BCE Announces Second Quarter Results - Revenues Up 4%; EBITDA Up 7%; $8.2 Billion Goodwill Write-Down


	BCE Announces Second Quarter Results - Revenues Up 4%; EBITDA Up 7%; $8.2 Billion Goodwill Write-Down MONTREAL,July 24 2002 --For the second quarter of 2002, BCE Inc. (TSX, NYSE: BCE) reported total revenue of $4.9 billion, EBITDA(1) of $1.9 billion, and net earnings applicable to common shares of $11 million ($0.01 per common share). Net earnings before non-recurring items(2) were $400 million ($0.49 per common share). "In the face of challenging times within our industry, BCE's results in the second quarter are on plan," said Michael Sabia, President and Chief Executive Officer of BCE Inc. "BCE achieved its solid performance as a result of productivity initiatives and rigorous expense management. During the quarter, BCE completed an extensive balance sheet review of all its operations. The resulting charges which we have announced today will allow us to move forward with a clear balance sheet. And, as we do, all our efforts will focus on leveraging the capabilities of BCE to grow and expand our 24 million customer connections." OPERATIONAL HIGHLIGHTS (Q2 2002 vs. Q2 2001 unless otherwise indicated) - High-speed Internet (DSL) net additions in the quarter were 43,000; total subscribers grew by 72% to reach 909,000; - Postpaid cellular and PCS subscribers net additions in the quarter were 117,000; total cellular and PCS subscribers grew by 20% to reach 3,645,000; - Bell ExpressVu net activations in the quarter were 31,000; total subscribers grew 39% to reach 1,176,000; - Bell Globemedia's EBITDA improved 41% to $58 million; - BCE Emergis' revenues increased by 8% over the first quarter of 2002 to $142 million; and, - Productivity savings of $225 million achieved in the quarter. "At Bell Canada, we are pleased with the traction we have achieved on productivity initiatives while maintaining growth in key areas", Mr. Sabia said. "Revenues from our wireless operations increased by 21% while Bell ExpressVu revenues increased by 35%." "At Bell Globemedia cost-control measures and an increase in revenues due partially to higher demand for advertising have enhanced EBITDA performance," Mr. Sabia concluded. "BCE Emergis' revised business plan and restructuring efforts contributed to returning the company to positive EBITDA." Total revenue at BCE increased 4% over the second quarter of 2001 mainly as a result of growth from BCE's wireless, DTH (Direct-to-Home) satellite entertainment and data services and increased revenues at Bell Globemedia. EBITDA improved by 7% compared to the same period last year, mainly due to prudent cost management across all areas and higher overall revenue. BCE completed an extensive review of the carrying value of its assets on its balance sheet and as a result recorded the following after-tax charges in the second quarter of 2002: - A transitional goodwill impairment charge of $8.2 billion applied to opening retained earnings in accordance with the changes from the Canadian Institute of Chartered Accountants on goodwill accounting. The charge pertains to Teleglobe ($7.5 billion), Bell Globemedia ($545 million), and BCE Emergis ($119 million) (see "Goodwill Note" at the end of this press release); - A loss from discontinued operations of $295 million, relating to BCE's investments in BCI and Teleglobe; - Restructuring and other charges totaling $153 million at Bell Canada, mainly relating to accounts receivables write-offs from legacy systems dating back to the early 1990's as part of the modernization of Bell's billing systems, including the introduction of a new billing platform; and, - A $63 million restructuring and other charge at BCE Emergis. BCE also recorded net gains on investments of $122 million, mainly the gain on the sale by Bell Canada of an approximate 36% interest in Télébec and Northern Telephone. (Refer to the notes to BCE's unaudited second quarter 2002 financial statements for further information on the above charges.) OTHER DEVELOPMENTS Effective in the second quarter, BCE has classified Teleglobe as a discontinued operation. BCI had been classified as a discontinued operation effective in the first quarter of 2002. In addition, BCE deconsolidated Teleglobe and BCI effective in the second quarter. OUTLOOK The Company outlined its financial guidance for the third quarter of 2002 and confirmed its financial guidance for the full year 2002, excluding discontinued operations, as follows: << ------------------------------------------------------------------------- GUIDANCE Q3 2002 Full Year 2002 Outlook ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenue (billions) $4.8 - $5.1 $19.5 - $20.5 EBITDA (billions) $1.8 - $2.0 $7.5 - $8.0 Net earnings per share (before non-recurring items) $0.45 - $0.48 $1.80 - $1.90 ------------------------------------------------------------------------- RESULTS