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 June 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 June 30, 1994
187,851,000
The Exhibit Index is located at sequential page 13 .
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 June 30, 1994, a
copy of which is attached hereto, are incorporated herein by
reference:
Consolidated Statements of Income - for the three, six and
twelve months ended June 30, 1994 and 1993.
Consolidated Balance Sheets - June 30, 1994 and 1993 and
December 31, 1993.
Consolidated Statements of Cash Flows - for the six
and twelve months ended June 30, 1994 and 1993.
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 $3.344 billion at June 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 $548.2 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 were $146.8 million
in the second quarter of 1994 and $104.4 million in the second quarter
of 1993. Internally generated funds financed the majority of the
capital expenditures in the three, six and twelve month periods ended
June 30, 1994 and 1993.
The Company has a $500 million revolving credit agreement. Total
borrowings outstanding under this agreement were $104.4 million at
June 30, 1994, compared to $214.5 million at December 31, 1993. At
June 30, 1993, $38 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
The issuance of the $250 million debentures represent the
majority of long-term debt issued in the three and six month periods
of 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 in November
1993 account for the majority of long-term debt issued during the
twelve months ended June 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.
Telephone operations revenues and sales increased $49.4 million
or 20%, $101.3 million or 21%, and $142.9 million or 15% for the
three, six, and twelve months ended June 30, 1994, respectively.
Telephone operating income increased $14.5 million or 17%, $32.7
million or 19% and $52.1 million or 16% for the three, six and twelve
month periods, respectively. The acquisition of the GTE Georgia
properties accounted for $41.4 million, $84.9 million and $112.0
million of the increase in revenues and sales, and $12.3 million,
$26.9 million and $35.9 million of the increase in operating income
for the three, six and twelve months ended June 30, 1994,
respectively.
Local service revenue increased $22.7 million or 30%, $44.7
million or 30% and $64.0 million or 22% in the three, six, 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
Network access and long-distance revenues increased $20.6 million
or 14%, $43.9 million or 16%, and $62.4 million or 11% for the three,
six, 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. These
increases were partially offset by the impact of changing from an
average schedule to cost method of settling interstate access revenues
by one of the Company's telephone operating subsidiaries, and other
regulatory commission actions designed to reduce earnings levels in
the state of Ohio.
Miscellaneous revenues increased $6.1 million or 21%, $12.8
million or 21% and $16.5 million or 14% for the three, six and twelve
month periods, respectively. The increases are primarily due to the
GTE Georgia acquisition and increases in directory advertising, rental
revenues, billing and collection revenues and sales of customer-owned
telephone equipment maintenance and protection plans.
Total telephone operating expenses increased $34.9 million or
22%, $68.6 million or 21% and $90.8 million or 14% for the three, six,
and twelve month periods, respectively. The acquisition of the GTE
Georgia properties accounted for $29.1 million, $58.0 million and
$76.1 million of the increase in operating expenses for the three, six
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,
increased depreciation expense and an increase in information service
charges. These increases were partially offset by lower maintenance
expense related to electro-mechanical switching equipment.
Information Services
The information services segment continues to provide growth in
both revenues and sales and operating income for the Company. Revenues
and sales reflect increases of $51.7 million or 32%, $93.6 million or
29%, and $159.1 million or 26% for the three, six and twelve month
periods, respectively. Operating income reflects increases of $4.4
million or 15%, $4.7 million or 8% and $17.1 million or 16% for the
three, six and twelve month periods, respectively.
5
Information services revenues and sales increased for the three,
six 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, six and twelve month
periods primarily due to the revenue increases previously mentioned.
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, a reduction in
fees collected on 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 generated software.
Product Distribution Operations
The product distribution segment showed improved earnings but
continues to be impacted by market conditions and competition.
Revenues and sales reflect increases of $7.9 million or 8%, $17.7
million or 9% and $13.0 million or 3% for the three, six and twelve
month periods, respectively. Operating income reflects increases of
$1.3 million or 29%, $2.0 million or 22% and $.9 million or 5% for the
three, six and twelve month periods, respectively.
