EX-99.A 2 alltelex99a080206.htm PRESS RELEASE DATED AUGUST 2, 2006 OF ALLTEL CORPORATION PRESS RELEASE DATED AUGUST 2, 2006 OF ALLTEL CORPORATION
Exhibit 99(a)
 


For additional information contact:  Andrew Moreau 501-905-7962 
  VP - Corporate Communications
  andrew.moreau@alltel.com 
   
   
  John Ebner 501-905-8991 
  SVP - Investor Relations and Treasury 
  alltel.investor.relations@alltel.com  
   
Release Date: Aug. 2, 2006
 
 
Alltel reports combined wireless, wireline results for the final time
Company produces double-digit wireless revenue, segment income growth

LITTLE ROCK, Ark. - Alltel produced double-digit wireless revenue and segment income growth in the second quarter on top of strong wireless customer additions. Alltel reported fully diluted earnings per share under Generally Accepted Accounting Principles (GAAP) of $1.10, which includes several one-time items and wireless intangible amortization. Excluding these items, fully diluted earnings per share from current businesses was 93 cents. This is the final quarter Alltel will report results for the wireline business, which now is part of the operations of Little Rock-based Windstream Corp.
   “Our company has completed the spinoff of our wireline business and the sale of all of our international assets, important steps in the transformation of Alltel,” said Alltel President and CEO Scott Ford. “Alltel’s wireless growth in the second quarter was driven by continuing efforts to expand market share and focus on delivering superior customer satisfaction, which is reflected in a new six-year low in churn. At the same time, Alltel is pushing ahead with key financial goals, including a $3 billion stock repurchase and a $1 billion debt reduction plan.”
Among the combined highlights for the second quarter:
        ·  
Total revenues were $2.7 billion, an 18 percent increase from a year ago. Net income under GAAP was $429 million, up 7 percent. Net income from current businesses was $365 million, a 24 percent increase from a year ago.
        ·  
Wireless revenue was $1.9 billion, a 28 percent increase from a year ago. Service revenue was $1.7 billion, a 26 percent increase. Segment income was $392 million, a 22 percent increase.
        ·  
Alltel added 146,000 net new wireless customers, which includes 124,000 post-pay customers and 22,000 prepay customers. In addition, the company added 112,000 net new customers through acquisitions of First Cellular in Southern Illinois and Virginia Cellular. Post-pay churn was 1.47 percent, a 7 percent improvement from a year ago.
        ·  
Average revenue per wireless customer (ARPU) was $52.54, a 4 percent increase. Data revenue per customer was $3.26, a 61 percent increase, and now represents more than 6 percent of total ARPU.
        ·  
Wireline revenue was $581 million, down 2 percent from the previous year. Segment income was $235 million, up 9 percent from a year ago. The wireline business added 40,000 net broadband customers.
        ·  
Equity free cash flow from current businesses was $336 million, a 32 percent increase. Net cash provided from operations was $431 million.
            This quarter the company also is reporting pro-forma results for the new, all-wireless Alltel. These pro-forma results present Alltel as if both the spinoff of the wireline business and the acquisition of Western Wireless had occurred on Jan. 1, 2005. The results include the wireless business, the communications support services retained by the company after the spinoff and the operations of Western Wireless.
             On a pro-forma basis, revenues were $1.95 billion, up 9 percent, and operating income was $389 million, a 6 percent increase.
             Alltel began the quarter by launching “My Circle,” an exclusive feature that gives customers the ability to select up to 10 numbers they can call for free. Customers on select rate plans can choose any combination of wireless, home and office numbers located anywhere in the U.S., regardless of local phone company or wireless carrier. 
             Also in the quarter, Alltel signed a 10-year, voice and data roaming agreement with Sprint that became effective July 1, expanding Alltel’s high-speed data network nationwide. In addition, Alltel extended for two years, through 2012, its roaming agreement with Cingular Wireless.
             Alltel operates America’s largest wireless network, which delivers voice and advanced data services nationwide to more than 11 million customers. Headquartered in Little Rock, Arkansas, Alltel is a Forbes 500 company with annual revenues of $8 billion.
             Alltel claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act 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 generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; changes in communications technology; the risks associated with the pending acquisition of Midwest Wireless; the risks associated with the integration of acquired businesses; adverse changes in the terms and conditions of the wireless roaming agreements of Alltel; the potential for adverse changes in the ratings given to Alltel's debt securities by nationally accredited ratings organizations; the uncertainties related to Alltel’s strategic investments; the effects of litigation; and the effects of federal and state legislation, rules, and regulations governing the communications industry. 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, economic conditions, and governmental and public policy changes.


-end-

Alltel, NYSE: AT
www.alltel.com
 
 
 
 
ALLTEL CORPORATION
                      
 
          
CONSOLIDATED HIGHLIGHTS
                                  
BUSINESS SEGMENTS AND OTHER CONSOLIDATED FINANCIAL INFORMATION
                          
(In thousands, except per share amounts)
                                  
                                       
       
THREE MONTHS ENDED
  
SIX MONTHS ENDED
  
               
Increase
              
Increase
      
       
June 30,
  
June 30,
  
(Decrease)
      
June 30,
  
June 30,
  
(Decrease)
      
       
2006
  
2005
  
Amount
  
 %
  
2006
  
2005
  
Amount
  
% 
  
UNDER GAAP:
  
 
              
 
              
 Revenues and sales:                                    
Wireless
$
1,859,118
  
$
1,455,312
  
$
403,806
    
28
 
$
3,616,508
  
$
2,807,321
  
$
809,187
    
29
 
Wireline
  
580,933
   
595,071
   
(14,138
)
  
(2
)
  
1,156,368
   
1,188,703
   
(32,335
)
  
(3
)
Communications support services
  
286,682
   
261,230
   
25,452
   
10
   
537,610
   
485,935
   
51,675
   
11
 
Total business segments
  
2,726,733
   
2,311,613
   
415,120
   
18
   
5,310,486
   
4,481,959
   
828,527
   
18
 
Less intercompany eliminations
  
53,062
   
51,507
   
1,555
   
3
   
97,079
   
95,870
   
1,209
   
1
 
Total revenues and sales
$
2,673,671
  
$
2,260,106
  
$
413,565
    
18
 
$
5,213,407
  
$
4,386,089
  
$
827,318
    
19
 
                                                         
Segment income:
                                                      
Wireless
$
392,129
  
$
321,619
  
$
70,510
    
22
 
$
747,684
  
$
606,951
  
$
140,733
    
23
 
Wireline
  
235,379
   
215,296
   
20,083
   
9
   
461,945
   
429,797
   
32,148
   
7
 
Communications support services
  
30,979
   
11,572
   
19,407
   
168
   
52,460
   
23,474
   
28,986
   
123
 
Total segment income
  
658,487
   
548,487
   
110,000
   
20
   
1,262,089
   
1,060,222
   
201,867
   
19
 
Less: corporate expenses (A)
          
54,649
   
26,247
   
28,402
   
108
   
109,533
   
68,714
   
40,819
   
59
 
integration expenses and other charges
  
11,987
   
-
   
11,987
   
-
   
31,512
   
-
   
31,512
   
-
 
Total operating income
$
591,851
  
$
522,240
  
$
69,611
    
13
 
$
1,121,044
  
$
991,508
  
$
129,536
    
13
 
 
                                                  
Operating margin (B):
                                                     
Wireless
  
21.1
%
  
22.1
%
  
(1.0
%)
  
(5
)
  
20.7
%
  
21.6
%
  
(.9
%)
  
(4
)
Wireline
  
40.5
%
  
36.2
%
  
4.3
%
  
12
   
39.9
%
  
36.2
%
  
3.7
%
  
10
 
Communications support services
  
10.8
%
  
4.4
%
  
6.4
%
  
145
   
9.8
%
  
4.8
%
  
5.0
%
  
104
 
Consolidated
  
22.1
%
  
23.1
%
  
(1.0
%)
  
(4
)
  
21.5
%
  
22.6
%
  
(1.1
%)
  
(5
)
                                                         
Net income
        
$
428,903
  
$
402,061
  
$
26,842
    
7
 
$
726,310
  
$
715,065
  
$
11,245
    
2
 
Earnings per share:
                                                        
Basic
        
 
$1.10
  
 
$1.28
  
 
$(.18
)
  
(14
)
 
$1.87
  
 
$2.32
  
 
$(.45
)
  
(19
)
Diluted
        
 
$1.10
  
 
$1.27
  
 
$(.17
)
  
(13
)
 
$1.86
  
 
$2.31
  
 
$(.45
)
  
(19
)
                                                         
Weighted average common shares:
                                                    
