RULE NO. 424(b)(5)
REGISTRATION NO. 333-92891
PROSPECTUS SUPPLEMENT
(To prospectus dated April 10, 2001)
$300,000,000
[LOGO]
Verizon South Inc.
7% Debentures, Series F, due 2041
----------------
We will pay interest on the Series F Debentures on January 30, April 30, July
30 and October 30 of each year. The Series F Debentures will mature on April
30, 2041. We may redeem some or all of the Series F Debentures at any time on
or after April 30, 2006 at a redemption price equal to 100% of the principal
amount of the Series F Debentures being redeemed plus accrued and unpaid
interest to the date of redemption.
The Series F Debentures will be unsecured obligations and rank equally with
our unsecured senior indebtedness. The Series F Debentures will be issued in
denominations of $25 and integral multiples thereof.
We will apply to have the Series F Debentures trade on the New York Stock
Exchange starting within 30 days after the Series F Debentures are issued.
Investing in the Series F Debentures involves a reinvestment risk if we
redeem the Series F Debentures as described in the "Risk Factor" section
beginning on page S-2.
----------------
Per
Series F
Debenture Total
--------- -----
Public offering price (1)............................ 100% $300,000,000
Underwriting discount................................ 3.15% $9,450,000
Proceeds, before expenses, to Verizon South Inc. .... 96.85% $290,550,000
(1) Plus accrued interest from April 18, 2001, if settlement occurs after
that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if the
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The Series F Debentures will be ready for delivery in book-entry form only
through The Depository Trust Company on or about April 18, 2001.
----------------
Merrill Lynch & Co.
Morgan Stanley Dean Witter
Salomon Smith Barney
UBS Warburg
----------------
The date of this prospectus supplement is April 10, 2001.
TABLE OF CONTENTS
Prospectus Supplement
About this Prospectus Supplement........................................... S-2
Risk Factor................................................................ S-2
Description of the Series F Debentures..................................... S-2
Underwriting............................................................... S-3
Prospectus
About this Prospectus...................................................... 2
Where You Can Find More Information........................................ 2
The Company................................................................ 2
Use of Proceeds............................................................ 3
Ratios of Earnings to Fixed Charges........................................ 3
Description of the Debentures.............................................. 3
Experts.................................................................... 6
Certain Legal Matters...................................................... 6
Plan of Distribution....................................................... 6
ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the prospectus that
follows carefully before you invest. Both documents contain important
information you should consider when making your investment decision. This
prospectus supplement contains information about the Series F Debentures and
the prospectus contains information about our Debentures generally. This
prospectus supplement may add, update or change information in the prospectus.
You should rely only on the information provided or incorporated by reference
in this prospectus supplement and the prospectus. The information in this
prospectus supplement is accurate as of April 10, 2001. We have not authorized
anyone else to provide you with different information.
RISK FACTOR
If We Redeem the Series F Debentures, You May Not Be Able to Reinvest the
Redemption Proceeds and Obtain an Equal Effective Interest Rate.
We may redeem the Series F Debentures at any time on or after April 30, 2006,
at a redemption price which does not include a redemption premium. Prevailing
interest rates at the time we redeem the Series F Debentures may be lower than
7%. As a result, you may not be able to reinvest the redemption proceeds in a
comparable security at an effective interest rate of 7%.
DESCRIPTION OF THE SERIES F DEBENTURES
Principal Amount, Maturity and Interest
We are issuing $300,000,000 of Series F Debentures which will mature on April
30, 2041. We will pay interest on the Series F Debentures on January 30 to
holders of record on the preceding January 15, on April 30 to holders of record
on the preceding April 15, on July 30 to holders of record on the preceding
July 15 and on October 30 to holders of record on the preceding October 15. If
interest or principal is payable on a Saturday, Sunday or any other day when
banks are not open for business in the City of New York, we will make the
payment on the next business day, and no interest will accrue as a result of
the delay in payment. The first interest payment date is July 30, 2001.
Interest accrues from April 18, 2001, and will accrue on the basis of a 360-day
year consisting of 12 months of 30 days.
Form
The Series F Debentures will only be issued in book-entry form.
