-----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, AhMUt44btb/TIVh/8o2zG4MH+53fSEoH4ToRmqieqT6amD/E6Ty8VyZ8poDhdnaF p2meuMHN8EVMK6dzvF4XKQ== 0000732713-01-000002.txt : 20010123 0000732713-01-000002.hdr.sgml : 20010123 ACCESSION NUMBER: 0000732713-01-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010122 ITEM INFORMATION: FILED AS OF DATE: 20010122 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: 1512366 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 0001.txt 4Q00 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): January 22, 2001 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 Fourth Quarter 2000 Earnings On January 22, 2001, BellSouth announced earnings for the fourth quarter of 2000. See Exhibit 99 for a complete copy of the related press release. Earnings Guidance BellSouth is reaffirming its previous guidance for certain key financial and business metrics in 2001 as follows: - - EPS growth in the 7% - 9% range - - Total operating revenue growth (including Cingular) of 9% -11% - - Data revenue of approximately 30% growth - - DSL high-speed Internet customers of 600,000 at 12/31/01 - - Capital Expenditures of $5.5 -- $6.0 billion - ------------------------------------------------------------------------------ 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 a decrease in the growth rate of demand for the services which we offer; 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 - Fourth 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 - Finance and Supply Chain Management January 22, 2001 EX-99 2 0002.txt EARNINGS RELEASE FOR MORE INFORMATION FOR IMMEDIATE RELEASE Jeff Battcher (404-713-0274) January 22, 2001 Pattie Kushner (404-249-2365) BellSouth 2000 EPS Highlights Growth Areas * Normalized EPS increases 10% for year * Data, wireless and international continue to boost revenues * DSL customers increase over 60% in three months, exceeding target * Domestic wireless revenues grow 33% * Consolidated international revenues rise 26% ATLANTA - With solid performance continuing in its growth areas of data, wireless and international, BellSouth Corporation (NYSE: BLS) reported earnings per share (EPS) of 59 cents in the fourth quarter of 2000, compared to reported EPS of 55 cents in the fourth quarter of 1999. For the year, reported EPS was $2.23 in 2000 compared to $1.80 in 1999. Normalized for special items, EPS in the fourth quarter of 2000 was 57 cents compared to normalized EPS of 53 cents in the same quarter a year ago. For the year, normalized EPS was $2.20 in 2000, a 10 percent increase compared to $2.00 in 1999. (See "Special Items" below.) In addition to the special items, normalized EPS in the fourth quarter of 2000 reflected a three-cent reduction related to recently acquired wireless properties in Colombia. The full year reflected a five-cent reduction from Colombia. Revenues were $7.4 billion in the fourth quarter of 2000, adjusted to include BellSouth's 40 percent share of Cingular Wireless. This was a gain of 9.8 percent compared to the same three months of the previous year. Strong growth in data represented nearly one-third of revenue growth. For the year, revenues were $27.6 billion, including Cingular, up 9.3 percent compared to 1999. (Beginning in the fourth quarter of 2000, BellSouth's consolidated income statement no longer reflects revenues from domestic wireless. Net earnings from BellSouth's 40 percent share of Cingular are included in Other Income.) "Our focus on data and wireless strategies continues to result in consistent growth," said Duane Ackerman, Chairman and CEO of BellSouth. "While we continue to grow, we have not lost sight of what this business is really all about. It's about service. It's about succeeding one customer at a time. And it's about execution." In data services, BellSouth is rapidly accelerating broadband deployment and finished 2000 with more than 215,000 customers for DSL high-speed Internet access, exceeding its target of 200,000. In the fourth quarter alone, the company added more than 81,000 DSL customers - an increase of 60.4 percent in three months. Total data