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, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-4996-2
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) 661-8000
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Number of common shares outstanding as of September 30, 1994
187,599,000
The Exhibit Index is located at sequential page 13 .
<PAGE>
ALLTEL CORPORATION
FORM 10-Q
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated financial statements of ALLTEL
Corporation and subsidiaries, included in the interim report of ALLTEL
Corporation to its stockholders for periods ended September 30, 1994,
a copy of which is attached hereto, are incorporated herein by
reference:
Consolidated Statements of Income - for the three, nine and
twelve months ended September 30, 1994 and 1993.
Consolidated Balance Sheets - September 30, 1994 and 1993 and
December 31, 1993.
Consolidated Statements of Cash Flows - for the nine
and twelve months ended September 30, 1994 and 1993.
2
<PAGE>
ALLTEL CORPORATION
FORM 10-Q
PART I - FINANCIAL STATEMENTS
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
FINANCIAL CONDITION
Total capital structure was $3.496 billion at September 30, 1994,
reflecting 47% common and preferred equity and 53% debt. This
compares to a capital structure of $3.204 billion at December 31,
1993, reflecting 49% common and preferred equity and 51% debt. The
Company's financial strength continues to provide it the flexibility
to make necessary and desirable capital expenditures and to expand its
presence into new and existing telephone, cellular and information
services markets.
Capital expenditures are forecasted at $593.5 million for 1994,
which is expected to be financed primarily from internally generated
funds. The Company's capital expenditures are directed toward
telephone operations to continue to modernize its network and invest
in new equipment to provide new telecommunications services. In
addition, capital expenditures are incurred for expansion into new
cellular and information services markets, and to upgrade existing
cellular network facilities. Capital expenditures for the three and
nine month periods in 1994 were $157.1 million and $414.6 million,
respectively, compared to $102.0 million and $292.7 million for the
same periods in 1993. Internally generated funds financed the
majority of the capital expenditures in the three and nine month
periods ended September 30, 1994 and 1993.
The Company has a $500 million revolving credit agreement. Total
borrowings outstanding under this agreement were $158.6 million at
September 30, 1994, compared to $214.5 million at December 31, 1993.
At September 30, 1993, $95.8 million was outstanding under this
agreement. The increase in borrowings under the revolving credit
agreement for the twelve month period was incurred for expansion of
cellular investments and for other general corporate requirements. In
April 1994, the Company issued $250 million of 7.25% debentures. The
proceeds were used to reduce borrowings under the Company's revolving
credit agreement.
3
<PAGE>
The issuance of the $250 million debentures represents the
majority of long-term debt issued in the nine month period ended
September 30, 1994. The $250 million debentures along with the
issuance of $400 million of 6.5% debentures by the Company and a
subsidiary to finance the acquisition of certain telephone properties
of GTE Corporation (as described below) in November 1993 account for
the majority of long-term debt issued during the twelve months ended
September 30, 1994.
RESULTS OF OPERATIONS
Telephone Operations
In the fourth quarter of 1993, the Company purchased all of the
assets of the telephone operations of GTE Corporation ("GTE") in the
state of Georgia ("GTE Georgia") in exchange for the Company's
telephone operations in Illinois, Indiana and Michigan and $443
million in cash. The exchange was accounted for as a purchase, and
accordingly, GTE Georgia's results of operations have been included in
the consolidated financial statements beginning November 1, 1993. In
connection with this acquisition, the Company reorganized its
telephone headquarters staff and consolidated its five telephone
regions into three.
Telephone operations revenues and sales increased $43.8 million
or 18%, $145.1 million or 20%, and $176.2 million or 18% for the
three, nine, and twelve months ended September 30, 1994, respectively.
Telephone operating income increased $12.6 million or 15%, $45.3
million or 18% and $60.3 million or 18% for the three, nine and twelve
month periods, respectively, primarily due to the increases in
revenues and sales. The acquisition of the GTE Georgia properties
accounted for $43.0 million, $127.9 million and $155.0 million of the
increase in revenues and sales, and $16.1 million, $43.0 million and
$52.0 million of the increase in operating income for the three, nine
and twelve months ended September 30, 1994, respectively.
Local service revenue increased $22.7 million or 30%, $67.4
million or 30% and $82.7 million or 28% in the three, nine, and twelve
month periods, respectively, primarily due to the GTE Georgia
acquisition. Increases in customer access lines and growth in custom
calling feature revenues also contributed to the growth in local
service revenues for all periods. There have been no local rate
increases granted to any of the Company's telephone operating
subsidiaries during 1994, and management does not anticipate filing
for any local rate increases during the remainder of 1994.
