ALLTEL Reports Solid Fourth-Quarter, 2003 Results; Wireless Net Adds Are Best in Two Years; Post-Pay Churn at Four-Year Low.Business Editors LITTLE ROCK, Ark.--(BUSINESS WIRE)--Jan. 23, 2004 ALLTEL ALLTEL Corporation (NYSE: AT) is an American telecommunications company with headquarters in Little Rock, Arkansas. Alltel provides wireless services to residential and business customers in 35 states. (NYSE NYSE See: New York Stock Exchange : AT) today announced that the company achieved solid results in the fourth quarter and for 2003. Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the quarter was 83 cents. Excluding a gain from the sale of certain billing assets, fully diluted earnings per share from current businesses was 77 cents, a 4 percent increase from a year ago. Fully diluted earnings per share for the year was $4.25. Excluding a gain from the sale of ALLTEL Information Services See Information Systems. and other items, fully diluted earnings per share from current businesses for the year was $3.05, a 4 percent increase year-over-year. Among the highlights for the fourth quarter: -- Total revenues were $2 billion, a 5 percent increase from a year ago. Net income was $259 million, a 1 percent increase. Net income from current businesses was $240 million, a 3 percent increase. -- Wireless revenues were $1.2 billion, a 6 percent increase from a year ago. The company added 95,000 net wireless customers, the best quarter in two years. Post-pay churn churn: see butter. was 1.96 percent, the company's best post-pay churn rate (1) The percentage of customers who cancel their online, cellphone or other subscription service during a certain time period. (2) The percentage of employees who leave the company during a certain time period. See churning. in more than four years. -- Wireline revenues were $616 million, a 1 percent increase from a year ago. ALLTEL added 23,000 DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary customers, with total penetration The successful unauthorized breach of a security perimeter. See penetration test. reaching 8 percent of addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be lines. -- Equity free cash flow from current businesses was $218 million. Net cash from operations was $624 million. Among the highlights for the year: -- Total revenues were $8 billion, a 12 percent increase from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2002. Net income was $1.3 billion, a 44 percent increase. Net income from current businesses was $954 million, a 4 percent increase. -- Wireless revenues were $4.7 billion, a 14 percent increase from the previous year. Post-pay churn for the year was 2.09 percent, a 6 percent improvement compared with year-end 2002. -- Wireline revenues were $2.4 billion, a 12 percent increase from year-end 2002. The company more than doubled its DSL customer base in 2003, ending the year with more than 153,000 high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. customers. -- Equity free cash flow from current businesses was more than $1 billion, a 26 percent increase from a year ago. Net cash from operations was $2.5 billion, a 3 percent increase from a year ago. "ALLTEL continued to deliver solid financial results for the quarter and the year while further improving the company's already strong balance sheet," said Scott Ford Founding bassist for LA supergroup Camp Freddy. Current bassist for The Twilight Singers. Scott Ford hosts a 3 hour show on Internet Radio Station Little Radio on Thursdays. , ALLTEL president and chief executive officer. "On the operations side, the company improved service levels for our customers at the point of sale, within our call centers and on our networks. These improvements led to year-over-year declines in post-pay wireless churn, an increase in average revenue per customer and DSL customer increases of more than 118 percent, which more than offset ALLTEL's access line declines." Also, the company today announced that its board of directors adopted a $750 million stock repurchase plan stock repurchase plan 1. See buyback. 2. See self-tender. , which equates to about 5 percent of outstanding shares at ALLTEL's current stock price. Under the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. plan, ALLTEL may repurchase shares, from time to time, on the open market or in negotiated transactions, as circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or warrant, depending upon market conditions and other factors. The plan authorizes repurchases over the period ending Dec. 31, 2005. During the next month, ALLTEL will change its organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. to support continued improvements in service delivery and customer satisfaction. This change will eliminate a total of 400 to 600 positions on the regional and corporate levels and result in a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge of about $15 million in the first quarter and savings of about $20 million in 2004. The new structure will be in place in late February February: see month. . ALLTEL is a customer-focused communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. with more than 12 million customers and $8 billion in annual revenues. ALLTEL provides wireless, local telephone, long-distance long-dis·tance adj. 1. Covering a long distance: a long-distance runner; operating under long-distance supervision. 2. , Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and high-speed data services to residential and business customers in 26 states. ALLTEL claims the protection of the safe-harbor for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results. Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) adverse changes in economic conditions in the markets served by ALLTEL; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; material changes in communications technology Noun 1. communications technology - the activity of designing and constructing and maintaining communication systems engineering, technology - the practical application of science to commerce or industry ; the risks associated with the integration of acquired businesses; adverse changes in the terms and conditions of the company's wireless roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. agreements; the potential for adverse changes in the ratings given to ALLTEL's debt securities by nationally accredited accredited recognition by an appropriate authority that the performance of a particular institution has satisfied a prestated set of criteria. accredited herds cattle herds which have achieved a low level of reactors to, e.g. ratings organizations; the availability and cost of financing in the corporate debt markets; the uncertainties related to ALLTEL's strategic investments; the effects of work stoppages; the effects of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; ongoing deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. (and the resulting likelihood of significantly increased price and product/service competition) in the communications business as a result of federal and state legislation, rules, and regulations; the final outcome of federal, state, and local regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. initiatives and proceedings related to the terms and conditions of interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. , access charges, universal service, and unbundled network elements Unbundled Network Elements (UNE) are a requirement mandated by the United States Telecommunications Act of 1996. They are the parts of the telecommunications network that the incumbent local exchange carriers (ILECs) are required to offer on an unbundled basis. and resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. rates; and the effects of the Federal Communications Commission's number portability See NP. rules. In addition to these factors, actual future performance, outcomes and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. , economic conditions, and governmental and public policy changes. ALLTEL, NYSE: AT www.alltel.com
ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS
BUSINESS SEGMENTS AND OTHER CONSOLIDATED FINANCIAL INFORMATION
UNDER GAAP
(In thousands, except per share amounts)
THREE MONTHS ENDED
----------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
----------- ----------- ---------- ---
REVENUES AND SALES:
Wireless $1,191,932 $1,119,382 $ 72,550 6
Wireline 615,784 607,815 7,969 1
Communications support
services 247,139 234,918 12,221 5
Total business segments 2,054,855 1,962,115 92,740 5
Less: intercompany
eliminations 41,179 39,340 1,839 5
Total revenues and sales $2,013,676 $1,922,775 $ 90,901 5
SEGMENT INCOME:
Wireless $ 231,607 $ 246,495 $(14,888) (6)
Wireline 236,830 223,736 13,094 6
Communications support
services 17,623 21,832 (4,209) (19)
Total segment income 486,060 492,063 (6,003) (1)
Less: corporate expenses 12,008 9,727 2,281 23
integration expenses
and other charges - (2,526) 2,526 100
Total operating income $ 474,052 $ 484,862 $(10,810) (2)
OPERATING MARGIN (A):
Wireless 19.4% 22.0% (2.6%) (12)
Wireline 38.5% 36.8% 1.7% 5
Communications support
services 7.1% 9.3% (2.2%) (24)
Consolidated 23.5% 25.2% (1.7%) (7)
NET INCOME $ 258,935 $ 256,573 $ 2,362 1
EARNINGS PER SHARE:
Basic $.83 $.82 $.01 1
Diluted $.83 $.82 $.01 1
Weighted average common shares:
Basic 312,413 311,133 1,280 -
Fully diluted 313,265 312,244 1,021 -
Annual dividend rate per common
share $1.48 $1.40 $.08 6
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME UNDER GAAP-Page 2
(In thousands, except per share amounts)
THREE MONTHS ENDED
-----------------------
December 31, December 31,
2003 2002
---------- ----------
Revenues and sales:
Service revenues $1,806,026 $1,734,481
Product sales 207,650 188,294
Total revenues and sales 2,013,676 1,922,775
Costs and expenses:
Cost of services 567,946 538,620
Cost of products sold 262,058 233,905
Selling, general, administrative and
other 388,290 363,616
Depreciation and amortization 321,330 304,298
Integration expenses and other charges - (2,526)
Total costs and expenses 1,539,624 1,437,913
Operating income 474,052 484,862
Equity earnings in unconsolidated
partnerships 16,401 23,260
Minority interest in consolidated
partnerships (17,093) (18,610)
Other income (expense), net 3,596 (3,581)
Interest expense (90,881) (109,220)
Gain on disposal of assets, write-
down of investments and other 30,999 19,516
Income from continuing operations before
income taxes 417,074 396,227
Income taxes 158,139 150,832
Income from continuing operations 258,935 245,395
Discontinued operations:
Income from discontinued operations
(net of income taxes) - 11,178
Gain on sale of discontinued operations
(net of income taxes) - -
Income before cumulative effect of
accounting change 258,935 256,573
Cumulative effect of accounting change
(net of income taxes) - -
Net income 258,935 256,573
Preferred dividends 27 29
Net income applicable to common shares $ 258,908 $ 256,544
Basic earnings per share:
Income from continuing operations $.83 $.79
Income from discontinued operations - .03
Cumulative effect of accounting change - -
Net income $.83 $.82
Diluted earnings per share:
Income from continuing operations $.83 $.79
Income from discontinued operations - .03
Cumulative effect of accounting change - -
Net income $.83 $.82
ALLTEL CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS FROM CURRENT BUSINESSES
(NON-GAAP)-Page 3
(In thousands, except per share amounts)
(NON-GAAP)
THREE MONTHS ENDED
---------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
---------- ---------- -------- ---
REVENUES AND SALES:
Wireless $1,191,932 $1,119,382 $ 72,550 6
Wireline 615,784 607,815 7,969 1
Communications support
services 247,139 234,918 12,221 5
Total business segments 2,054,855 1,962,115 92,740 5
Less: intercompany
eliminations 41,179 39,340 1,839 5
Total revenues and sales $2,013,676 $1,922,775 $ 90,901 5
SEGMENT INCOME:
Wireless $ 231,607 $ 246,495 $(14,888) (6)
Wireline 236,830 223,736 13,094 6
Communications support
services 17,623 21,832 (4,209) (19)
Total segment income 486,060 492,063 (6,003) (1)
Less: corporate expenses 12,008 9,727 2,281 23
Total operating income $ 474,052 $ 482,336 $ (8,284) (2)
OPERATING MARGIN (A):
Wireless 19.4% 22.0% (2.6%) (12)
Wireline 38.5% 36.8% 1.7% 5
Communications support
services 7.1% 9.3% (2.2%) (24)
Consolidated 23.5% 25.1% (1.6%) (6)
NET INCOME $ 239,994 $ 231,902 $ 8,092 3
EARNINGS PER SHARE:
Basic $.77 $.75 $.02 3
Diluted $.77 $.74 $.03 4
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
Current businesses excludes the effects of discontinued operations,
early termination of debt, integration expenses and other charges,
gain on disposal of assets, write-down of investments and receivables,
and net financing costs related to prefunding the Company's 2002
wireless and wireline acquisitions.
ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS
BUSINESS SEGMENTS AND OTHER CONSOLIDATED FINANCIAL INFORMATION
UNDER GAAP
(In thousands, except per share amounts)
TWELVE MONTHS ENDED
---------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
---------- ---------- -------- ---
REVENUES AND SALES:
Wireless $4,728,399 $4,160,204 $568,195 14
Wireline 2,436,079 2,179,761 256,318 12
Communications support
services 959,061 925,674 33,387 4
Total business segments 8,123,539 7,265,639 857,900 12
Less: intercompany
eliminations 143,629 153,253 (9,624) (6)
Total revenues and sales $7,979,910 $7,112,386 $867,524 12
SEGMENT INCOME:
Wireless $ 998,000 $ 947,851 $ 50,149 5
Wireline 883,873 793,039 90,834 11
Communications support
services 76,417 84,126 (7,709) (9)
Total segment income 1,958,290 1,825,016 133,274 7
Less: corporate expenses 41,316 35,453 5,863 17
integration expenses
and other charges 18,979 69,883 (50,904) (73)
Total operating income $1,897,995 $1,719,680 $178,315 10
OPERATING MARGIN (A):
Wireless 21.1% 22.8% (1.7%) (7)
Wireline 36.3% 36.4% (.1%) -
Communications support
services 8.0% 9.1% (1.1%) (12)
Consolidated 23.8% 24.2% (.4%) (2)
NET INCOME $1,330,119 $ 924,310 $405,809 44
EARNINGS PER SHARE:
Basic $4.27 $2.97 $1.30 44
Diluted $4.25 $2.96 $1.29 44
Weighted average common shares:
Basic 311,784 310,982 802 -
Fully diluted 312,767 312,328 439 -
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME UNDER GAAP-Page 2
(In thousands, except per share amounts)
TWELVE MONTHS ENDED
-------------------------
December 31, December 31,
2003 2002
---------- ----------
Revenues and sales:
Service revenues $7,156,067 $6,428,942
Product sales 823,843 683,444
Total revenues and sales 7,979,910 7,112,386
Costs and expenses:
Cost of services 2,273,598 2,039,014
Cost of products sold 1,043,468 891,306
Selling, general, administrative and
other 1,498,122 1,297,034
Depreciation and amortization 1,247,748 1,095,469
Integration expenses and other charges 18,979 69,883
Total costs and expenses 6,081,915 5,392,706
Operating income 1,897,995 1,719,680
Equity earnings in unconsolidated
partnerships 64,373 65,776
Minority interest in consolidated
partnerships (78,604) (73,339)
Other income (expense), net 11,068 2,350
Interest expense (378,627) (355,129)
Gain on disposal of assets, write-
down of investments and other 17,933 985
Income from continuing operations before
income taxes 1,534,138 1,360,323
Income taxes 580,609 510,163
Income from continuing operations 953,529 850,160
Discontinued operations:
Income from discontinued operations
(net of income taxes) 37,072 74,150
Gain on sale of discontinued operations
(net of income taxes) 323,927 -
Income before cumulative effect of
accounting change 1,314,528 924,310
Cumulative effect of accounting change
(net of income taxes) 15,591 -
Net income 1,330,119 924,310
Preferred dividends 111 125
Net income applicable to common shares $1,330,008 $ 924,185
Basic earnings per share:
Income from continuing operations $3.06 $2.73
Income from discontinued operations 1.16 .24
Cumulative effect of accounting change .05 -
Net income $4.27 $2.97
Diluted earnings per share:
Income from continuing operations $3.05 $2.72
Income from discontinued operations 1.15 .24
Cumulative effect of accounting change .05 -
Net income $4.25 $2.96
ALLTEL CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS FROM CURRENT BUSINESSES
(NON-GAAP)-Page 3
(In thousands, except per share amounts)
(NON-GAAP)
TWELVE MONTHS ENDED
---------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
---------- ---------- -------- ---
REVENUES AND SALES:
Wireless $4,728,399 $4,160,204 $568,195 14
Wireline 2,436,079 2,179,761 256,318 12
Communications support
services 959,061 925,674 33,387 4
Total business segments 8,123,539 7,265,639 857,900 12
Less: intercompany
eliminations 143,629 153,253 (9,624) (6)
Total revenues and sales $7,979,910 $7,112,386 $867,524 12
SEGMENT INCOME:
Wireless $ 998,000 $ 950,951 $ 47,049 5
Wireline 883,873 803,939 79,934 10
Communications support
services 76,417 84,126 (7,709) (9)
Total segment income 1,958,290 1,839,016 119,274 6
Less: corporate expenses 41,316 35,453 5,863 17
Total operating income $1,916,974 $1,803,563 $113,411 6
OPERATING MARGIN (A):
Wireless 21.1% 22.9% (1.8%) (8)
Wireline 36.3% 36.9% (.6%) (2)
Communications support
services 8.0% 9.1% (1.1%) (12)
Consolidated 24.0% 25.4% (1.4%) (6)
NET INCOME $ 954,395 $ 916,956 $ 37,439 4
EARNINGS PER SHARE:
Basic $3.06 $2.95 $.11 4
Diluted $3.05 $2.94 $.11 4
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
Current businesses excludes the effects of discontinued operations,
early termination of debt, integration expenses and other charges,
gain on disposal of assets, write-down of investments and receivables,
and net financing costs related to prefunding the Company's 2002
wireless and wireline acquisitions.
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 4
for the three months ended December 31, 2003
(In thousands, except per share amounts)
Items Results of
Results Excluded Operations
of from from
Operations Current Current
Under GAAP Businesses Businesses
---------- ---------- ----------
Revenues and sales:
Service revenues $1,806,026 $ - $1,806,026
Product sales 207,650 - 207,650
Total revenues and sales 2,013,676 - 2,013,676
Costs and expenses:
Cost of services 567,946 - 567,946
Cost of products sold 262,058 - 262,058
Selling, general,
administrative
and other 388,290 - 388,290
Depreciation and
amortization 321,330 - 321,330
Integration expenses and
other charges - - -
Total costs and expenses 1,539,624 - 1,539,624
Operating income 474,052 - 474,052
Equity earnings in
unconsolidated partnerships 16,401 - 16,401
Minority interest in
consolidated partnerships (17,093) - (17,093)
Other income, net 3,596 - 3,596
Interest expense (90,881) - (90,881)
Gain on disposal of
assets, write-down of
investments and other 30,999 (30,999) (A) -
Income from continuing
operations before
income taxes 417,074 (30,999) 386,075
Income taxes 158,139 (12,058) (K) 146,081
Income from continuing
operations 258,935 (18,941) 239,994
Discontinued operations:
Income from discontinued
operations (net of income
taxes) - - -
Gain on sale of discontinued
operations (net of income
taxes) - - -
Income before cumulative effect
of accounting change 258,935 (18,941) 239,994
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 258,935 (18,941) 239,994
Preferred dividends 27 - 27
Net income applicable to
common shares $ 258,908 $(18,941) $ 239,967
Basic earnings per share:
Income from continuing
operations $.83 $(.06) $.77
Income from discontinued
operations - - -
Cumulative effect of
accounting change - - -
Net income $.83 $(.06) $.77
Diluted earnings per share:
Income from continuing
operations $.83 $(.06) $.77
Income from discontinued
operations - - -
Cumulative effect of
accounting change - - -
Net income $.83 $(.06) $.77
See notes on pages 8 and 9 for a description of the line items marked
(A) - (M).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 4
for the three months ended December 31, 2003
(In thousands, except per share amounts)
Segment Information from Current
Businesses Corporate
------------------------------------ Operations
Communications and
Support Intercompany
Wireless Wireline Services Eliminations
