BellSouth reports Q4

Fiber Optics Weekly Update, Feb 7, 2003

BellSouth reported earnings per share (EPS) of 32 cents in the fourth quarter of 2002, compared to EPS of 42 cents in the same quarter of 2001. Normalized for special items, detailed below, EPS in the fourth quarter of 2002 was 50 cents, compared to normalized EPS of 63 cents in the same quarter a year ago. Capital expenditures for 2002 were $3.8 billion, a reduction of 36.9 percent compared to $6.0 billion in 2001. Operating free cash flow (defined as cash flow from operations less capital expenditures) was $791 million in the fourth quarter of 2002, and totaled $4.5 billion for the year as a whole. Including asset sales and note repayments to BellSouth during the year, the company generated free cash flow of $6.8 billion in 2002. The company reduced net debt. to $14.9 billion in 2002 from $19.5 billion in 2001, or 23.6 percent, and increased its quarterly per share cash dividend 5.3 percent.

Consolidated revenues, which do not include BellSouth's 40 percent share of Cingular Wireless, were $5.69 billion, compared to $6.21 billion in the fourth quarter of 2001. Normalized total operating revenues, which include Cingular, were $7.12 billion, a decline of 6.8 percent versus the fourth quarter of 2001. BellSouth reduced consolidated total operating expenses, which exclude Cingular, by 4.2 percent in the fourth quarter of 2002, compared to the same three months a year ago. Net income in the quarter was $597 million, compared to $792 million in the fourth quarter of the previous year. Normalized net income was $936 million, compared to $1.19 billion in the final quarter of 2001.

For the year, EPS was 76 cents in 2002, compared to $1.36 in 2001. Normalized EPS was $2.09 in the latest year, compared to $2.34 in 2001. Foreign currency losses in 2002 totaled 32 cents per share, compared to 12 cents per share in the previous year. Including Cingular, revenues were $28.4 billion in 2002, a decline of 3.9 percent for the year. Net income was $1.42 billion in 2002, compared to $2.57 billion a year earlier. Normalized net income in 2002 was $3.92 billion, compared to $4.42 billion in 2001.

BellSouth's operating results continued to reflect weak demand for communications services, both in the United States and Latin America. Bankruptcies continued to affect both retail and wholesale demand, as well as bad debt expense. Retail access line market share loss in the U.S., as well as currency devaluations in Argentina and Venezuela, also continued to impact results.