Filing pursuant to Rule 424(b)(3)
Registration No. 333-13783
BellSouth Compensation Deferral Plan
Prospectus
The date of this prospectus is October 15, 1997.
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
Prospectus Index
The Plan...............................................1
Employee Retirement Income Security Act...............26
Administration........................................26
Investment of Funds...................................26
Your Company's Obligation to Pay......................27
Tax Effects...........................................27
Incorporation of Documents by Reference...............28
Appendix A............................................29
BellSouth Corporation
The Plan
Table of Contents
Background and Purpose.......................................6
Article 1----->Definitions...................................7
1.1 "Account"................................................7
1.2 "Affiliate"..............................................7
1.3 "Base Salary"............................................7
1.4 "BellSouth"..............................................7
1.5 "Beneficiary"............................................7
1.6 "Board"..................................................7
1.7 "Business Day"...........................................7
1.8 "Code"...................................................7
1.9 "Company Stock"..........................................7
1.10 "Compensation"..........................................8
1.11 "Credited Interest Rate"................................8
1.12 "Deferral Contributions"................................8
1.13 "Deferral Election".....................................8
1.14 "Effective Date"........................................8
1.15 "Election Deadline".....................................8
1.16 "Election Package"......................................8
1.17 "Eligible Employee".....................................8
1.18 "ERISA".................................................8
1.19 "Interest Income Option"................................8
1.20 "Interest Income Subaccount"............................9
1.21 "Investment Election"...................................9
1.22 "Investment Options"....................................9
1.23 "Participant"...........................................9
1
1.24 "Participating Company".................................9
1.25 "Plan"..................................................9
1.26 "Plan Administrator"....................................9
1.27 "Plan Year".............................................9
1.28 "Stock Unit "...........................................9
1.29 "Stock Unit Option".....................................9
1.30 "Stock Unit Subaccount".................................9
1.31 "Valuation Date"........................................9
Article II-->Eligibility and Participation..................10
2.1 Eligibility.............................................10
2.2 Election Procedures.....................................10
2.3 Cessation of Eligibility................................10
Article III-->Participants' Accounts; Deferral
Contributions...............................................11
3.1 Participants' Accounts..................................11
(a) Establishment of Account..........................11
(b) Nature of Contributions and Accounts..............11
(c) Several Liabilities...............................11
(d) General Creditors.................................11
3.2 Deferral Contributions..................................11
(a) Effective Date....................................11
(b) Term..............................................11
(c) Amount............................................11
(d) Revocation........................................12
(e) Crediting of Deferred Compensation................12
3.3 Deferral Elections and Multiple Participating
Companies.............................................12
3.4 Termination under Severance Arrangement.................13
3.5 Vesting.................................................13
2
Article IV-->Determination and Crediting of Investment
Return......................................................14
4.1 General Investment Parameters...........................14
4.2 Participant Direction of Deemed Investments.............14
(a) Nature of Participant Direction...................14
(b) Investment of Contributions.......................14
(c) Investment of Existing Account Balances...........14
(d) Investment Subaccounts............................14
4.3 Stock Unit Option.......................................15
(a) Stock Unit Subaccount.............................15
(b) Cash Dividends....................................15
(c) Adjustments for Stock Dividends and Splits........15
4.4 Interest Income Option..................................15
(a) Interest Income Subaccount........................15
(b) Crediting of Deemed Interest......................16
(i) Amount Invested................................16
(ii) Determination of Amount........................16
4.5 Good Faith Valuation Binding............................16
4.6 Errors and Omissions in Accounts........................16
Article V-->Payment of Account Balances.....................17
5.1 Benefit Amounts.........................................17
(a) Benefit Entitlement...............................17
(b) Valuation of Benefit..............................17
(c) Conversion of Stock Units into Dollars............17
5.2 Elections of Timing and Form............................17
(a) Timing............................................17
(b) Form of Distribution..............................17
(c) Multiple Selections...............................17
5.3 Benefit Payments to a Participant.......................18
(a) Timing............................................18
(b) Form of Distribution..............................18
3
(c) Valuation of Single Sum Payments..................18
(d) Valuation of Installment Payments.................18
5.4 Death Benefits..........................................18
(a) General...........................................18
(b) Valuation.........................................18
5.5 Beneficiary Designation.................................19
(a) General...........................................19
(b) No Designation or Designee Dead or Missing........19
(c) Death of Beneficiary..............................19
5.6 Taxes...................................................19
Article VI-->Claims.........................................20
6.1 Initial Claim...........................................20
6.2 Appeal..................................................20
6.3 Satisfaction of Claims..................................20
Article VII-->Source of Funds...............................21
Article VIII-->Plan Administration..........................22
8.1 Action by the Plan Administrator........................22
(a) Individual Administrator..........................22
(b) Administrative Committee..........................22
8.2 Rights and Duties of the Plan Administrator.............22
8.3 Bond; Compensation......................................22
Article IX-->Amendment and Termination......................23
9.1 Amendments..............................................23
9.2 Termination of Plan.....................................23
9.3 Limitation of Authority.................................23
(a) Plan Amendments...................................23
(b) Plan Termination..................................23
(c) Opinions of Counsel...............................23
4
Article X-->Miscellaneous...................................24
10.1 Taxation...............................................24
10.2 Withholding............................................24
10.3 No Employment Contract.................................24
10.4 Headings...............................................24
10.5 Gender and Number......................................24
10.6 Assignment of Benefits.................................24
10.7 Legally Incompetent....................................24
10.8 Entire Document........................................24
10.9 Governing Law..........................................24
Exhibit A --> Participating Companies.......................25
5
Effective as of the 1st day of January 1997, BellSouth Corporation
("BellSouth") established the BellSouth Compensation Deferral Plan
(the "Plan"). The Plan is hereby amended and restated effective as
of October 1, 1997.
Background and Purpose
Goal.....BellSouth desires to provide its designated key
management employees, and those of its affiliated
companies that participate in the Plan, with an
opportunity (i) to defer the receipt and income taxation
of a portion of such employees' base salaries; and (ii)
to receive an investment return on those deferred amounts
based on the return of BellSouth stock, an indexed rate
of interest, or a combination of the two.
Purpose....The purpose of the Plan is to set forth the terms and
conditions pursuant to which these deferrals may be made
and deemed invested and to describe the nature and extent
of the employees' rights to their deferred amounts.
Type of Plan...The Plan constitutes an unfunded, nonqualified
deferred compensation plan that benefits certain
designated employees who are within a select group of key
management or highly compensated employees. Each
Participating Company alone has the obligation to pay
amounts payable under this Plan to its Plan Participants,
and such payments are not an obligation of any other
Participating Company.
6
Article 1
Definitions
For purposes of the Plan, each of the following terms, when used
with an initial capital letter, shall have the meaning set forth
below unless a different meaning plainly is required by the
context.
1.1 Account shall mean, with respect to a Participant or
Beneficiary, the total dollar amount or value evidenced by
the last balance posted in accordance with the terms of the
Plan to the account record established for such Participant
or Beneficiary with respect to the Deferral Contributions of
such Participant for any Plan Year.
