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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, 2000
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
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
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BELLSOUTH SAVINGS AND SECURITY PLAN
Table of Contents
Page
----
Report of Independent Accountants.......................................... 2
Statement of Net Assets Available for Benefits, With Fund
Information as of December 31, 2000....................................... 3
Statement of Net Assets Available for Benefits, With Fund
Information as of December 31, 1999....................................... 5
Statement of Changes in Net Assets Available for Benefits, With Fund
Information for the Year Ended December 31, 2000.......................... 7
Statement of Changes in Net Assets Available for Benefits, With Fund
Information for the Year Ended December 31, 1999.......................... 9
Statement of Changes in Net Assets Available for Benefits, With Fund
Information for the Year Ended December 31, 1998.......................... 11
Notes to Financial Statements.............................................. 13
Signature Page............................................................. 24
Exhibit 23--Consent of Independent Accountants............................. 25
1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Plan 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, 2000 and 1999, and the changes in net assets available for
benefits for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States
of America. 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 auditing standards generally accepted in the United States of
America, 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 our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. 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. The Fund Information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
June 25, 2001
2
BELLSOUTH SAVINGS
STATEMENT OF NET ASSETS AVAILABLE
December
(In Tho
Vanguard
Index Fidelity
BellSouth Indexed Interest Trust Growth
Stock Stock Income Growth & Income Balanced
Fund Fund Fund Portfolio Portfolio Fund
ASSETS ---------- -------- -------- --------- --------- --------
Share of Trust net
assets................. $1,323,639 $176,541 $334,662 $97,374 $66,864 $22,870
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...... 1,323,639 176,541 334,662 97,374 66,864 22,870
Contributions
receivable............. 1,553 384 537 330 203 61
Fund, BellSouth
Retirement Savings Plan
and other transfers
receivable--net........ 310 197 -- -- 44 14
---------- -------- -------- ------- ------- -------
Total Assets........... 1,325,502 177,122 335,199 97,704 67,111 22,945
---------- -------- -------- ------- ------- -------
LIABILITIES
Distributions payable... 677 98 96 51 17 4
Fund, BellSouth
Retirement Savings Plan
and other transfers
payable--net........... -- -- 376 185 -- --
Notes payable........... -- -- -- -- -- --
---------- -------- -------- ------- ------- -------
Total Liabilities...... 677 98 472 236 17 4
---------- -------- -------- ------- ------- -------
Net Assets Available for
Benefits............... $1,324,825 $177,024 $334,727 $97,468 $67,094 $22,941
========== ======== ======== ======= ======= =======
The accompanying notes are an integ
3
AND SECURITY PLAN
FOR BENEFITS, WITH FUND INFORMATION
31, 2000
usands)
T. Rowe DFA DFA U.S. Employee Stock
Price DFA U.S. International Large Cap Ownership Plan
Bond Mid-Cap 6-10 Value Value II Value II Participant ---------------------
Fund Growth Portfolio II Fund Fund Loans Other Allocated Unallocated Total
------ ------- ------------ ------------- --------- ----------- ------ --------- ----------- ----------
$8,587 $52,782 $13,112 $6,102 $8,652 $39,982 $9,665 $ -- $ -- $2,160,832
-- -- -- -- -- -- -- 879,192 -- 879,192
-- -- -- -- -- -- -- -- 214,370 214,370
-- -- -- -- -- -- -- 414 7,302 7,716
------ ------- ------- ------ ------ ------- ------ -------- -------- ----------
8,587 52,782 13,112 6,102 8,652 39,982 9,665 879,606 221,672 3,262,110
26 160 40 23 38 -- -- 1,840 -- 5,195
123 -- 16 -- 24 1,306 -- -- -- 2,034
------ ------- ------- ------ ------ ------- ------ -------- -------- ----------
8,736 52,942 13,168 6,125 8,714 41,288 9,665 881,446 221,672 3,269,339
------ ------- ------- ------ ------ ------- ------ -------- -------- ----------
-- 5 1 2 15 4 -- 108 -- 1,078
-- 262 -- -- -- -- 9,665 17 -- 10,505
-- -- -- -- -- -- -- -- 98,175 98,175
------ ------- ------- ------ ------ ------- ------ -------- -------- ----------
-- 267 1 2 15 4 9,665 125 98,175 109,758
------ ------- ------- ------ ------ ------- ------ -------- -------- ----------
$8,736 $52,675 $13,167 $6,123 $8,699 $41,284 $ -- $881,321 $123,497 $3,159,581
====== ======= ======= ====== ====== ======= ====== ======== ======== ==========
ral part of these financial statements.