----------- --------- -------------- ------------
Revenues and sales:
Service revenues $1,128,024 $605,665 $105,910 $(33,573)
Product sales 63,908 10,119 141,229 (7,606)
Total revenues
and sales 1,191,932 615,784 247,139 (41,179)
Costs and expenses:
Cost of services 350,603 173,751 74,876 (31,284)
Cost of products
sold 131,243 7,495 131,568 (8,248)
Selling, general,
administrative
and other 303,033 65,644 13,896 5,717
Depreciation and
amortization 175,446 132,064 9,176 4,644
Integration expenses
and other charges - - - -
Total costs and
expenses 960,325 378,954 229,516 (29,171)
Operating income $ 231,607 $236,830 $ 17,623 $(12,008)
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 5
for the three months ended December 31, 2002
(In thousands, except per share amounts)
Items Results of
Results Excluded Operations
of from from
Operations Current Current
Under GAAP Businesses Businesses
---------- ---------- ----------
Revenues and sales:
Service revenues $1,734,481 $ - $1,734,481
Product sales 188,294 - 188,294
Total revenues and sales 1,922,775 - 1,922,775
Costs and expenses:
Cost of services 538,620 - 538,620
Cost of products sold 233,905 - 233,905
Selling, general,
administrative
and other 363,616 - 363,616
Depreciation and
amortization 304,298 - 304,298
Integration expenses and
other charges (2,526) 2,526 (D) -
Total costs and expenses 1,437,913 2,526 1,440,439
Operating income 484,862 (2,526) 482,336
Equity earnings in
unconsolidated partnerships 23,260 - 23,260
Minority interest in
consolidated partnerships (18,610) - (18,610)
Other income (expense), net (3,581) - (3,581)
Interest expense (109,220) - (109,220)
Gain on disposal of
assets, write-down of
investments and other 19,516 (19,516) (E) -
Income from continuing
operations before
income taxes 396,227 (22,042) 374,185
Income taxes 150,832 (8,549) (K) 142,283
Income from continuing
operations 245,395 (13,493) 231,902
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 11,178 (11,178) (L) -
Gain on sale of discontinued
operations (net of income
taxes) - - -
Income before cumulative effect
of accounting change 256,573 (24,671) 231,902
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 256,573 (24,671) 231,902
Preferred dividends 29 - 29
Net income applicable to
common shares $ 256,544 $(24,671) $ 231,873
Basic earnings per share:
Income from continuing
operations $.79 $(.04) $.75
Income from discontinued
operations .03 (.03) -
Cumulative effect of
accounting change - - -
Net income $.82 $(.07) $.75
Diluted earnings per share:
Income from continuing
operations $.79 $(.05) $.74
Income from discontinued
operations .03 (.03) -
Cumulative effect of
accounting change - - -
Net income $.82 $(.08) $.74
See notes on pages 8 and 9 for a description of the line items marked
(A) - (M).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 5
for the three months ended December 31, 2002
(In thousands, except per share amounts)
Segment Information from Current
Businesses Corporate
------------------------------------ Operations
Communications and
Support Intercompany
Wireless Wireline Services Eliminations
---------- -------- -------------- ------------
Revenues and sales:
Service revenues $1,065,747 $598,107 $109,224 $(38,597)
Product sales 53,635 9,708 125,694 (743)
Total revenues
and sales 1,119,382 607,815 234,918 (39,340)
Costs and expenses:
Cost of services 329,004 175,511 72,419 (38,314)
Cost of products
sold 114,672 7,404 112,577 (748)
Selling, general,
administrative
and other 269,728 69,366 18,451 6,071
Depreciation and
amortization 159,483 131,798 9,639 3,378
Integration expenses
and other charges - - - -
Total costs and
expenses 872,887 384,079 213,086 (29,613)
Operating income $ 246,495 $223,736 $ 21,832 $ (9,727)
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 6
for the twelve months ended December 31, 2003
(In thousands, except per share amounts)
Items Results of
Results Excluded Operations
of from from
Operations Current Current
Under GAAP Businesses Businesses
---------- ---------- ----------
Revenues and sales:
Service revenues $7,156,067 $ - $7,156,067
Product sales 823,843 - 823,843
Total revenues and sales 7,979,910 - 7,979,910
Costs and expenses:
Cost of services 2,273,598 - 2,273,598
Cost of products sold 1,043,468 - 1,043,468
Selling, general,
administrative
and other 1,498,122 - 1,498,122
Depreciation and
amortization 1,247,748 - 1,247,748
Integration expenses and
other charges 18,979 (18,979) (B) -
Total costs and expenses 6,081,915 (18,979) 6,062,936
Operating income 1,897,995 18,979 1,916,974
Equity earnings in
unconsolidated partnerships 64,373 - 64,373
Minority interest in
consolidated partnerships (78,604) - (78,604)
Other income, net 11,068 - 11,068
Interest expense (378,627) - (378,627)
Gain on disposal of
assets, write-down of
investments and other 17,933 (17,933) (A,C) -
Income from continuing
operations before
income taxes 1,534,138 1,046 1,535,184
Income taxes 580,609 180 (K) 580,789
Income from continuing
operations 953,529 866 954,395
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 37,072 (37,072) (L) -
Gain on sale of discontinued
operations (net of income
taxes) 323,927 (323,927) (L) -
Income before cumulative effect
of accounting change 1,314,528 (360,133) 954,395
Cumulative effect of accounting
change (net of income
taxes) 15,591 (15,591) (M) -
Net income 1,330,119 (375,724) 954,395
Preferred dividends 111 - 111
Net income applicable to
common shares $1,330,008 $(375,724) $ 954,284
Basic earnings per share:
Income from continuing
operations $3.06 $ - $3.06
Income from discontinued
operations 1.16 (1.16) -
Cumulative effect of
accounting change .05 (.05) -
Net income $4.27 $(1.21) $3.06
Diluted earnings per share:
Income from continuing
operations $3.05 $ - $3.05
Income from discontinued
operations 1.15 (1.15) -
Cumulative effect of
accounting change .05 (.05) -
Net income $4.25 $(1.20) $3.05
See notes on pages 8 and 9 for a description of the line items marked
(A) - (M).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 6
for the twelve months ended December 31, 2003
(In thousands, except per share amounts)
Segment Information from Current
Businesses Corporate
-------------------------------------- Operations
Communications and
Support Intercompany
Wireless Wireline Services Eliminations
---------- ---------- ------------- ------------
Revenues and sales:
Service revenues $4,466,462 $2,395,625 $428,983 $(135,003)
Product sales 261,937 40,454 530,078 (8,626)
Total revenues
and sales 4,728,399 2,436,079 959,061 (143,629)
Costs and expenses:
Cost of services 1,367,812 737,161 299,006 (130,381)
Cost of products
sold 536,648 29,131 486,936 (9,247)
Selling, general,
administrative
and other 1,154,961 259,406 60,511 23,244
Depreciation and
amortization 670,978 526,508 36,191 14,071
Integration expenses
and other charges - - - -
Total costs and
expenses 3,730,399 1,552,206 882,644 (102,313)
Operating income $ 998,000 $ 883,873 $ 76,417 $ (41,316)
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 7
for the twelve months ended December 31, 2002
(In thousands, except per share amounts)
Items Results of
Results Excluded Operations
of from from
Operations Current Current
Under GAAP Businesses Businesses
---------- ---------- ----------
Revenues and sales:
Service revenues $6,428,942 $ - $6,428,942
Product sales 683,444 - 683,444
Total revenues and sales 7,112,386 - 7,112,386
Costs and expenses:
Cost of services 2,039,014 (14,000) (H) 2,025,014
Cost of products sold 891,306 - 891,306
Selling, general,
administrative
and other 1,297,034 - 1,297,034
Depreciation and
amortization 1,095,469 - 1,095,469
Integration expenses and
other charges 69,883 (69,883) (D,I) -
Total costs and expenses 5,392,706 (83,883) 5,308,823
Operating income 1,719,680 83,883 1,803,563
Equity earnings in
unconsolidated partnerships 65,776 - 65,776
Minority interest in
consolidated partnerships (73,339) - (73,339)
Other income (expense), net 2,350 (8,200) (F) (5,850)
Interest expense (355,129) 34,959 (G) (320,170)
Gain on disposal of
assets, write-down of
investments and other 985 (985) (E,J) -
Income from continuing
operations before
income taxes 1,360,323 109,657 1,469,980
Income taxes 510,163 42,861 (K) 553,024
Income from continuing
operations 850,160 66,796 916,956
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 74,150 (74,150) (L) -
Gain on sale of discontinued
operations (net of income
taxes) - - -
Income before cumulative effect
of accounting change 924,310 (7,354) 916,956
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 924,310 (7,354) 916,956
Preferred dividends 125 - 125
Net income applicable to
common shares $ 924,185 $ (7,354) $ 916,831
Basic earnings per share:
Income from continuing
operations $2.73 $ .22 $2.95
Income from discontinued
operations .24 (.24) -
Cumulative effect of
accounting change - - -
Net income $2.97 $(.02) $2.95
Diluted earnings per share:
Income from continuing
operations $2.72 $ .22 $2.94
Income from discontinued
operations .24 (.24) -
Cumulative effect of
accounting change - - -
Net income $2.96 $(.02) $2.94
See notes on pages 8 and 9 for a description of the line items marked
(A) - (M).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 7
for the twelve months ended December 31, 2002
(In thousands, except per share amounts)
Segment Information from Current
Businesses Corporate
------------------------------------ Operations
Communications and
Support Intercompany
Wireless Wireline Services Eliminations
---------- ---------- ------------- ------------
Revenues and sales:
Service revenues $3,999,206 $2,145,315 $434,465 $(150,044)
Product sales 160,998 34,446 491,209 (3,209)
Total revenues
and sales 4,160,204 2,179,761 925,674 (153,253)
Costs and expenses:
Cost of services 1,243,068 634,166 295,299 (147,519)
Cost of products
sold 430,550 24,843 439,219 (3,306)
Selling, general,
administrative
and other 957,983 251,214 69,280 18,557
Depreciation and
amortization 577,652 465,599 37,750 14,468
Integration expenses
and other charges - - - -
Total costs and
expenses 3,209,253 1,375,822 841,548 (117,800)
Operating income $ 950,951 $ 803,939 $ 84,126 $ (35,453)
ALLTEL CORPORATION
NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO
RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 8
As disclosed in the Company's Form 8-K filed on January 23, 2004,
ALLTEL has presented in this earnings release results of operations
from current businesses which exclude the following items: the effects
of discontinued operations, early termination of debt, integration
expenses and other charges, gain on disposal of assets, write-down of
investments and receivables and the net financing costs related to
prefunding the Company's 2002 acquisitions of wireless properties from
CenturyTel, Inc. ("CenturyTel") and wireline properties in Kentucky
from Verizon Communications, Inc. ("Verizon"). ALLTEL's purpose for
excluding items from the current business measures is to focus on
ALLTEL's true earnings capacity associated with providing
telecommunication services. Management believes the items excluded
from the current business measures are related to strategic activities
or other events, specific to the time and opportunity available, and,
accordingly, should be excluded when evaluating the trends of the
Company's operations.
ALLTEL believes that presenting the current business measures
assists investors in assessing the true business performance of the
Company by clarifying for investors the effects that certain items
such as asset sales, restructuring expenses and other business
consolidation costs arising from past acquisition and restructuring
activities had on the Company's GAAP consolidated results of
operations. The Company uses results from current businesses as
management's primary measure of the performance of its business
segments. ALLTEL management, including the chief operating
decision-maker, uses the current business measures consistently for
all purposes, including internal reporting purposes, the evaluation of
business objectives, opportunities and performance and the
determination of management compensation.
As the Company evaluates segment performance based on segment
income, which is computed as revenues and sales less operating
expenses, the integration expenses and other charges, gain on disposal
of assets, write-down of investments and debt prepayment penalties
have not been allocated to the business segments. In addition, none of
the non-operating items such as equity earnings in unconsolidated
partnerships, minority interest expense, other income, net, interest
expense and income taxes have been allocated to the segments.
(A) The Company recorded a pretax gain of $31.0 million from the
sale of certain assets and related liabilities, including selected
customer contracts and capitalized software development costs,
associated with the Company's telecommunications information services
operations.
(B) These charges included severance and employee benefit costs of
$8.5 million related to a planned workforce reduction, primarily
resulting from the closing of certain call center locations. The
Company also recorded a $2.7 million reduction in the liabilities
associated with various restructuring activities initiated prior to
2003, primarily resulting from differences between estimated and
actual severance costs paid in completing the previous planned
workforce reductions. ALLTEL also wrote off $13.2 million of certain
capitalized software development costs that had no alternative future
use or functionality.
(C) ALLTEL recorded pretax write-downs totaling $6.0 million to
reflect other-than-temporary declines in the fair value of certain
investments in unconsolidated limited partnerships. In addition, the
Company retired, prior to its stated maturity dates, $249.1 million of
long-term debt, representing all of the long-term debt outstanding
under the Rural Utilities Services, Rural Telephone Bank and Federal
Financing Bank programs. In connection with the early retirement of
the debt, the Company incurred pretax termination fees of $7.1
million.
(D) The Company recorded a $2.5 million reduction in the
liabilities associated with the restructuring of its competitive local
exchange carrier ("CLEC") operations initiated during the first
quarter of 2002, as further discussed in Note I below. The reduction
primarily reflected differences between estimated and actual costs to
exit certain CLEC markets and consisted of $2.0 million in lease
termination costs and $0.5 million in severance and employee benefit
costs.
