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 19, 1999
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.)
Room 15G03, 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
<PAGE>
Item 5. Other Events
Qwest announcement
- ------------------
On April 19, 1999, BellSouth announced a new strategic relationship with
Qwest Communications International Inc. See Exhibit 99a for a complete copy of
the related press release.
First Quarter 1999 Earnings
- ---------------------------
On April 20, 1999, BellSouth announced earnings for the first quarter of
1999. See Exhibit 99b for a complete copy of the related press release.
Earnings guidance
- ---------------------------------
BellSouth believes that normalized earnings growth will be from 13 percent
to 15 percent for fiscal 2000 before impacts of accounting for software
capitalization.
SAFE HARBOR STATEMENT
- ---------------------
Statements that do not address historical performance are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 and are based on a number of assumptions, including but not limited to:
(1) continued domestic economic growth and demand for BellSouth's services; (2)
economic, monetary, regulatory and political stability where BellSouth conducts
its international operations; (3) the reasonable accuracy of BellSouth's
expectations of the impact on its international operations of weakening
currencies in Latin America as compared to the U.S. Dollar; (4) the reasonable
accuracy of BellSouth's expectations of the results of regulatory actions as
well as costs and recoveries with respect to access reform, universal service
and interconnection; (5) the reasonable accuracy of BellSouth's estimate of
regulatory authorization to provide wireline long distance services and the
impact of competition in its markets; and (6) satisfactory identification and
completion of Year 2000 software and hardware revisions by BellSouth and
entities with which it does business. Any developments significantly deviating
from these assumptions could cause actual results to differ materially from
those forecast or implied in the aforementioned forward-looking statements.
<PAGE>
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 20, 1999
BellSouth and Qwest announce strategic relationship to provide
next-generation digital communications services;
BellSouth takes 10 percent stake in Qwest
BellSouth Corporation (NYSE: BLS) and Qwest Communications International
Inc. (Nasdaq: QWST) today announced a strategic relationship that will
significantly accelerate the companies' efforts to provide a full set of
integrated digital data, image and voice communications services to their
customers. The relationship includes three basic components:
* Qwest and BellSouth immediately begin coordinated marketing of services,
with Qwest offering its full portfolio of data networking, Internet and
voice services. BellSouth will offer a full complement of local networking
services.
* Once BellSouth is allowed into the long-distance business, the companies
will jointly develop and deliver a comprehensive set of end-to-end,
high-speed data, image and voice communications services to business
customers, with a heavy emphasis on the fast-growing broadband and
Internet-based data services. BellSouth will assume retail leadership with
customers based in the South; Qwest will provide support resources to
assist BellSouth in the region as required with the primary emphasis of the
Qwest sales force being focused on the rest of the country.
* And finally, as part of the agreement, BellSouth will invest approximately
$3.5 billion at $94.50 a share for about a 10 percent equity stake in
Qwest. Qwest will issue 20,350,000 new shares to BellSouth in exchange for
approximately $1.93 billion in cash. At BellSouth's request, Qwest's
principal stockholder, Anschutz Company, will sell 16,650,000 shares to
BellSouth for approximately $1.57 billion. This will reduce Anschutz
Company's ownership interest in Qwest to approximately 39 percent.
"This is a significant step in our objective of becoming the premier data
communications provider to our customers," said Duane Ackerman, chairman and CEO
of BellSouth. "This relationship allows our customers to enjoy the range of
benefits from a comprehensive set of Internet and broadband digital solutions."
Once BellSouth receives permission to enter the long-distance market, the two
companies will offer seamless, high-capacity and high-speed network services
such as frame relay, ATM, and Internet Protocol and advanced applications
including web-hosting, electronic commerce, video streaming, Managed Network
Services, Managed Software Services and enhanced virtual private network
services.
"We are delighted to have this strategic relationship with a like-minded,
customer-focused company that is committed to offering customers end-to-end
high-speed communications services and who understands the tremendous potential
the Internet and data communications marketplace has to offer," said Joseph P.