4
BELLSOUTH SAVINGS
STATEMENT OF NET ASSETS AVAILABLE
December
(In Tho
Vanguard
Index Fidelity
BellSouth Indexed Interest Trust Growth
Stock Stock Income Growth & Income Balanced
Fund Fund Fund Portfolio Portfolio Fund
---------- -------- -------- --------- --------- --------
ASSETS
Share of Trust net
assets................. $1,752,639 $206,747 $349,737 $90,015 $70,821 $25,104
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...... 1,752,639 206,747 349,737 90,015 70,821 25,104
Contributions
receivable............. 1,776 416 596 223 180 65
Fund, BellSouth
Retirement Savings Plan
and other transfers
receivable--net........ -- 472 914 414 -- --
---------- -------- -------- ------- ------- -------
Total Assets........... 1,754,415 207,635 351,247 90,652 71,001 25,169
---------- -------- -------- ------- ------- -------
LIABILITIES
Distributions payable... 378 10 124 2 9 --
Fund, BellSouth
Retirement Savings Plan
and other transfers
payable--net........... 1,880 -- -- -- 65 15
Notes payable .......... -- -- -- -- -- --
---------- -------- -------- ------- ------- -------
Total Liabilities...... 2,258 10 124 2 74 15
---------- -------- -------- ------- ------- -------
Net Assets Available for
Benefits............... $1,752,157 $207,625 $351,123 $90,650 $70,927 $25,154
========== ======== ======== ======= ======= =======
The accompanying notes are an integ
5
AND SECURITY PLAN
FOR BENEFITS, WITH FUND INFORMATION
31, 1999
usands)
T. Rowe DFA DFA U.S. Employee Stock
Price DFA U.S. International Large Cap Ownership Plan
Bond Mid-Cap 6-10 Value Value II Value II Participant ----------------------
Fund Growth Portfolio II Fund Fund Loans Other Allocated Unallocated Total
------ ------- ------------ ------------- --------- ----------- ------ ---------- ----------- ----------
$7,684 $20,363 $11,178 $5,621 $9,249 $39,176 $1,704 $ -- $ -- $2,590,038
-- -- -- -- -- -- -- 1,061,872 -- 1,061,872
-- -- -- -- -- -- -- -- 305,734 305,734
-- -- -- -- -- -- -- 1,837 7,770 9,607
------ ------- ------- ------ ------ ------- ------ ---------- -------- ----------
7,684 20,363 11,178 5,621 9,249 39,176 1,704 1,063,709 313,504 3,967,251
25 61 36 17 27 -- -- -- -- 3,422
6 -- -- 42 -- 456 -- -- -- 2,304
------ ------- ------- ------ ------ ------- ------ ---------- -------- ----------
7,715 20,424 11,214 5,680 9,276 39,632 1,704 1,063,709 313,504 3,972,977
------ ------- ------- ------ ------ ------- ------ ---------- -------- ----------
-- -- -- -- 3 4 -- 74 -- 604
-- 45 23 -- 52 -- 1,704 -- -- 3,784
-- -- -- -- -- -- -- -- 127,373 127,373
------ ------- ------- ------ ------ ------- ------ ---------- -------- ----------
-- 45 23 -- 55 4 1,704 74 127,373 131,761
------ ------- ------- ------ ------ ------- ------ ---------- -------- ----------
$7,715 $20,379 $11,191 $5,680 $9,221 $39,628 $ -- $1,063,635 $186,131 $3,841,216
====== ======= ======= ====== ====== ======= ====== ========== ======== ==========
ral part of these financial statements.
