11-K 1 a11-k.txt FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------- FORM 11-K ------------- (Mark One) /x/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the years ended December 31, 1999 and 1998 OR / / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 1-8606 ------------- Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic North ------------- Bell Atlantic Corporation 1095 Avenue of the Americas, New York, New York 10036 BELL ATLANTIC SAVINGS and SECURITY PLAN for ASSOCIATES OF BELL ATLANTIC NORTH As of December 31, 1999 and 1998
TABLE OF CONTENTS Independent Auditors' Report 1 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1999 and 1998 2-3 Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 1999 and 1998 4-5 Notes to Financial Statements 6-21 Signature Page 22
INDEPENDENT AUDITORS' REPORT To the Corporate Employees' Benefits Committee of Bell Atlantic Corporation: We have audited the accompanying Statements of Net Assets Available for Benefits of the Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic North (the "Plan") as of December 31, 1999 and 1998, and the related Statements of Changes in Net Assets Available for Benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic North as of December 31, 1999 and 1998, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. /s/ Mitchell & Titus, LLP New York, New York June 9, 2000 1 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1999 (DOLLARS IN THOUSANDS)
FUND INFORMATION -------------------------------------------------------------------------- BELL PASSIVE ATLANTIC U.S EQUITY SHARES TELECOMMUNICATIONS INDEX INCOME FUND FUND FUND FUND ----------------- ------------------ ------------ -------------- ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ 2,670,119 $ 264,650 $ 425,902 $ 400,046 Temporary cash investments -- -- 639 -- ----------------- ----------------- ------------ -------------- Total investments 2,670,119 264,650 426,541 400,046 Receivables: Loans to participants -- -- -- -- Dividends and interest receivable -- -- 1 -- ----------------- ------------------ ------------ -------------- Total receivables -- -- 1 -- ----------------- ----------------- ------------ -------------- Net assets available for benefits (Notes 1 and 2) $ 2,670,119 $ 264,650 $ 426,542 $ 400,046 ================== =================== ============ ============== FUND INFORMATION -------------------------------------------------------------------------- ACTIVE ACTIVE U.S. GLOBAL INTERNATIONAL LOAN U.S. EQUITY BALANCED BALANCED EQUITY FUND FUND FUND FUND FUND -------------- ----------- -------- -------- ------------- ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ -- $ 63,336 $ 24,615 $ 22,454 $ 66,496 Temporary cash investments -- 95 37 34 100 -------------- ----------- --------- -------- ------------- Total investments -- 63,431 24,652 22,488 66,596 Receivables: Loans to participants 153,844 -- -- -- -- Dividends and interest receivable -- -- -- -- -- -------------- ----------- --------- -------- ------------- Total receivables 153,844 -- -- -- -- -------------- ----------- --------- -------- ------------- Net assets available for benefits (Notes 1 and 2) $ 153,844 $ 63,431 $ 24,652 $ 22,488 $ 66,596 ============== =========== ========= ======== ============= FUND INFORMATION ----------------------------------------------------------------------------- GOVERNMENT PASSIVE U.S. SMALL U.S. BOND MONEY INTERNATIONAL CAPITALIZATION MARKET INDEX MARKET EQUITY INDEX FUND FUND FUND FUND TOTAL ----------------- -------------- -------------- ------------- ---------- ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ 46,683 $ 10,072 $ 6,955 $ 14,556 $ 4,015,884 Temporary cash investments 70 -- - -- 975 --------------- ------------ ------------- ------------- ----------- Total investments 46,753 10,072 6,955 14,556 4,016,859 Receivables: Loans to participants -- -- -- -- 153,844 Dividends and interest receivable -- -- -- -- 1 --------------- ------------ ------------- ------------- ----------- Total receivables -- -- -- -- 153,845 --------------- ------------ ------------- ---------------- ----------- Net assets available for benefits (Notes 1 and 2) $ 46,753 $ 10,072 $ 6,955 $ 14,556 $ 4,170,704 =============== ============= ============= ============== ===========
See notes to financial statements. 2 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 (DOLLARS IN THOUSANDS)
FUND INFORMATION --------------------------------------------------------------------------- BELL PASSIVE U.S. ATLANTIC EQUITY SHARES TELECOMMUNICATIONS INDEX INCOME LOAN FUND FUND FUND FUND FUND -------------- -------------------- ------------- ----------- ------------ ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ 2,167,098 $ 226,834 $ 386,580 $ 440,716 $ -- Temporary cash investments -- -- 89 -- -- -------------- -------------------- ------------- ----------- ------------ Total investments 2,167,098 226,834 386,669 440,716 -- Receivables: Participants' contributions 2,682 -- 855 569 -- Loan repayments 646 -- 191 145 (1,101) Loans to participants -- -- -- -- 153,037 Interfund 6,895 (3) (191) (5,989) -- Dividends and interest receivable -- -- 1 -- -- -------------- -------------------- ------------- ----------- ------------ Total receivables 10,223 (3) 856 (5,275) 151,936 -------------- -------------------- ------------- ----------- ------------ Net assets available for benefits (Notes 1 and 2) $ 2,177,321 $ 226,831 $ 387,525 $ 435,441 $ 151,936 ============== ===================== ============= =========== ============ FUND INFORMATION ------------------------------------------------------------------------------ ACTIVE ACTIVE U.S. U.S. GLOBAL INTERNATIONAL U.S. SMALL EQUITY BALANCED BALANCED EQUITY CAPITALIZATION FUND FUND FUND FUND FUND -------------------------- ------------ ----------------- ---------------- ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ 69,281 29,275 $ 22,909 $ 13,478 $ 39,887 Temporary cash investments 16 7 5 3 9 -------------- ----------- ------------ ----------------- ------------------- Total investments 69,297 29,282 22,914 13,481 39,896 Receivables: Participants' contributions 195 76 64 46 126 Loan repayments 38 13 12 9 24 Loans to participants -- -- -- -- -- Interfund 21 (114) (37) (44) 431 Dividends and interest receivable -- -- -- -- -- -------------- ----------- ------------ ----------------- ------------------- Total receivables 254 (25) 39 11 581 -------------- ----------- ------------ ----------------- ------------------- Net assets available for benefits (Notes 1 and 2) $ 69,551 29,257 $ 22,953 $ 13,492 $ 40,477 ============== =========== ============ ================= =================== FUND INFORMATION ----------------------------- -------------- ---------------- GOVERNMENT PASSIVE U.S. BOND MONEY INTERNATIONAL MARKET INDEX MARKET EQUITY INDEX FUND FUND FUND TOTAL ------------- ------------- -------------- ---------------- ASSETS: Investments at market (see Notes 2 and 3): Allocated Share of Master Trust net assets $ 20,337 $ 7,403 $ 6,049 $ 3,429,847 Temporary cash investments -- -- -- 129 ------------- ------------- --------------- ---------------- Total investments 20,337 7,403 6,049 3,429,976 Receivables: Participants' contributions 62 22 40 4,737 Loan repayments 12 3 8 -- Loans to participants -- -- -- 153,037 Interfund (672) (446) 149 -- Dividends and interest receivable -- -- -- 1 ------------- ------------- --------------- ---------------- Total receivables (598) (421) 197 157,775 ------------- ------------- --------------- --------------- Net assets available for benefits (Notes 1 and 2) $ 19,739 $ 6,982 $ 6,246 $ 3,587,751 ============= ============= =============== ===============