4
<PAGE>
Network access and long-distance revenues increased $15.4 million
or 10%, $59.3 million or 14%, and $70.6 million or 12% for the three,
nine, and twelve month periods, respectively. The increases were
primarily due to the GTE Georgia acquisition. An increase in
universal service fund revenues and higher volumes of access
connections also contributed to the growth in network access and long-
distance revenues in all periods. These increases were partially
offset by the impact of changing from an average schedule to cost
method of settling interstate access revenues by two of the Company's
telephone operating subsidiaries and other regulatory commission
actions designed to reduce earnings levels in the states of Ohio and
Pennsylvania.
Miscellaneous revenues increased $5.6 million or 19%, $18.4
million or 20% and $22.9 million or 19% for the three, nine and twelve
month periods, respectively. The increases are primarily due to the
GTE Georgia acquisition and increases in directory advertising, rental
revenues, intrastate billing and collection revenues and sales of
customer-owned telephone equipment maintenance and protection plans.
Total telephone operating expenses increased $31.3 million or
19%, $99.9 million or 21% and $115.9 million or 18% for the three,
nine, and twelve month periods, respectively. The acquisition of the
GTE Georgia properties accounted for $26.9 million, $84.9 million and
$103.0 million of the increase in operating expenses for the three,
nine and twelve month periods, respectively. Operating expenses also
increased in all periods due to increased expense for maintenance and
repair of cable, digital electronic switching and circuit equipment,
and an increase in information service charges. These increases were
partially offset by lower maintenance expense related to electro-
mechanical switching equipment and by a reduction in accounting,
financial and human resource management expenses resulting from the
reorganization and consolidation of the Company's telephone
operations.
Information Services
The information services segment provided double-digit growth in
both revenues and sales and operating income for the Company.
Revenues and sales reflect increases of $47.4 million, $141.0 million,
and $185.8 million for the three, nine and twelve month periods,
respectively, representing a 29% increase in each period. Operating
income reflects increases of $6.2 million or 23%, $10.9 million or 13%
and $21.2 million or 20% for the three, nine and twelve month periods,
respectively.
5
<PAGE>
Information services revenues and sales increased for the three,
nine and twelve month periods as a result of new facilities management
and remote processing contracts including telecommunications
operations, and increased revenues from additional services provided
under existing facilities management contracts, net of contract non-
renewals. Additional software license and maintenance revenues, an
increase in the number of loans processed, and increased usage of new
mortgage processing service offerings also contributed to the increase
in revenues and sales for all periods. In addition, the acquisition
of TDS Healthcare Systems Corporation ("TDS") effective October 1,
1993, also contributed to the increase in revenues and sales for all
periods. These increases in revenues and sales were partially offset
by a reduction in revenues collected for early termination of
facilities management contracts.
Operating income increased for the three, nine and twelve month
periods primarily due to the revenue increases noted above. The
growth in operating income for all periods was slower than the growth
in revenues and sales due to increased costs to procure and support
additional international service contracts, the reduction in revenues
as a result of early termination of facilities management contracts,
operating losses sustained by this segment's check processing
operations and an increase in depreciation and amortization expense.
Depreciation and amortization expense increased primarily due to the
acquisition of additional data processing equipment, as a result of
the growth in business and due to an increase in amortization of
internally developed software.
Product Distribution Operations
The product distribution segment showed improved operating
results with revenues and sales reflecting increases of $27.5 million
or 30%, $45.1 million or 16% and $44.2 million or 12% for the three,
nine and twelve month periods, respectively. Operating income
increased $2.8 million or 66%, $4.8 million or 36% and $4.5 million or
26% for the three, nine and twelve month periods, respectively.
The increases in revenues and sales for all periods are primarily
due to growth in sales of telecommunications and data products to new
and existing customers, including sales to affiliates. Sales of
electrical wire and cable also increased in all periods reflecting
increased copper prices and a higher demand for these products.
Operating income increased in the three, nine and twelve month periods
primarily because of the increases in revenues and sales previously
noted, partially offset by an increase in selling related expenses.
