UNITED
STATES
|
|
SECURITIES
AND EXCHANGE COMMISSION
|
|
WASHINGTON,
D. C. 20549
|
|
FORM
10-Q
|
|
[x] QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
|
For
the quarterly period ended September 30,
2007
|
|
OR
|
|
[
] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
|
Commission
file number 1-4996
|
|
ALLTEL
CORPORATION
|
|
(Exact
name of registrant as specified in its charter)
|
|
Delaware
|
34-0868285
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
One
Allied Drive, Little Rock, Arkansas
|
72202
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code
|
(501)
905-8000
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
FORM
10-Q
|
|
TABLE
OF CONTENTS
|
|
Page
No.
|
PART
I – FINANCIAL INFORMATION
|
||
2
|
||
22
|
||
39
|
||
39
|
||
PART
II – OTHER INFORMATION
|
||
40
|
||
40
|
||
44
|
||
Item
3.
|
Defaults
Upon Senior Securities
|
*
|
44
|
||
Item
5.
|
Other
Information
|
*
|
44
|
CONSOLIDATED
BALANCE SHEETS
(UNAUDITED)
|
||||||||
(Dollars
in millions, except per share amounts)
|
September
30,
|
December
31,
|
||||||
Assets
|
2007
|
2006
|
||||||
Current
Assets:
|
||||||||
Cash
and short-term investments
|
$ |
824.6
|
$ |
934.2
|
||||
Accounts
receivable (less allowance for doubtful
|
||||||||
accounts
of $73.2 and $54.9, respectively)
|
872.6
|
807.3
|
||||||
Inventories
|
166.9
|
218.6
|
||||||
Prepaid
expenses and other
|
84.1
|
67.7
|
||||||
Assets
related to discontinued operations
|
-
|
4.3
|
||||||
Total
current assets
|
1,948.2
|
2,032.1
|
||||||
Investments
|
188.8
|
368.9
|
||||||
Goodwill
|
8,421.1
|
8,447.0
|
||||||
Other
intangibles
|
2,001.0
|
2,129.4
|
||||||
Property,
Plant and Equipment:
|
||||||||
Land
|
335.0
|
314.9
|
||||||
Buildings
and improvements
|
1,011.5
|
955.1
|
||||||
Operating
plant and equipment
|
8,519.1
|
7,933.8
|
||||||
Information
processing
|
1,142.8
|
1,048.1
|
||||||
Furniture
and fixtures
|
184.8
|
173.8
|
||||||
Under
construction
|
358.9
|
496.0
|
||||||
Total
property, plant and equipment
|
11,552.1
|
10,921.7
|
||||||
Less
accumulated depreciation
|
6,520.7
|
5,690.3
|
||||||
Net
property, plant and equipment
|
5,031.4
|
5,231.4
|
||||||
Other
assets
|
115.3
|
89.4
|
||||||
Assets
related to discontinued operations
|
-
|
45.5
|
||||||
Total
Assets
|
$ |
17,705.8
|
$ |
18,343.7
|
||||
Liabilities
and Shareholders’ Equity
|
||||||||
Current
Liabilities:
|
||||||||
Current
maturities of long-term debt
|
$ |
39.0
|
$ |
36.3
|
||||
Accounts
payable
|
523.5
|
576.1
|
||||||
Advance
payments and customer deposits
|
199.6
|
186.2
|
||||||
Accrued
taxes
|
316.5
|
114.1
|
||||||
Accrued
dividends
|
43.1
|
46.0
|
||||||
Accrued
interest
|
48.7
|
79.3
|
||||||
Other
current liabilities
|
188.5
|
156.5
|
||||||
Liabilities
related to discontinued operations
|
-
|
2.8
|
||||||
Total
current liabilities
|
1,358.9
|
1,197.3
|
||||||
Long-term
debt
|
2,665.3
|
2,697.4
|
||||||
Deferred
income taxes
|
1,085.4
|
1,109.5
|
||||||
Other
liabilities
|
654.4
|
677.6
|
||||||
Total
liabilities
|
5,764.0
|
5,681.8
|
||||||
Shareholders’
Equity:
|
||||||||
Preferred
stock, Series C, $2.06, no par value, 10,028 and 10,307
|
||||||||
shares
issued and outstanding, respectively
|
0.3
|
0.3
|
||||||
Common
stock, par value $1 per share, 1.0 billion shares
authorized,
|
||||||||
344,485,125
and 364,505,820 shares issued and outstanding,
respectively
|
344.5
|
364.5
|
||||||
Additional
paid-in capital
|
3,050.3
|
4,296.8
|
||||||
Accumulated
other comprehensive income (loss)
|
(25.1 | ) |
9.5
|
|||||
Retained
earnings
|
8,571.8
|
7,990.8
|
||||||
Total
shareholders’ equity
|
11,941.8
|
12,661.9
|
||||||
Total
Liabilities and Shareholders’ Equity
|
$ |
17,705.8
|
$ |
18,343.7
|
CONSOLIDATED
STATEMENTS OF INCOME (UNAUDITED)
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Millions,
except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues
and sales:
|
||||||||||||||||
Service
revenues
|
$ |
2,071.5
|
$ |
1,795.4
|
$ |
5,923.2
|
$ |
5,178.7
|
||||||||
Product
sales
|
210.0
|
211.9
|
611.9
|
617.1
|
||||||||||||
Total
revenues and sales
|
2,281.5
|
2,007.3
|
6,535.1
|
5,795.8
|
||||||||||||
Costs
and expenses:
|
||||||||||||||||
Cost
of services (excluding depreciation of $225.7, $190.5,
|
||||||||||||||||
$680.8
and $559.1, respectively, included below)
|
682.2
|
610.1
|
1,933.4
|
1,726.9
|
||||||||||||
Cost
of products sold
|
300.0
|
293.8
|
876.1
|
849.8
|
||||||||||||
Selling,
general, administrative and other
|
496.1
|
438.3
|
1,445.5
|
1,298.5
|
||||||||||||
Depreciation
and amortization
|
358.2
|
307.1
|
1,060.0
|
916.0
|
||||||||||||
Integration
expenses, restructuring and other charges
|
11.0
|
-
|
53.3
|
10.8
|
||||||||||||
Total
costs and expenses
|
1,847.5
|
1,649.3
|
5,368.3
|
4,802.0
|
||||||||||||
Operating
income
|
434.0
|
358.0
|
1,166.8
|
993.8
|
||||||||||||
Equity
earnings in unconsolidated partnerships
|
17.1
|
17.3
|
48.5
|
45.6
|
||||||||||||
Minority
interest in consolidated partnerships
|
(8.8 | ) | (11.7 | ) | (27.4 | ) | (37.1 | ) | ||||||||