See notes to financial statements. 3 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1999 (DOLLARS IN THOUSANDS)
FUND INFORMATION ------------------------------------------------------------------------ BELL PASSIVE U.S. ATLANTIC EQUITY SHARES TELECOMMUNICATIONS INDEX INCOME FUND FUND FUND FUND ---------------- ----------------- ----------------- ----------------- Additions: Allotments, Contributions and Transfers: Employee allotments $ 83,609 $ - $ 47,667 $ 26,231 Interfund transfers 120,342 (3,776) (58,039) (44,526) Plan transfers-in 3,002 144 2,124 930 Rollover contributions 797 25 277 54 Employing company contributions (Note 1) 83,208 - - - Loans to participants (44,047) (1,715) (17,868) (13,718) Loan repayments 41,299 - 13,606 8,372 ---------------- ----------------- ----------------- ----------------- Total allotments, contributions, and transfers 288,210 (5,322) (12,233) (22,657) Investment income: Dividends/Interest 63,672 - - - Allocated share of Master Trust investment activities (Note 3) 346,469 57,922 78,339 25,311 ---------------- ----------------- ----------------- ----------------- Total additions (subtractions) 698,351 52,600 66,106 2,654 ---------------- ----------------- ----------------- ----------------- Deductions: Administrative expenses 1,664 169 285 505 Plan transfers-out 16,986 1,036 4,237 1,981 Distributions to participants 186,903 13,576 22,567 35,563 ---------------- ----------------- ----------------- ----------------- Total deductions 205,553 14,781 27,089 38,049 ---------------- ----------------- ----------------- ----------------- Net increase (decrease) 492,798 37,819 39,017 (35,395) Net assets available for benefits: Beginning of year 2,177,321 226,831 387,525 435,441 ---------------- ----------------- ----------------- ----------------- End of year (Notes 1 and 2) $ 2,670,119 $ 264,650 $ 426,542 $ 400,046 ================ ================= ================= ================= FUND INFORMATION --------------------------------------------------------------------------------- ACTIVE ACTIVE U.S. GLOBAL INTERNATIONAL LOAN U.S. EQUITY BALANCED BALANCED EQUITY FUND FUND FUND FUND FUND --------------- --------------- ------------- -------------- -------------- Additions: Allotments, Contributions and Transfers: Employee allotments $ - $ 9,592 $ 3,785 $ 3,087 $ 4,835 Interfund transfers - (19,926) (8,409) (5,153) 34,895 Plan transfers-in - 302 94 82 77 Rollover contributions - 102 91 25 44 Employing company contributions (Note 1) - - - - - Loans to participants 86,378 (2,708) (853) (891) (1,337) Loan repayments (71,590) 2,424 818 810 1,326 --------------- --------------- ------------- -------------- -------------- Total allotments, contributions, and transfers 14,788 (10,214) (4,474) (2,040) 39,840 Investment income: Dividends/Interest - - - - - Allocated share of Master Trust investment activities (Note 3) - 8,309 1,850 3,074 14,943 --------------- --------------- ------------- -------------- -------------- Total additions (subtractions) 14,788 (1,905) (2,624) 1,034 54,783 --------------- --------------- ------------- -------------- -------------- Deductions: Administrative expenses - 257 57 103 190 Plan transfers-out - 547 142 116 287 Distributions to participants 12,880 3,411 1,782 1,280 1,202 --------------- --------------- ------------- -------------- -------------- Total deductions 12,880 4,215 1,981 1,499 1,679 --------------- --------------- ------------- -------------- -------------- Net increase (decrease) 1,908 (6,120) (4,605) (465) 53,104 Net assets available for benefits: Beginning of year 151,936 69,551 29,257 22,953 13,492 --------------- --------------- ------------- -------------- -------------- End of year (Notes 1 and 2) $ 153,844 $ 63,431 $ 24,652 $ 22,488 $ 66,596 =============== =============== ============= ============== ============== FUND INFORMATION -------------------------------------------------------------------------------- GOVERNMENT PASSIVE U.S. SMALL U.S. BOND MONEY INTERNATIONAL CAPITALIZATION MARKET INDEX MARKET EQUITY INDEX FUND FUND FUND FUND TOTAL ------------ --------------- -------------- --------------- -------------- Additions: Allotments, Contributions and Transfers: Employee allotments $ 5,844 $ 2,046 $ 1,374 $ 2,770 $ 190,840 Interfund transfers (8,474) (10,459) 610 2,915 - Plan transfers-in 144 37 104 29 7,069 Rollover contributions 63 64 133 50 1,725 Employing company contributions (Note 1) - - - - 83,208 Loans to participants (1,685) (622) (351) (583) - Loan repayments 1,422 522 229 762 - -------------- --------------- ------------- --------------- -------------- Total allotments, contributions, and transfers (2,686) (8,412) 2,099 5,943 282,842 Investment income: Dividends/Interest - - - - 63,672 Allocated share of Master Trust investment activities (Note 3) 11,487 (174) 362 2,953 550,845 -------------- --------------- ------------- --------------- -------------- Total additions (subtractions) 8,801 (8,586) 2,461 8,896 897,359 -------------- --------------- ------------- --------------- -------------- Deductions: Administrative expenses 281 19 9 20 3,559 Plan transfers-out 306 104 91 79 25,912 Distributions to participants 1,938 958 2,388 487 284,935 -------------- --------------- ------------- --------------- -------------- Total deductions 2,525 1,081 2,488 586 314,406 -------------- --------------- ------------- --------------- -------------- Net increase (decrease) 6,276 (9,667) (27) 8,310 582,953 Net assets available for benefits: Beginning of year 40,477 19,739 6,982 6,246 3,587,751 -------------- --------------- ------------- --------------- -------------- End of year (Notes 1 and 2) $ 46,753 $ 10,072 $ 6,955 $ 14,556 $ 4,170,704 ============== =============== ============= =============== ==============
See notes to financial statements. 4 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1998 (DOLLARS IN THOUSANDS)
