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ALLTEL Reports Solid First Quarter as Wireless Growth Accelerates; Gross Customer Adds Set New Record; Net Customer Adds Reach Five-Year High
LITTLE ROCK, Ark. --(Business Wire)-- April 22, 2004 -- ALLTEL (NYSE: AT) today announced that the company achieved solid results and very strong wireless customer growth in the first quarter. Fully diluted earnings per share was 61 cents under Generally Accepted Accounting Principles (GAAP). The company achieved fully diluted earnings per share of 71 cents from current businesses, which excludes one-time items.
Among the highlights for the first quarter:
-- Total revenues were $1.96 billion, a 3 percent increase from a year ago.
-- Wireless service revenues were $1.12 billion, a 7 percent increase from a year ago. The company achieved gross wireless customer additions of 737,000, the highest in ALLTEL's history. Net customer additions were 158,000, the highest in almost five years. Post-pay wireless churn improved to 1.93 percent.
-- Wireline segment income was $228 million, a 2 percent increase from a year ago. Average revenue per wireline customer was $64.62, a 1 percent increase from a year ago, as the company added 21,000 DSL customers.
-- Equity free cash flow from current businesses was $328 million, a 13 percent increase from a year ago. Net cash from operations was $552 million, a 1 percent increase from a year ago.
"ALLTEL experienced very strong wireless customer growth as we improved our gross additions and post-pay churn in the first quarter," said Scott Ford, ALLTEL president and chief executive officer. "Though dilutive to first-quarter earnings, this growth bolsters the future earnings potential of our wireless business. In the wireline business, we again produced some of the top margins in the industry while continuing strong customer growth in DSL broadband."
During the quarter, the company completed its Touch2Talk launch in all markets. ALLTEL began offering the walkie-talkie service in January and completed the rollout by late March. Touch2Talk allows customers to talk instantly to one another and switch to a wireless call at the touch of a button.
ALLTEL is a customer-focused communications company with almost 13 million customers and $8 billion in annual revenues. ALLTEL provides wireless, local telephone, long-distance, Internet and high-speed data services to residential and business customers in 26 states.
ALLTEL claims the protection of the safe-harbor for forward-looking statements 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; material changes in communications technology; the risks associated with the integration of acquired businesses; adverse changes in the terms and conditions of the company's wireless roaming agreements; the potential for adverse changes in the ratings given to ALLTEL's debt securities by nationally accredited ratings organizations; the availability and cost of financing in the corporate debt markets; the uncertainties related to ALLTEL's strategic investments; the effects of work stoppages; the effects of litigation; ongoing deregulation (and the resulting likelihood of significantly increased price and product/service competition) in the communications business as a result of federal and state legislation, rules, and regulations; the final outcome of federal, state, and local regulatory initiatives and proceedings related to the terms and conditions of interconnection, access charges, universal service, and unbundled network elements and resale rates; and the effects of the Federal Communications Commission's number portability rules. In addition to these factors, actual future performance, outcomes and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.