Other
income, net
|
5.9
|
37.3
|
19.2
|
69.1
|
||||||||||||
Interest
expense
|
(46.2 | ) | (63.8 | ) | (140.3 | ) | (234.9 | ) | ||||||||
Gain
(loss) on exchange or disposal of assets and other
|
-
|
(50.5 | ) |
56.5
|
126.1
|
|||||||||||
Income
from continuing operations before income taxes
|
402.0
|
286.6
|
1,123.3
|
962.6
|
||||||||||||
Income
taxes
|
123.3
|
121.3
|
415.8
|
374.7
|
||||||||||||
Income
from continuing operations
|
278.7
|
165.3
|
707.5
|
587.9
|
||||||||||||
Income
from discontinued operations (net of income tax expense
|
||||||||||||||||
(benefit)
of $(4.2), $7.9, $(2.5) and $222.6, respectively)
|
3.9
|
21.9
|
0.9
|
325.6
|
||||||||||||
Net
income
|
282.6
|
187.2
|
708.4
|
913.5
|
||||||||||||
Preferred
dividends
|
0.1
|
0.1
|
0.1
|
0.1
|
||||||||||||
Net
income applicable to common shares
|
$ |
282.5
|
$ |
187.1
|
$ |
708.3
|
$ |
913.4
|
||||||||
Earnings
per share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Income
from continuing operations
|
$.81
|
$.43
|
$2.03
|
$1.52
|
||||||||||||
Income
from discontinued operations
|
.01
|
.06
|
-
|
.84
|
||||||||||||
Net
income
|
$.82
|
$.49
|
$2.03
|
$2.36
|
||||||||||||
Diluted:
|
||||||||||||||||
Income
from continuing operations
|
$.80
|
$.43
|
$2.01
|
$1.51
|
||||||||||||
Income
from discontinued operations
|
.01
|
.05
|
-
|
.84
|
||||||||||||
Net
income
|
$.81
|
$.48
|
$2.01
|
$2.35
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
||||||||
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
(Millions)
|
2007
|
2006
|
||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
income
|
$ |
708.4
|
$ |
913.5
|
||||
Adjustments
to reconcile net income to net cash provided from operating
activities:
|
||||||||
Income
from discontinued operations
|
(0.9 | ) | (325.6 | ) | ||||
Depreciation
and amortization expense
|
1,060.0
|
916.0
|
||||||
Provision
for doubtful accounts
|
140.9
|
179.9
|
||||||
Non-cash
portion of loss (gain) on exchange or disposal of assets
|
(56.5 | ) | (149.1 | ) | ||||
Change
in deferred income taxes
|
30.4
|
6.2
|
||||||
Adjustment
to income tax liabilities, including contingency reserves
|
(33.8 | ) |
-
|
|||||
Other,
net
|
(24.7 | ) | (6.3 | ) | ||||
Changes
in operating assets and liabilities, net of effects of acquisitions
and
dispositions:
|
||||||||
Accounts
receivable
|
(207.5 | ) | (245.9 | ) | ||||
Inventories
|
51.8
|
39.6
|
||||||
Accounts
payable
|
(54.4 | ) | (35.3 | ) | ||||
Other
current liabilities
|
235.6
|
(255.1 | ) | |||||
Other,
net
|
(10.5 | ) | (40.9 | ) | ||||
Net
cash provided from operating activities
|
1,838.8
|
997.0
|
||||||
Cash
Flows from Investing Activities:
|
||||||||
Additions
to property, plant and equipment
|
(720.3 | ) | (718.6 | ) | ||||
Additions
to capitalized software development costs
|
(24.3 | ) | (24.0 | ) | ||||
Purchases
of property, net of cash acquired
|
(6.2 | ) | (676.5 | ) | ||||
Proceeds
from the sale of investments
|
188.7
|
200.5
|
||||||
Proceeds
from the return on investments
|
40.2
|
36.7
|
||||||
Other,
net
|
0.9
|
7.8
|
||||||
Net
cash used in investing activities
|
(521.0 | ) | (1,174.1 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Dividends
paid on common and preferred stock
|
(133.5 | ) | (447.1 | ) | ||||
Repayments
of long-term debt
|
(36.9 | ) | (1,012.2 | ) | ||||
Repurchases
of common stock
|
(1,360.3 | ) | (709.0 | ) | ||||
Cash
payments to effect conversion of convertible notes
|
-
|
(59.8 | ) | |||||
Distributions
to minority investors
|
(31.8 | ) | (27.7 | ) | ||||
Excess
tax benefits from stock option exercises
|
25.7
|
9.1
|
||||||
Common
stock issued
|
59.0
|
191.5
|
||||||
Net
cash used in financing activities
|
(1,477.8 | ) | (2,055.2 | ) | ||||
Cash
Flows from Discontinued Operations:
|
||||||||
Cash
provided from operating activities
|
2.8
|
595.4
|
||||||
Cash
provided from investing activities
|
47.6
|
3,746.6
|
||||||
Cash
used in financing activities
|
-
|
(0.2 | ) | |||||
Net
cash provided from discontinued operations
|
50.4
|
4,341.8
|
||||||
Effect
of exchange rate changes on cash and short-term
investments
|
-
|
(5.9 | ) | |||||
Increase
(decrease) in cash and short-term investments
|
(109.6 | ) |
2,103.6
|
|||||
Cash
and Short-term Investments:
|
||||||||
Beginning
of the period
|
934.2
|
982.4
|
||||||
End
of the period
|
$ |
824.6
|
$ |
3,086.0
|
CONSOLIDATED
STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)
|
|||||||||||||||||||||||||
Accumulated
|
|||||||||||||||||||||||||
Additional
|
Other
|
||||||||||||||||||||||||
Preferred
|
Common
|
Paid-In
|
Comprehensive
|
Retained
|
|||||||||||||||||||||
Stock
|
Stock
|
Capital
|
Income
(Loss)
|
Earnings
|
Total
|
||||||||||||||||||||
Balance
at December 31, 2006
|
$ |
0.3
|
$ |
364.5
|
$ |
4,296.8
|
$ |
9.5
|
$ |
7,990.8
|
$ |
12,661.9
|
|||||||||||||
Cumulative
effect adjustment to adopt recognition
|
|||||||||||||||||||||||||
and
measurement provisions of FASB Interpretation
|
|||||||||||||||||||||||||
No.
