-----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, VIrqZYANL5U2fyN866yFdYDTCV8nGTzgNPKsW7Dm1XNoA2pmahyqv97PCpI+9m0n lgVdPMj4PpCV+M+kS0fCWg== 0000732713-01-000011.txt : 20010424 0000732713-01-000011.hdr.sgml : 20010424 ACCESSION NUMBER: 0000732713-01-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010419 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010420 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: 1607154 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 1Q01 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 19, 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 First Quarter 2001 Earnings On April 19, 2001, BellSouth announced earnings for the first quarter of 2001. See Exhibit 99a for a complete copy of the related press release. Item 9. Regulation FD disclosure First Quarter 2001 Investor news brief On April 19, 2001, BellSouth posted its investor news brief for first quarter 2001 on its web site. See Exhibit 99b for a complete copy of the BellSouth Investor News brief. - ------------------------------------------------------------------------------ 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. There are possible developments that 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 disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. While the below list of cautionary statements is not exhaustive, some 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: - - a change in economic conditions in domestic or international markets where we operate or have material investments which would affect demand for our services; - - significant deterioration in foreign currencies relative to the U.S. dollar in foreign countries in which we operate; - - changes in U.S. or foreign laws or regulations, or in their interpretations, which could result in the loss, or reduction in value, of our licenses, concessions or markets, or in an increase in competition, compliance costs or capital expenditures; - - a decrease in the growth rate of demand for the services which we offer; - - the intensity of competitive activity and its resulting impact on pricing strategies and new product offerings; - - protracted delay in our entry into the interLATA long distance market; - - higher than anticipated start-up costs or significant up-front investments associated with new business initiatives; - - unanticipated higher capital spending from, or delays in, the deployment of new technologies; and - - the impact of the wireless joint venture with SBC Communications, known as Cingular Wireless, including marketing and product development efforts and financial capacity. Item 7. Financial Statements and Exhibits (c) Exhibits Exhibit No. 99a Press Release - First Quarter 2001 Earnings 99b BellSouth Investor News brief as posted on BellSouth Investor Relations Website 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 April 19, 2001 EX-99 2 0002.txt EXHIBIT 99A - EARNINGS RELEASE FOR MORE INFORMATION FOR IMMEDIATE RELEASE Jeff Battcher (404-713-0274) April 19, 2001 Pattie Kushner (404-249-2365) BellSouth Reports First Quarter Earnings - - Quarterly data revenues top $1 billion for first time - - Increase in DSL customers brings total to 303,000 - - Cingular Wireless surpasses 20.5 million cellular customers - - Latin America customer growth approaches 53 percent - - Results reflect impact of DSL, Colombia growth initiatives ATLANTA - With strong volumes in the growth areas of data and wireless, BellSouth Corporation (NYSE: BLS) reported normalized earnings per share (EPS) of 52 cents in the first quarter of 2001, including a 2-cent reduction related to foreign currency losses. This compared to normalized EPS of 52 cents in the same quarter a year earlier. As previously disclosed, the first quarter of 2001 reflected BellSouth's accelerated growth initiatives in domestic broadband and Latin America wireless. The company's continuing ramp-up of DSL high-speed Internet access service reduced EPS an incremental 2 cents compared to the first quarter of 2000. BellSouth's wireless operations in Colombia, which were acquired in July 2000 and not included in the first quarter a year ago, reduced EPS 3 cents. First quarter revenues were $7.2 billion, adjusted to include BellSouth's 40 percent share of Cingular Wireless. This was a gain of 10.5 percent compared to the first three months of the previous year. BellSouth's quarterly data revenues exceeded $1 billion for the first time, as strong growth in DSL and other broadband and Internet services represented nearly one-third of revenue growth. Data: Broadband, Internet, E>Commerce BellSouth continues to rapidly deploy broadband services, and finished the quarter with 303,000 customers for DSL high-speed Internet access. In the first quarter alone, the company added more than 88,000 DSL customers - a sequential quarter increase of 40.9 percent. Including dial-up, total Internet access customers passed the one million milestone. Total data revenues of $1.03 billion increased 27.5 percent compared to the same quarter of 2000. In the consumer marketplace, BellSouth's DSL revenues are increasing rapidly. The bulk of data revenues, however, comes from high-speed, high-capacity services for BellSouth's business customers. LightGate(R) service, for example, is one of the company's top selling data products. LightGate integrates data, voice and video over a fiber optic-based private line service, giving businesses the equivalent of 672 circuits for data, private line, dial-up or voice applications. In March 2001, BellSouth became the first and only data network provider offering Subrate T3 service, a new frame relay product that gives businesses true bandwidth on demand. Domestic Wireless / Cingular BellSouth's domestic wireless revenues, representing the company's 40 percent share of Cingular, were $1.3 billion in the first quarter of 2001. This was a gain of 38.8 percent compared to BellSouth's domestic wireless revenues in the first quarter of 2000. At March 31, Cingular had 20.5 million cellular and PCS customers, an annual growth rate of 18.7 percent. Revenue growth in the first quarter of 2001 was driven by Cingular's nationwide footprint and demand for the company's array of data and voice services, including