6
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS, WITH
Year Ended Dec
(In Tho
Vanguard
Index Fidelity
BellSouth Indexed Interest Trust Growth
Stock Stock Income Growth & Income Balanced Bond
Fund Fund Fund Portfolio Portfolio Fund Fund
---------- -------- -------- --------- --------- -------- ------
Net Assets Available for
Benefits,
December 31, 1999...... $1,752,157 $207,625 $351,123 $ 90,650 $70,927 $25,154 $7,715
---------- -------- -------- -------- ------- ------- ------
Employee contributions.. 50,900 13,445 35,526 11,208 6,589 2,450 744
Transfer of
participants'
balances--net.......... (111,811) 708 37,950 41,946 1,433 (1,784) 681
Supplemental
contributions.......... -- -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- -- --
---------- -------- -------- -------- ------- ------- ------
Total Contributions,
Allocations and
Transfers.............. (60,911) 14,153 73,476 53,154 8,022 666 1,425
Share of Trust
investment activities.. (148,371) (17,323) 20,131 (27,360) (1,659) 798 819
---------- -------- -------- -------- ------- ------- ------
Total .................. (209,282) (3,170) 93,607 25,794 6,363 1,464 2,244
---------- -------- -------- -------- ------- ------- ------
Less: Distributions to
participants..... 218,050 27,431 110,003 18,976 10,196 3,677 1,223
Interest on notes
payable.......... -- -- -- -- -- -- --
---------- -------- -------- -------- ------- ------- ------
Net Assets Available for
Benefits,
December 31, 2000...... $1,324,825 $177,024 $334,727 $ 97,468 $67,094 $22,941 $8,736
========== ======== ======== ======== ======= ======= ======
The accompanying notes are an integ
7
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
FUND INFORMATION
ember 31, 2000
usands)
T. Rowe DFA DFA U.S. Employee Stock
Price DFA U.S. International Large Cap Ownership Plan
Mid-Cap 6-10 Value Value II Value II Participant -----------------------
Growth Portfolio II Fund Fund Loans Other Allocated Unallocated Total
------- ------------ ------------- --------- ----------- ------- ---------- ----------- ----------
$20,379 $11,191 $5,680 $9,221 $39,628 $ -- $1,063,635 $186,131 $3,841,216
------- ------- ------ ------ ------- ------- ---------- -------- ----------
4,363 1,188 676 864 -- -- -- -- 127,953
31,734 1,720 783 (749) (6,211) (1,090) (16,035) -- (20,725)
-- -- -- -- -- -- -- 24,861 24,861
-- -- -- -- -- -- 40,221 (40,221) --
-- -- -- -- -- -- (9,863) 9,863 --
------- ------- ------ ------ ------- ------- ---------- -------- ----------
36,097 2,908 1,459 115 (6,211) (1,090) 14,323 (5,497) 132,089
2,134 1,055 (4) 670 9,863 1,090 (96,712) (46,159) (301,028)
------- ------- ------ ------ ------- ------- ---------- -------- ----------
38,231 3,963 1,455 785 3,652 -- (82,389) (51,656) (168,939)
------- ------- ------ ------ ------- ------- ---------- -------- ----------
5,935 1,987 1,012 1,307 1,996 -- 99,925 -- 501,718
-- -- -- -- -- -- -- 10,978 10,978
------- ------- ------ ------ ------- ------- ---------- -------- ----------
$52,675 $13,167 $6,123 $8,699 $41,284 $ -- $ 881,321 $123,497 $3,159,581
======= ======= ====== ====== ======= ======= ========== ======== ==========
ral part of these financial statements.
