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):
October 20, 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
Third Quarter 1999 Earnings
- ---------------------------
On October 20, 1999, BellSouth announced earnings for the third quarter of
1999. See Exhibit 99a for a complete copy of the related press release.
Earnings guidance
- ---------------------------------
BellSouth has recorded $0.12 EPS year-to-date from the change in accounting for
software. We may go beyond our original estimate, which would drive an increase
in our reported EPS estimates for this year. However, BellSouth still expects
EPS growth from operations in the 12%-14% range in 1999, excluding the change in
accounting for software, impact of the currency devaluation in Brazil, and the
other normalizing items in this quarter. Consolidated total operating revenue
growth is targeted in the 8%-10% range, while consolidated total operating
expenses are targeted in the 6%-8% range for 1999 including the impact of the
change in accounting for software. For 2000, BellSouth expects EPS growth from
operations in the 13%-15% range.
- --------------------------------------------------------------------------
Cautionary Language Concerning Forward-Looking Statements
- --------------------------------------------------------------------------
Statements that do not address historical performance are based on our
assumptions and estimates and are subject to risks and uncertainties. For these
statements, we claim the protection of the safe harbor for forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995.
Factors that could affect future operating results and financial position and
could cause actual results to differ materially from those expressed in the
forward-looking statements are:
o a change in economic conditions in domestic or international markets where
we operate or have material investments which would affect demand for our
services;
o the intensity of competitive activity and its resulting impact on pricing
strategies and new product offerings;
o further delay in our entry into the interLATA long distance market;
o higher than anticipated start-up costs or significant up-front investments
associated with new business initiatives;
o unanticipated higher capital spending from the deployment of new
technologies;
o unsatisfactory results in regulatory actions including access reform,
universal service, terms of interconnection and unbundled network elements
and resale rates; and
o failure to satisfactorily identify and complete Year 2000 software and
hardware revisions by us and entities with which we do business.
This list of cautionary statements is not exhaustive. These and other
developments could cause our actual results to differ materially from those
forecast or implied in the forward-looking statements. You are cautioned not to
place undue reliance on these forward-looking statements, which are current only
as of the date of this filing. We have no obligation to publicly release the
results of any revisions to these forward-looking statements to reflect events
or circumstances after the date of this filing.
<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
October 20, 1999
FOR MORE INFORMATION FOR IMMEDIATE RELEASE
Jeff Battcher (404-713-0274) October 20, 1999
Pattie Thompson (404-249-2365)
BellSouth Reports 24.4% Growth in Normalized EPS
EPS of 51 cents before special items jumps 10 cents;
Company surpasses 10 million wireless customers worldwide
ATLANTA - With continued across-the-board growth highlighted by surpassing 10
million wireless customers worldwide, BellSouth Corporation (NYSE: BLS) reported
third quarter earnings per share (EPS) of 51 cents before special items, a 24.4
percent increase compared to 41 cents in the third quarter of 1998. Consolidated
revenues increased 9.5 percent to a record $6.4 billion, as BellSouth's data,
Internet and other digital services continued to boost top line growth.
Reported EPS in the most recent quarter was 53 cents. It included gains of 5
cents related to the recognition of certain foreign investment tax credits
generated in prior years and 1 cent on the August 1999 sale of Honolulu
Cellular. EPS also reflected a charge of 4 cents related to foreign currency
impact on Brazilian debt.
"Our financial performance didn't skip a beat in the third quarter," said Duane
Ackerman, BellSouth chairman and chief executive officer. "We're combining the
packages of communications services customers want with the award-winning
service they expect from BellSouth. In addition, our revenue and earnings gains
demonstrate the advantages of operating in high growth markets, both in the U.S.
and internationally."
[Note to editors: On August 4, 1999 BellSouth took top honors (tie) for the
fourth consecutive year in the J.D. Power and Associates Residential Local
Telephone Service Satisfaction Study(SM). On September 23, BellSouth Mobility
and BellSouth Mobility DCS placed first in Atlanta and Charlotte, respectively,
in the J.D. Power and Associates 1999 U.S. Wireless Customer Satisfaction
Study(SM).]
BellSouth's fast-growing domestic and international wireless operations shot
past the combined 10 million customer milestone during the third quarter, based
on the company's ownership percentages. In the U.S., wireless customers reached
5.1 million on a proportionate basis, an increase of 16.1 percent compared to
September 30, 1998. BellSouth's international wireless customer base expanded at
the annual rate of 76 percent. On a proportionate basis, the company now serves
5.2 million customers outside the U.S., including 3.7 million in Latin America.