Basic
          
388,752
   
314,475
   
74,277
   
24
   
387,760
   
308,317
   
79,443
   
26
 
Diluted
          
390,463
   
315,837
   
74,626
   
24
   
389,958
   
309,653
   
80,305
   
26
 
                                                         
FROM CURRENT BUSINESSES (NON-GAAP) (C):
                                                
Operating income
        
$
648,579
  
$
536,934
  
$
111,645
    
21
 
$
1,242,789
  
$
1,039,770
  
$
203,019
    
20
 
Operating margin (B)
          
24.3
%
  
23.8
%
  
.5
%
  
2
   
23.8
%
  
23.7
%
  
.1
%
  
-
 
Net income
        
$
364,773
  
$
293,102
  
$
71,671
    
24
 
$
684,875
  
$
556,867
  
$
128,008
    
23
 
Earnings per share:
                                                  
Basic
        
 
$.94
  
 
$.93
  
 
$.01
    
1
 
 
$1.77
  
 
$1.81
  
 
$(.04
)
  
(2
)
Diluted
        
 
$.93
  
 
$.93
  
 
$   -
    
-
 
 
$1.76
  
 
$1.80
  
 
$(.04
)
  
(2
)
                                                         
PRO FORMA FROM CURRENT BUSINESSES (NON-GAAP) (D):
                                          
Revenues and sales
        
$
1,945,232
  
$
1,788,073
  
$
157,159
    
9
 
$
3,788,465
  
$
3,444,961
  
$
343,504
    
10
 
Operating income
        
$
388,572
  
$
368,168
  
$
20,404
    
6
 
$
736,808
  
$
688,376
  
$
48,432
    
7
 
                                                         
(A) Corporate expenses include amortization expense related to intangible assets recorded in connection with the acquisition of wireless properties. Corporate expenses for the six
months ended June 30, 2005 also include the effects of a change in accounting for operating leases with scheduled rent increases.
(B) Operating margin is calculated by dividing segment income by the corresponding amount of segment revenues and sales.
(C) Current businesses excludes the effects of discontinued operations, amortization expense related to intangible assets recorded in connection with the acquisition of wireless
properties, special cash dividend received on the Company's investment in Fidelity National Financial, Inc. common stock, gain on the exchange or disposal of assets, debt
prepayment expenses, costs associated with Hurricane Katrina, a change in accounting for operating leases and integration expenses and other charges.
(D) Pro forma from current businesses excludes the items listed in Note C above and also gives effect to the spin-off of Alltel's wireline business to its stockholders completed on
July 17, 2006 and includes the operating results of Western Wireless as if the spin-off and acquisition of Western Wireless occurred on January 1, 2005.
 


ALLTEL CORPORATION
          
 
      
CONSOLIDATED STATEMENTS OF INCOME UNDER GAAP-Page 2
              
(In thousands, except per share amounts)
                  
                   
   
THREE MONTHS ENDED
  
SIX MONTHS ENDED
  
   
June 30,
  
June 30,
  
June 30,
  
June 30,
  
   
2006
  
2005
  
2006
  
2005
  
Revenues and sales:
                  
Service revenues
  
$
2,334,559
  
$
1,989,264
  
$
4,582,278
  
$
3,887,526
  
Product sales
    
339,112
   
270,842
   
631,129
   
498,563
 
Total revenues and sales
    
2,673,671
   
2,260,106
   
5,213,407
   
4,386,089
 
Costs and expenses:
                      
Cost of services
    
762,335
   
660,945
   
1,494,060
   
1,287,205
 
Cost of products sold
    
384,669
   
308,065
   
740,462
   
589,838
 
Selling, general, administrative and other
    
510,931
   
420,536
   
1,009,890
   
828,001
 
Depreciation and amortization
    
411,898
   
348,320
   
816,439
   
689,537
 
Integration expenses and other charges
    
11,987
   
-
   
31,512
   
-
 
Total costs and expenses
    
2,081,820
   
1,737,866
   
4,092,363
   
3,394,581
 
                           
Operating income
    
591,851
   
522,240
   
1,121,044
   
991,508
 
                           
Equity earnings in unconsolidated partnerships
    
15,399
   
15,214
   
28,331
   
25,957
 
Minority interest in consolidated partnerships
    
(11,482
)
  
(18,918
)
  
(25,377
)
  
(37,265
)
Other income, net
    
21,140
   
7,976
   
33,022
   
128,711
 
Interest expense
    
(90,623
)
  
(76,343
)
  
(179,597
)
  
(163,032
)
Gain on exchange or disposal of assets and other
    
176,639
   
188,273
   
176,639
   
188,273
 
                           
 
                          
Income from continuing operations before income taxes
    
702,924
   
638,442
   
1,154,062
   
1,134,152
 
Income taxes
    
265,424
   
236,381
   
436,983
   
419,087
 
                           
Income from continuing operations
    
437,500
   
402,061
   
717,079
   
715,065
 
                           
Income (loss) from discontinued operations (net of income taxes)
    
(8,597
)
  
-
   
9,231
   
-
 
                           
                           
Net income
    
428,903
   
402,061
   
726,310
   
715,065
 
Preferred dividends
    
21
   
24
   
42
   
48
 
Net income applicable to common shares
  
$
428,882
  
$
402,037
  
$
726,268
  
$
715,017
  
                       
Basic earnings per share:
                          
Income from continuing operations
  
 
$1.12
  
 
$1.28
  
 
$1.85
  
 
$2.32
  
Income (loss) from discontinued operations
    
(.02
)
  
-
   
.02
   
-
 
Net income
  
 
$1.10
  
 
$1.28
  
 
$1.87
  
 
$2.32
  
                           
Diluted earnings per share:
                          
Income from continuing operations
  
 
$1.12
  
 
$1.27
  
 
$1.84
  
 
$2.31
  
Income (loss) from discontinued operations
    
(.02
)
  
-
   
.02
   
-
 
Net income
  
 
$1.10
  
 
$1.27
  
 
$1.86
  
 
$2.31
  

 
 
 

ALLTEL CORPORATION
              
 
                  
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 3
  
for the three months ended June 30, 2006
                                  
(In thousands, except per share amounts)
                                  
                               
Corporate
  
   
Results of
  
Items
      
Results of
  
Segment Information
  
Operations
  
   
Operations
  
Excluded from
      
Operations
          
Communications
  
and
  
   
Under
  
Current
      
from Current
          
Support
  
Intercompany
  
   
GAAP
  
Businesses
      
Businesses
  
Wireless
  
Wireline
  
Services
  
Eliminations
  
                                   
Revenues and sales:
                                  
Service revenues
  
$
2,334,559
  
$
-
        
$
2,334,559
  
$
1,726,285
  
$
570,600
  
$
87,636
  
$
(49,962
)
Product sales
    
339,112
   
-
         
339,112
   
132,833
   
10,333
   
199,046
   
(3,100
)
Total revenues and sales
    
2,673,671
   
-
         
2,673,671
   
1,859,118
   
580,933
   
286,682
   
(53,062
)
Costs and expenses:
                                        
Cost of services
    
762,335
   
2,235
   
(B)
 
  
764,570
   
573,700
   
173,372
   
60,965
   
(43,467
)
Cost of products sold
    
384,669
   
-
         
384,669
   
213,775
   
8,339
   
171,727
   
(9,172
)
Selling, general, administrative and other
    
510,931
   
-
         
510,931
   
424,229
   
63,175
   
15,704
   
7,823
 
Depreciation and amortization
    
411,898
   
(46,976
)
  
(A)
 
  
364,922
   
255,285
   
100,668
   
7,307
   
1,662
 
Integration expenses and other charges
    
11,987
   
(11,987
)
  
(C)
 
  
-
   
-
   
-
   
-
   
-
 
Total costs and expenses
    
2,081,820
   
(56,728
)
        
2,025,092
   
1,466,989
   
345,554
   
255,703
   
(43,154
)
                                                   
Operating income
    
591,851
   
56,728
         
648,579
 
$
392,129
  
$
235,379
  
$
30,979
  
$
(9,908
)
                                           
Equity earnings in unconsolidated partnerships
    
15,399
   
-
         
15,399
                 
Minority interest in consolidated partnerships
    
(11,482
)
  
-
         
(11,482
)
                
Other income, net
    
21,140
   
-
         
21,140
                       
Interest expense
    
(90,623
)
  
-
         
(90,623
)
                        
Gain on exchange or disposal of assets and other
    
176,639
   
(176,639
)
  
(D)
 
  
-
                         
 
                                                  
Income from continuing operations before income taxes
    
702,924
   
(119,911
)
        
583,013
                         
Income taxes
    
265,424
   
(47,184
)
  
(I)
 
  
218,240
                         
                                                 
Income from continuing operations
    
437,500
   
(72,727
)
        
364,773
                         
                                                 
Income (loss) from discontinued operations (net of income taxes)
    
(8,597
)
  
8,597
   
(J)
 
  
-
                         
                                                   
                                                   
Net income
    
428,903
   
(64,130
)
        
364,773
                         
Preferred dividends
    
21
   
-
         
21
                       
Net income applicable to common shares
  
$
428,882
  
$
(64,130
)
      
$
364,752
                          
                                               
Basic earnings per share:
                                              
Income from continuing operations
  
 
$1.12
  
 
$(.18
)
      
 
$.94
                          
Income (loss) from discontinued operations
    
(.02
)
  
.02
         
-
                         
Net income
  
 
$1.10
  
 
$(.16
)
      
 
$.94
                        
                                                   
Diluted earnings per share:
                                                  
Income from continuing operations
  
 
$1.12
  
 
$(.19
)
      
 
$.93
                          
Income (loss) from discontinued operations
    
(.02
)
  
.02
         
-
                         
Net income
  
 
$1.10
  
 
$(.17
)
      
 
$.93
                        
                                                   
                                                   
See notes on pages 7 and 8 for a description of the line items marked (A) - (J).

