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, 1996
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
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, 1996:
189,602,797
The Exhibit Index is located at sequential page 14.
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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, 1996, 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, 1996 and 1995.
Consolidated Balance Sheets - September 30, 1996 and 1995 and
December 31, 1995.
Consolidated Statements of Cash Flows - for the nine and twelve
months ended September 30, 1996 and 1995.
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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, LIQUIDITY AND CAPITAL RESOURCES
The Company's total capital structure was $3.8 billion at September 30,
1996, reflecting 54% common and preferred equity and 46% debt. This compares
to a capital structure of $3.7 billion at December 31, 1995, reflecting 52%
common and preferred equity and 48% debt. The Company has adequate internal
and external resources available to finance its ongoing operating requirements,
including capital expenditures, business development and the payment of
dividends.
Cash provided by operations, which continues to be the Company's primary
source of liquidity, was $576.8 million and $767.0 million for the nine and
twelve month periods in 1996, respectively, compared to $498.9 million and
$702.8 million for the same periods in 1995. The increases in the 1996 periods
primarily reflect reductions in working capital requirements and the growth in
earnings of the Company, excluding the impact of certain non-cash,
non-extraordinary charges, as further discussed below. Cash from investing
activities for 1996 includes proceeds totaling $38.7 million and $155.7 million
for the nine and twelve month periods, respectively, which were received
principally from the sale of telephone properties, as discussed below. Cash
from investing activities also includes proceeds of $30.4 million related to
the withdrawal of the Company's investment in GO Communications Corporation
("GOCC"). The Company's investment in GOCC was subject to a number of
conditions, including GOCC's ability to secure "C" band licenses in the
Personal Communications Services ("PCS") auctions conducted by the Federal
Communications Commission. Following GOCC's decision to exit the PCS auctions,
the Company elected to withdraw its investment.
The primary uses of capital resources continue to be for capital
expenditures and for the payment of dividends. Capital expenditures for the
nine and twelve month periods in 1996 were $329.4 million and $443.1 million,
respectively, compared to $409.3 million and $590.8 million for the same
periods in 1995. The Company financed the majority of its capital expenditures
through the internal generation of funds in each of the past two-year periods.
Capital expenditures are forecast at $456.7 million for 1996, which are
expected to be financed primarily from internally generated funds. During each
of the past two-year periods, the Company's capital expenditures were directed
toward telephone operations to continue to modernize its network and invest in
equipment to provide new telecommunications services. In addition, capital
expenditures were incurred for expansion into existing cellular and information
services markets, and to upgrade existing cellular network facilities. Common
and preferred dividend payments for the nine and twelve month periods in 1996
were $148.6 million and $194.3 million, respectively, compared to
$136.6 million and $182.1 million for the same periods in 1995. The increases
in dividend payments in the 1996 periods primarily reflect the October 1995
action of the Board of Directors to increase the quarterly common stock
dividend rate from $.24 per share to $.26 per share.
On October 21, 1996, the Company announced its plans to repurchase up to
3.5 million shares of ALLTEL Corporation common stock. The program is
effective immediately, and through October 31, 1996, the Company has
repurchased 316,500 of its shares. In addition, the Company is participating
in the Federal Communications Commission's "D" and "E" band PCS auctions.
The Company has bid on PCS licensing rights for service areas representing
approximately 25 to 30 million "pops". Until the outcome of the PCS auctions
is known, the Company's future capital requirements related to the PCS
licensing rights and network construction cannot be determined.
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As of September 30, 1996, the Company had a $500 million revolving credit
agreement. There were no borrowings outstanding under this agreement at either
September 30, 1996 or September 30, 1995, as compared to $151.5 million that
was outstanding at December 31, 1995. On October 11, 1996, the Company entered
into an amended and restated revolving credit agreement in the amount of
$750 million. The new agreement, which includes provision for annual
extensions, has a five-year term with an initial termination date of
October 1, 2001.
In March 1996, the Company issued $300 million of 7.0 percent debentures to
refinance existing high-cost indebtedness consisting of $200 million of 9.5
percent debentures. The remaining proceeds were used to reduce borrowings
under the Company's revolving credit agreement. The Company was required to
pay $15.8 million in termination fees to complete the early retirement of the
$200 million of long-term debt. The retirement of the $200 million debentures
and the reduction in revolving credit agreement borrowings represent the
majority of long-term debt retired in the nine month period ended
September 30, 1996. In September 1995, the Company issued $200 million of 6.75
percent debentures to retire $150 million of 10.375 percent debentures and
$50 million of 8.875 percent debentures. In October 1995, the Company was
required to pay $14.0 million in termination fees to complete the early
retirement of these two debt issues. The retirement of $200 million of
debentures in March 1996 and the retirement of $200 million of long-term debt
in October 1995 represent the majority of long-term debt retired in the twelve
month period ended September 30, 1996. The issuance of the $300 million of
7.0 percent debentures represent substantially all of the long-term debt issued
in the nine and twelve month periods ended September 30, 1996.
RESULTS OF OPERATIONS
Telephone Operations
In November 1994, the Company signed definitive agreements to sell
telephone properties serving approximately 117,000 access lines in Arizona,
California, Nevada, New Mexico, Oregon, Tennessee, Utah and West Virginia to
Citizens Utilities Company ("Citizens") in exchange for approximately $250
million in cash, assumed debt and 3,600 access lines in Pennsylvania. The sale
of properties in Oregon and West Virginia was completed at the end of the
second quarter of 1995, the sale of all remaining properties except for those
in Nevada was completed during the fourth quarter of 1995, and the sale of
properties in Nevada was completed during March 1996. The sale of properties
resulted in pre-tax gains of $15.3 million and $34.2 million for the nine and
twelve month periods ended September 30, 1996, respectively. Additionally, the
sale of properties resulted in decreases in revenues and sales of
$19.6 million, $72.9 million and $87.9 million and decreases in operating
income of $6.2 million, $24.2 million and $28.8 million for the three, nine and
twelve month periods ended September 30, 1996, respectively.
Telephone operations revenues and sales decreased $4.4 million or 1%, $29.8
million or 3% and $29.3 million or 2% for the three, nine and twelve months
ended September 30, 1996, respectively. Telephone operating income decreased
$1.1 million or 1%, $7.7 million or 2% and increased $0.6 million or less than
1% for the three, nine and twelve month periods, respectively. Excluding the
impact of the sale of properties to Citizens, telephone's revenues and sales
would have increased $15.2 million, $43.1 million and $58.6 million or 5% in
each period and operating income would have increased $5.1 million or 5%, $16.5
million or 5% and $29.4 million or 7% for the three, nine and twelve month
periods ended September 30, 1996, respectively.
Local service revenue increased $2.1 million, $5.8 million and $8.2 million
or 2% in each of the three, nine and twelve month periods, respectively.
Customer access lines, net of lines sold to Citizens, increased nearly 5%
during the past twelve month period, reflecting increased sales of second
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access lines and growth in the number of residential lines, principally
occurring in Georgia, North Carolina, Ohio, Pennsylvania, and Texas. Growth
in custom calling feature revenues also contributed to the increase in revenues
for all periods. The increases in local service revenues due to growth in
customer access lines and custom calling feature revenues were partially offset
by the sale of properties to Citizens, which reduced revenues $5.2 million,
$19.0 million and $22.8 million for the three, nine and twelve month periods,
respectively. There have been no local rate increases granted to any of the
Company's telephone operating subsidiaries during 1996, and management does not
anticipate filing for any local rate increases during the remainder of 1996.
Network access and long-distance revenues decreased $5.8 million or 4%,
$30.5 million or 6% and $32.3 million or 5% for the three, nine and twelve
month periods, respectively. The decreases in all periods reflect the sale of
properties to Citizens which accounted for $11.5 million, $44.8 million and
$54.1 million of the decrease in network access and long-distance revenues for
three, nine and twelve month periods, respectively. The decreases in revenues
for all periods were partially offset by higher volumes of access usage and
additional revenues derived from the Company's start-up, long-distance
operations. In 1996, the Company began offering long-distance service to its
customers in selected service areas, and as of the end of third quarter, the
Company provided service to over 140,000 customers in 12 states. On July 12,
1996, the Georgia Public Service Commission ("Georgia PSC") issued an order
requiring that the Company's telephone subsidiaries which operate within its
jurisdiction reduce their annual intrastate network access charges by $24
million, prospectively. The Georgia PSC's action was in response to the
Company's election to move from a rate-of-return method of pricing to an
incentive rate structure, under Georgia's new alternative rate regulation. The
Company appealed the Georgia PSC order. On August 22, 1996, the superior court
of Fulton County, Georgia (the "superior court") issued a stay of the Georgia
PSC order until the outcome of the Company's appeal could be determined. On
November 6, 1996, the superior court rendered its decision regarding the
Company's appeal and reversed the Georgia PSC order.
Miscellaneous revenues decreased $0.7 million or 2%, $5.1 million or 5%
and $5.2 million or 3% for the three, nine and twelve month periods,
respectively. The decreases in all periods reflect the sale of properties to
Citizens which reduced revenues by $2.9 million, $9.1 million and $11.0
million for the three, nine and twelve month periods, respectively. The
decreases in revenues for all periods were partially offset by increases in
directory advertising revenues, direct sales of telephone equipment, rental
revenues, and sales of telephone equipment maintenance and protection plans.
Total telephone operating expenses decreased $3.3 million or 2%, $22.1
million or 4% and $29.9 million or 4% for the three, nine and twelve month
periods, respectively. The sale of properties to Citizens accounted for $13.4
million, $48.7 million and $59.1 million of the decreases in operating expenses
for the three, nine and twelve month periods, respectively. The decreases in
operating expenses for all periods resulting from the sale of properties to
Citizens were partially offset by start-up costs associated with the
long-distance operations and by increased expense for maintenance and repair of
cable, digital electronic switching and circuit equipment, an increase in cost
of products sold related to sales of telephone equipment and maintenance and
protection plans, and increased depreciation expense.
The decreases in telephone operating income for the three and nine month
periods reflect the decreases in revenues and sales previously noted.
Although revenues and sales decreased in the twelve month period, growth in
operating income occurred primarily due to the increase in sales of
higher-margin second access lines and a reduction in accounting, financial
management and other general administrative expenses, reflecting the Company's
ongoing cost-control efforts.
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The Company's telephone subsidiaries follow the accounting for regulated
enterprises prescribed by Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" ("SFAS 71"). If
the Company's telephone subsidiaries no longer qualified for the provisions of
SFAS 71, the accounting impact to the Company would be an extraordinary
non-cash charge to operations of an amount that would be material. Criteria
that would give rise to the discontinuance of SFAS 71 include (1) increasing
competition that restricts the telephone subsidiaries' ability to establish
prices to recover specific costs and (2) a significant change in the manner in
which rates are set by regulators from cost-based regulation to another form
of regulation. The Company periodically reviews these criteria to ensure the
continuing application of SFAS 71 is appropriate.
Information Services
Revenues and sales for the information services segment reflect increases
of $16.1 million or 7%, $30.0 million or 4% and $46.7 million or 5% for the
three, nine and twelve month periods ended September 30, 1996, respectively.
The increases in revenues and sales for all periods primarily resulted from
growth in the healthcare and telecommunications portions of this segment's
outsourcing business, reflecting volume growth in existing data processing
contracts and the addition of new outsourcing contracts. Additional software
maintenance revenues, new financial outsourcing and remote processing
agreements and increased usage of specialized programming service offerings
also contributed to the increase in revenues and sales for all periods. Growth
in revenues and sales for the nine and twelve month periods also reflect the
May 1995 purchase of Vertex Business Systems, Inc. The increases in revenues
and sales for all periods were partially offset by the sale of this segment's
check processing operations completed in September 1995, lost operations from
contract terminations due primarily to the merger and consolidation activity in
the domestic financial services market, and by a reduction in revenues
collected for early termination of facilities management contracts. In
addition, growth in mortgage processing revenues for all periods has been
impacted by the consolidation in the mortgage industry, which has resulted in
lower revenues realized on a per loan basis. Excluding the sale of the check
processing operations, revenues and sales for the information services segment
would have increased 11%, 8% and 9% for the three, nine and twelve months
ended September 30, 1996, respectively.
During the third quarter of 1996, information services recorded a pre-tax
write-down of $53.0 million in the carrying value of certain assets primarily
consisting of capitalized software development costs. The write-down of
software resulted from a net realizability evaluation of this segment's
software-related products that have been impacted by changes in software and
hardware technologies, including a shift from mainframe to client server-based
applications. In addition, due to current and projected future operating
losses sustained by this segment's community banking operations, information
services also recorded a pre-tax write-down of $22.0 million to adjust the
carrying value of these operations to their estimated fair value based upon
projections of future cash flows. Primarily as a result of these write-downs,
operating income decreased $75.9 million or 220%, $67.4 million or 74% and
$59.2 million or 48% for the three, nine and twelve month periods,
respectively. Excluding the impact of the third quarter write-downs, operating
income would have decreased $0.9 million or 3% for the three month period of
1996 and would have increased $7.6 million or 8% and $15.8 million or 13% for
the nine and twelve month periods of 1996, respectively.
In addition to the third quarter write-downs, the decrease in operating
income for the three month period also reflects the loss of higher margin
operations due to contract terminations, reductions in fees collected on the
early termination of facilities management contracts and an increase in
depreciation and amortization expense. These decreases were partially offset
by the increase in revenues and sales previously noted. Excluding the impact
of the third quarter write-downs, the increases in operating income for the
nine and twelve month periods reflect the increases in revenues and sales
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previously discussed, partially offset by the loss of higher margin operations
due to contract terminations, reductions in fees collected on the early
termination of facilities management contracts, and an increase in depreciation
and amortization expense. Operating income for all periods of 1996 was also
impacted by start-up costs associated with the Enterprise Network Services
Division and lower margins realized on international software sales due to
increased costs to procure and support these sales. The Enterprise Network
Services Division was established in May 1996 to offer network consulting,
implementation and operations support services to customers across all of the
Company's vertical markets. Depreciation and amortization expense increased in
all periods primarily due to the acquisition of additional data processing
equipment and due to an increase in amortization of internally developed
software.
