ALLTEL Reports Strong Second-Quarter Results; Company Strengthens Balance Sheet as Cash Flow Grows.Business Editors/High-Tech Writers LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 24, 2003 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 strong results in the second quarter. 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 under Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) was $1.75, a 154 percent increase from a year ago, and includes a gain from the sale of ALLTEL's financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. division and several other one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. items. Excluding these items, fully diluted earnings per share from current businesses was 78 cents, a 10 percent increase from a year ago. Among the highlights for the second-quarter: -- Total revenues were $2 billion, an 18 percent increase from a year ago. Net income under GAAP was $548 million. Net income from current businesses was $244 million, up 10 percent. -- Wireless revenues were $1.2 billion, a 19 percent increase from a year ago. Segment income was $262 million, up 15 percent. -- Wireline revenues were $606 million, a 22 percent increase from a year ago. Segment income was $217 million, up 20 percent. -- Equity free cash flow from current businesses was $236 million, an 84 percent increase from a year ago. Net cash from operations was $663 million, a 23 percent increase from a year ago. -- Wireless post-pay customer churn churn: see butter. was 2.03 percent, the company's lowest 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 three years. -- More than 17,000 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 were added, giving the company a penetration The successful unauthorized breach of a security perimeter. See penetration test. rate of 6 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. "ALLTEL delivered strong results that were driven by solid performance throughout the business," 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. ALLTEL completed the sale of the financial services division of its information services See Information Systems. business on April 1, recording a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain of $555 million. The company also incurred one-time expenses of $32 million in the quarter. The company used the proceeds from the sale of the financial services division along with the cash generated from business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets to decrease long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. by $535 million. The company has no borrowings outstanding on its $1.5 billion commercial paper facility and increased its cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments by more than $440 million in the quarter. Also in the quarter, the company began an advertising campaign highlighting ALLTEL's commitment to serving customers. The campaign conveys ALLTEL's brand promise to "get it right or make it right" for customers. 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 nearly $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 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. 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 wireless 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
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED
------------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
REVENUES AND SALES:
Wireless $1,195,416 $1,002,725 $192,691 19
Wireline 606,244 497,206 109,038 22
Communications support
services 242,835 239,902 2,933 1
Total business segments 2,044,495 1,739,833 304,662 18
Less: intercompany
eliminations 34,243 40,796 (6,553) (16)
Total revenues and sales $2,010,252 $1,699,037 $311,215 18
SEGMENT INCOME:
Wireless $ 261,991 $ 224,284 $ 37,707 17
Wireline 216,826 170,459 46,367 27
Communications support
services 20,801 21,105 (304) (1)
Total segment income 499,618 415,848 83,770 20
Corporate expenses 9,502 8,788 714 8
Integration expenses and
other charges 18,979 9,022 9,957 110
Total operating income $ 471,137 $ 398,038 $ 73,099 18
OPERATING MARGIN (A):
Wireless 21.9% 22.4% (.5%) (2)
Wireline 35.8% 34.3% 1.5% 4
Communications support
services 8.6% 8.8% (.2%) (2)
Consolidated 23.4% 23.4% - -
NET INCOME $ 548,136 $ 216,168 $331,968 154
EARNINGS PER SHARE:
Basic $1.76 $.70 $1.06 151
Diluted $1.75 $.69 $1.06 154
Weighted average common shares:
Basic (in thousands) 311,423 310,973 450 -
Fully diluted (in
thousands) 312,431 312,361 70 -
Annual dividend rate per common
share $1.40 $1.36 $.04 3
(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
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED
------------------
June 30, June 30,
2003 2002
---- ----
Revenues and sales:
Service revenues $1,797,520 $1,524,322
Product sales 212,732 174,715
Total revenues and sales 2,010,252 1,699,037