Redemption
We have the option to redeem the Series F Debentures on not less than 30 nor
more than 60 days' notice, in whole or from time to time in part, on or after
April 30, 2006, at a redemption price equal to 100% of the principal amount of
the Series F Debentures being redeemed plus accrued and unpaid interest to the
date of redemption.
If we redeem the Series F Debentures in part only, we will issue, in the name
of the holder, upon presentation and surrender, new Series F Debentures for the
unredeemed portion otherwise having the same terms as the holder's original
Series F Debentures.
Additional Information
See "DESCRIPTION OF THE DEBENTURES" in the accompanying prospectus for
additional
S-2
important information about the Debentures. That information includes:
. additional information about the terms of the Debentures;
. general information about the indenture and the trustee;
. a description of certain restrictions; and
. a description of events of default under the indenture.
UNDERWRITING
We intend to offer our Series F Debentures through the underwriters. Merrill
Lynch, Pierce, Fenner & Smith Incorporated, is acting as representative of the
underwriters named below. Subject to the terms and conditions contained in the
purchase agreement between the underwriters and us, we have agreed to sell to
the underwriters, and the underwriters severally have agreed to purchase from
us, the aggregate principal amount of the Series F Debentures listed opposite
their names below:
Principal
Underwriter Amount
----------- ---------
Merrill Lynch, Pierce, Fenner & Smith Incorporated................ $57,375,000
Morgan Stanley & Co. Incorporated................................. 57,375,000
Salomon Smith Barney Inc. ........................................ 57,375,000
UBS Warburg LLC................................................... 57,375,000
Banc of America Securities LLC.................................... 4,500,000
Bear, Stearns & Co. Inc. ......................................... 4,500,000
Dain Rauscher Incorporated........................................ 4,500,000
Deutsche Banc Alex. Brown Inc. ................................... 4,500,000
A.G. Edwards & Sons, Inc.......................................... 4,500,000
First Union Securities, Inc....................................... 4,500,000
H&R Block Financial Advisors, Inc. ............................... 4,500,000
HSBC Securities (USA) Inc. ....................................... 4,500,000
Legg Mason Wood Walker, Incorporated.............................. 4,500,000
McDonald Investments Inc., A KeyCorp Company...................... 4,500,000
Prudential Securities Incorporated................................ 4,500,000
Quick & Reilly, Inc. ............................................. 4,500,000
U.S. Bancorp Piper Jaffray Inc. .................................. 4,500,000
ABN AMRO Incorporated............................................. 500,000
Advest, Inc....................................................... 500,000
BB&T Capital Markets, A division of Scott and Stringfellow,
Inc. ............................................................ 500,000
Robert W. Baird & Co. Incorporated................................ 500,000
Banc One Capital Markets, Inc. ................................... 500,000
Blaylock & Partners, L.P. ........................................ 500,000
CIBC World Markets Corp. ......................................... 500,000
Principal
Underwriter Amount
----------- ---------
Fahnestock & Co. Inc. ............................................ 500,000
Fifth Third Securities, Inc. ..................................... 500,000
Gibraltar Securities Co. ......................................... 500,000
Gruntal & Co., L.L.C. ............................................ 500,000
Guzman & Company.................................................. 500,000
J.J.B. Hilliard, W.L. Lyons, Inc. ................................ 500,000
Ormes Capital Markets, Inc. ...................................... 500,000
Raymond James & Associates, Inc. ................................. 500,000
The Robinson-Humphrey Company, LLC................................ 500,000
Charles Schwab & Co., Inc. ....................................... 500,000
Muriel Siebert & Co., Inc. ....................................... 500,000
Southwest Securities, Inc. ....................................... 500,000
M.L. Stern & Co., Inc............................................. 500,000
Tucker Anthony Incorporated....................................... 500,000
Utendahl Capital Partners, L.P. .................................. 500,000
Wells Fargo Van Kasper, LLC....................................... 500,000
The Williams Capital Group, L.P. ................................. 500,000
------------
Total........................................................ $300,000,000
============
The underwriters have agreed to purchase all of the Series F Debentures sold
pursuant to the terms and conditions of the purchase agreement if any of the
Series F Debentures are purchased. If an underwriter defaults, the purchase
agreement provides that the purchase commitments of the non-defaulting
underwriters may be increased or the purchase agreement may be terminated.
