SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
_
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
_
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8607
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-1533433
(State of (I.R.S. Employer
Incorporation) Identification Number)
1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 404 249-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
At November 7, 1994, a total of 496,236,058 common shares were outstanding.
<PAGE>
PART I -- FINANCIAL INFORMATION
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Operating Revenues: (Restated)
Network and related services
Local service $1,728.2 $1,669.9 $5,117.6 $4,912.9
Interstate access 770.8 759.8 2,338.2 2,227.7
Intrastate access 226.6 222.6 687.1 655.8
Toll 298.4 305.7 899.0 910.8
Directory advertising
and publishing 364.3 364.6 1,105.4 1,088.9
Wireless communications 528.7 397.5 1,477.0 1,129.1
Other services 280.7 294.8 825.6 830.3
Total Operating Revenues 4,197.7 4,014.9 12,449.9 11,755.5
Operating Expenses:
Cost of services and products 1,521.8 1,445.2 4,506.4 4,403.5
Depreciation and amortization 814.1 789.0 2,413.2 2,327.5
Selling, general
and administrative 868.1 871.6 2,522.8 2,454.9
Total Operating Expenses 3,204.0 3,105.8 9,442.4 9,185.9
Operating Income 993.7 909.1 3,007.5 2,569.6
Interest Expense 177.3 159.8 496.2 520.6
Other Income (Expense), net (22.9) 7.9 24.9 33.6
Income before Income Taxes,
Extraordinary Loss and
Cumulative Effect of Change
in Accounting Principle 793.5 757.2 2,536.2 2,082.6
Provision for Income Taxes 294.0 314.8 934.9 795.9
Income Before Extraordinary
Loss and Cumulative Effect
of Change in Accounting
Principle 499.5 442.4 1,601.3 1,286.7
Extraordinary Loss on Early
Extinguishment of Debt,
net of tax - (7.8) - (63.2)
Cumulative Effect of Change
in Accounting Principle,
net of tax - - - (67.4)
Net Income $ 499.5 $ 434.6 $1,601.3 $1,156.1
<PAGE>
Weighted Average Common
Shares Outstanding 496.7 496.3 496.6 495.9
Dividends Declared
Per Common Share $ .69 $ .69 $ 2.07 $ 2.07
Earnings Per Share:
Income Before Extraordinary
Loss and Cumulative Effect of
Change in Accounting Principle $ 1.01 $ .89 $ 3.22 $ 2.59
Extraordinary Loss on Early
Extinguishment of Debt,
net of tax - (.01) - (.12)
Cumulative Effect of Change
in Accounting Principle,
net of tax - - - (.14)
Net Income $ 1.01 $ .88 $ 3.22 $ 2.33
The accompanying notes are an integral part of these financial statements.
<PAGE>
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions)
September 30, December 31,
1994 1993
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 680.3 $ 501.5
Temporary cash investments 69.3 49.0
Accounts receivable, net of allowance for
uncollectibles of $153.2 and $149.6 2,936.1 2,985.2
Material and supplies 445.8 418.7
Other current assets 335.6 364.6
4,467.1 4,319.0
Investments and Advances 2,511.6 2,039.4
Property, Plant and Equipment, net 25,030.6 24,667.8
Deferred Charges and Other Assets 522.4 512.2
Intangible Assets, net 1,420.0 1,334.9
Total Assets $33,951.7 $32,873.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 1,916.7 $ 1,838.6
Accounts payable 1,287.5 979.0
Other current liabilities 2,675.9 2,943.8
5,880.1 5,761.4
Long-Term Debt 7,466.4 7,380.7
Deferred Credits and Other Liabilities:
Accumulated deferred income taxes 3,457.3 3,465.3
Unamortized investment tax credits 463.5 515.9
Other liabilities and deferred credits 2,551.1 2,255.8
6,471.9 6,237.0
Shareholders' Equity:
Common stock, $1 par value 502.5 501.6
Paid-in capital 8,053.9 8,009.4
Retained earnings 6,502.2 5,919.3
Shares held in trust (336.2) (292.6)
Guarantee of ESOP debt (589.1) (643.5)
14,133.3 13,494.2
Total Liabilities and Shareholders' Equity $33,951.7 $32,873.3
The accompanying notes are an integral part of these financial statements.
<PAGE>
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions)
For the Nine Months
Ended September 30,
1994 1993
(Restated)
Cash Flows from Operating Activities:
Net income........................................... $1,601.3 $1,156.1
Adjustments to net income:
Depreciation...................................... 2,373.9 2,281.8
Amortization of intangibles....................... 39.3 45.7
Dividends received from unconsolidated affiliates. 89.3 106.9
Losses/(earnings) of unconsolidated affiliates.... 55.4 (22.6)
Write-off of unamortized debt issuance costs
due to early extinquishment of debt.............. - 106.4
Payment of call premium........................... - (76.4)
Provision for losses on bad debts................. 135.1 148.0
Deferred income taxes and unamortized
investment tax credits........................... (122.6) (145.7)
Change in accounting principle, net of tax........ - 67.4
Gain on sale of operations........................ (64.7) -
Allowance for funds used during construction...... (14.0) (18.7)
Change in accounts receivable..................... (277.3) (302.9)
Change in material and supplies................... (142.0) (53.3)
Change in accounts payable and
other current liabilities........................ (28.3) 10.8
Change in deferred charges and other assets....... 11.6 (25.8)
Change in other liabilities and
deferred credits................................. 349.7 117.0
Other reconciling items, net...................... 63.9 22.8
Net cash provided by operating activities...... 4,070.6 3,417.5
Cash Flows from Investing Activities:
Capital expenditures................................. (2,698.0) (2,480.0)
Proceeds from disposals of property, plant
and equipment....................................... 86.7 84.2
Proceeds from disposition of short-term
investments......................................... 59.2 129.3
Purchase of short-term investments................... (79.5) (100.9)
Investment dispositions.............................. 133.8 34.3
Investments in/advances to unconsolidated
affiliates.......................................... (564.7) (237.9)
Other investing activities, net...................... 41.1 29.0
Net cash (used for) investing activities....... (3,021.4) (2,542.0)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings.................. 17,048.2 11,638.0
Repayments of short-term borrowings..................(16,918.5) (11,263.9)
Proceeds of long-term debt........................... 149.4 2,198.7
Repayment of long-term debt.......................... (105.7) (2,289.4)
Payments of capital lease obligations................ (11.6) (9.7)
Proceeds from issuing common shares.................. 7.2 36.1
Dividends paid....................................... (1,039.4) (961.9)
Net cash (used for) financing activities....... (870.4) (652.1)
<PAGE>
Net Increase in Cash and Cash Equivalents............... 178.8 223.4
Cash and Cash Equivalents at Beginning of Period........ 501.5 265.5
Cash and Cash Equivalents at End of Period..............$ 680.3 $ 488.9
The accompanying notes are an integral part of these financial statements.
<PAGE>
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Millions)
(Unaudited)
(a) Preparation of Interim Financial Statements
The consolidated financial statements of BellSouth Corporation (BellSouth) have
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission (SEC). Certain amounts have been reclassified from
previous presentations. In the opinion of BellSouth, these statements include
all adjustments necessary for a fair presentation of the results of all interim
periods reported herein. All adjustments are of a normal recurring nature
unless otherwise disclosed. Certain information and footnote disclosures
prepared in accordance with generally accepted accounting principles have been
either condensed or omitted pursuant to SEC rules and regulations. However,
BellSouth believes that the disclosures made are adequate for a fair
presentation of results of operations, financial position and cash flows.
These consolidated financial statements should be read in conjunction with the
consolidated financial statements and accompanying notes included in
BellSouth's latest annual report on Form 10-K and previous quarterly reports on
Form 10-Q.
(b) BellSouth Corporation Consolidated Shareholders' Equity
Common Paid-In Retained Shares Held Guarantee of
Stock Capital Earnings in Trust ESOP Debt
Balance at December 31,
1993..................... $501.6 $8,009.4 $5,919.3 $(292.6) $(643.5)
Net income................ 1,601.3
Dividends................. (1,027.1)
Shares issued in
connection with various
employee benefit plans... .1 6.7
Shares issued to grantor
trusts................... .8 42.8 (43.6)
Reduction of ESOP debt and
other related activity... 8.7 54.4
Foreign currency
translation adjustment... ______ ____(5.0) ________ ______ _______
Balance at
September 30, 1994....... $502.5 $8,053.9 $6,502.2 $(336.2) $(589.1)
<PAGE>
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(c) Supplemental Cash Flow Information
The following supplemental information is presented in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 95,
"Statement of Cash Flows":
For the Nine Months
Ended September 30,
1994 1993
Cash paid during the period for:
Income taxes.................................... $1,023.6 $861.4
Interest........................................ $ 545.1 $611.6
Schedule of Noncash Investing and
Financing Activities:
Common shares issued in lieu of cash dividends
under the Shareholder Dividend Reinvestment
and Stock Purchase Plan....................... $ - $ 66.4
Shares issued to grantor trusts................. $ 43.6 $253.1
(d) SFAS No. 112, "Employers' Accounting for Postemployment Benefits"
In the fourth quarter of 1993, BellSouth adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." The cumulative effect of the change
in accounting principle was $67.4 ($.14 per share). Because the change in
accounting was retroactive to January 1, 1993, the consolidated financial
statements at September 30, 1993 and for the nine months then ended have been
restated to reflect the adoption of the accounting standard.
<PAGE>
BELLSOUTH CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Network Access Lines in Service at September 30 (In Thousands)(a):
Percentage
Gain/(Loss) for the
Periods Ended
September 30,
1994 vs. 1993 vs.
1994 1993 1992
By Category:
Residence 14,058.7 3.45 2.93
Business 5,680.7 6.97 5.12
Other 253.8 (.12) (4.26)
Total Access Lines 19,993.2 4.38 3.42
By State:
Alabama 1,712.8 3.49 3.34
Florida 5,269.8 4.67 3.94
Georgia 3,309.6 5.54 3.92
Kentucky 1,053.7 2.99 2.67
Louisiana 2,020.2 3.53 2.03
Mississippi 1,110.2 3.98 2.92
North Carolina 1,971.0 4.87 3.71
South Carolina 1,235.1 3.34 2.50
Tennessee 2,310.8 4.49 3.72
Total Access Lines 19,993.2 4.38 3.42
Percentage
Gain/(Loss) for the
Periods Ended
1994 vs. 1993 vs.
1994 1993 1992
Access Minutes of Use (In Millions)(a)(b):
Interstate:
Three months ended March 31 14,050.8 7.94 5.55
Three months ended June 30 14,422.3 7.59 6.03
Three months ended September 30 14,482.1 8.63 4.74
Nine months ended September 30 42,955.2 8.05 5.44
Intrastate:
Three months ended March 31 4,005.6 11.39 6.74
Three months ended June 30 4,175.0 9.90 8.79
Three months ended September 30 4,293.2 10.45 9.31
Nine months ended September 30 12,473.8 10.57 8.30
Total Minutes of Use:
Three months ended March 31 18,056.4 8.69 5.80
Three months ended June 30 18,597.3 8.10 6.63
Three months ended September 30 18,775.3 9.04 5.74
Nine months ended September 30 55,429.0 8.61 6.06
Toll Messages (In Millions)(a)(c)
Three months ended March 31 386.6 5.28 (2.40)
Three months ended June 30 397.2 2.12 7.14
Three months ended September 30 387.2 1.70 4.03
Nine months ended September 30 1,171.0 3.00 2.86
<PAGE>
(a) Prior period operating data are often revised at later dates to reflect
the most current information. The above information reflects the
latest data available for the periods indicated.
(b) Minutes of Use are classified as either interstate or intrastate based
on the percentage interstate usage factor. This factor is updated
periodically.
(c) Effective in 1994, toll messages include messages completed under
optional calling plans. Prior period toll message volumes have been
restated to reflect this change. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition - Business
Volumes."
<PAGE>
BELLSOUTH CORPORATION
SELECTED OPERATING DATA - continued
Cellular and Paging Customers Served at September 30 (Equity Basis (d)):
Percentage Gain
1994
1994 vs. 1993
Domestic Cellular.......................... 1,929,800 39.5
International Cellular..................... 309,100 113.5
Domestic Paging (e)........................ 1,563,000 30.9
(d) Includes customers served based on BellSouth's ownership percentage in all
markets served.
(e) Includes customers attributable to an acquisition during third quarter 1994.
See "Management's Discussion and Analysis of Results of Operations and
Financial Condition - Business Volumes."
For the Nine
Months Ended
September 30, Year Ended December 31,
1994 1993 1992 1991 1990 1989
Ratio of Earnings to Fixed Charges (f) 5.38 2.98 4.00 3.47 3.68 3.85
(f) For the purpose of this ratio: (i) earnings have been calculated by adding
income before income taxes, gross interest expense, such portion of rental
expense representative of the interest factor on such rentals and equity in
losses from less-than-50%-owned investments (accounted for under the equity
method of accounting) less the excess of earnings over distributions from
less-than-50%-owned investments (accounted for under the equity method of
accounting); (ii) fixed charges are comprised of gross interest expense and
such portion of rental expense representative of the interest factor on such
rentals.
<PAGE>
BELLSOUTH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
(Dollars in Millions, Except Per Share Amounts)
BellSouth Corporation (BellSouth) is a holding company headquartered in Atlanta,
Georgia whose operating telephone company subsidiary, BellSouth
Telecommunications, Inc. (BellSouth Telecommunications) serves, in the
aggregate, approximately two-thirds of the population and one-half of the
territory within Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi,
North Carolina, South Carolina and Tennessee. BellSouth Telecommunications
primarily provides local exchange service and toll communications services
within court-defined geographic areas, called Local Access and Transport Areas
(LATAs), and provides network access services to enable interLATA communications
using the long-distance facilities of interexchange carriers. Through
subsidiaries, other telecommunications services and products are provided both
inside and outside the nine-state BellSouth Telecommunications region.
BellSouth Enterprises, Inc. (BellSouth Enterprises), another wholly-owned
subsidiary, owns businesses providing domestic and international wireless
communications services and advertising and publishing products.
Approximately 73% and 74% of BellSouth's Total Operating Revenues for the
nine-month periods ended September 30, 1994 and 1993, respectively, and a
greater portion of net income were from wireline services provided by BellSouth
Telecommunications. Charges for local service, access services and toll
messages for the nine months ended September 30, 1994 accounted for
approximately 57%, 33% and 10%, respectively, of the wireline revenues discussed
above. Revenues from wireless communications services and directory advertising
and publishing services accounted for approximately 12% and 9%, respectively, of
Total Operating Revenues for the nine months ended September 30, 1994. The
remainder of such revenues was derived principally from other nonregulated
services provided by BellSouth Telecommunications.
Results of Operations
For the Three For the Nine
Months Ended September 30, Months Ended September 30,
1994 1993 1994 1993 _
Net Income $ 499.5 $ 434.6 $1,601.3 $1,156.1
Earnings Per Share $ 1.01 $ .88 $ 3.22 $ 2.33
Net Income increased $64.9 (14.9%) and $445.2 (38.5%) for the three- and
nine-month periods ended September 30, 1994, respectively, when compared to the
same prior year periods; Earnings Per Share increased $.13 (14.8%) and $.89
(38.2%). The increases for both periods were attributable in part to revenue
growth, driven by improvements in key business volumes, and cost control efforts
at BellSouth Telecommunications, including expense savings attributable to the
restructuring plan implemented in 1993. The increases for the three- and
nine-month periods were also due to the effect of 1993 charges of $7.8 ($.01 per
<PAGE>
share) and $63.2 ($.12 per share), respectively, for the refinancing of certain
long-term debt issues at lower interest rates by BellSouth Telecommunications
and $42.1 ($.08 per share) and $15.6 ($.03 per share), respectively, related to
the federal income tax legislation enacted in 1993 (see "Provision for Income
Taxes" herein). The increase for the nine-month period was also due in part to
a $67.5 ($.14 per share) gain in first quarter 1994 on the sale of BellSouth's
interest in a cellular telephone business in Mexico and the effect of charges in
first quarter 1993 of $67.4 ($.14 per share) for the retroactive adoption of
Statement of Financial Accounting Standards (SFAS) No. 112, "Employers'
Accounting for Postemployment Benefits" (see Note (d)) and approximately $25
($.05 per share) associated with severe 1993 winter weather conditions. After
adjusting for the effect of the unusual items in 1994 and 1993, Net Income for
the three- and nine-month periods ended September 30, 1994 increased $15.0
(3.1%) and $206.5 (15.6%), respectively, when compared to the same periods last
year; Earnings Per Share, as adjusted, increased $.04 (4.1%) and $.41 (15.4%).
Business Volumes
The rate of growth in access lines continued to be particularly strong. The
number of access lines in service since September 30, 1993 increased by
approximately 839,400, or 4.38%, to 19,993,200, compared to a 3.42% rate of
increase for the same prior year period. The overall increase, led by growth in
Georgia, North Carolina, Florida and Tennessee, was primarily attributable to
continued economic improvement, including expanding employment in BellSouth
Telecommunications' nine-state region, and an increase in the number of second
residential lines. Second residential lines accounted for approximately 41.5%
and 23.2% of the overall increase in residence access lines and total access
lines, respectively, since September 30, 1993. The growth rates in 1994 for
total residence and business lines of 3.45% and 6.97%, respectively, improved
compared to growth rates of 2.93% and 5.12%, respectively, in 1993.