As a result of the declining contributions from this segment's check
processing and community banking operations, the Company recorded a pre-tax
write-down of approximately $54.2 million to the estimated net realizable value
of these operations in December 1994. The effect of this write-down is
included in the twelve months ended September 30, 1995. In accordance with the
Company's plan for the disposal of the check processing operations, the Company
recorded an additional $5.0 million pre-tax write-down in June 1995 to reflect
the net realizable value of these operations. The effect of this write-down is
included in the nine and twelve months ended September 30, 1995. As previously
noted, the sale of the check processing operations was completed at the end of
the third quarter of 1995.
Product Distribution Operations
Revenues and sales for the product distribution segment reflect decreases
of $9.3 million or 8%, $0.4 million or less than 1% and $11.5 million or 3% for
the three, nine and twelve month periods, respectively. Operating income
decreased $1.7 million or 22%, $2.9 million or 13% and $3.2 million or 12% for
the three, nine and twelve month periods, respectively.
The decreases in revenues and sales for all periods were primarily due to a
reduction in sales of telecommunications and data products to affiliates.
Compared to the prior-year periods, sales to affiliates decreased $12.0
million, $20.3 million and $29.9 million, for the three, nine and twelve
months, respectively. The decreases in sales to affiliates reflect both the
sale of properties to Citizens and a reduction in capital expenditures by the
remaining telephone subsidiaries, as compared to the prior-year periods. The
decreases in sales to affiliates for all periods were partially offset by
increased retail sales of telecommunications and data products at this
segment's counter-showrooms, which increased $3.9 million, $12.9 million and
$16.0 million for the three, nine and twelve months periods of 1996,
respectively. Also contributing to the overall decrease in revenues and sales
for the three month period was a decrease in the sale of electrical wire and
cable products, reflecting lower demand for these products. Sales of
electrical wire and cable products increased slightly in the nine and twelve
month periods.
The decreases in operating income for all periods reflect the decreases in
revenue and sales noted above and lower profit margins realized on the sale of
electrical wire and cable products. During the first nine months of 1996,
gross profit margins for electrical wire and cable products have been adversely
impacted by sharp declines in copper prices, as compared to the prior-year
period.
During the third quarter of 1996, the Company recorded a pre-tax
write-down of $45.3 million in the carrying value of goodwill related to its
wire and cable subsidiary, HWC Distribution Corp. ("HWC"). This write-down
resulted from the Company's plans to dispose of these non-strategic operations.
The Company expects to complete the sale of HWC during the fourth quarter of
1996. The impact of this write-down has been included in corporate operating
expenses.
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Cellular Operations
Cellular operations produced strong operating results. Revenues and sales
reflect increases of $19.6 million or 19%, $54.5 million or 18% and $73.9
million or 20% for the three, nine and twelve month periods, respectively.
Operating income increased $5.6 million or 16%, $22.9 million or 25% and $32.9
million or 30% for the three, nine and twelve month periods, respectively.
During the twelve month period ended September 30, 1996, subscriber growth
remained strong as the number of cellular customers grew to 738,040 from
575,952, an increase of 162,088 customers or 28%.
Cellular revenues and sales increased in all periods primarily due to the
significant growth in its customer base. The acquisition of new cellular
properties also contributed to the growth in revenues and sales in all periods.
Partially offsetting the increases in revenues and sales resulting from
subscriber growth were declines in the average monthly revenue per subscriber.
The declines in revenue per subscriber per month reflect the industry-wide
trend of increased penetration into lower-usage market segments and reductions
in roaming revenue rates. Growth in revenues and sales in all periods was also
impacted by increases in uncollectible revenues, reflecting increased
write-offs from bad debts.
Operating income increased in all periods primarily due to the growth in
revenues and sales. Improved profit margins realized on the sale of cellular
equipment also contributed to the growth in operating income for all periods.
The increases in operating income for all periods were partially offset by
higher expenses for selling and advertising, depreciation and other operating
expenses. Growth in operating income has also been impacted by increased
losses sustained from fraud. The Company has implemented new technologies and
enhanced credit and collection procedures in order to reduce future losses
incurred from both fraud and bad debts.
Other Operations
Other operations revenues and sales decreased $0.4 million or 1%, $4.0
million or 4% and $13.2 million or 9% for the three, nine and twelve month
periods, respectively. Operating income increased $0.6 million or 31%, $2.1
million or 33% and $0.7 million or 8% for the three, nine and twelve month
periods, respectively.
Revenues and sales for other operations decreased in all periods due to a
reduction in directory publishing revenues. The decrease in revenues and sales
for the three month period primarily reflects a decrease in the number of
directories published as compared to the prior-year period. The decreases in
revenues and sales for the nine and twelve month periods of 1996 reflect a
decline in the average revenues realized per published directory. Compared to
the prior-year periods, average revenues realized per published directory have
declined by 3% and 6% for the nine and twelve month periods of 1996,
respectively. The declines in average revenues realized per published
directory for all periods reflect the loss of several large independent
directory contracts. The decreases in revenues and sales for the nine and
twelve month periods were partially offset by the receipt of a one-time
settlement from GTE Directories Corporation ("GTE Directories") for
reimbursement of certain computer software conversion costs incurred by the
Company subsequent to its purchase of GTE Directories' independent telephone
directory operations.
Operating income for the three month period increased due to a reduction
in directory publishing expenses, primarily reflecting the elimination of
certain transitional amounts paid to GTE Directories. At the time of acquiring
the independent telephone directory business, the Company's publishing
subsidiary contracted with GTE Directories to receive directory advertising
sales support, printing and other services. These sales and service functions
are now performed at a lower cost internally by the Company's publishing
subsidiary. The increase in operating income for the nine and twelve month
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periods reflect the impact of the one-time settlement received from GTE
Directories, elimination of the transitional amounts paid to GTE Directories
and improved collection experience related to directory advertising revenues.
Compared to the prior year-to-date period, amounts charged to uncollectible
revenues in 1996 have decreased by approximately $0.7 million. Operating
income for the twelve month period also reflects lower margins realized on
directories published for affiliates. The lower margins resulted from
increased fees paid to affiliates for publishing rights under the terms of a
new contract that became effective on January 1, 1995.
Corporate Operating Expenses
Corporate operating expenses increased $47.1 million or 975%, $45.7
million or 259% and $48.8 million or 208% for the three, nine and twelve month
periods, respectively. The increases for all periods reflect the $45.3 million
write-down in the carrying value of goodwill related to the Company's wire and
cable subsidiary, as previously discussed. Excluding the impact of this
write-down, corporate operating expenses would have increased $1.8 million or
38%, $0.4 million or 2% and $3.5 million or 15% for the three, nine and twelve
month periods of 1996, respectively. Also contributing to the increases in
corporate operating expenses for the three and nine month periods of 1996 was
an increase in employee benefit costs. The increase in corporate operating
expenses for the twelve month period also reflects the reclassification of the
amortization of telephone plant acquisition adjustments related to the
Company's purchase of certain telephone properties of GTE Corporation in the
state of Georgia ("GTE Georgia"). Prior to April 1995, this amortization
expense had been classified as non-operating expense. Accordingly, as a result
of this reclassification, corporate operating expenses for the twelve months
ended September 30, 1995, do not include approximately $2.0 million of
amortization of telephone plant acquisition adjustments related to the GTE
Georgia acquisition. Corporate operating expenses for the twelve month period
of 1996 also includes approximately $1.0 million of additional amortization of
excess cost related to entities purchased subsequent to April 1995.
Other Income, Net
Other income, net increased $2.2 million or 239%, $1.5 million or 317% and
$2.4 million or 149% for the three, nine and twelve month periods,
respectively. The increase in the three month period was primarily due to an
increase in equity income recognized on investments in cellular limited
partnerships, partially offset by an increase in the minority interest in
earnings of the Company's cellular operations by others. The increase in the
nine month period primarily resulted from an increase in equity income
recognized on investments in cellular limited partnerships and an increase in
capitalized interest costs related to long-term construction projects. These
increases were partially offset by an increase in the minority interest in
earnings of the Company's cellular operations by others. The increase in the
twelve month period primarily reflects the reclassification to corporate
operating expenses of the amortization of telephone plant acquisition
adjustments related to the GTE Georgia acquisition, as previously discussed.
As a result of this reclassification, other income, net for the twelve months
ended September 30, 1995, includes $2.0 million of amortization expense.
Interest Expense
Interest expense decreased $5.1 million or 14%, $13.9 million or 12% and
$16.4 million or 11% for the three, nine and twelve month periods,
respectively. The decreases in interest expense in all periods primarily
reflects the two debt refinancings completed in October 1995 and March 1996,
which resulted in the retirement of three high-cost debt issues and reduced
borrowings under the Company's revolving credit agreement, as previously
discussed. The decreases in interest expense for all periods also reflect
decreases in the average borrowing rates for amounts outstanding under the
Company's revolving credit agreement.
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Provision to Reduce Carrying Value of Certain Assets
As previously discussed, during the third quarter of 1996, the Company
incurred non-cash, pre-tax charges of $120.3 million to write-down the
carrying value of certain assets. In accordance with the Company's plan to
dispose of its wire and cable subsidiary, the Company recorded a pre-tax
write-down of goodwill in the amount of $45.3 million. In addition, the
information services segment recorded a pre-tax write-down of $53.0 million in
the carrying value of certain assets primarily consisting of capitalized
software development costs. The write-down of software resulted from
performing a net realizability evaluation of this segment's software-related
products that have been impacted by changes in software and hardware
technologies. The information services segment also recorded a pre-tax
write-down of $22.0 million to adjust the carrying value of its community
banking operations to their estimated fair value based upon projections of
future cash flows. The net income impact of these write-downs resulted in a
decrease in net income of $72.7 million or $.38 per share for the three, nine
and twelve month periods ended September 30, 1996.
Gain on Disposal or Exchange of Assets, Write-down of Assets and Other
As previously discussed, during the first quarter of 1996, the Company
recorded a pre-tax gain of $15.3 million from the sale of telephone properties
in Nevada to Citizens. The Company also incurred $15.8 million of termination
fees related to the early retirement of $200 million of long-term debt.
Finally, the Company realized a loss of $1.8 million related to the withdrawal
of its investment in GOCC. The net income impact from these transactions
resulted in a decrease of $1.5 million in net income and $.01 in earnings per
share for the nine month period ended September 30, 1996.
Including the impact of the above transactions, the twelve month period
of 1996 includes pre-tax gains totaling $34.2 million from the disposal of
certain telephone properties to Citizens, termination fees totaling $29.8
million related to the refinancing of long-term debt completed in October 1995
and March 1996, and the $1.8 million loss incurred on the withdrawal of its
investment in GOCC. The net income impact from these transactions resulted in
an increase of $1.8 million in net income and approximately $.01 in earnings
per share for the twelve month period ended September 30, 1996.
As previously discussed, during the second quarter of 1995, the Company
completed the sale of telephone properties in Oregon and West Virginia to
Citizens. This sale resulted in a pre-tax gain of $30.9 million. In
accordance with the Company's plan for disposal of its check processing
operations, the Company recorded an additional $5.0 million pre-tax write-down
in June 1995 to reflect the net realizable value of these operations. The net
income impact from these transactions resulted in an increase of $16.6 million
in net income and $.09 in earnings per share for the nine month period ended
September 30, 1995. The twelve month period for 1995 also includes the
December 1994 pre-tax write-down of $54.2 million recorded to reflect the
estimated net realizable value of its information services segment's community
banking and check processing operations. The net income impact from these
transactions resulted in a decrease of $15.6 million in net income and $.08 in
earnings per share for the twelve month period ended September 30, 1995.
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Income Taxes
Income tax expense decreased $45.8 million or 88%, $44.3 million or 28%
and $8.8 million or 5% for the three, nine and twelve month periods,
respectively. The changes in income tax expense for all periods of 1996
primarily reflect the tax-related impact of various one-time,
non-extraordinary items, as previously discussed. Income tax expense for the
three month period of 1996 includes a net tax benefit of $47.6 million
resulting from the write-downs of the wire and cable subsidiary, community
banking operations and other assets primarily consisting of capitalized
software development costs. In addition to including the asset write-downs
recorded in the third quarter of 1996, income tax expense for the nine and
twelve month periods also includes the tax effects of the payment of
termination fees related to debt refinancings and a loss incurred on the
withdrawal of an investment, partially offset by gains on the sale of telephone
properties to Citizens. Income tax expense for all periods of 1995 includes
the tax effects of the gain on the sale of telephone properties in Oregon and
West Virginia to Citizens and the additional write-down of the check processing
operations. In addition, income tax expense for the twelve months ended
September 30, 1995 includes a tax benefit of approximately $22 million
resulting from the write-down of the information services operations recorded
in December 1994. Excluding the impact on tax expense of these transactions,
income tax expense would have increased $1.8 million or 3%, $13.4 million or 9%
and $25.4 million or 13% for the three, nine and twelve month periods,
respectively, and these increases would reflect the overall growth in the
Company's earnings from continuing operations before one-time,
non-extraordinary items.
Net Income Applicable to Common Shares
Net income applicable to common shares decreased $66.5 million or 78%,
$67.2 million or 26% and $18.5 million or 6% for the three, nine and twelve
month periods, respectively. Primary earnings per common share decreased 78%,
26% and 7% for the three, nine and twelve month periods, respectively.
Excluding the net income impact in each period of the non-extraordinary items
detailed in the sections entitled "Provision to Reduce Carrying Value of
Certain Assets" and "Gain on Disposal or Exchange of Assets, Write-Down of
Assets and Other", net income would have increased $6.2 million or 7%, $23.6
million or 10% and $36.7 million or 11% and primary earnings per share would
have increased 7%, 9% and 11% for the three, nine and twelve month periods
ended September 30, 1996, respectively.
Average Common Shares Outstanding
The average number of common shares outstanding increased slightly for
the three, nine and twelve month periods ended September 30, 1996. The
increases in all periods were primarily due to additional shares issued under
the Company's stock option plans.
11
<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 14.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
12
<PAGE>
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 and
Chief Financial Officer
November 13, 1996
13
<PAGE>
ALLTEL CORPORATION
FORM 10-Q
INDEX OF EXHIBITS
Form 10-Q Sequential
Exhibit No. Description Page No.
