UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
|X|
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
or
|_|Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from______to______
Commission file Number l-8610
SBC COMMUNICATIONS INC.
Incorporated under the laws of the State of Delaware
I.R.S. Employer Identification Number 43-1301883
175 E. Houston, San Antonio, Texas 78205
Telephone Number 210-821-4105
(1) Exhibit 99-b Annual Report on Form 11-K for the SBC Savings Plan for the year 2000.
(2) Exhibit 99-c Annual Report on Form 11-K for the SBC Savings and Security Plan for the year 2000.
(3) Exhibit 99-d Annual
Report on Form 11-K for the Ameritech Savings and Security Plan for Non-Salaried
Employees for the year
2000.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized on the 27th day of June, 2001.
| SBC COMMUNICATIONS INC. By /s/ Donald E. Kiernan |
| ----------------------------------- Donald E. Kiernan Senior Executive Vice President and Chief Financial Officer |
June 27, 2001
EX 99-b
Form 10-K for 2000
File No. 1-8610
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 11-K
ANNUAL REPORT
--------------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
Commission File Number l-8610
------------------------
SBC SAVINGS PLAN
------------------------
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
Financial Statements, Supplemental Schedule and Exhibit
Table of Contents
Page
Report of Independent Auditors........................................................... 1
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2000 and 1999. 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2000.................................................... 3
Notes to Financial Statements................................................... 4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year).................. 8
Exhibit:
23-a Consent of Ernst & Young LLP
REPORT OF INDEPENDENT AUDITORS
SBC Communications Inc., Plan Administrator
for the SBC Savings Plan
We have audited the accompanying statements of net assets available for benefits of the SBC Savings Plan as
of December 31, 2000 and 1999, and the related statement of changes in net assets available for benefits for
the year ended December 31, 2000. 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 auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our 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 benefits at December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting principles generally accepted in
the United States.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2000 is
presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been subjected to auditing procedures
applied in our audits of the financial statements, and in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001
SBC SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
-------------------------------
2000 1999
------------ ------------
ASSETS
Investments (See Note 4) $ 5,768,391 $ 6,686,120
Cash - 152
Participant contributions receivable 13 7
Dividends and interest receivable 551 387
Receivable for investments sold 1,903 202
Other 78 39
------------ ------------
Total Assets 5,770,936 6,686,907
------------ ------------
LIABILITIES
Overdrafts 2,352 -
Payable for investments purchased - 12,086
Administrative expenses payable 1,136 646
Dividends and interest payable 789 4,063
Long-term debt:
SBC Communications Inc. 35,996 54,762
Other - 28,866
Other 7 10
------------ ------------
Total Liabilities 40,280 100,433
------------ ------------
Net Assets Available for Benefits $ 5,730,656 $ 6,586,474
============ ============
See Notes to Financial Statements.
SBC SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Net Assets Available for Benefits, December 31, 1999 $ 6,586,474
Additions to Net Assets:
Contributions:
Participant contributions 235,677
Employer contributions 67,162
------------
302,839
------------
Investment Income:
Dividends on SBC common shares 73,902
Interest 52,575
------------
126,477
------------
Total Net Additions 429,316
------------
Deductions from Net Assets:
Net depreciation in value of investments 165,226
Administrative expenses 4,463
Interest expense 6,929
Distributions 1,108,516
------------
Total Deductions 1,285,134
------------
Net Assets Available for Benefits, December 31, 2001 $ 5,730,656
============
See Notes to Financial Statements.
SBC SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Plan Description - The SBC Savings Plan (Plan) was established by SBC Communications Inc. (SBC) to
----------------
provide a convenient way for eligible employees to save for retirement on a regular and long-term basis.
The following description of the Plan provides only general information. The Plan has detailed
provisions covering participant eligibility, participant allotments from pay, participant withdrawals,
participant loans, employer contributions and related vesting of contributions and Plan expenses. The
Plan text and prospectus include complete descriptions of these and other Plan provisions. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Participants can invest their contributions in one or more of the following funds in 1% increments: the
SBC Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the Interest Income Fund, the Asset
Allocation Fund and the Global Equity Fund. Effective January 1, 2001, participants may also invest their
contributions in the Mid and Small Cap Fund and the International Stock Fund.
Company matching contributions are made solely in the form of shares of SBC's common stock held in a
leveraged Employee Stock Ownership Plan (ESOP) which is a separate investment account of this Plan.
The Plan prefunded the ESOP by borrowing Guaranteed Salaried Employees' ESOP Notes due 2005, the
repayment of which is guaranteed by SBC. Funds borrowed by the Plan were used to purchase shares of
SBC's common stock held in the open market (Financed Shares), which act as collateral for reimbursement to
SBC for any payments it makes under its guarantee of the ESOP Notes. Dividends on Financed Shares and
employer cash contributions are used by the Plan to make the required principal and interest payments on
the ESOP Notes. As the ESOP Notes are paid down, the Financed Shares are released from the collateral.
The Financed Shares are allocated to participants' accounts in the form of a company matching
contribution. In lieu of dividends on Financed Shares previously allocated to participants, additional
Financed Shares are allocated to participants' accounts. The interest rate on the notes range from 6.79%
to 7.89%.
To the extent insufficient shares have been released through payments on outstanding notes net of amounts
refinanced, additional employer contributions are made to the ESOP to purchase shares necessary to meet
any shortfall in the company match or in the shares issued in lieu of dividends. Dividends on these
shares are used to acquire additional shares which are allocated to participants' accounts in the ESOP.
Should shares released exceed the required company matching contribution, the excess is considered an
additional employer contribution and is allocated to participants' accounts based on each participant's
proportionate share of actual plan year ESOP contributions.
Dividends on shares in the SBC Shares Fund are paid into a separate fund known as a Dividend Fund Account
(DFA). At the end of the year, dividends held in the DFA are paid out to the participant. The
participant may elect reinvestment and have the special Deferred-Tax Allotment offset the payout through
the purchase of additional units. Interest earned on dividends held in the DFA will be paid into the SBC
Shares Fund. During 2000, Plan participants elected to receive $35.2 million in dividend distributions.
This amount is included in distributions on the statement of changes in net assets.
Although it has not expressed any intent to do so, SBC has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event
that the Plan is terminated, subject to the conditions set forth by ERISA, the account balances of all
participants shall be 100% vested.
2. Accounting Policies - The values of investments are determined as follows: SBC common shares on the basis
-------------------
of the closing price as reported on the New York Stock Exchange; contracts with insurance companies and
other financial institutions at principal plus reinvested interest which approximates fair value; common
collective trust funds at values obtained from fund managers; and temporary cash investments at cost
which approximates fair value.
Purchases and sales of securities are reflected as of the trade date. Dividend income is recognized on
the ex-dividend date. Interest earned on investments is recognized on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles in
the United States requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133), which requires all derivatives to be recorded
on the statement of net assets available benefits at fair value, and requires changes in the fair value
of the derivatives to be recorded on the statement of changes in net assets available for benefits. SBC
adopted FAS 133 on January 1, 2001, and the Plan's December 31, 2001 financial statements will reflect
this adoption. However, because of the Plan's minimal use of derivatives, SBC does not expect that
adoption of this standard will have a significant effect on the Plan.
3. Voluntary Enhanced Pension and Retirement Program - In October 2000, SBC implemented a voluntary enhanced
-------------------------------------------------
pension and retirement program (EPR) to reduce the number of management employees. The program offered
eligible management employees who decided to terminate employment an enhanced pension benefit and
increased eligibility for post-retirement medical and dental benefits. Although distributions under
normal plan provisions increased due to the EPR program, partial termination of the Plan did not occur.