ALLTEL, NYSE: AT
www.alltel.com -0- *T ALLTEL CORPORATION CONSOLIDATED HIGHLIGHTS BUSINESS SEGMENTS AND OTHER CONSOLIDATED FINANCIAL INFORMATION (In thousands, except per share amounts) THREE MONTHS ENDED ------------------ Increase March 31, March 31, (Decrease) 2004 2003 Amount % ---- ---- ------ - UNDER GAAP: Revenues and sales: Wireless $1,184,486 $1,107,819 $ 76,667 7 Wireline 599,466 608,856 (9,390) (2) Communications support services 219,050 225,124 (6,074) (3) Total business segments 2,003,002 1,941,799 61,203 3 Less intercompany eliminations 41,830 36,001 5,829 16 Total revenues and sales $1,961,172 $1,905,798 $ 55,374 3 Segment income: Wireless $ 210,923 $ 235,987 $(25,064) (11) Wireline 228,186 222,788 5,398 2 Communications support services 16,447 17,650 (1,203) (7) Total segment income 455,556 476,425 (20,869) (4) Less: corporate expenses 8,973 10,382 (1,409) (14) restructuring and other charges 51,765 - 51,765 100 Total operating income $ 394,818 $ 466,043 $(71,225) (15) Operating margin (A): Wireless 17.8% 21.3% (3.5%) (16) Wireline 38.1% 36.6% 1.5% 4 Communications support services 7.5% 7.8% (.3%) (4) Consolidated 20.1% 24.5% (4.4%) (18) Net income $ 189,843 $ 280,285 $(90,442) (32) Earnings per share: Basic $.61 $.90 $(.29) (32) Diluted $.61 $.90 $(.29) (32) Weighted average common shares: Basic 311,486 311,219 267 - Fully diluted 312,458 312,302 156 - Annual dividend rate per common share $1.48 $1.40 $.08 6 FROM CURRENT BUSINESSES (NON-GAAP) (B): Operating income $ 446,583 $ 466,043 $(19,460) (4) Operating margin (A) 22.8% 24.5% (1.7%) (7) Net income $ 221,499 $ 227,622 $ (6,123) (3) Earnings per share: Basic $.71 $.73 $(.02) (3) Diluted $.71 $.73 $(.02) (3) (A) Operating margin is calculated by dividing segment income by the corresponding amount of segment revenues and sales. (B) Current businesses excludes the effects of discontinued operations and restructuring and other charges. ALLTEL CORPORATION CONSOLIDATED STATEMENTS OF INCOME UNDER GAAP-Page 2 (In thousands, except per share amounts) THREE MONTHS ENDED ------------------ March 31, March 31, 2004 2003 ---- ---- Revenues and sales: Service revenues $1,765,578 $1,716,462 Product sales 195,594 189,336 Total revenues and sales 1,961,172 1,905,798 Costs and expenses: Cost of services 560,771 537,431 Cost of products sold 257,283 237,712 Selling, general, administrative and other 375,193 361,089 Depreciation and amortization 321,342 303,523 Restructuring and other charges 51,765 - Total costs and expenses 1,566,354 1,439,755 Operating income 394,818 466,043 Equity earnings in unconsolidated partnerships 13,252 17,505 Minority interest in consolidated partnerships (15,571) (17,834) Other income, net 4,613 447 Interest expense (91,736) (103,372) Income from continuing operations before income taxes 305,376 362,789 Income taxes 115,533 135,167 Income from continuing operations 189,843 227,622 Discontinued operations: Income from discontinued operations (net of income taxes) - 37,072 Income before cumulative effect of accounting change 189,843 264,694 Cumulative effect of accounting change (net of income taxes) - 15,591 Net income 189,843 280,285 Preferred dividends 27 28 Net income applicable to common shares $ 189,816 $ 280,257 Basic earnings per share: Income from continuing operations $.61 $.73 Income from discontinued operations - .12 Cumulative effect of accounting change - .05 Net income $.61 $.90 Diluted earnings per share: Income from continuing operations $.61 $.73 Income from discontinued operations - .12 Cumulative effect of accounting change - .05 Net income $.61 $.90 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 March 31, 2004 (In thousands, except per share amounts) Items Results of Results Excluded from Operations of Operations Current from Current Under GAAP Businesses Businesses ---------- ---------- ---------- Revenues and sales: Service revenues $1,765,578 $ - $1,765,578 Product sales 195,594 - 195,594 Total revenues and sales 1,961,172 - 1,961,172 Costs and expenses: Cost of services 560,771 - 560,771 Cost of products sold 257,283 - 257,283 Selling, general, administrative and other 375,193 - 375,193 Depreciation and amortization 321,342 - 321,342 Restructuring and other charges 