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 1, 1997
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 1-8607 58-1533433
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(404) 249-2000
Item 5. Other Events
Sale of Optus Communications
On July 1, 1997, BellSouth announced that it had agreed to
sell its interest in Optus Communications to Cable and
Wireless, a U.K. telecommunications company. See Exhibit
99a for a complete copy of the related press release.
Sale of ITT World Directories
On July 16, 1997, BellSouth announced that it had sold its
20% ownership interest in ITT World Directories Inc. to ITT
Corporation. See Exhibit 99b for a complete copy of the
related press release.
Second Quarter 1997 Earnings
On July 21, 1997, BellSouth announced earnings for the
second quarter of 1997. See Exhibit 99c for a complete copy
of the related press release.
1997-1998 Earnings Growth
BellSouth believes that normalized earnings growth could be
in the low double digits through 1998. This forward-looking
statement is based on a number of assumptions including, but
not limited to: (1) economic growth and demand for wireline
and wireless communications services continues in
BellSouth's service territories; (2) BellSouth
Telecommunications, Inc. is successful in furthering its
cost reduction efforts; (3) the final resolution of the
access reform and universal service orders of the FCC is
reasonably revenue neutral; (4) local service competition
does not have a significant adverse impact on earnings
through 1998; and (5) the current level of economic,
monetary and political stability continues in foreign
countries in which BellSouth does business. Any
developments significantly deviating from these assumptions
could cause actual results to differ materially from those
in the above forward-looking statements.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
99a Press Release - Sale of Optus Communications
99b Press Release - Sale of ITT World Directories
99c Press Release - Second Quarter 1997 Earnings
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.
BELLSOUTH CORPORATION
By: /s/ W. Patrick Shannon
W. Patrick Shannon
Vice President and Controller
July 21, 1997
Exhibit 99a
ATLANTA--BellSouth Corporation (NYSE: BLS) announced today
that is has agreed to sell its 24.5 percent stake in
Australia's Optus Communications to Cable & Wireless, a U.K.
telecommunications company.
BellSouth will receive A$2 (US$1.50) per share in cash for
its 490 million shares, and in addition, Cable & Wireless
will transfer to BellSouth its 22.3 percent interest in
Occidente y Caribe Celular S.A. (Occel), a Colombian
cellular communications company. This agreement is subject
to government approvals.
"This decision was a difficult one for us to make, as our
experience with Optus has been overwhelmingly positive. We
believe, however, it is the right decision for both Cable &
Wireless and BellSouth, based on our respective strategies
for international growth," said Charles C. Miller, president
of BellSouth International. "BellSouth's investment in
Optus has not only been a good financial investment but has
also provided BellSouth an excellent opportunity to hone
competitive marketing skills, which are proving very
valuable in our increasingly competitive domestic market."
BellSouth is a $19 billion communications company. It
provides telecommunications, wireless communications,
directory advertising and publishing, video, Internet and
information services to more than 27 million customers in 20
countries worldwide.
###
For more information about BellSouth, visit the BellSouth
Web page at http://www.bellsouth.com. Also, BellSouth news
releases dating back one year are available by fax at no
charge by calling 1-800-758-5804, ext. 095650.
Exhibit 99b
ATLANTA--BellSouth Corporation (NYSE: BLS), through its
wholly owned subsidiary, L.M. Berry and Company, has sold
its 20 percent ownership interest in ITT World Directories
Inc. to ITT Corporation (NYSE: ITT) for $254 million.
ITT World Directories has also paid a dividend to both ITT
Corp. and BellSouth. BellSouth's share of the dividend was
$11 million, providing total proceeds to BellSouth of $265
million.
ITT World Directories, an information services unit of ITT,
publishes directories primarily in Belgium, Holland and
Portugal and has other publishing operations in Europe,
Asia, Africa and the Caribbean.
"BellSouth has had an excellent, long-standing relationship
with ITT World Directories. This transaction, however,
gives BellSouth a good return on its investment and the
opportunity to reallocate resources at a time of dynamic
change in the telecommunications and yellow pages publishing
industries," said Donald J. Perozzi, group president of
advertising and publishing for BellSouth.
BellSouth is a $19 billion communications services company.
It provides telecommunications, wireless communications,
directory advertising and publishing, video, Internet and
information services to more than 27 million customers in 20
countries worldwide. BellSouth's subsidiary L.M. Berry
markets and publishes more than 1,300 directories for
BellSouth and approximately 200 independent telephone
companies.
