BellSouth Reports Second Quarter Earnings * Sequential earnings
growth from continuing operations ATLANTA, July 25
/PRNewswire-FirstCall/ -- BellSouth Corporation (NYSE:BLS)
announced second quarter 2005 earnings per share (EPS) from
continuing operations of 43 cents compared to 37 cents in the first
quarter of 2005 and 51 cents in the second quarter of 2004.
Normalized EPS from continuing operations was 46 cents, an increase
compared to 39 cents in the first quarter of 2005 and a decline
compared to 51 cents in the second quarter of 2004. Normalizing
items in the second quarter of 2005 consisted of wireless merger
integration costs (2 cents) and debt extinguishment costs (1 cent).
"The realignment of our assets toward wireless and broadband
services is starting to pay off," said Duane Ackerman, Chairman and
Chief Executive Officer. "Cingular delivered strong growth in
customers, revenues and operating margins. Our results this quarter
clearly demonstrate how Cingular's progress impacts BellSouth's
bottom line. Our wireline business and growing Advertising &
Publishing services delivered consistent, overall financial
performance." Normalized Results from Continuing Operations
Normalized results from continuing operations include BellSouth's
40 percent proportionate share of Cingular's revenues and expenses.
Cingular completed its acquisition of AT&T Wireless on Oct. 26,
2004. Results prior to the acquisition date have not been restated.
For the second quarter of 2005, normalized revenue was $8.52
billion, up 2.6 percent compared to the first quarter of 2005.
Operating margin was 19.2 percent, a 190 basis point improvement
compared to the first quarter of 2005. Net income was $849 million,
up $131 million from the first quarter of 2005. These improvements
reflect Cingular's continued growth and merger integration
progress, stable results from Communications Group and continued
Advertising & Publishing revenue growth. Year-over-year, second
quarter 2005 normalized revenue was $8.52 billion compared to $6.71
billion in the second quarter of 2004. Second quarter normalized
net income decreased $89 million compared to $938 million in the
second quarter of 2004, impacted by a decline in core voice
revenues and higher retiree medical expense in the Communications
Group and financing costs associated with the acquisition of
AT&T Wireless. Year-over-year, Cingular's higher operating
income before depreciation and amortization offset increased
intangible amortization expense related to the acquisition of
AT&T Wireless. Reported Results from Continuing Operations For
the second quarter of 2005, BellSouth's consolidated reported
revenue from continuing operations totaled $5.14 billion, an
increase of 1.2 percent compared to the same quarter of 2004.
Income from continuing operations was $795 million compared to $939
million in the same quarter of the previous year. In addition to
the items noted above, the comparison of period-to- period reported
results was negatively impacted by wireless merger integration
costs associated with the acquisition of AT&T Wireless.
Operating free cash flow (defined as net cash provided by operating
activities less capital expenditures) was $1.3 billion for the
second quarter of 2005. In June, the Company increased the dividend
by more than 7 percent to 29 cents per share quarterly or $1.16 per
share annually. Over the last three years, BellSouth has raised the
quarterly dividend a total of 53 percent. Capital expenditures for
the second quarter of 2005 were $829 million. In addition, the
Company has paid down $2.9 billion in debt since the beginning of
2005. Communications Group In the second quarter of 2005,
Communications Group revenue remained stable at $4.62 billion, a
slight increase compared to the same quarter of 2004. Revenue
growth from long distance, DSL and small business access line gains
effectively offset revenue declines from residential access line
loss and large business services. Second quarter operating margin
was 23.6 percent compared to 25.0 percent for the full year of
2004. As of June 30, 2005, total access lines were 20.8 million,
down 419,000 compared to the first quarter of 2005. Access line
loss was driven by wireless substitution, competition and seasonal
household moves that traditionally affect the second quarter. UNE-P
access lines resold by BellSouth competitors were down 235,000
compared to the first quarter of 2005. Residential retail access
lines were down 204,000. In contrast, business retail access lines
held steady, boosted by 33,000 net new access lines in the small
business segment. BellSouth long distance customers reached 53
percent penetration of its mass-market customer base. The Company
added 301,000 net mass-market long distance customers during the
second quarter of 2005, and now serves nearly 6.8 million
mass-market long distance customers. New and existing customers
continue to choose BellSouth as their long distance provider. With
many residential and small business customers choosing unlimited
long distance and international calling plans, average revenue per
user (ARPU) is about $17 per month. Driven by DSL, network data
revenue for the second quarter was $1.17 billion, an increase of
4.5 percent compared to the same quarter of 2004. BellSouth now
serves more than 2.4 million DSL subscribers. During the second
quarter of 2005, BellSouth added 124,000 net DSL customers. Net
customer additions declined compared to the first quarter of 2005,
impacted by changes in promotional activity during the first
quarter and traditional seasonal slowing. Increasing broadband
penetration remains a priority for BellSouth. An additional 80,000
customers added DIRECTV(R) service to their communications packages
during the second quarter, bringing the total number of customers
with this package to 394,000. Through our successful alliance with
DIRECTV(R), BellSouth provides competitively priced packages that
include wireline and wireless voice, Internet access and
entertainment services. Cingular Wireless Cingular Wireless, the
nation's largest wireless provider, added approximately 1.1 million
net customers in the second quarter of 2005, bringing its
nationwide customer base to 51.6 million customers. Cingular's
gross customer additions in the second quarter were 4.4 million,
demonstrating continued success in the marketplace. Overall churn
remained at 2.2 percent in the second quarter of 2005, and postpaid
churn improved sequentially by 10 basis points to 1.8 percent.
Cingular's reported revenue was $8.6 billion for the second quarter
of 2005, representing a 5.4 percent increase over pro forma revenue
from the prior year period and a 4.6 percent sequential increase.