package plans. Latin America Group BellSouth added 715,000 Latin America wireless customers in the first quarter, bringing customers to nearly 7.8 million, an annual growth rate of 52.7 percent. Consolidated Latin America revenues -- including advertising and publishing - were $773 million in the first quarter of 2001. BellSouth's mid-2000 acquisition in Colombia and last year's expansion of wireless service into the interiors of Argentina and Chile had a favorable impact on customer growth. BellSouth now serves markets in 11 Central and South American countries. Worldwide Wireless Reach Including Cingular, BellSouth now provides wireless services to 42.6 million total customers in 16 countries. On a proportionate basis, BellSouth's wireless customers around the world numbered 18.4 million at March 31, an increase of 6.0 million, or 47.8 percent, compared to the first quarter of 2000. Through its international operations and its domestic joint venture, Cingular, BellSouth's wireless licenses cover a total population globally of more than 537 million. Special Items Reported EPS in the first quarter of 2001 was 47 cents, including the impact of special items totaling 5 cents. These items were: a non-cash charge for post- retirement benefit changes; a loss on the sale of an investment; and transition costs associated with the previously announced restructuring of BellSouth's consumer wireless video entertainment business. 2001 Guidance BellSouth reaffirmed 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 45 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 first quarter earnings can be accessed at www.bellsouth.com/investor. The press release, financial statements and earnings commentary summarizing highlights of the quarter are available on the BellSouth Investor Relations Web site starting today at 8 a.m. Eastern Time. BellSouth will host a conference call with the investment community at 10 a.m. Eastern Time today, April 19. Participating on the call will be BellSouth CFO Ron Dykes and Investor Relations Vice President Nancy Humphries. Dial-in information for the conference call is: Domestic: 888-209-4006 International: 212-231-6005 A replay of the call will be available beginning at noon today, through 5 p.m. April 26. The replay can be accessed by dialing: Domestic: 800-633-8625 - Reservation number: 18437429 International: 858-812-6450 - Reservation number: 18437429 The first quarter earnings press release, BLS Investor News summarizing highlights of the quarter, and downloadable Microsoft Excel and computer viewable financial statements are available on our Web site at www.bellsouth.com/investor at 8 a.m. today. Today's conference call will also be audiocast live beginning at 10 a.m. on our Web site, with a replay available through April 26, 2001. 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 Consolidated Statements of Income - Normalized Basis (unaudited) (amounts in millions, except per share data) Note to Readers: Our reported results have been 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 have prepared the following normalized information, including the notes on page 4 which discuss the impacts of these events. See the following page for our reported results. 1Q01 1Q00(10) Growth Operating Revenues Communications group $4,627 $ 4,491 3.0% Domestic wireless 1,310 944 38.8% Latin America 773 678 14.0% Domestic advertising and publishing 434 349 24.4% All other 34 33 3.0% Total Operating Revenues 7,178 6,495 10.5% Operating Expenses Operational and support expenses 3,955 3,576 10.6% Depreciation and amortization 1,337 1,218 9.8% Total Operating Expenses 5,292 4,794 10.4% Operating Income 1,886 1,701 10.9% Interest Expense 420 306 37.3% Other Income (Expense), net 71 146 -51.4% Income Before Income Taxes 1,537 1,541 -0.3% Provision for Income Taxes 562 560 0.4% Net Income $975 $981 -0.6% Diluted: Weighted Average Common Shares Outstanding 1,886 1,898 -0.6% Earnings Per Share $0.52 $0.52 -- Selected Financial and Operating Data EBITDA (5) $3,223 $2,919 10.4% EBITDA margin (6) 44.9% 44.9% -- Return on average equity (annualized) 22.6% 25.9% - 330 bps Return on average total capital (annualized) 15.5% 15.6% -10 bps Digital and data revenues $1,034 $811 27.5% Dividends per share $0.19 $0.19 -- Capital expenditures $1,644 $1,563 5.2% Common shares outstanding 1,873 1,880 -0.4% Book value per share $9.29 $8.33 11.5% Debt ratio 52.6% 51.0% +160 bps Total employees 107,155 96,653 10.9% BellSouth Corporation Consolidated Statements of Income - Reported Basis (unaudited) (amounts in millions, except per share data) 1Q01 1Q00(10) Growth Operating Revenues Communications group $ 4,665 $ 4,513 3.4% Domestic wireless - 867 -100.0% Latin America 773 678 14.0% Domestic advertising and publishing 434 349 24.4% All other 47 33 42.4% Total Operating Revenues 5,919 6,440 -8.1% Operating Expenses Operational and support expenses 3,161 3,521 -10.2% Depreciation and amortization 1,157 1,218 -5.0% Severance accrual - 78 -100.0% Total Operating Expenses 4,318 4,817 -10.4% Operating Income 1,601 1,623 -1.4% Interest Expense 360 306 17.6% Other Income (Expense), net 166 214 -22.4% Income Before Income Taxes 1,407 1,531 -8.1% Provision for Income Taxes 516 530 -2.6% Net Income $891 $1,001 -11.0% Diluted: Weighted Average Common Shares Outstanding 1,886 1,898 -0.6% Earnings Per Share $0.47 $0.53 -11.3% Selected Financial and Operating Data EBITDA (5) $2,758 $2,919 -5.5% EBITDA margin (6) 46.6% 45.3% +130 bps Return on average equity (annualized) 20.7% 26.4% - 570 bps Return on average total capital (annualized) 14.5% 15.8% - 130 bps BellSouth Corporation Normalized Earnings Summary (unaudited) (amounts in millions, except per share data) 1Q01 1Q00 Growth Reported Net Income $891 $1,001 -11.0% Postretirement benefit expense (a) 47 - Loss on sale of Qwest common stock (b) 32 - Losses from wireless video business (c) 5 - Gain on E-Plus restructuring (d) - (68) Severance accrual (e) - 48 Normalized Net Income $975 $981 -0.6% Reported Diluted Earnings Per Share $0.47 $0.53 -11.3% Postretirement benefit expense (a) 0.02 - Loss on sale of Qwest common stock (b) 0.02 - Losses from wireless video business (c) - - Gain on E-Plus restructuring (d) - (0.04) Severance accrual (e) - 