3rd Quarter Results
Bellsouth Corp
22 October 2003
For Immediate Release
October 22, 2003
For More Information Contact:
Jeff Battcher, Media Relations at 404-249-2793
BellSouth Investor Relations at 800-241-3419
BellSouth Reports Third Quarter EPS of 51 Cents
• High-speed Internet customers reach 1.3 million
• Communications services bundles exceed 2.6 million
• Cingular Wireless adds 745,000 customers in quarter
• Latin America adds 421,000 customers
ATLANTA - BellSouth Corporation (NYSE: BLS) reported earnings per share (EPS) of
51 cents in the third quarter of 2003, including special charges totaling 2
cents. This compared to reported EPS of 34 cents in the third quarter of 2002,
which included special charges totaling 17 cents (see below).
Consolidated revenues increased 5.4 percent to $5.7 billion from $5.4 billion in
the third quarter of 2002. Consolidated operating expenses were $4.2 billion
compared to $4.4 billion in the same quarter of 2002. Net income was $936
million compared to $640 million in the same quarter a year ago.
Operating free cash flow (defined as cash flow from operations less capital
expenditures) was $1.7 billion. Capital expenditures in the third quarter of
2003 were $764 million for a total of $2.1 billion year-to-date, a reduction of
25.8 percent compared to $2.9 billion in the first nine months of 2002. Total
debt at September 30, 2003 was $15.0 billion, a reduction of $2.4 billion, or
13.8 percent, since the first of the year.
In accordance with Generally Accepted Accounting Principles (GAAP), BellSouth's
reported consolidated revenues and consolidated operating expenses do not
include the company's 40 percent share of Cingular Wireless.
Normalized results include BellSouth's 40 percent proportionate share of
Cingular's revenues and expenses. Normalized EPS of 53 cents in the third
quarter of 2003 increased 3.9 percent compared to 51 cents in the same quarter
of 2002. Normalized total operating revenues were $7.3 billion, an increase of
2.7 percent versus the third quarter of 2002. Normalized total operating
expenses of $5.5 billion increased 2.6 percent. Normalized net income was $980
million, compared to $958 million in the same quarter a year ago.
Communications Group
BellSouth Long Distance and DSL high-speed Internet service drove Communications
Group revenue growth in the third quarter of 2003, as customers increasingly
chose BellSouth's integrated communications packages. Revenues increased 1.1
percent to $4.7 billion compared to $4.6 billion in the third quarter of 2002.
Operating margin increased to 26.6 percent from 25.3 percent in the second
quarter of 2003.
Throughout the third quarter, packages fueled increased retention and
reacquisition of residential and small business customers. BellSouth AnswersSM
packages, which combine local, long distance, Internet and wireless services all
on one bill, increased to more than 2.6 million. BellSouth(R) Unlimited
AnswersSM contributed to the significant growth in package customers. Unlimited
Answers allows customers to call anywhere in the United States anytime for a
flat monthly fee.
BellSouth added 654,000 net long distance customers in the third quarter. The
company now serves 3.4 million long distance customers, including approximately
24 percent of its residence and 34 percent of its mass-market small business
accounts.
Driven by DSL, data revenues of $1.1 billion in the third quarter of 2003 grew
5.5 percent compared to the same quarter of 2002. BellSouth added 111,000 net
DSL customers during the quarter, for a total of 1.3 million at September 30,
2003. The July introduction of BellSouth(R) FastAccess(R) DSL Lite helped
generate new retail broadband customers. FastAccess Lite allows customers to
choose between two tiers of broadband service at a connection speed and price
that match their Internet service needs.
Total access lines of 23.9 million at September 30 declined 4.0 percent compared
to a year earlier, impacted by the economy, competition and technology
substitution. Residence and business access lines served by BellSouth
competitors under UNE-P (unbundled network elements-platform) increased by
188,000 in the third quarter, the smallest increase since the fourth quarter of
2001.
Domestic Wireless / Cingular
Cingular Wireless added 745,000 net total cellular and PCS customers in the
third quarter, exceeding total net customer additions for the first half of
2003. It was the highest number of new customers in 10 quarters. Cingular's
focus on calling plans tailored to local markets and co-branding and bundling
programs with its parent companies were significant contributors to growth at
Cingular, which ended the quarter with 23.4 million total customers.
BellSouth's share of Cingular's revenues was $1.6 billion, a gain of 4.7 percent
compared to the same quarter a year ago. BellSouth's share of Cingular operating
income was $195 million compared to $246 million in the third quarter last year.
Increased operating costs were impacted by significantly higher gross customer
additions and by customer retention programs in anticipation of Wireless Local
Number Portability in November. In addition, depreciation costs were higher,
associated with the technology upgrade of Cingular's nationwide network to
improve services and coverage. The company's GSM/GPRS network now covers 92
percent of its potential customers, ahead of its target for year-end 2003.
Cingular significantly improved its spectrum position during the third quarter
with acquisitions and swaps, including an agreement to purchase licenses from
NextWave in 34 markets covering approximately 83 million potential customers.
Cingular also will expand its coverage under agreements announced with Dobson
Communications, Sunshine PCS Corporation and US Unwired Inc.
Latin America Group
Continuing the trend of organic growth, Latin America Group wireless customers
increased 421,000 during the third quarter on a consolidated basis.
Year-over-year, customers increased 1.4 million, or 18.2 percent. Consolidated
customers served by BellSouth and its partners at the end of the quarter were
9.4 million.
Consolidated Latin America revenues increased 18.8 percent to $588 million in
the third quarter of 2003 compared to the same three months of the previous
year. Strong customer growth in Colombia, Ecuador and Chile, as well as more
stable local currencies, drove the growth in segment revenues. Net income was
$48 million in the third quarter and $99 million year-to-date. Latin America
Group generated positive operating free cash flow year-to-date in 2003.