1.2 Affiliate shall mean at any time any corporation, joint
venture or partnership in which BellSouth owns directly or
indirectly, (i) with respect to a corporation, stock
possessing at least ten percent (10%) of the total combined
voting power of all classes of stock in the corporation, or
(ii) in the case of a joint venture or partnership, a ten
percent (10%) or greater interest in the capital or profits
of such joint venture or partnership.
1.3 Base Salary shall mean, with respect to each Eligible
Employee for a Plan Year, the gross regular, periodic base
salary paid or payable to him during such Plan Year,
including any of his own before-tax and after-tax
contributions to, or deferrals under, any Code Section
401(k), Code Section 125, nonqualified deferred compensation
or other employee benefit plan or program, maintained by a
Participating Company from time to time, but excluding any
contributions or benefits paid under any such plan or program
by a Participating Company.
1.4 BellSouth shall mean BellSouth Corporation, a Georgia
corporation.
1.5 Beneficiary shall mean, with respect to a Participant, the
person(s) determined in accordance with Section 5.5 to
receive any death benefits that may be payable under the Plan
upon the death of the Participant.
1.6 Board shall mean the Board of Directors of BellSouth.
1.7 Business Day shall mean each day on which the New York Stock
Exchange operates and is open to the public for trading.
1.8 Code shall mean the Internal Revenue Code of 1986, as
amended.
1.9 Company Stock shall mean the $1.00 par value per share voting
common stock of BellSouth.
7
1.10 Compensation shall mean, for purposes of determining the
maximum amount that a Participant may defer under the Plan
for any Plan Year, the total of such Participant's (i)
annualized Base Salary rate, and (ii) standard short-term
incentive award amount. For a Participant who is designated
by the Plan Administrator as a member of BellSouth's
"executive compensation group" for purposes of this Plan such
amounts shall be determined as the rate or amount in effect
or applicable on the date such Participant executes a
Deferral Election. For a Participant who is designated by the
Plan Administrator as a "senior manager" for purposes of this
Plan such amount shall be determined at the rate or amount in
effect or applicable on September 1 of the year in which the
Participant executes a Deferral Election. For any Eligible
Employee employed by a Participating Company whose
compensation structure does not readily fit this definition,
"Compensation" shall mean cash compensation as defined by the
Plan Administrator.
1.11 Credited Interest Rate shall mean, for each Plan Year, the
rate of return equal to Moody's Monthly Average of Yields of
Aa Corporate Bonds, as published by Moody's Investor Service,
Inc., for the month of July immediately preceding such Plan
Year. If such rate (or any alternative rate described in this
sentence) is at any time no longer available, the Plan
Administrator shall designate an alternative rate which in
the Plan Administrator's reasonable judgment is generally
comparable to the rate described in the preceding sentence,
and such alternative rate shall thereafter be the Credited
Interest Rate.
1.12 Deferral Contributions shall mean, for each Plan Year, that
portion of a Participant's Base Salary deferred under the
Plan pursuant to Section 3.2.
1.13 Deferral Election shall mean a written election form provided
by the Plan Administrator on which an Eligible Employee may
elect to defer under the Plan a portion of his Base Salary.
1.14 Effective Date shall mean January 1, 1997.
1.15 Election Deadline shall mean, with respect to a Plan Year,
the November 30 (of if November 30 is not a Business Day, the
last Business Day immediately preceding November 30)
immediately preceding the first day of such Plan Year.
1.16 Election Package shall mean a package consisting of a
Deferral Election, an Investment Election and such other
forms and documents distributed to Eligible Employees by the
Plan Administrator for the purpose of allowing them to elect
to actively participate in the Plan for a Plan Year.
1.17 Eligible Employee shall mean, for each Plan Year, each
management employee of a Participating Company who (i) is a
member of a select group of highly compensated or key
management employees, and (ii) is designated by the Plan
Administrator as a member of BellSouth's "executive
compensation group" or as a "senior manager" for purposes of
this Plan for the Plan Year, or is otherwise designated by
the Plan Administrator as eligible to participate in the Plan
for such Plan Year.
1.18 ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
1.19 Interest Income Option shall mean the Investment Option
described in Section 4.4, pursuant to which a Participant's
deemed investment earnings are determined on the basis of the
Credited Interest Rate.
1.20 Interest Income Subaccount shall mean a bookkeeping
subaccount reflecting that portion of a Participant's Account
for each Plan Year which is deemed to be invested in the
Interest Income Option.
1.21 Investment Election shall mean a written election form
provided by the Plan Administrator on which an Eligible
Employee may elect to have his Deferral Contributions for a
Plan Year (and all investment earnings attributable thereto)
deemed invested in either the Stock Unit Option and/or the
Interest Income Option.
8
1.22 Investment Options shall mean the Stock Unit Option and the
Interest Income Option.
1.23 Participant shall mean any person participating in the Plan
pursuant to the provisions of Article II.
1.24 Participating Company shall mean BellSouth and each Affiliate
listed as a Participating Company as of January 1, 1997 on
Exhibit A hereto, and each other Affiliate which, by action
of its board of directors (or equivalent governing body),
adopts the Plan as a Participating Company with the approval
of the Plan Administrator. Exhibit A shall be updated from
time to time to reflect the addition of new Participating
Companies, and the effective dates of their participation,
and the deletion of any entities which are no longer
Participating Companies.
1.25 Plan shall mean the BellSouth Compensation Deferral Plan, as
contained herein and all amendments hereto.
1.26 Plan Administrator shall mean the Chief Executive Officer of
BellSouth and any individual or committee he designates to
act on his behalf with respect to any or all of his
responsibilities hereunder; provided, the Board may designate
any other person or committee to serve in lieu of the Chief
Executive Officer as the Plan Administrator with respect to
any or all of the administrative responsibilities hereunder.
1.27 Plan Year shall mean the calendar year.
1.28 Stock Unit shall mean an accounting entry that represents an
unsecured obligation of a Participating Company to pay to a
Participant an amount which is based on the fair market value
of one share of Company Stock as set forth herein. A Stock
Unit shall not carry any voting, dividend or other similar
rights and shall not constitute an option or any other right
to acquire any equity securities of BellSouth.
1.29 Stock Unit Option shall mean the Investment Option described
in Section 4.3, pursuant to which a Participant's deemed
investment earnings are determined by the rate of return
applicable to Stock Units.
1.30 Stock Unit Subaccount shall mean a bookkeeping subaccount
reflecting that portion of a Participant's Account for each
Plan Year which is deemed to be invested in the Stock Unit
Option.
1.31 Valuation Date shall mean December 31 (or, if December 31 is
not a Business Day, the last Business Day immediately
preceding December 31), and each other day declared by the
Plan Administrator to be a Valuation Date.
9
Article II
Eligibility and Participation
2.1 Eligibility. Each individual who is an Eligible Employee for
a Plan Year shall be eligible to defer a portion of his Base
Salary and thereby to actively participate in the Plan for
such Plan Year. Such individual's participation shall become
effective as of the first day of such Plan Year, assuming he
properly and timely completes the election procedures
described below.
2.2 Election Procedures. Each Eligible employee shall elect to
defer a portion of his Base Salary and thereby become an
active Participant for a Plan Year by delivering a completed
Deferral Election and an Investment Election by the Election
Deadline for such Plan Year. The Plan Administrator also may
require the Eligible Employee to complete other forms and
provide other data, as a condition of participation in the
Plan. Furthermore, such an election by an individual shall be
effective only if the individual is actively employed as an
Eligible Employee at the time the individual delivers the
completed Deferral Election and Investment Election.