FUND INFORMATION ------------------------------------------------------------------------------- BELL PASSIVE U.S. ATLANTIC EQUITY SHARES TELECOMMUNICATIONS INDEX INCOME LOAN FUND FUND FUND FUND FUND --------------- ------------------ -------------- ------------- ------------ Additions: Allotments, Contributions and Transfers: Employee allotments $ 65,722 $ (8) $ 47,807 $ 32,276 $ - Interfund transfers 36,526 (8,182) (15,675) (18,160) - Plan transfers-in - - 95 - - Rollover contributions 552 - 297 155 - Employing company contributions (Note 166,254 - - - - Loans to participants (42,155) (1,895) (14,328) (14,743) 80,429 Loan repayments 37,966 - 7,538 6,598 (57,937) --------------- ------------------ -------------- ------------- ------------ Total allotments, contributions, and transfers 164,865 (10,085) 25,734 6,126 22,492 Investment income: Dividends/Interest 62,732 7,762 - - - Allocated share of Master Trust investment activities (Note 3) 292,977 73,137 83,819 25,873 - --------------- ------------------ -------------- ------------- ------------ Total additions 520,574 70,814 109,553 31,999 22,492 --------------- ------------------ -------------- ------------- ------------ Deductions: Administrative expenses 269 49 42 207 - Plan transfers-out 13,843 577 1,850 2,240 - Distributions to participants 167,231 13,437 24,540 40,470 - --------------- ------------------ -------------- ------------- ------------ Total deductions 181,343 14,063 26,432 42,917 - --------------- ------------------ -------------- ------------- ------------ Net increase (decrease) 339,231 56,751 83,121 (10,918) 22,492 Net assets available for benefits: Beginning of year 1,838,090 170,080 304,404 446,359 129,444 --------------- ------------------ -------------- ------------- ------------ End of year (Notes 1 and 2) $ 2,177,321 $ 226,831 $ 387,525 $ 435,441 $ 151,936 =============== ================== ============== ============= ============ FUND INFORMATION ---------------------------------------------------------------------------- ACTIVE ACTIVE U.S. GLOBAL INTERNATIONAL U.S. SMALL U.S. EQUITY BALANCED BALANCED EQUITY CAPITALIZATION FUND FUND FUND FUND FUND ------------ ------------ ----------- ------------ ------------------ Additions: Allotments, Contributions and Transfers: Employee allotments $ 11,988 $ 3,803 $ 3,823 $ 2,802 $ 8,412 Interfund transfers (6,538) 1,588 (2,806) (2,959) (6,942) Plan transfers-in 51 39 34 11 59 Rollover contributions 211 100 51 27 60 Employing company contributions (Note - - - - - Loans to participants (2,687) (750) (875) (591) (1,669) Loan repayments 2,039 400 578 596 1,466 ----------- ------------ ----------- ----------- ------------------ Total allotments, contributions, and transfers 5,064 5,180 805 (114) 1,386 Investment income: Dividends/Interest - - - - - Allocated share of Master Trust investment activities (Note 3) 8,239 3,647 2,710 130 262 ------------ ------------ ----------- ------------ ------------------ Total additions 13,303 8,827 3,515 16 1,648 ------------ ------------ ----------- ------------ ------------------ Deductions: Administrative expenses 127 26 49 34 98 Plan transfers-out 413 200 153 132 230 Distributions to participants 4,976 2,350 1,729 918 2,715 ------------ ------------ ----------- ------------ ------------------ Total deductions 5,516 2,576 1,931 1,084 3,043 ------------ ------------ ----------- ------------ ----------------- Net increase (decrease) 7,787 6,251 1,584 (1,068) (1,395) Net assets available for benefits: Beginning of year 61,764 23,006 21,369 14,560 41,872 ------------ ------------ ----------- ------------ ----------------- End of year (Notes 1 and 2) $ 69,551 $ 29,257 $ 22,953 $ 13,492 $ 40,477 ============ ============ =========== ============ ================== FUND INFORMATION ------------------------------------------------------------- GOVERNMENT PASSIVE U.S. BOND MONEY INTERNATIONAL MARKET INDEX MARKET EQUITY INDEX FUND FUND FUND TOTAL --------------- ----------- -------------- ----------------- Additions: Allotments, Contributions and Transfers: Employee allotments $ 1,951 $ 569 $ 698 $ 179,843 Interfund transfers 10,832 7,237 5,079 - Plan transfers-in 4 14 33 340 Rollover contributions 85 296 23 1,857 Employing company contributions (Note -- -- -- 66,254 Loans to participants (505) (114) (117) - Loan repayments 466 104 186 - ------------- ----------- ------------ --------------- Total allotments, contributions, and transfers 12,833 8,106 5,902 248,294 Investment income: Dividends/Interest -- -- -- 70,494 Allocated share of Master Trust investment activities (Note 3) 571 156 485 492,006 ------------- ----------- ----------- --------------- Total additions 13,404 8,262 6,387 810,794 ------------- ----------- ----------- --------------- Deductions: Administrative expenses 2 3 52 958 Plan transfers-out 74 46 19 19,777 Distributions to participants 928 1,231 70 260,595 ------------- ----------- ----------- --------------- Total deductions 1,004 1,280 141 281,330 ------------- ----------- ----------- --------------- Net increase (decrease) 12,400 6,982 6,246 529,464 Net assets available for benefits: Beginning of year 7,339 -- -- 3,058,287 ------------- ----------- ------------ --------------- End of year (Notes 1 and 2) $ 19,739 $ 6,982 $ 6,246 $ 3,587,751 ============= =========== ============ ===============
See notes to financial statements. 5 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) 1. PLAN DESCRIPTION The following description of the Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic North (the "NSSP") provides only general information on the NSSP's provisions as of December 31, 1999 and 1998. Participants should refer to the Benefits Handbook, NSSP plan document and prospectus for a more complete description of the NSSP's provisions. The NSSP* was established by NYNEX Corporation on January 1, 1984 to provide a convenient way for non-salaried employees to save on a regular and long-term basis. In August 1997, Bell Atlantic Corporation merged with NYNEX Corporation (the "Merger") to form the new Bell Atlantic Corporation ("Bell Atlantic"). Effective January 1, 1998, Bell Atlantic became the NSSP plan sponsor. The NSSP is a defined contribution plan covering all regular non-salaried employees of the pre-merger NYNEX Corporation and its participating subsidiaries. Employees are eligible to make tax-deferred or after-tax contributions to the NSSP, and to receive matching employer contributions, upon completion of enrollment in the NSSP as soon as practicable following the date of hire. ALLOTMENTS AND CONTRIBUTIONS Eligible employees may authorize basic contributions of 1% to 6% of salary, as defined, and supplementary contributions up to an additional 10% of salary. For employees of Bell Atlantic and most of its participating