revenues of $965 million in the fourth quarter increased 27 percent compared to the same quarter of 1999. Domestic wireless revenues were $1.2 billion in the fourth quarter of 2000, adjusted to include BellSouth's 40 percent share of Cingular Wireless. This was a gain of 33.2 percent compared to BellSouth's domestic wireless revenues in the fourth quarter of 1999. Cingular, the nation's second largest wireless provider, ended the year with 19.7 million total customers, a growth rate of 20.3 percent. In international, BellSouth added 561,000 wireless customers in the fourth quarter, bringing customers to more than 9.3 million on a proportionate basis, an annual growth rate of 58.9 percent. Consolidated international revenues climbed 25.9 percent, to $740 million in the fourth quarter of 2000 from $588 million in the same quarter of the previous year. BellSouth's mid-2000 acquisition in Colombia and the fourth quarter launch of wireless service in Guatemala boosted customer growth. Guatemala is the 11th market served by the company in Central and South America. Special Items In the fourth quarter of 2000, the difference between reported EPS of 59 cents and normalized EPS of 57 cents is the result of four special items: Los Angeles cellular 15 cents Gain Pension settlements 12 cents Gain Restructuring 18 cents Charge Contract termination 7 cents Charge Los Angeles cellular - In connection with establishing Cingular Wireless's nationwide footprint, BellSouth exercised its option to redeem the 55.6% partnership interest of AT&T in AB Cellular Holding, LLC by distributing to AT&T the Los Angeles area cellular business. BellSouth then contributed to Cingular the remaining assets of AB Cellular - 100% of the Houston area cellular market; 87.35% of the Galveston, Texas, area market; and more than $1 billion cash. Pension settlements - As required by accounting rules, BellSouth recognized income as a result of the number of employees in 2000 who elected a lump sum payment to settle their pension benefits. Restructuring - These charges relate primarily to the previously announced restructuring of BellSouth's consumer wireless video entertainment business. Contract termination - BellSouth has settled previously disclosed litigation with a distributor of customer telephone equipment. BellSouth paid $200 million to the distributor for the termination of their existing agreement, and has entered into a new agreement with the distributor. 2001 Guidance BellSouth reaffirmed its previous guidance for certain key financial and business metrics in 2001 as follows: Earnings per share 7-9% growth Total operating revenue-including Cingular 9-11% growth Data Revenue 30% growth (approx.) Capital expenditures $5.5-6.0 billion DSL high-speed Internet customers 600,000 at 12/31/01 About BellSouth Corporation BellSouth Corporation is a Fortune 100 communications services company headquartered in Atlanta, GA, serving more than 44 million customers in the United States and 16 other countries. Consistently recognized for customer satisfaction, BellSouth provides a full array of broadband data and e-commerce solutions to business customers, including Web hosting and other Internet services. In the residential market, BellSouth offers DSL high-speed Internet access, advanced voice features and other services. BellSouth also provides online and directory advertising services, including BellSouth(R) Real PagesSM.com. BellSouth owns 40 percent of Cingular Wireless, the nation's second largest wireless company, which provides innovative wireless data and voice services. Further information about BellSouth's fourth quarter earnings release can be accessed at the company's Investor Relations Web site at www.bellsouth.com/investor. The press release, earnings commentary summarizing highlights of the quarter and financial statements will be available on the BellSouth Web site starting today at 8 a.m. Eastern Time. In addition, the audio of the earnings commentary can be accessed by calling the BellSouth Investor Newsline at 404-523-0214, beginning today shortly after 8 a.m. Eastern Time and continuing through