2.3 Cessation of Eligibility. An Eligible Employee's active
participation in the Plan shall terminate, and he shall not
be eligible to make any additional Deferral Contributions for
any portion of a Plan Year following the date his employment
with BellSouth and all Participating Companies terminates
(unless he is reemployed as an Eligible Employee later in
such Plan Year). In addition, an individual who actively
participated in the Plan during prior Plan Years but who is
not an Eligible Employee or does not complete the election
procedures, for a subsequent Plan Year, shall cease his
active participation in the Plan for such subsequent Plan
Year. Even if an individual's active participation in the
Plan ends, such individual shall remain an inactive
Participant in the Plan until the earlier of (i) the date the
full amount of his Accounts is distributed from the Plan, or
(ii) the date he again becomes an Eligible Employee and
recommences active participation in the Plan. During the
period of time that an individual is an inactive Participant
in the Plan, his accounts shall continue to be credited with
earnings as provided in the Plan.
10
Article III
Participants' Accounts: Deferral Contributions
3.1 Participants' Accounts.
(a) Establishment of Accounts. The Plan Administrator shall
establish and maintain an Account on behalf of each Participant
for each Plan Year for which the Participant makes Deferral
Contributions. The Plan Administrator shall credit each
Participant's Account with his Deferral Contributions for such
Plan Year and earnings attributable thereto, and shall maintain
such Account until the value thereof has been distributed
to or on behalf of such Participant or his Beneficiary.
(b) Nature of Contributions and Accounts. The amounts credited to a
Participant's Accounts shall be represented solely by bookkeeping
entries. Except as provided in Article VII, no monies or other
assets shall actually be set aside for such Participant, and all
payments to a Participant under the Plan shall be made from the
general assets of the Participating Companies.
(c) Several Liabilities. Each Participating Company shall be
severally (and not jointly) liable for the payment of benefits
under the Plan under Deferral Elections executed by Eligible
Employees with, and while employed by, such Participating
Company.
(d) General Creditors. Any assets which may be acquired by a
Participating Company in anticipation of its obligations under
the Plan shall be part of the general assets of such Participating
Company. A Participating Company's obligation to pay benefits
under the Plan constitutes a mere promise of such Participating
Company to pay such benefits, and a Participant or Beneficiary
shall be and remain no more than an unsecured, general creditor
of such Participating Company.
3.2 Deferral Contributions. Each Eligible Employee may
irrevocably elect to have Deferral Contributions made on his
behalf for a Plan Year by completing in a timely manner a
Deferral Election and an Investment Election and following
other election procedures as provided in Section 2.2. Subject
to any modifications, additions or exceptions that the Plan
Administrator, in its sole discretion, deems necessary,
appropriate or helpful, the following terms shall apply to
such Deferral Elections:
(a) Effective Date. A Participant's Deferral Election for any Plan
Year shall be effective and provide for the reduction and deferral
of a portion of such Participant's Base Salary otherwise payable
in regular,periodic paychecks during such Plan Year. If an Eligible
Employee fails to deliver a Deferral Election, or to complete any
of the other requisite election procedures, in a timely manner, he
shall be deemed to have elected not to participate in the Plan for
that Plan Year.
(b) Term. Each Participant's Deferral Election for a Plan Year shall
remain in effect with respect to a portion of all Base Salary paid
or payable during such Plan Year, but shall not apply to any
subsequent Plan Year.
(c) Amount. Each Eligible Employee's Deferral Election shall specify
a dollar amount, in increments of $1,000, of annual Base Salary
to be deferred. The maximum amount that an Eligible Employee
may defer for any Plan Year shall be as follows:
(i) for an Eligible Employee who is designated as a "senior
manager", or otherwise designated by the Plan Administrator
as eligible to participate in the Plan (and who is not also
designated as a member of BellSouth's "executive
compensation group" for the Plan Year), 10% of his
Compensation; and
(ii) for an Eligible Employee who is designated as a member of
BellSouth's "executive compensation group", 25% of his
Compensation;
in each case, rounded to the next highest thousand dollars.
The total dollar amount shall be withheld from such
Eligible Employee's regular, periodic paychecks of Base
Salary in substantially equal installments throughout the
Plan Year. Notwithstanding any provision of this Plan or a
Deferral Election
11
to the contrary, however, the amount
withheld from any payment of Base Salary shall be reduced
automatically, if necessary, so that it does not exceed the
amount of such payment net of all withholding, allotments
and deductions, other than any reduction pursuant to such
Deferral Election. No amounts shall be withheld during any
period an individual ceases to receive Base Salary as an
actively employed Eligible Employee for any reason during
the Plan Year except that, in the case of an individual on
an approved paid leave of absence as an Eligible Employee
(including a paid leave of absence under a short term
disability plan of a Participating Company), amount shall
be withheld from such leave of absence payments and
otherwise treated in the same manner as if such payments
constituted Base Salary under the Plan. No adjustment shall
be made in the amount to be withheld from any subsequent
payment of Base Salary for a Plan Year to compensate for
any missed or reduced withholding amounts above.
(d) Revocation. Once made for a Plan Year, a Participant may not
revoke his Deferral Election for such Plan Year.
(e) Crediting of Deferred Compensation. The Plan Administrator shall
credit to each Participant's Account for a Plan Year, as of the
first day of such Plan Year, the entire amount of the Participant's
Deferral Contributions reflected in his Deferral Election for such
Plan Year; provided, that the Participant's Account shall
be automatically adjusted, retroactively to the first day of such
Plan Year, to reflect the amount of Deferral Contributions
actually made from Base Salary (or pursuant to Section 3.4, if
applicable) during the Plan Year if for any reason the entire
amount of the Participant's Deferral Contributions so reflected
is not made.
3.3 Deferral Elections and Multiple Participating Companies. Any
Deferral Election which is timely executed and delivered to
the Plan Administrator shall be effective to defer Base
Salary earned by the Participant from the Participating
Company employing such Participant at the time of his
election or any other Participating Company employing such
Participant during the Plan Year for which the Deferral
Election is effective. In particular, a Participant (i) who
timely executes and delivers a Deferral election while
employed by one Participating Company and subsequently
transfers to another Participating Company, or (ii) who
terminates employment and subsequently becomes employed by
another Participating Company, shall have the Base Salary
that is paid or payable to him by both Participating
Companies reduced under the terms of the Deferral Election
and the Plan as if the transfer or termination and
reemployment had not occurred; provided, that, as provided in
Section 3.2(c), no amounts shall be withheld attributable to
any portion of the Plan Year during which he is not receiving
Base Salary as an Eligible Employee of a Participating
Company.
12
3.4 Termination Under Severance Arrangement. A Participant
eligible to participate in a severance plan or arrangement
sponsored by a Participating Company which provides for a
lump-sum severance payment upon termination of employment may
elect, on such form and at such time and in such manner as
shall be prescribed by the Plan Administrator, to reduce the
amount of a lump-sum severance payment to which the
Participant may become entitled under such plan or
arrangement in an amount not to exceed the dollar amount by
which the Participant's Deferral Contributions for the Plan
Year in which such termination occurs would not have been
made at the time of termination of employment, and the amount
so elected shall for all purposes be treated as Deferral
Contributions made under the Plan.