Costs and expenses:
Cost of services 541,348 490,269
Cost of products sold 271,354 224,360
Selling, general, administrative and
other 396,722 319,582
Depreciation and amortization 310,712 257,766
Integration expenses and other charges 18,979 9,022
Total costs and expenses 1,539,115 1,300,999
Operating income 471,137 398,038
Equity earnings in unconsolidated
partnerships 16,689 13,741
Minority interest in consolidated
partnerships (21,390) (18,677)
Other income, net 3,634 5,537
Interest expense (93,210) (77,509)
Write-down of investments and other (13,066) (13,739)
Income from continuing operations before
income taxes 363,794 307,391
Income taxes 139,585 115,378
Income from continuing operations 224,209 192,013
Discontinued operations:
Income from discontinued operations
(net of income taxes) - 24,155
Gain on sale of discontinued operations
(net of income taxes) 323,927 -
Income before cumulative effect of
accounting change 548,136 216,168
Cumulative effect of accounting change
(net of income taxes) - -
Net income 548,136 216,168
Preferred dividends 28 32
Net income applicable to common shares $ 548,108 $ 216,136
Basic earnings per share:
Income from continuing operations $ .72 $.62
Income from discontinued operations 1.04 .08
Cumulative effect of accounting change - -
Net income $1.76 $.70
Diluted earnings per share:
Income from continuing operations $ .72 $.61
Income from discontinued operations 1.03 .08
Cumulative effect of accounting change - -
Net income $1.75 $.69
ALLTEL CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-
Page 3
(Dollars in thousands, except per share amounts)
(NON-GAAP)
THREE MONTHS ENDED
------------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
REVENUES AND SALES:
Wireless $1,195,416 $1,002,725 $192,691 19
Wireline 606,244 497,206 109,038 22
Communications support
services 242,835 239,902 2,933 1
Total business segments 2,044,495 1,739,833 304,662 18
Less: intercompany
eliminations 34,243 40,796 (6,553) (16)
Total revenues and sales $2,010,252 $1,699,037 $311,215 18
SEGMENT INCOME:
Wireless $ 261,991 $ 227,384 $ 34,607 15
Wireline 216,826 181,359 35,467 20
Communications support
services 20,801 21,105 (304) (1)
Total segment income 499,618 429,848 69,770 16
Corporate expenses 9,502 8,788 714 8
Total operating income $ 490,116 $ 421,060 $ 69,056 16
OPERATING MARGIN (A):
Wireless 21.9% 22.7% (.8%) (4)
Wireline 35.8% 36.5% (.7%) (2)
Communications support
services 8.6% 8.8% (.2%) (2)
Consolidated 24.4% 24.8% (.4%) (2)
NET INCOME $ 244,016 $ 222,809 $ 21,207 10
EARNINGS PER SHARE:
Basic $.78 $.72 $.06 8
Diluted $.78 $.71 $.07 10
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
Current businesses excludes integration expenses and other charges,
gain (loss) on disposal of assets, write-down of investments and
receivables, and net financing costs related to the prefunding of the
Company's 2002 wireless and wireline acquisitions.
ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS
BUSINESS SEGMENTS AND OTHER CONSOLIDATED FINANCIAL INFORMATION UNDER
GAAP
(Dollars in thousands, except per share amounts)
SIX MONTHS ENDED
----------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
REVENUES AND SALES:
Wireless $2,303,235 $1,946,854 $356,381 18
Wireline 1,215,100 996,258 218,842 22
Communications support
services 467,959 451,760 16,199 4
Total business segments 3,986,294 3,394,872 591,422 17
Less: intercompany
eliminations 70,244 72,947 (2,703) (4)
Total revenues and sales $3,916,050 $3,321,925 $594,125 18
SEGMENT INCOME:
Wireless $ 497,978 $ 444,520 $ 53,458 12
Wireline 439,614 360,541 79,073 22
Communications support
services 38,451 39,819 (1,368) (3)
Total segment income 976,043 844,880 131,163 16
Corporate expenses 19,884 17,091 2,793 16
Integration expenses and
other charges 18,979 51,870 (32,891) (63)
Total operating income $ 937,180 $ 775,919 $161,261 21
OPERATING MARGIN (A):
Wireless 21.6% 22.8% (1.2%) (5)
Wireline 36.2% 36.2% - -
Communications support
services 8.2% 8.8% (.6%) (7)
Consolidated 23.9% 23.4% .5% 2
NET INCOME $ 828,421 $ 429,974 $398,447 93
EARNINGS PER SHARE:
Basic $2.66 $1.38 $1.28 93
Diluted $2.65 $1.38 $1.27 92
Weighted average common shares:
Basic (in thousands) 311,306 310,886 420 -
Fully diluted (in
thousands) 312,371 312,494 (123) -
Annual dividend rate per common
share $1.40 $1.36 $.04 3
(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
(Dollars in thousands, except per share amounts)
SIX MONTHS ENDED
----------------
June 30, June 30,
2003 2002
---- ----
Revenues and sales:
Service revenues $3,513,982 $3,003,213
Product sales 402,068 318,712
Total revenues and sales 3,916,050 3,321,925
Costs and expenses:
Cost of services 1,068,753 940,626
Cost of products sold 509,066 433,096
Selling, general, administrative and
other 767,837 615,151
Depreciation and amortization 614,235 505,263
Integration expenses and other charges 18,979 51,870