BY BUSINESS GROUP (unaudited) BCE's operations as at June 30, 2002, included the Bell Canada segment, Bell Globemedia, and BCE Emergis. BCE Ventures consists of BCE's other investments. ------------------------------------------------------------------------- (CDN$ millions, except per share amounts) ------------------------------------------ Second Quarter Six Months For the period ended June 30 2002 2001 2002 2001 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Revenue Bell Canada 4,368 4,248 8,643 8,355 Bell Globemedia 326 297 638 603 BCE Emergis 142 159 274 302 BCE Ventures 261 261 524 495 Corporate and Other, including Inter-segment eliminations (157) (198) (305) (346) ------------------------------------------ Total revenue 4,940 4,767 9,774 9,409 ------------------------------------------ ------------------------------------------------------------------------- ------------------------------------------------------------------------- EBITDA Bell Canada 1,850 1,719 3,610 3,354 Bell Globemedia 58 41 91 71 BCE Emergis 11 31 (9) 57 BCE Ventures 73 72 150 129 Corporate and Other, including Inter-segment eliminations (47) (39) (85) (73) ------------------------------------------ Total EBITDA 1,945 1,824 3,757 3,538 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings (loss) Bell Canada 359 330 680 492 Bell Globemedia 11 (40) 12 (73) BCE Emergis (62) (75) (77) (166) BCE Ventures 59 24 83 92 Corporate and Other, including Inter-segment eliminations (47) 36 (19) 2,979 ------------------------------------------------------------------------- Earnings from continuing operations 320 275 679 3,324 ------------------------------------------------------------------------- Discontinued operations (295) (253) (340) (2,397) Dividends on preferred shares (14) (16) (27) (34) ------------------------------------------------------------------------- Net earnings applicable to common shares 11 6 312 893 ------------------------------------------------------------------------- Net earnings per common share 0.01 0.01 0.39 1.11 ------------------------------------------------------------------------- Impact of non-recurring items on net earnings per common share Amortization of goodwill - 0.31 - 0.62 Other items 0.48 0.14 0.53 (0.86) ------------------------------------------------------------------------- Net earnings before non-recurring items 0.49 0.46 0.92 0.87 ------------------------------------------------------------------------- >> SECOND QUARTER REVIEW (Q2 2002 vs. Q2 2001, unless otherwise indicated) BELL CANADA The Bell Canada segment includes Bell Canada, Aliant, Bell ExpressVu and Bell Canada's interests in other Canadian telcos. - Total revenue in the second quarter was up 3% to $4.4 billion, driven mainly by growth in wireless, DTH and data revenues. - Local and access revenues decreased by 4% to $1.5 billion, mainly due to lower network access and carrier access tariff revenues, partially offset by higher consumer terminal sales. - Long distance revenue remained flat at $645 million. The effect of a 5% increase in Bell's long distance conversation minutes, to 4.7 billion minutes, was offset by lower pricing due to competitive pricing pressures. - Wireless revenue was up 21% to $542 million due mainly to strong growth in cellular and PCS subscribers. - Data revenue increased 8% to $947 million, mainly due to higher IP/Broadband and Sympatico ISP revenues. - Total Internet (DSL and dial-up) subscribers reached 1.9 million as at June 30. - Bell ExpressVu had net subscriber activations in the quarter of 31,000, bringing the total customer base to almost 1.2 million. Year-over-year, the number of ExpressVu subscribers grew by 39 %. - Bell Canada's EBITDA grew by $131 million or 8% in the second quarter to reach $1.9 billion due mainly to continued productivity improvements and the growth in revenues. BELL GLOBEMEDIA Bell Globemedia includes CTV, The Globe and Mail and Bell Globemedia Interactive. - Total revenue was $326 million in the quarter compared with revenue of $297 million for the same period last year. This increase includes the impact of the acquisitions of CFCF-TV, CKY-TV and ROB TV, which were purchased in the latter part of 2001, as well as organic growth. - Advertising revenue was $230 million in the quarter, an increase of 8% compared to the second quarter of 2001. - Subscriber revenues increased by 11% to reach $70 million, reflecting the recognition of revenue from the new digital specialty channels starting in January 2002, a higher penetration of the DTH market, and increased print circulation revenues due mainly to rate increases. - EBITDA was $58 million in the second quarter compared with $41 million for the same period last year, reflecting the increase in revenues and implemented productivity initiatives. BCE EMERGIS - BCE Emergis' revenue was $142 million in the quarter, compared