 
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, 2005
                                  
(In thousands, except per share amounts)
                                  
                               
Corporate
  
   
Results of
  
Items
      
Results of
  
Segment Information
  
Operations
  
   
Operations
  
Excluded from
      
Operations
          
Communications
  
and
  
   
Under
  
Current
      
from Current
          
Support
  
Intercompany
  
   
GAAP
  
Businesses
      
Businesses
  
Wireless
  
Wireline
  
Services
  
Eliminations
  
                           
 
      
Revenues and sales:
                                  
Service revenues
  
$
1,989,264
  
$
-
        
$
1,989,264
  
$
1,371,089
  
$
584,016
  
$
77,772
  
$
(43,613
)
Product sales
    
270,842
   
-
         
270,842
   
84,223
   
11,055
   
183,458
   
(7,894
)
Total revenues and sales
    
2,260,106
   
-
         
2,260,106
   
1,455,312
   
595,071
   
261,230
   
(51,507
)
Costs and expenses:
                                      
Cost of services
    
660,945
   
-
       
660,945
   
453,806
   
182,667
   
62,776
   
(38,304
)
Cost of products sold
    
308,065
   
-
         
308,065
   
150,278
   
9,001
   
161,399
   
(12,613
)
Selling, general, administrative and other
    
420,536
   
-
         
420,536
   
331,743
   
62,662
   
16,982
   
9,149
 
Depreciation and amortization
    
348,320
   
(14,694
)
  
(A)
 
  
333,626
   
197,866
   
125,445
   
8,501
   
1,814
 
Integration expenses and other charges
    
-
   
-
         
-
   
-
   
-
   
-
   
-
 
Total costs and expenses
    
1,737,866
   
(14,694
)
        
1,723,172
   
1,133,693
   
379,775
   
249,658
   
(39,954
)
                                                   
Operating income
    
522,240
   
14,694
         
536,934
 
$
321,619
  
$
215,296
  
$
11,572
  
$
(11,553
)
                                           
Equity earnings in unconsolidated partnerships
    
15,214
   
-
         
15,214
                 
Minority interest in consolidated partnerships
    
(18,918
)
  
-
         
(18,918
)
                      
Other income, net
    
7,976
   
-
       
7,976
                       
Interest expense
    
(76,343
)
  
-
         
(76,343
)
                        
Gain on exchange or disposal of assets and other
    
188,273
   
(188,273
)
  
(F)
 
  
-
                       
 
                                                  
Income from continuing operations before income taxes
    
638,442
   
(173,579
)
        
464,863
                         
Income taxes
    
236,381
   
(64,620
)
  
(I)
 
  
171,761
                       
                                                 
Income from continuing operations
    
402,061
   
(108,959
)
        
293,102
                         
                                                 
Income (loss) from discontinued operations (net of income taxes)
    
-
   
-
         
-
                         
                                                   
                                                   
Net income
    
402,061
   
(108,959
)
        
293,102
                       
Preferred dividends
    
24
   
-
         
24
                       
Net income applicable to common shares
  
$
402,037
  
$
(108,959
)
      
$
293,078
                        
                                             
Basic earnings per share:
                                            
Income from continuing operations
  
 
$1.28
  
 
$(.35
)
      
 
$.93
                          
Income (loss) from discontinued operations
    
-
   
-
         
-
                       
Net income
  
 
$1.28
  
 
$(.35
)
      
 
$.93
                          
                                                   
Diluted earnings per share:
                                                
Income from continuing operations
  
 
$1.27
  
 
$(.34
)
      
 
$.93
                          
Income (loss) from discontinued operations
    
-
   
-
         
-
                         
Net income
  
 
$1.27
  
 
$(.34
)
      
 
$.93
                          
                                                   
                                                 
See notes on pages 7 and 8 for a description of the line items marked (A) - (J).

 
ALLTEL CORPORATION
              
 
                  
RECONCILIATION OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 5
  
for the six months ended June 30, 2006
                                  
(In thousands, except per share amounts)
                                  
                               
Corporate
  
   
Results of
  
Items
      
Results of
  
Segment Information
  
Operations
  
   
Operations
  
Excluded from
      
Operations
          
Communications
  
and
  
   
Under
  
Current
      
from Current
          
Support
  
Intercompany
  
   
GAAP
  
Businesses
      
Businesses
  
Wireless
  
Wireline
  
Services
  
Eliminations
  
                   
 
              
Revenues and sales:
                  
 
              
Service revenues
  
$
4,582,278
  
$
-
        
$
4,582,278
  
$
3,365,083
  
$
1,136,445
  
$
172,590
  
$
(91,840
)
Product sales
    
631,129
   
-
         
631,129
   
251,425
   
19,923
   
365,020
   
(5,239
)
Total revenues and sales
    
5,213,407
   
-
       
5,213,407
   
3,616,508
   
1,156,368
   
537,610
   
(97,079
)
Costs and expenses:
                                                
Cost of services
    
1,494,060
   
2,235
   
(B)
 
  
1,496,295
   
1,111,539
   
349,246
   
118,818
   
(83,308
)
Cost of products sold
    
740,462
   
-
         
740,462
   
418,205
   
15,692
   
319,376
   
(12,811
)
Selling, general, administrative and other
    
1,009,890
   
-
       
1,009,890
   
837,335
   
125,234
   
32,236
   
15,085
 
Depreciation and amortization
    
816,439
   
(92,468
)
  
(A)
 
  
723,971
   
501,745
   
204,251
   
14,720
   
3,255
 
Integration expenses and other charges
    
31,512
   
(31,512
)
  
(E)
 
  
-
   
-
   
-
   
-
   
-
 
Total costs and expenses
    
4,092,363
   
(121,745
)
        
3,970,618
   
2,868,824
   
694,423
   
485,150
   
(77,779
)
                                                   
Operating income
    
1,121,044
   
121,745
         
1,242,789
 
$
747,684
  
$
461,945
  
$
52,460
  
$
(19,300
)
                                                   
Equity earnings in unconsolidated partnerships
    
28,331
   
-
         
28,331
                 
Minority interest in consolidated partnerships
    
(25,377
)
  
-
         
(25,377
)
                
Other income, net
    
33,022
   
-
       
33,022
                     
Interest expense
    
(179,597
)
  
-
         
(179,597
)
                      
Gain on exchange or disposal of assets and other
    
176,639
   
(176,639
)
  
(D)
 
  
-
                         
 
                                                  
Income from continuing operations before income taxes
    
1,154,062
   
(54,894
)
        
1,099,168
                         
Income taxes
    
436,983
   
(22,690
)
  
(I)
 
  
414,293
                       
                                                 
Income from continuing operations
    
717,079
   
(32,204
)
        
684,875
                       
                                                 
Income (loss) from discontinued operations (net of income taxes)
    
9,231
   
(9,231
)
  
(J)
 
  
-
                         
                                                   
                                                   
Net income
    
726,310
   
(41,435
)
        
684,875
                         
Preferred dividends
    
42
   
-
         
42
                         
Net income applicable to common shares
  
$
726,268
  
$
(41,435
)
      
$
684,833
                          
                                               
Basic earnings per share:
                                            
Income from continuing operations
  
 
$1.85
  
 
$(.08
)
      
 
$1.77
                          
Income (loss) from discontinued operations
    
.02
   
(.02
)
        
-
                         
Net income
  
 
$1.87
  
 
$(.10
)
      
 
$1.77
                          
                                                   
Diluted earnings per share:
                                                  
Income from continuing operations
  
 
$1.84
  
 
$(.08
)
      
 
$1.76
                          
Income (loss) from discontinued operations
    
.02
   
(.02
)
        
-
                         
Net income
  
 
$1.86
  
 
$(.10
)
      
 
$1.76
                          
                                                   
                                                   
See notes on pages 7 and 8 for a description of the line items marked (A) - (J).
 