Access minutes of use represent the volume of traffic carried by interexchange
carriers between LATAs, both interstate and intrastate, using BellSouth
Telecommunications' local facilities. Total access minutes of use increased by
1,556.5 million (9.04%) and 4,394.0 million (8.61%) for the three- and
nine-month periods ended September 30, 1994, respectively, compared to increases
of 5.74% and 6.06% for the same periods last year. The increases in access
minutes of use were partially attributable to access line growth, promotions by
the interexchange carriers and intraLATA toll competition, which has the effect
of increasing access minutes of use while reducing toll messages carried over
BellSouth Telecommunications' facilities. The growth rate in total minutes of
use continues to be negatively impacted by the effects of bypass and the
migration of interexchange carriers to categories of service (e.g., special
access) that have a fixed charge as opposed to a volume-driven charge and to
high capacity services, which causes a decrease in minutes of use.
Toll messages are comprised of Message Telecommunications Service and Wide Area
Telecommunications Service. Also, effective in 1994, toll messages include
messages completed under Optional Calling Plans (OCPs), which provide reduced
rates for toll calls within a LATA. Prior period toll message volumes have been
restated to reflect this change. The pricing of services provided under OCPs
has stimulated volume growth. Accordingly, the trend of declining toll message
volumes in prior periods has been mitigated to some extent by the inclusion of
messages completed under these plans.
<PAGE>
For the three- and nine-month periods ended September 30, 1994, toll messages
increased by 6.5 million (1.70%) and 34.1 million (3.00%), respectively,
compared to restated increases of 4.03% and 2.86% for the corresponding periods
in 1993. The increases were attributable in part to the growth of messages
completed under OCPs. Other than a plan implemented in South Carolina during
September 1994, which had only a negligible impact on 1994 volumes, no new
significant local area calling plans have been implemented since 1992. The
South Carolina plan and future implementation of other such plans in BellSouth
Telecommunications' service region, coupled with competition in the intraLATA
toll market, will adversely impact future toll message volumes. These plans and
the effects of competition result in the transfer of calls from toll to local
service and access categories, respectively, but the corresponding revenues are
not generally shifted at commensurate rates.
Domestic cellular customers (equity-weighted) increased by 546,100 (39.5%) since
September 30, 1993 to 1,929,800. The overall penetration rate (number of
customers as a percentage of the total population in the service territory)
increased from 3.57% at September 30, 1993 to 4.92% at September 30, 1994.
Total minutes of use have also continued to increase, although average minutes
of use per cellular customer declined slightly due to the trend of increased
penetration into lower-usage market segments.
Since September 30, 1993, the number of international cellular customers
increased by 164,300 (113.5%) to 309,100. Growth in total minutes of use for
international cellular properties remained strong due to demand stimulated by
competitive programs, enhanced services and underdeveloped land-line service.
Domestic paging customers increased by 369,400 (30.9%) to 1,563,000 since
September 30, 1993 due primarily to the acquisition of the remaining 50%
ownership interest in a paging business, effective August 1, 1994, and also to
continued success of the retail distribution program and aggressive pricing
strategies in the reseller market. Of the overall growth, approximately 210,000
customers were attributable to the acquisition. Excluding the effect of the
acquisition, domestic paging customers increased by approximately 159,400
(13.4%) since September 30, 1993.
See "Selected Operating Data."
Operating Revenues
Total Operating Revenues increased $182.8 (4.6%) and $694.4 (5.9%) for the
three- and nine-month periods ended September 30, 1994, respectively, when
compared to the corresponding 1993 periods. The components of Total Operating
Revenues were as follows:
<PAGE>
For the Three For the Nine
Months Ended September 30, Months Ended September 30,
1994 1993 1994 1993 _
Local Service $1,728.2 $1,669.9 $5,117.6 $4,912.9
Interstate Access 770.8 759.8 2,338.2 2,227.7
Intrastate Access 226.6 222.6 687.1 655.8
Toll 298.4 305.7 899.0 910.8
Directory Advertising
and Publishing 364.3 364.6 1,105.4 1,088.9
Wireless Communications 528.7 397.5 1,477.0 1,129.1
Other Services __ 280.7 294.8 825.6 830.3
Total Operating
Revenues $4,197.7 $4,014.9 $12,449.9 $11,755.5
Local Service revenues increased $58.3 (3.5%) and $204.7 (4.2%) for the three-
and nine-month periods ended September 30, 1994, respectively, as compared to
the same 1993 periods. Both increases were attributable to an increase in
access lines in service since September 30, 1993. In addition, growth in
revenues from optional extended area calling plans, which shift revenues from
Toll to Local Service, contributed to the increases for both periods. The
increases were partially offset by the effect of net rate reductions since
September 30, 1993, principally in Louisiana and, to a lesser extent, in
Florida, Alabama and North Carolina.
Interstate Access revenues increased $11.0 (1.4%) and $110.5 (5.0%) for the
three- and nine-month periods ended September 30, 1994, respectively, as
compared to the same prior year periods. The increases for both periods were
attributable to growth in minutes of use, additional end user charges due
primarily to access line growth and, for the nine-month period, the effect of
billing adjustments recorded in first quarter 1993, which reduced revenues for
that period. The increases were partially offset by the net effect of rate
reductions, including revenue deferrals under the Federal Communications
Commission's (FCC) price cap plan, and decreased net settlements with the
National Exchange Carriers Association. Since BellSouth Telecommunications'
earnings remain in the sharing range of the FCC's current price cap plan and
because of other factors, it is unlikely that significant revenue growth in this
category can be sustained over the long term.
Intrastate Access revenues increased $4.0 (1.8%) and $31.3 (4.8%) for the three-
and nine-month periods ended September 30, 1994, respectively, from the
comparable 1993 periods. The increases were due to growth in minutes of use,
increased net settlements with independent telephone companies and, for the
nine-month period, the effect of billing adjustments recorded in first quarter
1993, which reduced revenues for that period. The increases were partially
offset by rate reductions since September 30, 1993, principally in Alabama,
Florida and Tennessee.
<PAGE>
Toll revenues decreased $7.3 (2.4%) and $11.8 (1.3%) for the three- and
nine-month periods ended September 30, 1994, respectively, when compared to the
same prior year periods. The decreases were primarily attributable to net rate
reductions since September 30, 1993 and the impact of optional extended area
calling plans which shift revenues to Local Service. The decreases were
partially offset by growth in toll message volumes, reflecting improvements
related in part to optional calling plans.
Directory Advertising and Publishing revenues decreased $0.3 (0.1%) and
increased $16.5 (1.5%) for the three- and nine-month periods ended September 30,
1994, respectively, when compared to the same prior year periods, reflecting
increases in the volumes and prices of advertising sold for Yellow Pages
directories included in both the 1993 and 1994 periods and decreases resulting
from a delay in the issue dates of certain directories.
Wireless Communications revenues include revenues from the consolidated wireless
communications businesses (primarily cellular and paging within BellSouth
Enterprises) as well as revenues from interconnections by unaffiliated cellular
carriers with BellSouth Telecommunications' network. (BellSouth's interests in
the net income or loss of the unconsolidated wireless businesses within
BellSouth Enterprises, which are accounted for under the equity method of
accounting, are recorded in Other Income (Expense), net).
Wireless Communications revenues increased $131.2 (33.0%) and $347.9 (30.8%) for
the three- and nine-month periods ended September 30, 1994, respectively, when
compared to the same periods last year. The increases were attributable to
continued growth of the customer base and demand for wireless services in
domestic and international markets.
Other Services revenues are principally comprised of revenues from customer
premises equipment (CPE) sales and maintenance services, billing and collection
services and other nonregulated services (primarily inside wire services)
offered by BellSouth Telecommunications.
Other Services revenues decreased $14.1 (4.8%) and $4.7 (0.6%) for the three-
and nine-month periods ended September 30, 1994, respectively, when compared to
the corresponding 1993 periods. The decreases were primarily attributable to
increased sharing accruals related to state regulatory plans and the sale in
April 1994 of BellSouth Telecommunications' out-of-region CPE sales and service
operations. The decreases were partially offset by higher demand for
unregulated products and services, including voice messaging and inside wire
services, and the effect of adjustments, related primarily to billing and
collection services.
See "Business Volumes."
Operating Expenses
The components of Total Operating Expenses are Depreciation and Amortization,
Cost of Services and Products and Selling, General and Administrative. Cost of
Services and Products includes employee and employee-related expenses associated
with network repair and maintenance, material and supplies expense, cost of
tangible goods sold and other expenses associated with providing services.
Selling, General and Administrative includes expenses related to sales
<PAGE>
activities such as salaries, commissions, benefits, travel, marketing and
advertising expenses. Total Operating Expenses increased $98.2 (3.2%) and
$256.5 (2.8%) for the three- and nine-month periods ended September 30, 1994,
respectively, compared to the same periods in 1993, the components of which were
as follows:
For the Three For the Nine
Months Ended September 30, Months Ended September 30,
1994 1993 1994 1993 _
Depreciation and
Amortization $ 814.1 $ 789.0 $2,413.2 $2,327.5
Other Operating Expenses:
Cost of Services
and Products 1,521.8 1,445.2 4,506.4 4,403.5
Selling, General and
Administrative 868.1 871.6 2,522.8 2,454.9
2,389.9 2,316.8 7,029.2 6,858.4
Total Operating
Expenses $3,204.0 $3,105.8 $9,442.4 $9,185.9
Depreciation and Amortization increased $25.1 (3.2%) and $85.7 (3.7%) for the
three- and nine-month periods ended September 30, 1994, respectively, compared
to the same periods in 1993. The increases were due to higher levels of
property, plant and equipment since September 30, 1993 resulting from continued
growth in the customer base for wireless and wireline services and continued
modernization of the networks. In addition, higher depreciation rates in
certain jurisdictions contributed to the increase. The effect of the expiration
of inside wire and reserve deficiency amortizations partially offset the
increases for the period.
Other Operating Expenses increased $73.1 (3.2%) and $170.8 (2.5%) for the three-
and nine-month periods ended September 30, 1994, respectively, when compared to
the corresponding 1993 periods. The increases were primarily attributable to
increased expenses related to growth in the wireless communications customer
base, including additional marketing and operational costs associated with
higher levels of sales and expanded operations, and, to a lesser extent, volume
growth in the wireline and directory advertising and publishing businesses. For
the wireline business, the increases reflect additional network-related
expenses, including software license fees and materials, and higher overall
labor costs. The increases in labor costs resulted from annual compensation
increases for management and craft employees and increased overtime attributable
to volume growth and network service activities, partially offset by expense
savings from a net reduction of approximately 3,150 employees since September
30, 1993. The net reduction in employees at BellSouth Telecommunications
reflects reductions of approximately 3,100 attributable to the restructuring
plan announced in the fourth quarter of 1993 and approximately 750 from the sale
in April 1994 of the out-of-region CPE sales and service operations, partially
offset by the addition of about 700 employees primarily for the support of
network and other business functions. For the nine-month period, the increase
in Other Operating Expenses was partially offset by the inclusion in 1993 of
approximately $40 of expenses related to severe weather conditions.
<PAGE>
For the Three For the Nine
Months Ended September 30, Months Ended September 30,
1994 1993 1994 1993 _
Interest Expense $177.3 $159.8 $496.2 $520.6
Other Income
(Expense), net (22.9) 7.9 24.9 33.6
Provision for
Income Taxes 294.0 314.8 934.9 795.9
Interest Expense increased $17.5 (11.0%) and decreased $24.4 (4.7%) for the
three- and nine-month periods ended September 30, 1994, respectively, compared
to the same periods last year. For the three month period, the increase was
attributable to higher interest rates on short-term borrowings and higher
average levels of debt. The increase was partially offset by interest savings
resulting from the refinancing of long-term debt at lower interest rates in
fourth quarter 1993 and, to a lesser extent, in third quarter 1993. For the
nine-month period, the decrease was due to interest savings resulting from the
refinancings of long-term debt at lower interest rates throughout 1993,
partially offset by higher interest rates on short-term borrowings and higher
average levels of debt.
Other Income (Expense), net decreased $30.8 and $8.7 (25.9%) for the three- and
nine-month periods ended September 30, 1994, respectively, compared to the
corresponding periods in 1993. The decreases were due primarily to higher costs
and expenses related to new and start-up unconsolidated operations, principally
the business with RAM Broadcasting Corporation ("RAM"), and, to a lesser extent,
the cellular business in Germany and the long distance telecommunications
business in Chile, as well as higher income attributable to minority interests.
The decreases were partially offset by an overall increase in income from
BellSouth's investments in other unconsolidated domestic and international
wireless businesses and, for the nine month period, the $67.5 gain on sale of
BellSouth's interest in the cellular telephone business in Mexico.
Provision for Income Taxes decreased $20.8 (6.6%) and increased $139.0 (17.5%)
for the three- and nine-month periods ended September 30, 1994 over the
comparable 1993 periods. The decrease for the three-month period was due to the
inclusion in third quarter 1993 of $42.1 for the cumulative adjustment related
to the one percent increase in the Federal statutory income tax rate for
corporations. Of such total adjustment, $26.5 applied to income earned in the
first nine months of 1993 and $15.6 related to the adjustment of the deferred
tax liability at January 1, 1993 for the increase in the tax rate. The decrease
was partially offset by a higher level of pretax income in third quarter 1994.
For the nine-month period, the increase was primarily attributable to a higher
level of pretax income and the effect of the $7.8 transition adjustment
associated with the implementation of SFAS No. 109, "Accounting for Income
Taxes" in first quarter 1993, which reduced tax expense for that period. The
increase was partially offset by the effect of the $15.6 adjustment recorded in
third quarter 1993 which related to the January 1, 1993 deferred tax liability.
<PAGE>
Financial Condition
BellSouth uses the net cash generated from its operations and external financing
to fund capital expenditures, pay dividends and invest in and operate its
existing operations and new business ventures. BellSouth believes that funds
provided from operations and from its readily available sources of external
financing will be sufficient to meet the needs of its business for the
foreseeable future.
BellSouth's cash flow from operations increased 19.1% to $4,070.6 for the first
nine months of 1994, compared to the same period in 1993. The increase was due
in part to the improvement in net income and also to the impact of expenditures
in 1993 attributable to Hurricane Andrew, which reduced cash flow for that
period. Expenditures for the construction and purchase of plant and equipment
to support network development activities, which is BellSouth's primary use of
capital funds, totaled $2,698.0 during the first nine months of 1994, compared
to $2,480.0 for the same period last year. Substantially all funds supporting
construction activity were provided internally and this trend is expected to
continue through 1994.
Cash used for investments in and advances to unconsolidated affiliates increased
from $237.9 to $564.7 in 1994. Approximately 33% of such cash in 1994 was
loaned to Prime South Diversified, Inc. which indirectly wholly owns Community
Cable TV, a Las Vegas cable operation managed by Prime Cable. Approximately 41%
of the cash used was for investments and advances to RAM Mobile Data and the
German and Venezuelan cellular businesses. The remainder was invested in
other businesses in which BellSouth has an interest.
Cash dividends paid to BellSouth's common shareholders totaled $1,039.4 during
the first nine months of 1994, compared to $961.9 during the first nine months
of 1993. The increase was due to the use of $66.4 of common shares, newly
issued by BellSouth, during the first nine months of 1993 as payment in lieu of
cash dividends under the Shareholder Dividend Reinvestment and Stock Purchase
Plan. No such newly-issued shares were used for that purpose during the first
nine months of 1994.
BellSouth's debt to total capitalization ratio increased from 39.2% at September
30, 1993 to 39.5% at September 30, 1994. The increase was attributable to a
slight increase in the level of debt.
Other Matters
Restructuring of Telephone Operations
In the fourth quarter of 1993, BellSouth Telecommunications recognized a
$1,136.4 restructuring charge in connection with a plan to redesign, consolidate
and streamline the fundamental processes and work activities in its telephone
operations. The restructuring is being undertaken in response to an
increasingly competitive business environment. Upon completion, restructuring
of the telephone operations is expected to improve overall responsiveness to
customer needs and reduce costs. The charge consists of $368.2 for Employee
Separation, $342.8 for Consolidation/Elimination of Operations and $425.4 for
Systems.
<PAGE>
Employee Separation. Employee separation costs include severance payments,
health care coverage, education benefits, and costs of relocating employees to
new job locations, as well as pension curtailment expenses. These costs relate
to BellSouth Telecommunications' targeted reduction of 10,200 employees by the
end of 1996. Such reductions will result in future cost savings and, as a
result, are expected to improve BellSouth Telecommunications' competitive
position.
Consolidation/Elimination of Operations. Consolidation and elimination of
various operations involve the redesign of key work processes and the design of
new processes, both of which facilitate the consolidation of service functions
and permit the targeted employee reductions. These costs include those to
implement changes such as: the consolidation of data centers from 11 to 6;
consolidation of comptrollers offices from 48 to 11; and consolidation of repair
and installation centers from 288 to 80. Through these changes, BellSouth
Telecommunications expects to establish and implement enhanced customer service
processes.
