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 20, 2000
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
First Quarter 2000 Earnings
On April 20, 2000, BellSouth announced earnings for the first quarter
of 2000. See Exhibit 99 for a complete copy of the related press
release.
Earnings Guidance
BellSouth is targeting EPS growth in the 10%-12% range for 2000 and 13%-15%
for 2001. In addition, revenue growth is targeted in the 8%-10% range for
both years, while expense growth is targeted in the 7%-9% range for both
years.
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Cautionary Language Concerning Forward-Looking Statements
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In addition to historical information, this document contains forward-looking
statements regarding events and financial trends that may affect our future
operating results, financial position and cash flows. These statements 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, financial position and cash
flows 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 product offerings;
o protracted 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, or delays in, the deployment of
new technologies; and
o unsatisfactory results in regulatory actions including access reform,
universal service, terms of interconnection, unbundled network elements and
resale rates.
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, and we do not intend, to
publicly release the results of any revisions to these forward-looking
statements to reflect events or circumstances after the date of this filing.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
99 Press Release - First Quarter 2000 Earnings
<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, 2000
FOR MORE INFORMATION FOR IMMEDIATE RELEASE
Jeff Battcher (404-713-0274) April 20, 2000
Pattie Kushner (404-249-2365)
BellSouth Reports 13% Growth in Normalized EPS
Company adds nearly 1.3 million wireless customers in first quarter;
Data/Internet/E>Commerce revenues grow 30.6% to $811 million
ATLANTA - With its domestic and international wireless businesses adding
nearly 1.3 million customers in the first three months of 2000, BellSouth
Corporation (NYSE: BLS) reported first quarter earnings per share (EPS) before
special items of 52 cents, a 13.0 percent increase. Consolidated revenues were a
first quarter record $6.5 billion, boosted by 30.6 percent growth in data
revenues.
EPS was 52 cents before the effect of two offsetting one-time items: a gain
of 4 cents related to the restructuring of BellSouth's investment in German
wireless company E-Plus; and a charge of 3 cents for severance benefits related
to a workforce reduction announced in February. In the first quarter a year ago,
EPS was 46 cents before a non-cash loss of 14 cents related to foreign currency
devaluation. On a reported basis, EPS of 53 cents in the first quarter of 2000
increased 65.6 percent compared to 32 cents in the three months ended March 31,
1999.
"Our strategies are positioning BellSouth for more growth based on the
strength of our assets," said Duane Ackerman, chairman and chief executive
officer. "Our deal to combine the domestic wireless operations of BellSouth and
SBC Communications highlights that strength. The new company will immediately
become the second largest wireless company in voice customers, plus it will
boast the leading digital network for data services such as wireless Web access,
e-mail, stock quotes, news alerts and transactions nationwide."
Domestic Wireless
BellSouth's domestic wireless businesses added an average of nearly 100,000
customers per month in the first quarter on a proportionate basis. At March 31,
BellSouth served 5.6 million mobile phone customers in the U.S., an annual
growth rate of 15.4 percent (adjusted for the 1999 sale of Honolulu Cellular),
up from 14.1 percent in the fourth quarter of 1999. In addition to winning new
customers, BellSouth's digital one-rate plans and other attractively priced
service packages are driving increased usage and revenues. Proportionate
wireless revenues of $792 million grew 15.1 percent compared to $688 million
(normalized for Honolulu) in the same quarter of 1999. Average revenue per
subscriber of $53 in the first quarter of 2000 increased 8.2 percent compared to
$49 in the same quarter a year ago.
International
BellSouth added nearly 1 million international wireless customers in the
first quarter of 2000 (proportionate basis), fueling an annual growth rate of
70.6 percent. First quarter proportionate revenues climbed 19.9 percent, to $844
million in 2000 from $704 million in the same quarter of the previous year. With
operations concentrated in Latin America and Europe, BellSouth's businesses now
cover a total population overseas of nearly 276 million and serve 13.8 million
total wireless customers (6.8 million on a proportionate basis).