BellSouth's normalized revenue includes its 40 percent share of
Cingular's reported revenue. Service ARPU (average revenue per
user) in the second quarter was $50.43, a decline of 5.6 percent
from the prior year (pro forma) and a sequential increase of 1.7
percent from this year's first quarter ARPU. ARPU from data
services continued to grow in the second quarter reaching $4.16, a
46 cent increase from the previous quarter. This increase was
driven by customer usage of text messaging, downloadable ringtones,
games and many other wireless applications. Cingular's second
quarter normalized service margin from operating income before
depreciation and amortization (OIBDA) was 28.9 percent, 340 basis
points better than the first quarter of 2005. This increase was
driven by improved revenue growth, lower gross customer additions
and customer upgrades and operational efficiencies associated with
merger synergies. During the second quarter, 78 percent of
Cingular's subscriber base was GSM-equipped, up from 72 percent in
the first quarter of 2005. In addition, an impressive 90 percent of
the company's total combined minutes are now carried on its GSM
network. Through roaming partners, Cingular now has coverage in
more than 170 countries worldwide. Cingular is on track to launch
UMTS/HSDPA in 15-20 markets by the end of 2005. This
next-generation technology provides superior speeds for data and
video services. Advertising & Publishing In the second quarter
of 2005, Advertising & Publishing continued to grow revenue.
Revenue was $531 million, a 3.9 percent increase over the same
quarter of 2004, and operating margin was 46.1 percent. Segment net
income was $154 million, up $4 million compared to the second
quarter of 2004. Normalizing Items In the second quarter of 2005,
the difference between reported (GAAP) EPS from continuing
operations and normalized EPS is shown in the following table: 2Q05
2Q04 GAAP Diluted EPS - Income from continuing operations $0.43
$0.51 Wireless merger integration costs $0.02 Debt extinguishment
costs $0.01 Normalized Diluted EPS - Income from continuing
operations $0.46 $0.51 Wireless merger integration costs --
Represents BellSouth's 40 percent share of tax-effected wireless
merger integration costs of $204 million incurred during the second
quarter of 2005 in connection with the Cingular/AT&T Wireless
merger. Integration costs include one-time cash outlays or
specified non-cash charges, including accelerated depreciation
directly related to rationalization of the wireless network, sales
distribution channels, the workforce, information technology
systems and real estate. Debt extinguishment costs -- Represents
one-time expenses associated with the early extinguishment of $300
million of long-term debt in the second quarter of 2005. About
BellSouth Corporation BellSouth Corporation is a Fortune 100
communications company headquartered in Atlanta, Georgia. BellSouth
has joint control and 40 percent ownership of Cingular Wireless,
the nation's largest wireless voice and data provider with more
than 50 million customers. Backed by award winning customer
service, BellSouth offers the most comprehensive and innovative
package of voice and data services available in the market. Through
BellSouth Answers(R), residential and small business customers can
bundle their local and long distance service with dial-up and
high-speed DSL Internet access, satellite television and
Cingular(R) Wireless service. For businesses, BellSouth provides
secure, reliable local and long distance voice and data networking
solutions. BellSouth also offers online and directory advertising
through BellSouth(R) RealPages.com(R) and The Real Yellow Pages(R).
BellSouth believes that diversity and fostering an inclusive
environment are critical in maintaining a competitive advantage in
today's global marketplace. More information about BellSouth can be
found at http://www.bellsouth.com/. Further information about
BellSouth and Cingular's Second quarter earnings can be accessed at
http://www.bellsouth.com/investor. The press release, financial
statements and Investor News summarizing highlights of the quarter
are available on the BellSouth Investor Relations website starting
today at 8 a.m. Eastern Time (ET). BellSouth will host a conference
call with investors today at 10 a.m. (ET). Dial-in information for
the conference call is as follows: Domestic: 888-370-1863
International: 706-634-1735 The conference call will also be
webcast live beginning at 10 a.m. (ET) on our website at
http://www.bellsouth.com/investor. The webcast will be archived on
our website beginning at approximately 1 p.m. (ET) today. A replay
of the call will be available beginning at approximately 1 p.m.
(ET) today, through August 1, 2005, and can be accessed by dialing:
Domestic: 800-642-1687 - Conference ID: 4107471 International:
706-645-9291 - Conference ID: 4107471 In addition to historical
information, this document may contain 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 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; (iv) unfavorable
regulatory actions; and (v) 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. This document
may also contain certain non-GAAP financial measures. The most
directly comparable GAAP financial measures, and a full
reconciliation of non-GAAP to GAAP financial information, are