Systems. The information management systems in use prior to the restructuring
effort are inadequate to deal with increased competition and changing
technology. Accordingly, as a part of the restructuring plan, a major redesign
of information systems throughout the company is being undertaken to attain a
systems framework that both facilitates the targeted employee reductions and
correlates to the increasingly competitive business environment. This effort
entails significant changes to the overall computing platform, architecture and
corporate systems structure.
Progress Under the Plan. Since inception of the restructuring plan in fourth
quarter 1993, cumulative employee reductions and total amounts charged against
the restructuring reserve are 3,100 and $300, respectively, detailed as follows:
Three Months Ended Three Months Ended Nine Months Ended
December 31, 1993 September 30, 1994 September 30, 1994
Employees Amount Employees Amount Employees Amount
1,300 $ 53.0 1,000 $120.7 1,800 $247.0
As of September 30, 1994, the recorded liability associated with the
restructuring plan was $836.4. For the nine-month period ended September 30,
1994, cash expenditures relating to the ongoing implementation of the
restructuring plan were approximately $204. The levels of restructuring
activities and cash expenditures related to this plan are expected to increase
over the restructuring period.
<PAGE>
Business Developments
Optus Vision. Optus Communications Pty. Ltd. (Optus), an international
consortium in which BellSouth has an approximate one-fourth ownership interest,
has agreed to form a business (Optus Vision) with Australian and U.S. companies
to develop a high capacity broadband network in Australia. The network
services are expected to include cable and pay television, interactive services
and local telecommunications services. Optus will own approximately 35% of
Optus Vision. BellSouth expects to invest up to $200 over the next three years
in this business.
Other Developments. BellSouth, Ameritech Corporation, SBC Communications Inc.
(formerly Southwestern Bell Corporation) and The Walt Disney Company have
signed a memorandum of understanding to form a business to acquire, develop,
market and deliver traditional and interactive video programming services to
consumers. Such services could include broadcast and satellite television
networks, movies-on-demand and interactive shopping and entertainment services.
BellSouth has also signed a memorandum of understanding with China United
Telecommunications Corporation, LTD (China Unicom) of the Peoples Republic of
China to provide engineering, system integration and other technological
services. BellSouth will provide these services in connection with China
Unicom's development of networks for cellular, wireless and long distance
communications.
In October, BellSouth announced its intention to participate in the FCC's
December 1994 auction for broadband Personal Communications Services (PCS)
licenses for Major Trading Areas (MTAs). BellSouth plans to bid on two
licenses in the nine-state area served by BellSouth Telecommunications. One
such bid, for the MTA covering North and South Carolina, will be submitted by a
consortium of which BellSouth owns approximately 60%. BellSouth alone will bid
for the Eastern Tennessee MTA.
Regulatory Environment
Accounting Under SFAS No. 71
BellSouth's regulated enterprise, BellSouth Telecommunications, continues to
account for the economic effects of regulation under SFAS No. 71, "Accounting
for the Effects of Certain Types of Regulation." Where appropriate, the
provisions of SFAS No. 71 give recognition to the effect of actions of
regulators, which can provide reasonable assurance of the existence of an
asset, reduce or eliminate the value of an asset or impose or eliminate a
liability on a regulated entity. As a result of such actions by regulators,
BellSouth's balance sheet at September 30, 1994 reflects deferred charges
(regulatory assets) of approximately $129, primarily related to compensated
absences and unamortized issuance costs for debt that has been refinanced, and
deferred credits (regulatory liabilities) of approximately $39, related to
income tax issues. Virtually all of the current regulatory assets and
liabilities arose in connection with the incorporation of new accounting
standards into the ratemaking process, and are transitory in nature. The
magnitude of the regulatory assets and liabilities is decreasing over time due
to the ongoing amortization prescribed as a part of the adoption in 1988 of the
FCC's current Uniform System of Accounts. Additional regulatory assets and
liabilities may arise in the future as long as BellSouth Telecommunications
remains subject to the provisions of SFAS No. 71. SFAS No. 71 also requires
<PAGE>
that telephone plant and equipment be depreciated using asset lives prescribed
by regulators. Generally as a result of increasing competition, such
regulator-prescribed lives extend beyond the telephone plant's actual economic
and technological lives. Consequently, the recorded net book value of the
telephone plant is greater than that which would otherwise be recorded by
unregulated enterprises.
Various forms of earnings-based regulation remain in effect at the federal
level and in all nine states served by BellSouth Telecommunications. However,
recent legislative and regulatory initiatives suggest that fully competitive
markets for telecommunications services will eventually be established. In its
recently-completed session, the United States Congress considered legislation
designed specifically to open all telecommunications services to full
competition. Although no such legislation was enacted into law, BellSouth
expects that Congress will again consider legislation of this type in its next
session. Furthermore, in the regulatory arena, BellSouth Telecommunications
continues to pursue modification of the existing regulatory framework. Price
regulation plans, whereby prices of basic local exchange service are directly
regulated and prices for other telecommunications products and services are
based on market factors, have been proposed for implementation and are under
review in four of nine states in the service area.
BellSouth Telecommunications would be required to discontinue accounting under
SFAS No. 71 if the existing and anticipated levels of competition no longer
allow for service and product pricing that provides for the recovery of costs.
Additionally, SFAS No. 71 would no longer apply if BellSouth Telecommunications
is successful in altering the existing regulatory framework and achieving price
regulation since such plans do not provide for the recovery of specific costs.
While accounting under SFAS No. 71 is currently appropriate, it is increasingly
likely that the company will discontinue accounting under SFAS No. 71 due to
the effect of one or both of these conditions. In that event, the impact on
BellSouth's financial position and results of operations would be material.
Under such circumstances, BellSouth Telecommunications would be required to
reduce the recorded value for telephone plant and equipment in recognition of
amounts that are not recoverable or are overstated due to longer
regulator-prescribed asset lives. In addition, BellSouth Telecommunications
would be required to eliminate its regulatory assets and liabilities, adjust
the level of its unamortized investment tax credits and fully adopt issue basis
accounting for its directory publishing fees. Specific financial impacts of
discontinuing SFAS No. 71 would depend on the timing and magnitude of changes,
both in the marketplace and in the overall regulatory framework.
Judicial Update
In September 1994, the U.S. District Court for the Northern District of Alabama
declared as unconstitutional a provision of the Cable Communications Policy Act
of 1984 that prohibits BellSouth and its affiliates from providing cable
television programming in the areas served by BellSouth Telecommunications. As
a result of the Court's decision, which was rendered in response to a suit
filed by BellSouth in 1993 and is now pending appeal by the United States,
BellSouth and its affiliates may seek the appropriate governmental
authorizations to provide video programming and interactive services directly
to consumers within the areas of the Court's jurisdiction. Initially,
<PAGE>
BellSouth plans to provide such services to residents of Vestavia Hills,
Alabama, subject to finality of the Court's decision and approval by the FCC
and the City of Vestavia Hills. The cost of constructing the network for
approximately 7,600 households in Vestavia Hills is estimated to be $7 to $8.
State Regulation
South Carolina. In August, the South Carolina Public Service Commission
concluded its hearings concerning BellSouth Telecommunications' current rates
and 1992 earnings. An order is expected to be issued by the South Carolina
Commission in the near term.
Mississippi. In response to an order issued by the Mississippi Public Service
Commission, BellSouth Telecommunications filed in September a model price
regulation plan. Under the model plan, the regulatory focus would shift from
the company's earnings to rates that customers pay for services. The proposal
includes provisions that basic rates will not increase for three years and the
rates for interconnection services and other services (as defined in the
model plan) would be set by BellSouth Telecommunications based on market
considerations, subject to certain defined limitations. Hearings are scheduled
during the first quarter of 1995.
Kentucky. Pursuant to an order issued by the Kentucky Public Service
Commission, hearings originally scheduled for the fall of 1994 on BellSouth
Telecommunications' proposed price regulation plan have been postponed. Such
hearings have not yet been rescheduled.
Louisiana. In October, hearings regarding BellSouth Telecommunications'
proposed price regulation plan were completed. The Louisiana Public Service
Commission has not issued an order.
Georgia. The Georgia Public Service Commission is currently reviewing the
company's earnings in conjunction with hearings on the proposed price
regulation plan filed in June by BellSouth Telecommunications.
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number
3b Bylaws of BellSouth Corporation.
4a No instrument which defines the rights of
holders of long and intermediate term debt of
BellSouth Corporation is filed herewith
pursuant to Regulation S-K, Item
601(b)(4)(iii)(A). Pursuant to this
regulation, BellSouth Corporation hereby
agrees to furnish a copy of any such
instrument to the SEC upon request.
10aa BellSouth Corporation Nonqualified Deferred
Income Plan.
10bb BellSouth Corporation Nonqualified Deferred
Compensation Plan.
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed
Charges. (See "Selected Operating Data"
section of this Form 10-Q.)
27 Financial Data Schedule.
(b) Reports on Form 8-K:
July 21, 1994 - BellSouth Corporation Second Quarter 1994
Earnings Release
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELLSOUTH CORPORATION
By /s/ Ronald M. Dykes
RONALD M. DYKES
Vice President and Comptroller
(Principal Accounting Officer)
November 9, 1994
<PAGE>
EXHIBIT INDEX
Exhibit
Number
3b Bylaws of BellSouth Corporation.
10aa BellSouth Corporation Nonqualified Deferred
Income Plan.
10bb BellSouth Corporation Nonqualified Deferred
Compensation Plan.
11 Computation of Earnings Per Common Share.
12 Computation of Ratio of Earnings to Fixed
Charges. (See "Selected Operating Data"
section of this Form 10-Q.)
27 Financial Data Schedule.
EXHIBIT 3b
BELLSOUTH CORPORATION
Incorporated under the Laws
of the State of Georgia
on October l3, l983
Adopted
October 24, l983
BY-LAWS
As Amended
September 24, 1994
Secretary's Department
19A01 Campanile Building
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
<PAGE>
CONTENTS
Article I......Shareholders
Article II.....Directors
Article III....Officers
Article IV.....Stock
Article V......Business Combinations
Article VI.....Seal
Article VII....Indemnity
Article VIII...Amendment of By-laws
<PAGE>
BY-LAWS
OF
BELLSOUTH CORPORATION
ARTICLE I
Shareholders
Section l. Annual Meeting. The annual meeting of the
shareholders for the election of Directors and for the
transaction of such other business as may properly come before
the meeting shall be held on such date and at such time and
place as the Board of Directors may by resolution provide.
Notice of any nominations of persons for election to the Board
of Directors or of any other business to be brought before an
annual meeting of shareholders by a shareholder must be
provided in writing to the Secretary of the Corporation not
later than the close of business on the sixtieth (60th) day nor
earlier than the close of business on the one hundred and
twentieth (120th) day prior to the date of the meeting. Such
shareholder's notice shall set forth (a) as to each person whom
the shareholder proposes to nominate for election as a director
all information relating to such person that is required to be
disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended (including such person's written consent to being named
in the Proxy Statement as a nominee and to serving as a
director if elected, and evidence reasonably satisfactory to
the Company that such nominee has no interests that would
limit their ability to fulfill their duties of office; (b) as
to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired
to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any,
on whose behalf the proposal is made; and (c) as to the
shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (i) the name
and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the
class and number of shares of the Corporation that are owned
beneficially and held of record by such shareholder and such
beneficial owner.
Section 2. Special Meeting. A special meeting of the
shareholders may be called at any time by the Board of
Directors or the Chief Executive Officer and shall be called
upon written request to the Chief Executive Officer or
Secretary, signed by the holders of at least two-thirds of the
outstanding shares entitled to vote at such meeting. Such
written request shall specify the time and purpose of the
proposed meeting.
<PAGE>
Section 3. Notice of Meetings of Shareholders. Written notice
of each meeting of shareholders, stating the place and time of
the meeting, shall be mailed to each shareholder entitled to
vote at such meeting at such shareholder's address shown on the
records of the Corporation not less than thirty nor more than
fifty days prior to such meeting. If the notice is for a
special meeting, the notice shall also include the purpose or
purposes for which the special meeting is being called and
shall indicate that the notice is being issued by or at the
direction of the person or persons calling the meeting.
Failure to receive notice of any meeting of shareholders shall
not invalidate the meeting. Notice of any meeting may be given
by or at the direction of the Chairman, the President, the
Secretary or by the person or persons calling such meeting.
Section 4. Quorum; Required Shareholder Vote. A quorum for
the transaction of business at any meeting of the shareholders
shall exist when the holders of forty per centum of the
outstanding shares entitled to vote are represented either in
person or by proxy. At any duly constituted meeting, or at any
adjournment thereof, the affirmative vote of the majority of
the shares represented at the meeting and entitled to vote on
the subject matter shall be the act of the shareholders, unless
a greater vote is required by law, by the Articles of
Incorporation or by these By-laws. The holders of a majority of
the voting shares represented at a meeting may adjourn such
meeting to another time or place despite the absence of a
quorum.
Section 5. Ballots. All elections by shareholders shall be by
ballot.
Section 6. Proxies. A shareholder may vote either in person
or by a proxy which such shareholder has duly executed in
writing.
Section 7. Inspectors of Elections. The Board of Directors,
in advance of any shareholders' meeting, shall appoint an
Inspector or Inspectors to act at the meeting or any
adjournment, thereof. Any vacancy may be filled by appointment
of the Board in advance of the meeting or at the meeting by the
person presiding thereat.
ARTICLE II
Directors
Section l. Power of Directors. The Board of Directors shall
direct the management of the business and affairs of the
Corporation and may exercise all of the powers of the
Corporation, subject to any restrictions imposed by law, by the
Articles of Incorporation or by these By-laws.
<PAGE>
Section 2. Composition of the Board. The Board of Directors
of the Corporation shall consist of seventeen (17) natural
persons of the age of eighteen years or over. The Directors
shall be divided into three classes (of at least three
directors each), as nearly equal in number of directors as
possible, with the term of each class to be three years. Each
Director shall hold office for the term for which elected,
which term shall end at an Annual Meeting of Shareholders, and
until his successor shall have been elected and qualified, or
until his earlier retirement, resignation, removal from office,
or death. The authorized number of directors may be increased
or decreased from time to time by vote of a majority of the
then authorized number of directors or by the affirmative vote
of the holders of at least 75% of the voting power of all
shares of the Corporation entitled to vote generally in the
election of directors, voting together as a single class;
provided, however, that such number shall not be less than
nine.
Section 3. Election of Chairman of the Board and Vice
Chairmen of the Board. The Board of Directors may elect from
among their number a Chairman of the Board, and may also elect
from among their number a Vice Chairman or Vice Chairmen of the
Board (referred to in these By-laws as a "Vice Chairman" or
"Vice Chairmen").
Section 4. Chairman of the Board. The Chairman of the Board
(referred to in these By-laws as the "Chairman") shall preside,
when present, at all meetings of the Board of Directors and
shall have such other powers and duties as may be conferred
upon or assigned to the Chairman by the Board of Directors.
Section 5. Vice Chairmen of the Board. The Vice Chairman (or
if there be more than one Vice Chairman, the Vice Chairman
designated by the Chairman) of the Board, shall preside at
meetings of the Board of Directors in the absence of the
Chairman and at meetings of the Shareholders in the absence of
the Chief Executive Officer, and shall perform such other
duties as the Board or Chairman may assign.
Section 6. Meetings of the Board; Notice of Meetings; Waiver
of Notice. The Annual Meeting of the Board of Directors, for
the purpose of electing officers and transacting such other
business as may be brought before the meeting, shall be held
each year immediately following the Annual Meeting of the
shareholders. Regular meetings shall be held at such times and
places as the Board of Directors or Committees may determine,
and no notice of such regular meetings need be given. Special
meetings of the Board of Directors may be called at any time by
the Chief Executive Officer or by any two members of the
Executive Committee, and shall be called by the Chief Executive
Officer or the Secretary upon request in writing signed by two
or more directors and specifying the purpose or purposes of the
meeting.
<PAGE>
Notice of the time and place of such special meetings shall be
given to each Director, in person or by first class mail,
telegraph, cablegram or telephone, or by any other means
customary for expedited business communications, at least two
(2) days before the meeting. Neither the business to be
transacted at, nor the purpose of, any meeting of the Board of
Directors need be stated in the notice of such meeting.
Section 7. Quorum; Vote Requirement. One-third of the number
of Directors fixed in these By-laws at any time shall
constitute a quorum for the transaction of business at any
meeting. When a quorum is present, the vote of a majority of
the Directors present shall be the act of the Board of
Directors, unless a greater vote is required by law, by the
Articles of Incorporation or by these By-laws.
Section 8. Action of Board Without Meeting. Any action
required or permitted to be taken at a meeting of the Board of
Directors or any committee thereof may be taken without a
meeting if written consent, setting forth the action so
taken,is signed by all the Directors or committee members and
filed with the minutes of the proceedings of the Board of
Directors or committee. Such consent shall have the same force
and effect as a unanimous affirmative vote of the Board of
Directors or committee, as the case may be.
