Slide 1: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended March 31, 2006 (In thousands, except per share amounts) Results of Operations Under GAAP $2,247,719 292,017 2,539,736 731,725 355,793 498,959 404,541 19,525 2,010,543 529,193 12,932 (13,895) 11,882 (88,974) 451,138 171,559 279,579 17,828 297,407 297,407 21 297,386 Items Excluded from Current Businesses $ (45,492) (A) (19,525) (B) (65,017) 65,017 65,017 24,494 (N) 40,523 (17,828) (O) 22,695 22,695 22,695 Results of Operations from Current Businesses $2,247,719 292,017 2,539,736 731,725 355,793 498,959 359,049 1,945,526 594,210 12,932 (13,895) 11,882 (88,974) 516,155 196,053 320,102 320,102 320,102 21 320,081 $ Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,638,798 118,592 1,757,390 537,839 204,430 413,106 246,460 1,401,835 355,555 $565,845 9,590 575,435 175,874 7,353 62,059 103,583 348,869 $ 226,566 $ $ 84,954 165,974 250,928 57,853 147,649 16,532 7,413 229,447 21,481
Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
Corporate Operations and Intercompany Eliminations $ (41,878) (2,139) (44,017) (39,841) (3,639) 7,262 1,593 (34,625) $ (9,392)
$
$
$
$ .72 .05 $.77
$.11 (.05) $.06
$.83 $.83
$ .72 .05 $.77
$.10 (.05) $.05
$.82 $.82
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 2: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the twelve months ended December 31, 2005 (In thousands, except per share amounts) Results of Operations Under GAAP $8,380,501 1,106,458 9,486,959 2,743,745 1,315,320 1,795,516 1,482,605 58,717 7,395,903 2,091,056 43,383 (69,105) 158,788 (332,588) 218,830 2,110,364 801,836 1,308,528 30,292 1,338,820 (7,441) 1,331,379 93 $1,331,286 Items Excluded from Current Businesses $ (37,557) (1,898) (104,440) (58,717) (202,612) 202,612 (116,036) (F)(K) (218,830) (H)(I) (132,254) (58,641) (N) (73,613) (30,292) (O) (103,905) 7,441 (Q) (96,464) (96,464)
(C)(F)(J) (F) (A) (D)(E)(G)
Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
Results of Operations from Current Businesses $8,380,501 1,106,458 9,486,959 2,706,188 1,315,320 1,793,618 1,378,165 7,193,291 2,293,668 43,383 (69,105) 42,752 (332,588) 1,978,110 743,195 1,234,915 1,234,915 1,234,915 93 $1,234,822
Segment Information from Current Businesses Communications Support Wireless Wireline Services $5,895,143 380,714 6,275,857 1,917,754 697,593 1,445,165 856,258 4,916,770 $1,359,087 $2,336,741 42,395 2,379,136 705,506 32,919 256,259 480,729 1,475,413 $ 903,723 $ $ 322,665 702,917 1,025,582 236,160 621,864 65,494 33,866 957,384 68,198
Corporate Operations and Intercompany Eliminations $(174,048) (19,568) (193,616) (153,232) (37,056) 26,700 7,312 (156,276) $ (37,340)
$
$3.84 .09 (.02) $3.91
$(.22) (.09) .02 $(.29)
$3.62 $3.62
$3.80 .09 (.02) $3.87
$(.21) (.09) .02 $(.28)
$3.59 $3.59
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 3: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended December 31, 2005 (In thousands, except per share amounts) Results of Operations Under GAAP $2,263,605 318,146 2,581,751 736,857 381,764 496,549 404,079 39,844 2,059,093 522,658 6,992 (11,267) 2,752 (86,134) 435,001 176,681 258,320 4,270 262,590 (7,441) 255,149 21 $ 255,128 Items Excluded from Current Businesses $ (9,506) (C) (43,596) (A) (39,844) (D)(E) (92,946) 92,946 92,946 24,424 (N) 68,522 (4,270) (O) 64,252 7,441 (Q) 71,693 71,693 Results of Operations from Current Businesses $2,263,605 318,146 2,581,751 727,351 381,764 496,549 360,483 1,966,147 615,604 6,992 (11,267) 2,752 (86,134) 527,947 201,105 326,842 326,842 326,842 21 $ 326,821 Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,643,195 116,983 1,760,178 543,352 218,678 411,139 243,191 1,416,360 $ 343,818 $588,349 9,801 598,150 165,116 6,899 63,637 106,955 342,607 $ 255,543 $ $ 82,323 194,115 276,438 58,077 168,545 16,874 8,553 252,049 24,389
Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
