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ITCI\DeltaCom News Release

ITC"'DELTACOM

June 10, 1997FOR IMMEDIATE RELEASEDana Phelps205-519-21101-800-239-3000dphelps(({:deltacom.com

ITC"DeltaCom to Add Local Service to its Communications Product Package

Page 1 of2

--Company Completes $200 Million High Yield Debt--

West Point, GA - ITC"DeltaCom, has acquired $200 million in high yield public debt fmancing in effortsto better position itself as a leading regional provider of integrated telecommunications services. includingcompetitive local exchange telephone services, according to company officials. Additionally, the companyis fmalizing a $100 million underwritten term and revolving bank commitment from NationsBank, which isexpected to be syndicated to a number of other regional and national banks.

The company plans to allocate the proceeds to fund market expansion, the ongoing development andconstruction of the company's fiber optic network, and local services network and product development.This will enable ITC"DeltaCom to provide "one-stop" integrated telecommunications services to businesscustomers, including local service, long distance and data services, Internet access and development, andtelephone equipment in a single package tailored to the customer's specific needs. The company hascompleted its resale and interconnection agreement with BeUSouth and has been certified as a Local ServiceProvider in seven Southern states.

"With the addition of competitive local service to our existing services this summer, we are completing ourinitiative to be an integrated telecommunications provider. We will truly offer our customers a onepoint-of-contact, full-service communications alternative," said Foster McDonald, ITC"DeltaCom President.

DeltaCom began in 1982 as a provider of long distance services in the Huntsville, Alabama area, quicklyadding sales offices throughout Alabama. By 1995, the DeltaCom network had grown to multiple networkswitches and a statewide digital fiber optic network. The company transitioned to a regional facility-basedinterexchange carrier, matching network and support services of any long distance carrier.

DeltaCom was acquired by ITC Holding Company, Inc., of West Point, Georgia, in early 1996. With a100-year tradition of excellence in the independent telephone business, and success in the 1980s of creatingand building the fourth largest long distance carrier in the United States (SouthemNet and Telcom*USA),DeltaCom was a natural addition to its renewed and growing interest and investment in thetelecommunications industry. This year, DeltaCom operations have been combined with those of InterstateFiberNet, another ITC Holding subsidiary, which joins the expansive Southern fiber optic network ofInterstate FiberNet, and its wholesale sales channel, with the retail sales and marketing strength ofDeltaCom. The resulting company is called ITC"DeltaCom.

With the more aggressive vision ofITC Holding Company behind the company, ITC"DeltaCom hasexpanded to new markets outside Alabama including Louisiana, Florida, Georgia, South Carolina and NorthCarolina, with plans to further expand throughout the Southern United States during the next five years.Spanning this region is the ITCI\DeltaCom network, providing a differential advantage for the company inthe provision of long distance, Internet, local exchange services, and business telephone equipment.

The company will continue'to be a leading provider of long-haul services to other communications carriers,serving over 60 markets in ten states via its sonet-based network, which deploys the latest in fiber optictechnology.

ITCI\DeltaCom is built on a solid foundation of service exceeding customers' expectations every day.Focused on serving business customers, ITCI\DeltaCom provides a level of understanding and supportwhich comes from proven experience in meeting the needs and expectations of business operations.

http://www.itcdeltacom.comljune1O.html 11113/97

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ITC"DeltaCom News Release

"We will continue to focus on business customers as we grow to new markets and add new products," saidDrew Walker, ITC"DeltaCom CEO, "We serve a wide range of business customers, from small businessesto large regional banking, retail and insurance companies, to state government."

"As a regional full-service provider, we differentiate our offering with exceptional service, provided byexceptional people. This is the basis of our past success and will continue to dominate our direction in thefuture," he added.

More infonnation about ITC"DeltaCom can be found on the world wide web athttp://www.itcdeltacom.com.

http://www.itcdeltacom.com/june1O.html

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Copyright 1997 UMI Inc.;Copyright American City Business Publications Inc. 1997;

Business Dateline;Atlanta Business Chronicle

July ll, 1997

SECTION: Vol 20; No 6; pg lA

LENGTH: 873 words

HEADLINE: Tiny telecom fIrm shoots for BellSouth

BYLINE: Jason Kelly

DATELINE: West Point; GA; US; South Atlantic

BODY:

A company run by telecommunications golden boy Cam Lanier and backed by a recently raised $300 million willcompete for a chunk of BellSouth Telecommunications Corp.'s business in the Southeast.

West Point, Ga.-based fll1l1, ITC DeltaCom Inc., plans to go after customers in the Southeast, pushing a service-heavyoffering to business customers. The fast-growing, SOO-person-company currently has offIces across the region,including two in Atlanta. Officials of the privately held company would not disclose present revenues or projections.

"We're going to be a gnat, but we think there's going to be a niche for us to compete in," said Lanier, a longtimepresence in the local and long-distance telephone business in Georgia. His resume tells the story of other "gnats,"gathered and cultivated into swarms that made him a fortune.

ITC DeltaCom is the company resulting from a purchase made in early 1996: DeltaCom Inc. --a l5-year-oldAlabama-based long-distance company -- was bought by ITC Holding Co., headed by Lanier. ITC then combinedDeltaCom operations with Interstate FiberNet, another ITC subsidiary.

In June, ITC DeitaCom completed a $200 million high-yield debt offering, as well as arranged for a $100 millionfmancing from NationsBank. Drew Walker, the president of ITC DeltaCom, said he company would use the funds toextend the network, as well as beef up sales and marketing personnel.

For BellSouth, the prospect of competing with ITC DeltaCom is not nearly as daunting as battling with AT&T Corp.for several reasons. First, ITC DeltaCom will command much less of the market than AT&T and won't even enter theresidential arena.

Furthermore, and arguably more interestingly, BellSouth and ITC have had and will sustain a close relationship, givenLanier's experience running an incumbent rural phone company -- as well as the interesting dynamics created by thenow-deregulated telecommunications industry.

BellSouth is in the unique position of desperately needing competition; only when a balanced playing fIeld isachieved will the state Public Service Commission and the Federal Communications Commission allow Regional BellOperating Companies (RBOCs) like BeliSouth to offer long-distance service to its customers.

