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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):
January 23, 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
Fourth quarter earnings per share (EPS) were 64 cents in
1996, an increase of 12.3 percent compared with 57 cents in
the same quarter a year earlier, before special charges
totaling 73 cents. Including the special charges, in the
fourth quarter of 1995 BellSouth reported a loss of 16 cents
per share.
In 1996, the company added 1,002,000 lines, a 4.7 percent
annual growth rate, and ended the year with 22,135,000
domestic access lines. Business access lines grew 8.1
percent.
New retail distribution channels and marketing promotions of
phone lines for Internet access, work-at-home, fax machines
and children's numbers spurred fourth quarter sales of
82,000 additional residential lines.
Sales of BellSouth's calling features and convenience
services, such as Caller ID, Call Waiting and MemoryCall(r)
service voice messaging, continued to grow rapidly. With
more than 29 million features currently activated, revenues
from these services surpassed $1 billion for the first time
in 1996.
BellSouth's domestic and international wireless services
grew by a combined 3,700 new customers every day during
1996. The company's U.S. cellular operations ended 1996
with 3,612,000 customers, growing by 279,000 in the fourth
quarter and 765,000 for the year. In BellSouth's 11
international cellular markets, customers increased to
1,244,000 at December 31.
BellSouth's fourth quarter revenues of $5.1 billion
increased 6.0 percent compared with the same quarter of
1995. Net income in the quarter was $633 million, compared
with a reported loss of $161 million in the fourth quarter a
year earlier (after special charges totaling $725 million).
In BellSouth's telephone operations, cash operating expenses
were up 0.7 percent in the fourth quarter of 1996.
BellSouth's total operating expenses increased 5.6 percent,
excluding the special charge in the fourth quarter of 1995
related to work force reductions. When the paging
operations sold by BellSouth in 1996 are excluded from 1995
results, quarterly revenues increased 8.1 percent, and total
operating expenses increased 7.7 percent.
BellSouth's annual revenues of $19.0 billion were up 6.5
percent compared with 1995. Excluding a first quarter gain
of 35 cents per share on the paging sale, EPS in 1996 was
$2.53, an increase of 12.9 percent compared with $2.24 in
1995, before special charges totaling $3.48 per share.
Including the gain in 1996, EPS was $2.88, compared to
1995's reported loss of $1.24 per share after the special
charges. Net income in 1996 was $2.9 billion, including the
paging gain of $344 million. This compared with a reported
loss of $1.2 billion in 1995 (after special charges totaling
$3.5 billion).
BellSouth believes that normalized earnings growth could be
in the low double digits through 1997. 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 effect of access reform
initiatives now being considered by the FCC is reasonably
revenue neutral and (4) local service competition does not
have a significant adverse impact on revenues in 1997. Any
developments significantly deviating from these assumptions
could cause actual results to differ materially from those
in the above forward-looking statement.
PRELIMINARY
January 23, 1997
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Amounts)
For the Three
Months Ended For the Year Ended
December 31, December 31,
1996 1995 1996 1995
(unaudited)(unaudited)(unaudited)
Operating Revenues:
Network and related
services
Local service $ 2,070 $ 1,875 $ 8,082 $ 7,294
Interstate access 881 869 3,553 3,275
Intrastate access 185 201 812 884
Toll 194 242 794 1,009
Wireless communications 760 704 2,799 2,592
Directory advertising
and publishing 642 569 1,742 1,677
Other services 318 305 1,258 1,155
Total Operating Revenues 5,050 4,765 19,040 17,886
Operating Expenses:
Cost of services and
products 1,589 1,654 6,072 6,184
Depreciation and
amortization 959 887 3,719 3,455
Selling, general and
administrative 1,295 1,099 4,470 3,873
Work force reduction
charge -- 1,082 -- 1,082
Total Operating Expenses 3,843 4,722 14,261 14,594
Operating Income 1,207 43 4,779 3,292
Interest Expense 190 192 721 724
Gain on Sale of Paging
Business -- -- 442 --
Other Income (Expense),
net 24 (31) 108 20
Income (Loss) Before
Income Taxes and
Extraordinary Losses 1,041 (180) 4,608 2,588
Provision for Income
Taxes 408 (81) 1,745 1,024
Income (Loss) Before
Extraordinary Losses 633 (99) 2,863 1,564
Extraordinary Loss for
Discontinuance of SFAS
No. 71, net of tax -- -- -- (2,718)
Extraordinary Loss on
Early Extinguishment of
Debt, net of tax -- (62) -- (78)
Net Income (Loss) $ 633 $ (161) $ 2,863 $(1,232)
PRELIMINARY
January 23, 1997
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Continued)
(In Millions, Except Per Share Amounts)
For the Three
Months Ended For the Year Ended
December 31, December 31,
1996 1995 1996 1995
(unaudited)(unaudited)(unaudited)
Weighted Average Common
Shares Outstanding 993 993 994 993
Dividends Declared Per
Common Share $ .36 $ .36 $ 1.44 $ 1.41
Earnings (Loss) Per
Share:
Income (Loss) Before
