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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):
April 21, 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
First Quarter Earnings
BellSouth Corporation (NYSE: BLS) reported earnings per
share (EPS) of 70 cents in the first quarter of 1997.
EPS increased 11.1 percent compared with 63 cents in the
first quarter a year ago, before a one-time gain of 35 cents
in 1996 on the sale of paging operations.
BellSouth's access lines increased 379,000 in the three
months ended March 31, 1997 compared to an increase of
359,000 in the first quarter of 1996. The 4.8 percent
annual growth was driven by strong demand in the consumer
market. Total residential lines increased by 254,000 in the
first three months of 1997. Additional residential lines
increased 106,000.
Sales of BellSouth's calling features and convenience
services, such as Caller ID, Caller ID Deluxe, Call Waiting
and MemoryCallr service voice messaging, continued to grow
rapidly, posting a 24 percent increase in total features
activated. Total revenues from vertical services were $295
million in the first quarter of 1997, up 29 percent from the
same three months of 1996.
BellSouth continued its growth in wireless communications,
both in the U.S. and in international markets. The
company's U.S. cellular operations ended the first quarter
with 3.8 million customers, an annual growth rate of 24
percent. In BellSouth's international cellular markets,
customers increased 76 percent since the first quarter of
1996, reaching 1.5 million. With the addition of Peru,
Nicaragua and Ecuador during the first quarter of 1997,
BellSouth now serves cellular markets in 14 countries with
188 million potential customers.
BellSouth's first quarter revenues of $4.8 billion increased
6.7 percent compared with the same quarter of 1996. Total
operating expenses increased 4.0 percent, primarily
reflecting customer growth in wireless. In BellSouth's
telephone operations, cash operating expenses declined 1.6
percent compared with the first quarter of 1996. Net income
in the quarter was $693 million, compared with $626 million
in the first quarter a year earlier (before the one-time
gain of $344 million on the sale of paging operations.)
1997 Earnings Growth
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.
South Carolina Settlement
In 1994, the South Carolina Public Service Commission
ordered BellSouth Telecommunications to refund approximately
$29 million, plus interest, based on an investigation of
1992 earnings. The Commission postponed review of earnings
in 1993 and 1994 pending final resolution of the 1992
period. The order with respect to the 1992 period was
substantially affirmed by the South Carolina Court of Common
Pleas in October 1996 and BellSouth Telecommunications began
to pursue further review of the decision.
On April 29, 1997, BellSouth Telecommunications, the
Commission and other parties to the proceeding agreed on a
settlement to claims of alleged overearnings for the years
1992 through 1994. Under the terms of the settlement,
BellSouth Telecommunications will pay approximately $72
million to its customers. Accordingly, BellSouth will
record a charge of approximately $.05 per share in the
second quarter of 1997 associated with the settlement.
PRELIMINARY
April 21, 1997
BELLSOUTH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In Millions, Except Per Share Amounts)
(Unaudited)
For the Three
Months Ended
March 31,
1997 1996
Operating Revenues:
Network and related
services
Local service $ 2,104 $ 1,930
Interstate access 917 909
Intrastate access 218 218
Toll 174 207
Wireless communications 765 625
Directory advertising
and publishing 361 318
Other services 306 334
Total Operating Revenues 4,845 4,541
Operating Expenses:
Cost of services and
products 1,422 1,468
Depreciation and
amortization 960 903
Selling, general and
administrative 1,110 987
Total Operating Expenses 3,492 3,358
Operating Income 1,353 1,183
Interest Expense 183 180
Gain on Sale of Paging
Business - 442
Other Income (Expense),
net (7) 36
Income Before Income
Taxes 1,163 1,481
Provision for Income
Taxes 470 511
Net Income $ 693 $ 970
Weighted Average Common
Shares Outstanding 992 994
Dividends Declared Per
Common Share $ .36 $ .36
Earnings Per Share $ .70 $ .98
PRELIMINARY
April 21, 1997
BELLSOUTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In Millions, Except Per Share Amounts)
March 31, December 31,
1997 1996
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 946 $ 1,178
Temporary cash investments 43 51
Accounts receivable, net of
allowance for uncollectibles
of $185 and $180 3,982 4,087
Material and supplies 423 451
Other current assets 547 531
Total Current Assets 5,941 6,298
Investments and Advances 2,821 2,430
Property, Plant and Equipment:
Property, Plant and Equipment 50,727 50,059
Accumulated Depreciation 28,944 28,234
21,783 21,825
Deferred Charges and Other
Assets 536 610
Intangible Assets, net 1,445 1,405
Total Assets $ 32,526 $ 32,568
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt maturing within one year $ 1,635 $ 2,124
Accounts payable 1,391 1,446
Other current liabilities 3,111 2,871
Total Current Liabilities 6,137 6,441
Long-Term Debt 7,961 8,116
Deferred Credits and Other
Liabilities:
Accumulated deferred income
taxes 1,872 1,899
Unamortized investment tax
credits 262 278
Other liabilities and
deferred credits 2,641 2,585
Total Deferred Credits and
Other Liabilities 4,775 4,762
Shareholders' Equity:
Common stock, $1 par value 1,009 1,009
Paid-in capital 7,698 7,697
Retained earnings 5,879 5,541
Shares held in trust and
treasury (499) (532)
Guarantee of ESOP debt (434) (466)
Total Shareholders' Equity 13,653 13,249
Total Liabilities and
Shareholders' Equity $ 32,526 $ 32,568
PRELIMINARY
April 21, 1997
BELLSOUTH FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
Earnings per share $ .70 $ .98(a)
Return on average common
equity (annualized) 20.5% 31.6%
Return on average total
capital(annualized) 14.3% 19.4%
Weighted average common shares
outstanding (millions) 992 994
Dividends per share $ .36 $ .36
Property additions (millions) $ 901 $ 902
At March 31,
1997 1996
Common shares outstanding
(millions) 992 994
Debt ratio 41.2% 43.0%
Total employees 81,803 85,905
(a) Includes an after-tax gain of $344 ($.35 per share)
from sale of paging business.
PRELIMINARY
April 21, 1997
BELLSOUTH TELECOMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
(Unaudited)
For the Three
Months Ended
March 31,
1997 1996
Operating Revenues:
Local service $ 2,104 $ 1,930
Interstate access 917 909
Intrastate access 218 218
Toll 174 207
Other 392 391
Total Operating Revenues 3,805 3,655
Operating Expenses:
Cost of services and
products 1,205 1,260
Depreciation and
amortization 819 798
Selling, general and
administrative 630 604
Total Operating Expenses 2,654 2,662
Operating Income 1,151 993
Interest Expense 134 139
Other Income, net 2 11
Income Before Income
Taxes 1,019 865
Provision for Income
Taxes 386 326
Net Income $ 633 $ 539
PRELIMINARY
April 21, 1997
BELLSOUTH TELECOMMUNICATIONS FINANCIAL HIGHLIGHTS
SELECTED DATA
(UNAUDITED)
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
Property additions (millions) $ 732 $ 738
Access minutes of use
(millions):
Interstate 17,721 16,660
Intrastate 5,552 5,118
IntraLATA toll messages 230 281
(millions)
At March 31,
1997 1996
Debt ratio 47.7% 49.5%
Telephone employees 62,307 68,425
Network access lines in
service (thousands) 22,514 21,492
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
April 30, 1997
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