48 (See Note 2)
|
-
|
-
|
-
|
-
|
3.2
|
3.2
|
|||||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
708.4
|
708.4
|
|||||||||||||||||||
Other
comprehensive loss, net of tax (See Note 11)
|
|||||||||||||||||||||||||
Unrealized
holding losses on investments,
|
|||||||||||||||||||||||||
net
of reclassification adjustments
|
-
|
-
|
-
|
(37.5 | ) |
-
|
(37.5
|
) | |||||||||||||||||
Defined
benefit pension plans
|
-
|
-
|
-
|
2.7
|
-
|
2.7
|
|||||||||||||||||||
Other
postretirement benefit plan
|
-
|
-
|
-
|
0.2
|
-
|
0.2
|
|||||||||||||||||||
Comprehensive
income
|
-
|
-
|
-
|
(34.6 | ) |
708.4
|
673.8
|
||||||||||||||||||
Employee
plans, net
|
-
|
1.8
|
38.4
|
-
|
-
|
40.2
|
|||||||||||||||||||
Issuance
of restricted stock
|
-
|
0.2
|
-
|
-
|
-
|
0.2
|
|||||||||||||||||||
Amortization
of stock-based compensation
|
-
|
-
|
24.5
|
-
|
-
|
24.5
|
|||||||||||||||||||
Tax
benefit for non-qualified stock options
|
-
|
-
|
27.0
|
-
|
-
|
27.0
|
|||||||||||||||||||
Repurchases
of stock
|
-
|
(22.0 | ) | (1,338.3 | ) |
-
|
-
|
(1,360.3
|
) | ||||||||||||||||
Other
|
-
|
-
|
1.9
|
-
|
-
|
1.9
|
|||||||||||||||||||
Dividends:
|
|||||||||||||||||||||||||
Common
- $.375 per share
|
-
|
-
|
-
|
-
|
(130.5 | ) |
(130.5
|
) | |||||||||||||||||
Preferred
|
-
|
-
|
-
|
-
|
(0.1 | ) |
(0.1
|
) | |||||||||||||||||
Balance
at September 30, 2007
|
$ |
0.3
|
$ |
344.5
|
$ |
3,050.3
|
$ | (25.1 | ) | $ |
8,571.8
|
$ |
11,941.8
|
|
1.
|
General:
|
|
2.
|
Accounting
Changes:
|
|
2.
|
Accounting
Changes, Continued:
|
|
3.
|
Acquisitions:
|
|
3.
|
Acquisitions,
Continued:
|
|
4.
|
Goodwill
and Other Intangible
Assets:
|
(Millions)
|
||||
Balance
at December 31, 2006
|
$ |
8,447.0
|
||
Acquired
during the period
|
1.8
|
|||
Other
adjustments
|
(27.7 | ) | ||
Balance
at September 30, 2007
|
$ |
8,421.1
|
September
30,
|
December
31,
|
|||||||
(Millions)
|
2007
|
2006
|
||||||
Cellular
and Personal Communications Services licenses
|
$ |
1,661.5
|
$ |
1,657.8
|
September
30, 2007
|
||||||||||||
Net
|
||||||||||||
Gross
|
Accumulated
|
Carrying
|
||||||||||
(Millions)
|
Cost
|
Amortization
|
Value
|
|||||||||
Customer
lists
|
$ |
946.6
|
$ | (609.5 | ) | $ |
337.1
|
|||||
Roaming
agreement
|
6.1
|
(3.8 | ) |
2.3
|
||||||||
Non-compete
agreement
|
0.3
|
(0.2 | ) |
0.1
|
||||||||
$ |
953.0
|
$ | (613.5 | ) | $ |
339.5
|
||||||
December
31, 2006
|
||||||||||||
Net
|
||||||||||||
Gross
|
Accumulated
|
Carrying
|
||||||||||
(Millions)
|
Cost
|
Amortization
|
Value
|
|||||||||
Customer
lists
|
$ |
946.6
|
$ | (478.6 | ) | $ |
468.0
|
|||||
Roaming
agreement
|
6.1
|
(2.5 | ) |
3.6
|
||||||||
$ |
952.7
|
$ | (481.1 | ) | $ |
471.6
|
|
5.
