3rd Quarter Results
Bellsouth Corp
18 October 2001
FOR MORE INFORMATION FOR IMMEDIATE RELEASE
Jeff Battcher (404-713-0274) October 18, 2001
Pattie Kushner (404-249-2365)
BellSouth Reports Third Quarter Earnings
* DSL customers increase to 463,000
* Data revenues grow nearly 28 percent
* Data revenues exceed $1 billion for third consecutive quarter
ATLANTA - BellSouth Corporation (NYSE: BLS) reported normalized earnings per
share (EPS) of 56 cents in the third quarter of 2001, before the impact of
special items. Normalized EPS included a 3-cent reduction related to foreign
currency losses. Without that impact, normalized EPS would have been 59
cents. Normalized EPS in the third quarter of 2000 was 55 cents.
Data, Broadband, Internet
Third quarter data revenues exceeded $1.1 billion and represented more than 15
percent of the company's total revenues. It was BellSouth's third consecutive
$1 billion-plus quarter for data revenues, which increased at an annual rate
of 27.7 percent, compared to 25.3 percent growth in the second quarter of
2001. The company finished the third quarter with 463,000 DSL customers.
The bulk of BellSouth's data revenue growth continues to be driven by
high-speed, high-capacity services for business customers, including products
such as Frame Relay. In Network Magazine's recent North American Carrier
Survey, 4,000 corporate and business telecom managers rated BellSouth No. 1 in
Frame Relay, a high-speed packet switching technology. BellSouth also offers
Frame Relay Secure for backup and redundancy. The company's comprehensive
array of Managed Security Services includes managed firewall, intrusion
detection and response, anti-virus and anti-vandal filters, and Web site
blocking.
Domestic Wireless / Cingular
BellSouth's domestic wireless revenues were $1.5 billion in the third quarter
of 2001. This was a gain of 38.1 percent compared to revenues from
BellSouth's stand-alone domestic wireless operations in the third quarter of
the previous year. (Cingular Wireless services revenues increased 13.6
percent.) Cingular, the second largest wireless company in the U.S., had 21.3
million cellular and PCS customers at September 30, an annual growth rate of
12.8 percent. This week, Cingular announced an innovative infrastructure
joint venture with VoiceStream Wireless that will allow Cingular to offer
service in New York City much more quickly and cost effectively than building
its own network.
Latin America Group
Consolidated Latin America revenues, including advertising and publishing,
were $710 million in the third quarter. Earnings before interest, taxes,
depreciation and amortization, or EBITDA, increased 17.3 percent to $224
million, and EBITDA margin improved by 6.6 percentage points, to 31.3 percent,
compared to the third quarter of 2000. BellSouth had 8.1 million customers in
Latin America at the end of the third quarter, an annual growth rate of 21.4
percent. In four of the 11 countries BellSouth serves in Central and South
America, mobile phone customers now outnumber fixed line subscribers.
Long Distance
Following unanimous approval by the Public Service Commissions (PSC) in
Louisiana (September 19) and Georgia (October 2), BellSouth filed an
application October 2 with the Federal Communications Commission to offer long
distance service to customers in those two states. On October 4, the
Mississippi PSC also unanimously endorsed BellSouth's state-level filing to
provide long distance service.
Special Items
On a reported basis, EPS in the third quarter of 2001 was breakeven. Reported
results were affected by a number of special items:
BellSouth recorded a charge of 54 cents per share resulting from the
impairment of certain strategic investments in publicly traded and private
equity securities -- principally its investment in Qwest Communications
International. As required under generally accepted accounting principles,
BellSouth regularly monitors and evaluates the realizable value of its
investments.
In addition, BellSouth sold approximately 4.5 million shares of Qwest during
the quarter, resulting in a loss of 3 cents per share.
During the quarter, BellSouth closed on the sale of its 24.5 percent interest
in Skycell, a wireless carrier in India, resulting in a gain of 1 cent per
share.
Additional Financial Highlights
Adjusted to include BellSouth's 40 percent share of Cingular, total revenues
of $7.5 billion increased 7.7 percent compared to the third quarter of 2000.
Normalized net income in the third quarter this year was $1.063 billion,
compared to $1.036 billion in the same quarter a year ago. Third quarter
reported net income was $7 million in 2001 and $1.036 billion in 2000 (same as
normalized amount).
