SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-8607
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-1533433
(State of Incorporation) (I.R.S. Employer
Identification Number)
1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number 404 249-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
At July 31, 1997, a total of 991,394,906 common shares were
outstanding.
Table of Contents
Item Page
Part I
1. Financial Statements 3
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Selected Operating Data 10
2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 12
Results of Operations 13
Volumes of Business 13
Operating Revenues 14
Operating Expenses 16
Other Income Statement Items 18
Financial Condition 19
Regulatory Developments and Competition 20
Federal Developments 20
State Developments 21
Other Matters 21
Sale of Operations 21
Brazil Wireless Auctions 22
Competitive Local Exchange Carrier 22
Part II
4. Submission of Matters to a Vote of
Security Holders 23
6. Exhibits and Reports on Form 8-K 24
PART I - FINANCIAL INFORMATION
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Three Months For the Six Months
Ended June 30, Ended 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
The accompanying notes are an integral part of these consolidated
financial statements.
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
The accompanying notes are an integral part of these consolidated
financial statements.
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Millions, Except Per Share Amounts)
For the Six Months
Ended June 30,
1997 1996
Cash Flows from Operating Activities:
Net income $ 1,347 $ 1,599
Adjustments to net income:
Depreciation and amortization 1,937 1,820
Gain from sale of paging business -- (442)
Net losses and dividends from unconsolidated
affiliates 147 136
Provision for uncollectibles 125 113
Deferred income taxes and unamortized
investment tax credits 14 68
Net change in:
Accounts receivable and other current assets (126) (146)
Accounts payable and other current liabilities 200 (438)
Deferred charges and other assets (151) (164)
Other liabilities and deferred credits (2) 99
Other reconciling items, net 3 (89)
Net cash provided by operating activities 3,494 2,556
Cash Flows from Investing Activities:
Capital expenditures (1,978) (2,185)
Proceeds from sale of paging business -- 930
Proceeds from disposition of short-term
investments 145 67
Purchases of short-term investments (152) (31)
Investments in and advances to unconsolidated
affiliates (341) (247)
Other investing activities, net (131) 15
Net cash used for investing activities (2,457) (1,451)
Cash Flows from Financing Activities:
Proceeds from short-term borrowings 9,375 12,649
Repayments of short-term borrowings (9,538) (13,112)
Proceeds from long-term debt 30 56
Repayments of long-term debt (19) (527)
Dividends paid (713) (715)
Other financing activities, net (42) 2
Net cash used for financing activities (907) (1,647)
Net Increase (Decrease) in Cash and Cash
Equivalents 130 (542)
Cash and Cash Equivalents at Beginning of Period 1,178 1,711
Cash and Cash Equivalents at End of Period $ 1,308 $ 1,169
The accompanying notes are an integral part of these consolidated
financial statements.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In Millions, Except Per Share Amounts)
Note A -- Preparation of Interim Financial Statements
The consolidated financial statements of BellSouth
Corporation (BellSouth) have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission
(SEC). Certain amounts have been reclassified from previous
presentations. These consolidated financial statements include
estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and
liabilities and the amounts of revenues and expenses. Actual
results could differ from those estimates. In the opinion of
BellSouth, these statements include all adjustments necessary for
a fair presentation of the results of all interim periods
reported herein. All adjustments are of a normal recurring
nature unless otherwise disclosed. Certain information and
footnote disclosures prepared in accordance with generally
accepted accounting principles have been either condensed or
omitted pursuant to SEC rules and regulations. BellSouth
believes, however, that the disclosures made are adequate for a
fair presentation of results of operations, financial position
and cash flows. These consolidated financial statements should
be read in conjunction with the consolidated financial statements
and accompanying notes included in BellSouth's latest annual
report on Form 10-K and previous quarterly report on Form 10-Q.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note B -- BellSouth Corporation Consolidated Shareholders' Equity
Number of Shares Amount
-------------------- ----------------
Shares
Held
Common in Common Paid-in
Stock Trust Stock Capital
and
Treasury
(1)
Balance at
December 31, 1996 1,009 (18) $1,009 $7,697
Net Income
Dividends declared
Shares issued for:
