- Continued growth in earnings per share
- DSL customers total 3.4 million
- Strong revenue growth and margins at Cingular
- Cingular customers total 58.7 million
ATLANTA, Oct. 24 /PRNewswire-FirstCall/ -- BellSouth Corporation (NYSE:
BLS) announced third quarter 2006 earnings per share (EPS) from continuing
operations of 58 cents, up 31.8 percent compared to the third quarter of
2005. Normalized EPS from continuing operations of 65 cents increased 27.5
percent compared to the third quarter of 2005. A list of normalizing items
is provided in the table below.
Normalized Results from Continuing Operations
Normalized results from continuing operations include BellSouth's 40
percent proportionate share of Cingular's revenues and expenses that are
recognized as equity earnings for purposes of GAAP reporting. Normalized
results exclude the impact of significant nonoperational or nonrecurring
items.
Normalized operating income before depreciation and amortization
(OIBDA) grew to $3.6 billion representing a 40.1 percent OIBDA margin.
Revenue growth and cost containment drove OIBDA margin up 290 basis points
year-over-year and 140 basis points sequentially. Normalized revenue
increased 5.4 percent year- over-year driven by growth in wireless,
wireline and yellow pages. Normalized revenues were nearly $9.0 billion for
the third quarter of 2006. Normalized net income of $1.2 billion grew 25.8
percent compared to the third quarter of 2005.
Reported Results from Continuing Operations
For the third quarter of 2006, BellSouth's consolidated reported
revenues from continuing operations were $5.2 billion, up 2.9 percent
compared to the same quarter of 2005. Income from continuing operations was
approximately $1.1 billion, up 29.6 percent compared to the same quarter of
the previous year.
For the third quarter of 2006, operating free cash flow (defined as net
cash provided by operating activities less capital expenditures) was $976
million. Capital expenditures for the quarter were $730 million, a decline
compared to the first and second quarters of 2006. Year-to-date capital
expenditures were $2.8 billion and included $265 million in expenditures
for Hurricane Katrina restoration efforts.
Proposed Merger with AT&T
On March 5, 2006, BellSouth and AT&T announced an agreement to merge
the two companies in a combination that will create a more effective and
efficient provider of communications services. BellSouth and AT&T firmly
believe that no conditions on this merger are necessary for this
combination to be a public benefit. Nevertheless, in response to an inquiry
from the Federal Communications Commission staff, AT&T indicated that, in
the interest of facilitating the speediest possible approval of the merger,
it would not object to the imposition of certain merger conditions. The FCC
has scheduled an open meeting for Nov. 3, 2006 to consider the merger in
the event the Commission has not completed its review prior to that date.
Communications Group
In the third quarter of 2006, Communications Group revenues were $4.7
billion, a 2.4 percent increase over the third quarter of 2005. Adjusting
for the one-time customer credits of $44 million issued during the third
quarter of 2005, revenue growth was 1.4 percent. Revenue growth in
mass-market broadband and long distance services and growth in emerging
data services offset revenue declines from traditional access line
services. Revenue growth, increased penetration in broadband and long
distance services and continued focus on cost containment drove
Communications Group operating margin to 25.7 percent, an increase of 340
basis points year-over-year and 80 basis points sequentially.
Network data revenues exceeded $1.3 billion, a 12.8 percent increase
over the third quarter of 2005, due to improvements in both retail and
wholesale data services. Retail data revenues grew 19.5 percent
year-over-year driven by retail DSL revenues and continued momentum from
emerging retail data services. Wholesale data revenues grew 3.3 percent as
growth in wireless transport more than offset declines in general transport
services.
During the third quarter, BellSouth added 176,000 new DSL customers,
reaching a total of more than 3.4 million broadband DSL customers. The vast
majority of new customers chose BellSouth's higher speed offers --
FastAccess(R) DSL Xtreme and FastAccess(R) DSL Xtreme 6.0. Year-over-year
the average revenue per unit on DSL was up slightly as improved customer
mix offset revenue impacts from the discontinuance of regulatory recovery
fees.
BellSouth customers continued to choose more services and save with
multiple service discounts by adding long distance and DIRECTV(R) service
to their BellSouth Answers(R) bundles. During the third quarter, BellSouth
added 118,000 long distance subscribers. At the end of the third quarter,
BellSouth served 7.6 million long distance customers representing
approximately 63 percent of its mass-market customer base. Nearly 65,000
customers added DIRECTV(R) service to their bundle, resulting in a total of
756,000 customers who included DIRECTV(R) service in their BellSouth
Answers(R) bundles.
As of Sept. 30, 2006, total access lines were 19.0 million down 6.9
percent year-over-year. For the quarter, total access lines declined
301,000. Retail residential access lines declined 135,000 reflecting losses
to wireless substitution and cable telephony service. Retail small business
access line gains were 20,000, offset by a decline in retail large business
access lines of 13,000 lines. Wholesale lines declined 174,000 compared to
June 30, 2006.
Cingular Wireless
Cingular Wireless was a significant contributor to BellSouth's results
with strong revenue growth and robust margin expansion. The nation's
largest wireless provider delivered strong customer growth, improved ARPU
trends, and completed the integration of its GSM network.
During the quarter, Cingular added 1.4 million new customers, totaling
58.7 million customers at the end of September. Postpaid customer additions
were 928,000. Overall monthly churn for the quarter was 1.8 percent and
postpaid churn remained at 1.5 percent.
In the third quarter of 2006, Cingular's revenues were $9.6 billion,
increasing 9.2 percent over the same quarter a year ago and up 3.6 percent
sequentially. Service revenues, which exclude revenues from sales of
handsets and accessories, were $8.7 billion up 12.2 percent year-over-year
and 4.4 percent sequentially.
Cingular's average revenue per user (ARPU) was $49.76. This compares to
$49.65 in the same quarter last year and $48.84 in the second quarter of
2006. ARPU from data services continued its robust growth in the third
quarter of 2006, increasing 46.0 percent to $6.32 year-over-year and up 9.5
percent sequentially.
For the third quarter of 2006, Cingular accelerated its margin
improvement driven by operational improvements and successful merger
integration activities. Normalized operating income before depreciation and
amortization (OIBDA) margin was 35.6 percent, up 400 basis points compared
to the third quarter of 2005 and up 300 basis points sequentially. This
performance was driven by revenue acceleration from customer growth and
ARPU stabilization coupled with operational and merger related synergies.