(10)(k)(4) Amendments No. 6 and 7 to ALLTEL Corporation 24 - 38
Pension Plan (January 1, 1994 Restatement)
(10)(l)(3) Amendment No. 5 to ALLTEL Corporation 39 - 40
Profit-Sharing Plan (January 1, 1994
Restatement)
(10)(o)(3) Amendment No. 4 to ALLTEL Corporation 41 - 61
Thrift Plan (January 1, 1994 Restatement)
(19) Interim Report to Stockholders and 15 - 23
Notes to Consolidated Financial Statements
for the periods ended September 30, 1996
(27) Financial Data Schedule 62
for the nine months ended September 30, 1996
14
EXHIBIT 19
<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
1996 1995 (Decrease) 1996 1995 (Decrease) 1996 1995 (Decrease)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues and sales $807,398 $785,779 3 $2,386,117 $2,335,870 2 $3,159,972 $3,093,344 2
Net income $ 18,824 $ 85,312 (78) $ 194,805 $ 262,039 (26) $ 287,382 $ 305,991 (6)
Primary earnings per average
common share outstanding $.10 $.45 (78) $1.02 $1.38 (26) $1.50 $1.61 (7)
Excluding provision to reduce
carrying value of certain assets,
gain on disposal of assets,
write-down of assets, and other:
Operating income $176,115 $175,355 - $ 528,170 $ 506,676 4 $ 705,472 $ 662,229 7
Net income $ 91,540 $ 85,312 7 $ 269,002 $ 245,432 10 $ 358,337 $ 321,607 11
Earnings per share $.48 $.45 7 $1.41 $1.29 9 $1.88 $1.69 11
Average common shares
including equivalents 190,456,000 189,988,000 - 190,584,000 189,982,000 - 190,531,000 189,826,000 -
Annual dividend rate
per common share $1.04 $.96 8
Total assets $5,173,935 $5,069,978 2
Telephone access lines 1,664,851 1,666,526 -
Cellular customers 738,040 575,952 28
15
</TABLE>
<PAGE>
<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
1996 1995 (Decrease) 1996 1995 (Decrease) 1996 1995 (Decrease)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues and Sales:
Telephone $292,788 $297,196 (1) $ 872,432 $ 902,267 (3) $1,167,838 $1,197,133 (2)
Information services 244,771 228,715 7 704,929 674,932 4 956,342 909,605 5
Product distribution 111,038 120,296 (8) 349,598 350,002 - 447,715 459,259 (3)
Cellular 123,259 103,627 19 350,227 295,712 18 452,637 378,706 20
Other operations 35,542 35,945 (1) 108,931 112,957 (4) 135,440 148,641 (9)
Total $807,398 $785,779 3 $2,386,117 $2,335,870 2 $3,159,972 $3,093,344 2
Operating Income:
Telephone $ 99,350 $100,466 (1) $ 307,304 $ 315,036 (2) $ 414,810 $ 414,191 -
Information services (41,380) 34,510 (220) 23,667 91,095 (74) 64,615 123,847 (48)
Product distribution 5,936 7,590 (22) 19,057 21,933 (13) 24,462 27,702 (12)
Cellular 41,155 35,534 16 112,945 90,030 25 144,422 111,480 30
Other operations 2,726 2,087 31 8,274 6,210 33 9,104 8,427 8
Corporate expenses (51,952) (4,832) 975 (63,357) (17,628) 259 (72,221) (23,418) 208
Total $ 55,835 $175,355 (68) $ 407,890 $ 506,676 (19) $ 585,192 $ 662,229 (12)
16
</TABLE>
<PAGE>
<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,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Revenues and Sales:
Service revenues $638,865 $610,283 $1,870,471 $1,816,205 $2,496,092 $2,408,618
Product sales 168,533 175,496 515,646 519,665 663,880 684,726
Total revenues and sales 807,398 785,779 2,386,117 2,335,870 3,159,972 3,093,344
Costs and Expenses:
Cost of products sold 111,331 117,528 342,517 347,423 444,213 457,634
Operations 361,203 335,609 1,041,245 1,018,089 1,375,717 1,347,646
Maintenance 37,202 37,929 111,591 112,080 147,409 150,586
Depreciation and amortization 105,392 102,397 314,930 299,428 425,301 407,009
Taxes, other than income taxes 16,155 16,961 47,664 52,174 61,860 68,240
Provision to reduce carrying value
of certain assets 120,280 - 120,280 - 120,280 -
Total costs and expenses 751,563 610,424 1,978,227 1,829,194 2,574,780 2,431,115
Operating Income 55,835 175,355 407,890 506,676 585,192 662,229
Other income, net 1,261 (909) 2,038 489 4,030 1,616
Interest expense (32,082) (37,159) (98,281) (112,187) (131,522) (147,947)
Gain on disposal of assets,
write-down of assets and other - - (2,278) 25,927 2,570 (28,230)
Income before income taxes 25,014 137,287 309,369 420,905 460,270 487,668
Federal and state income taxes 6,190 51,975 114,564 158,866 172,888 181,677
Net income 18,824 85,312 194,805 262,039 287,382 305,991
Preferred dividends 265 287 813 883 1,088 1,184
Net income applicable to common shares $ 18,559 $ 85,025 $ 193,992 $ 261,156 $ 286,294 $ 304,807
Primary Earnings per Share $.10 $.45 $1.02 $1.38 $1.50 $1.61
17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (unaudited)
(Dollars in thousands)
Nine Months Twelve Months
Ended Sept. 30, Ended Sept. 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Cash Provided by Operations $576,781 $498,921 $767,046 $702,828
Cash Flows from Investing Activities:
Additions to property, plant and equipment (329,361) (409,316) (443,109) (590,828)
Sale of property 38,687 95,944 155,654 95,944
Additions to capitalized software
development costs (55,850) (39,196) (68,962) (52,188)
Investments sold (acquired) 22,548 (18,326) 7,145 (27,715)
Other, net (37,761) (11,657) (98,123) (12,476)
Net cash used in investing activities (361,737) (382,551) (447,395) (587,263)
Cash Flows from Financing Activities:
Dividends on preferred and common stock (148,586) (136,571) (194,285) (182,117)
Reductions in long-term debt (376,327) (180,792) (473,171) (220,115)
Long-term debt issued 313,579 198,603 333,140 288,693
Purchase of common stock - - - (1,429)
Common stock issued 3,797 11,049 9,973 21,074
Other, net (725) (647) (1,215) (12,158)
Net cash used in financing activities (208,262) (108,358) (325,558) (106,052)
Increase (decrease) in cash and
short-term investments 6,782 8,012 (5,907) 9,513
Cash and Short-term Investments:
Beginning of period 21,421 26,098 34,110 24,597
End of period $ 28,203 $ 34,110 $ 28,203 $ 34,110
18
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets (unaudited)
Assets (Dollars in thousands)
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
<S> <C> <C> <C>
Current Assets:
Cash and short-term investments $ 28,203 $ 21,421 $ 34,110
Accounts receivable (less allowance for
doubtful accounts of $20,688, $18,439
and $23,552 respectively) 554,098 582,797 543,559
Materials and supplies 19,164 22,191 28,611
Inventories 83,632 89,667 89,227
Prepaid expenses 41,669 15,165 18,963
Total current assets 726,766 731,241 714,470
Investments 699,416 611,706 534,604
Excess of cost over equity in purchased entities 433,511 480,070 504,193
Property, Plant and Equipment:
Telephone 3,782,042 3,733,468 3,841,452
Information services 494,401 468,648 449,874
Cellular 544,007 462,397 432,241
Other 27,229 28,965 29,331
Under construction 153,574 148,349 175,518
Total property, plant and equipment 5,001,253 4,841,827 4,928,416
Less accumulated depreciation 2,003,225 1,869,075 1,888,743
Net property, plant and equipment 2,998,028 2,972,752 3,039,673
Other assets 316,214 277,336 277,038
Total Assets $5,173,935 $5,073,105 $5,069,978
19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Liabilities and Shareholders' Equity
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt $ 38,082 $ 36,892 $ 37,834
Accounts payable 214,686 213,944 217,239
Advance payments and customers' deposits 77,907 73,660 70,343
Accrued taxes 41,380 58,341 50,618
Accrued dividends 49,772 49,149 45,210
Other current liabilities 139,166 137,298 138,150
Total current liabilities 560,993 569,284 559,394
Deferred Credits:
Investment tax 16,623 21,821 24,874
Income taxes 614,605 544,435 514,640
Total deferred credits 631,228 566,256 539,514
Long-term debt 1,687,411 1,761,604 1,852,936
Other liabilities 243,674 233,318 249,128
Preferred stock, redeemable 6,455 7,078 7,249
Shareholders' Equity:
Preferred stock 9,216 9,241 9,285
Common stock 189,603 189,268 189,024
Additional capital 359,230 355,663 349,636
Unrealized holding gain on investments 267,813 208,681 184,165
Retained earnings 1,218,312 1,172,712 1,129,647
Total shareholders' equity 2,044,174 1,935,565 1,861,757
Total Liabilities and Shareholders' Equity $5,173,935 $5,073,105 $5,069,978
20
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Financial Statement Presentation:
The consolidated financial statements at September 30, 1996 and 1995 and
for the three, nine and twelve month periods then ended are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation
of the financial position and operating results for the interim periods.
2. Accounting Policies-Evaluation of Computer Software Development Costs:
The net realizable value of capitalized software development costs is
periodically evaluated by the Company. This evaluation requires
considerable judgment by management with respect to certain external
factors, including, but not limited to, anticipated future revenues
generated by the software, estimated economic life of the software and
changes in software and hardware technologies. Accordingly, it is
reasonably possible that estimates of anticipated future revenues
generated by the software, the remaining economic life of the software, or
both may be reduced significantly in the near term materially impacting the
carrying value of capitalized software development costs. As a result of
this periodic evaluation, the Company recorded a write-down of software in
the third quarter of 1996. (See Note 3).
3. Provision to Reduce Carrying Value of Certain Assets:
During the third quarter of 1996, the Company incurred non-cash, pre-tax
charges of $120.3 million to write-down the carrying value of certain
assets. The Company recorded a pre-tax write-down of $45.3 million in the
carrying value of goodwill related to its product distribution segment's
wire and cable subsidiary, HWC Distribution Corp., ("HWC"). This write-
down resulted from the Company's plan to dispose of these non-strategic
operations. The Company expects to complete the sale of HWC in the fourth
quarter of 1996. The information services segment recorded a pre-tax
write-down of $53.0 million in the carrying value of certain assets
primarily consisting of capitalized software development costs. The
write-down of software resulted from performing a net realizability
evaluation of this segment's software-related products that have been
impacted by changes in software and hardware technologies. Finally, due to
current and projected future operating losses sustained by its community
banking operations, the information services segment also recorded a
pre-tax write-down of $22.0 million to adjust the carrying value of these
operations to their estimated fair value based upon projections of future
cash flows. The net income impact of these write-downs resulted in a
decrease in net income of $72.7 million or $.38 per share for the three,
nine and twelve month periods ended September 30, 1996.
Operating results of the wire and cable subsidiary included in the
Company's consolidated results of operations for the three, nine and
twelve months ended September 30, 1996 and 1995, were as follows:
(Thousands)
Three Months Nine Months Twelve Months
Ended Ended Ended
1996 1995 1996 1995 1996 1995
Revenues and sales $38,032 $42,761 $123,363 $120,075 $161,893 $160,678
Operating income $ 1,876 $ 2,985 $ 5,929 $ 8,054 $ 8,746 $ 10,927
21
<PAGE>
To ALLTEL Stockholders:
ALLTEL Corporation recently announced its financial results for the period
ended Sept. 30, 1996.
Third quarter earnings per share from operations before one-time items
were 48 cents per share, compared with 45 cents per share a year ago, a
7 percent increase. Net income from operations before one-time items for
the third quarter of 1996 was $91,540,000 compared with $85,312,000 in the
third quarter of 1995, an increase of 7 percent. Revenues and sales were
$807,398,000 compared with $785,779,000 in the corresponding quarter of 1995,
up 3 percent.
Earnings per share from operations before one-time items for the nine
months ended Sept. 30, 1996 were $1.41, compared to $1.29 a year ago, a
9 percent increase, while net income from operations before one-time items was
$269,002,000, compared with $245,432,000, representing a 10 percent increase in
the year-ago period. Revenues and sales were $2,386,117,000 compared to
$2,335,870,000 in 1995.
During the third quarter, the company recorded one-time adjustments
totaling approximately $120,000,000 before tax and $73,000,000 after tax,
reducing earnings per share by 38 cents. Including these one-time adjustments,
net income for the quarter was $18,824,000 compared with $85,312,000 in the
year-ago period, while earnings per share amounted to 10 cents compared with
45 cents for the comparable period. Net income and earnings per share for the
nine months ended Sept. 30, 1996 were $194,805,000 and $1.02, respectively,
compared with $262,039,000 and $1.38 for the nine months ended Sept. 30, 1995.
The one-time charge of $120,000,000 reflects the company adjusting the
carrying value of certain purchased and developed software, the company's
investment in HWC Distribution Corp., and various other assets. The adjustment
of HWC reflects the company's plans to dispose of these operations.
Faced with unprecedented growth opportunities, the company continues to
implement initiatives designed to enhance our ability to compete effectively
in today's quickly-changing environment. As reflected by one-time items in the
quarter, some of these initiatives include redeploying certain assets into more
productive areas.
More importantly, we have continued to evolve our organization, realigning
our operating structure and business processes into a company that can move
effectively and quickly to develop and deliver communication and information
services across a larger addressable market. This new structure allows us to
better utilize the extraordinary skills residing within the organization, while
aligning those skills to meet the challenges of an increasingly competitive
market.
In addition to our realignment initiative, we are taking other steps to
create shareholder value. We have announced our intent to repurchase up to
3.5 million shares of ALLTEL common stock. The program is effective
immediately.
Our current quarterly results continue to highlight the success of our
wireless business, even as we work through a new round of competitors. Our
extensive array of service offerings, coupled with our superior customer
service, has resulted in solid customer growth and strong financial results.
Our wireless business was built for competition, and we are dedicated to
maintaining our market leadership.
Our wireline business also showed solid growth despite start-up costs
associated with several strategic initiatives such as long-distance and
excluding the effect of the sale of certain properties in earlier periods.
During the quarter, we extended our long-distance offering to our twelfth
state and moved aggressively to offer bundled communication services in two
out-of-region markets - Little Rock, Ark. and Charlotte, N.C. - where we have
a highly visible presence due to our successful wireless business in those
areas. It is our intent to continue pursuing wireline opportunities in other
markets where we can leverage the existing presence of other parts of our
company.