51,765 (51,765) (A) - Total costs and expenses 1,566,354 (51,765) 1,514,589 Operating income 394,818 51,765 446,583 Equity earnings in unconsolidated partnerships 13,252 - 13,252 Minority interest in consolidated partnerships (15,571) - (15,571) Other income, net 4,613 - 4,613 Interest expense (91,736) - (91,736) Income from continuing operations before income taxes 305,376 51,765 357,141 Income taxes 115,533 20,109 (B) 135,642 Income from continuing operations 189,843 31,656 221,499 Discontinued operations: Income from discontinued operations (net of income taxes) - - - Income before cumulative effect of accounting change 189,843 31,656 221,499 Cumulative effect of accounting change (net of income taxes) - - - Net income 189,843 31,656 221,499 Preferred dividends 27 - 27 Net income applicable to common shares $ 189,816 $ 31,656 $ 221,472 Basic earnings per share: Income from continuing operations $.61 $.10 $.71 Income from discontinued operations - - - Cumulative effect of accounting change - - - Net income $.61 $.10 $.71 Diluted earnings per share: Income from continuing operations $.61 $.10 $.71 Income from discontinued operations - - - Cumulative effect of accounting change - - - Net income $.61 $.10 $.71 See notes on page 5 for a description of the line items marked (A) - (D). 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 March 31, 2004 (In thousands, except per share amounts) Segment Information Corporate ----------------------------------- Operations Communications and Support Intercompany Wireless Wireline Services Eliminations -------- -------- -------- ------------ Revenues and sales: Service revenues $1,115,504 $591,533 $ 93,755 $(35,214) Product sales 68,982 7,933 125,295 (6,616) Total revenues and sales 1,184,486 599,466 219,050 (41,830) Costs and expenses: Cost of services 355,742 172,871 65,959 (33,801) Cost of products sold 144,550 5,155 114,868 (7,290) Selling, general, administrative and other 295,742 60,920 13,230 5,301 Depreciation and amortization 177,529 132,334 8,546 2,933 Restructuring and other charges - - - - Total costs and expenses 973,563 371,280 202,603 (32,857) Operating income $ 210,923 $228,186 $ 16,447 $ (8,973) 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 March 31, 2003 (In thousands, except per share amounts) Items Results of Results Excluded from Operations of Operations Current from Current Under GAAP Businesses Businesses ---------- ---------- ---------- Revenues and sales: Service revenues $1,716,462 $ - $1,716,462 Product sales 189,336 - 189,336 Total revenues and sales 1,905,798 - 1,905,798 Costs and expenses: Cost of services 537,431 - 537,431 Cost of products sold 237,712 - 237,712 Selling, general, administrative and other 361,089 - 361,089 Depreciation and amortization 303,523 - 303,523 Restructuring and other charges - - - Total costs and expenses 1,439,755 - 1,439,755 Operating income 466,043 - 466,043 Equity earnings in unconsolidated partnerships 17,505 - 17,505 Minority interest in consolidated partnerships (17,834) - (17,834) Other income, net 447 - 447 Interest expense (103,372) - (103,372) Income from continuing operations before income taxes 362,789 - 362,789 Income taxes 135,167 - 135,167 Income from continuing operations 227,622 - 227,622 Discontinued operations: Income from discontinued operations (net of income taxes) 37,072 (37,072) (C) - Income before cumulative effect of accounting change 264,694 (37,072) 227,622 Cumulative effect of accounting change (net of income taxes) 15,591 (15,591) (D) - Net income 280,285 (52,663) 227,622 Preferred dividends 28 - 28 Net income applicable to common shares $ 280,257 $(52,663) $ 227,594 Basic earnings per share: Income from continuing operations $.73 $ - $.73 Income from discontinued operations .12 (.12) - Cumulative effect of accounting change .05 (.05) - Net income $.90 $(.17) $.73 Diluted earnings per share: Income from continuing operations $.73 $ - $.73 Income from discontinued operations .12 (.12) - Cumulative effect of accounting change .05 (.05) - Net income $.90 $(.17) $.73 See notes on page 5 for a description of the line items marked (A) - (D). 