Friday, January 26. In addition to historical information, this document contains forward-looking statements regarding events and financial trends. Factors that could affect future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (i) a change in economic conditions in domestic or international markets where we operate or have material investments which would affect demand for our services; (ii) the intensity of competitive activity and its resulting impact on pricing strategies and new product offerings; and (iii) higher than anticipated cash requirements for investments, new business initiatives and acquisitions. The forward-looking information in this document is given as of this date only, and BellSouth assumes no duty to update this information. BellSouth Corporation GAAP Basis Consolidated Statements of Income (unaudited) (amounts in millions, except per share data) Note to Readers: Our fourth quarter results were significantly impacted by several events, including the formation of Cingular Wireless, adoption of new revenue recognition policies and other one-time items. To assist in your understanding of our results, we refer you to our normalized information, including the notes which discuss the impacts of these events. Quarter Ended 12/31/00 12/31/99 % Change Operating Revenues Wireline communications Local service $2,811 $2,774 1.3% Network access 1,220 1,183 3.1% Long distance 124 147 (15.6%) Other wireline 403 353 14.2% Total wireline communications 4,558 4,457 2.3% Domestic wireless - 836 (100.0%) International operations 740 588 25.9% Advertising and publishing 756 720 5.0% Other 106 80 32.5% Total Operating Revenues 6,160 6,681 (7.8%) Operating Expenses Operational and support expenses 3,079 3,643 (15.5%) Depreciation and amortization 1,176 1,196 (1.7%) Provision for restructuring and asset impairments 528 - N/M Severance accrual - - N/M Total Operating Expenses 4,783 4,839 (1.2%) Operating Income 1,377 1,842 (25.2%) Interest Expense 346 293 18.1% Other Income (Expense), net 729 73 N/M Income Before Income Taxes 1,760 1,622 8.5% Provision for Income Taxes 641 569 12.7% Net Income $1,119 $1,053 6.3% Diluted: Weighted Average Common Shares Outstanding 1,884 1,901 (0.9%) Earnings Per Share $0.59 $0.55 7.3% Selected Financial and Operating Data Quarter Ended 12/31/00 12/31/99 % Change EBITDA $3,081 $3,038 1.4% EBITDA margin 50.0% 45.5% +450bps Return on average equity (annualized) 26.6% 30.1% -350bps Return on average total capital (annualized) 17.4% 17.2% +20bps Digital and data revenues $965 $760 27.0% Dividends per share $0.19 $0.19 0.0% Capital expenditures $2,055 $1,744 17.8% Year Ended 12/31/00 12/31/99 % Change Operating Revenues Wireline communications Local service $11,262 $10,887 3.4% Network access 4,885 4,761 2.6% Long distance 523 608 (14.0%) Other wireline 1,393 1,198 16.3% Total wireline communications 18,063 17,454 3.5% Domestic wireless 2,714 3,191 (14.9%) International operations 2,771 2,289 21.1% Advertising and publishing 2,178 2,010 8.4% Other 425 280 51.8% Total Operating Revenues 26,151 25,224 3.7% Operating Expenses Operational and support expenses 13,726 13,796 (0.5%) Depreciation and amortization 4,935 4,671 5.7% Provision for restructuring and asset impairments 528 320 N/M Severance accrual 78 - N/M Total Operating Expenses 19,267 18,787 2.6% Operating Income 6,884 6,437 6.9% Interest Expense 1,328 1,030 28.9% Other Income (Expense), net 1,042 81 N/M Income Before Income Taxes 6,598 5,488 20.2% Provision for Income Taxes 2,378 2,040 16.6% Net Income $4,220 $3,448 22.4% Diluted: Weighted Average Common Shares Outstanding 1,891 1,916 (1.3%) Earnings Per Share $2.23 $1.80 23.9% Selected Financial and Operating Data Year Ended 12/31/00 12/31/99 % Change EBITDA $12,425 $11,428 8.7% EBITDA margin 47.5% 45.3% +220bps Return on average equity (annualized) 26.0% 24.0% +200bps Return on average total capital (annualized) 16.3% 14.7% +160bps Digital and data revenues $3,540 $2,764 28.1% Dividends per share $0.76 $0.76 0.0% Capital expenditures $6,995 $6,200 12.8% As of 12/31/00 12/31/99 % Change Common shares outstanding 1,872 1,883 (0.6%) Book value per share $9.03 $7.87 14.7% Debt ratio 54.2% 53.1% +110bps Total employees 103,918 96,162 8.1% BellSouth Corporation Normalized Financial and Operating Data (unaudited) (amounts in millions, except per share data) Consolidated Normalized Statements of Income (unaudited) (i)(j)(k) Quarter Ended 12/31/00 12/31/99 % Change Operating Revenues Wireline communications Local service $ 2,811 $ 2,736 2.7% Network access 1,220 1,166 4.6% Long distance 124 147 (15.6%) Other wireline 385 344 11.9% Total wireline communications 4,540 4,393 3.3% Domestic wireless 1,224 919 33.2% International operations 740 588 25.9% Advertising and publishing 756 720 5.0% Other 98 80 22.5% Total Operating Revenues 7,358 6,700 9.8% Operating Expenses Operational and support expenses 4,115 3,662 12.4% Depreciation and amortization 1,345 1,196 12.5% Total Operating Expenses 5,460 4,858 12.4% Operating Income 1,898 1,842 3.0% Interest Expense 409 293 39.6% Other Income (Expense), net 161 26 N/M Income Before Income Taxes 1,650 1,575 4.8% Provision for Income Taxes 576 569 1.2% Normalized Net Income $ 1,074 $ 1,006 6.8% Diluted Earnings Per Share $ 0.57 $ 0.53 7.5% Year Ended 12/31/00 12/31/99 % Change Operating Revenues Wireline communications Local service $11,262 $10,740 4.9% Network access 4,885 4,695 4.0% Long distance 523 608 (14.0%) Other wireline 1,375 1,163 18.2% Total wireline communications 18,045 17,206 4.9% Domestic wireless 4,205 3,473 21.1% International operations 2,771 2,289 21.1% Advertising and publishing 2,178 2,010 8.4% Other 417 280 48.9% Total Operating Revenues 27,616 25,258 9.3% Operating Expenses Operational and support expenses 15,029 13,830 8.7% Depreciation and amortization 5,104 4,671 9.3% Total Operating Expenses 20,133 18,501 8.8% Operating Income 7,483 6,757 10.7% Interest Expense 1,391 1,030 35.0% Other Income (Expense), net 406 368 N/M Income Before Income Taxes 6,498 6,095 6.6% Provision for Income Taxes 2,343 2,270 3.2% Normalized Net Income $ 4,155 $ 3,825 8.6% Diluted Earnings Per Share $ 2.20 $ 2.00 10.0% Normalized Earnings Summary (unaudited) Quarter Ended 12/31/00 12/31/99 % Change Reported Net Income $ 1,119 $ 1,053 6.3% Gain on partner redemption (a) (292) -- Gains from pension settlements (b) (223) -- Loss on Restructurings and Asset Impairments(c) 345 -- Contract termination payment (d) 125 -- Gain on E-Plus restructuring (e) -- -- Severance accrual (f) -- -- Recognition of foreign investment tax credits (g) -- -- Gain on Sale of Honolulu Cellular -- -- Foreign currency loss (h) -- (47) Normalized Net Income $ 1,074 $ 1,006 6.8% Reported Diluted Earnings Per Share $ 0.59 $ 0.55 7.3% Gain on partner redemption (a) (0.15) -- Gains from pension settlements (b) (0.12) -- Loss on Restructurings and Asset Impairments(c) 0.18 -- Contract termination payment(d) 0.07 -- Gain on E-Plus restructuring (e) -- -- Severance accrual (f) -- -- Recognition of foreign investment tax credits (g) -- -- Gain on Sale of Honolulu Cellular -- -- Foreign currency loss (h) -- (0.02) Normalized Diluted Earnings Per Share $ 0.57 $ 0.53 7.5% Selected Financial and Operating Data EBITDA $3,243 $3,038 6.7% EBITDA margin 44.1% 45.3% -120bps Normalized return on average equity (annualized) 25.5% 28.7% -320bps Normalized return on average total capital (annualized) 16.8% 16.5% +30bps Year Ended 12/31/00 12/31/99 % Change Reported Net Income $ 4,220 $ 3,448 22.4% Gain on partner redemption (a) (292) -- Gains from pension settlements (b) (223) -- Loss on Restructurings and Asset Impairments(c) 345 187 Contract termination payment (d) 125 -- Gain on E-Plus restructuring (e) (68) -- Severance accrual (f) 48 -- Recognition of foreign investment tax credits (g) -- (95) Gain on Sale of Honolulu Cellular -- (23) Foreign currency loss (h) -- 308 Normalized Net Income $ 4,155 $ 3,825 8.6% Reported Diluted Earnings Per Share $ 2.23 $ 1.80 23.9% Gain on partner redemption (a) (0.15) -- Gains from pension settlements (b) (0.12) -- Loss on Restructurings and Asset Impairments(c) 0.18 0.10 Contract termination payment(d) 0.07 -- Gain on E-Plus restructuring (e) (0.04) -- Severance accrual (f) 0.03 -- Recognition of foreign investment tax credits (g) -- (0.05) Gain on Sale of Honolulu Cellular -- (0.01) Foreign currency loss (h) -- 0.16 Normalized Diluted Earnings Per Share $ 2.20 $ 2.00 10.0% Selected Financial and Operating Data EBITDA $12,587 $11,428 10.1% EBITDA margin 45.6% 45.2% +40bps Normalized return on average equity (annualized) 25.6% 26.7% -110bps Normalized return on average total capital (annualized) 16.1% 16.0% +10bps BellSouth Corporation Notes to Normalized Financial and Operating Data Our normalized earnings have been adjusted for the following: (a) Gain on Partner Redemption - We redeemed AT&T's interest in the AB Cellular partnership through the distribution of the Los Angeles Cellular wireless property. As required by accounting rules, AB Cellular adjusted the carrying value of the LA Cellular assets to fair value immediately prior to the distribution. The amount shown represents our share of the gain recognized by AB Cellular as a result of that adjustment. (b) Gains from Pension Settlements- During 2000, the number of employees who voluntarily separated and elected to receive lump-sum retirement benefits exceeded thresholds established by generally accepted accounting principles. The amount shown represents the gain recognized in accordance with those guidelines. (c) Loss on restructurings and asset impairments. For the 2000 periods, the amount represents expense recorded as a result of our previously announced plan to restructure our domestic wireless entertainment business. For 1999, the amount represents the after-tax loss recorded in second quarter 1999 associated with the write-down of equipment that was replaced as we upgraded our U.S. wireless network. (d) Contract termination payment - BellSouth has settled previously disclosed litigation with a distributor of customer telephone equipment. BellSouth paid $200 million to the distributor for the termination of their existing agreement, and has entered into a new agreement with the distributor. (e) Gain on E-Plus Restructuring - Represents income related to the restructuring of our ownership interest in German wireless operator E-Plus. (f) Severance Accrual - Represents expense recorded as a result of our previously announced plan to reduce our domestic workforce. (g) Recognition of foreign investment tax credits - Represents foreign tax credits generated in prior years. (h) Foreign currency loss - Represents our share of foreign currency losses recorded during 1999 as a result of the devaluation of the Brazilian Real during January 1999. In addition to the items discussed above, our consolidated normalized statements of income have been adjusted for the following: (i) The fourth quarter and year-to-date 2000 periods have been adjusted to include our proportional share of Cingular Wireless' operating results for fourth quarter 2000, net of eliminations for amounts charged between Cingular and other BellSouth companies. (j) Cingular presents its revenues and expenses from roamer activity on a gross basis. We have conformed our domestic wireless revenues and operational and support expenses for fiscal 2000, fiscal 1999 and fourth quarter 1999 to present roamer revenues and roamer costs on a consistent basis. (k) During fourth quarter 2000, we adopted a new method of recognizing revenues and expenses derived from installation and activation activities. We did this to comply with new accounting guidance contained in SAB101, which requires that revenues from such activities be deferred and recognized over the estimated life of the relationship with the customer. As required by SAB101, we retroactively adopted the new method effective January 1, 2000. The retroactive adoption decreased our previously reported revenues and expenses equally by $47 for first quarter 2000, $51 for second quarter 2000 and $53 for third quarter 2000. The adoption did not affect our reported earnings for any 2000 period. In order to provide comparable revenue and expense data, we have adjusted the 1999 periods to present the results which would have occurred if SAB101 was adopted on January 1, 1999. BellSouth