Extraordinary Losses $ .64 $ (.10) $ 2.88 $ 1.57
Extraordinary Loss for
Discontinuance of SFAS
No. 71, net of tax -- -- -- (2.73)
Extraordinary Loss on
Early Extinguishment of
Debt, net of tax -- (.06) -- (.08)
Earnings (Loss) Per Share $ .64 $ (.16) $ 2.88 $(1.24)
PRELIMINARY
January 23, 1997
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Per Share Amounts)
December 31,
1996 December 31,
ASSETS (Unaudited) 1995
Current Assets:
Cash and cash equivalents $ 1,178 $ 1,711
Temporary cash investments 51 71
Accounts receivable, net of
allowance for uncollectibles
of $180 and $171 4,087 3,772
Material and supplies 451 430
Other current assets 531 521
6,298 6,505
Investments and Advances 2,430 2,418
Property, Plant and Equipment:
Property, Plant and Equipment 50,059 46,869
Accumulated Depreciation 28,234 25,777
21,825 21,092
Intangible Assets, net 1,405 1,527
Deferred Charges and Other
Assets 610 338
Total Assets $ 32,568 $ 31,880
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 2,124 $ 2,951
Accounts payable 1,446 1,724
Other current liabilities 2,871 2,715
6,441 7,390
Long-Term Debt 8,116 7,924
Deferred Credits and Other
Liabilities:
Accumulated deferred income
taxes 1,899 1,650
Unamortized investment tax
credits 278 355
Other liabilities and
deferred credits 2,585 2,736
4,762 4,741
Shareholders' Equity:
Common stock, $1 par value 1,009 1,007
Paid-in capital 7,697 7,619
Retained earnings 5,541 4,099
Shares held in trust
and treasury (532) (374)
Guarantee of ESOP debt (466) (526)
13,249 11,825
Total Liabilities and
Shareholders' Equity $ 32,568 $ 31,880
PRELIMINARY
January 23, 1997
BELLSOUTH FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
(Dollars in Millions, Except Per Share Amounts)
Three Months Three Months
Ended Ended
December 31, December 31,
1996 1995
Earnings (Loss) per share $ .64 $ (.16)(a)
Return to average common
equity (annualized) 19.1% (5.3%)
Return to average total
capital(annualized) 13.4% (0.2%)
Weighted average common shares
outstanding (millions) 993 993
Dividends per share $ .36 $ .36
Property additions $1,162 $ 1,332
At December 31,
1996 1995
Common shares outstanding
(millions) 991 994
Debt ratio 43.5% 46.7%
Total employees 81,241 87,571
(a) Includes the impact of an after-tax charge for work
force reductions of $663 ($.67 per share) and a debt
refinancing charge of $62 ($.06 per share).
PRELIMINARY
January 23, 1997
BELLSOUTH FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
(Dollars in Millions, Except Per Share Amounts)
Year Ended Year Ended
December 31, December 31,
1996 1995
Earnings (Loss) per share $ 2.88(a) $(1.24)(b)
Return to average common
equity 22.4% (9.2%)
Return to average total
capital 15.0% (2.7%)
Weighted average common shares
outstanding (millions) 994 993
Dividends per share $ 1.44 $ 1.41
Property additions $4,386 $4,092
(a) Includes an after-tax gain of $344 ($.35 per share) from
sale of paging business.
(b) Includes the impact of an extraordinary charge of $2,718
($2.73 per share) related to discontinuance of SFAS No.
71, an after-tax charge for work force reductions of
$663 ($.67 per share) and debt refinancing charges of
$78 ($.08 per share).
PRELIMINARY
January 23, 1997
BELLSOUTH TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
For the Three
Months Ended For the Year Ended
December 31, December 31,
1996 1995 1996 1995
(unaudited)(unaudited)(unaudited)
Operating Revenues:
Local service $ 2,070 $ 1,875 $ 8,082 $ 7,294
Interstate access 881 869 3,553 3,275
Intrastate access 185 201 812 884
Toll 194 242 794 1,009
Other 386 592 1,535 2,078
Total Operating Revenues 3,716 3,779 14,776 14,540
Operating Expenses:
Cost of services and
products 1,279 1,374 5,133 5,268
Depreciation and
amortization 828 779 3,255 3,065
Selling, general and
administrative 760 651 2,681 2,344
Work force reduction
charge -- 1,082 -- 1,082
Total Operating Expenses 2,867 3,886 11,069 11,759
Operating Income (Loss) 849 (107) 3,707 2,781
Interest Expense 142 148 552 573
Other Income, net 3 7 20 27
Income (Loss) Before
Income Taxes and
Extraordinary Losses 710 (248) 3,175 2,235
Provision for Income
Taxes 251 (126) 1,170 818
Income (Loss) Before
Extraordinary Losses 459 (122) 2,005 1,417
Extraordinary Loss for
Discontinuance of SFAS
No. 71, net of tax -- -- -- (2,718)
Extraordinary Loss on
Early Extinguishment of
Debt, net of tax -- (62) -- (78)
Net Income (Loss) $ 459 $ (184) $ 2,005 $(1,379)
PRELIMINARY
January 23, 1997
BELLSOUTH TELECOMMUNICATIONS FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Three Months Three Months
Ended Ended
December 31, December 31,
1996 1995
Property additions (millions) $ 790 $ 959
Access minutes of use
(millions):
Interstate 17,217 15,969
Intrastate 5,469 4,993
IntraLATA toll messages 231 323
(millions)
Year Ended Year Ended
December 31, December 31,
1996 1995
Property additions (millions) $3,232 $3,218
Access minutes of use
(millions):
Interstate 67,690 62,411
Intrastate 21,171 19,197
IntraLATA toll messages
(millions) 1,023 1,374
At December 31,
1996 1995
Debt ratio 49.4% 51.9%
Telephone employees 62,425 68,585
Network access lines in
service (thousands) 22,135 21,133
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, Controller
February 6, 1997
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