Advertising & Publishing
Advertising & Publishing revenues were $505 million in the third quarter of
2003, a decrease of 3.1 percent compared to the same quarter a year ago,
resulting in part from the soft economy and competition. Operating income of
$238 million was 12.8 percent higher than the third quarter of 2002, primarily
the result of improvement in uncollectibles expense.
Special Items
In the third quarter of 2003, the difference between reported (GAAP) EPS of 51
cents and normalized EPS of 53 cents is the result of two special items:
Foreign currency transaction losses 1 cent Charge
Asset Impairment 2 cents Charge
Effect of Rounding 1 cent
Total of special items 2 cents Charge
Foreign currency transaction losses - Primarily associated with the
remeasurement of U.S. dollar-denominated liabilities in Latin America.
Asset Impairment - Write-off of capitalized software.
In the third quarter of 2002, special charges totaled 17 cents per share, after
rounding, for: workforce reduction (6 cents); service curtailments/asset
impairments (5 cents); refund of certain late payment fees to customers in
Florida (4 cents); foreign currency transaction losses (1 cent); early
extinguishment of debt (1 cent); and Advertising & Publishing accounting change
(1 cent).
About BellSouth Corporation
BellSouth Corporation is a Fortune 100 communications services company
headquartered in Atlanta, Georgia. BellSouth serves more than 45 million local,
long distance, Internet and wireless customers in the United States and 14 other
countries.
Consistently recognized for customer satisfaction, BellSouth provides a full
array of broadband data solutions to large, medium and small businesses. In the
residential market, BellSouth offers DSL high-speed Internet access, advanced
voice features and other services. BellSouth also offers long distance service
throughout its markets, serving both business and residential customers. The
company's BellSouth AnswersSM package combines local and long distance service
with an array of calling features; wireless data, voice and e-mail services; and
high-speed DSL or dial-up Internet service. BellSouth also provides online and
directory advertising services through BellSouth(R) RealPages.comSM and The Real
Yellow Pages(R).
BellSouth owns 40 percent of Cingular Wireless, the nation's second largest
wireless company, which provides innovative 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 8 a.m. Eastern Time.
BellSouth will host a conference call with investors today at 10 a.m. Eastern
Time. Participating will be BellSouth CFO Ron Dykes and Investor Relations Vice
President Nancy Davis. 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. Eastern
Time today, through October 29, 2003. The replay can be accessed by dialing:
Domestic: 800-642-1687 - Reservation number: 2135954
International: 706-645-9291 - Reservation number: 2135954
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 domestic or international markets where we operate or
have material investments which would affect demand for our services; (ii)
currency devaluations and continued economic weakness in certain international
markets in which we operate or have material investments; (iii) the intensity of
competitive activity and its resulting impact on pricing strategies and new
product offerings; (iv) higher than anticipated cash requirements for
investments, new business initiatives and acquisitions; (v) unfavorable
regulatory actions and (vi) 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 Web site, 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.
Year-to-Date
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Communications group $ 4,626 $ 4,469 3.5% $ 4,545 1.8% $ 13,679 $ 13,745 -0.5%
Latin America 587 494 18.8% 563 4.3% 1,659 1,747 -5.0%
Advertising and publishing 501 458 9.4% 520 -3.7% 1,515 1,212 25.0%
All other 14 13 7.7% 14 0.0% 40 44 -9.1%
Total Operating Revenues 5,728 5,434 5.4% 5,642 1.5% 16,893 16,748 0.9%
Operating Expenses
Cost of services and products 2,038 1,879 8.5% 2,008 1.5% 5,979 5,718 4.6%
Selling, general & administrative 1,032 1,024 0.8% 1,133 -8.9% 3,217 3,243 -0.8%
expenses
Depreciation and amortization 1,052 1,161 -9.4% 1,046 0.6% 3,136 3,492 -10.2%
Provision for restructuring and asset 52 328 -84.1% 20 160.0% 193 685 -71.8%
impairments
Total Operating Expenses 4,174 4,392 -5.0% 4,207 -0.8% 12,525 13,138 -4.7%
Operating Income 1,554 1,042 49.1% 1,435 8.3% 4,368 3,610 21.0%
Interest Expense 260 291 -10.7% 249 4.4% 805 896 -10.2%
Other Income (Expense), net 148 211 -29.9% 287 -48.4% 741 790 -6.2%
Income Before Taxes and Accounting Change 1,442 962 49.9% 1,473 -2.1% 4,304 3,504 22.8%
Provision for Income Taxes 506 322 57.1% 522 -3.1% 1,502 1,470 2.2%
Income Before Cumulative Effect Change 936 640 46.3% 951 -1.6% 2,802 2,034 37.8%
Cumulative Effect of Changes in Accounting - - - 315 (1,285) 124.5%
Principle
Net Income $936 $640 46.3% $951 -1.6% $3,117 $749 N/M*
Diluted:
Weighted Average Common Shares 1,851 1,871 -1.1% 1,851 0.0% 1,854 1,881 -1.4%
Outstanding
Earnings Per Share $0.51 $0.34 50.0% $0.51 0.0% $1.68 $0.40 N/M
* - Not meaningful.
Selected Financial and Operating Data
Operating income $1,554 $1,042 49.1% $1,435 8.3% $4,368 $3,610 21.0%
Operating margin 27.1% 19.2% 790 bps 25.4% 170 bps 25.9% 21.6% 430 bps
Declared dividends per share $0.23 $0.20 15.0% $0.23 0.0% $0.67 $0.59 13.6%
Capital expenditures $764 $835 -8.5% $729 4.8% $2,124 $2,863 -25.8%
Common shares outstanding 1,848 1,862 -0.8% 1,847 0.1%
Book value per share $10.65 $9.47 12.5% $10.32 3.2%
Debt ratio 43.2% 50.0% -680 bps 44.6% -140 bps
Total employees 76,009 80,882 -6.0% 75,779 0.3%
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. Certain
reclassifications have been made to prior periods to conform to the current presentation.
