<PAGE> 1
PROSPECTUS SUPPLEMENT Filed Pursuant to Rule 424(b)(2)
Registration Number 333-00649
Registration Number 333-77815
Registration Number 333-51404
(To Prospectus dated May 12, 1999)
$1,800,000,000
BELLSOUTH TELECOMMUNICATIONS, INC.
EXTENDIBLE LIQUIDITY SECURITIES(SM)(EXLS(SM))
---------------------
The senior floating rate renewable notes (EXtendible Liquidity Securities)
described in this prospectus supplement, which we refer to as the EXLs, will
mature on January 4, 2002, the initial maturity date, unless the maturity of all
or any portion of the principal amount of the EXLs is extended in accordance
with the procedures described herein. In no event will the maturity of the EXLs
be extended beyond January 4, 2006, the final maturity date. We may not redeem
the EXLs prior to maturity.
We will pay interest on the EXLs on the fourth day of each March, June,
September and December, commencing March 4, 2001, at a rate determined for each
interest period by reference to three-month LIBOR, plus or minus the applicable
spread for that interest period, except that the interest rate for the final
interest period prior to maturity will be based on one-month LIBOR. We describe
how such rate is calculated under "Descriptions of the EXLs -- Interest" herein.
---------------------
PRICE 100% AND ACCRUED INTEREST, IF ANY
---------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
-------------- ------------- --------------
<S> <C> <C> <C>
Per EXL......................................... 100.000% .250% 99.750%
Total........................................... $1,800,000,000 $4,500,000 $1,795,500,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the EXLs to purchasers on December 14,
2000.
"EXtendible Liquidity Securities" and "EXLs" are the service marks of
Morgan Stanley Dean Witter & Co.
---------------------
Joint Bookrunners
BANC OF AMERICA SECURITIES LLC MORGAN STANLEY DEAN WITTER
December 7, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Proceeds of the Offering.................................... S-1
Ratio of Earnings to Fixed Charges.......................... S-1
Description of the EXLs..................................... S-2
United States Federal Income Taxation....................... S-7
Underwriters................................................ S-9
Legal Opinions.............................................. S-10
Independent Accountants..................................... S-10
PROSPECTUS
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Information About BellSouth Telecommunications.............. 3
Use of Proceeds............................................. 3
Description of Debt Securities.............................. 3
Plan of Distribution........................................ 6
Legal Opinions.............................................. 6
Independent Accountants..................................... 7
</TABLE>
You should rely only on the information contained in, or incorporated by
reference into, this prospectus supplement and the accompanying prospectus but
should not assume the information is accurate after the date of this prospectus
supplement, even if it is delivered in connection with the sale of notes and the
debentures. We have not authorized anyone to provide you with information
different from that contained in this prospectus supplement and the accompanying
prospectus. We are offering to sell the notes and the debentures and seeking
offers to buy the notes and the debentures only in jurisdictions where offers
and sales are permitted.
In this prospectus supplement, "we" and "our" refer to BellSouth
Telecommunications, Inc. and its consolidated subsidiaries.
PROCEEDS OF THE OFFERING
We intend to apply the net proceeds (approximately $1,795,500,000 after
deducting underwriting discounts and commissions and expenses) to refinance
commercial paper. The weighted average interest cost of our commercial paper is
6.63%.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED
-------------------------------------- SEPTEMBER 30,
1995 1996 1997 1998 1999 2000
------ ----- ----- ----- ----- -----------------
<S> <C> <C> <C> <C> <C>
4.33x 6.01x 7.17x 7.68x 8.07x 7.20x
</TABLE>
For the purpose of this ratio: (i) earnings have been calculated by adding
income before income taxes, gross interest expense and such portion of rental
expense representative of the interest factor on such rentals; and (ii) fixed
charges are comprised of gross interest expense and such portion of rental
expense representative of the interest factor on such rentals.
<PAGE> 3
DESCRIPTION OF THE EXLS
GENERAL
The following description of the terms of the senior floating rate
renewable notes (EXtendible Liquidity Securities) offered by this prospectus
supplement (which we refer to in this prospectus supplement as the EXLs)
supplements the more general description of the Debt Securities set forth in the
accompanying Prospectus, to which description you should also refer. The EXLs
are senior unsecured debt and will rank on a parity with all of our other senior
unsecured debt. The EXLs are to be issued as a series of Debt Securities under
an Indenture dated as of June 1, 1998 (the "Indenture"), between us and SunTrust
Bank, as Trustee, which is more fully described in the accompanying Prospectus
under "Description of Debt Securities."
We may not redeem the EXLs prior to maturity. The EXLs will be issued in
denominations of $1,000 and integral multiples thereof. Upon issuance, the EXLs
will be represented by one or more fully registered global notes ("Global
Notes"). Each such Global Note will be deposited with, or on behalf of, The
Depository Trust Company, as Depositary. Therefore, you can only hold interests
in the Global Notes through direct and indirect participants in DTC, including
Clearstream Luxembourg and Euroclear. See "Description of Debt
Securities -- Global Securities" in the accompanying Prospectus and "Book-Entry
System" in this Prospectus Supplement.