0.03 Normalized Diluted Earnings Per Share * $0.52 $0.52 -- * Normalized earnings per share for first quarter 2001 does not sum due to rounding. BellSouth Corporation Notes to Normalized Financial and Operating Data Our normalized earnings have been adjusted for the following: (a) Postretirement benefit expense - The amount shown represents expense for changes in postretirement medical benefit obligations. This expense is being recognized in accordance with generally accepted accounting principles. (b) Loss on sale of Qwest common stock - Represents the loss incurred from the sale of a portion of our investment in Qwest common stock. (c) Losses from Wireless Video Business - Represents the current period losses being incurred as we exit the wireless video entertainment business. (d) Gain on E-Plus Restructuring - Represents income related to the restructuring of our ownership interest in German wireless operator E-Plus. (e) Severance Accrual - Represents expense recorded as a result of our plan to reduce our domestic general and administrative staff. In addition to the items discussed above, our consolidated normalized statements of income have been adjusted for the following: (f) Communications group revenues have been adjusted to present all revenues from sales of customer premises equipment on an agency-fee basis (net of associated direct costs). This adjustment is made to present these revenues on a basis comparable to amounts earned under a new vendor contract entered into during first quarter 2001. (g) The first quarter 2001 period has been adjusted to include our proportional share of Cingular Wireless' operating results for first quarter 2001, net of eliminations for amounts charged between Cingular and other BellSouth companies. (h) 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 first quarter 2000 to present roamer revenues and roamer costs on a consistent basis. BellSouth Corporation Consolidated Balance Sheets (unaudited) (amounts in millions, except per share data) March 31, December 31, 2001 2000 Assets Current Assets: Cash and cash equivalents $712 $1,061 Temporary cash investments 4 37 Accounts receivable, net of allowance for uncollectibles of $398 and $377 5,359 5,157 Material and supplies 414 379 Other current assets 890 772 Total Current Assets 7,379 7,406 Investments and Advances 9,905 11,010 Property, Plant and Equipment, net 24,634 24,157 Deferred Charges and Other Assets 4,445 4,180 Intangible Assets, net 4,280 4,172 Total Assets $50,643 $50,925 Liabilities and Shareholders' Equity Current Liabilities: Debt maturing within one year $6,250 $7,569 Accounts payable 2,105 2,233 Other current liabilities 3,511 3,468 Total Current Liabilities 11,866 13,270 Long-Term Debt 13,075 12,463 Noncurrent Liabilities: Deferred income taxes 3,516 3,580 Other noncurrent liabilities 4,793 4,700 Total Noncurrent Liabilities 8,309 8,280 Shareholders' Equity: Common stock, $1 par value 2,020 2,020 Paid-in capital 6,761 6,740 Retained earnings 14,588 14,074 Accumulated other comprehensive income (637) (488) Shares held in trust and treasury (5,168) (5,222) Guarantee of ESOP debt (171) (212) Total Shareholders' Equity 17,393 16,912 Total Liabilities and Shareholders' Equity $50,643 $50,925 BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Communications Group (1) 1Q01 1Q00 Growth Operating Revenues Local service $2,910 $2,828 2.9% Network access 1,237 1,232 0.4% Long distance 171 170 0.6% Other 368 348 5.7% Total Operating Revenues 4,686 4,578 2.4% Operating Expenses Operational and support expenses 2,200 2,164 1.7% Depreciation and amortization 976 911 7.1% Total Operating Expenses 3,176 3,075 3.3% Operating Income 1,510 1,503 0.5% Interest Expense 168 162 3.7% Other Income, net 12 4 N/M* Income Before Income Taxes 1,354 1,345 0.7% Provision for Income Taxes 499 513 -2.7% Segment Net Income(1) $855 $832 2.8% * - Not meaningful. Selected Financial and Operating Data (amounts in millions) EBITDA (5) $2,486 $2,414 3.0% EBITDA margin (6) 53.1% 52.7% +40 bps Calling feature revenues $567 $515 10.1% Access minutes of use 27,942 28,716 -2.7% Toll messages 108 136 -20.6% Capital expenditures $1,477 $1,201 23.0% Equivalent access lines in service (thousands): Access lines 25,898 25,860 0.1% Access line equivalents 31,252 19,725 58.4% Total equivalent access lines in service 57,150 45,585 25.4% Wholesale lines 1,408 930 51.4% Internet customers (thousands): 1,047 753 39.0% DSL customers (thousands): 303 49 518.4% BellSouth Corporation Results by Segment (unaudited) Supplemental Operating Data (in thousands) Communications Group - Network Access Lines In Service(a) 1Q01 1Q00 Growth Access lines (b) Residence 17,192 17,278 -0.5% Business 8,464 8,319 1.7% Other 242 263 -8.0% Total access lines in service 25,898 25,860 0.1% Access line equivalents(c) Selected digital data services: DS0 & ADSL 2,513 848 196.3% DS1 5,985 4,780 25.2% DS3 & higher 22,754 14,097 61.4% Total digital data lines in service 31,252 19,725 58.4% Total equivalent access lines in service 57,150 45,585 25.4% (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 counts include amounts for switched access lines, 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 Segment (1)(a) 1Q01 1Q00 Growth Operating Revenues Service revenues (4) $1,205 $873 38.0% Equipment and other revenues 105 77 36.4% Total Operating Revenues 1,310 950 37.9% Operating Expenses Operational and support expenses 925 726 27.4% Depreciation and amortization 180 167 7.8% Total Operating Expenses 1,105 893 23.7% Operating Income 205 57 259.6% Interest Expense 82 27 203.7% Other Income, net 20 34 -41.2% Income Before Income Taxes 143 64 123.4% Provision for Income Taxes 55 23 139.1% Segment Net Income(1) $88 $41 114.6% Selected Financial and Operating Data (b) (amounts in millions, except customer data in thousands) EBITDA (5) $385 $224 71.9% EBITDA margin (6)(c) 32.0% 25.7% +630 bps Average monthly revenue per customer (7)(d) $50 $59 -15.3% Customer net adds in period (excluding ownership changes) Cellular and PCS 342 309 10.7% Data (Cingular Interactive) 34 79 -57.0% Customers Cellular and PCS 8,214 5,196 58.1% Data (Cingular Interactive) 263 303 -13.2% POPs 76,800 57,034 34.7% Penetration rate (9) 10.7% 9.4% +130 bps (a) The first