subsidiaries, Bell Atlantic makes employer matching contributions in an amount equal to 80% of basic contributions. Such matching contributions are invested currently only in the Bell Atlantic Shares Fund. Contributions are subject to applicable rules set forth in the Internal Revenue Code (the "Code") and the regulations thereunder. Employer matching contributions are invested only in the Bell Atlantic Shares Fund until employees reach age 50, at which point they may begin to diversify the matching contributions. The NSSP provides for 100% vesting of employer matching contributions upon attaining three years of service. A terminated employee's unvested employer matching contributions are forfeited and offset against the participating companies' obligation to make subsequent contributions to the NSSP. Forfeitures were $237 and $195 in 1999 and 1998, respectively. -------------------- * Certain other capitalized terms used but not defined herein shall have their respective meanings as defined in the NSSP Prospectus. 6 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) LOANS The NSSP includes an employee loan provision authorizing participants to borrow an amount from their vested account balances in the NSSP. Loans are generally repaid by payroll deductions. The term of repayment for loans generally will not be less than six months nor more than fifteen years. Each new loan will bear interest at a rate based upon the prime rate for loans up to sixty months and prime plus one for loans sixty-one months to one hundred eighty months as published in The Wall Street Journal. TERMINATION PRIORITIES Although it has not expressed any intent to do so, Bell Atlantic has the right under the NSSP to discontinue all employer matching contributions at any time and to terminate the NSSP subject to the provisions of the Employee Retirement Income Security Act ("ERISA") of 1974, as amended. In the event of plan termination, participants would become 100% vested in their accounts. FUND OPTIONS Participants are able to invest in one or more combinations of the following funds (referred to herein individually as a "Fund" and collectively as the "Funds"): Bell Atlantic Shares Fund, Telecommunications Fund, U.S. Bond Market Index Fund, Passive U.S. Equity Index Fund, Government Money Market Fund, Income Fund, Passive International Equity Index Fund, U.S. Balanced Fund, Global Balanced Fund, Active U.S. Equity Fund, Active International Equity Fund and U.S. Small Capitalization Fund. The Bell Atlantic Shares Fund invests primarily in the common stock of Bell Atlantic. As of the date of the Merger, the NSSP's investments in the NYNEX Shares Fund were converted into shares of Bell Atlantic common stock within the Bell Atlantic Shares Fund. The Telecommunications Fund's portfolio is comprised of investments in twenty-four North American telephone utility and telecommunications companies each with a minimum market value of approximately $1 billion at the time of their inclusion in the portfolio. Effective January 1, 1998, the Telecommunications Fund was no longer open to new investments. Participants who did not elect a new investment direction had their current contributions automatically directed to the Passive U.S. Equity Index Fund. Also effective January 1, 1998, transfers of participant existing balances into the Telecommunications Fund were prohibited. Dividends, including stock dividends of the Telecommunications Fund, will be reinvested in the Fund. Participants will be allowed to move money out of the Fund at any time. The Fund is a market weighted index fund and is managed by Bell Atlantic Asset Management Company ("BAAMCO"). 7 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) Effective January 1, 1998, the Government Obligations Fund was no longer offered as a Fund selection. All balances in the Fund were automatically transferred to the U.S. Bond Market Index Fund along with any current investment directions designated to the Government Obligations Fund. To accomplish this automatic transfer, some of the Government Obligations Fund's assets were held in shorter maturity government instruments beginning in December 1997. The U.S. Bond Market Index Fund includes all U.S. Treasury, government-sponsored, mortgaged-backed, asset-backed and investment-grade corporate bonds, with at least one year maturity and at least $100 million outstanding. The Fund may use interest rate futures and various other kinds of derivatives to adjust portfolio duration or as interest rate hedges. The Fund is managed by Barclays Global Investors, N.A. On January 1, 1998 the Diversified Equity Portfolio was renamed the Passive U.S. Equity Index Fund. The Passive U.S Equity Index Fund invests in an equity index fund which is managed by BAAMCO. This Fund is principally a portfolio of common stocks and is structured and maintained with the objective of providing investment results which approximate the overall performance of the common stocks included in the Standard and Poors Composite Index of 500 stocks. On January 1, 1998 the Government Money Market Fund was newly offered to NSSP participants. The Government Money Market Fund invests in securities of the U.S. government or its agencies, obligations guaranteed or insured by the U.S. government and repurchase agreements that use these securities as collateral. The average maturity of the securities in the Fund generally will be thirty to sixty days, but may vary from one to ninety days. The Fund may use interest rate futures for cash management purposes or to adjust the average duration of the portfolio. The Fund is managed by Deutsche Asset Management. On January 1, 1998 the Interest Income Fund was renamed the Income Fund. The Income Fund, invests primarily in a diversified portfolio of guaranteed investment contracts ("GICs") issued by insurance companies. Some of the assets of the Fund are also invested in pools of asset-backed securities, corporate bonds, and obligations of the U.S. government and its agencies ("Synthetic Investment Contract"). As an integral part of the purchase of each pool of these investments, a financial institution, via a wrapper contract, agrees to pay at book value for qualified distributions (e.g. participant withdrawals) and at maturity of the contract, based on the agreed upon interest rate for the relevant time period but not in the event of a default of any security in the pool. The NSSP is exposed to credit risk in the event of nonperformance by the entities for which the contracts are placed. The NSSP seeks to minimize credit risk by diversifying among a group of GIC issuers and other financial institutions which meet certain investment criteria established by BAAMCO. These contracts guarantee (i) a fixed rate of interest for a fixed period of time or (ii) a fixed interest for 8 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) an indefinite period of time. Such interest is not guaranteed by any of the Employing Companies. The Fund is managed by BAAMCO. (For further discussion of this Fund see Note 2). On January 1, 1998 the Passive International Equity Index Fund was newly offered to NSSP participants. The Passive International Equity Index Fund has investments that mirror the MSCI-EAFE-GDP, which is an index established by Morgan Stanley Dean Witter, comprised of approximately 1,000 companies from twenty of the largest countries outside of the United States, including Japan, Germany and the United Kingdom. The weighting of each country in the index is based upon its GDP, which is a measure of domestic economic output. The Fund is managed by Barclays Global Investors, N.A. In addition to the Passive U.S. Equity Index Fund, each of the following five Funds invest in the assets of unitized investment advisor account(s) of the Bell Atlantic Master Trust ("Master Trust"), as designated by BAAMCO: U.S. Balanced Fund, Global Balanced Fund, Active U.S. Equity Fund, Active International Equity Fund, and the U.S. Small Capitalization Fund. The U.S. Balanced Fund invests primarily in domestic stocks and bonds. The fixed income portion of the Fund may invest a small portion of its assets in issues of international agencies, foreign governments, their agencies and foreign corporations. The Fund targets approximately 60% in stocks and 40% in bonds. As of December 31, 1999, BAAMCO had selected the following unitized investment advisor account(s) of the Master Trust ("Master Trust pooled accounts") for the Fund: Barrow, Hanley, Mewhinney & Strauss, Inc., Fidelity Management Trust Company, Franklin Portfolio Associates, LLC, Gardner Lewis Asset Management, L.P., Goldman Sachs Asset Management Co., Independence Investment Associates, LLC, Miller Anderson & Sherrerd, LLP, Palisade Capital Management, LLC, Provident Investment Counsel, Inc., State Street Research and Management Company, Transamerica Investment Management, LLC, and Wilshire Associates, Inc. The Global Balanced Fund invests in the world's capital markets, primarily in equity and fixed income instruments. The Fund is diversified and has representation in a variety of countries, from those of the most mature and developed nations to those still in their developmental stages (generally referred to as emerging market countries). The Fund may invest in large or small capitalization stocks. The Global Balanced Fund typically targets 75% of its investments for the domestic market and 25% for the foreign market, and approximately 70% in stocks and 30% in bonds. Emerging markets investments are targeted at 4% of the total Fund. As of December 31, 1999, BAAMCO had selected the following Master Trust pooled accounts for the Fund: Barrow, Hanley, Mewhinney & Strauss, Inc., Capital Guardian Trust Company, Fidelity Management Trust Company, Franklin Portfolio Associates, LLC, Gardner 9 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) Lewis Asset Management, L.P., Goldman Sachs Asset Management Co., Independence Investment Associates, Inc., Miller Anderson & Sherrerd, LLP, Morgan Stanley Dean Witter Investment Management, Inc., Northern Cross Investments, Ltd., Palisade Capital Management, LLC, Provident Investment Counsel, Inc., Rogge Global Partners, PLC, State Street Global Advisors, State Street Research and Management Company, Transamerica Investment Management, LLC, and Wilshire Associates, Inc. The Active U.S. Equity Fund invests primarily in domestic common stocks. As of December 31, 1999, BAAMCO had selected the following Master Trust pooled accounts for the Fund: Barrow, Hanley, Mewhinney & Strauss, Inc., Fidelity Management Trust Company, Franklin Portfolio Associates, LLC, Gardner Lewis Asset Management, L.P., Goldman Sachs Asset Management Co., Independence Investment Associates, Inc., Miller Anderson & Sherrerd, LLP, Palisade Capital Management, LLC, Provident Investment Counsel, Inc., Transamerica Investment Management, LLC, Trinity Investment Management Corporation, and Wilshire Associates, Inc. On January 1, 1998, the International Equity Fund was renamed the Active International Equity Fund. The Active International Equity Fund invests in international equity markets throughout the world, generally excluding the United States. It is well-diversified and has representation in a variety of economies, from those of the most mature and developed nations to those still in their developmental stages (generally referred to as emerging market countries). The Fund may invest in large or small capitalization stocks. It targets 80% of its investments for developed countries such as Japan, Germany and the United Kingdom and 20% for emerging markets such as Brazil, Mexico and Taiwan. As of December 31, 1999, BAAMCO had selected Capital Guardian Trust Company, Morgan Stanley Dean Witter Investment Management, Inc., Northern Cross Investments, Ltd., and State Street Global Advisors as the Master Trust pooled accounts for the Fund. The U.S. Small Capitalization Fund invests primarily in the stocks of smaller-sized domestic companies, generally with a market capitalization that is in the smallest 15% of publicly traded stocks. As of December 31, 1999, BAAMCO had selected the following as the Master Trust pooled accounts for the Fund: Columbus Circle Investors, Gardner Lewis Asset Management, L.P., Investment Counselors of Maryland, Inc., The Boston Company Asset Management, Inc., Provident Investment Counsel, Inc., and Wilshire Associates, Inc. All the assets of the NSSP are included in the Bell Atlantic Master Trust (See Note 2) for which Mellon Bank, N.A., is the trustee. 10 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) Wellspring Resources, LLC, was the recordkeeper for the NSSP through June 30, 1998. As of July 1, 1998, the Kwasha Group of PricewaterhouseCoopers, LLP, became the recordkeeper for the NSSP. 2. ACCOUNTING POLICIES INVESTMENTS Effective January 1, 1998, the NYNEX Master Trust was renamed the Bell Atlantic Master Trust (the "Master Trust"). All of the assets of the NSSP are included in the Master Trust. VALUE OF INVESTMENTS The Trustee values the investments in the Master Trust as follows: Investments in securities traded on national and foreign securities exchanges are valued by the Trustee at the last reported sale prices on the last business day of the year or, if no sales were reported on that date, at the last reported bid prices. Over-the-counter securities and government obligations are valued at the bid prices or the average of the bid and asked prices on the last business day of the year from published sources where available or, if not available, from other sources