Data, Internet, E>Commerce
Web hosting, Internet access and e>commerce applications for customers
helped BellSouth generate digital and data revenues of $811 million in the first
quarter of 2000, a 30.6 percent increase compared to $621 million in the same
quarter a year earlier. Equivalent access lines, which include broadband data
services as well as traditional switched lines, grew at an annual rate of 17.2
percent. BellSouth Internet Service now serves more than 735,000 consumer and
business customers, while customers of high-speed Internet access products such
as DSL total 49,000.
Packages and Calling Features
With service packages such as the BellSouth(r) Complete Choice(r) Plan
leading the way, calling feature revenues were $515 million in the first quarter
of 2000, a 16.0 percent increase compared to $444 million in the same three
months of 1999. More than one in four residential customers subscribe to
Complete Choice, which packages basic service with any or all of some two dozen
calling features such as Caller ID. Including packages, Caller ID now is used on
more than 40 percent of BellSouth residential lines.
<PAGE>
Additional Financial Highlights
BellSouth's consolidated revenues of $6.5 billion increased 8.6 percent compared
to $6.0 billion in the first quarter of 1999. Consolidated expenses increased
9.6 percent, not including $78 million for severance benefits. Normalized net
income of $981 million increased 9.6 percent compared to the first quarter of
1999, when net income was $895 million (before a foreign currency loss of $280
million). Reported net income of $1.0 billion reflected a gain of $68 million on
the E-Plus restructuring, and after-tax expenses of $48 million for the
severance benefits.
BellSouth is a $25 billion communications services company. It provides
telecommunications services, Internet, data and e>commerce applications,
wireless communications, cable and digital TV, and online and directory
advertising to nearly 39 million customers in 19 countries worldwide.
BellSouth invites to you access our computer viewable and downloadable earnings
commentary and financial statements on our Web site, www.bellsouth.com/investor.
In addition, recorded earnings commentary is available on the BellSouth Investor
Newsline at 770-662-0779 from 10 a.m. Eastern time Thursday, April 20 through
Wednesday, April 26, 2000.
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (unaudited)
(amounts in millions, except per share data)
Quarter Ended
3/31/00 3/31/99 % Change
Operating Revenues
Wireline communications
Local service $2,821 $2,654 6.3%
Network access 1,263 1,191 6.0%
Long distance 135 150 (10.0%)
Other wireline 285 280 1.8%
Total wireline
communications 4,504 4,275 5.4%
Domestic wireless 853 744 14.7%
International operations 664 561 18.4%
Advertising and publishing 364 343 6.1%
Other 102 50 N/M
Total Operating Revenues 6,487 5,973 8.6%
Operating Expenses
Operational and support expenses 3,568 3,253 9.7%
Depreciation and amortization 1,218 1,113 9.4%
Severance accrual 78 - N/M
Total Operating Expenses 4,864 4,366 11.4%
Operating Income 1,623 1,607 1.0%
Interest Expense 306 226 35.4%
Other Income (Expense), net 214 (207) N/M
Income Before Income Taxes 1,531 1,174 30.4%
Provision for Income Taxes 530 559 (5.2%)
Net Income $1,001 $615 62.8%
Diluted:
Weighted Average Common