Any EXLs issued in definitive form will be issued only in fully registered
form, without coupons, in denominations of $1,000 and in integral multiples
thereof, in the amount of each holder's registered holdings. Any EXLs so issued
will be registered in such names, and in such denominations, as the Depositary
shall request. Such EXLs may be presented for registration of transfer or
exchange at the office of The Bank of New York, as transfer agent, in New York,
New York and principal thereof and interest thereon will be payable at such
office, provided that interest thereon may be paid by check mailed to the
registered holders of the definitive EXLs.
MATURITY AND EXTENSION OF MATURITY
The initial maturity date for the EXLs is January 4, 2002, or if such day
is not a business day, the immediately preceding business day. The maturity of
all or any portion of the principal amount of the EXLs may be extended in
accordance with the procedures set forth below. In no event will the maturity of
the EXLs be extended beyond the final maturity date of January 4, 2006, or if
such day is not a business day, the immediately preceding business day.
On each election date, you may elect to extend the maturity of all or any
portion of the principal amount of your EXLs so that the maturity of such EXLs
will be extended to the fourth calendar day in the month thirteen months from
that election date. However, if that fourth calendar day is not a business day,
the maturity of your EXLs will be extended to the immediately preceding business
day. The election dates will be the fourth calendar day of each March, June,
September and December, from March 2001 to December 2004 inclusive, whether or
not any such day is a business day.
You may elect to extend the maturity of all of your EXLs or of any portion
thereof having a principal amount of $1,000 or any multiple of $1,000 in excess
thereof. To make your election effective on any election date, you must deliver
a notice of election during the notice period for that election date. The notice
period for each election date will begin on the fifth business day prior to the
election date and end on the election date, however, if that election date is
not a business day, the notice period will be extended to the following business
day. Your notice of election must be delivered to the elections agent for the
EXLs, through the normal clearing system channels described in more detail below
and in the accompanying Prospectus, no later than the last business day in the
notice period. Upon delivery to the elections agent of a notice of election to
extend the maturity of the EXLs or any portion thereof, that election will be
irrevocable.
S-2
<PAGE> 4
If on any election date you do not make an election to extend the maturity
of all or any portion of the principal amount of your EXLs, the principal amount
of the EXLs for which you have failed to make such an election will become due
and payable on the initial maturity date, or any later date to which the
maturity of your EXLs has previously been extended. The principal amount of the
EXLs for which such election is not exercised will be represented by a note
issued on such election date. The note so issued will have the same terms as the
EXLs, except that it will not be extendible, will have a separate CUSIP number
and its maturity date will be the fourth calendar day in the month ten months
from that election date or, if such fourth calendar day is not a business day,
the immediately preceding business day. The failure to elect to extend the
maturity of all or any portion of the EXLs will be irrevocable and will be
binding upon any subsequent holder of such EXLs.
The EXLs will be issued in registered global form and will remain on
deposit with the Depositary. Therefore, you must exercise the option to extend
the maturity of your EXLs through the Depositary. To ensure that the Depositary
will receive timely notice of your election to extend the maturity of all or a
portion of your EXLs, so that it can deliver notice of your election to the
elections agent prior to the close of business on the last business day in the
notice period, you must instruct the direct or indirect participant through
which you hold an interest in the EXLs to notify the Depositary of your election
to extend the maturity of your EXLs in accordance with the then applicable
operating procedures of the Depositary.
THE DEPOSITARY MUST RECEIVE ANY NOTICE OF ELECTION FROM ITS PARTICIPANTS NO
LATER THAN 12:00 NOON (NEW YORK CITY TIME) ON THE LAST BUSINESS DAY IN THE
NOTICE PERIOD FOR ANY ELECTION DATE. DIFFERENT FIRMS HAVE DIFFERENT DEADLINES
FOR ACCEPTING INSTRUCTIONS FROM THEIR CUSTOMERS. YOU SHOULD CONSULT THE DIRECT
OR INDIRECT PARTICIPANT THROUGH WHICH YOU HOLD AN INTEREST IN THE EXLS TO
ASCERTAIN THE DEADLINE FOR ENSURING THAT TIMELY NOTICE WILL BE DELIVERED TO THE
DEPOSITARY. IF YOU HOLD YOUR INTEREST IN THE EXLS THROUGH EUROCLEAR OR
CLEARSTREAM LUXEMBOURG, ADDITIONAL TIME MAY BE NEEDED TO GIVE YOUR NOTICE. IF
THE ELECTION DATE IS NOT A BUSINESS DAY IN NEW YORK CITY, NOTICE OF YOUR
ELECTION TO EXTEND THE MATURITY DATE OF YOUR EXLS MUST BE DELIVERED TO THE
DEPOSITARY BY ITS PARTICIPANTS NO LATER THAN 12:00 NOON (NEW YORK CITY TIME) ON
THE BUSINESS DAY FOLLOWING SUCH ELECTION DATE.
