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.
 
 3Q04 3Q03 Growth 2Q04 Growth
 
 Operating Revenues
 Communications group $4,585 $4,626  -0.9% $4,562 0.5%
 Advertising and publishing 495 501 -1.2% 507 -2.4%
 All other 15 14 7.1% 14 7.1%
 Total Operating Revenues 5,095 5,141 -0.9% 5,083 0.2%
 Operating Expenses
 Cost of services and products 1,881 1,789 5.1% 1,789 5.1%
 Selling, general &
 administrative expenses 905 889 1.8% 930 -2.7%
 Depreciation and amortization 908  959 -5.3% 914 -0.7%
 Provision for restructuring
 and asset impairments - 51 -100.0% 8 -100.0%
 Total Operating Expenses 3,694 3,688 0.2% 3,641 1.5%
 Operating Income  1,401 1,453 -3.6% 1,442 -2.8%
 Interest Expense 220 234 -6.0% 211 4.3%
 Other Income (Expense), net 136 161 -15.5% 224 -39.3%
 Income from Continuing
 Operations before Income Taxes,
 Discontinued Operations and
 Cumulative Effect of Changes
 in Accounting Principles 1,317 1,380 -4.6% 1,455 -9.5%
 Provision for Income Taxes 465 486 -4.3% 516 -9.9%
 Income from Continuing
 Operations before Discontinued
 Operations and Cumulative Effect
 of Changes in Accounting
 Principles 852 894 -4.7% 939 -9.3%
 Income (Loss) from Discontinued
 Operations, net of tax  (53) 42 -226.2% 57 -193.0%
 Income Before Cumulative Effect
 of Changes in Accounting
 Principles 799 936 -14.6% 996 -19.8%
 Cumulative Effect of Changes in
 Accounting Principle  - - N/M* - N/M
 Net Income 799 936 -14.6% 996 -19.8%
 
 Diluted:
 Weighted Average Common Shares
 Outstanding 1,835 1,851 -0.9% 1,836 -0.1%
 Earnings Per Share:
 Income from Continuing
 Operations $0.46 $0.48 -4.2% $0.51 -9.8%
 Income from Discontinued
 Operations ($0.03) $0.02 -250.0% $0.03 -200.0%
 Cumulative Effect of
 Changes in Accounting
 Principles $0.00 $0.00 N/M $0.00 N/M
 Net Income $0.44 $0.51 -13.7% $0.54 -18.5%
 * - Not meaningful.
 
 Selected Financial and Operating Data
 
 Operating income $1,401 $1,453 -3.6% $1,442 -2.8%
 Operating margin 27.5% 28.3% -80 bps 28.4% -90 bps
 
 Declared dividends per share $0.27 $0.23 17.4% $0.27 0.0%
 Capital expenditures $768 $713 7.7% $731 5.1%
 
 Common shares outstanding 1,831 1,848 -0.9% 1,831 0.0%
 Book value per share $11.94 $10.65 12.1% $11.75 1.6%
 
 
 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
 2004 2003 Growth
 
 
 Operating Revenues
 Communications group $13,632 $13,679 -0.3%
 Advertising and publishing 1,481 1,515 -2.2%
 All other 41 40 2.5%
 Total Operating Revenues 15,154 15,234 -0.5%
 Operating Expenses
 Cost of services and products 5,468 5,229 4.6%
 Selling, general & administrative
 expenses 2,744 2,797 -1.9%
 Depreciation and amortization 2,720 2,861 -4.9%
 Provision for restructuring and
 asset impairments 21 189 -88.9%
 Total Operating Expenses 10,953 11,076 -1.1%
 Operating Income 4,201 4,158 1.0%
 Interest Expense 646 725 -10.9%
 Other Income (Expense), net 990 706 40.2%
 Income from Continuing Operations
 before Income Taxes, Discontinued
 Operations and Cumulative Effect
 of Changes in Accounting
 Principles 4,545 4,139 9.8%
 Provision for Income Taxes  1,604 1,487 7.9%
 Income from Continuing Operations
 before Discontinued Operations and
 Cumulative Effect of Changes in
 Accounting Principles 2,941 2,652 10.9%
 Income (Loss) from Discontinued
 Operations, net of tax 453 150 202.0%
 Income Before Cumulative Effect of
 Changes in Accounting Principles 3,394 2,802 21.1%
 Cumulative Effect of Changes in
 Accounting Principle - 315 -100.0%
 Net Income 3,394 3,117 8.9%
 
 Diluted:
 Weighted Average Common Shares
 Outstanding 1,836 1,854 -1.0%
 Earnings Per Share:
 Income from Continuing
 Operations $1.60 $1.43 11.9%
 Income from Discontinued
 Operations $0.25 $0.08 212.5%
  Cumulative Effect of Changes in
 Accounting Principles $0.00 $0.17 -100.0%
 Net Income $1.85 $1.68 10.1%
 * - Not meaningful.
 