Corporate Operations and Intercompany Eliminations $ (50,262) (2,753) (53,015) (39,194) (12,358) 4,899 1,784 (44,869) $ (8,146)
$
$ .67 .01 (.02) $.66
$.18 (.01) .02 $.19
$.85 $.85
$ .67 .01 (.02) $.66
$.17 (.01) .02 $.18
$.84 $.84
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 4: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended September 30, 2005 (In thousands, except per share amounts) Results of Operations Under GAAP $2,229,370 289,749 2,519,119 719,683 343,718 470,966 388,989 18,873 1,942,229 576,890 10,434 (20,573) 27,325 (83,422) 30,557 541,211 206,068 335,143 26,022 361,165 361,165 24 361,141 Items Excluded from Current Businesses $ (8,260) (1,898) (32,373) (18,873) (61,404) 61,404 (5,000) (F) (30,557) (H) 25,847 9,784 (N) 16,063 (26,022) (O) (9,959) (9,959) (9,959)
(F) (F) (A) (G)
Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
Results of Operations from Current Businesses $2,229,370 289,749 2,519,119 711,423 343,718 469,068 356,616 1,880,825 638,294 10,434 (20,573) 22,325 (83,422) 567,058 215,852 351,206 351,206 351,206 24 351,182 $
Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,606,482 101,876 1,708,358 514,923 179,831 379,806 225,480 1,300,040 408,318 $580,561 11,722 592,283 176,699 10,021 66,154 121,026 373,900 $ 218,383 $ $ 84,728 178,481 263,209 58,964 158,860 16,710 8,340 242,874 20,335
Corporate Operations and Intercompany Eliminations $ (42,401) (2,330) (44,731) (39,163) (4,994) 6,398 1,770 (35,989) $ (8,742)
$
$
$
$ .92 .07 $.99
$.05 (.07) $(.02)
$.97 $.97
$ .91 .07 $.98
$.05 (.07) $(.02)
$.96 $.96
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 5: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended June 30, 2005 (In thousands, except per share amounts) Results of Operations Under GAAP $1,989,264 270,842 2,260,106 660,945 308,065 420,536 348,320 1,737,866 522,240 15,214 (18,918) 7,976 (76,343) 188,273 638,442 236,381 402,061 402,061 402,061 24 402,037 Items Excluded from Current Businesses $ (14,694) (A) (14,694) 14,694 (188,273) (I) (173,579) (64,620) (N) (108,959) (108,959) (108,959) $ (108,959) Results of Operations from Current Businesses $1,989,264 270,842 2,260,106 660,945 308,065 420,536 333,626 1,723,172 536,934 15,214 (18,918) 7,976 (76,343) 464,863 171,761 293,102 293,102 293,102 24 293,078 $ Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,371,089 84,223 1,455,312 453,806 150,278 331,743 197,866 1,133,693 321,619 $584,016 11,055 595,071 182,667 9,001 62,662 125,445 379,775 $ 215,296 $ $ 77,772 183,458 261,230 62,776 161,399 16,982 8,501 249,658 11,572
Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
Corporate Operations and Intercompany Eliminations $ (43,613) (7,894) (51,507) (38,304) (12,613) 9,149 1,814 (39,954) $ (11,553)
$
$
$1.28 $1.28
$(.35) $(.35)
$.93 $.93
$1.27 $1.27
$(.34) $(.34)
$.93 $.93
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 6: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended March 31, 2005 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income $1,898,262 227,721 2,125,983 626,260 281,773 407,465 341,217 1,656,715 469,268 10,743 (18,347) 120,735 (86,689) 495,710 182,706 313,004 313,004 313,004 24 312,980 Items Excluded from Current Businesses $ (19,791) (J) (13,777) (A) (33,568) 33,568 (111,036) (K) (77,468) (28,229) (N) (49,239) (49,239) (49,239) (49,239) Results of Operations from Current Businesses $1,898,262 227,721 2,125,983 606,469 281,773 407,465 327,440 1,623,147 502,836 10,743 (18,347) 9,699 (86,689) 418,242 154,477 263,765 263,765 263,765 24 263,741 $ Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,274,377 77,632 1,352,009 405,673 148,806 322,477 189,721 1,066,677 285,332 $583,815 9,817 593,632 181,024 6,998 63,806 127,303 379,131 $214,501 $ $ 77,842 146,863 224,705 56,343 133,060 14,928 8,472 212,803 11,902 $ Corporate Operations and Intercompany Eliminations $ (37,772) (6,591) (44,363) (36,571) (7,091) 6,254 1,944 (35,464) (8,899)