INTEREST
The EXLs will bear interest at LIBOR plus or minus the applicable spread,
as described below. We will pay interest quarterly in arrears on the fourth day
of each March, June, September and December (each an "interest payment date"),
beginning March 4, 2001, and on the applicable maturity date. If any interest
payment date falls on a day that is not a business day, we will postpone the
interest payment date to the next succeeding business day. The final interest
payment date for the EXLs, or any portion of the EXLs maturing prior to the
final maturity date, will be the maturity date and interest for the final
interest period will accrue from and including the interest payment date
immediately preceding such maturity date to but excluding the maturity date.
Interest on the EXLs will be computed on the basis of a 360-day year for the
actual number of days elapsed.
Interest on the EXLs will accrue from, and including, December 14, 2000,
to, and excluding, the first interest payment date and then from, and including,
each interest payment date to which interest has been paid or duly provided for
to, but excluding, the next interest payment date or the maturity date, as the
case may be. We will refer to each of these periods as an "interest period."
We will pay interest on the EXLs to the persons in whose names the EXLs are
registered at the close of business on the fifteenth calendar day, whether or
not a business day, immediately preceding the interest payment date. However, we
will pay interest on the maturity date to the same persons to whom the principal
will be payable.
When we use the term "business day," we mean any day except a Saturday, a
Sunday or a legal holiday in The City of New York on which banking institutions
are authorized or required by law, regulation or executive order to close;
provided, that the day is also a London business day. "London business day"
means any day on which dealings in United States dollars are transacted in the
London interbank market.
S-3
<PAGE> 5
The calculation agent appointed by us, initially The Bank of New York, will
calculate the interest rate on the EXLs. The calculation agent will reset the
interest rate on each interest payment date, each of which we will refer to as
an "interest reset date." The interest rate for each interest period will be
equal to LIBOR, as determined below, plus or minus the spread. The spread for
each interest period will be as follows:
<TABLE>
<CAPTION>
FOR INTEREST RESET DATES OCCURRING SPREAD
---------------------------------- ----------
<S> <C>
From December 14, 2000, to but excluding December 4, 2001... Minus 0.02%
From December 4, 2001, to but excluding December 4, 2002.... Plus 0.01%
From December 4, 2002, to but excluding December 4, 2003.... Plus 0.04%
From December 4, 2003, to but excluding December 4, 2004.... Plus 0.06%
From December 4, 2004, to but excluding January 4, 2006..... Plus 0.06%
</TABLE>
The interest rate in effect for the period from December 14, 2000, to, but
excluding, March 4, 2001, the initial interest reset date, will be LIBOR, as
determined on December 12, 2000, minus 0.02%. The second London business day
preceding an interest reset date will be the "interest determination date" for
that interest reset date. The interest rate in effect on each day that is not an
interest reset date will be the interest rate determined as of the interest
determination date pertaining to the immediately preceding interest reset date.
The interest rate in effect on any day that is an interest reset date will be
the interest rate determined as of the interest determination date pertaining to
that interest reset date, except that the interest rate in effect for the period
from and including December 14, 2000 to the first interest reset date will be
the initial interest rate.
The calculation agent will determine "LIBOR" in accordance with the
following provisions:
(i) With respect to any interest determination date, LIBOR will be the
rate for deposits in United States dollars having a maturity of three
months commencing on the interest reset date that appears on Telerate Page
3750 as of 11:00 A.M., London time, on that interest determination date;
provided, that with respect to the interest determination date for any
final interest reset date, LIBOR will be the rate for deposits in United
States dollars having a maturity of one month, commencing on such final
reset date. If no rate appears, LIBOR, in respect to that interest
determination date, will be determined in accordance with the provisions
described in (ii) below.
(ii) With respect to an interest determination date on which no rate
appears on Telerate Page 3750, as specified in (i) above, the calculation
agent will request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the
calculation agent, to provide the calculation agent with its offered
quotation for deposits in United States dollars for the period of three
months (or one month in the case of the interest determination date
relating to any final interest reset date), commencing on the interest
reset date, to prime banks in the London interbank market at approximately
11:00 A.M., London time, on that interest determination date and in a
principal amount that is representative for a single transaction in United
States dollars in that market at that time. If at least two quotations are
provided, then LIBOR on that interest determination date will be the
arithmetic mean of those quotations. If fewer than two quotations are
provided, then LIBOR on the interest determination date will be the
arithmetic mean of the rates quoted at approximately 11:00 A.M., in The
City of New York, on the interest determination date by three major banks
in The City of New York selected by the calculation agent for loans in
United States dollars to leading European banks, having a three-month
maturity (or one month in the case of the interest determination date
relating to any final interest reset date) and in a principal amount that
is representative for a single transaction in United States dollars in that
market at that time; provided, however, that if the banks selected by the
calculation agent are not providing quotations in the manner described by
this sentence, LIBOR determined as of that interest determination date will
be LIBOR in effect on that interest determination date.