attached hereto and provided on the Company's investor relations
website, http://www.bellsouth.com/investor. BellSouth Corporation
Consolidated Statements of Income - Reported Basis (unaudited)
(amounts in millions, except per share data) Note to Readers: See
Normalization Earnings Summary and Reconciliation to GAAP results
on pages 3 and 4 for a summary of unusual items included in
Reported Basis results. 2Q05 2Q04 Growth 1Q05 Growth Operating
Revenues Communications group $4,598 $4,565 0.7% $4,593 0.1%
Advertising and publishing 527 507 3.9% 488 8.0% All other 17 11
54.5% 10 70.0% Total Operating Revenues 5,142 5,083 1.2% 5,091 1.0%
Operating Expenses Cost of services and products 1,925 1,789 7.6%
1,920 0.3% Selling, general & administrative expenses 951 938
1.4% 901 5.5% Depreciation and amortization 916 914 0.2% 918 -0.2%
Total Operating Expenses 3,792 3,641 4.1% 3,739 1.4% Operating
Income 1,350 1,442 -6.4% 1,352 -0.1% Interest Expense 285 211 35.1%
291 -2.1% Other Income (Expense), net 124 224 -44.6% (24) N/M*
Income from Continuing Operations before Income Taxes and
Discontinued Operations 1,189 1,455 -18.3% 1,037 14.7% Provision
for Income Taxes 394 516 -23.6% 354 11.3% Income from Continuing
Operations 795 939 -15.3% 683 16.4% Income (Loss) from Discontinued
Operations, net of tax - 57 -100.0% 381 -100.0% Net Income 795 996
-20.2% 1,064 -25.3% Diluted: Weighted Average Common Shares
Outstanding 1,835 1,836 -0.1% 1,836 -0.1% Earnings Per Share:
Income from Continuing Operations $0.43 $0.51 -15.7% $0.37 16.2%
Income from Discontinued Operations $0.00 $0.03 -100.0% $0.21
-100.0% Net Income $0.43 $0.54 -20.4% $0.58 -25.9% * - Not
meaningful. Selected Financial and Operating Data Operating income
$1,350 $1,442 -6.4% $1,352 -0.1% Operating margin 26.3% 28.4% -210
bps 26.6% -30 bps Declared dividends per share $0.29 $0.27 7.4%
$0.27 7.4% Capital expenditures $829 $731 13.4% $750 10.5% Common
shares outstanding 1,832 1,831 0.1% 1,831 0.1% Book value per share
$13.10 $11.75 11.5% $12.93 1.3% Year-to-Date 2005 2004 Growth
Operating Revenues Communications group $9,191 $9,053 1.5%
Advertising and publishing 1,015 986 2.9% All other 27 20 35.0%
Total Operating Revenues 10,233 10,059 1.7% Operating Expenses Cost
of services and products 3,845 3,587 7.2% Selling, general &
administrative expenses 1,852 1,860 -0.4% Depreciation and
amortization 1,834 1,812 1.2% Total Operating Expenses 7,531 7,259
3.7% Operating Income 2,702 2,800 -3.5% Interest Expense 576 426
35.2% Other Income (Expense), net 100 854 -88.3% Income from
Continuing Operations before Income Taxes and Discontinued
Operations 2,226 3,228 -31.0% Provision for Income Taxes 748 1,139
-34.3% Income from Continuing Operations 1,478 2,089 -29.2% Income
(Loss) from Discontinued Operations, net of tax 381 506 -24.7% Net
Income 1,859 2,595 -28.4% Diluted: Weighted Average Common Shares
Outstanding 1,835 1,837 -0.1% Earnings Per Share: Income from
Continuing Operations $0.81 $1.14 -28.9% Income from Discontinued
Operations $0.21 $0.28 -25.0% Net Income $1.01 $1.41 -28.4% * - Not
meaningful. Selected Financial and Operating Data Operating income
$2,702 $2,800 -3.5% Operating margin 26.4% 27.8% -140 bps Declared
dividends per share $0.56 $0.52 7.7% Capital expenditures $1,579
$1,366 15.6% BellSouth Corporation Consolidated Statements of
Income - Normalized Basis (unaudited) (amounts in millions, except
per share data) Note to Readers: Our reported results, as shown on
page 1, are prepared in accordance with generally accepted
accounting principles (GAAP). The normalized results presented
below exclude the impact of certain non-recurring or non-operating
items, the details of which are provided on pages 3 and 4 of this
release. In addition, the normalized results reflect our 40%
proportionate share of Cingular's results, the presentation of
which is not allowed under GAAP. Normalized results exclude
discontinued operations from all periods. Certain reclassifications
have been made to prior periods to conform to the current
presentation. 2Q05 2Q04 Growth 1Q05 Growth Operating Revenues
Communications group $4,537 $4,514 0.5% $4,521 0.4% Domestic
wireless 3,443 1,675 105.6% 3,292 4.6% Advertising and publishing
527 507 3.9% 488 8.0% All other 16 10 60.0% 10 60.0% Total
Operating Revenues 8,523 6,706 27.1% 8,311 2.6% Operating Expenses
Cost of services and products 3,268 2,333 40.1% 3,231 1.1% Selling,
general, & administrative expenses 2,097 1,519 38.1% 2,053 2.1%
Depreciation and amortization 1,524 1,140 33.7% 1,588 -4.0% Total
Operating Expenses 6,889 4,992 38.0% 6,872 0.2% Operating Income
1,634 1,714 -4.7% 1,439 13.6% Interest Expense 392 268 46.3% 403
-2.7% Other Income (Expense), net 58 8 N/M* 74 -21.6% Income Before
Income Taxes 1,300 1,454 -10.6% 1,110 17.1% Provision for Income
Taxes 451 516 -12.6% 392 15.1% Net Income $849 $938 -9.5% $718
18.2% Diluted: Weighted Average Common Shares Outstanding 1,835
1,836 -0.1% 1,836 -0.1% Earnings Per Share $0.46 $0.51 -9.8% $0.39
17.9% * - Not meaningful. Selected Financial and Operating Data
Operating income $1,634 $1,714 -4.7% $1,439 13.6% Operating margin
19.2% 25.6% -640 bps 17.3% 190 bps Declared dividends per share
$0.29 $0.27 7.4% $0.27 7.4% Capital expenditures $829 $731 13.4%
$750 10.5% Common shares outstanding 1,832 1,831 0.1% 1,831 0.1%