Nacchio, Qwest chairman and CEO. "Moving forward, the BellSouth/Qwest
relationship will provide customers with a comprehensive communications solution
set and global reach that is unmatched in the industry."
The companies also pointed out that after BellSouth receives approval to offer
long-distance data and voice services, the agreement will enable both of them to
use each other's assets to develop infrastructure and/or distribution
capabilities in serving their respective customers across the globe. BellSouth
has extensive operations throughout Latin America as well as significant
presence in Europe. Qwest has a stronger presence in Europe and is beginning to
move into the Asia/Pacific and Latin American regions.
In addition, the relationship will also use the strategic alliances each has
with key Internet and technology companies including Microsoft, Cisco, Lotus and
others to the customers' advantage.
"There is a natural fit to our strategies that bodes well for our customers in
the future," said Ackerman. "Given the rapid change occurring in the
communications industry today, there is no doubt that together we have the
potential to be an even more significant driving force."
The equity aspect of the transaction is subject to Hart-Scott-Rodino review.
The deal is expected to close by the end of May.
BellSouth is a $23 billion communications services company. It provides
telecommunications, wireless communications, cable and digital TV, directory
advertising and publishing, and Internet and data services to nearly 34
million customers in 19 countries worldwide.
Qwest Communications International Inc. is a leader in reliable and secure
broadband Internet-based data, voice and image communications for businesses
and consumers. Headquartered in Denver, Qwest has more than 8,000 employees
and 80 sales offices in North America, Europe and Mexico. The Qwest Macro
Capacity(SM) Fiber Network, designed with the newest optical networking, will
span more than 18,500 route miles in the United States when it is completed by
mid-1999, and the additional 315-mile network route recently announced will be
complete by the end of the year. In addition, Qwest and KPN, the Dutch
telecommunications company, are forming a venture to build and operate a high-
capacity European fiber optic, Internet Protocol-based network that has 2,100
miles and will span 9,100 miles when it is completed in 2001. Qwest also has
nearly completed a 1,400-mile network in Mexico. For more information, please
visit the Qwest web site at http://www.qwest.com.
For more information about BellSouth Corporation, visit the BellSouth Web
page at: http://www.bellsouth.com. For more information about Qwest
Communications International Inc., visit the Qwest Web page at:
http://www.qwest.com.
# # #
BellSouth Note: This release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are based on
a number of assumptions, including but not limited to: (1) continued domestic
economic growth and demand for BellSouth's services; (2) economic, monetary,
regulatory and political stability where BellSouth conducts its international
operations; (3) the reasonable accuracy of BellSouth's expectations of the
impact on its international operations of weakening currencies in Latin America
as compared to the U.S. Dollar; (4) the reasonable accuracy of BellSouth's
expectations of the results of regulatory actions as well as costs and
recoveries with respect to access reform, universal service and interconnection;
(5) the reasonable accuracy of BellSouth's estimate of regulatory authorization
to provide wireline long distance services and the impact of competition in its
markets; and (6) satisfactory identification and completion of Year 2000
software and hardware revisions by BellSouth and entities with which it does
business. Any developments significantly deviating from these assumptions could
cause actual results to differ materially from those forecast or implied in the
aforementioned forward-looking statements.