S-4
<PAGE> 6
"Telerate Page 3750" means the display designated as "Page 3750" on Bridge
Telerate, Inc., or any successor service, for the purpose of displaying the
London interbank rates of major banks for United States dollars.
FURTHER ISSUES
We may from time to time, without notice to or the consent of the
registered holders of the EXLs, create and issue further notes ranking pari
passu with the EXLs in all respects (or in all respects except for the payment
of interest accruing prior to the issue date of such further notes or except for
the first payment of interest following the issue date of such further notes)
and so that such further notes may be consolidated and form a single series with
the EXLs and have the same terms as to status, redemption or otherwise as the
EXLs.
DEFEASANCE
The EXLs will be subject to defeasance and covenant defeasance as described
in the attached Prospectus.
TRUSTEE AND AGENTS
SunTrust Bank (the "Trustee") is the trustee under the Indenture. We, along
with certain of our affiliates maintain banking relationships in the ordinary
course of business with the Trustee. The Trustee is also the trustee with
respect to the our Ten Year 6 1/2% Notes, due June 15, 2005, Twelve Year 7%
Notes, due February 1, 2005, Forty Year 7 5/8% Debentures, due May 15, 2035,
Thirty Year 6 3/8% Debentures, due June 1, 2028, and 6% Reset Put Securities
(REPS(SM)), due June 15, 2012.
The Bank of New York initially has been appointed transfer agent, paying
agent, calculation agent, authenticating agent and elections agent.
BOOK-ENTRY SYSTEM
We will issue the EXLs in registered book-entry only form. They will be
represented by one or more permanent global certificates registered in the name
of The Depository Trust Company, New York, New York ("DTC") or its nominee.
Except as we describe below, a global security is not transferable, except that
DTC, its nominees and their successors may transfer an entire global security to
one another.
DTC will keep a computerized record of its participants (for example, your
broker) whose clients have purchased the EXLs. The participant would then keep a
record of its clients who purchased the EXLs.
Under book-entry only, we will not issue certificates to you or any other
individual holders. Your beneficial interest in a global EXL will be shown on,
and transfers of your beneficial interest will be made only through, records
maintained by DTC and its participants. The laws of some states require that
certain purchasers take physical delivery of notes in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
the global EXLs.
DTC
DTC has provided us with the following information. DTC is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the United States Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.
S-5
<PAGE> 7
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through computerized records
for participants' accounts. This eliminates the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that act through a
participant. The rules that apply to DTC and its participants are on file with
the SEC.
DTC is owned by a number of its participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
According to DTC, the foregoing information with respect to DTC has been
provided to the financial community for informational purposes only and is not
intended to serve as a representation, warranty or contract modification of any
kind.
Transfers
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
Payments
We will wire principal and interest payments on book-entry EXLs to DTC's
nominee. We and the Trustee will treat DTC's nominee as the owner of the global
EXLs for all purposes. Accordingly, neither we, the Trustee nor any paying agent
will have any direct responsibility or liability to pay amounts due on the EXLs,
or to furnish any information, to owners of beneficial interests in the EXLs.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit participants' accounts on the payment date according to
their respective holdings of beneficial interests in global securities as shown
on DTC's records as of the record date for such payment. In addition, it is
DTC's current practice to assign any consenting or voting rights to
participants, whose accounts are credited with securities on a record date, by
using an omnibus proxy. Payments by participants to owners of beneficial
interests in global securities, and voting by participants, will be governed by
the customary practices between the participants and owners of beneficial
interest, as is the case with securities held for the account of customers
registered in "street name." However, these payments, and your holdings, will be
the responsibility of the participants and not of DTC, the Trustee, any paying
agent or us.
Exchanges
EXLs represented by a global security would be exchangeable for EXLs
represented by certificates with the same terms in authorized denominations only
if:
- DTC notifies us that it is unwilling or unable to continue as depository
or if DTC ceases to be a clearing agency registered under applicable law
and we do not appoint a successor depository within 90 days; or
- we instruct the Trustee that the EXL is exchangeable; or
- an event of default has occurred and is continuing.
If, after the occurrence of one of the foregoing events, you hold an EXL in
fully certificated form, we will pay the interest and principal on your EXL to
you by check.
S-6
<PAGE> 8
UNITED STATES FEDERAL INCOME TAXATION
In the opinion of Davis Polk & Wardwell, our special tax counsel, the
following summary accurately describes the principal United States federal
income tax consequences to United States holders, as defined below, of ownership
and disposition of the EXLs. This discussion only applies to EXLs purchased by
initial holders purchasing EXLs at the "issue price" (i.e., the first price to
the public, not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement agents or
wholesalers, at which a substantial amount of EXLs are sold for money) and which
are held as capital assets.
This discussion does not describe all of the tax consequences that may be
relevant to a holder in light of its particular circumstances or to holders
subject to special rules, such as:
- certain financial institutions;
- insurance companies;
- dealers in securities or foreign currencies;
- persons holding EXLs as part of a hedging, "straddle," conversion
transaction or any other integrated transaction;
- United States holders whose functional currency is not the U.S. dollar;
- persons subject to the alternative minimum tax;
- persons owning 10% or more of our capital; or
- persons who are not United States holders.