4. Investments - Investments representing 5% or more of Plan net assets at either December 31, 2000 or 1999
------------
were:
2000 1999
----------- ----------
Employee Stock Ownership Plan*
------------------------------
SBC common shares:
Allocated $ 1,184,049 $ 1,280,082
Unallocated $ 84,996 $ 228,258
SBC Shares Fund
---------------
SBC common shares $ 1,648,251 $ 2,129,807
Diversified Equity Portfolio
----------------------------
Barclays Global Investors Equity Index Fund F $ 1,379,669 $ 1,667,335
Asset Allocation Fund
---------------------
Barclays Global Investors U.S. Tactical Asset $ 403,199 $ 447,668
Allocation Fund F
* Nonparticipant-directed
During 2000, the Plan's investments (including gains and losses on investments bought and sold, as well
as held during the year) depreciated in value as follows:
Common Stock $ 19,853
Common Collective Trusts 145,373
----------
Total $ 165,226
==========
The Interest Income Fund consists of contracts with various companies that promise to repay principal
plus accrued income at contract maturity, subject to the creditworthiness of the issuer. Interest
crediting rates are generally established when the contract is purchased and are not reset. For the
years ended December 31, 2000 and 1999, the average interest rates earned on these contracts were 6.29%
and 6.04%. At December 31, 2000, the fixed crediting interest rates on these contracts ranged from 5.24%
to 7.65%. At December 31, 1999, the fixed crediting interest rates on these contracts ranged from 5.06%
to 8.38%.
The Interest Income Fund invests in both guaranteed investment contracts (GICs) and synthetic investment
contracts (SICs). SICs differ from GICs in that the assets supporting the SICs are owned by the Plan. A
bank or insurance company issues a wrapper contract that allows participant directed transactions to be
made at contract value. Wrapper contracts are valued as the difference between the fair value of the
supporting assets and the contract value. The assets supporting the GICs and SICs generally consist of
high quality fixed income securities with fair values of $615,408 and $481,369 at December 31, 2000 and
1999. The contract values of the GICs and SICs at December 31, 2000 and 1999 were $605,647 and $486,799.
5. Nonparticipant-Directed Investments - Information about the net assets and the significant components of
-----------------------------------
the changes in net assets relating to the nonparticipant-directed investments as of December 31 is as
follows:
2000 1999
---------- ----------
Assets
------
SBC common shares:
Allocated $ 1,184,049 $ 1,280,082
Unallocated 84,996 228,258
Temporary cash investments 14,644 25,735
Cash - 2
Dividends and interest receivable 83 120
Receivable for investments sold 1,903 202
Other 16 -
---------- ----------
Total Assets 1,285,691 1,534,399
---------- ----------
Liabilities
-----------
Overdrafts 2,352 -
Administrative expenses payable 152 106
Interest payable 758 4,063
Long-term debt 35,996 83,628
---------- ----------
Total Liabilities 39,258 87,797
---------- ----------
Net Assets Available for Benefits $ 1,246,433 $ 1,446,602
========== ==========
2000
----------
Net Assets Available for Benefits, December 31, 1999 $ 1,446,602
Employer contributions 67,162
Interest income 4,676
Dividends 30,284
Net depreciation in fair value of investments (23,580)
Administrative expenses (457)
Interest expense (6,929)
Distributions (271,325)
----------
(200,169)
----------
Net Assets Available for Benefits, December 31, 2000 $ 1,246,433
==========
6. Long-Term Debt - Long-term debt consists of the ESOP Notes issued in connection with the ESOP and the
--------------
refinancing notes (as discussed in Note 1). At December 31, 2000, the aggregate principal amounts of
long-term debt scheduled for repayment for the years 2001 through 2005 were $4,302, $4,616, $4,952,
$3,959 and $18,077. The carrying amount and the estimated fair value of the ESOP and refinancing notes
as of December 31 were:
2000 1999
----------- -----------
Carrying Amount $ 35,996 $ 83,628
=========== ===========
Fair Value $ 36,890 $ 83,505
=========== ===========
The fair values of the ESOP Notes were estimated based on quoted prices. The fair value of the
refinancing notes were estimated based on discounted future cash flows using current interest rates.
7. Tax Status - The Internal Revenue Service issued a determination letter on November 4, 1997, stating
----------
that the Plan and related trust are designed in accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since the determination letter was received. The Plan
Administrator believes that the Plan is currently designed and is operating in compliance with the
applicable requirements of the IRC.
8. Reconciliation of Financial Statements to Form 5500 - The following is a reconciliation of Net Assets
---------------------------------------------------
Available for Benefits per the financial statements to the Form 5500 as of December 31:
2000 1999
------------ ------------
Net Assets Available for Benefits per the financial statement $ 5,730,656 $ 6,586,474
Less: Distribution payable to participants 20,220 -
------------ ------------
Net Assets Available for Benefits per the Form 5500 $ 5,710,436 $ 6,586,474
============ ============
The following is a reconciliation of benefits paid to participants per the financial statements to the
Form 5500 for the year ended December 31, 2000:
2000
------------
Distributions to participants per the financial statements $ 1,108,516
Add: Distributions payable to participants at December 31, 2000 20,220
Less: Distributions payable to participants at December 31, 1999 -
------------
Distributions to participants per the Form 5500 $ 1,128,736
============
Distributions payable to participants are recorded on the Form 5500 for benefit claims that have been
processed and approved for payment prior to December 31, but not yet paid as of that date.
9. Subsequent Event - Due to the merger of SBC and Ameritech Corporation (Ameritech) effective October 8,
----------------
1999, the Ameritech Savings Plan for Salaried Employees (Ameritech Plan) merged into the Plan effective
January 1, 2001. In conjunction with the merger, all assets of the Ameritech Plan were either
transferred directly to the Plan through in-kind securities transfers or sold and the cash transferred to
the Plan, together with the unallocated SBC common shares and the remaining liability under the loan
agreement.
SBC SAVINGS PLAN
EIN 43-1301883, PLAN NO. 002
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2000
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
------------------------------------------- ------------------------ ---------- -----------
Employee Stock Ownership Plan
-----------------------------
* SBC common shares:
Allocated 24,796,835 shares $ 440,743 $ 1,184,049
Unallocated 1,780,016 shares 33,362 84,996
* Boston Safe Deposit and Trust Company Temporary cash investment 14,644 14,644
---------- -----------
Total Employee Stock Ownership Plan 488,749 1,283,689
---------- -----------
SBC Shares Fund
---------------
* SBC common shares 34,518,351 shares 1,648,251
* Boston Safe Deposit and Trust Company Temporary cash investment 78,076
-----------
Total SBC Shares Fund ** 1,726,327
-----------
Bond Fund
---------
* Barclays Global Investors Intermediate -----------
Government/Credit Bond Index Fund F 6,733,145 units ** 86,454
-----------
Diversified Equity Portfolio
----------------------------
* Barclays Global Investors Equity -----------
Index Fund F 79,429,989 units ** 1,379,699
-----------
Interest Income Fund
--------------------
Allstate Life Insurance Company Synthetic contract wrapper
#31068-W, 6.09%, *** (1)
Allstate Life Insurance Company Allstate SA Wind Down 1,787
-----------
1,786
Allstate Life Insurance Company 7.06% - 7.10%,
11/14/03 - 11/22/04 21,332
Bank of America Synthetic contract wrapper
#99-058, 7.13%, *** (1,251)
WFS Financial Owners Trust Prime Auto 10,180
WFS Financial Owners Trust Sub Prime Auto 5,222
Countrywide ABS - Other 7,898
Ford Auto Owners Trust Prime Auto 7,868
Ford Auto Owners Trust Prime Auto 3,008
Providian Master Trust Monoline Credit Card 7,287
Federal Home Loan Mortgage Company Home Equity Monoline 6,484
Avis AESOP Leasing L.P. Operating Assets 5,412
Toyota Auto Rec Owner Trust Prime Auto 4,015
Residential Asset Se Home Equity Senior Sub 3,028
Daimler Chrysler Prime Auto 1,225
Bank of America Cash on Hand 482
-----------
60,858