Qwest Note: This release may contain forward-looking statements that involve
risks and uncertainties. These statements may differ materially from actual
future events or results. Readers are referred to the documents filed by Qwest
with the SEC, specifically the most recent reports which identify important risk
factors that could cause actual results to differ from those contained in the
forward-looking statements, including potential fluctuations in quarterly
results, dependence on new product development, rapid technological and market
change, failure to complete the network on schedule and on budget, financial
risk management and future growth subject to risks, Qwest's ability to achieve
Year 2000 compliance, and adverse changes in the regulatory or legislative
environment. Qwest undertakes no obligation to review or confirm analysts'
expectations or estimates or to release publicly any revisions to any
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
###
FOR MORE INFORMATION FOR IMMEDIATE RELEASE
Tim Klein (404-249-4135) April 20, 1999
Jeff Battcher (404-713-0274)
BellSouth Reports 15% Growth in Normalized EPS
Data/Internet helps fuel strong revenue growth;
International, wireless, convenience features also boost performance
ATLANTA - BellSouth Corporation (NYSE: BLS) reported a 15-percent increase
in first quarter earnings per share (EPS) before special items. Revenues grew
10.1 percent on a consolidated basis.
EPS was 46 cents before a non-cash expense of 14 cents related to Brazil's
currency devaluation. In the first quarter of 1998, EPS was 40 cents, before a
one-time gain of 5 cents. Reported EPS in the three months ended March 31, 1999
was 32 cents. (All per share amounts reflect BellSouth's 2-for-1 stock split in
December 1998.)
"BellSouth's fundamentals were very solid in the first quarter," said Duane
Ackerman, chairman and chief executive officer. "In addition to strong customer
growth in our international operations, we continued to drive growth in volumes
and revenues by marketing digital and data services, additional lines,
convenience features, wireless service and BellSouth Internet services for
businesses and consumers."
Consolidated revenues were a quarterly record $6.0 billion. Digital and
data services revenues increased to $555 million in the first quarter of 1999, a
30.3 percent increase compared to $426 million in the same three months a year
earlier.
Other volume measures in BellSouth's core business also showed strong
growth. Access line equivalents, which include digital and data services as well
as traditional switched lines, grew at an annual rate exceeding 15 percent.
BellSouth added 307,000 residential access lines in the first three months of
1999, an all-time high for any quarter.
The company also continued to boost the penetration of additional lines,
installing a quarterly record 126,000 for residential customers during January,
February and March. About one out of every six BellSouth residential customers
now has an additional line that is used for Internet access, fax machines,
work-at-home needs and extra voice lines.
BellSouth's performance benefited from sustained growth in convenience
features such as Caller ID Deluxe, Call Return and MemoryCall(r) service voice
messaging. Revenues from these and other convenience features were $434 million
in the first quarter of 1999, up 21.6 percent from the same three months of
1998. Twenty-three percent of BellSouth's residential customers now use the
company's popular Complete Choice(r) Plans, which package basic local service
with the customer's own unlimited menu selection of more than 20 convenience
features.
On a consolidated basis, domestic wireless revenues of $744 million in the
first quarter of 1999 grew 15.5 percent compared to $644 million in the same
three months of the previous year. On a proportionate basis, U.S. wireless
revenues were $701 million in the first quarter, an increase of 12.3 percent.
Including traditional analog cellular, digital cellular and PCS, U.S. wireless
customers grew 19.6 percent since March 31, 1998, surpassing 5.0 million on a
proportionate basis at the end of 1999's first quarter. About 40 percent of
BellSouth's customers in the U.S. are using digital wireless services.
(Proportionate data are adjusted for the fourth quarter 1998 restructuring of
partnerships in Los Angeles and Houston.)
International operations generated consolidated revenues of $561 million in
the first quarter, compared to $452 million in the same three months of 1998. On
a proportionate basis, international revenues were $704 million, an increase of
73 percent driven significantly by Brazil. Based on the company's ownership
percentages, BellSouth's international wireless customer base grew by 2.0
million, or 98 percent, compared to the year earlier, and now stands at 4.0
million. (Proportionate data exclude operations in New Zealand that BellSouth
sold in the fourth quarter of 1998.)
Reflecting across-the-board customer growth, as well as accelerated
investment spending and marketing costs, total operating expenses were $4.4
billion in the first quarter of 1999, an increase of 9.9 percent from the same
period a year ago. Net income was $615 million, including the foreign exchange
impact of $280 million. A change in accounting for internal-use software had a
positive impact of $65 million, or 3 cents per share. In the first quarter of
1998, net income was $892 million, including $96 million from the one-time gain.