Fourth Quarter Restructuring Charge
BellSouth will record an after-tax charge of $170 million to $200 million (9
to 10 cents per share) during the fourth quarter reflecting restructuring
actions and related asset impairments. These actions are being taken to
reduce operating costs in response to a slowing economy and increased
competition. Targeted reductions will be largely focused on staff support
functions, resulting in the elimination of approximately 3,000 positions.
2001 Guidance
BellSouth provided revised guidance for certain key financial and business
metrics in 2001 as follows:
Normalized earnings per share $2.22 to $2.27*
Total operating revenue - including Cingular 8-9% growth
Data revenue 30% growth (approx.)
Capital expenditures $5.5-6.0 billion
DSL high-speed Internet customers 600,000 at 12/31/01
*Includes foreign currency losses through third quarter. Excludes effect of
restructuring mentioned above.
About BellSouth Corporation
BellSouth Corporation is a Fortune 100 communications services company
headquartered in Atlanta, GA, serving more than 46 million customers in the
United States and 15 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 third quarter earnings can be accessed
at www.bellsouth.com/investor. The press release, financial statements and
BLS Investor News summarizing highlights of the quarter are available on the
BellSouth Investor Relations Web site starting today at 9 a.m. Eastern Time.
BellSouth will host a conference call with investors today at 10 a.m. Eastern
Time. 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: 888-370-1863
International: 706-634-1735
A replay of the call will be available beginning at approximately 1 p.m.
today, through October 25. The replay can be accessed by dialing:
Domestic: 800-642-1687 - Reservation number: 1956988
International: 706-645-9291 - Reservation number: 1956988
The third quarter earnings release, BLS Investor News summarizing highlights
of the quarter, and downloadable financial statements in Excel and PDF are
available at 9 a.m. today on our Web site, www.bellsouth.com/investor.
Today's conference call will be audiocast live on our Web site beginning at 10
a.m., with a replay available through October 25.
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; (iii) higher than anticipated cash
requirements for investments, new business initiatives and acquisitions and
(iv) those factors contained in the Company's periodic reports filed with the
SEC. 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 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
3 which discuss the impacts of these events. See page 4 for our reported
results.
Year-to-Date
3Q01 3Q00(10) Growth 2001 2000(10) Growth
Operating Revenues
Communications
group $4,748 $4,539 4.6% $14,111 $13,601 3.7%
Domestic
wireless 1,465 1,061 38.1% 4,189 3,033 38.1%
Latin America 710 757 -6.2% 2,227 2,124 4.8%
Domestic
advertising
and publishing 493 539 -8.5% 1,363 1,329 2.6%
All other 37 26 42.3% 106 93 14.0%
Total
Operating
Revenues 7,453 6,922 7.7% 21,996 20,180 9.0%
Operating Expenses
Operational
and support
expenses 4,079 3,684 10.7% 12,003 10,836 10.8%
Depreciation
and
amortization 1,376 1,301 5.8% 4,105 3,759 9.2%
Total
Operating
Expenses 5,455 4,985 9.4% 16,108 14,595 10.4%
Operating
Income 1,998 1,937 3.1% 5,888 5,585 5.4%
Interest
Expense 361 344 4.9% 1,175 982 19.7
Other Income
(Expense), net 50 31 N/M* 68 245 N/M
Income Before
Income Taxes 1,687 1,624 3.9% 4,781 4,848 -1.4%
Provision for
Income Taxes 624 588 6.1% 1,770 1,767 0.2%
Net Income $1,063 $1,036 2.6% $3,011 $3,081 -2.3%
Diluted:
Weighted Average
Common Shares
Outstanding 1,887 1,885 0.1% 1,886 1,894 -0.4%
Earnings
Per Share $0.56 $0.55 1.8% $1.60 $1.63 -1.8%
* - Not meaningful.