But, is the enemy you know better than the one you don't?

"I think they do look at us differently," Walker said. "We obviously don't pose the threat in magnitude that the othersio. But we present a challenge that they will have a tough time overcoming. Where they are weak, we are strong."

Walker said ITC DeltaCom's focus on face-to-face sales and a smaller niche will allow the company to ferret away thelucrative business customers that account for a sizable portion of telecommunications revenues. In a sense, the companywill fly under BellSouth's business radar screen, capturing midsized business customers that BellSouth never had toworry about selling to before because it was a monopoly.

"They've never had to do that," Walker said. "And we don't believe that will be an area where they will put a lot ofresources. "

As for ITC DeltaCom's strategy and the threat it poses, BellSouth won't say. Spokesperson Lynn Bress said hercompany was "not in a position to comment on what they do or might do."

"We want to make sure that everyone that is a certified provider of our service has an opportunity to compete," Bresssaid. "We're treating (ITC DeltaCom) like one of our 52 competitors (that have been certified to resell BellSouthservice).

"They're in an enviable position, since they can provide what we can't," Bress said referring to the local and long­distance bundle.

But industry analysts said BellSouth is likely more comfortable with players like Lanier, whom they've known for awhile. "They (BellSouth) need to show they're working with the competition, so working with someone they know hasto be a good thing," said Dan Carpenter, president of Atlanta-based TeleAdvice Inc., a telecommunications consultingfirm. "They know Cam; they know how he does business."

Carpenter said he wouldn't be surprised if BellSouth eventually acquired ITC DeltaCom. "The idea behind what_ (Lanier's) doing could be to go into a market we can sell and then sell the company in two years," Carpenter said.

It wouldn't be unheard of, especially for Lanier -- who created a name for himself in the 1980s, when he madeSouthernNet (eventually called Telecom USA), into a top five long-distance company. He sold the business to MCICommunications Corp. in 1990 for $1.2 billion.

He has invested those profits and subsequent money in a variety of different concerns, including Powertel Inc., whichwill launch its Personal Communications Service offering in Atlanta at the end of 1996. Other investments include astake in MindSpring Enterprises Inc., an Atlanta-based Internet service provider. Walker, whose tenure with Lanierdates back to the Telecom USA days, said they will draw on that experience.

"We have the infrastrucure that allows us to compete, otherwise we'd just run out of gas," he said. "We really had thesame type of customer base at Telecom USA that we plan to have here. In the South, we will have a capacity thatmatches any competitor."

GRAPHIC: Photo

LANGUAGE: ENGLISH

UMI-ACC-NO: 9787094

LOAD-DATE: July 31, 1997

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Copyright 1997 UMI Inc.;Copyright Birmingham Business Journal, Inc. 1997;

Business Dateline;Birmingham Business Journal

October 6, 1997

SECTION: Vol 14; No 40; pg 1

LENGTH: 680 words

HEADLINE: Teleport will 'cherry pick' from BellSouth

BYLINE: Don Milazzo

DATELINE: Birmingham; AL; US; South Central

BODY:

A New York telecommunications giant is putting its foot down in Birmingham's telephone business, a step that willaccelerate the competition for high-volume commercial accounts.

Teleport Communications Group Inc. is investing some $6.7 million in its market launch downtown, where it isbuilding a fiber optics ring around the business district to provide dial tone service and other communications products.A rival to BellSouth and part of the new breed of industry competitors, Teleport (TCG) expects to have its localnetwork operational by December, according to a company spokesman.

At that point, TCG will join a short but growing list of companies that have this year begun challenging BellSouth forlocal commercial dial tone revenue, namely Maryland-based American Communications Services Inc. (ACSI), Denver'sICG Telecom Group Inc. and West Point, Gao's ITClDeltaCom. Each of these companies maintains some of its owncommunications infrastructure and switches but relies on interconnection agreements with BellSouth to processcustomer calls to residences and other areas it doesn't serve.

TCG--which dubs itself "The other local phone company"--is currently leasing space in Energen Plaza downtown,where it employs 15 technicians. A sales staff will be added shortly to pursue business customers in the area, accordingto Craig Eichelman, a public relations agent for the company's regional headquarter's in Nashville.

"Nationwide, TCG is adding about 1,500 jobs per year," Eichelman said, but he could not speculate on the size ofTCG's eventual employment ranks in Birmingham.

Marcus Belli, TCG's vice president and general manager in Nashville, did not return phone calls seeking comment bypress time.

Founded in 1983, TCG is the country's first and largest competitive local exchange carrier but also packages longdistance, data communications and other capabilities with its dial tone service, Merrill Lynch started the company tofulfill its own communications needs and later expanded it to encompass other large businesses in New York andbeyond.

Backed by $1.3 billion in investment capital from its listing on the NASDAQ exchange, TCG already serves 57 majorU.S. markets and expects to have a presence in eight more--including Birmingham-by the end of the year. Launches. inNashville and Chattanooga are scheduled for November, followed by Knoxville in early 1998.

-'

Unlike BellSouth, TCG and most other competitors will not immediately, if ever, serve residential customers. NotesITC/DeltaCom's Director of Marketing Moss Crosby: "It's just not our target market."

Instead, most fIrms taking advantage of the deregulation ushered in by the federal Telecommunications Act of 1996are content to pursue high-volume clients clustered in metropolitan business districts and suburban corporate centers.Vic Grover, a telecommunications analyst with Sterne Agee & Leach Inc. in Atlanta, said such "cherry picking" is to beexpected in this age of deregulation and fIerce competition.

"They're typically targeting the most profItable segments of the business," Grover said ofTCG and others. "It's a verysuccessful strategy, and Wall Street is anteing up for it."

Last week, TCG's stock hit an all-time high of $53, Grover said, adding that the company's 1996 revenues grewnearly 48 percent from the previous fIscal year to exceed $267 million.

BELLSOUTH spokesman Bill Todd said TCG's plans for the Birmingham market are bittersweet.

"It's another threat to our business customer market," he said. "On the positive side, though, it adds credence to theexistence of competition in the local phone service business."