quarter 2000 period is comprised of BellSouth's wireless voice and wireless data operations. The first quarter 2001 period is comprised of BellSouth's 40% share of the reported results of Cingular Wireless. (b) Customer data for first quarter 2001, including POPs, penetration rate and average monthly revenue per customer, is comprised of BellSouth's 40% share of the managed results of Cingular Wireless. (c) EBITDA margin denominator includes service revenues only. (d) Average monthly revenue per customer excludes Cingular Interactive (formerly BellSouth Wireless Data). BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Latin America Group (1)(2) 1Q01 1Q00 Growth Operating Revenues Service revenues (4) $642 $575 11.7% Equipment and other revenues 139 106 31.1% Advertising and publishing revenues 1 14 -92.9% Total Operating Revenues 782 695 12.5% Operating Expenses Operational and support expenses 630 581 8.4% Depreciation and amortization 154 126 22.2% Total Operating Expenses 784 707 10.9% Operating Income (2) (12) 83.3% Interest Expense 60 33 81.8% Other Income, net (41) 12 N/M* Income Before Income Taxes (103) (33) N/M Provision for Income Taxes 3 (13) N/M Segment Net Income(1) ($106) ($20) N/M * - Not meaningful. Selected Financial and Operating Data (amounts in millions, except customer data in thousands) EBITDA (5) $152 $114 33.3% EBITDA margin (6) 19.4% 16.4% +300 bps Average monthly revenue per customer (8) $28 $40 -30.0% Customer net adds in period (excluding ownership changes) 715 827 -13.5% Customers (voice) 7,784 5,096 52.7% POPs 156,200 114,600 36.3% Penetration rate (9) 5.0% 5.5% -50 bps BellSouth Corporation Proportionate Basis(3) - Selected Financial and Operating Data (Amounts in millions, except customer data in thousands) Latin America Group (1)(2) 1Q01 1Q00 Growth Operating revenues $712 $667 6.7% EBITDA(5) $154 $109 41.3% EBITDA margin(6) 21.6% 16.3% +530 bps Average monthly revenue per customer (8) $28 $39 -28.2% Customer net adds in period (excluding ownership changes) 668 780 -14.4% Customers (voice) 7,574 5,007 51.3% POPs 156,586 124,401 25.9% Penetration rate (9) 4.8% 4.9% -10 bps BellSouth Corporation Worldwide Wireless (unaudited) Customers and POPs by Country (Proportionate Basis(3) in thousands) Customers As of Country Brand 1Q01 1Q00 Growth United States Cingular Wireless / 8,214 5,637 45.7% BellSouth Mobility Argentina Movicom BellSouth 1,094 836 30.9% Brazil Various* 1,393 890 56.5% Chile BellSouth 757 403 87.8% Colombia Celumovil BellSouth 738 - N/M** Ecuador BellSouth 217 182 19.2% Guatemala BellSouth 17 - N/M Nicaragua BellSouth 116 45 157.8% Panama BellSouth 98 62 58.1% Peru BellSouth 369 309 19.4% Uruguay Movicom BellSouth 62 65 -4.6% Venezuela Telcel BellSouth 2,713 2,215 22.5% Total Latin America 7,574 5,007 51.3% Denmark Sonofon 408 385 6.0% Germany e-plus 1,554 920 68.9% India SkyCell 11 6 83.3% Israel Cellcom 687 526 30.6% 2,660 1,837 44.8% Total Worldwide Wireless Customers 18,448 12,481 47.8% POPs As of Country Brand 1Q01 1Q00 Growth United States Cingular Wireless / 76,800 59,403 29.3% BellSouth Mobility Argentina Movicom BellSouth 23,270 23,270 -- Brazil Various* 25,234 20,500 23.1% Chile BellSouth 15,100 15,100 -- 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 24,403 24,403 -- Uruguay Movicom BellSouth 966 966 -- Venezuela Telcel BellSouth 18,132 18,132 -- Total Latin America 156,586 124,401 25.9% Denmark Sonofon 2,465 2,465 -- Germany e-plus 18,568 18,568 -- India SkyCell 1,348 1,348 -- Israel Cellcom 2,119 2,119 -- 24,500 24,500 -- Total Worldwide Wireless Customers 257,886 208,304 23.8% * - BCP in Sao Paulo and Northeast regions; TCO. ** - Not meaningful. BellSouth Corporation Results by Segment (amounts in millions) (unaudited) Domestic Advertising & Publishing (1) 1Q01 1Q00 Growth Total Operating Revenues $ 437 $ 353 23.8% Operating Expenses Operational and support expenses 204 191 6.8% Depreciation and amortization 7 7 -- Total Operating Expenses 211 198 6.6% Operating Income 226 155 45.8% Interest Expense 8 5 60.0% Other Income, net 4 - N/M* Income Before Income Taxes 222 150 48.0% Provision for Income Taxes 85 56 51.8% Segment Net Income(1) $137 $94 45.7% EBITDA (5) $233 $162 43.8% EBITDA margin (6) 53.3% 45.9% +740 bps * - Not meaningful. 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) Results for the Latin America segment are reported one month in arrears. (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. (4) Wireless service revenues includes activation fees, access, airtime, roaming, long distance and value added services. Roaming revenues are included on a gross basis for the Domestic Wireless segment and on a net basis for the Latin America segment. (5) EBITDA is defined as operating revenues less operational and support expenses. (6) EBITDA margin is calculated by dividing EBITDA by operating revenues. (7) For the Domestic Wireless segment, average monthly revenue per customer is calculated by dividing average monthly revenue by average customers. Average monthly revenue includes activation fees, access, airtime, roaming (gross), long distance and value added services. (8) For the Latin America segment, Average monthly revenue per customer is calculated by dividing average monthly revenue by average customers. Average monthly revenue includes activation fees, access, airtime, roaming (net), long distance and value added services. (9) Penetration rate is calculated by dividing customers by POPs (excludes POPs in markets where service has not been initiated). (10) 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. The adoption did not affect our reported earnings for any 2000 period. EX-99 3 0003.txt EXHIBIT 99B - BLS INVESTOR NEWS BRIEF BellSouth Investor News INSIDE: DATA - revenues top $1 billion The Communications Group - driven by strong growth in data Domestic Wireless - Cingular delivers strong customer and revenue growth Latin America Group - delivers strong customer and operating cast flow growth Worldwide Wireless Additional Details BellSouth Reports First Quarter Earnings - - Data revenues top $1 billion for first time, gaining 28% - - Increase in DSL customers brings total to 303,000 - - Cingular Wireless surpasses 20.5 million cellular customers - - Latin America customer