The increases in revenues and sales for the three and six month
periods is primarily due to growth in sales of telecommunications and
data products to new and existing customers, including sales to
affiliates. The increase in sales for the twelve month period is
primarily due to growth in sales of telecommunications and data
products to new and existing customers, including sales to affiliates,
partially offset by an decrease in sales by the wire and cable
operations.
6
Operating income increased in the three, six and twelve month
periods primarily because of the increases in revenues and sales noted
previously, partially offset by an increase in selling related
expenses. The growth in operating income for the twelve month period
was also impacted by the decrease in sales and profit margins of
electrical wire and cable products as a result of sluggish market
conditions and intense competition, especially from direct sales by
manufacturers.
Cellular Operations
Cellular operations provided solid operating results and
contributed significantly to the Company's overall earnings growth.
Revenues and sales reflect increases of $25.8 million or 54%, $52.3
million or 59%, and $96.2 million or 61% for the three, six and twelve
month periods, respectively. Operating income reflects increases of
$11.0 million or 102%, $18.9 million or 104% and $32.0 million or 103%
for the three, six and twelve month periods, respectively. During the
twelve month period ended June 30, 1994, the number of cellular
customers grew to 360,493 from 210,907, an increase of 149,586
customers or 71%.
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 interest 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 $31.0
million or 233%, $63.5 million or 241% and $86.2 million or 160% for
the three, six and twelve month periods, respectively. Operating
income reflects increases of $2.2 million or 103%, $4.5 million or 99%
and $3.6 million or 36% for the three, six and twelve month periods,
respectively.
7
The increases in revenues and sales for all periods are primarily
due to 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 six months of 1994
was 172 compared to only 62 directories published during the same
period in 1993, an increase of 177%. Paging operations also
contributed to the increases in revenues and sales for all periods as
a result of steady growth in its customer base.
Operating income increased in the three and six month periods
primarily due to the increases in revenues and sales previously noted,
partially offset by increases in directory services expense, sales and
marketing expenses, depreciation and other operating expenses.
Operating income for the twelve month period increased primarily due
to the increase in revenues and sales, partially offset by the one-
time costs incurred with the purchase and start-up of the new
directory publishing business.
Corporate Expenses
Corporate operating expenses decreased $1.8 million or 27% for
the three month period. Corporate operating expenses increased $.4
million or 5% and $5.6 million or 35% for the six and twelve month
periods, respectively. The decrease in the three month period is
primarily due to a decrease in employee benefit costs. The increase
in the six and twelve month periods is primarily due to an increase in
operating expenses, an increase in deferred and incentive compensation
costs, and a reduction in charges to subsidiaries for cost of debt
related to new buildings. These increases were partially offset by a
decrease in both employee benefit costs and workers compensation
expense.
Other Income, Net
Other income, net decreased $2.8 million or 1000%, $5.4 million
or 505% and $8.7 million or 158% for the three, six 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.
8
The decrease in the twelve month period is also due to the elimination
of equity income recognized from investments 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.
Interest Expense
Interest expense increased $11.1 million or 48%, $19.8 million or
43% and $25.9 million or 28% for the three, six 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 $8.9 million or 23%, $16.0 million
or 21% and $58.5 million or 40% for the three, six and twelve month
periods, respectively. The increases primarily resulted from an
increase in taxable income and additional taxes resulting from the
Revenue Reconciliation Act of 1993 which was enacted on August 10,
1993, and which increased the statutory federal corporate tax rate 1
percent to 35 percent retroactive to January 1, 1993. For the twelve
month period, income tax expense does not reflect the tax benefit from
the write-down of product distribution operations, since utilization
of the benefit is not certain.
9
Net Income Applicable to Common Shares
Net income applicable to common shares increased $12.4 million or
20%, $21.3 million or 17% and $34.7 million or 14% for the three, six
and twelve month periods, respectively. Primary earnings per common
share for the three, six, and twelve month periods ended June 30, 1994
increased 18%, 15%, and 13%, 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.
Average Common Shares Outstanding
The average number of common shares outstanding increased 1% for
the three, six and twelve month periods ended June 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
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
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
August 11, 1994
12
ALLTEL CORPORATION
FORM 10-Q
INDEX OF EXHIBITS
Description
Form 10-Q Sequential
Exhibit No. Page No.