This summary is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), administrative pronouncements, judicial decisions
and existing and proposed Treasury Regulations, changes to any of which
subsequent to the date of this Prospectus may affect the tax consequences
described herein. Persons considering the purchase of EXLs should consult their
tax advisors with regard to the application of the United States federal income
tax laws to their particular situations as well as any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction.
As used herein, the term "United States holder" means an owner of an EXL
that is for United States federal income tax purposes:
- a citizen or resident of the United States;
- a corporation created or organized in or under the laws of the United
States or of any political subdivision thereof; or
- an estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
The term United States holder also includes certain former citizens or
residents of the United States.
If a partnership (including for this purpose any entity treated as a
partnership for United States tax purposes) is a beneficial owner of EXLs, the
treatment of a partner in the partnership will generally depend upon the status
of the partner and upon the activities of the partnership. A holder of EXLs that
is a partnership, and partners in such partnership, should consult their tax
advisors about the United States federal income tax consequences of holding and
disposing of EXLs.
Treatment of EXLs
Although the U.S. federal income tax treatment of the EXLs is not certain,
we intend to take the position, based on advice of counsel, that an election to
extend the maturity of all or any portion of the principal amount of the EXLs in
accordance with the procedures described above will not be a taxable event for
U.S. federal income tax purposes. Prospective investors should note that no
assurance can be
S-7
<PAGE> 9
given that the Internal Revenue Service (the "IRS") will accept, or that the
courts will uphold, this position. If the IRS were successful in asserting that
an election to extend the maturity of all or any portion of the principal amount
of the EXLs is a taxable event for U.S. federal income tax purposes, then United
States holders of EXLs would be required to recognize gain (if any) upon the
exercise of such election. In such event, it is also possible that the IRS would
assert that the EXLs were subject to special rules governing contingent payment
obligations. If the IRS were successful in its assertion, the timing and
character of income with respect to the EXLs would be affected. Among other
things, United States holders of EXLs may be required to accrue as original
issue discount income, subject to adjustments, at a "comparable yield" on the
issue price. Furthermore, any gain recognized with respect to the EXLs would
generally be treated as ordinary income. However, because the EXLs bear a
variable interest rate that is reset every quarter, we expect that (i) the
accrual of income at the comparable yield will not significantly alter the
timing of income inclusion for accrual basis taxpayers; and (ii) any gain
recognized with respect to the EXLs will not be significant. Although we have
been advised by our special tax counsel to the effect that it is more likely
than not that an election to extend the maturity of all or any portion of the
principal amount of the EXLs in accordance with the procedures described above
will not be a taxable event for U.S. federal income tax purposes, prospective
investors are urged to consult their own tax advisors regarding the U.S. federal
income tax consequences of investing in the EXLs. The remainder of this
discussion assumes that an election to extend the maturity of all or any portion
of the principal amount of the EXLs will not be a taxable event for U.S. federal
income tax purposes.
Payments of Interest
Interest paid on an EXL will generally be taxable to a United States holder
as ordinary interest income at the time it accrues or is received in accordance
with the United States holder's method of accounting for federal income tax
purposes.
Sale, Exchange or Retirement of the EXLs
Upon the sale, exchange or retirement of an EXL, a United States holder
will recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such holder's adjusted tax
basis in the EXL. For these purposes, the amount realized does not include any
amount attributable to accrued interest on the EXL. Amounts attributable to
accrued interest are treated as interest as described under "Payments of
Interest" above. A United States holder's adjusted tax basis in an EXL will
equal the cost of the EXL to such holder.
Gain or loss realized on the sale, exchange or retirement of an EXL will
generally be capital gain or loss, and will be long-term capital gain or loss if
at the time of sale, exchange or retirement the EXL has been held for more than
one year. The excess of net long-term capital gains over net short-term capital
losses is taxed at a lower rate than ordinary income for certain non-corporate
taxpayers. The distinction between capital gain or loss and ordinary income or
loss is also relevant for purposes of, among other things, limitations on the
deductibility of capital losses.
Backup Withholding and Information Reporting
Certain noncorporate United States holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest on,
and the proceeds of dispositions of, an EXL. Backup withholding will apply only
if the holder (i) fails to furnish its Taxpayer Identification Number ("TIN")
which, for an individual, would be his or her Social Security number, (ii)
furnishes an incorrect TIN, (iii) is notified by the IRS that is has failed to
properly report payments of interest and dividends or (iv) under certain
circumstances, fails to certify, under penalty of perjury, that is has furnished
a correct TIN and has not been notified by the IRS that it is subject to backup
withholding for failure to report interest and dividend payments. United States
holders should consult their tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption if applicable.