22
<PAGE>
Information services results reflected moderate third quarter sales, as
well as start-up costs associated with our Enterprise Network Services
business. As part of our reorganization, we are moving information services
into a more nimble, market-responsive structure - a structure comprised of
profit centers responsible for the development, delivery and support of
information products and services across a broader array of industries.
ALLTEL Launches Virtuoso II
The first installation of ALLTEL's state-of-the-art wireless customer care and
billing product, Virtuoso II, is now fully functional in our Springfield, Mo.
service area and will be expanded throughout our wireless operation.
In addition, GTE has selected Virtuoso II to support its wireless
operations nationwide.
With the launching of this comprehensive and highly flexible client/
server-based system, ALLTEL has become a technology leader in the critical
customer billing sector of the telecommunications industry.
ALLTEL Invests in Global Internet Access Provider
ALLTEL Corporation will invest up to $12.5 million and become a minority
investor in Apex Global Information Services, Inc. (AGIS), one of only six
global providers of Internet access.
This investment solidly locks ALLTEL into one of the top Internet access
providers in the world and ensures ALLTEL of being able to explore the many
options for business ventures via the Internet on a worldwide basis.
Board Increases Dividends
ALLTEL's board of directors voted to increase the regular quarterly common
dividend from 26 cents to 27.5 cents per share.
The new indicated annual dividend rate will be $1.10 per common share, an
increase of 6 cents or approximately 6 percent over the previous rate. This is
the 36th consecutive annual dividend increase since the company's founding.
The 27.5 cent dividend is payable Jan. 3, 1997 to stockholders of record as of
Dec. 6, 1996.
Dividends were also declared on all series of the company's preferred
stock. Preferred dividends are payable Dec. 15, 1996 to stockholders of record
as of Nov. 22, 1996.
/s/ Joe Ford
Joe T. Ford,
Chairman and Chief Executive Officer
October 24, 1996
23
AMENDMENT NO. 6
TO
ALLTEL CORPORATION PENSION PLAN
(January 1, 1994 Restatement)
WHEREAS, ALLTEL Corporation (the "Company") maintains
the ALLTEL Corporation Pension Plan, as amended and restated effective
January 1, 1994, and subsequently further amended, (the "Plan"); and
WHEREAS, the Company desires further to amend the Plan;
NOW THEREFORE, BE IT RESOLVED, that the Company hereby
amends the Plan in the respects hereinafter set forth.
Effective as of the close of business on December 31, 1995,
Section 10.04Q of the Plan is amended by renumbering paragraph (ii) thereof
as paragraph (iii)and adding a new paragraph (ii) to provide as follows:
10.04Q Deferred Vested Pension Upon Termination of Employment
(f) (ii) Notwithstanding the provisions of paragraph (iii)
above, a former Participant eligible for a Deferred
Vested Benefit with respect to his SLT Benefit who
has not attained age 55 may elect to commence his
SLT Benefit as of the first day of any month
following his Termination of Employment as follows:
(1) if he is married, in the form of Option 5 of
subsection (g) of Section 11.05Q otherwise
payable as of the first day of the month
coincident with or next following the date
the Participant would attain Normal
Retirement Age (if he survived to such date)
or Option 2; provided, however, that a former
Participant's election of Option 5 shall be
subject to the written consent of his spouse
in the manner provided in subsection (b) of
Section 11.04; or
(2) if he is unmarried, in the form of Option 5
of subsection (g) of Section 11.05Q otherwise
payable as of the first day of the month
coincident with or next following the date
the Participant would attain Normal
Retirement Age (if he survived to such date)
or Option 1.
24
<PAGE>
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Amendment to be executed on this 29th day of July 1996.
ALLTEL CORPORATION
By: /s/ John L. Comparin
Title: V.P. Human Resources and
Administration
25
<PAGE>
AMENDMENT NO. 7
TO
ALLTEL CORPORATION PENSION PLAN
(January 1, 1994 Restatement)
WHEREAS, ALLTEL Corporation (the "Company") maintains the
ALLTEL Corporation Pension Plan, as amended and restated effective
January 1, 1994, and as subsequently further amended (the "Plan"); and
WHEREAS, the Company desires further to amend the Plan;
NOW THEREFORE, BE IT RESOLVED, that the Company hereby amends
the Plan, effective with respect to distributions commencing on or after
January 1, 1995, and any single sum (lump sum) payment made as of a date on or
after January 1, 1995, in the respects hereinafter set forth.
1. Subsection (a) of Section 1.03 of the Plan is amended
to provide as follows:
(a) Any determination of actuarial equivalence required by
the provisions of the Plan involving a Retirement,
termination or death shall be made on the basis of
tables prescribed from time to time by the Plan's
Actuary; provided, however, that:
(i) With respect to a Non-Transitioned Participant
(as hereinafter defined): Except as otherwise
provided herein, actuarial equivalence of single
sums and annuities shall be determined on the
basis of the Applicable Mortality Table and the
Applicable Interest Rate, except that (A)
actuarial equivalence of a single sum
distribution made as of a date prior to
January 1, 1997, shall be determined in
accordance with the Plan provisions in effect
on the day immediately preceding the date of
execution of Amendment No. 7 to ALLTEL
Corporation Pension Plan (January 1, 1994,
Restatement) if the application of this clause
(A) produces a larger single sum distribution;
and (B) a single sum distribution to a
Participant shall not be less than the single
sum distribution amount determined on the basis
of the GA-1951 Mortality Table projected to 1975
by Scale C with interest at 8% per annum based
on the Participant's Accrued Pension as of
December 31, 1996, (and based on the
26
<PAGE>
Participant's age at the annuity starting date).
(ii) With respect to a Transitioned Participant (as
hereinafter defined): Except as otherwise
provided herein, actuarial equivalence of single
sums and annuities shall be determined on the
basis of the Applicable Mortality Table and the
Applicable Interest Rate, except that (A)
actuarial equivalence of a single sum
distribution made as of a date prior to the
first day of the first Plan Year beginning after
December 31, 1999, shall be determined in
accordance with the Plan provisions in effect on
the day immediately preceding the date of
execution of Amendment No. 7 to ALLTEL
Corporation Pension Plan (January 1, 1994,
Restatement) if the application of this clause
(A) produces a larger single sum distribution;
and (B) a single sum distribution to a
Participant shall not be less than the single
sum distribution amount determined on the basis
of the GA-1951 Mortality Table projected to 1975
by Scale C with interest at 8% per annum based
on the Participant's Accrued Pension as of the
last day of the last Plan Year ending prior to
January 1, 2000, (and based on the Participant's
age at the annuity starting date).
(iii) Except as otherwise provided herein, any other
actuarial equivalence shall be determined on
the basis of the 1951 Basic Annuity Table
projected to 1965 by Scale C with interest at
5% per annum.
(iv) For purposes of this subsection (a), the term
"Transitioned Participant" shall mean a
Participant who, on the earlier of the day
immediately preceding the date of execution of
Amendment No. 7 to ALLTEL Corporation Pension
Plan (January 1, 1994, Restatement) or the last
date on which he was an employee of a member of
the Controlled Group, was covered by a
collective bargaining agreement that provided
for his participation in the Plan, and the term
"Non-Transitioned Participant" shall mean any
2
27
<PAGE>
Participant who is not a Transitioned
Participant.
In making a determination under paragraphs (i) and (ii)
above with respect to an annuity with a deferred
commencement date, consideration shall not be given
to any benefits provided under Article XII.
2. A new Section~1.04-A is added to the Plan to provide
as follows:
1.04-A Applicable Interest Rate
The annual rate of interest on 30-year Treasury securities
for the second full calendar month before the first day of
the Plan Year in which occurs the date as of which
distribution is made, as specified by the Commissioner of
Internal Revenue for that month in revenue rulings, notices,
or other guidance published in the Internal Revenue Bulletin.
3. A new Section 1.04-B is added to the Plan to provide
as follows:
1.04-B Applicable Mortality Table
The mortality table based on the prevailing commissioners'
standard table, described in Section 807(d)(5)(A) of the
Code, used to determine reserves for group annuity contracts
issued on the date as of which present value is being
determined (without regard to any other subparagraph of
Section 807(d)(5) of the Code), prescribed by the
Commissioner of Internal Revenue in revenue rulings, notices,
or other guidance published in the Internal Revenue Bulletin.
4. Subsection (f) of Section 11.05 of the Plan is amended
by deleting the phrase "and Section 1.27" therefrom.
5. Section 11.06 of the Plan is amended to provide as
follows:
11.06 Payment of Small Pensions
(a) If the Actuarial Equivalent of a Participant's vested
Accrued Pension does not exceed $3,500 (or such other
amount as is established by the Secretary of the
Treasury pursuant to Section 411(a)(7)(B)(i) of the
Code) and did not exceed $3,500 at the time of any
prior distribution, the Pension shall be paid as soon
as reasonably practicable following the Participant's
3
28
<PAGE>
Termination of Employment in a single sum that is the
Actuarial Equivalent of the Participant's vested
Accrued Pension, provided that any such single sum
payment may be made with respect only to a Pension the
payment of which has not commenced. For purposes of
this Section 11.06, Actuarial Equivalent shall be
determined without regard to clause (B) of paragraph
(i) of subsection (a) of Section 1.03.
(b) Notwithstanding subsection (a) of this Section 11.06,
with respect only to a single sum distribution made as
of a date prior to the first day of the first Plan Year
beginning after December 31, 1999, to a Transitioned
Participant (as defined in Section 1.03), if the
Actuarial Equivalent of the Participant's Vested
Accrued Pension determined under paragraph (ii) of
subsection (a) of Section 1.03 exceeds $3,500 and the
Actuarial Equivalent of the Participant's vested
Accrued Pension if determined in accordance with the
Plan provisions in effect on the day prior to the date
of execution of Amendment No. 7 to ALLTEL Corporation
Pension Plan (January 1, 1994 Restatement) does not
exceed $3,500, such Participant may elect to receive
such vested Accrued Pension in a single sum
distribution of the Actuarial Equivalent amount
determined under paragraph (ii) of subsection (a) of
Section 1.03 as soon as reasonably practicable
following the Transitioned Participant's Termination
of Employment. An election pursuant to this subsection
(b) shall be subject to the qualified joint and
survivor annuity and consent requirements applicable
to both married and unmarried Participants, as
specified in Sections 411(a)(11) and 417 of the Code
and the regulations thereunder, and, in the event that
an annuity commences in accordance with this subsection
(b) prior to a Transitioned Participant's Normal
Retirement Age, such Participant's vested Accrued
Pension shall be reduced for early commencement thereof
in accordance with Table I to Appendix S and
Appendix T - Early Commencement Factors for Deferred
Vested Pensions.
6. The last sentence of subsection (g) of Section 11.05F
of Appendix F to Section 13.07 of the Plan is amended to provide as follows:
Actuarial equivalence for Option F shall be determined
by applying the definition of Actuarial Equivalent
4
29
<PAGE>
applicable under paragraph (i) of subsection (a) of
Section 1.03.
7. Section 5 of Table A to Appendix I to Section 13.09 of
the Plan is amended to provide as follows:
5. Lump Sum Restriction:
(a) Except as otherwise provided in this Section 5, in
determining whether the lump sum Actuarial Equivalent
of the vested accrued portion of a Participant's
Retirement Benefit exceeds $3,500 as of any date, the
determination shall be made (1) in accordance with
paragraph (ii) of subsection (a) of Section 1.03 or (2)
on the basis of the UP-1984 Mortality Table with
interest at 8% per annum, whichever produces the larger
lump sum distribution.
(b) With respect to a CPN Transitioned Participant (as
hereinafter defined), actuarial equivalence of a lump
sum distribution made as of a date prior to the first
day of the first Plan Year beginning after
December 31, 1999, shall be determined in accordance
with the Plan provisions in effect on the day
immediately preceding the date of execution of
Amendment No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) if the application of
this paragraph (b) produces a larger lump sum
distribution.
(c) With respect only to a lump sum distribution made as
of a date prior to the first day of the first Plan Year
beginning after December 31, 1999 to a CPN Transitioned
Participant (as hereinafter defined), if the Actuarial
Equivalent of the Participant's vested Retirement
Benefit determined under paragraph (a) of this
Section 5 exceeds $3,500 and the Actuarial Equivalent
of the Participant's vested Retirement Benefit if
determined in accordance with the Plan provisions in
effect on the day prior to the date of execution of
Amendment No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) does not exceed $3,500,
such Participant may elect to receive such vested
Retirement Benefit in a lump sum distribution of the
Actuarial Equivalent amount determined under
paragraph (a) of this Section 5 as soon as reasonably
practicable following the CPN Transitioned
Participant's Termination of Employment. An election
5
30
<PAGE>
pursuant to this subsection (b) shall be subject to the
qualified joint and survivor annuity and consent
requirements applicable to both married and unmarried
Participants, as specified in Sections 411(a)(11)
and 417 of the Code and the regulations thereunder,
and, in the event that an annuity commences in
accordance with this paragraph (b) prior to a CPN
Transitioned Participant's Normal Retirement Age, such
Participant's vested Retirement Benefit shall be
reduced for early commencement thereof in accordance
with Table I to Appendix S and Appendix T - Early
Commencement Factors for Deferred Vested Pensions.
(d) For purposes of this Section 5, the term "CPN
Transitioned Participant" shall mean a Participant who
(i) ceased to be an employee of a member of the
Controlled Group prior to the date of execution of
Amendment No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) and (ii) on the last date
on which he was an employee of a member of the
Controlled Group was covered by a collective bargaining
agreement that provided for his participation in the
Plan under this Appendix I to Section 13.09.
8. Section 1.03Q of Appendix Q to Section 13.17 of the
Plan is amended to provide as follows:
1.03Q "Actuarial Equivalent" with respect to any determination of
actuarial equivalence required by the provisions of the Plan
involving the SLT Benefit shall be made using the following
actuarial assumptions:
(1) In General
Paragraph (2) of this Section 1.03Q shall apply to
lump sum distributions from the Plan with respect to
a Participant's SLT Benefit pursuant to Option 5 of
subsection (g) of Section 11.05Q of Appendix Q to
Section 13.17. Paragraph (3) of this Section 1.03Q
shall apply for all other purposes with respect to a
Participant's SLT Benefit.