BellSouth is a $23 billion communications services company. It provides
telecommunications, wireless communications, cable and digital TV, advertising
and publishing, and Internet and data services to more than 34 million customers
in 19 countries worldwide.
NOTE: For more information about BellSouth Corporation, visit the BellSouth
Web page at http://www.bellsouth.com/
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (unaudited)
(amounts in millions, except per share data)
Quarter Ended
3/31/99 3/31/98 % Change
Operating Revenues
Wireline communications
Local service $2,654 $2,414 9.9%
Network access 1,191 1,151 3.5%
Long distance 150 175 (14.3%)
Other wireline 280 236 18.6%
Total wireline
communications 4,275 3,976 7.5%
Domestic wireless 744 644 15.5%
International operations 561 452 24.1%
Advertising and publishing 343 336 2.1%
Other services 50 18 N/M
Total Operating Revenues 5,973 5,426 10.1%
Operating Expenses
Operational and support expenses 3,253 2,929 11.1%
Depreciation and amortization 1,113 1,043 6.7%
Total Operating Expenses 4,366 3,972 9.9%
Operating Income 1,607 1,454 10.5%
Interest Expense 226 190 18.9%
Gain on Sale of Operations - 155 N/M
Other (Expense) Income, net (207) 28 N/M
Income Before Income Taxes 1,174 1,447 (18.9%)
Provision for Income Taxes 559 555 0.7%
Net Income $615 $892 (31.1%)
Weighted Average Common Shares
Outstanding:
Basic 1,932 1,983 (2.6%)
Diluted 1,951 1,993 (2.1%)
Earnings Per Share:
Basic $0.32 $0.45 (28.9%)
Diluted $0.32 $0.45 (28.9%)
Selected Financial and Operating Data
Quarter Ended
3/31/99 3/31/98 % Change
(amounts in millions, except
per share data)
EBITDA $2,720 $2,497 8.9%
EBITDA margin 45.5% 46.0% -50bps
Return on average equity
(annualized) 16.1% 23.0% -690bps
Return on average total
capital (annualized) 11.3% 15.6% -430bps
Dividends per share $0.19 $0.18 5.6%
Capital expenditures $1,387 $1,226 13.1%
As of
3/31/99 3/31/98 % Change
Common shares outstanding 1,908 1,982 (3.7%)
Book value per share $7.55 $7.92 (4.7%)
Debt ratio 47.3% 41.1% +620bps
Total employees 91,955 84,126 9.3%
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Normalized Earnings Summary ($ in millions, except per share amounts)
(unaudited)
Quarter Ended
3/31/99 3/31/98 % Change
Reported Net Income $615 $892 (31.1%)
Foreign currency loss(a) 280 -
Gain on sale of ITT
World Directories(b) - (96)
Normalized Net Income $895 $796 12.4%
Reported Diluted Earnings
Per Share $0.32 $0.45 (28.9%)
Foreign currency loss(a) 0.14 -
Gain on sale of ITT
World Directories(b) - (0.05)
Normalized Diluted Earnings
Per Share $0.46 $0.40 15.0%
Normalized return on average
equity (annualized) 23.4% 20.5% +290bps
Normalized return on average
total capital (annualized) 15.2% 14.1% +110bps
(a) Represents our share of foreign currency losses recorded
during first quarter 1999 as a result of the devaluation of the
Brazilian Real during January 1999.
(b) Represents the after-tax gain associated with additional
proceeds received in first quarter 1998 on the July 1997 sale of ITT
World Directories.