Section 9. Committees. The Board of Directors, by resolution
adopted by a majority of all of the Directors, may designate
from among its members an Executive Committee and other
committees, each composed of three (3) or more Directors, and
may fix the quorum thereof. Any committee so designated shall
serve at the pleasure of and may exercise such authority as is
delegated by the Board of Directors, provided that no committee
shall have the authority of the Board of Directors to
(1) approve or propose to shareholders action required to be
approved by shareholders, (2) fill vacancies on the board of
directors or on any of its committees, (3) amend the Articles
of Incorporation, (4) adopt, amend, or repeal By-laws, or
(5) approve a plan of merger not requiring shareholder
approval.
Section l0. Executive Committee. The Executive Committee
shall consist of the Chairman and the President and such other
Directors as are designated from time to time by the Board of
Directors. The Chief Executive Officer may designate an
Alternate Chairman who shall preside during the absence or
disability of the Chief Executive Officer. The Executive
Committee shall, except as otherwise provided herein, by law or
by resolution of the Board of Directors, have all the authority
of the Board of Directors during the intervals between the
meetings of the Board of Directors.
<PAGE>
Section ll. Vacancies. A vacancy occurring in the Board of
Directors by reason of the removal of a Director by the
shareholders shall be filled by the shareholders, or, if
authorized by the shareholders, by the remaining Directors. Any
other vacancy occurring in the Board of Directors, including,
without limitation, any vacancy occurring by reason of an
amendment to these By-laws increasing the number of Directors,
may be filled by the affirmative vote of a majority of the
remaining Directors, though less than a quorum of the Board of
Directors, or, if the vacancy is not so filled, or if no
director remains, by the shareholders. A Director elected to
fill a vacancy shall serve for the unexpired term of his
predecessor in office or, if such vacancy occurs by reason of
an amendment to these By-laws increasing the number of
Directors, until the next election of Directors by the
shareholders and the election and qualification of the
successor.
Section l2. Telephone Conference Meetings. Members of the
Board of Directors, or any committee designated by the Board of
Directors, may participate in a meeting of the Board or
committee by means of telephone conference or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and
participation in a meeting pursuant to this section shall
constitute presence in person at such meeting.
Section l3. Removal of Directors. Subject to the rights of
the holders of any series of Preferred Stock then outstanding,
any director, or all directors, may be removed from office at
any time, with or without cause, only by the affirmative vote
of the holders of at least 75% of the voting power of all
shares of the Corporation entitled to vote generally in the
election of directors, voting together as a single class.
ARTICLE III
Officers
Section l. Executive Structure. The officers of the
Corporation shall be elected by the Board of Directors and
shall consist of a Chairman of the Board, if there be one, a
President, a Vice Chairman or Vice Chairmen of the Board, if
there be any and if elected as an officer or officers of the
Corporation, such number of Executive Vice Presidents and Vice
Presidents as the Board of Directors shall from time to time
determine, a Secretary, a Treasurer, a Comptroller and such
other officers or assistant officers as may be elected or
appointed by the Board of Directors. The Board shall designate
either the Chairman or the President as the Chief Executive
Officer of the Corporation and may designate a Chief Operating
Officer. Each officer shall hold office for the term for which
such officer has been elected or appointed and until such
officer's successor has been elected or appointed and has
qualified, or until such officer's earlier resignation, removal
from office, or death. Any two or more offices may be held by
the same person, except that neither the Chairman nor the
President shall serve as Secretary or Assistant Secretary.
<PAGE>
Section 2. Chief Executive Officer. The Chief Executive
Officer shall, under the direction of the Board of Directors,
have responsibility for the general direction of the
Corporation's business, policies and affairs. The Chief
Executive Officer shall preside, when present, at all meetings
of the shareholders and at all meetings of the Executive
Committee. The Chief Executive Officer shall have such other
authority and perform such other duties as usually appertain to
the chief executive office in business corporations or as are
provided by the Board of Directors. The Chief Executive Officer
shall be empowered at any time and from time to time to issue
and promulgate rules, regulations and directives relating to
the conduct of the business and affairs of the Corporation, and
the Secretary of the Corporation shall maintain a record of
such rules, regulations and directives.
Section 3. Chief Operating Officer. If there be one, the
Chief Operating Officer shall, under the direction of the Chief
Executive Officer, have direct superintendence of the
Corporation's business, policies, properties and affairs. The
Chief Operating Officer shall have such further powers and
duties as from time to time may be conferred upon or assigned
to such officer by the Board of Directors or the Chief
Executive Officer. In the absence or disability of the Chief
Executive Officer, the Chief Operating Officer shall perform
the duties and exercise the powers of the Chief Executive
Officer.
Section 4. President. The President shall have such powers
and duties as from time to time may be conferred upon or
assigned to the President by the Board of Directors or the
Chief Executive Officer (if the President is not the Chief
Executive Officer).
Section 5. Vice Presidents. The Executive Vice Presidents, if
any, and Vice Presidents shall have such powers and duties as
from time to time may be conferred upon or assigned to them by
the Board of Directors, the Chairman, or the President. An
Executive Vice President or other officer may be responsible
for the assignment of duties to subordinate Vice Presidents.
Section 6. Secretary. The Secretary shall send all requisite
notices of meetings of the shareholders, the Board of
Directors, and the Executive Committee. The Secretary shall
attend all meetings of the shareholders, the Board of
Directors, and the Executive Committee, and shall keep a true
and faithful record of the proceedings. The Secretary shall
have custody of the seal of the Corporation, and of all
records, books, documents, and papers of the Corporation,
except those required to be in the custody of the Treasurer or
the Comptroller and except such subsidiary records as may be
kept in departmental offices. The Secretary shall sign and
execute all documents which require his signature and
execution, and shall affix the seal of the Corporation thereto
<PAGE>
and attest the same when necessary. Assistant Secretaries
shall have such of the authority and perform such of the duties
of the Secretary as may be provided in these By-laws or
assigned to them by the Board of Directors or by the Secretary.
During the Secretary's absence or inability, the Secretary's
authority and duties shall be possessed by such Assistant
Secretary or Assistant Secretaries as the Board of Directors,
or the Secretary with the approval of the Chairman, or the
President may designate.
Section 7. Treasurer. The Treasurer shall receive and have
charge of all funds and securities of the Corporation. The
Treasurer shall deposit the funds to the credit of the
Corporation in such depositories as shall be approved from time
to time by the Chairman, the President, the Executive Vice
President or Vice President responsible for financial matters,
or the Treasurer, and the Treasurer shall disburse the same
only on written approval of the Comptroller or the
Comptroller's duly authorized representative, or under such
other rules and regulations and upon such other disbursement
instruments as the Chairman or the Executive Vice President or
Vice President responsible for financial matters may adopt or
authorize. The Treasurer shall keep full and regular books
showing all the Treasurer's receipts and disbursements.
Assistant Treasurers shall have such of the authority and
perform such of the duties of the Treasurer as may be provided
in these By-laws or assigned to them by the Board of Directors
or by the Treasurer. During the Treasurer's absence or
inability, the Treasurer's authority and duties shall be
possessed by such Assistant Treasurer or Assistant Treasurers
as the Board of Directors, or the Treasurer upon the approval
of the Chairman, the President or the officer responsible for
financial matters, may designate. The Treasurer and each
Assistant Treasurer shall give such security for the faithful
performance of such officer's duties as the Board of Directors
may require.
Section 8. Comptroller. The Comptroller shall be the
principal accounting officer of the Corporation and shall have
custody and charge of all books of account, except those
required by the Treasurer in keeping record of the work of the
Treasurer's office, and shall have supervision over such
subsidiary accounting records as may be kept in departmental
offices. The Comptroller shall have access to all books of
account, including the records of the Secretary and the
Treasurer, for obtaining information necessary to verify or
complete the records of the Comptroller's office. The
Comptroller or a duly authorized representative shall certify
to the authorizations and approvals pertaining to all vouchers;
and no payments from the general cash shall be made by the
Treasurer except on vouchers bearing the written approval of
the Comptroller or an authorized representative, unless the
Board of Directors, the Chairman or other officer responsible
for financial matters provides otherwise. Assistant
Comptrollers shall have such of the authority and perform such
<PAGE>
of the duties of the Comptroller as may be provided in these
By-laws or assigned to them by the Board of Directors or by the
Comptroller. During the Comptroller's absence or inability, the
Comptroller's authority and duties shall be possessed by such
Assistant Comptroller or Assistant Comptrollers as the Board of
Directors, or the Comptroller upon the approval of the
Chairman, the President or other officer responsible for
financial matters may designate.
Section 9. Other Duties and Authority. Each officer, employee
and agent of the Corporation shall have such other duties and
authority as may be conferred upon such officer by the Board of
Directors or delegated to such officer by the Chairman, the
President or the responsible officer.
Section 10. Removal of Officers. Any officer may be removed
at any time by the Board of Directors with or without cause,
and such vacancy may be filled by the Board of Directors.
Section ll. Appointed Officers. The Board of Directors, the
Chairman, the President, or the officer responsible for
administrative matters may, from time to time, appoint
individuals to serve in such designated capacities for the
Corporation (such as Vice President, Assistant Vice President,
Assistant Secretary, Assistant Treasurer or Assistant
Comptroller) as may be deemed appropriate. Each appointed
officer shall perform such duties and shall have such authority
as shall be delegated to such officer from time to time by the
officer of the Corporation to whom such appointed officer is
responsible. Any duty or authority delegated to any appointed
officer pursuant to this Section may be withdrawn, with or
without cause, at any time by the Board of Directors, the
Chairman, the President, the officer responsible for
administrative matters or such officer delegating such duty or
authority to the appointed officer.
ARTICLE IV
Stock
Section l. Stock Certificates. The shares of stock of the
Corporation shall be represented by certificates in such form
as may be approved by the Board of Directors, which
certificates shall be signed or signed by facsimile by the
Chairman or President and the Secretary or Treasurer or an
Assistant Secretary or Assistant Treasurer of the Corporation;
and which shall be sealed with the seal of the Corporation or a
facsimile thereof. No share certificate shall be issued until
the consideration for the shares represented thereby has been
fully paid or otherwise provided for.
<PAGE>
Section 2. Transfer of Stock. Shares of stock of the
Corporation shall be transferred on the books of the
Corporation upon surrender to the Corporation of certificates
representing the shares to be transferred accompanied by an
assignment in writing of such shares properly executed by the
shareholder of record or such shareholder's duly authorized
attorney-in-fact and with all taxes on the transfer having been
paid. The Corporation may refuse any requested transfer until
furnished evidence satisfactory to it that such transfer is
proper. The Board of Directors may make such rules concerning
the issuance, transfer and registration of stock, the
cancellation of stock and certificates, and requirements
regarding the replacement of lost, destroyed or wrongfully
taken stock certificates (including any requirement of an
indemnity bond prior to issuance of any replacement
certificate) as it deems appropriate.
Section 3. Registered Shareholders. The Corporation may deem
and treat the holder of record of any stock as the absolute
owner for all purposes and shall not be required to take any
notice of any right or claim of right of any other person.
Section 4. Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of
the Corporation may fix in advance a date as the record date
for any such determination of shareholders, such date in any
case to be not more than fifty days and, in the case of a
meeting of shareholders, not less than ten days prior to the
date on which the particular action requiring such
determination of shareholders is to be taken.
ARTICLE V
Business Combinations
Section 1. All of the requirements within Article 11 of
Chapter 2 of Title 14 of the Official Code of Georgia
Annotated, in the form enacted and amended by Georgia Laws,
l985, Page 527, shall be applicable to business combinations of
the Corporation.
Section 2. All of the requirements within Article 11A of
Chapter 2 of Title 14 of the Official Code of Georgia Annotated
in the form enacted by Georgia Laws 1988, Page 158, shall be
applicable to business combinations of the Corporation.
ARTICLE VI
Seal
The common seal of the Corporation shall bear within
concentric circles the words "BellSouth Corporation" with the
word "Seal" in the center. The seal and its attestation may be
by facsimile.
<PAGE>
ARTICLE VII
Indemnity
Section 1. Any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (including any action by or in
the right of the Corporation), by reason of the fact that such
person is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified by the
Corporation against expenses (including reasonable attorney's
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such
action, suit or proceeding, to the maximum extent permitted by,
and in the manner provided by, the Georgia Business Corporation
Code.
Section 2. The Board of Directors is expressly authorized on
behalf of the Corporation to enter indemnity agreements between
the Corporation and any director or officer of the Corporation,
or any person serving at the request of the Corporation as a
director, officer, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan,
trust or enterprise, in form and content acceptable to the
Board and substantially in the form of agreement submitted to
and approved by the shareholders of the Corporation. Such
agreements may provide that the Corporation shall indemnify
such persons and provide for procedural rights intended to
assure that appropriate indemnification is available against
expenses (including reasonable attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such persons in connection with such action, suit
or proceeding. No indemnification may be made for liability
(i) for any appropriation, in violation of a director's duties,
of any business opportunity of the Corporation, (ii) for acts
or omissions not in good faith or constituting intentional
misconduct or a knowing violation of law, (iii) for the types
of liability set forth in Section 14-2-154 of the Georgia
Business Corporation Code, or (iv) for any transaction from
which the person derived an improper personal benefit.
ARTICLE VIII
Amendment of By-laws
The Board of Directors shall have the power to alter, amend
or repeal the By-laws or adopt new by-laws, but any by-laws
adopted by the Board of Directors may be altered, amended or
repealed and new by-laws adopted by the shareholders. The
shareholders may prescribe that any by-law or by-laws adopted
<PAGE>
by them, including, without limitation, a by-law establishing
the number of Directors, shall not be altered, amended or
repealed by the Board of Directors. Action by the Board of
Directors with respect to the By-laws shall be taken by an
affirmative vote of a majority of all of the Directors then in
office. Action by the shareholders with respect to the By-laws
shall be taken by an affirmative vote of a majority of the
shares entitled to vote at an election of Directors.
Notwithstanding the preceding sentence, the affirmative vote
of the holders of at least 75% of the voting power of all
shares of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, shall
be required to amend or repeal, or adopt any provision
inconsistent with, Section 2 or l3 of Article II of these By-
laws, or this sentence.
EXHIBIT 10aa
BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN
<PAGE>
BellSouth Nonqualified Deferred Income Plan
BellSouth Corporation ("BellSouth") hereby establishes
this first (1st) day of September, 1985, the BellSouth
Nonqualified Deferred Income Plan ("Plan") for certain
employees of BellSouth and its subsidiaries.
Article 1
Definitions
1.1 "Base Salary" means the gross salary of the
Participants, including the amount of any before-tax
basic and supplemental contributions to the BellSouth
Management Savings and Employee Stock Ownership Plan
or similar contributions to a comparable plan
maintained by a Participating Company and the amount
of any other deferrals from gross salary under any
nonqualified deferred compensation plans which may be
maintained by a Participating Company from time to
time.
1.1(A) "CEO" means the Chief Executive Officer of
BellSouth Corporation.
1.1(B) "Code" means the Internal Revenue Code of
1986, as amended.
1.2 "Compensation" means Net Gross Monthly Salary.
1.3 "Compensation Rate" means the cash compensation
of a Participant, including (i) annual Base Salary
rate in effect on the date the Deferral Agreement is
executed, and (ii) lump-sum awards under incentive
compensation programs received for performance
rendered during the calendar year preceding the year
in which the Deferral Agreement is executed. For
Participants employed by Participating Companies whose
compensation structures do not readily fit within this
definition, Compensation Rate means cash compensation
as defined by the CEO.
1.4 "Deferral Agreement" means an agreement pursuant
to which deferral elections under this Plan are made
and includes a standard Deferral Agreement,
substantially in the form of Exhibit A hereto, a
Deferral Agreement for deferral of certain lump-sum
payments, substantially in the form of Exhibit B
hereto, and other agreements approved from time to
time for use in connection with this Plan as described
in Article 2.
1.5 "Employer" means (i) BellSouth and (ii) any
subsidiary of BellSouth authorized by BellSouth to
enter into Deferral Agreements pursuant to this Plan.
1.5(A) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
<PAGE>
1.6 "Net Gross Monthly Salary" means the amount of a
Participant's Base Salary which actually is paid to
him or her in any month, net of all withholding,
allotments, and deductions other than any reduction as
a result of participation in this Plan.
1.7 "Participant" means an employee who is
authorized by the CEO or his delegated representative
to participate in the Plan and to execute a Deferral
Agreement.
1.8 "Plan Year" means (i) January 1, 1986 through
December31, 1986 and (ii) each and every calendar year
thereafter.
1.8(A) "Responsible Officer" means the officer
elected by the Employer's Board of Directors (or
similar governing body) responsible for human
resources matters for the Employer.
1.9 "Retirement" means any termination by a
Participant who is eligible for a pension, other than
a deferred vested pension, under the terms and
conditions of the BellSouth Personal Retirement
Account Pension Plan, as amended from time to time, or
comparable plan maintained by the Participating
Company employing the Participant. (In the absence of
a comparable Participating Company sponsored plan,
Retirement eligibility is based upon certification by
the Board of Directors of the Participating Company
employing the Participant that the Participant is
retirement eligible.)