Business Men's Assurance Company of America 7.41% - 7.44%,
7/29/03 - 7/15/04 14,877
CDC Financial Products Inc. 6.99% - 7.01%,
5/23/05 - 10/17/05 30,384
Chase Manhattan Bank Synthetic contract wrapper
#401740-L2, 6.71%, *** (76)
IGT Lambda 99-3Q-4.0yD 6,297
-----------
6,221
Chase Manhattan Bank Synthetic contract wrapper
#426423-T, 7.00%, *** (592)
Fannie Mae Grantor Trust FHA/VA Reperforming Pass 10,187
Capital One Auto Monoline Credit Card 7,062
Harley-Davidson Eagleman Prime Auto 4,111
Fleet Credit Card MT Bank Credit Card 3,973
Chase Manhattan Bank Cash on Hand 148
-----------
24,889
Continental Assurance Company Synthetic contract wrapper
#631-05868, 5.65%,*** 35
INVESCO Group Trust Beta 10,370
-----------
10,405
Deutsche Bank AG Synthetic contract wrapper
#PRM-SNM1, 5.63%, *** (129)
United States Treasury Treasury Note 8,267
General Electric Capital Corporate Finance 1,767
General Electric Capital Corporate Finance 1,455
-----------
11,360
GE Life and Annuity Assurance Company 6.87% - 7.47%,
12/17/01 - 12/1/03 19,425
Jackson National Life Insurance Company 6.93% - 7.42%,
6/29/01 - 8/18/04 12,163
John Hancock Mutual Life Insurance Company 5.28% - 6.72%,
1/2/01 - 2/3/03 69,460
Massachusetts Mutual Life Insurance Company Synthetic contract wrapper
#10483, 6.08%, *** 9
Massachusetts Mutual Life Insurance Company Separate Account B-11 2,179
-----------
2,188
Metropolitan Life Insurance Company 5.25% - 6.74%,
4/15/01 - 3/20/02 68,158
Monumental Life Insurance Company 6.28% - 6.87%,
10/15/01 - 1/19/04 19,201
Monumental Life Insurance Company Synthetic contract wrapper
#00291TR, 6.16%, *** (182)
Toyota Auto Lease Trust Auto Leases 3,091
Premier Auto Master Trust Prime Auto 2,653
Copel Capital Funding Small Equipment Lease 2,000
First USA Master Trust Bank Credit Card 1,973
Amex. Optima CC MT Monoline Credit Card 1,658
Commonwealth Edison Stranded Cost 1,652
Monumental Life Insurance Company Cash on Hand 61
-----------
12,906
New York Life Insurance Company 5.24% - 6.74%,
6/29/01 - 9/1/03 47,606
Prudential Insurance Company of America 6.99% - 7.48%,
10/6/03 - 11/30/05 36,695
Security Life of Denver Insurance Company 7.35% - 7.65%,
2/11/03 - 11/12/03 16,785
State Street Bank and Trust Synthetic contract wrapper
#98246-LB1, 5.47%, *** 48
IGT: Lambda 98-4Q-3.0yD 4,371
-----------
4,419
State Street Bank and Trust Company Synthetic contract wrapper
#99038, 6.53%, *** (1,472)
MBNA Master Trust Monoline Credit Card 8,153
MBNA Master Trust Monoline Credit Card 5,264
MBNA Master Trust Monoline Credit Card 3,701
Sears Credit Account Trust Monoline Credit Card 7,543
Sears Credit Account Trust Retail Credit Card 6,202
Sovereign Bank Home Equity Home Equity Monoline 5,098
Daimler-Benz Auto Prime Auto 4,959
Saxon Asset Securities Trust Home Equity Senior Sub 4,546
Fleet Credit Card MT Monoline Credit Card 4,246
Citibank Credit Card MT Bank Credit Card 2,518
State Street Bank and Trust Cash on Hand 279
-----------
51,037
Sun America Life Insurance Company 7.02% - 7.55%,
1/2/04 - 11/4/08 35,071
Travelers Insurance Company Life Department 5.40%, 12/31/01 26,415
United of Omaha Life Insurance Company 7.13%, 12/14/01 2,004
-----------
605,646
* Boston Safe Deposit and Trust Company Temporary cash investment 23,095
-----------
Total Interest Income Fund ** 628,741
-----------
Asset Allocation Fund
---------------------
* Barclays Global Investors U.S. Tactical -----------
Asset Allocation Fund F 23,510,144 units ** 403,199
-----------
Global Equity Fund
------------------
* Barclays Global Investors U.S. Equity
Market Fund F 3,734,883 units 111,188
* Barclays Global Investors EAFE Equity Index
Fund F 1,828,653 units 36,463
-----------
Total Global Equity Fund ** 147,651
-----------
Loan Fund
---------
-----------
* Loans to Plan Participants 9.50% - 10.50% ** 112,630
-----------
TOTAL $ 5,768,391
===========
* Party-in-Interest.
** Participant-directed investment, cost not required.
*** Synthetic Insurance Contracts, no stated maturity.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator for the Plan has
duly caused this annual report to be signed by the undersigned thereunto duly authorized.
SBC SAVINGS PLAN
By SBC Communications Inc., Plan Administrator
for the Foregoing Plan
By /s/ Karen E. Jennings
----------------------------
Karen E. Jennings
Senior Executive Vice President-
Human Resources
Date: June 27, 2001
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
-----------
23-a Consent of Independent Auditors Ernst & Young LLP.
EX 23-a
Form 11-K for 2000
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (Form S-8, No. 333-24295,
333-66105 and 333-88667) pertaining to the SBC Savings Plan of our report dated June 22, 2001, with
respect to the financial statements and supplemental schedules of the SBC Savings Plan included in
this Annual Report (Form 11-K) for the year ended December 31, 2000.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001
EX99-c
Form 10-K for 2000
File No. 1-8610
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 11-K
ANNUAL REPORT
--------------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
Commission File Number l-8610
------------------------------------------
SBC SAVINGS AND SECURITY PLAN
------------------------------------------
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
Financial Statements, Supplemental Schedule and Exhibit
Table of Contents
Page
Report of Independent Auditors............................................................. 1
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2000 and 1999... 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2000....................................................... 3
Notes to Financial Statements...................................................... 4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)..................... 8
Exhibit:
23-a Consent of Ernst & Young LLP
REPORT OF INDEPENDENT AUDITORS
SBC Communications Inc., Plan Administrator
for the SBC Savings and Security Plan
We have audited the accompanying statements of net assets available for benefits of the SBC Savings and
Security Plan as of December 31, 2000 and 1999, and the related statement of changes in net assets available
for benefits for the year ended December 31, 2000. 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 auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our 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 benefits at December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting principles generally accepted in
the United States.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2000 is
presented for purposes of additional analysis and is not a required part of the 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been subjected to auditing procedures
applied in our audits of the financial statements, and in our opinion, is fairly stated in all material
respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001
SBC SAVINGS AND SECURITY PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
--------------------------------
2000 1999
------------- -------------
ASSETS
Investments (See Note 3) $ 4,634,699 $ 4,886,427
Cash - 176
Participant contributions receivable 7 19
Dividends and interest receivable 437 382
Receivable for investments sold 224 92
Other 52 -
------------- -------------
Total Assets 4,635,419 4,887,096
------------- -------------
LIABILITIES
Payable for investments purchased - 10,799
Administrative expenses payable 1,054 413
Interest payable - 1,290
Long-term debt:
SBC Communications Inc. 644 23,768
Other - 22,380
Other - 6
------------- -------------
Total Liabilities 1,698 58,656
------------- -------------
Net Assets Available for Benefits $ 4,633,721 $ 4,828,440
============= =============
See Notes to Financial Statements.
SBC SAVINGS AND SECURITY PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Net Assets Available for Benefits, December 31, 1999 $ 4,828,440
Additions to Net Assets:
Contributions:
Participant contributions 212,428
Employer contributions 70,317
-------------
282,745
-------------
Investment Income:
Dividends on SBC common shares 70,243
Interest 44,234
-------------
114,477
-------------
Total Net Additions 397,222
-------------
Deductions from Net Assets:
Net depreciation in fair value of investments 113,182
Administrative expenses 5,466
Interest expense 2,563
Distributions 470,730
-------------
Total Deductions 591,941
-------------
Net Assets Available for Benefits, December 31, 2000 $ 4,633,721
=============
See Notes to Financial Statements.