8
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS, WITH
Year Ended De
(In Tho
Vanguard
Index Fidelity T. Rowe
BellSouth Indexed Interest Trust Growth Price
Stock Stock Income Growth & Income Balanced Bond Mid-Cap
Fund Fund Fund Portfolio Portfolio Fund Fund Growth
---------- -------- -------- --------- --------- -------- ------ -------
Net Assets Available for
Benefits,
December 31, 1998...... $2,058,039 $184,123 $322,241 $45,629 $67,836 $23,896 $8,658 $14,171
---------- -------- -------- ------- ------- ------- ------ -------
Employee contributions.. 47,492 11,477 18,166 5,250 4,775 1,793 762 1,514
Transfer of
participants'
balances--net.......... (82,142) (13,108) 38,967 23,424 (3,913) (901) (646) 2,218
Supplemental
contributions.......... -- -- -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- -- -- --
---------- -------- -------- ------- ------- ------- ------ -------
Total Contributions,
Allocations and
Transfers.............. (34,650) (1,631) 57,133 28,674 862 892 116 3,732
Share of Trust
investment activities.. (148,325) 36,005 18,059 19,713 6,474 1,832 (172) 3,749
---------- -------- -------- ------- ------- ------- ------ -------
Total .................. (182,975) 34,374 75,192 48,387 7,336 2,724 (56) 7,481
---------- -------- -------- ------- ------- ------- ------ -------
Less: Distributions to
participants...... 122,907 10,872 46,310 3,366 4,245 1,466 887 1,273
Interest on notes
payable........... -- -- -- -- -- -- -- --
---------- -------- -------- ------- ------- ------- ------ -------
Net Assets Available for
Benefits,
December 31, 1999...... $1,752,157 $207,625 $351,123 $90,650 $70,927 $25,154 $7,715 $20,379
========== ======== ======== ======= ======= ======= ====== =======
The accompanying notes are an integ
9
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
FUND INFORMATION
cember 31, 1999
usands)
DFA U.S. Employee Stock
DFA U.S. DFA Large Cap Ownership Plan
6-10 Value International Value II Participant -----------------------
Portfolio II Value II Fund Fund Loans Other Allocated Unallocated Total
------------ ------------- --------- ----------- ----- ---------- ----------- ----------
$13,441 $4,170 $10,318 $30,026 $ -- $1,084,067 $264,096 $4,130,711
------- ------ ------- ------- ----- ---------- -------- ----------
961 386 747 -- -- -- -- 93,323
(3,902) 723 (1,573) 8,084 (118) (3,545) -- (36,432)
-- -- -- -- -- -- 24,500 24,500
-- -- -- -- -- 76,948 (76,948) --
-- -- -- -- -- (9,384) 9,384 --
------- ------ ------- ------- ----- ---------- -------- ----------
(2,941) 1,109 (826) 8,084 (118) 64,019 (43,064) 81,391
1,282 716 336 2,416 118 (45,335) (21,443) (124,575)
------- ------ ------- ------- ----- ---------- -------- ----------
(1,659) 1,825 (490) 10,500 -- 18,684 (64,507) (43,184)
------- ------ ------- ------- ----- ---------- -------- ----------
591 315 607 898 -- 39,116 -- 232,853
-- -- -- -- -- -- 13,458 13,458
------- ------ ------- ------- ----- ---------- -------- ----------
$11,191 $5,680 $ 9,221 $39,628 $ -- $1,063,635 $186,131 $3,841,216
======= ====== ======= ======= ===== ========== ======== ==========
ral part of these financial statements.
10
BELLSOUTH SAVINGS
STATEMENT OF CHANGES
FOR BENEFITS,
Year Ended Dec
(In Tho
Vanguard
Index Fidelity
BellSouth Indexed Interest Trust Growth
Stock Stock Income Growth & Income Balanced
Fund Fund Fund Portfolio Portfolio Fund
---------- -------- -------- --------- --------- --------
Net Assets Available for
Benefits,
December 31, 1997...... $1,166,812 $182,325 $350,850 $19,922 $62,264 $22,369
---------- -------- -------- ------- ------- -------
Employee contributions.. 37,009 13,190 19,815 2,941 5,075 2,021
Transfer of
participants'
balances--net.......... 79,815 (46,967) (28,214) 12,526 (11,553) (3,263)
Supplemental
contributions.......... -- -- -- -- -- --
Allocation of shares to
participants........... -- -- -- -- -- --
Transfer for loan
repayment.............. -- -- -- -- -- --
---------- -------- -------- ------- ------- -------
Total Contributions,
Allocations and
Transfers.............. 116,824 (33,777) (8,399) 15,467 (6,478) (1,242)
Share of Trust
investment activities.. 877,915 46,165 20,699 11,780 16,272 4,465
---------- -------- -------- ------- ------- -------
Total .................. 994,739 12,388 12,300 27,247 9,794 3,223
---------- -------- -------- ------- ------- -------
Less: Distributions to
participants...... 103,512 10,590 40,909 1,540 4,222 1,696
Interest on notes
payable........... -- -- -- -- -- --
---------- -------- -------- ------- ------- -------
Net Assets Available for
Benefits,
December 31, 1998...... $2,058,039 $184,123 $322,241 $45,629 $67,836 $23,896
========== ======== ======== ======= ======= =======
The accompanying notes are an integ
11
AND SECURITY PLAN
IN NET ASSETS AVAILABLE
WITH FUND INFORMATION
ember 31, 1998
usands)
T. Rowe DFA U.S. Employee Stock