Software Capitalization
The new accounting rules on capitalization of internal software
costs were adopted in first quarter 1999. The following table adjusts
our 1999 normalized operating results for the impact of adoption:
Quarter Ended
3/31/99 3/31/98 % change
Operational and support expenses $3,367 $2,929 15.0%
Depreciation and amortization $1,107 $1,043 6.1%
Adjusted:
Net Income $830 $796 4.3%
Earnings Per Share $.43 $.40 7.5%
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
March 31, December 31,
1999 1998
Assets
Current Assets
Cash and cash equivalents $1,779 $3,003
Temporary cash investments 209 184
Accounts receivable - net of
allowance for uncollectibles
of $246 and $251 4,450 4,629
Material and supplies 426 431
Other current assets 526 459
Total Current Assets 7,390 8,706
Investments and Advances 2,515 2,861
Property, Plant and Equipment 58,944 57,974
Less: accumulated depreciation 34,874 34,034
Property, Plant and Equipment, net 24,070 23,940
Deferred Charges and Other Assets 1,066 1,028
Intangible Assets, net 3,134 2,875
Total Assets $38,175 $39,410
Liabilties and Shareholders' Equity
Current Liabilities
Debt maturing within one year $4,570 $3,454
Accounts payable 1,492 2,219
Other current liabilities 3,863 3,477
Total Current Liabilities 9,925 9,150
Long-Term Debt 8,406 8,715
Other Noncurrent Liabilities
Deferred income taxes 2,656 2,512
Unamortized investment tax credits 157 167
Other noncurrent liabilities 2,629 2,756
Total Other Noncurrent Liabilities 5,442 5,435
Shareholders' Equity
Common stock, $1 par value 2,020 2,020
Paid-in capital 6,766 6,766
Retained earnings 9,718 9,479
Accumulated other comprehensive income (222) (64)
Shares held in trust and treasury (3,577) (1,752)
Guarantee of ESOP debt (303) (339)
Total Shareholders' Equity 14,402 16,110
Total Liabilities and Shareholders' Equity $38,175 $39,410
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Wireline Communications
Quarter Ended
3/31/99 3/31/98 % Change
Operating Revenues
Local service $2,654 $2,414 9.9%
Network access 1,191 1,151 3.5%
Long distance 150 175 (14.3%)
Other wireline 328 280 17.1%
Total Operating Revenues 4,323 4,020 7.5%
Operating Expenses
Operational and support
expenses 2,077 1,971 5.4%
Depreciation and
amortization 833 826 0.8%
Total Operating Expenses 2,910 2,797 4.0%
Operating Income 1,413 1,223 15.5%
Interest Expense 135 133 1.5%
Other Income, net 1 2 N/M
Income Before Income Taxes 1,279 1,092 17.1%
Provision for Income Taxes 478 409 16.9%
Segment Net Income(1) $801 $683 17.3%
Selected Financial and Operating Data
Quarter Ended
3/31/99 3/31/98 % Change
(amounts in millions)
EBITDA $2,246 $2,049 9.6%
EBITDA margin 52.0% 51.0% +100bps
Convenience feature revenues $434 $357 21.6%
Access minutes of use 26,825 25,082 6.9%
Long distance messages 177 201 (11.9%)
Capital expenditures $1,089 $843 29.2%
As of
3/31/99 3/31/98 % Change
Debt ratio 47.7% 46.6% +110bps
Equivalent access lines
in service (thousands):
Switched access lines 24,361 23,548 3.5%
Access line equivalents 16,065 11,537 39.2%
Total equivalent access lines
in service 40,426 35,085 15.2%
Telephone employees 62,934 58,326 7.9%
Telephone employees per 10,000
switched access lines 25.8 24.8 4.0%
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Supplemental Operating Data
Wireline Communications - Network Access Lines In Service(a)
As of
3/31/99 3/31/98 % Change
Switched access lines
Residence 16,764 16,127 3.9%
Business 7,325 7,148 2.5%
Other 272 273 (0.4%)
Total switched access
lines in service 24,361 23,548 3.5%
Access line equivalents(b)(c)
Selected digital data services:
Basic rate ISDN 193 147 31.3%
Primary rate ISDN 625 351 78.1%
DS0 451 411 9.7%
DS1 3,674 2,836 29.5%
DS3 & higher 11,122 7,792 42.7%
Total digital data lines
in service 16,065 11,537 39.2%
Total equivalent access lines in
service 40,426 35,085 15.2%
(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) Access line equivalents are derived by converting high
capacity data lines to the estimated capacity of one switched access
line. The conversion factors used are as follows: Basic rate ISDN=2.5
DS0s, Primary rate ISDN=24 DS0s, DS1=24 DS0s, DS3=672 DS0s, OC3=2,016
DS0s, OC12=8,064 DS0s, OC24=16,128 DS0s and OC48=32,256 DS0s. Basic
rate ISDN lines are included in our switched access line count as
equaling one line.