During the third quarter, Cingular completed its GSM network
integration. With 45,000 cell sites around the country, customers benefit
from improved coverage and call quality while the company benefits from
lower churn. In addition, the company continued its aggressive deployment
of 3G UMTS/HSDPA network throughout the country. The 3G service is
available in 115 cities (with populations of 100 thousand or more) in and
around 52 major markets in 28 states and the District of Columbia.
Advertising & Publishing
Advertising & Publishing maintained its momentum growing revenue 5.5
percent to $537 million. Adjusting for one-time customer credits issued in
the third quarter 2005 for Hurricane Katrina, revenue growth was 4.1
percent. These results reflect continued market penetration of online
advertising and growth in print advertising revenue. Operating margins were
45.6 percent for the third quarter of 2006.
Normalizing Items
For the third quarter of 2006, the difference between reported (GAAP)
EPS from continuing operations and normalized EPS is shown in the following
table. Full income statement reconciliation is included in the attached
exhibits.
3Q06
GAAP Diluted EPS - Income from continuing operations $0.58
Wireless merger integration costs $0.02
Wireless merger intangible amortization $0.04
AT&T Merger Costs $0.01
Normalized Diluted EPS - Income from continuing operations $0.65
Wireless merger integration costs - Represents BellSouth's 40 percent
share of wireless merger integration costs incurred 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.
Wireless merger intangible amortization - Represents BellSouth's 40
percent share of the non-cash amortization of intangibles, primarily
customer lists that were created in Cingular's acquisition of AT&T
Wireless.
AT&T Merger Costs - Represents specific deal-related costs directly
associated with the pending merger with AT&T. Costs include legal and
regulatory fees, costs of filing and printing the joint proxy statement and
expense associated with employee retention awards.
About BellSouth Corporation
BellSouth Corporation is a Fortune 500 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 58.7 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 print and online directory advertising through The Real Yellow
Pages(R) and YELLOWPAGES.COM(TM) from BellSouth.
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 third 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 at http://www.bellsouth.com/investor 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 Web site, http://www.bellsouth.com/investor. The webcast will be
archived on our Web site.
A replay of the call will be available through Oct. 31, 2006, and can
be accessed by dialing:
Domestic: 800-642-1687 - Conference ID: 7061516
International: 706-645-9291 - Conference ID: 7061516
In addition to historical information, this document may contain
forward- looking statements regarding events and financial trends. Factors
that could affect our future results and could cause our 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.
Factors that could prevent or delay completion of the proposed merger
with AT&T, could affect the future results of the merged company and could
cause the merged company's actual results to differ from those expressed in
the forward-looking statements include: (i) our and AT&T's ability to
obtain governmental approvals of the proposed merger on the proposed terms
and contemplated schedule; (ii) the risk that the businesses of AT&T and
BellSouth will not be integrated successfully or as quickly as expected;
(iii) the risk that the cost savings and any other synergies from the
merger, including any savings and other synergies relating to the resulting
sole ownership of Cingular Wireless LLC, may not be fully realized or may
take longer to realize than expected; (iv) disruption from the merger
making it more difficult to maintain relationships with customers,
employees or suppliers; and (v) those factors contained in the proxy
statement relating to the proposed merger 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,
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.
3Q06 3Q05 Growth 2Q06 Growth
Operating Revenues
Communications group $4,669 $4,558 2.4% $4,647 0.5%
Advertising and publishing 535 506 5.7% 543 -1.5%
All other 14 8 75.0% 16 -12.5%
Total Operating Revenues 5,218 5,072 2.9% 5,206 0.2%
Operating Expenses
Cost of services and products 1,905 2,017 -5.6% 1,960 -2.8%
Selling, general, &
administrative expenses 967 996 -2.9% 970 -0.3%
Depreciation and amortization 894 922 -3.0% 898 -0.4%
Provision for restructuring and
asset impairments 7 166 * 73 *
Total Operating Expenses 3,773 4,101 -8.0% 3,901 -3.3%
Operating Income 1,445 971 48.8% 1,305 10.7%
Interest Expense 302 274 10.2% 279 8.2%
Other Income (Expense), net 432 512 -15.6% 280 54.3%
Income from Continuing Operations
before Income Taxes 1,575 1,209 30.3% 1,306 20.6%
Provision for Income Taxes 516 392 31.6% 419 23.2%
Income from Continuing Operations 1,059 817 29.6% 887 19.4%
Income (Loss) from Discontinued
Operations, net of tax - - * - *
Net Income $1,059 $817 29.6% $887 19.4%
Diluted:
Weighted Average Common Shares
Outstanding 1,822 1,836 -0.8% 1,813 0.5%
Earnings Per Share:
Income from Continuing
Operations $0.58 $0.44 31.8% $0.49 18.4%
Income from Discontinued
Operations $0.00 $0.00 * $0.00 *
Net Income $0.58 $0.44 31.8% $0.49 18.4%
* - Not meaningful.
Selected Financial and
Operating Data
Operating income $1,445 $971 48.8% $1,305 10.7%
Operating margin 27.7% 19.1% 860 bps 25.1% 260 bps
Declared dividends per share $0.29 $0.29 0.0% $0.29 0.0%
Capital expenditures excluding
Hurricane Katrina $730 $864 -15.5% $821 -11.1%
Total capital expenditures $730 $886 -17.6% $950 -23.2%
Common shares outstanding 1,822 1,831 -0.5% 1,812 0.6%
Book value per share $13.96 $13.28 5.1% $13.56 2.9%
Year-to-Date
2006 2005 Growth
Operating Revenues
Communications group $13,969 $13,749 1.6%
Advertising and publishing 1,581 1,521 3.9%
All other 45 35 28.6%
Total Operating Revenues 15,595 15,305 1.9%
Operating Expenses
Cost of services and products 5,974 5,862 1.9%
Selling, general, & administrative
expenses 2,868 2,833 1.2%
Depreciation and amortization 2,685 2,756 -2.6%
Provision for restructuring and
asset impairments 72 181 *
Total Operating Expenses 11,599 11,632 -0.3%
Operating Income 3,996 3,673 8.8%
Interest Expense 860 850 1.2%
Other Income (Expense), net 906 612 48.0%
Income from Continuing Operations
before Income Taxes 4,042 3,435 17.7%
Provision for Income Taxes 1,312 1,140 15.1%
Income from Continuing Operations 2,730 2,295 19.0%
Income (Loss) from Discontinued
Operations, net of tax - 381 *
Net Income $2,730 $2,676 2.0%
Diluted:
Weighted Average Common Shares
Outstanding 1,813 1,835 -1.2%
Earnings Per Share:
Income from Continuing
Operations $1.51 $1.25 20.8%
Income from Discontinued
Operations $0.00 $0.21 *
Net Income $1.51 $1.46 3.4%
* - Not meaningful.