Price DFA U.S. DFA Large Cap Ownership Plan
Bond Mid-Cap 6-10 Value International Value II Participant -----------------------
Fund Growth Portfolio II Value II Fund Fund Loans Other Allocated Unallocated Total
------ ------- ------------ ------------- --------- ----------- ----- ---------- ----------- ----------
$7,763 $11,069 $25,037 $4,711 $13,679 $23,140 $-- $ 592,278 $109,087 $2,591,306
------ ------- ------- ------ ------- ------- ---- ---------- -------- ----------
782 1,267 1,677 432 850 -- -- -- -- 85,059
177 103 (10,901) (1,211) (4,758) 5,922 (688) (4,304) -- (13,316)
-- -- -- -- -- -- -- -- 24,413 24,413
-- -- -- -- -- -- -- 59,763 (59,763) --
-- -- -- -- -- -- -- (8,214) 8,214 --
------ ------- ------- ------ ------- ------- ---- ---------- -------- ----------
959 1,370 (9,224) (779) (3,908) 5,922 (688) 47,245 (27,136) 96,156
712 2,358 (1,150) 604 1,298 2,141 688 476,989 197,854 1,658,790
------ ------- ------- ------ ------- ------- ---- ---------- -------- ----------
1,671 3,728 (10,374) (175) (2,610) 8,063 -- 524,234 170,718 1,754,946
------ ------- ------- ------ ------- ------- ---- ---------- -------- ----------
776 626 1,222 366 751 1,177 -- 32,445 -- 199,832
-- -- -- -- -- -- -- -- 15,709 15,709
------ ------- ------- ------ ------- ------- ---- ---------- -------- ----------
$8,658 $14,171 $13,441 $4,170 $10,318 $30,026 $-- $1,084,067 $264,096 $4,130,711
====== ======= ======= ====== ======= ======= ==== ========== ======== ==========
ral part of these financial statements.
12
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands, Except 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 1-800-995-1000. 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, 1155 Peachtree Street, N.E., Atlanta, Georgia 30309-3610.
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.
Master Trust
For investment purposes, the assets of the Plan are held in the BellSouth
Master Savings Trust (the Master Savings Trust). The Master Savings Trust also
holds the assets of the BellSouth Retirement Savings Plan (BRSP).
Investment Options
At December 31, 2000, 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, T. Rowe 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.
Concentrations of Risk
At December 31, 2000 and 1999, 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.
13
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
1. Plan Description--(continued)
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 7.00% to 11.00% at December 31, 2000. Principal and interest are paid
ratably through periodic payroll deductions for active employees and by coupon
for nonactive employees.
Service Providers
As of May 1, 1999, State Street Bank & Trust Company serves as the Trustee
for the Master Savings Trust. During 1998, and in 1999 prior to May 1, Bankers
Trust Company served as the Trustee for the Master Savings Trust. Metropolitan
Life Insurance Company serves as the recordkeeper and service center provider
for the Plan.
2. Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
changes therein, and disclosure of contingent assets and liabilities. 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.
14
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except 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, 2000 and 1999 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, 2000 and 1999 from published sources
where available and, if not available, from other sources considered
reliable; and
. Annuity contracts with insurance companies and synthetic contracts 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 date the trust is entitled to the
benefit. Interest earned on investments is recognized on the accrual basis.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 requires that an entity recognize all derivatives and
measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No. 133 effective
January 1, 2001. Management has not yet been able to determine the impact of
SFAS No. 133 on the Plan financial statements as a result of the inconsistency
in accounting literature between SFAS No. 133, requiring derivatives to be
measured at fair value, and the AICPA Audit and Accounting Guide on "Audits of
Employee Benefit Plans" and Statement of Position 94-4, "Reporting of
Investment Contracts Held by Health and Welfare Benefit Plans and Defined-
Contribution Pension Plans", requiring benefit responsive investment contracts
(including synthetic GICs) to be measured at contract value. Until this
discrepancy is resolved, management is unable to determine the impact that
SFAS 133 will have on the Plan financial statements. The carrying value of
benefit responsive investment contracts (including synthetic GICs) in the
Master Trust is $1,219,984 at December 31, 2000. The carrying value of other
derivative instruments in the Master Trust is $86,830 at December 31, 2000.