(c) Revenues associated with digital data lines are derived from
the sale of specific high-bandwidth products provisioned over
transmission lines with DS0 or greater capacity. While access line
equivalent counts have a directional relationship with digital and
data revenues, growth rates cannot be compared on an equivalent basis.
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Domestic Wireless(2)
Quarter Ended
3/31/99 3/31/98 % Change
Operating revenues $748 $646 15.8%
Segment net income(1) $60 $69 (13.0%)
Total assets $6,392 $5,859 9.1%
Control Basis(3) - Selected
Operating Data
(end of period, in thousands)
Customers 5,041 5,194 (2.9%)
POPs 59,541 74,817 (20.4%)
Proportionate Basis(4) - Selected
Financial and Operating Data
Quarter Ended
3/31/99 3/31/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(5) $701 $650 7.8%
Net income(6) $63 $70 (10.0%)
Operating cash flow(8) $269 $267 0.7%
Operating cash flow margin(9) 38.4% 41.1% -270bps
Customer net adds in period
(excluding ownership changes) 213 130 63.8%
Average monthly revenue per
customer(10) $49 $53 (7.5%)
As of
3/31/99 3/31/98 % Change
Customers 5,005 4,335 15.5%
POPs 58,052 59,942 (3.2%)
Penetration rate(11) 9.4% 8.9% +50bps
Property, plant and equipment,
gross ($M) $4,617 $4,376 5.5%
Normalized Financial and Operating
Data(12)
Quarter Ended
3/31/99 3/31/98 % Change
Wireless revenues, net(5) $701 $624 12.3%
Customers 5,005 4,185 19.6%
POPs 58,052 57,664 0.7%
Penetration rate(11) 9.4% 9.1% +30bps
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
International Operations(2)
Quarter Ended
3/31/99 3/31/98 % Change
Operating revenues $561 $452 24.1%
Segment net loss(1)(7) ($20) ($5) N/M
Total assets $4,110 $4,190 (1.9%)
Control Basis(3) - Selected
Operating Data
(end of period, in thousands)
Wireless:
Customers 3,050 1,984 53.7%
POPs 85,400 71,100 20.1%
Proportionate Basis(4) - Selected
Financial and Operating Data
Quarter Ended
3/31/99 3/31/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(5) $704 $427 64.9%
Net (loss) income(6)(7) ($8) $17 (147.1%)
Operating cash flow(8) $173 $103 68.0%
Operating cash flow margin(9) 24.6% 24.2% +40bps
Customer net adds in period
(excluding ownership changes) 574 217 164.5%
Average monthly revenue per
customer(10) $55 $66 (16.7%)
As of
3/31/99 3/31/98 % Change
Wireless:
Customers 4,012 2,098 91.2%
POPs 109,098 90,729 20.2%
Penetration rate(11) 4.1% 2.9% +120bps
Property, plant and equipment,
gross $3,053 $2,107 44.9%
Normalized Financial and
Operating Data(13)
Quarter Ended
3/31/99 3/31/98 % Change
Wireless revenues, net(5) $704 $406 73.4%
Customers 4,012 2,031 97.5%
POPs 109,098 88,324 23.5%
Penetration rate(11) 4.1% 2.9% +120bps
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Supplemental Operating Data - International Customers and
POPs by Country
(amounts in thousands)
Customers
Quarter Ended
Country Brand 3/31/99 3/31/98 % Change
PROPORTIONATE BASIS(4)
Argentina Movicom 613 421 45.6%
Brazil BCP (Sao Paulo) 381 - N/M
BCP (Northeast) 78 - N/M
Chile BellSouth (Santiago) 223 148 50.7%
Ecuador BellSouth 118 42 181.0%
Nicaragua BellSouth 20 8 150.0%
Panama BSC de Panama 28 10 180.0%
Peru Tele2000 (Lima) 153 85 80.0%