Domestic wireless revenues of $815 million grew 16.1 percent on a consolidated
basis compared to $702 million in the third quarter of the previous year.
BellSouth's rapidly growing international operations generated proportionate
revenues of $749 million in the third quarter, compared to $600 million in the
same three months of 1998. This 24.8 percent increase was driven by continued
high growth in Latin America, particularly in prepaid customers. During the
third quarter BellSouth extended its popular prepaid cellular products to all
nine of the countries it serves in Latin America.
Digital and data services revenues grew to $698 million in the third quarter of
1999, a 31 percent increase compared to $534 million in the same three months a
year earlier. Demand for BellSouth's family of high-speed digital services and
data products continued to fuel revenues. Innovative wireless data offerings
such as BellSouth Interactive Paging(SM) service and joint marketing of the Palm
VII(TM) connected organizer by 3Com also contributed to revenue growth. In
addition, the number of BellSouth.net(SM) Internet service customers more than
doubled, reaching 626,000, an annual growth rate of 107 percent.
Revenues from convenience features were $481 million in the third quarter of
1999. Sales of the new BellSouth(R) Solutions product are running ahead of
projections. Introduced in August for residential and small business customers,
BellSouth Solutions is a package of Internet access, wireless, paging and local
phone service with convenience features -- all on one bill, with one number to
call for service.
Total operating expenses were $4.7 billion, a 7.0 percent increase compared to
the third quarter of 1998. Expenses reflected the growth in volumes and
customers as well as spending on BellSouth's data initiatives and marketing,
offset by a change in accounting for internal-use software.
Reported net income in the third quarter of 1999 was $1.015 billion, including
$95 million from the recognition of certain foreign investment tax credits
generated in prior years and $23 million from the gain on Honolulu Cellular. The
non-cash foreign currency charge reduced reported net income by $75 million. Net
income in the third quarter of 1998 was $814 million.
BellSouth is a $25 billion communications services company. It provides
telecommunications, wireless communications, cable and digital TV, advertising
and publishing, and Internet and data services to more than 36 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
9/30/99 9/30/98 % Change
Operating Revenues
Wireline communications
Local service $2,747 $2,542 8.1%
Network access 1,200 1,147 4.6%
Long distance 158 180 (12.2%)
Other wireline 310 267 16.1%
Total wireline
communications 4,415 4,136 6.7%
Domestic wireless 815 702 16.1%
International operations 575 514 11.9%
Advertising and publishing 540 481 12.3%
Other 77 32 N/M
Total Operating Revenues 6,422 5,865 9.5%
Operating Expenses
Operational and support expenses 3,541 3,291 7.6%
Depreciation and amortization 1,170 1,111 5.3%
Total Operating Expenses 4,711 4,402 7.0%
Operating Income 1,711 1,463 17.0%
Interest Expense 266 218 22.0%
Other Income (Expense), net 25 73 N/M
Income Before Income Taxes 1,470 1,318 11.5%
Provision for Income Taxes 455 504 (9.7%)
Net Income $1,015 $814 24.7%
Diluted:
Weighted Average Common
Shares Outstanding 1,904 1,979 (3.8%)
Earnings Per Share $0.53 $0.41 29.3%
Selected Financial and Operating Data
Quarter Ended
9/30/99 9/30/98 % Change
EBITDA $2,881 $2,574 11.9%
EBITDA margin 44.9% 43.9% +100bps
Return on average
equity (annualized) 28.4% 19.6% +880bps
Return on average total
