------- ----------
$1,197,686 $1,197,686
---------- ----------
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, 1998
--------------------------------
Number of
Shares or
Principal Carrying
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- ----------- ----------
Temporary Cash Investments--7.2%
IBM Commercial Paper, 01/04/99................. $10,000 $ 9,992 $ 9,992
BT Pyramid Directed Cash Fund*................. 82,767 $ 82,767 $ 82,767
----------- ----------
$ 92,759 $ 92,759
----------- ----------
Total Interest Income Fund--100.0%............ $ 1,290,445 $1,290,445
----------- ----------
BOND FUND
U.S. Government Treasury Notes--9.8%
U.S. Treasury Notes, 3.625%, 07/15/02.......... $ 3,000 $ 3,016 $ 3,049
U.S. Treasury Notes, 7.500%, 02/15/05.......... $10,000 $ 11,419 $ 11,450
----------- ----------
$ 14,435 $ 14,499
----------- ----------
U.S. Government Treasury Bonds--15.7%
U.S. Treasury Bonds, 8.750%, 05/15/17......... $ 1,000 $ 1,404 $ 1,391
U.S. Treasury Bonds, 8.875%, 02/15/19......... $ 500 $ 717 $ 712
U.S. Treasury Bonds, 11.125%, 08/15/03......... $ 4,450 $ 5,619 $ 5,616
U.S. Treasury Bonds, 11.625%, 11/15/04......... $ 600 $ 799 $ 808
U.S. Treasury Bonds, 12.000%, 08/15/13......... $ 9,600 $ 14,531 $ 14,657
----------- ----------
$ 23,070 $ 23,184
----------- ----------
Other U.S. Government--2.5%
Stripped U.S. Treasury Bonds, 8.750%, 05/15/17. $10,100 $ 3,541 $ 3,670
----------- ----------
$ 3,541 $ 3,670
----------- ----------
Federal Agency Obligations--6.7%
Government Natl. Mtg. Assn., 6.500%, 12/20/28.. $ 5,000 $ 4,802 $ 4,816
U.S. Dept. Veterans Affairs, 6.500%, 05/15/25.. $ 5,000 $ 5,039 $ 5,070
----------- ----------
$ 9,841 $ 9,886
----------- ----------
Other Federal Agencies--7.7%
F.H.L.M. Corp., 02/15/27....................... $11,104 $ 11,177 $ 11,149
F.H.L. Banks Discount Note, 01/20/99........... $ 200 $ 199 $ 200
----------- ----------
$ 11,376 $ 11,349
----------- ----------
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, 1998
---------------------------
Number of
Shares or
Principal Carrying
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- -------- --------
Domestic Corporate Obligations--55.8%
Associates Corp. North Amer.
5.750%, 11/01/03................................... $ 5,000 $ 4,998 $ 5,045
Chrysler Finl. Corp.
6.52%, 07/21/99.................................... $ 200 $ 202 $ 201
Chrysler Finl. Corp.
9.5%, 12/15/99..................................... $ 900 $ 967 $ 935
Citicorp Mtg. Secs Inc.
6.500%, 11/25/27................................... $10,000 $ 10,050 $ 10,078
Columbia/HCA
6.500%, 03/15/99................................... $ 600 $ 601 $ 599
Ford Motor Credit Company
7.750%, 11/15/02................................... $ 5,000 $ 5,317 $ 5,385
General Mtrs. Accept. Corp.
5.750%, 11/10/03................................... $ 5,000 $ 4,981 $ 5,039
General Mtrs. Accept. Corp.
6.750%, 02/07/02................................... $ 6,000 $ 6,134 $ 6,215
Norwest Asset Secs Corp.
6.750%, 05/25/28................................... $ 8,000 $ 7,813 $ 7,912
Philadelphia Elec. Co.
5.625%, 11/01/01................................... $ 5,000 $ 4,938 $ 5,002
Xxxxxx Xxxxxx
7.250%, 01/15/03................................... $ 300 $ 311 $ 318
Residential Fdg. Mtg. Secs I Inc.
7.000%, 11/25/27................................... $ 5,000 $ 5,052 $ 5,086
Residential Fdg. Mtg. Secs I Inc.
7.500%, 04/25/27................................... $ 6,394 $ 6,510 $ 6,546
Texas Utilities
9.50%, 08/01/99.................................... $ 600 $ 637 $ 613
Union Oil
7.24%, 04/01/99 ................................... $ 1,600 $ 1,635 $ 1,610
Union Pac. Corp.
6.250%, 03/15/99................................... $ 2,600 $ 2,607 $ 2,603
United Telecommunications Inc.
9.440%, 08/15/01................................... $10,000 $ 10,932 $ 10,911
USA Waste Svcs. Inc.