3.5 Vesting. A Participant shall at all times be fully vested in
his Deferral Contributions and all investment earnings
attributable thereto.
13
Article IV
Determination and Crediting of Investment Return
4.1 General Investment Parameters. The rate of return credited to
each Participant's Account shall be determined on the basis
of the Investment Option(s) selected by the Participant. The
terms of this selection process and the manner in which
investment return is credited are set forth in this Article
IV.
4.2 Participant Direction of Deemed Investments. Each Participant
generally may direct the manner in which his Deferral
Contributions for each Plan Year shall be deemed invested in
and between the Stock Unit Option and/or the Interest Income
Option, in accordance with the following terms:
(a) Nature of Participant Direction. A Participant's election of the
Stock Unit Option and/or Interest Income Option shall be for the
sole purpose of determining the rate of return to be credited to
his Account for such Plan Year, and shall not be treated or
interpreted in any manner whatsoever as a requirement or direction
to actually invest assets in Company Stock, an interest income
fund or any other investment media. The Plan, as an unfunded,
nonqualified deferred compensation plan, at no time shall have
any actual investment of assets relative to
the benefits or Accounts hereunder.
(b) Investment of Contributions. In conjunction with completing a
Deferral Election for a Plan Year, an Eligible Employee shall
complete an Investment Election prescribing the percentage of
his Deferral Contributions for such Plan Year that will be deemed
to be invested in the Stock Unit Option and/or the Interest
Income Option; provided, such Investment Election shall specify
one of the three alternatives, as follows:
(i) 100% of the Deferral Contributions for such Plan Year shall
be deemed invested in the Stock Unit Option;
(ii) 100% of the Deferral Contributions for such Plan Year shall
be deemed invested in the Interest Income Option; or
(iii) 50% of the Deferral Contributions for such Plan Year shall
be deemed invested in the Stock Unit Option, and 50% of the
Deferral Contributions for such Plan Year shall be deemed
invested in the Interest Income Option.
(a) Investment of Existing Account Balances. A Participant may
not make an Investment Election changing the percentage of an
existing Account balance that will be deemed to be invested in the
Stock Unit Option and/or the Interest Income Option. Once an
Investment Election is made with respect to an Account, it shall
continue to apply with respect to such Account until all
amounts in such Account are distributed.
(b) Investment Subaccounts. For the sole purpose of tracking a
Participant's investment elections and calculating investment
earnings attributable to a Participant's Account for a Plan
Year pursuant to the terms of this Article IV, the Plan
Administrator shall establish and maintain for such
Participant for such Plan Year a Stock Unit Subaccount and
an Interest Income Subaccount, as necessary, the total of which
shall equal such Participant's Account for such Plan Year.
14
4.3 Stock Unit Option.
(a) Stock Unit Subaccount. To the extent an Eligible Employee makes
an Investment Election in accordance with Section 4.2 to have all
or a portion of his Deferral Contributions for a Plan Year deemed
to be invested in the Stock Unit Option, the Participant's Stock
Unit Subaccount for such Plan Year shall be credited (subject to
the adjustment described in subsection 3.2(e), if applicable), as
of the first day of such Plan Year, with a number of Stock Units
equal to the number of full and fractional shares of Company Stock
that could have been purchased with such portion of the Eligible
Employee's Deferral Contributions elected for such Plan Year at
the average of the high and low sales prices of one share of
company Stock on the New York Stock Exchange for the last Business
Day of each of the three calendar months immediately preceding
the first day of such Plan Year.
(b) Cash Dividends. As of each date on which BellSouth has paid a
cash dividend on Company Stock, the number of Stock Units credited
to a Participant's Stock Unit Subaccount for each Plan Year shall
be increased by a number of additional Stock Units equal to the
quotient of (i) the amount of dividends that would have been paid
on the number of shares of Company Stock equivalent to the number
of Stock Units credited to such subaccount as of such dividend
payment date, divided by (ii) the average of the daily high and
low sales prices of one share of Company Stock on the New York
Stock Exchange for the period of five Business Days ending on
such dividend payment date (or the period of five Business Days
ending on the immediately preceding Business Day if such
date was not a Business Day).
(c) Adjustments. In the event of any change in outstanding shares of
Company Stock, by reclassification, recapitalization, merger,
consolidation, spin off, combination, exchange of shares, stock
split, reverse stock split or otherwise, or in the event of the
payment of a stock dividend on Company Stock, or in the event of
any other increase or decrease the number of outstanding shares of
Company Stock, other than the issuance of shares for value
received by BellSouth or the redemption of shares for value,
the Plan Administrator shall adjust the number and/or form of
Stock Units in the manner it deems appropriate in its reasonable
judgment to reflect such event, including substituting or
adding publicly traded shares of companies other than the Company
as a basis for determining Stock Units. The Plan Administrator
similarly shall make such adjustments as it deems are appropriate
in its reasonable judgment in the form, including the basis of
measurement, of Stock Units in the event all shares of Company
Stock cease for any reason to be outstanding or to be actively
traded on the New York Stock Exchange. In the event the Plan
Administrator determines in its reasonable judgment that it would
not be possible to appropriately reflect an event under this
paragraph (c) by adjusting the number and/or form of Stock
Units, the Plan Administrator shall establish a special
Valuation Date appropriate to such event for all Stock Unit
Subaccounts and shall cause subaccounts, as so valued,
automatically to be converted into Interest Income Subaccounts,
which thereafter shall be subject to Section 4.4.
4.4 Interest Income Option
(a) Interest Income Subaccount. To the extent that an Eligible
Employee makes an Investment Election in accordance with Section
4.2 to have all or a portion of his Deferral Contributions for a
Plan Year deemed to be invested in the Interest Income Option, the
Participant's Interest Income Subaccount for such Plan Year shall
be credited (subject to the adjustment described in subsection
3.2(e), if applicable), as of the first day of such Plan Year,
with such portion of the Eligible Employee's Deferral
Contributions elected for such Plan Year.
(b) Crediting of Deemed Interest. As of each Valuation Date, the
Plan Administrator shall credit a Participant's Interest Income
Subaccounts with the amount of earnings applicable thereto for the
period since the immediately preceding Valuation Date. Such
crediting of earnings for each Interest Income Subaccount shall be
effected, as follows:
(i) Amount Invested. The Plan Administrator shall determine the
amount of (A) in the case of an Interest Income Subaccount
established in connection with a Deferral Election for the Plan
Year ending on such Valuation Date, such Participant's Deferral
Contributions credited to such Participant's Interest Income
Subaccount for such Plan Year; and (B) in the case of an
Interest Income Subaccount for a prior Plan Year, the
balance of such Participant's Interest Income Subaccount as of
the immediately preceding Valuation Date, minus the amount
distributed from such Participant's Interest Income subaccount
since the immediately preceding Valuation Date; and
15
(ii) Determination of Amount. The Plan Administrator then shall
apply the Credited Interest Rate for such Plan Year to such
Participant's adjusted Interest Income Subaccount (as
determined in subparagraph (i) hereof), and the total amount
of investment earnings resulting therefrom shall be credited
to such Participant's Interest Income Subaccount as of
such Valuation Date.