(2) Determination of Single Sum Greater than $3,500
Actuarial equivalence for purposes of determining the
amount of a Participant's vested Accrued Pension with
6
31
<PAGE>
respect to his SLT Benefit in a form of payment to
which this paragraph (2) is applicable, shall be
determined based on:
(a) the Applicable Interest Rate and the Applicable
Mortality Table, except that actuarial
equivalence of a lump sum distribution made as
of a date prior to January 1, 1997, shall be
determined in accordance with the Plan
provisions in effect on the day immediately
preceding the date of execution of Amendment
No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) if the application
of this exception produces a larger lump sum
distribution; or
(b) the Unisex Pension Mortality Table (UP-1984
Table) and 6% interest;
whichever produces the larger lump sum distribution.
(3) Other Purposes
Except as otherwise provided herein, actuarial
equivalence for other purposes under the Plan with
respect to a Participant's SLT Benefit shall be
determined using the Unisex Pension Mortality Table
(UP-1984 Table) and 6% interest.
9. Each reference in section 13.19 of the Plan to Table
III to Appendix S and Appendix T - Factors for Small Pensions shall be changed
to a reference to Table III to Appendix S and Appendix T - Actuarial
Equivalence for Small Pensions.
10. Each reference in section 13.19 of the Plan to Table
V - Determination of Actuarial Equivalence for Lump Sum Distributions (Other
than Small Pensions) and Lump Sum Factors shall be changed to a reference to
Table V - Determination of Actuarial Equivalence for Lump Sum Distributions
(Other than Small Pensions).
11. Section 1.03S of Appendix S to Section 13.19 of the
Plan is amended to provide as follows:
1.03S Actuarial Equivalent.
(a) Actuarial Equivalent means with respect to any
determination of actuarial equivalence required by the
provisions of the Plan involving the GTE Benefit shall
be made using the factors or actuarial assumptions set
7
32
<PAGE>
forth on Table I - Early Commencement Factors for
Deferred Vested Pensions, Table II - Joint and Survivor
Factors, Table III - Actuarial Equivalence for Small
Pensions, Table IV - Factors for Five-Year Certain and
Life Option, or Table V - Determination of Actuarial
Equivalence for Lump Sum Distributions (Other than
Small Pensions), as applicable, each of which Tables is
attached to this Appendix S to Section 13.19 and made
a part hereof.
(b) With respect only to a lump sum distribution made as
of a date prior to January 1, 1997 pursuant to
paragraph (3) of subsection (g) of Section 11.06S
(as in effect on the day immediately preceding the date
of execution of Amendment No. 7 to ALLTEL Corporation
Pension Plan (January 1, 1994 Restatement)), actuarial
equivalence shall be determined in accordance with the
Plan provisions in effect on the day immediately
preceding the date of execution of Amendment No. 7 to
ALLTEL Corporation Pension Plan (January 1, 1994
Restatement) if the application of this subsection (b)
produces a larger lump sum distribution.
12. Section 11.06S of Appendix S to Section 13.19 of the
Plan is deleted.
13. Section 6 of Article VI of Appendix T to Section 13.19
of the Plan is amended to provide as follows:
6. (a) The Committee shall direct a lump sum payment of
the present value of a former Employee's Pension, provided that such
payment does not exceed $3,500 (and did not exceed $3,500 at the
time of any prior distribution), determined in accordance with
Table III - Actuarial Equivalence for Small Pensions.
(b) Notwithstanding subsection (a), above, actuarial
equivalence of a lump sum distribution made as of a date prior to the
first day of the first Plan Year beginning after December 31, 1999
shall be determined in accordance with the Plan provisions in effect
on the day immediately preceding the date of execution of Amendment
No. 7 to ALLTEL Corporation Pension Plan (January 1, 1994
Restatement) if the application of this subsection (b) produces a
larger single sum distribution.
(c) With respect only to a lump sum distribution made
as of a date prior to the first day of the first Plan Year beginning
after December 31, 1999, to a GTE Transitioned Employee (as
hereinafter defined), if the Actuarial Equivalent of the Employee's
8
33
<PAGE>
vested Pension determined under subsection (a) of this Section 6
exceeds $3,500 and the Actuarial Equivalent of the Employee's Pension
if determined in accordance with the Plan provisions in effect on the
day prior to the date of execution of Amendment No. 7 to ALLTEL
Corporation Pension Plan (January 1, 1994 Restatement) does not
exceed $3,500, such Employee may elect to receive such vested Pension
in a lump sum distribution of the Actuarial Equivalent amount
determined under subsection (a) of this Section 6 as soon as
reasonably practicable following the GTE Transitioned Employee's
Termination of Employment. An election pursuant to this
subsection (c) shall be subject to the qualified joint and survivor
annuity and consent requirements applicable to both married and
unmarried Participants, as specified in Sections 411(a)(11) and 417
of the Code and the regulations thereunder, and, in the event that
an annuity commences in accordance with this subsection (b) prior
to a GTE Transitioned Participant's Normal Retirement Age, such
Participant's vested Pension shall be reduced for early commencement
thereof in accordance with the appropriate factor in Table I - Early
Commencement Factors for Deferred Vested Pensions.
(d) For purposes of this Section 6, the term "GTE
Transitioned Employee" shall mean a former Employee (i) who ceased
to be an employee of a member of the Controlled Group prior to the
date of execution of Amendment No. 7 to ALLTEL Corporation Pension
Plan (January 1, 1994 Restatement) and on the last date on which he
was an employee of a member of the Controlled Group was covered by a
collective bargaining agreement that provided for his participation
in the Plan under this Appendix T to Section 13.19.
(e) Application of subsections (a), (b), and (c),
above, shall not cause a lump sum payment to a former Employee to
be less than the lump sum payment would have been as of
December 31, 1986.
14. Table III to Appendix S and Appendix T - Actuarial
Equivalence for Small Pensions to Section 13.19 of the Plan is amended to
provide as set forth on Schedule A hereto.
15. Table V to Appendix S - Determination of Actuarial
Equivalence for Lump Sum Distributions (Other than Small Pensions) to
Section 13.19 of the Plan is amended to provide as set forth on Schedule B
hereto.
16. Subsection (a) of Section 1.03W of Appendix W to
Section 13.22 of the Plan is amended to provide as follows:
(a) Lump Sum Distributions Pursuant to Paragraph (8) of
Subsection (g) of Section 11.05W
9
34
<PAGE>
(1) The application of
(A) The Applicable Mortality Table and the
Applicable Interest Rate; or
(B) The UP-1984 Mortality Table with a 3 year
setback for contingent annuitants and the
Applicable Interest Rate;
whichever produces the larger lump sum
distribution.
(2) Minimum Actuarial Equivalent Present Value - The
minimum Actuarial Equivalent present value for
an employee with 20 or more years of Vesting
Service who was a participant in the Former Plan
on December 31, 1983, shall be based on:
(A) Mortality: 1971 GAM Table for Males.
(B) Interest: 6%.
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Amendment to be executed on this 13th day of
September, 1996.
ALLTEL CORPORATION
By: /S/John L. Comparin
Title: V.P. Human Resources and
Administration
35
<PAGE>
SCHEDULE A
TABLE III
TO
APPENDIX S AND APPENDIX T
ACTUARIAL EQUIVALENCE FOR SMALL PENSIONS
Actuarial Equivalence for small pensions shall be determined in accordance
with paragraph (i) of subsection (a) of Section 1.03 without regard to clause
(B) thereof or paragraph (ii) of subsection (a) of Section 1.03 without
regard to clause (B) thereof, as applicable.
36
<PAGE>
SCHEDULE B
TABLE V
TO APPENDIX S
DETERMINATION OF ACTUARIAL EQUIVALENCE FOR
LUMP SUM DISTRIBUTIONS (OTHER THAN SMALL PENSIONS)
Actuarial equivalence of a lump sum distribution shall be determined
by the greatest of:
(1) for a Participant who on October 31, 1982 was a
participant in a predecessor plan sponsored by the Company or an
Affiliate (as defined in the Former Plan), the application of The
Travelers Insurance Company's single premium life annuity rates, set
forth on Travelers Insurance Company Table LHFS Department Qualified
Individual Single Premium Immediate Annuities No Refund-Monthly
Incomes for $1,000 for Male and Female Ages 45-70, inclusive, which
are used to determine the cost of a single premium immediate life
annuity during the month of the Participant's pension commencement
date, to the Participant's portion of the GTE Benefit attributable to
the GTE Telephone Operations Salaried Pension Plan determined as of
October 31, 1982, assuming the Participant's age as of said date;
(2) the application of the 1971 Towers, Perrin, Forster
& Crosby Forecast Mortality Table with ages set back two years and
the six-month moving average yield of United States Treasury
obligations with ten year maturities, as reported in the Federal
Reserve Statistical Release or an equivalent publication of said
Federal Reserve, with the six-month averaging period commencing 12
months prior to the Participant's pension commencement date, to the
Participant's GTE Benefit attributable to the GTE Telephone
Operations Salaried Pension Plan;
(3) the application of the Applicable Mortality Table
and the Applicable Interest Rate to the Participant's GTE Benefit
attributable to the GTE Telephone Operations Salaried Pension Plan
commencing as of the date as of which distribution is made; provided,
however, that lump sum distributions occurring during the period
beginning on January 1, 1995, and ending one year after the date of
execution of Amendment No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) shall be determined under this
paragraph (3) by the application of (i) the Applicable Interest Rate
or (ii) the annual rate of interest on 30-year Treasury securities
in effect 90 days before the proposed distribution date, as specified
by the Commissioner of Internal Revenue for that month in revenue
rulings, notices, or other guidance published in the Internal Revenue
Bulletin, whichever results in the larger distribution; or
37
<PAGE>
(4) the application of the Applicable Mortality Table
and the Applicable Interest Rate to the Participant's GTE Benefit
attributable to the GTE Telephone Operations Salaried Pension Plan
as of the date as of which distribution is made based on such benefit
commencing as of the Participant's Normal Retirement Date; provided,
however, that lump sum distributions occurring during the period
beginning on January 1, 1995, and ending one year after the date of
execution of Amendment No. 7 to ALLTEL Corporation Pension Plan
(January 1, 1994 Restatement) shall be determined under this
paragraph (4) by the application of (i) the Applicable Interest Rate
or (ii) the annual rate of interest on 30-year Treasury securities in
effect 90 days before the proposed distribution date, as specified by
the Commissioner of Internal Revenue for that month in revenue
rulings, notices, or other guidance published in the Internal Revenue
Bulletin, whichever results in the larger distribution;
except that, in the event a Participant whose lump sum distribution is
determined to be greater under paragraph (1) above, fails to meet the good
health requirement established under the Former Plan, said Participant can
elect to have the good health requirement waived by electing to have his lump
sum distribution calculated under the greatest of paragraph (2), (3), or (4)
above.
38
AMENDMENT NO. 5
TO
ALLTEL CORPORATION PROFIT-SHARING PLAN
(January 1, 1994 Restatement)
WHEREAS, ALLTEL Corporation (the "Company") maintains the
ALLTEL Corporation Profit-Sharing Plan, as amended and restated effective
January 1, 1994, and subsequently further amended, (the "Plan"); and
WHEREAS, the Company desires further to amend the Plan;
NOW THEREFORE, BE IT RESOLVED, that the Company hereby amends
the Plan in the following respects.
1. Effective for periods on and after February 15, 1995,
the last sentence of subsection (d) of Section 9.04 of the Plan is amended to
provide as follows:
Furthermore, each person who became an "Employee" (as defined
in the Systematics Plan prior to its merger into the Plan) of
Systematics Information Services, Inc. or its subsidiaries
(or Systematics, Inc.or its subsidiaries) pursuant to a
Facilities Management Agreement prior to January 1, 1995,
became an Employee of Systematics Information Services, Inc.
or its subsidiaries pursuant to a Facilities Management
Agreement on or after January 1, 1995, but prior to
February 15, 1995, or becomes an Employee of ALLTEL
Information Services, Inc. or its subsidiaries pursuant to a
Facilities Management Agreement on or after February 15,
1995, shall be credited with Years of Eligibility Service for
service with a prior employer to the extent, if any, provided
in the Facilities Management Agreement.
2. Effective for periods on and after February 15, 1995,
the last sentence of subsection (d) of Section 9.05 of the Plan is amended to
provide as follows:
Furthermore, each person who became an "Employee" (as defined
in the Systematics Plan prior to its merger into the Plan) of
Systematics Information Services, Inc. or its subsidiaries
(or Systematics, Inc. or its subsidiaries) pursuant to a
Facilities Management Agreement prior to January 1, 1995,
became an Employee of Systematics Information Services, Inc.
or its subsidiaries pursuant to a Facilities Management
Agreement on or after January 1, 1995, but prior to
February 15, 1995, or becomes an Employee of ALLTEL
Information Services, Inc. or its subsidiaries pursuant to a
Facilities Management Agreement on or after February 15,
1995, shall be credited with Years of Vesting Service for
service with a prior employer to the extent, if any, provided
in the Facilities Management Agreement.
39
<PAGE>
3. Effective for periods on and after February 15, 1995,
Section 16.02 of the Plan is amended to provide as follows:
16.02 Vesting Schedule
(a) A Participant other than a Participant to whom subsection (b)
of this Section 16.02 applies shall vest in the value of his
Separate Account in accordance with the following schedule:
Vesting Years Vested
of Service Percentage
less than 5 0%
5 or more 100%
(b) A Participant who was an Employee of Systematics Information
Services, Inc. or its subsidiaries and whose Employment
Commencement Date occurred prior to January 1, 1995, shall
vest in the value of his Separate Account in accordance with
the following schedule:
Vesting Years Vested
of Service Percentage
less than 3 0%
3 but not 4 25%
4 but not 5 50%
5 or more 100%
4. Effective for Plan Years beginning on or after
January 1, 1996, the fifth sentence of Section 13.01 of the Plan is amended to
provide as follows:
In any event, the annual Employer Contribution so determined and so
assigned to each Region shall be an amount not less than 1% of the
aggregate Compensation for the Plan Year of all Participants in that
Region.
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Amendment to be executed on this 29th day of
July, 1996.