For more information about BellSouth, visit the BellSouth
Web page at http://www.bellsouth.com. Also, BellSouth news
releases dating back one year are available by fax at no
charge by calling 1-800-758-5804, ext. 095650.
##
Exhibit 99c
ATLANTA - BellSouth Corporation (NYSE: BLS) reported a 12.7 percent
increase in second quarter earnings per share (EPS) before a special
item. The company said telephone customers in the South installed
additional lines in record numbers, marketing continued to drive high
growth in convenience features, and its wireless operations expanded
further through customer growth, international acquisitions and new
services.
It was BellSouth's 18th consecutive quarter of improved operating
results, even though reported EPS of 66 cents reflected a previously
disclosed charge of 5 cents for a regulatory settlement in South
Carolina. Without the charge, EPS would have been 71 cents. EPS in
the second quarter a year ago was 63 cents. Net income in the three
months ended June 30, 1997 was $654 million, including the charge of
$47 million, compared with $629 million in the second quarter of 1996.
"Our strategies are working," said Duane Ackerman, BellSouth's
president and chief executive officer. "We're continuing to achieve
excellent current results, while making the investments we need to
keep earnings growth going in the future. Our recent award of a
cellular license in Brazil is one of those investments."
BellSouth continues to satisfy consumers' appetite for additional
telephone lines in the home. Through innovative promotions, new
distribution channels and special offers that bundle services,
BellSouth installed a record 121,000 additional lines for residential
customers in its nine-state region during the second quarter.
Additional lines are now in 13 percent of the homes BellSouth serves.
In all, BellSouth increased total residential and business access
lines to 22,717,000, an annual growth rate of 4.6 percent.
As data communications command a rapidly expanding share of network
capacity around the world, BellSouth continues to meet the needs of
customers with a wide range of data services for consumers, small
businesses and large businesses. Highlighting BellSouth's success in
these growth markets is BellSouth.net1(sm) service. Since its launch
last August in just two cities, the consumer Internet service has
expanded to 44 markets in the South. BellSouth.net achieved the
100,000 customer milestone during the second quarter.
"Our domestic and international strategies are all built on marketing
an array of services, including long distance, that give our customers
reliability, simplicity and value in one convenient package," said
Ackerman.
Sales of BellSouth's calling features and convenience services
continued to grow rapidly, posting a 25 percent increase to 33.4
million features activated. Revenues from services such as Call
Waiting and MemoryCallr service voice messaging were $322 million in
the second quarter of 1997, up 26 percent from the same three months
of 1996. Caller ID and Caller ID Deluxe combined grew more than 50
percent in the past year.
Rapid growth continued in BellSouth's wireless communications
businesses, both in the U.S. and in international markets. The
company's U.S. cellular operations ended the second quarter with 3.9
million customers, an annual growth rate of 21 percent. BellSouth
Mobility DCS, the new digital wireless service launched by BellSouth
and its partners in the Carolinas and Eastern Tennessee a year ago,
now has a total of more than 106,000 customers.
In BellSouth's international cellular markets, customers reached 1.8
million, an increase of 83 percent since June 30, 1996. With the 1997
acquisitions of telecommunications companies in Peru, Nicaragua and
Ecuador, BellSouth now serves cellular markets in 14 countries with
188 million potential customers. In addition, two weeks ago in
Brazil, a company headed by BellSouth was awarded a license to operate
cellular services in Sao Paulo, the third largest city in the world
with a population of 18 million.
Before a $72 million reduction related to the regulatory settlement,
BellSouth's second quarter revenues increased 8.1 percent compared
with the same quarter of 1996. Total operating expenses increased 7.8
percent, reflecting growth in wireless and development of new
businesses such as BellSouth.net and BellSouth Mobility DCS. Cash
operating expenses in BellSouth's telephone operations were up just
2.3 percent.
BellSouth is a $19 billion communications services company. It
provides telecommunications, wireless communications, directory
advertising and publishing, video, Internet and information services
to more than 27 million customers in 20 countries worldwide.