Shares Outstanding 1,898 1,951 (2.7%)
Earnings Per Share $0.53 $0.32 65.6%
Selected Financial and Operating Data
Quarter Ended
3/31/00 3/31/99 % Change
EBITDA $2,919 $2,720 7.3%
EBITDA margin 45.0% 45.5% -50bps
Return on average
equity (annualized) 26.4% 16.1% + 1,030bps
Return on average
total capital (annualized) 15.8% 11.3% +450bps
Digital and data revenues $811 $621 30.6%
Dividends per share $0.19 $0.19 0.0%
Capital expenditures $1,563 $1,387 12.7%
As of
3/31/00 3/31/99 % Change
Common shares outstanding 1,880 1,908 (1.5%)
Book value per share $8.33 $7.55 10.3%
Debt ratio 51.0% 47.3% +370bps
Total employees 96,653 91,955 5.1%
<PAGE>
BellSouth Corporation
Normalized Earnings Summary (unaudited)
(amounts in millions, except per share data)
Quarter Ended
3/31/00 3/31/99 % Change
Reported Net Income $1,001 $615 62.8%
Gain on E-Plus restructuring (a) (68) - -
Severance accrual (b) 48 - -
Foreign currency loss(c) - 280 -
Normalized Net Income $981 $895 9.6%
Reported Diluted Earnings Per Share $0.53 $0.32 65.6%
Gain on E-Plus restructuring (a) (0.04) - -
Severance accrual (b) 0.03 - -
Foreign currency loss(c) - 0.14 -
Normalized Diluted Earnings Per Share $0.52 $0.46 13.0%
Normalized return on average
equity (annualized) 25.9% 23.4% +250bps
Normalized return on average total
capital (annualized) 15.6% 15.2% +40bps
(a) Represents income related to the restructuring of our ownership
interest in German wireless operator E-Plus.
(b) Represents expense recorded as a result of our previously
announced plan to reduce our domestic workforce.
(c) 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.
<PAGE>
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
March 31, December 31,
2000 1999
Assets
Current Assets:
Cash and cash equivalents $1,154 $1,287
Temporary cash investments 28 105
Accounts receivable--net of
allowance for uncollectibles
of $330 and $312 4,971 5,177
Material and supplies 443 451
Other current assets 524 367
Total Current Assets 7,120 7,387
Investments and Advances 6,663 6,097
Property, Plant and Equipment, net 24,934 24,631
Deferred Charges and Other Assets 1,652 1,564
Intangible Assets, net 3,942 3,774
Total Assets $44,311 $43,453
Liabilities and Shareholders' Equity
Current Liabilities:
Debt maturing within one year $5,484 $7,653
Accounts payable 2,085 1,961
Other current liabilities 3,918 3,781
Total Current Liabilities 11,487 13,395
Long-Term Debt 10,880 9,113
Noncurrent Liabilities:
Deferred income taxes 2,828 2,705
Unamortized investment tax credits 116 126
Other noncurrent liabilities 3,331 3,299
Total Noncurrent Liabilities 6,275 6,130
Shareholders' Equity:
Common stock, $1 par value 2,020 2,020
Paid-in capital 6,775 6,771
Retained earnings 12,078 11,456
Accumulated other comprehensive income (73) (358)
Shares held in trust and treasury (4,892) (4,798)
Guarantee of ESOP debt (239) (276)
Total Shareholders' Equity 15,669 14,815
Total Liabilities and Shareholders' Equity $44,311 $43,453
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (amounts in millions) (unaudited)
Wireline Communications
Quarter Ended
3/31/00 3/31/99 % Change
Operating Revenues
Local service $2,821 $2,654 6.3%
Network access 1,263 1,191 6.0%
Long distance 135 150 (10.0%)
Other wireline 357 328 8.8%
Total Operating Revenues 4,576 4,323 5.9%
Operating Expenses
Operational and support expenses 2,143 2,077 3.2%