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 March 31, 2003 (In thousands, except per share amounts) Segment Information Corporate ----------------------------------- Operations Communications and Support Intercompany Wireless Wireline Services Eliminations -------- -------- -------- ------------ Revenues and sales: Service revenues $1,047,010 $597,532 $107,557 $(35,637) Product sales 60,809 11,324 117,567 (364) Total revenues and sales 1,107,819 608,856 225,124 (36,001) Costs and expenses: Cost of services 316,372 182,083 73,852 (34,876) Cost of products sold 122,447 7,942 107,684 (361) Selling, general, administrative and other 271,844 66,209 16,572 6,464 Depreciation and amortization 161,169 129,834 9,366 3,154 Restructuring and other charges - - - - Total costs and expenses 871,832 386,068 207,474 (25,619) Operating income $ 235,987 $222,788 $ 17,650 $(10,382) ALLTEL CORPORATION NOTES TO RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 5 As disclosed in the Company's Form 8-K filed on April 22, 2004, ALLTEL has presented in this earnings release results of operations from current businesses which exclude the effects of discontinued operations and restructuring 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 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 restructuring and other charges have not been allocated to the business segments. In addition, none of the non-operating items such as equity earnings in unconsolidated partnerships, minority interest expense, other income, net, interest expense and income taxes have been allocated to the segments. (A) The Company announced its plans to reorganize its operating structure and exit its CLEC operations in the Jacksonville, Florida market. In connection with these activities, the Company recorded a restructuring charge of $29.3 million consisting of severance and employee benefit costs related to a planned workforce reduction, employee relocation costs, lease termination and other restructuring-related costs. The Company also recorded a $2.3 million reduction in the liabilities associated with various restructuring activities initiated prior to 2003. In addition, the Company recorded a write-down of $24.8 million in the carrying value of certain corporate and regional facilities to fair value in conjunction with the proposed leasing or sale of those facilities. (B) Tax-related effect of the items discussed in Note A. (C) Eliminates the effects of discontinued operations. On April 1, 2003, ALLTEL completed the sale of the financial services division of its information services subsidiary, ALLTEL Information Services, Inc., to Fidelity National Financial Inc. ("Fidelity National"), for $1.05 billion received as $775.0 million in cash and $275.0 million in Fidelity National common stock. As part of this transaction, Fidelity National acquired ALLTEL's mortgage servicing, retail and wholesale banking and commercial lending operations, as well as the community/regional bank division. (D) Represents the cumulative effect of the change in accounting resulting from the Company's adoption of Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations". In accordance with federal and state regulations, depreciation expense for ALLTEL's wireline operations historically included an additional provision for cost of removal. For ALLTEL's wireline operations in Kentucky and Nebraska not subject to SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation", effective with the adoption of SFAS No. 143, the Company ceased recognition of the cost of removal provision in depreciation expense and eliminated the cumulative cost of removal included in accumulated depreciation because it did not meet the recognition and measurement principles of an asset retirement obligation under SFAS No. 143. As a result of a Federal Communications Commission ruling, ALLTEL continues to record a regulatory liability for cost of removal for its wireline subsidiaries that follow the accounting prescribed by SFAS No. 71. ALLTEL CORPORATION SUPPLEMENTAL OPERATING INFORMATION-Page 6 (Dollars in thousands, except per customer amounts) THREE MONTHS ENDED ------------------ Increase March 31, March 31, (Decrease) 2004 2003 Amount % ---- ---- ------ - Wireless: Controlled POPs 61,313,088 60,018,544 1,294,544 2 Customers 8,181,166 7,760,849 