Corporation Consolidated Balance Sheets (unaudited) (amounts in millions, except per share data) December 31, December 31, 2000 1999 Assets Current Assets: Cash and cash equivalents $ 1,036 $ 1,287 Temporary cash investments 37 105 Accounts receivable--net of allowance for uncollectibles of $377 and $312 5,211 5,177 Material and supplies 379 451 Other current assets 646 367 Total Current Assets 7,309 7,387 Investments and Advances 11,141 6,097 Property, Plant and Equipment, net 24,157 24,631 Deferred Charges and Other Assets 4,180 1,564 Intangible Assets, net 4,172 3,774 Total Assets $ 50,959 $ 43,453 Liabilities and Shareholders' Equity Current Liabilities: Debt maturing within one year $ 7,569 $ 7,653 Accounts payable 2,196 1,961 Other current liabilities 3,539 3,781 Total Current Liabilities 13,304 13,395 Long-Term Debt 12,463 9,113 Noncurrent Liabilities: Deferred income taxes 3,580 2,831 Other noncurrent liabilities 4,700 3,299 Total Noncurrent Liabilities 8,280 6,130 Shareholders' Equity: Common stock, $1 par value 2,020 2,020 Paid-in capital 6,740 6,771 Retained earnings 14,074 11,456 Accumulated other comprehensive income (488) (358) Shares held in trust and treasury (5,222) (4,798) Guarantee of ESOP debt (212) (276) Total Shareholders' Equity 16,912 14,815 Total Liabilities and Shareholders' Equity $ 50,959 $ 43,453 BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Wireline Communications Quarter Ended 12/31/00 12/31/99 % Change Operating Revenues Local service $ 2,811 $ 2,736 2.7% Network access 1,220 1,166 4.6% Long distance 124 147 (15.6%) Other wireline 446 429 4.0% Total Operating Revenues 4,601 4,478 2.7% Operating Expenses Operational and support expenses 2,163 2,049 5.6% Depreciation and amortization 935 842 11.0% Total Operating Expenses 3,098 2,891 7.2% Operating Income 1,503 1,587 (5.3%) Interest Expense 180 150 20.0% Other Income, net 25 -- N/M Income Before Income Taxes 1,348 1,437 (6.2%) Provision for Income Taxes 486 521 (6.7%) Segment Net Income(1) $ 862 $ 916 (5.9%) Selected Financial and Operating Data Quarter Ended 12/31/00 12/31/99 % Change (amounts in millions) EBITDA $ 2,438 $ 2,429 0.4% EBITDA margin 53.0% 54.2% -120bps Calling feature revenues $ 547 $ 501 9.2% Access minutes of use 27,848 27,778 0.3% Long distance messages 119 139 (14.4%) Capital expenditures $ 1,579 $ 1,170 35.0% Year Ended 12/31/00 12/31/99 % Change Operating Revenues Local service $11,262 $10,740 4.9% Network access 4,885 4,695 4.0% Long distance 523 608 (14.0%) Other wireline 1,681 1,481 13.5% Total Operating Revenues 18,351 17,524 4.7% Operating Expenses Operational and support expenses 8,499 8,303 2.4% Depreciation and amortization 3,644 3,393 7.4% Total Operating Expenses 12,143 11,696 3.8% Operating Income 6,208 5,828 6.5% Interest Expense 698 560 24.6% Other Income, net 40 18 N/M Income Before Income Taxes 5,550 5,286 5.0% Provision for Income Taxes 2,047 1,971 3.9% Segment Net Income(1) $ 3,503 $ 3,315 5.7% Selected Financial and Operating Data Year Ended 12/31/00 12/31/99 % Change (amounts in millions) EBITDA $ 9,852 $ 9,221 6.8% EBITDA margin 53.7% 52.6% +110bps Calling feature revenues $ 2,145 $ 1,913 12.1% Access minutes of use 113,913 110,088 3.5% Long distance messages 509 644 (21.0%) Capital expenditures $ 5,285 $ 4,638 13.9% As of 12/31/00 12/31/99 % Change Equivalent access lines in service (thousands): Switched access lines 25,908 25,499 1.6% Access line equivalents 28,321 17,770 59.4% Total equivalent access lines in service 54,229 43,269 25.3% Internet customers (thousands): 956 695 37.6% ADSL customers (thousands): 215 30 N/M BellSouth Corporation Supplemental Operating Data (in thousands) Wireline Communications - Network Access Lines In Service(a) As of 12/31/00 12/31/99 % Change Access lines (b) Residence 17,135 17,002 0.8% Business 8,525 8,232 3.6% Other 248 265 (6.4%) Total access lines in service 25,908 25,499 1.6% Access line equivalents(c) Selected digital data services: DS0 & ADSL 1,950 706 176.2% DS1 5,673 4,529 25.3% DS3 & higher 20,698 12,535 65.1% Total digital data lines in service 28,321 17,770 59.4% Total equivalent access