Total costs and expenses 2,978,870 2,546,006
Operating income 937,180 775,919
Equity earnings in unconsolidated
partnerships 34,194 22,385
Minority interest in consolidated
partnerships (39,224) (33,702)
Other income, net 4,081 6,773
Interest expense (196,582) (138,380)
Write-down of investments and other (13,066) (13,739)
Income from continuing operations before
income taxes 726,583 619,256
Income taxes 274,752 232,307
Income from continuing operations 451,831 386,949
Discontinued operations:
Income from discontinued operations
(net of income taxes) 37,072 43,025
Gain on sale of discontinued operations 323,927 -
(net of income taxes)
Income before cumulative effect of
accounting change 812,830 429,974
Cumulative effect of accounting change
(net of income taxes) 15,591 -
Net income 828,421 429,974
Preferred dividends 56 65
Net income applicable to common shares $ 828,365 $ 429,909
Basic earnings per share:
Income from continuing operations $1.45 $1.24
Income from discontinued operations 1.16 .14
Cumulative effect of accounting change .05 -
Net income $2.66 $1.38
Diluted earnings per share:
Income from continuing operations $1.45 $1.24
Income from discontinued operations 1.15 .14
Cumulative effect of accounting change .05 -
Net income $2.65 $1.38
ALLTEL CORPORATION
CONSOLIDATED RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-
Page 3
(Dollars in thousands, except per share amounts)
(NON-GAAP)
SIX MONTHS ENDED
----------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
REVENUES AND SALES:
Wireless $2,303,235 $1,946,854 $356,381 18
Wireline 1,215,100 996,258 218,842 22
Communications support
services 467,959 451,760 16,199 4
Total business segments 3,986,294 3,394,872 591,422 17
Less: intercompany
eliminations 70,244 72,947 (2,703) (4)
Total revenues and sales $3,916,050 $3,321,925 $594,125 18
SEGMENT INCOME:
Wireless $ 497,978 $ 447,620 $ 50,358 11
Wireline 439,614 371,441 68,173 18
Communications support
services 38,451 39,819 (1,368) (3)
Total segment income 976,043 858,880 117,163 14
Corporate expenses 19,884 17,091 2,793 16
Total operating income $ 956,159 $ 841,789 $114,370 14
OPERATING MARGIN (A):
Wireless 21.6% 23.0% (1.4%) (6)
Wireline 36.2% 37.3% (1.1%) (3)
Communications support
services 8.2% 8.8% (.6%) (7)
Consolidated 24.4% 25.3% (.9%) (4)
NET INCOME $ 471,638 $ 443,835 $ 27,803 6
EARNINGS PER SHARE:
Basic $1.51 $1.43 $.08 6
Diluted $1.51 $1.42 $.09 6
(A) Operating margin is calculated by dividing segment income by the
corresponding amount of segment revenues and sales.
Current businesses excludes integration expenses and other charges,
gain (loss) on disposal of assets, write-down of investments and
receivables, and net financing costs related to the prefunding of 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 June 30, 2003
(Dollars in thousands, except per share amounts)
Items Results of
Results Excluded from Operations
of Operations Current from Current
Under GAAP Businesses Businesses
--------- ---------- ----------
Revenues and sales:
Service revenues $1,797,520 $ - $1,797,520
Product sales 212,732 - 212,732
Total revenues and sales 2,010,252 - 2,010,252
Costs and expenses:
Cost of services 541,348 - 541,348
Cost of products sold 271,354 - 271,354
Selling, general,
administrative
and other 396,722 - 396,722
Depreciation and
amortization 310,712 - 310,712
Integration expenses and
other charges 18,979 (18,979) (A) -
Total costs and expenses 1,539,115 (18,979) 1,520,136
Operating income 471,137 18,979 490,116
Equity earnings in
unconsolidated partnerships 16,689 - 16,689
Minority interest in
consolidated partnerships (21,390) - (21,390)
Other income, net 3,634 - 3,634
Interest expense (93,210) - (93,210)
Write-down of investments
and other (13,066) 13,066 (B) -
Income from continuing
operations before
income taxes 363,794 32,045 395,839
Income taxes 139,585 12,238 (J) 151,823
Income from continuing
operations 224,209 19,807 244,016
Discontinued operations:
Income from discontinued
operations (net of income
taxes) - - -
Gain on sale of discontinued
operations (net of income
taxes) 323,927 (323,927) (H) -
Income before cumulative effect
of accounting change 548,136 (304,120) 244,016
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 548,136 (304,120) 244,016
Preferred dividends 28 - 28
Net income applicable to
common shares $ 548,108 $(304,120) $ 243,988
Basic earnings per share:
Income from continuing
operations $ .72 $ .06 $.78
Income from discontinued
operations 1.04 (1.04) -
Cumulative effect of
accounting change - - -
Net income $1.76 $(.98) $.78
Diluted earnings per share:
Income from continuing
operations $ .72 $ .06 $.78
Income from discontinued
operations 1.03 (1.03) -
Cumulative effect of
accounting change - - -
Net income $1.75 $(.97) $.78
See notes on pages 8 and 9 for a description of the line items marked
(A) - (K).