SBC SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Plan Description - The SBC Savings and Security Plan (Plan) was established by SBC Communications Inc.
----------------
(SBC) to provide a convenient way for eligible employees to save for retirement on a regular and
long-term basis. The majority of eligible employees are represented by the Communications Workers of
America. The following description of the Plan provides only general information. The Plan has detailed
provisions covering participant eligibility, participant allotments from pay, participant withdrawals,
participant loans, employer contributions and related vesting of contributions and Plan expenses. The
Plan text and prospectus include complete descriptions of these and other Plan provisions. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Participants can invest their contributions in one or more of the following funds in 1% increments: the
SBC Shares Fund, the Bond Fund, the Diversified Equity Portfolio, the Interest Income Fund, the Asset
Allocation Fund and the Global Equity Fund.
Company matching contributions are made solely in the form of shares of SBC's common stock held in a
leveraged Employee Stock Ownership Plan (ESOP) which is a separate investment account of this Plan.
The Plan prefunded the ESOP by borrowing Guaranteed Non-Salaried Employees' ESOP Notes due 2005, the
repayment of which is guaranteed by SBC. Funds borrowed by the Plan were used to purchase shares of SBC's
common stock held in the open market (Financed Shares), which act as collateral for reimbursement to SBC
for any payments it makes under its guarantee of the ESOP Notes. Dividends on Financed Shares and
employer cash contributions are used by the Plan to make the required principal and interest payments on
the ESOP Notes. As the ESOP Notes are paid down, the Financed Shares are released from the collateral.
The Financed Shares are allocated to participants' accounts in the form of a company matching
contribution. In lieu of dividends on Financed Shares previously allocated to participants, additional
Financed Shares are allocated to participants' accounts. The interest rate on the notes is 7.78%.
To the extent insufficient shares have been released through payments on outstanding notes net of amounts
refinanced, additional employer contributions are made to the ESOP to purchase shares necessary to meet
any shortfall in the company match or in the shares issued in lieu of dividends. Dividends on these
shares are used to acquire additional shares which are allocated to participants' accounts in the ESOP.
Should shares released exceed the required company matching contribution, the excess is considered an
additional employer contribution and is allocated to participants' accounts based on each participant's
proportionate share of actual plan year ESOP contributions.
Dividends on shares in the SBC Shares Fund are paid into a separate fund known as a Dividend Fund Account
(DFA). At the end of the year, dividends held in the DFA are paid out to the participant. The
participant may elect reinvestment and have the special Deferred-Tax Allotment offset the payout through
the purchase of additional units. Interest earned on dividends held in the DFA will be paid into the SBC
Shares Fund. During 2000, Plan participants elected to receive $38.7 million in dividend distributions.
This amount is included in distributions on the statement of changes in net assets.
Although it has not expressed any intent to do so, SBC has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event
that the Plan is terminated, subject to the conditions set forth by ERISA, the account balances of all
participants shall be 100% vested.
2. Accounting Policies - The values of investments are determined as follows: SBC common shares on the basis
-------------------
of the closing price as reported on the New York Stock Exchange; contracts with insurance companies and
other financial institutions at principal plus reinvested interest which approximates fair value; common
collective trust funds at values obtained from fund managers; and temporary cash investments at cost
which approximates fair value. Purchases and sales of securities are reflected as of the trade date.
Dividend income is recognized on the ex-dividend date. Interest earned on investments is recognized on
the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles in
the United States requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133), which requires all derivatives to be recorded
on the statement of net assets available benefits at fair value, and requires changes in the fair value
of the derivatives to be recorded on the statement of changes in net assets available for benefits. SBC
adopted FAS 133 on January 1, 2001, and the Plan's December 31, 2001 financial statements will reflect
this adoption. However, because of the Plan's minimal use of derivatives, SBC does not expect that
adoption of this standard will have a significant effect on the Plan.
3. Investments - Investments representing 5% or more of Plan net assets at either December 31, 2000 or 1999
-----------
were:
2000 1999
----------- -----------
Employee Stock Ownership Plan *
-------------------------------
SBC common shares:
Allocated $ 1,209,908 $ 1,197,257
Unallocated $ 3 $ 118,174
SBC Shares Fund
---------------
SBC common shares $ 1,941,683 $ 1,941,683
Diversified Equity Portfolio
----------------------------
Barclays Global Investors Equity Index Fund $ 516,372 $ 549,268
* Nonparticipant-directed
During 2000, the Plan's investments (including gains and losses on investments bought and sold, as well
as held during the year) depreciated in value as follows:
Common Stock $ 62,626
Common Collective Trusts 50,556
-----------
Total $ 113,182
===========
The Interest Income Fund consists of contracts with various companies that promise to repay principal plus
accrued income at contract maturity, subject to the creditworthiness of the issuer. Interest crediting
rates are generally established when the contract is purchased and are not reset. For the years ended
December 31, 2000 and 1999, the average interest rates earned on these contracts were 6.15% and 5.89%. At
December 31, 2000, the fixed crediting interest rates on these contracts ranged from 5.18% to 8.00%. At
December 31, 1999, the fixed crediting interest rates on these contracts ranged from 5.08% to 8.38%.
The Interest Income Fund invests in both guaranteed investment contracts (GICs) and synthetic investment
contracts (SICs). SICs differ from GICs in that the assets supporting the SICs are owned by the Plan. A
bank or insurance company issues a wrapper contract that allows participant directed transactions to be
made at contract value. Wrapper contracts are valued as the difference between the fair value of the
supporting assets and the contract value. The assets supporting the GICs and SICs generally consist of
high quality fixed income securities with a fair value of $381,022 and $320,735 at December 31, 2000 and
1999. The contract value of the GICs and SICs at December 31, 2000 and 1999 were $376,050 and $324,896.
4. Nonparticipant-Directed Investments - Information about the net assets and the significant components of
-----------------------------------
the changes in net assets relating to the nonparticipant-directed investments as of December 31 is as
follows:
2000 1999
---------- ----------
Assets
------
SBC common shares:
Allocated $ 1,209,908 $ 1,197,257
Unallocated 3 118,174
Temporary cash investments 2,300 19,769
Dividends and interest receivable 24 96
Receivable for investments sold 224 92
Other 1 -
---------- ----------
Total Assets 1,212,460 1,335,388
---------- ----------
Liabilities
-----------
Administrative expenses payable 248 107
Interest payable - 1,290
Long-term debt 644 46,148
---------- ----------
Total Liabilities 892 47,545
---------- ----------
Net Assets Available for Benefits $ 1,211,568 $ 1,287,843
========== ==========
2000
----------
Net Assets Available for Benefits, December 31, 1999 $ 1,287,843
Employer contributions 70,317
Interest income 2,267
Dividends 26,441
Net depreciation in fair value of investments (29,306)
Administrative expenses (1,115)
Interest expense (2,563)
Distributions (142,316)
----------
(76,275)
----------
Net Assets Available for Benefits, December 31, 2000 $ 1,211,568
==========
5. Long-Term Debt - Long-term debt consists of the ESOP Notes issued in connection with the ESOP and the
--------------
refinancing notes (as discussed in Note 1). At December 31, 2000, there was no long-term debt scheduled
for repayment for the year 2001. The remaining $644 is due in the year 2005. The carrying amount and
the estimated fair value of the ESOP and refinancing notes as of December 31 were:
2000 1999
----------- -----------
Carrying Amount $ 644 $ 46,148
=========== ===========
Fair Value $ 644 $ 46,169
=========== ===========
At December 31, 2000 and 1999, the fair value of the ESOP Note was estimated based on quoted prices. At
December 31, 1999, the fair values of the 8.41% ESOP Notes were estimated based on quoted prices and the
fair value of the 9.40% ESOP Notes were estimated based on discounted future cash flows using current
interest rates.
6. Tax Status - The Internal Revenue Service issued a determination letter on March 10, 1997, stating that
----------
the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since the determination letter was received. The Plan
Administrator believes that the Plan is currently designed and is operating in compliance with the
applicable requirements of the IRC.