lines in service 54,229 43,269 25.3% (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) We have restated our access line counts to include amounts for Basic Rate ISDN, Primary Rate ISDN and UNE Combos. (c) 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 high-speed/high-capacity circuits 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 Results by Segment (amounts in millions) (unaudited) Domestic Wireless Quarter Ended 12/31/00 12/31/99 % Change Operating revenues (2)(3) $ 1,224 $ 920 33.0% Segment net income(1) $ 52 $ 48 8.3% Total assets (2) $ 8,133 $ 6,097 33.4% Year Ended 12/31/00 12/31/99 % Change Operating revenues (2)(3) $ 4,219 $ 3,486 21.0% Segment net income(1) $ 357 $ 234 52.6% Proportionate Basis(4) - Selected Financial and Operating Data Quarter Ended 12/31/00 12/31/99 % Change (amounts in millions, except customer data in thousands) Wireless revenues(3) $ 1,416 $ 1,003 41.2% Net income(5) $ 52 $ 48 8.3% Operating cash flow(6) $ 366 $ 286 28.0% Operating cash flow margin(7) 25.8% 28.5% -270bps Customer net adds in period (excluding ownership changes) 367 198 85.4% Average monthly revenue per customer (3) $ 53 $ 58 (8.6%) Year Ended 12/31/00 12/31/99 % Change (amounts in millions, except customer data in thousands) Wireless revenues(3) $ 4,696 $ 3,798 23.6% Net income(5) $ 357 $ 234 52.6% Operating cash flow(6) $ 1,398 $ 1,147 21.9% Operating cash flow margin(7) 29.8% 30.2% -40bps Customer net adds in period (excluding ownership changes) 1,176 657 79.0% Average monthly revenue per customer (3) $ 57 $ 56 1.8% As of 12/31/00 12/31/99 % Change Customers 8,337 5,337 56.2% POPs 82,170 58,662 40.1% Property, plant and equipment, gross $5,625 $4,588 22.6% BellSouth Corporation Results by Segment (amounts in millions) (unaudited) International Operations(9) Quarter Ended 12/31/00 12/31/99 % Change Operating revenues $747 $589 26.8% Segment net income (loss)(1) ($98) ($43) N/M Total assets $7,754 $4,869 59.3% Year Ended 12/31/00 12/31/99 % Change Operating revenues $2,810 $2,291 22.7% Segment net income (loss)(1) ($170) ($4) N/M Proportionate Basis(4) - Selected Financial and Operating Data Quarter Ended 12/31/00 12/31/99 % Change (amounts in millions, except customer data in thousands) Wireless revenues, net (10) $ 869 $ 781 11.3% Net income(5) $ (80) $ (16) N/M Operating cash flow (6) $ 247 $ 186 32.8% Operating cash flow margin(7) 28.4% 23.8% +460bps Customer net adds in period (excluding ownership changes) 561 630 (11.0%) Average monthly revenue per customer(11) $ 30 $ 42 (28.6%) Year Ended 12/31/00 12/31/99 % Change (amounts in millions, except customer data in thousands) Wireless revenues, net (10) $ 3,422 $ 2,944 16.2% Net income(5) $ (113) $ 54 N/M Operating cash flow (6) $ 928 $ 779 19.1% Operating cash flow margin(7) 27.1% 26.5% +60bps Customer net adds in period (excluding ownership changes) 2,804 2,312 21.3% Average monthly revenue per customer(11) $ 34 $ 48 (29.2%) As of 12/31/00 12/31/99 % Change Wireless: Customers 9,303 5,856 58.9% POPs 181,086 148,835 21.7% Penetration rate(8) 5.1% 4.6% +50bps Property, plant and equipment, gross $ 4,496 $ 3,579 25.6% BellSouth Corporation Supplemental Operating Data - International Customers and POPs by Country (Proportionate Basis(3) in thousands) Customers As of Country Brand 12/31/00 12/31/99 % Change Argentina Movicom BellSouth 967 761 27.1% Movicom BellSouth (Interior) 78 - N/M Brazil BCP (Sao Paulo) 693 574 20.7% BCP (Northeast) 354 206 71.8% TCO (12) 241 - N/M Chile BellSouth (Santiago) 562 339 65.8% BellSouth (Interior) 129 13 N/M Colombia Celumovil BellSouth 567 - N/M Ecuador BellSouth 201 166 21.1% Guatemala BellSouth 8 - N/M Nicaragua BellSouth 80 34 135.3% Panama BellSouth 90 53 69.8% Peru BellSouth (Lima) 295 286 3.1% BellSouth (Interior) 55 7 N/M Uruguay Movicom BellSouth 58 53 9.4% Venezuela Telcel BellSouth 2,528 1,734 45.8% Subtotal Latin America 6,906 4,226 63.4% Denmark Sonofon 377 379 (0.5%) Germany e-plus 1,366 767 78.1% India SkyCell 9 5 80.0% Israel Cellcom 645 479 34.7% Subtotal Europe and Asia/Pacific 2,397 1,630 47.1% Total International 9,303 5,856 58.9% POPs As of Country