The Series F Debentures are a new issue of securities with no established
trading market. We will make an application to list the Series F Debentures on
the New York Stock Exchange. We expect trading of the Series F Debentures to
commence within a 30-day period after the initial delivery of the Series F
Debentures. We have been advised by the underwriters that, prior to the
commencement of trading on the New York Stock Exchange, the underwriters intend
to make a market in the Series F Debentures but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Series F Debentures.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the underwriters may be required to make in respect of those liabilities.
S-3
The underwriters are offering the Series F Debentures, subject to prior sale,
when, as and if issued to and accepted by them, subject to approval of legal
matters by their counsel, including the validity of the Series F Debentures,
and other conditions contained in the purchase agreement, such as the receipt
by the underwriters of officer's certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify offers to the
public and to reject orders in whole or in part.
Commissions and Discounts
The underwriters have advised us that they propose initially to offer the
Series F Debentures to the public at the public offering price on the cover
page of this prospectus, and to dealers at that price less a concession not in
excess of 2% of the principal amount of the Series F Debentures. The
underwriters may allow, and the dealers may reallow, a discount not in excess
of 1.6% of the principal amount of the Series F Debentures to other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
We will pay the expenses of the offering which are estimated to be $220,000,
excluding the underwriting discount.
Price Stabilization and Short Positions
In connection with the offering, the underwriters are permitted to engage in
transactions that stabilize the market price of the Series F Debentures. Such
transactions consist of bids or purchases to peg, fix or maintain the price of
the Series F Debentures. If the underwriters create a short position in the
Series F Debentures in connection with the offering, i.e., if they sell more
Series F Debentures than are on the cover page of this prospectus, the
underwriters may reduce that short position by purchasing Series F Debentures
in the open market. Purchases of a security to stabilize the price or to reduce
a short position could cause the price of the security to be higher than it
might be in the absence of such purchases.
We have been advised by the underwriters that they make no representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Series F Debentures. In addition,
we have been advised by the underwriters that they make no representation that
they will engage in these transactions or that these transactions, once
commenced, will not be discontinued without notice.
Other Relationships
Some of the underwriters and their affiliates have engaged in, and may in the
future engage in, investment banking and other commercial dealings in the
ordinary course of business with us. They have received customary fees and
commissions for these transactions.
S-4
PROSPECTUS
$300,000,000
[LOGO]
Verizon South Inc.
DEBENTURES
----------------
Verizon South Inc. intends to offer at one or more times Debentures with a
total offering price not to exceed $300,000,000. We will provide the specific
terms of these securities in supplements to this prospectus.
You should read this prospectus and the supplements 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 truthful or complete. Any representation to the contrary is
a criminal offense.
April 10, 2001
TABLE OF CONTENTS
About this Prospectus....................................................... 2
Where You Can Find More Information......................................... 2
The Company................................................................. 2
Use of Proceeds............................................................. 3
Ratios of Earnings to Fixed Charges......................................... 3
Description of the Debentures............................................... 3
Experts..................................................................... 6
Certain Legal Matters....................................................... 6
Plan of Distribution........................................................ 6
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under this shelf process, we may, from time to time, sell the
Debentures described in this prospectus in one or more offerings with a total
offering price not to exceed $300,000,000. This prospectus provides you with a
general description of the Debentures. Each time we sell Debentures, we will
provide a prospectus supplement that will contain specific information about
the terms of that offering. The prospectus supplement may also add, update or
change information in this prospectus. The information in this prospectus is
accurate as of the date of this prospectus. Please carefully read both this
prospectus and any prospectus supplement together with additional information
described under the heading "WHERE YOU CAN FIND MORE INFORMATION."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You may read and copy any document we file at the SEC's public reference
room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings are also available to the public over the Internet at
the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, 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 information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the following document we filed with the SEC and our
future filings with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we or any underwriters sell all of the
Debentures:
. Annual Report on Form 10-K for the year ended December 31, 2000.