|
Stock-Based
Compensation:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions,
except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Compensation
expense related to stock options issued by Alltel
|
$ |
4.9
|
$ |
4.5
|
$ |
13.7
|
$ |
14.7
|
||||||||
Compensation
expense related to stock options converted to Alltel stock
options
in connection
with the acquisition of Western Wireless
|
0.5
|
0.5
|
1.0
|
1.5
|
||||||||||||
Compensation
expense related to restricted stock awards
|
3.7
|
7.1
|
9.8
|
13.4
|
||||||||||||
Compensation
expense before income taxes
|
9.1
|
12.1
|
24.5
|
29.6
|
||||||||||||
Income
tax benefit
|
(3.0 | ) | (4.2 | ) | (7.9 | ) |
(9.6
|
) | ||||||||
Compensation
expense, net of tax
|
$ |
6.1
|
$ |
7.9
|
$ |
16.6
|
$ |
20.0
|
Nine
Months Ended September 30,
|
||
2007
|
2006
|
|
Weighted
average grant date fair value per share
|
$17.41
|
$15.19
|
Expected
life
|
5.9
years
|
5.9
years
|
Expected
volatility
|
20.9%
|
22.9%
|
Dividend
yield
|
0.8%
|
0.8%
|
Risk-free
interest rate
|
4.7%
|
4.5%
|
(Thousands)
|
Weighted
|
||||
Number
of
|
Average
Price
|
||||
Shares
|
Per
Share
|
||||
Outstanding
at December 31, 2006
|
16,176.2
|
$46.78
|
|||
Granted
|
1,601.4
|
61.66
|
|||
Exercised
|
(2,627.2)
|
37.41
|
|||
Forfeited
|
(129.8)
|
46.06
|
|||
Expired
|
(1.2)
|
26.18
|
|||
Outstanding
at September 30, 2007
|
15,019.4
|
$50.01
|
|||
Exercisable
at end of period
|
10,779.6
|
$49.11
|
(Thousands)
|
Weighted
|
||||||||
Number
of
|
Average
Price
|
||||||||
Shares
|
Per
Share
|
||||||||
Non-vested
at December 31, 2006
|
4,391.9
|
$45.89
|
|||||||
Granted
|
1,601.4
|
61.66
|
|||||||
Vested
|
(1,676.7)
|
44.90
|
|||||||
Forfeited
|
(76.8)
|
41.31
|
|||||||
Non-vested
at September 30, 2007
|
4,239.8
|
$52.32
|
|
5.
|
Stock-Based
Compensation, Continued:
|
Weighted
|
|||||
Average
|
|||||
Number
of
|
Fair
Value
|
||||
Shares
|
Per
Share
|
||||
Non-vested
at December 31, 2006
|
487,552
|
$58.37
|
|||
Granted
|
255,520
|
60.64
|
|||
Vested
|
(128,441)
|
57.58
|
|||
Forfeited
|
(3,833)
|
53.18
|
|||
Non-vested
at September 30, 2007
|
610,798
|
$59.52
|
|
6.
|
Employee
Benefit Plans and Postretirement Benefits Other Than
Pensions:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Benefits
earned during the year
|
$ |
2.7
|
$ |
2.3
|
$ |
8.2
|
$ |
14.1
|
||||||||
Interest
cost on benefit obligation
|
3.2
|
3.0
|
9.6
|
32.3
|
||||||||||||
Special
termination benefits
|
-
|
-
|
-
|
9.0
|
||||||||||||
Settlement
and curtailment losses
|
-
|
0.4
|
-
|
3.8
|
||||||||||||
Amortization
of prior service cost
|
0.3
|
0.3
|
0.8
|
0.8
|
||||||||||||
Amortization
of net actuarial loss
|
1.2
|
1.0
|
3.6
|
16.2
|
||||||||||||
Expected
return on plan assets
|
(3.6 | ) | (3.4 | ) | (10.8 | ) | (45.3 | ) | ||||||||
Net
periodic benefit expense
|
$ |
3.8
|
$ |
3.6
|
$ |
11.4
|
$ |
30.9
|
|
6.
|
Employee
Benefit Plans and Postretirement Benefits Other Than Pensions,
Continued:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Benefits
earned during the year
|
$ |
0.1
|
$ |
0.1
|
$ |
0.3
|
$ |
0.3
|
||||||||
Interest
cost on benefit obligation
|
0.1
|
0.1
|
0.3
|
6.8
|
||||||||||||
Amortization
of transition obligation
|
-
|
-
|
-
|
0.4
|
||||||||||||
Amortization
of prior service cost
|
-
|
-
|
-
|
0.9
|
||||||||||||
Recognized
net actuarial loss
|
0.1
|
-
|
0.3
|
3.2
|
||||||||||||
Expected
return on plan assets
|
-
|
-
|
-
|
-
|
||||||||||||
Net
periodic benefit expense
|
$ |
0.3
|
$ |
0.2
|
$ |
0.9
|
$ |
11.6
|
|
7.
|
Integration
Expenses, Restructuring and Other
Charges:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Severance
and employee benefit costs
|
$ |
0.3
|
$ |
-
|
$ |
4.7
|
$ |
-
|
||||||||
Rebranding
and signage costs
|
3.9
|
-
|
4.3
|
8.3
|
||||||||||||
Computer
system conversion and other integration expenses
|
1.7
|
-
|
6.1
|
2.5
|
||||||||||||
Lease
termination costs
|
2.6
|
-
|
2.6
|
-
|
||||||||||||
Costs
associated with pending acquisition of Alltel
|
2.5
|
-
|
35.6
|
-
|
||||||||||||
Total
integration expenses, restructuring and other charges
|
$ |
11.0
|
$ |
-
|
$ |
53.3
|
$ |
10.8
|
|
7.
|
Integration
Expenses, Restructuring and Other Charges,
Continued:
|
(Millions)
|
||||
Balance,
beginning of period
|
$ |
0.1
|
||
Integration
expenses, restructuring and other charges recorded during the
period
|
53.3
|
|||
Cash
outlays during the period
|
(36.6 | ) | ||
Balance,
end of period
|
$ |
16.8
|
8.
|
Gain
(Loss) on Exchange or Disposal of Assets and
Other:
|
9.
|
Income
Taxes:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Statutory
federal income tax rates
|
35.0 | % | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Increase
(decrease):
|
||||||||||||||||
State
income taxes, net of federal benefit
|
4.1
|
4.7
|
4.0
|
3.9
|
||||||||||||
Non-deductible
costs associated with pending acquisition of Alltel
|
0.2
|
-
|
1.1
|
-
|
||||||||||||
Non-deductible
loss on debt exchange
|
-
|
3.4
|
-
|
1.0
|
||||||||||||
Reversal
of income tax contingency reserves
|
(8.1 | ) |
-
|
(3.0 | ) |
-
|
||||||||||
Effective
tax rate adjustment
|
-
|
1.5
|
-
|
0.2
|
||||||||||||
Tax-exempt
interest income
|
(0.2 | ) | (2.7 | ) | (0.2 | ) | (1.4 | ) | ||||||||
Other
items, net
|
(0.3 | ) |
0.4
|
0.1
|
0.2
|
|||||||||||
Effective
income tax rates
|
30.7 | % | 42.3 | % | 37.0 | % | 38.9 | % |
|
10.
|
Discontinued
Operations:
|
|
10.