NOTE: For more information about BellSouth Corporation, visit the
BellSouth Web page at http://www.bellsouth.com/
PRELIMINARY
July 21, 1997
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Amounts)
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1997 1996 1997 1996
Operating Revenues:
Network and related
services
Local service $ 2,068 $ 2,021 $ 4,172 $ 3,951
Interstate access 928 871 1,845 1,780
Intrastate access 186 202 404 420
Toll 186 198 360 405
Wireless communications 815 691 1,580 1,316
Directory advertising
and publishing 400 367 761 685
Other services 340 270 646 604
Total Operating Revenues 4,923 4,620 9,768 9,161
Operating Expenses:
Cost of services and
products 1,536 1,499 2,958 2,967
Depreciation and
amortization 977 917 1,937 1,820
Selling, general and
administrative 1,186 1,016 2,296 2,003
Total Operating Expenses 3,699 3,432 7,191 6,790
Operating Income 1,224 1,188 2,577 2,371
Interest Expense 187 174 370 354
Gain on Sale of Paging
Business -- -- -- 442
Other Income, net 33 16 26 52
Income Before Income
Taxes 1,070 1,030 2,233 2,511
Provision for Income
Taxes 416 401 886 912
Net Income $ 654 $ 629 $ 1,347 $ 1,599
Weighted Average Common
Shares Outstanding 992 994 992 994
Dividends Declared Per
Common Share $ .36 $ .36 $ .72 $ .72
Earnings Per Share $ .66 $ .63 $ 1.36 $ 1.61
PRELIMINARY
July 21, 1997
BELLSOUTH CORPORATION
EARNINGS SUMMARY
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1997 1996 1997 1996
Net Income
Reported Net Income $ 654 $ 629 $ 1,347 $ 1,599
South Carolina Regulatory
Settlement(a) 47 -- 47 --
Gain on Sale of Paging
Business(b) -- -- -- (344)
Adjusted Net Income $ 701 $ 629 $ 1,394 $ 1,255
Earnings Per Share
Reported Earnings Per
Share $ .66 $ .63 $ 1.36 $ 1.61
South Carolina Regulatory
Settlement (a) .05 -- .05 --
Gain on Sale of Paging
Business (b) -- -- -- (.35)
Adjusted Earnings Per
Share $ .71 $ .63 $ 1.41 $ 1.26
(a) Represents the after-tax effect of a regulatory settlement in
South Carolina which occurred in second quarter 1997.
(b) Represents the after-tax gain on the sale of BellSouth's paging
business which occurred in first quarter 1996. The pre-tax gain
on the sale was $442.
PRELIMINARY
July 21, 1997
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Per Share Amounts)
June 30, December 31,
1997 1996
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,308 $ 1,178
Temporary cash investments 58 51
Accounts receivable, net of
allowance for uncollectibles
of $198 and $180 4,064 4,087
Material and supplies 409 451
Other current assets 487 531
Total Current Assets 6,326 6,298
Investments and Advances 2,816 2,430
Property, Plant and Equipment:
Property, Plant and Equipment 51,364 50,059
Accumulated Depreciation 29,424 28,234
Property, Plant and
Equipment, Net 21,940 21,825
Deferred Charges and Other
Assets 608 610
Intangible Assets, net 1,705 1,405
Total Assets $ 33,395 $ 32,568
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 2,666 $ 2,124
Accounts payable 1,661 1,446
Other current liabilities 2,870 2,871
Total Current Liabilities 7,197 6,441
Long-Term Debt 7,406 8,116
Deferred Credits and Other
Liabilities:
Accumulated deferred income
taxes 1,906 1,899
Unamortized investment tax
credits 246 278
Other liabilities and
deferred credits 2,657 2,585
Total Deferred Credits and
Other Liabilities 4,809 4,762
Shareholders' Equity:
Common stock, $1 par value 1,010 1,009
Paid-in capital 7,761 7,697
Retained earnings 6,178 5,541
Shares held in trust and
treasury (533) (532)
Guarantee of ESOP debt (433) (466)
Total Shareholders' Equity 13,983 13,249
Total Liabilities and
Shareholders' Equity $ 33,395 $ 32,568
PRELIMINARY
July 21, 1997
BELLSOUTH FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
Earnings per share $ .66(a) $ .63
Return on average common
equity (annualized) 18.8% 20.1%
Return on average total
capital(annualized) 13.3% 13.6%
Weighted average common shares
outstanding (millions) 992 994
Dividends per share $ .36 $ .36
Property additions (millions) $ 1,114 $ 1,279
At June 30,
1997 1996
Common shares outstanding
(millions) 993 994
Debt ratio 41.8% 43.6%
Total employees 82,969 83,133
(a) Includes an after-tax charge of $47 ($.05 per share) related to a
regulatory settlement in South Carolina.