S-8
<PAGE> 10
The amount of any backup withholding from a payment to a United States
holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus supplement, the underwriters named
below have severally agreed to purchase, and we have agreed to sell to them, the
following principal amounts of EXLs:
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT OF EXLS
---- ---------------
<S> <C>
Banc of America Securities LLC.............................. $ 900,000,000
Morgan Stanley & Co. Incorporated........................... $ 900,000,000
--------------
Total............................................. $1,800,000,000
==============
</TABLE>
The underwriting agreement provides that the obligations of the
underwriters to pay for and accept delivery of the EXLs is subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The underwriters are obligated to take and pay for all the EXLs, if
any are taken.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
The EXLs are a new issue of securities with no established trading market.
In addition, we do not intend to apply for the EXLs to be listed on any
securities exchange or to arrange for the EXLs to be quoted on any quotation
system. The underwriters have advised us that they intend to make a market in
the EXLs. However, they are not obligated to do so and may discontinue the
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the EXLs.
In order to facilitate the offering of the EXLs, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the EXLs. Specifically, the underwriters may over-allot in connection with the
offering, creating a short position in the EXLs for their own accounts. In
addition, to cover over-allotments or to stabilize the price of the EXLs, the
underwriters may bid for, and purchase, the EXLs in the open market. Finally,
the underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the EXLs in the offering if the
syndicate repurchases previously distributed EXLs in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the EXLs above
independent market levels. The underwriters are not required to engage in these
activities and may end any of these activities at any time.
From time to time, certain of the underwriters have acted as financial
advisors to us and BellSouth and have received customary compensation for such
services.
In addition to the underwriting discounts and commissions, we estimate that
we will incur expenses of approximately $900,000 in connection with the
offering, and the underwriters have agreed to reimburse us for these expenses.
It is expected that delivery of the EXLs will be made against payment
therefor on or about the date specified on the cover page of this prospectus
supplement, which is the fifth business day following the date hereof. Under
Rule 15c6-1 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such trade expressly
agree otherwise. Accordingly, purchasers who wish to trade EXLs on the date
hereof will be required, by virtue of the fact that the EXLs initially will
settle in T + 5, to specify an alternate settlement cycle at the time of any
such trade to prevent a failed settlement and should consult their own advisor.
S-9
<PAGE> 11
LEGAL OPINIONS
The legality of the EXLs will be passed upon for us by Mary Jo Peed, our
General Counsel, and for the underwriters by Davis Polk & Wardwell, which is
also acting as our special tax counsel. Ms. Peed is a full-time employee and
owns, and holds options to purchase, common stock of our parent, BellSouth
Corporation.
INDEPENDENT ACCOUNTANTS
The financial statements incorporated in the Prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1999 have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given the authority of said firm as experts in auditing
and accounting.
S-10
<PAGE> 12
PROSPECTUS
BELLSOUTH TELECOMMUNICATIONS, INC.
---------------------
$1,500,000,000
DEBT SECURITIES
We will provide specific terms of these debt securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
---------------------
The date of this prospectus is May 12, 1999.
<PAGE> 13
ABOUT THIS PROSPECTUS
You may rely only on the information contained in this prospectus but
should not assume the information is accurate after the date of this prospectus,
even if it is delivered subsequently for any purpose. Neither we nor any
underwriter has authorized anyone else to provide you with information different
from that contained in this prospectus. This prospectus is not an offer to sell
and it is not soliciting an offer to buy these debt securities in any state
where the offer or sale is not permitted.
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may,
from time to time, sell the debt securities described in this prospectus in one
or more offerings up to a total dollar amount of $1,500,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. A prospectus supplement may also add, update or change information
contained in this prospectus.
TABLE OF CONTENTS
<TABLE>
<S> <C>
About This Prospectus....................................... 2
Where You Can Find More Information......................... 2
Information About BellSouth Telecommunications.............. 3
Use of Proceeds............................................. 3
Description of Debt Securities.............................. 3
Plan of Distribution........................................ 6
Legal Opinions.............................................. 6
Independent Accountants..................................... 7
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934 and file reports and other information with the SEC. You may read
and copy these reports at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at (800) 732-0330. In
addition, the SEC maintains an Internet site that contains reports and other
information regarding us (http://www.sec.gov).
You should note that we are not required to deliver annual reports to the
holders of our debt securities. We will, however, furnish to each indenture
trustee copies of our annual, quarterly and periodic reports to the SEC on Forms
10-K, 10-Q and 8-K (containing financial information audited by independent
accountants in the case of our annual report on Form 10-K).
We have registered these securities with the SEC (Nos. 333-00649 and
333-77815) under the Securities Act of 1933. This prospectus does not contain
all of the information set forth in the Registration Statements. You may obtain
copies of the registration statement, including exhibits, as discussed in the
first paragraph.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference our Annual Report on Form 10-K for
the year ended December 31, 1998 and any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
our offering is completed.
You may obtain copies of the above information (including exhibits) upon
written or oral request, without charge, from the office of our Vice President
and Comptroller, Room 20M77, 675 West Peachtree Street, N.E., Atlanta, Georgia
30375 (telephone number (404) 927-1909).