6
<PAGE>
Cellular Operations
Cellular operations provided solid operating results and
continued its trend of significantly contributing to the Company's
overall earnings growth. Revenues and sales reflect increases of
$30.0 million or 57%, $82.2 million or 58%, and $106.9 million or 61%
for the three, nine and twelve month periods, respectively. Operating
income reflects increases of $13.9 million or 113%, $32.8 million or
108% and $40.4 million or 110% for the three, nine and twelve month
periods, respectively. During the twelve month period ended
September 30, 1994, the number of cellular customers grew to 396,717
from 237,049, an increase of 159,668 customers or 67%.
Cellular operations revenues increased in all periods primarily
due to the significant growth in customer base. The acquisition of
new cellular properties and increased ownership interests in existing
cellular properties also contributed to the growth in revenues and
sales for the twelve month period. Operating income increased for all
periods reflecting the increases in revenues and sales noted above,
partially offset by higher expenses for selling and advertising,
depreciation and other operating expenses.
Other Operations
Other operations revenues and sales reflect increases of $25.0
million or 188%, $88.6 million or 223% and $110.5 million or 203% for
the three, nine and twelve month periods, respectively. Operating
income reflects increases of $2.8 million or 226%, $7.3 million or
127% and $7.5 million or 82% for the three, nine and twelve month
periods, respectively.
The increases in revenues and sales for all periods are primarily
due to the significant growth in publishing operations attributable to
the purchase of the independent telephone directory operations of GTE
Directories Corporation in October 1993. As a result of this
acquisition, the number of directories published during the first nine
months of 1994 was 279 compared to only 94 directories published
during the same period in 1993, an increase of 197%. Paging
operations also contributed to the increases in revenues and sales for
all periods as a result of steady growth in its customer base.
7
<PAGE>
Operating income increased in all periods primarily due to the
increases in revenues and sales previously noted, partially offset by
increases in directory services expense, contract services, and
selling and marketing expenses related to the publication of the
additional independent directories. Depreciation and other operating
expenses also increased in all periods as a result of the expansion
and rapid growth in the directory publishing operations. Operating
income for the twelve month period reflects the one-time costs
incurred with the purchase and start-up of the new directory
publishing business.
Corporate Expenses
Corporate operating expenses increased $1.3 million or 58%, $1.8
million or 14% and $12.4 million or 117% for the three, nine and
twelve month periods, respectively. The increase in the three month
period is primarily due to an increase in employee benefit costs and
workers compensation expense, partially offset by a decrease in
operating expenses including costs related to building operations. The
increase in the nine and twelve month periods is primarily due to an
increase in operating expenses, increases in deferred and incentive
compensation and increases in other employee benefit costs.
Other Income, Net
Other income, net decreased $3.8 million or 409%, $9.2 million or
461% and $10.8 million or 283% for the three, nine and twelve month
periods, respectively. The decreases in all periods are primarily due
to an increase in the minority interest in earnings of the Company's
cellular operations by others and the amortization of telephone plant
acquisition adjustments related to the GTE Georgia properties
acquisition. These decreases were partially offset by an increase in
equity income recognized on investments in cellular limited
partnerships. The increase in equity income reflects the improved
operating results of those partnership interests not managed by the
Company.
The decrease in the twelve month period is also due to the
elimination of equity income recognized from an investment in LDDS
Communications, Inc. ("LDDS"). The Company's investment in LDDS is
now accounted for under the cost method, since its ownership is now
less than 20 percent.
8
<PAGE>
Interest Expense
Interest expense increased $11.7 million or 49%, $31.4 million or
45% and $37.6 million or 41% for the three, nine and twelve month
periods, respectively. The increase in interest expense in all
periods is primarily due to an increase in long-term debt outstanding,
which reflects both the issuance of $400 million debentures in
November 1993 to finance the GTE Georgia properties acquisition and
the issuance of $250 million debentures in April 1994 to reduce
borrowings under the Company's revolving credit agreement, as
previously discussed.
Net Gain on Exchange of Assets and Other
In the fourth quarter of 1993, the Company recorded a gain on
exchange of telephone properties with GTE, which was partially offset
by the reorganization of its telephone operations as a result of this
transaction. These transactions amounted to $69.9 million. In
addition, the Company also recorded a partial write-down of its
product distribution operations. The net income impact of these
transactions is not significant to the results of operations for the
twelve month period.
Income Taxes
Income tax expense increased $7.7 million or 19%, $23.7 million
or 20% and $59.7 million or 39% for the three, nine and twelve month
periods, respectively. The increase in all periods primarily resulted
from an increase in taxable income. Income tax expense for the twelve
month period does not reflect the tax benefit from the partial write-
down of product distribution operations, since utilization of the
benefit is not certain.