ALLTEL CORPORATION
By: /S/John L. Comparin
Title: V.P. Human Resources and
Administration
40
AMENDMENT NO. 4
TO
ALLTEL CORPORATION THRIFT PLAN
(January 1, 1994 Restatement)
WHEREAS, ALLTEL Corporation (the "Company") amended and
restated the ALLTEL Corporation Thrift Plan (the "Plan"), effective January 1,
1994; and
WHEREAS, the Company desires further to amend the Plan;
NOW THEREFORE, BE IT RESOLVED, that the Company hereby amends
the Plan in the respects hereinafter set forth:
1. Effective with respect to Plan Years beginning on or
after January 1, 1996, Section 1.01 of the Plan is amended to provide as
follows:
1.01 Additional Employer Matching Contribution Contribution
A discretionary Employer matching contribution made pursuant
to Section 13.03.
2. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by adding a new Section 1.02-A
immediately following Section 1.02 to provide as follows:
Basic Employer Matching Contribution Contribution
1.02-A Basic Employer Matching Contribution
A discretionary Employer matching contribution made pursuant
to Section 13.02.
3. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by adding a new Section 1.10-A
immediately following Section 1.10 to provide as follows:
1.10-A Electing Participant
Any Participant on whose behalf Salary Deferral Contributions
are currently being made to the Plan pursuant to the
Participant's election under Section 12.01.
4. Effective as of February 15, 1995, Section 1.13 of the
Plan is amended to provide as follows:
41
<PAGE>
1.13 Employer
ALLTEL Information Services, Inc., and any other member of
the Controlled Group adopting the Plan pursuant to Section 3.01 or any
corresponding predecessor provision of the Plan.
5. Effective with respect to Plan Years beginning on or
after January 1, 1996, Section 1.14 of the Plan is amended to provide as
follows:
1.14 Employer Contribution
Any Employer contribution made pursuant to Article XIII.
6. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by adding a new Section 1.14-A
immediately following Section 1.14 to provide as follows:
1.14-A Employer Qualified Nonelective Contribution
An Employer contribution made pursuant to Section 13.01.
7. Effective with respect to Plan Years beginning on or
after January 1, 1996, Section 1.19 of the Plan is amended to provide as
follows:
1.19 Matched Salary Deferral Contributions
With respect to Basic Employer Matching Contributions, an
eligible Participant's Salary Deferral Contributions that
are not in excess of 6% of his Compensation for the Plan
Year. With respect to Additional Employer Matching
Contributions, an eligible Participant's Salary Deferral
Contributions that are (i) in excess of 3% of his
Compensation for the Plan Year and (ii) not in excess of 6%
of his Compensation for the Plan Year.
8. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by adding a new Section 1.19-A
immediately following Section 1.19 to provide as follows:
1.19-A Matching Employer
With respect to Basic Matching Employer Contributions, ALLTEL
Information Services, Inc., each subsidiary (direct or
indirect) of ALLTEL Information Services, Inc. that is an
Employer hereunder (other than a subsidiary that has not
elected to make Basic Employer Matching Contributions to the
Plan), and each other Employer that has elected to make Basic
Employer Matching Contributions to the Plan. With respect
to Additional Employer Matching Contributions, each Employer
that (i) is a Matching Employer with respect to Basic
2
42
<PAGE>
Employer Matching Contributions and (ii) has elected to make
Additional Employer Matching Contributions to the Plan.
9. Effective with respect to Plan Years beginning on or
after January 1, 1996, Section~1.40 of the Plan is amended to provide as
follows:
1.40 Unmatched Salary Deferral Contributions
With respect to Basic Employer Matching Contributions, all
Salary Deferral Contributions that are not Matched Salary
Contributions with respect to Basic Employer Contributions.
With respect to Additional Employer Matching Contributions,
all Salary Deferral Contributions that are not Matched
Salary Contributions with respect to Additional Employer
Contributions.
10. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by adding a new Section 1.42
immediately following Section 1.41 to provide as follows:
1.42 Year of Participation
A Plan Year beginning on or after January 1, 1996, during which
an Employee completes at least 1,000 Hours of Service.
11. Effective with respect to Plan Years beginning on or
after January 1, 1996, paragraph (c) of Section 5.02 of the Plan is amended by
adding immediately following the term "Salary Deferral Contributions Sub-
Account" the following:
or any portion of the balance of his Employer Contributions
Sub-Account attributable to Employer Qualified Nonelective
Contributions
12. Effective with respect to Plan Years beginning on or
after January 1, 1996, Article VII of the Plan is amended to provide as
follows:
ARTICLE VII
LIMITATIONS ON CONTRIBUTIONS
7.01 Definitions
For purposes of this Article VII, the following terms have
the following meanings:
(a) The "actual deferral percentage" with respect to a
Participant for a particular Plan Year means the ratio
of the Salary Deferral Contributions made on his behalf
for the Plan Year to his test compensation for the Plan
Year, except that, to the extent permitted by
regulations issued under Section 401(k) of the Code,
3
43
<PAGE>
the Company may elect to take into account in computing
the numerator of each Participant's actual deferral
percentage the Employer Qualified Nonelective
Contributions made to the Plan on his behalf for the
Plan Year, but only if such Employer Qualified
Nonelective Contributions are qualified nonelective
contributions; provided, however, that contributions
made on a Participant's behalf for a Plan Year shall
be included in determining his actual deferral
percentage for such Plan Year only if the contributions
are made to the Plan prior to the end of the 12-month
period immediately following the Plan Year to which the
contributions relate. The determination and treatment
of the actual deferral percentage amounts for any
Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(b) The "aggregate limit" means the sum of (i) 125 percent
of the greater of the average contribution percentage
for Participants other than Highly Compensated
Employees or the average actual deferral percentage for
Participants other than Highly Compensated Employees
and (ii) the lesser of 200 percent or two plus the
lesser of such average contribution percentage or
average actual deferral percentage, or, if it would
result in a larger aggregate limit, the sum of (iii)
125 percent of the lesser of the average contribution
percentage for Participants other than Highly
Compensated Employees or the average actual deferral
percentage for Participants other than Highly
Compensated Employees and (iv) the lesser of 200
percent or two plus the greater of such average
contribution percentage or average actual deferral
percentage.
(c) The "annual addition" with respect to a Participant for
a limitation year means the sum of the Salary Deferral
Contributions and Employer Contributions allocated to
his Separate Account for the limitation year (including
any amounts that are distributed pursuant to Section
7.05 and 7.07, the employer contributions, employee
contributions, and forfeitures allocated to his
accounts for the limitation year under any other
qualified defined contribution plan (whether or not
terminated) maintained by an Employer or any other
member of the Controlled Group, and amounts described
in Sections 415(l)(2) and 419A(d)(2) of the Code
allocated to his account for the limitation year.
(d) The "Code Section 402(g) limit" means the dollar limit
imposed by Section 402(g)(1) of the Code or established
by the Secretary of the Treasury pursuant to Section
402(g)(5) of the Code in effect on January 1 of the
calendar year in which a Participant's taxable year
begins.
(e) The "contribution percentage" with respect to a
Participant for a particular Plan Year means the ratio
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of the sum of the Basic Employer Matching Contributions
and Additional Employer Matching Contributions made to
the Plan on his behalf for the Plan Year to his test
compensation for such Plan Year, except that, to the
extent permitted by regulations issued under Section
401(m) of the Code, the Company may elect to take into
account in computing the numerator of each
Participant's contribution percentage the Salary
Deferral Contributions or Employer Qualified
Nonelective Contributions made to the Plan on his
behalf for the Plan Year, but only if such Employer
Qualified Nonelective Contributions are qualified
nonelective contributions; provided, however, that any
Salary Deferral Contributions or Employer Qualified
Nonelective Contributions that were taken into account
in computing the numerator of a Participant's actual
deferral percentage may not be taken into account in
computing the numerator of his contribution percentage;
and provided, further, that contributions made by or
on a Participant's behalf for a Plan Year shall be
included in determining his contribution percentage for
such Plan Year only if the contributions are made to
the Plan prior to the end of the 12-month period
immediately following the Plan Year to which the
contributions relate. The determination and treatment
of the contribution percentage amounts for any
Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(f) An "elective contribution" means any employer
contribution made to a plan maintained by an Employer
or any other member of the Controlled Group on behalf
of a Participant in lieu of cash compensation pursuant
to his written election to defer under any qualified
cash or deferred arrangement as described in Section
401(k) of the Code, any simplified employee pension
cash or deferred arrangement as described in Section
402(h)(1)(B) of the Code, any eligible deferred
compensation plan under Section 457 of the Code, or
any plan as described in Section 501(c)(18) of the
Code, and any contribution made on behalf of the
Participant by an Employer or any other member of the
Controlled Group for the purchase of an annuity
contract under Section 403(b) of the Code pursuant to
a salary reduction agreement.
(g) An "excess deferral" with respect to a Participant
means that portion of a Participant's Salary Deferral
Contributions that, when added to amounts deferred
under other plans or arrangements described in
Sections 401(k), 408(k), or 403(b) of the Code, would
exceed the Code Section 402(g) limit and is includable
in the Participant's gross income under Section 402(g)
of the Code.
(h) A "family member" of an Employee means the Employee's
spouse, his lineal ascendants, his lineal descendants,
and the spouses of such lineal ascendants and
descendants.
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(i) A "limitation year" means the Plan Year or such other
12-month period designated as such by the Company.
(j) A "matching contribution" means any employer
contribution allocated to a Participant's account
under the Plan or any other plan of an Employer or any
other member of the Controlled Group solely on account
of elective contributions made on his behalf or
employee contributions made by him.
(k) A "qualified nonelective contribution" means any
employer contribution made on behalf of a Participant
that the Participant could not elect instead to receive
in cash, that is a qualified nonelective contribution
as defined in Section 401(k) and Section 401(m) of the
Code and regulations issued thereunder, is
nonforfeitable when made, and is distributable only as
permitted in regulations issued under Section 401(k)
of the Code.
(l) The "test compensation" of a Participant for a Plan
Year means compensation as defined in Section 414(s) of
the Code and regulations issued thereunder, limited,
however, to (1) $200,000 for Plan Years beginning on
or after January 1, 1989 but prior to January 1, 1994,
or (2) $150,000 for Plan Years beginning on or after
January 1, 1994 (subject to adjustment annually at the
same time and in the same manner as under Section
415(d) of the Code as modified by Section 401(a)(17)
of the Code; provided, however, that the dollar
increase in effect on January 1 of any calendar year
is effective for Plan Years beginning in such calendar
year). If the test compensation of a Participant is
determined over a period of time that contains fewer
than 12 calendar months, then the annual compensation
limitation described above shall be adjusted with
respect to that Participant by multiplying the annual
compensation limitation in effect for the Plan Year by
a fraction the numerator of which is the number of full
months in the period and the denominator of which is
12; provided, however, that no proration is required
for a Participant who is covered under the Plan for
less than one full Plan Year if the formula for
allocations is based on Compensation for a period of at
least 12 months. In determining the test compensation,
for purposes of applying the annual compensation
limitation described above, of a Participant who is a
five-percent owner or among the ten Highly Compensated
Employees receiving the greatest test compensation for
the limitation year, the test compensation of the
Participant's spouse and of his lineal descendants who
have not attained age 19 as of the close of the
limitation year shall be included as test compensation
of the Participant for the limitation year. If as a
result of applying the family aggregation rule
described in the preceding sentence the annual
compensation limitation would be exceeded, the
limitation shall be prorated among the affected family
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members in proportion to each member's test
compensation as determined prior to application of the
family aggregation rules.
7.02 Code Section 402(g) Limit
In no event shall the amount of the Salary Deferral
Contributions made on behalf of a Participant for his taxable
year, when aggregated with any elective contributions made on
behalf of the Participant under any other plan of an Employer
or any other member of the Controlled Group for his taxable
year, exceed the Code Section 402(g) limit. In the event
that the Plan Administrator determines that the reduction
percentage elected by a Participant will result in his
exceeding the Code Section 402(g) limit, the Plan
Administrator may adjust the reduction authorization of such
Participant by reducing the percentage of his Salary Deferral
Contributions to such smaller percentage that will result in
the Code Section 402(g) limit not being exceeded. If the
Plan Administrator determines that the Salary Deferral
Contributions made on behalf of a Participant would exceed
the Code Section 402(g) limit for his taxable year, the
Salary Deferral Contributions for such Participant shall be
automatically suspended for the remainder, if any, of such
taxable year.
7.03 Distribution of Excess Deferrals
If an Employer notifies the Plan Administrator that the Code
Section 402(g) limit has been exceeded by a Participant for
his taxable year, the excess deferrals plus any income and
minus any losses attributable thereto, shall be distributed
to the Participant no later than the April 15 immediately
following such taxable year. Any Salary Deferral
Contributions that are distributed to a Participant in
accordance with this Section 7.03 shall not be taken into
account in computing the Participant's actual deferral
percentage for the Plan Year in which the Salary Deferral
Contributions were made, unless the Participant is a Highly
Compensated Employee. If an amount of Salary Deferral
Contributions is distributed to a Participant in accordance
with this Section 7.03, matching contributions that are
attributable solely to the distributed Salary Deferral
Contributions, plus any income and minus any losses
attributable thereto, shall be distributed to the Participant
as provided in Section 7.07.
Notwithstanding any other provision of the Plan to the
contrary, if a Participant notifies the Plan Administrator
in writing no later than the March 1 following the close of
the Participant's taxable year (1) that excess deferrals
have been made on his behalf under the Plan and any other
plan for such taxable year and (2) the amount of such excess
deferrals which are to be allocated to the Plan, the excess
deferrals, plus any income and minus any losses attributable
thereto, may be distributed to the Participant no later than
the April 15 immediately following such taxable year. Any
Salary Deferral Contributions that are distributed to a
Participant in accordance with this Section 7.03 shall
nevertheless be taken into account in computing the
Participant's actual deferral percentage for the Plan Year
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in which the Salary Deferral Contributions were made. If an
amount of Salary Deferral Contributions is distributed to a
Participant in accordance with this Section 7.03, matching
contributions that are attributable solely to the distributed
Salary Deferral Contributions, plus any income and minus any
losses attributable thereto, shall be distributed to the
Participant as provided in Section 7.07.
7.04 Limitation on Salary Deferral Contributions of Highly
Compensated Employees
Notwithstanding any other provision of the Plan to the
contrary, the Salary Deferral Contributions made with respect
to a Plan Year on behalf of Participants who are Highly
Compensated Employees may not result in an average actual
deferral percentage for such Participants that exceeds the
greater of:
(a) a percentage that is equal to 125 percent of the
average actual deferral percentage for all other
Participants; or
(b) a percentage that is not more than 200 percent of the
average actual deferral percentage for all other
Participants and that is not more than two percentage
points higher than the average actual deferral
percentage for all other Participants.