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<PAGE> 14
INFORMATION ABOUT BELLSOUTH TELECOMMUNICATIONS
We are a telecommunications company providing predominantly tariffed
wireline services to substantial portions of the population within Alabama,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South
Carolina and Tennessee. We are a wholly-owned subsidiary of BellSouth
Corporation.
Our principal offices are located at:
BellSouth Telecommunications, Inc.
675 West Peachtree Street, N.E.
Atlanta, Georgia 30375
(404) 927-1909
USE OF PROCEEDS
We intend to use the net proceeds from the sale of the securities for
refinancing debt and for general corporate purposes. We intend to offer the
securities periodically when prevailing interest rates and other market
conditions are advantageous.
DESCRIPTION OF DEBT SECURITIES
We will issue the securities in series under one or more indentures. A
trustee will be appointed by us under each indenture to provide administrative
and fiduciary duties on behalf of the holders of the securities. We expect that
the basic indenture terms and provisions will be substantially identical and
that terms and provisions specific to each particular series of securities will
be contained in an indenture supplement or similar instrument.
The following sections summarize the most important terms of the indentures
and provisions of any series of securities. The related prospectus supplement
will describe the terms and provisions of that series of securities and the name
of the applicable trustee. Copies of the indentures are exhibits to the
registration statement of which this prospectus is a part. Section references
below refer to the section in the applicable indenture.
GENERAL
The securities will be unsecured general obligations and will rank equally
with our other outstanding debt. The indentures will not limit the amount of
securities that we may issue or the amount of debt that we may incur, although
individual series may be limited.
PAYMENT, TRANSFER AND EXCHANGE OF DEBT SECURITIES
Principal and premium will be payable at our office or an agency designated
by us from time to time. Securities may be presented for transfer or exchange at
that office or agency. We will not require holders to pay any service charge for
any transfer or exchange.
LIMITATIONS ON LIENS
We have agreed that if we mortgage any of our property, we will similarly
secure all similarly entitled outstanding securities. Currently, each
outstanding issue of long and intermediate term debt is entitled to the benefit
of a similar agreement. This agreement will not apply to liens on new assets
purchased by us with borrowed funds ("purchase-money liens"), to deposits to
secure public or statutory obligations or to deposits with any governmental body
for specific purposes. In addition, this agreement will not apply to our
subsidiaries or affiliates, even if they mortgage property previously acquired
from us. (Section 4.03) The indentures will not restrict our ability to convey
our property to subsidiaries, affiliates or third parties.
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<PAGE> 15
CONSOLIDATION, MERGER OR SALE
The indentures will not prohibit us from:
- consolidating or merging with any other corporation, or
- selling or conveying our property to any other corporation, or
- acquiring the property of any other corporation;
however, if any such action would result in the imposition of a lien on any of
our then existing property, before taking such action we will similarly secure
all similarly entitled outstanding securities. (Section 4.04) Currently, each
outstanding issue of long and intermediate term debt is entitled to the benefit
of a similar agreement.
DEFEASANCE
Each indenture will provide that we may be discharged from all obligations
under outstanding securities if we irrevocably deposit with the indenture
trustee funds or U.S. Government Obligations that are sufficient to pay all
principal, premium and interest on such securities. Except in the case of
securities maturing within one year, we would deliver to the trustee a ruling
from the Internal Revenue Service or an opinion of counsel that such discharge
would not result in additional and adverse federal income tax consequences to
the holders of such securities. On substantially the same terms and conditions,
we may be relieved from certain indenture agreements, including those described
in the preceding two paragraphs. (Section 11.01)
MODIFICATION OR AMENDMENT OF THE INDENTURES
Each indenture will contain provisions permitting us and the trustee, with
the consent of the holders of at least 66 2/3% in aggregate principal amount of
the securities of each series outstanding, to modify the indenture or any
supplemental indenture or the rights of the holders of the securities, but no
such modification shall:
- extend the fixed maturity of any securities, or
- reduce the principal amount of any securities, or
- reduce the rate or extend the time of payment of interest on any
securities
- without the consent of the holder of each security so affected.
The indentures will not allow a modification to reduce the consent
requirement without the consent of the holders of all securities then
outstanding under that indenture. (Section 9.02) Each indenture will also
contain provisions permitting us and the trustee, without the consent of the
holders of securities, to modify the indenture or any supplemental indenture or
the rights of the holders of the securities for certain less significant
purposes. (Section 9.01)
EVENTS OF DEFAULT
Under each indenture, an event of default applicable to securities of any
series means:
- default for 90 days in payment of interest on securities of such series,
or
- default in payment of principal of or premium on securities of such
series, or
- default for 90 days after notice by the Trustee or the holders of at
least 25% in aggregate principal amount of securities of such series then
outstanding in performance of any other indenture agreement applicable to
securities of such series, or
- certain events of bankruptcy, insolvency or reorganization. (Section
6.01)
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<PAGE> 16
The holders of a majority in principal amount of outstanding securities of
a series may direct the time, method and place for certain enforcement actions
by the trustee. (Section 6.06). Although the Trustee is obligated to exercise
its fiduciary duties to protect the interests of holders of securities, it may
require reasonable security or indemnity before acting under the Indenture.