The actual impact on the Plan's net assets available for plan benefits of
adopting SFAS No. 133 will be made based on the derivative positions and
hedging relationships at the date of adoption.
3. Contributions
Employee contributions to the Plan are recorded based upon authorized basic
and supplemental contributions. The maximum basic contribution rate was $60
per week for 2000 and 1999, and $55 per week for 1998. Participants may
contribute up to the IRS limit of their eligible compensation to the Plan on a
before-tax basis.
As discussed in Section 3 of the Plan document, participants may also
rollover amounts into the Plan from other qualified plans.
15
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
3. Contributions--(continued)
The employing company makes matching contributions to the Employee Stock
Ownership Plan (ESOP) in respect of each participant's authorized basic
contribution. 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 ranges of
matching contribution rates for the three years ended December 31, 2000 were
as follows:
2000 1999 1998
---- --------- ---------
January-March.................................... 76% 76% - 81% 76% - 86%
April-December................................... 81% 76% 76% - 81%
4. 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 was $35.25 for 2000 and $33.00 for 1999 and 1998. Additional
fees are 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. The Plan's
share of 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,
---------------------
2000 1999 1998
------ ------ ------
BellSouth Stock Fund...................................... $269 $237 $--
Indexed Stock Fund........................................ (14) 65 32
Interest Income Fund...................................... 151 145 141
Balanced Fund............................................. 26 30 22
Bond Fund................................................. 17 18 21
------ ------ ------
$ 449 $ 495 $ 216
====== ====== ======
The Master Savings Trust did not pay investment management fees for the
BellSouth Stock Fund during 1998.
16
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
4. Plan Expenses--(continued)
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,
-----------------
2000 1999 1998
----- ----- -----
Vanguard Index Trust Growth Portfolio......................... 0.12% 0.12% 0.20%
Fidelity Growth & Income Portfolio............................ 0.67% 0.68% 0.71%
T. Rowe Price Mid-Cap Growth.................................. 0.87% 0.91% 0.91%
DFA U.S. 6-10 Value Portfolio II.............................. 0.44% 0.44% 0.45%
DFA International Value II Fund............................... 0.50% 0.50% 0.55%
DFA U.S. Large Cap Value II Fund.............................. 0.37% 0.37% 0.39%
5. 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.
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.
6. 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 account balances 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 account balances.
17
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. 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 was
31.80631% at December 31, 2000 and 34.42832% at December 31, 1999. The Plan's
allocated share of the net assets of each fund in the Master Savings Trust at
December 31, 2000 and 1999 were as follows:
2000 1999
--------- ---------
BellSouth Stock Fund..................................... 45.90979% 46.17488%
Indexed Stock Fund....................................... 13.79783% 14.19892%
Interest Income Fund..................................... 26.23836% 27.05779%
Vanguard Index Trust Growth Portfolio.................... 27.22200% 26.42735%
Fidelity Growth & Income Portfolio....................... 27.07369% 26.98209%
Balanced Fund............................................ 17.97972% 18.08127%
Bond Fund................................................ 7.82108% 7.30582%
T. Rowe Price Mid-Cap Growth ............................ 25.23658% 20.59616%
DFA U.S. 6-10 Value Portfolio II ........................ 15.77238% 15.07243%
DFA International Value II Fund.......................... 13.60468% 12.41314%
DFA U.S. Large Cap Value II Fund......................... 23.20607% 24.82715%
Participant Loans........................................ 36.75449% 36.86068%
Other.................................................... 39.40465% 50.42908%
18
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)
The financial position of the Master Savings Trust at December 31, 2000 and
1999 was as follows:
2000 1999
Assets: ---- ----
Investments at value:
BellSouth Stock Fund:
Shares of BellSouth Common Stock#...................... $2,867,936 $3,775,655
Temporary cash investments............................. 15,254 16,370
Distributable shares .................................. 18 63
Indexed Stock Fund:
Equity Index Fund#..................................... 1,279,516 1,456,096
Interest Income Fund:
General account investment contracts................... 74,600 93,672
Security backed investments............................ 1,145,384 1,096,133