 Selected Financial and Operating Data
 
  Operating income $4,201 $4,158 1.0%
 Operating margin 27.7% 27.3% 40 bps
 
 Declared dividends per share $0.79 $0.67 17.9%
 Capital expenditures  $2,134 $1,978 7.9%
 
 Common shares outstanding
 Book value per share
 
 
 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.
 
 3Q04 3Q03 Growth 2Q04 Growth
 
 Operating Revenues
 Communications group $4,533 $4,583 -1.1% $4,510 0.5%
 Domestic wireless 1,702 1,624 4.8% 1,662 2.4%
 Advertising and publishing 495 501 -1.2% 507 -2.4%
  All other 16 14 14.3% 14 14.3%
 Total Operating Revenues 6,746 6,722 0.4% 6,693 0.8%
 
 Operating Expenses
 Cost of services and products 2,445 2,392 2.2% 2,320 5.4%
  Selling, general, &
 administrative expenses 1,510 1,462 3.3% 1,519 -0.6%
 Depreciation and amortization 1,137 1,168 -2.7% 1,140 -0.3%
 Total Operating Expenses 5,092 5,022 1.4% 4,979 2.3%
 Operating Income 1,654 1,700 -2.7% 1,714 -3.5%
 Interest Expense 276 290 -4.8% 268 3.0%
 Other Income (Expense), net 7 25 -72.0% 8 -12.5%
 Income Before Income Taxes 1,385 1,435 -3.5% 1,454 -4.7%
 Provision for Income Taxes 492 509 -3.3% 516 -4.7%
 Net Income $893 $926 -3.6% $938 -4.8%
 
 Diluted:
 Weighted Average Common Shares
 Outstanding 1,835 1,851 -0.9% 1,836 -0.1%
 Earnings Per Share $0.49 $0.50 -2.0% $0.51 -3.9%
 
 
 Selected Financial and Operating
 Data
 
 Operating income  $1,654 $1,700 -2.7% $1,714 -3.5%
 Operating margin 24.5% 25.3% -80 bps 25.6% -110 bps
 
 Declared dividends per share $0.27 $0.23 17.4% $0.27 0.0%
 Capital expenditures $768 $713 7.7% $731 5.1%
 
 Common shares outstanding 1,831 1,848 -0.9% 1,831 0.0%
 Book value per share $11.94 $10.65 12.1% $11.75 1.6%
 Total employees 63,132 66,182 -4.6% 64,113 -1.5%
 
 
 Year-to-Date
 2004 2003 Growth
 
 Operating Revenues
 Communications group $13,531 $13,556 -0.2%
  Domestic wireless 4,941 4,628 6.8%
 Advertising and publishing 1,481 1,515 -2.2%
 All other 42 40 5.0%
 Total Operating Revenues 19,995 19,739 1.3%
 
 Operating Expenses
 Cost of services and products 7,104 6,781 4.8%
 Selling, general, &
 administrative expenses 4,493 4,356 3.1%
 Depreciation and amortization 3,396 3,468 -2.1%
 Total Operating Expenses 14,993 14,605 2.7%
 Operating Income 5,002 5,134 -2.6%
 Interest Expense  816 913 -10.6%
 Other Income (Expense), net 19 118 -83.9%
 Income Before Income Taxes 4,205 4,339 -3.1%
 Provision for Income Taxes  1,486 1,569 -5.3%
 Net Income $2,719 $2,770 -1.8%
 
 Diluted:
 Weighted Average Common Shares
 Outstanding 1,836 1,854 -1.0%
 Earnings Per Share $1.48 $1.49 -0.7%
 
 
 Selected Financial and Operating
 Data
 
 Operating income $5,002 $5,134 -2.6%
 Operating margin 25.0% 26.0% -100 bps
 
 Declared dividends per share $0.79 $0.67 17.9%
 Capital expenditures $2,134 $1,978 7.9%
 
 Common shares outstanding
 Book value per share
 Total employees
 
 
 BellSouth Corporation
 Normalized Earnings Summary and Reconciliation to Reported Results
 (amounts in millions, except per share data)
 
 Third Quarter 2004 Normalizing Items
  Hurricane-
 Discontinued related
 Cingular Operations Expenses
 GAAP A F H
 
 Operating Revenues $5,095 $1,651 $- $-
 Operating Expenses 3,694 1,466 - (38)
 Operating Income 1,401 185 - 38
 Interest Expense  220 56 - -
 Other Income (Expense), net 136 (129) - -
 Income from Continuing Operations
 before Income Taxes 1,317 - - 38
 Provision for Income Taxes 465 - - 15
 Income from Continuing Operations 852 - - 23
 Income (Loss) from Discontinued
 Operations, net of tax (53) - 53 -
 Net Income  $799 $0 $53 $23
 
 Diluted Earnings Per Share $0.44 $0.00 $0.03 $0.01
 
 
 BellSouth Corporation
 Normalized Earnings Summary and Reconciliation to Reported Results
 (amounts in millions, except per share data)
 