growth approaches 53% - - Results reflect impact of DSL and Colombia growth initiatives ATLANTA, April 19, 2001 - With strong volumes in the growth areas of data and wireless, BellSouth Corporation (NYSE: BLS) reported normalized earnings per share (EPS) of 52 cents in the first quarter of 2001, including a 2-cent reduction related to foreign currency losses. This compared to normalized EPS of 52 cents in the same quarter a year earlier. As previously disclosed, the first quarter of 2001 reflected BellSouth's accelerated growth initiatives in domestic broadband and Latin America wireless. The company's accelerating ramp-up of DSL high-speed Internet access service reduced EPS an incremental 2 cents compared to the first quarter of 2000. BellSouth's wireless operations in Colombia, which were acquired in July 2000 and not included in the first quarter a year ago, reduced EPS 3 cents. BellSouth's Colombia acquisition creates that country's first nationwide mobile cellular operator covering a total of 41 million people, with proportional customers of 738,000. BellSouth's other major initiative is a rapid DSL ramp-up that will allow the company to nearly triple its DSL customer base to 600,000 at the end of 2001, as compared to year-end 2000. Service will be available to over 70% of BellSouth's households, over 1,000 central offices and over 9,300 remote terminals - nearly doubling the number of central offices and remote terminals equipped. Revenue growth - reflecting BellSouth's 40% share of Cingular Wireless - was 10.5%. Growth was boosted by a strong 28% increase in data revenues. Data continues to be a strong driver of revenue growth, and this quarter represented nearly one-third of our total revenue growth. For the first time ever, quarterly data revenues exceeded the $1 billion level. Data revenues were driven by a record 25.4% jump in equivalent access lines. In addition, DSL customers increased 41% versus 4Q00, surpassing 300,000 customers. BellSouth is confident of reaching its target of 600,000 DSL customers by the end of 2001. Another strong driver was worldwide wireless customer growth. The company added nearly 1.3 million proportionate customers in the quarter - including the recently acquired operations in Colombia. This phenomenal wireless growth was driven by BellSouth's Latin American markets, where our customer base grew 53% in the past year, to 7.8 million customers. Domestically, Cingular Wireless ended the quarter with over 20.5 million cellular and PCS customers. Total operating expense grew 10.4% in the quarter, driven by the inclusion of our accelerated growth initiatives in DSL and Latin America, specifically, the recently acquired wireless properties in Colombia. In addition, strength in Cingular gross adds and the Cingular national branding kickoff costs drove expenses higher. - -------------------------------------------------------------------------------- Complete financial statements and the first quarter 2001 earnings press release can be accessed at www.bellsouth.com/investor - -------------------------------------------------------------------------------- 1Q01** 1Q00 % chg EPS - Reported Diluted $0.47 $0.53 N/A Loss on Sale of Qwest common stock $0.02 Post-retirement benefit expense $0.02 Loss from wireless video business Gain on E-Plus restructuring ($0.04) Severance Accrual $0.03 _______________________________________________________________________________ EPS - Normalized (1) $0.52 $0.52 0.0% - ------------------------------------------------------------------------------- Colombia Impact $0.03 - N/A DSL Impact $0.02 - N/A - ------------------------------------------------------------------------------- Foreign Currency Losses $0.02 EPS Adjusted for Colombia, DSL, & FX $0.59 $0.52 13.5% =============================================================================== (1) Normalized EPS for first quarter 2001 does not sum due to rounding. (2) See press release for an explanation of the normalizing items. - -------------------------------------------------------------------------------- Effective 1Q01, BellSouth adopted new segment reporting to align financial reporting with management of the business. Please see our March 26, 2001, BLS Investor News at www.bellsouth.com/investor for more details about BellSouth's new segments. - -------------------------------------------------------------------------------- Data Data revenues top $1 billion BellSouth continues to transform its core network from analog voice to digital data. More than three-quarters of the $5.3 billion of network investments made in 2000 is doing double duty to enable New Economy products and services. And BellSouth's network already has 3.5 million miles of fiber. The marketplace clearly has responded to this data-centric transformation. Already two-thirds of BellSouth's network traffic is data, and in the first quarter of 2001 total equivalent access lines grew a record 25.4%. This includes traditional switched lines as well as broadband data services. Equivalent business lines alone grew 38%. BellSouth's innovative products and services help drive customer demand for broadband data, as customers migrate from traditional voice lines to broadband data and other high-speed digital services. Driving the first quarter, BellSouth grew high capacity digital and data lines by 58% and produced record data revenues of $1.03 billion, a 28% growth rate. Data revenues alone contributed nearly one-third of the total consolidated revenue growth in the quarter. High-speed data services, such as LightGate(R) - a service that integrates data, voice and video over a fiber based private line service giving businesses the equivalent of 672 circuits -- drove the growth in data revenues. In addition, web hosting, DSL and e>commerce applications were among the leading drivers of data revenue growth. [Graphic inserted here BellSouth Data Revenue as % of TOR 1Q00 - 12.4% 2Q00 - 12.8% 3Q00 - 12.9% 4Q00 - 13.1% 1Q01 - 14.4%] DSL customers increased 41% in first quarter, to 303,000. The company added an average of over 1,300 customers per business day, and is currently installing next generation DSLAMs, which provide a 21% improvement in cost performance per line. The daily install rate is expected