Tele2000 (Interior) - - -
Uruguay Movicom 36 19 89.5%
Venezuela Telcel 1,088 471 131.0%
Subtotal Latin America 2,738 1,204 127.4%
Denmark Sonofon 381 257 48.2%
Germany e-plus 507 261 94.3%
India SkyCell 4 5 (20.0%)
Israel Cellcom 382 304 25.7%
New Zealand BellSouth - 67 N/M
Subtotal Europe and Asia/Pacific 1,274 894 42.5%
Total International (Proportionate) 4,012 2,098 91.2%
CONTROL BASIS(3)
Argentina Movicom 942 647 45.6%
Brazil BCP (Sao Paulo) - - -
BCP (Northeast) - - -
Chile BellSouth (Santiago) 223 148 50.7%
Ecuador BellSouth 132 69 91.3%
Nicaragua BellSouth 22 10 120.0%
Panama BSC de Panama - - -
Peru Tele2000 (Lima) 259 144 79.9%
Tele2000 (Interior) - - -
Uruguay Movicom 79 41 92.7%
Venezuela Telcel 1,393 822 69.5%
Subtotal Latin America 3,050 1,881 62.1%
Denmark Sonofon - - -
Germany e-plus - - -
India SkyCell - - -
Israel Cellcom - - -
New Zealand BellSouth - 103 N/M
Subtotal Europe and Asia/Pacific - 103 N/M
Total International (Control) 3,050 1,984 53.7%
POPs
Quarter Ended
Country Brand 3/31/99 3/31/98 % Change
PROPORTIONATE BASIS(4)
Argentina Movicom 8,775 8,515 3.1%
Brazil BCP (Sao Paulo) 8,049 7,374 9.2%
BCP (Northeast) 12,451 11,305 10.1%
Chile BellSouth (Santiago) 7,400 7,400 -
Ecuador BellSouth 10,996 7,462 47.4%
Nicaragua BellSouth 2,581 2,581 -
Panama BSC de Panama 1,135 1,135 -
Peru Tele2000 (Lima) 4,133 4,133 -
Tele2000 (Interior) 10,037 - N/M
Uruguay Movicom 966 966 -
Venezuela Telcel 18,132 13,010 39.4%
Subtotal Latin America 84,655 63,881 32.5%
Denmark Sonofon 2,465 2,465 -
Germany e-plus 18,545 18,545 -
India SkyCell 1,348 1,348 -
Israel Cellcom 2,085 2,085 -
New Zealand BellSouth - 2,405 N/M
Subtotal Europe and Asia/Pacific 24,443 26,848 (9.0%)
Total International (Proportionate) 109,098 90,729 20.2%
CONTROL BASIS(3)
Argentina Movicom 13,500 13,100 3.1%
Brazil BCP (Sao Paulo) - - -
BCP (Northeast) - - -
Chile BellSouth (Santiago) 7,400 7,400 -
Ecuador BellSouth 12,300 12,200 0.8%
Nicaragua BellSouth 2,900 2,900 -
Panama BSC de Panama - - -
Peru Tele2000 (Lima) 7,000 7,000 -
Tele2000 (Interior) 17,000 - N/M
Uruguay Movicom 2,100 2,100 -
Venezuela Telcel 23,200 22,700 2.2%
Subtotal Latin America 85,400 67,400 26.7%
Denmark Sonofon - - -
Germany e-plus - - -
India SkyCell - - -
Israel Cellcom - - -
New Zealand BellSouth - 3,700 N/M
Subtotal Europe and Asia/Pacific - 3,700 N/M
Total International (Control) 85,400 71,100 20.1%
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Advertising and Publishing
Quarter Ended
3/31/99 3/31/98 % Change
Operating revenues $346 $338 2.4%
Segment net income(1) $84 $86 (2.3%)
Total assets $1,184 $1,154 2.6%
Selected Financial and Operating Data
Quarter Ended
3/31/99 3/31/98 % Change
EBITDA $146 $143 2.1%
EBITDA margin 42.2% 42.3% -10bps
Other
Quarter Ended
3/31/99 3/31/98 % Change
Operating revenues $120 $72 66.7%
Segment net loss(1) ($57) ($40) 42.5%
Total assets $1,393 $1,247 11.7%
See Accompanying Notes at Page 10
<PAGE>
BellSouth Corporation
Notes
(1) Segment net income (loss) is based on normalized results
which exclude certain one-time transactions and certain corporate
intercompany billings. Intersegment revenues are not eliminated for
purposes of management reporting.