with $159 million in revenues for the same period in 2001, due mainly to a decline in non-recurring revenues. - BCE Emergis' revenue increased by 8% when compared to the first quarter of 2002, primarily due to higher revenues in the eHealth Solutions Group. - EBITDA decreased by $20 million to $11 million, mainly reflecting the shortfall in revenues. - Second quarter of 2002 EBITDA compared favorably to the first quarter of 2002 EBITDA shortfall of $20 million. The improvement in sequential quarter over quarter EBITDA was mainly related to lower employment costs and productivity improvements. - In the quarter, 40% of BCE Emergis' total revenue was from its U.S. operations. - During the second quarter, BCE Emergis implemented a cost reduction plan and recorded pre-tax restructuring and other charges of $119 million (BCE's share, on an after tax basis, is $63 million). BCE VENTURES BCE Ventures includes the activities of CGI, Telesat and other investments. - BCE Ventures' revenue was $261 million in the quarter, flat compared with the same period of 2001. Revenues at both CGI and Telesat were higher, offset by lower revenues from other Ventures' businesses. - EBITDA was $73 million in the quarter compared with $72 million in the second quarter of 2001. Higher EBITDA at CGI and Telesat was partially offset by lower EBITDA from other Ventures' businesses. - In July 2002, BCI's Plan of Arrangement was approved by its noteholders, its shareholders, and the courts. BELL CANADA STATUTORY RESULTS Bell Canada "statutory" includes Bell Canada, Bell Canada's interests in other Canadian telcos, and Bell Canada's 39% interest in Aliant (equity- accounted). Bell Canada's reported revenue was $3.6 billion in the second quarter compared with $3.5 billion in the same quarter of 2001. The net loss applicable to common shares was $1 billion in the quarter compared with net earnings applicable to common shares of $466 million for the same period last year. One-time charges in the quarter included the write-down of the Bell Canada's 23% interest in Teleglobe as well as the impact of the charge relating to the accounts receivable write-down. GOODWILL NOTE The CICA recently issued new Handbook Sections 1581, Business Combinations, and 3062, Goodwill and Other Intangible Assets. Effective July 1, 2001, the standards require that all business combinations be accounted for using the purchase method. Additionally, effective January 1, 2002, goodwill and intangible assets with an indefinite life are no longer being amortized to earnings and will be assessed for impairment on an annual basis in accordance with the new standards, including a transitional impairment test whereby any resulting impairment was charged to opening retained earnings. As of June 30, 2002, BCE's management had allocated its existing goodwill and intangible assets with an indefinite life to its reporting units and completed the assessment of the quantitative impact of the transitional impairment test on its financial statements. In the second quarter of 2002, an impairment of $8,180 million was charged to opening retained earnings as of January 1, 2002, as required by the transitional provisions of the new CICA Handbook section 3062, regarding the accounting for goodwill and other intangible assets, relating to impaired goodwill of reporting units within Teleglobe ($7,516 million), Bell Globemedia ($545 million) and BCE Emergis ($119 million). ABOUT BCE BCE is Canada's largest communications company. It has 24 million customer connections through the wireline, wireless, data/Internet and satellite services it provides, largely under the Bell brand. BCE leverages those connections with extensive content creation capabilities through Bell Globemedia which features some of the strongest brands in the industry 3/4 CTV, Canada's leading private broadcaster, The Globe and Mail, Canada's National Newspaper and Sympatico-Lycos, the leading Canadian Internet portal. As well, BCE has extensive e-commerce capabilities provided under the BCE Emergis brand. BCE shares are listed in Canada, the United States and Europe. SUPPLEMENTARY BCE FINANCIAL INFORMATION: ---------------------------------------- BCE's Second Quarter 2002 unaudited Financial Statements, Investor Briefing and other relevant financial materials are available in the "Investors" section of BCE's Web site at www.bce.ca . CALL WITH FINANCIAL ANALYSTS: ----------------------------- BCE will hold a teleconference / Webcast (audio only) to discuss its second quarter results on WEDNESDAY, JULY 24, 2002 AT 8:30 AM (EASTERN). "The media is welcome to participate on a listen only basis." Michael Sabia, President and Chief Executive Officer, and Siim Vanaselja, Chief Financial Officer, will be present for the teleconference/Webcast. Interested participants are asked to dial (416) 405-9328 between 8:20 AM and 8:28 AM. If you are