Year-to-Date
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Communications group $ 4,583 $ 4,539 1.0% $ 4,504 1.8% $ 13,556 $ 13,739 -1.3%
Domestic wireless 1,582 1,511 4.7% 1,514 4.5% 4,532 4,428 2.3%
Latin America 587 494 18.8% 563 4.3% 1,659 1,747 -5.0%
Advertising and publishing 501 515 -2.7% 520 -3.7% 1,515 1,586 -4.5%
All other 14 14 0.0% 14 0.0% 40 44 -9.1%
Total Operating Revenues 7,267 7,073 2.7% 7,115 2.1% 21,302 21,544 -1.1%
Operating Expenses
Cost of services and products 2,600 2,370 9.7% 2,471 5.2% 7,435 7,119 4.4%
Selling, general, & administrative 1,605 1,606 -0.1% 1,637 -2.0% 4,779 4,906 -2.6%
expenses
Depreciation and amortization 1,261 1,352 -6.7% 1,249 1.0% 3,743 4,045 -7.5%
Total Operating Expenses 5,466 5,328 2.6% 5,357 2.0% 15,957 16,070 -0.7%
Operating Income 1,801 1,745 3.2% 1,758 2.4% 5,345 5,474 -2.4%
Interest Expense 316 348 -9.2% 313 1.0% 993 1,069 -7.1%
Other Income (Expense), net 24 54 -55.6% 61 -60.7% 124 182 -31.9%
Income Before Income Taxes 1,509 1,451 4.0% 1,506 0.2% 4,476 4,587 -2.4%
Provision for Income Taxes 529 493 7.3% 535 -1.1% 1,584 1,616 -2.0%
Net Income $980 $958 2.3% $971 0.9% $2,892 $2,971 -2.7%
Diluted:
Weighted Average Common Shares 1,851 1,871 -1.1% 1,851 0.0% 1,854 1,881 -1.4%
Outstanding
Earnings Per Share $0.53 $0.51 3.9% $0.52 1.9% $1.56 $1.58 -1.3%
Selected Financial and Operating Data
Operating income $1,801 $1,745 3.2% $1,758 2.4% $5,345 $5,474 -2.4%
Operating margin 24.8% 24.7% 10 bps 24.7% 10 bps 25.1% 25.4% -30 bps
Dividends per share $0.23 $0.20 15.0% $0.23 0.0% $0.67 $0.59 13.6%
Capital expenditures $764 $835 -8.5% $729 4.8% $2,124 $2,863 -25.8%
Common shares outstanding 1,848 1,862 -0.8% 1,847 0.1%
Book value per share $10.65 $9.47 12.5% $10.32 3.2%
Debt ratio 43.2% 50.0% -680 bps 44.6% -140 bps
Total employees 76,009 80,882 -6.0% 75,779 0.3%
BellSouth Corporation
Normalized Earnings Summary and Reconciliation to Reported Results
(amounts in millions, except per share data)
Third Quarter 2003 Normalizing Items
FX
Losses Asset
Cingular (Gains) Impairment
GAAP A F L Normalized
Operating $ 5,728 $ 1,539 $ - $ - $ 7,267
Revenues
Operating 4,174 1,344 - (52) 5,466
Expenses
Operating Income 1,554 195 - 52 1,801
Interest Expense 260 56 - - 316
Other Income 148 (136) 12 - 24
(Expense), net
Income Before Taxes and 1,442 3 12 52 1,509
Accounting Change
Provision for 506 3 - 20 529
Income Taxes
Net Income Before 936 - 12 32 980
Cumulative Effect Change
Cumulative Effect of Change - - - - -
in Accounting Principle
Net Income $936 $0 $12 $32 $980
Diluted Earnings $0.51 $0.00 $0.01 $0.02 $0.53
Per Share *
* Normalized earnings per share for third
quarter 2003 does not sum due to rounding.
Year-to-Date 2003 Normalizing Items
FX
Losses A&P Pension/ Sale of Asset
Cingular (Gains) Acctg. FAS 143 Severance Brazil Impairment
Change NE
GAAP A F G I J K L Normalized
Operating $ 16,893 $ 4,409 $ - $ - $ - $ - $ - $ - $ 21,302
Revenues
Operating 12,525 3,625 - - - (141) - (52) 15,957
Expenses
Operating Income 4,368 784 - - - 141 - 52 5,345
Interest Expense 805 188 - - - - - - 993
Other Income 741 (588) (104) - - - 75 - 124
(Expense), net
Income Before Taxes and 4,304 8 (104) - - 141 75 52 4,476
Accounting Change
Provision for 1,502 8 (3) - - 55 2 20 1,584
Income Taxes
Net Income Before 2,802 - (101) - - 86 73 32 2,892
Cumulative Effect Change
Cumulative Effect of Change 315 - - 501 (816) - - - -
in Accounting Principle
Net Income $3,117 $0 ($101) $501 ($816) $86 $73 $32 $2,892
Diluted Earnings $1.68 $0.00 ($0.05) $0.27 ($0.44) $0.05 $0.04 $0.02 $1.56
Per Share *
* Normalized earnings per share for
year-to-date 2003 does not sum due to rounding.
Third Quarter 2002 Normalizing Items
FX A&P Pension/ Asset Early Florida
Losses Exting.
Cingular (Gains) Acctg. Severance Impairments of Debt Late Pay
Change
GAAP A F G J L M N Normalized
Operating $ 5,434 $ 1,473 $ - $ 58 $ - $ - $ - $ 108 $ 7,073
Revenues
Operating 4,392 1,225 - 38 (192) (135) - - 5,328
Expenses
Operating Income 1,042 248 - 20 192 135 - 108 1,745
Interest Expense 291 63 - - - - - (6) 348
Other Income 211 (185) (9) - - - 37 - 54
(Expense), net
Income Before Taxes and 962 - (9) 20 192 135 37 114 1,451
Accounting Change
Provision for 322 - (21) 8 75 50 15 44 493
Income Taxes
Net Income Before 640 - 12 12 117 85 22 70 958
Cumulative Effect Change
Cumulative Effect of Change - - - - - - - - -
in Accounting Principle
Net Income $640 $0 $12 $12 $117 $85 $22 $70 $958
Diluted Earnings $0.34 $0.00 $0.01 $0.01 $0.06 $0.05 $0.01 $0.04 $0.51
Per Share *
* Normalized earnings per share for third
quarter 2002 does not sum due to rounding.