 

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, 2005
                                  
(In thousands, except per share amounts)
                                  
                               
Corporate
  
   
Results of
  
Items
      
Results of
  
Segment Information
  
Operations
  
   
Operations
  
Excluded from
      
Operations
          
Communications
  
and
  
   
Under
  
Current
      
from Current
          
Support
  
Intercompany
  
   
GAAP
  
Businesses
      
Businesses
  
Wireless
  
Wireline
  
Services
  
Eliminations
  
                                   
Revenues and sales:
                  
 
      
 
      
Service revenues
  
$
3,887,526
  
$
-
        
$
3,887,526
  
$
2,645,466
  
$
1,167,831
  
$
155,614
  
$
(81,385
)
Product sales
    
498,563
   
-
         
498,563
   
161,855
   
20,872
   
330,321
   
(14,485
)
Total revenues and sales
    
4,386,089
   
-
         
4,386,089
   
2,807,321
   
1,188,703
   
485,935
   
(95,870
)
Costs and expenses:
                                              
Cost of services
    
1,287,205
   
(19,791
)
  
(H)
 
  
1,267,414
   
859,479
   
363,691
   
119,119
   
(74,875
)
Cost of products sold
    
589,838
   
-
         
589,838
   
299,084
   
15,999
   
294,459
   
(19,704
)
Selling, general, administrative and other
    
828,001
   
-
         
828,001
   
654,220
   
126,468
   
31,910
   
15,403
 
Depreciation and amortization
    
689,537
   
(28,471
)
  
(A)
 
  
661,066
   
387,587
   
252,748
   
16,973
   
3,758
 
Integration expenses and other charges
    
-
   
-
       
-
   
-
   
-
   
-
   
-
 
Total costs and expenses
    
3,394,581
   
(48,262
)
        
3,346,319
   
2,200,370
   
758,906
   
462,461
   
(75,418
)
                                                   
Operating income
    
991,508
   
48,262
         
1,039,770
 
$
606,951
  
$
429,797
  
$
23,474
  
$
(20,452
)
                                           
Equity earnings in unconsolidated partnerships
    
25,957
   
-
         
25,957
                 
Minority interest in consolidated partnerships
    
(37,265
)
  
-
         
(37,265
)
                    
Other income, net
    
128,711
   
(111,036
)
  
(G)
 
  
17,675
                       
Interest expense
    
(163,032
)
  
-
         
(163,032
)
                      
Gain on exchange or disposal of assets and other
    
188,273
   
(188,273
)
  
(F)
 
  
-
                         
 
                                                  
Income from continuing operations before income taxes
    
1,134,152
   
(251,047
)
        
883,105
                         
Income taxes
    
419,087
   
(92,849
)
  
(I)
 
  
326,238
                       
                                                 
Income from continuing operations
    
715,065
   
(158,198
)
        
556,867
                       
                                                 
Income (loss) from discontinued operations (net of income taxes)
    
-
   
-
       
-
                         
                                                   
                                                   
Net income
    
715,065
   
(158,198
)
        
556,867
                       
Preferred dividends
    
48
   
-
         
48
                         
Net income applicable to common shares
  
$
715,017
  
$
(158,198
)
      
$
556,819
                          
                                                 
Basic earnings per share:
                                              
Income from continuing operations
  
 
$2.32
  
 
$(.51
)
      
 
$1.81
                        
Income (loss) from discontinued operations
    
-
   
-
         
-
                         
Net income
  
 
$2.32
  
 
$(.51
)
      
 
$1.81
                        
                                                 
Diluted earnings per share:
                                                  
Income from continuing operations
  
 
$2.31
  
 
$(.51
)
      
 
$1.80
                          
Income (loss) from discontinued operations
    
-
   
-
         
-
                         
Net income
  
 
$2.31
  
 
$(.51
)
      
 
$1.80
                        
                                                   
                                                   
See notes on pages 7 and 8 for a description of the line items marked (A) - (J).

 
ALLTEL CORPORATION
NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 7
 
 
   
 
As disclosed in the ALLTEL Corporation ("Alltel" or the "Company") Form 8-K filed on August 2, 2006, Alltel has presented in this earnings release results of operations from current businesses which exclude the effects of discontinued operations, amortization expense related to intangible assets recorded in connection with the acquisition of wireless properties, a special cash dividend received on the Company's investment in Fidelity National Financial, Inc. ("Fidelity National") common stock, gain on exchange or disposal of assets, termination fees associated with the early retirement of long-term debt, a change in accounting for certain operating leases and integration expenses and other charges. Alltel’s purpose for excluding items from the current business measures is to focus on Alltel’s true earnings capacity associated with providing telecommunication services. Management believes the items excluded from the current business measures are related to strategic activities or other events, specific to the time and opportunity available, and, accordingly, should be excluded when evaluating the trends of the Company’s operations.
   
 
Alltel believes that presenting the current business measures assists investors in assessing the true business performance of the Company by clarifying for investors the effects that certain items such as asset sales, restructuring expenses and other business consolidation costs arising from past acquisition and restructuring activities had on the Company’s GAAP consolidated results of operations. The Company uses results from current businesses as management’s primary measure of the performance of its business segments. Alltel's 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 special cash dividend, gain on the exchange or disposal of assets, debt prepayment expenses, costs associated with Hurricane Katrina, 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 recorded a $2.2 million reduction in its allowance for doubtful accounts to reflect lower than expected write-offs from service interruptions and customer displacement attributable to the effects of Hurricane Katrina. The additional bad debt expense was originally recorded in the third quarter of 2005.
   
(C)
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 $12.0 million of incremental costs primarily consisting of employee benefit costs, consulting and legal fees.
   
(D)
During 2005, federal legislation was enacted which included provisions to dissolve and liquidate the assets of the Rural Telephone Bank ("RTB"). In connection with the dissolution and liquidation, during April 2006, the RTB redeemed all outstanding shares of its Class C stock. As a result, Alltel received liquidating cash distributions of $198.7 million in exchange for its $22.1 million investment in RTB Class C stock.
   
(E)
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 and other integration costs. In connection with the spin-off of its wireline business, Alltel incurred $20.7 million of incremental costs consisting of employee benefit costs, consulting and legal fees.
   
(F)
On April 15, 2005, Alltel and Cingular Wireless LLC 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 common stock. In addition, 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.
   
(G)
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.

 
ALLTEL CORPORATION
NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 8
 
 
   
(H)
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.
   
(I)
Tax-related effect of the items discussed in Notes A - H above.
   
(J)
Eliminates the effects of discontinued operations. As a condition of receiving approval for the Western Wireless 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 2005, Alltel completed the sales of international operations in Georgia, Ghana and Ireland acquired from Western Wireless. During the second quarter of 2006, Alltel completed the sales of the remaining international operations acquired from Western Wireless in Austria, Bolivia, Côte d’Ivoire, Haiti, and Slovenia. 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 in the accompanying consolidated financial statements.

 
 
ALLTEL CORPORATION
                          
 
                  
SUPPLEMENTAL OPERATING INFORMATION-Page 9
                                          
(Dollars in thousands, except per customer amounts)
                                              
                                               
   
THREE MONTHS ENDED
      
SIX MONTHS ENDED
  
           
Increase
                      
Increase
          
   
June 30,
  
June 30,
  
(Decrease)
              
June 30,
  
June 30,
  
(Decrease)
          
   
2006
  
2005
  
Amount
    
% 
      
2006
  
2005
  
Amount
    
% 
  
Wireless:
                                              
Controlled POPs
    
78,000,811
   
66,401,653
   
11,599,158
         
17
                                     
Customers
    
11,085,145
   
9,067,508
   
2,017,637
         
22
                                     
Penetration rate
    
14.2
%
  
13.7
%
  
.5
%
        
4
                                   
Average customers
    
10,951,268
   
9,040,259
   
1,911,009
         
21
         
10,838,881
   
8,869,945
   
1,968,936
         
22
 
Gross customer additions:
                                                              
Internal
    
770,589
   
593,045
   
177,544
         
30
         
1,576,043
   
1,262,749
   
313,294
         
25
 
Acquired
    
112,095
   
212,530
   
(100,435
)
        
(47
)
        
112,095
   
266,491
   
(154,396
)
        
(58
)
Total
    
882,684
   
805,575
   
77,109
         
10
         
1,688,138
   
1,529,240
   
158,898
         
10
 
Net customer additions:
                                                                
Internal
    
145,985
   
53,693
   
92,292
         
172
         
310,726
   
174,530
   
136,196
         
78
 
Acquired
    
112,095
   
212,530
   
(100,435
)
        
(47
)
        
112,095
   
266,491
   
(154,396
)
        
(58
)
Total
    
258,080
   
266,223
   
(8,143
)
        
(3
)
        
422,821
   
441,021
   
(18,200
)
        