$
$
$
$1.04 $1.04
$(.17) $(.17)
$.87 $.87
$1.03 $1.03
$(.16) $(.16)
$.87 $.87
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 7: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the twelve months ended December 31, 2004 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) $7,374,279 871,862 8,246,141 2,374,220 1,075,545 1,524,165 1,299,691 50,892 6,324,513 1,921,628 68,486 (80,096) 34,500 (352,490) 1,592,028 565,331 1,026,697 19,538 1,046,235 Items Excluded from Current Businesses $ (52,524) (A) (50,892) (L)(M) (103,416) 103,416 103,416 59,911 (N)(P) 43,505 (19,538) (P) 23,967 Results of Operations from Current Businesses $ 7,374,279 871,862 8,246,141 2,374,220 1,075,545 1,524,165 1,247,167 6,221,097 2,025,044 68,486 (80,096) 34,500 (352,490) 1,695,444 625,242 1,070,202 1,070,202 Segment Information from Current Businesses Communications Support Wireless Wireline Services $4,791,235 286,852 5,078,087 1,543,576 573,646 1,201,789 686,313 4,005,324 $ 1,072,763 $2,380,788 39,021 2,419,809 704,335 28,711 244,327 516,445 1,493,818 $ 925,991 $ $ 346,662 577,193 923,855 257,845 514,239 54,729 34,325 861,138 62,717 $ Corporate Operations and Intercompany Eliminations $ (144,406) (31,204) (175,610) (131,536) (41,051) 23,320 10,084 (139,183) (36,427)
Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
1,046,235 103 $ 1,046,132
$
23,967 23,967
1,070,202 103 $ 1,070,099
$3.34 .06 $3.40
$ .14 (.06) $.08
$3.48 $3.48
$3.33 .06 $3.39
$ .14 (.06) $.08
$3.47 $3.47
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 8: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended December 31, 2004 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) $1,897,402 242,391 2,139,793 604,818 299,603 402,489 332,520 (873) 1,638,557 501,236 14,970 (19,227) 11,360 (87,512) 420,827 150,182 270,645 270,645 Items Excluded from Current Businesses $ (13,431) (A) 873 (L) (12,558) 12,558 12,558 5,603 (N) 6,955 6,955 Results of Operations from Current Businesses $ 1,897,402 242,391 2,139,793 604,818 299,603 402,489 319,089 1,625,999 513,794 14,970 (19,227) 11,360 (87,512) 433,385 155,785 277,600 277,600 Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,252,773 73,999 1,326,772 399,114 154,747 318,968 180,358 1,053,187 $ 273,585 $597,315 10,460 607,775 173,146 8,576 62,466 127,921 372,109 $ 235,666 $ $ 81,462 167,027 248,489 64,297 146,997 14,856 8,454 234,604 13,885 $ Corporate Operations and Intercompany Eliminations $ (34,148) (9,095) (43,243) (31,739) (10,717) 6,199 2,356 (33,901) (9,342)
Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
270,645 25 $ 270,620
$
6,955 6,955
277,600 25 $ 277,575
$.89 $.89
$.03 $.03
$.92 $.92
$.89 $.89
$.02 $.02
$.91 $.91
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 9: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended September 30, 2004 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) $1,885,405 217,707 2,103,112 624,442 262,604 373,624 324,678 1,585,348 517,764 24,338 (23,647) 15,652 (86,699) 447,408 143,727 303,681 19,538 323,219 Items Excluded from Current Businesses $ (13,031) (A) (13,031) 13,031 13,031 24,402 (N)(P) (11,371) (19,538) (P) (30,909) Results of Operations from Current Businesses $ 1,885,405 217,707 2,103,112 624,442 262,604 373,624 311,647 1,572,317 530,795 24,338 (23,647) 15,652 (86,699) 460,439 168,129 292,310 292,310 Segment Information from Current Businesses Communications Support Wireless Wireline Services $1,239,409 74,338 1,313,747 406,660 139,301 294,070 173,138 1,013,169 $ 300,578 $592,373 10,563 602,936 179,719 7,822 60,033 127,580 375,154 $ 227,782 $ $ 86,862 140,275 227,137 68,910 124,575 13,593 8,570 215,648 11,489 $ Corporate Operations and Intercompany Eliminations $ (33,239) (7,469) (40,708) (30,847) (9,094) 5,928 2,359 (31,654) (9,054)
Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