Depreciation and amortization 881 833 5.8%
Total Operating Expenses 3,024 2,910 3.9%
Operating Income 1,552 1,413 9.8%
Interest Expense 162 135 20.0%
Other Income, net 6 1 N/M
Income Before Income Taxes 1,396 1,279 9.1%
Provision for Income Taxes 533 478 11.5%
Segment Net Income(1) $863 $801 7.7%
Selected Financial and Operating Data
Quarter Ended
3/31/00 3/31/99 % Change
(amounts in millions)
EBITDA $2,433 $2,246 8.3%
EBITDA margin 53.2% 52.0% +120bps
Convenience feature revenues $515 $444 16.0%
Access minutes of use 28,716 26,825 7.0%
Long distance messages 136 177 (23.2%)
Capital expenditures $1,177 $1,089 8.1%
As of
3/31/00 3/31/99 % Change
Debt ratio 53.4% 47.7% +570bps
Equivalent access lines
in service (thousands):
Switched access lines 24,726 24,361 1.5%
Access line equivalents 20,917 14,586 43.4%
Total equivalent access lines
in service 45,643 38,947 17.2%
Telephone employees 64,247 62,934 2.1%
<PAGE>
BellSouth Corporation
Supplemental Operating Data (in thousands)
Wireline Communications Network Access Lines In Service(a)
As of
3/31/00 3/31/99 % Change
Switched access lines
Residence 17,234 16,764 2.8%
Business 7,230 7,325 (1.3%)
Other 262 272 (3.7%)
Total switched access lines
in service 24,726 24,361 1.5%
Access line equivalents(b)
Selected digital data services:
Basic rate ISDN 226 193 17.1%
Primary rate ISDN 968 625 54.9%
DS0 848 468 81.2%
DS1 4,720 3,680 28.3%
DS3 & higher 14,155 9,620 47.1%
Total digital data
lines in service 20,917 14,586 43.4%
Total equivalent access
lines in service 45,643 38,947 17.2%
(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 represent a conversion of non-switched
data circuits to a switched access line basis and is presented
for comparability purposes. Equivalents are calculated by
converting data circuits (ISDN, ADSL, DS0, DS1 and DS3) and
SONET-based (optical) services (OC12 to OC48) to the equivalent
of a switched access line based on transport capacity. While the
revenues generated by access line equivalents have a directional
relationship with these counts, growth rates cannot be compared
on an equivalent basis.
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (amounts in millions) (unaudited)
Domestic Wireless(2)
Quarter Ended
3/31/00 3/31/99 % Change
Operating revenues $857 $748 14.6%
Segment net income(1) $60 $60 0.0%
Total assets $5,913 $6,392 (7.5%)
Proportionate Basis(3) Selected Financial and Operating Data
Quarter Ended
3/31/00 3/31/99 % Change
(amounts in millions,
except customer data in
thousands)
Wireless revenues, net(4) $792 $701 13.0%
Net income(5) $60 $63 (4.8%)
Operating cash flow(7) $290 $269 7.8%
Operating cash flow margin(8) 36.6% 38.4% -180bps
Customer net adds in period
(excluding ownership changes) 290 213 36.2%
Average monthly revenue per
customer(9) $53 $49 8.2%
As of
3/31/00 3/31/99 % Change
Customers 5,637 5,005 12.6%
POPs 59,403 58,052 2.3%
Penetration rate(10) 9.8% 9.4% +40bps
Property, plant and
equipment, gross $4,743 $4,617 2.7%
Normalized Financial and Operating Data
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
3/31/00 3/31/99 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $792 $688 15.1%
Customers 5,637 4,883 15.4%
POPs 59,403 57,172 3.9%
Penetration rate(10) 9.8% 9.3% +50bps
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (amounts in millions) (unaudited)
International Operations(2)