capital (annualized) 16.3% 13.9% +240bps
Dividends per share $0.19 $0.18 5.6%
Capital expenditures $1,570 $1,264 24.2%
As of
9/30/99 9/30/98 % Change
Common shares outstanding 1,884 1,959 (3.8%)
Book value per share $7.26 $8.12 (10.6%)
Debt ratio 54.0% 42.7% +1,130bps
Total employees 95,773 86,628 10.6%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating Revenues
Wireline communications
Local service $8,113 $7,458 8.8%
Network access 3,578 3,458 3.5%
Long distance 461 532 (13.3%)
Other wireline 845 752 12.4%
Total wireline
communications 12,997 12,200 6.5%
Domestic wireless 2,355 2,018 16.7%
International operations 1,701 1,450 17.3%
Advertising and publishing 1,290 1,211 6.5%
Other 200 76 N/M
Total Operating Revenues 18,543 16,955 9.4%
Operating Expenses
Operational and support
expenses 10,153 9,376 8.3%
Depreciation and amortization 3,426 3,228 6.1%
Total Operating Expenses 13,579 12,604 7.7%
Operating Income 4,964 4,351 14.1%
Interest Expense 737 611 20.6%
Other Income (Expense), net (10) 374 N/M
Income Before Income Taxes 4,217 4,114 2.5%
Provision for Income Taxes 1,607 1,590 1.1%
Net Income $2,610 $2,524 3.4%
Diluted:
Weighted Average Common
Shares Outstanding 1,921 1,987 (3.3%)
Earnings Per Share $1.36 $1.27 7.1%
Selected Financial and Operating Data
Nine Months Ended
9/30/99 9/30/98 % Change
EBITDA $8,390 $7,579 10.7%
EBITDA margin 45.2% 44.7% +50bps
Return on average
equity (annualized) 23.9% 20.9% +300bps
Return on average total
capital (annualized) 14.8% 14.4% +40bps
Dividends per share $0.57 $0.54 5.6%
Capital expenditures $4,456 $3,744 19.0%
See Accompanying Notes at Page 10 1
<PAGE>
BellSouth Corporation
Normalized Earnings Summary (unaudited)
($ in millions, except per share data)
Quarter Ended
9/30/99 9/30/98 % Change
Reported Net Income $1,015 $814 24.7%
Foreign currency loss(a) 75 - -
Recognition of foreign
investment tax credits(b) (95) - -
Gain on sale of Honolulu
Cellular (23) - -
Gain on sale of ITT World
Directories(c) - - -
Normalized Net Income $972 $814 19.4%
Reported Diluted Earnings Per Share $0.53 $0.41 29.3%
Foreign currency loss(a) 0.04 - -
Recognition of foreign
investment tax credits(b) (0.05) - -
Gain on sale of Honolulu
Cellular (0.01) - -
Gain on sale of ITT World
Directories(c) - - -
Normalized Diluted Earnings Per Share $0.51 $0.41 24.4%
Normalized return on average
equity (annualized) 27.2% 19.6% +760bps
Normalized return on average
total capital (annualized) 15.7% 13.9% +180bps
Nine Months Ended
9/30/99 9/30/98 % Change
Reported Net Income $2,610 $2,524 3.4%
Foreign currency loss(a) 355 -
Recognition of foreign
investment tax credits(b) (95) -
Gain on sale of Honolulu
Cellular (23) -
Gain on sale of ITT World
Directories(c) - (96)
Normalized Net Income $2,847 $2,428 17.3%
Reported Diluted Earnings Per Share $1.36 $1.27 7.1%
Foreign currency loss(a) 0.18 -
Recognition of foreign
investment tax credits(b) (0.05) -
Gain on sale of Honolulu
Cellular (0.01) -
Gain on sale of ITT World
Directories(c) - (0.05)
Normalized Diluted Earnings Per Share $1.48 $1.22 21.3%
Normalized return on average
equity (annualized) 26.1% 20.1% +600bps
Normalized return on average
total capital (annualized) 15.9% 13.9% +200bps
(a) Represents foreign currency losses recorded by our equity
investees in Brazil. These losses are primarily due to weakening
of the Brazilian Real and the resulting mark-to-market adjustment
of their US dollar-denominated debt.
(b) Represents Foreign investment tax credits generated in prior
years.
(c) Represents the after-tax gain associated with additional proceeds
received in first quarter 1998 on the July 1997 sale of ITT World
Directories, included in Other Income (Expense), net.