 Third Quarter 2004 Normalizing Items
 Merger
 Integration/FV
 Adj Rounding
 I Normalized
 
 Operating Revenues $- $- $6,746
 Operating Expenses (29) (1) 5,092
 Operating Income 29 1 1,654
 Interest Expense - - 276
 Other Income (Expense), net - - 7
 Income from Continuing Operations
 before Income Taxes 29 1 1,385
 Provision for Income Taxes 12 - 492
 Income from Continuing Operations 17 1 893
 Income (Loss) from Discontinued
 Operations, net of tax - - -
 Net Income $17 $1 $893
 
 Diluted Earnings Per Share $0.01 $0.00 $0.49
 
 
 
 Year-to-Date 2004 Normalizing Items
 Sale of Discontinued
 Cingular Sonofon Operations
  GAAP A E F
 
 Operating Revenues $15,154 $4,791 $- $-
 Operating Expenses 10,953 4,110 - -
 Operating Income 4,201 681 -  -
 Interest Expense 646 170 - -
 Other Income (Expense), net 990 (509) (462) -
 Income from Continuing Operations
 before Income Taxes 4,545 2 (462) -
 Provision for Income Taxes 1,604 2 (167) -
 Income from Continuing Operations 2,941 - (295) -
 Income (Loss) from Discontinued
 Operations, net of tax 453 - -  (453)
 Net Income $3,394 $0 ($295) ($453)
 
 Diluted Earnings Per Share $1.85 $0.00 ($0.16) ($0.25)
 
 
 Year-to-Date 2004 Normalizing Items
  Merger
 Hurricane- Integration /
 SC related FV
 Settlement Expenses Adj
  G H I Normalized
 
 Operating Revenues $50 $- $- $19,995
 Operating Expenses (3) (38) (29) 14,993
 Operating Income  53 38 29 5,002
 Interest Expense - - - 816
 Other Income (Expense), net - - - 19
 Income from Continuing Operations
 before Income Taxes 53 38 29 4,205
 Provision for Income Taxes 20 15 12 1,486
 Income from Continuing Operations 33 23 17 2,719
 Income (Loss) from Discontinued
 Operations, net of tax - - - -
 Net Income $33 $23 $17 $2,719
 
 Diluted Earnings Per Share $0.02 $0.01 $0.01 $1.48
 
 
 Third Quarter 2003  Normalizing Items
 Asset Discontinued
 Cingular Impairment Operations
 GAAP A J F Normalized
 
 Operating Revenues $5,141 $1,581 $- $- $6,722
 Operating Expenses 3,688 1,386 (52) - 5,022
 Operating Income 1,453 195 52 - 1,700
 Interest Expense  234 56 - - 290
 Other Income (Expense),
 net 161 (136) - - 25
 Income from Continuing
 Operations before Income
 Taxes 1,380 3 52 - 1,435
 Provision for Income
 Taxes 486 3 20 - 509
 Income from Continuing
 Operations 894 - 32 - 926
 Income (Loss) from
 Discontinued Operations,
 net of tax 42 - - (42) -
 Income Before Cumulative
 Effect of Changes in
 Accounting Principles 936 - 32 (42) 926
 Cumulative Effect of
 Changes in Accounting
 Principles - - - - -
 Net Income $936 $0 $32 ($42) $926
 
 Diluted Earnings Per
 Share *  $0.51 $0.00 $0.02 ($0.02) $0.50
 
 * Normalized earnings per share for third quarter 2003 does not sum due to
 rounding.
 
 
 Year-to-Date 2003 Normalizing Items
  A&P
 Acctg.
 Cingular Change FAS143
 GAAP A B C
 
 Operating Revenues $15,234 $4,505 $- $-
 Operating Expenses 11,076 3,722 - -
 Operating Income 4,158 783 - -
 Interest Expense  725 188 - -
 Other Income (Expense), net 706 (588) - -
 Income from Continuing Operations
 before Income Taxes 4,139 7 - -
 Provision for Income Taxes 1,487 7 - -
 Income from Continuing Operations 2,652 - - -
 Income (Loss) from Discontinued
 Operations, net of tax 150 - -  -
 Income Before Cumulative Effect of
 Changes in Accounting Principles 2,802 - - -
 Cumulative Effect of Changes in
 Accounting Principles 315 - 501 (816)
 Net Income  $3,117 $0 $501 ($816)
 
 Diluted Earnings Per Share * $1.68 $0.00 $0.27 ($0.44)
 
 * Normalized earnings per share for year-to-date 2003 does not sum due to
 rounding.
 
