We hold equity interests in two wireless communications operations in Brazil. During January 1999, the government of Brazil allowed its currency to trade freely against other currencies. As a result, the Brazilian Real experienced devaluation against the U.S. Dollar. The devaluation resulted in the entities recording exchange losses related to their net U.S. Dollar-denominated liabilities. Our share of the foreign exchange rate losses for the first quarter was $280. These exchange losses are subject to further upward or downward adjustment based on the fluctuations in the exchange rates between the U.S. Dollar and the Brazilian Real. In a press release announcing the first quarter 1999 results, BellSouth Corporation provided the following information (as found on the company€™s Web site): BellSouth Corporation (NYSE:BLS) reported a 15-percent increase in first quarter earnings per share (EPS) before special items. EPS was 46 cents before a non-cash expense of 14 cents related to Brazil€™s currency devaluation.
BellSouth Corporation
Normalized Earnings Summary ($ in millions, except per share amounts) (unaudited)

Required:
Given the disclosure provided by BellSouth Corporation, answer the following questions:
1. Why did the company report a foreign currency loss as a result of the devaluation of the Brazilian Real?
2. What does the company mean when it states: €œThese exchange losses are subject to further upward or downward adjustments based on fluctuation in the exchange rates between the U.S. Dollar and the Brazilian Real?€
3. What is the company€™s objective in reporting €œNormalized Net Income€? Do you agree with the company€™s assessment that it has a 15 percent increase in first-quarter earnings pershare?

3/31/98 3/31/99 $615 280 %Change Reported Net Income Foreign currency loss m Gain on sale of ITT World Directories Normalized Net Income $892 (31.1%) (96) $796 $895 $0.32 0.14 12.4% Reponed Diluted Earnings per Share Foreign currency loss@ Gain on sale of ITT World Directories S0.45 (28.9%) (0.05) Normalized Diluted Earnings per Share, 0.46 $0.40 15.0%