Form 11-K AT&T INC. For: Dec 31

June 28, 2019 3:32 PM
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 11-K

 

 

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

OR

 

TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File Number:1-8610

 

 

 

A.

Full title of the plan and the address of the plan, if different from that of the issuer named below:

BELLSOUTH SAVINGS AND SECURITY PLAN

 

B.

Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

AT&T INC.

208 S. Akard, Dallas, Texas 75202

 

 

 


Table of Contents

BellSouth Savings and Security Plan

Financial Statements, Supplemental Schedule and Exhibit

Table of Contents

 

     Page  

Reports of Independent Registered Public Accounting Firm

     1  

Financial Statements:

  

Statements of Net Assets Available for Benefits as of December  31, 2018 and 2017

     2  

Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 2018

     3  

Notes to Financial Statements

     4  

Supplemental Schedule:

  

Schedule H, Line 4(i) – Schedule of Assets (Held at End of Year) as of December 31, 2018

     16  

 


Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Plan Administrator and Plan Participants

Bellsouth Savings and Security Plan

Dallas, Texas

Opinion on the Financial Statements

We have audited the accompanying statements of net assets available for benefits of BellSouth Savings and Security Plan (Plan) as of December 31, 2018 and 2017, the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of BellSouth Savings and Security Plan as of December 31, 2018 and 2017, and the changes in net assets available for benefits for the year ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America.

Basis of Opinion

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 are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Report on Supplemental Information

The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2018, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental schedule is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental schedule reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedule. In forming our opinion on the supplemental schedule, we evaluated whether the supplemental schedule, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

/s/ BKD, LLP

We have served as the Plan’s auditor since 2018

San Antonio, Texas

June 28, 2019

 

1


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

(Dollars in Thousands)

 

     December 31,  
     2018      2017  

ASSETS

     
Investment in AT&T Savings Group Investment Trust    $ 552,489      $ 572,237  
Investments, at fair value      1,575,169        1,853,150  
  

 

 

    

 

 

 

Total Investments (See Note 4)

     2,127,658        2,425,387  
Notes receivable from participants      59,874        60,770  
Participant contributions receivable      2,170        2,204  
Employer contributions receivable      631        803  
Interest receivable      396        334  
  

 

 

    

 

 

 

Total Receivables

     63,071        64,111  
Total Assets      2,190,729        2,489,498  

LIABILITIES

     
Administrative expenses payable      825        811  
Due to broker for securities purchased      20,308        44,508  
  

 

 

    

 

 

 
Total Liabilities      21,133        45,319  
  

 

 

    

 

 

 
Net Assets Available for Benefits    $ 2,169,596      $ 2,444,179  
  

 

 

    

 

 

 

See Notes to Financial Statements.

     

 

2


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

FOR THE YEAR ENDED DECEMBER 31, 2018

(Dollars in Thousands)

 

Net Assets Available for Benefits, December 31, 2017

   $ 2,444,179  

Changes in Net Assets:

  

Contributions:

  

Participant contributions

     64,575  

Employer contributions

     20,441  

Rollover contributions

     9,089  
  

 

 

 
     94,105  

Investment Income (Loss):

  

Net income from investment in AT&T Savings Group Investment Trust

     11,608  

Interest

     2,353  

Dividends

     70,473  

Net (depreciation) in fair value of investments

     (240,707
  

 

 

 
     (156,273

Interest income on notes receivable from participants

     2,765  

Distributions

     (213,789

Administrative expenses

     (1,408
  

 

 

 

Net decrease before transfers

     (274,600
  

 

 

 

Transfers from affiliated qualified savings plan (Note 1)

     17  
  

 

 

 

Net Assets Available for Benefits, December 31, 2018

   $ 2,169,596  
  

 

 

 
See Notes to Financial Statements.   

 

3


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements

(Dollars in Thousands)

NOTE 1. PLAN DESCRIPTION

The BellSouth Savings and Security Plan (Plan) is a defined contribution plan originally established by BellSouth Corporation (BellSouth) to provide a convenient way for eligible nonmanagement employees of participating BellSouth companies to save on a regular and long-term basis. In December 2006, BellSouth was acquired by AT&T Inc. (AT&T or the Company). 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, as amended (ERISA).

During 2018, $17 of participant balances and assets were transferred into the Plan from the AT&T Savings and Security Plan.

The Plan participates in the AT&T Savings Group Investment Trust (Group Trust) with respect to the AT&T Stable Value Fund and International Stock Fund. The Bank of New York Mellon Corporation (BNY Mellon) serves as trustee for both the Group Trust and the trust holding the Plan’s assets, known as the BellSouth Savings and Security Plan Trust. Fidelity Investments Institutional Operations Company, Inc. (Fidelity) serves as recordkeeper for the Plan. During 2018, participants could invest their contributions in one or more of fourteen funds in 1% increments:

 

•  AT&T Shares Fund

  

•  T. Rowe Price Mid-Cap Growth Fund

•  Bond Fund

  

•  Indexed Stock Fund

•  Fidelity Growth and Income Portfolio **

  

•  Russell 1000 Growth Index

•  Balanced Fund

  

•  LifePath Funds (based on retirement date)

•  AT&T Stable Value Fund *

•  DFA U.S. Small Cap Value Portfolio

•  DFA U.S. Large Cap Value Portfolio II

  

•  Small and Mid-Sized U.S. Stock Index Fund **

•  International Stock Index Fund

•  AT&T International Stock Fund *

* Investment fund option of the Group Trust

** Effective as of market close on June 29, 2018, the Fidelity Growth and Income Portfolio investment option ceased to exist as an investment option and the Small and Mid-Sized U.S. Stock Index Fund was introduced.

Participants contribute to the Plan through payroll allotments. Participants may also contribute amounts representing distributions from other qualified defined benefit and defined contribution plans (rollovers). The Company contributes to the Plan by matching the participants’ contributions based on the provisions of the Plan. All contributions are participant directed.

Dividends on shares in the AT&T Shares Fund can either be reinvested in the AT&T Shares Fund on a quarterly basis, or paid into a short-term interest bearing fund for distribution before the end of the year. Interest earned on dividends held in the short-term interest-bearing fund are used to purchase additional units of the AT&T Shares Fund in the participant’s account. During 2018, Plan participants elected to receive $1,366 in dividend distributions. This amount is included in distributions on the Plan’s Statement of Changes in Net Assets Available for Benefits.

Each participant is entitled to exercise voting rights attributable to the AT&T shares allocated to their account and is notified by the Company prior to the time that such rights may be exercised. Subject to the fiduciary provisions of ERISA, the trustee will not vote any allocated shares for which instructions have not been given by a participant. The trustee votes any unallocated shares in the same proportion as it votes those shares that were allocated to the extent the proportionate vote is consistent with the trustee’s fiduciary obligations under ERISA. Participants have the same voting rights in the event of a tender or exchange offer.

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

Although it has not expressed any intent to do so, AT&T 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 collectively bargained agreements. 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.