Year-to-Date 2002 Normalizing Items
Losses on Brazil Loan Unbilled FX Losses A&P
Cingular E-Plus Equity Invest. Impairments Rec. Adj. (Gains) Acctg.Change
GAAP A B C D E F G
Operating $ 16,748 $ 4,314 $ - $ - $ - $ 163 $ - $ 211
Revenues
Operating 13,138 3,512 - - - - - 104
Expenses
Operating 3,610 802 - - - 163 - 107
Income
Interest 896 179 - - - - - -
Expense
Other 790 (623) (1,339) 388 383 - 546 -
Income
(Expense),
net
Income Before Taxes 3,504 - (1,339) 388 383 163 546 107
and Accounting Change
Provision 1,470 - (482) 114 120 62 (25) 41
for Income
Taxes
Net Income Before 2,034 - (857) 274 263 101 571 66
Cumulative Effect
Change
Cumulative (1,285) - - - - - - -
Effect of
Change in
Accounting
Principle
Net Income $749 $0 ($857) $274 $263 $101 $571 $66
Diluted $0.40 $0.00 ($0.46) $0.15 $0.14 $0.05 $0.30 $0.04
Earnings
Per Share
Year-to-Date 2002
Pension/ Asset Early Exting. Florida
FAS 142 Severance Impairments of Debt Late Pay
H J L M N Normalized
Operating Revenues $ - $ - $ - $ - $ 108 $ 21,544
Operating Expenses - (549) (135) - - 16,070
Operating Income - 549 135 - 108 5,474
Interest Expense - - - - (6) 1,069
Other Income (Expense), net - - - 37 - 182
Income Before Taxes and - 549 135 37 114 4,587
Accounting Change
Provision for Income Taxes - 207 50 15 44 1,616
Net Income Before Cumulative - 342 85 22 70 2,971
Effect Change
Cumulative Effect of Change in 1,285 - - - - -
Accounting Principle
Net Income $1,285 $342 $85 $22 $70 $2,971
Diluted Earnings Per Share $0.68 $0.18 $0.05 $0.01 $0.04 $1.58
BellSouth Corporation
Notes to Normalized Financial and Operating Data (pages 3 and 4)
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 proportional eliminations for amounts charged by other BellSouth companies to Cingular.
(b) Gain on E-Plus conversion and sale of KPN stock - In March 2002, we exchanged our 22.5% investment in E-Plus, a
German wireless carrier, for 234.7 million shares of KPN Royal. As a result of this exchange, we recorded a pretax
gain of $1,335 to recognize the difference between the fair value of the KPN shares obtained and our investment
balance in E-Plus. In addition, we subsequently sold the KPN shares for cash proceeds of $1,076 and recognized a
pretax loss of $27. The amount shown also includes income of $20 generated from the settlement of forward contracts
associated with advances to E-Plus. These advances were restructured in conjunction with the ownership exchange.
(c) Losses on equity investments - Represents charges for the impairment of and open market sales of an equity
investment in Qwest Communications. Also includes $63 impairment related to an investment in Guatemala and $6 in
losses for the liquidation of an investment in Crown Castle.
(d) Brazil loan impairments - Represents recognition of an impairment on shareholder loans to our Brazilian equity
investments, as well as the recognition of a guarantee on a portion of those operations' debt.
(e) Unbilled receivable adjustment - During first quarter 2002, BellSouth determined that the unbilled receivable
balance at its advertising and publishing subsidiary was overstated. As a result, BellSouth recorded a reduction to
advertising and publishing revenues.
(f) Foreign currency transaction (gains) losses - Represents net transaction (gains) losses incurred by our Latin
American operations related primarily to US Dollar denominated liabilities. These (gains) losses reflect the impact
of the (strengthening) weakening of those operations' local currencies against the U.S. Dollar which requires
recognition in the current period income statement.
(g) Change in method of accounting related to our directory publishing business from the issue basis method to the
deferral method - The 2003 amount is a one-time charge to net income of $501. The 2002 amounts reflect our
recasting of prior year results to present the advertising and publishing segment on a comparable basis
year-over-year.
(h) Adoption of Financial Accounting Standard No. 142 (FAS 142) - Represents a one-time charge related to the adoption
of new accounting rules for goodwill. The non-cash charge reduced the value of goodwill on the company's balance
sheet by approximately $1.3 billion.
(i) Adoption of Financial Accounting Standard No. 143 (FAS 143) - Represents a one-time charge related to the adoption
of new accounting rules associated with obligations related to the retirement of long-lived assets. The adjustment
resulted in a one-time increase to net income of $816.
(j) Pension/Severance Costs - Represents severance accruals recorded to reflect workforce reductions in an effort to
reduce operating costs. The accruals include cash severance, outplacement costs and payroll taxes. Amounts also
include pension settlements as the number of employees who separated and elected to receive lump-sum retirement
benefits exceeded thresholds which required current recognition of deferred amounts related to these benefits.
(k) Loss on sale of Brazil NE.
(l) Service curtailments/Asset impairments - The third quarter 2003 charge for asset impairment represents the
write-off of capitalized software related to an abandoned systems project. Prior periods represent charges related
to the decision to elimate sales of certain services: wholesale long distance ($17 after tax), e-business services
($44 after tax), multi-media internet exchange ($20 after tax) and public communications (pay phones) ($4 after
tax). Charges relate to asset impairments, early termination penalties on contracts and leases, and severance for
affected employees.
(m) Early extinguishment of debt - Represents one-time expenses associated with the early extinguishment of $620
million of long-term debt.