Net Income Applicable to Common Shares
Net income applicable to common shares increased $13.8 million or
21%, $35.1 million or 18% and $41.0 million or 16% for the three, nine
and twelve month periods, respectively. Primary earnings per common
share for the three, nine, and twelve month periods ended
September 30, 1994 increased 20%, 17%, and 15%, respectively over the
same periods in 1993. The twelve month period for 1994 includes the
effect of the net gain on exchange of telephone properties with GTE
partially offset by the reorganization of the Company's telephone
operations and the partial write-down of the product distribution
operations. The net income impact of these transactions is not
significant to the results of operations for the twelve month period.
9
<PAGE>
Average Common Shares Outstanding
The average number of common shares outstanding increased 1% in
each of the three, nine and twelve month periods ended September 30,
1994. The increases are primarily due to the issuance of
approximately 2.0 million shares in October 1993 for the acquisition
of TDS.
10
<PAGE>
ALLTEL CORPORATION
FORM 10-Q
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) See the exhibits specified on the Index of
Exhibits located at Sequential Page 13.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
quarter for which this report is filed.
11
<PAGE>
ALLTEL CORPORATION
FORM 10-Q
The information furnished reflects all adjustments which, in the
opinion of management, are necessary to a fair statement of the
results for these interim periods. Such adjustments are of a normal
recurring nature.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ALLTEL CORPORATION
(Registrant)
/S/ Dennis J. Ferra
Dennis J. Ferra
Senior Vice President -
Accounting and Administration,
and Chief Accounting Officer
November 10, 1994
12
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ALLTEL CORPORATION
FORM 10-Q
INDEX OF EXHIBITS
Form 10-Q Sequential
Exhibit No. Description Page No.
(20) Interim Report to Stockholders 14-21
for the periods ended
September 30, 1994
(27) Financial Data Schedule 22
for the nine months ended
September 30, 1994
13
<PAGE>
EXHIBIT 20
<TABLE>
<CAPTION>
HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, Twelve Months Ended Sept. 30,
% Increase % Increase % Increase
1994 1993 (Decrease) 1994 1993 (Decrease) 1994 1993 (Decrease)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues and sales $745,324 $571,678 30 $2,189,295 $1,687,270 30 $2,844,112 $2,220,662 28
Net income $ 79,728 $ 65,975 21 $ 227,801 $ 192,960 18 $ 296,858 $ 256,115 16
Primary earnings per average
common share outstanding $.42 $.35 20 $1.20 $1.03 17 $1.56 $1.36 15
Excluding net gain on exchange
of assets and other:
Net income $ 79,728 $ 65,975 21 $ 227,801 $ 192,960 18 $ 296,879 $ 256,115 16
Primary earnings per share $.42 $.35 20 $1.20 $1.03 17 $1.56 $1.36 15
Average common shares
outstanding 189,330,000 187,207,000 1 189,449,000 187,070,000 1 189,419,000 186,998,000 1
Annual dividend rate
per common share $.88 $.80 10
Total assets $4,617,635 $3,390,281 36
Telephone access lines 1,632,592 1,342,748 22
Cellular customers 396,717 237,049 67
</TABLE>
14
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<TABLE>
<CAPTION>
BUSINESS SEGMENTS (Unaudited)
(Dollars in thousands)
Three Months Ended Sept. 30, Nine Months Ended Sept. 30, Twelve Months Ended Sept. 30,
% Increase % Increase % Increase
1994 1993 (Decrease) 1994 1993 (Decrease) 1994 1993 (Decrease)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES AND SALES:
Telephone $293,752 $249,928 18 $ 883,411 $ 738,290 20 $1,161,215 $ 985,023 18
Information services 211,612 164,259 29 626,827 485,870 29 818,710 632,940 29
Product distribution 119,360 91,878 30 327,386 282,238 16 415,840 371,684 12
Cellular 82,279 52,326 57 223,445 141,211 58 283,449 176,591 61
Other operations 38,321 13,287 188 128,226 39,661 223 164,898 54,424 203
Total $745,324 $571,678 30 $2,189,295 $1,687,270 30 $2,844,112 $2,220,662 28
OPERATING INCOME:
Telephone $ 99,098 $ 86,547 15 $ 301,052 $ 255,794 18 $ 398,452 $ 338,127 18
Information services 33,287 27,099 23 97,013 86,151 13 127,470 106,236 20
Product distribution 6,997 4,215 66 18,151 13,395 36 21,750 17,278 26