Book value per share $13.10 $11.75 11.5% $12.93 1.3% Total
employees 62,524 64,113 -2.5% 62,636 -0.2% Year-to-Date 2005 2004
Growth Operating Revenues Communications group $9,058 $9,005 0.6%
Domestic wireless 6,735 3,262 106.5% Advertising and publishing
1,015 986 2.9% All other 26 19 36.8% Total Operating Revenues
16,834 13,272 26.8% Operating Expenses Cost of services and
products 6,499 4,682 38.8% Selling, general, & administrative
expenses 4,150 2,983 39.1% Depreciation and amortization 3,112
2,259 37.8% Total Operating Expenses 13,761 9,924 38.7% Operating
Income 3,073 3,348 -8.2% Interest Expense 795 540 47.2% Other
Income (Expense), net 132 12 N/M Income Before Income Taxes 2,410
2,820 -14.5% Provision for Income Taxes 843 994 -15.2% Net Income
$1,567 $1,826 -14.2% Diluted: Weighted Average Common Shares
Outstanding 1,835 1,837 -0.1% Earnings Per Share $0.85 $0.99 -14.1%
* - Not meaningful. Selected Financial and Operating Data Operating
income $3,073 $3,348 -8.2% Operating margin 18.3% 25.2% -690 bps
Declared dividends per share $0.56 $0.52 7.7% Capital expenditures
$1,579 $1,366 15.6% BellSouth Corporation Normalized Earnings
Summary and Reconciliation to Reported Results (amounts in
millions, except per share data) Second Quarter 2005 Normalized
Items Discon- Contin- Merger tinued uing Integra- Debt Opera-
Opera- tion Exting. tions tions Cingular Costs Costs GAAP C
(GAAP-C) A E F Normalized Operating Revenues $5,142 $- $5,142
$3,381 $- $- $8,523 Operating Expenses 3,792 - 3,792 3,178 (81) -
6,889 Operating Income 1,350 - 1,350 203 81 - 1,634 Interest
Expense 285 - 285 107 - - 392 Other Income (Expense), net 124 - 124
(86) - 20 58 Income from Continuing Operations before Income Taxes
1,189 - 1,189 10 81 20 1,300 Provision for Income Taxes 394 - 394
10 39 8 451 Income from Continuing Operations 795 - 795 - 42 12 849
Income (Loss) from Discontinued Operations, net of tax - - - - - -
- Net Income $795 $0 $795 $0 $42 $12 $849 Diluted Earnings Per
Share $0.43 $0.00 $0.43 $0.00 $0.02 $0.01 $0.46 Year-to-Date 2005
Normalized Items Discon- Contin- Merger tinued uing Integra- Debt
Opera- Opera- tion Exting. tions tions Cingular Costs Costs GAAP C
(GAAP-C) A E F Normalized Operating Revenues $10,233 $- $10,233
$6,601 $- $- $16,834 Operating Expenses 7,531 - 7,531 6,353 (123) -
13,761 Operating Income 2,702 - 2,702 248 123 - 3,073 Interest
Expense 576 - 576 219 - - 795 Other Income (Expense), net 100 - 100
(10) - 42 132 Income from Continuing Operations before Income Taxes
2,226 - 2,226 19 123 42 2,410 Provision for Income Taxes 748 - 748
19 60 16 843 Income from Continuing Operations 1,478 - 1,478 - 63
26 1,567 Income (Loss) from Discontinued Operations, net of tax 381
(381) - - - - - Net Income $1,859 ($381) $1,478 $0 $63 $26 $1,567
Diluted Earnings Per Share * $1.01 ($0.21) $0.80 $0.00 $0.03 $0.01
$0.85 * Normalized earnings per share for year-to-date 2005 does
not sum due to rounding. BellSouth Corporation Normalized Earnings
Summary and Reconciliation to Reported Results (amounts in
millions, except per share data Second Quarter 2004 Normalizing
Items Discon- Contin- tinued uing Opera- Opera- Rounding tions
tions Cingular Normalized GAAP C (GAAP-C) A Operating Revenues
$5,083 $- $5,083 $1,623 $- $6,706 Operating Expenses 3,641 - 3,641
1,351 - 4,992 Operating Income 1,442 - 1,442 272 - 1,714 Interest
Expense 211 - 211 57 - 268 Other Income (Expense), net 224 - 224
(215) (1) 8 Income from Continuing Operations before Income Taxes
1,455 - 1,455 - (1) 1,454 Provision for Income Taxes 516 - 516 - -
516 Income from Continuing Operations 939 - 939 - (1) 938 Income
(Loss) from Discontinued Operations, net of tax 57 (57) - - - - Net
Income $996 ($57) $939 $0 ($1) $938 Diluted Earnings Per Share
$0.54 ($0.03) $0.51 $0.00 ($0.00) $0.51 Year-to-Date 2004
Discontinued Continuing Operations Operations GAAP C (GAAP - C)
Operating Revenues $10,059 $- $10,059 Operating Expenses 7,259 -
7,259 Operating Income 2,800 - 2,800 Interest Expense 426 - 426
Other Income (Expense), net 854 - 854 Income from Continuing
Operations before Income Taxes 3,228 - 3,228 Provision for Income
Taxes 1,139 - 1,139 Income from Continuing Operations 2,089 - 2,089
Income (Loss) from Discontinued Operations, net of tax 506 (506) -
Net Income $2,595 ($506) $2,089 Diluted Earnings Per Share * $1.41
($0.28) $1.14 * Normalized earnings per share for year-to-date 2004
does not sum due to rounding. Year-to-Date 2004 Normalizing Items
Sale of Regulatory Cingular Sonofon Settlement Rounding A B D
Normalized Operating Revenues $3,163 $- $50 $- $13,272 Operating
Expenses 2,668 - (3) - 9,924 Operating Income 495 - 53 - 3,348
Interest Expense 114 - - - 540 Other Income (Expense), net (379)
(462) - (1) 12 Income from Continuing Operations before Income
Taxes 2 (462) 53 (1) 2,820 Provision for Income Taxes 2 (167) 20 -
994 Income from Continuing Operations - (295) 33 (1) 1,826 Income
(Loss) from Discontinued Operations, net of tax - - - - - Net
Income $0 ($295) $33 ($1) $1,826 Diluted Earnings Per Share* $0.00
($0.16) $0.02 ($0.00) $0.99 * Normalized earnings per share for
year-to-date 2004 does not sum due to rounding. BellSouth
Corporation Notes to Normalized Financial and Operating Data (pages
3 and 4) (amounts in millions, except per share data) Our