Although most Bell companies have opened their networks to competitors such as TCG, government regulators-­citing a lack of such competition--have so far rejected applications by at least two Baby Bells to enter the lucrative longdistance market.

"The RBOCs (regional Bell operating companies) kind of have their hands tied right now," Grover said."Deregulation hasn't really opened up the market for them yet."

GRAPHIC: Logo

LANGUAGE: ENGLISH

UMI-ACC-NO: 9813947

LOAD-DATE: October 23, 1997

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Form S-l/A for ITC DELTACOM INC filed on Oct 221997

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1997

REGISTRATION NO. 333- 36683

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

AMENDMENT NO. 3TO

FORM 5-1REGISTRATION STATEMENT

UNDERTHE SECURITIES ACT OF 1933

(EXACT NAME OFDELAWARE

{STATE OR OTHERJURISDICTION OF

INCORPORATION ORORGANIZATION}

ITC/\DELTACOM, INC.REGISTRANT AS SPECIFIED

4813(PRIMARY STANDARD

INDUSTRIALCLASSIFICATION CODE

NUMBER)

IN ITS CHARTER}58-2301135

(I.R.S. EMPLOYERIDENTIFICATION NUMBER)

206 WEST NINTH STREET WEST POINT, GEORGIA 31833 (706) 645-8990(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF

REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ANDREW M. WALKER CHIEF EXECUTIVE OFFICER ITC/\DELTACOM, INC. 206 WEST NINTHSTREET WEST POINT, GEORGIA 31833 (7061 645-8990

(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,OF AGENT FOR SERVICE)

COPIESRICHARD J. PARRINO, ESQ. ,NANCY J.

KELLNER, ESQ. HOGAN & HARTSON L.L.P.555 THIRTEENTH STREET, N.W.

WASHINGTON, D.C. 20004 (202) 637-5600

TO:JERRY V. ELLIOTT, ESQ. SHEARMAN &STERLING 599 LEXINGTON AVENUE NEW

YORK, NEW YORK 10022 (212) 848-4000

~PROXlMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as~cticable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are t~ be offered on

•339 11113/97 12:22 PM

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a delayed or con~inuous basis pursuan~ to Rule 415 under ~he Securities Act of:"933, check the following box. [ 1

If this Form is filed to register additional securities for an offeringpursuant to Rule 462(b) under the Securities Act, please check the following~~x and list the Securities Act registration statemen~ number of the earlier

:ective registration statement for the same offering. :_J- If this Form lS a post-effective amendment filed pursuant to Rule 462(c)under the Securities Act, check the following box and l~st the Securities Actreglstratlon statement number of the earlier effectlve registratlon statementfor the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,please check the followlng box. [ J

CALCULATION OF REGISTRATION FEE

TITLE OF EACH CLASS OFSECURITIES TO BE REGISTERED

Common Stock, $.01 parvalue .

AMOUNT TO BEREGISTERED

5,750,000 shares(l)

PROPOSED MAXIMUMOFFERING PRICE

PER SHARE

$16.50(2)

PROPOSEDMAXIMUM

AGGREGATEOFFERING PRICE

$94,875,000(2)

AMREGIS

$2

(1) Includes 750,000 shares to cover over-allotments, if any.(2) Estimated solely for purposes of calculating the registration fee.(3) Previously paid.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE ORDATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT~L FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS

~~ISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITHSECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATIONSTATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTINGPURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A ++REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE ++SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY ++OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT ++BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR ++THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE ++SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE ++UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ++ANY SUCH STATE. +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++PROSPECTUS (Subject to Completion)

Issued October 22, 1997

5,000,000 Shares

[LOGO OF ITC/\DELTACOM APPEARS HERE]

COMMON STOCK

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ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THECOMPANY. PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THECOMMON STOCK. :7 IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERINGPRICE OF THE COMMON STOCK WILL BE BETWEEN $14.50 AND $16.50 PER SHARE. SEE"UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS TO BE CONSIDERED INDETERMINING THE INITIAL PUBLIC OFFERING PRICE.

THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET,SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, "JNDER THE SYMBOL "ITCD."

SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR INFORMATIONTHAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES ANDEXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIESAND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THEACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY ISA CRIMINAL OFFENSE.

PRICE S A SHARE

UNDERWRITINGDISCOUNTS AND PROCEEDS TO

COMMISSIONS (1) COMPANY (2)PRICE TO

PUBLIC_.Per Share.................................. $Total (3).................................. $

$$

$$

(1) The Company has agreed to indemnify the Underwriters against certainliabilities, including liabilities under the Securities Act of 1933, asamended. See "Underwriters."

(2) Before deducting estimated offering expenses of $750,000 payable by theCompany.

(3) The Company has granted to the Underwriters an option, exercisable within30 days of the date hereof, to purchase up to an aggregate of 750,000additional Shares of Common Stock at the price to public lessunderwriting discounts and commissions, for the purpose of covering over­allotments, if any. If the Underwriters exercise such option in full, thetotal price to public, underwriting discounts and commissions, andproceeds to Company will be $ , $ and $ , respectively. See"Underwriters."

The Shares are offered, sUbject to prior sale, when, as and if accepted bythe Underwriters and subject to approval of certain legal matters by Shearman &Sterling, counsel for the Underwriters. It is expected that delivery of theShares will be made on or about , 1997 at the office of Morgan Stanley & Co.Incorporated, New York, N.Y., against payment therefor in immediately availablefunds.

"'M()RGAN STANLEY DEAN WITTERMERRILL LYNCH & CO.

f339 1l/13/97 12:23 PM

JAR-ONLINE http://www.edgar-onJine.col1ll

J.C. BRADFORD & CO.;'JHEAT FIRST BUTCHER SINGER

, 1997

No person is authorized in connectlon with any offering made hereby to give! information or to make any representations not contained in this

~ospectus, and, if given or made, such information or representations mustnot be relied upon as having been authorlzed by the Company or anyUnderwrlter. This Prospectus does not constitute an offer ~o sell or asolicltation of an offer to buy any securlties other than the Common Stockoffered hereby, nor does it constitute an offer to sell or a solicitation ofan offer to buy any securities offered hereby to any person in anyjurisdiction in which it is unlawful to make such an offer or solicitation tosuch person. Neither the delivery of this Prospectus nor any sale madehereunder shall under any circumstances create any implication that theinformation contained herein is correct as of any date subsequent to the datehereof.