Administrative Expenses Each participant in the Plan may be charged for investment manager fees and administrative expenses, including, trustee and other expenses considered reasonable by the Plan administrator. Investment manager fees are charged through the applicable investment option. Administrative fees are divided on a pro rata basis among investment options of the participant. An additional fee is charged to individual participants for various services provided by the Plan’s recordkeeper and other service providers. Certain expenses are paid by the Plan, Group Trust, or Company.

NOTE 2. ACCOUNTING POLICIES

The accompanying financial statements were prepared in conformity with U.S. generally accepted accounting principles (GAAP), which require management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Distributions are recorded when paid.

Investment Valuation and Income Recognition Investments are stated at fair value except those investments that are fully benefit responsive which are stated at contract value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements. Investments in securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the year. If no sale was reported on that date, they are valued at the last reported bid price. Shares of registered investment companies (i.e. mutual funds) are valued based on quoted market prices, which represent the net asset value of shares held at year-end. Over-the-counter securities (OTC) and government obligations are valued at the bid price or the average of the bid and asked price on the last business day of the year from published sources where available and, if not available, from other sources considered reliable. Depending on the types and contractual terms of OTC derivatives, fair value is measured using valuation techniques such as Black-Scholes option price models, simulation models, or a combination of various models.

Common/collective trust funds and 103-12 investment entities (i.e. an investment entity that holds the assets of two or more plans which are not members of a related group or employee benefit plan) are valued at quoted redemption values that represent the net asset values (NAV) of units held at year-end. Publicly traded partnerships are valued using trades on a national securities exchange based on the last reported sales price on the last business day of the year.

Investment contracts held by a defined contribution plan are required to be reported at contract value. Contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Group Trust invests in fully benefit-responsive guaranteed investment contracts (GICs) and synthetic investment contracts (Synthetic GICs). The underlying investments of the Synthetic GICs are owned by the Group Trust and are comprised of corporate bonds and notes, registered investment companies and government securities and are also valued as described above. The contract value of the fully benefit-responsive investment contracts represents contributions plus earnings, less participant withdrawals and administrative expenses.

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. Net depreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year. Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3 (significant unobservable inputs) are recognized on the period ending date.

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

Notes Receivable from Participants Notes receivable from participants represent participant loans that are recorded at their unpaid principal balance plus any accrued, but unpaid interest. Interest income on notes receivable from participants is recorded when it is earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2018 or 2017. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be a distribution, the participant loan balance is reduced and a distribution is recorded.

Recent Accounting Standards

In February 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2017-06 “Employee Benefit Plan Master Trust Reporting” (ASU 2017-06). ASU 2017-06 requires plans to report interests in a master trust and changes in the value of that interest as separate line items on the plan’s financial statements. The plans must also disclose the master trust’s investments by general type as well as other assets and liabilities and disclose the dollar amount of the plan’s interest in each category disclosed. The new standard is effective for fiscal years beginning after December 15, 2018 with retrospective application. Early adoption is permitted. The Plan is not early adopting this standard. Management is currently evaluating this updated guidance.

In July 2018, the FASB issued Accounting Standards Update No. 2018-09 “Codification Improvements” (ASU-2018-09). ASU 2018-09 requires a plan to evaluate its investments to determine whether a readily determinable fair value exists or if investments qualify for the net asset value per share practical expedient and can be excluded from the fair value hierarchy disclosure. The new standard is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Plan is not early adopting this standard. Management is currently evaluating this updated guidance.

NOTE 3. FAIR VALUE MEASUREMENTS

Accounting Standards Codification 820, Fair Value Measurement, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

 

Level 1

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.

 

Level 2

Inputs to the valuation methodology include:

 

   

Quoted prices for similar assets and liabilities in active markets;

 

   

Quoted prices for identical or similar assets or liabilities in inactive markets;

 

   

Inputs other than quoted market prices that are observable for the asset or liability;

 

   

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The valuation methodologies described in Note 2 may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Plan management believes its valuation methods are

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used at December 31, 2018 and 2017.

See Note 4 for fair value hierarchy for the Group Trust’s and Plan’s investments.

NOTE 4. INVESTMENTS

The Plan held investments in its own trust and in the Group Trust (through participation in the AT&T Stable Value Fund and AT&T International Stock Fund) as of December 31, 2018 and 2017.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets, other than the Plan’s investment in the Group Trust, at fair value as of December 31, 2018:

 

     Plan Assets at Fair Value as of December 31, 2018  
     Level 1      Level 2      Level 3      Total  

Interest-bearing investments

   $ 894      $ 16,101      $ —        $ 16,995  

AT&T common stock

     306,853           —          306,853  

Mutual funds or exchange-traded funds

     524,126           —          524,126  

Corporate debt

     —          26,914        —          26,914  

Mortgage-backed securities

     —          38,541        —          38,541  

Government debt

     —          8,765        —          8,765  

Futures

     62           —          62  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in fair value hierarchy

   $ 831,935      $ 90,321      $ —        $ 922,256  
  

 

 

    

 

 

    

 

 

    

Common/collective trusts measured at net asset value:

           

U.S. index stock fund1

              327,383  

International index stock fund2

              45,420  

Blended equity & debt3

              256,755  

Bond index fund4

              23,355  
           

 

 

 

Total assets at fair value

            $ 1,575,169  
           

 

 

 

 

1

This category includes common/collective trust funds with an objective of providing investment results that approximate the overall performance of the common stocks included in the Standard and Poor’s Composite Stock Price Index of 500 stocks (the “S&P 500®”) and the Russell 1000 Index. There are currently no redemption restrictions on these investments.

2 

This category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the All Country World Index ex U.S. Index. Except for a short-term trading fee applicable to certain participant transactions, there are currently no redemption restrictions on this investment.

3

This category includes common/collective trust funds also known as LifePath Portfolios which are well diversified portfolios that adjust the mix of the various underlying investments over time. The change in allocation of investments is designed to move from a more aggressive investment strategy to a more conservative strategy as the participants come closer to retirement. The year associated with the fund identification denotes the projected year of retirement of the participant selecting the fund. There are currently no redemption restrictions on these investments.

4

This category includes a common/collective trust fund with an objective to approximate the overall performance of the Barclays Capital Aggregate Bond Index. There are currently no redemption restrictions on these investments.

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets, other than the Plan’s investment in the Group Trust, at fair value as of December 31, 2017:

 

     Plan Assets at Fair Value as of December 31, 2017  
     Level 1      Level 2      Level 3      Total  

Interest-bearing investments

   $ 597      $ 39,313      $ —        $ 39,910  

AT&T common stock

     429,897        —          —          429,897  

Mutual funds or exchange-traded funds

     683,291        —          —          683,291  

Corporate debt

     —          23,832        —          23,832  

Mortgage-backed securities

     —          40,971        —          40,971  

Government debt

     —          13,100        —          13,100  

Futures

     37        —          —          37  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in fair value hierarchy

   $ 1,113,822      $ 117,216      $ —        $ 1,231,038  
  

 

 

    

 

 

    

 

 

    

Common/collective trusts measured at net asset value:

           

U.S. index stock fund1

              339,662  

International index stock fund2

              43,237  

Blended equity & debt3

              214,984  

Bond index fund4

              24,229  
           

 

 

 

Total assets at fair value

            $ 1,853,150  
           

 

 

 

 

1

This category includes common/collective trust funds with an objective of providing investment results that approximate the overall performance of the common stocks included in the Standard and Poor’s Composite Stock Price Index of 500 stocks (the “S&P 500®”) and the Russell 1000 Index. There are currently no redemption restrictions on these investments.