normalized earnings have been adjusted for the following: (a) The
periods presented have been adjusted to include our 40%
proportional share of Cingular Wireless' operating results, net of
eliminations for amounts charged by other BellSouth companies to
Cingular. (b) Gain related to the sale of our operations in
Denmark. (c) Discontinued Operations -- In March 2004, we announced
our intention to sell our Latin American properties. Accordingly,
the prior period results have been recast to reflect the Latin
American operations as Discontinued Operations and thus excluded
from normalized results. The first quarter 2005 results include an
after-tax gain of $390 related to the final 2 of the 10 properties
that were closed in January. (d) Regulatory Settlement -- In April
2004, BellSouth entered into a settlement agreement with respect to
previously disclosed litigation (See 2004 10K for further
discussion). (e) Wireless merger integration costs -- Represents
BellSouth's 40% share of tax-effected wireless merger integration
costs of $105 incurred during the 1st quarter 2005 and $204
incurred during 2nd quarter 2005 in connection with the
Cingular/AWE merger. Integration costs include one-time cash
outlays or specified non- cash charges, including accelerated
depreciation, directly related to rationalization of the wireless
network, sales distribution channels, the workforce, information
technology systems and real estate. (f) Debt extinguishment costs
-- Represents one-time expenses associated with the early
extinguishment of $400 of long-term debt in 1st quarter 2005 and
one-time expenses associated with the early extinguishment of $300
of long-term debt in 2nd quarter 2005. BellSouth Corporation
Consolidated Balance Sheets (unaudited) (amounts in millions,
except per share data) Change Change June 30, Dec. 31, vs. March
31, vs. Prior Prior 2005 2004 Year 2005 Quarter Assets Current
Assets: Cash and cash equivalents $485 $680 ($195) $516 ($31)
Short-term investments 0 16 (16) 0 0 Accounts receivable, net of
allowance for uncollectibles of $287, $317, and $291 2,480 2,559
(79) 2,467 13 Material and supplies 335 321 14 308 27 Other current
assets 951 1,055 (104) 907 44 Assets of discontinued operations 0
1,068 (1,068) 0 0 Total Current Assets 4,251 5,699 (1,448) 4,198 53
Investment in and Advances to Cingular Wireless 21,952 22,771 (819)
22,265 (313) Property, Plant and Equipment, net 21,853 22,039 (186)
21,913 (60) Other Assets 7,741 7,400 341 7,512 229 Intangible
Assets, net 1,529 1,587 (58) 1,557 (28) Total Assets $57,326
$59,496 ($2,170) $57,445 ($119) Liabilities and Shareholders'
Equity Current Liabilities: Debt maturing within one year $3,293
$5,475 ($2,182) $4,149 ($856) Accounts payable 1,027 1,047 (20) 994
33 Other current liabilities 3,444 3,018 426 3,049 395 Liabilities
of discontinued operations 0 830 (830) 0 0 Total Current
Liabilities 7,764 10,370 (2,606) 8,192 (428) Long-Term Debt 14,399
15,108 (709) 14,669 (270) Noncurrent Liabilities: Deferred income
taxes 6,594 6,492 102 6,351 243 Other noncurrent liabilities 4,575
4,460 115 4,557 18 Total Noncurrent Liabilities 11,169 10,952 217
10,908 261 Shareholders' Equity: Common stock, $1 par value 2,020
2,020 0 2,020 0 Paid-in capital 7,836 7,840 (4) 7,810 26 Retained
earnings 20,053 19,267 786 19,802 251 Accumulated other
comprehensive income (70) (157) 87 (80) 10 Shares held in trust and
treasury (5,845) (5,904) 59 (5,876) 31 Total Shareholders' Equity
23,994 23,066 928 23,676 318 Total Liabilities and Shareholders'
Equity $57,326 $59,496 ($2,170) $57,445 ($119) BellSouth
Corporation Consolidated Statements of Cash Flows (unaudited)
(amounts in millions, except per share data) Year-To-Date 2Q05 2Q04
1Q05 2005 2004 Cash Flows from Operating Activities: Income from
Continuing Operations $795 $939 $683 $1,478 $2,089 Adjustments to
income from continuing operations: Depreciation and amortization
916 914 918 1,834 1,812 Provision for uncollectibles 80 80 85 165
195 Net losses (earnings) of equity affiliates (68) (151) 80 12
(255) Deferred income taxes 162 434 (45) 117 603 Net (gains) losses
on sale or impairment of equity securities - - - - 3 Pension income
(133) (121) (133) (266) (242) Pension settlement (gains) losses - -
- - - Stock-based compensation expense 23 30 25 48 58 Loss on
extinguishment of debt 20 - 22 42 - (Gain) loss on sale/disposal of
operations - - - - (462) Net change in: Accounts receivable and
other current assets (79) (116) (84) (163) (124) Accounts payable
and other current liabilities 368 47 23 391 103 Deferred charges
and other assets (60) (37) 20 (40) (62) Other liabilities and
deferred credits 101 24 103 204 33 Other reconciling items, net 26
26 21 47 46 Net cash provided by operating activities 2,151 2,069
1,718 3,869 3,797 Cash Flows from Investing Activities: Capital
expenditures (829) (731) (750) (1,579) (1,366) Purchase of
short-term investments - (1,022) (12) (12) (1,846) Proceeds from
sale of short-term investments - 478 28 28 1,036 Investments in
debt and equity securities (71) (276) (32) (103) (416) Investments
in and advances to equity affiliates - - (2) (2) - Net short term
(advances to) repayments from Cingular 266 - 400 666 - Proceeds
from sale of securities and operations 15 - 929 944 559 Proceeds
from repayment of loans and advances 121 - 2 123 109 Settlement of