Cellular 26,256 12,352 113 63,205 30,428 108 77,069 36,688 110
Other operations 4,075 1,251 226 13,053 5,752 127 16,492 9,040 82
Corporate expenses (3,585) (2,262) 58 (14,161) (12,378) 14 (23,016) (10,623) 117
Total $166,128 $129,202 29 $ 478,313 $ 379,142 26 $ 618,217 $ 496,746 24
</TABLE>
15
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<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Nine Months Twelve Months
Ended Sept. 30, Ended Sept. 30, Ended Sept. 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
REVENUES AND SALES $745,324 $571,678 $2,189,295 $1,687,270 $2,844,112 $2,220,662
COSTS AND EXPENSES:
Cost of products sold 119,707 86,638 330,960 265,688 418,392 348,537
Operations 315,897 242,783 962,694 708,997 1,260,921 932,423
Maintenance 39,362 32,634 112,742 95,212 148,689 127,525
Depreciation and amortization 86,878 66,229 254,382 194,552 332,266 258,058
Taxes, other than income taxes 17,352 14,192 50,204 43,679 65,627 57,373
Total costs and expenses 579,196 442,476 1,710,982 1,308,128 2,225,895 1,723,916
OPERATING INCOME 166,128 129,202 478,313 379,142 618,217 496,746
Other income, net (2,851) 922 (7,191) 1,993 (6,954) 3,807
Interest expense (35,365) (23,696) (101,360) (69,930) (130,176) (92,543)
Income before net gain on exchange
of assets, other, and income taxes 127,912 106,428 369,762 311,205 481,087 408,010
Net gain on exchange of assets and other -- -- -- -- 27,390 --
Income before income taxes 127,912 106,428 369,762 311,205 508,477 408,010
Federal and state income taxes 48,184 40,453 141,961 118,245 211,619 151,895
Net income 79,728 65,975 227,801 192,960 296,858 256,115
Preferred dividends 304 387 931 1,196 1,313 1,605
Net income applicable to common shares $ 79,424 $ 65,588 $ 226,870 $ 191,764 $ 295,545 $ 254,510
PRIMARY EARNINGS PER SHARE: $.42 $.35 $1.20 $1.03 $1.56 $1.36
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS (Dollars in thousands)
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and short-term investments $ 24,597 $ 7,881 $ 26,574
Accounts receivable 501,334 379,743 293,925
Materials and supplies 27,330 22,321 23,104
Inventories 91,176 68,673 60,605
Prepaid expenses 16,357 15,520 13,642
Total current assets 660,794 494,138 417,850
Investments 358,957 382,343 162,166
Excess of cost over equity in
subsidiary companies 492,061 508,227 399,037
PROPERTY, PLANT AND EQUIPMENT:
Telephone 3,684,133 3,555,020 2,948,760
Information services 350,396 290,737 229,607
Other 297,509 235,884 214,835
Under construction 211,306 153,196 149,743
Total property, plant and equipment 4,543,344 4,234,837 3,542,945
Less accumulated depreciation 1,683,874 1,558,403 1,343,532
Net property, plant and equipment 2,859,470 2,676,434 2,199,413
OTHER ASSETS 246,353 209,316 211,815
TOTAL ASSETS $4,617,635 $4,270,458 $3,390,281
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
Sept. 30, Dec. 31, Sept. 30,
1994 1993 1993
<S> <C> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 49,528 $ 44,138 $ 30,902
Accounts payable 225,163 221,569 171,611
Advance payments and customers' deposits 58,075 62,490 54,189
Accrued taxes 54,060 35,053 47,842
Accrued interest, dividends and other 195,474 209,395 141,062
Other current liabilities 45,945 35,937 47,143
Total current liabilities 628,245 608,582 492,749
DEFERRED CREDITS:
Investment tax 33,252 38,575 40,314
Income taxes 381,280 377,253 247,754
Total deferred credits 414,532 415,828 288,068
Long-term debt 1,801,061 1,596,032 1,110,343
Other liabilities 128,345 86,681 89,658
Preferred stock, redeemable 7,834 8,627 8,718
SHAREHOLDERS' EQUITY
Preferred stock 9,340 9,405 9,408
Common stock 187,599 187,458 185,292
Additional capital 331,616 333,698 322,712
Unrealized holding gain on investments 103,393 121,507 --
Retained earnings 1,005,670 902,640 883,333
Total shareholders' equity 1,637,618 1,554,708 1,400,745
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,617,635 $4,270,458 $3,390,281
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Nine Months Twelve Months
Ended Sept. 30, Ended Sept. 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 376,970 $ 389,324 $ 556,751 $ 574,447
CASH USED IN INVESTING:
Additions to property, plant and equipment 414,600 292,746 548,025 396,563
