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: These 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 Normalized Net Income? Do you agree with the company's assessment that it has a 15 percent increase in first-quarter earnings pershare?