PRELIMINARY
July 21, 1997
BELLSOUTH FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
Earnings per share $ 1.36(a) $ 1.61(b)
Return on average common
equity (annualized) 19.6% 25.8%
Return on average total
capital (annualized) 13.8% 16.7%
Weighted average common shares
outstanding (millions) 992 994
Dividends per share $ .72 $ .72
Property additions (millions) $2,015 $2,181
(a) Includes an after-tax charge of $47 ($.05 per share) related to a
regulatory settlement in South Carolina.
(b) Includes an after-tax gain of $344 ($.35 per share) from sale of
paging business.
PRELIMINARY
July 21, 1997
BELLSOUTH TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Operating Revenues:
Local service $ 2,068 $ 2,021 $ 4,172 $ 3,951
Interstate access 928 871 1,845 1,780
Intrastate access 186 202 404 420
Toll 186 198 360 405
Other 386 353 778 744
Total Operating Revenues 3,754 3,645 7,559 7,300
Operating Expenses:
Cost of services and
products 1,292 1,284 2,497 2,544
Depreciation and
amortization 826 809 1,645 1,607
Selling, general and
administrative 654 618 1,284 1,222
Total Operating Expenses 2,772 2,711 5,426 5,373
Operating Income 982 934 2,133 1,927
Interest Expense 134 135 268 274
Other Income (Expense),
net (1) 6 1 17
Income Before Income
Taxes 847 805 1,866 1,670
Provision for Income
Taxes 316 295 702 621
Net Income $ 531 $ 510 $ 1,164 $ 1,049
PRELIMINARY
July 21, 1997
BELLSOUTH TELECOMMUNICATIONS FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, June 30,
1997 1996
Property additions (millions) $ 844 $ 960
Access minutes of use
(millions):
Interstate 18,552 16,847
Intrastate 5,873 5,235
IntraLATA toll messages 234 259
(millions)
At June 30,
1997 1996
Debt ratio 48.2% 50.1%
Telephone employees 62,779 66,439
Network access lines in
service (thousands) 22,717 21,721
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
Property additions (millions) $1,576 $1,698
Access minutes of use
(millions):
Interstate 36,273 33,507
Intrastate 11,425 10,353
IntraLATA toll messages
(millions) 464 540
PRELIMINARY
JULY 21, 1997
BELLSOUTH CORPORATION
CELLULAR OPERATING INFORMATION (UNAUDITED) (7)
($ THOUSANDS) Second Second
Quarter Quarter
NOTES 1997 1996 % Change
DOMESTIC OPERATIONS
Cellular Revenues, (1), (4) $ 625,731 $ 560,999 11.5%
net
Operating Expenses (1) 340,961 310,019 10.0%
Depreciation Expense (1) 92,545 71,504 29.4%
Amortization of
Intangibles (1) 18,333 16,211 13.1%
(including
goodwill)
Total Operating (1) 451,839 397,734 13.6%
Expenses
Operating Income (1) 173,892 163,265 6.5%
Other Expenses (1) 77,423 69,020 12.2%
(includes interest
and taxes)
Net Income (1) $ 96,469 $ 94,245 2.4%
Operating Cash Flow (1), (6) $ 284,770 $ 250,980 13.5%
Cash Operating (6) 45.51% 44.74% 1.7%
Margin
DOMESTIC CELLULAR DATA
Population Served:
Control Basis (2) 52,196,000 51,298,000 1.8%
Equity Basis (3) 40,671,000 39,991,000 1.7%
Customers Served:
Control Basis (2), (8) 4,836,000 4,018,000 20.4%
Equity Basis (3), (8) 3,901,000 3,231,000 20.7%
Average Monthly (5) $ 52 $ 57 -8.8%
Service Revenue per
Customer
Penetration Rate (3) 9.60% 8.08% 18.8%
Property, plant and (1) $3,403,676 $2,731,060 24.6%
equipment
PRELIMINARY
JULY 21, 1997
BELLSOUTH CORPORATION
CELLULAR OPERATING INFORMATION (UNAUDITED) (7)
($ THOUSANDS) Second Second
Quarter Quarter
NOTES 1997 1996 % Change
DOMESTIC PCS DATA
Population Served:
Control Basis (2),(10) 24,032,000 12,226,000 96.6%
Equity Basis (3),(10) 19,428,000 8,063,000 141.0%
Customers Served:
Control Basis (2) 106,000 -- --
Equity Basis (3) 65,000 -- --
SELECTED INTERNATIONAL OPERATING DATA (9)
Cellular Revenues (1) $ 382,995 $ 230,839 65.9%
Population Served:
Control Basis (2) 68,900,000 46,800,000 47.2%
Equity Basis (3) 73,042,000 57,641,000 26.7%
Cellular Customers (3) 1,784,000 976,000 82.8%
Served - Equity
Basis
Penetration Rate (3) 2.44% 1.69% 44.4%