7. Reconciliation of Financial Statements to Form 5500 - The following is a reconciliation of Net Assets
---------------------------------------------------
Available for Benefits per the financial statements to the Form 5500 as of December 31:
2000 1999
------------ ------------
Net Assets Available for Benefits per the financial statements $ 4,633,721 $ 4,828,440
Less: Distribution payable to participants 1,583 -
------------ ------------
Net Assets Available for Benefits per the Form 5500 $ 4,632,138 $ 4,828,440
============ ============
The following is a reconciliation of benefits paid to participants per the financial statements to
the Form 5500 for the year ended December 31, 2000:
2000
-----------
Distributions to participants per the financial statements $ 470,730
Add: Distributions payable to participants at December 31, 2000 1,583
Less: Distributions payable to participants at December 31, 1999 -
------------
Distributions to participants per the Form 5500 $ 472,313 $
============
Distributions payable to participants are recorded on the Form 5500 for benefit claims that have been
processed and approved for payment prior to December 31, but not yet paid as of that date.
SBC SAVINGS AND SECURITY PLAN
EIN 43-1301883, PLAN NO. 004
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2000
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
------------------------------------------- ------------------------- --------- ----------
Employee Stock Ownership Plan
-----------------------------
* SBC common shares:
Allocated 25,338,378 shares $ 479,776 $ 1,209,908
Unallocated 54 shares 1 3
* Boston Safe Deposit and Trust Company Temporary cash invest 2,300 2,300
--------- ----------
Total Employee Stock Ownership Plan 482,077 1,212,211
--------- ----------
SBC Shares Fund
---------------
* SBC common shares 40,663,509 shares 1,941,683
* Boston Safe Deposit and Trust Company Temporary cash invest 54,388
----------
Total SBC Shares Fund ** 1,996,071
----------
Bond Fund
---------
* Barclays Global Investors Intermediate -----------
Government/Credit Bond Index Fund F 2,690,442 units ** 34,545
-----------
Diversified Equity Portfolio
----------------------------
----------
* Barclays Global Investors Equity Index Fund 29,727,781 units ** 516,372
----------
Interest Income Fund
--------------------
Allstate Life Insurance Company Synthetic contract wrapper
#31086-W, 6.14%, *** (1)
Allstate Life Insurance Company Allstate SA Wind Down 898
----------
897
Allstate Life Insurance Company 7.10%, 10/15/03 11,186
Bank of America Synthetic contract wrapper
#99-086,7.06%, *** (933)
Daimler Chrysler Prime Auto 7,208
Providian Master Trust Monoline Credit Card 5,281
Americredit Auto Rec. Sub Prime Auto 5,055
Capital One Auto Monoline Credit Card 5,044
Daimler-Benz Auto Prime Auto 4,959
Ford Auto Owners Trust Prime Auto 3,934
Ford Auto Owners Trust Prime Auto 1,504
WFS Financial Owners Trust Sub Prime Auto 3,133
United States Treasury Treasury Note 3,023
Toyota Auto Rec Owner Trust Prime Auto 2,008
Bank of America Cash on Hand 143
----------
40,359
Business Men's Assurance Company of
America 7.44%, 7/29/03 5,681
CDC Financial Products Inc. 7.00% - 7.01%,
8/29/05 - 10/17/05 8,109
Canada Life Assurance Company 5.47%, 12/31/01 36,387
Chase Manhattan Bank Synthetic contract wrapper
#401792-L2, 6.73%, *** (41)
IGT: Lambda 99-3Q-4.0yD% 3,162
----------
3,121
Chase Manhattan Bank Synthetic contract wrapper
#426424-T, 6.42%, *** (323)
Federal Home Loan Mortgage Company Agency Debenture 13,711
United States Treasury Treasury Note 4,363
Amex. Optima CC MT Monoline Credit Card 3,773
Fleet Credit Card MT Bank Credit Card 2,718
Chase Manhattan Bank Cash on Hand 37
Chase Manhattan Bank Pending Settlement (10,473)
----------
13,806
Continental Assurance Company Synthetic contract wrapper
#630-05574, 5.65%, *** 18
INVESCO Group Trust Beta 5,207
----------
5,225
Deutsche Bank AG Synthetic contract wrappper
#PRMSBU901, 5.18%, *** (52)
United States Treasury Treasury Notes 2,584
WFS Financial Owners Trust Sub Prime Auto 2,089
Sears Credit Account Trust Retail Treasury Card 1,006
----------
5,627
GE Life and Annuity Assurance Company 7.01% - 8.00%,
12/17/01 - 7/7/04 11,493
Jackson National Life Insurance Company 6.80% - 7.50%,
1/2/01 - 1/5/04 9,496
John Hancock Mutual Life Insurance 5.28% - 6.86%,
Company 6/29/01 - 2/3/03 37,407
Massachusetts Mutual Life Insurance Synthetic contract wrapper
Company #10484, 6.31%, *** 1
Massachusetts Mutual Life Insurance
Company Separate Account B-11 978
----------
979
Metropolitan Life Insurance Company 5.25% - 6.58%,
2/20/01 - 5/13/02 24,508
Monumental Life Insurance Company 6.25% - 7.17%,
10/15/01 - 7/25/02 9,301
Monumental Life Insurance Company Synthetic contract wrapper
#00292TR, 6.08%, *** (127)
Fannie Mae Grantor Trust FHA/VA Reperforming Pass 5,093
Toyota Auto Lease Trust Auto Leases 1,553
Premier Auto Master Trust Prime Auto 1,332
United States Treasury Treasury Note 1,033
COPEL Capital Funding Small Equipment Lease 1,005
First USA Master Trust Bank Credit Card 991
Amex. Optima CC MT Monoline Credit Card 833
Commonwealth Edison Stranded Cost 830
Monumental Life Insurance Company Cash on Hand 70
----------
12,613
New York Life Insurance Company 5.28% - 6.72%,
9/17/01 - 2/2/04 25,342
Prudential Insurance Company of America 6.99% - 7.48%,
9/7/04 - 11/30/05 20,806
Security Life of Denver Insurance 7.39% - 7.65%,
Company 2/11/03 - 10/4/04 11,341
State Street Bank and Trust Company Synthetic contract wrapper
#99035-LB1, 5.49%, *** 23
IGT: Lambda 98-4Q-3.0yD 2,195
----------
2,218
State Street Bank and Trust Company Synthetic contract wrapper
#99039, 6.54%, *** (844)
MBNA Master Trust Monoline Credit Card 6,115
MBNA Master Trust Monoline Credit Card 3,701
MBNA Master Trust Monoline Credit Card 1,012
Amex. Optima CC MT Monoline Credit Card 5,033
Fleet Credit Card MT Bank Credit Card 4,182
Fleet Credit Card MT Monoline Credit Card 2,589
Sears Credit Account Trust Retail Credit Card 4,135
Sears Credit Account Trust Monoline Credit Card 4,077
Sears Credit Account Trust Retail Credit Card 2,144
Citibank Credit Card MT Bank Credit Card 4,118
Citibank Credit Card MT Bank Credit Card 3,021
General Electric Capital Corporate Finance 2,859
General Electric Capital Corporate Finance 2,339
United States Treasury Treasury Note 438
State Street Bank and Trust Cash on Hand 183
----------
45,102
SunAmerica Life Insurance Company 7.14%, - 7.55%
1/2/04 - 9/22/05 8,710
Travelers Insurance Company Life
Department 5.29%, 12/31/01 25,330
United of Omaha Life Insurance Company 7.13%, 12/14/01 1,006
----------
376,050
* Boston Safe Deposit and Trust Company Temporary cash investment 32,319
----------
Total Interest Income Fund ** 408,369
----------
Asset Allocation Fund
---------------------
* Barclays Global Investors U.S. Tactical Asset ----------
Allocation Fund F 11,397,013 units ** 195,459
----------
Global Equity Fund
------------------
* Barclays Global Investors U.S. Equity Market
Fund F 1,660,169 units 49,424
* Barclays Global Investors EAFE Equity
Index Fund E 779,394 units 15,541
----------
Total Global Equity Fund ** 64,965
----------
Loan Fund
---------
----------
* Loans to Plan Participants 9.50% - 10.50% ** 206,707
----------
TOTAL $ 4,634,699
===========
* Party-in-Interest.