323,219 25 $ 323,194
$
(30,909) (30,909)
292,310 25 $ 292,285
$ .99 .06 $1.05
$(.04) (.06) $(.10)
$.95 $.95
$ .99 .06 $1.05
$(.04) (.06) $(.10)
$.95 $.95
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 10: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended June 30, 2004 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) $ 1,825,894 216,170 2,042,064 584,189 256,055 372,859 321,151 1,534,254 507,810 15,926 (21,651) 2,875 (86,543) 418,417 155,889 262,528 262,528 Items Excluded from Current Businesses $ (13,031) (A) (13,031) 13,031 13,031 4,848 (N) 8,183 8,183 Results of Operations from Current Businesses $ 1,825,894 216,170 2,042,064 584,189 256,055 372,859 308,120 1,521,223 520,841 15,926 (21,651) 2,875 (86,543) 431,448 160,737 270,711 270,711 $ Segment Information from Current Businesses Communications Support Wireless Wireline Services $ 1,183,549 69,533 1,253,082 382,060 135,048 293,009 168,319 978,436 274,646 $ $ 599,567 10,065 609,632 178,599 7,158 60,908 128,610 375,275 234,357 $ $ 84,583 144,596 229,179 58,679 127,799 13,050 8,755 208,283 20,896 $ Corporate Operations and Intercompany Eliminations $ (41,805) (8,024) (49,829) (35,149) (13,950) 5,892 2,436 (40,771) (9,058)
Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
$
262,528 26 262,502
$
8,183 8,183
$
270,711 26 270,685
$.85 $.85
$.03 $.03
$.88 $.88
$.85 $.85
$.03 $.03
$.88 $.88
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 11: ALLTEL CORPORATION RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP) for the three months ended March 31, 2004 (In thousands, except per share amounts) Results of Operations Under GAAP Revenues and sales: Service revenues Product sales Total revenues and sales Costs and expenses: Cost of services Cost of products sold Selling, general, administrative and other Depreciation and amortization Restructuring and other charges Total costs and expenses Operating income Equity earnings in unconsolidated partnerships Minority interest in consolidated partnerships Other income, net Interest expense Gain on exchange or disposal of assets and other Income from continuing operations before income taxes Income taxes Income from continuing operations Income from discontinued operations (net of income taxes) Income before cumulative effect of accounting change Cumulative effect of accounting change (net of income taxes) $ 1,765,578 195,594 1,961,172 560,771 257,283 375,193 321,342 51,765 1,566,354 394,818 13,252 (15,571) 4,613 (91,736) 305,376 115,533 189,843 189,843 Items Excluded from Current Businesses $ (13,031) (A) (51,765) (M) (64,796) 64,796 64,796 25,058 (N) 39,738 39,738 Results of Operations from Current Businesses $ 1,765,578 195,594 1,961,172 560,771 257,283 375,193 308,311 1,501,558 459,614 13,252 (15,571) 4,613 (91,736) 370,172 140,591 229,581 229,581 $ $ Segment Information from Current Businesses Communications Support Wireless Wireline Services 1,115,504 68,982 1,184,486 355,742 144,550 295,742 164,498 960,532 223,954 $ $ 591,533 7,933 599,466 172,871 5,155 60,920 132,334 371,280 228,186 $ $ 93,755 125,295 219,050 65,959 114,868 13,230 8,546 202,603 16,447 $ Corporate Operations and Intercompany Eliminations $ (35,214) (6,616) (41,830) (33,801) (7,290) 5,301 2,933 (32,857) (8,973)
Net income Preferred dividends Net income applicable to common shares Basic earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income Diluted earnings per share: Income from continuing operations Income from discontinued operations Cumulative effect of accounting change Net income
$
189,843 27 189,816
$
39,738 39,738
$
229,581 27 229,554
$.61 $.61
$.13 $.13
$.74 $.74
$.61 $.61
$.12 $.12
$.73 $.73
See Notes to Reconcilations for a description of the items marked (A)-(Q).
Slide 12: ALLTEL CORPORATION NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)