Employee benefit plans 1 (12)
Grantor Trusts 1 (1) 1 60
Acquisitions 2 8
Purchase of
Treasury Stock (1)
ESOP activities and
related tax benefit
Foreign currency
translation
adjustment 8
______ ______ ______ ______
Balance at June 30, 1997 1,010 (17) $1,010 $7,761
====== ====== ====== ======
(1) Such shares are not considered to be outstanding for financial
reporting purposes. As of June 30, 1997 there were approximately 17 million
shares held in trust and 400 thousand treasury shares held by the company.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note B -- BellSouth Corporation Consolidated Shareholders' Equity
---------------------- Amount -----------------------
Shares Guarantee
Held of ESOP
Retained in Debt
Earnings Trust Total
and
Treasury
(1)
Balance at
December 31, 1996 $5,541 $(532) $(466) $13,249
Net Income 1,347 1,347
Dividends declared (714) (714)
Shares issued for:
Employee benefit plans 40 28
Grantor Trusts (61) --
Acquisitions 89 97
Purchase of
Treasury Stock (69) (69)
ESOP activities and
related tax benefit 4 33 37
Foreign currency
translation adjustment 8
______ ______ ______ _______
Balance at June 30, 1997 $6,178 $(533) $(433) $13,983
====== ====== ====== =======
(1) Such shares are not considered to be outstanding for financial
reporting purposes. As of June 30, 1997 there were approximately 17
million shares held in trust and 400 thousand treasury shares held by
the company.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note C -- Supplemental Cash Flow Information
For the Six Months
Ended June 30,
1997 1996
Cash Paid For:
Income taxes $ 830 $ 689
Interest $ 350 $ 373
Noncash Investing and Financing Activities:
Shares issued to grantor trusts $ 61 $ 35
Shares issued for acquisitions $ 97 $ --
Note D -- South Carolina Regulatory Settlement
On April 29, 1997, BellSouth Telecommunications, the South Carolina
Public Service Commission and other parties to proceedings related
to claims of alleged overearnings for the years 1992 through 1994
agreed on a settlement. Under the terms of the settlement,
BellSouth Telecommunications will pay $72 to its customers.
Accordingly, in the second quarter of 1997, BellSouth reduced
operating revenues by $72 ($47 or $.05 per share after tax) in
connection with the settlement.
Note E -- Sale of Paging Subsidiary
In January 1996, BellSouth sold to MobileMedia Corporation its
paging subsidiary, Mobile Communications Corporation of America
(MCCA), and its two-way nationwide narrowband personal
communications services license for a total of $930. The pretax
gain on such sale was $442 ($344 or $.35 per share after tax).
Note F -- Derivative Financial Instruments
BellSouth generally enters into derivative financial instruments
only for hedging purposes. Deferred accounting is applied when the
derivative reduces the risk of the underlying hedged item
effectively as a result of high inverse correlation with the value
of the hedged item. If a derivative instrument either initially
fails or later ceases to meet the criteria for deferral or
settlement accounting, any subsequent gains or losses are
recognized currently in income.
BELLSOUTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(In Millions, Except Per Share Amounts)
Note F -- Derivative Financial Instruments (continued)
Foreign exchange forward contracts are carried at fair value on the
consolidated balance sheets. Gains and losses on foreign exchange
forward contracts used as currency hedges of existing assets or
liabilities are deferred and offset the deferred losses and gains
of the underlying asset or liability. The net effect is ultimately
recognized in income as the underlying transaction matures. Gains
and losses related to qualifying hedges of firm commitments also
are deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs.
Currency swap contracts entered into as hedges of existing assets
and liabilities are carried at fair value in the consolidated
balance sheets. Gains and losses on currency swaps are deferred
and offset against the deferred currency losses and gains of the
underlying asset or liability. The net effect is ultimately
recognized in income as the underlying transaction matures.
Interest rate swap agreements are treated as off-balance sheet
financial instruments. Receipts or payments resulting from these
instruments are recognized as adjustments to interest expense as
received or paid.
BELLSOUTH CORPORATION
SELECTED OPERATING DATA
(Unaudited)
Percent Change
1997 vs. 1996 vs.
1997 1996 1995
Network Access Lines in Service at June 30 (Thousands)(a):
By Type:
Residence 15,511 3.8% 3.5%
Business 6,936 6.4 8.7
Other 270 3.1 2.3
Total Access Lines 22,717 4.6 5.0
By State:
Florida 6,066 5.5 5.4
Georgia 3,887 5.0 7.1
Tennessee 2,605 4.2 4.6
North Carolina 2,284 6.0 5.2
Louisiana 2,227 3.5 3.5
Alabama 1,894 3.4 4.1
South Carolina 1,375 3.8 4.0
Mississippi 1,220 3.1 3.5
Kentucky 1,159 3.2 3.6
Total Access Lines 22,717 4.6 5.0
Percent Change for
the Periods Ended
1997 vs. 1996 vs.