4.5 Good Faith Valuation Binding. In determining the value of
Accounts, the Plan Administrator shall exercise its best
judgment, and all such determinations of value (in the
absence of bad faith) shall be binding upon all Participants
and their Beneficiaries.
4.6 Errors and Omissions in Accounts. If an error or omission is
discovered in the Account of a Participant or in the amount
of a Participant's Deferral Contributions, the Plan
Administrator, in its sole discretion, shall cause
appropriate, equitable adjustment to be made as soon as
administratively practicable following the discovery of such
error or omission.
16
Article V
Payment of Account Balances
5.1 Benefit Amounts.
(a) Benefit Entitlement. As his benefit under the Plan, each
Participant (or his Beneficiary) shall be entitled to receive the
total amount of his Accounts, determined as of the most recent
Valuation Date, and payable at such times and in such forms as
described in this Article V.
(b) Valuation of Benefit. For purposes hereof, each Account of a
Participant as of any Valuation Date shall be equal to (i) the
total amount of all of such Participant's Deferral Contributions
credited thereto; plus (ii) all deemed investment earnings
attributable thereto; minus (iii) the total amount of all benefit
payments previously made therefrom.
(c) Conversion of Stock Units into Dollars. For purposes of
converting some or all of a Participant's Stock Units into a
dollar amount in valuing his Accounts as of any Valuation Date,
the value of each Stock Unit shall be equal to the average of
the high and low sales prices of one share of Company Stock on
the New York Stock Exchange for the last Business Day of each
of the three calendar months ending on or immediately preceding
such Valuation Date.
5.2 Elections of Timing and Form. In conjunction with, and at the
time of, completing a Deferral Election for each Plan Year,
an Eligible Employee shall select the timing and form of the
distribution that will apply to the Account for his Deferral
Contributions (and deemed investment earnings attributable
thereto) for such Plan Year. The terms applicable to this
selection process are as follows:
(a) Timing. For a Participant's Account for each Plan Year,
such Participant may elect that his distributions will be made
or commence as of any January 1 following the Plan Year of
deferral; provided, he may not select a benefit payment or
commencement date for such Account that is later than the
twentieth January 1 following the end of the Plan Year
of deferral.
(b) Form of Distribution. For a Participant's Account for each
Plan Year, such Participant may elect that his distribution will
be paid in one of the following forms:
(i) a single lump-sum cash payment; or
(ii) substantially equal annual installments (adjusted for
investment earnings between payments in the manner
described in Article IV) over a period of one (1) to
ten (10) years; provided that the number of years
so elected shall in no event exceed one (1) year for
each full $1,000 of Deferral Contributions elected for
such Plan Year.
(a) Multiple Selections. An Eligible Employee may select a
different benefit payment or commencement date and/or a different
form of distribution with respect to his Account for each Plan
Year. For ease of administration, the Plan Administrator may
combine Accounts and Subaccounts of a Participant to which the
same benefit payment/commencement date and the same form of
distribution apply.
17
5.3 Benefit Payments to a Participant.
(a) Timing. A Participant shall receive or begin receiving a
distribution of each of his Accounts as of the earlier of (i)
the January 1 selected by such Participant with respect to each
such Account pursuant to the terms of Section 5.2(a); or (ii)
the January 1 immediately following the date that such
Participant's employment with BellSouth and all Affiliates
ends for any reason, unless he returns to employment with
BellSouth or one of the Affiliates before such January 1.
An amount payable "as of" any January 1 shall be made as
soon as practicable after such January 1 and, unless
extenuating circumstances arise, no later than January 31.
(b) Form of Distribution. A Participant shall receive or begin
receiving a distribution of each of his Accounts in cash in
the form selected by such Participant with respect to such
Account pursuant to the terms of Section 5.2(b).
(c) Valuation of Single Lump-Sum Payments. The amount of a
Participant's single lump-sum distribution of any of his
Accounts as of any applicable January 1 shall be equal to
the value of such Account as of the Valuation Date
immediately preceding the date on which such distribution
is paid.
(d) Valuation of Installment Payments. For purposes of
determining the amount of any installment payment to be
paid as of January 1 from an Account, the following shall
apply:
(i) for any amount of such Account attributable to an
Interest Income Subaccount as of the immediately preceding
Valuation Date, such amount shall be divided by the number
of remaining installments to be paid from such Account
(including the current installment); and
(ii) for any portion of such Account attributable to a
Stock Unit Subaccount as of the immediately preceding
Valuation Date, the total number of Stock Units
constituting such portion shall be divided by the
number of remaining installments to be paid from such
Account (including the current installment), and the
resulting number of Stock Units shall be converted into
a dollar amount (pursuant to the terms of Section 5.1(c))
as of such Valuation Date.
5.4 Death Benefits.
(a) General. If a Participant dies before receiving the entire
amount of his benefit under the Plan, such Participant's
Beneficiary shall receive distribution of amounts remaining
in the Participant's Accounts in the form, as elected by the
Participant on a Beneficiary designation form described in
Section 5.5, of either:
(i) a single lump-sum cash payment of the entire balance in
the Participant's Accounts as of the January 1 immediately
following the date of the Participant's death; or
(ii) (A) for Accounts with respect to which distribution has
not commenced under Section 5.2 at the time of the
Participant's death, substantially equal annual
installments (adjusted for investment earnings between
payments in the manner described in Article IV) over a
period of one (1) to ten (10) years, commencing as of
the January 1 immediately following the Participant's
death; and (B) for Accounts with respect to which
distribution has commenced in the form of installments
described in Section 5.2(b)(ii) at the time of the
Participant's death, continuation of such installment
payment schedule.
An amount payable "as of" any January 1 shall be made as
soon as practicable after such January 1 and, unless
extenuating circumstances arise, no later than January 31.
(b) Valuation. The valuation rules described in subsections
5.3(c) and 5.3(d) shall apply to payments described in this
Section 5.4.
5.5 Beneficiary Designation.
(a) General. A Participant shall designate a Beneficiary or
Beneficiaries for all of his Accounts by completing the
form prescribed for this purpose for the Plan by the Plan
Administrator and submitting such form as instructed by the
Plan Administrator. Once a Beneficiary designation is made,
it shall continue to apply until and unless such
Participant makes and submits a new Beneficiary designation
form for this Plan.
18
(b) No Designation or Designee Dead or Missing. In the event that:
(i) a Participant dies without designating a Beneficiary;
(ii) the Beneficiary designated by a Participant is not
surviving or in existence when payments are to be made
or commence to such designee under the Plan, and no
contingent Beneficiary, surviving or in existence, has
been designated; or
(iii)the Beneficiary designated by a Participant cannot be
located by the Plan Administrator within 1 year from
the date benefit payments are to be made or commence
to such designee; then, in any of such events, the
Beneficiary of such Participant shall be the
Participant's surviving spouse, if any can then be
located, and if not, the estate of the Participant,
and the entire balance in the Participant's Accounts
shall be paid to such Beneficiary in the form of
a single lump-sum cash payment described in Section
5.4(a)(i).