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
9/30/99 9/30/98 % Change
Operational and support expenses $3,691 $3,291 12.2%
Depreciation and amortization 1,143 1,111 2.9%
Total Operating Expenses $4,834 $4,402 9.8%
Adjusted:
Net Income $892 $814 9.6%
Earnings Per Share $.47 $.41 14.6%
Nine Months Ended
9/30/99 9/30/98 % Change
Operational and support expenses $10,585 $9,376 12.9%
Depreciation and amortization 3,377 3,228 4.6%
Total Operating Expenses $13,962 $12,604 10.8%
Adjusted:
Net Income $2,607 $2,428 7.4%
Earnings Per Share $1.36 $1.22 11.5%
See Accompanying Notes at Page 10 2
<PAGE>
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
September 30, December 31,
1999 1998
Assets
Current Assets:
Cash and cash equivalents $878 $3,003
Temporary cash investments 262 184
Accounts receivable--net of
allowance for uncollectibles
of $293 and $251 4,794 4,629
Material and supplies 468 431
Other current assets 539 459
Total Current Assets 6,941 8,706
Investments and Advances 4,863 2,861
Property, Plant and Equipment 60,525 57,974
Less: accumulated depreciation 36,005 34,034
Property, Plant and
Equipment, net 24,520 23,940
Deferred Charges and Other Assets 1,876 1,028
Intangible Assets, net 3,719 2,875
Total Assets $41,919 $39,410
Liabilties and Shareholders' Equity
Current Liabilities:
Debt maturing within one year $7,308 $3,454
Accounts payable 2,062 2,219
Other current liabilities 4,244 3,477
Total Current Liabilities 13,614 9,150
Long-Term Debt 8,786 8,715
Noncurrent Liabilities
Deferred income taxes 2,649 2,512
Unamortized investment tax
credits 136 167
Other noncurrent liabilities 3,054 2,756
Total Noncurrent
Liabilities 5,839 5,435
Shareholders' Equity:
Common stock, $1 par value 2,020 2,020
Paid-in capital 6,766 6,766
Retained earnings 10,982 9,479
Accumulated other
comprehensive income (1,057) (64)
Shares held in trust and
treasury (4,721) (1,752)
Guarantee of ESOP debt (310) (339)
Total Shareholders' Equity 13,680 16,110
Total Liabilities and Shareholders' Equity $41,919 $39,410
See Accompanying Notes at Page 10 3
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Wireline Communications
Quarter Ended
9/30/99 9/30/98 % Change
Operating Revenues
Local service $2,747 $2,542 8.1%
Network access 1,200 1,147 4.6%
Long distance 158 180 (12.2%)
Other wireline 376 326 15.3%
Total Operating
Revenues 4,481 4,195 6.8%
Operating Expenses
Operational and support
expenses 2,175 2,203 (1.3%)
Depreciation and amortization 868 847 2.5%
Total Operating Expenses 3,043 3,050 (0.2%)
Operating Income 1,438 1,145 25.6%
Interest Expense 142 132 7.6%
Other Income, net 17 (2) N/M
Income Before Income Taxes 1,313 1,011 29.9%
Provision for Income Taxes 496 344 44.2%
Segment Net Income(1) $817 $667 22.5%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating Revenues
Local service $8,113 $7,458 8.8%
Network access 3,578 3,458 3.5%
Long distance 461 532 (13.3%)
Other wireline 1,078 903 19.4%
Total Operating
Revenues 13,230 12,351 7.1%
Operating Expenses
Operational and support
expenses 6,438 6,295 2.3%
Depreciation and amortization 2,551 2,509 1.7%
Total Operating Expenses 8,989 8,804 2.1%
Operating Income 4,241 3,547 19.6%
Interest Expense 410 409 0.2%
Other Income, net 18 2 N/M
Income Before Income Taxes 3,849 3,140 22.6%
Provision for Income Taxes 1,450 1,146 26.5%
Segment Net Income(1) $2,399 $1,994 20.3%
Selected Financial and Operating Data
Quarter Ended
9/30/99 9/30/98 % Change
(amounts in millions)
EBITDA $2,306 $1,992 15.8%
EBITDA margin 51.5% 47.5% +400bps
Convenience feature revenues $481 $428 12.4%
Access minutes of use 27,858 26,438 5.4%
Long distance messages 160 199 (19.6%)
Capital expenditures $1,213 $870 39.4%
Nine Months Ended
9/30/99 9/30/98 % Change
(amounts in millions)
EBITDA $6,792 $6,056 12.2%
EBITDA margin 51.3% 49.0% +230bps
Convenience feature revenues $1,381 $1,175 17.5%
Access minutes of use 82,310 77,760 5.9%
Long distance messages 505 601 (16.0%)
Capital expenditures $3,468 $2,593 33.7%
As of
9/30/99 9/30/98 % Change
Debt ratio 49.2% 47.3% +190bps
Equivalent access lines in
service (thousands):
Switched access lines 24,440 23,869 2.4%
Access line equivalents 18,349 13,470 36.2%
Total equivalent access lines
in service 42,789 37,339 14.6%
Telephone employees 64,987 60,087 8.2%