** Participant-directed investment, cost not required.
*** Synthetic Insurance Contracts, no stated maturity.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator for the Plan has
duly caused this annual report to be signed by the undersigned thereunto duly authorized.
SBC SAVINGS AND SECURITY PLAN
By SBC Communications Inc., Plan Administrator
for the Foregoing Plan
By /s/ Karen E. Jennings
----------------------------
Karen E. Jennings
Senior Executive Vice President-
Human Resources
Date: June 27, 2001
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
-----------
23-a Consent of Independent Auditors Ernst & Young LLP.
EX 23-a
Form 11-K for 2000
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements (Form S-8, No. 333-24295,
333-66105 and 333-88667) pertaining to the SBC Savings and Security Plan of our report dated
June 22, 2001, with respect to the financial statements and supplemental schedules of the SBC Savings
and Security Plan included in this Annual Report (Form 11-K) for the year ended December 31, 2000.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001
EX 99-d
Form 10-K for 2000
File No. 1-8610
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 11-K
ANNUAL REPORT
--------------------
Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
Commission File Number l-8610
----------------------
A. Full title of the plan and the address of the plan, if different from that of the issuer
named below:
Ameritech Savings and
Security Plan for
Non-Salaried
Employees
----------------------
B. Name of issuer of the securities held pursuant to the plan and the address of its
principal executive office:
SBC COMMUNICATIONS INC.
175 E. Houston, San Antonio, Texas 78205
Financial Statements, Supplemental Schedule and Exhibit
Table of Contents
Page
Report of Independent Auditors: Ernst & Young LLP........................................1
Financial Statements:
Statements of Net Assets Available for Benefits as of December 31, 2000 and 1999..2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2000......................................................3
Notes to Financial Statements.....................................................4
Supplemental Schedule:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)....................9
Exhibit:
23-a Consent of Ernst & Young LLP
REPORT OF INDEPENDENT AUDITORS
Ameritech Corporation, Plan Administrator
for the Ameritech Savings and Security Plan for Non-Salaried Employees
We have audited the accompanying statements of net assets available for benefits of the Ameritech Savings and
Security Plan for Non-Salaried Employees as of December 31, 2000 and 1999, and the related statement of
changes in net assets available for benefits for the year ended December 31, 2000. These financial
statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our 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 benefits of the Plan at December 31, 2000 and 1999, and the changes in its net assets
available for benefits for the year ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a
whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2000 is
presented for the purpose of additional analysis and is not a required part of the 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. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been subjected to auditing procedures
applied in our audits of the financial statements, and in our opinion, are fairly stated in all material
respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Dollars in Thousands)
December 31,
-------------------------------
2000 1999
------------ ------------
ASSETS
Investments (See Note 5) $ 2,562,090 $ 2,969,747
Employer contributions receivable 8,029 -
Participant contributions receivable 8,651 6,613
Dividends and interest receivable 759 2,171
Receivable for investments sold - net 3,067 14,560
------------ ------------
Total Assets 2,582,596 2,993,091
------------ ------------
LIABILITIES
Other payable - net 11,830 10,939
Administrative expenses payable 237 307
Interest payable - 479
Long-term debt - 12,000
------------ ------------
Total Liabilities 12,067 23,725
------------ ------------
Net Assets Available for Benefits $ 2,570,529 $ 2,969,366
============ ============
See Notes to Financial Statements.
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2000
(Dollars in Thousands)
Net Assets Available for Benefits, December 31, 1999 $ 2,969,366
Additions to Net Assets:
Contributions:
Participant contributions 86,216
Employer contributions 21,772
------------
107,988
------------
Investment Income:
Dividends 47,301
Interest 19,583
------------
66,884
------------
Total Additions 174,872
------------
Deductions from Net Assets:
Net depreciation in value of investments 107,703
Administrative expenses 3,531
Interest expense 1,702
Interplan transfers 35,707
Distributions 424,235
Other 831
------------
Total Deductions 573,709
------------
Net Assets Available for Benefits, December 31, 2000 $ 2,570,529
============
See Notes to Financial Statements.
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Merger of Plan Sponsor - In October 1999, Ameritech Corporation (Ameritech) and a wholly owned subsidiary
----------------------
of SBC Communications Inc. (SBC) merged, resulting in Ameritech becoming a wholly owned subsidiary of SBC
(the merger). As a result of the merger, each share of Ameritech common stock held by the Ameritech
Savings and Security Plan for Non-Salaried Employees (the Plan) was automatically converted to 1.316
shares of SBC common stock. The conversion did not represent a Plan transaction and no gain or loss was
recognized.
2. Plan Description - The Plan was established by Ameritech to provide a convenient way for eligible
----------------
non-salaried employees of participating Ameritech companies to save for retirement on a regular and
long-term basis. The following description of the Plan provides only general information. The Plan has
detailed provisions covering participant eligibility, participant allotments from pay, participant
withdrawals, participant loans, employer contributions and related vesting of contributions and Plan
expenses. The Plan is summarized in the Summary Plan Description, which has been distributed to all
participants. Participants should refer to the official Plan documents for a more complete description
of the Plan's provisions. The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
During 2000, participants could invest in various combinations of five funds: the SBC Shares Fund, the
Equities Market Plus Fund, the Fixed Income Fund, the Balanced Fund and the Diversified Telephone
Portfolio (DTP) Fund, or for members of the International Brotherhood of Electrical Workers (IBEW) only,
in the Union-sponsored International Brotherhood of Electrical Workers Locals Savings and Retirement
Trust Fund (IBEW Fund - see Note 4). In addition, Communications Workers of America (CWA) members could
elect to contribute to the CWA Savings and Retirement Trust Fund (CWA Fund). Such contributions are made
by the employee directly to the fund, rather than by payroll deduction. The CWA Fund is not part of the
Plan's financial statements.
Company matching contributions are made solely in the form of shares of SBC common stock which are
acquired weekly on an as needed basis. Prior to January 2000, these stock contributions were made from
shares held in a leveraged Employee Stock Ownership Plan (ESOP).
The Plan prefunded the ESOP by borrowing $240 million of ten and one-half year notes (ESOP Notes) which
were payable in semi-annual installments through the year 2000, at 8.1% interest. In January 2000, these
notes were paid in full. Funds borrowed by the Plan were used to purchase shares of Ameritech's common
stock held by Ameritech in its treasury (Financed Shares), which acted as collateral for reimbursement to
Ameritech for any payments it made under its guarantee of the ESOP Notes. The interest rate on this debt
decreased to 8.03% effective January 1, 1993 due to the increased Federal income tax rate.
Dividends on Financed Shares, interest and employer cash contributions were used by the Plan to make the
required principal and interest payments on the ESOP Notes. As the notes were paid down, the Financed
Shares were released from the collateral. The Financed Shares were allocated to participants' accounts
in the form of a company matching contribution. In lieu of dividends on Financed Shares previously
allocated to participants, additional Financed Shares were allocated to participants' accounts.
To the extent insufficient shares had been released through payments on outstanding notes, additional
employer contributions were made to the ESOP to purchase shares necessary to meet any shortfall in
company matching contributions or in the shares issued in lieu of dividends. Dividends on these shares
were used to acquire additional shares, which were allocated to participants' accounts in the ESOP.
Should shares released exceed the required company matching contribution, the excess was considered an
additional employer contribution and was allocated to participants' accounts based on each participant's
proportionate share of actual plan year company matching contributions.
State Street Bank and Trust was the trustee of the Plan until October 1, 2000. Effective October 2,
2000, the Plan's assets were transferred to Boston Safe Deposit and Trust Company, a wholly owned
subsidiary of Mellon Bank, N.A.
Although it has not expressed any intent to do so, Ameritech has the right under the Plan to discontinue
its contributions at any time and to terminate the Plan subject to the provisions of ERISA and any
applicable collective bargaining agreements. In the event that the Plan is terminated, subject to
conditions set forth in ERISA, the Plan provides that the net assets will be distributed to participants
whose employment has terminated in an amount equal to their respective interests in such assets; assets
attributable to participants whose employment has not terminated will remain in the Plan until such
employment terminates.