Additionally, "Retirement" means (i) any termination
by a Participant who is eligible for a service benefit
under terms and conditions of the BellSouth
Corporation Supplemental Executive Retirement Plan,
(ii) any termination by a Participant who has attained
age 62 or older and whose Term of Employment is ten
years or more at the time of employment termination,
(iii) any termination by a Participant who separates
from service under the BellSouth Career Transition
Assistance Plan (CTAP), the BellSouth Enterprises
Employee Career Transition Plan (ECTP), the BellSouth
Telecommunications, Inc. Career Transition Assistance
Plan (BST CTAP), the BellSouth Telecommunications,
Inc. Career Transition Assistance Plan-Professional
(BST CTAP-P), the BellSouth Telecommunications, Inc.
Employee Separation Assistance Plan (ESAP), the
BellSouth Advertising & Publishing Corporation
Voluntary Management Separation Pay Plan (VMSPP), or a
designated successorto anysuch plan, or other
severance arrangement approved by the CEOas applicable
to this Plan, and (iv) any termination by a
Participant who separates from service under
theBellSouth Voluntary Transition Incentive Plan
(VTIP) and whose Term of Employment is ten years or
more of the time of such separation.
<PAGE>
1.10 "Disability" means a condition as that term is
defined in the BellSouth Long Term Disability Plan for
Salaried Employees, as amended from time to time, or
comparable plan maintained by the Participating
Company employing the Participant. In the absence of
a comparable Participating Company sponsored
disability plan, the condition is based upon
certification by the Board of Directors of the
Participating Company employing the Participant that
the Participant is disabled.
1.11 "Participating Company" means (i) BellSouth and
(ii) any subsidiary of BellSouth at least eighty
percent (80) of the capital stock of which is owned by
BellSouth or by one or more subsidiaries of BellSouth,
which has been designated by BellSouth for
participation in this Plan.
1.12 "Term of Employment" shall have the same
meaning as is given such term in theBellSouth Personal
Retirement Account Pension Plan, except that it shall
include only the portion of a Participant's term
ofemployment as is attributableto service with
BellSouth, a Participating Company or any other
corporation which is a member of the same controlled
group of corporations, within the meaning of Code
Section 414(b), as BellSouth and any trade or business
(whether or not incorporated) which is under common
control with BellSouth, within the meaning of Code
Section 414(c).
Article 2
Term; Amendment
This Plan is effective on the date hereof and shall
be effective until terminated by the CEO. This Plan
provides for 1986 through 1998 with Plan
specifications and interest rates being established by
the CEO for each separate Plan Year. This Plan may be
amended, renewed, restated or extended for additional
Plan Years by the CEO and the CEO may in his sole
discretion, on the basis of financial or other
considerations, not authorize the execution of
Deferral Agreements by Plan Participants prospectively
deferring Compensation for any given Plan Year. The
CEO may also establish the maximum number of deferrals
for which Participants are eligible under this Plan.
The CEO may also establish the maximum number of
deferrals for which Participants are eligible under
this Plan. The CEO may also authorize the execution
of Deferral Agreements, in addition to those
specifically described herein, which are subject to
the terms and conditions of this Plan with such
modifications as the CEO may approve, and such
Deferral Agreements shall be deemed to have been made
hereunder. Notwithstanding the foregoing, no
contractual right created by and under any Deferral
Agreement on the date of termination or amendment
shall be abrogated by the termination or amendment of
<PAGE>
this Plan unless the Participant who executed such
Deferral Agreement consents. Participants have no
other right or interest in the continuance of this
Plan in any form.
Article 3
Administration; Interpretation
The CEO shall have the exclusive responsibility and
complete discretionary authority to control the
operation and administration of the Plan, with all
powers necessary to properly carry out such
responsibility, including without limitation the power
(i) to interpret the terms of this Plan and any
Deferral Agreement, (ii) to establish reasonable
procedures with which Participants must comply to
exercise any right established under the Plan or any
Deferral Agreement, (iii) to determine status,
coverage and eligibility for benefits, (iv) to resolve
all questions that arise in the operation and
administration of this Plan, and (v) to delegate his
responsibilities hereunder to any person or entity.
All actions or determinations of the CEO (or his
delegate) shall (subject to Section 6.13) be final,
conclusive and binding on all persons. The rights and
duties of Participants and other persons and entities
are subject to, and governed by, such acts of
administration, interpretations, procedures, and
delegations.
Article 4
Deferral Agreement
4.1 Election to Defer. As hereinafter provided and
subject to acceptance by an Employer, (a) a
Participant may elect to reduce the amount of
Compensation which will be paid to him or her during
any Plan Year by executing and delivering to his or
her Employer in a timely fashion a standard Deferral
Agreement, substantially in the form of Exhibit A
hereto, and (b) a Participant may elect to reduce the
amount of a lump-sum payment to which he or she may
become entitled in connection with separation under
the BellSouth Career Transition Assistance Plan
(CTAP), the BellSouth Enterprises Employee Career
Transition Plan (ECTP), the BellSouth
Telecommunications, Inc. Career Transition Assistance
Plan (BST CTAP), the BellSouth Telecommunications,
Inc. Career Transition Assistance Plan Professional
(BST CTAP-P), the BellSouth Telecommunications, Inc.
Employee Separation Assistance Plan (ESAP), the
BellSouth Advertising & Publishing Corporation
Voluntary Management Separation Pay Plan (VMSPP), the
BellSouth Voluntary Transition Incentive Plan (VTIP)
or a designated successor to any such plan,or other
severance arrangement approved by the CEO as
applicable to this Plan, by executing and delivering
to his or her Employer in a timely fashion a Deferral
Agreement, substantially in the form of Exhibit B
hereto; provided that subsection (b) of this Section
<PAGE>
4.1 shall apply to a Participant separating under the
BellSouth Voluntary Transition Incentive Plan (VTIP)
only if the Participant's Term of Employment is ten
years or more at the time of such separation.
4.2 Creation of Contractual Obligation. An Employer
which accepts a properly executed and timely delivered
Deferral Agreement agrees to pay to the Participant or
his or her Designated Beneficiary, as defined in
Section 6.1, the benefits described in Article 5,
which shall be calculated based upon (i) the amount
deferred by each Participant, (ii) interest rate
established for each Plan Year by the CEO or his
delegate and applied to that amount annually, (iii)
the time which elapses between the Plan Year of
deferral and the date of benefit payments, and (iv)
other factors established in this Plan and by the CEO
or his delegate.
An Employer's senior executive officer or Responsible
Officer is authorized to accept and approve a properly
executed Deferral Agreement on behalf of that Employer
under Section 4.2.
4.3 Timing of Election. A Participant may execute
and deliver to his or her Employer a standard Deferral
Agreement, substantially in the form of Exhibit A
hereto, on or before November 30 of any calendar year
to reduce the Participant's Compensation only for the
next subsequent Plan Year. In addition, a Participant
may execute and deliver to his or her Employer a
Deferral Agreement, substantially in the form of
Exhibit B hereto, in connection with a lump-sum
payment described in Section 4.1(b) of this Plan
within the time period prescribed by his or her
Employer, but in no event later than the day preceding
the day on which individuals are selected for
separation under such program by the Employer.
Notwithstanding any other provisions of this Plan or
any Deferral Agreement, no Deferral Agreement shall be
effective to defer Compensation (or other amounts)
which is earned by any Participant on or before the
date upon which the Deferral Agreement is properly
executed and timely delivered to the Participant's
Employer.
4.4 Amount of Deferral. (a) A Participant may elect
to defer during any Plan Year a dollar amount which is
less than or equal to a specified percent of his or
her Compensation Rate applicable to the Plan Year
rounded to the next highest one thousand dollars. The
CEO shall establish the specified percent of the
Compensation Rate applicable to each Plan Year.
Notwithstanding any provision of a Deferral Agreement
or this Plan to the contrary, the Deferral Agreement
of a Participant, with regard to a deferral described
in this paragraph (a) shall be modified automatically
if necessary such that all actual reductions pursuant
to his or her Deferral Agreement are made from his or
her Net Gross Monthly Salary.
<PAGE>
(b) A Participant may elect to defer a portion of a
lump-sum payment to which he or she may become
entitled as described in Section 4.1(b) in an amount
not to exceed (i) a dollar amount which is less than
or equal to the maximum deferral, if any, which such
Participant could elect under paragraph (a) of this
Section 4.4 at the time of election, and (ii) the
dollar amount by which any election of deferrals under
paragraph (a) of this Section 4.4 for the Plan Year in
which the Participant terminates employment have not
been satisfied at the time of termination of
employment, except as may be otherwise approved by the
CEO.
Article 5
Payment of Benefits
5.1 Retirement Benefit. If a Participant terminates
employment with his or her Employer and is not
immediately reemployed by another Employer and such
termination constitutes a Retirement, then the
Employer shall pay to the Participant the annual
Retirement benefit stated in his or her Deferral
Agreements on those dates specified in each Deferral
Agreement. Except as hereinafter provided, the number
of Retirement benefit payments which will be stated in
a Participant's Deferral Agreement shall equal the
lesser of (i) fifteen (15) and (ii) the remainder of
eighty (80) minus the age at which Retirement benefit
payments commence pursuant to this Section. The first
Retirement benefit payable under a Deferral Agreement
shall be paid as soon as administratively practicable
after the first (1st) day of January following the
calendar year in which the Participant attains age
sixty-five (65). Any Deferral Agreement executed by a
Participant which defers amounts which would otherwise
be payable to the Participant in or after the Plan
Year in which he or she attains age sixty-five (65),
however, shall provide that the first Retirement
benefit payable shall be paid as soon as
administratively practicable after the first (1st) day
of January following the later of (i) the fifth (5th)
anniversary of the date upon which the Deferral
Agreement is accepted by the Employer or (ii) his or
her Retirement, and that the number of Retirement
benefit payments shall equal the remainder of (i)
eighty (80) minus (ii) the age at which Retirement
benefit payments commence pursuant to this Section.
Notwithstanding the foregoing, with respect to any
Plan Year or selected deferrals, the CEO may specify
alternative benefit payment schedules.
If a Participant is, on the date of Retirement, or
becomes thereafter a proprietor, officer, partner, or
employee of, or otherwise is or becomes affiliated
with (i) any business that is in competition with any
Employer or (ii) any government agency having
regulatory jurisdiction over the business activities
of any Employer, then, upon that date, no further
benefit payments shall be made to the Participant, or
<PAGE>
any other person with respect to the Participant's
participation in this Plan, under any provision or
Section of this Plan, except that, the Participant
shall be paid in lump-sum as soon as administratively
practicable after the first (1st) day of January
following that date an amount equal to (i) the amount
deferred pursuant to each of his or her Deferral
Agreements, (ii) plus interest on each such amount
(adjusted to take into account all payments described
in clause (iii) below) credited separately at a rate
equal to the rate paid on ten (10) year United States
Treasury obligations on each date for which interest
is credited, compounded quarterly, for each Plan Year
between the Plan Year to which the Deferral Agreement
applies and the Plan Year in which the act occurs or
status is first attained, inclusive, (iii) minus the
amount of all Interim Distributions and any other
payments hereunder. If the above calculation results
in a negative amount, such amount shall not be
collected from, or enforced against the Participant as
a claim by his or her Employer.
5.2 Interim Distributions. A Participant shall be
paid the benefits stated in Paragraph 3 of his or her
standard Deferral Agreements on those dates stated in
that paragraph of each such Deferral Agreement (herein
referred to as "Interim Distributions"). However, no
Interim Distribution shall be stated in a Deferral
Agreement or paid to any Participant as a result of
the Deferral Agreement if the Participant is age
fifty-five (55) or older on any day during the Plan
Year to which the Deferral Agreement applies. Except
as may be otherwise specified by the CEO, no Interim
Distribution shall be paid to a Participant on or
after the date upon which the Participant or his or
her Designated Beneficiary receives any benefit or
payment under any other Section of this Plan or any
other paragraph of his or her Deferral Agreement. No
Interim Distribution shall be paid in connection with
any Deferral Agreement which does not specifically
provide for such benefits.
5.3 Death Benefit. If a Participant dies on or
before the date upon which he or she is eligible for
Retirement, then his or her Designated Beneficiary, as
defined in Section 6.1, shall be paid in a lump-
sum as soon as administratively practicable after the
first day of January following his or her date of
death an amount equal to: (i) the amount deferred
pursuant to each of his or her Deferral Agreements,
(ii) plus interest on each such amount (adjusted to
take into account all payments described in clause
(iii) below) credited separately at the rate approved
for and applicable to his or her participation in each
Plan Year for which he or she executed accepted
Deferral Agreements, such rates to be compounded
quarterly for each Plan Year between the Plan Year to
which the Deferral Agreement applies and the Plan Year
in which his or her death occurs, inclusive, (iii)
minus the amount of all Interim Distributions, if any,
<PAGE>
received by the Participant or to which the
Participant is entitled on or before the date of his
or her death. If the above calculation results in a
negative amount, such amount shall not be collected
from, or enforced against the Participant as a claim
by his or her Employer.
If a Participant dies on or after the date upon which
he or she is eligible for Retirement (as defined in
Section 1.9), whether or not he or she has in fact
terminated employment, prior to commencing receipt of
benefits, or having received all benefits, as the case
may be, payable in accordance with the duly authorized
Deferral Agreement under this Plan, except as provided
under Section 5.4, then his or her Designated
Beneficiary, as defined in Section 6.1, shall receive
all benefits, or continue to receive the remaining
benefits, as the case may be, in accordance with that
Deferral Agreement.
If the Participant's Designated Beneficiary receives
or is entitled to receive a benefit hereunder, then no
person or persons shall receive or be entitled to
receive any benefit or payment under any other Section
or this Plan or under any Deferral Agreement,
notwithstanding any other provision of this Plan or
any Deferral Agreement.
5.4 Pre-Retirement Disability Benefit. If a
Participant suffers a Disability or becomes Disabled
(as defined in Section 1.10) prior to the date upon
which he or she receives or is entitled to receive a
benefit under Section 5.1 or Section 5.3, then he or
she shall be paid by the Employer in a lump-sum as
soon as administratively practicable after the first
(1st) day of January following the Plan Year in which
the Disability occurs an amount equal to: (i) the
amount deferred pursuant to each of his or her
Deferral Agreements, (ii) plus interest on each such
amount (adjusted to take into account all payments
described in clause (iii) below) credited separately
at the rate approved for and applicable to his or her
participation in each Plan Year for which he or she
executed accepted Deferral Agreements, such rates to
be compounded annually for each Plan Year between the
Plan Year to which the Deferral Agreement applies and
the Plan Year in which his or her Disability occurs,
inclusive, (iii) minus the amount of all Interim
Distributions, if any, received by the Participant or
to which the Participant is entitled on or before the
date of onset of Disability. If the above calculation
results in a negative amount, such amount shall not be
collected from, or enforced against the Participant as
a claim by his or her Employer. If the Participant
receives or is entitled to receive a benefit
hereunder, then no person or persons shall receive or
be entitled to receive any benefit or payment under
any other section of this Plan or under any Deferral
Agreement, notwithstanding any other provisions of
this Plan or any Deferral Agreement.
<PAGE>
5.5 Termination of Employment Prior to Retirement or
Disability. If a Participant terminates employment
with his or her Employer, and is not immediately
reemployed by another Employer, prior to death,
Disability or Retirement, then a benefit amount shall
be paid to the Participant, either in a lump-sum or in
five (5) annual installments, at the election of the
CEO, payable as soon as administratively practicable
after the first (1st) day of January following his or
her date of termination (and anniversaries thereof in
case of installments), which amount equals (i) the
amount deferred pursuant to each of his or her
Deferral Agreements, (ii) plus interest on each such
amount (adjusted to take into account all payments
described in clause (iii) below) credited separately
at a rate equal to the rate on ten (10) year United
States Treasury obligations on each date for which
interest is to be credited, compounded quarterly, for
each Plan Year between the Plan Year to which the
Deferral Agreement applies and the Plan Year in which
the termination occurs, inclusive, (iii) minus the
amount of all Interim Distributions, if any, received
by the Participant or to which the Participant is
entitled on or before the date of his or her
termination. If the above calculation results in a
negative amount, such amount shall not be collected
from, or enforced against the Participant as a claim
by his or her Employer. If the Participant receives
or is entitled to receive a benefit hereunder, then no
person or persons shall then or thereafter receive any
benefit or payment under any other Section of this
Plan or any Deferral Agreement, notwithstanding any
other provision of this Plan or any Deferral
Agreement.
5.6 Certain Rotational Assignments. In the event
that a Participant is transferred to Bellcore or to
any other subsidiary of BellSouth that is not a
Participating Company, and under circumstances where
it is expected that such Participant will return to
employment with BellSouth or another Employer, then
(1) such transfer will not be considered a termination
of employment under Section 5.5, (2) such
Participant's Compensation deferrals shall cease as of
the date of such transfer and (3) his Deferral
Agreement in effect for the year of transfer shall
automatically be amended by his Employer to reduce his
Retirement benefits and Interim Distributions to equal
the percentage of such payments equal to the
percentage that his actual Compensation deferrals made
for the year of transfer are of his elected
Compensation deferrals for such year. Such a
Participant shall be deemed to have terminated
employment under Section 5.5 if, and as of the date,
that he terminates employment with Bellcore or such
other applicable company and fails to return to
employment with BellSouth or other Employer, or he
otherwise fails to meet the terms of his rotational
assignment.