(20) Interim Report to Stockholders 14-19
for the periods ended June 30, 1994
13
EXHIBIT 20
<TABLE>
HIGHLIGHTS (Unaudited)
(Dollars in thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHSENDED JUNE 30, TWELVE MONTHS ENDED JUNE 30,
Increase Increase Increase
(Decrease) (Decrease) (Decrease)
1994 1993 % 1994 1993 % 1994 1993 %
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues and Sales $734,563 $568,868 29 $1,443,971 $1,115,592 29 $2,670,466 $2,173,023 23
Net income $ 76,187 $ 63,829 19 $ 148,073 $126,985 17 $ 283,105 $ 248,597 14
Primary earnings per average
common share outstanding $.40 $.34 18 $.78 $.68 15 $1.49 $1.32 13
Excluding net gain on exchange
of assets and other:
Net Income $76,187 $63,829 19 $148,073 $126,985 17 $ 283,126 $ 248,597 14
Primary earnings $.40 $.34 18 $.78 $.68 15 $1.49 $1.32 13
Average common shares
outstanding 189,387,000 186,976,000 1 189,488,000 186,875,000 1 188,866,000 186,489,000 1
Annual dividend rate
per common share $.88 $.80 10
Total assets $4,418,415 $3,317,738 33
Telephone access lines 1,616,741 1,329,879 22
Cellular customers 360,493 210,907 71
14
</TABLE>
<TABLE>
BUSINESS SEGMENTS (Unaudited)
(Dollars in thousands)
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, TWELVE MONTHS ENDED JUNE 30,
Increase Increase Increase
(Decrease) (Decrease) (Decrease)
1994 1993 % 1994 1993 % 1994 1993 %
REVENUES AND SALES:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Telephone $295,367 $245,987 20 $ 589,659 $ 488,362 21 $1,117,391 $ 974,476 15
Information Services 215,423 163,772 32 415,215 321,611 29 771,357 612,232 26
Product Distribution 105,391 97,529 8 208,026 190,360 9 388,358 375,356 3
Cellular 74,108 48,268 54 141,166 88,885 59 253,496 157,263 61
Other operations 44,274 13,312 233 89,905 26,374 241 139,864 53,696 160
Total $734,563 $568,868 29 $1,443,971 $1,115,592 29 $2,670,466 $2,173,023 23
OPERATING INCOME:
Telephone $100,395 $ 85,922 17 $ 201,954 $ 169,247 19 $ 385,901 $ 333,787 16
Information Services 34,397 30,002 15 63,726 59,052 8 121,282 104,174 16
Product Distribution 5,765 4,472 29 11,154 9,180 22 18,968 18,068 5
Cellular 21,825 10,793 102 36,949 18,076 104 63,165 31,120 103
Other operations 4,329 2,129 103 8,978 4,501 99 13,668 10,061 36
Corporate Expenses (4,803) (6,619) (27) (10,576) (10,116) 5 (21,693) (16,050) 35
Total $161,908 $126,699 28 $ 312,185 $ 249,940 25 $ 581,291 $ 481,160 21
</TABLE>
15
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share amounts)
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE30, TWELVE MONTHS ENDED JUNE 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
REVENUES AND SALES $734,563 $568,868 $1,443,971 $1,115,592 $2,670,466 $2,173,023
COSTS AND EXPENSES:
Cost of products sold 106,863 92,521 211,253 179,050 385,323 349,726
Operations 327,164 238,957 646,797 466,214 1,187,807 906,325
Maintenance 38,138 31,160 73,380 62,578 141,961 125,414
Depreciation and
amortization 84,576 64,517 167,504 128,323 311,617 253,435
Taxes, other than
income taxes 15,914 15,014 32,852 29,487 62,467 56,963
Total costs and
expenses 572,655 442,169 1,131,786 865,652 2,089,175 1,691,863
OPERATING INCOME 161,908 126,699 312,185 249,940 581,291 481,160
Other income, net (3,058) (278) (4,340) 1,071 (3,181) 5,494
Interest expense (34,510) (23,336) (65,995) (46,234) (118,507) (92,635)
Income before net gain
on exchange of assets,
other, and income taxes 124,340 103,085 241,850 204,777 459,603 394,019
Net gain on exchange of
assets and other -- -- -- -- 27,390 --
Income before income
taxes 124,340 103,085 241,850 204,777 486,993 394,019
Federal and state
income taxes 48,153 39,256 93,777 77,792 203,888 145,422