Selected Financial and Operating Data
Operating income $3,996 $3,673 8.8%
Operating margin 25.6% 24.0% 160 bps
Declared dividends per share $0.87 $0.85 2.4%
Capital expenditures excluding
Hurricane Katrina $2,496 $2,443 2.2%
Total capital expenditures $2,761 $2,465 12.0%
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.
3Q06 3Q05 Growth 2Q06 Growth
Operating Revenues
Communications group $4,583 $4,480 2.3% $4,569 0.3%
Wireless 3,821 3,499 9.2% 3,687 3.6%
Advertising and publishing 535 506 5.7% 543 -1.5%
All other 15 9 66.7% 16 -6.3%
Total Operating Revenues 8,954 8,494 5.4% 8,815 1.6%
Operating Expenses
Cost of services and products 3,288 3,250 1.2% 3,360 -2.1%
Selling, general, &
administrative expenses 2,079 2,084 -0.2% 2,047 1.6%
Depreciation and amortization 1,377 1,343 2.5% 1,372 0.4%
Total Operating Expenses 6,744 6,677 1.0% 6,779 -0.5%
Operating Income 2,210 1,817 21.6% 2,036 8.5%
Interest Expense 405 374 8.3% 379 6.9%
Other Income (Expense), net 57 38 50.0% 31 83.9%
Income Before Income Taxes 1,862 1,481 25.7% 1,688 10.3%
Provision for Income Taxes 682 543 25.6% 606 12.5%
Net Income $1,180 $938 25.8% $1,082 9.1%
Diluted:
Weighted Average Common Shares
Outstanding 1,822 1,836 -0.8% 1,813 0.5%
Earnings Per Share $0.65 $0.51 27.5% $0.60 8.3%
* - Not meaningful.
Selected Financial and Operating
Data
Operating income $2,210 $1,817 21.6% $2,036 8.5%
Operating margin 24.7% 21.4% 330 bps 23.1% 160 bps
Declared dividends per share $0.29 $0.29 0.0% $0.29 0.0%
Capital expenditures excluding
Hurricane Katrina $730 $864 -15.5% $821 -11.1%
Total capital expenditures $730 $886 -17.6% $950 -23.2%
Common shares outstanding 1,822 1,831 -0.5% 1,812 0.6%
Book value per share $13.96 $13.28 5.1% $13.56 2.9%
Total employees 59,745 63,049 -5.2% 61,284 -2.5%
Year-to-Date
2006 2005 Growth
Operating Revenues
Communications group $13,726 $13,538 1.4%
Wireless 11,100 10,234 8.5%
Advertising and publishing 1,581 1,521 3.9%
All other 46 35 31.4%
Total Operating Revenues 26,453 25,328 4.4%
Operating Expenses
Cost of services and products 10,041 9,749 3.0%
Selling, general, &
administrative expenses 6,163 6,234 -1.1%
Depreciation and amortization 4,103 4,080 0.6%
Total Operating Expenses 20,307 20,063 1.2%
Operating Income 6,146 5,265 16.7%
Interest Expense 1,165 1,169 -0.3%
Other Income (Expense), net 111 170 -34.7%
Income Before Income Taxes 5,092 4,266 19.4%
Provision for Income Taxes 1,847 1,570 17.6%
Net Income $3,245 $2,696 20.4%
Diluted:
Weighted Average Common Shares
Outstanding 1,813 1,835 -1.2%
Earnings Per Share $1.79 $1.47 21.8%
* - Not meaningful.
Selected Financial and Operating
Data
Operating income $6,146 $5,265 16.7%
Operating margin 23.2% 20.8% 240 bps
Declared dividends per share $0.87 $0.85 2.4%
Capital expenditures excluding
Hurricane Katrina $2,496 $2,443 2.2%
Total capital expenditures $2,761 $2,465 12.0%
BellSouth Corporation
Normalized Earnings Summary and Reconciliation to Reported Results
(amounts in millions, except per share data)
Third Quarter 2006
Discontinued Continuing
Operations Operations
GAAP A (GAAP - A)
Operating Revenues $5,218 $0 $5,218
Operating Expenses 3,773 - 3,773
Operating Income 1,445 - 1,445
Interest Expense 302 - 302
Other Income (Expense), net 432 - 432
Income from Continuing Operations
before Income Taxes 1,575 - 1,575
Provision for Income Taxes 516 - 516
Income from Continuing Operations 1,059 - 1,059
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $1,059 $0 $1,059
Diluted Earnings Per Share $0.58 $0.00 $0.58
Third Quarter 2006 Normalizing Items
Wireless
Wireless Merger
Merger Intang-
Integra- ible AT&T
tion Amortiz- Merger
Cingular Costs ation Costs Normal-
B C D H ized
Operating Revenues $3,736 $0 $0 $0 $8,954
Operating Expenses 3,169 (55) (126) (17) 6,744
Operating Income 567 55 126 17 2,210
Interest Expense 103 - - - 405
Other Income (Expense), net (375) - - - 57
Income from Continuing
Operations before Income
Taxes 89 55 126 17 1,862
Provision for Income Taxes 89 22 51 4 682
Income from Continuing
Operations - 33 75 13 1,180
Income (Loss) from Discontinued
Operations, net of tax - - - - -
Net Income $0 $33 $75 $13 $1,180
Diluted Earnings Per Share $0.00 $0.02 $0.04 $0.01 $0.65
Year-to-Date 2006
Discontinued Continuing
Operations Operations
GAAP A (GAAP - A)
Operating Revenues $15,595 $0 $15,595
Operating Expenses 11,599 - 11,599
Operating Income 3,996 - 3,996
Interest Expense 860 - 860
Other Income (Expense), net 906 - 906
Income from Continuing Operations
before Income
Taxes 4,042 - 4,042
Provision for Income Taxes 1,312 - 1,312
Income from Continuing Operations 2,730 - 2,730
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $2,730 $0 $2,730
Diluted Earnings Per Share $1.51 $0.00 $1.51
Year-to-Date 2006 Normalizing Items
Wireless
Wireless Merger
Merger Intang-
Integra- ible Hurricane-
tion Amortiz- related
Cingular Costs ation Expenses
B C D E
Operating Revenues $10,858 $0 $0 $0
Operating Expenses 9,562 (214) (404) (119)
Operating Income 1,296 214 404 119
Interest Expense 305 - - -
Other Income (Expense), net (795) - - -