Telephone employees per 10,000
switched access lines 26.6 25.2 5.6%
See Accompanying Notes at Page 10 4
<PAGE>
BellSouth Corporation
Supplemental Operating Data (in thousands)
Wireline Communications - Network Access Lines In Service(a)
As of
9/30/99 9/30/98 % Change
Switched access lines
Residence 16,889 16,329 3.4%
Business 7,282 7,266 0.2%
Other 269 274 (1.8%)
Total switched access
lines in service 24,440 23,869 2.4%
Access line equivalents(b)(c)
Selected digital data services:
Basic rate ISDN 214 167 28.1%
Primary rate ISDN 785 458 71.4%
DS0 512 425 20.5%
DS1 4,198 3,247 29.3%
DS3 & higher 12,640 9,173 37.8%
Total digital data lines
in service 18,349 13,470 36.2%
Total equivalent access lines
in service 42,789 37,339 14.6%
(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 5
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Domestic Wireless(2)
Quarter Ended
9/30/99 9/30/98 % Change
Operating revenues $820 $703 16.6%
Segment net income(1) $76 $79 (3.8%)
Total assets $6,130 $6,005 2.1%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating revenues $2,367 $2,023 17.0%
Segment net income(1) $214 $222 (3.6%)
Proportionate Basis(3) - Selected Financial and Operating Data
Quarter Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $755 $692 9.1%
Net income(5) $76 $80 (5.0%)
Operating cash flow(7) $296 $298 (0.7%)
Operating cash flow margin(8) 39.2% 43.1% -390bps
Customer net adds in period
(excluding ownership changes) 82 171 (52.0%)
Average monthly revenue per
customer(9) $51 $54 (5.6%)
Nine Months Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $2,217 $2,004 10.6%
Net income(5) $217 $229 (5.2%)
Operating cash flow(7) $861 $844 2.0%
Operating cash flow margin(8) 38.8% 42.1% -330bps
Customer net adds in period
(excluding ownership changes) 481 496 (3.0%)
Average monthly revenue per
customer(9) $51 $54 (5.6%)
As of
9/30/99 9/30/98 % Change
Customers 5,135 4,700 9.3%
POPs 58,402 60,250 (3.1%)
Penetration rate(10) 9.0% 9.6% -60bps
Property, plant and
equipment, gross $4,745 $4,606 3.0%
Normalized Financial and Operating Data
During the fourth quarter of 1998, we reorganized our Los Angeles and
Houston/Galveston cellular partnerships with AT&T. During the third
quarter of 1999, we sold our Honolulu Cellular Operations. In the
following table, we have restated the prior period financial and
operating data to reflect these changes and provide more meaningful
comparative information for existing operations.
Quarter Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $745 $653 14.1%
Customers 5,135 4,423 16.1%
POPs 58,402 57,091 2.3%
Penetration rate(10) 9.0% 9.7% -70bps
Nine Months Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $2,179 $1,893 15.1%
See Accompanying Notes at Page 10 6
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
International Operations(2)
Quarter Ended
9/30/99 9/30/98 % Change
Operating revenues $576 $514 12.1%
Segment net income (loss)(1)(6) $9 $5 80.0%
Total assets $4,734 $4,483 5.6%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating revenues $1,702 $1,450 17.4%
Segment net income (loss)(1)(6) $39 ($22) N/M
Proportionate Basis(3) - Selected Financial and Operating Data
Quarter Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $749 $620 20.8%
Net income (5)(6) $24 $20 20.0%
Operating cash flow(7) $205 $170 20.6%
Operating cash flow margin(8) 27.4% 27.4% -
Customer net adds in period
(excluding ownership changes) 684 403 69.7%
Average monthly revenue per
customer(9) $46 $67 (31.3%)
Nine Months Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $2,163 $1,519 42.4%
Net income (5)(6) $70 $31 N/M
Operating cash flow(7) $593 $396 49.7%
Operating cash flow margin(8) 27.4% 26.1% +130bps
Customer net adds in period
(excluding ownership changes) 1,682 911 84.6%
Average monthly revenue per
customer(9) $51 $66 (22.7%)
As of
9/30/99 9/30/98 % Change
Wireless:
Customers 5,163 3,014 71.3%
POPs 135,131 108,942 24.0%
Penetration rate(10) 4.8% 3.1% +170bps
Property, plant and
equipment, gross $3,374 $2,819 19.7%
Normalized Financial and Operating Data
During 1998, we sold our interest in BellSouth New Zealand. In the
following table, we have excluded this operation from the prior period
financial and operating data to provide more meaningful comparative
information for existing operations.