Net income 76,187 63,829 148,073 126,985 283,105 248,597
Preferred dividends 317 403 627 809 1,396 1,636
Net income applicable to
common shares $ 75,870 $ 63,426 $ 147,446 $ 126,176 $ 281,709 $ 246,961
PRIMARY EARNINGS PER SHARE: $.40 $.34 $.78 $.68 $1.49 $1.32
</TABLE>
16
CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS (Dollars in thousands)
JUNE 30, DEC.31, JUNE 30,
1994 1993 1993
CURRENT ASSETS:
Cash and short-term investments $ 30,839 $ 7,881 $ 42,799
Accounts receivable 466,195 379,743 269,530
Materials and supplies 27,203 22,321 23,529
Inventories 69,621 68,673 63,238
Prepaid expenses 18,269 15,520 14,850
Total current assets 612,127 494,138 413,946
Investments 296,194 382,343 169,714
Excess of cost over equity in
subsidiary companies 495,287 508,227 397,950
PROPERTY, PLANT AND EQUIPMENT:
Telephone 3,600,850 3,555,020 2,901,147
Information Services 334,628 290,737 222,252
Other 273,150 235,884 199,291
Under construction 242,958 153,196 145,788
Total property, plant and equipment 4,451,586 4,234,837 3,468,478
Less accumulated depreciation 1,677,306 1,558,403 1,313,821
Net property, plant and equipment 2,774,280 2,676,434 2,154,657
Other assets 240,527 209,316 181,471
TOTAL ASSETS $4,418,415 $4,270,458 $3,317,738
17
LIABILITIES AND SHAREHOLDERS' EQUITY
JUNE 30, DEC. 31, JUNE 30,
1994 1993 1993
CURRENT LIABILITIES:
Current maturities of long-term debt $ 56,580 $ 44,138 $ 32,277
Accounts payable 225,412 221,569 183,376
Advance payments and customers' deposits 63,754 62,490 62,351
Accrued taxes 43,151 35,053 24,435
Accrued interest, dividends and other 197,692 209,395 129,504
Other current liabilities 36,055 35,937 51,623
Total current liabilities 622,644 608,582 483,566
DEFERRED CREDITS:
Investment tax 35,031 38,575 42,187
Income taxes 346,741 377,253 250,555
Total deferred credits 381,772 415,828 292,742
Long-term debt 1,714,057 1,596,032 1,069,266
Other liabilities 126,523 86,681 92,471
Preferred stock, redeemable 8,046 8,627 8,969
SHAREHOLDERS' EQUITY
Preferred stock 9,358 9,405 9,457
Common stock 187,851 187,458 185,117
Additional capital 337,072 333,698 321,315
Unrealized holding gain on investments 63,848 121,507 --
Retained earnings 967,244 902,640 854,835
Total shareholders' equity 1,565,373 1,554,708 1,370,724
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,418,415 $4,270,458 $3,317,738
18
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
<CAPTION>
Six Months Twelve Months
Ended June 30, Ended June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $246,344 $273,821 $ 541,628 $592,976
CASH USED IN INVESTING:
Additions to property, plant and equipment 256,360 190,623 491,908 386,626
Companies purchased, net of cash acquired -- -- 443,000 --
Additions to investments 1,676 15,048 7,069 26,749
Other, net 15,811 24,476 77,871 35,389
Net cash used in investing activities 273,847 230,147 1,019,848 448,764
CASH (PROVIDED) USED IN FINANCING:
Dividends on preferred and common stock 83,196 74,817 162,489 143,066
Reductions in long-term debt 135,386 29,472 197,050 117,887
Long-term debt issued (265,853) (69,549) (824,108) (121,798)
Common stock issued (3,117) (3,934) (4,939) (3,796)
Other, net (73) 492 3,248 802
Net cash (provided) used in
financing activities (50,461) 31,298 (466,260) 136,161
Increase (decrease) in cash
and short-term investments 22,958 12,376 (11,960) 8,051
CASH AND SHORT-TERM INVESTMENTS:
Beginning of period 7,881 30,423 42,799 34,748
End of period $ 30,839 $ 42,799 $ 30,839 $ 42,799
19
To ALLTEL STOCKHOLDERS:
ALLTEL Corporation recently announced its financial results for the
quarter ended June 30, 1994.