2 

This category includes a common/collective trust fund with an objective of providing investment results that approximate the overall performance of the common stocks included in the All Country World Index ex U.S. Index. Except for a short-term trading fee applicable to certain participant transactions, there are currently no redemption restrictions on this investment.

3

This category includes common/collective trust funds also known as LifePath Portfolios which are well diversified portfolios that adjust the mix of the various underlying investments over time. The change in allocation of investments is designed to move from a more aggressive investment strategy to a more conservative strategy as the participants come closer to retirement. The year associated with the fund identification denotes the projected year of retirement of the participant selecting the fund. There are currently no redemption restrictions on these investments.

4 

This category includes a common/collective trust fund with an objective to approximate the overall performance of the Barclays Capital Aggregate Bond Index. There are currently no redemption restrictions on these investments.

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

AT&T Savings Group Investment Trust Investments

AT&T established the Group Trust to manage assets of pooled investment options among various AT&T sponsored employee benefit trusts. Each participating trust’s interest in the investment fund options (i.e., separate accounts) of the Group Trust is based on account balances of the participants and their elected investment fund options. The Group Trust assets are allocated among the participating plans by assigning to each trust those transactions (primarily contributions, distributions, and expenses) that can be specifically identified and by allocating investment income and administrative expenses to the individual plans on a daily basis based on each participant’s account balance within each investment fund option.

The participating entities and ownership percentages of the Group Trust are listed below:

 

     December 31,  
     2018     2017  

AT&T Master Trust

     95.4     95.3

BellSouth Savings and Security Plan

     4.6     4.7
  

 

 

   

 

 

 

Total

     100.0     100.0
  

 

 

   

 

 

 

The Plan’s percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2018.

 

     AT&T Total
Return Bond
Fund
    AT&T U.S.
Stock Fund
    AT&T
International
Stock Fund
    AT&T
Stable Value
Fund
    Group
Trust
 

Interest bearing cash

   $ 8,064     $ 500     $ 3     $ —       $ 8,567  

Foreign cash

     3,892       —         16       —         3,908  

Mortgage-backed securities

     267,127       —         —         —         267,127  

Corporate debt

     712,633       —         —         —         712,633  

Government securities

     315,654       —         —         —         315,654  

Common/collective trust funds

     756,427       2,161,448       157,522       —         3,075,397  

103-12 investment entities

     —         —         236,952       —         236,952  

Equities - common stock

     —         324,930       193,898       —         518,828  

Equities - preferred stock

     —         —         4,528       —         4,528  

Futures

     (245     —         —         —         (245

Registered investment companies

     291,899       6,090       3,536       185,716       487,241  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Group Trust investments at fair value

     2,355,451       2,492,968       596,455       185,716       5,630,590  

Unsettled trades and other

     (395,768     (263     801       (771     (396,001

Fully benefit-responsive investments contracts valued at contract value

     —         —         —         6,829,151       6,829,151  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Group Trust net assets

   $ 1,959,683     $ 2,492,705     $ 597,256     $ 7,014,096     $ 12,063,740  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Plan’s percentage

Ownership interest of investments

     —       —       1.4     7.8     4.6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

The Plan’s percentage interest in each of the investment fund options within the Group Trust is disclosed below as of December 31, 2017.

 

     AT&T Total
Return Bond
Fund
    AT&T U.S.
Stock Fund
    AT&T
International
Stock Fund
    AT&T
Stable Value
Fund
    Group
Trust
 

Interest bearing cash

   $ 8,635     $ —       $ —       $ —       $ 8,635  

Foreign cash

     2,513       —         49       —         2,562  

Mortgage-backed securities

     197,984       —         —         —         197,984  

Corporate debt

     435,034       —         —         —         435,034  

Government securities

     334,453       —         —         —         334,453  

Common/collective trust funds

     660,574       2,465,860       262,744       —         3,389,178  

103-12 investment entities

     —         —         259,704       —         259,704  

Equities - common stock

     —         363,871       215,321       —         579,192  

Equities - preferred stock

     —         —         981       —         981  

Futures

     622       —         —         —         622  

Registered investment companies

     468,488       73,167       4,304       63,048       609,007  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Group Trust investments at fair value

     2,108,303       2,902,898       743,103       63,048       5,817,352  

Unsettled trades and other

     (238,620     100       625       (785     (238,680

Fully benefit-responsive investments contracts valued at contract value

     —         —         —         6,582,615       6,582,615  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Group Trust net assets

   $ 1,869,683     $ 2,902,998     $ 743,728     $ 6,644,878     $ 12,161,287  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Plan’s percentage Ownership interest of investments

     —       —       1.3     8.5     4.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Depreciation in Fair Value of Group Trust Investments and

Total Investment Income (Loss) for the year ended December 31, 2018

 

     Group
Trust
 

Net depreciation in fair value of Group Trust Investments

   $ (279,287

Investment income:

  

Interest

   $ 207,574  

Dividends

     23,104  

Less: Investment management expenses

     (9,070
  

 

 

 

Net investment loss of Group Trust Investments

   $ (57,679
  

 

 

 

 

10


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

The following tables sets forth by level, within the fair value hierarchy, the Group Trust’s assets at fair value as

of December 31, 2018 and 2017:

 

    

Group Trust Assets and Liabilities at Fair Value

December 31, 2018

 
     Level 1      Level 2      Level 3      Total  

Corporate debt

   $ —        $ 712,633      $ —        $ 712,633  

Mortgage-backed securities

     —          267,127        —          267,127  

Interest-bearing investments

     —          8,567        —          8,567  

Foreign cash

     3,908        —          —          3,908  

Common stock

     518,828        —          —          518,828  

Preferred stock

     4,528        —          —          4,528  

Futures

     (245      —          —          (245

Registered investment companies

     487,241        —          —          487,241  

Government debt

     —          315,654        —          315,654  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in fair value hierarchy

   $ 1,014,260      $ 1,303,981      $ —        $ 2,318,241  
  

 

 

    

 

 

    

 

 

    

Investments measured at net asset value

           

U.S. common/collective trusts1

              2,868,746  

International common/collective trusts2

              157,522  

103-12 investments3

              236,952  

Non-publicly traded registered investments companies4

              49,129  
           

 

 

 

Total assets at fair value

            $ 5,630,590  
           

 

 

 

 

1 

The objective of the common/collective trust funds held in the AT&T U.S. Stock Fund is to deliver diversified exposure to the large-capitalization U.S. equity market as represented by the Russell 3000 Index. The objective of the common/collective trust funds held in the AT&T Total Return Bond Fund is to deliver diversified exposure to the fixed income market as represented by the Bloomberg Barclays Aggregate Index. There are currently no redemption restrictions on these investments.