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 June 30, 2003
(Dollars 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 $1,127,642 $597,109 $106,708 $(33,939)
Product sales 67,774 9,135 136,127 (304)
Total revenues
and sales 1,195,416 606,244 242,835 (34,243)
Costs and expenses:
Cost of services 316,912 185,546 72,046 (33,156)
Cost of products
sold 141,246 6,319 124,088 (299)
Selling, general,
administrative
and other 309,903 64,177 17,094 5,548
Depreciation and
amortization 165,364 133,376 8,806 3,166
Integration expenses
and other charges - - - -
Total costs and
expenses 933,425 389,418 222,034 (24,741)
Operating income $ 261,991 $216,826 $ 20,801 $ (9,502)
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 June 30, 2002
(Dollars in thousands, except per share amounts)
Items Results of
Results Excluded from Operations
of Operations Current from Current
Under GAAP Businesses Businesses
--------- ---------- ----------
Revenues and sales:
Service revenues $1,524,322 $ - $1,524,322
Product sales 174,715 - 174,715
Total revenues and sales 1,699,037 - 1,699,037
Costs and expenses:
Cost of services 490,269 (14,000) (C) 476,269
Cost of products sold 224,360 - 224,360
Selling, general,
administrative
and other 319,582 - 319,582
Depreciation and
amortization 257,766 - 257,766
Integration expenses and
other charges 9,022 (9,022) (D) -
Total costs and expenses 1,300,999 (23,022) 1,277,977
Operating income 398,038 23,022 421,060
Equity earnings in
unconsolidated partnerships 13,741 - 13,741
Minority interest in
consolidated partnerships (18,677) - (18,677)
Other income, net 5,537 (4,291) (E) 1,246
Interest expense (77,509) 17,813 (F) (59,696)
Write-down of investments
and other (13,739) 13,739 (G) -
Income from continuing
operations before
income taxes 307,391 50,283 357,674
Income taxes 115,378 19,487 (J) 134,865
Income from continuing
operations 192,013 30,796 222,809
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 24,155 (24,155) (H) -
Gain on sale of discontinued
operations (net of income
taxes) - - -
Income before cumulative effect
of accounting change 216,168 6,641 222,809
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 216,168 6,641 222,809
Preferred dividends 32 - 32
Net income applicable to
common shares $ 216,136 $ 6,641 $ 222,777
Basic earnings per share:
Income from continuing
operations $.62 $.10 $.72
Income from discontinued
operations .08 (.08) -
Cumulative effect of
accounting change - - -
Net income $.70 $.02 $.72
Diluted earnings per share:
Income from continuing
operations $.61 $.10 $.71
Income from discontinued
operations .08 (.08) -
Cumulative effect of
accounting change - - -
Net income $.69 $.02 $.71
See notes on pages 8 and 9 for a description of the line items marked
(A) - (K).
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 June 30, 2002
(Dollars 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 $ 965,543 $489,265 $109,625 $(40,111)
Product sales 37,182 7,941 130,277 (685)
Total revenues
and sales 1,002,725 497,206 239,902 (40,796)
Costs and expenses:
Cost of services 293,862 146,128 75,677 (39,398)
Cost of products
sold 103,624 5,695 115,717 (676)
Selling, general,
administrative
and other 240,282 56,924 18,050 4,326
Depreciation and
amortization 137,573 107,100 9,353 3,740
Integration expenses
and other charges - - - -
Total costs and
expenses 775,341 315,847 218,797 (32,008)
Operating income $ 227,384 $181,359 $ 21,105 $ (8,788)
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 6
for the six months ended June 30, 2003
(Dollars in thousands, except per share amounts)
Items Results of
Results Excluded from Operations
of Operations Current from Current
Under GAAP Businesses Businesses
--------- ---------- ----------
Revenues and sales:
Service revenues $3,513,982 $ - $3,513,982
Product sales 402,068 - 402,068
Total revenues and sales 3,916,050 - 3,916,050
Costs and expenses:
Cost of services 1,068,753 - 1,068,753
Cost of products sold 509,066 - 509,066
Selling, general,
administrative
and other 767,837 - 767,837
Depreciation and
amortization 614,235 - 614,235
Integration expenses and
other charges 18,979 (18,979) (A) -
Total costs and expenses 2,978,870 (18,979) 2,959,891
Operating income 937,180 18,979 956,159
Equity earnings in
unconsolidated partnerships 34,194 - 34,194
Minority interest in
consolidated partnerships (39,224) - (39,224)
Other income, net 4,081 - 4,081
Interest expense (196,582) - (196,582)
Write-down of investments
and other (13,066) 13,066 (B) -
Income from continuing
operations before
income taxes 726,583 32,045 758,628
Income taxes 274,752 12,238 (J) 286,990
Income from continuing
operations 451,831 19,807 471,638
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 37,072 (37,072) (H) -
Gain on sale of discontinued
operations (net of income