No action has been or will be taken in any jurisdiction by the Company orany Underwriter that would permit a pUblic offering of the Common Stock orpossession or distribution of this Prospectus in any jurisdiction where actionfor that purpose is required, other than in the United States. Persons intowhose possession this Prospectus comes are required by the Company and theUnderwrlters to inform themselves about and to observe any restrictions as tothe offering of the Common Stock and the distribution of this Prospectus.

In this Prospectus references to "dollar" and "S" are to United Statesdollars, and the terms "United States" and "U.S." mean the United States ofAmerica, its states, its territories, its possessions and all areas subject toits jurisdiction.

TABLE OF CONTENTS

PAGE

Prospectus Summary.... 3Risk Factors...................... 10History of the Company 21Use of Proceeds 23Dividend Policy 23Capitalization......•............. 24Dilution. . . . .. . . . . 25Selected Financial and Operating

Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Pro Forma Financial Data 28Management's Discussion andAnalysis of Financial Conditionand Results of Operations 32

Busines s . . . . . . . . . . . . . . . . . . . . . . . . . . 49Management. . . . . . . . . . . . . . . . . . . . . . . . 64

Certain Transactions .Principal Stockholders .Description of Certain Indebtedness .Description of Capital Stock .Shares Eligible for Future Sale ,.Certain United States Federal Tax Consequences for Non-United States Holders ..

derwriters .;Jal Matters .

'EXperts .Available Information .

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Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-lIndex -cc Financlal Statements ·· ·······... F-l

he Company intends to furnish its stockholders with annual reports~ntaining consolidated financial statements audited by an independent publicaccounting firm and quarterly reports containing unaudited consolidatedfinanclal data for the first three quarters of each year.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONSTHAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERINGAND MAY BID FOR AND PURCHASE SHARES OF THE COMMON STOCK IN THE OPEN MARKET.FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."

2

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailedinformation and financial statements, the notes -chereto and the other financialdata contained elsewhere in this Prospectus. Except as otherwise indicatedhereln, all share and per share amounts set forth in this Prospectus (il giveeffect to consummation of the Merger (as defined herelnl and (ii) assume aninitial public offering price of $15.50 per share of Common Stock and noexercise of the Underwriters' over-allotment option. References herein to the"Company" or "ITC/\DeltaCom" refer to ITC/\DeltaCom, Inc. and its subsidiariesand references herein to EBITDA refer to earnings before extraordinary item,preacquisition (earnings) losses, equity in losses of unconsolidatedsubsidiaries, net interest, income taxes, depreciation and amortization.

tain other terms used in this Prospectus are defined in the "Glossary"~earing elsewhere herein.

THE COMPANY

The Company prOVides retail long distance services to mid-sized and majorregional businesses in the southern United States and is a leading regionalprovider of wholesale long-haul services to other telecommunications companiesusing the Company's owned, operated and managed fiber optic network (the"Carriers' Carrier Services"). The Company intends to become a leading regionalprovider of integrated telecommunications services to mid-sized and majorregional businesses in the southern United States by offering such customers abroad range of telecommunications services, including local exchange and longdistance data and voice, Internet and operator services, and the sale andservicing of customer premise equipment (collectively, the "Retail Services")in a single package tailored to the business customer's specific needs. TheCompany had pro forma revenues of approximately $85.4 million for the yearended December 31, 1996 and approximately $54.3 million for the six monthsended June 30, 1997.

The Company provides Carriers' Carrier Services to other telecommunicationscarriers, including AT&T, MCI, Sprint, WorldCom, Cable & Wireless, LCI,Frontier and IXC. The Company's fiber optic network reaches over 60 points ofpresence ("POPs") in ten southern states (Alabama, Arkansas, Florida, Georgia,Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas)and extends approximately 6,000 route miles, of which approximately 3,000 milesare Company-owned and approximately 3,000 miles are owned and operatedprincipally by three public utilities (Duke Power Company, Florida Power &

'ht Company and Entergy Technology Company) and managed and marketed by thepany. The Company expects to add approximately 300 owned and operated route

mIles to its fiber network by the end of 1997 through long-term dark fiberleases. For the six months ended June 30, 1997, pro forma revenue for the

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:ompany's Carriers' :arr~er Services was $14.3 milli~n ana pr~ forma EBITDA asa percentage of revenue ("EBITDA Margin") for 1:he Company's Carr~ers' Carrier3erv~ces was 59~. As of June 30, 1997, on a pro forma Das~s, 1:he Company hadremaining future long-term contract commitmen1:s totaling approximately $75.8

. 11ion. These contracts expire on various dates through 2006 and are expectedgenerate approximately $56.0 million in revenues to the Company through

·?'tJOl, of which apprOXimately $14.5 million are expec1:ed ':8 be realized in 1998.

The Company curren1:1y provides a variety of Retail Serv~ces, including retaillong distance services such as traditional switched and dedicated longdistance, 800/888 calling, calling card and operator serVlces, AsynchronousTransfer Mode (UATM"), frame relay, high capacity broadband pr~vate lineservices, as well as Internet, Intranet and Web page hostlng and developmentservices, and customer prem~se equipment installation and repair. As of June30, 1997, the Company provided services to over 6,600 business customers. TheCompany currently offers Retail Services, other than local exchange services(which are provlded in two markets), in 14 metropolitan areas In Alabama,florida, Georgia, Louisiana, North Carolina and South Carolina and intends toprOVide a full range of Retail Services (including local exchange services) inapproximately 22 additional

3

metropolitan areas throughout the southern United States over the next fiveyears. For the six months ended June 30, 1997, pro forma revenue for theCompany's Retail Services was $40.0 million and pro forma EBITDA Margin for theCompany's Retail Services was 8%.