Quarter Ended
3/31/00 3/31/99 % Change
Operating revenues $675 $561 20.3%
Segment net income (loss)(1)(6) $14 ($20) N/M
Total assets $5,106 $4,110 24.2%
Proportionate Basis(3) Selected Financial and Operating Data
Quarter Ended
3/31/00 3/31/99 % Change
(amounts in millions, except
customer data in thousands)
Wireless revenues, net(4) $844 $704 19.9%
Net income (5)(6) $21 ($8) N/M
Operating cash flow(7) $192 $173 11.0%
Operating cash flow margin(8) 22.7% 24.6% -190bps
Customer net adds in period
(excluding ownership changes) 987 574 72.0%
Average monthly revenue per
customer(9) $39 $55 (29.1%)
As of
3/31/00 3/31/99 % Change
Wireless:
Customers 6,844 4,012 70.6%
POPs 148,901 109,098 36.5%
Penetration rate(10) 5.4% 4.1% +130bps
Property, plant and
equipment, gross $3,796 $3,053 24.3%
<PAGE>
BellSouth Corporation
Supplemental Operating Data - International Customers and POPs by
Country
(Proportionate Basis(3) in thousands)
Customers As of
Country Brand 3/31/00 3/31/99 % Change
Argentina Movicom 836 613 36.4%
Interior - - -
Brazil BCP (So Paulo) 618 381 62.2%
BCP (Northeast) 272 78 248.7%
Chile BellSouth (Santiago) 376 223 68.6%
BellSouth (Interior) 27 - N/M
Ecuador BellSouth 182 118 54.2%
Nicaragua BellSouth 45 20 125.0%
Panama BSC de Panama 62 28 121.4%
Peru Tele2000 (Lima) 299 153 95.4%
Tele2000 (Interior) 10 - N/M
Uruguay Movicom 65 36 80.6%
Venezuela Telcel 2,215 1,088 103.6%
Guatemala Guatemala - - -
Subtotal Latin
America 5,007 2,738 82.9%
Denmark Sonofon 385 381 1.0%
Germany eplus 920 507 81.5%
India SkyCell 6 4 50.0%
Israel Cellcom 526 382 37.7%
Subtotal Europe and
Asia/Pacific 1,837 1,274 44.2%
Total International 6,844 4,012 70.6%
POPs As of
Country Brand 3/31/00 3/31/99 % Change
Argentina Movicom 8,710 8,775 (0.7%)
Interior 14,560 - N/M
Brazil BCP (So Paulo) 8,049 8,049 -
BCP (Northeast) 12,451 12,451 -
Chile BellSouth (Santiago) 7,500 7,400 1.4%
BellSouth (Interior) 7,600 - N/M
Ecuador BellSouth 11,086 10,996 0.8%
Nicaragua BellSouth 2,581 2,581 -
Panama BSC de Panama 1,223 1,135 7.8%
Peru Tele2000 (Lima) 7,069 4,133 71.0%
Tele2000 (Interior) 17,334 10,037 72.7%
Uruguay Movicom 966 966 -
Venezuela Telcel 18,132 18,132 -
Guatemala Guatemala 7,140 - N/M
Subtotal Latin
America 124,401 84,655 47.0%
Denmark Sonofon 2,465 2,465 -
Germany eplus 18,568 18,545 0.1%
India SkyCell 1,348 1,348 -
Israel Cellcom 2,119 2,085 1.6%
Subtotal Europe and
Asia/ Pacific 24,500 24,443 0.2%
Total International 148,901 109,098 36.5%
<PAGE>
BellSouth Corporation
Consolidated Statements of Income (amounts in millions) (unaudited)
Advertising and Publishing
Quarter Ended
3/31/00 3/31/99 % Change
Operating revenues $369 $346 6.6%
Segment net income(1) $90 $84 7.1%
Total assets $1,552 $1,184 31.1%
Selected Financial and Operating Data
Quarter Ended
3/31/00 3/31/99 % Change
EBITDA $155 $146 6.2%
EBITDA margin 42.0% 42.2% -20bps
Other
Quarter Ended
3/31/00 3/31/99 % Change
Operating revenues $190 $120 58.3%
Segment net loss(1) ($39) ($57) 31.6%
Total assets $1,395 $1,393 0.1%
<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' first quarter 1999 segment net income
(loss) and proportionate basis net income (loss) exclude $280
million in foreign exchange losses associated with the
devaluation of the Brazilian Real to U.S. Dollar exchange rate.
(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).