SELECTED LATIN AMERICA INFORMATION (9)
Cellular Revenues (1) $ 186,100 $ 110,943 67.7%
Net Earnings from (1) $ 11,287 $ 21,834 -48.3%
Operations
Operating Cash Flow (1), (6) $ 55,670 $ 44,377 25.4%
Cash Operating (6) 29.91% 40.00% -25.2%
Margin
Population Served - (3) 42,066,000 27,988,000 50.3%
Equity Basis
Customers Served - (3) 743,000 370,000 100.8%
Equity Basis
Average Monthly
Service Revenue Per (5) $ 83 $ 87 -4.6%
Customer
Penetration Rate (3) 1.77% 1.32% 34.1%
PRELIMINARY
JULY 21, 1997
BELLSOUTH CORPORATION
CELLULAR OPERATING INFORMATION (UNAUDITED) (7)
($ THOUSANDS) Year-to-Date Year-to-Date
NOTES 1997 1996 % Change
DOMESTIC OPERATIONS
Cellular Revenues, (1), (4) $1,213,885 $1,097,816 10.6%
net
Operating Expenses (1) 702,818 630,562 11.5%
Depreciation Expense (1) 181,899 139,696 30.2%
Amortization of (1) 36,838 32,548 13.2%
Intangibles
(including
goodwill)
Total Operating (1) 921,555 802,806 14.8%
Expenses
Operating Income (1) 292,330 295,010 -0.9%
Other Expenses (1) 134,064 124,793 7.4%
(includes interest
and taxes)
Net Income (1) $ 158,266 $ 170,217 -7.0%
Operating Cash Flow (1), (6) $ 511,067 $ 467,254 9.4%
Cash Operating (6) 42.10% 42.56% -1.1%
Margin
DOMESTIC CELLULAR DATA
Average Monthly
Service Revenue Per (5) $ 52 $ 58 -10.3%
Customer
SELECTED INTERNATIONAL OPERATING DATA (9)
Cellular Revenues (1) $ 706,617 $ 435,777 62.2%
SELECTED LATIN AMERICA INFORMATION (9)
Cellular Revenues (1) $ 327,523 $ 213,851 53.2%
Net Earnings from (1) $ 28,420 $ 35,103 -19.0%
Operations
Operating Cash Flow (1),(6) $ 107,685 $ 85,839 25.4%
Cash Operating (6) 32.88% 40.14% -18.1%
Margin
Average Monthly (5) $ 83 $ 88 -5.7%
Service Revenue Per
Customer
PRELIMINARY
JULY 21, 1997
NOTES
(1) The presentation of selected income statement and balance sheet
information is based on BellSouth's ownership percentage for all
domestic and international cellular subsidiaries and affiliates,
whether or not consolidated for financial statement presentation
purposes. Gains/losses from the sale of properties are not included
in net income. Financial information for Domestic Cellular
Operations does not include PCS.
(2) Includes 100% of population/customers served in markets where
BellSouth has operating control and/or BellSouth ownership exceeds
50%; excludes population/customers served for markets where BellSouth
does not have operating control and ownership is less than 50%.
(3) Includes population/customers served based on BellSouth's
ownership percentage in all markets served.
(4) Included in revenues is equipment revenue net of cost.
(5) Includes local service revenue, which consists of charges for
cellular air-time service, long distance, and access billed by a
carrier for services in its market. Excluded are roaming charges,
toll charges, taxes on service revenues, equipment sales,
installation and repair revenues.
(6) Operating cash flow represents operating income before
depreciation and amortization.
(7) The income statement and balance sheet information are for the
periods ended May 31, 1997 and 1996. The domestic customer numbers
presented above are as of June 30, 1997 and 1996 and international
customer numbers are as of May 31, 1997 and 1996.
(8) As information, domestic cellular customers served on a control
basis for the periods ended May 31, 1997 and 1996 were 4,786,000
and 3,951,000 respectively. On an equity basis, domestic cellular
customers served for the same periods were 3,885,000 and 3,176,000
respectively.
(9) Second Quarter and Year-to-Date information reflects initial
reporting of recently-acquired investments in properties in Peru,
Nicaragua and Ecuador.
(10) For Domestic PCS, second quarter 1997 population served, control
and equity basis, includes 11,806,000 (based on 1990 information)
for Basic Trading Area licenses won at auction in January 1997.
_______________________________
1