3. Accounting Policies - The financial statements of the Plan are prepared using the accrual method of
-------------------
accounting. The values of investments are determined as follows: SBC common shares on the basis of the
closing price as reported on the New York Stock Exchange; contracts with insurance companies and other
financial institutions at principal plus reinvested interest; common/collective trusts and other group
trusts at net asset values per share obtained from published sources or fund manager; and temporary cash
investments and participant loans at cost, which approximates fair value.
Purchases and sales of securities are reflected as of the trade date. Dividend income is recognized on
the ex-dividend date. Interest earned on investments is recognized on the accrual basis.
The preparation of financial statements in conformity with generally accepted accounting principles in
the United States requires management to make estimates that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those estimates.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133), which requires all derivatives to be recorded
on the statement of net assets available for benefits at fair value, and requires changes in the fair
value of the derivatives to be recorded on the statement of changes in net assets available for
benefits. SBC adopted FAS 133 on January 1, 2001 and the Plan's December 31, 2001 financial statements
will reflect this adoption. However, because of the Plan's minimal use of derivatives, SBC does not
expect that adoption of this standard will have a significant effect on the Plan.
Certain prior year balances have been reclassified to conform to current year presentation.
4. IBEW Fund - In order to allow eligible employees to participate in the IBEW Fund investment option, the
---------
Plan adopted the provisions of the IBEW Savings and Retirement Group Trust (IBEW Group Trust) effective
January 1, 1988, for the limited purpose of and for specifically complying with the requirements of
Revenue Ruling 81-100 related to group trusts. The Plan, by agreement, participates in the IBEW Group
Trust with respect to participant eligibility, contribution, distribution and withdrawal requirements as
administered by Ameritech (the Participating Employer), and with respect to maintaining participant
records and IBEW Fund accounting through the Trustee. The Plan's equitable interest in the IBEW Group
Trust at December 31, 2000 and 1999 was 2.30% and 5.40%, of the net assets available for benefits of the
IBEW Group Trust. The Plan's interest is valued on a per unit basis, changes in which represent periodic
investment income, net of expenses related to administration of the IBEW Group Trust and investment
management services.
5. Investments - Investments representing 5% or more of Plan net assets at either December 31, 2000 or 1999
-----------
were:
2000 1999
---------- -----------
Employee Stock Ownership Plan - Special Stock Fund*
---------------------------------------------------
SBC common shares:
Allocated $ 601,131 $ 650,032
Unallocated $ - $ 36,959
SBC Shares Fund
---------------
SBC common shares $ 1,430,296 $ 1,643,557
Diversified Telephone Portfolio Fund
------------------------------------
SBC common shares $ 30,554 $ 39,543
Equities Market Plus Fund
-------------------------
IRT Ameritech Collective Equity Fund $ 129,856 $ 150,450
* Nonparticipant-directed
During 2000, the Plan's investments (including gains and losses on investments bought and sold, as well
as held during the year) depreciated in value by $107,703 as follows:
SBC Common Stock $ 80,787
Common Collective Trusts 26,916
-----------
Total $ 107,703
===========
The Fixed Income Fund consists of contracts with various companies that promise to repay principal plus
accrued income at contract maturity, subject to the creditworthiness of the issuer. Interest crediting
rates are generally established when the contract is purchased and are not reset. For the year ended
December 31, 2000, the average interest rate earned on these contracts was 6.35%. At December 31, 2000
the fixed crediting interest rates on these contracts ranged from 5.38% to 7.52%. At December 31, 1999,
the fixed crediting interest rates on these contracts ranged from 5.26% to 6.61%. No valuation reserves
were recorded to adjust contract amounts as of December 31, 2000 or 1999.
The Fixed Income Fund invests in both guaranteed investment contracts (GICs) and synthetic investment
contracts (SICs). SICs differ from GICs in that the assets supporting the SICs are owned by the Plan. A
bank or insurance company issues a wrapper contract that allows participant directed transactions to be
made at contract value. Wrapper contracts are valued as the difference between the fair value of the
supporting assets and the contract value. The assets supporting the GICs and SICs generally consist of
high quality fixed income securities with fair values of $171,461 and $162,142 at December 31, 2000 and
1999. The contract values of the GICs and SICs at December 31, 2000 and 1999 were $169,603 and $165,826.
6. Nonparticipant-Directed Investments - Information about the net assets and the significant components of
-----------------------------------
the changes in net assets relating to the nonparticipant-directed investments (held in the Special Stock
Fund) as of December 31 is as follows:
2000 1999
---------- ----------
Assets
------
SBC common shares:
Allocated $ 601,131 $ 650,032
Unallocated - 36,959
Employer Contributions receivable 8,029 -
Temporary cash investments 45 13,545
Dividends and interest receivable 37 64
---------- ----------
Total Assets 609,242 700,600
---------- ----------
Liabilities
-----------
Other payable-net 2,776 2,388
Administrative expenses payable 11 27
Interest payable - 479
Long-term debt - unallocated - 12,000
---------- ----------
Total Liabilities 2,787 14,894
---------- ----------
Net Assets Available for Benefits $ 606,455 $ 685,706
========== ==========
2000
----------
Net Assets Available for Benefits, December 31, 1999 $ 685,706
Contributions 21,772
Dividends and interest 15,292
Net appreciation in value of investments (25,699)
Transfers of participants' balances - net (12,515)
Administrative expenses (92)
Interest expense (1,702)
Distributions to participants (76,307)
----------
(79,251)
----------
Net Assets Available for Benefits, December 31, 2000 $ 606,455
==========
7. Long-Term Debt - Long-term debt consisted of the ESOP Notes (as discussed in Note 2). The ESOP Notes
--------------
were paid in full in January 2000. The carrying amount and the estimated fair value of the ESOP Notes as
of December 31 were:
1999
-----------
Carrying Amount $ 12,000
===========
Fair Value $ 12,000
==========
The fair value of the ESOP Notes were estimated based on quoted prices.
8. Tax Status - The Internal Revenue Service issued a determination letter on April 16, 1996, stating
----------
that the Plan and related trust are designed in accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since the determination letter was received. The Plan
Administrator believes that the Plan is currently designed and is operating in compliance with the
applicable requirements of the IRC.
9. Reconciliation of Financial Statements to Form 5500 - The following is a reconciliation of Net Assets
---------------------------------------------------
Available for Benefits per the financial statements to the Form 5500 as of December 31:
2000 1999
------------ ------------
Net Assets Available for Benefits per the Financial Statement $ 2,570,529 $ 2,969,366
Less: Distributions payable to participants 66,274 92,100
------------ ------------
Net Assets Available for Benefits per the Form 5500 $ 2,504,255 $ 2,877,266
============ ============
The following is a reconciliation of distributions to participants per the financial statements to the
Form 5500 for the year ended December 31:
2000
------------
Distributions to participants per the Financial Statement $ 424,235
Add: Distributions payable to participants at December 31, 2000 66,274
Less: Distributions payable to participants at December 31, 1999 92,100
------------
Distributions to participants per the Form 5500 $ 398,409
============
Distributions payable to participants are recorded on the Form 5500 for benefit claims that have been
processed and approved for payment prior to December 31, but not yet paid as of that date.