420,317 5 Penetration rate 13.3% 12.9% .4% 3 Average customers 8,089,877 7,654,689 435,188 6 Gross customer additions: Internal 737,385 657,124 80,261 12 Acquired, net of divested - 110,920 (110,920) (100) Total 737,385 768,044 (30,659) (4) Net customer additions: Internal 157,741 48,331 109,410 226 Acquired, net of divested - 110,920 (110,920) (100) Total 157,741 159,251 (1,510) (1) Customer acquisition costs: Product sales $ (52,322) $ (39,932) $ (12,390) (31) Cost of products sold 86,792 65,761 21,031 32 Selling and marketing expenses 185,873 161,210 24,663 15 Total $ 220,343 $ 187,039 $ 33,304 18 Cost to acquire a new customer (A) $299 $285 $14 5 Cash costs: Product sales $ (68,982) $ (60,809) $ (8,173) (13) Cost of services 355,742 316,372 39,370 12 Cost of products sold 144,550 122,447 22,103 18 Selling, general, administrative and other 295,742 271,844 23,898 9 Total 727,052 649,854 77,198 12 Less customer acquisition costs 220,343 187,039 33,304 18 Total $ 506,709 $ 462,815 $ 43,894 9 Cash cost per unit per month, excluding customer acquisition costs (B) $20.88 $20.15 $.73 4 Revenues: Service revenues $ 1,115,504 $ 1,047,010 $ 68,494 7 Less wholesale revenues 82,669 87,448 (4,779) (5) Retail revenues $ 1,032,835 $ 959,562 $ 73,273 8 Average revenue per customer per month (C) $45.96 $45.59 $.37 1 Retail revenue per customer per month (D) $42.56 $41.79 $.77 2 Retail minutes of use per customer per month (E) 432 334 98 29 Postpay churn 1.93% 2.16% (.23%) (11) Total churn 2.40% 2.66% (.26%) (10) Service revenue operating margin (F) 18.9% 22.5% (3.6%) (16) Capital expenditures (G) $127,596 $154,552 ($26,956) (17) (A) Cost to acquire a new customer is calculated by dividing the sum of the GAAP reported product sales, cost of products sold and sales and marketing expenses (included within "Selling, general, administrative and other"), as reported in the Consolidated Statements of Income, by the number of internal gross customer additions in the period. Customer acquisition costs exclude amounts related to the Company's customer retention efforts. (B) Cash cost per unit per month, excluding customer acquisition costs, is calculated by dividing the sum of the GAAP reported product sales, cost of services, cost of products sold, selling, general, administrative and other expenses 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 7 (Dollars in thousands, except per customer amounts) THREE MONTHS ENDED ------------------ Increase March 31, March 31, (Decrease) 2004 2003 Amount % ---- ---- ------ - Wireline: Customers 3,089,713 3,159,948 (70,235) (2) Average customers 3,092,255 3,162,287 (70,032) (2) DSL customers 174,489 87,732 86,757 99 Average revenue per customer per month (H) $64.62 $64.18 $.44 1 Capital expenditures (G) $77,361 $82,494 ($5,133) (6) Communications support services: Long-distance customers 1,707,746 1,604,999 102,747 6 Capital expenditures (G) $1,689 $3,819 ($2,130) (56) Consolidated: Equity free cash flow (I) $327,612 $289,845 $37,767 13 Capital expenditures (G) $215,229 $241,300 ($26,071) (11) Total assets $16,539,668 $16,208,717 $ 330,951 2 (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 8 (In thousands) ASSETS March 31, December 31, 2004 2003 ---- ---- CURRENT ASSETS: Cash and short-term investments $ 637,432 $ 657,764 Accounts receivable (less allowance for doubtful accounts of $41,895 and $46,333, respectively) 841,513 890,015 Inventories 116,703 122,133 Prepaid expenses and other 70,353 59,210 Total current assets 1,666,001 1,729,122 Investments 765,823 722,698 Goodwill 4,854,263 4,854,263 Other intangibles 1,321,906 1,336,956 PROPERTY, PLANT AND EQUIPMENT: Land 261,574 259,180 Buildings and improvements 1,065,961 1,052,994 Wireline 6,578,496 6,514,694 Wireless 5,366,815 5,255,820 Information processing 980,628 946,749 Other 494,609 482,255 Under construction 334,565 398,232 Total property, plant and equipment 15,082,648 14,909,924 Less accumulated depreciation 7,571,972 7,289,145 Net property, plant and equipment 7,510,676 7,620,779 Other assets 420,999 397,320 TOTAL ASSETS $16,539,668 $16,661,138 ALLTEL CORPORATION CONSOLIDATED BALANCE SHEETS UNDER GAAP-Page 8 (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY March 31, December 