2 

The objective of the common/collective trust funds held in the AT&T International Stock Fund is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S., MSCI Emerging Markets Net Dividend Index, MSCI Australia Index and MSCI Canada Index. There are currently no redemption restrictions on these investments.

3 

The objective of these equity commingled funds is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S. that invest in both developed and emerging countries. These funds have redemption restrictions limited to daily and monthly settlement.

4 

These are non-publicly traded registered investment companies, consisting of a short-term floating rate portfolio plus publicly-traded high-yield and asset-backed fixed income securities. The fair value of the investments in this group have been estimated using the net asset values reported by the fund manager. These funds are utilized on a discretionary basis as part of a broad fixed income mandate. These are open-ended funds, with no final termination dates. There are currently no redemption restrictions on this investment.

 

11


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

    

Group Trust Assets and Liabilities at Fair Value

December 31, 2017

 
     Level 1      Level 2      Level 3      Total  

Corporate debt

   $ —        $ 435,034      $ —        $ 435,034  

Mortgage-backed securities

     —          197,984        —          197,984  

Interest-bearing investments

     —          8,635        —          8,635  

Foreign cash

     2,513        49        —          2,562  

Common stock

     579,192        —          —          579,192  

Preferred stock

     981        —          —          981  

Futures

     622        —          —          622  

Registered investment companies

     526,784        —          —          526,784  

Government debt

     —          334,453        —          334,453  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets in fair value hierarchy

   $ 1,110,092      $ 976,155      $ —        $ 2,086,247  
  

 

 

    

 

 

    

 

 

    

Investments measured at net asset value

           

U.S. common/collective trusts1

              3,126,434  

International common/collective trusts2

              262,744  

103-12 investments3

                                 259,704  

Non-publicly traded registered investments companies4

              82,223  
           

 

 

 

Total assets at fair value

            $ 5,817,352  
           

 

 

 

 

1 

The objective of the common/collective trust funds held in the AT&T U.S. Stock Fund is to deliver diversified exposure to the large-capitalization U.S. equity market as represented by the Russell 3000 Index. This common/collective trust fund has redemption restrictions limited to daily and monthly settlement.

2 

The objective of the common/collective trust funds held in the AT&T International Stock Fund is to provide diversified exposure to international markets as represented by the All Country World Index ex U.S. and MSCI Emerging Markets Net Dividend Index. The three common/collective trust funds have redemption restrictions limited to daily, weekly or monthly. One fund is invested broadly in developed and emerging market countries, while the other two funds are invested primarily in emerging market countries.

3 

These are equity commingled funds that invest primarily in developed countries. These funds have redemption restrictions limited to monthly settlement.

4 

These are non-publicly traded registered investment companies, consisting of a short-term floating rate portfolio plus publicly-traded high-yield and asset-backed fixed income securities. The fair value of the investments in this group have been estimated using the net asset values reported by the fund manager. These funds are utilized on a discretionary basis as part of a broad fixed income mandate. These are open-ended funds, with no final termination dates.

 

12


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

Derivative Financial Instruments

In the normal course of operations, Group Trust assets and liabilities held in the AT&T Stable Value Fund (Stable Value Fund) may include derivative financial instruments (futures and foreign currency forward contracts). These instruments involve, in varying degrees, elements of credit and market volatility risks in excess of more traditional investment holdings such as equity and debt instruments. The intent is to use derivative financial instruments as an economic hedge to manage market volatility and foreign currency exchange rate risk associated with the Stable Value Fund’s investment assets. The gains (losses) are located on the Statement of Changes in Net Assets Available for Benefits as Net Income from Investment in AT&T Savings Group Investment Trust to the extent of the Plan’s ownership in the Group Trust. The Group Trust’s fiduciaries do not anticipate any material adverse effect on the Group Trust’s financial position resulting from its involvement in these instruments.

In addition to the derivative financial instruments held by the Group Trust, the Plan also holds derivative financial instruments as Plan investments in its own trust. The income is located on the Statements of Changes in Net Assets Available for Benefits a component of net appreciation in fair value of investments.

At December 31, 2018 and 2017, the fair value of derivative financial instruments held by the Group Trust and the Plan was not material.

Futures Contracts

The primary risk managed by the Group Trust using futures contracts is the price risk associated with investments. On behalf of the Group Trust, investment managers enter into various futures contracts to economically hedge investments. These contracts, which are considered derivatives under Accounting Standards Codification Topic 815, Derivatives and Hedging are agreements between two parties to buy or sell a security or financial interest at a set price on a future date and are standardized and exchange-traded. Upon entering into such a contract on behalf of the Group Trust, the investment manager is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Pursuant to the contract, the investment manager agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as variation margin and are recorded on a daily basis by the trustee as a realized gain or loss equal to the difference in the value of the contract between daily closing prices. Upon entering into such contracts, the Group Trust bears the risk of interest or exchange rates or securities prices moving unexpectedly, in which case, the Group Trust may not achieve the anticipated benefits of the futures contracts and may realize a loss. With futures, there is minimal counterparty credit risk to the Group Trust since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default. The investments in the Group Trust are subject to equity price risk and interest rate risk, in the normal course of pursuing its investment objectives. The U.S. interest rate futures held in the portfolio as of December 31, 2018 and 2017 were used primarily to hedge and manage the duration risk of the portfolio.

The futures held in the Plan as of December 31, 2018 and 2017, were used primarily to maintain the target allocations of the portfolio.

Foreign Currency Contracts

The primary risks managed by the Group Trust using foreign currency forward contracts is the foreign currency exchange rate risk associated with the Group Trust’s investments denominated in foreign currencies. On behalf of the Group Trust, investment managers enter into forward foreign currency contracts, which are agreements to exchange foreign currencies at a specified future date at a specified rate, the terms of which are not standardized on an exchange. These contracts are intended to minimize the effect of currency fluctuations on the performance of investments denominated in foreign currencies. Although in some cases, forward foreign currency contracts are used to express a view on the direction of a particular currency, risk arises both from the possible inability of the counterparties to meet the terms of the contracts (credit risk) and from movement in foreign currency exchange rates (market risk). Foreign currency forward contracts are entered into with major banks to minimize credit risk, and accordingly, no credit reserve has been established against these amounts. The contracts are recorded at fair value on the date the contract is entered into, which is typically zero.

Fully Benefit-Responsive Investment Contracts

The Stable Value Fund consists of fully benefit-responsive investment contracts with various financial institutions and insurance companies which can be accounted for by the Plans at contract value. Generally contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.