derivatives on advances - - - - (17) Other investing activities,
net (9) 10 (3) (12) 5 Net cash provided by (used for) investing
activities (507) (1,541) 560 53 (1,936) Cash Flows from Financing
Activities: Net borrowing (repayments) of short-term debt (571) 23
(1,093) (1,664) (339) Proceeds from long-term debt - 696 - - 696
Repayments of long-term debt (613) (214) (669) (1,282) (221)
Dividends paid (494) (457) (494) (988) (914) Purchase of treasury
shares (6) (99) (77) (83) (99) Other financing activities, net 9 3
6 15 51 Net cash used for financing activities (1,675) (48) (2,327)
(4,002) (826) Net Increase/(Decrease) in Cash from Continuing
Operations (31) 480 (49) (80) 1,035 Net Increase/(Decrease) in Cash
from Discontinued Operations - (176) (115) (115) (185) Net Increase
(Decrease) in Cash and Cash Equivalents (31) 304 (164) (195) 850
Cash and Cash Equivalents at Beginning of Period 516 3,493 680 680
2,947 Cash and Cash Equivalents at End of Period $485 $3,797 $516
$485 $3,797 BellSouth Corporation Results by Segment (amounts in
millions) (unaudited) Communications Group (1) 2Q05 2Q04 Growth
1Q05 Growth Operating Revenues Voice $3,155 $3,154 0.0% $3,154 0.0%
Data 1,165 1,115 4.5% 1,160 0.4% Other 305 323 -5.6% 304 0.3% Total
Operating Revenues 4,625 4,592 0.7% 4,618 0.2% Operating Expenses
Cost of services and products 1,850 1,724 7.3% 1,853 -0.2% Selling,
general, & administrative expenses 775 758 2.2% 738 5.0%
Depreciation and amortization 910 908 0.2% 910 0.0% Total Operating
Expenses 3,535 3,390 4.3% 3,501 1.0% Segment Operating Income 1,090
1,202 -9.3% 1,117 -2.4% Interest Expense 100 90 11.1% 98 2.0% Other
Income (Expense), net 20 6 233.3% 11 81.8% Income Before Income
Taxes 1,010 1,118 -9.7% 1,030 -1.9% Provision for Income Taxes 350
403 -13.2% 366 -4.4% Segment Net Income(1) $660 $715 -7.7% $664
-0.6% Selected Financial and Operating Data (amounts in millions)
Segment operating income $1,090 $1,202 -9.3% $1,117 -2.4% Segment
operating margin 23.6% 26.2% -260 bps 24.2% -60 bps Long distance
revenues $580 $479 21.1% $578 0.3% Switched Access MOUs 15,617
17,755 -12.0% 16,151 -3.3% BSLD MOUs 6,301 4,998 26.1% 6,011 4.8%
Total Access minutes of use 21,918 22,753 -3.7% 22,162 -1.1%
Capital expenditures $826 $726 13.8% $742 11.3% (amounts in
thousands) Wholesale lines 2,664 3,139 -15.1% 2,882 -7.6% DSL
customers 2,473 1,738 42.3% 2,349 5.3% LD customers 6,771 5,131
32.0% 6,470 4.7% Consumer ARPU (4) $58.39 $55.33 5.5% $58.25 0.2%
BellSouth Corporation Results by Segment (amounts in millions)
(unaudited) Communications Group (1) Year-To-Date 2005 2004 Growth
Operating Revenues Voice $6,309 $6,323 -0.2% Data 2,325 2,206 5.4%
Other 609 627 -2.9% Total Operating Revenues 9,243 9,156 1.0%
Operating Expenses Cost of services and products 3,703 3,465 6.9%
Selling, general, & administrative expenses 1,513 1,503 0.7%
Depreciation and amortization 1,820 1,799 1.2% Total Operating
Expenses 7,036 6,767 4.0% Segment Operating Income 2,207 2,389
-7.6% Interest Expense 198 183 8.2% Other Income (Expense), net 31
9 244.4% Income Before Income Taxes 2,040 2,215 -7.9% Provision for
Income Taxes 716 803 -10.8% Segment Net Income(1) $1,324 $1,412
-6.2% Selected Financial and Operating Data (amounts in millions)
Segment operating income $2,207 $2,389 -7.6% Segment operating
margin 23.9% 26.1% -220 bps Long distance revenues $1,158 $919
26.0% Switched Access MOUs 31,768 36,474 -12.9% BSLD MOUs 12,312
9,572 28.6% Total Access minutes of use 44,080 46,046 -4.3% Capital
expenditures $1,568 $1,352 16.0% BellSouth Corporation Results by
Segment (unaudited) Supplemental Operating Data (in thousands)
Communications Group -- Network Access Lines In Service Reported
(a) 2Q05 2Q04 Growth 1Q05 Growth Access lines Residence Retail
Primary 11,595 11,876 -2.4% 11,752 -1.3% Additional 1,257 1,447
-13.1% 1,304 -3.6% Total Retail Residence 12,852 13,323 -3.5%
13,056 -1.6% Wholesale Resale 151 127 18.9% 133 13.5% UNE-P 1,689
2,149 -21.4% 1,886 -10.4% Total Wholesale Residence 1,840 2,276
-19.2% 2,019 -8.9% Total Residence 14,692 15,599 -5.8% 15,075 -2.5%
Business Retail Total Retail Business 5,253 5,282 -0.5% 5,251 0.0%
Wholesale Resale 59 63 -6.3% 60 -1.7% UNE-P 700 740 -5.4% 737 -5.0%
Total Wholesale Business 759 803 -5.5% 797 -4.8% Total Business
6,012 6,085 -1.2% 6,048 -0.6% Other Retail/Wholesale Lines Retail
31 42 -26.2% 30 3.3% Wholesale 65 60 8.3% 66 -1.5% Total Other
Retail/Wholesale Lines 96 102 -5.9% 96 0.0% Total Access Lines in
Service 20,800 21,786 -4.5% 21,219 -2.0% ISDN line equivalents
Residence 7 11 -36.4% 9 -22.2% Business 1,421 1,477 -3.8% 1,416
0.4% Total ISDN Adjusted ALIS 22,228 23,274 -4.5% 22,644 -1.8%
Access Line Equivalents (b) Selected digital data services:
Unbundled Loops 298 343 -13.1% 298 0.0% DS0 & ADSL 15,079
10,695 41.0% 14,335 5.2% DS1 8,028 7,475 7.4% 7,861 2.1% DS3 &
higher 32,861 32,547 1.0% 32,449 1.3% Total digital data lines in
service 56,266 51,060 10.2% 54,943 2.4% Total equivalent access
lines in service 78,494 74,334 5.6% 77,587 1.2% (a) Prior period
operating data are often revised at later dates to reflect updated
information. The above information reflects the latest data
available for the periods indicated. (b) Access line equivalents
represent a conversion of non-switched data circuits to a switched
access line basis and is presented for comparability purposes.