Quarter Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $749 $600 24.8%
Customers 5,163 2,933 76.0%
POPs 135,131 106,537 26.8%
Penetration rate(10) 4.8% 3.0% +180bps
Nine Months Ended
9/30/99 9/30/98 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $2,163 $1,457 48.5%
See Accompanying Notes at Page 10 7
<PAGE>
BellSouth Corporation
Supplemental Operating Data -
International Customers and POPs by Country
(Proportionate Basis(3) in thousands)
Customers
As of
Country Brand 9/30/99 9/30/98 % Change
Argentina Movicom 702 519 35.3%
Interior - - -
Brazil BCP (Sao Paulo) 510 194 162.9%
BCP (Northeast) 146 21 N/M
Chile BellSouth (Santiago) 306 164 86.6%
Chile BellSouth (Interior) 4 - N/M
Ecuador BellSouth 149 94 58.5%
Nicaragua BellSouth 28 12 133.3%
Panama BSC de Panama 42 18 133.3%
Peru Tele2000 (Lima) 214 125 71.2%
Tele2000 (Interior) - - -
Uruguay Movicom 48 21 128.6%
Venezuela Telcel 1,513 755 100.4%
Subtotal Latin America 3,662 1,923 90.4%
Denmark Sonofon 389 308 26.3%
Germany e-plus 661 356 85.7%
India SkyCell 5 5 -
Israel Cellcom 446 341 30.8%
New Zealand BellSouth - 81 N/M
Subtotal Europe and Asia/Pacific 1,501 1,091 37.6%
Total International 5,163 3,014 71.3%
POPs
As of
Country Brand 9/30/99 9/30/98 % Change
Argentina Movicom 8,775 8,515 3.1%
Interior 14,690 - N/M
Brazil BCP (Sao Paulo) 8,049 7,374 9.2%
BCP (Northeast) 12,451 11,305 10.1%
Chile BellSouth (Santiago) 7,400 7,400 -
Chile BellSouth (Interior) 7,400 - N/M
Ecuador BellSouth 10,996 10,906 0.8%
Nicaragua BellSouth 2,581 2,581 -
Panama BSC de Panama 1,135 1,135 -
Peru Tele2000 (Lima) 5,283 4,133 27.8%
Tele2000 (Interior) 12,830 10,037 27.8%
Uruguay Movicom 966 966 -
Venezuela Telcel 18,132 17,742 2.2%
Subtotal Latin America 110,688 82,094 34.8%
Denmark Sonofon 2,465 2,465 -
Germany e-plus 18,545 18,545 -
India SkyCell 1,348 1,348 -
Israel Cellcom 2,085 2,085 -
New Zealand BellSouth - 2,405 N/M
Subtotal Europe and Asia/Pacific 24,443 26,848 (9.0%)
Total International 135,131 108,942 24.0%
See Accompanying Notes at Page 10 8
<PAGE>
BellSouth Corporation
Consolidated Statements of Income ($ in millions) (unaudited)
Advertising and Publishing
Quarter Ended
9/30/99 9/30/98 % Change
Operating revenues $542 $481 12.7%
Segment net income(1) $160 $143 11.9%
Total assets $1,438 $1,117 28.7%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating revenues $1,298 $1,211 7.2%
Segment net income(1) $342 $331 3.3%
Selected Financial and Operating Data
Quarter Ended
9/30/99 9/30/98 % Change
EBITDA $269 $239 12.6%
EBITDA margin 49.6% 49.7% -10bps
Nine Months Ended
9/30/99 9/30/98 % Change
EBITDA $584 $545 7.2%
EBITDA margin 45.0% 45.0% -
Other
Quarter Ended
9/30/99 9/30/98 % Change
Operating revenues $179 $90 98.9%
Segment net loss(1) ($39) ($50) 22.0%
Total assets $1,231 $1,132 8.7%
Nine Months Ended
9/30/99 9/30/98 % Change
Operating revenues $464 $241 92.5%
Segment net loss(1) ($155) ($121) (28.1%)
See Accompanying Notes at Page 10 9
<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) 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.
(4) 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.
(5) 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.
(6) International operations' third quarter and year-to-date 1999
segment net income (loss) and proportionate basis net income
(loss) excludes $75 million and $355 million, respectively, in
foreign exchange losses associated with the devaluation of the
Brazilian Real. Those results also exclude $95 million related to
the recognition of foreign investment tax credits.
(7) 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.
(8) Operating cash flow margin is calculated by dividing operating
cash flow by wireless revenues, net.
(9) 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.
(10) Penetration rate is calculated by dividing proportionate basis
customers by proportionate basis POPs (excludes POPs in markets
where service has not been initiated).
10