 

13


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

The investments held by the Stable Value Fund as of December 31, 2018 include Synthetic GICs which are fully benefit-responsive investment contracts. Synthetic GICs are constructed by combining a stable value insurance wrapper contract and a fixed income portfolio. The assets supporting the Synthetic GICs are owned by the Group Trust and generally consist of high quality fixed income securities.

Traditional Guaranteed Investment Contracts (“Traditional GICs” also known as “General Account GICs”) are issued by insurance companies and typically pay a guaranteed fixed or floating rate of interest over the life of the contract with a repayment of principal at maturity. A Synthetic GIC is similar to a Traditional GIC but has unbundled the insurance and investment components of the Traditional GIC.

Wrapper contracts are typically issued by a bank or insurance company, and seek to provide preservation of principal by permitting daily liquidity at contract value for participant directed transactions, in accordance with the provisions of the Plans. Wrapper contracts amortize the realized and unrealized gains and losses on the underlying fixed income investments through adjustments to the future interest crediting rate of the contract. Wrapper contracts typically contain contractual provisions that prevent the interest crediting rate from falling below zero.

In certain circumstances, the amount withdrawn from the wrapper contract could be payable at fair value rather than at contract value. These events include termination of the Plans, a material adverse change to the provisions of the Plans, if AT&T elects to withdraw from a wrapper contract in order to switch to a different investment provider or, in the event of a spin-off or sale of a division, if the terms of the successor plan do not meet the contract issuers’ underwriting criteria for issuance of a clone wrapper contract. Events that would permit a wrapper contract issuer to terminate a wrapper contract upon short notice include the Plans’ loss of qualified status, un-cured material breaches of responsibilities or material and adverse changes to the provisions of the Plans. The Company does not believe any of the events are probable of occurring in the foreseeable future.

Investment Risk

Investments held by the Group Trust and the Plan are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of investments could 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. Participants’ accounts that are invested in the Company stock fund option are exposed to market risk in the event of a significant decline in the value of AT&T stock.

Additionally, the Group Trust invests in securities with contractual cash flows, such as asset backed securities, collateralized mortgage obligations and commercial mortgage-backed securities. The value, liquidity and related income of these securities are sensitive to changes in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates

NOTE 5. PARTIES-IN-INTEREST TRANSACTIONS

The Plan may, at the discretion of the Plan’s participants or via the Company match, invest in the Company’s common stock. The Plan held 10,751,695 and 11,057,020 shares of the Company’s common stock as of December 31, 2018 and 2017, respectively. Dividends earned by the Plan on the Company’s common stock were $20,523 for the year ended December 31, 2018.

Plan assets are invested in AT&T stock either directly or through the Group Trust. Because the Company is the plan sponsor, transactions involving the Company’s stock qualify as party-in-interest transactions. In addition, certain investments held by the Plan and Group Trust are managed by BNY Mellon and Fidelity as trustee and record keeper, respectively, as defined by various agreements. Therefore, these transactions and fees paid to these entities qualify as parties-in-interest transactions. All of these transactions are exempt from the prohibited transactions rules.

 

14


Table of Contents

BellSouth Savings and Security Plan

Notes to Financial Statements (Continued)

(Dollars in Thousands)

 

NOTE 6. TAX STATUS

The Plan has received a determination letter from the Internal Revenue Service (IRS) dated June 4, 2015, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is exempt from taxation. Subsequent to this determination by the IRS, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The plan administrator has indicated that it will take the necessary steps, if any, to bring the Plan’s operations into compliance with the Code.

Accounting principles generally accepted in the United States require Plan management to evaluate uncertain tax positions taken by the Plan. The financial statement effects of a tax position are recognized when the position is more likely than not, based on the technical merits, to be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2018, there were no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.

NOTE 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:

 

     2018      2017  

Net Assets Available for Benefits per the financial statements

   $ 2,169,596      $ 2,444,179  

Distributions payable to participants

     (368      (524
  

 

 

    

 

 

 

Net Assets Available for Benefits per the Form 5500

   $ 2,169,228      $ 2,443,655  
  

 

 

    

 

 

 

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. The following is a reconciliation of distributions to participants per the financial statements to the Form 5500 for the year ended December 31, 2018:

 

Distributions to participants per the financial statements

   $ 213,789  

Distributions payable to participants at December 31, 2017

     (524

Distributions payable to participants at December 31, 2018

     368  
  

 

 

 

Distributions to participants per the Form 5500

   $ 213,633  
  

 

 

 

 

15


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  
Indexed Stock Fund      

NORTHERN TRUST S&P 500 INDEX STOCK FUND

  

COMMON/COLLECTIVE TRUST

FUND: 16,271 UNITS

     $142,422  

BLACKROCK RUSSELL 1000 INDEX FUND

  

COMMON/COLLECTIVE TRUST

FUND: 5,888,991 UNITS

     144,289  

EXTENDED EQUITY MARKET FUND F

  

COMMON/COLLECTIVE TRUST

FUND: 59,348 UNITS

     3,515  
     

 

 

 

Total Indexed Stock Fund

        290,226  
     

 

 

 
Balanced Fund      

* DREYFUS GOVERNMENT CASH MANAGEMENT FUND

  

REGISTERED INVESTMENT

COMPANY: 2,716,274 UNITS

     2,716  

US TREASURY BILL

   0.000% 01/31/2019 DD 02/01/18      297  

US TREASURY BILL

   0.000% 02/28/2019 DD 03/01//18      299  

US TREASURY BILL

   0.000% 04/25/2019 DD 04/26/18      298  

NORTHERN TRUST QM AGGREGATE BOND INDEX FUND

  

COMMON/COLLECTIVE TRUST

FUND: 43,470 UNITS

     23,355  

NORTHERN TRUST S&P 500 INDEX STOCK FUND

  

COMMON/COLLECTIVE TRUST

FUND: 4,245 UNITS

     37,156  

FUTURES CONTRACT

  

US 10YR TREAS NTS FUTURE (CBT)

EXP MAR 19

     39  

FUTURES CONTRACT

  

S&P 500 EMINI INDEX FUT (CME)

EXP MAR 19

     23  

*BNY MELLON CASH RESERVES

   0.100% 12/31/20149 DD 06/26/97      2,188  
     

 

 

 

Total Balanced Fund

        66,371  
     

 

 

 
Registered Investment Companies      

T ROWE PRICE MID-CAP GROWTH FUND

  

REGISTERED INVESTMENT

COMPANY: 5,441,822 UNITS

     262,786  

DFA U.S. SMALL CAP VALUE PORTFOLIO

  

REGISTERED INVESTMENT

COMPANY: 3,908,671 UNITS

     117,260  

DFA U.S. LARGE CAP VALUE PORTFOLIO II

  

REGISTERED INVESTMENT

COMPANY: 9,206,092 UNITS

     136,719  
     

 

 

 

Total Registered Investment Companies

        516,765  
     

 

 

 
LifePath Funds      

LIFEPATH 2050 FUND

  