Income from Continuing Operations
before Income
Taxes 196 214 404 119
Provision for Income Taxes 196 87 164 46
Income from Continuing Operations - 127 240 73
Income (Loss) from Discontinued
Operations, net of tax - - - -
Net Income $0 $127 $240 $73
Diluted Earnings Per Share $0.00 $0.07 $0.13 $0.04
Year-to-Date 2006
Normalizing Items
AT&T Merger
Severance Costs
G H Normalized
Operating Revenues $0 $0 $26,453
Operating Expenses (73) (44) 20,307
Operating Income 73 44 6,146
Interest Expense - - 1,165
Other Income (Expense), net - - 111
Income from Continuing Operations
before Income Taxes 73 44 5,092
Provision for Income Taxes 28 14 1,847
Income from Continuing Operations 45 30 3,245
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $45 $30 $3,245
Diluted Earnings Per Share $0.02 $0.02 $1.79
Third Quarter 2005
Discontinued Continuing
Operations Operations
GAAP A (GAAP - A)
Operating Revenues $5,072 $0 $5,072
Operating Expenses 4,101 - 4,101
Operating Income 971 - 971
Interest Expense 274 - 274
Other Income (Expense), net 512 - 512
Income from Continuing Operations
before Income Taxes 1,209 - 1,209
Provision for Income Taxes 392 - 392
Income from Continuing Operations 817 - 817
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $817 $0 $817
Diluted Earnings Per Share $0.44 $0.00 $0.44
Third Quarter 2005 Normalizing Items
Wireless
Wireless Merger
Merger Intang-
Integra- ible Hurricane-
tion Amortiz- related
Cingular Costs ation Expenses
B C D E
Operating Revenues $3,422 $0 $0 $0
Operating Expenses 3,158 (96) (158) (328)
Operating Income 264 96 158 328
Interest Expense 100 - - -
Other Income (Expense), net (123) - - -
Income from Continuing Operations
before Income Taxes 41 96 158 328
Provision for Income Taxes 41 40 65 128
Income from Continuing Operations - 56 93 200
Income (Loss) from Discontinued
Operations, net of tax - - - -
Net Income $0 $56 $93 $200
Diluted Earnings Per Share $0.00 $0.03 $0.05 $0.11
Third Quarter 2005 Normalizing Items
Sale
Debt Exting. of
Costs Cellcom
F I Normalized
Operating Revenues $0 $0 $8,494
Operating Expenses - - 6,677
Operating Income - - 1,817
Interest Expense - - 374
Other Income (Expense), net - (351) 38
Income from Continuing Operations
before Income Taxes - (351) 1,481
Provision for Income Taxes - (123) 543
Income from Continuing Operations - (228) 938
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $0 ($228) $938
Diluted Earnings Per Share $0.00 ($0.12) $0.51
Year-to-Date 2005
Discontinued Continuing
Operations Operations
GAAP A (GAAP - A)
Operating Revenues $15,305 $0 $15,305
Operating Expenses 11,632 - 11,632
Operating Income 3,673 - 3,673
Interest Expense 850 - 850
Other Income (Expense), net 612 - 612
Income from Continuing Operations
before Income Taxes 3,435 - 3,435
Provision for Income Taxes 1,140 - 1,140
Income from Continuing Operations 2,295 - 2,295
Income (Loss) from Discontinued
Operations, net of tax 381 (381) -
Net Income $2,676 ($381) $2,295
Diluted Earnings Per Share * $1.46 ($0.21) $1.25
* Normalized earnings per share for year-to-date 2005 does not sum due to
rounding.
Year-to-Date 2005 Normalizing Items
Wireless
Wireless Merger
Merger Intang-
Integra- ible Hurricane-
tion Amortiz- related
Cingular Costs ation Expenses
B C D E
Operating Revenues $10,023 $0 $0 $0
Operating Expenses 9,511 (219) (533) (328)
Operating Income 512 219 533 328
Interest Expense 319 - - -
Other Income (Expense), net (133) - - -
Income from Continuing Operations
before Income Taxes 60 219 533 328
Provision for Income Taxes 60 100 249 128
Income from Continuing Operations - 119 284 200
Income (Loss) from Discontinued
Operations, net of tax - - - -
Net Income $0 $119 $284 $200
Diluted Earnings Per Share * $0.00 $0.06 $0.15 $0.11
* Normalized earnings per share for year-to-date 2005 does not sum due to
rounding.
Year-to-Date 2005 Normalizing Items
Sale
Debt Exting. of
Costs Cellcom
F I Normalized
Operating Revenues $0 $0 $25,328
Operating Expenses - - 20,063
Operating Income - - 5,265
Interest Expense - - 1,169
Other Income (Expense), net 42 (351) 170
Income from Continuing Operations
before Income
Taxes 42 (351) 4,266
Provision for Income Taxes 16 (123) 1,570
Income from Continuing Operations 26 (228) 2,696
Income (Loss) from Discontinued
Operations, net of tax - - -
Net Income $26 ($228) $2,696
Diluted Earnings Per Share * $0.01 ($0.12) $1.47
* Normalized earnings per share for year-to-date 2005 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) Discontinued Operations - In March 2004, we announced our intention to
sell our 10 Latin American properties. Accordingly, results of the
Latin American operations are shown as Discontinued Operations and
thus excluded from normalized results. The year-to-date 2005 results
include an after-tax gain of $390 related to the final 2 properties
that were closed in January.
(b) 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.
(c) Wireless Merger Integration Costs - Represents BellSouth's 40% share
of wireless merger integration costs incurred 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.