Selected Financial and Operating Data
EBITDA (5) $3,374 $3,238 4.2% $9,993 $9,344 6.9%
EBITDA
margin (6) 45.3% 46.8% -150 bps 45.4% 46.3% -90 bps
Return on
average equity 23.3% 25.0% -170 bps 22.6% 25.7% -310 bps
(annualized)
Return on
average total 13.7% 15.5% -180 bps 13.8% 15.8% -200 bps
capital (annualized)
Digital and
data revenues$1,142 $894 27.7% $3,265 $2,574 26.8%
Dividends
per share $0.19 $0.19 -- $0.57 $0.57 --
Capital
expenditures $1,367 $1,672 -18.2% $4,724 $4,940 -4.4%
Common shares
outstanding 1,877 1,866 0.6%
Book value
per share $9.61 $8.84 8.7%
Debt ratio 52.6% 54.8% -220 bps
Total
employees 103,055 102,191 0.8%
BellSouth Corporation
Normalized Earnings Summary (unaudited)
(amounts in millions, except per share data)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Reported Net Income $7 $1,036 -99.3% $1,778 $3,101 -42.7%
Loss on 1,017 - 1,017 -
writedown of
investments (a)
Gain on sale of Skycell (19) - (19) -
Adjustment to ISP
Accrual (b) - - 88 -
Postretirement benefit
expense (c) - - 47 -
Loss on sale of Qwest
common stock (d) 52 - 84 -
Losses from
wireless video
business (e) 6 - 16 -
Gain on E-Plus
restructuring (f) - - - (68)
Severance accrual (g) - - - 48
Normalized Net Income $1,063 $1,036 2.6% $3,011 $3,081 -2.3%
Reported Diluted
Earnings Per Share $0.00 $0.55 -100.0% $0.94 $1.64 -42.7%
Loss on writedown
of investments (a) 0.54 - 0.54 -
Gain on sale of
Skycell (0.01) - (0.01) -
Adjustment to ISP
Accrual (b) - - 0.05 -
Postretirement benefit
expense (c) - - 0.02 -
Loss on sale of Qwest
common stock (d) 0.03 - 0.04 -
Losses from wireless
video business (e) - - 0.01 -
Gain on E-Plus
restructuring (f) - - - (0.04)
Severance accrual (g) - - - 0.03
Normalized Diluted
Earnings Per Share * $0.56 $0.55 1.8% $1.60 $1.63 -1.8%
* Normalized earnings per share for year-to-date 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) Loss on writedown of investments -
Represents the loss incurred to recognize
other-than-temporary declines in the
market values of several investments
accounted for under the cost method. This
loss is being recognized in accordance
with generally accepted accounting
principles.
(b) Adjustment to ISP Accrual - Represents the
loss incurred for prior claims from
competitive local exchange carriers
regarding reciprocal compensation for ISP
traffic.
(c) 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.
(d) Loss on sale of Qwest common stock -
Represents the loss incurred from the sale
of a portion of our investment in Qwest
common stock.
(e) Losses from Wireless Video Business -
Represents the current period losses being
incurred as we exit the wireless video
entertainment business.
(f) Gain on E-Plus Restructuring - Represents
income related to the restructuring of our
ownership interest in German wireless
operator E-Plus.
(g) 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:
(h) 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.
(i) The 2001 periods have been adjusted to
include our proportional share of Cingular
Wireless' operating results for third
quarter 2001 and year-to-date 2001, 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 the 2000 periods to
present roamer revenues and roamer costs
on a consistent basis.
BellSouth Corporation
Consolidated Statements of Income - Reported Basis (unaudited)
(amounts in millions, except per share data)
Year-to-Date
3Q01 3Q00(10) Growth 2001 2000(10) Growth
Operating Revenues
Communications
group $4,770 $4,565 4.5% $14,199 $13,679 3.8%
Domestic
wireless - 963 -100.0% - 2,766 -100.0%
Latin America 710 757 -6.2% 2,227 2,124 4.8%
Domestic
advertising and
publishing 493 539 -8.5% 1,363 1,329 2.6%
All other 40 26 53.8% 128 93 37.6%
Total
Operating
Revenues 6,013 6,850 -12.2% 17,917 19,991 -10.4%
Operating Expenses
Operational
and support
expenses 3,138 3,612 -13.1% 9,531 10,647 -10.5%
Depreciation
and
amortization 1,178 1,301 -9.5% 3,538 3,759 -5.9%
Severance
accrual - - N/M* - 78 N/M
Total 4,316 4,913 -12.2% 13,069 14,484 -9.8%
Operating
Expenses
Operating Income 1,697 1,937 -12.4% 4,848 5,507 -12.0%
Interest Expense 304 344 -11.6% 998 982 1.6%
Other Income
(Expense), net (1,336) 31 N/M (982) 313 N/M
Income Before
Income Taxes 57 1,624 -96.5% 2,868 4,838 -40.7%
Provision for
Income Taxes 50 588 -91.5% 1,090 1,737 -37.2%
Net Income $7 $1,036 -99.3% $1,778 $3,101 -42.7%
Diluted:
Weighted
Average
Common Shares
Outstanding 1,887 1,885 0.1% 1,886 1,894 -0.4%
Earnings Per
Share $0.00 $0.55 -100.0% $0.94 $1.64 -42.7%
* - Not meaningful.