 
 Year-to-Date 2003
 
  Pension/ Discontinued Asset
 Severance Operations Impairment
 D F J Normalized
 
 Operating Revenues $-  $- $- $19,739
 Operating Expenses (141) - (52) 14,605
 Operating Income 141 - 52 5,134
 Interest Expense - - -  913
 Other Income (Expense), net - - - 118
 Income from Continuing Operations
 before Income Taxes 141 - 52 4,339
 Provision for Income Taxes 55 -  20 1,569
 Income from Continuing Operations 86 - 32 2,770
 Income (Loss) from Discontinued
 Operations, net of tax - (150) - -
 Income Before Cumulative Effect of
 Changes in Accounting Principles 86 (150) 32 2,770
 Cumulative Effect of Changes in
 Accounting Principles - - - -
 Net Income $86 ($150) $32 $2,770
 
 Diluted Earnings Per Share * $0.05 ($0.08) $0.02 $1.49
 
 * Normalized earnings per share for year-to-date 2003 does not sum due to
 rounding.
 
 
 BellSouth Corporation
 Notes to Normalized Financial and Operating Data (pages 3 and 4)
 (amounts in millions, except per share data)
 
 Our normalized earnings have been adjusted for the following:
 
 (a) The periods presented have been adjusted to include our 40%
 proportional share of Cingular Wireless' operating results, net of
 eliminations for amounts charged by other BellSouth companies to
 Cingular.
 
 (b) 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.
 
 (c) 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.
 
 (d) Pension/Severance Costs - During 2003, the number of employees who
 voluntarily separated and elected to receive lump-sum retirement
 benefits exceeded thresholds that require current recognition of
 deferred losses related to these employees. These costs include $33
 after-tax of severance related costs.
 
 (e) Gain related to the sale of our operations in Denmark.
 
 (f) Discontinued Operations - In March 2004, we announced our intention to
 sell our Latin American properties. Accordingly, the prior period
 results have been recast to reflect the Latin American operations as
 Discontinued Operations and excluded from normalized results. The
 year-to-date period in 2004 includes $357 in net income tax benefit
 representing the recognition of book over tax basis differential in
 connection with the announced sale of these properties. The third
 quarter 2004 results include an after-tax charge of $190 related to
 the buyout of the other major shareholder in Telcel, our Venezuelan
 operation and the settlement of all outstanding claims with this
 shareholder.
 
 (g) SC Regulatory Settlement - In April 2004, BellSouth entered into a
 settlement agreement with the South Carolina Consumer Advocate with
 respect to previously disclosed litigation (See 2003 10K for further
 discussion). The settlement required among other things, that
 BellSouth refund $50 to its South Carolina customers. The
 refund was recognized in the first quarter 2004 as a reduction to
 revenue.
 
 (h) Hurricane-related Expenses - Represents the incremental labor and
 material costs incurred during the 3rd quarter related to service
 restoration and network repairs in the wireline business due to
 Hurricanes Charley, Frances, Ivan and Jeanne.
 
 (i) Wireless merger integration planning costs and fair value adjustment -
 Represents BellSouth's 40% share of tax-effected wireless merger
 integration planning costs of $43 incurred during the 3rd
 quarter in preparation for the Cingular/AWE merger. Also includes a
 $31 fair value adjustment for the announced sale of Cingular
 Interactive.
 
 (j) Asset Impairment - The third quarter 2003 charge for asset impairment
 represents the write-off of capitalized software related to an
 abandoned systems project.
 
 
 BellSouth Corporation
 Consolidated Balance Sheets (unaudited)
 (amounts in millions, except per share data)
 
  September December Change Change
 30, 31, vs. June 30, vs.
 2004 2003 Prior 2004 Prior
  Year Quarter
 Assets
 Current Assets:
 Cash and cash equivalents $9,200 $4,556 $4,644 $6,216 $2,984
 Accounts receivable, net of
 allowance for uncollectibles
 of $331, $496, and $338  2,546 2,870 (324) 2,436 110
 Material and supplies 316 375 (59) 319 (3)
 Other current assets 842 1,048 (206) 870 (28)
 Assets of discontinued
 operations  3,977 0 3,977 3,928 49
 Total Current Assets 16,881 8,849 8,032 13,769 3,112
 
 Investments and Advances 8,768 8,552 216 8,638 130
 Property, Plant and Equipment,
 net  21,971 23,807 (1,836) 22,104 (133)
 Deferred Charges and Other
 Assets 6,113 5,855 258 6,033 80
 Goodwill 249 342 (93) 249 0
  Intangible Assets, net 1,507 2,297 (790) 1,501 6
 Total Assets $55,489 $49,702 $5,787 $52,294 $3,195
 
 Liabilities and Shareholders'
 Equity
 Current Liabilities:
 Debt maturing within one year $3,048 $3,491 ($443) $3,262 ($214)
 Accounts payable 970 1,339 (369) 883 87
 Other current liabilities 3,150 3,628 (478) 3,301 (151)
 Liabilities of discontinued
 operations 2,674 0 2,674 2,469 205
 Total Current Liabilities 9,842 8,458 1,384 9,915 (73)
 
 Long-Term Debt 13,142 11,489 1,653 10,341 2,801
 
 Noncurrent Liabilities:
 Deferred income taxes 6,314 5,349 965 6,180 134
 Other noncurrent liabilities 4,327 4,694 (367) 4,342 (15)
 Total Noncurrent
 Liabilities 10,641 10,043 598 10,522  119
 