(d) Wireless Merger Intangible Amortization - Represents BellSouth's 40%
share of the non-cash amortization of intangibles, primarily customer
lists, that were created in Cingular's acquisition of AT&T Wireless.
(e) Hurricane Katrina-related Expenses - Represents incremental labor and
material costs primarily related to service restoration and network
repairs in BellSouth's wireline business. These expenses have been
reduced by partial insurance recoveries during the 1st and 2nd
quarters of 2006.
(f) Debt extinguishment costs - Represents one-time expenses associated
with the early extinguishment of $400 of long-term debt in the 1st
quarter of 2005 and one-time expenses associated with the early
extinguishment of $300 of long-term debt in the 2nd quarter of 2005.
(g) Severance - Represents the net severance-related costs recorded in the
2nd quarter of 2006 associated with voluntary management workforce
reductions.
(h) AT&T Merger Costs - Represents specific deal-related costs directly
associated with the pending merger with AT&T. Costs include legal and
regulatory fees, costs of filing and printing the joint proxy
statement and expense associated with employee retention awards.
(i) Gain related to the sale of Cellcom, a cellular communications
operator in Israel.
BellSouth Corporation
Consolidated Balance Sheets (unaudited)
(amounts in millions, except per share data)
September December Change Change
30, 31, vs. June 30, vs.
Prior Prior
2006 2005 Year 2006 Quarter
Assets
Current Assets:
Cash and cash equivalents $731 $427 $304 $259 $472
Short-term investments 1,327 - 1,327 483 844
Accounts receivable, net of
allowance for uncollectibles
of $244, $289 and $274 2,562 2,555 7 2,472 90
Material and supplies 383 385 (2) 408 (25)
Other current assets 928 842 86 932 (4)
Total Current Assets 5,931 4,209 1,722 4,554 1,377
Investment in and advances to
Cingular Wireless 22,357 21,274 1,083 22,108 249
Property, plant and equipment,
net 21,820 21,723 97 21,920 (100)
Other assets 8,725 7,814 911 8,250 475
Intangible assets, net 1,540 1,533 7 1,606 (66)
Total Assets $60,373 $56,553 $3,820 $58,438 $1,935
Liabilities and Shareholders'
Equity
Current Liabilities:
Debt maturing within one year $3,926 $4,109 ($183) $4,325 ($399)
Accounts payable 909 1,040 (131) 911 (2)
Other current liabilities 4,047 3,505 542 4,131 (84)
Total Current Liabilities 8,882 8,654 228 9,367 (485)
Long-Term Debt 14,278 13,079 1,199 13,047 1,231
Noncurrent Liabilities:
Deferred income taxes 6,818 6,607 211 6,713 105
Other noncurrent liabilities 4,959 4,679 280 4,740 219
Total Noncurrent
Liabilities 11,777 11,286 491 11,453 324
Shareholders' Equity:
Common stock, $1 par value 2,020 2,020 - 2,020 -
Paid-in capital 8,130 7,960 170 7,919 211
Retained earnings 21,525 20,383 1,142 20,965 560
Accumulated other
comprehensive income 35 (14) 49 19 16
Shares held in trust and
treasury (6,274) (6,815) 541 (6,352) 78
Total Shareholders' Equity 25,436 23,534 1,902 24,571 865
Total Liabilities and
Shareholders' Equity $60,373 $56,553 $3,820 $58,438 $1,935
BellSouth Corporation
Consolidated Statements of Cash Flows (unaudited)
(amounts in millions, except per share data)
Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Cash Flows from Operating
Activities:
Income from Continuing Operations $1,059 $817 $887 $2,730 $2,295
Adjustments to income from
continuing operations:
Depreciation and amortization 894 922 898 2,685 2,756
Provision for uncollectibles 83 93 60 230 258
Net losses (earnings) of equity
affiliates (342) (97) (213) (694) (85)
Deferred income taxes 107 (66) (1) 165 51
Asset impairments - 166 - - 166
Pension income (130) (133) (131) (391) (399)
Stock-settled compensation
expense 14 22 15 46 70
Loss on extinguishment of debt - - - - 42
(Gain) loss on sale/disposal of
operations - (351) - - (351)
Net change in:
Accounts receivable and other
current assets (120) (11) (76) (275) (174)
Accounts payable and other
current liabilities 37 618 332 447 1,009
Deferred charges and other
assets (52) (39) 26 (49) (79)
Other liabilities and deferred
credits 137 133 117 332 337
Other reconciling items, net 19 40 16 42 38
Net cash provided by operating
activities 1,706 2,114 1,930 5,268 5,934
Cash Flows from Investing
Activities:
Capital expenditures (730) (886) (950) (2,761) (2,465)
Purchase of short-term investments (4,122) (76) (797) (5,227) (88)
Proceeds from sale of short-term
investments 3,279 76 368 3,901 104
Investments in debt and equity
securities (476) (53) (143) (819) (156)
Proceeds from sale of securities
and operations 154 656 132 289 1,600
Net (advances to) repayments from
Cingular 61 949 (11) (416) 1,736
Other investing activities, net (10) (25) (7) (32) (37)
Net cash provided by (used for)
investing activities (1,844) 641 (1,408) (5,065) 694
Cash Flows from Financing
Activities:
Net borrowings (repayments) of
short-term debt (399) (480) (80) 234 (2,110)
Proceeds from issuance of long-
term debt 1,200 - - 1,200 -
Repayments of long-term debt (4) (233) (12) (433) (1,500)
Dividends paid (526) (532) (525) (1,572) (1,520)
Purchase of treasury shares - (54) (2) (52) (137)
Proceeds from issuing common stock 274 22 120 654 60
Other financing activities, net 65 67 (11) 70 44
Net cash provided by (used for)
financing activities 610 (1,210) (510) 101 (5,163)
Net Increase/(Decrease) in Cash
from Continuing Operations 472 1,545 12 304 1,465
Net Increase/(Decrease) in Cash
from Discontinued Operations - - - - (115)
Net Increase/(Decrease) in Cash
and Cash Equivalents 472 1,545 12 304 1,350
Cash and Cash Equivalents at
Beginning of Period 259 485 247 427 680
Cash and Cash Equivalents at End
of Period $731 $2,030 $259 $731 $2,030
BellSouth Corporation
Results by Segment (amounts in millions) (unaudited)
Communications Group (1)
3Q06 3Q05 Growth 2Q06 Growth
Operating Revenues
Voice $3,058 $3,136 -2.5% $3,102 -1.4%
Data 1,315 1,166 12.8% 1,282 2.6%
Other 323 286 12.9% 289 11.8%
Total Operating Revenues 4,696 4,588 2.4% 4,673 0.5%
Operating Expenses
Cost of services and products 1,833 1,860 -1.5% 1,848 -0.8%
Selling, general, &
administrative expenses 772 793 -2.6% 771 0.1%
Depreciation and amortization 886 914 -3.1% 890 -0.4%
Total Operating Expenses 3,491 3,567 -2.1% 3,509 -0.5%
Segment Operating Income 1,205 1,021 18.0% 1,164 3.5%
Interest Expense 111 94 18.1% 111 0.0%
Other Income (Expense), net 23 14 64.3% 12 91.7%
Income Before Income Taxes 1,117 941 18.7% 1,065 4.9%
Provision for Income Taxes 397 330 20.3% 367 8.2%
Segment Net Income(1) $720 $611 17.8% $698 3.2%
* - Not meaningful.
