-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NbELw4ce4X6Cbr2rxJLYQfWjbG7/Tvls6JphVUDDhx24byvT+7AzRSIkMNlgnh4P MLk6jU6zaaPektEAmGHlXg== 0000732713-00-000006.txt : 20000421 0000732713-00-000006.hdr.sgml : 20000421 ACCESSION NUMBER: 0000732713-00-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000420 ITEM INFORMATION: FILED AS OF DATE: 20000420 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELLSOUTH CORP CENTRAL INDEX KEY: 0000732713 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 581533433 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08607 FILM NUMBER: 605737 BUSINESS ADDRESS: STREET 1: 1155 PEACHTREE ST NE STREET 2: ROOM 15G03 CITY: ATLANTA STATE: GA ZIP: 30309-3610 BUSINESS PHONE: 4042492000 8-K 1 1Q00 EARNINGS RELEASE 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 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. - ------------------------------------------------------------------------------ Cautionary Language Concerning Forward-Looking Statements - ------------------------------------------------------------------------------ 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 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 EX-99 2 EARNINGS RELEASE 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. 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. 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% 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. 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 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% 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. 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 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% 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% 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% 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). -----END PRIVACY-ENHANCED MESSAGE-----