 Shareholders' Equity:
 Common stock, $1 par value 2,020 2,020 0 2,020 0
 Paid-in capital 7,790 7,729 61 7,748 42
 Retained earnings 18,421 16,540 1,881 18,126 295
 Accumulated other
 comprehensive income (470) (585) 115 (460) (10)
 Shares held in trust and
 treasury (5,897) (5,992) 95 (5,918) 21
 Total Shareholders' Equity 21,864 19,712 2,152 21,516 348
 Total Liabilities and
 Shareholders' Equity $55,489 $49,702 $5,787 $52,294 $3,195
 
 
 BellSouth Corporation
 Consolidated Statements of Cash Flows (unaudited)
 (amounts in millions, except per share data)
 Year-To-Date
 3Q04 3Q03 2Q04 2004 2003
 
 Cash Flows from Operating
 Activities:
 Income from Continuing Operations $852 $894 $939 $2,941 $2,652
 Adjustments to income from
 continuing operations:
 Depreciation and amortization 908 959 914 2,720 2,861
 Provision for uncollectibles 90  111 80 285 398
 Net losses (earnings) of equity
 affiliates (73) (79) (151) (328) (427)
 Deferred income taxes 137 294 434 740 800
 Net (gains) losses on sale or
 impairment of equity
 securities 6 (1) - 9 7
 Pension income (121) (134) (121) (363) (401)
 Pension settlement (gains)
 losses  - - - - 87
 Stock-based compensation
 expense 29 32 30 87 92
 Asset impairments - 52 - - 52
 (Gain) loss on sale/disposal of
 operations - - - (462) -
 Net change in:
 Accounts receivable and other
 current assets (147) (55) (110) (271) 8
 Accounts payable and other
 current liabilities (88) 164 43 (4) 288
 Deferred charges and other
 assets 19 122 (52) (58) 253
 Other liabilities and deferred
 credits  28 (97) 17 48 (133)
 Other reconciling items, net 51 6 46 144 18
 Net cash provided by operating
 activities 1,691 2,268 2,069 5,488 6,555
 
 Cash Flows from Investing
 Activities:
 Capital expenditures (768) (713) (731) (2,134) (1,978)
 Investments in debt and equity
 securities (87) (6) (276) (503) (27)
 Proceeds from sale of securities
 and operations 6 1 - 565 27
 Proceeds from repayment of loans
 and advances 20 - - 129 1,899
 Settlement of derivatives on
 advances  - - - (17) (352)
 Other investing activities, net (8) (10) 10 (3) (11)
 Net cash provided by (used for)
 investing activities (837) (728) (997) (1,963) (442)
 
 Cash Flows from Financing
 Activities:
 Net borrowing (repayments) of
 short-term debt 73 (25) 23 (266) (423)
 Proceeds from long-term debt 2,993 - 696 3,689 -
 Repayments of long-term debt (524) (280) (214) (745) (1,836)
 Dividends paid (493) (424) (457) (1,407) (1,183)
 Purchase of treasury shares - - (99) (99) (322)
 Other financing activities, net (3) 7 3 48 29
 Net cash used for financing
 activities 2,046 (722) (48) 1,220 (3,735)
 
 Net Increase/(Decrease) in Cash
 from Continuing Operations 2,900 818 1,024 4,745 2,378
 Net Increase/(Decrease) in Cash
 from Discontinued Operations 84 85 (176) (101) 165
 Net Increase (Decrease) in Cash
 and Cash Equivalents 2,984 903 848 4,644 2,543
 Cash and Cash Equivalents at
 Beginning of Period 6,216 4,122 5,368 4,556 2,482
 Cash and Cash Equivalents at End
 of Period $9,200 $5,025 $6,216 $9,200 $5,025
 
 
 BellSouth Corporation
 Results by Segment (amounts in millions) (unaudited)
 
 Communications Group (1)
 
 3Q04 3Q03 Growth 2Q04 Growth
 
 Operating Revenues
 Voice $3,121 $3,204 -2.6% $3,153 -1.0%
 Data  1,145 1,104 3.7% 1,116 2.6%
 Other 361 360 0.3% 334 8.1%
 Total Operating Revenues 4,627 4,668 -0.9% 4,603 0.5%
 Operating Expenses
 Cost of services and products  1,783 1,720 3.7% 1,730 3.1%
 Selling, general, &
 administrative expenses 729 755 -3.4% 778 -6.3%
 Depreciation and amortization 898 949 -5.4% 903 -0.6%
 Total Operating Expenses 3,410 3,424 -0.4% 3,411 0.0%
 Segment Operating Income 1,217 1,244 -2.2% 1,192 2.1%
 Interest Expense 94 98 -4.1% 89 5.6%
 Other Income (Expense), net 7 7 0.0% 7 0.0%
 Income Before Income Taxes 1,130 1,153 -2.0% 1,110 1.8%
 Provision for Income Taxes 416 426 -2.3% 408 2.0%
 Segment Net Income(1) $714 $727 -1.8% $702 1.7%
 