(n) Florida late payment fees - On October 31, 2002, the Florida Supreme Court, by a 5-2 vote affirmed the decision of
the Florida Public Service Commission regarding our dispute over late payment fees. This will require a one-time
refund to affected customers in Florida. Based on this decision, we recorded a reduction to revenues of $108 plus
interest expense of $6 in the third quarter of 2002.
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
September 30, December 31, Change vs. June 30, Change vs.
2003 2002 Prior Year 2003 Prior
Quarter
Current Assets:
Cash and cash equivalents $5,025 $2,482 $2,543 $4,122 $903
Accounts receivable, net of allowance for 3,013 4,129 (1,116) 2,999 14
uncollectibles of $461, $476, and $492
Material and supplies 329 313 16 312 17
Other current assets 932 938 (6) 1,029 (97)
Total Current Assets 9,299 7,862 1,437 8,462 837
Investments and Advances 8,394 9,741 (1,347) 8,283 111
Property, Plant and Equipment, net 23,765 23,445 320 24,047 (282)
Deferred Charges and Other Assets 5,756 5,726 30 5,757 (1)
Goodwill 346 347 (1) 346 0
Intangible Assets, net 2,262 2,358 (96) 2,356 (94)
Total Assets $49,822 $49,479 $343 $49,251 $571
Liabilities and Shareholders' Equity
Current Liabilities:
Debt maturing within one year $3,347 $5,114 ($1,767) $3,694 ($347)
Accounts payable 1,294 1,572 (278) 1,344 (50)
Other current liabilities 3,701 2,897 804 3,421 280
Total Current Liabilities 8,342 9,583 (1,241) 8,459 (117)
Long-Term Debt 11,646 12,283 (637) 11,718 (72)
Noncurrent Liabilities:
Deferred income taxes 5,352 4,452 900 5,109 243
Other noncurrent liabilities 4,810 5,255 (445) 4,908 (98)
Total Noncurrent Liabilities 10,162 9,707 455 10,017 145
Shareholders' Equity:
Common stock, $1 par value 2,020 2,020 0 2,020 0
Paid-in capital 7,656 7,546 110 7,620 36
Retained earnings 16,251 14,531 1,720 15,744 507
Accumulated other comprehensive income (771) (740) (31) (779) 8
Shares held in trust and treasury (5,488) (5,372) (116) (5,503) 15
Guarantee of ESOP debt 4 (79) 83 (45) 49
Total Shareholders' Equity 19,672 17,906 1,766 19,057 615
Total Liabilities and Shareholders' Equity $49,822 $49,479 $343 $49,251 $571
BellSouth Corporation
Consolidated Statements of Cash Flows (unaudited)
(amounts in millions, except per share data)
Year-To-Date
3Q03 3Q02 2Q03 2003 2002
Cash Flows from Operating Activities:
Net income $ 936 $ 640 $ 951 $ 3,117 $ 749
Adjustments to net income:
Depreciation and amortization 1,052 1,161 1,046 3,136 3,492
Provision for uncollectibles 117 197 138 423 617
Net losses (earnings) of equity affiliates (82) (114) (179) (435) 8
Minority interests in income of subsidiaries 18 (3) 20 30 (80)
Deferred income taxes 275 213 229 963 990
Net (gains) losses on sale or impairment of (1) - 8 7 388
equity securities
Pension income (134) (208) (133) (401) (618)
Pension settlement (gains) losses - 107 20 87 107
Curtailment and termination benefits charges - - - - 60
Stock-based compensation 35 40 36 102 132
Unbilled receivable adjustment - - - - 163
Asset impairments 52 81 - 52 81
Foreign currency transaction (gains) losses 7 (8) (99) (137) 637
Cumulative effect of changes in accounting - - - (539) 1,285
principle
(Gain) loss on sale/disposal of operations - - 75 75 (1,335)
Net change in:
Accounts receivable and other current assets (68) (86) 120 (69) (9)
Accounts payable and other current liabilities 228 223 197 339 (62)
Deferred charges and other assets 128 21 39 242 (23)
Other liabilities and deferred credits (100) (9) 18 (139) (9)
Other reconciling items, net 6 85 32 42 (40)
Net cash provided by operating activities 2,469 2,340 2,518 6,895 6,533
Cash Flows from Investing Activities:
Capital expenditures (764) (835) (729) (2,124) (2,863)
Investments in and advances to equity affiliates - (274) - - (281)
Investments in debt and equity securities (40) (11) (7) (61) (28)
Proceeds from sale of securities and operations 1 18 46 82 1,472
Proceeds from repayment of loans and advances - 6 1,899 1,899 432
Settlement of derivatives on advances - - (352) (352) 85
Other investing activities, net (9) (5) 2 (17) (8)
Net cash provided by (used for) investing (812) (1,101) 859 (573) (1,191)
activities
Cash Flows from Financing Activities:
Net borrowing (repayments) of short-term debt (30) 263 (179) (411) (1,130)
Proceeds from long-term debt - - - 1 8
Repayments of long-term debt (307) (651) (1,072) (1,893) (1,219)
Dividends paid (424) (375) (388) (1,183) (1,088)
Purchase of treasury shares - (266) (67) (322) (455)
Other financing activities, net 7 (2) 9 29 -
Net cash used for financing activities (754) (1,031) (1,697) (3,779) (3,884)
Net Increase (Decrease) in Cash and Cash 903 208 1,680 2,543 1,458
Equivalents
Cash and Cash Equivalents at Beginning of Period 4,122 1,842 2,442 2,482 592
Cash and Cash Equivalents at End of Period $ 5,025 $ 2,050 $ 4,122 $ 5,025 $ 2,050
BellSouth Corporation
Results by Segment (amounts in millions) (unaudited)
Communications Group (1)
Year-To-Date
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Voice $3,184 $3,133 1.6% $3,175 0.3% $9,490 $9,442 0.5%
Data 1,118 1,060 5.5% 1,064 5.1% 3,272 3,219 1.6%
Other 366 422 -13.3% 347 5.5% 1,068 1,307 -18.3%
Total Operating Revenues 4,668 4,615 1.1% 4,586 1.8% 13,830 13,968 -1.0%
Operating Expenses
Cost of services and products 1,720 1,673 2.8% 1,712 0.5% 5,057 4,928 2.6%
Selling, general, & 755 641 17.8% 768 -1.7% 2,287 2,115 8.1%
administrative expenses
Depreciation and amortization 949 1,046 -9.3% 944 0.5% 2,830 3,120 -9.3%
Total Operating Expenses 3,424 3,360 1.9% 3,424 0.0% 10,174 10,163 0.1%
Segment Operating Income 1,244 1,255 -0.9% 1,162 7.1% 3,656 3,805 -3.9%
Interest Expense 98 119 -17.6% 101 -3.0% 317 364 -12.9%
Other Income (Expense), net 7 6 16.7% 18 -61.1% 28 3 N/M*
Income Before Income Taxes 1,153 1,142 1.0% 1,079 6.9% 3,367 3,444 -2.2%
Provision for Income Taxes 426 432 -1.4% 400 6.5% 1,252 1,297 -3.5%
Segment Net Income(1) $727 $710 2.4% $679 7.1% $2,115 $2,147 -1.5%
* - Not meaningful.