taxes) 323,927 (323,927) (H) -
Income before cumulative effect
of accounting change 812,830 (341,192) 471,638
Cumulative effect of accounting
change (net of income
taxes) 15,591 (15,591) (K) -
Net income 828,421 (356,783) 471,638
Preferred dividends 56 - 56
Net income applicable to
common shares $ 828,365 $(356,783) $ 471,582
Basic earnings per share:
Income from continuing
operations $1.45 $ .06 $1.51
Income from discontinued
operations 1.16 (1.16) -
Cumulative effect of
accounting change .05 (.05) -
Net income $2.66 $(1.15) $1.51
Diluted earnings per share:
Income from continuing
operations $1.45 $ .06 $1.51
Income from discontinued
operations 1.15 (1.15) -
Cumulative effect of
accounting change .05 (.05) -
Net income $2.65 $(1.14) $1.51
See notes on pages 8 and 9 for a description of the line items marked
(A) - (K).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 6
for the six months ended June 30, 2003
(Dollars 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 $2,174,652 $1,194,641 $214,265 $(69,576)
Product sales 128,583 20,459 253,694 (668)
Total revenues
and sales 2,303,235 1,215,100 467,959 (70,244)
Costs and expenses:
Cost of services 624,422 367,612 144,751 (68,032)
Cost of products
sold 263,693 14,261 231,772 (660)
Selling, general,
administrative
and other 590,609 130,403 34,813 12,012
Depreciation and
amortization 326,533 263,210 18,172 6,320
Integration expenses
and other charges - - - -
Total costs and
expenses 1,805,257 775,486 429,508 (50,360)
Operating income $ 497,978 $ 439,614 $ 38,451 $(19,884)
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 7
for the six months ended June 30, 2002
(Dollars in thousands, except per share amounts)
Items Results of
Results Excluded from Operations
of Operations Current from Current
Under GAAP Businesses Businesses
--------- ---------- ----------
Revenues and sales:
Service revenues $3,003,213 $ - $3,003,213
Product sales 318,712 - 318,712
Total revenues and sales 3,321,925 - 3,321,925
Costs and expenses:
Cost of services 940,626 (14,000) (C) 926,626
Cost of products sold 433,096 - 433,096
Selling, general,
administrative
and other 615,151 - 615,151
Depreciation and
amortization 505,263 - 505,263
Integration expenses and
other charges 51,870 (51,870) (D,I) -
Total costs and expenses 2,546,006 (65,870) 2,480,136
Operating income 775,919 65,870 841,789
Equity earnings in
unconsolidated partnerships 22,385 - 22,385
Minority interest in
consolidated partnerships (33,702) - (33,702)
Other income, net 6,773 (4,291) (E) 2,482
Interest expense (138,380) 17,813 (F) (120,567)
Write-down of investments
and other (13,739) 13,739 (G) -
Income from continuing
operations before
income taxes 619,256 93,131 712,387
Income taxes 232,307 36,245 (J) 268,552
Income from continuing
operations 386,949 56,886 443,835
Discontinued operations:
Income from discontinued
operations (net of income
taxes) 43,025 (43,025) (H) -
Gain on sale of discontinued
operations (net of income
taxes) - - -
Income before cumulative effect
of accounting change 429,974 13,861 443,835
Cumulative effect of accounting
change (net of income
taxes) - - -
Net income 429,974 13,861 443,835
Preferred dividends 65 - 65
Net income applicable to
common shares $ 429,909 $ 13,861 $ 443,770
Basic earnings per share:
Income from continuing
operations $1.24 $.19 $1.43
Income from discontinued
operations .14 (.14) -
Cumulative effect of
accounting change - - -
Net income $1.38 $.05 $1.43
Diluted earnings per share:
Income from continuing
operations $1.24 $.18 $1.42
Income from discontinued
operations .14 (.14) -
Cumulative effect of
accounting change - - -
Net income $1.38 $.04 $1.42
See notes on pages 8 and 9 for a description of the line items marked
(A) - (K).
ALLTEL CORPORATION
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 7
for the six months ended June 30, 2002
(Dollars 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 $1,880,289 $980,672 $213,569 $(71,317)
Product sales 66,565 15,586 238,191 (1,630)
Total revenues
and sales 1,946,854 996,258 451,760 (72,947)
Costs and expenses:
Cost of services 562,219 287,394 146,836 (69,823)
Cost of products
sold 213,379 10,981 210,405 (1,669)
Selling, general,
administrative
and other 454,855 116,030 36,211 8,055
Depreciation and
amortization 268,781 210,412 18,489 7,581
Integration expenses
and other charges - - - -
Total costs and
expenses 1,499,234 624,817 411,941 (55,856)
Operating income $ 447,620 $371,441 $ 39,819 $(17,091)
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 July 24, 2003,
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
telecommunications 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 and write-down of
investments 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) These charges include 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.