Temporary cash investments............................. 48,616 96,209
Vanguard Index Trust Growth Portfolio:
Securities............................................. 357,703 340,612
Fidelity Growth & Income Portfolio:
Securities............................................. 246,970 262,475
Balanced Fund:
Securities............................................. 114,758 126,019
Temporary cash investments............................. 12,333 12,975
Bond Fund:
Securities............................................. 136,945 113,524
Temporary cash investments............................. 4,954 1,786
T. Rowe Price Mid-Cap Growth:
Securities............................................. 209,152 98,869
DFA U.S. 6-10 Value Portfolio II:
Securities............................................. 83,136 74,162
DFA International Value II Fund:
Securities............................................. 44,852 45,283
Personal Choice Retirement Account:
Securities............................................. 51,004 25,360
Mutual Funds........................................... 29,181 8,592
Common trusts.......................................... 2,508 291
Temporary cash investments............................. 16,360 9,351
DFA U.S. Large Cap Value II Fund:
Securities............................................. 37,284 37,252
Participant Loans:
Loans to participants................................... 108,781 106,282
Contribution Account+:
BellSouth Common Shares................................. 5,086 --
Temporary cash investments.............................. 1,346 42
Distribution Account+:
Temporary cash investments.............................. 17,958 47
(Continued)
19
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)
2000 1999
---- ----
Expense Account+:
Temporary cash investments............................ 2,540 3,290
Dividends and interest income receivable............... 9,029 7,787
Receivable for investments sold........................ 474 13,074
Other receivables...................................... 76 469
---------- -----------
6,923,754 7,821,740
Liabilities:
Payable for investments purchased...................... 36,300 23,378
Variation margin payable............................... 42 224
Other payables......................................... 392 --
---------- -----------
Trust net assets (excluding ESOP Trusts)............... 6,887,020 7,798,138
Investment in ESOP Trusts:
Shares of BellSouth Common Stock allocated to partici-
pants#................................................ 2,034,525 2,350,638
Distributable shares................................... 5 1
Shares of BellSouth Common Stock held for future allo-
cation#............................................... 661,301 949,327
Temporary cash investments............................. 21,672 25,505
---------- -----------
Total investments...................................... 9,604,523 11,123,609
Liabilities:
Notes payable.......................................... 306,959 391,429
---------- -----------
Trust net assets....................................... $9,297,564 $10,732,180
========== ===========
Investments at cost.................................... $7,371,056 $ 7,276,780
========== ===========
--------
# Represents an individual investment which is 5% or more of the Net Assets of
the Master Savings Trust.
+ These accounts are combined and presented as the "Other" fund in the
accompanying financial statements.
20
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)
Distributions from the BellSouth Stock Fund and the BellSouth Management
Savings and ESOP Trust and the BellSouth Savings and Security ESOP Trust (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."
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, therefore the values of the fund units
fluctuate daily.
Assets in the Interest Income Fund are invested in the following types of
financial vehicles:
. General Account Investment Contracts--These contracts are also referred
to as traditional investment contracts. An investment contract is termed
"general account" when the assets committed to the contract are
commingled with other general assets of the contract issuer. The
contract issuer promises to return the invested principal plus a stated
rate of interest upon maturity. The quality of the promise is a function
of the financial condition of the contract issuer.
. Security Backed Investments--These are generic terms which refer to
investment contracts other than "traditional" general account investment
contracts as defined above. These investments consist of a combination
of marketable securities, owned directly by the Plan or as units of a
separate account or trust owned by the Plan, and an investment contract
that provides liquidity for eligible employee benefits at book value.
Market value securities are investments in fixed income securities owned
by the Plan without a corresponding investment contract. Liquidation of
these securities to pay eligible benefit events is at market value.