(4
)
Customer acquisition costs:
                                                                
Cost of products sold
  
$
96,886
  
$
62,516
  
$
34,370
          
55
       
$
192,024
  
$
132,213
  
$
59,811
          
45
 
Selling and marketing expenses
    
263,896
   
198,938
   
64,958
         
33
         
517,565
   
383,930
   
133,635
         
35
 
Less product sales
    
72,621
   
51,046
   
21,575
         
42
         
137,842
   
100,905
   
36,937
         
37
 
Total
  
$
288,161
  
$
210,408
  
$
77,753
          
37
       
$
571,747
  
$
415,238
  
$
156,509
          
38
 
Cost to acquire a new customer (A)
  
 
$374
  
 
$355
  
 
$19
          
5
       
 
$363
  
 
$329
  
 
$34
          
10
 
Cash costs:
                                                                
Cost of services
  
$
573,700
  
$
453,806
  
$
119,894
          
26
       
$
1,111,539
  
$
859,479
  
$
252,060
          
29
 
Cost of products sold
    
213,775
   
150,278
   
63,497
         
42
         
418,205
   
299,084
   
119,121
         
40
 
Selling, general, administrative and other
    
424,229
   
331,743
   
92,486
         
28
         
837,335
   
654,220
   
183,115
         
28
 
Less product sales
    
132,833
   
84,223
   
48,610
         
58
         
251,425
   
161,855
   
89,570
         
55
 
Total
    
1,078,871
   
851,604
   
227,267
         
27
         
2,115,654
   
1,650,928
   
464,726
         
28
 
Less customer acquisition costs
    
288,161
   
210,408
   
77,753
         
37
         
571,747
   
415,238
   
156,509
         
38
 
Total
  
$
790,710
  
$
641,196
  
$
149,514
          
23
       
$
1,543,907
  
$
1,235,690
  
$
308,217
          
25
 
Cash cost per unit per month, excluding
                                                                
customer acquisition costs (B)
  
 
$24.07
  
 
$23.64
  
 
$.43
          
2
       
 
$23.74
  
 
$23.22
  
 
$.52
          
2
 
Revenues:
                                                                    
Service revenues
  
$
1,726,285
  
$
1,371,089
  
$
355,196
          
26
       
$
3,365,083
  
$
2,645,466
  
$
719,617
          
27
 
Less wholesale revenues
    
163,592
   
112,227
   
51,365
         
46
       
314,595
   
203,293
   
111,302
         
55
 
Retail revenues
  
$
1,562,693
  
$
1,258,862
  
$
303,831
          
24
     
$
3,050,488
  
$
2,442,173
  
$
608,315
          
25
 
Average revenue per customer per month (C)
  
 
$52.54
  
 
$50.55
  
 
$1.99
          
4
       
 
$51.74
  
 
$49.71
  
 
$2.03
          
4
 
Retail revenue per customer per month (D)
  
 
$47.57
  
 
$46.42
  
 
$1.15
          
2
       
 
$46.91
  
 
$45.89
  
 
$1.02
          
2
 
Retail minutes of use per customer per month (E)
    
638
   
593
   
45
         
8
   
 
    
620
   
571
   
49
         
9
 
Postpay churn
    
1.47
%
  
1.58
%
  
(.11
%)
        
(7
)
        
1.56
%
  
1.65
%
  
(.09
%)
        
(5
)
Total churn
    
1.91
%
  
1.99
%
  
(.08
%)
        
(4
)
        
1.95
%
  
2.05
%
  
(.10
%)
        
(5
)
Service revenue operating margin (F)
    
22.7
%
  
23.5
%
  
(.8
%)
        
(3
)
        
22.2
%
  
22.9
%
  
(0.7
%)
        
(3
)
Capital expenditures (G)
  
 
$290,785
  
 
$283,166
  
 
$7,619
          
3
       
 
$446,904
  
 
$473,742
  
 
$(26,838
)
        
(6
)
                                                                 
(A) Cost to acquire a new customer is calculated by dividing the sum of the GAAP reported cost of products sold and sales and marketing expenses (included within "Selling,
general, administrative and other") less product sales, as reported in the Consolidated Statements of Income, by the number of internal gross customer additions in the
period.  Customer acquisition costs exclude amounts related to the Company's customer retention efforts.
(B) Cash cost per unit per month, excluding customer acquisition costs, is calculated by dividing the sum of the GAAP reported cost of services, cost of products sold, selling,
general, administrative and other expenses less product sales, as reported in the Consolidated Statements of Income, less customer acquisition costs, by the number of
average customers for the period.
(C) Average revenue per customer per month is calculated by dividing wireless service revenues by average customers for the period.
(D) Retail revenue per customer per month is calculated by dividing wireless retail revenues (service revenues less wholesale revenues) by average customers for the period.
(E) Retail minutes of use per customer per month represents the average monthly minutes that Alltel's customers use on both the Company's network and while roaming on other
carriers' networks.
(F) Service revenue operating margin is calculated by dividing wireless segment income by wireless service revenues.
(G) Includes capitalized software development costs.
    
 
 

ALLTEL CORPORATION
                      
 
                  
SUPPLEMENTAL OPERATING INFORMATION-Page 10
                                      
(Dollars in thousands, except per customer amounts)
                                          
                                           
   
THREE MONTHS ENDED
  
SIX MONTHS ENDED
  
           
Increase
                  
Increase
          
   
June 30,
  
June 30,
  
(Decrease)
          
June 30,
  
June 30,
  
(Decrease)
          
   
2006
  
2005
  
Amount
      %  
2006
  
2005
  
Amount
      %  
Wireline:
  
 
  
 
              
 
                  
Customers
    
2,831,668
   
2,953,000
   
(121,332
)
        
(4
)
                              
Average customers
    
2,847,709
   
2,967,986
   
(120,277
)
        
(4
)
  
2,859,863
   
2,981,080
   
(121,217
)
        
(4
)
Broadband customers
    
481,684
   
319,315
   
162,369
         
51
                             
Net broadband additions
    
40,209
   
36,189
   
4,020
         
11
   
83,988
   
75,990
   
7,998
         
11
 
Average revenue per customer per month (H)
  
 
$68.00
  
 
$66.83
  
 
$1.17
          
2
 
 
$67.39
  
 
$66.46
  
 
$.93
          
1
 
Capital expenditures (G)
  
 
$93,177
  
 
$85,354
  
 
$7,823
          
9
 
 
$155,365
  
 
$158,424
  
 
$(3,059
)
        
(2
)
                                                             
Communications support services:
                                                        
Long-distance customers
    
1,761,667
   
1,779,813
   
(18,146
)
        
(1
)
                              
Capital expenditures (G)
  
 
$4,130
  
 
$3,376
  
 
$754
          
22
 
 
$6,563
  
 
$5,619
  
 
$944
          
17
 
                                                           
Consolidated:
                                                          
Equity free cash flow (I)
  
 
$335,824
  
 
$254,663
  
 
$81,161
          
32
 
 
$794,120
  
 
$579,906
  
 
$214,214
          
37
 
Capital expenditures (G)
  
 
$393,871
  
 
$372,065
  
 
$21,806
          
6
 
 
$614,726
  
 
$638,027
  
 
$(23,301
)
        
(4
)
Total assets
  
$
23,933,548
  
$
17,914,892
  
$
6,018,656
          
34
                           
                                                             
                                                           
(G) Includes capitalized software development costs.
    
(H) Average revenue per customer per month is calculated by dividing total wireline revenues by average customers for the period.
(I) 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 G.
    