Selected Financial and Operating Data
EBITDA (5) $2,875 $3,238 -11.2% $8,386 $9,344 -10.3%
EBITDA margin(6) 47.8% 47.3% 50 bps 46.8% 46.7% 10 bps
Return on
average equity
(annualized) 0.2% 25.0% -2480 bps 13.4% 25.8% -1240 bps
Return on average
total capital
(annualized) 2.8% 15.5% -1270 bps 9.5% 15.9% -640 bps
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
September 30, December 31,
2001 2000
Assets
Current Assets:
Cash and cash equivalents $854 $1,061
Accounts receivable, net of 5,192 5,157
allowance for uncollectibles
of $428 and $377
Material and supplies 377 379
Other current assets 738 809
Total Current Assets 7,161 7,406
Investments and Advances 10,500 11,010
Property, Plant and Equipment, net 25,233 24,157
Deferred Charges and Other Assets 4,876 4,180
Intangible Assets, net 4,273 4,172
Total Assets $52,043 $50,925
Liabilities and Shareholders' Equity
Current Liabilities:
Debt maturing within one year $6,961 $7,569
Accounts payable 1,627 2,233
Other current liabilities 4,241 3,468
Total Current 12,829 13,270
Liabilities
Long-Term Debt 13,105 12,463
Noncurrent Liabilities:
Deferred income taxes 3,078 3,580
Other noncurrent liabilities 4,991 4,700
Total Noncurrent Liabilities 8,069 8,280
Shareholders' Equity:
Common stock, $1 par value 2,020 2,020
Paid-in capital 6,766 6,740
Retained earnings 14,704 14,074
Accumulated other (277) (488)
comprehensive income
Shares held in trust and (5,034) (5,222)
treasury
Guarantee of ESOP debt (139) (212)
Total Shareholders' Equity 18,040 16,912
Total Liabilities and Shareholders' Equity $52,043 $50,925
BellSouth Corporation
Results by Segment (amounts in millions) (unaudited)
Communications Group (1)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Operating Revenues
Local service $3,003 $2,803 4.0% $8,877 $8,607 3.1%
Network access 1,252 1,154 8.5% 3,715 3,596 3.3%
Long distance 192 178 7.9% 539 517 4.3%
Other 360 418 -13.9% 1,161 1,161 0.0%
Total Operating
Revenues 4,807 4,638 3.6% 14,292 13,881 3.0%
Operating Expenses
Operational and
support expenses 2,439 2,168 12.5% 6,995 6,516 7.4%
Depreciation and 1,014 962 5.4% 3,003 2,813 6.8%
amortization
Total Operating
Expense 3,453 3,130 10.3% 9,998 9,329 7.2%
Operating Income 1,354 1,508 -10.2% 4,294 4,552 -5.7%
Interest Expense 139 180 -22.8% 472 519 -9.1%
Other Income, net 9 1 N/M* 26 8 N/M
Income Before Income
Taxes 1,224 1,329 -7.9% 3,848 4,041 -4.8%
Provision for Income
Taxes 458 492 -6.9% 1,408 1,501 -6.2%
Segment Net Income(1)$766 $837 -8.5% $2,440 $2,540 -3.9%
* - Not meaningful.