<PAGE>
Article 6
Miscellaneous
6.1 Beneficiary Designation. If a Participant dies
and, on the date of his or her death, any benefit or
benefits remain to be paid to the Participant under
the terms and conditions of this Plan, the remaining
benefit or benefits shall be paid to that person or
persons designated by the Participant ("Designated
Beneficiary") on the form provided from time to time
to the Participant by his or her Employer in
accordance with the Deferral Agreement. If the
Designated Beneficiary dies prior to completion of all
payments under the Deferral Agreement, the estate of
the Designated Beneficiary shall be paid by the
Employer in a lump-sum as soon as administratively
practicable after the first (1st) day of January
following the year in which the Designated Beneficiary
died. The amount of the lump-sum will be equal to (i)
the amount deferred pursuant to each of the
Participant's Deferral Agreements, (ii) plus interest
on each such amount (adjusted to take into account all
payments described in clauses (iii) and (iv) below)
credited separately at the rate approved for and
applicable to the Participant's participation in each
Plan Year from which he or she executed accepted
Deferral Agreements, such rates to be compounded
quarterly for each Plan Year between the Plan Year to
which the Deferral Agreement applies and the Plan Year
in which the Designated Beneficiary's death occurs,
inclusive, (iii) minus the amount of all Interim
Distributions, if any, received by the Participant or
Designated Beneficiary, (iv) minus the Retirement
benefits paid to the Participant or Designated
Beneficiary pursuant to the Deferral Agreement(s). If
the above calculation results in a negative amount,
such amount shall not be collected from, or enforced
against the estate of the Designated Beneficiary. If
no Designated Beneficiary has been chosen by the
Participant or if the Designated Beneficiary is not
living on the date of the Participant's death, the
estate of the Participant shall be paid by the
Employer in a lump-sum as soon as administratively
practicable after the first (1st) day of January
following the year in which the Participant died. The
amount of the lump-sum shall be determined in the
manner described previously in this Section 6.1.
6.2 Obligations of Employers not the Obligations of
BellSouth. The duties and obligations of each
Employer hereunder are several but not joint, each
Employer is only liable to its own employees who are
Participants hereunder, and BellSouth is not liable
for the actions, omissions, duties or obligations of
any other Employer hereunder.
<PAGE>
6.3 Recalculation Events; Treatment of this Plan
under Applicable Federal Income Tax Laws. The
adoption and maintenance of the Plan is strictly
conditioned upon (i) the applicability of Code Section
451(a) to the Participant's recognition of gross
income as a result of his or her participation, (ii)
the fact that Participants will not recognize gross
income as a result of participation in this Plan until
and to the extent that benefits are received, (iii)
the applicability of Code Section 404(a)(5) to the
deductibility of the amounts paid to Participants
hereunder, (iv) the fact that an Employer will not
receive a deduction for amounts credited to any
accounting reserve created as a result of this Plan
until and only to the extent that benefits are paid,
and (v) the inapplicability of Parts 2, 3, and 4 of
Title I of ERISA to this Plan by reason of the
exemptions set forth in ERISA Sections 201(a), 301(a)
and 401(a) and Part 1 of ERISA by reason of the
exemption set forth in Section 2520.104-23 of
applicable United States Department of Labor
regulations. If the Internal Revenue Service, the
Department of Labor or any court determines or finds
as a fact or legal conclusion that any of the above
conditions is untrue and issues or intends to issue an
assessment, determination, opinion or report stating
such, or if the opinion of the legal counsel of
BellSouth based upon legal authorities then existing
is that any of the above assumptions is incorrect,
then, if the CEO so elects within one year of such
finding, determination, or opinion, a Recalculation
Event shall be deemed to have occurred.
If a Recalculation Event occurs under this Section
6.3, Section 6.4, or any other Section of this Plan,
then each Participant who has not attained the age of
fifty-five (55) years on the date on which the CEO
takes official action to elect the occurrence of a
Recalculation Event shall thereafter be paid benefits
in accordance with the election made irrevocably in
connection therewith in the Deferral Agreement. For
each such Participant the amount of Retirement benefit
stated in the Deferral Agreement shall be recalculated
and restated using a rate of interest equal to the
rate of interest on ten (10) year United States
Treasury obligations on each date upon which interest
should have been or will be calculated, compounded
quarterly, instead of the interest rate assumed in
originally calculating the benefit, as referenced in
Section 4.2.
Notwithstanding anything to the contrary contained in
this Plan or a Deferral Agreement, the benefits
payable with respect to any Participant who shall
have either (i) attained the age of fifty-five (55)
years or (ii) died, on or prior to the date on which
the CEO takes official action to elect the occurrence
of a Recalculation Event under either Sections 6.3 or
6.4 of this Plan, shall not be recalculated and
restated in the manner described in such Sections or
<PAGE>
in any other way affected by such action. If such
Participant or Designated Beneficiary receives or is
entitled to receive a benefit as result of the
occurrence of a Recalculation Event, then no person or
persons shall receive or be entitled to receive any
benefit or payment under any other Section of this
Plan or under any Deferral Agreement, notwithstanding
any other provision of this Plan or the Deferral
Agreement.
6.4 Changes in the Internal Revenue Code of 1954.
The adoption and maintenance of this Plan also is
strictly conditioned upon the existence and
continuation of the percentage tax rates for
corporations stated in Section 11(b) of the Internal
Revenue Code of 1954, as amended through August 13,
1981 but not thereafter (the "1954 Code"). In
particular, the adoption and maintenance of this Plan
is strictly conditioned upon the rate of tax stated in
Section 11(b)(5) of the 1954 Code, that is, "46
percent of so much of the taxable income as exceeds
$100,000." If (1) 1954 Code Section 11(b) is deleted
or amended or a surtax or other addition to tax is
imposed and, as a result thereof, the rate of federal
income tax imposed on taxable income of corporations
in excess of One Hundred Thousand Dollars ($100,000)
is reduced below such rate in effect immediately
before reduction and is less than forty percent (40),
(2) a tax is imposed by the federal government on
income, sales, consumption, or the value of goods and
services which is not currently contained in the Code,
or (3) the Code is amended or restated so extensively
that in the opinion of the legal counsel of BellSouth
the tax treatment of this Plan to the Employer has
materially changed to the detriment of the Employer,
then, if the CEO so elects within one year after the
enactment of the legislation causing such event, a
Recalculation Event shall be deemed to have occurred
and a benefit will be payable only as described in
Section 6.3.
6.5 Governing Law. This Plan and the Deferral
Agreements shall be construed in accordance with the
laws of the State of Georgia to the extent such laws
are not preempted by ERISA.
6.6 Successors, Mergers, Consolidations. The terms
and conditions of this Plan and each Deferral
Agreement shall inure to the benefit of and bind
BellSouth, the other Employers, the Participants,
their successors, assigns, and personal
representatives. If substantially all of the assets
of any Employer are acquired by another corporation or
entity or if an Employer is merged into, or
consolidated with, another corporation or entity, then
the obligations created hereunder and as a result of
the Employer's acceptance of Deferral Agreements shall
be obligations of the successor corporations or
entity.
<PAGE>
6.7 Discharge of Employer's Obligation. The payment
by the Employer of the benefits due under each and
every Deferral Agreement to the Participant or to the
person or persons specified in Section 6.1 discharges
the Employer's obligations hereunder, and the
Participant has no further rights under this Plan or
the Deferral Agreements upon receipt by the
appropriate person of all benefits. In addition, (i)
if any payment is made to a Participant or his or her
Designated Beneficiary with respect to benefits
described in this Plan from any source arranged by the
Employer including, without limitation, any fund,
trust, insurance arrangement, bond, security device,
or any similar arrangement, such payment shall be
deemed to be in full and complete satisfaction of the
obligation of the Employer under this Plan and the
Deferral Agreements to the extent of such payment as
if such payment had been made directly by the
Employer; and (ii) if any payment from a source
described in clause (i) above shall be made, in whole
or in part, prior to the time payment would be made
under the terms of this Plan and the Deferral
Agreement, such payment shall be deemed to satisfy the
Employer's obligation to pay Plan benefits beginning
with the benefit which would next become payable under
the Plan and the Deferral Agreement and continuing in
the order in which benefits are so payable, until the
payment from such other source is fully recovered. In
determining the benefits satisfied by a payment
described in clause (ii), Plan benefits, as they
become payable, shall be discounted to their value as
of the date such actual payment was made using an
interest rate equal to the valuation interest rate for
deferred annuities as last published by the Pension
Benefit Guaranty Corporation prior to the date of such
actual payment. If the benefits which actually become
payable under this Plan, after applying the discount
described in the preceding sentence, are less than the
amount of the payment(s) described in clause (ii), any
such shortfall shall not be collected from or enforced
against the Participant as a claim by the Employer.
6.8 Social Security and Income Tax Withholding.
Each Participant agrees as a condition of
participation hereunder that his or her Employer may
withhold federal, state, and local income taxes and
Social Security taxes from any distribution or benefit
paid hereunder.
6.9 Notice; Delivery of Deferral Agreement. Any
notice required to be delivered hereunder and any
Deferral Agreement is properly delivered to the
Employer when personally delivered to, or actually
received from the United States mail, postage prepaid,
by Executive Compensation and Benefits Group, Room
13J08, BellSouth Corporation, 1155 Peachtree St.,
N.E., Atlanta, Georgia 30309-3610.
<PAGE>
6.10 Nature of Obligations Created Hereunder. The
Participants agree as a condition of participation
hereunder that:
(a) Participants have the status of general, unsecured
creditors of the Employer and the Plan and the
Deferral Agreements constitute the mere promise by the
Employer to make benefit payments in the future;
(b) nothing contained in this Plan or any Deferral
Agreement shall create or be construed to create a
trust of any kind between BellSouth, any Employer,
and any Participant;
(c) benefits payable, and rights to benefits under,
this Plan and Deferral Agreements may not be
anticipated, sold, assigned (either at law or in
equity), transferred, pledged, encumbered or subject
to attachment, garnishment, levy, execution or other
legal or equitable process.
The Plan is intended to be unfunded for purposes of
ERISA and the Code.
6.11 No Modification of Employment Agreement.
Neither this Plan nor any Deferral Agreement
constitutes a modification of any employment agreement
which may exist between the Participant and the
Participating Company employing the Participant, and
no right to continued employment is created by this
Plan or the Deferral Agreement.
6.12 Liability of Employers for Individual
Participants Employed by More than One Employer;
Applicability of Deferral Agreement Filed with One
Employer to Subsequent Employers. Any Deferral
Agreement which is timely executed and delivered to an
Employer shall be effective to defer Compensation
earned by the Participant from that Employer or any
other Employer during the period in which the Deferral
Agreement is effective. The execution and delivery of
a Deferral Agreement by a Participant constitutes an
election by the Participant to defer Compensation
earned from any Employer under the terms of this Plan.
A Participant who timely executes and delivers a
Deferral Agreement to one Employer and who
subsequently transfers to another Employer or
otherwise terminates employment and becomes employed
by another Employer shall have the Compensation which
is paid to him or her by both Employers reduced under
the terms of the Deferral Agreement and this Plan as
if the transfer or termination and reemployment had
not occurred. The Employer which accepts an executed,
timely delivered Deferral Agreement is liable to the
Participant for all benefits which may be payable
under, and as a result of, that Deferral Agreement
notwithstanding the transfer of a Participant to or
from another Employer, or the termination and
reemployment of a Participant by another Employer. If
a Participant timely executes and delivers Deferral
<PAGE>
Agreements to more than one Employer, each Employer is
singly and not jointly liable for the Deferral
Agreement or Deferral Agreements which it accepted.
Any provision of this Plan which refers to a benefit
or payment which is payable as a result of more than
one (1) Deferral Agreement shall be construed to apply
only to the Deferral Agreements delivered by that
Participant and accepted by each separate Employer of
that Participant, and not to all Deferral Agreements
executed and timely delivered by one Participant or
all Participants to all Employers, each Deferral
Agreement which incorporates the terms of this
constituting a separate contractual obligation of a
single Employer.
6.13 Claims for Benefits. The CEO (or his delegate)
shall review all claims for benefits under the Plan
and the Deferral Agreements. Any claim for benefits
hereunder which is denied, in whole or in part, shall
be subject to the review and appeals procedures
adopted by BellSouth for executive and senior manager
benefits.
<PAGE>
Exhibit A
Deferral Agreement
for the BellSouth Nonqualified Deferred Income Plan
1. Amount of Deferral. I,
, hereby agree to participate in the BellSouth
Nonqualified Deferred Income Plan ("Plan"). I have
read the Plan in its entirety and agree to its terms
and conditions, which are incorporated herein by
reference. Pursuant to the terms of the Plan, I elect
to defer from my compensation to be paid to me in Plan
Year ____ the sum of Dollars.
I understand that my Compensation which ordinarily
would be paid to me in that Plan Year will be reduced
by the amount of my deferral, and that such reduction
will be made only from my gross monthly salary, not
from any bonus or incentive award which may be payable
to me.
2. Retirement Benefits. In consideration for my
deferral, my Employer shall pay to me the following
benefits on the dates specified, if I am entitled to
these benefits under the terms and conditions of the
Plan:
3. Interim Distributions. In consideration for my
deferral, my Employer shall pay to me the following
benefits on the dates specified, if I am entitled to
these benefits under the terms and conditions of the
Plan:
4. Recalculation Event. If a Recalculation Event
applicable to me occurs, my Employer shall pay to me
benefits in an amount determined in accordance with
the terms and conditions of paragraph 6.3 of the Plan
paid in accordance with the terms elected below. The
undistributed balance of the recalculated amount will
continue to accumulate at the reduced rate specified
in paragraph 6.3 of the Plan. This election is
irrevocable after November 30 immediately preceding
the Plan Year to which this Agreement pertains:
Recalculated amount paid in a lump-sum as soon as
administratively practicable after the first day of
the year following the date of the Recalculation
Event.
Recalculated amount paid in four annual payments
beginning as soon as administratively practicable
after the first day of the year following the date of
the Recalculation Event.
Recalculated amount paid in same number of payments
beginning on the same date as specified in paragraph 2
of this Agreement.
<PAGE>
5. Primacy of Plan. I recognize that I am entitled
to benefits hereunder and that this Agreement is
subject to the terms and conditions of the Plan.
Accepted by Employer:
_______________________ ____________________________
Signature Signature
_______________________ __________________________
Date Date
<PAGE>
Exhibit B
DEFERRAL AGREEMENT
FOR THE BELLSOUTH NONQUALIFIED DEFERRED INCOME PLAN
(For Deferral of Lump-Sum Payments)
THIS AGREEMENT is made this _____ day of
____________, 19 ,
by and between (the
"Company") and _________________ (the "Employee");
W I T N E S S E T H:
WHEREAS, the Employee may separate from service with
the Company under the terms of an eligible separation
plan or arrangement sponsored by the Company
(hereinafter, the "Separation Plan"); and
WHEREAS, the BellSouth Nonqualified Deferred Income
Plan (the "Plan") permits the Employee to elect
irrevocably to defer a portion of the lump-sum
separation allowance to which he may become entitled
thereunder, and the Employee desires to make such
deferral;
NOW, THEREFORE, it is mutually agreed as follows:
1.
PLAN PROVISIONS CONTROL
The Plan, including all terms, conditions,
restrictions and limitations contained therein, is
hereby incorporated by reference and made a part of
this Agreement for all purposes. The terms and
conditions applicable to the plan year of the Plan in
which the Employee separates from service shall apply
to deferrals hereunder. In interpreting the Plan for
purposes of this Agreement, the lump-sum separation
allowance payable under the Separation Plan shall not
be included in the Employee's "Compensation Rate" as
that term is used in the Plan.
2.
CONDITIONAL DEFERRAL
The deferral election contained herein shall be
irrevocable by the Employee upon its submission to the
Company but shall be expressly conditioned upon the
Employee's separation from service under the
Separation Plan. If the Employee does not separate
from service under the Separation Plan, this Agreement
shall be null and void. Neither the Company's
offering of this deferral opportunity to the Employee,
the Company's acceptance of the Employee's deferral
<PAGE>
election contained in this Agreement, nor any other
provision hereof shall in any way be construed as
conferring upon the Employee any right or entitlement
to any payment under the Separation Plan.
3.
DEFERRAL ELECTION(S)
(a) Subject to the Plan's limitations, the Employee
hereby irrevocably elects to defer from the lump-sum
separation allowance payable under the Separation Plan
Dollars ($ ).
NOTE: Amount may not exceed [25% or 10%] of the sum of
your current annual base salary and lump-sum awards
received in the previous twelve (12) months.
