8-K 1 d8k.txt VERIZON SOUTH INC FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 31, 2002 VERIZON SOUTH INC. (Exact name of registrant as specified in its charter) Virginia 2-36292 56-0656680 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 1095 Avenue of the Americas, Room 3868 New York, New York 10036 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 395-2121 Not applicable (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets. On July 31, 2002, Verizon South Inc. ("Verizon South" or the "Company") (a wholly owned indirect subsidiary of Verizon Communications Inc.) completed the sale of approximately 600,000 telephone access lines and related local exchange operations in Kentucky to Kentucky ALLTEL, Inc. (formerly ALLTEL NEWCO NO. 1, INC.) for approximately $1.9 billion in cash, pursuant to an Asset Purchase Agreement, dated as of October 31, 2001. For additional information regarding this disposition, please see the pro forma financial information and other documents filed herewith under Item 7. 1 Item 7. Financial Statements and Exhibits. b) Pro forma financial information: UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS In October 2001, Verizon South Inc. ("Verizon South" or the "Company") and Contel of the South, Inc. (both wholly owned indirect subsidiaries of Verizon Communications Inc.) entered into an agreement to sell all of their local exchange telephone operations in Alabama to CenturyTel of Alabama, L.L.C. ("CenturyTel") for approximately $1.0 billion in cash. The sale closed on July 1, 2002 and the Company transferred all of its telephone access lines (approximately 170,000) and related local exchange operations in Alabama to CenturyTel for approximately $572 million in cash. In October 2001, Verizon South entered into an agreement to sell all of its local exchange telephone operations in Kentucky to Kentucky ALLTEL, Inc. ("ALLTEL"). The sale closed on July 31, 2002 and the company transferred all of its telephone access lines (approximately 600,000) and related local exchange telephone operations in Kentucky to ALLTEL for approximately $1.9 billion in cash. The unaudited pro forma condensed financial statements reported below consist of unaudited pro forma condensed statements of income for the three months ended March 31, 2002 and for the year ended December 31, 2001 and an unaudited pro forma condensed balance sheet as of March 31, 2002. The unaudited pro forma financial statements should be read in conjunction with the Company's historical financial statements and the related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2002. The following unaudited pro forma condensed financial statements have been prepared giving effect to the sale of the Company's local exchange telephone operations in Alabama to CenturyTel and the sale of the Company's local exchange telephone operations in Kentucky to ALLTEL, as if they had occurred as of March 31, 2002 for the unaudited pro forma condensed balance sheet and as of January 1 of each period for the unaudited pro forma condensed statements of income. The Company believes that the assumptions used in the unaudited pro forma condensed financial statements provide a reasonable basis on which to present such statements. The unaudited pro forma condensed financial statements included in this Form 8-K have been derived from the Company's financial statements and do not purport to represent what the Company's financial position or results of operations actually would have been had the sales occurred on the dates indicated. 2 VERIZON SOUTH INC. UNAUDITED PRO FORMA CONDENSED BALANCE SHEET As of March 31, 2002

See Notes to Unaudited Pro Forma Condensed Financial Statements. 3 VERIZON SOUTH INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME For the Three Months Ended March 31, 2002

See Notes to Unaudited Pro Forma Condensed Financial Statements. 4 VERIZON SOUTH INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME For the Year Ended December 31, 2001

See Notes to Unaudited Pro Forma Condensed Financial Statements. 5 VERIZON SOUTH INC. NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS 1. Basis of Presentation In October 2001, Verizon South Inc. ("Verizon South" or the "Company") and Contel of the South, Inc. entered into an agreement to sell all of their local exchange telephone operations in Alabama to CenturyTel of Alabama, L.L.C. ("CenturyTel"). The Company continued to operate its Alabama properties until July 1, 2002 when the sale to CenturyTel was consummated. Also in October 2001, Verizon South entered into an agreement to sell all of its local exchange telephone operations in Kentucky to Kentucky ALLTEL, Inc. ("ALLTEL"). The Company continued to operate its Kentucky properties until July 31, 2002 when the sale to ALLTEL was consummated. Beginning in the third quarter of 2001 the assets related to the Alabama and Kentucky operations (principally plant, property, and equipment) were classified as "Net assets held for sale" in the Company's balance sheet and the Company ceased recording depreciation expense on these properties, in accordance with Statements of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The accompanying unaudited pro forma condensed financial statements include the historical financial statements of Verizon South and are intended, through the pro forma adjustments described below, to reflect the impact of the sales of the Alabama and Kentucky operations. Such financial statements are not necessarily indicative of the operating results or financial position that would have occurred if the disposition of these operations had been completed at the dates indicated. 2. Pro Forma Adjustments (A) Adjustment for cash proceeds received from the sale of the operations. (B) Adjustment to eliminate net book value of plant, property and equipment related to the operations sold (classified as net assets held for sale in the historical balance sheet). (C) Adjustment to eliminate deferred nonrecurring service activation revenues and costs related to the operations sold. (D) Adjustment to eliminate materials and supplies related to the operations sold. (E) Adjustment to eliminate pension assets and other post-employment benefit liabilities related to certain active employees transferred to the purchaser of the operations. (F) Adjustment to reflect deferred income taxes. (G) Adjustment to eliminate operating revenues of the operations sold. (H) Adjustment to eliminate operations and support expenses related to the operations sold, excluding Corporate allocations. (I) Adjustment to reflect tax benefit related to pro forma adjustments. (J) Adjustment for depreciation and amortization expense recorded prior to decision to sell the operations. (K) Adjustment for capitalized interest. 6 VERIZON SOUTH INC. (c) Exhibits: Exhibit Number 2.1 Asset Purchase Agreement, dated as of October 31, 2001, between Verizon South Inc. and ALLTEL NEWCO NO. 1, INC. 7 VERIZON SOUTH INC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Verizon South Inc. Date: August 13, 2002 By /s/ Edwin F. Hall -------------------------- Edwin F. Hall Controller 8 EXHIBIT INDEX Exhibit Number Description 2.1 Asset Purchase Agreement, dated as of October 31, 2001, between Verizon South Inc. and ALLTEL NEWCO NO. 1, INC. 9

VERIZON SOUTH INC 8-K