1997 1996 1995
Access Minutes of Use (Millions)(a)(b):
Interstate:
Three months ended March 31 17,721 6.4% 10.1%
Three months ended June 30 18,552 10.1 8.0
Six months ended June 30 36,273 8.3 9.0
Intrastate:
Three months ended March 31 5,552 8.4 13.0
Three months ended June 30 5,873 12.2 9.3
Six months ended June 30 11,425 10.3 11.1
Total Access Minutes of Use:
Three months ended March 31 23,273 6.9 10.8
Three months ended June 30 24,425 10.6 8.3
Six months ended June 30 47,698 8.8 9.5
Toll Messages (Millions)(a):
Three months ended March 31 230 (18.1) (24.1)
Three months ended June 30 232 (10.5) (27.0)
Six months ended June 30 462 (14.5) (25.5)
BELLSOUTH CORPORATION
SELECTED OPERATING DATA (Continued)
(Unaudited)
(a) Prior period operating data are often revised at later dates
to reflect updated information. The above information reflects the
latest data available for the periods indicated.
(b) Minutes of Use are classified as either interstate or
intrastate based on the percentage interstate usage factor. This
factor is updated periodically.
Cellular and Personal Communications Service (PCS) Customers Served
at June 30(Equity basis)(Thousands)(c):
Percent Change
1997 vs. 1996 vs.
1997 1996 1995
Domestic Cellular 3,901 20.7% 31.1%
International Cellular 1,784 82.8 102.9
PCS 65 -- --
(c) Includes customers served based on BellSouth's ownership
percentage in all markets served.
For the Six
Months Ended
June 30,
1997
Ratio of Earnings to Fixed Charges (d) 6.32
(d) For the purpose of this ratio: (i) earnings have been
calculated by adding income before income taxes, gross interest
expense, such portion of rental expense representative of the
interest factor on such rentals and equity in losses from less-than-
50%-owned investments (accounted for under the equity method of
accounting) less the excess of earnings over distributions from
less-than-50%-owned investments (accounted for under the equity
method of accounting); (ii) fixed charges are comprised of gross
interest expense and such portion of rental expense representative
of the interest factor on such rentals.
BELLSOUTH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
(Dollars in Millions, Except Per Share Amounts)
Management's Discussion and Analysis of Results of Operations and
Financial Condition (MD&A) should be read in conjunction
with MD&A in BellSouth Corporation's (BellSouth)
latest annual report on Form 10-K and previous
quarterly report on Form 10-Q.
BellSouth is a holding company headquartered in Atlanta, Georgia
whose operating telephone company subsidiary, BellSouth
Telecommunications, Inc. (BellSouth Telecommunications), serves, in
the aggregate, approximately two-thirds of the population and one-
half of the territory within Alabama, Florida, Georgia, Kentucky,
Louisiana, Mississippi, North Carolina, South Carolina and
Tennessee. BellSouth Telecommunications primarily provides local
exchange and toll communications services within geographic areas,
called Local Access and Transport Areas (LATAs), and provides
network access services to enable interLATA and intraLATA
communications using the long-distance facilities of interexchange
carriers. Through subsidiaries, other telecommunications services
and products are provided primarily within the nine-state BellSouth
Telecommunications region. BellSouth Enterprises, Inc. (BellSouth
Enterprises), another wholly-owned subsidiary, owns businesses
providing primarily wireless and international communications
services and advertising and publishing products.
Approximately 69% and 72% of BellSouth's Total Operating Revenues
for each of the six-month periods ended June 30, 1997 and 1996 were
from wireline services provided by BellSouth Telecommunications.
Charges for local, access and toll services for the six-month
period ended June 30, 1997 accounted for approximately 62%, 33% and
5%, respectively, of the wireline revenues discussed above.
Revenues from wireless communications services and directory
advertising and publishing services accounted for approximately 16%
and 8%, respectively, of Total Operating Revenues for the six
months ended June 30, 1997. The remainder of such revenues was
derived principally from sales and maintenance of customer premises
equipment and other nonregulated services provided by BellSouth
Telecommunications.
RESULTS OF OPERATIONS
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
1997 1996 1997 1996
Net Income $ 654 $ 629 $ 1,347 $ 1,599
Earnings Per Share $ .66 $ .63 $ 1.36 $ 1.61
For the three and six-month periods ended June 30, 1997, Net Income
increased by $25 (4.0%) and decreased by $252 (15.8%) when compared
to the same 1996 periods. Earnings Per Share increased $.03 (4.8%)
and decreased $.25 (15.5%) when compared to the same 1996 periods.