 
 Selected Financial and Operating Data
 
 (amounts in millions)
 Segment operating income $1,217 $1,244 -2.2% $1,192 2.1%
 Segment operating margin 26.3% 26.6% -30 bps 25.9% 40 bps
 
 Long distance revenues  $524 $381 37.5% $479 9.4%
 Access minutes of use 22,801 23,390 -2.5% 22,753 0.2%
 Capital expenditures $724 $692 4.6% $713 1.5%
 (amounts in thousands)
 Wholesale lines  3,070 2,507 22.5% 3,139 -2.2%
 DSL customers 1,872 1,336 40.1% 1,738 7.7%
 LD customers 5,663 3,440 64.6% 5,131 10.4%
 
 Consumer ARPU (4) $56.80 $53.35 6.5% $55.47 2.4%
 
 
 BellSouth Corporation
 Results by Segment (amounts in millions) (unaudited)
 
 Communications Group (1)
 
 Year-To-Date
  2004 2003 Growth
 
 Operating Revenues
 Voice $9,443 $9,538 -1.0%
 Data 3,353 3,259 2.9%
 Other  1,009 1,033 -2.3%
 Total Operating Revenues 13,805 13,830 -0.2%
 Operating Expenses
 Cost of services and products 5,258 5,057 4.0%
 Selling, general, & administrative
 expenses 2,279 2,287 -0.3%
 Depreciation and amortization 2,689 2,830 -5.0%
 Total Operating Expenses 10,226 10,174 0.5%
 Segment Operating Income 3,579 3,656 -2.1%
 Interest Expense 274 317 -13.6%
 Other Income (Expense), net 20 28 -28.6%
 Income Before Income Taxes  3,325 3,367 -1.2%
 Provision for Income Taxes 1,222 1,252 -2.4%
 Segment Net Income(1) $2,103 $2,115 -0.6%
 
 
 Selected Financial and Operating Data
 
 (amounts in millions)
 Segment operating income $3,579 $3,656 -2.1%
 Segment operating margin 25.9% 26.4% -50 bps
 
 Long distance revenues $1,443 $943 53.0%
  Access minutes of use 68,847 69,238 -0.6%
 Capital expenditures $2,049 $1,923 6.6%
 (amounts in thousands)
 Wholesale lines
 DSL customers
 LD customers
 
 Consumer ARPU (4)
 
 
 BellSouth Corporation
 Results by Segment (unaudited)
 Supplemental Operating Data (in thousands)
 
 Communications Group -- Network Access Lines In Service Reported (a)
 
 3Q04 3Q03 Growth 2Q04  Growth
 Access lines
 Residence
 Retail
 Primary 11,816 12,670 -6.7% 11,876 -0.5%
 Additional 1,388 1,671 -16.9% 1,447 -4.1%
 Total Retail Residence 13,204 14,341 -7.9% 13,323 -0.9%
 Wholesale
 Resale 114 198 -42.4% 127 -10.2%
 UNE-P 2,082 1,534 35.7% 2,149 -3.1%
 Total Wholesale
  Residence 2,196 1,732 26.8% 2,276 -3.5%
 Total Residence 15,400 16,073 -4.2% 15,599 -1.3%
 
 Business
 Retail
 Total Retail Business 5,264 5,484 -4.0% 5,282 -0.3%
 Wholesale
 Resale 61 75 -18.7% 63 -3.2%
 UNE-P 752 654 15.0% 740 1.6%
 Total Wholesale Business 813 729 11.5% 803 1.2%
 Total Business 6,077 6,213 -2.2% 6,085 -0.1%
 
 Other Retail/Wholesale Lines
 Retail 38 113 -66.4% 42 -9.5%
 Wholesale 61 46 32.6% 60 1.7%
 Total Other Retail/Wholesale
 Lines 99 159 -37.7% 102 -2.9%
 
 Total Access Lines in Service 21,576 22,445 -3.9% 21,786 -1.0%
 
 ISDN line equivalents
 Residence 10 14 -28.6% 11 -9.1%
 Business 1,462 1,445 1.2% 1,477 -1.0%
 Total ISDN Adjusted ALIS 23,048 23,904 -3.6% 23,274 -1.0%
 Access Line Equivalents (b)
  Selected digital data services:
 Unbundled Loops 326 353 -7.6% 343 -5.0%
 DS0 & ADSL 11,493 8,301 38.5% 10,695 7.5%
 DS1 7,594 7,089 7.1% 7,475 1.6%
 DS3 & higher 32,643 31,342 4.2% 32,547 0.3%
 Total digital data lines in
 service 52,056 47,085 10.6% 51,060 2.0%
 
 Total equivalent access lines in
 service  75,104 70,989 5.8% 74,334 1.0%
 
 (a) Prior period operating data are often revised at later dates to
 reflect updated information. The above information reflects the
 latest data available for the periods indicated.
 