Selected Financial and Operating
Data
(amounts in millions)
Segment operating income $1,244 $1,255 -0.9% $1,162 7.1% $3,656 $3,805 -3.9%
Segment operating margin 26.6% 27.2% -60 bps 25.3% 130 bps 26.4% 27.2% -80 bps
Long distance revenues $399 $234 70.5% $309 29.1% $972 $652 49.1%
Access minutes of use 23,390 24,591 -4.9% 23,053 1.5% 69,238 75,247 -8.0%
Capital expenditures $692 $737 -6.1% $665 4.1% $1,923 $2,577 -25.4%
(amounts in thousands)
Wholesale Lines 2,873 2,260 27.1% 2,730 5.2%
DSL customers 1,336 924 44.6% 1,225 9.1%
LD customers 3,440 416 N/M 2,786 23.5%
Consumer ARPU (5) $53.46 $48.99 9.1% $51.34 4.1%
BellSouth Corporation
Results by Segment (unaudited)
Supplemental Operating Data (in thousands)
Communications Group - Network Access Lines In Service(a)(b)
3Q03 3Q02 Growth 2Q03 Growth
Access lines (b)
Residence
Retail
Primary 12,684 13,481 -5.9% 12,852 -1.3%
Additional 1,671 2,002 -16.5% 1,758 -4.9%
Total Retail Residence 14,355 15,483 -7.3% 14,610 -1.7%
Wholesale
Resale 198 383 -48.3% 238 -16.8%
UNE-P 1,534 775 97.9% 1,369 12.1%
Total Wholesale Residence 1,732 1,158 49.6% 1,607 7.8%
Total Residence 16,087 16,641 -3.3% 16,217 -0.8%
Business
Retail
Voice 5,484 5,783 -5.2% 5,542 -1.0%
ISDN 1,432 1,588 -9.8% 1,504 -4.8%
Total Retail Business 6,916 7,371 -6.2% 7,046 -1.8%
Wholesale
Resale 82 110 -25.5% 81 1.2%
UNE-P 660 584 13.0% 640 3.1%
Total Wholesale Business 742 694 6.9% 721 2.9%
Total Business 7,658 8,065 -5.0% 7,767 -1.4%
Other Retail/Wholesale Lines
Retail 113 165 -31.5% 123 -8.1%
Wholesale 46 23 100.0% 43 7.0%
Total Other Retail/Wholesale Lines 159 188 -15.4% 166 -4.2%
Total Access Lines in Service 23,904 24,894 -4.0% 24,150 -1.0%
Access Line Equivalents (c)
Selected digital data
services:
Unbundled Loops 353 385 -8.3% 359 -1.7%
DS0 & ADSL 8,301 5,863 41.6% 7,646 8.6%
DS1 7,088 6,849 3.5% 7,000 1.3%
DS3 & higher 31,309 31,035 0.9% 31,672 -1.1%
Total digital data lines in 47,051 44,132 6.6% 46,677 0.8%
service
Total equivalent access lines in service 70,955 69,026 2.8% 70,827 0.2%
(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 counts include amounts for switched access lines, Basic Rate ISDN (converted at 1.5:1), Primary Rate
ISDN (converted at 24:1) 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
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Service revenues (3) $1,429 $1,409 1.4% $1,412 1.2% $4,179 $4,133 1.1%
Equipment and other revenues 153 102 50.0% 102 50.0% 353 295 19.7%
Total Operating Revenues 1,582 1,511 4.7% 1,514 4.5% 4,532 4,428 2.3%
Operating Expenses
Cost of services and products 601 500 20.2% 501 20.0% 1,570 1,429 9.9%
Selling, general, & administrative 577 574 0.5% 507 13.8% 1,571 1,644 -4.4%
expenses
Depreciation and amortization 209 191 9.4% 203 3.0% 607 553 9.8%
Total Operating Expenses 1,387 1,265 9.6% 1,211 14.5% 3,748 3,626 3.4%
Segment Operating Income 195 246 -20.7% 303 -35.6% 784 802 -2.2%
Interest Expense 79 93 -15.1% 92 -14.1% 261 271 -3.7%
Other Income (Expense), net (44) (43) -2.3% (39) -12.8% (114) (111) -2.7%
Income Before Income Taxes 72 110 -34.5% 172 -58.1% 409 420 -2.6%
Provision for Income Taxes 28 42 -33.3% 68 -58.8% 160 161 -0.6%
Segment Net Income(1) $44 $68 -35.3% $104 -57.7% $249 $259 -3.9%
Selected Financial and Operating Data
(amounts in millions, except customer data
in thousands)
Segment operating income $195 $246 -20.7% $303 -35.6% $784 $802 -2.2%
Segment operating margin 12.3% 16.3% -400 bps 20.0% -770 bps 17.3% 18.1% -80 bps
Cellular/PCS Operating Metrics:
Total Customers 9,354 8,830 5.9% 9,056 3.3% 9,354 8,830 5.9%
Net Customer Additions 298 (43) N/M* 216 38.0% 590 192 207.3%
Partitioned Customers and/or 0 0 N/M 6 -100.0% 6 0 N/M
Adjustments
Churn 2.8% 3.0% -20 bps 2.5% 30 bps 2.6% 2.9% -30 bps
Wireless Service ARPU (5) $50.91 $52.17 -2.4% $51.80 -1.7% $50.93 $51.58 -1.3%
Wireless Subscriber ARPU (5) $48.25 $48.84 -1.2% $48.87 -1.3% $48.17 $48.31 -0.3%
Minutes Of Use Per Subscriber 456 399 14.3% 445 2.5% 436 384 13.5%
Licensed POPs (b) 94 88 6.8% 94 0.0% 94 88 6.8%
Penetration (b) 10.6% 10.2% 40 bps 10.2% 40 bps 10.6% 10.2% 40 bps
Cingular Interactive Operating Metrics:
Total Customers 315 320 -1.6% 315 0.0% 315 320 -1.6%
Net Customer Additions - 6 -100.0% (19) 100.0% (12) 27 -144.4%
* - Not meaningful.