The increase for the three-month period was primarily attributable
to continued strong growth in key business volumes and expense
savings due to employee reductions under BellSouth
Telecommunications' work force reduction plan initiated in 1995.
The increase was partially offset by an after-tax charge of $47
($.05 per share) related to a regulatory settlement in South
Carolina (see Note D to the Consolidated Financial Statements). The
decrease for the six-month period resulted primarily from the $344
gain ($.35 per share) on sale of BellSouth's paging business (see
Note E to the Consolidated Financial Statements) during the first
quarter of 1996, partially offset in the first half of 1997 by
continued strong growth in key business volumes and expense savings
as discussed above.
Volumes of Business
The total number of access lines in service as of June 30, 1997
increased by approximately 996,000 (4.6%) since June 30, 1996 to
22,717,000, compared to a 5.0% rate of increase for the same period
a year ago. The 1996 growth rate was positively impacted by pre-
Olympics stimulation, particularly in the business line category.
Business and residence access lines increased by 6.4% and 3.8%,
respectively, compared to growth rates of 8.7% and 3.5% in the same
1996 period. The increase in residence lines includes additional
lines used by customers for home office purposes, access to on-line
computer services, children's phones and other uses. The number of
additional residence lines increased by 396,000 (28.6%) to
1,783,000 and accounted for approximately 69.0% and 39.8% of the
overall increase in residence access lines and total access lines,
respectively, since June 30, 1996. The growth in all categories of
access lines was primarily attributable to continued economic
improvement in the Southeast and successful marketing programs.
Access minutes of use represent the volume of traffic carried by
interexchange carriers, both interstate and intrastate, using
BellSouth Telecommunications' local facilities. Total access
minutes of use increased by 2,343 million (10.6%)and 3,838 million
(8.8%) for the three and six-month periods ended June 30, 1997,
compared to increases of 8.3% and 9.5% for the same 1996 periods.
The increase in access minutes of use was primarily attributable to
access line growth, promotions by the interexchange carriers, and
intraLATA toll competition (which has the effect of increasing
access minutes of use while reducing toll messages carried over
BellSouth Telecommunications' facilities). The growth rate in
total minutes of use continues to be impacted negatively by
competition and the migration of interexchange carriers to
categories of service (e.g., special access) that have a fixed
charge as opposed to a volume-driven charge and to high capacity
services.
Toll messages are comprised of Message Telecommunications Service
and Wide Area Telecommunications Service. For the three and six-
month periods ended June 30, 1997, toll messages decreased by 27
million (10.5%) and 78 million (14.5%), compared to a decrease of
27.0% and 25.5% for the same 1996 periods. The decrease in 1997
is primarily attributable to increasing competition from
interexchange carriers in the intraLATA toll market as well as the
continuing expansion of local area calling plans (LACPs).
Competition in the intraLATA toll market coupled with continued
expansion of LACPs will adversely impact future toll message
volumes. Competition and the effects of expanded LACPs result in
the transfer of calls from toll to access and local service
categories, respectively, but the corresponding revenues are not
generally shifted at commensurate rates.
Domestic cellular customers (equity-weighted) increased by 670,000
(20.7%) since June 30, 1996 to 3,901,000 due to continuing high
demand for wireless services. The overall penetration rate (number
of customers as a percentage of the total population in the service
territory) increased from 8.1% at June 30, 1996 to 9.6% at June 30,
1997. While total minutes of use have also continued to increase,
average minutes of use per cellular customer have declined slightly
from second quarter 1996. Average minutes of use per cellular
customer were negatively impacted by the continuing trend of
increased penetration into lower-usage market segments. This
decrease was partially offset by the impact of customer promotions.
Since June 30, 1996, the number of international cellular customers
(equity-weighted) increased by 808,000 (82.8%) to 1,784,000.
Growth in total minutes of use for international cellular
properties remained strong, primarily due to demand stimulated by
market-driven pricing programs, enhanced services and
underdeveloped land-line service. Similar to the domestic cellular
market, average minutes of use per international customer have been
negatively impacted by increased penetration into lower-usage
market segments.
Domestic PCS customers (equity-weighted) totaled 65,000 at June 30,
1997.
Operating Revenues
Total Operating Revenues increased $303 (6.6%) and $607 (6.6%) for
the three- and six-month periods ended June 30, 1997, respectively,
when compared to the same 1996 periods. Excluding a $72 reduction
of revenues related to a regulatory settlement in South Carolina,
the increases in operating revenues for the three- and six-month
periods would have been 8.1% and 7.4%, respectively. The components
of Total Operating Revenues were as follows:
AMENDMENT TO THE BELLSOUTH RETIREMENT SAVINGS PLAN
This Amendment is made to the BellSouth Retirement
Savings Plan (the "Plan"), which was amended and restated
effective as of July 1, 1996. The BellSouth Savings Plan
Committee, under authority delegated by the Nominating and
Compensation Committee to approve amendments to the Plan,
hereby amends the Plan as follows:
1.