(2) Domestic wireless and international operations financial and
operating data are reported one month in arrears, except for domestic
wireless customers and POPs which are presented as of quarter end.
(3) Control basis customers and POPs represent end of period
customers and estimated market population, respectively, in markets
where we exercise operating control or our ownership exceeds 50%. The
decrease in domestic wireless customers and POPs over the prior period
relates to the reorganization of our interests in the Los Angeles and
Houston/Galveston properties.
(4) Proportionate basis financial and operating data reflect our
ownership interest in the total operating results for each of our
wireless properties, both domestic and international, whether or not
consolidated for financial statement presentation purposes.
Proportionate basis customers and POPs represent end of period
customers and estimated market population, respectively, multiplied by
our ownership interest in a licensee operating in that market.
(5) Wireless revenues, net includes activation fees, access,
airtime, roaming (net), long distance, equipment sales, value added
services and other revenue. Proportionate domestic wireless revenues
have been adjusted to include the cost of equipment sold to customers.
(6) Net income (loss) represents our proportionate interest in
the net income (loss) of the respective operations and does not
include gains (losses) from the sale of properties or development
expenses for markets prior to service initiation.
(7) International operations' first quarter 1999 segment net
income (loss) and proportionate basis net income (loss) excludes $280
million in foreign exchange losses associated with the devaluation of
the Brazilian Real.
(8) Operating cash flow is defined as operating income plus
depreciation and amortization. While it represents our proportionate
interest in the operating entities' operating cash flows, it does not
necessarily represent cash available to us.
(9) Operating cash flow margin is calculated by dividing
operating cash flow by wireless revenues, net.
(10) Average monthly revenue per customer is calculated by
dividing average monthly revenue by average proportionate basis
customers. Average monthly revenue includes activation fees, access,
airtime, roaming (net), long distance and value added services.
(11) Penetration rate is calculated by dividing proportionate
basis customers by proportionate basis POPs (excludes POPs in markets
where service has not been initiated).
(12) During the fourth quarter of 1998, we reorganized our Los
Angeles and Houston/Galveston cellular partnerships with AT&T. The
reorganization changed our ownership interest from 60%, 44% and 37%,
respectively, to 44%, 44% and 39%, respectively. We have restated the
operating data to reflect this reorganization for all periods
presented and provide a more meaningful presentation of existing
operations.
(13) During 1998, we sold our interest in BellSouth New Zealand.
We have restated the operating data to exclude this operation from all
periods presented and provide a more meaningful presentation of
existing operations.