(a) The domestic wireless segment is comprised of BellSouth's 40% share
of the reported results of Cingular Wireless.
(b) Licensed POPs refers to the number of people residing in areas where Cingular and its partners, Salmon and T-Mobile
USA, Inc., have licenses to provide cellular or PCS service, including the New
York City metropolitan area, and in areas where Cingular has not yet commenced service, such as the Salt Lake City
area. As a result of the consolidation of Salmon, effective January 1, 2003, Salmon's
licensed POPs of 4 million (BellSouth's 40% share) are included in the 2003 total licensed POPs. Penetration
calculation is based upon licensed operational POPs of 89 million (BellSouth's 40%
share). The New York City metropolitan area is included in the penetration
calculation, beginning in the third quarter of 2002.
BellSouth Corporation
Results by Segment (amounts in millions)(unaudited)
Latin America Group (1)(2)
Year-To-Date
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Service revenues (3) $494 $404 22.3% $471 4.9% $1,397 $1,467 -4.8%
Equipment and other revenues 94 78 20.5% 94 0.0% 265 250 6.0%
Advertising and publishing revenues - 13 -100.0% - N/M* - 35 -100.0%
Total Operating Revenues 588 495 18.8% 565 4.1% 1,662 1,752 -5.1%
Operating Expenses
Cost of services and products 249 173 43.9% 243 2.5% 750 669 12.1%
Selling, general, & administrative 151 156 -3.2% 154 -1.9% 441 546 -19.2%
expenses
Depreciation and amortization 91 106 -14.2% 93 -2.2% 274 342 -19.9%
Total Operating Expenses 491 435 12.9% 490 0.2% 1,465 1,557 -5.9%
Segment Operating Income 97 60 61.7% 75 29.3% 197 195 1.0%
Interest Expense 31 33 -6.1% 22 40.9% 96 108 -11.1%
Other Income (Expense), net (4) (23) 82.6% (7) 42.9% (7) (52) 86.5%
Income Before Income Taxes 62 4 N/M 46 34.8% 94 35 168.6%
Provision for Income Taxes 14 (50) 128.0% 5 180.0% (5) (34) 85.3%
Segment Net Income(1) $48 $54 -11.1% $41 17.1% $99 $69 43.5%
* - Not meaningful.
Selected Financial and Operating Data
(amounts in millions, except customer data
in thousands)
Segment operating income $97 $60 61.7% $75 29.3% $197 $195 1.0%
Segment operating margin 16.5% 12.1% 440 bps 13.3% 320 bps 11.9% 11.1% 80 bps
Average monthly revenue per customer (3) $18 $17 5.9% $18 0.0% $18 $20 -10.0%
Customer net adds in period (a) 421 (152) N/M 377 11.7% 1,170 103 N/M
Customers (voice) (a) 9,351 7,913 18.2% 8,921 4.8% 9,351 7,913 18.2%
POPs 160,600 162,100 -0.9% 160,600 0.0% 160,600 162,100 -0.9%
Penetration rate (4) 5.8% 4.9% 90 bps 5.6% 20 bps 5.8% 4.9% 90 bps
(a) The beginning balance of 3Q02 customers was adjusted to include 225 customers related to fixed wireless customers
in Venezuela. Year-to-date net adds for 2002 would have been 143 higher. Annual growth in net adds would have been
375.6%.