Selected Financial and Operating Data
(amounts in millions)
EBITDA (5) $2,368 $2,470 -4.1% $7,297 $7,365 -0.9%
EBITDA margin (6) 49.3% 53.3% -400 bps 51.1% 53.1% -200 bps
Calling feature revenues $580 $551 5.3% $1,724 $1,598 7.9%
Access minutes of use 26,922 28,859 -6.7% 83,338 86,786 -4.0%
Toll messages 109 125 -12.8% 331 390 -15.1%
Capital expenditures $1,138 $1,317 -13.6% $4,032 $3,802 6.0%
Equivalent access lines in
service (thousands):
Access lines 25,574 25,942 -1.4%
Access line
equivalents 36,693 24,937 47.1%
Total equivalent access
lines in service 62,267 50,879 22.4%
Wholesale Lines 1,596 1,188 34.3%
Internet customers
(thousands) 1,141 871 31.0%
DSL customers
(thousands) 463 134 245.5%
BellSouth Corporation
Results by Segment(unaudited)
Supplemental Operating Data (in thousands)
Communications Group - Network Access Lines In Service(a)
3Q01 3Q00 Growth
Access lines (b)
Residence 16,915 17,205 -1.7%
Business 8,441 8,481 -0.5%
Other 218 256 -14.8%
Total access lines in service 25,574 25,942 -1.4%
Access line equivalents(c)
Selected digital data services:
DS0 & ADSL 3,507 1,422 146.6%
DS1 6,465 5,359 20.6%
DS3 & higher 26,721 18,156 47.2%
Total digital data lines
in service 36,693 24,937 47.1%
Total equivalent access lines
in service 62,267 50,879 22.4%
(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, revenue growth rates cannot be compared to line
growth rates on an equivalent basis.
BellSouth Corporation
Results by Segment (amounts in millions) (unaudited)
Domestic Wireless Segment (1)(a)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Operating Revenues
Service revenues(4) $1,365 $995 37.2% $3,882 $2,832 37.1%
Equipment and other 100 76 31.6% 307 225 36.4%
revenues
Total 1,465 1,071 36.8% 4,189 3,057 37.0%
Operating
Revenues
Operating Expenses
Operational and 975 776 25.6% 2,821 2,226 26.7%
support expenses
Depreciation and 199 151 31.8% 569 472 20.6%
amortization
Total 1,174 927 26.6% 3,390 2,698 25.6%
Operating
Expenses
Operating Income 291 144 102.1% 799 359 122.6%
Interest Expense 80 29 N/M* 244 83 N/M
Other Income (Expense), net (2) 44 N/M 8 117 N/M
Income Before Income Taxes 209 159 31.4% 563 393 43.3%
Provision for Income Taxes 81 61 32.8% 218 148 47.3%
Segment $128 $98 30.6% $345 $245 40.8%
Net Income(1)
* - Not meaningful.
Selected Financial and Operating Data (b)
(amounts in millions, except
customer data in thousands)
EBITDA (5) $490 $295 66.1% $1,368 $831 64.6%
EBITDA margin (6)(c) 35.9% 29.6% 630 bps 35.2% 29.3% 590 bps
Average monthly revenue per $53 $60 -11.7% $52 $60 -13.3%
customer (7)(d)
Customer net adds in period:
Cellular and PCS 24 229 -89.5% 639 824 -22.5%
Data (Cingular 3 80 -96.3% 50 238 -79.0%
Interactive)
Customers:
Cellular and PCS 8,512 5,711 49.0%
Data (Cingular 279 462 -39.6%
Interactive)
POPs 84,400 57,034 48.0%
Penetration rate (9) 11.1% 10.3% 80 bps
(a) The 2000 periods are comprised of BellSouth's wireless voice and
wireless data operations. The 2001 periods are comprised of
BellSouth's 40% share of the reported results of Cingular
Wireless.
(b) Customer data for the 2001 periods, 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)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Operating Revenues
Service revenues (4) $591 $613 -3.6% $1,862 $1,762 5.7%
Equipment and 91 110 -17.3% 327 315 3.8%
other revenues
Advertising and 34 49 -30.6% 58 94 -38.3%
publishing
revenues
Total 716 772 -7.3% 2,247 2,171 3.5%
Operating
Revenues
Operating Expenses
Operational and 492 581 -15.3% 1,627 1,684 -3.4%
support expenses
Depreciation and 138 167 -17.4% 447 423 5.7%
amortization
Total 630 748 -15.8% 2,074 2,107 -1.6%
Operating
Expenses
Operating Income 86 24 258.3% 173 64 170.3%
Interest Expense 51 52 -1.9% 166 111 49.5%
Other Income (Expense), net (67) (37) N/M* (236) (83) N/M
Income Before Income Taxes (32) (65) N/M (229) (130) N/M
Provision for Income Taxes 20 (3) N/M 48 (14) N/M
Segment ($52) ($62) N/M ($277) ($116) N/M
Net Income(1)
* - Not meaningful.