As the Company evaluates segment performance based on segment income, which is computed as revenues and sales less operating expenses, the special cash dividend, the effects of the change in accounting for operating leases and integration expenses and other charges have not been allocated to the business segments. Wireless segment income also excludes amortization expense related to acquired intangible assets. 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) Eliminates the effects of amortization expense related to intangible assets recorded in connection with the acquisition of wireless properties. (B) The Company incurred $10.8 million of integration expenses related to its acquisition completed on August 1, 2005 of Western Wireless Corporation (“Western Wireless”). These expenses consisted of $8.3 million of rebranding costs and $2.5 million of system conversion costs and other integration costs. On December 9, 2005, Alltel announced that it would spin off its wireline telecommunications business to its stockholders and merge it with Valor Communications Group, Inc. ("Valor") In connection with the spin-off and merger, Alltel incurred $8.7 million of incremental costs consisting of employee benefit costs, consulting and legal fees. (C) Alltel incurred $9.5 million of incremental costs related to Hurricane Katrina consisting of increased system maintenance costs to restore network facilities and additional losses from bad debts. (See Note F). (D) The Company incurred $2.1 million of integration expenses related to its acquisition of Western Wireless. These expenses primarily consisted of system conversion costs. In addition, Alltel incurred $5.0 million of integration expenses related to the exchange of certain wireless assets with Cingular Wireless LLC (“Cingular”) completed during the second and third quarters of 2005. The Company also incurred $1.6 million of integration expenses related to its acquisition of Public Service Cellular Inc. (“PS Cellular”) completed on February 28, 2005. The integration expenses related to the Cingular and PS Cellular acquisitions consisted of handset subsidies incurred to migrate the acquired customer base to CDMA handsets. The Company also recorded a $0.2 million reduction in the liabilities associated with the wireline restructuring activities initiated during the third quarter of 2005. (See Note G).
(E) On December 9, 2005, Alltel announced that it would spin off its wireline telecommunications business to its stockholders and merge it with Valor. In connection with the spin-off and merger, Alltel incurred $31.3 million of incremental costs principally consisting of investment banker, audit and legal fees. (F) Alltel incurred $10.2 million of incremental costs related to Hurricane Katrina consisting of increased long distance and roaming expenses due to providing these services to affected customers at no charge, system maintenance costs to restore network facilities and additional losses from bad debts. These incremental costs also included Company donations to support the hurricane relief efforts. These incremental expenses were partially offset by $5.0 million of insurance proceeds received to date by Alltel. (G) The Company incurred $2.4 million of integration expenses related to its acquisition of Western Wireless. These expenses primarily consisted of system conversion and relocation costs. In addition, the Company incurred $11.9 million of integration expenses related to the exchange of certain wireless assets with Cingular completed during the second and third quarters of 2005. These expenses consisted of handset subsidies incurred to migrate the acquired customer base to CDMA handsets. The Company also incurred $4.6 million in restructuring charges associated with its wireline operations. These charges consisted of severance and employee benefit costs related to a planned workforce reduction.