(B) 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.
(C) 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.
(D) These charges represent costs incurred by the Company related
to its acquisitions completed on August 1, 2002 of wireless properties
from CenturyTel and wireline properties in Kentucky from Verizon.
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.
(E) 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 D.
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 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 D.
(G) Represents the write-down to reflect the other-than-temporary
declines in the fair value of two equity investments.
(H) 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 subsidy, 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.
(I) These charges included $32.4 million incurred by the Company
in connection with the restructuring of the Company's competitive
local exchange carrier ("CLEC") and retail store operations. The
restructuring charges included severance and employee benefit costs of
$13.4 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 cell site equipment, and incurred $3.4 million of expenses
related to ALLTEL's acquisition completed on August 1, 2002 of
wireline properties from Verizon in Kentucky, as discussed in Note D
above.
(J) Tax related effects of the items discussed in Notes A - I
above.
(K) 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 will continue 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
THREE MONTHS ENDED
------------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
Wireless:
Controlled POPs 60,163,350 51,107,009 9,056,341 18
Customers 7,872,260 6,843,411 1,028,849 15
Penetration rate 13.1% 13.4% (.3%) (2)
Average customers 7,828,849 6,804,099 1,024,750 15
Gross customer additions:
Internal 655,682 558,887 96,795 17
Acquired, net of
divested 30,413 - 30,413 -
Total 686,095 558,887 127,208 23
Net customer additions:
Internal 80,998 80,197 801 1
Acquired, net of
divested 30,413 - 30,413 -
Total 111,411 80,197 31,214 39
Average revenue per
customer per month $48.01 $47.30 $.71 2
Cost to acquire a new
customer (A) $322 $321 $1 -
Postpay churn 2.03% 2.19% (.16%) (7)
Total churn 2.45% 2.35% .10% 4
Service revenue
operating margin (B) 23.2% 23.5% (.3%) (1)
Capital expenditures
(in thousands) $205,903 $220,863 ($14,960) (7)
Wireline:
Customers 3,133,659 2,611,861 521,798 20
DSL customers 105,178 38,067 67,111 176
Capital expenditures
(in thousands) $91,848 $104,642 ($12,794) (12)
Communications support
services:
Long-distance customers 1,644,436 1,363,794 280,642 21
Capital expenditures
(in thousands) $5,992 $7,146 ($1,154) (16)
Consolidated:
Equity free cash flow (C) $236,223 $128,280 $107,943 84
Capital expenditures
(in thousands)(D) $318,505 $352,295 ($33,790) (10)
Total assets
(in thousands) $16,607,806 $15,580,988 $1,026,818 7
(A) Cost to acquire a new customer is calculated by dividing the
GAAP reported sales and marketing expenses and net equipment subsidies
(included within "Selling, general, administrative and other" and
"Cost of products sold", respectively, as reported in the Consolidated
Statements of Income), by the number of internal gross customer
additions in the period.
(B) Service revenue operating margin is calculated by dividing
wireless segment income by wireless service revenue.
(C) 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 D.
(D) Includes capitalized software development costs.
ALLTEL CORPORATION
SUPPLEMENTAL OPERATING INFORMATION-Page 10
SIX MONTHS ENDED
----------------
Increase
June 30, June 30, (Decrease)
2003 2002 Amount %
---- ---- ------ -
Wireless:
Average customers 7,741,959 6,747,821 994,138 15
Gross customer additions:
Internal 1,312,806 1,127,723 185,083 16
Acquired, net of
divested 141,333 - 141,333 -
Total 1,454,139 1,127,723 326,416 29
Net customer additions:
Internal 129,329 160,447 (31,118) (19)
Acquired, net of
divested 141,333 - 141,333 -
Total 270,662 160,447 110,215 69
Average revenue per
customer per month $46.82 $46.44 $.38 1
Cost to acquire a new
customer (A) $303 $318 ($15) (5)
Postpay churn 2.10% 2.25% (.15%) (7)
Total churn 2.55% 2.39% .16% 7
Service revenue
operating margin (B) 22.9% 23.8% (.9%) (4)
Capital expenditures
(in thousands) $347,855 $336,470 $11,385 3
Wireline:
Capital expenditures
(in thousands) $173,394 $174,576 ($1,182) (1)
Communications support
services:
Capital expenditures
(in thousands) $9,811 $11,503 ($1,692) (15)
Consolidated:
Equity free cash flow (C) $526,068 $387,190 $138,878 36
Capital expenditures
(in thousands) (D) $559,805 $561,908 ($2,103) -
(A) Cost to acquire a new customer is calculated by dividing the
GAAP reported sales and marketing expenses and net equipment subsidies
(included within "Selling, general, administrative and other" and
"Cost of products sold", respectively, as reported in the Consolidated
Statements of Income), by the number of internal gross customer
additions in the period.