Selected Financial and Operating
Data
(amounts in millions)
Segment operating income $1,205 $1,021 18.0% $1,164 3.5%
Segment operating margin 25.7% 22.3% 340 bps 24.9% 80 bps
DSL revenues $405 $305 32.8% $400 1.3%
Long distance revenues $662 $608 8.9% $645 2.6%
Switched Access MOUs 14,810 15,511 -4.5% 14,954 -1.0%
BSLD MOUs 6,703 6,660 0.6% 6,548 2.4%
Total Access minutes of use 21,513 22,171 -3.0% 21,502 0.1%
Capital expenditures excluding
Hurricane Katrina $725 $856 -15.3% $817 -11.3%
Total capital expenditures $725 $878 -17.4% $946 -23.4%
(amounts in thousands)
Wholesale lines 1,732 2,454 -29.4% 1,906 -9.1%
DSL customers 3,449 2,678 28.8% 3,273 5.4%
LD customers 7,596 6,993 8.6% 7,478 1.6%
Consumer ARPU (3) $63.26 $58.53 8.1% $62.81 0.7%
Year-to-Date
2006 2005 Growth
Operating Revenues
Voice $9,289 $9,445 -1.7%
Data 3,861 3,491 10.6%
Other 898 895 0.3%
Total Operating Revenues 14,048 13,831 1.6%
Operating Expenses
Cost of services and products 5,627 5,563 1.2%
Selling, general, & administrative
expenses 2,285 2,306 -0.9%
Depreciation and amortization 2,662 2,734 -2.6%
Total Operating Expenses 10,574 10,603 -0.3%
Segment Operating Income 3,474 3,228 7.6%
Interest Expense 329 292 12.7%
Other Income (Expense), net 42 45 -6.7%
Income Before Income Taxes 3,187 2,981 6.9%
Provision for Income Taxes 1,115 1,046 6.6%
Segment Net Income(1) $2,072 $1,935 7.1%
* - Not meaningful.
Selected Financial and Operating Data
(amounts in millions)
Segment operating income $3,474 $3,228 7.6%
Segment operating margin 24.7% 23.3% 140 bps
DSL revenues $1,187 $885 34.1%
Long distance revenues $1,946 $1,766 10.2%
Switched Access MOUs 45,088 47,279 -4.6%
BSLD MOUs 19,877 18,972 4.8%
Total Access minutes of use 64,965 66,251 -1.9%
Capital expenditures excluding
Hurricane Katrina $2,478 $2,424 2.2%
Total capital expenditures $2,743 $2,446 12.1%
BellSouth Corporation
Results by Segment (unaudited)
Supplemental Operating Data (in thousands)
Communications Group - Network Access Lines In Service Reported (a)
3Q06 3Q05 Growth 2Q06 Growth
Access lines
Residence
Retail
Primary 10,932 11,465 -4.6% 11,022 -0.8%
Additional 1,044 1,206 -13.4% 1,089 -4.1%
Total Residence Retail 11,976 12,671 -5.5% 12,111 -1.1%
Residence Wholesale Voice
Lines 1,121 1,674 -33.0% 1,251 -10.4%
Total Residence 13,097 14,345 -8.7% 13,362 -2.0%
Business
Business Retail 5,305 5,294 0.2% 5,301 0.1%
Business Wholesale Voice
Lines 553 712 -22.3% 590 -6.3%
Total Business 5,858 6,006 -2.5% 5,891 -0.6%
Other Retail/Wholesale Lines
Retail 25 27 -7.4% 21 19.0%
Wholesale 58 68 -14.7% 65 -10.8%
Total Other Retail/Wholesale
Lines 83 95 -12.6% 86 -3.5%
Total Access Lines in Service 19,038 20,446 -6.9% 19,339 -1.6%
ISDN line equivalents
Residence 5 7 -28.6% 6 -16.7%
Business 1,425 1,440 -1.0% 1,420 0.4%
Total ISDN Adjusted ALIS 20,468 21,893 -6.5% 20,765 -1.4%
Access Line Equivalents (b)
Selected digital data services:
Unbundled Loops 376 279 34.8% 373 0.8%
DS0 & ADSL 20,940 16,333 28.2% 19,886 5.3%
DS1 8,478 8,163 3.9% 8,344 1.6%
DS3 & higher 35,287 33,639 4.9% 35,267 0.1%
Total digital data lines in
service 65,081 58,414 11.4% 63,870 1.9%
Total equivalent access lines in
service 85,549 80,307 6.5% 84,635 1.1%
* - Not meaningful.