-- Group Trust Investment Contracts--Group Trust refers to the INVESCO
Group Trust for Retirement Benefit Plans. The INVESCO Group Trust
contains a series of commingled investment funds, available only to
INVESCO clients, constructed to provide a stable value portfolio
with the beneficial elements of various fixed income management
strategies. The Plan's investment in any one of the various INVESCO
Group Trust Funds is unitized and may be "wrapped" by an independent
financial institution through the issuance of an investment
contract.
-- Separate Account Investment Contracts--An investment contract is
termed "separate account" when the assets committed to the contract
are segregated from the general assets of the contract issuer
through the use of a specifically identifiable separate account. The
separate account may be comprised of investments from one Plan or
Trust, or comprised of investments from multiple qualified
retirement Plans and Trusts. Though ownership of the assets held in
a separate account is retained by the contract issuer, the assets
are protected from liabilities arising from the contract issuers'
general operations. The investment performance of a separate account
investment contract may be a function of the investment performance
of the investments held in the separate account.
-- Synthetic Investment Contract--The term "synthetic" investment
contract is used to describe a variety of investment contracts under
which a Plan retains ownership of the invested assets, or owns units
of an account or trust which holds the invested assets. To ensure
these invested assets may be accounted for at book value, a
"synthetic" investment contract, also referred to as a "wrap"
contract, is negotiated with an independent financial institution.
Under the terms of these investment contracts, the contract issuer
ensures the Plan's ability to pay eligible employee benefits at book
value. The investment performance of a synthetic investment contract
may be a function of the investment performance of the invested
assets.
21
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)
The value of the Interest Income Fund reflected in these financial
statements is based upon the principal invested and the interest credited. The
fair value of the Interest Income Fund, by investment type, at December 31,
2000 and 1999 was as follows:
December 31, December 31,
2000 1999
------------ ------------
General account investment contracts............... $ 74,600 $ 93,672
Security backed investments:
Underlying assets................................. 1,171,635 1,093,149
Wrapper contracts................................. (26,251) 2,984
---------- ----------
Total contracts.................................. $1,219,984 $1,189,805
========== ==========
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. The crediting interest rate was 6.60% at December 31, 2000 and
6.23% at December 31, 1999. The average yield was 6.51% in 2000 and 6.12% in
1999. Interest rates are reset on a semi-annual, quarterly or monthly basis to
move the current book value of these investments toward the projected future
market value over the life of the contract.
During 1990, 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.
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.
22
BELLSOUTH SAVINGS AND SECURITY PLAN
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Dollars in Thousands, Except Per-Participant Amounts)
7. Interest in BellSouth Master Savings Trust--(continued)
BellSouth made supplemental cash contributions to the ESOP Trusts in the
amount of $75,497 in 2000, $73,389 in 1999 and $71,857 in 1998, for the
purpose of servicing the guaranteed debt.
A description of each debt issue is as follows:
BellSouth Management Savings and ESOP 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,
2000 were as follows:
2001 2002 2003 Total
------- -------- -------- --------
Maturities................................... $94,128 $104,648 $108,183 $306,959
======= ======== ======== ========
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, 2000.
The Master Savings Trust investment activities for the years ended December
31, 2000, 1999 and 1998 were as follows:
For the Year Ended
December 31,
------------------------------------
2000 1999 1998
----------- ----------- ----------
Investment Activities:
Dividends on shares of BellSouth Common
Stock.................................. $ 112,515 $ 119,742 $ 110,822
Interest Income Fund income............. 70,326 71,112 78,395
Other interest.......................... 37,067 66,375 46,717
Net change in unrealized
appreciation/(depreciation) on
investments............................ (1,575,258) (1,264,789) 2,617,133
Net realized gain on investments........ 589,455 1,084,574 1,161,504
Investment manager fees................. (1,437) (1,880) (1,198)
Other fees.............................. (3,325) (2,999) (3,262)
----------- ----------- ----------
Net investment activities................ $ (770,657) $ 72,135 $4,010,111
=========== =========== ==========
23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
BellSouth Savings and Security Plan has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
BellSouth Savings and Security Plan
By: BellSouth Corporation, as Plan
Administrator
/s/ Clinton A. Demetriou
By: _________________________________
Clinton A. Demetriou
(Executive Director)
Date: June 27, 2001
24