|
Discontinued
Operations, Continued:
|
|
10.
|
Discontinued
Operations, Continued:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues
and sales
|
$ |
-
|
$ |
127.3
|
$ |
7.8
|
$ |
1,830.8
|
||||||||
Operating
expenses (a)
|
-
|
97.4
|
10.6
|
1,253.6
|
||||||||||||
Operating
income (loss)
|
-
|
29.9
|
(2.8 | ) |
577.2
|
|||||||||||
Minority
interest expense in unconsolidated entities
|
-
|
-
|
-
|
(6.0 | ) | |||||||||||
Loss
on disposal of discontinued operations
|
(0.3 | ) |
-
|
(0.1 | ) | (14.8 | ) | |||||||||
Other
income, net
|
-
|
0.6
|
1.3
|
0.9
|
||||||||||||
Interest
expense (b)
|
-
|
(0.7 | ) |
-
|
(9.1 | ) | ||||||||||
Pretax
income (loss) from discontinued operations
|
(0.3 | ) |
29.8
|
(1.6 | ) |
548.2
|
||||||||||
Income
tax expense (benefit) (c)
|
(4.2 | ) |
7.9
|
(2.5 | ) |
222.6
|
||||||||||
Income
from discontinued operations
|
$ |
3.9
|
$ |
21.9
|
$ |
0.9
|
$ |
325.6
|
(a)
|
Operating
expenses for the nine-month period of 2007 included an impairment
charge
of $1.7 million to reflect the fair value less cost to sell of the
four
rural markets in Minnesota required to be divested. Operating
expenses for 2006 excluded general corporate overhead expenses previously
allocated to the wireline business in accordance with Emerging Issues
Task
Force Issue No. 87-24, “Allocation of Interest Expense to Discontinued
Operations”. The amount of corporate overhead expenses added
back to Alltel’s continuing operations totaled $7.0 million for the nine
months ended September 30, 2006.
|
(b)
|
Except
for $260.8 million of long-term debt directly related to the wireline
business that was transferred to Windstream and a $50.0 million credit
facility agreement that was assumed by the buyer of the Bolivian
operations, Alltel had no outstanding indebtedness directly related
to the
wireline business, the international operations or the domestic markets
to
be divested, and accordingly, no additional interest expense was
allocated
to discontinued operations for the periods presented.
|
(c)
|
Income
taxes in the three and nine month periods of 2007 reflected a change
in
the estimate of tax benefits associated with transaction costs incurred
in
connection with the wireline spin-off and the reversal of income
tax
contingency reserves applicable to the sold financial services division
due to the expiration of certain state statutes of
limitation.
|
|
11.
|
Comprehensive
Income:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Net
income
|
$ |
282.6
|
$ |
187.2
|
$ |
708.4
|
$ |
913.5
|
||||||||
Other
comprehensive income (loss):
|
||||||||||||||||
Unrealized
holding gains (losses) on investments:
|
||||||||||||||||
Unrealized
holding gains (losses) arising in the period
|
-
|
-
|
(1.1 | ) |
24.2
|
|||||||||||
Income
tax expense (benefit)
|
-
|
-
|
(0.4 | ) |
8.5
|
|||||||||||
-
|
-
|
(0.7 | ) |
15.7
|
||||||||||||
Less
reclassification adjustments for gains included
|
||||||||||||||||
in
net income for the period
|
-
|
-
|
(56.5 | ) |
-
|
|||||||||||
Income
tax expense
|
-
|
-
|
19.7
|
-
|
||||||||||||
-
|
-
|
(36.8 | ) |
-
|
||||||||||||
Net
unrealized gains (losses) in the period
|
-
|
-
|
(57.6 | ) |
24.2
|
|||||||||||
Income
tax expense (benefit)
|
-
|
-
|
(20.1 | ) |
8.5
|
|||||||||||
-
|
-
|
(37.5 | ) |
15.7
|
||||||||||||
Foreign
currency translation adjustment:
|
||||||||||||||||
Translation
adjustments for the period
|
-
|
-
|
-
|
(2.1 | ) | |||||||||||
Reclassification
adjustments for losses included
|
||||||||||||||||
in
net income for the period
|
-
|
-
|
-
|
4.9
|
||||||||||||
-
|
-
|
-
|
2.8
|
|||||||||||||
Defined
benefit pension plans:
|
||||||||||||||||
Amounts
included in net periodic benefit cost for the period:
|
||||||||||||||||
Amortization
of prior service cost
|
0.3
|
-
|
0.8
|
-
|
||||||||||||
Amortization
of net actuarial loss
|
1.2
|
-
|
3.6
|
-
|
||||||||||||
1.5
|
-
|
4.4
|
-
|
|||||||||||||
Income
tax expense
|
0.6
|
-
|
1.7
|
-
|
||||||||||||
0.9
|
-
|
2.7
|
-
|
|||||||||||||
Other
postretirement benefit plan:
|
||||||||||||||||
Amounts
included in net periodic benefit cost for the period:
|
||||||||||||||||
Amortization
of net actuarial loss
|
0.1
|
-
|
0.3
|
-
|
||||||||||||
Income
tax expense
|
-
|
-
|
0.1
|
-
|
||||||||||||
0.1
|
-
|
0.2
|
-
|
|||||||||||||
Other
comprehensive income (loss) before tax
|
1.6
|
-
|
(52.9 | ) |
27.0
|
|||||||||||
Income
tax expense (benefit)
|
0.6
|
-
|
(18.3 | ) |
8.5
|
|||||||||||
Other
comprehensive income (loss)
|
1.0
|
-
|
(34.6 | ) |
18.5
|
|||||||||||
Comprehensive
income
|
$ |
283.6
|
$ |
187.2
|
$ |
673.8
|
$ |
932.0
|
(Millions)
|
September
30, 2007
|
December
31,
2006
|
||||||
Unrealized
holding gains on investments
|
$ |
-
|
$ |
37.5
|
||||
Defined
benefit pension plans
|
(23.1 | ) | (25.8 | ) | ||||
Other
postretirement benefit plan
|
(2.0 | ) | (2.2 | ) | ||||
Accumulated
other comprehensive income (loss)
|
$ | (25.1 | ) | $ |
9.5
|
|
12.