(H) Primarily due to certain minority partners' right-of-first-refusal, three of the wireless partnership interests to be exchanged between Alltel and Cingular, as discussed in Note J below, were not completed until July 29, 2005. As a result of completing the exchange transaction, Alltel recorded an additional pretax gain of $30.5 million. (I) On April 15, 2005, Alltel and Cingular completed the exchange of certain wireless assets. In connection with this transaction, Alltel recorded a pretax gain of $127.5 million. On April 6, 2005, Alltel recorded a pretax gain of $75.8 million from the sale of all of its shares of Fidelity National Financial, Inc. ("Fidelity National") common stock. On April 8, 2005, Alltel retired all of its issued and outstanding 7.50 percent senior notes due March 1, 2006, representing an aggregate principal amount of $450.0 million. Concurrent with the debt retirement, Alltel also terminated the related pay variable/receive fixed, interest rate swap agreement that had been designated as a fair value hedge against the $450.0 million senior notes. In connection with the early termination of the debt and interest rate swap agreement, Alltel incurred net pretax termination fees of approximately $15.0 million. (J) Effective January 1, 2005, Alltel changed its accounting for operating leases with scheduled rent increases. Certain of the Company's operating lease agreements for cell sites and for office and retail locations include scheduled rent escalations during the initial lease term and/or during succeeding optional renewal periods. Previously, the Company had not recognized the scheduled increases in rent expense on a straight-line basis in accordance with the provisions of Statement of Financial Accounting Standards ("SFAS") No. 13, "Accounting for Leases" and Financial Accounting Standards Board ("FASB") Technical Bulletin No. 85-3, "Accounting for Operating Leases with Scheduled Rent Increases". The effects of this change, which are included in corporate expenses, were not material to the Company's previously reported consolidated results of operations, financial position or cash flows.
(K) On March 9, 2005, Fidelity National declared a special $10 per share cash dividend to Fidelity National stockholders. The special cash dividend was received by Alltel on March 28, 2005.
(L) The Company recorded a $0.9 million reduction in the liabilities associated with the restructuring efforts initiated in the first quarter of 2004 (see Note M), consisting of $0.7 million in employee relocation expenses and $0.2 million in severance and employee benefit costs. (M) The Company announced its plans to reorganize its operating structure and exit its competitive local exchange carrier operations in the Jacksonville, Florida market. In connection with these activities, the Company recorded a restructuring charge of $29.3 million consisting of severance and employee benefit costs related to a planned workforce reduction, employee relocation costs, lease termination and other restructuring-related costs. The Company also recorded a $2.3 million reduction in the liabilities associated with various restructuring activities initiated prior to 2003. In addition, the Company recorded a write-down of $24.8 million in the carrying value of certain corporate and regional facilities to fair value in conjunction with the proposed leasing or sale of those facilities. (N) Tax-related effects of the items discussed in the Notes A - M above. (O) Eliminates the effects of discontinued operations. On August 1, 2005, Alltel completed its acquisition of Western Wireless. As a condition of receiving approval for the acquisition from the Department of Justice and the Federal Communications Commission, Alltel agreed to divest certain wireless operations of Western Wireless in 16 markets in Arkansas, Kansas and Nebraska. In December 2005, Alltel completed an exchange of wireless properties with United States Cellular Corporation that included a substantial portion of the divestiture requirements related to the merger. In the first quarter of 2006, Alltel completed the required divestitures with the sale of the remaining property in Arkansas. During the third and fourth quarters of 2005, the Company completed the sale of international operations acquired from Western Wireless in Georgia, Ghana and Ireland, and on April 28, 2006, Alltel sold the international operations in Austria and Haiti. Alltel has a pending definitive agreement to sell the international operations in Bolivia and is actively pursuing the disposition of the remaining international operations acquired from Western Wireless. As a result, the acquired international operations and interests of Western Wireless and the 16 markets to be divested in Arkansas, Kansas and Nebraska have been classified as discontinued operations and assets held for sale in the accompanying consolidated financial statements.