You may request a copy of this filing at no cost, by writing or calling us at
the following address:
Director--Telecom Reporting and Consolidations
Verizon Communications Inc.
47th Floor
1717 Arch Street
Philadelphia, Pennsylvania 19103
(215) 963-6360
You should rely only on the information incorporated by reference or provided
in this prospectus and any supplement. We have not authorized anyone else to
provide you with different information.
THE COMPANY
We are an indirect wholly-owned subsidiary of Verizon Communications Inc. We
provide communications services in Alabama, Illinois, Kentucky, North Carolina,
South Carolina and Virginia. We were formerly known as GTE South Incorporated.
Our principal line of business is providing communications services ranging
from local telephone service for the home and office to highly complex voice
and data services. We provide local telephone service within our franchise area
and intraLATA (Local Access Transport Area) toll service between our
facilities. We also provide intraLATA toll service between our facilities and
the facilities of other telephone companies within our LATAs. We provide
network facilities through which long distance companies offer InterLATA
service to other points in and out of the states in which we operate. We charge
these long distance companies access fees for using our network. Business and
2
residential customers also pay us charges to connect to our local network and
to obtain long distance service. We also earn revenue by providing billing,
collection, operator and other services to long distance companies.
Our principal executive offices are located at 1095 Avenue of the Americas,
Room 3868, New York, New York 10036, telephone (212) 395-2121.
USE OF PROCEEDS
We will use the net proceeds from the sale of the Debentures to repay short-
term borrowings and for general corporate purposes.
At February 28, 2001, our short-term borrowings (not including the current
maturities of long-term debt) were approximately $181 million at an average
annual interest rate of 5.41%.
RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for the periods indicated are as
follows:
Years ended December 31,
-----------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
----- ----- ----- ----- -----
5.80 7.19 7.07 8.37 8.56
For these ratios, "earnings" have been calculated by adding the loss from
unconsolidated businesses, interest expense, the estimated interest portion of
rentals and amortization of capitalized interest to income before provision for
income taxes and extraordinary charges, and "fixed charges" include interest
expense, the estimated interest portion of rentals and capitalized interest.
DESCRIPTION OF THE DEBENTURES
General
We will issue the Debentures under an Indenture between us and the Trustee, The
Bank of New York, as successor trustee to Nationsbank of Georgia, National
Association, dated as of May 1, 1994, and supplemented as of June 1, 1998. We
have summarized material provisions of the Indenture below. This summary does
not describe all of the exceptions and qualifications contained in the
Indenture or the Debentures. In the summary below, we have included references
to article and section numbers of the Indenture so that you can easily locate
these provisions. Capitalized terms used in the summary have the meanings
specified in the Indenture.
The Debentures will be unsecured and will rank equally with all our senior
unsecured debt. The Indenture does not limit the amount of Debentures that may
be issued and each series of Debentures may differ as to its terms.
A supplement to the Indenture, Board Resolution or Officers' Certificate will
designate the specific terms relating to any new series of Debentures. (ARTICLE
TWO) These terms will be described in a prospectus supplement and will include
the following:
. title of the series;
. total principal amount of the series;
. maturity date or dates;
. interest rate and interest payment dates;
. any redemption dates, prices, obligations and restrictions; and
. any other terms of the series.
Form and Exchange
The Debentures will be denominated in U.S. dollars and we will pay principal,
interest and any premium in U.S. dollars. We will normally issue the Debentures
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 Debentures in certificated form registered in
the name of the Debenture holder. Under these circumstances, holders may
receive certificates representing the Debentures. Debentures in certificated
form will be exchangeable without charge except for reimbursement of taxes, if
any. We will refer to this form in the prospectus supplement as "certificated."
(ARTICLE TWO)
Book-Entry Only Procedures
The following discussion pertains to Debentures that are issued in book-entry
only form.
3
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 Debentures. 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 ("Direct Participants") deposit with DTC. DTC
also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
computerized records for Direct Participants' accounts. This eliminates the
need to exchange certificates. Direct 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 Direct
Participant. The rules that apply to DTC and its participants are on file with
the SEC.
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., The American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc.