(E) The Company recorded a pretax gain of $22.1 million from the
sale of a wireless property in Pennsylvania to Verizon Wireless,
partially offset by a $2.6 million write-down in the carrying value of
an investment.
ALLTEL CORPORATION
NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO
RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 9
(F) Represents additional interest income earned due to investing
proceeds received from ALLTEL's equity unit and long-term debt
offerings. These security offerings were issued to prefund the
Company's 2002 acquisitions of wireless properties from CenturyTel and
wireline properties in Kentucky from Verizon discussed in Note I.
(G) Represents additional interest expense incurred due to the
issuance of ALLTEL's equity unit and long-term debt offerings to
prefund the Company's 2002 wireless and wireline acquisitions
discussed in Note I.
(H) Represents additional bad debt expense recorded by the Company
due to the bankruptcy filing of an interexchange carrier. Of the
total, $3.1 million of the write-down related to the wireless segment
and $10.9 million related to the wireline segment.
(I) These charges included $36.5 million incurred by the Company
in connection with the restructuring of the Company's CLEC and retail
store operations. The restructuring charges included severance and
employee benefit costs of $17.5 million related to a planned workforce
reduction, $12.4 million of costs associated with terminating certain
CLEC transport agreements and lease termination fees incurred with the
closing of certain retail and call center locations. In exiting the
CLEC operations, the Company also incurred $2.2 million of costs to
disconnect and remove switching and other transmission equipment from
central office facilities and expenses to notify and migrate customers
to other service providers. ALLTEL also wrote off $4.4 million of
certain capitalized software development costs that had no alternative
future use or functionality. The Company also recorded a $7.1 million
write-down in the carrying value of certain cell site equipment, and
incurred $28.8 million of expenses related to ALLTEL's acquisition
completed on August 1, 2002 of wireline properties from Verizon in
Kentucky and wireless properties from CenturyTel, Inc. These expenses
included internal payroll and employee benefit costs, contracted
services, branding and other computer programming costs incurred in
connection with expanding ALLTEL's customer service and operations
support functions to handle increased customer volumes resulting from
the acquisitions and to convert Verizon's customer billing and
operations support systems to ALLTEL's internal systems.
(J) Represents a $13.7 million write-down recorded by ALLTEL to
reflect the other-than-temporary declines in the fair value of two
equity investments and a pretax adjustment of $4.8 million to reduce
the gain recognized from the dissolution of a wireless partnership
with BellSouth Mobility, Inc. This gain was initially recorded in
2001.
(K) Tax related effects of the items discussed in Notes A - J above.
(L) Eliminates the effects of discontinued operations, including
the gain realized upon the sale of such operations. On April 1, 2003,
ALLTEL completed the sale of the financial services division of its
information services subsidiary, ALLTEL Information Services, Inc., to
Fidelity National Financial Inc. ("Fidelity National"), for $1.05
billion, payable in the form of $775.0 million in cash and $275.0
million in Fidelity National common stock. As part of this
transaction, Fidelity National acquired ALLTEL's mortgage servicing,
retail and wholesale banking and commercial lending operations, as
well as the community/regional bank division.
(M) Represents the cumulative effect of the change in accounting
resulting from the Company's adoption of Statement of Financial
Accounting Standards ("SFAS") No. 143, "Accounting for Asset
Retirement Obligations". In accordance with federal and state
regulations, depreciation expense for ALLTEL's wireline operations
historically included an additional provision for cost of removal. For
ALLTEL's wireline operations in Kentucky and Nebraska not subject to
SFAS No. 71, "Accounting for the Effects of Certain Types of
Regulation", effective with the adoption of SFAS No. 143, the Company
ceased recognition of the cost of removal provision in depreciation
expense and eliminated the cumulative cost of removal included in
accumulated depreciation because it did not meet the recognition and
measurement principles of an asset retirement obligation under SFAS
No. 143. As a result of a Federal Communications Commission ruling,
ALLTEL is continuing to record a regulatory liability for cost of
removal for its wireline subsidiaries that follow the accounting
prescribed by SFAS No. 71.
ALLTEL CORPORATION
SUPPLEMENTAL OPERATING INFORMATION-Page 10
(Dollars in thousands, except per customer amounts)
THREE MONTHS ENDED
-----------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
----------- ----------- --------- ---
Wireless:
Controlled POPs 60,368,281 59,008,262 1,360,019 2
Customers 8,023,425 7,601,598 421,827 6
Penetration rate 13.3% 12.9% .4% 3
Average customers 7,956,723 7,561,283 395,440 5
Gross customer additions:
Internal 696,888 675,230 21,658 3
Acquired, net of
divested - (8,939) 8,939 100
Total 696,888 666,291 30,597 5
Net customer additions:
Internal 95,374 51,608 43,766 85
Acquired, net of
divested - (8,939) 8,939 100
Prepaid customer unit
adjustment - - - -
Total 95,374 42,669 52,705 124
Customer acquisition
costs:
Product sales $ (45,486) $ (35,776) $ (9,710) (27)
Cost of products sold 76,980 64,355 12,625 20
Selling and marketing
expenses 190,854 156,626 34,228 22
Total $ 222,348 $ 185,205 $ 37,143 20
Cost to acquire a new
customer (A) $319 $274 $45 16
Average revenue per
customer per month $47.26 $46.98 $.28 1
Postpay churn 1.96% 2.25% (.29%) (13)
Total churn 2.53% 2.76% (.23%) (8)
Service revenue
operating margin (B) 20.5% 23.1% (2.6%) (11)
Capital expenditures (C) $223,242 $178,823 $44,419 25
Wireline:
Customers 3,095,635 3,167,275 (71,640) (2)
DSL customers 153,028 70,182 82,846 118
Capital expenditures (C) $115,964 $119,154 ($3,190) (3)
Communications support
services:
Long-distance customers 1,680,181 1,542,210 137,971 9
Capital expenditures (C) $3,738 $9,975 ($6,237) (63)
Consolidated:
Equity free cash flow (D) $218,043 $226,070 ($8,027) (4)
Capital expenditures (C) $343,281 $310,130 $33,151 11
Total assets $16,661,138 $16,244,589 $416,549 3
(A) Cost to acquire a new customer is calculated by dividing the
sum of the GAAP reported product sales, cost of products sold and
sales and marketing expenses (included within "Selling, general,
administrative and other"), as reported in the Consolidated Statements
of Income, by the number of internal gross customer additions in the
period. Customer acquisition costs exclude amounts related to the
Company's customer retention efforts.