(P) During the third quarter of 2004, the Internal Revenue Service (“IRS”) completed its fieldwork related to the audits of the Company’s consolidated federal income tax returns for the fiscal years 1997 through 2001. As a result of the IRS completing this phase of their audits, Alltel reassessed its income tax contingency reserves related to the periods under examination. Based upon this reassessment, Alltel recorded a $129.3 million reduction in its income tax contingency reserves. The corresponding effects of the reversal of these tax contingencies resulted in a reduction in goodwill of $94.5 million and a reduction in income tax expense associated with continuing operations of $19.7 million. In addition, $15.1 million of the income tax contingency reserves reversed related to the financial services division that was sold to Fidelity National on April 1, 2003. Pursuant to the terms of the sale agreement, Alltel retained, as of the date of sale, all income tax liabilities related to the sold operations and agreed to indemnify Fidelity National from any future tax liability imposed on the financial services division for periods prior to the date of sale. The adjustment of the tax contingency reserves related to the disposed financial services division has been reported as discontinued operations in the Company’s consolidated financial statements for the year ended December 31, 2004. Discontinued operations for the year ended December 31, 2004 also included a tax benefit of $4.4 million attributable to a foreign tax credit carryback recognized as a result of the IRS audits. (Q) Represents the cumulative effect of the change in accounting principle resulting from the Company's adoption of FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations" (“FIN 47”). The Company evaluated the effects of FIN 47 on its operations and determined that, for certain buildings containing asbestos, Alltel is legally obligated to remediate the asbestos if the Company were to abandon, sell or otherwise dispose of the buildings. In addition, for its acquired Kentucky and Nebraska wireline operations not subject to SFAS No. 71, “Accounting for the Effects of Certain Types of Regulation", the Company is legally obligated to properly dispose of its chemically-treated telephone poles at the time they are removed from service. In accordance with federal and state regulations, depreciation expense for the Company’s wireline operations that follow the accounting prescribed by SFAS No. 71 have historically included an additional provision for cost of removal, and accordingly, the adoption of FIN 47 had no impact to these operations.
Slide 13: ALLTEL Corporation Pro Forma Financial Measures Reflecting Acquisitions of Western Wireless and Midwest Wireless and Spin-Off of Wireline Operations Reconciliations of Non-GAAP Financial Measures
Alltel Net Debt to Operating Income for the twelve months ended March 31, 2006: (Dollars in millions) Long-term debt, including current maturities Cash and short-term investments Net debt Operating income under GAAP Net debt to operating income Alltel Net Debt to OIBDA from Current Businesses for the twelve months ended March 31, 2006: (Dollars in millions) Adjusted net debt (see above) Operating income under GAAP Restructuring and other charges Incremental costs related to Hurricane Katrina Depreciation and amortization expense OIBDA from current businesses Net debt to OIBDA from current businesses Wireless OIBDA for the twelve months ended March 31, 2006: (Dollars in millions) Wireless segment income under GAAP Depreciation & amortization Wireless OIBDA Wireless Net Debt to Operating Income