COMMON/COLLECTIVE TRUST

FUND: 536,473 UNITS

     8,422  

LIFEPATH 2040 FUND

  

COMMON/COLLECTIVE TRUST

FUND: 2,604,029 UNITS

     53,924  

LIFEPATH 2030 FUND

  

COMMON/COLLECTIVE TRUST

FUND: 4,744,694 UNITS

     95,549  

 

16


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  

LIFEPATH 2020 FUND

  

COMMON/COLLECTIVE TRUST

FUND: 3,633,110 UNITS

     69,928  

LIFEPATH RETIREMENT FUND

  

COMMON/COLLECTIVE TRUST

FUND: 1533,073 UNITS

     28,932  
     

 

 

 

Total LifePath Age-Based Retirement Funds

        256,755  
     

 

 

 
AT&T Shares Fund      

* AT&T COMMON STOCK

   10,751,695 SHARES      306,853  

* DREYFUS GOVERNMENT CASH MANAGEMENT FUND

  

REGISTERED INVESTMENT

COMPANY:3,360,153 UNITS

     3,360  
     

 

 

 

Total AT&T Shares Fund

        310,213  
     

 

 

 
Bond Fund      

SLH PROXY LONG EXPOSURE

   SLHOPNTA4      13  

CITIGROUP GLOBAL REV REPO

   2.950% 01/02/2019 DD 12/31/18      13,900  

* DREYFUS GOVT CAS MGMT INST 289

   VAR RT 12/31/2075 DD 06/03/97      339  

ABBVIE INC

   4.500% 05/14/2035 DD 05/14/15      185  

ABBVIE INC

   4.700% 05/14/2045 DD 05/14/15      91  

ALLY AUTO RECEIVABLES TRU 4 A2

   1.590% 04/15/2020 DD 08/23/17      94  

AMERICAN INTERNATIONAL GROUP I

   4.875% 06/01/2022 DD 05/24/12      726  

AMERICAN MUNI PWR-OHIO INC OH

   6.449% 02/15/2044 DD 12/09/09      1,284  

AMERICAN WATER CAPITAL CORP

   3.400% 03/01/2025 DD 08/14/14      296  

AMGEN INC

   3.125% 05/01/2025 DD 05/01/15      861  

ARROW ELECTRONICS INC

   3.250% 09/08/2024 DD 09/08/17      279  

ASSET BACKED SECURITIES HE4 M1

   VAR RT 08/15/2033 DD 08/06/03      93  

AVIATION CAPITAL GROUP LL 144A

   4.125% 08/01/2025 DD 08/01/18      97  

AVIATION CAPITAL GROUP LL 144A

   VAR RT 06/01/2021 DD 12/03/18      100  

BANC OF AMERICA FUNDING 2 D A1

   VAR RT 05/25/2035 DD 06/01/05      31  

BANK OF AMERICA CORP

   VAR RT 03/05/2024 DD 03/05/18      97  

BANK OF AMERICA CORP

   VAR RT 03/05/2024 DD 03/05/18      593  

BANK OF AMERICA CORP

   VAR RT 07/23/2024 DD 07/23/18      299  

BEAR STEARNS ARM TRUST 11 1A2

   VAR RT 02/25/2033 DD 12/01/02      2  

BEAR STEARNS ARM TRUST 12 13A1

   VAR RT 02/25/2036 DD 12/01/05      16  

BMW US CAPITAL LLC 144A

   VAR RT 08/13/2021 DD 08/14/18      297  

BOSTON SCIENTIFIC CORP

   3.850% 05/15/2025 DD 05/12/15      295  

BROADCOM CORP / BROADCOM CAYMA

   3.000% 01/15/2022 DD 01/15/18      96  

BROADCOM CORP / BROADCOM CAYMA

   3.625% 01/15/2024 DD 01/15/18      284  

CD 2018-CD7 MORTGAGE T CD7 ASB

   4.213% 08/15/2051 DD 08/01/18      314  

CHARTER COMMUNICATIONS OPERATI

   VAR RT 02/01/2024 DD 07/03/18      197  

CHASE ISSUANCE TRUST A1 A

   VAR RT 01/15/2022 DD 02/06/17      200  

CHICAGO IL TRANSIT AUTH SALES

   6.899% 12/01/2040 DD 08/06/08      128  

 