 
 

ALLTEL CORPORATION
             
 
          
CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 11
                      
(In thousands)
                          
                           
                           
ASSETS
          
LIABILITIES AND SHAREHOLDERS' EQUITY
  
                           
   
June 30,
  
December 31,
          
June 30,
  
December 31,
  
   
2006
  
2005
          
2006
  
2005
  
                           
CURRENT ASSETS:
          
CURRENT LIABILITIES:
          
Cash and short-term investments
  
$
2,531,357
  
$
989,153
  
Current maturities of long-term debt
$
1,594,121
  
$
205,117
  
Accounts receivable (less allowance for
              
Accounts payable
  
583,265
   
645,443
 
doubtful accounts of $81,200 and
            
Advance payments and customer deposits
  
243,978
   
240,499
 
$84,750, respectively)
    
1,093,654
   
1,077,207
 
Accrued taxes
  
384,538
   
174,693
 
Inventories
    
160,874
   
232,634
 
Accrued dividends
  
150,070
   
147,841
 
Prepaid expenses and other
    
187,206
   
115,179
 
Accrued interest
  
102,322
   
102,512
 
Assets held for sale
    
-
   
1,951,240
 
Current deferred income taxes
  
-
   
339,014
 
             
Other current liabilities
199,186
   
255,425
 
Total current assets
    
3,973,091
   
4,365,413
 
Liabilities related to assets held for sale
    
-
   
294,364
 
                                       
Investments
    
365,865
   
358,412
 
Total current liabilities
  
3,257,480
   
2,404,908
 
Goodwill
    
9,067,133
   
8,677,251
                         
Other intangibles
    
2,214,018
   
2,179,107
                         
                                       
 
              
Long-term debt 
  
4,262,808
   
5,782,890
 
PROPERTY, PLANT AND EQUIPMENT:
              
Deferred income taxes
  
1,894,228
   
1,860,904
 
Land
    
313,546
   
298,593
 
Other liabilities
  
907,482
   
948,962
 
Buildings and improvements
    
1,242,984
   
1,211,359
                         
Wireline
    
7,020,996
   
6,942,039
                         
Wireless
    
7,062,730
   
6,852,565
                         
Information processing
    
1,266,769
   
1,187,192
 
SHAREHOLDERS' EQUITY:
            
Other
    
541,297
   
530,333
 
Preferred stock
  
260
   
278
 
Under construction
    
525,786
   
475,453
 
Common stock
  
389,551
   
383,613
 
           
Additional paid-in capital 
  
5,483,997
   
5,339,321
 
Total property, plant and equipment
    
17,974,108
   
17,497,534
 
Unrealized holding gain on investments
  
38,028
   
22,297
 
Less accumulated depreciation
    
9,976,118
   
9,433,951
 
Foreign currency translation adjustment
  
-
   
(2,841
)
 
              
Retained earnings 
  
7,699,714
   
7,272,769
 
Net property, plant and equipment
    
7,997,990
   
8,063,583
                         
             
Total shareholders' equity 
  
13,611,550
   
13,015,437
 
Other assets
    
315,451
   
369,335
                         
                                       
 
              
TOTAL LIABILITIES AND  
            
TOTAL ASSETS
  
$
23,933,548
  
$
24,013,101
  
SHAREHOLDERS' EQUITY
$
23,933,548
  
$
24,013,101
  

 

 
ALLTEL CORPORATION
  
 
              
CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 12
                  
(In thousands)
                  
                   
   
THREE MONTHS ENDED
  
SIX MONTHS ENDED
  
   
June 30,
  
June 30,
  
June 30,
  
June 30,
  
   
2006
  
2005
  
2006
  
2005
  
Net Cash Provided from Operations:
                  
Net income
  
$
428,903
  
$
402,061
  
$
726,310
  
$
715,065
  
Adjustments to reconcile net income to net cash provided from operations:
                          
Income (loss) from discontinued operations
    
8,597
   
-
   
(9,231
)
  
-
 
Depreciation and amortization
    
411,898
   
348,320
   
816,439
   
689,537
 
Provision for doubtful accounts
    
69,951
   
49,744
   
123,608
   
90,659
 
Non-cash portion of gain on exchange or disposal of assets and other
    
(107,573
)
  
(202,185
)
  
(107,573
)
  
(202,185
)
Change in deferred income taxes
    
(12,072
)
  
25,401
   
9,463
   
6,281
 
Other, net
    
(15,468
)
  
(2,443
)
  
(4,250
)
  
11,116
 
Changes in operating assets and liabilities, net of the effects of
                          
acquisitions and dispositions:
                          
Accounts receivable
    
(139,661
)
  
(122,360
)
  
(130,417
)
  
(105,833
)
Inventories
    
34,053
   
(10,956
)
  
72,795
   
(2,295
)
Accounts payable
    
61,401
   
(48,905
)
  
(59,107
)
  
(31,295
)
Other current liabilities
    
(262,970
)
  
14,027
   
(229,343
)
  
100,617
 
Other, net
    
(46,440
)
  
12,239
   
(44,958
)
  
(28,067
)
Net cash provided from operations
    
430,619
   
464,943
   
1,163,736
   
1,243,600
 
                         
Cash Flows from Investing Activities:
                          
Additions to property, plant and equipment
    
(384,465
)
  
(356,277
)
  
(598,174
)
  
(611,139
)
Additions to capitalized software development costs
    
(9,406
)
  
(15,788
)
  
(16,552
)
  
(26,888
)
Additions to investments
    
-
   
(129
)
  
-
   
(882
)
Purchases of property, net of cash acquired
    
(186,850
)
  
(171,897
)
  
(645,781
)
  
(223,732
)
Proceeds from the sale of assets
    
-
   
36,162
   
-
   
36,162
 
Proceeds from the sale of investments
    
199,921
   
350,769
   
199,921
   
353,445
 
Proceeds from the return on investments
    
13,445
   
15,238
   
22,372
   
20,388
 
Other, net
    
(7,461
)
  
82
   
(8,383
)
  
3,103
 
Net cash used in investing activities
    
(374,816
)
  
(141,840
)
  
(1,046,597
)
  
(449,543
)
                           
Cash Flows from Financing Activities:
                          
Dividends on preferred and common stock
    
(149,415
)
  
(114,989
)
  
(297,152
)
  
(220,720
)
Repayments of long-term debt
    
(114
)
  
(451,039
)
  
(858
)
  
(452,913
)
Distributions to minority investors
    
(8,483
)
  
(14,266
)
  
(20,293
)
  
(27,009
)
Excess tax benefits from stock option exercises
    
1,282
   
-
   
3,209
   
-
 
Long-term debt issued
    
-
   
-
   
-
   
50,000
 
Conversion of convertible debt
    
-
   
-
   
(59,848
)
  
-
 
Common stock issued
    
33,688
   
1,396,481
   
88,584
   
1,399,313
 
Net cash provided from (used in) financing activities
    
(123,042
)
  
816,187
   
(286,358
)
  
748,671
 
                           
Net cash provided from discontinued operations
    
1,718,529
   
-
   
1,717,302
   
-
 
                           
Effect of exchange rate changes on cash and short-term investments
    
(6,464
)
  
-
   
(5,879
)
  
-
 
                            
Increase in cash and short-term investments
    
1,644,826
   
1,139,290
   
1,542,204
   
1,542,728
 
                           
Cash and Short-term Investments:
                          
Beginning of the period
    
886,531
   
888,372
   
989,153
   
484,934
 
End of the period
  
$
2,531,357
  
$
2,027,662
  
$
2,531,357
  
$
2,027,662
  
 
 

ALLTEL CORPORATION
          
 
      
RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 13
  
(In thousands)
                  
                   
   
THREE MONTHS ENDED
  
SIX MONTHS ENDED
  
   
June 30,
  
June 30,
  
June 30,
  
June 30,
  
   
2006
  
2005
  
2006
  
2005
  
                   
                   
Net cash provided from operations
  
$
430,619
  
$
464,943
  
$
1,163,736
  
$
1,243,600
  
Adjustments to reconcile to net income under GAAP:
                          
Income (loss) from discontinued operations
    
(8,597
)
  
-
   
9,231
   
-
 
Depreciation and amortization expense
    
(411,898
)
  
(348,320
)
  
(816,439
)
  
(689,537
)
Provision for doubtful accounts
    
(69,951
)
  
(49,744
)
  
(123,608
)
  
(90,659
)
Non-cash portion of gain on exchange or disposal of assets and other
    
107,573
   
202,185
   
107,573
   
202,185
 
Change in deferred income taxes
    
12,072
   
(25,401
)
  
(9,463
)
  
(6,281
)
Other non-cash changes, net
    
15,468
   
2,443
   
4,250
   
(11,116
)
Changes in operating assets and liabilities, net of the
                          
effects of acquisitions and dispositions
    
353,617
   
155,955
   
391,030
   
66,873
 
Net income under GAAP
    
428,903
   
402,061
   
726,310
   
715,065
 
Adjustments to reconcile to net income from current businesses:
                        
Amortization expense related to acquired wireless intangible assets, net of tax
    
28,704
   
9,080
   
56,503
   
17,561
 
Reversal of excess bad debt reserve related to Hurricane Katrina, net of tax
    
(1,366
)
  
-
   
(1,366
)
  
-
 
Integration expenses and other charges, net of tax
    
7,508
   
-
   
20,232
   
-
 
Gain on exchange or disposal of assets and other, net of tax
    
(107,573
)
  
(118,039
)
  
(107,573
)
  
(118,039
)
Special dividend received on Fidelity National common stock,
                          
net of tax
    
-
   
-
   
-
   
(69,812
)
Change in accounting for operating leases, net of tax
    
-
   
-
   
-
   
12,092
 
Income (loss) from discontinued operations
    
8,597
   
-
   
(9,231
)
  
-
 
Net income from current businesses
    
364,773
   
293,102
   
684,875
   
556,867
 
Adjustments to reconcile to equity free cash flow from current businesses:
                        
Depreciation and amortization expense from current businesses
    
364,922
   
333,626
   
723,971
   
661,066
 
Capital expenditures
    
(393,871
)
  