YES NO
(b) The Employee hereby irrevocably elects to defer
from the lump-sum separation allowance payable under
the Separation Plan the dollar amount by which any
election of deferrals from base salary under the Plan
for the plan year of the Plan in which the Employee
separates from service has not been satisfied by the
time the Employee separates.
YES NO
Such amounts shall be subject to the terms of the
original Deferral Agreement to which they relate.
I understand that the lump-sum separation allowance
payable under the Separation Plan which would
otherwise have been paid to me will be reduced by the
amount of my deferral(s).
4.
RETIREMENT BENEFITS
In consideration of my deferral described in section
3(a) above, if any, the Company shall pay to me the
following benefits on the dates specified, if I am
entitled to these benefits under the terms and
conditions of the Plan:
Any distributions attributable to deferral(s) under
Schedule B of the Plan shall be made beginning on
in annual payments.
<PAGE>
5.
INTERIM DISTRIBUTIONS
In consideration for my deferral described in
section 3(a) above, if any, the Company shall pay to
me the following benefits on the dates specified, if I
am entitled to these benefits under the terms and
conditions of the Plan:
6.
RECALCULATION EVENT
If a Recalculation Event occurs, the Company
shall pay to me benefits in an amount determined in
accordance with the terms and conditions of paragraph
6.3 of the Plan paid in accordance with the terms
elected below. The undistributed balance of the
recalculated amount will continue to accumulate at the
reduced rate specified in paragraph 6.3 of the Plan.
__
|__| Recalculated amount paid in a lump-sum
as soon as administratively practicable after
the first day of the year following the date
of the Recalculation Event.
__
|__| Recalculated amount paid in four annual payments
beginning as soon as administratively
practicable after the first day of the year
following the date of the Recalculation Event.
__
|__| Recalculated amount paid in same number of payments
beginning on the same date as specified in paragraph
4 of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by a duly authorized officer, and
the Employee has hereunto set his hand, as of the date set forth
above.
EMPLOYEE: THE COMPANY:
By:
Signature Signature
Name (Print) Title
EXHIBIT 10bb
BellSouth Nonqualified Deferred Compensation Plan
BellSouth Corporation ("BellSouth") hereby establishes this first (1st)
day of January, 1985, the BellSouth Nonqualified Deferred Compensation
Plan ("Plan") for certain executive employees and all Nonemployee
Directors of BellSouth and its adopting subsidiaries.
Article 1
Definitions
1.1 "Board" means the Board of Directors of BellSouth.
1.1(A)"Code" means the Internal Revenue Code of 1986, as amended.
1.2 "Base Salary" means the gross monthly salary paid to executive
employees, not including Nonemployee Directors, plus the amount of any
Before-Tax Basic and Supplemental Contributions to the BellSouth
Management Savings Plan and the amount of any other deferrals from
gross monthly salary under any nonqualified deferred compensation
plans which may be maintained by an Employer from time to time.
1.3 "Compensation" means Net Gross Monthly Salary or Net Directors Fees
and Retainers.
1.4 "Compensation Rate" means the cash Compensation of a Participant,
including (i) annual Base Salary rate in effect on the date the
Deferral Agreement is executed, and (ii) standard short-term award
amounts in effect on the date the Deferral Agreement is executed for
Participants who are officers, as those terms are used in the
Compensation procedures of BellSouth, and lump sum payments received
during the calendar year in which the Deferral Agreement is executed,
as that term is used in the Compensation procedures of BellSouth for
Participants other than officers and Nonemployee Directors, and (iii)
Fees and Retainers paid to Nonemployee Directors during the calendar
year in which the Deferral Agreement is executed.
1.5 "Deferral Agreement" means an agreement substantially in the form of
Exhibit A or Exhibit B hereto.
1.6 "Employer" means (i) BellSouth and (ii) any subsidiary of BellSouth,
at least eighty percent (80%) of the capital stock of which is owned
by BellSouth or by one or more subsidiaries of BellSouth if the Board
of Directors of that subsidiary adopts the Plan and if that
subsidiary's adoption of the Plan is approved by the Board or its
designee.
1.7 "Net Gross Monthly Salary" or "Net Directors Fees and Retainers" means
the amount of a Participant's Gross Salary or Directors Fees and
Retainers which actually is paid to him or her in any month net of all
withholding, allotments, and deductions other than any reduction as a
result of participation in this Plan.
1.8 "Nonemployee Director" means a member of the Board or a member of the
Board of Directors of any Employer who is not concurrently a common
law employee of an Employer.
<PAGE>
1.9 "Participant" means an individual who is authorized by the Board to
participate in this Plan and to execute a Deferral Agreement.
1.10 "Plan Year" means (i) February 1, 1985, through December 31, 1985, and
(ii) each and every calendar year thereafter.
1.11 "Retirement" means any termination by a Participant after the date
upon which the Participant is eligible for a pension, other than a
Deferred Vested Pension, under the terms and conditions of the
BellSouth Corporation Management Pension Plan, as amended from time to
time; however, any termination of employment by the Nonemployee
Director is a Retirement. Additionally, "Retirement" means any
termination by a Participant who has attained age 62 or older and
whose term of employment is ten years or more at the time of
employment termination.
For purposes of the preceding sentence, the "term of employment" shall
have the same meaning as given such term in the BellSouth Corporation
Management Pension Plan, except that it shall include only the portion
of a Participant's term of employment as is attributable to service
with BellSouth, a Participating Company or any other corporation which
is a member of the same controlled group of corporations, within the
meaning of Code Section 414(b), as BellSouth and any trade or business
(whether or not incorporated) which is under common control with
BellSouth, within the meaning of Code Section 414(c).
Article 2
Term; Amendment
This Plan is effective on the date hereof and shall be effective until
terminated by the Board; however, this Plan provides for Plan Years
1985 through 1998 with Plan specifications and interest rates being
approved by the Board for each separate Plan Year. This Plan may be
amended, renewed, restated or extended for additional Plan Years by
the Board and the Board may in its sole discretion, on the basis of
financial or other considerations, not authorize the execution of
Deferral Agreements by Plan Participants prospectively deferring
Compensation for any given Plan Year. The Board may also establish
the maximum number of deferrals for which Participants are eligible
under this Plan. Notwithstanding the foregoing, no contractual right
created by and under any Deferral Agreement on the date of termination
or amendment shall be abrogated by the termination or amendment of
this Plan unless the Participant who executed such Deferral Agreement
consents. Participants have no other right or interest in the
continuance of this Plan in any form.
Article 3
Administration; Interpretation
The Board may (i) administer and interpret the terms and conditions of
this Plan and any Deferral Agreement, (ii) establish reasonable
procedures with which Participants must comply to exercise any right
established hereunder or any contractual right established under the
Deferral Agreement, and (iii) delegate its responsibilities or duties
<PAGE>
hereunder to any person or entity. The rights and duties of
Participants and other persons and entities are subject to, and
governed by, such acts of administration, interpretation, procedures,
and delegations.
Article 4
Deferral Agreement
4.1 Election to Defer. As hereinafter provided and subject to acceptance
by an Employer, a Participant may elect to reduce the amount of
Compensation which will be paid to him or her during any Plan Year by
executing and delivering to his or her Employer in a timely fashion a
Deferral Agreement.
4.2 Creation of Contractual Obligation. An Employer which accepts a
properly executed and timely delivered Deferral Agreement agrees to
pay to Participant or his or her Designated Beneficiary, as defined in
Sections 6.1 and 6.1A, the benefits described in Article 5, which
shall be calculated based upon (i) the amount of the Compensation
deferred by each Participant, (ii) interest rates established for each
Plan Year by the Board or its delegate applied to that amount
quarterly, (iii) the time which elapses between the Plan Year in which
Compensation is deferred and the date of benefit payments, and (iv)
other factors established in this Plan and by the Board or its
delegate.
An Employer's President or Vice-President responsible for
administration of the Plan is authorized to accept and approve a
properly executed Deferral Agreement on behalf of that Employer under
Section 4.2.
4.3 Timing of Election. A Participant may execute and deliver to his or
her Employer a Deferral Agreement:
(a) on or before November 30 of any calendar year, however, such a
Deferral Agreement shall be effective to reduce a Participant's
Compensation only for the next subsequent Plan year;
(b) on or before January 31, 1985, however, such a Deferral Agreement
may be executed and delivered only by a Participant who is
employed as an employee or Nonemployee Director by an Employer on
January 1, 1985, and is only effective to reduce a Participant's
Compensation earned during the first Plan Year of this Plan;
(c) notwithstanding any other provisions of this Plan or any Deferral
Agreement, no Deferral Agreement shall be effective to defer
Compensation which is earned by any Participant on or before the
date upon which the Deferral Agreement is properly executed and
timely delivered to the Participant's Employer.
4.4 Amount of Deferral. A Participant other than a Nonemployee Director
may elect to defer during any Plan Year any dollar amount which is
less than or equal to thirty-five percent (35%) of his or her
Compensation Rate applicable to the Plan Year rounded to the next
highest one thousand dollars. However, a Nonemployee Director may
defer any dollar amount which is less than or equal to one hundred
percent (100%) of his or her Compensation during the Plan Year.
Notwithstanding any provision of any Deferral Agreement or this Plan
<PAGE>
to the contrary, the Deferral Agreement of a Participant shall be
modified automatically if necessary such that all actual reductions
pursuant to his or her Deferral Agreement are made from his or her Net
Gross Monthly Salary or his or her Net Directors Fees and Retainers.
Article 5
Payment of Benefits
5.1 Retirement Benefit. If a Participant terminates employment with his
or her Employer and is not immediately reemployed by another Employer
and such termination constitutes a Retirement, then Employer shall pay
to the Participant the annual benefit stated in Paragraph 2 of each of
his or her Deferral Agreements as soon as administratively practicable
after those dates specified in that Paragraph of each Deferral
Agreement. The number of benefit payments and the date upon which
such payments begin shall be established for each Plan Year by the
Board or its delegate and stated in the Deferral Agreement executed by
the Participant for each Plan Year.
If a Participant is, on the date of Retirement, or becomes thereafter
a proprietor, officer, partner, or employee of, or otherwise is or
becomes affiliated with (i) any business that is in competition with
any Employer or (ii) any government agency having regulatory
jurisdiction over the business activities of any Employer, then, upon
that date, no further benefit payments shall be made to the
Participant or any other person under any provision or Section of this
Plan, except that, the Participant shall be paid in lump sum as soon
as administratively practicable after the first (1st) day of January
following that date an amount equal to (i) the amount of Compensation
deferred pursuant to each of his or her Deferral Agreements, (ii)
plus interest on each amount credited separately at a rate equal to
the rate paid on ten (10) year United States Treasury obligations on
each date for which interest is credited, compounded quarterly, for
each Plan Year between the Plan Year to which the Deferral Agreement
applies and the Plan Year in which the act occurs or status is first
attained, inclusive, (iii) minus the amount of all Interim
Distributions and any other payments hereunder. If the above
calculation results in a negative amount, such amount shall not be
collected from, nor enforced against the Participant as a claim by his
or her Employer.
5.2 Interim Distributions. A Participant shall be paid the benefits
stated in paragraph 3 of his or her Deferral Agreements as soon as
administratively practicable after those dates stated in that
paragraph of each Deferral Agreement (hereinafter referred to as
"Interim Distributions"). However, no Interim Distribution shall be
stated in paragraph 3 of a Deferral Agreement or paid to any
Participant as a result of the Deferral Agreement if the Participant
is age fifty-five (55) or older on any day during the Plan Year to
which the Deferral Agreement applies. No Interim Distribution shall
be paid to a Participant on or after the date upon which the
Participant or his or her Designated Beneficiary receives any benefit
or payment under any other Section of this Plan or any other paragraph
of his or her Deferral Agreement. Notwithstanding the foregoing, with
respect to any Plan Year or selected deferrals in any Plan Year, the
Board of Directors may specify alternative Interim Distribution
schedules.
<PAGE>
5.3 Pre-Retirement, Pre-Disability Death Benefit. Regarding deferrals for
Plan Year 1985, if a Participant dies on or before the date upon which
he or she is first entitled to receive a benefit under Section 5.1 or
Section 5.4, then his or her Designated Beneficiary, as defined in
Section 6.1, shall be paid in a lump sum as soon as administratively
practicable after the first (1st) day of January following his or her
date of death an amount equal to: (i) the amount of Compensation
deferred pursuant to each of his or her Deferral Agreements, (ii) plus
interest on each amount credited separately at the rate approved for
and applicable to his or her participation in each Plan Year for which
he or she executed accepted Deferral Agreements, such rates to be
compounded quarterly for each Plan Year between the Plan Year to which
the Deferral Agreement applies and the Plan Year in which his or her
death occurs, inclusive, (iii), minus the amount of all Interim
Distributions, if any, received by the Participant or to which the
Participant is entitled on or before the date of his or her death. If
the above calculation results in a negative amount, such amount shall
not be collected from, nor enforced against the Participant as a claim
by his or her Employer. If the Participant's Designated Beneficiary
receives or is entitled to receive a benefit hereunder, then no person
or persons shall receive or be entitled to receive any benefit or
payment under any other Section of this Plan or under any Deferral
Agreement, notwithstanding any other provision of this Plan or any
Deferral Agreement.
5.3(A)Death Benefit. Regarding deferrals for any Plan Year after 1985, if
a Participant (other than a Nonemployee Director) dies on or before
the date upon which he or she is pension eligible (as defined in the
BellSouth Corporation Management Pension Plan), then his or her
Designated Beneficiary, as defined in Section 6.1A, shall be paid in a
lump sum as soon as administratively practicable after the first day
of January following his or her date of death an amount equal to: (i)
the amount of Compensation deferred pursuant to each of his or her
Deferral Agreements, (ii) plus interest on each amount credited
separately at the rate approved for and applicable to his or her
participation in each Plan Year for which he or she executed accepted
Deferral Agreements, such rates to be compounded quarterly for each
Plan Year between the Plan Year to which the Deferral Agreement
applies and the Plan Year in which his or her death occurs, inclusive,
(iii) minus the amount of all Interim Distributions, if any, received
by the Participant or to which the Participant is entitled on or
before the date of his or her death. If the above calculation results
in a negative amount, such amount shall not be collected from, nor
enforced against the Participant as a claim by his or her Employer.
Except as provided in the first sentence of this Section 5.3A, if a
Participant dies prior to receiving all benefits payable in accordance
with the duly authorized Deferral Agreement under this Plan, except as
provided under Section 5.4, then his or her Designated Beneficiary, as
defined in Section 6.1A, shall continue to receive the remaining
benefits in accordance with that Deferral Agreement; provided,
however, that each Participant shall have the right to elect, or to
revoke any such election or make a new election, at any time prior to
his or her death, to have the death benefit described in this sentence
paid to his or her Designated Beneficiary, as defined in Section 6.1A,
in a lump sum as soon as administratively practicable after the first
day of January following the year in which the Participant died. A
lump sum payment made pursuant to an election by an officer in
accordance with the preceding sentence shall be in an amount equal to:
(i) the amount of Compensation deferred pursuant to each of his or her
Deferral Agreements, (ii) plus interest on each amount credited
<PAGE>
separately at the rate approved for and applicable to his or her
participation in each Plan Year for which he or she accepted Deferral
Agreements, such rates to be compounded quarterly for each Plan Year
between the Plan Year to which the Deferral Agreement applies and the
Plan Year in which his or her death occurs, inclusive, (iii) minus the
amount of all Interim Distributions, if any, received by the
Participant, and (iv) minus the Retirement benefits paid to the
Participant pursuant to Paragraph 2 of the Deferral Agreement(s). If
the above calculation results in a negative amount, such amount shall
not be collected from or enforced against the estate of the
Participant as a claim by the Participant's Employer.
For purposes of this Section, termination of employment because of
death shall be treated as a Retirement. If the Participant's
Designated Beneficiary receives or is entitled to receive a benefit
hereunder, then no person or persons shall receive or be entitled to
receive any benefit or payment under any other Section of this Plan or
under any Deferral Agreement, notwithstanding any other provision of
this Plan or any Deferral Agreement.
5.4 Pre-Retirement Disability Benefit. If a Participant suffers a
Disability or becomes Disabled, as those terms are defined in the
BellSouth Executive Long Term Disability and Survivor Protection Plan
and the BellSouth Long Term Disability Plan for Salaried Employees, as
amended from time to time, prior to that date upon which he or she
receives or is entitled to receive a benefit under Section 5.1 or
Section 5.3, then he or she shall be paid by the Employer in a lump
sum as soon as administratively practicable after the first (1st) day
of January following the Plan Year in which the disability occurs an
amount equal to: (i) the amount of Compensation deferred pursuant to
each of his or her Deferral Agreements, (ii) plus interest on each
amount credited separately at the rate approved for and applicable to
his or her participation in each Plan Year for which he or she
executed accepted Deferral Agreements, such rates to be compounded
quarterly for each Plan Year between the Plan Year to which the
Deferral Agreement applies and the Plan Year in which his or her
Disability occurs, inclusive, (iii) minus the amount of all Interim
Distributions, if any, received by the Participant or to which the
Participant is entitled on or before the date of onset of Disability.