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 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 Direct Participants' accounts on the payment date according
to their respective holdings of beneficial interests in the global securities
as shown on DTC's records. In addition, it is DTC's current practice to assign
any consenting or voting rights to Direct 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, or us.
Debentures represented by a global security would be exchangeable for Debenture
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 now exchangeable.
Redemption Provisions, Sinking Fund and Defeasance
We may redeem some or all of the Debentures at our option subject to the
conditions stated in the prospectus supplement relating to that series of
Debentures. (ARTICLE THREE) If a series of Debentures is subject to a sinking
fund, the prospectus supplement will describe those terms.
The Indenture permits us to discharge or "defease" certain of our obligations
on any series of Debentures at any time. We may defease by depositing with the
Trustee sufficient cash or government securities to pay all sums due on that
series of Debentures. (SECTION 11.02)
4
Restrictions
The Debentures will not be secured. However, if we at any time incur other debt
or obligations secured by a mortgage or pledge on any of our property, the
Indenture requires us to secure the Debentures equally with the other debt or
obligations for as long as the other debt or obligations remain secured.
Exceptions to this requirement include the following:
. purchase money mortgages, conditional sales agreements or pre-existing
mortgages on property acquired after May 1, 1994;
. certain deposits or pledges to secure the performance of bids, tenders,
contracts or leases or in connection with worker's compensation and similar
matters;
. mechanics' and similar liens created in the ordinary course of business;
. our first mortgage bonds outstanding on May 1, 1994, issued and secured by
us and our predecessors, and any replacement or renewals of these first
mortgage bonds which do not increase their amount or extend their final
maturity dates;
. first mortgage bonds which we may issue in connection with our consolidation
or merger with or into our affiliates in exchange or substitution for the
long-term senior debt of those affiliates;
. debt that we are required to assume in connection with the merger or
consolidation with or into us of certain of our affiliates. (SECTION 4.05)
We may issue or assume an unlimited amount of debt under the Indenture. As a
result, the Indenture does not prevent us from significantly increasing our
unsecured debt levels, which may negatively affect the resale of the
Debentures. (SECTION 2.01) However, the issuance of most of our debt
securities, including the Debentures, does require state regulatory approval,
which may or may not be granted. It is unlikely that we or our management would
initiate or support a leveraged buyout, because all of our common stock is
owned indirectly by Verizon Communications Inc., which has no current intention
of selling its ownership in us.
Changes to the Indenture
The Indenture may be changed with the consent of holders owning more than 50%
in principal amount of the outstanding Debentures of each series affected by
the change. However, we may not change your principal or interest payment
terms, or the percentage required to change other terms of the Indenture,
without your consent, as well as the consent of others similarly affected.
(SECTION 9.02)
We may enter into supplemental indentures for other specified purposes,
including the creation of any new series of Debentures, without the consent of
any holder of Debentures. (SECTIONS 2.01, 9.01 and 10.01)
Consolidation, Merger or Sale
We may not merge with another company or sell or transfer all or substantially
all of our property to another company unless:
. we are the continuing corporation; or
. the successor corporation expressly assumes:
-- payment of principal, interest and any premium on the Debentures; and
-- performance and observance of all covenants and conditions in the
Indenture. (SECTIONS 10.01 and 10.02)
Events of Default
"Event of Default" means, with respect to any series of Debentures, any of the
following:
. failure to pay interest on that series of Debentures for 30 business days
after payment is due;
. failure to pay principal or any premium on that series of Debentures when
due;
. failure to perform any other covenant relating to that series of Debentures
for 90 days after we are given written notice; or
. certain events in bankruptcy, insolvency or reorganization.
An Event of Default for a particular series of Debentures does not necessarily
impact any other series of Debentures issued under the Indenture. (SECTION
6.01)
5
If an Event of Default for any series of Debentures occurs and continues, the
Trustee or the holders of at least 25% of the principal amount of the
Debentures of the series may declare the entire principal of all the Debentures
of that series to be due and payable immediately. If this happens, subject to
certain conditions, the holders of a majority of the principal amount of the
Debentures of that series can rescind the declaration if we have deposited with
the Trustee a sum sufficient to pay all matured installments of interest,
principal and any premium. (SECTION 6.01)
The holders of more than 50% of the principal amount of any series of the
Debentures may, on behalf of the holders of all the Debentures of that series,
control any proceedings resulting from an Event of Default or waive any past
default except a default in the payment of principal, interest or any premium.