 (b) Access line equivalents represent a conversion of non-switched data
 circuits to a switched access line basis and is presented for
 comparability purposes. Equivalents are calculated by converting
 high-speed/high-capacity circuits to the equivalent of a switched
 access line based on transport capacity. While the revenues
 generated by access line equivalents have a directional relationship
 with these counts, revenue growth rates cannot be compared to line
 growth rates on an equivalent basis.
 
 
 BellSouth Corporation
 Results by Segment (amounts in millions) (unaudited)
 
 Domestic Wireless Segment (1)(a)
 3Q04 3Q03 Growth 2Q04 Growth
 Operating Revenues
 Service revenues (2) $1,534 $1,471 4.3% $1,521 0.9%
 Equipment and other revenues 168 153 9.8% 141 19.1%
 Total Operating Revenues 1,702 1,624 4.8%  1,662 2.4%
 Operating Expenses
 Cost of services and products 651 643 1.2% 579 12.4%
 Selling, general, &
 administrative expenses 609 577 5.5% 585 4.1%
 Depreciation and amortization 229 209 9.6% 226 1.3%
 Total Operating Expenses 1,489 1,429 4.2% 1,390 7.1%
 Segment Operating Income 213 195 9.2% 272 -21.7%
 Interest Expense 80 79 1.3% 80 0.0%
 Other Income (Expense), net (46) (44) -4.5% (52) 11.5%
 Income Before Income Taxes 87 72 20.8% 140 -37.9%
 Provision for Income Taxes 33 28 17.9% 51 -35.3%
 Segment Net Income (1) $54 $44 22.7% $89 -39.3%
 
 
 Selected Financial and Operating Data
 
 (amounts in millions, except
 customer data in thousands)
 Segment operating income $213 $195 9.2% $272 -21.7%
 Segment operating margin 12.5% 12.0% 50 bps 16.4% -390 bps
 Cellular/PCS Operating Metrics
 (100% Cingular):
 Total Customers 25,672 23,385 9.8% 25,044 2.5%
 Net Customer Additions  657 745 -11.8% 428 53.5%
 Partitioned Customers and/or
 Adjustments (29) 0 N/M (2) -1350.0%
 Churn 2.8% 2.8% 0 bps 2.7% 10 bps
 Wireless Service ARPU (3) $49.78 $52.43 -5.1% $50.32 -1.1%
 Minutes Of Use Per Subscriber 537 456 17.8% 523 2.7%
 Licensed POPs (4) 243 236 3.0% 243 0.0%
 Penetration (4) 11.4% 10.6% 80 bps 11.1% 30 bps
 Cingular Interactive Operating
 Metrics:
 Total Customers 653 788 -17.1% 735 -11.2%
 Net Customer Additions (82) - N/M (33) -148.5%
 
 (a) The domestic wireless segment is comprised of BellSouth's 40% share
 of the reported results of Cingular Wireless.
 
 
 Year-To-Date
 2004 2003 Growth
 Operating Revenues
 Service revenues (2) $4,478 $4,275 4.7%
 Equipment and other revenues 463 353 31.2%
 Total Operating Revenues 4,941 4,628 6.8%
 Operating Expenses
 Cost of services and products 1,814 1,666 8.9%
 Selling, general, & administrative
 expenses 1,742 1,571 10.9%
 Depreciation and amortization 676 607 11.4%
 Total Operating Expenses 4,232 3,844 10.1%
 Segment Operating Income 709 784 -9.6%
 Interest Expense  239 261 -8.4%
 Other Income (Expense), net (145) (114) -27.2%
 Income Before Income Taxes 325 409 -20.5%
 Provision for Income Taxes 123 160 -23.1%
 Segment Net Income (1) $202 $249 -18.9%
 
 
 Selected Financial and Operating Data
 
 (amounts in millions, except customer
 data in thousands)
 Segment operating income $709 $784 -9.6%
 Segment operating margin 14.3% 16.9% -260 bps
 Cellular/PCS Operating Metrics (100%
 Cingular):
 Total Customers 25,672 23,385 9.8%
 Net Customer Additions 1,639 1,474 11.2%
 Partitioned Customers and/or
 Adjustments 6 (14) 142.9%
 Churn 2.7% 2.6% 10 bps
  Wireless Service ARPU (3) $49.36 $52.12 -5.3%
 Minutes Of Use Per Subscriber 516 436 18.3%
 Licensed POPs (4) 243 236 3.0%
 Penetration (4)  11.4% 10.6% 80 bps
 Cingular Interactive Operating
 Metrics:
 Total Customers 653 788 -17.1%
 Net Customer Additions (136) (29) N/M
 
 (a) The domestic wireless segment is comprised of BellSouth's 40% share
 of the reported results of Cingular Wireless.
 