Equivalents are calculated by converting 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) 2Q05 2Q04
Growth 1Q05 Growth Operating Revenues Service revenues (2) $3,087
$1,534 101.2% $2,968 4.0% Equipment and other revenues 356 141
152.5% 324 9.9% Total Operating Revenues 3,443 1,675 105.6% 3,292
4.6% Operating Expenses Cost of services and products 1,401 592
136.7% 1,375 1.9% Selling, general, & administrative expenses
1,151 585 96.8% 1,159 -0.7% Depreciation and amortization 608 226
169.0% 670 -9.3% Total Operating Expenses 3,160 1,403 125.2% 3,204
-1.4% Segment Operating Income 283 272 4.0% 88 221.6% Interest
Expense 130 80 62.5% 135 -3.7% Other Income (Expense), net (4) (52)
92.3% 4 -200.0% Income Before Income Taxes 149 140 6.4% (43) N/M*
Provision for Income Taxes 72 51 41.2% (10) N/M Segment Net Income
(1) $77 $89 -13.5% ($33) N/M * - Not meaningful. Selected Financial
and Operating Data (amounts in millions, except customer data in
thousands) Segment operating income $283 $272 4.0% $88 221.6%
Segment operating margin 8.2% 16.2% -800 bps 2.7% 550 bps
Cellular/PCS Operating Metrics (100% Cingular): Total Customers
51,596 25,044 106.0% 50,369 2.4% Net Customer Additions 1,071 428
150.2% 1,419 -24.5% Partitioned Customers and/or Adjustments 156
(2) N/M (159) 198.1% Churn 2.2% 2.7% -50 bps 2.2% 0 bps Wireless
Service ARPU (3) $50.43 $50.75 -0.6% $49.59 1.7% Minutes Of Use Per
Subscriber(4) 704 568 23.9% 642 9.7% Licensed POPs (5) 292 243
20.2% 292 0.0% Penetration (5) 18.0% 11.1% 690 bps 17.7% 30 bps
PROFORMA 2Q05 2Q04 Growth 1Q05 Growth Service Revenue 3,087 2,981
3.6% 2,968 4.0% Total Revenue (40%) 3,443 3,267 5.4% 3,292 4.6% Net
Adds (100%) 1,071 424 152.6% 1,419 -24.5% ARPU $50.43 $53.42 -5.6%
$49.59 1.7% (a) The domestic wireless segment is comprised of
BellSouth's 40% share of the reported results of Cingular Wireless.
BellSouth Corporation Results by Segment (amounts in millions)
(unaudited) Domestic Wireless Segment (1)(a) Year-To-Date 2005 2004
Growth Operating Revenues Service revenues (2) $6,055 $2,967 104.1%
Equipment and other revenues 680 295 130.5% Total Operating
Revenues 6,735 3,262 106.5% Operating Expenses Cost of services and
products 2,776 1,186 134.1% Selling, general, & administrative
expenses 2,310 1,133 103.9% Depreciation and amortization 1,278 447
185.9% Total Operating Expenses 6,364 2,766 130.1% Segment
Operating Income 371 496 -25.2% Interest Expense 265 159 66.7%
Other Income (Expense), net - (99) 100.0% Income Before Income
Taxes 106 238 -55.5% Provision for Income Taxes 62 90 -31.1%
Segment Net Income (1) $44 $148 -70.3% * - Not meaningful. Selected
Financial and Operating Data (amounts in millions, except customer
data in thousands) 2005 2004 Growth Segment operating income $371
$496 -25.2% Segment operating margin 5.5% 15.2% -970 bps
Cellular/PCS Operating Metrics (100% Cingular): Total Customers
51,596 25,044 106.0% Net Customer Additions 2,490 982 153.6%
Partitioned Customers and/or Adjustments (3) 35 -108.6% Churn 2.2%
2.7% -50 bps Wireless Service ARPU (3) $50.01 $49.54 0.9% Minutes
Of Use Per Subscriber (4) 674 547 23.2% Licensed POPs (5) 292 243
20.2% Penetration (5) 18.0% 11.1% 690 bps (a) The domestic wireless
segment is comprised of BellSouth's 40% share of the reported
results of Cingular Wireless. BellSouth Corporation Results by
Segment (amounts in millions) (unaudited) Advertising &
Publishing (1) 2Q05 2Q04 Growth 1Q05 Growth Operating Revenues
Advertising and publishing revenues 481 466 3.2% 475 1.3%
Commission revenues 50 45 11.1% 16 212.5% Total Operating Revenues
531 511 3.9% 491 8.1% Operating Expenses Cost of services 99 90
10.0% 90 10.0% Selling, general, & administrative expenses 180
167 7.8% 163 10.4% Depreciation and amortization 7 7 0.0% 7 0.0%
Total Operating Expenses 286 264 8.3% 260 10.0% Segment Operating
Income 245 247 -0.8% 231 6.1% Interest Expense 2 2 0.0% 3 -33.3%
Other Income (Expense), net 1 1 0.0% (1) 200.0% Income Before
Income Taxes 244 246 -0.8% 227 7.5% Provision for Income Taxes 90
96 -6.3% 86 4.7% Segment Net Income(1) $154 $150 2.7% $141 9.2%
Segment operating income $245 $247 -0.8% $231 6.1% Segment
operating margin 46.1% 48.3% -220 bps 47.0% -90 bps * - Not
meaningful. BellSouth Corporation Results by Segment (amounts in
millions) (unaudited) Advertising & Publishing (1) Year-To-Date
2005 2004 Growth Operating Revenues Advertising and publishing
revenues 956 932 2.6% Commission revenues 66 61 8.2% Total
Operating Revenues 1,022 993 2.9% Operating Expenses Cost of
services 189 170 11.2% Selling, general, & administrative
expenses 343 323 6.2% Depreciation and amortization 14 14 0.0%
Total Operating Expenses 546 507 7.7% Segment Operating Income 476
486 -2.1% Interest Expense 5 4 25.0% Other Income (Expense), net -
1 -100.0% Income Before Income Taxes 471 483 -2.5% Provision for
Income Taxes 176 186 -5.4% Segment Net Income(1) $295 $297 -0.7%
Segment operating income $476 $486 -2.1% Segment operating margin
46.6% 48.9% -230 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. Certain intersegment revenues are not
eliminated for purposes of management reporting. (2) 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.