to accelerate over the next three quarters. BellSouth is confident of reaching its goal of 600,000 DSL customers by the end of 2001. Over 90% of new residential DSL customers are opting for self-install, and about 75% successfully install it - reducing the need for a home visit. The popular self-install option is being enhanced by deployment of BroadJump's broadband solutions tool kit giving BellSouth an end-to-end broadband solution. The tool kit allows BellSouth to monitor, test, and maintain a customer's DSL connection and enables customers to determine if their system can support a broadband connection. It also provides customer instructions to establish connectivity and helps customers solve routine connection problems, often without help desk support. BellSouth already has over 5,600 remote terminals and nearly 650 central offices provisioned for DSL - and is well on its way to having over 9,300 remote terminals and over 1,000 central offices equipped for DSL by the end of 2001. In addition, DSL will pass over 70% of BellSouth households by year-end. BellSouth recently announced an agreement with Dell to jointly market broadband-enabled computers with a pre-installed DSL modem and pre-loaded BellSouth FastAccess DSL software, giving customers plug-and-play broadband solutions. DSL is a primary driver of the growth in BellSouth Internet Services, which now has over 1 million customers. BellSouth DSL Deployment Stats Actual at Actual at Target at 12/31/00 03/31/01 12/31/01 - ------------- ----------- -------------- ----------- Markets 46 56 63 - ------------- ----------- -------------- ----------- CO's Equipped 508 625 >1,000 - ------------- ----------- -------------- ----------- RTs Deployed 4,881 >5,600 >9,300 - ------------- ----------- -------------- ----------- HHs Passed 45% nearly 50% >70% - ------------- ----------- -------------- ----------- Lines Passed >10M nearly 11M >15.5M - ------------- ----------- -------------- ----------- BellSouth's recent data offerings include two e>business centers in Atlanta and Miami - which already host over 25,000 websites. The company offers a broad spectrum of e>business content, storage, security and application services. In the near future, the centers will host network-centric applications like customer care and VPN access. Recently, the centers passed the rigorous requirements of IBM's Hosting Advantage program, which identified the BellSouth centers as world-class hosting environments. The market opportunity in the Southeast for these services will be somewhere in the $4 -- $6 billion range by 2004. BellSouth expects to gain 10-20% of this market. In addition, during the quarter, BellSouth and IBM formed an alliance to deliver turnkey e>business solutions to small and mid-sized businesses throughout the Southeast. The alliance includes sales, marketing and business development initiatives that will build upon IBM's and BellSouth's extensive network of distribution partners who market to businesses in the Southeast - providing a solution that customers in this market normally don't have the resources to do in-house. The alliance enhances BellSouth's e>business strategy and state-of-the-art hosting centers and builds upon joint marketing and distribution channels to tap into the multi-billion dollar e>business infrastructure market. During the quarter, BellSouth became the first and only data network provider offering subrate T3 service, a new frame relay product that offers businesses true bandwidth-on-demand from 3 Mbps up to 44.2 Mbps. The service provides customers the rapid scalability, reliability and reduced provisioning intervals needed in today's electronic marketplace. With over 80,000 frame relay customer sites in its markets, BellSouth recognized that users need a cost-effective, flexible solution that easily expands beyond T1 speeds. [Graphic inserted here BellSouth DSL Lines (000's) 1Q00 - 49 2Q00 - 74 3Q00 - 134 4Q00 - 215 1Q01 - 303 BellSouth grew DSL lines 41% sequentially in 1Q01 to 303,000] [Graphic inserted here BellSouth Data Revenues In millions 1Q00 - $811 2Q00 - $869 3Q00 - $894 4Q00 - $966 1Q01 - $1,034 BellSouth grew data revenues 28% over 1Q01, exceeding $1 billion for the first time in any quarter] The Communications Group Driven by strong growth in data BellSouth's Communications Group represents the company's core domestic businesses, including: all domestic wireline voice, data, broadband, e-commerce, long distance, Internet services, and advanced voice features - all of which are provided to our array of customers, including residential, business, and wholesale. On the BellSouth normalized income statement, Communications Group revenues grew 3.0% in the quarter, driven by strong growth in digital and data revenues, wholesale revenues, and by the company's marketing of calling features, and were offset by competition, rate reductions and the slower growth in access lines, reflecting a slowing economy. In the Communications Group segment, local service revenue increased 2.9% -- impacted by competition, rate reductions, and the slower growth in access lines, which reflects a slowing economy. Excluding an adjustment related to a one-time retroactive rate settlement, operating local revenue grew nearly 4%, boosted by strong growth in digital and data revenues, wholesale revenues (ending the quarter with 1.4 million wholesale lines in service), and by the company's marketing of calling features. Calling Features and Other Enhanced Services Calling features generated $567 million in revenues in 1Q01, growing 10.1 % over 1Q00 to total nearly 60 million features in service. Growth was driven by sales of Complete Choice(R) -- a package combining a basic telephone line with various calling features. Sales of the Complete Choice family of products grew 18% in 1Q01 to 5.6 million packages, a 31.4% penetration rate. BellSouth's leading calling features include: - - Caller ID, which increased 12% to over 8.6 million -- a 47.5% penetration rate of residential customers. - - Call Waiting Deluxe, which grew 26% in the past year to nearly 4.9 million features in service, a 28% penetration rate. - - BellSouth VoiceMail, which climbed 14.5% to nearly 3.4 million mailboxes, a 17% penetration rate. - - Privacy