Second quarter earnings were 40 cents per share compared to 34
cents per share a year ago, an 18 percent increase. Net income for
the second quarter of 1994 was $76,187,000, compared to $63,829,000
in the second quarter of 1993, an increase of 19 percent. Revenues
and sales were $734,563,000, up 29 percent from $568,868,000 in the
corresponding quarter of 1993.
Earnings per share for the six months ended June 30, 1994 were
78 cents, compared to 68 cents a year ago, a 15 percent increase. Net
income was $148,073,000 compared to $126,985,000 in the year-ago
period, reflecting an increase of 17 percent. Revenues and sales were
$1,443,971,000, an increase of 29 percent over $1,115,592,000 in
1993.
ALLTEL continues to produce accelerating earnings growth with
second quarter results showing increased contributions to earnings by
all of the Company's core business units.
Telephone produced solid results due to our recent expansion in
Georgia, steady access line growth and continued focus on cost
controls.
Information services recorded another quarter of strong sales
with operating income also returning to double-digit growth levels as
margins continue to improve on the surge of new contracts signed in
recent quarters. In addition, results continue to be enhanced by
increased software sales from Systematics international and TDS
Healthcare.
Cellular again generated outstanding growth in revenues,
operating income and customers. In addition, cellular's key operating
results -- including churn and penetration rates as well as cost to
add a new customer -- continue to be among the best in the industry.
As a result, this unit once again contributed approximately 30
percent of ALLTEL's growth in operating income.
Product distribution showed improved performance over its year-
ago results, with both sales and operating income reaching all-time
highs.
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ALLTEL NAMES NEW BOARD MEMBER
Lawrence L. Gellerstedt III, chairman and chief executive officer of
Beers Construction Co. in Atlanta, Ga., has been elected to ALLTEL's
board of directors.
Gellerstedt, 38, serves on the boards of a number of
organizations including the Hospital Equipment Finance Authority of
the State of Georgia, NationsBank of Georgia, St. Joseph's Mercy
Foundation, Holloway Installation Co., Southern Mills, Inc. and the
Construction Industry Presidents Forum.
ALLTEL RISES IN BUSINESS RANKINGS
ALLTEL's solid financial results have once again increased the
CompanyOs standing in the Forbes 500.
ALLTEL advanced to 180th in market value as of March 18, 1994,
up from 198th in the previous year's ranking.
The company also rose to 392nd in assets and 417th in sales. In
the category of net profits, ALLTEL placed 209th.
In addition, for the first time, Fortune magazine has ranked
ALLTEL among the 500 largest service corporations in America.
The Company placed in two overall categories of Fortune's 1993
Service 500. ALLTEL produced the 27th highest 10-year total return to
investors and the 48th highest return on sales and revenues.
BOARD DECLARES REGULAR QUARTERLY DIVIDENDS
The Company's Board of Directors declared regular quarterly dividends
on ALLTEL common stock. The 22 cent dividend is payable Oct. 3, 1994
to stockholders of record as of Sept. 2, 1994.
Regular quarterly dividends were also declared on all series of
the Company's preferred stock. Preferred dividends are payable on
Sept. 15, 1994 to stockholders of record as of Aug. 24, 1994.
ALLTEL's record of excellent financial performance is the result of a
prudent, but diligent, strategy. We have expanded into the fast-
growing cellular and information services markets, while
strengthening our core telephone business. Through this strategy, the
Company has achieved a well-diversified business mix that positions
the Company for continued success.
Joe T. Ford,
Chairman and Chief Executive Officer
July 21, 1994
21
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