(372,065
)
  
(614,726
)
  
(638,027
)
Equity free cash flow from current businesses
  
$
335,824
  
$
254,663
  
$
794,120
  
$
579,906
  

 
 
 
ALLTEL CORPORATION
                                      
 
  
SUPPLEMENTAL UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET-Page 14
                  
as of June 30, 2006
                                          
(Dollars in thousands)
                                          
                                           
                                           
                                           
       
Pro Forma Adjustments
          
                       
Receipt of
     
Exchange of
          
                       
Special Cash
      
Spinco Debt
          
       
Distribution of
      
Transfer of
      
Dividend and
      
Securities for
          
   
Alltel,
  
Wireline
      
Shared
     
Debt Securities
      
Alltel Debt
          
   
as Reported
  
Business
      
Assets
      
From Spinco
      
Securities
      
Pro Forma
  
Assets
                                          
Cash and short-term investments
  
$
2,531,357
  
$
(4,896
)
(A)
 
 
$
-
        
$
2,275,082
    
(C)
 
 
$
-
        
$
4,801,543
  
Note receivable from Spinco
    
-
   
-
       
-
         
1,703,170
 
(C)
 
 
  
(1,703,170
)
(D) 
 
 
  
-
 
Other current assets
    
1,441,734
   
(371,782
)
  
(A)
 
 
  
-
         
-
         
-
         
1,069,952
 
Total current assets
    
3,973,091
   
(376,678
)
        
-
         
3,978,252
         
(1,703,170
)
        
5,871,495
 
Investments
    
365,865
   
(1,400
)
(A)
 
 
  
-
         
-
         
-
         
364,465
 
Goodwill
    
9,067,133
   
(1,247,937
)
(A)
 
 
  
-
         
-
         
-
         
7,819,196
 
Other intangibles
    
2,214,018
   
(313,672
)
(A)
 
 
  
-
         
-
         
-
         
1,900,346
 
Property, plant and equipment, net
    
7,997,990
   
(3,021,338
)
  
(A)
 
 
  
(7,565
)
(B)
 
 
  
-
         
-
         
4,969,087
 
Other assets
    
315,451
   
(233,157
)
(A)
 
 
  
-
         
-
         
-
         
82,294
 
                                                               
Total Assets
  
$
23,933,548
  
$
(5,194,182
)
      
$
(7,565
)
      
$
3,978,252
        
$
(1,703,170
)
      
$
21,006,883
  
                                                               
                                                             
Liabilities and Shareholders' Equity
                                                            
Current maturities of long-term debt
  
$
1,594,121
  
$
(22,123
)
(A)
 
 
$
-
        
$
-
        
$
(685,082
)
 (D) 
 
 
$
886,916
  
Other current liabilities
    
1,663,359
   
(293,171
)
(A)
 
 
  
-
         
-
         
-
         
1,370,188
 
Total current liabilities
    
3,257,480
   
(315,294
)
        
-
         
-
         
(685,082
)
        
2,257,104
 
Long-term debt
    
4,262,808
   
(238,684
)
(A)
 
 
  
-
         
-
         
(988,540
)
 (D)
 
 
  
3,035,584
 
Deferred income taxes
    
1,894,228
   
(772,955
)
(A)
 
 
  
(2,870
)
(B)
 
 
  
-
         
-
         
1,118,403
 
Other liabilities
    
907,482
   
(181,405
)
(A)
 
 
  
-
         
-
         
-
         
726,077
 
Shareholders' equity:
                                                              
Preferred stock
    
260
   
-
       
-
         
-
         
-
         
260
 
Common stock
    
389,551
   
-
       
-
         
-
         
-
         
389,551
 
Additional paid-in capital
    
5,483,997
   
(3,685,844
)
(A)
 
 
  
(4,695
)
(B)
 
 
  
3,978,252
 
(C) 
 
  
-
         
5,771,710
 
Unrealized holding gain on investments
   
38,028
   
-
       
-
         
-
         
-
         
38,028
 
Foreign currency translation adjustment
    
-
   
-
       
-
         
-
         
-
         
-
 
Retained earnings
    
7,699,714
   
-
         
-
         
-
         
(29,548
)
 (D)
 
 
  
7,670,166
 
                                                               
Total shareholders' equity
    
13,611,550
   
(3,685,844
)
        
(4,695
)         
3,978,252
         
(29,548
)
        
13,869,715
 
                                                               
Total Liabilities and Shareholders' Equity
  
$
23,933,548
  
$
(5,194,182
)
      
$
(7,565
)
      
$
3,978,252
        
$
(1,703,170
)
      
$
21,006,883
  
                                                               
                                                           
See notes on pages 17 and 18 for a description of the line items marked (A) - (D).



ALLTEL CORPORATION
                      
 
  
SUPPLEMENTAL UNAUDITED PRO FORMA SELECTED FINANCIAL INFORMATION FROM CURRENT BUSINESSES-Page 15
  
(Dollars in thousands)
                          
                           
For the three months ended June 30, 2006
  
       
Pro Forma Adjustments
          
   
Operating
         
Add Back
          
   
Results from
  
Distribution of
      
of Corporate
      
 
  
   
Current
 
Wireline
      
Overhead
          
   
Businesses
  
Business
      
Expenses
      
Pro Forma
  
Revenues and sales:
                          
Service revenues
  
$
2,334,559
  
$
(600,431
)
(E)
 
 
$
-
        
$
1,734,128
  
Product sales
    
339,112
   
(128,008
)
(E)
 
 
  
-
         
211,104
 
Total revenues and sales
    
2,673,671
   
(728,439
)
        
-
         
1,945,232
 
                                       
Costs and expenses:
                                      
Cost of services
    
764,570
   
(188,358
)
(E)
 
 
  
-
         
576,212
 
Cost of products sold
    
384,669
   
(101,318
)
(E)
 
 
  
-
         
283,351
 
Selling, general administrative and other
    
510,931
   
(78,292
)
(E)
 
 
  
1,870
 
(F)
 
 
  
434,509
 
Depreciation and amortization
    
364,922
   
(102,334
)
(E)
 
 
  
-
         
262,588
 
Total costs and expenses
    
2,025,092
   
(470,302
)
        
1,870
         
1,556,660
 
                                       
Operating income
  
$
648,579
  
$
(258,137
)
      
$
(1,870
)
      
$
388,572
  
 
   
For the six months ended June 30, 2006
  
       
Pro Forma Adjustments
          
   
Operating
         
Add Back
          
   
Results from
  
Distribution of
      
of Corporate
      
 
  
   
Current
 
Wireline
      
Overhead
          
   
Businesses
  
Business
      
Expenses
      
Pro Forma
  
Revenues and sales:
                          
Service revenues
  
$
4,582,278
  
$
(1,199,002
)
(E)
 
 
$
-
        
$
3,383,276
  
Product sales
    
631,129
   
(225,940
)
(E)
 
 
  
-
         
405,189
 
Total revenues and sales
    
5,213,407
   
(1,424,942
)
      
-
         
3,788,465
 
                                       
Costs and expenses:
                                      
Cost of services
    
1,496,295
   
(377,299
)
(E)
 
 
  
-
         
1,118,996
 
Cost of products sold
    
740,462
   
(184,414
)
(E)
 
 
  
-
         
556,048
 
Selling, general administrative and other
    
1,009,890
   
(156,662
)
(E)
 
 
  
6,977
 
(F)
 
  
860,205
 
Depreciation and amortization
    
723,971
   
(207,563
)
(E)
 
 
  
-
         
516,408
 
Total costs and expenses
    
3,970,618
   
(925,938
)
      
6,977
         
3,051,657
 
                                       
Operating income
  
$
1,242,789
  
$
(499,004
)
      
$
(6,977
)
      
$
736,808
  
                                     
Operating results from current businesses have been reconciled to operating results under GAAP on pages 3 and 5 of this earnings release.
See notes on pages 17 and 18 for a description of the line items marked (E) - (F).
 