17


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  

CITIBANK NA

   VAR RT 07/23/2021 DD 07/23/18      396  

CITIGROUP COMMERCIAL GC35 AAB

   3.608% 11/10/2048 DD 12/01/15      913  

CITIGROUP INC

   VAR RT 04/23/2029 DD 04/23/18      389  

COMMIT TO PUR FHLMC GOLD SFM

   4.000% 01/01/2049 DD 01/01/19      2,447  

COMMIT TO PUR FNMA SF MTG

   3.000% 02/01/2049 DD 02/01/19      3,117  

COMMIT TO PUR FNMA SF MTG

   3.500% 01/01/2049 DD 01/01/19      4,199  

COMMIT TO PUR FNMA SF MTG

   4.000% 01/01/2049 DD 01/01/19      10,194  

COMMIT TO PUR FNMA SF MTG

   4.000% 02/01/2049 DD 02/01/19      611  

CONAGRA BRANDS INC

   VAR RT 10/22/2020 DD 10/22/18      100  

CONSOLIDATED EDISON CO OF NEW

   VAR RT 06/25/2021 DD 06/26/18      99  

CONSTELLATION BRANDS INC

   2.650% 11/07/2022 DD 11/07/17      96  

CONTINENTAL AIRLINES 2012-1 CL

   4.150% 10/11/2025 DD 03/22/12      145  

CVS HEALTH CORP

   4.300% 03/25/2028 DD 03/09/18      98  

CVS HEALTH CORP

   5.050% 03/25/2048 DD 03/09/18      146  

DELL INTERNATIONAL LLC / 144A

   6.020% 06/15/2026 DD 06/01/16      301  

DIGITAL REALTY TRUST LP

   4.450% 07/15/2028 DD 06/21/18      199  

DISCOVER CARD EXECUTION A1 A1

   VAR RT 07/15/2021 DD 01/27/14      500  

DUKE ENERGY CAROLINAS LLC

   3.750% 06/01/2045 DD 03/12/15      829  

ENTERGY ARKANSAS LLC

   3.500% 04/01/2026 DD 01/08/16      298  

FHLMC MULTICLASS MTG 3626 ME

   5.000% 01/15/2040 DD 01/01/10      21  

FHLMC MULTICLASS MTG K156 A1

   3.700% 05/25/2030 DD 08/01/18      206  

FLORIDA POWER & LIGHT CO

   4.125% 02/01/2042 DD 12/13/11      504  

FNMA    POOL #0915042

   5.500% 04/01/2022 DD 04/01/07      1  

FNMA    POOL #0AB2130

   3.500% 01/01/2026 DD 12/01/10      13  

FNMA    POOL #0AE0676

   3.500% 01/01/2026 DD 12/01/10      20  

FNMA    POOL #0AE7060

   3.500% 12/01/2025 DD 11/01/10      13  

FNMA    POOL #0AL2617

   6.000% 10/01/2040 DD 11/01/12      166  

FNMA    POOL #0AM0359

   2.310% 08/01/2022 DD 08/01/12      99  

FNMA    POOL #0AS1338

   5.000% 12/01/2043 DD 11/01/13      429  

FNMA    POOL #0AS2741

   5.000% 06/01/2044 DD 05/01/14      335  

FNMA    POOL #0AV5751

   3.500% 04/01/2029 DD 04/01/14      11  

FNMA    POOL #0AX5306

   3.500% 01/01/2027 DD 11/01/14      1,197  

FNMA    POOL #0AZ4023

   3.500% 06/01/2030 DD 06/01/15      21  

FNMA    POOL #0BM2007

   4.000% 09/01/2048 DD 08/01/18      300  

FNMA    POOL #0MA2161

   3.500% 01/01/2030 DD 12/01/14      23  

FNMA    POOL #0MA3443

   4.000% 07/01/2048 DD 07/01/18      4,015  

FNMA GTD REMIC P/T 03-25 KP

   5.000% 04/25/2033 DD 03/01/03      89  

FNMA GTD REMIC P/T 03-W1 1A1

   VAR RT 12/25/2042 DD 01/01/03      28  

FNT MORTGAGE-BACKED PASS 3 1A1

   6.750% 08/21/2031 DD 07/01/01      0  

FORD MOTOR CREDIT CO LLC

   3.664% 09/08/2024 DD 09/08/14      179  

FORD MOTOR CREDIT CO LLC

   3.157% 08/04/2020 DD 08/04/15      196  

FORD MOTOR CREDIT CO LLC

   2.343% 11/02/2020 DD 11/02/17      192  

GENERAL ELECTRIC CO

   4.125% 10/09/2042 DD 10/09/12      391  

 

18


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  

GENERAL MOTORS FINANCIAL CO IN

   3.150% 06/30/2022 DD 06/30/17      382  

GM FINANCIAL AUTOMOBILE 2 A2B

   VAR RT 01/21/2020 DD 06/14/17      120  

GNMA    POOL #0705997

   5.000% 01/15/2039 DD 01/01/09      67  

GNMA    POOL #0782523

   5.000% 11/15/2035 DD 12/01/08      61  

GNMA    POOL #0AE7708

   4.000% 08/15/2043 DD 08/01/13      16  

GNMA    POOL #0AL0766

   3.500% 01/15/2045 DD 01/01/15      289  

GNMA    POOL #0AL5269

   3.500% 02/15/2045 DD 02/01/15      570  

GNMA    POOL #0AN4392

   4.000% 06/15/2045 DD 06/01/15      865  

GNMA GTD REMIC P/T 12-H08 FC

   VAR RT 04/20/2062 DD 04/20/12      208  

GNMA GTD REMIC P/T 15-H08 FB

   VAR RT 03/20/2065 DD 03/20/15      545  

GNMA GTD REMIC P/T 16-H11 F

   VAR RT 05/20/2066 DD 05/20/16      268  

GNMA GTD REMIC P/T 16-H23 FD

   VAR RT 10/20/2066 DD 10/20/16      97  

GNMA GTD REMIC P/T 17-H14 FE

   VAR RT 06/20/2067 DD 06/20/17      578  

GOLDMAN SACHS GROUP INC/THE

   3.850% 07/08/2024 DD 07/08/14      782  

GS MORTGAGE SECURITIE GC26 AAB

   3.365% 11/10/2047 DD 12/01/14      906  

GSR MORTGAGE LOAN TRUS AR6 1A1

   VAR RT 09/25/2035 DD 09/01/05      73  

HARLEY-DAVIDSON FINANCIAL 144A

   VAR RT 03/02/2021 DD 11/28/18      100  

HCA INC

   6.500% 02/15/2020 DD 08/01/11      103  

HOST HOTELS & RESORTS LP

   4.000% 06/15/2025 DD 05/15/15      583  

INTERNATIONAL FINANCE CORP

   2.125% 04/07/2026 DD 04/07/16      671  

INTERNATIONAL LEASE FINANCE CO

   8.625% 01/15/2022 DD 12/22/11      111  

JOHN DEERE CAPITAL CORP

   VAR RT 09/10/2021 DD 09/10/18      297  

JPMBB COMMERCIAL MORTG C31 ASB

   3.540% 08/15/2048 DD 08/01/15      906  

JPMBB COMMERCIAL MORTG C32 ASB

   3.358% 11/15/2048 DD 10/01/15      900  

JPMBB COMMERCIAL MORTG C33 ASB

   3.562% 12/15/2048 DD 11/01/15      504  

JPMDB COMMERCIAL MORTGA C2 ASB

   2.954% 06/15/2049 DD 05/01/16      392  

JPMORGAN CHASE & CO

   VAR RT 03/09/2021 DD 03/09/17      100  

JPMORGAN CHASE & CO

   VAR RT 07/23/2024 DD 07/23/18      586  

KRAFT HEINZ FOODS CO

   3.950% 07/15/2025 DD 07/15/16      387  

MERRILL LYNCH MORTGAGE IN E A1

   VAR RT 11/25/2029 DD 09/23/04      45  

MICROSOFT CORP

   4.000% 02/12/2055 DD 02/12/15      786  

MIDAMERICAN ENERGY CO

   4.400% 10/15/2044 DD 04/03/14      412  

MORGAN STANLEY

   3.875% 04/29/2024 DD 04/28/14      100  

MORGAN STANLEY

   3.700% 10/23/2024 DD 10/23/14      983  

MORGAN STANLEY CAPITAL H3 ASB

   4.120% 07/15/2051 DD 07/01/18      209  

MORGAN STANLEY MORTGA 11AR 1A1

   VAR RT 01/25/2035 DD 12/29/04      27  

NAVIENT STUDENT LOA EA A1 144A

   3.430% 12/15/2059 DD 11/15/18      301  

NELNET STUDENT LOAN TRUST 3 A4

   VAR RT 11/25/2024 DD 04/24/08      275  

NEW YORK CITY NY TRANSITIONAL

   5.750% 02/01/2035 DD 03/03/10      543  

NEW YORK CITY NY TRANSITIONAL

   5.767% 08/01/2036 DD 10/22/09      836  

NEW YORK ST DORM AUTH ST PERSO

   5.289% 03/15/2033 DD 10/14/10      457  

NISSAN AUTO LEASE TRUST A A2B

   VAR RT 09/16/2019 DD 06/28/17      140  

PENNSYLVANIA HIGHER EDUCA 2 A3

   VAR RT 10/25/2036 DD 11/17/06      224  

 