(B) Service revenue operating margin is calculated by dividing
wireless segment income by wireless service revenue. For the twelve
months ended 12/31/02, wireless segment income under GAAP differed
from wireless segment income from current businesses. Accordingly,
service revenue operating margin calculated using wireless segment
income under GAAP was 23.7% for that period.
(C) Includes capitalized software development costs.
(D) Equity free cash flow is calculated as the sum of net income
from current businesses plus depreciation and amortization less
capital expenditures which includes capitalized software development
costs as indicated in Note C.
ALLTEL CORPORATION
SUPPLEMENTAL OPERATING INFORMATION-Page 10
(Dollars in thousands, except per customer amounts)
TWELVE MONTHS ENDED
----------------------------------------
Increase
December 31, December 31, (Decrease)
2003 2002 Amount %
----------- ----------- --------- ---
Wireless:
Average customers 7,834,470 7,095,544 738,926 10
Gross customer additions:
Internal 2,709,369 2,404,180 305,189 13
Acquired, net of
divested 147,462 752,784 (605,322) (80)
Total 2,856,831 3,156,964 (300,133) (10)
Net customer additions:
Internal 274,365 279,703 (5,338) (2)
Acquired, net of
divested 147,462 752,784 (605,322) (80)
Prepaid customer unit
adjustment - (113,853) 113,853 100
Total 421,827 918,634 (496,807) (54)
Customer acquisition
costs:
Product sales $ (176,429) $ (118,059) $ (58,370) (49)
Cost of products sold 296,757 269,022 27,735 10
Selling and marketing
expenses 714,026 579,333 134,693 23
Total $ 834,354 $ 730,296 $ 104,058 14
Cost to acquire a new
customer (A) $308 $304 $4 1
Average revenue per
customer per month $47.51 $46.97 $.54 1
Postpay churn 2.09% 2.23% (.14%) (6)
Total churn 2.59% 2.50% .09% 4
Service revenue
operating margin (B) 22.3% 23.8% (1.5%) (6)
Capital expenditures (C) $788,430 $766,395 $22,035 3
Wireline:
Capital expenditures (C) $386,235 $404,998 ($18,763) (5)
Communications support
services:
Capital expenditures (C) $18,999 $36,635 ($17,636) (48)
Consolidated:
Equity free cash flow (D) $1,007,733 $799,247 $208,486 26
Capital expenditures (C) $1,194,410 $1,213,178 ($18,768) (2)
(A) Cost to acquire a new customer is calculated by dividing the
sum of the GAAP reported product sales, cost of products sold and
sales and marketing expenses (included within "Selling, general,
administrative and other"), as reported in the Consolidated Statements
of Income, by the number of internal gross customer additions in the
period. Customer acquisition costs exclude amounts related to the
Company's customer retention efforts.
(B) Service revenue operating margin is calculated by dividing
wireless segment income by wireless service revenue. For the twelve
months ended 12/31/02, wireless segment income under GAAP differed
from wireless segment income from current businesses. Accordingly,
service revenue operating margin calculated using wireless segment
income under GAAP was 23.7% for that period.
(C) Includes capitalized software development costs.
(D) Equity free cash flow is calculated as the sum of net income
from current businesses plus depreciation and amortization less
capital expenditures which includes capitalized software development
costs as indicated in Note C.
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 11
(In thousands)
ASSETS
December 31, December 31,
2003 2002
------------ ------------
CURRENT ASSETS:
Cash and short-term investments $ 657,764 $ 134,641
Accounts receivable (less allowance for
doubtful accounts of $46,333 and
$68,391, respectively) 890,015 1,018,282
Inventories 122,133 138,530
Prepaid expenses and other 59,210 38,819
Assets held for sale - 538,223
Total current assets 1,729,122 1,868,495
Investments 722,698 325,797
Goodwill 4,854,263 4,769,718
Other intangibles 1,336,956 1,348,137
PROPERTY, PLANT AND EQUIPMENT:
Land 259,180 275,332
Buildings and improvements 1,052,994 1,074,277
Wireline 6,514,694 6,188,507
Wireless 5,255,820 4,798,304
Information processing 946,749 1,047,659
Other 482,255 571,042
Under construction 398,232 365,026
Total property, plant and equipment 14,909,924 14,320,147
Less accumulated depreciation 7,289,145 6,756,451
Net property, plant and equipment 7,620,779 7,563,696
Other assets 397,320 368,746
TOTAL ASSETS $16,661,138 $16,244,589
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 11
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, December 31,
2003 2002
------------ ------------
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 277,235 $ 494,711
Accounts payable 479,786 413,724
Advance payments and
customer deposits 205,277 214,296
Accrued taxes 114,618 72,255
Accrued dividends 116,162 109,564
Accrued interest 107,085 123,806
Other current liabilities 192,504 171,818
Liabilities related to
assets held for sale - 190,498
Total current liabilities 1,492,667 1,790,672
Long-term debt 5,581,243 6,145,381
Deferred income taxes 1,417,667 1,115,463
Other liabilities 1,147,364 1,194,969
SHAREHOLDERS' EQUITY:
Preferred stock 348 391
Common stock 312,644 311,183
Additional paid-in capital 750,131 695,656
Unrealized holding gain (loss)
on investments 73,634 (1)
Foreign currency translation
adjustment 569 (6,868)
Retained earnings 5,884,871 4,997,743
Total shareholders' equity 7,022,197 5,998,104
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $16,661,138 $16,244,589
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 12
(In thousands)
THREE MONTHS ENDED
-------------------------
December 31, December 31,
2003 2002
----------- ------------
Net Cash Provided from Operations:
Net income $ 258,935 $ 256,573
Adjustments to reconcile net income to net
cash provided from operations:
Income from discontinued operations - (11,178)
Cumulative effect of accounting
change - -
Depreciation and amortization 321,330 304,298
Provision for doubtful accounts 42,152 66,992
Non-cash portion of integration
expenses and other charges - -
Non-cash portion of gain on disposal
of assets, write-down of
investments and other (30,999) (19,516)
Increase in deferred income taxes 83,536 223,552
Other, net (31,705) (36,567)
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions:
Accounts receivable 9,877 (36,761)
Inventories 21,817 (29,145)
Accounts payable 53,692 31,231
Other current liabilities (12,708) (124,617)
Other, net (91,753) 29,340
Net cash provided from operations 624,174 654,202
Cash Flows from Investing Activities:
Additions to property, plant and
equipment (331,221) (301,183)
Additions to capitalized software
development costs (12,060) (8,947)
Additions to investments (2,705) (3,336)
Purchases of property, net of
cash acquired - (28,361)
Proceeds from the lease of cell
