1st Quarter Results
Bellsouth Corp
27 April 2001
For more information
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
April 19, 2001
Atlanta, GA - 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
http://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
http://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.
Page 1
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% -330bps
Return on average total capital (annualized) 15.5% 15.6% -10bps
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% +160bps
Total employees 107,155 96,653 10.9%
See Accompanying Notes at Page 4
Page 2
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% +130bps
Return on average equity (annualized) 20.7% 26.4% -570bps
Return on average total capital (annualized) 14.5% 15.8% -130bps
See Accompanying Notes at Page 13
Page 3
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.
See Accompanying Notes at Page 4
Page 4
BellSouth Corporation
Notes to Normalized Financial and Operating Data
Our normalized earnings have been adjusted for the following:
(a) Post-retirement benefit expense - The amount shown represents expense for
changes in post-retirement 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.
Page 5
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
See Accompanying Notes at Page 13
Page 6
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% +40bps
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%
See Accompanying Notes at Page 13
Page 7
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.
See Accompanying Notes at Page 13
Page 8
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% +630bps
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% +130bps
(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).
See Accompanying Notes at Page 13
Page 9
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% +300bps
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% -50bps
See Accompanying Notes at Page 13
Page 10
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% +530bps
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% -10bps
See Accompanying Notes at Page 13
Page 11
BellSouth Corporation
Worldwide Wireless (unaudited)
Customers and POPs by Country
(Proportionate Basis(3) in thousands)
Customers As of POPs As of
Country Brand 1Q01 1Q00 Growth 1Q01 1Q00 Growth
United States Cingular Wireless/ 8,214 5,637 45.7% 76,800 59,403 29.3%
BellSouth Mobility
Argentina Movicom BellSouth 1,094 836 30.9% 23,270 23,270 --
Brazil Various* 1,393 890 56.5% 25,234 20,500 23.1%
Chile BellSouth 757 403 87.8% 15,100 15,100 --
Colombia Celumovil BellSouth 738 - N/M** 27,451 - N/M
Ecuador BellSouth 217 182 19.2% 11,086 11,086 --
Guatemala BellSouth 17 - N/M 7,140 7,140 --
Nicaragua BellSouth 116 45 157.8% 2,581 2,581 --
Panama BellSouth 98 62 58.1% 1,223 1,223 --
Peru BellSouth 369 309 19.4% 24,403 24,403 --
Uruguay Movicom BellSouth 62 65 -4.6% 966 966 --
Venezuela Telcel BellSouth 2,713 2,215 22.5% 18,132 18,132 --
Total Latin America 7,574 5,007 51.3% 156,586 124,401 25.9%
Denmark Sonofon 408 385 6.0% 2,465 2,465 --
Germany e-plus 1,554 920 68.9% 18,568 18,568 --
India SkyCell 11 6 83.3% 1,348 1,348 --
Israel Cellcom 687 526 30.6% 2,119 2,119 --
2,660 1,837 44.8% 24,500 24,500 --
Total Worldwide Wireless Customers 18,448 12,481 47.8% 257,886 208,304 23.8%
* - BCP in Sao Paulo and Northeast regions; TCO.
** - Not meaningful.
See Accompanying Notes at Page 13
Page 12
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% +740bps
* - Not meaningful.
See Accompanying Notes at Page 13
Page 13
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.
Notes to Segment Results
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