disconnected from the call, simply redial the number. If you need assistance during the teleconference, you can reach the operator by pressing "0". This teleconference will also be Webcast live (audio only) on our Web site at www.bce.ca . A replay facility will be available between 12:00 PM on Wednesday, July 24, 2002 and 12:00 PM on Wednesday, July 31, 2002. To access the replay facility, please dial (416) 695-5800 and enter access code 1170650. The Webcast will also be archived on our Web site. CALL WITH THE MEDIA: -------------------- BCE will hold a teleconference for media on BCE's second quarter results on WEDNESDAY, JULY 24, 2002 AT 10:15 AM (EASTERN). Michael Sabia, President and Chief Executive Officer, will be present for the teleconference. Interested participants are asked to dial (866) 546-6145 or (416) 406-4206 between 10:05 AM and 10:13 AM. If you are disconnected from the call, simply redial the number. If you need assistance during the teleconference, you can reach the operator by pressing "0". This teleconference will also be Webcast live (audio only) on our Web site at www.bce.ca . CAUTION CONCERNING FORWARD-LOOKING STATEMENTS Certain statements made in this press release, including, but not limited to, the statements appearing under the "Outlook" section, and other statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. These statements do not reflect the potential impact of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be announced or completed after the date hereof. Other factors which could cause results or events to differ materially from current expectations include, among other things: the timing and extent of economic expansion in Canada and of improvement in consumers confidence and spending; the possibility of further deterioration in the state of capital markets and the telecommunications industry; BCE's ability to manage costs and generate productivity improvements; BCE's ability to implement its permanent financing plan (including its ability to dispose of or monetize assets) in order to finance the purchase of SBC Communications Inc.'s minority interest in Bell Canada; the financial condition and credit risk of customers and uncertainties regarding collectibility of receivables; the rate of decline of prices for data and voice services; uncertainty as to whether BCE's strategies will yield the expected benefits, synergies and growth prospects; the intensity of competitive activity, and its resulting impact on the ability to retain existing, and attract new, customers, and the consequent impact on pricing strategies, revenues and network capacity; the level of capital expenditures necessary to expand operations, increase the number of customers, provide new services, build and update networks and maintain or improve quality of service; the availability and cost of capital required to fund capital and other expenditures; the Internet economy growing at a slower pace than is currently anticipated; the ability to deploy new technologies and offer new products and services rapidly and achieve market acceptance thereof; BCE's ability to carry out cross selling of the various services offered by the BCE group of companies; stock market volatility; the risk of credit rating downgrades; the availability of, and ability to retain, key personnel; the impact of adverse changes in laws or regulations or of adverse regulatory initiatives or proceedings; and the final outcome of pending or future litigation. For additional information with respect to certain of these and other factors, see the reports on Forms 6-K and 40-F filed by BCE with the U.S. Securities and Exchange Commission and BCE's filings with the Canadian securities commissions. The forward-looking statements contained in this press release represent BCE's expectations as of July 24, 2002 and, accordingly, are subject to change after such date. However, BCE disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. ------------------------------------------- (1) EBITDA is defined as operating revenues less operating expenses and therefore reflects earnings before interest, taxes, depreciation and amortization, as well as any non-recurring items. BCE uses EBITDA, amongst other measures, to assess the operating performance of its on- going businesses. The term EBITDA does not have a standardized meaning prescribed by Canadian generally accepted accounting principles and therefore may not be comparable to similarly titled measures presented by other publicly traded companies. EBITDA should not be construed as the equivalent of net cashflows from operating activities. (2) Refer to the discussion on after-tax charges and Results of Business Group for a description of non-recurring items. -30- For further information: Nick Kaminaris, Communications, (514) 786-3908; Isabelle Morin, Investor Relations, (514) 786-3845

	Go to Press Releases Index