BellSouth Corporation
Worldwide Wireless (unaudited)
Customers and POPs by Country (in thousands)
Ownership
Percentage
As of Total Customers Total POPs As of
As of
Country Brand 3Q03 3Q03 3Q02 Growth 2Q03 Growth 3Q03 3Q02 Growth 2Q03 Growth
United Cingular 40.0% 23,386 22,076 5.9% 22,640 3.3% 236,000 219,000 7.8% 236,000 0.0%
States Wireless
Argentina Movicom 86.7% 1,391 1,339 3.9% 1,336 4.1% 37,400 37,500 -0.3% 37,400 0.0%
BellSouth
Brazil - Sao BCP 45.4% 1,699 1,683 1.0% 1,699 0.0% 18,100 18,100 0.0% 18,100 0.0%
Paulo Region
Chile BellSouth 100.0% 1,238 1,023 21.0% 1,161 6.6% 15,300 15,400 -0.6% 15,300 0.0%
Colombia Celumovil 66.0% 1,824 1,277 42.8% 1,684 8.3% 40,300 43,000 -6.3% 40,300 0.0%
BellSouth
Ecuador BellSouth 89.4% 833 532 56.6% 740 12.6% 13,200 12,800 3.1% 13,200 0.0%
Guatemala BellSouth 60.0% 246 173 42.2% 214 15.0% 13,000 11,700 11.1% 13,000 0.0%
Nicaragua BellSouth 89.0% 262 201 30.3% 247 6.1% 2,900 2,900 0.0% 2,900 0.0%
Panama BellSouth 43.7% 405 329 23.1% 377 7.4% 2,800 3,000 -6.7% 2,800 0.0%
Peru BellSouth 97.4% 614 509 20.6% 573 7.2% 27,500 26,100 5.4% 27,500 0.0%
Uruguay Movicom 46.0% 143 149 -4.0% 141 1.4% 2,100 2,100 0.0% 2,100 0.0%
BellSouth
Venezuela Telcel 78.2% 3,189 3,033 5.1% 3,179 0.3% 24,000 24,400 -1.6% 24,000 0.0%
BellSouth
Total Latin 11,844 10,248 15.6% 11,351 4.3% 196,600 197,000 -0.2% 196,600 0.0%
America
Denmark Sonofon 46.5% 1,305 1,063 22.8% 1,312 -0.5% 5,300 5,300 0.0% 5,300 0.0%
Israel Cellcom 34.8% 2,614 2,405 8.7% 2,551 2.5% 6,100 6,100 0.0% 6,100 0.0%
Total Europe 3,919 3,468 13.0% 3,863 1.4% 11,400 11,400 0.0% 11,400 0.0%
Total Worldwide 39,149 35,792 9.4% 37,854 3.4% 444,000 427,400 3.9% 444,000 0.0%
Wireless
BellSouth Corporation
Results by Segment (amounts in millions)(unaudited)
Advertising & Publishing (1)
Year-To-Date
3Q03 3Q02 Growth 2Q03 Growth 2003 2002 Growth
Operating Revenues
Advertising and publishing revenues 475 494 -3.8% 480 -1.0% 1,436 1,513 -5.1%
Commission revenues 30 27 11.1% 45 -33.3% 92 88 4.5%
Total Operating Revenues 505 521 -3.1% 525 -3.8% 1,528 1,601 -4.6%
Operating Expenses
Cost of services 94 83 13.3% 82 14.6% 254 265 -4.2%
Selling, general, & administrative 168 220 -23.6% 184 -8.7% 522 614 -15.0%
expenses
Depreciation and amortization 5 7 -28.6% 7 -28.6% 19 21 -9.5%
Total Operating Expenses 267 310 -13.9% 273 -2.2% 795 900 -11.7%
Segment Operating Income 238 211 12.8% 252 -5.6% 733 701 4.6%
Interest Expense 1 3 -66.7% 2 -50.0% 5 9 -44.4%
Other Income (Expense), net - - N/M* 2 -100.0% 1 1 0.0%
Income Before Income Taxes 237 208 13.9% 252 -6.0% 729 693 5.2%
Provision for Income Taxes 90 80 12.5% 95 -5.3% 276 266 3.8%
Segment Net Income(1) $147 $128 14.8% $157 -6.4% $453 $427 6.1%
Segment operating income $238 $211 12.8% $252 -5.6% $733 $701 4.6%
Segment operating margin 47.1% 40.5% 660 bps 48.0% -90 bps 48.0% 43.8% 420 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) 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. Average monthly revenue per customer is calculated by dividing average monthly service
revenue by average customers.
(4) Penetration rate is calculated by dividing customers by POPs (excludes POPs in markets where service has not been
initiated).
(5) 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 Subscriber ARPU - Cellular/ PCS is defined as cellular/PCS subscriber revenues during the period divided by
average cellular/PCS
subscribers during the period. Wireless Subscriber ARPU - Cellular/PCS is our primary measure of customer value. It
provides a metric to
evaluate our pricing and promotional activity. We benchmark against this measure in comparisons to prior periods and
internal targets.
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.
BellSouth Corporation
Non-GAAP Measures - Reconciliation (amounts in millions) (unaudited)
Segment Net Income Reconciliation to GAAP Net Income
Year-to-Date
3Q03 3Q02 2Q03 2003 2002
Communications group segment net income $ 727 $ 710 $ 679 $ 2,115 $ 2,147
Domestic wireless group segment net income (a) 44 68 104 249 259
Latin America group segment net income 48 54 41 99 69
Advertising and publishing group segment net income 147 128 157 453 427
Corporate, eliminations and other 14 (2) (10) (24) 69
Normalized net income 980 958 971 2,892 2,971
Add back Excluded non-recurring or non-operational items (b) (44) (318) (20) 225 (2,222)
Consolidated GAAP net income $ 936 $ 640 $ 951 $ 3,117 $ 749
Free Cash Flow Year-to-Date
3Q03 3Q02 2Q03 2003 2002
Net cash provided by operating activities $ 2,469 $ 2,340 $ 2,518 $ 6,895 $ 6,533
Less Capital Expenditures (764) (835) (729) (2,124) (2,863)
Operating Free Cash Flow $ 1,705 $ 1,505 $ 1,789 $ 4,771 $ 3,670
Net Debt
September December June 30,
30, 31,
2003 2002 2003
Total Debt $ 14,993 $ 17,397 $ 15,412
Less Cash (5,025) (2,482) (4,122)
Net Debt $ 9,968 $ 14,915 $ 11,290
Communications Group Operating Income before Depreciation and
Amortization Year-to-Date
3Q03 3Q02 2Q03 2003 2002
Operating Revenues $ 4,668 $ 4,615 $ 4,586 $ 13,830 $ 13,968
Operating Income 1,244 1,255 1,162 3,656 3,805
Add back Depreciation and amortization 949 1,046 944 2,830 3,120
Operating Income before Depreciation and Amortization $ 2,193 $ 2,301 $ 2,106 $ 6,486 $ 6,925
Margin 47.0% 49.9% 45.9% 46.9% 49.6%
(a) The domestic wireless segment is comprised of BellSouth's 40% share of the
reported results of Cingular Wireless.
(b) See pages 3 and 4 for detail of excluded items.
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