for the twelve months ended March 31, 2006: (Dollars in millions) Long-term debt, including current maturities Cash and short-term investments Net debt Operating income under GAAP Net debt to operating income Wireless Net Debt to OIBDA from Current Businesses for the twelve months ended March 31, 2006: (Dollars in millions) Net debt (see above) Wireless Operating income under GAAP Restructuring and other charges Incremental costs related to Hurricane Katrina Depreciation and amortization expense OIBDA from current businesses Net debt to OIBDA from current businesses
(A) (B) (A) / (B)
Alltel 5,867.0 (886.5) $ 4,980.5 $ 2,151.0 2.3 $
Midwest Wireless 1,075.0 f $ 1,075.0 $ 69.2 g $
Pro Forma Adjustments (1,184.2) d $ (1,184.2) $ 86.1 a $
$ $ $ $
Pro Forma Combined 5,757.8 (886.5) 4,871.3 2,306.3 2.1
(A)
(B) (A) / (B)
Alltel $ 4,980.5 $ 2,151.0 78.2 19.7 1,545.9 $ 3,794.8 1.3
Midwest Wireless $ 1,075.0 $ 69.2 31.1 $ 100.3
f g
g g
Pro Forma Adjustments $ (1,184.2) d $ 86.1 a 63.2 b $ 149.3
Pro Forma Combined $ 4,871.3 $ 2,306.3 78.2 19.7 1,640.2 $ 4,044.4 1.2 Pro Forma Adjustments $ 10.9 c 27.2 c $ 38.1 Pro Forma Combined $ 1,595.5 1,034.5 $ 2,630.0
Alltel $ 1,429.3 913.0 $ 2,342.3
Midwest Wireless $ 69.2 g 31.1 g $ 100.3 g
$ $
Western Wireless 86.1 a 63.2 b 149.3
(A) (B) (A) / (B)
Alltel $ 5,867.0 (886.5) $ 4,980.5 $ 1,429.3 3.5
Midwest Wireless $ 1,075.0 f $ 1,075.0 $ 69.2 g
$ $ $
Western Wireless (1,184.2) d (1,184.2) 86.1 a
Deleveraging Wireline $ (4,200.0) e $ (4,200.0) $ -
Pro Forma Adjustments $ 11.1 h $ 11.1 $ 10.9 c
Pro Forma Combined $ 1,557.8 (875.4) $ 682.4 $ 1,595.5 0.4
(A)
(B) (A) / (B)
Alltel 4,980.5 1,429.3 78.2 19.7 913.0 $ 2,440.2 2.0 $ $
Midwest Wireless 1,075.0 69.2 31.1 $ 100.3 $ $
f g
$ $
g g
$
Western Wireless (1,184.2) d 86.1 a 63.2 a 149.3
Deleveraging Wireline (4,200.0) $ $ $
Pro Forma Adjustments $ 11.1 h $ 10.9 c 27.2 c $ 38.1
Pro Forma Combined $ 682.4 $ 1,595.5 78.2 19.7 1,034.5 $ 2,727.9 0.3
Notes: a-Adjustment reflects Western Wireless operating results for the period 4/1/05 - 7/31/05. b-Adjustment reflects Western Wireless depreciation and amortization expense for the period 4/1/05 - 7/31/05. c-Adjustment reflects the retained portion of infrastructure support for wireless operations. d-Adjustment reflects the after-tax proceeds from the sale of Western Wireless international operations. e-Estimated amount to deleverage wireline division. f-Represents purchase price paid by Alltel to acquire Midwest Wireless. g-Operating results for Midwest Wireless is for the twelve months ended September 30, 2005. More current information is not available. h-Reflects cash outlay of $141.1 million for the purchase of a wireless properties in Illinios announced on May 1, 2006 and the net after-tax proceeds of $130.0 million received in April 2006 by Alltel in connection with the liquidation of its investment in Rural Telephone Bank Class C stock. ALLTEL Corporation Reconciliations of Non-GAAP Financial Measures
Wireline OIBDA for the three months ended March 31: Segment income under GAAP Depreciation & amortization Wireline OIBDA Reconciliation of Diluted Earnings Per Share for the three months ended March 31, Diluted earnings per share under GAAP Items excluded from measuring results from current businesses, net of tax: Integration expenses and other charges Discontinued operations Diluted earnings per share excluding integration expenses and other charges and discontinued operations Amortization expense related to acquired wireless intangible assets Diluted earnings per share from current businesses
2006 226.6 103.6 $ 330.2 $
2005 214.5 127.3 $ 341.8 $
2006 $.77 .03 (.05) $.75 .07 $.82
