SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 22, 2004
BELLSOUTH CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 1-8607 58-1533433
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
Room 15G03, 1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(404) 249-2000
Item 12. Results of Operations and Financial Condition
The information in this report, including the Exhibits described below, shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, nor shall they be deemed incorporated by reference in any filing under
the Securities Act of 1933, except as shall be expressly set forth by specific
reference in such filing.
Attached and incorporated herein by reference are:
(i) Exhibit 99-a, which is a copy of a press release of BellSouth
Corporation dated January 22, 2004, reporting the company's
financial results for the quarter ended December 31, 2003 and
(ii) Exhibit 99-b, which is a document entitled "Investor News" that
contains more detailed information about the recently completed
quarter.
Non-GAAP Financial Information
To provide clarity, internally and externally, about the most tangible and
relevant measures of our financial performance, we supplement the reporting of
BellSouth's consolidated financial information under GAAP with certain non-GAAP
financial measures, including normalized operating results, operating free cash
flow and operating income before deprecation and amortization margin. This
information should not be considered in isolation or as a substitute for the
consolidated (GAAP) financial information. We believe the presentation of these
measures provides useful information to investors for the following specific
reasons:
Normalized Results. The presentation of normalized results enables investors to
focus on period-over-period operating performance, without the impact of
significant non-operational or non-recurring items. Additionally, normalized
results include BellSouth's 40 percent share of Cingular Wireless' revenues and
expenses. Cingular's results are recognized on the equity method for GAAP
purposes. Accordingly, Cingular's results are not included in the revenue,
expense, or operating income line items in the GAAP presentation. The financial
results of Cingular, a joint venture representing our second largest operating
segment, are a critical element of BellSouth's overall financial performance.
The inclusion of Cingular's revenues and expenses on a proportional basis
enables investors to evaluate BellSouth's overall financial performance,
including all business segments.
Normalized results are provided to enhance the user's overall understanding of
the Company's current financial performance and the Company's prospects for the
future. We believe normalized results are an important measure of our recurring
operations because it excludes items that may not be indicative of our core
operating results, includes items that are core to our operating results not
allowed by GAAP (e.g. Cingular's results) and provides a better baseline for
modeling future earnings expectations. We believe the inclusion of normalized
results provides consistency and comparability in our financial reporting and is
provided in order to enable investors to more thoroughly evaluate our current
performance compared to past performance.
Finally, normalized measures are among the primary indicators management uses in
planning and operating the business. By providing this information to investors
supplementally, investors will be able to evaluate the results of the business
through the eyes of management and assess the fundamental performance of the
business.
Normalized results may exclude (a) events, such as changes in accounting method,
that are generally non-recurring in nature and (b) material one-time gains or
losses, both of which can distort reported operating results. A complete list of
normalizing items, as well as a full reconciliation of normalized results to
GAAP reporting, are included in the quarterly financial
statements that are attached hereto and are available on the company's Web site,
www.bellsouth.com/investor.
Free Cash Flow. We believe free cash flow provides investors a meaningful
measure of liquidity of the business. It indicates the level of cash the
business is generating from normal operations less capital reinvestment that is
required to continue the operations. Investors can utilize this measure to make
assessments of the viability of the company and as a base line for valuation of
the company. Management monitors operating free cash flow and makes operating
decisions based on its level. We define operating free cash flow as operating
cash flow less capital expenditures, both of which are taken directly from the
statement of cash flows.
Operating Income Before Depreciation and Amortization and Related Margin.
Facility-based telecommunications companies require significant recurring
capital investments that generate large non-cash expense, making operating
income a less meaningful measure of current period business performance and
profitability. We use operating income before depreciation and amortization, and
the related margin, as a measure of underlying operating performance of the
business and to make meaningful comparisons of different operating periods.
In addition to historical information, this document contains forward-looking
statements regarding events and financial trends. Factors that could affect
future results and could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: (i) a change in
economic conditions in domestic or international markets where we operate or
have material investments which would affect demand for our services; (ii)
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.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BELLSOUTH CORPORATION
By: /s/ W. Patrick Shannon
W. Patrick Shannon
Vice President - Finance
January 22, 2004