In order to assure that the limitation contained herein is
not exceeded with respect to a Plan Year, the Plan
Administrator is authorized to suspend completely further
Salary Deferral Contributions on behalf of Highly Compensated
Employees for any remaining portion of a Plan Year or to
adjust the projected actual deferral percentages of Highly
Compensated Employees by reducing their percentage elections
with respect to Salary Deferral Contributions for any
remaining portion of a Plan Year to such smaller percentages
that will result in the limitation set forth above not being
exceeded. In the event of any such suspension or reduction,
Highly Compensated Employees affected thereby shall be
notified of the reduction or suspension as soon as possible
and shall be given an opportunity to make a new Salary
Deferral Contribution election to be effective the first day
of the next following Plan Year. In the absence of such an
election, the election in effect immediately prior to the
suspension or adjustment described above shall be reinstated
as of the first day of the next following Plan Year.
For purposes of applying the limitation contained in this
Section 7.04, the Salary Deferral Contributions and test
compensation of any Participant who is a family member of
another Participant who is a five percent owner or among the
ten Highly Compensated Employees receiving the greatest test
compensation for the Plan Year shall be aggregated with the
Salary Deferral Contributions and test compensation of such
other Participant, and such family member shall not be
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considered a Participant for purposes of determining the
average actual deferral percentage for all other
Participants.
In determining the actual deferral percentage for any
Participant who is a Highly Compensated Employee for the
Plan Year, elective contributions made to his accounts under
any other plan of an Employer or any other member of the
Controlled Group shall be treated as if all such
contributions were made to the Plan; provided, however, that
if such a plan has a plan year different from the Plan Year,
any such contributions made to the Highly Compensated
Employee's accounts under the plan for the plan year ending
with or within the same calendar year as the Plan Year shall
be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not
be treated as if they were made to the Plan if regulations
issued under Section 401(k) of the Code do not permit such
plan to be aggregated with the Plan.
If one or more plans of an employer or any other member of
the Controlled Group are aggregated with the Plan for
purposes of satisfying the requirements of Section 401(a)(4)
or 410(b) of the Code, then actual deferral percentages under
the Plan shall be calculated as if the Plan and such one or
more other plans were a single plan. Plans may be aggregated
to satisfy Section 401(k) of the Code only if they have the
same plan year.
The Plan Administrator shall maintain records sufficient to
show that the limitation contained in this Section 7.04 was
not exceeded with respect to any Plan Year.
7.05 Distribution of Excess Salary Deferral Contributions
Notwithstanding any other provision of the Plan to the
contrary, in the event that the limitation contained in
Section 7.04 is exceeded in any Plan Year, the Salary
Deferral Contributions made with respect to a Highly
Compensated Employee that exceed the maximum amount permitted
to be contributed to the Plan on his behalf under
Section 7.04, plus any income and minus any losses
attributable thereto, shall be distributed to the Highly
Compensated Employee prior to the end of the next succeeding
Plan Year. If excess amounts are attributable to
Participants aggregated under the family aggregation rules
described in Section 7.04, the excess shall be allocated
among family members in proportion to the Salary Deferral
Contributions made with respect to each family member. If
such excess amounts are distributed more than 2 1/2 months
after the last day of the Plan Year for which the excess
occurred, an excise tax may be imposed under Section 4979
of the Code on the Employer maintaining the Plan with respect
to such amounts.
The maximum amount permitted to be contributed to the Plan on
a Highly Compensated Employee's behalf under Section 7.04
shall be determined by reducing Salary Deferral Contributions
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<PAGE>
made on behalf of Highly Compensated Employees in order of
their actual deferral percentages beginning with the highest
of such percentages. The determination of the amount of
excess Salary Deferral Contributions shall be made after
application of Section 7.03, if applicable.
If an amount of Salary Deferral Contributions is distributed
to a Participant in accordance with this Section 7.05,
matching contributions that are attributable solely to the
distributed Salary Deferral Contributions, plus any income
and minus any losses attributable thereto, shall be
distributed to the Participant as provided in Section 7.07.
7.06 Limitation on Matching Contributions of Highly
Compensated Employeested Employees
Notwithstanding any other provision of the Plan to the
contrary, the Basic Employer Matching Contributions and
Additional Employer Matching Contributions made with respect
to a Plan Year on behalf of Participants who are Highly
Compensated Employees may not result in an average
contribution percentage for such Participants that exceeds
the greater of:
(a) a percentage that is equal to 125 percent of the
average contribution percentage for all other
Participants; or
(b) a percentage that is not more than 200 percent of the
average contribution percentage for all other
Participants and that is not more than two percentage
points higher than the average contribution percentage
for all other Participants.
For purposes of applying the limitation contained in this
Section 7.06, the Basic Employer Matching Contributions,
Additional Employer Matching Contributions, Salary Deferral
Contributions, and Employer Qualified Nonelective
Contributions (to the extent that such Salary Deferral
Contributions or Employer Qualified Nonelective Contributions
are taken into account in computing contribution
percentages), and test compensation of any Participant who is
a family member of another Participant who is a five percent
owner or among the ten Highly Compensated Employees receiving
the greatest test compensation for the Plan Year shall be
aggregated with the Basic Employer Matching Contributions,
Additional Employer Matching Contributions, Salary Deferral
Contributions, Employer Qualified Nonelective Contributions,
and test compensation of such other Participant, and such
family member shall not be considered a Participant for
purposes of determining the average contribution percentage
for all other Participants.
In determining the contribution percentage for any
Participant who is a Highly Compensated Employee for the Plan
Year, matching contributions, employee contributions,
elective contributions, and qualified nonelective
contributions (to the extent that elective contributions and
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qualified nonelective contributions are taken into account in
computing contribution percentages) made to his accounts
under any other plan of an Employer or any other member of
the Controlled Group shall be treated as if all such
contributions were made to the Plan; provided, however, that
if such a plan has a plan year different from the Plan Year,
any such contributions made to the Highly Compensated
Employee's accounts under the plan for the plan year ending
with or within the same calendar year as the Plan Year shall
be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not
be treated as if they were made to the Plan if regulations
issued under Section 401(m) of the Code do not permit such
plan to be aggregated with the Plan.
If one or more plans of an Employer or any other member of
the Controlled Group are aggregated with the Plan for
purposes of satisfying the requirements of Section 401(a)(4)
or 410(b) of the Code, the contribution percentages under the
Plan shall be calculated as if the Plan and such one or more
other plans were a single plan. Plans may be aggregated to
satisfy Section 401(m) of the Code only if they have the same
plan year.
The Plan Administrator shall maintain records sufficient to
show that the limitation contained in this Section was not
exceeded with respect to any Plan Year and the amount of the
elective contributions and qualified nonelective
contributions taken into account in computing contribution
percentages for any Plan Year.
7.07 Distribution of Excess Matching Contributions
Notwithstanding any other provision of the Plan to the
contrary, in the event that the limitation contained in
Section 7.06 is exceeded in any Plan Year, the matching
contributions made to the Plan on behalf of a Highly
Compensated Employee that exceed the maximum amount permitted
to be contributed to the Plan on behalf of such Highly
Compensated Employee under Section 7.06, plus any income and
minus any losses attributable thereto, shall be distributed
prior to the end of the next succeeding Plan Year as
hereinafter provided. If excess amounts are attributable to
Participants aggregated under the family aggregation rules
described in Section 7.05, the excess shall be allocated
among family members in proportion to the matching
contributions made to the Plan with respect to each family
member. If such excess amounts are distributed more than
2 1/2 months after the last day of the Plan Year for which
the excess occurred, an excise tax may be imposed under
Section 4979 of the Code on the Employer maintaining the
Plan with respect to such amounts.
The maximum amount permitted to be contributed to the Plan on
behalf of a Highly Compensated Employee under Section 7.06
shall be determined by reducing matching contributions made
to the Plan on behalf of Highly Compensated Employees in
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order of their contribution percentages beginning with the
highest of such percentages.
The determination of the amount of excess matching
contributions shall be made after application of Section
7.03, if applicable, and after application of Section 7.05,
if applicable.
7.08 Multiple Use Limitation
Notwithstanding any other provision of the Plan to the
contrary, the following multiple use limitation as required
under Section 401(m) of the Code shall apply: the sum of the
average actual deferral percentage for Eligible Employees who
are Highly Compensated Employees and the average contribution
percentage for Participants who are Highly Compensated
Employees may not exceed the aggregate limit. In the event
that, after satisfaction of Section 7.05 and Section 7.07, it
is determined that contributions under the Plan fail to
satisfy the multiple use limitation contained herein, the
multiple use limitation shall be satisfied by further
reducing the contribution percentages of Participants who are
Highly Compensated Employees (beginning with the highest such
percentage) to the extent necessary to eliminate the excess,
with such further reductions to be treated as excess matching
contributions and disposed of as provided in Section 7.07.
7.09 Determination of Income or Lossncome or Loss
The income or loss attributable to excess amounts that are
distributed pursuant to Section 7.05 or 7.07 shall be
determined for the Plan Year to which such amounts relate
under the method otherwise used for allocating income or loss
to Participants' Separate Accounts. The income attributable
to excess amounts that are distributed pursuant to
Section 7.10 shall be determined for the Plan Year to which
such amounts relate and the period from the end of such Plan
Year to the date of distribution under the method otherwise
used for allocating income to Participants' Separate
Accounts.
7.10 Code Section 415 Limitations on Crediting of Contributions
and Forfeitures
Notwithstanding any other provision of the Plan to the
contrary, the annual addition with respect to a Participant
for a limitation year shall in no event exceed the lesser of
(i) the greater of $30,000 or 25 percent of the defined
benefit dollar limitation set forth in Section 415(b)(1) of
the Code in effect for the limitation year or (ii) 25 percent
of the Participant's compensation, as defined in
Section 415(c)(3) of the Code and regulations issued
thereunder. If the annual addition to the Separate Account
of a Participant in any limitation year would otherwise
exceed the amount that may be applied for his benefit under
the limitation contained in this Section 7.10, the limitation
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shall be satisfied by reducing contributions made on behalf
of the Participant to the extent necessary in the following
order:
(a) Salary Deferral Contributions made on the Participant's
behalf for the limitation year that have not been
matched, if any, shall be reduced.
(b) Salary Deferral Contributions made on the Participant's
behalf for the limitation year that have been matched,
if any, and the matching contributions attributable
thereto shall be reduced pro rata.
(c) Employer Qualified Nonelective Contributions made on
the Participant's behalf for the limitation year shall
be reduced.
The amount of any such reduction of Salary Deferral
Contributions (plus any income attributable thereto) shall be
returned to the Participant. The amount of any such
reduction of Employer Contributions shall be deemed a
forfeiture for the limitation year and held unallocated in a
suspense account. The suspense account shall be allocated in
the same manner as Employer Contributions in the next
limitation year, and each succeeding limitation year if
necessary. If a suspense account is in existence at any time
during a limitation year, all amounts in the suspense account
must be allocated to Participants' Separate Accounts (subject
to the limitations contained herein) before any further
Salary Deferral Contributions or Employer Contributions may
be made to the Plan on behalf of Participants. If a suspense
account is in existence at any time during a limitation year,
it shall not share in any increase or decrease in the net
worth of the Trust Fund. For purposes of this Section 7.10,
excesses shall result only from the allocation of
forfeitures, a reasonable error in estimating a Participant's
annual compensation, a reasonable error in determining the
amount of elective deferrals that may be made with respect to
any Participant under the limits of Section 415 of the Code,
or other limited facts and circumstances that justify the
availability of the provisions set forth above.
7.11 Coverage Under Other Qualified Defined Contribution Plan
If a Participant is covered by any other qualified defined
contribution plan (whether or not terminated) maintained by
an Employer or any other member of the Controlled Group, and
if the annual addition for the limitation year would
otherwise exceed the amount that may be applied for the
Participant's benefit under the limitation contained in
Section 7.10, the excess shall be eliminated by reducing
Salary Deferral Contributions and Employer Contributions
under the Plan to the extent necessary, as provided in
Section 7.10. If the limitation in Section 7.10 would still
be exceeded after applying the provisions of Section 7.10,
the excess shall be reduced in the manner specified in such
other plan. In the event that a Participant is covered by a
qualified defined benefit plan, the procedure specified in
Section 7.12 shall be implemented prior to effecting any
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reduction in the benefit of the Participant under the defined
contribution plans.
7.12 Coverage Under Qualified Defined Benefit Plan
If a Participant in the Plan is also covered by a qualified
defined benefit plan (whether or not terminated) maintained
by an Employer or any other member of the Controlled Group,
in no event shall the sum of the defined benefit plan
fraction (as defined in Section 415(e)(2) of the Code) and
the defined contribution plan fraction (as defined in
Section 415(e)(3) of the Code) exceed 1.0 in any limitation
year. If, before October 3, 1973, the Participant was an
active participant in a qualified defined benefit plan
maintained by an Employer or any other member of the
Controlled Group and otherwise satisfies the requirements of
Section 2004(d)(2) of ERISA, then for purposes of applying
this Section 7.12, the defined benefit plan fraction shall
not exceed 1.0. In the event the special limitation
contained in this Section 7.12 is exceeded, the benefits
otherwise payable to the Participant under any such qualified
defined benefit plan shall be reduced to the extent necessary
to meet such limitation.
If a Participant was a participant in one or more defined
contribution plans maintained by the employer which were in
existence on July 1, 1982, the numerator of the defined
contribution plan fraction (as defined in Section 415(e)(3)
of the Code) will be adjusted if the sum of this fraction
and the defined benefit plan fraction (as defined in Section
415(e)(2) of the Code) would otherwise exceed 1.0 under the
terms of the Plan. Under this adjustment, an amount equal to
the product of (1) the excess of the sum of the fractions
over 1.0 times (2) the denominator of this fraction, will be
permanently subtracted from the numerator of the defined
contribution plan fraction (as defined in Section 415(e)(3)
of the Code). The adjustment is calculated using the
fractions as they would be computed as of the later of the
end of the last limitation year beginning before
January 1, 1983, or September 30, 1983. This adjustment also
will be made if at the end of the last limitation year
beginning before January 1, 1984, the sum of the fractions
exceeds 1.0 because of accruals or additions that were made
before the limitations of this Article VII became effective
as to any plans of the employer in existence on July 1, 1982.