Selected Financial and Operating Data
(amounts in millions, except
customer data in thousands)
EBITDA (5) $224 $191 17.3% $620 $487 27.3%
EBITDA margin (6) 31.3% 24.7% 660 bps 27.6% 22.4% 520 bps
Average monthly revenue per $24 $31 -22.6% $26 $32 -18.8%
customer (8)
Customer net adds in period 84 365 -77.0% 1,023 1,680 -39.1%
(excluding ownership changes)
Customers (voice) 8,092 6,668 21.4%
POPs 156,200 156,200 0.0%
Penetration rate (9) 5.2% 4.3% 90 bps
BellSouth Corporation
Proportionate Basis(3) - Selected Financial and Operating Data
(Amounts in millions, except customer data in thousands)
Latin America Group (1)(2)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Operating revenues $657 $727 -9.6% $2,070 $2,086 -0.8%
EBITDA(5) $203 $188 8.0% $579 $476 21.6%
EBITDA margin(6) 30.9% 25.9% 500 bps 28.0% 22.8% 520 bps
Average monthly $24 $31 -22.6% $26 $33 -21.2%
revenue per
customer (8)
Customer net adds 212 399 -46.9% 1,184 1,672 -29.2%
in period (excluding
ownership changes)
Customers (voice) 8,109 6,541 24.0%
POPs 156,961 156,586 0.2%
Penetration rate(9) 5.2% 4.4% 80 bps
BellSouth Corporation
Worldwide Wireless (unaudited)
Customers and POPs by Country
(Proportionate Basis(3) in thousands)
Customers As of POPs As of
Country Brand 3Q01 3Q00 Growth 3Q01 3Q00 Growth
United Cingular 8,512 6,151 38.4% 84,400 59,427 42.0%
States Wireless/
BellSouth
Mobility
Argentina Movicom 1,121 1,005 11.5% 23,270 23,270 --
BellSouth
Brazil Various* 1,615 1,250 29.2% 25,461 25,234 0.9%
Chile BellSouth 827 602 37.4% 15,100 15,100 --
Colombia BellSouth 767 490 56.5% 27,451 27,451 --
Ecuador BellSouth 276 186 48.4% 11,086 11,086 --
Guatemala BellSouth 39 - N/M** 7,140 7,140 --
Nicaragua BellSouth 136 67 103.0% 2,581 2,581 --
Panama BellSouth 127 81 56.8% 1,223 1,223 --
Peru BellSouth 388 357 8.7% 24,551 24,403 0.6%
Uruguay Movicom 63 60 5.0% 966 966 --
BellSouth
Venezuela Telcel 2,750 2,443 12.6% 18,132 18,132 --
BellSouth
Total Latin America 8,109 6,541 24.0% 156,961 156,586 0.2%
Denmark Sonofon 438 357 22.7% 2,465 2,465 --
Germany e-plus 1,694 1,231 37.6% 18,568 18,568 --
India SkyCell*** - 8 N/M - 1,348 N/M
Israel Cellcom 746 606 23.1% 2,119 2,119 --
2,878 2,202 30.7% 23,152 24,500 --
Total Worldwide Wireless 19,499 14,894 30.9% 264,513 240,513 10.0%
* - BCP in Sao Paulo and Northeast regions; TCO.
** - Not meaningful.
*** - Sold in third quarter 2001.
BellSouth Corporation
Results by Segment (amounts in millions) (unaudited)
Domestic Advertising & Publishing (1)
Year-to-Date
3Q01 3Q00 Growth 2001 2000 Growth
Total Operating Revenues $ 496 $ 545 -9.0% $ 1,376 $ 1,346 2.2%
Operating Expenses
Operational and 232 244 -4.9% 677 672 0.7%
support expenses
Depreciation and 7 8 -12.5% 20 22 -9.1%
amortization
Total 239 252 -5.2% 697 694 0.4%
Operating
Expenses
Operating Income 257 293 -12.3% 679 652 4.1%
Interest Expense 2 1 100.0% 13 10 30.0%
Other Income, net 1 1 N/M* 5 1 N/M
Income Before Income Taxes 256 293 -12.6% 671 643 4.4%
Provision for Income Taxes 98 112 -12.5% 257 244 5.3%
Segment $158 $181 -12.7% $414 $399 3.8%
Net
Income(1)
EBITDA (5) $264 $301 -12.3 $699 $674 3.7%
EBITDA margin (6) 53.2% 55.2% -200 bps 50.8% 50.1% 70 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 $53 for third
quarter 2000 and $151 for the year-to-date period. The adoption did not
affect our reported earnings for any 2000 period.
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