By replacing paragraph 7.6 thereof with the following
new paragraph:
"7.6 General Investment Fund Transition Rule. The
Committee or its designee may establish Plan Rules
applicable to any change in investment funds under the Trust
Agreement. In the event any investment fund is eliminated,
unless otherwise specifically provided by the Committee in a
Plan Rule for this purpose, all amounts remaining in such
fund on the date it is eliminated as an investment fund
shall be reinvested in the Interest Income Fund established
under the Trust Agreement and all amounts subject to a
current Participant election under this Section 7 to invest
in that eliminated investment fund shall be invested in the
Interest Income Fund."
2.
By amending Section 10 thereof by (i) adding the words
"who is an Employee of a Participating Company and" between
the words "Employee" and "who" in the third line of
paragraph 1 thereof; (ii) changing the words "who is" to
"while" in the first line of subparagraph 1.c. thereof; and
(iii) changing the clause between the words "loan" and
"shall" in the first line of subparagraph 1.e. thereof to
read ", subject to such other Plan Rules as the Committee or
its designee shall establish,".
3.
By replacing the first sentence of paragraph 9.2
thereof with the following two sentences:
"A Participating Employee (including a Participating
Employee who is a former Employee) may make a withdrawal by
giving notice to the Committee's designated representative
in the manner prescribed in the Plan Rules. A withdrawal
under this Section 9.2 can be made not more than once in any
consecutive six-calendar month period in the case of a
Participating Employee who is an Employee and not more than
once in any consecutive three-calendar month period in the
case of a Participating Employee who is a former Employee."
Amendments 1 and 2 shall be effective as of the date
below, and amendment 3 shall be effective as of January 1,
1998.
APPROVED this 24th day of June, 1997.
BELLSOUTH SAVINGS PLAN COMMITTEE
/s/ Arlen G. Yokley
BY: Arlen G. Yokley
Senior Vice President - Executive Staff
Officer and Corporate Secretary
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share
For the Three Month For the Six Month
Periods Ended Periods Ended
June 30, June 30,
1997 1996 1997 1996
Earnings Per Common Share:
Net Income $ 654 $ 629 $ 1,347 $ 1,599
Weighted
average shares
outstanding 992 994 992 994
Earnings Per
Common Share $ .66 $ .63 $ 1.36 $ 1.61
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share (continued)
For the Three Month For the Six Month
Periods Ended Periods Ended
June 30, June 30,
1997 1996 1997 1996
Primary Earnings Per Common Share:
Net Income $ 654 $ 629 $ 1,347 $ 1,599
Weighted
average shares
outstanding 992 994 992 994
Incremental
shares from
assumed
exercise of
stock options
and payment of
performance
share awards 2 2 2 3
Total Shares 994 996 994 997
Earnings Per
Common Share $ .66 $ .63 $ 1.36 $ 1.60
EXHIBIT 11
BellSouth Corporation
Computation of Earnings Per Share (continued)
For the Three Month For the Six Month
Periods Ended Periods Ended
June 30, June 30,
1997 1996 1997 1996
Fully Diluted Earnings Per Common Share:
Net Income $ 654 $ 629 $ 1,347 $ 1,599
Weighted
average shares
outstanding 992 994 992 994
Incremental
shares from
assumed
exercise of
stock options
and payment of
performance
share awards 3 3 3 3
Total Shares 995 997 995 997
Earnings Per
Common Share $ .66 $ .63 $ 1.35 $ 1.60
EXHIBIT 12
BellSouth Corporation
Computation Of Earnings To Fixed Charges
(Dollars In Millions)
For the Six
Months Ended
June 30,
1997
1. Earnings
(a) Income from continuing operations $ 2,603
before deductions for taxes and interest
(b) Portion of rental expense 39
representative of interest factor
(c) Equity in losses from less-than-50% 46
owned investments (accounted for under the
equity method of accounting)
(d) Excess of earnings over distributions
of less-than-50%-owned investments
(accounted for under the equity method of
accounting) (43)
TOTAL $ 2,645
2. Fixed Charges
(a) Interest $ 379
(b) Portion of rental expense
representative of interest factor 39
TOTAL $ 418
Ratio (1 divided by 2) 6.3
<TABLE> <S> <C>
<S> <C>
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