 


ALLTEL CORPORATION
                      
 
      
SUPPLEMENTAL UNAUDITED PRO FORMA SELECTED FINANCIAL INFORMATION FROM CURRENT BUSINESSES-Page 16
  
(Dollars in thousands)
                              
                               
For the three months ended June 30, 2005
  
       
Pro Forma Adjustments
    
   
Operating
         
Add Back
              
   
Results from
  
Distribution of
      
of Corporate
          
 
  
   
Current
 
Wireline
      
Overhead
      
Western
      
   
Businesses
  
Business
      
Expenses
      
Wireless
  
Pro Forma
  
Revenues and sales:
                              
Service revenues
  
$
1,989,264
  
$
(610,104
)
(E) 
 
 
$
-
        
$
247,082
  
$
1,626,242
  
Product sales
    
270,842
   
(124,051
)
 (E) 
 
 
  
-
         
15,040
   
161,831
 
Total revenues and sales
    
2,260,106
   
(734,155
)
        
-
         
262,122
   
1,788,073
 
                                             
Costs and expenses:
                                            
Cost of services
    
660,945
   
(205,388
)
 (E) 
 
 
  
-
         
69,223
   
524,780
 
Cost of products sold
    
308,065
   
(100,482
)
 (E) 
 
 
  
-
         
26,681
   
234,264
 
Selling, general administrative and other
    
420,536
   
(78,811
)
 (E) 
 
 
  
9,055
 
(F)
 
 
56,647
   
407,427
 
Depreciation and amortization
    
333,626
   
(127,329
)
 (E) 
 
 
  
-
         
47,137
   
253,434
 
Total costs and expenses
    
1,723,172
   
(512,010
)
        
9,055
         
199,688
   
1,419,905
 
                                             
Operating income
  
$
536,934
  
$
(222,145
)
      
$
(9,055
)
      
$
62,434
  
$
368,168
  
                                             


For the six months ended June 30, 2005
  
       
Pro Forma Adjustments
    
   
Operating
         
Add Back
              
   
Results from
  
Distribution of
      
of Corporate
          
 
  
   
Current
 
Wireline
      
Overhead
      
Western
      
   
Businesses
  
Business
      
Expenses
      
Wireless
  
Pro Forma
  
Revenues and sales:
                              
Service revenues
  
$
3,887,526
  
$
(1,227,626
)
(E)
 
$
-
        
$
472,052
  
$
3,131,952
  
Product sales
    
498,563
   
(216,188
)
(E)
 
 
  
-
         
30,634
   
313,009
 
Total revenues and sales
    
4,386,089
   
(1,443,814
)
        
-
         
502,686
   
3,444,961
 
                                             
Costs and expenses:
                                            
Cost of services
    
1,267,414
   
(406,063
)
(E)
 
 
  
-
         
130,701
   
992,052
 
Cost of products sold
    
589,838
   
(179,951
)
(E)
 
 
  
-
         
53,386
   
463,273
 
Selling, general administrative and other
    
828,001
   
(156,795
)
(E)
 
 
  
18,587
 
(F)
 
  
115,157
   
804,950
 
Depreciation and amortization
    
661,066
   
(256,485
)
(E)
 
 
  
-
         
91,729
   
496,310
 
Total costs and expenses
    
3,346,319
   
(999,294
)
        
18,587
         
390,973
   
2,756,585
 
                                             
Operating income
  
$
1,039,770
  
$
(444,520
)
      
$
(18,587
)
      
$
111,713
  
$
688,376
  
                                             
Operating results from current businesses have been reconciled to operating results under GAAP on pages 4 and 6 of this earnings release.
See notes on pages 17 and 18 for a description of the line items marked (E) - (F).

 
 
 
ALLTEL CORPORATION
NOTES TO SUPPLEMENTAL UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION-Page 17
 
 
   
 
The supplemental unaudited pro forma condensed consolidated financial information presented on pages 14 to 16 of this earnings release gives effect to the spin-off of the wireline telecommunications business of Alltel to its stockholders that was completed on July 17, 2006. The spin-off included the majority of Alltel’s communications support services, including directory publishing, information technology outsourcing services, retail long distance and the wireline sales portion of communications products. As a result, Alltel’s historical results of operations have been adjusted on a pro forma basis to reflect the wireline business as a discontinued operation.
   
 
On the distribution date, Alltel contributed the assets and liabilities of its wireline business to ALLTEL Holding Corp. (“Spinco”), a wholly owned subsidiary of Alltel, in exchange for: (i) all of the shares of common stock of Spinco, (ii) the payment of a special dividend of approximately $2.3 billion and (iii) the distribution by Spinco to Alltel of Spinco debt securities of approximately $1.7 billion, which Alltel exchanged for certain of the Company’s outstanding debt securities. Alltel also transferred to Spinco approximately $260.8 million of long-term debt that had been issued by the Company’s wireline subsidiaries. Alltel distributed the shares of common stock of Spinco on a pro rata basis to its shareholders of record as of July 12, 2006 in a ratio of one Spinco share for each share of Alltel common stock held.
 
Immediately after the consummation of the spin off, Spinco merged with and into Valor Communications Group, Inc. (“Valor”), with Valor continuing as the surviving corporation. As a result of the merger, all of the issued and outstanding shares of Spinco common stock were converted into the right to receive an aggregate number of shares of common stock of Valor. Valor issued in the aggregate approximately 403 million shares of common stock to Alltel stockholders pursuant to the merger, or 1.0339267 shares of Valor common stock for each share of Spinco common stock outstanding as of the effective time of the merger. Upon completion of the merger, Alltel stockholders owned approximately 85 percent of the outstanding equity interests of the surviving corporation, which is named Windstream Corporation, and the stockholders of Valor owned the remaining 15 percent of such equity interests.
   
 
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2006 gives effect to the spin-off as if it had occurred on June 30, 2006. The unaudited pro forma selected financial information for the three and six months ended June 30, 2006 and 2005 give effect to the spin-off as if it had occurred on January 1, 2005. In addition, the unaudited pro forma selected financial information for the three and six months ended June 30, 2005 have been adjusted to include the operating results of Western Wireless as if the acquisition occurred on January 1, 2005.
   
 
The pro forma adjustments described in these notes to the selected unaudited pro forma financial information are based on the best information available and assumptions that management believes are reasonable. The pro forma adjustments may differ from those that will be calculated to report the wireline business as a discontinued operation in Alltel’s future filings. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to represent or be indicative of what Alltel’s results of operations or financial position would have been had the spin-off occurred on the dates indicated. The unaudited pro forma condensed consolidated financial information also should not be considered representative of Alltel’s future results of operations or financial position.
   
(A)
This adjustment is to eliminate the assets, liabilities, and equity associated with the wireline business.
   
(B)
This adjustment is to reflect the transfer to Spinco of certain assets and liabilities related to the operations of Spinco’s business that were previously utilized or incurred on a shared basis with Alltel’s wireless business. Immediately prior to the spin-off, Alltel transferred property, plant and equipment (net book value of $7.6 million) along with the associated deferred income taxes ($2.9 million).
   
(C)
This adjustment is to reflect (1) the receipt in cash of a special dividend from Spinco of approximately $2.3 billion and (2) the distribution by Spinco to Alltel of certain Spinco debt securities consisting of $1,746.0 million aggregate principal amount of 8.625 percent senior notes due 2016 (the “Spinco Securities”). The Spinco Securities were issued at a discount and sold in an underwritten private placement offering. At the date of distribution to Alltel, the Spinco Securities had a carrying value of $1,703.2 million (par value of $1,746.0 million less discount of $42.8 million).
 
 

ALLTEL CORPORATION
NOTES TO SUPPLEMENTAL UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION-Page 18
 
 
   
(D)
In connection with the spin-off transaction, Alltel entered into an exchange agreement (the “Exchange Agreement”), with J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. (together, the “Investment Banks”), and Spinco. Pursuant to the terms of the Exchange Agreement, Alltel agreed to transfer the Spinco Securities to the Investment Banks, in equal amounts, in exchange for the transfer by the Investment Banks to Alltel of all or a portion of the $1.0 billion aggregate principal amount of Alltel’s commercial paper held by the Investment Banks and all or a portion of the $686.6 million aggregate principal amount of Alltel’s 4.656 percent notes due May 17, 2007 held by the Investment Banks.
   
 
On July 17, 2006, following the completion of the spin-off transaction, Alltel and the Investment Banks completed the exchange of debt securities pursuant to the terms of the Exchange Agreement. The Alltel debt securities exchanged consisted of $988.5 million of outstanding commercial paper borrowings and $685.1 million of Alltel’s 4.656 percent notes due May 17, 2007. The fair value of the Alltel debt obligations transferred by the Investment Banks to Alltel had an agreed upon fair market value of approximately $1,673.4 million on the date of the debt exchange.  This adjustment is to reflect the exchange of the Spinco debt securities received by Alltel for outstanding Alltel debt securities held by the Investment Banks. As part of the Exchange Agreement with the Investment Banks, Alltel incurred approximately $29.8 million of costs related to the exchange of its debt securities and realized a gain of approximately $0.2 million upon completion of the debt exchange.
   
(E)
This adjustment is to eliminate the results of operations associated with the wireline business.
   
(F)
This adjustment is to add back to Alltel’s continuing operations general corporate overhead expenses previously allocated to the wireline business in accordance with Emerging Issues Task Force Issue No. 87-24 "Allocation of Interest to Discontinued Operations". Except for the $260.8 million of long-term debt directly related to the wireline business, no other interest expense was allocated to the wireline operations for the periods presented.