considered reliable, generally broker quotes. The value of each contract with an insurance company or other financial institution included in the Income Fund is reported at contract value in the Statements of Net Assets Available for Benefits based upon the principal then invested in by the Fund plus the interest then accrued on such principal, which approximates the fair value. In accordance with Statement of Position 94-4 "Reporting of Investment Contracts held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans" and in connection with the fully benefit-responsive investment contracts, the following information is presented: i. The asset weighted crediting interest rate yielded a return of 6.1% and 6.3% for the years ended December 31, 1999 and 1998, respectively. ii. The crediting interest rates ranged from 5.06% to 8.15% at December 31, 1999 and 4.2% to 8.2% at December 31, 1998. iii. The fair value, as determined by discounting future cash flows of the underlying investments, at December 31, 1999 and 1998, was approximately $353,162 and $376,460, respectively. Forward currency contracts are accounted for as contractual commitments on a trade date basis and are carried at fair value derived by the Trustee at the exchange rate prevailing on the last business day of the year. Index futures contracts are recorded as contractual commitments on a trade-date basis and are carried at fair value based on the closing index 11 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) futures price prevailing on the last business day of the year. Both exchange rates and index futures prices are readily available from published sources. Temporary cash investments are stated at redemption value which approximates fair value. PURCHASES AND SALES OF INVESTMENTS Purchases and sales of investments are reflected as of the trade date. Realized gains and losses on sales of investments are determined on the basis of average cost. INVESTMENT INCOME Dividend income is recorded on the ex-dividend date. Interest earned on investments is recorded on the accrual basis. NET APPRECIATION (DEPRECIATION) OF INVESTMENTS The Statements of Changes in Net Assets Available for Benefits reflects the net appreciation (depreciation) in the fair value of the NSSP's investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. DISTRIBUTIONS Distributions elected to be withdrawn from the NSSP by participants are recorded when paid. PLAN EXPENSES The NSSP pays certain administrative expenses out of assets held in the Master Trust and out of interest income earned from the NSSP's disbursement account, as held by the Trustee, in accordance with NSSP provisions and to the extent permitted by law. Any expenses not paid by the NSSP are paid by Bell Atlantic. BELL ATLANTIC'S USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires the NSSP's trust asset administrator, to make significant estimates and assumptions that affect the reported amounts of net assets available for benefits at the date of the financial statements and the changes in net assets available for benefits during the reporting period and, when applicable, disclosures of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. RISKS AND UNCERTAINTIES The NSSP provides for various participant investment options in any combination of funds which can invest in any combination of stocks, bonds, fixed income securities, mutual funds, and other investment securities. Investment securities are exposed to various risks, such as 12 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) 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. 3. INVESTMENTS INVESTMENT IN MASTER TRUST All of the investment assets in the Master Trust are managed by BAAMCO or external investment advisors. The assets in the Master Trust are either (a) pooled between the defined benefit plans and the defined contribution plans or (b) net assets that are specific to the defined benefit plans, or (c) net assets specific to the defined contribution plans. The total fair value of the Master Trust at December 31, 1999 and 1998 was approximately $56.6 billion (of which net assets totaling approximately $21.4 billion are specific to the defined benefit plans, item (b) above, for which separate financial statements are prepared) and approximately $51.2 billion, respectively. INVESTMENTS HELD IN POOLED ACCOUNTS The pooled investments are unitized, aggregated and reported by the Master Trust with a carrying value of $22.7 billion at December 31, 1999 and 1998, and with investment earnings of $3.9 billion and $2.2 billion for the years ended December 31, 1999 and 1998, respectively. Given that the pooled accounts include interests of the defined contribution plans and the defined benefit plans, the totals in each respective statement do not equal the carrying value or net investment income of/from the Master Trust pooled accounts in this footnote. 13 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) The total investments held in the Master Trust pooled accounts at December 31, 1999 and 1998 were as follows:
FAIR VALUE (NOTE 2) ------------------------------ DESCRIPTION 1999 1998 ----------- ----------- ----------- Cash - non interest bearing $ -- $ 7,587 Receivables 691,568 1,300,045 Common Stock 21,107,790 18,625,854 Bell Atlantic Corporation common shares 91,530 70,998 Preferred Stock 76,783 115,874 U.S. Government Securities 99,119 1,097,450 Corporate Debt - preferred and other 228,401 1,489,671 Real estate -- 166 Temporary cash investments 586,308 619,688 Other investments* 485,553 708,470 ----------- ----------- 23,367,052 24,035,803 Liabilities 650,607 1,307,975 ----------- ----------- Total pooled net assets in the Master Trust $22,716,445 $22,727,828 =========== ===========
*Other investments include foreign investments, principally foreign government debt. The NSSP's interests in the Master Trust pooled accounts carrying value and investment income of the Master Trust pooled accounts are reported in each respective Fund option as the "Allocated share of Master Trust net assets" in the Statements of Net Assets Available for Benefits and "Allocated share of Master Trust investment activities" in the Statements of Changes in Net Assets Available for Benefits. Investments in the Master Trust are allocated to the NSSP's Fund options in accordance with their respective percentages of interest. The proportionate interests of the NSSP's Fund options in the carrying value of the Master Trust pooled accounts at December 31, 1999 and 1998 were as follows: 14 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS)