(c) Death of Beneficiary. If a Beneficiary who survives the
Participant, and to whom payment of Plan benefits commences,
dies before complete distribution of the Participant's Accounts,
the entire balance in such Accounts shall be paid to the estate
of such Beneficiary in the form of a single lump-sum cash payment
as of the January 1 immediately following such Beneficiary's
death. An amount payable "as of" any January 1 shall be made
as soon as practicable after such January 1 and, unless
extenuating circumstances arise, no later than January 31. The
valuation rules described in subsection 5.3(c) shall apply to
any payments described in this subsection 5.5(c).
5.6 Taxes. If the whole or any part of any Participant's or
Beneficiary's benefit hereunder shall become subject to any
estate, inheritance, income, employment or other tax which a
Participating Company shall be required to pay or withhold,
the Participating Company shall have the full power and
authority to withhold and pay such tax out of any monies or
other property in its hand for the account of the Participant
or Beneficiary whose interest hereunder are so affected.
Prior to making any payment, the Participating Company may
require such releases or other documents from any lawful
taxing authority as it shall deem necessary.
19
Article VI
Claims
6.1 Initial Claim. Claims for benefits under the Plan may be
filed with the Plan Administrator on forms or in such other
written documents, as the Plan Administrator may prescribe.
The Plan Administrator shall furnish to the claimant written
notice of the disposition of a claim within 90 days after the
application therefor is filed. In the event the claim is
denied, the notice of the disposition of the claim shall
provide the specific reasons for the denial, citations of the
pertinent provisions of the Plan, and, where appropriate, an
explanation as to how the claimant can perfect the claim
and/or submit the claim for review.
6.2 Appeal. Any Participant or Beneficiary who has been denied a
benefit shall be entitled, upon request to the Plan
Administrator, to appeal the denial of his claim. The
claimant (or his duly authorized representative) may review
pertinent documents related to the Plan and in the Plan
Administrator's possession in order to prepare the appeal.
The request for review, together with written statement of
the claimant's position, must be filed with the Plan
Administrator no later than 60 days after receipt of the
written notification of denial of a claim provided for in
Section 6.1. The Plan Administrator's decision shall be made
within 60 days following the filing of the request for
review. If unfavorable, the notice of the decision shall
explain the reasons for denial and indicate the provisions of
the Plan or other documents used to arrive at the decision.
6.3 Satisfaction of Claims. The payment of the benefits due under
the Plan to a Participant or Beneficiary shall discharge the
Participating Company's obligations under the Plan, and
neither the Participant nor the Beneficiary shall have any
further rights under the Plan upon receipt by the appropriate
person of all benefits. In addition, (i) if any payment is
made to a Participant or Beneficiary with respect to benefits
described in the Plan from any source arranged by BellSouth
or a Participating Company 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
Participating Company under the Plan to the extent of such
payment as if such payment had been made directly by such
Participating Company; and (ii) if any payment from a source
described in clause (i) shall be made, in whole or in part,
prior to the time payment would be made under the terms of
the Plan, such payment shall be deemed to satisfy such
Participating Company's obligation to pay Plan benefits
beginning with the benefit which would next become payable
under the Plan and continuing in the order in which benefits
are so payable, until the payment from such other source is
fully recovered. The Plan Administrator or such Participating
Company, as a condition to making any payment, may require
such Participant or Beneficiary to execute a receipt and
release therefor in such form as shall be determined by the
Plan Administrator or the Participating Company. If receipt
and release is required but the Participant or Beneficiary
(as applicable) does not provide such receipt and release in
a timely enough manner to permit a timely distribution in
accordance with the general timing of distribution provisions
in the Plan, the payment of any affected distribution may be
delayed until the Plan Administrator or the Participating
Company receives a proper receipt and release.
20
Article VII
Source of Funds
Each Participating Company shall provide the benefits described in
the Plan from its general assets. However, to the extent that
funds in one or more trusts, or other funding arrangement(s),
allocable to the benefits payable under the Plan are available,
such assets may be used to pay benefits under the Plan. If such
assets are not sufficient or are not used to pay all benefits due
under the Plan, then the appropriate Participating Company shall
have the obligation, and the Participant or Beneficiary, who is
due such benefits, shall look to such Participating Company to
provide such benefits. No Participant or Beneficiary shall have
any interest in the assets of any trust, or other funding
arrangement, or in the general assets of the Participating
Companies other than as a general, unsecured creditor.
Accordingly, a Participating Company shall not grant a security
interest in the assets held by the trust in favor of the
Participants, Beneficiaries or any creditor.
21
Article VIII
Plan Administration
8.1 Action by the Plan Administrator.
(a) Individual Administrator. If the Plan Administrator is an
individual, he shall act and record his actions in writing.
Any matter concerning specifically such individual's own benefit
or rights hereunder shall be determined by the Board or its
designee.
(b) Administrative Committee. If the Plan Administrator is a
committee, action of the Plan Administrator may be taken with or
without a meeting of committee members; provided, action shall
be taken only upon the vote or other affirmative expression of a
majority of the committee members qualified to vote with respect
to such action. If a member of the committee is a Participant
or Beneficiary, he shall not participate in any decision which
solely affects his own benefit under the Plan. For purposes
of administering the Plan, the Plan Administrator shall choose
a secretary who shall keep minutes of the committee's
proceedings and all records and documents pertaining to the
administration of the Plan. The secretary may execute any
certificate or any other written direction on behalf of the
Plan Administrator.
8.2 Rights and Duties of the Plan Administrator. The Plan
Administrator shall administer the Plan and shall have all
powers necessary to accomplish that purpose, including (but
not limited to) the following:
(a) to construe, interpret and administer the Plan;
(b) to make determinations required by the Plan, and to maintain
records regarding Participants' and Beneficiaries' benefits
hereunder;
(c) to compute and certify to Participating Companies the amount
and kinds of benefits payable to Participants and Beneficiaries,
and to determine the time and manner in which such benefits are
to be paid;
(d) to authorize all disbursements by a Participating Company
pursuant to the Plan;
(e) to maintain all the necessary records of the administration
of the Plan;
(f) to make and publish such rules and procedures for the
regulation of the Plan as are not inconsistent with the terms
hereof;
(g) to delegate to other individuals or entities from time to
time the performance of any of its duties or responsibilities
hereunder; and
(h) to hire agents, accountants, actuaries, consultants and
legal counsel to assist in operating and administering the Plan.
The Plan Administrator shall have the exclusive right to
construe and interpret the Plan, to decide all questions of
eligibility for benefits and to determine the amount of such
benefits, and its decisions on such matters shall be final
and conclusive on all parties.
8.3 Bond; Compensation. The Plan Administrator and (if
applicable) its members shall serve as such without bond and
without compensation for services hereunder. All expenses of
the Plan Administrator shall be paid by the Participating
Companies.
Article IX
Amendment and Termination
22
9.1 Amendments. Subject to Section 9.3, the Board shall have the
right, in its sole discretion, to amend the Plan in whole or
in part at any time and from time to time. In addition, the
Plan Administrator shall have the right, in its sole
discretion, to amend the Plan at any time and from time to
time so long as such amendment is not of a material nature.
9.2 Termination of Plan. Subject to Section 9.3, BellSouth
reserves the right to discontinue and terminate the Plan at
any time, for any reason. Any action to terminate the Plan
shall be taken by the Board and such termination shall be
binding on all Participating Companies, Participants and
Beneficiaries.