(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)
Wireless Segment (1)(a)
3Q06 3Q05 Growth 2Q06 Growth
Operating Revenues
Service revenues (2) $3,464 $3,089 12.1% $3,318 4.4%
Equipment and other revenues 357 410 -12.9% 369 -3.3%
Total Operating Revenues 3,821 3,499 9.2% 3,687 3.6%
Operating Expenses
Cost of services and products 1,464 1,395 4.9% 1,511 -3.1%
Selling, general, &
administrative expenses 1,125 1,128 -0.3% 1,097 2.6%
Depreciation and amortization 484 421 15.0% 473 2.3%
Total Operating Expenses 3,073 2,944 4.4% 3,081 -0.3%
Segment Operating Income 748 555 34.8% 606 23.4%
Interest Expense 122 122 0.0% 119 2.5%
Other Income (Expense), net (16) (9) * (15) *
Income Before Income Taxes 610 424 43.9% 472 29.2%
Provision for Income Taxes 250 182 37.4% 196 27.6%
Segment Net Income (1) $360 $242 48.8% $276 30.4%
Selected Financial and Operating
Data
(amounts in millions, except
customer data in thousands)
Segment operating income $748 $555 34.8% $606 23.4%
Segment operating margin 19.6% 15.9% 370 bps 16.4% 320 bps
Cellular/PCS Operating Metrics
(100% Cingular)**:
Total Customers (7) 58,666 52,292 12.2% 57,308 2.4%
Net Customer Additions (7) 1,358 867 56.6% 1,498 -9.3%
M&A Activity, Partitioned
Customers and/or Adjs (7) - (17) * - *
Churn (8) 1.8% 2.3% -50 bps 1.7% 10 bps
Wireless Service ARPU (3) $49.76 $49.65 0.2% $48.84 1.9%
Minutes Of Use Per Subscriber
(4) 755 698 8.2% 741 1.9%
Licensed POPs (5) 296 294 0.7% 296 0.0%
Penetration (6) 20.8% 18.3% 250 bps 20.0% 80 bps
Year-to-Date
2006 2005 Growth
Operating Revenues
Service revenues (2) $9,984 $9,144 9.2%
Equipment and other revenues 1,116 1,090 2.4%
Total Operating Revenues 11,100 10,234 8.5%
Operating Expenses
Cost of services and products 4,427 4,171 6.1%
Selling, general, & administrative
expenses 3,341 3,438 -2.8%
Depreciation and amortization 1,418 1,324 7.1%
Total Operating Expenses 9,186 8,933 2.8%
Segment Operating Income 1,914 1,301 47.1%
Interest Expense 360 387 -7.0%
Other Income (Expense), net (43) (9) *
Income Before Income Taxes 1,511 905 67.0%
Provision for Income Taxes 632 428 47.7%
Segment Net Income (1) $879 $477 84.3%
Selected Financial and Operating Data
(amounts in millions, except customer
data in thousands)
Segment operating income $1,914 $1,301 47.1%
Segment operating margin 17.2% 12.7% 450 bps
Cellular/PCS Operating Metrics (100%
Cingular)**:
Total Customers (7) 58,666 52,292 12.2%
Net Customer Additions (7) 4,535 3,186 42.3%
M&A Activity, Partitioned
Customers and/or Adjs (7) (13) (26) 50.0%
Churn (8) 1.8% 2.2% -40 bps
Wireless Service ARPU (3) $49.04 $49.92 -1.8%
Minutes Of Use Per Subscriber (4) 732 673 8.8%
Licensed POPs (5) 296 294 0.7%
Penetration (6) 20.8% 18.3% 250 bps
* - Not meaningful.
** - These metrics and calculations are not impacted by the
normalization of wireless merger integration costs and wireless
merger intangible amortization.
(a) The 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)
3Q06 3Q05 Growth 2Q06 Growth
Operating Revenues
Advertising and publishing revenues $502 $477 5.2% $494 1.6%
Commission revenues 35 32 9.4% 53 -34.0%
Total Operating Revenues 537 509 5.5% 547 -1.8%
Operating Expenses
Cost of services 96 94 2.1% 97 -1.0%
Selling, general, & administrative
expenses 188 175 7.4% 191 -1.6%
Depreciation and amortization 8 7 14.3% 7 14.3%
Total Operating Expenses 292 276 5.8% 295 -1.0%
Segment Operating Income 245 233 5.2% 252 -2.8%
Interest Expense 4 3 33.3% 4 0.0%
Other Income (Expense), net - - * (3) *
Income Before Income Taxes 241 230 4.8% 245 -1.6%
Provision for Income Taxes 87 84 3.6% 89 -2.2%
Segment Net Income(1) $154 $146 5.5% $156 -1.3%
Segment operating income $245 $233 5.2% $252 -2.8%
Segment operating margin 45.6% 45.8% -20 bps 46.1% -50 bps
Year-to-Date
2006 2005 Growth
Operating Revenues
Advertising and publishing
revenues $1,483 $1,433 3.5%
Commission revenues 107 98 9.2%
Total Operating Revenues 1,590 1,531 3.9%
Operating Expenses
Cost of services 286 283 1.1%
Selling, general, & administrative
expenses 558 518 7.7%
Depreciation and amortization 23 21 9.5%
Total Operating Expenses 867 822 5.5%
Segment Operating Income 723 709 2.0%
Interest Expense 13 8 62.5%
Other Income (Expense), net (5) - *
Income Before Income Taxes 705 701 0.6%
Provision for Income Taxes 255 260 -1.9%
Segment Net Income(1) $450 $441 2.0%
Segment operating income $723 $709 2.0%
Segment operating margin 45.5% 46.3% -80 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 include activation fees, access, airtime,
roaming, long distance and value added services. Roaming revenues
are included on a gross basis for the Wireless segment.
(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 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) Effective with the 1Q05 reporting period, the Total Minutes of Use
per Cellular/PCS Subscriber (MOUs) definition has been revised to
exclude Short Message Service (SMS) activity and include Local MOUs
and Outcollect MOUs in the numerator.
(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.
(6) Penetration calculation for 3Q06 is based on licensed "operational"
POPs of 282 million.
(7) Cellular/PCS customers include customers served through reseller
agreements.
(8) Cellular/PCS churn is calculated by dividing the aggregate number of
Cellular/PCS customers who cancel service during each month in a
period by the total number of Cellular/PCS customers at the beginning
of each month in that period.