(SECTION 6.06) We are required to file an annual certificate with the Trustee
stating whether we are in compliance with all the conditions and covenants
under the Indenture. (SECTION 5.03)
Concerning the Trustee
Within 90 days after a default occurs, the Trustee must notify the holders of
the Debentures of the series of all defaults known to the Trustee if we have
not remedied them (default is defined for this purpose to include the Events of
Default specified above absent any grace periods or notice). The Trustee may
withhold notice to the holders of such Debentures of any default (except in the
payment of principal, interest or any premium) if it in good faith believes
that withholding this notice is in the interest of the holders. (SECTION 6.07)
Prior to an Event of Default, the Trustee is required to perform only the
specific duties stated in the Indenture and, after an Event of Default, must
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (SECTION 7.01). The Trustee is not required
to take any action permitted by the Indenture at the request of any holders of
the Debentures, unless those holders protect the Trustee against costs,
expenses and liabilities. (SECTION 7.02) The Trustee is not required to spend
its own funds or become financially liable when performing its duties if it
reasonably believes that it will not be adequately protected financially.
(SECTION 7.01)
The Bank of New York serves as trustee under indentures relating to other debt
securities issued by us. Verizon Communications Inc., our indirect parent, and
certain of its affiliates have commercial banking relationships with certain
affiliates of The Bank of New York.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial statements
and financial statement schedule, as of and for the year ended December 31,
2000, included in our Annual Report on Form 10-K for the year ended December
31, 2000, as set forth in their report. Our financial statements are
incorporated by reference in this prospectus in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Arthur Andersen LLP, independent public accountants, audited our financial
statements and schedule, as of December 31, 1999 and for each of the two years
in the period then ended, incorporated by reference in this prospectus. We have
relied on Arthur Andersen LLP as experts in accounting and auditing in giving
the report.
CERTAIN LEGAL MATTERS
Our Vice President-General Counsel issued an opinion about the validity of the
Debentures for us. Milbank, Tweed, Hadley & McCloy LLP of New York, New York
will issue an opinion on certain legal matters for the agents or underwriters.
PLAN OF DISTRIBUTION
We may sell any series of Debentures:
. through underwriters or dealers;
. through agents; or
. directly to one or more purchasers.
The prospectus supplement will include:
. the initial public offering price;
. the names of any underwriters, dealers or agents;
. the purchase price of the Debentures;
. our proceeds from the sale of the Debentures;
. any underwriting discounts or agency fees and other underwriters' or agents'
compensation; and
6
. any discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are used in the sale, they will buy the Debentures for their
own account. The underwriters may then resell the Debentures in one or more
transactions, at any time or times, at a fixed public offering price or at
varying prices.
This prospectus should not be considered an offer of the Debentures in states
where prohibited by law.
If there is a default by one or more of the underwriters affecting 10% or less
of the total principal amount of Debentures offered, the non-defaulting
underwriters must purchase the Debentures agreed to be purchased by the
defaulting underwriters. If the default affects more than 10% of the total
principal amount of the Debentures, we may, at our option, sell less than all
the Debentures offered.
Underwriters and agents that participate in the distribution of the Debentures
may be underwriters as defined in the Securities Act of 1933. Any discounts or
commissions that we pay them and any profit they receive when they resell the
Debentures may be treated as underwriting discounts and commissions under that
Act. We may have agreements with underwriters, dealers and agents to indemnify
them against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute with respect to payments which they
may be required to make.
Underwriters and agents may be our customers or may engage in transactions with
us or perform services for us in the ordinary course of business.
7
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$300,000,000
[LOGO]
Verizon South Inc.
7% Debentures, Series F, due 2041
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PROSPECTUS SUPPLEMENT
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Merrill Lynch & Co.
Morgan Stanley Dean Witter
Salomon Smith Barney
UBS Warburg
April 10, 2001
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