|
Earnings
per Share:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions,
except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Basic
earnings per share:
|
||||||||||||||||
Income
from continuing operations
|
$ |
278.7
|
$ |
165.3
|
$ |
707.5
|
$ |
587.9
|
||||||||
Income
from discontinued operations
|
3.9
|
21.9
|
0.9
|
325.6
|
||||||||||||
Less
preferred dividends
|
(0.1 | ) | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||||||||
Net
income applicable to common shares
|
$ |
282.5
|
$ |
187.1
|
$ |
708.3
|
$ |
913.4
|
||||||||
Weighted
average common shares outstanding for the period
|
343.5
|
384.6
|
348.5
|
386.7
|
||||||||||||
Basic
earnings per share:
|
||||||||||||||||
From
continuing operations
|
$.81
|
$.43
|
$2.03
|
$1.52
|
||||||||||||
From
discontinued operations
|
.01
|
.06
|
-
|
.84
|
||||||||||||
Net
income
|
$.82
|
$.49
|
$2.03
|
$2.36
|
||||||||||||
Diluted
earnings per share:
|
||||||||||||||||
Net
income applicable to common shares
|
$ |
282.5
|
$ |
187.1
|
$ |
708.3
|
$ |
913.4
|
||||||||
Adjustment
for interest expense on convertible notes, net of tax
|
-
|
0.1
|
-
|
0.3
|
||||||||||||
Adjustment
for convertible preferred stock dividends
|
0.1
|
0.1
|
0.1
|
0.1
|
||||||||||||
Net
income applicable to common shares assuming conversion
of
preferred stock and convertible notes
|
$ |
282.6
|
$ |
187.3
|
$ |
708.4
|
$ |
913.8
|
||||||||
Weighted
average common shares outstanding for the period
|
343.5
|
384.6
|
348.5
|
386.7
|
||||||||||||
Increase
in shares resulting from:
|
||||||||||||||||
Assumed
exercise of stock options
|
2.7
|
1.2
|
2.4
|
1.2
|
||||||||||||
Assumed
conversion of convertible notes
|
0.1
|
0.6
|
0.1
|
0.7
|
||||||||||||
Assumed
conversion of preferred stock
|
0.3
|
0.2
|
0.2
|
0.2
|
||||||||||||
Non-vested
restricted stock awards
|
0.3
|
0.1
|
0.3
|
0.1
|
||||||||||||
Weighted
average common shares assuming conversion of the
above
securities
|
346.9
|
386.7
|
351.5
|
388.9
|
||||||||||||
Diluted
earnings per share:
|
||||||||||||||||
From
continuing operations
|
$.80
|
$.43
|
$2.01
|
$1.51
|
||||||||||||
From
discontinued operations
|
.01
|
.05
|
-
|
.84
|
||||||||||||
Net
income
|
$.81
|
$.48
|
$2.01
|
$2.35
|
|
13.
|
Pending
Acquisition of Alltel by Two Private Investment
Firms:
|
|
14.
|
Commitments
and Contingencies – Legal
Proceedings:
|
14.
|
Commitments
and Contingencies – Legal Proceedings,
Continued:
|
15.
|
Subsequent
Event – Tender Offers to Repurchase Long-Term
Debt:
|
·
|
Revenues
and sales increased 14 percent over 2006 driven by Alltel’s continued
focus on quality customer growth, improvements in data revenues and
additional Eligible Telecommunications Carrier (“ETC”) support. Growth in
revenues and sales in the quarter also reflected the effects of Alltel’s
October 3, 2006 acquisition of Midwest Wireless Holdings (“Midwest
Wireless”). Average revenue per customer and retail revenue per
customer both increased 4 percent year-over-year to $55.96 and $49.62,
respectively, due to continued growth in data and ETC revenues, partially
offset by lower voice revenues per customer. Average revenue
per customer for the third quarter of 2007 also reflected growth
in data
roaming revenues and additional wholesale transport revenues earned
from
charging third parties, principally Windstream Corporation (“Windstream”),
for use of Alltel’s fiber-optic
network.
|
·
|
Excluding
the effects of acquisitions, gross customer additions were 905,000
in the
quarter, a 9 percent increase from a year ago, while net customer
additions were 205,000, a 103 percent increase from
2006. Postpay churn decreased 36 basis points from the same
period a year ago to 1.31 percent, while total churn declined 28
basis
points year-over-year to 1.9 percent, marking the seventh consecutive
quarter that both churn metrics improved on a comparative year-over-year
basis.
|
·
|
Operating
income increased 21 percent from a year ago, primarily reflecting
the
growth in revenues and sales noted above and declines in bad debt
and
roaming expenses. The decrease in roaming expense resulted from
negotiated lower cost per minute charges, when compared to the rates
in
effect in the third quarter of
2006.
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||
September
30,
|
September
30,
|
|||||||
(Thousands,
except per customer amounts)
|
2007
|
2006
|
2007
|
2006
|
||||
Customers
|
12,447.1
|
11,162.3
|
-
|
-
|
||||
Average
customers
|
12,338.4
|
11,133.2
|
12,140.3
|
10,933.6
|
||||
Gross
customer additions (a)
|
904.8
|
805.4
|
2,562.2
|
2,493.5
|
||||
Net
customer additions (a)
|
205.0
|
77.2
|
623.1
|
500.0
|
||||
Market
penetration
|
15.6%
|
14.5%
|
-
|
-
|
||||
Postpay
customer churn
|
1.31%
|
1.67%
|
1.27%
|
1.60%
|
||||
Total
churn
|
1.90%
|
2.18%
|
1.78%
|
2.03%
|
||||
Retail
minutes of use per customer per month (b)
|
746
|
645
|
708
|
629
|
||||
Retail
revenue per customer per month (c)
|
$49.62
|
$47.66
|
$48.28
|
$47.18
|
||||
Average
revenue per customer per month (d)
|
$55.96
|
$53.76
|
$54.21
|
$52.63
|
(a)
|
Includes
the effects of acquisitions. Excludes reseller customers for
all periods presented.
|
(b)
|
Represents
the average monthly minutes that Alltel’s customers use on both the
Company’s network and while roaming on other carriers’
networks.