CARRYING CARRYING VALUE VALUE 1999 1999 1998 1998 -------- ------- -------- ------- Active U.S. Equity Fund $ 63,431 0.2792% $ 69,551 0.3060% U.S. Balanced Fund 24,652 0.1085% 29,257 0.1287% Global Balanced Fund 22,488 0.0990% 22,953 0.1010% Active International Equity Fund 66,596 0.2932% 13,492 0.0594% U.S. Small Capitalization Fund 46,753 0.2058% 40,477 0.1781% Passive U.S. Equity Index Fund 426,542 1.8777% 387,525 1.7051% -------- -------- Total $650,462 $563,255 ======== ========
INVESTMENTS HELD IN SPECIFIC ACCOUNTS Effective January 1, 1998, the assets of all Bell Atlantic's defined contribution plans were included in the Master Trust. The net assets specific to these plans are the Bell Atlantic Shares Fund, Telecommunications Fund, Government Money Market Fund, Income Fund, Loan Fund, Employee Stock Ownership Plan ("ESOP") allocated account, the ESOP unallocated account, Bell Atlantic Employee Stock Ownership Plan ("PAYSOP"), Passive International Equity Index Fund, and the U.S. Bond Market Index Fund. The investments held in the Master Trust specific accounts for the defined contribution plans at December 31, 1999 and 1998 were as follows:
FAIR VALUE (NOTE 2) ------------------------------ DESCRIPTION 1999 1998 ----------- ----------- ----------- Receivables $ 401,820 $ 410,006 Common Stock 741,499 609,620 Bell Atlantic Corporation common shares 9,787,824 8,324,047 Temporary cash investments 174,224 139,788 Fixed income obligations - insurance contracts 1,826,236 1,973,019 Fixed income corporate obligations 168,522 239,031 ----------- ----------- 13,100,125 11,695,511 Liabilities 578,356 642,498 ----------- ----------- Total net assets in the specific accounts in the Master Trust $12,521,769 $11,053,013 =========== ===========
15 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) Investments in the Master Trust are allocated to the NSSP's Fund options in accordance with their respective percentages of interest. The proportionate interest of the NSSP, the Bell Atlantic Savings Plan for Salaried Employees (the "BASP") and the Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic South (the "BASSP") in the carrying value of the Master Trust specific accounts at December 31, 1999 was as follows:
CARRYING CARRYING CARRYING VALUE VALUE VALUE NSSP PLAN % BASP PLAN % BASSP PLAN % ---------- --------- ---------- --------- ---------- ------- Bell Atlantic Shares Fund $2,670,119 39% $2,755,661 40% $1,411,573 21% Telecommunications Fund 264,650 47% 297,567 53% -- Government Money Market Fund 6,955 4% 147,899 85% 19,400 11% Passive International Equity Index Fund 14,556 8% 138,330 77% 26,437 15% Income Fund 400,046 22% 1,180,551 65% 245,693 13% Loan Fund 153,844 38% 161,631 40% 82,001 22% ESOP -- -- 1,632,176 76% 503,322 24% U.S. Bond Market Index Fund 10,072 6% 148,611 88% 9,864 6% PAYSOP -- -- 83,502 35% 157,309 65% ---------- ---------- ---------- Total $3,520,242 $6,545,928 $2,455,599 ========== ========== ==========
The following table reflects the investments that represent 5% or more of the net assets in the Master Trust as of December 31:
1999 1998 ---------- ---------- Bell Atlantic Corporation common shares $9,787,824 $8,324,047
INVESTMENT INCOME Investment income and expenses are allocated to the NSSP's Fund options daily in accordance with their respective daily percentages of interest in the Master Trust's pooled accounts. Percentages of interest are based on the daily ratio of units owned by each plan's Fund options to the total units in the Master Trust pooled accounts. Investment income related to investments held in specific accounts for the defined contribution plans is allocated to each plan's Fund options daily in accordance with each plan's respective percentage of interest. 16 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) The allocated net investment income to the NSSP's Fund options for the years ended December 31, 1999 and 1998 was as follows:
Dividends On Bell Atlantic Other Corporation Net Income/ Net Common Other Appreciation Expenses Investment Interest Shares Dividends (Depreciation) Net Income Income -------- ------------- --------- -------------- ---------- ------ DECEMBER 31, 1999: ------------------ Bell Atlantic Shares Fund $ 982 $-- $ -- $ 345,487 $ -- $ 346,469 Telecommunications Fund 59 -- 3,320 54,559 (16) 57,922 Government Money Market Fund 362 -- -- -- -- 362 Passive U.S. Equity Index Fund 1,014 -- 4,821 72,510 (6) 78,339 Passive International Equity Index Fund 9 -- -- 2,944 -- 2,953 Income Fund 25,311 -- -- -- -- 25,311 U.S. Bond Market Index Fund 6 -- -- (180) -- (174) Active U.S. Equity Fund 38 -- 877 7,394 -- 8,309 U.S. Balanced Fund 606 -- 224 1,020 -- 1,850 Global Balanced Fund 409 -- 226 2,446 (7) 3,074 Active International Equity Fund 27 -- 352 14,598 (34) 14,943 U.S. Small Capitalization Fund 76 -- 316 11,095 -- 11,487 --------- --- --------- --------- --------- --------- Total $ 28,899 $-- $ 10,136 $ 511,873 $ (63) $ 550,845 ========= === ========= ========= ========= =========
Dividends On Bell Atlantic Other Corporation Net Income/ Net Common Other Appreciation Expenses Investment Interest Shares Dividends (Depreciation) Net Income Income -------- ------------- --------- -------------- ---------- ------ DECEMBER 31, 1998: ------------------ Bell Atlantic Shares Fund $ 408 $ 62,732 $ -- $ 229,837 $ -- $ 292,977 Telecommunications Fund 55 -- 3,690 69,397 (5) 73,137 Government Money Market Fund 158 -- -- (2) -- 156 Passive U.S. Equity Index Fund 647 -- 4,882 78,283 7 83,819 Passive International Equity Index Fund 2 -- -- 483 -- 485 Income Fund 26,237 -- -- (364) -- 25,873 U.S. Bond Market Index Fund 8 -- -- 563 -- 571 Active U.S. Equity Fund 65 -- 1,129 7,045 -- 8,239 U.S. Balanced Fund 576 -- 263 2,808 -- 3,647 Global Balanced Fund 379 -- 273 2,065 (7) 2,710 Active International Equity Fund 31 -- 312 (185) (28) 130 U.S. Small Capitalization Fund 115 -- 312 (166) 1 262 --------- --------- --------- --------- --------- --------- Total $ 28,681 $ 62,732 $ 10,861 $ 389,764 $ (32) $ 492,006 ========= ========= ========= ========= ========= =========