(B) Service revenue operating margin is calculated by dividing
wireless segment income by wireless service revenue.
(C) 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 D.
(D) Includes capitalized software development costs.
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 11
(Dollars in thousands)
ASSETS
June 30, Dec. 31,
2003 2002
---- ----
CURRENT ASSETS:
Cash and short-term investments $ 496,413 $ 134,641
Accounts receivable (less allowance for
doubtful accounts of $51,585 and
$68,391, respectively) 1,111,347 1,162,833
Inventories 135,956 138,530
Prepaid expenses and other 51,979 38,819
Assets held for sale - 538,223
Total current assets 1,795,695 2,013,046
Investments 640,087 327,424
Goodwill 4,851,624 4,769,718
Other intangibles 1,342,846 1,346,510
PROPERTY, PLANT AND EQUIPMENT:
Land 289,787 275,332
Buildings and improvements 1,114,479 1,074,277
Wireline 6,331,789 6,188,507
Wireless 5,069,452 4,798,304
Information processing 1,064,773 1,047,659
Other 561,347 571,042
Under construction 412,401 365,026
Total property, plant and equipment 14,844,028 14,320,147
Less accumulated depreciation 7,248,749 6,756,451
Net property, plant and equipment 7,595,279 7,563,696
Other assets 382,275 368,746
TOTAL ASSETS $16,607,806 $16,389,140
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 11
(Dollars in thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
June 30, Dec. 31,
2003 2002
---- ----
CURRENT LIABILITIES:
Current maturities of
long-term debt $ 276,471 $ 494,711
Accounts payable 588,819 558,275
Advance payments and
customer deposits 207,991 214,296
Accrued taxes 347,010 72,255
Accrued dividends 109,504 109,564
Accrued interest 108,171 123,806
Other current liabilities 144,355 136,459
Liabilities related to
assets held for sale - 190,498
Total current liabilities 1,782,321 1,899,864
Long-term debt 5,657,670 6,145,381
Deferred income taxes 1,281,364 1,115,463
Other liabilities 1,223,366 1,230,328
SHAREHOLDERS' EQUITY:
Preferred stock 368 391
Common stock 311,817 311,183
Additional paid-in capital 718,678 695,656
Unrealized holding gain (loss)
on investments 23,516 (1)
Foreign currency translation
adjustment 592 (6,868)
Retained earnings 5,608,114 4,997,743
Total shareholders' equity 6,663,085 5,998,104
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $16,607,806 $16,389,140
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 12
(Dollars in thousands)
THREE MONTHS ENDED
------------------
June 30, June 30,
2003 2002
---- ----
Net Cash Provided from Operations:
Net income $ 548,136 $ 216,168
Adjustments to reconcile net income to net
cash provided from operations:
Income from discontinued operations (323,927) (24,155)
Cumulative effect of accounting
change - -
Depreciation and amortization 310,712 257,766
Provision for doubtful accounts 44,232 80,929
Non-cash portion of integration
expenses and other charges 13,245 942
Write-down of investments and other 13,066 13,739
Increase in deferred income taxes 36,543 29,529
Other, net 13,649 1,228
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions:
Accounts receivable (92,898) (110,374)
Inventories 18,802 (2,822)
Accounts payable 59,424 29,954
Other current liabilities 20,887 34,710
Other, net 1,370 9,956
Net cash provided from operations 663,241 537,570
Cash Flows from Investing Activities:
Additions to property, plant and
equipment (303,644) (333,731)
Additions to capitalized software
development costs (14,861) (18,564)
Additions to investments (6,844) (3,426)
Purchases of property, net of
cash acquired (7,500) (190)
Proceeds from the lease of cell
site towers - -
Proceeds from the return on investments 3,743 8,426
Other, net (226) 3,050
Net cash used in investing
activities (329,332) (344,435)
Cash Flows from Financing Activities:
Dividends on preferred and common stock (109,035) (105,657)
Reductions in long-term debt (569,232) (25,557)
Distributions to minority investors (18,283) (13,201)
Long-term debt issued, net of
issuance costs - 2,810,910
Common stock issued 20,107 2,073
Net cash provided from (used in)
financing activities (676,443) 2,668,568
Net cash provided from discontinued
operations 785,183 5,210
Effect of exchange rate changes on cash and
short-term investments 903 3,017
Increase in cash and short-term
investments 443,552 2,869,930
Cash and Short-term Investments:
Beginning of the period 52,861 72,256
End of the period $ 496,413 $2,942,186
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 12
(Dollars in thousands)
SIX MONTHS ENDED
----------------
June 30, June 30,
2003 2002
---- ----
Net Cash Provided from Operations:
Net income $ 828,421 $ 429,974
Adjustments to reconcile net income to net
cash provided from operations:
Income from discontinued operations (360,999) (43,025)
Cumulative effect of accounting
change (15,591) -
Depreciation and amortization 614,235 505,263