site towers - -
Proceeds from the sale of assets 46,072 24,075
Proceeds from the return on or sale
of investments 14,046 20,399
Other, net (7,833) 17,677
Net cash used in investing
activities (293,701) (279,676)
Cash Flows from Financing Activities:
Dividends on preferred and common stock (109,214) (105,913)
Reductions in long-term debt (19,146) (461,041)
Preferred stock redemptions - 14
Distributions to minority investors (23,085) (16,080)
Long-term debt issued, net of
issuance costs - 209,650
Common stock issued 18,205 4,828
Net cash provided from (used in)
financing activities (133,240) (368,542)
Net cash provided from (used in)
discontinued operations (106,376) 53,343
Effect of exchange rate changes on cash and
short-term investments 5 444
Increase in cash and short-term
investments 90,862 59,771
Cash and Short-term Investments:
Beginning of the period 566,902 74,870
End of the period $ 657,764 $ 134,641
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 12
(In thousands)
TWELVE MONTHS ENDED
-------------------------
December 31, December 31,
2003 2002
------------ ------------
Net Cash Provided from Operations:
Net income $ 1,330,119 $ 924,310
Adjustments to reconcile net income to net
cash provided from operations:
Income from discontinued operations (360,999) (74,150)
Cumulative effect of accounting
change (15,591) -
Depreciation and amortization 1,247,748 1,095,469
Provision for doubtful accounts 184,670 265,901
Non-cash portion of integration
expenses and other charges 13,245 12,580
Non-cash portion of gain on disposal
of assets, write-down of
investments and other (25,035) (985)
Increase in deferred income taxes 225,021 357,565
Other, net (11,402) (25,605)
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions:
Accounts receivable (79,681) (219,317)
Inventories 17,141 28,491
Accounts payable 21,803 80,085
Other current liabilities 30,177 (42,830)
Other, net (102,462) (9,271)
Net cash provided from operations 2,474,754 2,392,243
Cash Flows from Investing Activities:
Additions to property, plant and
equipment (1,137,716) (1,154,789)
Additions to capitalized software
development costs (56,694) (58,389)
Additions to investments (13,532) (9,379)
Purchases of property, net of
cash acquired (160,560) (3,365,509)
Proceeds from the lease of cell
site towers - 7,500
Proceeds from the sale of assets 46,072 24,075
Proceeds from the return on or sale
of investments 48,348 51,876
Other, net 8,140 9,981
Net cash used in investing
activities (1,265,942) (4,494,634)
Cash Flows from Financing Activities:
Dividends on preferred and common stock (436,391) (423,081)
Reductions in long-term debt (763,429) (265,844)
Preferred stock redemptions - 14
Distributions to minority investors (67,551) (57,890)
Long-term debt issued, net of
issuance costs - 2,809,101
Common stock issued 49,131 17,177
Net cash provided from (used in)
financing activities (1,218,240) 2,079,477
Net cash provided from (used in)
discontinued operations 531,791 91,338
Effect of exchange rate changes on cash and
short-term investments 760 3,060
Increase in cash and short-term
investments 523,123 71,484
Cash and Short-term Investments:
Beginning of the period 134,641 63,157
End of the period $ 657,764 $ 134,641
ALLTEL CORPORATION
RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 13
(In thousands)
THREE MONTHS ENDED
-------------------------
December 31, December 31,
2003 2002
------------ ------------
Net cash provided from operations $ 624,174 $ 654,202
Adjustments to reconcile to net income
under GAAP:
Income from discontinued operations - 11,178
Cumulative effect of accounting change - -
Depreciation and amortization expense (321,330) (304,298)
Provision for doubtful accounts (42,152) (66,992)
Non-cash portion of integration expenses
and other charges - -
Non-cash portion of gain on disposal
of assets, write-down of
investments and other 30,999 19,516
Increase in deferred income taxes (83,536) (223,552)
Other non-cash changes, net 31,705 36,567
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions 19,075 129,952
Net income under GAAP 258,935 256,573
Adjustments to reconcile to net income from
current businesses:
Write-down of receivables due to inter-
exchange carrier's bankruptcy filing,
net of tax - -
Integration expenses and other charges,
net of tax - (1,568)
Net financing costs related to prefunding
the Company's wireless and wireline
acquisitions, net of tax - -
Gain on disposal of assets, write-
down of investments and other,
net of tax (18,941) (11,925)
Cumulative effect of accounting change - -
Income from discontinued operations - (11,178)
Net income from current businesses 239,994 231,902
Adjustments to reconcile to equity free cash
flow from current businesses:
Depreciation and amortization expense 321,330 304,298
Capital expenditures (343,281) (310,130)
Equity free cash flow from current
businesses $ 218,043 $ 226,070
ALLTEL CORPORATION
RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 13
(In thousands)
TWELVE MONTHS ENDED
-------------------------
December 31, December 31,
2003 2002
------------ ------------
Net cash provided from operations $ 2,474,754 $ 2,392,243
Adjustments to reconcile to net income
under GAAP:
Income from discontinued operations 360,999 74,150
Cumulative effect of accounting change 15,591 -
Depreciation and amortization expense (1,247,748) (1,095,469)
Provision for doubtful accounts (184,670) (265,901)
Non-cash portion of integration expenses
and other charges (13,245) (12,580)
Non-cash portion of gain on disposal
of assets, write-down of
investments and other 25,035 985
Increase in deferred income taxes (225,021) (357,565)
Other non-cash changes, net 11,402 25,605
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions 113,022 162,842
Net income under GAAP 1,330,119 924,310
Adjustments to reconcile to net income from
current businesses:
Write-down of receivables due to inter-
exchange carrier's bankruptcy filing,
net of tax - 8,694
Integration expenses and other charges,
net of tax 9,449 42,325
Net financing costs related to prefunding
the Company's wireless and wireline
acquisitions, net of tax - 16,337
Gain on disposal of assets, write-
down of investments and other,
net of tax (8,583) (560)
Cumulative effect of accounting change (15,591) -
Income from discontinued operations (360,999) (74,150)
Net income from current businesses 954,395 916,956
Adjustments to reconcile to equity free cash
flow from current businesses:
Depreciation and amortization expense 1,247,748 1,095,469
Capital expenditures (1,194,410) (1,213,178)
Equity free cash flow from current
businesses $ 1,007,733 $ 799,247
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