9.3 Limitation on Authority. Except as otherwise provided in this
Section 9.3, no contractual right created by and under any
Deferral Election made prior to the effective date of any
amendment or termination shall be abrogated by any amendment
or termination of the Plan, absent the express, written
consent of the Participant who made the Deferral Election.
(a) Plan Amendments. The limitation on authority described in
this Section 9.3 shall not apply to any amendment of the Plan
which is reasonably necessary, in the opinion of counsel,
(i) to preserve the intended income tax consequences of the
Plan described in Section 10.1, (ii) to preserve the status
of the Plan as an unfunded, nonqualified deferred compensation
plan for the benefit of a select group of management or
highly compensated employees and not subject to the
requirements of Part 2, Part 3 and Part 4 of Title I of ERISA,
or (iii) to guard against other material adverse impacts on
Participants and Beneficiaries, and which, in the opinion of
counsel, is drafted primarily to preserve such intended
consequences, or status, or to guard against such adverse
impacts.
(b) Plan Termination. The limitation on authority described in
this Section 9.3 shall not apply to any termination of the Plan
as the result of a determination that, in the opinion of counsel,
(i) Participants and Beneficiaries generally are subject to
federal income taxation on Deferral Contributions or other
amounts in Participation Accounts prior to the time of
distribution of amounts under the Plan, or (ii) the Plan
is generally subject to Part 2, Part 3 or Part 4 of Title I
of ERISA, but in either case only if such termination is
reasonably necessary, in the opinion of counsel, to guard
against material adverse impacts on Participants and
Beneficiaries, or BellSouth or Participating Companies.
Upon such termination, the entire amount in each Participant's
Accounts shall be distributed in a single lump-sum distribution
as soon as practicable after the date on which the Plan is
terminated. In such event, the Plan Administrator shall declare
that the date of termination (or, if such day is not a Business
Day, the last Business Day immediately preceding such day) shall
be a Valuation Date and all distributions shall be made based
on the value of the Accounts as of such Valuation Date.
(c) Opinions of Counsel. In each case which an opinion of counsel
is contemplated in this Section 9.3, such opinion shall be in
writing and delivered to the Board, rendered by a nationally
recognized law firm selected or approved by the Board.
23
Article X
Miscellaneous
10.1 Taxation. It is the intention of BellSouth that the benefits
payable hereunder shall not be deductible by the
Participating Companies nor taxable for federal income tax
purposes to Participants or Beneficiaries until such benefits
are paid by the Participating Company to such Participants or
Beneficiaries. When such benefits are so paid, it is the
intention of the Participating Companies that they shall be
deductible by the Participating Companies under Code Section
162.
10.2 Withholding. All Payments made to a Participant or
Beneficiary hereunder shall be reduced by any applicable
federal, state or local withholding or other taxes or charges
as may be required under applicable law.
10.3 No Employment Contract. Nothing herein contained is intended
to be nor shall be construed as constituting a contract or
other arrangement between a Participating Company and any
Participant to the effect that the Participant will be
employed by the Participating Company or continue to be an
employee for any specific period of time.
10.4 Headings. The headings of the various articles and sections
in the Plan are solely for convenience and shall not be
relied upon in construing any provisions hereof. Any
reference to a section shall refer to a section of the Plan
unless specified otherwise.
10.5 Gender and Number. Use of any gender in the Plan will be
deemed to include all genders when appropriate, and use of
the singular number will be deemed to include the plural when
appropriate, and vice versa in each instance.
10.6 Assignment of Benefits. The right of a Participant or his
Beneficiary to receive payments under the Plan may not be
anticipated, alienated, sold, assigned, transferred, pledged,
encumbered, attached or garnished by creditors of such
Participant or Beneficiary, except by will or by the laws of
descent and distribution and then only to the extent
permitted under the terms of the Plan.
10.7 Legally Incompetent. The Plan Administrator, in its sole
discretion, may direct that payment be made to an incompetent
or disabled person, for whatever reason, to the guardian of
such person or to the person having custody of such person,
without further liability on the part of a Participating
Company for the amount of such payment to the person on whose
account such payment is made.
10.8 Entire Document. This Plan document sets forth the entire
Plan and all rights and limits. Except for a formal amendment
hereto, no document shall modify the Plan or create any
additional rights or benefits.
10.9 Governing Law. The Plan shall be construed, administered and
governed in all respects in accordance with applicable
federal law (including ERISA) and, to the extent not
preempted by federal law, in accordance with the laws of the
State of Georgia. If any provisions of this instrument shall
be held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions hereof shall continue
to be fully effective.
Exhibit A
24
To BellSouth Compensation Deferral Plan
Participating Companies
Participating Company Names Effective Date
- -------------------------------------- ---------------
BellSouth Advertising and Publishing January 1, 1997
Corporation
BellSouth Applied Technologies, Inc. January 1, 1997
BellSouth BSE, Inc. January 1, 1998
BellSouth Business Systems, Inc. January 1, 1997
BellSouth Cellular Corp. January 1, 1997
BellSouth Cellular National Marketing, January 1, 1997
Inc.
BellSouth Communication Systems, Inc. January 1, 1997
BellSouth Corporate Aviation and January 1, 1997
Travel Services, Inc.
BellSouth Corporation January 1, 1997
BellSouth D.C., Inc. January 1, 1997
BellSouth Entertainment, Inc. January 1, 1997
BellSouth Information Systems, Inc. January 1, 1997
BellSouth International, Inc. January 1, 1997
BellSouth Long Distance, Inc. January 1, 1997
BellSouth Mobile Data Services, Inc. January 1, 1997
BellSouth.net Inc. January 1, 1997
BellSouth Personal Communications, January 1, 1997
Inc.
BellSouth Public Communications, Inc. January 1, 1998
BellSouth Resources, Inc. January 1, 1997
BellSouth Telecommunications, Inc. January 1, 1997
BellSouth Wireless, Inc. January 1, 1997
Intelligent Media Ventures, Inc. January 1, 1997
L.M. Berry and Company January 1, 1997
Ondacom Wireless Services, Inc. January 1, 1998
Stevens Graphics, Inc. January 1, 1997
Sunlink Corporation January 1, 1997
Westel-Indianapolis Company January 1, 1998
25
Employee Retirement Income Security Act
Because the Plan is a non-qualified deferred compensation plan
covering only a select group of key management and highly
compensated employees, the Plan is subject only to minimal
requirements under the Employee Retirement Income Security Act of
1974 ("ERISA"), including certain reporting requirements of Part 1
of Title I thereof. The Plan is not subject to the qualification
requirements of Section 401(a) of the Internal Revenue Code of
1986, as amended. The Plan is an "unfunded" arrangement, and all
benefits are paid from the Participating Companies' general
assets.
Administration
The Plan will be administered by the Chief Executive Officer of
BellSouth, through any individual or committee he designates to
act on his behalf. The Board of Directors of BellSouth may
designate another person or committee to serve in lieu of the
Chief Executive Officer as the Plan Administrator. The Plan
Administrator has the exclusive right to construe and interpret
the Plan, to decide all questions of eligibility for benefits and
to determine the amount of such benefits. The decisions of the
Plan Administrator on such matters shall be final and conclusive
on all parties.