Director, a service that BellSouth began offering last year, enables customers to screen out unwanted calls. The service gives the customer the option of answering a call, ignoring a call, or sending a sales-reject message. While still in the early stages, the service has grown over five-fold in the past year, to nearly 600 thousand customers. Access Lines & Revenues Network access revenue grew 0.4%, impacted by higher incremental rate reductions and slowing access MOU growth. Total switched access minutes of use fell 2.7% in 1Q01, the result of continued migration of minutes to dedicated digital and data services and to competitive services, such as wireless and Internet e-mail. Long distance revenue increased 0.6%, driven by the strong growth in wireless long distance and offset by the demand for Area Plus, a package that combines a basic telephone line with an expanded local calling area, and also offset by toll market share loss. Area Plus packages grew 19% in the past year to nearly 1.9 million. Long distance messages declined by 20.6% in 1Q01, a result of competition and the demand for Area Plus. Other Communications Group Revenue increased 5.7 %, driven by growth in wireless interconnection revenues and offset by a reduction in payphone revenues, as BellSouth begins the transition out of this business that will be completed by December 2002. Communications Group expenses The Communications Group EBITDA margin was 53.1% in 1Q01, compared to 52.7% in 1Q00. Communications Group total operating expenses increased 3.3%, driven by expenses related to data initiatives and higher depreciation and amortization expense - primarily due to the deployment of software since first quarter 2000. This was offset by lower discretionary expenses. Domestic Wireless Cingular delivers strong customer and revenue growth Cingular, BellSouth's domestic wireless joint venture generated strong net adds of 854 thousand and grew revenues by 14.6% during the first quarter of 2001. Cingular's nationwide footprint serves over 20.5 million cellular and PCS customers with an array of data and voice services. Driven by the excitement surrounding the nationwide branding campaign and an increasing demand for wireless services, Cingular revenues increased 14.6% to $3.3 billion. EBITDA improved 4.2% over 1Q00 to $972 million and the EBITDA margin increased sequentially from 4Q00 to 31.7%, a 320 basis points improvement. Strong net additions, national branding launch and one-time merger related initiatives impacted operating expenses. Cingular added 854 thousand net cellular and PCS customers during the first quarter of 2001, a 22.9% increase over last year. Cingular's innovative marketing and effective segmentation programs for both post and prepaid products, coupled with an array of data offerings are attracting quality customers while generating strong growth. Cingular ended the quarter with 20.5 million customers, an increase of 18.7% over prior year. In addition, Cingular Interactive more than doubled it's customer base over prior year to bring the total customers to 657 thousand, adding 84 thousand customers during the first quarter. Cingular currently operates in 42 of the top 50 MSA's with about 192 million POPs, while the pending receipt of New York will bring that number to 43 MSA's and about 211 million POPs. Salmon PCS, of which Cingular is an 85% non-controlling equity owner, was a winner of spectrum in the recent 1900 MHz band auction. The spectrum covers approximately 77 million POPs; 28 million of these are in five markets where Cingular currently has no presence. To service its nationwide footprint, Cingular continues to provide innovative product offerings. During this quarter, Cingular completed a nationwide roll-out of wireless internet (WAP) capabilities. In addition, Cingular announced "Wireless Internet Express," which ushered in always-on connections for virtual instant access to e-mail, Internet, games and other services. [Graphic inserted here Cingular Wireless Customer Growth In millions 1Q00 - 17.3 2Q00 - 18.1 3Q00 - 18.9 4Q00 - 19.7 1Q01 - 20.5 Cingular, BellSouth's domestic wireless joint venture grew customers 18.7% over 1Q00] In an ongoing effort to create synergies and streamline customer service functions throughout the United States, Cingular announced the opening of six new state-of-the-art, multi-functional regional customer care call centers at the beginning of April. The centralization and consolidation of customer care centers will allow Cingular to provide consistent, high quality service in a cost-efficient manner. - -------------------------------------------------------------------------------- Beginning in the fourth quarter of 2000, BellSouth's reported consolidated income statement no longer reflects revenues and expenses from domestic wireless. Net earnings from BellSouth's share of Cingular are included in Other Income on BellSouth's Consolidated Statement of Income - Reported Basis. Cingular's pro forma financial statements for 1Q01, and for 1999 and 2000, can be accessed at www.bellsouth.com/investor. - -------------------------------------------------------------------------------- Latin America Group delivers strong customer and operating cash flow growth: Consolidated revenues from BellSouth's Latin America segment grew 13%, driven by Colombia and Chile. BellSouth's consolidated international properties include Argentina, Chile, Colombia, Ecuador, Nicaragua, Peru and Venezuela. Revenues were impacted by a delay in publication of directories by Listel, one of the company's Advertising and Publishing subsidiaries in Brazil. Excluding this impact, revenues grew 15% to $781 million in the first quarter. Consolidated ARPU declined to $28, impacted by the increased penetration of cellular service into the mass-consumer market. Despite the decline in ARPU, consolidated EBITDA increased 33% to $152 million, and the operating cash flow margin improved 300 basis points over 1Q00. Proportionate EBITDA improved more than 41% over 1Q00, reflecting strong operational performance in Brazil. The Latin America Group portfolio generated a net loss for the quarter of $106 million, primarily related to the Colombia acquisition and FX losses. [Graphic inserted here