AMERITECH SAVINGS AND SECURITY PLAN FOR NON-SALARIED EMPLOYEES
EIN 36-3251481, PLAN NO. 004
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2000
(Dollars in Thousands)
Description of Current
Identity of Issue Investment Cost Value
------------------------------------------- ------------------------ ---------- ----------
Employee Stock Ownership Plan - Special
---------------------------------------
Stock Fund
----------
* SBC common shares:
Allocated 12,589,135 shares $ 168,144 $ 601,131
* Boston Safe Deposit and Trust Company Temporary cash investments 45 45
---------- ----------
Total Special Stock Fund 168,189 601,176
---------- ----------
SBC Shares Fund
---------------
* SBC common shares 29,953,843 shares 1,430,296
* Boston Safe Deposit and Trust Company Temporary cash investments 336
---------- ----------
Total SBC Shares Fund ** 1,430,632
---------- ----------
Fixed Income Fund
-----------------
Allstate Life Insurance Company Synthetic contract wrapper
#77079, 5.76%, *** 47
IGT: Lambda 98-4Q-3.0yD 9,868
----------
9,915
Business Men's Assurance Company 5.75%, 11/17/03 2,252
CDC Financial Products 5.38%, 10/15/03 2,022
Chase Manhattan Bank Synthetic contract wrapper
#433420-T, 5.79%, *** (56)
Sears Credit Account Trust Retail Credit Card 4,138
Fannie Mae Grantor Trust FHA/VA Reperforming Pass 3,056
Federal Home Loan Mortgage Residential Balloon 2,676
United States Treasury Treasury Note 2,584
General Electric Capital Corp - Finance Companies 1,559
Ford Auto Owners Trust Prime Auto 1,528
Sears Credit Account Trust Cash on Hand 1,912
----------
17,397
Synthetic contract wrapper
Continental Assurance Company #25700-202, 6.21%, *** (186)
Fleet Credit Card MT Bank Credit Card 3,659
Federal Home Loan Mortgage Agency Debenture 3,140
United States Treasury Treasury Note 2,102
Federal National Mortgage Company Agency Debenture 2,015
Ford Auto Owners Trust Prime Auto 1,943
MBNA Master Trust Monoline Credit Card 1,561
Continental Assurance Company Cash on Hand 41
----------
14,275
Continental Assurance Company Synthetic contract wrapper
#63005611, 6.18%, *** (48)
INVESCO Group Trust: Beta 10,626
----------
10,578
Deutsche Bank AG Synthetic contract wrapper
#PRM-ATS-1, 6.29%, *** (348)
Federal National Mortgage Company Agency Debenture 8,161
Federal Home Loan Mortgage Agency Debenture 8,147
----------
15,960
Jackson National Life Insurance Company 5.80%, 01/03/01 1,058
John Hancock Mutual Life Insurance Company 6.07%, 03/03/03 4,020
Massachusetts Mutual Life Insurance Synthetic contract wrapper
Company #10749, 5.41%, *** 93
Massachusetts Mutual Life Insurance
Company Separate Account B13 3,810
---------
3,903
Metropolitan Life Insurance Company 6.92%, 10/29/03 2,024
Metropolitan Life Insurance Company 6.99%, 11/21/03 2,015
Monumental Life Insurance Company Synthetic contract wrapper
#00207TR-1, 6.66%, *** -
INVESCO Group Trust: Epsilon 42
---------
42
Monumental Life Insurance Company Synthetic contract wrapper
#76TR, 6.56%, *** (234)
Amex. Optima CC MT Monoline Credit Card 5,063
Pinnacle CBO FSA Insure Cash Flow CBO 4,661
Discover Card Trust Monoline Credit Card 3,011
Home Ownership Fund Co Step Down Preferred 2,285
General Electric Capital Corporate Finance 2,131
Premier Auto Master Trust Prime Auto 2,007
Fannie Mae DUS Program Residential MBS Fixed 1,922
Home Ownership Fund Co Step Down Preferred 1,905
Commonwealth Edison TF Stranded Cost 1,286
Monumental Life Insurance Company Cash on Hand 252
---------
24,289
Monumental Life Insurance Company 7.25%, 09/02/03 2,046
Monumental Life Insurance Company 7.08%, 10/03/02 2,034
New York Life Insurance Company 5.82%, 06/02/03 2,010
The Prudential Insurance Company of America 5.95%, 08/10/01 2,291
The Prudential Insurance Company of America 6.03%, 08/11/03 2,295
The Prudential Insurance Company of America 7.03%, 11/21/05 2,011
State Street Bank and Trust Company Synthetic contract wrapper
#96041, 7.15%, *** (421)
Case New Holland Eq Trust Large Equipment Loan 5,083
Green Tree Financial Home Equity Monoline 5,038
Ford Auto Owners Trust Prime Auto 3,072
Capital Auto Rec Owner Trust Prime Auto 3,052
Amex. Optima CC MT Monoline Credit Card 3,039
Toyota Auto Rec Owner Trust Prime Auto 2,510
MBNA Master Trust Monoline Credit Card 1,579
Sears Credit Account Trust Retail Credit Card 959
CIT RV Trust Motor Homes 867
Sears Credit Account Trust Retail Credit Card 497
Citibank Credit Card MT Bank Credit Card 321
Providian Master Trust Monoline Credit Card 320
MBNA Master Trust Monoline Credit Card 314
Sears Credit Account Trust Retail Credit Card 212
State Street Bank and Trust Company Cash on Hand 434
----------
26,876
Union Bank of Switzerland AG Synthetic contract wrapper
#5029, 7.52%, *** (454)
Union Acceptance Corp. Non Prime Auto 5,693
Residential Asset Se Home Equity Senior Sub 5,212
COPEL Co. Cap. Fund. Corp. Small Equipment Lease 3,570
Daimler Chrysler Prime Auto 3,089
Ford Auto Owners Trust Prime Auto 3,055
Union Bank of Switzerland AG Cash on Hand 124
----------
20,289
169,602
* Boston Safe Deposit and Trust Company Temporary cash investments 11,605
---------- ----------
Total Fixed Income Fund ** 181,207
---------- ----------
Equities Market Plus Fund
-------------------------
IRT Ameritech Collective Equity Fund 4,488,633 units 129,856
* Boston Safe Deposit and Trust Company Temporary cash investments 100
---------- ----------
Total Equities Market Plus Fund ** 129,956
---------- ----------
Balanced Fund
-------------
Bankers Trust Pyramid Balanced Fund 285,374 units 76,638
* Boston Safe Deposit and Trust Company Temporary cash investments 35
---------- ----------
Total Balanced Fund ** 76,673
---------- ----------
Diversified Telephone Portfolio (DTP) Fund
------------------------------------------
AT&T Corporation common shares 312,883 shares 5,417
BellSouth Corporation common shares 343,037 shares 14,043
* SBC Communications common shares 639,872 shares 30,554
Verizon Communications common shares 269,031 shares 13,485
* Boston Safe Deposit and Trust Company Temporary cash investments 45
---------- ----------
Total DTP Fund ** 63,544
---------- ----------
IBEW Fund
---------
IBEW Savings/Security Master Investment
Fund 4,929,662 units 4,930
* Boston Safe Deposit and Trust Company Temporary cash investments 25
---------- ----------
Total IBEW Fund ** 4,955
---------- ----------
Loan Fund
---------
* Loans to Plan Participants 10.50% 73,595
* Boston Safe Deposit and Trust Company Temporary cash investments 351
---------- ----------
Total Loan Fund ** 73,946
---------- ----------
TOTAL $ 2,562,090
==========
* Party-in-Interest.
** Participant-directed investment, cost not required.
*** Synthetic investment, no stated maturity.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator for the Plan has
duly caused this annual report to be signed by the undersigned thereunto duly authorized.
AMERITECH SAVINGS AND SECURITY
PLAN FOR NON-SALARIED EMPLOYEES
By Ameritech Corporation, Plan Administrator for
the Foregoing Plan
By /s/ Karen E. Jennings
----------------------------
Karen E. Jennings
Senior Executive Vice President-
Human Resources
Date: June 27, 2001
EXHIBIT INDEX
Exhibit identified below, is filed herein as exhibit hereto.
Exhibit
Number
-----------
23-a Consent of Independent Auditors: Ernst & Young LLP.
EX 23-a
Form 11-K for 2000
File No. l-8610
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-88667) and
pertaining to the Ameritech Savings and Security Plan for Non-Salaried Employees of our report dated June
22, 2001, with respect to the financial statements and supplemental schedules of the Ameritech Savings and
Security Plan for Non-Salaried Employees included in this Annual Report (Form 11-K) for the year ended
December 31, 2000.
ERNST & YOUNG LLP
San Antonio, Texas
June 22, 2001