 
 BellSouth Corporation
 Results by Segment (amounts in millions) (unaudited)
 
 Advertising & Publishing (1)
 3Q04 3Q03 Growth 2Q04 Growth
 Operating Revenues
 Advertising and publishing
 revenues 471 475 -0.8% 466 1.1%
 Commission revenues  27 30 -10.0% 45 -40.0%
 Total Operating Revenues 498 505 -1.4% 511 -2.5%
 Operating Expenses
 Cost of services 89 94 -5.3% 90 -1.1%
 Selling, general, &
 administrative expenses 173 168 3.0% 167 3.6%
 Depreciation and amortization 7 5 40.0% 7 0.0%
 Total Operating Expenses 269 267 0.7% 264 1.9%
 Segment Operating Income  229 238 -3.8% 247 -7.3%
 Interest Expense 2 1 100.0% 2 0.0%
 Other Income (Expense), net - - N/M* 1 -100.0%
 Income Before Income Taxes 227  237 -4.2% 246 -7.7%
 Provision for Income Taxes 86 90 -4.4% 96 -10.4%
 Segment Net Income(1) $141 $147 -4.1% $150 -6.0%
 
 Segment operating income $229 $238 -3.8% $247 -7.3%
 Segment operating margin 46.0% 47.1% -110 bps 48.3% -230 bps
 
 * - Not meaningful.
 
 
 Year-To-Date
 2004 2003 Growth
 Operating Revenues
 Advertising and publishing revenues 1,403 1,436 -2.3%
 Commission revenues 88 92 -4.3%
 Total Operating Revenues 1,491 1,528 -2.4%
 Operating Expenses
 Cost of services 259 254 2.0%
 Selling, general, & administrative
 expenses 496 522 -5.0%
 Depreciation and amortization 21 19 10.5%
 Total Operating Expenses 776 795 -2.4%
 Segment Operating Income 715 733 -2.5%
 Interest Expense  6 5 20.0%
 Other Income (Expense), net 1 1 0.0%
 Income Before Income Taxes 710 729 -2.6%
 Provision for Income Taxes 272 276 -1.4%
 Segment Net Income(1) $438 $453 -3.3%
 
 Segment operating income $715 $733 -2.5%
 Segment operating margin 48.0% 48.0% 0 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) Wireless service revenues includes activation fees, access, airtime,
 roaming, long distance and value added services. Roaming revenues
 are included on a gross basis for the Domestic Wireless segment.
 Average monthly revenue per customer is calculated by dividing
 average monthly service revenue by average customers.
 
 (3) Management uses average revenue per unit (ARPU) as an indicator of
 operating performance of the business.
 Consumer ARPU -- is defined as consumer revenues during the period
 divided by average primary access lines during the period.
 Wireless Service ARPU -- Cellular/PCS is defined as Cellular/PCS
 service revenues during the period divided by average Cellular/PCS
 subscribers during the period. This metric is used to compare the
 recurring revenue amounts being generated on our network to prior
  periods and internal targets. We believe that each of these metrics
 provides useful information concerning the performance of our
 initiatives to attract and retain high value customers and the use of
 our network.
 
 (4) 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. Penetration
 calculation is based upon licensed operational POPs of 226 million.
 The New York City metropolitan area is included in the penetration
 calculation, beginning in the third quarter of 2002.
 
 
 BellSouth Corporation
 Non-GAAP Measures -- Reconciliation
 (amounts in millions) (unaudited)
 
 Segment Net Income Reconciliation to GAAP Net Income
  Year-to-Date
 3Q04 3Q03 2Q04 2004 2003
 Communications group segment net
 income $714 $727 $702 $2,103 $2,115
 Domestic wireless group segment net
 income 54 44 89 202 249
 Advertising and publishing group
 segment net income 141 147 150 438 453
 Corporate, eliminations and other (16) 8 (3) (24) (47)
 Normalized net income 893 926 938 2,719 2,770
 Add back Excluded non-recurring or
 non-operational items (a) (94) 10 58 675 347
 Consolidated GAAP net income  $799 $936 $996 $3,394 $3,117
 
 
 Free Cash Flow Year-to-Date
 3Q04 3Q03 2Q04 2004 2003
 Net cash provided by operating
 activities  $1,691 $2,268 $2,069 $5,488 $6,555
 Less Capital Expenditures (768) (713) (731) (2,134) (1,978)
 Operating Free Cash Flow $923 $1,555 $1,338 $3,354 $4,577
 
 
 Net Debt
  September 30, December 31, June 30,
 2004 2003 2004
 Total Debt $16,190 $14,980 $13,603
 Less Cash  (9,200) (4,556) (6,216)
 Net Debt $6,990 $10,424 $7,387
 
 
 Communications Group Operating Income before
 Depreciation and Amortization Year-to-Date
  3Q04 3Q03 2Q04 2004 2003
 Operating Revenues $4,627 $4,668 $4,603 $13,805 $13,830
 Operating Income 1,217 1,244 1,192 3,579 3,656
 Add back Depreciation and
  amortization 898 949 903 2,689 2,830
 Operating Income before
 Depreciation and Amortization $2,115 $2,193 $2,095 $6,268 $6,486

Margin 45.7% 47.0% 45.5% 45.4% 46.9%