Average monthly revenue per customer is calculated by dividing
average monthly service revenue by average customers. (3)
Management uses average revenue per unit (ARPU) as an indicator of
operating performance of the business. Consumer ARPU - is defined
as consumer revenues during the period divided by average primary
access lines during the period. Wireless Service ARPU -
Cellular/PCS is defined as Cellular/PCS service revenues during the
period divided by average Cellular/PCS subscribers during the
period. This metric is used to compare the recurring revenue
amounts being generated on our network to prior periods and
internal targets. We believe that each of these metrics provides
useful information concerning the performance of our initiatives to
attract and retain high value customers and the use of our network.
(4) Total Minutes of Use per Cell/PCS Subscriber definition was
changed effective with the 2Q05 reporting period. Prior to the
change, the numerator was defined as Local Minutes of Use.
Effective with this change, the numerator is now defined as
including Local Minutes of Use and Outcollect Minutes of Use. (5)
Licensed POPs refers to the number of people residing in areas
where Cingular and its partners have licenses to provide cellular
or PCS service including areas where Cingular has not yet commenced
service. Penetration calculation for 2Q05 is based on licensed
"operational" POP's of 292 million. BellSouth Corporation Non-GAAP
Measures - Reconciliation (amounts in millions) (unaudited) Segment
Net Income Reconciliation to GAAP Net Income Year-to-Date 2Q05 2Q04
1Q05 2005 2004 Communications group segment net income $660 $715
$664 $1,324 $1,412 Domestic wireless group segment net income 77 89
(33) 44 148 Advertising and publishing group segment net income 154
150 141 295 297 Corporate, eliminations and other (42) (16) (54)
(96) (31) Normalized net income 849 938 718 1,567 1,826 Add back
Excluded non-recurring or non-operational items (a) (54) 58 346 292
769 Consolidated GAAP net income $795 $996 $1,064 $1,859 $2,595
Free Cash Flow Year-to-Date 2Q05 2Q04 1Q05 2005 2004 Net cash
provided by operating activities $2,151 $2,069 $1,718 $3,869 $3,797
Less Capital Expenditures (829) (731) (750) (1,579) (1,366)
Operating Free Cash Flow $1,322 $1,338 $968 $2,290 $2,431 Net Debt
June 30, December 31, March 31, 2005 2004 2005 Total Debt $17,692
$20,583 $18,818 Less Cash (485) (680) (516) Net Debt $17,207
$19,903 $18,302 Communications Group Operating Income before
Depreciation and Amortization Year-to-Date 2Q05 2Q04 1Q05 2005 2004
Operating Revenues $4,625 $4,592 $4,618 $9,243 $9,156 Operating
Income 1,090 1,202 1,117 2,207 2,389 Add back Depreciation and
amortization 910 908 910 1,820 1,799 Operating Income before
Depreciation and Amortization $2,000 $2,110 $2,027 $4,027 $4,188
Margin 43.2% 45.9% 43.9% 43.6% 45.7% Domestic Wireless Operating
Income before Depreciation and Amortization Year-to-Date 2Q05 2Q04
1Q05 2005 2004 Service revenues $3,087 $1,534 $2,968 $6,055 $2,967
Equipment and other revenues 356 141 324 680 295 Operating revenues
3,443 1,675 3,292 6,735 3,262 Operating Income 283 272 88 371 496
Operating Margin (Operating income divided by operating
revenues)(b) 8.2% 16.2% 2.7% 5.5% 15.2% Add back Depreciation and
amortization 608 226 670 1,278 447 Operating Income before
Depreciation and Amortization $891 $498 $758 $1,649 $943 Margin
(Operating Income before Depr & Amort divided by service
revenues) (b) 28.9% 32.5% 25.5% 27.2% 31.8% Domestic Wireless
Proforma Revenue 2Q05 2Q04 1Q05 Operating Revenue $3,443 $1,675
$3,292 Add back Proforma Adjustments (c) - 1,592 - Total Operating
Revenue (Proforma) $3,443 $3,267 $3,292 Domestic Wireless Proforma
ARPU 2Q05 2Q04 1Q05 Service revenues $3,087 $1,534 $2,968 Less
Mobitex data revenues - 24 - Add back Proforma Adjustments (c) -
1,447 - Service revenue used to calculate Proforma ARPU $3,087
$2,957 $2,968 ARPU (Proforma) $50.43 $53.42 $49.59 (a) See pages 3
and 4 for detail of excluded items. (b) Margin calculations for our
domestic wireless segment represents 40% of Cingular's margin
calculations adjusted for the related normalized items as presented
on pages 3-4. (c) These adjustments are consistent in nature with
those set forth in Cingular's Form 8-K/A dated November 29, 2004.
DATASOURCE: BellSouth Corporation CONTACT: Jeff Battcher, Media
Relations of BellSouth Corporation, +1-404-249-2793, or BellSouth
Investor Relations, +1-800-241-3419 Web site:
http://www.bellsouth.com/ http://www.bellsouth.com/investor
Copyright
Bellsouth (NYSE:BLS)
Graphique Historique de l'Action
De Juin 2024 à Juil 2024
Bellsouth (NYSE:BLS)
Graphique Historique de l'Action
De Juil 2023 à Juil 2024