(Sections 7.01 and 7.02).
The agreements contained in the indentures would not prohibit, or create an
event of default resulting from, our merger or sale or a highly-leveraged
transaction involving us.
GLOBAL SECURITIES
Form and Exchange
We will normally issue the securities in book-entry only form, which means
that they will be represented by one or more permanent global certificates
registered in the name of The Depository Trust Company, New York, New York
("DTC"), or its nominee. We will refer to this form here and in the prospectus
supplement as "book-entry only."
Alternatively, we may issue the securities in certificated form registered
in the name of the holder. Under these circumstances, holders may receive
certificates representing the securities. Securities in certificated form will
be issued only in increments of $1,000 and multiples of $1,000 and will be
exchangeable without charge except for reimbursement of taxes or other
governmental charges, if any. We will refer to this form in the prospectus
supplement as "certificated."
Book-Entry Only Procedures
The following discussion pertains to securities that are issued in
book-entry only form.
One or more global securities would be issued to DTC or its nominee. DTC
would keep a computerized record of its participants (for example, your broker)
whose clients have purchased the securities. The participant would then keep a
record of its clients who purchased the securities. A global security may not be
transferred, except that DTC, its nominees and their successors may transfer an
entire global security to one another.
Under book-entry only, we will not issue certificates to individual holders
of the securities. Beneficial interests in global securities will be shown on,
and transfers of global securities will be made only through, records maintained
by DTC and its participants.
DTC has provided us with the following information. DTC is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the United States Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the settlement among participants of securities transactions, such
as transfers and pledges, in deposited securities through computerized records
for participants' accounts. This eliminates the need to exchange certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that work through a
participant. The rules that apply to DTC and its participants are on file with
the SEC.
DTC is owned by a number of its participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
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<PAGE> 17
We will wire principal and interest payments to DTC's nominee. We and the
Trustee will treat DTC's nominee as the owner of the global securities for all
purposes. Accordingly, we and the Trustee will have no direct responsibility or
liability to pay amounts due on the securities, or to furnish any information,
to owners of beneficial interests in the global securities.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit participants' accounts on the payment date according to
their respective holdings of beneficial interests in the global securities as
shown on DTC's record on the record date. In addition, it is DTC's current
practice to assign any consenting or voting rights to participants whose
accounts are credited with securities on a record date, by using an omnibus
proxy. Payments by participants to owners of beneficial interests in the global
securities, and voting by participants, will be governed by the customary
practices between the participants and owners of beneficial interests, as is the
case with securities held for the account of customers registered in "street
name." However, these payments will be the responsibility of the participants
and not of DTC, the Trustee nor us.
Debt securities represented by a global security would be exchangeable for
certificates with the same terms in authorized denominations only if:
- DTC notifies us that it is unwilling or unable to continue as depository
or if DTC ceases to be a clearing agency registered under applicable law
and a successor depository is not appointed by us within 90 days; or
- we instruct the Trustee that the global security is not exchangeable; or
- an event of default has occurred and is continuing.
PLAN OF DISTRIBUTION
We may sell the Securities directly to purchasers or through agents,
underwriters or dealers.
We may distribute the securities in one or more transactions, either at a
fixed price or varying prices, at prevailing market prices, at prices related to
prevailing market prices or at negotiated prices.
The prospectus supplement will identify the terms of the offering, the
names of underwriters or agents, the purchase price and any underwriting
discounts.
In connection with the sale of securities, underwriters or agents may
receive discounts, concessions or commissions from us or from purchasers for
whom they may act as agents. Underwriters may sell securities to or through
dealers, and such dealers may receive discounts, concessions or commissions from
the underwriters or from purchasers for whom they may act as agents.
Underwriters, dealers and agents that participate in the distribution of
securities may all have the status of underwriters under the Securities Act of
1933. The prospectus supplement will identify any underwriter or agent and
describe any compensation paid by us.
We may agree to indemnify underwriters and other persons against certain
civil liabilities, including liabilities under the Securities Act of 1933.
LEGAL OPINIONS
Mr. Jeffrey P. Brown, Vice President and General Counsel of BellSouth
Telecommunications, Inc., is passing upon the legality of the securities for us,
relying on the opinions of other counsel as to certain matters. Mr. Brown may be
considered to beneficially own 91,389 shares of BellSouth Corporation common
stock, including interests through various BellSouth Corporation benefit plans.
On behalf of dealers, underwriters or agents, Davis Polk & Wardwell is
passing upon certain legal matters in connection with the offering of the debt
securities.
6
<PAGE> 18
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, independent accountants, has audited the
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 1998. That Form 10-K is incorporated by reference in
this prospectus, to the extent and for the periods indicated in
PricewaterhouseCoopers LLP's report relating to such consolidated financial
statements, which is also incorporated by reference. We have included our
consolidated financial statements in reliance upon the report of
PricewaterhouseCoopers LLP given upon their authority as experts in auditing and
accounting.
7