|
(c)
|
Retail
revenue per customer per month is calculated by dividing retail revenues
by average customers for the period. A reconciliation of the
revenues used in computing retail revenue per customer per month
is as
follows for the three and nine month periods ended September
30:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Service
revenues
|
$ |
2,071.5
|
$ |
1,795.4
|
$ |
5,923.2
|
$ |
5,178.7
|
||||||||
Less
wholesale roaming revenues
|
(196.5 | ) | (171.5 | ) | (520.8 | ) | (486.1 | ) | ||||||||
Less
wholesale transport revenues
|
(38.1 | ) | (32.2 | ) | (127.4 | ) | (50.4 | ) | ||||||||
Total
retail revenues
|
$ |
1,836.9
|
$ |
1,591.7
|
$ |
5,275.0
|
$ |
4,642.2
|
(d)
|
Average
revenue per customer per month is calculated by dividing service
revenues
by average customers for the period.
|
CONSOLIDATED
RESULTS OF OPERATIONS
|
|||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||||||
September
30,
|
September
30,
|
||||||||||||||||
(Millions,
except per share amounts)
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenues
and sales:
|
|||||||||||||||||
Service
revenues
|
$ |
2,071.5
|
$ |
1,795.4
|
$ |
5,923.2
|
$ |
5,178.7
|
|||||||||
Product
sales
|
210.0
|
211.9
|
611.9
|
617.1
|
|||||||||||||
Total revenues and sales
|
2,281.5
|
2,007.3
|
6,535.1
|
5,795.8
|
|||||||||||||
Costs
and expenses:
|
|||||||||||||||||
Cost
of services
|
682.2
|
610.1
|
1,933.4
|
1,726.9
|
|||||||||||||
Cost
of products sold
|
300.0
|
293.8
|
876.1
|
849.8
|
|||||||||||||
Selling,
general, administrative and other
|
496.1
|
438.3
|
1,445.5
|
1,298.5
|
|||||||||||||
Depreciation
and amortization
|
358.2
|
307.1
|
1,060.0
|
916.0
|
|||||||||||||
Integration
expenses, restructuring and other charges
|
11.0
|
-
|
53.3
|
10.8
|
|||||||||||||
Total costs and expenses
|
1,847.5
|
1,649.3
|
5,368.3
|
4,802.0
|
|||||||||||||
Operating
income
|
434.0
|
358.0
|
1,166.8
|
993.8
|
|||||||||||||
Non-operating
income, net
|
14.2
|
42.9
|
40.3
|
77.6
|
|||||||||||||
Interest
expense
|
(46.2 | ) | (63.8 | ) | (140.3 | ) |
(234.9
|
) | |||||||||
Gain
(loss) on exchange or disposal of assets and other
|
-
|
(50.5 | ) |
56.5
|
126.1
|
||||||||||||
Income
from continuing operations before income taxes
|
402.0
|
286.6
|
1,123.3
|
962.6
|
|||||||||||||
Income
taxes
|
123.3
|
121.3
|
415.8
|
374.7
|
|||||||||||||
Income
from continuing operations
|
278.7
|
165.3
|
707.5
|
587.9
|
|||||||||||||
Income
from discontinued operations
|
3.9
|
21.9
|
0.9
|
325.6
|
|||||||||||||
Net
income
|
$ |
282.6
|
$ |
187.2
|
$ |
708.4
|
$ |
913.5
|
|||||||||
Basic
earnings per share:
|
|||||||||||||||||
Income
from continuing operations
|
$.81
|
$.43
|
$2.03
|
$1.52
|
|||||||||||||
Income
from discontinued operations
|
.01
|
.06
|
-
|
.84
|
|||||||||||||
Net
income
|
$.82
|
$.49
|
$2.03
|
$2.36
|
|||||||||||||
Diluted
earnings per share:
|
|||||||||||||||||
Income
from continuing operations
|
$.80
|
$.43
|
$2.01
|
$1.51
|
|||||||||||||
Income
from discontinued operations
|
.01
|
.05
|
-
|
.84
|
|||||||||||||
Net
income
|
$.81
|
$.48
|
$2.01
|
$2.35
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Severance
and employee benefit costs
|
$ |
0.3
|
$ |
-
|
$ |
4.7
|
$ |
-
|
||||||||
Rebranding
and signage costs
|
3.9
|
-
|
4.3
|
8.3
|
||||||||||||
Computer
system conversion and other integration expenses
|
1.7
|
-
|
6.1
|
2.5
|
||||||||||||
Lease
termination costs
|
2.6
|
-
|
2.6
|
-
|
||||||||||||
Costs
associated with pending acquisition of Alltel
|
2.5
|
-
|
35.6
|
-
|
||||||||||||
Total
integration expenses, restructuring and other charges
|
$ |
11.0
|
$ |
-
|
$ |
53.3
|
$ |
10.8
|
Non-Operating
Income, Net
|
||||||||||||||||
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Equity
earnings in unconsolidated partnerships
|
$ |
17.1
|
$ |
17.3
|
$ |
48.5
|
$ |
45.6
|
||||||||
Minority
interest in consolidated partnerships
|
(8.8 | ) | (11.7 | ) | (27.4 | ) | (37.1 | ) | ||||||||
Other
income, net
|
5.9
|
37.3
|
19.2
|
69.1
|
||||||||||||
Non-operating
income, net
|
$ |
14.2
|
$ |
42.9
|
$ |
40.3
|
$ |
77.6
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(Millions)
|
2007
|
2006
|
2007
|
2006
|
||||||||||||
Revenues
and sales
|
$ |
-
|
$ |
127.3
|
$ |
7.8
|
$ |
1,830.8
|
||||||||
Operating
expenses
|
-
|
97.4
|
10.6
|
1,253.6
|
||||||||||||
Operating
income (loss)
|
-
|
29.9
|
(2.8 | ) |
577.2
|
|||||||||||
Minority
interest expense in unconsolidated entities
|
-
|
-
|
-
|
(6.0 | ) | |||||||||||
Loss
on disposal of discontinued operations
|
(0.3 | ) |
-
|
(0.1 | ) | (14.8 | ) | |||||||||
Other
income, net
|
-
|
0.6
|
1.3
|
0.9
|
||||||||||||
Interest
expense
|
-
|
(0.7 | ) |
-
|
(9.1 | ) | ||||||||||
Pretax
income (loss) from discontinued operations
|
(0.3 | ) |
29.8
|
(1.6 | ) |
548.2
|
||||||||||
Income
tax expense (benefit)
|
(4.2 | ) |
7.9
|
(2.5 | ) |
222.6
|
||||||||||
Income
from discontinued operations
|
$ |
3.9
|
$ |
21.9
|
$ |
0.9
|
$ |
325.6
|
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES | ||||||||
Nine
Months Ended
|
||||||||
September
30,
|
||||||||
(Millions,
except per share amounts)
|
2007
|
2006
|
||||||
Cash
flows from (used in):
|
||||||||
Operating activities from continuing operations
|
$ |
1,838.8
|
$ |
997.0
|
||||
Investing activities from continuing operations
|
(521.0 | ) | (1,174.1 | ) | ||||
Financing activities from continuing operations
|
(1,477.8 | ) | (2,055.2 | ) | ||||
Discontinued operations
|
50.4
|
4,341.8
|
||||||
Effect of exchange rate changes
|
-
|
(5.9 | ) | |||||
Increase
(decrease) in cash and short-term investments
|
$ | (109.6 | ) | $ |
2,103.6
|
|||
Total
capital structure (a)
|
$14,646.8
|
$16,292.5
|
||||||
Percent
of equity to total capital (b)
|
81.5% | 82.0% | ||||||
Book
value per share (c)
|
$34.66
|
$35.25
|
(a)
|
Computed
as the sum of long-term debt including current maturities, redeemable
preferred stock and total shareholders’ equity.