Brand 12/31/00 12/31/99 % Change Argentina Movicom BellSouth 8,710 8,710 - Movicom BellSouth (Interior) 14,560 14,560 - Brazil BCP (Sao Paulo) 8,049 8,049 - BCP (Northeast) 12,451 12,451 - TCO (12) 4,734 - N/M Chile BellSouth (Santiago) 7,500 7,500 - BellSouth (Interior) 7,600 7,600 - Colombia Celumovil BellSouth 27,451 - N/M Ecuador BellSouth 11,086 11,086 - Guatemala BellSouth 7,140 7,140 - Nicaragua BellSouth 2,581 2,581 - Panama BellSouth 1,223 1,223 - Peru BellSouth (Lima) 7,069 7,066 0.0% BellSouth (Interior) 17,334 17,327 0.0% Uruguay Movicom BellSouth 966 966 - Venezuela Telcel BellSouth 18,132 18,133 0.0% Subtotal Latin America 156,586 124,392 25.9% Denmark Sonofon 2,465 2,465 - Germany e-plus 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 181,086 148,835 21.7% BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Advertising and Publishing Quarter Ended 12/31/00 12/31/99 % Change Operating revenues $761 $730 4.2% Segment net income(1) $241 $214 12.6% Total assets $1,886 $1,662 13.5% Year Ended 12/31/00 12/31/99 % Change Operating revenues $2,200 $2,028 8.5% Segment net income(1) $637 $556 14.6% Selected Financial and Operating Data Quarter Ended 12/31/00 12/31/99 % Change EBITDA $403 $348 15.8% EBITDA margin 53.0% 47.7% +530bps Year Ended 12/31/00 12/31/99 % Change EBITDA $1,073 $932 15.1% EBITDA margin 48.8% 46.0% +280bps Other Quarter Ended 12/31/00 12/31/99 % Change Operating revenues $210 $187 12.3% Segment net loss(1) ($45) ($60) 25.0% Total assets $1,554 $1,380 12.6% Year Ended 12/31/00 12/31/99 % Change Operating revenues $838 $651 28.7% Segment net loss(1) ($189) ($215) 12.1% 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) For fourth quarter 2000, domestic wireless operating revenues and total assets represent our proportionate share of revenues and assets of Cingular Wireless. (3) Prior to fourth quarter 2000, we presented wireless service revenues net of costs related to roaming revenues. In addition, our presentation of proportionate wireless service revenues included equipment revenues net of related costs. To present our historical results on a basis consistent with the results reported by Cingular, we have conformed our prior period segment and proportionate information to include both roaming and equipment revenues on a gross basis. Effective fourth quarter 2000, our basis of presentation for domestic wireless results is as follows: --Segment and proportionate wireless service revenues include activation fees, access, airtime, roaming (gross), long distance, equipment sales (gross), value added services and other revenue. --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 (gross), long distance and value added services. --Operating cash flows and operating cash flow margin will continue to be calculated as discussed in notes 6 and 7 below. The reclassification of roaming costs does not impact previously reported operating cash flow amounts, but does decrease operating cash flow margin percentages as a result of the use of higher revenue amounts. (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) 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) 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. (7) Operating cash flow margin is calculated by dividing operating cash flow by wireless revenues, net. (8) Penetration rate is calculated by dividing proportionate basis customers by proportionate basis POPs (excludes POPs in markets where service has not been initiated). (9) Financial and operating data for our international operations are reported one month in arrears. (10) International wireless revenues, net includes activation fees, access, airtime, roaming (net), long distance, equipment sales, value added services and other revenue. (11) The calculation of average monthly revenue for our international operations includes activation fees, access, airtime, roaming (net), long distance and value added services. (12) TCO represents a new investment acquired in May, 2000. This investment is accounted for under the cost method; therefore, it has no impact on operating results. -----END PRIVACY-ENHANCED MESSAGE-----