6.125%, 07/15/01................................... $ 3,000 $ 2,994 $ 3,019
Worldcom Inc. GA
6.125%, 08/15/01................................... $ 5,000 $ 4,995 $ 5,080
-------- --------
$ 81,674 $ 82,197
-------- --------
Temporary Cash Investments--1.7%
General Electric Cap. Corp. Comm. Paper, 01/29/99 .. $ 1,100 $ 1,095 $ 1,095
Bankers Trust Pyramid Cash Plus*.................... 686 $ 1,458 $ 1,460
-------- --------
$ 2,553 $ 2,555
-------- --------
Total Bond Fund--100.0%............................ $146,490 $147,340
-------- --------
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, 1998
-----------------------------
Number of
Shares or
Principal Carrying
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- --------- ---------
BALANCED FUND
BT Equity Index Fund*--56.2%................................ 27 $ 52,637 $ 77,664
--------- ---------
BT Broad Market Fixed Income Fund*--35.5%................... 22,325 $ 39,064 $ 48,973
--------- ---------
U.S. Treasury Xxxx, Exp. 01/07/99--0.3%..................... $ 470 $ 448 $ 448
--------- ---------
Temporary Cash Investments--8.0%............................ 5,197 $ 10,884 $ 11,050
--------- ---------
Total Balanced Fund--100.0%............................... $ 103,033 $ 138,135
--------- ---------
FIDELITY GROWTH & INCOME PORTFOLIO
Shares of Fidelity Secs Growth & Income Com. Stk.--99.9%.... 5,400 $ 183,847 $ 247,529
--------- ---------
Temporary Cash Investments--0.1%............................ 3 $ 5 $ 6
--------- ---------
Total Fidelity Growth & Income Portfolio--100.0%.......... $ 183,852 $ 247,535
--------- ---------
VANGUARD INDEX TRUST GROWTH PORTFOLIO
Shares of Vanguard Index--99.9%............................. 5,513 $ 140,738 $ 174,581
--------- ---------
Temporary Cash Investments--0.1%............................ 2 $ 4 $ 4
--------- ---------
Total Vanguard Index Trust Growth Portfolio--100.0%....... $ 140,742 $ 174,585
--------- ---------
DFA U.S. 6-10 VALUE PORTFOLIO II
Shares of Dimensional Invt Grp Small Cap Val. Com. Stk.--
100.0%..................................................... 5,370 $ 86,079 $ 81,518
--------- ---------
Total DFA U.S. 6-10 Value Portfolio II--100.0%............ $ 86,079 $ 81,518
--------- ---------
X. XXXX PRICE MID-CAP GROWTH
Shares of X. Xxxx Price Mid-Cap Growth--99.9%............... 2,091 $ 61,179 $ 71,251
--------- ---------
Temporary Cash Investments--0.1%............................ 1 $ 1 $ 1
--------- ---------
Total X. Xxxx Price Mid-Cap Growth--100.0%................ $ 61,180 $ 71,252
--------- ---------
DFA U.S. LARGE CAP VALUE II FUND
Shares of Dimensional Invt Grp Inc Lrge Cap Val. Com. Stk.--
100.0% 2,198 $ 35,542 $ 40,975
--------- ---------
Total DFA U.S. Large Cap Value II Fund--100.0%............ $ 35,542 $ 40,975
--------- ---------
DFA INTERNATIONAL VALUE II FUND
Shares of Dimensional Invt Grp Intl Com. Stk.--99.9%........ 3,242 $ 35,870 $ 36,986
--------- ---------
Temporary Cash Investments--0.1%............................ 1 $ 3 $ 3
--------- ---------
Total DFA International Value II Fund--100.0%............. $ 35,873 $ 36,989
--------- ---------
PARTICIPANT LOANS
Loans to Participants (7.0%-11.0%)--100.0%.................. $89,430 $ 89,430 $ 89,430
--------- ---------
Total Loan Fund--100.0%................................... $ 89,430 $ 89,430
--------- ---------
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, 1998
--------------------------------
Number of
Shares or
Principal Carrying
Name of Issuer and Title of Issue Amount Cost Value
--------------------------------- --------- ---------- -----------
CONTRIBUTION ACCOUNT++
Temporary Cash Investments--100.0%.............. 73 $ 155 $ 155
---------- -----------
Total Contribution Acct.--100.0%.............. $ 155 $ 155
---------- -----------
DISTRIBUTION ACCOUNT++
Shares of BellSouth Common Stock*--11.2%........ 22 $ 347 $ 1,075
---------- -----------
Temporary Cash Investments--88.8%............... 3,996 $ 8,488 $ 8,496
---------- -----------
Total Distribution Acct.--100.0%.............. $ 8,835 $ 9,571
---------- -----------
EXPENSE ACCOUNT++
Temporary Cash Investments--100.0%.............. 1,187 $ 2,473 $ 2,524
---------- -----------
Total Expense Acct.--100.0%................... $ 2,473 $ 2,524
---------- -----------
EMPLOYEE STOCK OWNERSHIP PLAN
Shares of BellSouth Common Stock*#--99.0%....... 72,036 $ 996,178 $ 3,592,701
---------- -----------
Temporary Cash Investments--1.0%................ 16,358 $ 34,198 $ 34,783
---------- -----------
Total Employee Stock Ownership Fund--100.0%... $1,030,376 $ 3,627,484
---------- -----------
TOTAL INVESTMENTS............................. $6,453,240 $11,577,764
========== ===========
--------
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.
# Represents an individual investment which is 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 6.13%
for the year 1998. 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