If the above calculation results in a negative amount, such amount
shall not be collected from, or enforced against the Participant as a
claim by his or her Employer. If the Participant receives or is
entitled to receive a benefit hereunder, then no person or persons
shall receive or be entitled to receive any benefit or payment under
any other Section of this Plan or under any Deferral Agreement,
notwithstanding any other provisions of this Plan or any Deferral
Agreement.
5.5 Termination of Employment Prior to Retirement or Disability. If a
Participant other than a Nonemployee Director terminates employment
with his or her Employer, and is not immediately reemployed by another
Employer, prior to Death, Disability or Retirement, then a benefit
amount shall be paid to the Participant, either in lump sum or in five
(5) annual installments, at the election of the Board, payable as soon
as administratively practicable after the first (1st) day of January
following his or her date of termination (and anniversaries thereof in
case of installments), which amount equals (i) the amount of
Compensation deferred pursuant to each of his or her Deferral
Agreements, (ii) plus interest on each amount credited separately at a
rate equal to the rate on ten (10) year United States Treasury
<PAGE>
obligations on each date for which interest is to be credited,
compounded quarterly, for each Plan Year between the Plan Year to
which the Deferral Agreement applies and the Plan Year in which the
termination occurs, inclusive, (iii) minus the amount of all Interim
Distributions, if any, received by the Participant or to which the
Participant is entitled on or before the date of his or her
termination. If the above calculation results in a negative amount,
such amount shall not be collected from, nor enforced against the
Participant as a claim by his or her Employer. If the Participant
receives or is entitled to receive a benefit hereunder, then no person
or persons shall then or thereafter receive any benefit or payment
under any other Section of this Plan or any Deferral Agreement,
notwithstanding any other provision of this Plan or any Deferral
Agreement.
Article 6
Miscellaneous
6.1 Beneficiary Designation. Regarding Deferrals for Plan Year 1985, if a
Participant dies after Retirement and, on the date of his or her
death, any benefit or benefits remain to be paid to the Participant
under the terms and conditions of this Plan, the remaining benefit or
benefits shall be paid to that person or persons designated by the
Participant ("Designated Beneficiary") on the form provided from time
to time to the Participant by his or her Employer in accordance with
Section 5.1. If no Designated Beneficiary has been chosen by the
Participant or is then living on the date of the Participant's death,
then the remaining benefit or benefits shall be paid to the personal
representative, executor, or administrator of the Participant's estate
who shall be deemed to be a Designated Beneficiary.
6.1(A)Beneficiary Designation. Regarding Deferrals for any Plan Year after
1985, if a Participant dies and, on the date of his or her death, any
benefit or benefits remain to be paid to the Participant under the
terms and conditions of this Plan, the remaining benefit or benefits
shall be paid to that person or persons designated by the Participant
("Designated Beneficiary") on the form provided from time to time to
the Participant by his or her Employer in accordance with the Deferral
Agreement. If the Designated Beneficiary dies prior to completion of
all payments under the Deferral Agreement, the estate of the
Designated Beneficiary shall be paid by the Employer in a lump sum as
soon as administratively practicable after the first (1st) day of
January following the year in which the Designated Beneficiary died.
The amount of the lump sum will be equal to (i) the amount of
Compensation deferred pursuant to each of the Participant's Deferral
Agreements, (ii) plus interest on each amount credited separately at
the rate approved for and applicable to the Participant's
participation in each Plan Year for which he or she executed accepted
Deferral Agreements, such rates to be compounded quarterly for each
Plan Year between the Plan Year to which the Deferral Agreement
applies and the Plan Year in which the Designated Beneficiary's death
occurs, inclusive, (iii) minus the amount of all Interim
Distributions, if any, received by the Participant or Designated
Beneficiary, (iv) minus the Retirement benefits paid to the
Participant or Designated Beneficiary pursuant to Paragraph 2 of the
Deferral Agreement(s). If the above calculation results in a negative
amount, such amount shall not be collected from, or enforced against
the estate of the Designated Beneficiary. If no Designated
<PAGE>
Beneficiary has been chosen by the Participant or if the Designated
Beneficiary is not living on the date of the Participant's death, the
estate of the Participant shall be paid by the Employer in a lump sum
as soon as administratively practicable after the first (1st) day of
January following the year in which the Participant died. The amount
of the lump sum shall be determined in the manner described previously
in this Section 6.1A.
6.2 Obligations of Employers not the Obligations of BellSouth. The duties
and obligations of each Employer hereunder are several but not joint;
each Employer is only liable to its own employees and Nonemployee
Directors who are Participants hereunder, and BellSouth is not liable
for the actions, omissions, duties or obligations of any other
Employer hereunder.
6.3 Recalculation Events; Treatment of this Plan under Applicable Federal
Income Tax Laws. The adoption and maintenance of the Plan is strictly
conditioned upon (i) the applicability of Code Section 451(a) to the
Participant's recognition of gross income as a result of his or her
participation, (ii) the fact that Participants will not recognize
gross income as a result of participation in this Plan until and to
the extent that benefits are received, (iii) the applicability of Code
Section 404(a)(5) to the deductability of the amounts paid to
Participants hereunder, (iv) the fact that an Employer will not
receive a deduction for amounts credited to any accounting reserve
created as a result of this Plan until and only to the extent that
benefits are paid, and (v) the inapplicability of the provisions of
the Employee Retirement Income Security Act of 1974. If the Internal
Revenue Service, the Department of Labor or any court determines or
finds as a fact or legal conclusion that any of the above conditions
is untrue and issues or intends to issue an assessment, determination,
opinion or report stating such, or if the opinion of the legal counsel
of BellSouth based upon legal authorities then existing is that any of
the above assumptions is incorrect, then, if the Board so elects
within one year of such finding, determination, or opinion, a
Recalculation Event shall be deemed to have occurred.
If a Recalculation Event occurs under this or any other section of
this Plan, then each Participant who has not attained the age of
fifty-five (55) years on the date on which the Board takes official
action to elect the occurrence of a Recalculation Event shall
thereafter be paid benefits in accordance with the election made
irrevocably in paragraph 4 of the Deferral Agreement executed on or
before November 30, immediately preceding the Plan Year to which the
Deferral Agreement pertains. For each such Participant the amount of
each benefit stated in Paragraph 2 of the Deferral Agreement shall be
recalculated and restated using a rate of interest equal to the rate
of interest on ten (10) year United States Treasury obligations on
each date upon which interest should have been or will be calculated,
compounded quarterly, instead of the interest rate assumed in
originally calculating the benefit, as referenced in Section 4.2.
Notwithstanding anything to the contrary contained in this Plan or a
Deferral Agreement, the benefits payable with respect to any
Participant who shall have either (i) attained the age of fifty-five
(55) years, or (ii) died, on or prior to the date on which the Board
takes official action to elect the occurrence of a Recalculation Event
under either Sections 6.3 or 6.4 of this Plan, shall not be
recalculated and restated in the manner described above or in any
other way affected by such action. If the Participant or Designated
<PAGE>
Beneficiary receives or is entitled to receive a benefit as a result
of the occurrence of a Recalculation Event, then no person or persons
shall receive or be entitled to receive any benefit or payment under
any other Section of this Plan or under any Deferral Agreement,
notwithstanding any other provision of this Plan or the Deferral
Agreement.
6.4 Changes in the Internal Revenue Code of 1954. The adoption and
maintenance of this Plan also is strictly conditioned upon the
existence and continuation of the percentage tax rates for
corporations stated in Code Section 11(b) of the Internal Revenue Code
of 1954, as amended through August 13, 1981, but not thereafter (the
"1954 Code"). In particular, the adoption and maintenance of this
Plan is strictly conditioned upon the rate of tax stated in Section
11(b)(5) of the 1954 Code, that is, "46 percent of so much of the
taxable income as exceeds $100,000." If (1) 1954 Code Section 11(b)
is deleted or amended or a surtax or other addition to tax is imposed
hereafter and, as a result thereof, the rate of federal income tax
imposed on taxable income of corporations in excess of One Hundred
Thousand Dollars ($100,000) is reduced below such rate in effect
immediately before reduction and is less than forty percent (40%), (2)
a tax is imposed by the federal government on income, sales,
consumption, or the value of goods and services which is not currently
contained in the Code, or (3) the Code is amended or restated so
extensively that in the opinion of the legal counsel of BellSouth the
tax treatment of this Plan to the Employer has materially changed to
the detriment of the Employer, then, if the Board so elects within one
year after the enactment of the legislation causing such event, a
Recalculation Event shall be deemed to have occurred and a benefit
will be payable only as described in Section 6.3.
6.5 Governing Law. This Plan and the Deferral Agreements are subject to
the laws of the State of Georgia.
6.6 Successors, Mergers, Consolidations. The terms and conditions of this
Plan and each Deferral Agreement shall inure to the benefit of and
bind BellSouth, the other Employers, the Participants, their
successors, assigns, and personal representatives. If substantially
all of the assets of any Employer are acquired by another corporation
or entity or if an Employer is merged into, or consolidated with,
another corporation or entity, then the obligations created hereunder
and as a result of the Employer's acceptance of Deferral Agreements
shall be obligations of the successor corporation or entity.
6.7 Discharge of Employer's Obligation. The payment by the Employer of
the benefits due under each and every Deferral Agreement to the
Participant or to the person or persons specified in Section 6.1 or
Section 6.1A discharges the Employer's obligations hereunder, and the
Participant has no further rights under this Plan or the Deferral
Agreements upon receipt by the appropriate person of all benefits.
In addition, (i) if any payment is made to a Participant or his or her
Designated Beneficiary with respect to benefits described in this Plan
from any source arranged by the Employer including, without
limitation, any fund, trust, insurance arrangement, bond, security
device, or any similar arrangement, such payment shall be deemed to be
in full and complete satisfaction of the obligation of the Employer
under this Plan and the Deferral Agreements to the extent of such
<PAGE>
payment as if such payment had been made directly by the Employer;
and (ii) if any payment from a source described in clause (i) above
shall be made, in whole or in part, prior to the time payment would be
made under the terms of this Plan and the Deferral Agreement, such
payment shall be deemed to satisfy the Employer's obligation to pay
Plan benefits beginning with the benefit which would next become
payable under the Plan and the Deferral Agreement and continuing in
the order in which benefits are so payable, until the payment from
such other source is fully recovered. In determining the benefits
satisfied by a payment described in clause (ii), Plan benefits, as
they become payable, shall be discounted to their value as of the date
such actual payment was made using an interest rate equal to the
valuation interest rate for deferred annuities as last published by
the Pension Benefit Guaranty Corporation prior to the date of such
actual payment. If the benefits which actually become payable under
this Plan, after applying the discount described in the preceding
sentence, are less than the amount of the payment(s) described in
clause (ii), any such shortfall shall not be collected from or
enforced against the Participant as a claim by the Employer.
6.8 Social Security and Income Tax Withholding. The Participants agree as
a condition of participation hereunder that his or her Employer may
withhold federal, state, and local income taxes and Social Security
taxes from any distribution or benefit paid hereunder.
6.9 Notice; Delivery of Deferral Agreement. Any notice required to be
delivered hereunder and any Deferral Agreement is properly delivered
to Employer when personally delivered to, or actually received from
the United States mail, postage prepaid, by Executive Compensation
Matters Group, Room 13J08, BellSouth Corporation, 1155 Peachtree St.,
N.E., Atlanta, Georgia 30309-3610.
6.10 Nature of Obligations Created Hereunder. The Participants agree as a
condition of participation hereunder that:
(a) the Employers only have a contractual obligation to make payments
to or on behalf of the Participants, and the rights of
Participants under this Plan and the Deferral Agreements are no
greater than the rights of any unsecured creditor of an Employer;
(b) to the extent that any person, other than a Participant, acquires
a right to receive payments from an Employer under this Plan or
any Deferral Agreement, such right is no greater than the rights
of any general unsecured creditor of the Employer;
(c) nothing contained in this Plan or any Deferral Agreement shall
create or be construed to create a trust of any kind of a
fiduciary relationship between BellSouth, any Employer, and any
Participant;
(d) the rights of any Participant may not be sold, assigned,
transferred, pledged, or encumbered, nor shall any interest of
the Participant be liable to the claim of any creditor of the
Participant or subject to any judicial process involving the
Participant;
(e) no Participant shall have any rights in any specific assets of
BellSouth or an Employer, any accounting reserve established as a
result of the Plan only reflects a contractual obligation of the
Employer on its books of accounting and does not constitute a
segregated fund of assets or separation of assets, and the
<PAGE>
obligations of each Employer only are payable from its operating
assets at the time the payment is due.
6.11 No Modification of Employment Agreement. Neither this Plan nor any
Deferral Agreement constitutes a modification of the employment
agreement of any Participant, and no right to continued employment is
created by this Plan or the Deferral Agreement.
6.12 Liability of Employers for Individual Participants Employed by More
than One Employer; Applicability of Deferral Agreement Filed with One
Employer to Subsequent Employers. Any Deferral Agreement which is
timely executed and delivered to an Employer shall be effective to
defer Compensation earned by the Participant from that Employer or any
other Employer during the period in which the Deferral Agreement is
effective. The execution and delivery of a Deferral Agreement by a
Participant constitutes an election by the Participant to defer
Compensation earned from any Employer under the terms of this Plan. A
Participant who timely executes and delivers a Deferral Agreement to
one Employer and who subsequently transfers to another Employer or
otherwise terminates employment and becomes employed by another
Employer shall have the Compensation which is paid to him or her by
both Employers reduced under the terms of the Deferral Agreement and
this Plan as if the transfer or termination and reemployment had not
occurred. The Employer which accepts an executed, timely delivered
Deferral Agreement is liable to the Participant for all benefits which
may be payable under, and as a result of, that Deferral Agreement
notwithstanding the transfer of a Participant to or from another
Employer, or the termination and reemployment of a Participant by
another Employer. If a Participant timely executes and delivers
Deferral Agreements to more than one Employer, each Employer is singly
and not jointly liable for the Deferral Agreement or Deferral
Agreements which it accepted. Any provision of this Plan which refers
to a benefit or payment which is payable as a result of more than one
(1) Deferral Agreement shall be construed to apply only to the
Deferral Agreements delivered by that Participant, and accepted by
each separate Employer of that Participant, and not to all Deferral
Agreements executed and timely delivered by one Participant or all
Participants to all Employers, each Deferral Agreement which
incorporates the terms of this constituting a separate contractual
obligation of a single Employer.
EXHIBIT 11
BELLSOUTH CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(Dollars in Millions, Except Per Share Amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Earnings Per
Common Share:
Income Before
Extraordinary Loss
and Cumulative
Effect of Change in
Accounting Principle 499.5 442.4 1,601.3 1,286.7
Extraordinary Loss on
Early Extinguishment
of Debt, net of tax - (7.8) - (63.2)
Cumulative Effect of
Change in
Accounting Principle,
net of tax - - - (67.4)
Net Income $ 499.5 $ 434.6 $ 1,601.3 $ 1,156.1
Weighted average
shares outstanding 496,220,414 495,885,002 496,167,610 495,527,366
Incremental shares
from assumed
exercise of stock
options and payment
of performance
share awards 519,719 419,947 462,747 404,143
Total Shares 496,740,133 496,304,949 496,630,357 495,931,509
Earnings Per
Common Share:
Income before
Extraordinary Loss
and Cumulative Effect
of Change in
Accounting
Principle $ 1.01 $ .89 $ 3.22 $ 2.59
Extraordinary Loss on
Early Extinguishment
of Debt, net of tax - (.01) - (.12)
Cumulative Effect of
Change in
Accounting Principle,
net of tax - - - (.14)
Earnings per
Common Share $ 1.01 $ .88 $ 3.22 $ 2.33
<PAGE>
BELLSOUTH CORPORATION
COMPUTATION OF EARNINGS PER COMMON SHARE
(Dollars in Millions, Except Per Share Amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Fully Diluted
Earnings Per
Common Share:
Income Before
Extraordinary Loss
and Cumulative Effect
of Change in Accounting
Principle 499.5 442.4 1,601.3 1,286.7
Extraordinary Loss on
Early Extinguishment
of Debt, net of tax - (7.8) - (63.2)
Cumulative Effect of
Change in Accounting
Principle, net of tax - - - (67.4)
Net Income $ 499.5 $ 434.6 $ 1,601.3 $ 1,156.1
Weighted average
shares outstanding 496,220,414 495,885,002 496,167,610 495,527,366
Incremental shares
from assumed
exercise of stock
options and payment
of performance
share awards 519,719 502,007 462,747 567,712
Total Shares 496,740,133 496,387,009 496,630,357 496,095,078
Fully Diluted
Earnings Per
Common Share:
Income before
Extraordinary Loss
and Cumulative
Effect of Change
in Accounting
Principle $ 1.01 $ .89 $ 3.22 $ 2.59
Extraordinary Loss on
Early Extinguishment
of Debt, net of tax - (.01) - (.12)
Cumulative Effect of
Change in Accounting
Principle, net of tax - - - (.14)
Fully Diluted
Earnings per
Common Share $ 1.01 $ .88 $ 3.22 $ 2.33
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<NAME> BELLSOUTH CORPORATION
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<S> <C>
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0
0
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