BellSouth Latin America Group Wireless Customer Growth (000's) 1Q00 - 5,007 2Q00 - 5,667 3Q00 - 6,541 4Q00 - 6,906 1Q01 - 7,574 BellSouth's proportionate Latin America customers grew by 2.6M over 1Q00, a 51% growth rate] With a focus on attracting quality customers, BellSouth added over 668 thousand proportionate wireless customers during the first quarter. The company's Latin American wireless equity customer base surpassed 7.6 million for a 51% growth rate over last year. The primary customer growth drivers were: - - Venezuela, which added 184 thousand subscribers to surpass 2.7 million equity customers - - Colombia added more than 170 thousand customers during the quarter - - Brazil which stands at 1.4 million equity customers, a growth rate of 57% over last year, and - - Chile continued strong growth with an 88% increase in customers. In March the company successfully launched the BellSouth brand name in Colombia, integrating two properties acquired last year to form the first nationwide wireless operator in the country. In the last 3 months alone, BellSouth Colombia grew its subscriber base 30% to reach 737 thousand equity subscribers. Consolidation of the operations has enabled the company to streamline processes and capture cost synergies. Armed with targeted price plans and new service offerings, such as concierge services, short messaging and WAP-based services, BellSouth's BCP operation in Brazil increased its share of postpaid customers this quarter. Nationwide prepaid roaming, implemented in Brazil in January 2001, drove additional customer growth and bolstered ARPU. In December 2000 and January 2001, BellSouth's operation in Venezuela won licenses to provide nationwide Wireless Local Loop (WLL) services, and Telcel-BellSouth is now offering basic telephony services throughout Venezuela, without installing local landlines. The company is leveraging its current backbone network to provide voice and high-speed Internet access, providing service to over 3,500 voice customers and 250 Internet customers. Worldwide Wireless - - Lead by E-plus in Germany with a 69% customer growth rate, BellSouth's Europe and other International properties contributed 263 thousand proportionate net adds during the quarter. BellSouth's non-Latin proportionate customer base increased 45% over 1Q00 to 2.7 million. - - On a proportionate basis, worldwide wireless customer growth was a robust 48%, demonstrating the increasing demand for wireless services globally. - - From 1Q00, BellSouth's worldwide wireless total customer base doubled to 42.6 million throughout sixteen countries, with a total population of 537 million. - - For the quarter, BellSouth's Domestic and Latin America wireless operations delivered more than two-thirds of the company's normalized consolidated revenue growth. Additional Details Domestic Advertising and Publishing - BellSouth's advertising and publishing business grew revenues 23.8% -- driven by a book shift and volume growth in the domestic books. EBITDA grew 44% to $233 million, driving an EBITDA margin of 53.3%. BellSouth consolidated results Interest expense increased 37.3% over 1Q00, primarily driven by interest expense related to Cingular but which is offset by interest income booked to the Other Income/Expense line. Adjusting for the higher interest expense related to Cingular, interest expense would have grown 17.6%, driven by debt related to Colombia, and the buyout of our partners in our Carolinas PCS operations. The effective tax rate for 1Q01 was 36.6%. BellSouth's capital expenditures for 1Q01 were $1.6 billion, up 5% over 1Q00. First quarter was a ramp-up due to heavier spending on DSL and long distance entry. Total cumulative costs related to long distance entry are in the $1.0 -- $1.5 billion range. Capital expenditure guidance for 2001 is in the range of $5.5 -- $6.0 billion, excluding the impact of Cingular Wireless. BellSouth's level of investment in its networks has remained fairly stable and consistent over time, allowing BellSouth to lead the industry in broadband deployment, with 95% of the customers in our top metros within 12,000 feet of a fiber connection. The company's success in managing its network is clear - today BellSouth has over 520 broadband switches, over 17,000 SONET rings, and 3.5 million miles of fiber deployed in its network. Long distance entry update During the quarter, BellSouth passed a major long distance milestone in Georgia when KPMG delivered its final report to the Georgia PSC. After evaluating over 1,170 criteria in testing BellSouth's OSS, the independent firm told the PSC that BellSouth satisfied over 96% of the sample criteria, and with actual orders from CLECs flowing through at an even better rate than the samples. The same OSS systems support local competition across BellSouth's nine-state region. BellSouth expects to file a notification with the Georgia PSC in late May and with the FCC in July. In addition, on April 12, BellSouth asked the North Carolina Utilities Commission to concur that the company is ready to provide long distance service. After gaining the Commissions endorsement, BellSouth will then seek permission from the FCC to enter the long distance market in North Carolina. Commission action is expected this summer. OSS testing continues in Florida with a filing expected with the PSC in May and a state decision expected in December, followed by an FCC filing in late December or January. 2001 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 growth of approximately 30% - - DSL high-speed Internet customers of 600,000 at 12/31/01 - - Capital Expenditures of $5.5 -- $6.0 billion - -------------------------------------------------------------------------------- This document contains forward-looking statements, and actual results may vary significantly depending on factual developments, including whether our assumptions materialize. We refer you to our form 10-K, 10-Qs, and 8-Ks that we have filed with the SEC, which discuss factors that may cause actual results to differ materially from those forecast. The forward-looking information in this document is given as of this date only, and BellSouth assumes no duty to update this information. - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----