BellSouth Corporation
Non-GAAP Measures - Reconciliation
(amounts in millions) (unaudited)
Segment Net Income Reconciliation to GAAP Net Income
Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Communications Group segment
Net Income $720 $611 $698 $2,072 $1,935
Wireless segment Net Income 360 242 276 879 477
Advertising and Publishing
Group segment Net Income 154 146 156 450 441
Corporate, eliminations and
other (54) (61) (48) (156) (157)
Normalized Net Income 1,180 938 1,082 3,245 2,696
Add back Excluded
non-recurring or
non-operational items (a) (121) (121) (195) (515) (20)
Consolidated GAAP Net Income $1,059 $817 $887 $2,730 $2,676
Free Cash Flow Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Net cash provided by
Operating Activities $1,706 $2,114 $1,930 $5,268 $5,934
Less Capital Expenditures (730) (886) (950) (2,761) (2,465)
Operating Free Cash Flow $976 $1,228 $980 $2,507 $3,469
Net Debt
Sept. 30, Dec. 31, June 30,
2006 2005 2006
Total Debt $18,204 $17,188 $17,372
Less Cash (731) (427) (259)
Net Debt $17,473 $16,761 $17,113
Consolidated Normalized
Operating Income before
Depreciation and
Amortization Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Operating Revenues $8,954 $8,494 $8,815 $26,453 $25,328
Operating Income 2,210 1,817 2,036 6,146 5,265
Add back Depreciation and
Amortization 1,377 1,343 1,372 4,103 4,080
Operating Income before
Depreciation and
Amortization $3,587 $3,160 $3,408 $10,249 $9,345
Margin 40.1% 37.2% 38.7% 38.7% 36.9%
Communications Group
Operating Income before
Depreciation and
Amortization Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Operating Revenues $4,696 $4,588 $4,673 $14,048 $13,831
Operating Income 1,205 1,021 1,164 3,474 3,228
Add back Depreciation and
Amortization 886 914 890 2,662 2,734
Operating Income before
Depreciation and
Amortization $2,091 $1,935 $2,054 $6,136 $5,962
Margin 44.5% 42.2% 44.0% 43.7% 43.1%
Wireless Operating Income
before Depreciation and
Amortization Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Service Revenues $3,464 $3,089 $3,318 $9,984 $9,144
Equipment and Other Revenues 357 410 369 1,116 1,090
Operating Revenues 3,821 3,499 3,687 11,100 10,234
Operating Income 748 555 606 1,914 1,301
Operating Margin (Operating
Income divided by Operating
Revenues) (b) 19.6% 15.9% 16.4% 17.2% 12.7%
Add back Depreciation and
Amortization 484 421 473 1,418 1,324
Operating Income before
Depreciation and
Amortization $1,232 $976 $1,079 $3,332 $2,625
Margin (Operating Income
before Depr & Amort divided
by Service Revenues) (b) 35.6% 31.6% 32.6% 33.4% 28.7%
Advertising & Publishing
Operating Income before
Depreciation and
Amortization Year-to-Date
3Q06 3Q05 2Q06 2006 2005
Operating Revenues $537 $509 $547 $1,590 $1,531
Operating Income 245 233 252 723 709
Add back Depreciation and
Amortization 8 7 7 23 21
Operating Income before
Depreciation and
Amortization $253 $240 $259 $746 $730
Margin 47.1% 47.2% 47.3% 46.9% 47.7%
(a) See pages 3 and 4 for detail of excluded items.
(b) Margin calculations for our wireless segment represent 40% of
Cingular's margin calculations adjusted for the related normalized
items as presented on pages 3-4.
BellSouth Corporation
Hurricane Katrina Revenue Impacts
(amounts in millions, except per share data)
Communications Group:
3Q06 3Q05 Growth
As reported (with Katrina customer
bill credits):
Operating revenues $4,696 $4,588 2.4%
Pro forma (without Katrina customer
bill credits):
Operating revenues $4,696 $4,632 1.4%
Impact of Hurricane Katrina bill
credits on:
Operating revenues $- $(44) 100 bps
Advertising & Publishing:
3Q06 3Q05 Growth
As reported (with Katrina customer
bill credits):
Operating revenues $537 $509 5.5%
Pro forma (without Katrina customer
bill credits):
Operating revenues $537 $516 4.1%
Impact of Hurricane Katrina bill
credits on:
Operating revenues $- $(7) 140 bps
BellSouth Corporation
Cingular Amortization Reconciliation
(amounts in millions, except per share data)
Consolidated
4Q04 2004 1Q05 2Q05 3Q05
Normalized D&A - as originally
disclosed $1,472 $4,868 $1,588 $1,524 $1,501
Wireless merger intangible
amortization ($159) ($159) ($196) ($179) ($158)
Normalized D&A $1,313 $4,709 $1,392 $1,345 $1,343
Normalized Operating Income - as
originally disclosed $1,270 $6,272 $1,439 $1,634 $1,659
Wireless merger intangible
amortization $159 $159 $196 $179 $158
Normalized Operating Income $1,429 $6,431 $1,635 $1,813 $1,817
Normalized Operating Margin - as
originally disclosed 16.0% 22.4% 17.3% 19.2% 19.5%
Wireless merger intangible
amortization 2.0% 0.6% 2.4% 2.1% 1.9%
Normalized Operating Margin 18.0% 23.0% 19.7% 21.3% 21.4%
Normalized Earnings Per Share - as
originally disclosed $0.35 $1.83 $0.39 $0.46 $0.46
Wireless merger intangible
amortization $0.04 $0.04 $0.06 $0.05 $0.05
Normalized Earnings Per Share $0.39 $1.87 $0.45 $0.51 $0.51
Wireless Segment
4Q04 2004 1Q05 2Q05 3Q05
Normalized D&A - as originally
disclosed $556 $1,232 $670 $608 $579
Wireless merger intangible
amortization ($159) ($159) ($196) ($179) ($158)
Normalized D&A $397 $1,073 $474 $429 $421
Normalized Operating Income - as
originally disclosed $27 $736 $88 $283 $397
Wireless merger intangible
amortization $159 $159 $196 $179 $158
Normalized Operating Income $186 $895 $284 $462 $555
Normalized Operating Margin - as
originally disclosed 0.9% 9.4% 2.7% 8.2% 11.3%
Wireless merger intangible
amortization 5.6% 2.0% 5.9% 5.2% 4.6%
Normalized Operating Margin 6.5% 11.4% 8.6% 13.4% 15.9%
Wireless merger intangible amortization - Represents BellSouth's
40 percent share of the non-cash amortization of intangibles, primarily
customer lists, that were created in Cingular's acquisition of
AT&T Wireless.
SOURCE BellSouth Corporation
 back to top
Related links:
http://www.bellsouth.com
http://www.prnewswire.com/comp/095650.html /
CONTACT:
Brent Fowler, Media Relations, of BellSouth,
+1-404-249-2839, or BellSouth Investor Relations, 800-241-3419
|