In August 1997, the Company began offering local exchange services inBirmingham and Montgomery, Alabama by both reselling the services of theincumbent local exchange carrier and using its own sWitching facilities. TheCompany expects to offer local exchange services as part of its Retail Servicesin a total of six to nine markets (including Birmingham and Montgomery) by the

i of 1997, initially by reselling the services of incumbent local exchange~rriers and, where market conditions warrant, by using its own local switchingfacilities.

In connection with offering local exchange services, the Company has enteredinto an Interconnection Agreement (the "Interconnection Agreement") withBellSouth Telecommunications, Inc. ("BellSouth") to (i) resell BellSouth' slocal exchange services and (ii) interconnect the Company's network withBellSouth's network for the purpose of immediately gaining access to all ofBellSouth's unbundled network elements. This agreement will allow the Companyto enter new markets with minimal capital expenditures and to offer localexchange services to its current customer base. The Interconnection Agreementcurrently allows the Company to provide local service on a resale basis or bypurchasing all unbundled network elements required to provide local service ona facilities basis, without using Company-owned facilities. The terms of theInterconnection Agreement, including interim pricing terms agreed to by theCompany and BellSouth, have been approved by state regulatory authorities inmost states, although they remain subject to review and modification by suchauthorities. In addition, the Interconnection Agreement does not resolve alloperational issues, particularly those relating to the collocation of theCompany's equipment with that of BellSouth. The Company and BellSouth arecontinuing to negotiate to resolve such issues. The Company expects that theInterconnection Agreement will provide a foundation for it to provide localservices on a reasonable commercial basis, but there can be no assurance inthis regard and important issues remain unsettled as a result of legal andregulatory developments and related matters. The Interconnection Agreementexpires in July 1999, and there can be no assurance that the Company will beable to renew it under favorable terms, or at all.

3INESS STRATEGY

The Company's objectives are to maintain its leadership position in the

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p~ovision of Ca~~iers' Ca~~ier Services and ~o Decome a ~eadlng p~ovide~ ofRetail Servlces ln the southe~n United States. ~~e Company 1ntends to inc~ease

1ts market sha~e in existing ma~kets and expand 1~tO new markets. ~~e p~lnclpal

elements of the Company's business strategy lnclude t~e followlng:

PROVIDING INTEGRATED TELECOMMUNICATIONS SERVICES TO EXISTING BASE OF MID-~IZED AND MAJOR REGIONAL BUSINESS CUSTOMERS. By provlding additional

telecommunications services such as local telephone service to its existing,well-established base of long distance customers, the Company expects to beable to increase revenues at relatively low incremental cost. 7he Companybelieves that bundling a variety of telecommunicatlons services and presentingcustomers wlth one fully integ~ated monthly billing statement for all of thoseservices will allow lt to penetrate its ta~get markets rapidly and buildcustomer loyalty. The Company believes that there is substantial demand in itstarget markets among mid-sized and major regional business customers for anintegrated package of telecommunications services that meets all of theirtelecommunications needs.

LEVERAGING ITS EXTENSIVE FIBER OPTIC NETWORK. The Company intends to leverageits extensive fiber optic network, which currently reaches over 60 POPs, by (i)continuing to provide switched and transport services to other communicationscarriers throughout its region to enable such carriers to diverslfy theirroutes and expand their networks; (ii) targeting customers that need totransmit large amounts of data within the Company's service region, such asbanks and local and state governments; and (iii) offerlng local exchangeservices to its business customers, which began on a limited basis in thesecond half of 1997, as part of its integrated package of telecommunicationsservices. The Company intends initially to provlde local exchange services byreselling the

4

~ervices of incumbent local exchange carriers and, in some established markets,ing its own local switching facilities. Over time, the Company expects to

~ovide local services primarily using the Company's own switching facilitiesand existing regional fiber optic network, supplemented by unbundled facilitiesof incumbent local exchange carriers or other competitive local exchangecarriers. The configuration of the Company's network enables the Company toexpand its network by installing additional remote local switches, whichoperate in conjunction with the Company's OMS-SOO switches to providefacilities-based local services. Because remote local switches are lessexpensive to purchase and install than OMS-SOO switches, and can be installedmore qUickly than OMS-SOO switches, the Company believes that it will be ableto enter new markets at less expense than many of its competitors. At present,the Company does not plan to construct intra-city local loop facilities.

FOCUSING ON THE SOUTHERN UNITED STATES. The Company intends to continue tofocus on the southern United States in order to leverage its extensivetelecommunications network in the region. The Company believes that itsregional focus will enable it to take advantage of economies of scale inmanagement, network operations and sales and marketing. The regionalconcentration of the Company's network also provides an opportunity forimproved margins because a high portion of the Company's customers'telecommunications traffic originates and terminates within the region. TheCompany also believes that its regional focus will enable it to build on itslong-standing customer and business relationships in the region.

BUILDING MARKET SHARE THROUGH PERSONALIZED CUSTOMER SERVICE. The Companybelieves that the key to revenue growth in its target markets is capturing andretaining customers by emphasizing marketing, sales and customer service.Management believes that customers prefer one company to be accountable for

'eir telecommunications services, and that a consultative, face-to-face sales,d service strategy is the most effective method of acquiring and maintaining

a high quality customer base. The Company seeks to obtain long-term commitmentsfrom its business customers by responding rapidly and creatively to their

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~elecommunica~ions needs. The Company cu~ren~ly 8pe~a~es l~ sales offices in.~abama, rlo~ida, Seo~g~a, Louisiana, No~th Carol~na and S8uth Carolina. Eachsales office is staffed by personnel capable of market~ng all cf the Company'sp~oducts and providing comprehensive support to the Company's customers. :n the

~ure, the Company expects to expand significantly its direct sales force and=n sales offices in additional majo~ and secondary population centers in the

~~uthern United States.