31, 2004 2003 ---- ---- CURRENT LIABILITIES: Current maturities of long-term debt $ 277,319 $ 277,235 Accounts payable 404,755 479,786 Advance payments and customer deposits 208,641 205,277 Accrued taxes 129,089 114,618 Accrued dividends 115,963 116,162 Accrued interest 85,347 107,085 Other current liabilities 181,395 192,504 Total current liabilities 1,402,509 1,492,667 Long-term debt 5,608,123 5,581,243 Deferred income taxes 1,500,993 1,417,667 Other liabilities 1,129,461 1,147,364 SHAREHOLDERS' EQUITY: Preferred stock 338 348 Common stock 308,171 312,644 Additional paid-in capital 519,509 750,131 Unrealized holding gain on investments 110,319 73,634 Foreign currency translation adjustment 820 569 Retained earnings 5,959,425 5,884,871 Total shareholders' equity 6,898,582 7,022,197 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $16,539,668 $16,661,138 ALLTEL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS UNDER GAAP-Page 9 (In thousands) THREE MONTHS ENDED ------------------ March 31, March 31, 2004 2003 ---- ---- Net Cash Provided from Operations: Net income $ 189,843 $ 280,285 Adjustments to reconcile net income to net cash provided from operations: Income from discontinued operations - (37,072) Cumulative effect of accounting change - (15,591) Depreciation and amortization 321,342 303,523 Provision for doubtful accounts 42,598 52,808 Non-cash portion of restructuring and other charges 25,569 - Increase in deferred income taxes 72,143 77,983 Other, net (2,894) (1,798) Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions: Accounts receivable 4,475 21,644 Inventories 5,430 (15,484) Accounts payable (75,031) (73,138) Other current liabilities (14,964) (37,082) Other, net (16,978) (9,228) Net cash provided from operations 551,533 546,850 Cash Flows from Investing Activities: Additions to property, plant and equipment (207,205) (227,751) Additions to capitalized software development costs (8,024) (13,549) Additions to investments (1,057) (3,761) Purchases of property, net of cash acquired - (124,584) Proceeds from the return on or sale of investments 20,286 13,841 Other, net (5,853) 7,187 Net cash used in investing activities (201,853) (348,617) Cash Flows from Financing Activities: Dividends on preferred and common stock (115,489) (109,070) Reductions in long-term debt (1,494) (456,202) Distributions to minority investors (16,174) (9,972) Long-term debt issued, net of issuance costs - 284,950 Repurchases of common stock (243,033) - Common stock issued 5,927 2,904 Net cash used in financing activities (370,263) (287,390) Net cash provided from discontinued operations - 7,497 Effect of exchange rate changes on cash and short-term investments 251 (120) Decrease in cash and short-term investments (20,332) (81,780) Cash and Short-term Investments: Beginning of the period 657,764 134,641 End of the period $ 637,432 $ 52,861 ALLTEL CORPORATION RECONCILIATIONS OF RESULTS OF OPERATIONS UNDER GAAP TO RESULTS OF OPERATIONS FROM CURRENT BUSINESSES (NON-GAAP)-Page 10 (In thousands) THREE MONTHS ENDED ------------------ March 31, March 31, 2004 2003 ---- ---- Net cash provided from operations $ 551,533 $ 546,850 Adjustments to reconcile to net income under GAAP: Income from discontinued operations - 37,072 Cumulative effect of accounting change - 15,591 Depreciation and amortization expense (321,342) (303,523) Provision for doubtful accounts (42,598) (52,808) Non-cash portion of restructuring and other charges (25,569) - Increase in deferred income taxes (72,143) (77,983) Other non-cash changes, net 2,894 1,798 Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions 97,068 113,288 Net income under GAAP 189,843 280,285 Adjustments to reconcile to net income from current businesses: Restructuring and other charges, net of tax 31,656 - Cumulative effect of accounting change - (15,591) Income from discontinued operations - (37,072) Net income from current businesses 221,499 227,622 Adjustments to reconcile to equity free cash flow from current businesses: Depreciation and amortization expense 321,342 303,523 Capital expenditures (215,229) (241,300) Equity free cash flow from current businesses $ 327,612 $ 289,845 *T
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