7.13 Scope of Limitations
The limitations contained in Sections 7.10, 7.11, and 7.12
shall be applicable only with respect to benefits provided
pursuant to defined contribution plans and defined benefit
plans described in Section 415(k) of the Code.
7.14 Separate Testing
The Plan Administrator may elect for any Plan Year to apply
Section 410(b) of the Code separately to that portion of the
Plan that benefits Participants who have not both attained
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age 21 and been credited with a year of service with the
Controlled Group, in accordance with the provisions of
Sections 1.410(b)-6(b)(3) and 1.410(b)-7(b)(3) of the
Treasury Regulations. In which case, the requirements of
Sections 401(a)(4), 401(k)(3), 401(m)(2), and 401(m)(9) of
the Code shall be applied separately with respect to such
portion of the Plan.
13. Effective with respect to Plan Years beginning on or
after January 1, 1996, Article IX of the Plan is amended to provide as follows:
ARTICLE IX
SERVICE
9.01 Crediting of Hours of Service
(a) An Employee shall be credited with an Hour of Service
for:
(1) Each hour for which the Employee is directly or
indirectly compensated or entitled to
compensation by the Employer or any other member
of the Controlled Group for the performance of
duties during the applicable Computation Period;
(2) Subject to the provisions of Section 9.02, each
hour for which the Employee is directly or
indirectly compensated or entitled to
compensation by the Employer or any other member
of the Controlled Group (irrespective of whether
the employment relationship has terminated) for
reasons other than the performance of duties
(such as vacation, holidays, sickness, jury
duty, disability, lay-off, military duty or
leave of absence) during the applicable
Computation Period; and
(3) Each hour for which back pay is awarded or
agreed to by the Employer or any other member of
the Controlled Group without regard to
mitigation of damages (provided that the same
Hours of Service shall not be credited under
both this paragraph (3) and paragraph (1) or
(2) above).
(b) If an Employee has been granted an Authorized Leave of
Absence, he shall be credited with Hours of Service as
if he had been compensated by the Employer for what
would have been his regularly scheduled hours of work
during the period of such Authorized Leave of Absence.
An Employee for whom records of his actual numbers of
Hours of Service are not normally maintained shall be
credited with 10 Hours of Service for each day of his
Authorized Leave of Absence.
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(c) Notwithstanding the provisions of subsection (a) above,
an Employee for whom records of his actual number of
Hours of Service are not normally maintained shall be
credited with 10 Hours of Service for each day he would
be required to be credited with at least one Hour of
Service.
9.02 Limitations on Crediting of Hours of Service
In the application of the provisions of paragraph (2) of
subsection (a) of Section 9.01, the following shall apply:
(a) No more than 501 Hours of Service are required to be
credited to an Employee on account of any single
continuous period during which the Employee performs no
duties (whether or not such period occurs in a single
Plan Year);
(b) An hour for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period
during which no duties are performed, is not required
to be credited to the Employee if such payment is made
or due under a plan maintained solely for the purpose
of complying with applicable worker's compensation,
unemployment compensation or disability insurance laws;
and
(c) Hours of Service are not required to be credited for a
payment which solely reimburses an Employee for medical
or medically related expenses incurred by the Employee.
(d) A payment shall be deemed to be made by or due from the
Employer or any other member of the Controlled Group
regardless of whether such payment is made by or due
from the Employer or any other member of the Controlled
Group directly or indirectly through, among others, a
trust fund, or insurer, to which the Employer or other
member of the Controlled Group contributes or pays
premiums and regardless of whether contributions made
or due to the trust fund, insurer, or other entity are
for the benefit of particular Employees or are on
behalf of a group of Employees in the aggregate.
9.03 Department of Labor Rules
The provisions of Department of Labor Regulations Sections
2530.200b-2(b) and (c) are incorporated herein by reference.
14. Effective for periods beginning on or after
September 1, 1996, Article X of the Plan is amended to provide as follows:
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ARTICLE X
ELIGIBILITY AND PARTICIPATION
10.01 Eligibility and Participation
Each Eligible Employee shall become a Participant on the date
on which he becomes an Eligible Employee. Each Participant
may elect to become an Electing Participant in accordance
with Section 12.01.
10.02 Termination and Rehiring
A Participant whose service terminates and who is
subsequently rehired by an Employer shall be eligible to
participate in the plan on his Reemployment Commencement
Date.
An Eligible Employee whose service terminates and who is
subsequently rehired by a member of the Controlled Group in a
capacity other than as an Eligible Employee shall be eligible
to participate in the Plan on the date he again becomes an
Eligible Employee.
10.03 Duration of Participation
Once an Eligible Employee becomes a Participant, he shall
remain a Participant (1) while he is an Employee, for so long
as a portion of the Trust is credited to his Separate Account
whether or not he continues to be an Eligible Employee, or
(2) while he is not an Employee, for so long as a portion of
the Trust is credited to his Separate Account or, if earlier,
until his death. If a Participant ceases to be an Eligible
Employee, no further Salary Deferral Contributions may be
made on his behalf and no further Employer Contributions
shall be allocated to his Separate Account, except as
provided in clause (2) or (3) of the first paragraph of
Section 13.07. A Participant who is on an Authorized Leave
of Absence shall continue as a Participant but no Salary
Deferral Contributions or Employer Contributions shall be
made to his Separate Account for any Plan Year during which
he does not receive Compensation from an Employer.
15. Effective with respect to Plan Years beginning on or
after January 1, 1996, the Plan is amended by deleting
the term "Active Participant" therefrom and
substituting the term "Electing Participant" therefor,
by deleting the term "Active Participants" therefrom
and substituting the term "Electing Participants"
therefor, and by deleting the term "Active
Participant's" therefrom and substituting the term
"Electing Participant's" therefor, in each place such
terms appear.
16. Effective for periods on or after September 1, 1996,
Section 12.08 of the Plan is amended by deleting the second paragraph
therefrom.
17
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<PAGE>
17. Effective with respect to Plan Years beginning on or
after January 1, 1996, Article XIII of the Plan is amended to provide as
follows:
ARTICLE XIII
EMPLOYER CONTRIBUTIONS AND ALLOCATIONS
13.01 Employer Qualified Nonelective Contributions
For each Plan Year, each Employer shall make an Employer
Qualified Nonelective Contribution under the Plan in an
amount equal to one percent of the Compensation of persons
eligible to share in the allocation of Employer Qualified
Nonelective Contributions in accordance with Section 13.07.
13.02 Basic Employer Matching Contributions
For each Plan Year, a Matching Employer may, in its sole
discretion, make a Basic Matching Contribution or more than
one Basic Employer Matching Contribution under the Plan in an
amount or amounts, if any, that the Company, in its sole
discretion, shall determine.
13.03 Additional Employer Matching Contributions
For each Plan Year, a Matching Employer may, in its sole
discretion, make an Additional Matching Contribution or more
than one Additional Employer Matching Contribution under the
Plan in an amount or amounts, if any, that the Company, in
its sole discretion, shall determine.
13.04 Allocation of Employer Qualified Nonelective Contributions
As of the last Valuation Date of each Plan Year, after making
the credits or debits to Participants' Separate Accounts
required by Section 11.07, an amount equal to the Employer
Qualified Nonelective Contribution for the Plan Year shall be
allocated and credited to the Employer Contribution Account
of each Participant in the Plan who is eligible (in
accordance with Section 13.07) to share in the allocation of
the Employer Qualified Nonelective Contribution for the Plan
Year in an amount equal to one percent of his Compensation
for the Plan Year.
13.05 Allocation of Basic Employer Matching Contributions
As of the last Valuation Date of each Plan Year, after making
the credits or debits to Participants' Separate Accounts
required by Section 11.07, an amount equal to the Basic
Employer Matching Contribution(s) for the Plan Year shall be
allocated and credited to the Employer Contribution Accounts
of those Participants in the Plan who are eligible (in
accordance with Section 13.07) to share in the allocation of
18
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<PAGE>
the Basic Employer Matching Contribution(s) for the Plan Year
and who during such Plan Year were Eligible Employees of a
Matching Employer that made a Basic Matching Contribution to
the Plan for such Plan Year. The allocation of the Basic
Employer Matching Contribution(s) for a Plan Year shall be in
the proportion which the Matched Salary Deferral
Contributions for the Plan Year made on behalf of a
Participant eligible (in accordance with Section 13.07) to
share in the allocation of the Basic Employer Matching
Contribution(s) for the Plan Year bear to the aggregate
Matched Salary Deferral Contributions made during the Plan
Year for all Participants who are eligible (in accordance
with Section 13.07) to share in the allocation of the Basic
Employer Matching Contribution(s) for the Plan Year.
13.06 Allocation of Additional Employer Matching Contributions
As of the last Valuation Date of each Plan Year, after making
the credits or debits to Participants' Separate Accounts
required by Section 11.07, an amount equal to the Additional
Employer Matching Contribution(s) for the Plan Year shall be
allocated and credited to the Employer Contribution Accounts
of those Participants in the Plan who are eligible (in
accordance with Section 13.07) to share in the allocation of
the Additional Employer Matching Contribution(s) for the Plan
Year and who during such Plan Year were Eligible Employees of
a Matching Employer that made an Additional Matching
Contribution to the Plan for such Plan Year. The allocation
of the Additional Employer Matching Contribution(s) for a
Plan Year shall be in the proportion which the Matched Salary
Deferral Contributions for the Plan Year that are in excess
of three percent of his Compensation for the Plan Year but
not in excess of six percent of his Compensation for the Plan
Year made on behalf of a Participant eligible (in accordance
with Section 13.07) to share in the allocation of the
Additional Employer Matching Contribution(s) for the Plan
Year bear to the aggregate Matched Salary Deferral
Contributions that are in excess of three percent of a
Participant's Compensation for the Plan Year but not in
excess of six percent of a Participant's Compensation for the
Plan Year made during the Plan Year for all Participants who
are eligible (in accordance with Section 13.07) to share in
the allocation of the Additional Employer Matching
Contribution(s) for the Plan Year.
13.07 Eligibility to Share in Allocation of Employer Contributions
A person shall be eligible to share in the allocation of
Employer Contributions, if any, for a Plan Year only if he:
(1) is in the active service of the Employer as an Eligible
Employee on the last Valuation Date of the Plan Year
(i.e., whose service has not terminated prior to the
last business day of the Plan Year),
19
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<PAGE>
(2) is not in active service because of termination of
service during the Plan Year after attaining age 65,
because of Total and Permanent Disability, or death,
or, for Plan Years beginning on or after January 1,
1996, because of termination of service after meeting
the age and service requirements for early retirement
under the ALLTEL Corporation Pension Plan or the ALLTEL
Corporation Profit-Sharing Plan (if he had been a
participant thereunder), or
(3) became ineligible by reason of transfer of employment
to a Controlled Group Member that is not an Employer
and who would be an Eligible Employee after such
transfer of employment but for the fact that his
employer is not an Employer (provided that he remains
an Eligible Employee but for the fact that his employer
is not an Employer or would otherwise be eligible for
an allocation of any Employer Contribution as a former
Eligible Employee by reason of termination of service
on or after the age of 65 years, Total and Permanent
Disability, death, or, for Plan Years beginning on or
after January 1, 1996, meeting the age and service
requirements for early retirement under the ALLTEL
Corporation Pension Plan or the ALLTEL Corporation
Profit-Sharing Plan (if he had been a participant
thereunder),
and, with respect only to Employer Qualified Nonelective
Contributions, he has a Year of Participation for the Plan
Year, and with respect only to Basic Employer Matching
Contributions and Additional Employer Matching Contributions,
he is an Electing Participant in the Plan at any time during
the Plan Year.
A Participant described in clause (3) above shall be
ineligible to share in further allocations of Employer
Contributions after the Plan Year in which his transfer of
employment occurs unless he again becomes an Eligible
Employee and, with respect to Basic Employer Matching
Contributions or Additional Employer Matching Contributions,
he again becomes an Electing Participant.
For a Plan Year in which a Participant's employment transfers
to or from a Matching Employer who made a Basic Employer
Matching Contribution or an Additional Employer Matching
Contribution on behalf of its eligible Participants for the
Plan Year, the Participant's Salary Deferral Contributions
for such Plan Year shall be deemed to be Matched Salary
Deferral Contributions or Unmatched Salary Deferral
Contributions as if his employment had been with such
Matching Employer for the entire Plan Year.
A Participant who is on an Authorized Leave of Absence on the
last Valuation Date of a Plan Year or a Participant who is
employed by a member of the Controlled Group who is not an
Employer on the last Valuation Date of the Plan Year in which
his employment transferred to such other member of the
20
60
<PAGE>
Controlled Group shall be deemed to be actively employed by
an Employer on the last Valuation Date of such Plan Year
for purposes of this Section 13.07.
13.08 Timing of Employer Contributions
The Employer Contributions which are to be made for a Plan
Year shall be paid to the Trust from time to time as deemed
advisable by the Employer but in no event later than the
earlier of (i) the time prescribed by law for filing the
Employer's Federal income tax return for its applicable
taxable year, including extensions thereof, or (ii) such time
as is required by regulations under Section 401(k) and/or
Section 401(m) of the Code, as applicable. In no event shall
the total amount of Employer Contributions under this
Article XIII exceed the maximum amount deductible in such
year, under the provisions of the Code and applicable
Treasury Regulations thereunder.
13.09 Suspense Account Reduction
Employer Contributions shall be reduced, if necessary, by any
amount held in a suspense account pursuant to Section 7.10.
13.10 Limitations on Employer Contributions
Employer Contributions are subject to all applicable
limitations contained in Article VII.
18. Effective with respect to Plan Years beginning on or
after January 1, 1996, Section 15.04 is amended by deleting the reference to
"Section 13.03" therefrom and substituting a reference to "Section 13.07"
therefor.
IN WITNESS WHEREOF, the Company, by its duly authorized
officer, has caused this Amendment to be executed on this 29th day of
July, 1996.
ALLTEL CORPORATION
By: /S/ John L. Compain
Title: V.P. Human Resources and
Administration
21
61
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE THIRD
QUARTER REPORT TO STOCKHOLDERS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH REPORT.
</LEGEND>
<CIK> 0000065873
<NAME> ALLTEL CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
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<RECEIVABLES> 554,098
<ALLOWANCES> 20,688
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<BONDS> 1,687,411
6,455
9,216
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<NET-INCOME> 194,805
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