EXPANDING ITS FIBER OPTIC NETWORK AND SWITCHING FACILITIES. The Companyexpects to expand its fiber optic telecommunications network and switchingfacilities to include additional markets within the southern United States. TheCompany cu~rently owns and operates approximately 3,000 ~oute miles of fiberoptic network extending from Georgia to Texas, with an additional 300 owned andoperated route miles expected to be added by the end of 1997. The Company alsomarkets and manages capacity on 3,000 additional network route miles throughits strategic ~elationships principally with public ut~lities. In addit~on, theCompany has a buy-sell agreement with Carolinas fibernet, LLC, which managesfiber optic facilities in North Carolina and South Carolina. This agreementenables the parties to buy and sell capacity on each other's networks andallows the Company to provide customers with access to POPs throughout thosestates. The Company believes that, by continuing to combine its owned networkwith the networks of public utilities and by adding switching facilitiesthroughout its network, it will be able to achieve capital efficiencies andrap~dly expand its netwo~k in a cost-effective manner.

LEVERAGING PROVEN MANAGEMENT TEAM. The Company's management team consists ofexperienced telecommunications managers who in the past have successfullyimplemented a customer-focused long distance telecommunications strategy in thesouthern United States. Members of the team include Andrew Walker, ChiefExecutive Officer of the Company, Foster McDonald, President of the Company,and Douglas Shumate, Chief Financial Officer of the Company. ITC HoldingCompany, Inc. ("ITC Holding"), a diversified company with substantial holdings'~ telecommunications businesses operating in the southern United States, was

~ Company's sole stockholder prior to the Merger. The Company anticipates'~lat the experience and contacts of ITC Holding's management and certain of itsstockholders in the telecommunications industry will enhance the Company'sdevelopment.

5

HISTORY OF THE COMPANY

ITC/\DeltaCom was incorporated in March 1997 as a wholly owned subsidiary ofITC Holding to acquire and operate ITC Holding's Retail Services and Carriers'Carrier Services businesses. The Company acquired such businesses on July 25,1997 in the Reorganization described below.

BACKGROUND. ITC Holding has provided operator and directory assistanceservices since March 1992 through its subsidiary, Eastern Telecom, Inc., whichdoes business as InterQuest ("InterQuest"). Carriers' Carrier Services havebeen offered since April 1992 through Interstate FiberNet, a partnershiporiginally formed by ITC Holding (with a 49% interest) and SCANACommunications, Inc. ("SCANA") [with a 51% interest). In August 1994, ITCHolding acquired SCANA's interest in Interstate FiberNet through ITCTransmission Systems II, Inc., a wholly-owned subsidiary of ITC Holding("Transmission 11"1. Also in August 1994, ITC Holding and SCANA formed a secondpartnership, Gulf States FiberNet, to construct and operate a fiber optic routeprimarily between Atlanta, Georgia and Shreveport, LOUisiana with severalsupplemental spur routes. In a transaction consummated in March 1997 (the "GulfStates Acquisition"), ITC Holding acquired SCANA's 64% partnership interest in

1f States FiberNet and certain fiber and fiber-related assets, including a,,_gnificant customer contract for network services in Georgia (the "GeorgiaFiber Assets"). Following the Gulf States Acquisition, ITC Holding contributedthe remaining 64% interest in Gulf States fiberNet to Gulf States Transmission

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Systems, Inc., a wholly owned subs~diary of ITC Holding :"~ulf StatesTrans~ss~on"), and the Georgia Fiber Asse~s ~o ITC Trans~ssion Sys~ems, Inc.,a wholly owned subs~diary of ITC Holding ("Transm~ss~on":. :-4embers of theCompany's managemen~ have been managing the bus~nesses of both Interstate

~erNet and Gulf States FiberNet s~nce their inception.

-'In January 1996, ::hrough its acquisition (the "DeltaCom Acquisition") ofDel taCom, Inc. ("Del taCom"), ITC Holding entered the retail long distancebusiness and acquired several fiber optic routes within the state of Alabamathat complemented the eXisting networks operated by Interstate FiberNet(including a fiber optic route from Atlanta, Georgia to Columbus, Georgia) andGulf States FiberNet. DeltaCom, a prov~der of telecommunica~ions services sinceits inception in 1982, provides long distance serv~ces to mid-sized bus~nesses

primarily in Alabama. In July 1996, DeltaCom purchased substantially all of theassets of Viper Computer Systems, Inc. ("ViperNet"), "Which provides Internetaccess, Web-hosting and Web page development services to business customers.

To finance the DeltaCom Acquisition and to refinance existing DeltaCom debt,ITC Holding incurred approximately $74.0 million of indebtedness, which waspushed down to the Company (the "DeltaCom Indebtedness"). The aggregateconsideration paid by ITC Holding ~n the Gulf States Acquisition wasapproximately $27.9 million, of which $10.0 million consisted of an unsecurednote (the "SCANA Note"), "Which has been assumed by a subsidiary of the Company,and $17.9 million consisted of ITC Holding preferred stock. In connection withthe Gulf States Acquisition, Gulf States Transmission borrowed $41.6 millionunder a credit facility (the "Bridge Facility") with Nat~onsBank, N.A., torefinance a project loan incurred by Gulf States FiberNet.

SENIOR NOTE OFFERING. On June 3, 1997, the Company completed the sale of$200.0 million principal amount of its 11% Senior Notes due 2007 (the "SeniorNotes"). The net proceeds from the sale of the Senior Notes (the "Sen~or NoteOffering"), other than the portion of such proceeds invested in U.S. government·Qcurities (the "Pledged Securities") pledged to secure and fund the first six

eduled interest payments on the Senior Notes, were released to the Company"~n consummation of the Reorganization.

REORGANIZATION. On July 25, 1997, ITC Holding contributed to the Company in aseries of transactions the businesses of Interstate FiberNet, Gulf StatesFiberNet, DeltaCom and InterQuest (such transactions collectively referred toherein as the "Reorganization"). In connection with the Reorganization,approximately $31.0 million of the $74.0 million of the DeltaCom Indebtednesswas forgiven by ITC Holding and contributed

6

to the Company as additional equity. Following the Reorganization, the Companyrepaid the remaining $43.0 million of the DeltaCom Indebtedness, accruedinterest on all $74.0 million of such indebtedness and the $41.6 million ofindebtedness outstanding under the Bridge Facility and accrued interest thereonwith a portion of the net proceeds from the Senior Note Offering.