|
(b)
|
Computed
by dividing total shareholders’ equity by total capital structure as
computed in (a) above.
|
(c)
|
Computed
by dividing total shareholders’ equity less preferred stock by the total
number of common shares outstanding at the end of the
period.
|
Description
|
Moody’s
|
Standard
&
Poor’s
|
Fitch
|
Commercial
paper credit rating
|
Prime-1
|
A-2
|
Withdrawn
|
Long-term
debt credit rating
|
A2
|
BB
|
BB-
|
ALLTEL
CORPORATION
|
FORM
10-Q
|
PART
I – FINANCIAL INFORMATION
|
(a)
|
Evaluation
of disclosure controls and procedures.
|
The
term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e))
refers to the controls and other procedures of a company that are
designed
to ensure that information required to be disclosed by a company
in the
reports that it files under the Securities Exchange Act of 1934 (the
“Exchange Act”) is recorded, processed, summarized and reported within
required time periods. Disclosure controls and procedures (as
defined in SEC Rule 13a-15(e)) include, without limitation, controls
and
procedures designed to ensure that information required to be disclosed
by
a company in the reports that it files or submits under the Exchange
Act
is accumulated and communicated to the company’s management, including the
company’s principal executive and financial officers, as appropriate to
allow timely decisions regarding required disclosure. Alltel’s
management, with the participation of the Chief Executive Officer
and
Chief Financial Officer, have evaluated the effectiveness of the
Company’s
disclosure controls and procedures as of the end of the period covered
by
this quarterly report (the “Evaluation Date”). Based on that
evaluation, Alltel’s Chief Executive Officer and Chief Financial Officer
have concluded that, as of the Evaluation Date, such controls and
procedures were effective.
|
|
(b)
|
Changes
in internal control over financial reporting.
|
The
term “internal control over financial reporting” (defined in SEC Rule
13a-15(f)) refers to the process of a company that is designed to
provide
reasonable assurance regarding the reliability of financial reporting
and
the preparation of financial statements for external purposes in
accordance with generally accepted accounting
principles. Alltel’s management, with the participation of the
Chief Executive Officer and Chief Financial Officer, have evaluated
any
changes in the Company’s internal control over financial reporting that
occurred during the period covered by this quarterly report, and
they have
concluded that there were no changes to Alltel’s internal control over
financial reporting that have materially affected, or are reasonably
likely to materially affect, Alltel’s internal control over financial
reporting.
|
ALLTEL
CORPORATION
|
FORM
10-Q
|
PART
II – OTHER INFORMATION
|
(c)
|
On
January 19, 2006, Alltel’s Board of Directors authorized the Company to
repurchase up to $3.0 billion of its outstanding common stock over
a
three-year period ending December 31, 2008. During 2006, Alltel
repurchased 28,472,500 shares of its common stock at a total cost
of
$1,595.6 million, or at an average cost of $56.04 per
share. During the first six months of 2007, Alltel repurchased
22,024,000 shares of its common stock at a total cost of $1,360.3
million,
or at an average cost of $61.76 per share. No repurchases were
made under this authorization during the third quarter of
2007.
|
(1)
|
A
proposal to adopt the Agreement and Plan of Merger dated as of May
20,
2007, by and among Alltel Corporation, Atlantis Holdings LLC and
Atlantis
Merger Sub, Inc. was approved with 252,785,977 votes for, 3,993,107
votes
against and 3,626,806 abstentions.
|
(2)
|
A
proposal to adjourn or postpone the special meeting to a later date
or
time, if necessary or appropriate, to solicit additional proxies
in favor
of the proposal to approve the merger agreement if there are insufficient
votes at the time of such adjournment or postponement to approve
the
merger agreement was approved with 228,357,732 votes for, 27,987,683
votes
against and 3,850,809 abstentions.
|
|
ALLTEL
CORPORATION
|
(Registrant)
|
|
/s/
Sharilyn S. Gasaway
|
|
Sharilyn
S. Gasaway
|
|
Executive
Vice President - Chief Financial Officer
|
|
(Principal
Financial Officer)
|
|
October
19, 2007
|
ALLTEL
CORPORATION
|
FORM
10-Q
|
Form
10-Q
|
||
Exhibit
No.
|
Description
of Exhibits
|
|
31(a)
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
(a)
|
31(b)
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
(a)
|
32(a)
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
(a)
|
32(b)
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
(a)
|
(a)
|
Filed
herewith.
|