19


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  

PHILIP MORRIS INTERNATIONAL IN

   3.250% 11/10/2024 DD 11/10/14      878  

PLAINS ALL AMERICAN PIPELINE L

   4.650% 10/15/2025 DD 08/24/15      393  

PNC BANK NA

   1.950% 03/04/2019 DD 03/04/16      998  

PRIME MORTGAGE TRUST 2 CL1 1A2

   VAR RT 02/25/2034 DD 01/25/04      8  

PRINCETON UNIVERSITY

   5.700% 03/01/2039 DD 01/21/09      382  

PUBLIC PWR GENERATION AGY NE R

   7.242% 01/01/2041 DD 07/16/09      131  

REYNOLDS AMERICAN INC

   4.000% 06/12/2022 DD 06/12/15      198  

SABINE PASS LIQUEFACTION LLC

   VAR RT 02/01/2021 DD 02/01/14      103  

SANTANDER HOLDINGS USA INC

   3.400% 01/18/2023 DD 12/18/17      384  

SBA GTD PARTN CTFS 2003-20C 1

   4.500% 03/01/2023 DD 03/12/03      489  

SBA GTD PARTN CTFS 2005-20B 1

   4.625% 02/01/2025 DD 02/16/05      305  

SBA GTD PARTN CTFS 2008-20D 1

   5.370% 04/01/2028 DD 04/16/08      281  

SBA GTD PARTN CTFS 2008-20E 1

   5.490% 05/01/2028 DD 05/14/08      270  

SBA GTD PARTN CTFS 2008-20F 1

   5.680% 06/01/2028 DD 06/11/08      119  

SBA GTD PARTN CTFS 2009-20A 1

   5.720% 01/01/2029 DD 01/14/09      38  

SIGMA ERISA LIQUIDATING POOL

   VAR RT 12/31/2049 DD 05/01/01      0  

SLM STUDENT LOAN TRUST 2 9 A7A

   VAR RT 01/25/2041 DD 01/25/18      397  

SLM STUDENT LOAN TRUST 20 4 A3

   VAR RT 01/25/2027 DD 05/19/05      197  

SLM STUDENT LOAN TRUST 200 9 A

   VAR RT 04/25/2023 DD 08/28/08      182  

SMB PRIVATE EDUCATIO C A1 144A

   VAR RT 09/15/2025 DD 09/19/18      166  

SOFI CONSUMER LOAN P 3 A1 144A

   3.200% 08/25/2027 DD 08/07/18      225  

SOUTH DAKOTA ST EDUCTNL ENHANC

   3.539% 06/01/2022 DD 03/14/13      2,007  

SOUTHERN CALIFORNIA GAS CO

   4.450% 03/15/2044 DD 03/13/14      201  

STRUCTURED ADJUSTABLE R 12 7A1

   VAR RT 09/25/2034 DD 08/01/04      150  

STRUCTURED ASSET INVESTME 8 M1

   VAR RT 09/25/2034 DD 08/25/04      101  

STRUCTURED ASSET MORTG AR4 2A1

   VAR RT 12/19/2034 DD 07/30/04      36  

THORNBURG MORTGAGE SECUR 1 I1A

   VAR RT 03/25/2044 DD 03/31/04      347  

U S TREASURY BOND

   2.875% 11/15/2046 DD 11/15/16      97  

U S TREASURY BOND

   2.750% 08/15/2047 DD 08/15/17      1,184  

U S TREASURY BOND

   3.000% 02/15/2048 DD 02/15/18      353  

U S TREASURY BOND

   3.125% 05/15/2048 DD 05/15/18      153  

U S TREASURY BOND

   3.000% 08/15/2048 DD 08/15/18      259  

U S TREASURY NOTE

   2.625% 12/31/2025 DD 12/31/18      301  

UBS COMMERCIAL MORTGAG C11 ASB

   4.119% 06/15/2051 DD 07/01/18      209  

UBS COMMERCIAL MORTGAG C13 ASB

   4.241% 10/15/2051 DD 10/01/18      211  

UNIV OF CALIFORNIA CA REVENUES

   6.270% 05/15/2031 DD 08/27/09      304  

US TREAS-CPI INFLAT

   1.375% 02/15/2044 DD 02/15/14      224  

US TREAS-CPI INFLAT

   1.000% 02/15/2046 DD 02/15/16      506  

VERIZON COMMUNICATIONS INC

   4.150% 03/15/2024 DD 03/17/14      1,021  

VISA INC

   3.150% 12/14/2025 DD 12/14/15      393  

WALGREEN CO

   3.100% 09/15/2022 DD 09/13/12      293  

WELLS FARGO & CO

   3.000% 02/19/2025 DD 02/19/15      283  

WELLS FARGO & CO

   2.625% 07/22/2022 DD 07/24/17      289  

 

20


Table of Contents

BELLSOUTH SAVINGS AND SECURITY PLAN

EIN 58-1533433, PLAN NO. 004

SCHEDULE H, LINE 4(i) - SCHEDULE OF ASSETS (HELD AT END OF YEAR)

December 31, 2018

(Dollars in Thousands)

 

Identity of Issue

  

Description of Investment

   Current Value  

WELLS FARGO BANK NA

   VAR RT 03/25/2020 DD 09/25/18      249  

WELLS FARGO COMMERCIA NXS4 ASB

   3.522% 12/15/2048 DD 12/01/15      912  

WELLS FARGO COMMERCIAL C45 ASB

   4.147% 06/15/2051 DD 07/01/18      313  

WELLTOWER INC

   4.250% 04/15/2028 DD 04/10/18      396  
     

 

 

 

Total Bond Fund

        88,474  
     

 

 

 

International Stock

     

INTL STOCK INDEX

  

BGI MSCI ACWI EX-US

INDEX SUPERFUND

     45,420  

Interest Bearing Cash

     

* DREYFUS GOVERNMENT CASH MANAGEMENT FUND

        945  

* Notes Receivable from Participants

   4.25% - 10.50%      59,874  
     

 

 

 

Total

        $1,635,043  
     

 

 

 

* Party-in-Interest

     

 

21


Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed by the undersigned thereunto duly authorized.

 

BellSouth Savings and Security Plan

By: AT&T Services, Inc.,

Plan Administrator for the Foregoing Plan

By  

/s/ Debra L. Dial

  Debra L. Dial
  Senior Vice President and Controller

Date: June 28, 2019

 


Table of Contents

EXHIBIT INDEX

Exhibit identified below, Exhibits 23 is filed herein as exhibit hereto.

 

Exhibit

Number

    
23
   Consent of Independent Registered Public Accounting Firm

 

Exhibit 23

Form 11-K for 2018

File No. 1-8610

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement (Form S-8, No. 333-189789) of our report dated June 28, 2019, relating to the statements of net assets available for benefits as of December 31, 2018 and 2017, the statement of changes in net assets available for benefits for the year ended December 31, 2018, and the supplemental schedule of assets (held at end of year) as of December 31, 2018, of the BellSouth Savings and Security Plan, which appears in this Annual Report on Form 11-K of the BellSouth Savings and Security Plan for the year ended December 31, 2018.

 

/s/ BKD, LLP

San Antonio, Texas

June 28, 2019

Categories

SEC Filings