Additional information concerning the Plan and its administrators
may be obtained from BellSouth Corporation, 1155 Peachtree Street,
N.E., Atlanta, Georgia 30309-3610, attention: Director, Executive
Benefits, telephone number
404-249-2228.
Investment of Funds
As described in the Plan, Participants may elect to have their
Deferral Contributions deemed to be invested in the Stock Unit
Option and/or the Interest Income Option. The tables in Appendix A
to this Prospectus show the results that would have been achieved
through August 29, 1997 if a Participant had deferred $1,000 and
such sum had been invested in the Stock Unit Option (Table 1) and
the Interest Income Option (Table 2), respectively, on January 1
of the last five years. The data in the tables is based on the
price of BellSouth stock as it would have been determined under
the Plan for each of the periods listed and the applicable Moody's
Monthly Average of Yields on Aa Corporate Bonds, as published by
Moody's Investors Service, Inc. (the "Moody's Rate"), for each of
the periods listed. This information is provided in order to
apprise Participants of material trends and significant changes in
the performance of the alternative investment options available
under the Plan and to enable Participants to make informed
investment decisions. There is no guarantee, however, that the
future performance of either investment option will be consistent
with their past performance.
26
Your Company's Obligation to Pay
Your employing company will have a legally enforceable obligation
to pay you the amounts deferred during 1998, adjusted for
investment experience. In addition, a trust, sometimes referred to
as a "rabbi" trust, has been established and funded by BellSouth
whose assets are available to pay amounts due its Participants
under the Plan, subject only to company creditors' rights. This
trust, which is held by Bankers Trust Company in New York as
trustee and is irrevocable, holds BellSouth common stock projected
to be sufficient to satisfy all Plan obligations to BellSouth
Participants. Additional contributions are made annually, if
necessary to maintain this funded status.
Tax Effects
The amounts by which Participants elect to have their compensation
reduced pursuant to the Plan, and any amounts credited to
Participants' accounts as deemed interest or dividends, should not
be included in the gross income of the Participants or their
Beneficiaries for federal income tax purposes until such time as
distributions are made under the Plan. Distributions from the Plan
will be subject to federal (and state, if applicable) income taxes
at the time Participants receive these amounts at then prevailing
tax rates. Inclusion in income for local tax purposes will depend
on the rules of the local tax jurisdiction. Taxes may not be
deferred by having distributions from the Plan rolled over to
another plan or IRA. BellSouth will be entitled to a tax deduction
at the time the deferred amounts are includible in the
Participants' income.
Deferred compensation will be treated as wages subject to Social
Security tax for the year when the services are performed.
Participants will also be subject to the Medicare hospital
insurance portion of the Social Security tax on amounts deferred
under the Plan in the year in which the deferrals are made.
BellSouth is required to withhold this tax from a Participant's
wages. Distributions from the Plan will not be subject to Social
Security taxes.
There can be no assurance that the Internal Revenue Service
("IRS") will not take a contrary view to the conclusions described
herein, and no ruling from the IRS has been or will be sought.
Also, legislative, judicial or administrative changes or
interpretations may be forthcoming that could alter or modify the
conclusions herein. Any such changes or interpretations may be
retroactive and could affect the tax consequences to Participants
under the Plan.
Some states have enacted laws calling for the taxation of
retirement income earned in that state by former residents who
have moved away from the state. A federal "source tax" law
prohibits this type of taxation by the states under certain
circumstances. One such circumstance is when retirement income
will be paid for a period of 10 years or more. Participants may
want to consider these tax implications when making elections as
to the timing of their payouts.
Because the tax consequences to a Participant may vary depending
on his individual circumstances, each Participant is strongly
encouraged to consult his personal tax advisor regarding the
federal and any state, local or foreign tax consequences to him.
27
Incorporation of Documents by Reference
The following documents have been filed by BellSouth with the SEC
(File No. 1-8607) and are incorporated herein by reference:
(1) BellSouth's Annual Report on Form 10-K for the year ended
December 31, 1996;
(2) BellSouth's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1997 and June 30, 1997; and
(3) BellSouth's Current Reports on Form 8-K for January 23, 1997,
April 21, 1997, July 1, 1997, July 9, 1997 and July 24, 1997.
All documents filed by BellSouth pursuant to Section 13(a), 13
(c), 14 or 15(d) of the Securities Exchange Act of 1934 subsequent
to the date of this Prospectus shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Copies of the above documents (excluding exhibits) and other
relevant information may be obtained upon oral or written request
without charge from the Office of the Controller, BellSouth
Corporation, 1155 Peachtree Street, N.E., Atlanta, Georgia 30309-
3610 (telephone number 404-249-3290).
28
Appendix A
The following tables are intended to allow Participants to compare
the historical performance of BellSouth common stock and the
Moody's Rate. Table 1 assumes that a Participant made a deferral
election of $1,000, effective January 1 of each of the years
shown, and chose the Stock Unit Option. The Table shows the number
of stock units and the value of each Deferral Contribution that
would have been accrued at August 29, 1997 and the cumulative
aggregate value of all five Deferral Contributions that would have
been accrued at August 29, 1997:
Table 1 - Stock Unit Option
Deemed Investment Applicable Number of Value at
Date for $1,000 BellSouth Units at August 29, 1997
Deferral Stock Price * August 29, ***
1997 **
1/1/93 $25.428 47.909 $2,183.90
1/1/94 $29.709 38.999 $1,777.74
1/1/95 $26.573 41.771 $1,904.10
1/1/96 $40.386 26.338 $1,200.60
1/1/97 $45.584 25.178 $1,147.70
Cumulative Deferral Total 180.195 $8,214.04
* Calculated by determining the average of the high and low sales
prices of BellSouth common stock on the New York Stock Exchange
for the last day of each of the last three calendar months of
1992, 1993, 1994, 1995 and 1996 (the year prior to the deferral
year). Stock prices have been adjusted to reflect the two-for-
one split of BellSouth common stock effective November 8, 1995.
The closing price of BellSouth common stock on the New York
Stock Exchange on October 3, 1997 was $48.38.
** Assumes, as contemplated by the Plan, that dividends are deemed
to be earned on the stock units and used to purchase additional
stock units. Shows number of units accrued as a result of one
year's deferral only.
*** Calculated by multiplying the total number of stock units
deemed to have been accrued at August 29, 1997 and multiplying
by $45.584, the closing price of BellSouth common stock on the
New York Stock Exchange on August 29, 1997.
29
Table 2 assumes that a Participant made a Deferral Contribution of
$1,000 on January 1 of each of the years shown and chose the
Interest Income Option. The Table shows the applicable Moody's
rate, the value of each Deferral Contribution that would have been
accrued at August 29, 1997, and the cumulative aggregate value of
all five Deferral Contributions that would have been accrued at
August 29, 1997:
Table 2 - Interest
Income Option
Date of $1,000 Applicable Value at August
Deferral Moody's Rate 29, 1997
1/1/93 8.4% $ 1,425.89
1/1/94 7.4% $ 1,315.40
1/1/95 8.3% $ 1,224.76
1/1/96 7.5% $ 1,130.90
1/1/97 7.8% $ 1,052.00
Cumulative Deferral Total $ 6,148.95
The applicable Moody's Rate for 1998 is 7.4%.
30