Provision for doubtful accounts 97,040 135,100
Non-cash portion of integration
expenses and other charges 13,245 12,387
Write-down of investments and other 13,066 13,739
Increase in deferred income taxes 114,526 63,394
Other, net 11,851 6,189
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions:
Accounts receivable (71,254) (146,788)
Inventories 3,318 41,347
Accounts payable (13,714) 12,302
Other current liabilities (16,193) 99,137
Other, net (7,860) (23,761)
Net cash provided from operations 1,210,091 1,105,258
Cash Flows from Investing Activities:
Additions to property, plant and
equipment (531,395) (524,595)
Additions to capitalized software
development costs (28,410) (37,313)
Additions to investments (10,605) (4,477)
Purchases of property, net of
cash acquired (132,084) (19,724)
Proceeds from the lease of cell
site towers - 7,500
Proceeds from the return on investments 17,584 19,709
Other, net 6,961 (6,071)
Net cash used in investing
activities (677,949) (564,971)
Cash Flows from Financing Activities:
Dividends on preferred and common stock (218,105) (211,388)
Reductions in long-term debt (740,484) (253,002)
Distributions to minority investors (28,255) (25,757)
Long-term debt issued, net of
issuance costs - 2,810,910
Common stock issued 23,011 11,872
Net cash provided from (used in)
financing activities (963,833) 2,332,635
Net cash provided from discontinued
operations 792,680 3,456
Effect of exchange rate changes on cash and
short-term investments 783 2,651
Increase in cash and short-term
investments 361,772 2,879,029
Cash and Short-term Investments:
Beginning of the period 134,641 63,157
End of the period $ 496,413 $2,942,186
ALLTEL CORPORATION
RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 13
(Dollars in thousands)
THREE MONTHS ENDED
------------------
June 30, June 30,
2003 2002
---- ----
Net cash provided from operations $ 663,241 $ 537,570
Adjustments to reconcile to net income
under GAAP:
Income from discontinued operations 323,927 24,155
Cumulative effect of accounting change - -
Depreciation and amortization expense (310,712) (257,766)
Provision for doubtful accounts (44,232) (80,929)
Non-cash portion of integration expenses
and other charges (13,245) (942)
Write-down of investments and other (13,066) (13,739)
Increase in deferred income taxes (36,543) (29,529)
Other non-cash changes, net (13,649) (1,228)
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions (7,585) 38,576
Net income under GAAP 548,136 216,168
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 5,408
Net financing costs related to prefunding
the Company's wireless and wireline
acquisitions, net of tax - 8,256
Write-down of investments and other,
net of tax 10,358 8,438
Cumulative effect of accounting change - -
Income from discontinued operations (323,927) (24,155)
Net income from current businesses 244,016 222,809
Adjustments to reconcile to equity free cash
flow from current businesses:
Depreciation and amortization expense 310,712 257,766
Capital expenditures (303,644) (333,731)
Capitalized software development costs (14,861) (18,564)
Equity free cash flow from current
businesses $ 236,223 $ 128,280
ALLTEL CORPORATION
RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF
OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 13
(Dollars in thousands)
SIX MONTHS ENDED
----------------
June 30, June 30,
2003 2002
---- ----
Net cash provided from operations $1,210,091 $1,105,258
Adjustments to reconcile to net income
under GAAP:
Income from discontinued operations 360,999 43,025
Cumulative effect of accounting change 15,591 -
Depreciation and amortization expense (614,235) (505,263)
Provision for doubtful accounts (97,040) (135,100)
Non-cash portion of integration expenses
and other charges (13,245) (12,387)
Write-down of investments and other (13,066) (13,739)
Increase in deferred income taxes (114,526) (63,394)
Other non-cash changes, net (11,851) (6,189)
Changes in operating assets and
liabilities, net of the effects
of acquisitions and dispositions 105,703 17,763
Net income under GAAP 828,421 429,974
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 31,498
Net financing costs related to prefunding
the Company's wireless and wireline
acquisitions, net of tax - 8,256
Write-down of investments and other,
net of tax 10,358 8,438
Cumulative effect of accounting change (15,591) -
Income from discontinued operations (360,999) (43,025)
Net income from current businesses 471,638 443,835
Adjustments to reconcile to equity free cash
flow from current businesses:
Depreciation and amortization expense 614,235 505,263
Capital expenditures (531,395) (524,595)
Capitalized software development costs (28,410) (37,313)
Equity free cash flow from current
businesses $ 526,068 $ 387,190
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