17 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) 4. DERIVATIVE FINANCIAL INVESTMENTS Derivative financial instruments are used in the Master Trust's pooled accounts primarily to rebalance fixed income/equity allocations, to efficiently gain exposure to a specific underlying market, and to offset the currency risk associated with foreign investments. Leveraging of the NSSP's assets and speculation are prohibited as stated in the NSSP plan documents. Offsetting currency positions are not permitted to exceed the level of exposure in the NSSP's foreign asset base. The derivatives most commonly used by investment managers are highly-liquid, exchange-traded equity and fixed income futures and over-the-counter foreign exchange forward contracts. Bell Atlantic's use of financial instruments for risk management purposes is represented by notional amounts. These notional values represent solely contractual amounts that serve as the basis or reference amounts upon which contractually stipulated calculations are based. Therefore, these amounts are intended to serve as general volume indicators only and do not represent the potential gain or loss from market or credit risks. Market risk arises from the potential for changes in the value of financial instruments resulting from fluctuations in interest rates, foreign exchange rates and prices of equity securities. Market risk is also affected by changes in volatility and liquidity in the markets in which these instruments are traded. Equity price risk arises from the possibility that equity prices will fluctuate, affecting the value of equity securities and derivative financial instruments that derive their value from a stock index, a particular stock or a defined basket of stocks. The credit risk and amount of accounting loss of the NSSP's forward contracts is equal to any gains which have not been settled as of the NSSP's year end. The credit risk of the NSSP's futures contracts is equal to the posted margin plus any unsettled positive variation margin. The amount of accounting loss at year end is equal to any variation margin owed to the NSSP. All derivative activity relating to the NSSP is within the Master Trust pooled accounts. The Master Trust pooled accounts' derivative activity is allocated to the NSSP in accordance with the NSSP's Fund options' respective percentages of interest (see Note 3). The following disclosures regarding the notional values, fair values, average fair values and net trading gains are reported for the NSSP. 18 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) The notional values and fair values of the derivative activity used for trading purposes held by the NSSP at December 31, were as follows:
1999 1998 ------ ------ Domestic Equity Futures Contracts: Notional values $3,549 $2,817 Fair values 3,653 2,973 Forward Foreign Currency Payable Contracts: Notional values 176 147 Fair values 178 152 Forward Foreign Currency Receivable Contracts: Notional values 176 147 Fair values 170 151
The average fair values of the derivative activity used for trading purposes held by the NSSP during the years ended December 31, were as follows:
1999 1998 ------ ------ Average Fair Values: Domestic Equity Futures Contracts $9,499 $2,067 Forward Foreign Currency Payable Contracts 187 198 Forward Foreign Currency Receivable Contracts 182 199
The NSSP was allocated net trading gains from futures contracts of $698 and $805 in 1999 and 1998, respectively. Net trading losses allocated to the NSSP from foreign exchange contracts totaled $3,034 and $16,521 in 1999 and 1998, respectively. 5. TAX DETERMINATION On September 25, 1995, the Internal Revenue Service issued a ruling that the NSSP meets the requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code") and is exempt from Federal income taxes under the appropriate sections of the Code. The NSSP has been amended since receiving the determination letter. However, the NSSP's administrator and the NSSP's tax counsel believe that the NSSP is designed and is currently being operated in compliance with the applicable requirements of the Code. 19 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) 6. RELATED PARTY TRANSACTIONS BAAMCO, a wholly owned subsidiary of Bell Atlantic, is the investment advisor for the Telecommunications Fund, Passive U.S. Equity Index Fund, and Income Fund and therefore qualifies as a party-in-interest. BAAMCO received no compensation from the NSSP for the investment advisory services rendered. 7. CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the NSSP to concentrations of credit risk consist principally of investment contracts with insurance companies and other financial institutions. The NSSP places its investment contracts with high-credit quality insurance companies and financial institutions in order to limit credit exposure. The NSSP regularly monitors the financial stability of the financial institutions and insurance companies. 8. PLAN AMENDMENTS Effective January 1, 1999, the NSSP was amended to become an employee stock ownership plan. Effective July 1, 1998, the NSSP was amended for conforming changes in certain administrative rules. Effective January 1, 1998, the NSSP was amended to offer new investment funds, and, to close the Telecommunications Fund (See Note 1). 9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 The Department of Labor requires that amounts allocated to accounts of persons who have elected to withdraw from the NSSP but have not yet been paid be reported as liabilities on the plan's Form 5500. In accordance with the relevant American Institute of Certified Public Accountants audit and accounting guide, benefit amounts should not be accrued as liabilities of the plan. 20 BELL ATLANTIC SAVINGS AND SECURITY PLAN FOR ASSOCIATES OF BELL ATLANTIC NORTH NOTES TO FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN THOUSANDS) The following is a reconciliation of net assets available for benefits per the financial statements to the amounts reported in Form 5500.
1999 1998 ---------- ---------- Net assets available for benefits presented in the Statement of Net Assets Available for Benefits $4,170,704 $3,587,751 Less: Benefits claims payable presented in the Statement of Net Assets Available for Benefits in Form 5500 755 1,258 ---------- ---------- Net assets available for benefits presented in the Statement of Net Assets Available for Benefits in Form 5500 $4,169,949 $3,586,493 ========== ==========
The following is a reconciliation of benefits paid to participants per the financial statements to the amounts reported in Form 5500.
1999 1998 -------- -------- Aggregate distributions to participants as presented in the Statement of Changes in Net Assets Available for Benefits $284,935 $260,595 Add: Current year benefits claims payable presented in the Statement of Net Assets Available for Benefits in Form 5500 755 1,258 Less: Prior year benefits claims payable presented in the Statement of Net Assets Available for Benefits in Form 5500 1,258 2,644 -------- -------- Benefit payments and payments to provide benefits directly to Participants and beneficiaries presented in the Statement of Changes in Net Assets Available for Benefits in Form 5500 $284,432 $259,209 ======== ========
21 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Bell Atlantic Corporate Employees' Benefits Committee has duly caused this annual report to be signed by the undersigned thereunto duly authorized. Bell Atlantic Savings and Security Plan for Associates of Bell Atlantic North By: /s/ Thomas J. Edwards ----------------------------------------- Thomas J. Edwards (Acting Chairman, Bell Atlantic Corporate Employees' Benefit Committee) Date: June 19, 2000 22