Purchase of subsidiaries,
net of cash acquired -- -- 443,000 --
Additions to investments 75 18,015 2,501 30,435
Other, net 35,816 55,364 66,988 73,777
Net cash used in investing activities 450,491 366,125 1,060,514 500,775
CASH (PROVIDED) USED IN FINANCING:
Dividends on preferred and common stock 124,490 112,292 166,308 147,460
Reductions in long-term debt 108,461 46,532 153,065 112,134
Long-term debt issued (314,793) (127,320) (815,277) (172,634)
Purchase of common stock 9,503 -- 9,503 --
Common stock issued (6,825) (5,248) (7,333) (1,499)
Other, net (11,073) 792 (8,052) 794
Net cash (provided) used in
financing activities (90,237) 27,048 (501,786) 86,255
Increase (decrease) in cash
and short-term investments 16,716 (3,849) (1,977) (12,583)
CASH AND SHORT-TERM INVESTMENTS:
Beginning of period 7,881 30,423 26,574 39,157
End of period $ 24,597 $ 26,574 $ 24,597 $ 26,574
</TABLE>
19
<PAGE>
To ALLTEL STOCKHOLDERS:
ALLTEL Corporation recently announced that its financial results for
the period ended Sept. 30, 1994 were the best in the Company's
history.
Third quarter earnings were 42 cents per share, up 20 percent
from 35 cents a year ago on 1 percent more average common shares
outstanding. Net income advance 21 percent to $79,728,000 from the
$65,975,000 reported in the third quarter last year, while revenues
and sales were $745,324,000, up 30 percent from $571,678,000 in the
corresponding quarter of 1993.
Earnings per share for the nine months ended Sept. 30, 1994 were
$1.20, up 17 percent from $1.03 a year ago. Net income was
$227,801,000, an increase of 18 percent over $192,960,000 last year
on revenues and sales of $2,189,295,000, up 30 percent from
$1,687,270,000 in the corresponding period last year.
Strong performances by ALLTEL's cellular and information
services businesses - coupled with strategic positioning efforts in
our core telephone operations - produced another quarter of excellent
financial results.
Telephone results showed solid increases, reflecting the impact
of our 1993 repositioning efforts. These efforts more than offset the
effect of regulatory actions designed to reduce earnings.
Information services also generated double-digit increases in
both revenue and operating income. This quarter's rise in operating
income follows several quarters of strong revenue growth in
information services. And results continue to be enhanced by
Systematics' healthcare and telecommunications divisions.
ALLTEL's cellular operations once again produced some of the
best results in the industry - with strong gains in revenues,
operating income and customers. Cellular, which generated only 11
percent of total corporate revenues, produced 36 percent of the
growth in ALLTEL's operating income this quarter.
20
<PAGE>
QUARTERLY DIVIDEND INCREASED TO 24 CENTS
The CompanyOs Board of Directors recently voted to increase the
regular quarterly common dividend from 22 cents to 24 cents per
share.
The new indicated annual dividend rate will be 96 cents per
common share, an increase of 8 cents or 9 percent over the previous
rate. This is the 34th consecutive annual dividend increase since the
Company's founding. The 24 cent dividend is payable Jan. 3, 1995 to
stockholders of record as of Dec. 6, 1994.
Dividends were also declared on all series of the CompanyOs
preferred stock. Preferred dividends are payable on Dec. 15, 1994 to
stockholders of record as of Nov. 21, 1994.
Through a strategy of balance diversification into three key areas -
telephone, cellular and information services - ALLTEL has not only
produced strong financial results, but has also positioned itself for
continued performance. And we pledge to you our continued efforts to
enhance the value of the shares you hold.
Joe T. Ford,
Chairman and Chief Executive Officer
October 24, 1994
21
<PAGE>
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THIRD
QUARTER REPORT TO SHAREHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH REPORT.
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
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<RECEIVABLES> 501,334
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7,834
9,340
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