HOLDING COMPANY MERGER. On October 20, 1997, as part of a reorganization ofthe ITC Holding group of companies, ITC Holding transferred all of its assets(other than its stock in the Company) and all of its liabilities to anotherentity and then merged (the "Merger") with and into the Company, which is thesurviving corporation in the Merger. In connection with the Merger, holders ofITC Holding common stock and convertible preferred stock received shares of theCompany's Common Stock and Series A Convertible Preferred Stock (the "Series APreferred Stock"), respectively.

THE OFFERING

__,.mon Stock offered hereby .. 5,000,000 sharesCommon Stock to beoutstanding after the

·339 11/13/97 12:23 PM

16

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cro••-IXaII1DaC1oa by Ml'. Micba.l Lamen

cro••-hUS1cation by Itt. IU.cba~d ln19htcn..-IxaaiDatioa by MI. v.... POftlr

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IlI-Dir.ct !JWI1DaC1OA by Ml'. N11Ce TwOlllly

OUlnion. by Juc1gl ..inar.

••-Cro•• Ixalll1Dation by Mr. Miolla.l Laura

llI-ero.. IxaII1netioll by Mr. Ilic:Jlard JtzUgbt

.1-D1rlot llu1I1natlon by M1'. Miltl 'l'we-ey

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22 Di~.at. IXUlinatlon of Mvar.. Witn••• by Mr. Mik. '1'WcauIy U-52

23 Dir.ct: IXn1Dati0trby MI'. Mlcba.l L_r. 62-70

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MR. RIOWUl IOlICJHT

Dlract Examinatlon of Mvar.a Wlen••• by M%. Mik. Twomey 54-62

Na~.tlV1 T••tlmoay by MI'. Richard Kniqct 77-12

Cro••-IXUI1aatlon by Ml'. Mia Twomey 82-85

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bu.1M" ba.ad on all the !nva.l:1UDU in eia and my inva.~or. and

flY fUl11.y &D4 my pannu. ~t eUy .1101114 up :h. nc•• eel put ma

CNt: Clf tN.iM•• ju.e bleau•• eUy WaAe to. I ~u I .bauld be

graQdtath.r.d in b•••d on thll face that I .ntered thi. ~ina.. and

llItar.d r:l1e.. HoM. and paid for the.. au. c:cau.ng tCl my hlClll.. at

r ••ldelleia1. rae... ~e" all I have ~e .ay.

J1mQI Mlzau. All right. Ma'. 't'waIIay, c!c YOIl ~- &fty qu••ticm.'

MIl. "1'WQMIY: AI wieh Dr. 1'al...r, I ba". .CllIIIl que.c:i=- b••ad on what

h.'. ju.e .aid.

caa"-RJl'TDnQl or w, mwr n p · :mPI!'

MIl. '1'WClMIT: Mr. 1t111ghe, ycu ca.tiU.d that: you 1II&de the ...... ~yp••

-- I think that'l a quO~1 of cClftaen=icm ChaJ:9I.. rou "aid ehl

.... ~yp. of oon.truct1oc charge. th.t Dr. pal...: paidt 1. that

right'

MIt. KHIQHT: 'l'bat·. conace.

Q. lIbae .a. eh. lIIIOW1e of clIO•• ClCUtru=iClft ClhUga.?

A. I beUevl they wue about U,200.

O. Now, you t ••tifi.d that you -- I V&DC to go back a littl. to

thi. PRI, pl:ll11&ZY raa1dallc:a - - pl'111&1Y rat. ISI:lN 11n.. ~hat you ••1:.

talking about. Dr. palmal: t ••tifi.4 that it WOUldn't 111&•• any

.coACllllic: ••Il.. ae aU to be 111 W.U1••• a. all %J2ta¥ut p%'O\'1dlr with

41.1-up liM. at a tN.in... rata, beaala•• you COIl1d have lnoth.1:

type Clf dld1ear..d facU:\.ty to prO¥i.da that, con-ace? Did you hl.r

Me Illy that?

A. Ya., I did.

Q. NOW, yOl.l arl a=ua11, ill !:Nainl•• 011 the IlOnh .l1Or••ir.h

di.l-up buain••a I'ata 11D.', COlTect?

A. That'. CCft'llct.

O. Oleay. Now, you lIlid thar. you are m1grat1nq tho•• lift•• from

buain.a. race d1al-up linea to a primary ratl IiD. lin., co~Ct?

A. Conlct.

Q. )1'_. that 1lI1!1%ae1cft lIa. nCl~ine .hat,ce~r to do with en1,

earift, correct?

-1 A. W.~l, actually, it de•• , D.cau•• it .a••ug§e.t.6 ~a••d on the

2 ottar ••11South did to me or actually Ch.y cam. to me and oft.r.d .-

] they plal1 to ra.enctun IllY a'tworA:. And that'" you lczunr, I maaD.

t that'. bow I fClW\d out about all thll .tuft. So, you Mew, ttl.., dies

5 QCIlIle to me &n4 talk to IIIlI al:lout that.

6 Q. Oltay. I..t lIa btl a littla bit IlIOn pnei... You ara alnady

7 payit\lJ bu'in••' l'a1:.' &t tAcHla 10C&t1=- CI: cha nann ahor•• corr.ct?

• A. Tbac'. ~ot.

, Q. '0, ehi. tarttr ~, it it'. Appl:Oftct, w111 not aftlet in any

10 .ay your buain••• on the aORb .heft. coneot?

11 A. 'l'hat'. cornc:c.

12 Q. And you ta.titi.ct ea~ll.r abaut, .all, it'l all tlact togethar,

13 but it WOIIo't arfact the raul that you pay on the north lbora tor

16 thoaa dial-up liDl', eo~cc?

11 .... ya., ehay'11 aotually go dowIl, beoau., I WCIIS' t b. g01ng thl'ough

l' 'alllouCh.

17

18

11

20

Z1

22

23

26

25

2&

27

28

31

30

31

32

U

Q. Olcay. Hew f you ara lIIi;ratift9 evar to IlImf voluntarily,

corract? I mean, thac" yeNr budD". decidcm to 40 th&c?

A. '1'haC'I COZ'Yle:t:.

Q. And you'r. actually not u.iq ••Ulouth. ar. you?

A. I plan not to. Wall, in raa11ty. X .. u.ln; .a~lSouth, buc, no,

I'm cot.

Q. You' n buyiq ••:rvic:a tlU:ough ACI1, eon.e:t:1

.... Via ..me. thrOugll ••U.outh.

Q. Wbo 11 I r ••alllr?

A. That', corr.ct.

Q. Oltay. And you allo t'ltitla4 that you latancl to migrate tho••

ra.idanth1 liDa' to primary rat. IIml AI 100II a. thl .c:.n4aZ'ct. an

'It, corract?

A. No, I'm not •• ,oon •• the Itanclarcll ar•••t. It would cSep.nc1

on the ~n'ent ~.tClller bal. thaI: •• ~rr.Jltly ha". DOW. AI

~.tOlUr, move CD ,NS they WlUlt Ult aac... aa4 •• that c1_ roll, on

I will reduce my rl.1dantial liD.' to a point wbare I hop.Cully w111

u

1 not ha". any reeic!aedal 11MI a: :luu: point. !Sut .. dm2' t know how

2 1=9 that I. gciq to be. That couleS be U W, till year. frOlll now.

J Q. ~y. But tU aU.~.ti= f~ r ..ic!antial l1na. C7YWr :0 pd_ry

• rat. IstlW 11 not c!apendant. on wh.th.r thl tad!! i. apprCl'V1lc!. It

5 _eftd. on wbat your C'U.tQlllQ" want ill thl .ay of '11:"1e., con-ct.?

, A. That'.·· .111, no. I~ the t.ari!! i. approvaeS. than I will havi

, eo autcma:lcal1y I will go to all ,ar type lacvle-. r .il1 have

• :0 j\mk prClbably no,ooo worth of equipuZlt and purcba.., in ordar

J to replace it, alac.t '100,000 worth of aquipmeDt.

10 O. Oltay. ROW you baw, in~ lfOrID, j\mUeS that t~ of

11 IqI&ipman: on t.hl north .~n voluntarily, c:ornet1

12 A. I junkad, ya., .OMa of it. Ya••

l] O. Which ha. noe1l:Lng eo do wi th tAil urU!, cornet ?

16 A. NO.

l' Q. Okay. I ..an. Ch. ae...r .... i. that corrlct?

l' A. Y••, that ••• corrlet.

n Q. TI., it .al cornat. Oltay. Did. you e..ti!y that you coule! no:

II obtain r ••idlntia1 lin.. t~ anotUr ~aay?

11 A. That·. ~IClt.

20 O. Even on • re.014 bali.?

21 A. ~n on a r.lo14 ba.i•.

22 Q. Oi4 you 'P1cifically rl~••t that AClI give you rlli4antial

23 II~ca?

2. A. t a.ked t.h... They ..1e! they wt:N14 not give n.1CSactial .arvici.

25 Q. ~ld it .urprill you to 1••~ chat • w1tnal' for ACI% t ••titlld

21 1n thtl h.adDV rOCD lAie wau in UOther c!calcat that if aaulS I:ly

27 CU.tOl\\lln to provic!a raeid.llle1a1 .Inie., thly weNle! 40 10?

2. A. That would lurpri.. 1M.

2' C. Who die! you .peak to at AC'%?

30 A. Mike Orban.

31 Q. Hike who?

32 A. Oroban. O-K-a·A·N. An4 J1m ROberto.

33 Q. An4 you rlqu••tld a r ••14antial linl tron tham?

-

--

. ,

1 A. I a.ked it they could provi~ it.

2 Q. Azld th.y told you no.

3 A. tnI·huh.

4 JmlCD MlnmJUI: N1Wl: Wal your aDa"'1'?

5 MIl. 1CHIGJl'r: Wbat'. that?

, JOCCII MlINIllS I 'lou .dd r and ebay tolel you, no • - what d14 you .ay?

, MIl. 1OI1CJlt'r: Th-V .aid tAllY don't ~ r ..i~ntlal liM.. Th-V laid

1 tbey do ~.il1.a. l1n••.

II .:rtmCD MI%l1IU I Ho, I lIla_, Mr. orw-y .aiel, .11cl t~-v tolc! you, no.

10 ACcl did you ..y, ye•• that'l COI'\'IIct. I jUlt didn't b••r your

11 reapon.'.

12 MR. XNIGHT: 'l'I. Oh, yel. I'm .orry. 'll.. Y.I.

11 .nJI)CIJ: NBIJTI1UII I'D IOny.

14 MR. '1'WOMIY: I ha.,. 110 C\lftha:r qulac10D1.

15 JtIDCD MID1IJlS: Ally qu.nionl?

11 MR. UMIII. No qu.atlonl.

11 JtmQI MlIHlRS: Ally qu.ui=l? ThIll I haw I couple.

11 9PIII'll- U .mpcg "'1PP'!

11 JaDCIZ MllH1U, I mo.r that you .In -- .IleD you wen telt1fylng you

20 ••1d that therl warl 11llnty of di.cu••lem. b.t•••n you and S.11. at

21 the tl.. you ••ra putting in your llDaI a. to .h.t tbl P~OII "al

22 I' oppoI.d to gr. P.~r'l tl.tl~ .blr. 1t jUlt didn't ••-m to ba

::u • nllvallt 1101111: of dilcu..1on. You ,aiel that than WI:r.

2. ~r••tlon•••

25 MI. JQrICJHr: Sun.

2' Q... whul you c11IC1.1...d exactly whal: you wen 111.1Ul11\9 to do wlth

27 your lln.,?

2. A. Uh·huh.

2' Q. How did you fint DeCOll\ll .wa:. that you could do thb and g.t

30 t~'I' lin•• It I :11141ntial rat.?

31 A. W••,Ic.d BallSoutlL

32 Q. How? JUlt till m. how.

33 A. I callld .nc! alklel th.m it I w&Gcld 100 11n•• hlr. at my hOUI.,·