Filed pursuant to Rule 424(b)(5)
SEC File No. 333-85142
Prospectus Supplement
June 14, 2002
(To prospectus dated April 10, 2002)
$1,500,000,000
[LOGO] ALLTEL
ALLTEL CORPORATION
$800,000,000 7% SENIOR NOTES DUE 2012
$700,000,000 7.875% SENIOR NOTES DUE 2032
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ALLTEL Corporation is offering $800,000,000 principal amount of 7% Senior
Notes due 2012 and $700,000,000 principal amount of 7.875% Senior Notes due
2032. The 2012 notes will mature on July 1, 2012 and will bear interest at the
rate of 7% per year. The 2032 notes will mature on July 1, 2032 and will bear
interest at the rate of 7.875% per year. Interest will be payable on January 1
and July 1 of each year, beginning January 1, 2003. We may redeem some or all
of the notes of each series, at our option at any time, at the relevant
"make-whole" prices described in this prospectus supplement.
The notes of each series will be unsecured and will rank equally with all of
our other unsecured senior indebtedness from time to time outstanding. The
notes of each series will not be entitled to the benefit of any sinking fund
and will not be listed on any securities exchange. The notes of each series
will be issued in registered form only in denominations of $1,000 and integral
multiples of $1,000.
Investing in the notes involves risks that are described in "Risk Factors"
beginning on page S-12 of this prospectus supplement.
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Per 7% Note Per 7.875% Note
due 2012 Total due 2032 Total
----------- ------------ --------------- ------------
Price to public (1)................. 99.605% $796,840,000 99.584% $697,088,000
Underwriting discount............... 0.450% $ 3,600,000 0.875% $ 6,125,000
Proceeds, before expenses, to ALLTEL 99.155% $793,240,000 98.709% $690,963,000
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(1) Plus accrued interest, if any, from June 19, 2002 if settlement occurs
after that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus supplement or the accompanying prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
The notes of each series will be ready for delivery in book-entry form only
through the facilities of The Depository Trust Company, Clearstream Banking
Luxembourg or Euroclear System on or about June 19, 2002.
Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH & CO.
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Co-Lead Manager
STEPHENS INC.
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BANC ONE CAPITAL MARKETS, INC.
MCDONALD INVESTMENTS INC.
MORGAN KEEGAN & COMPANY, INC.
SALOMON SMITH BARNEY
SUNTRUST ROBINSON HUMPHREY
WACHOVIA SECURITIES
THE WILLIAMS CAPITAL GROUP, L.P.
TABLE OF CONTENTS
Prospectus Supplement
Page
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About This Prospectus Supplement.............. S-4
Prospectus Supplement Summary................. S-5
Risk Factors.................................. S-12
Use of Proceeds............................... S-15
Capitalization................................ S-16
Description of the Senior Notes............... S-17
Certain U.S. Federal Income Tax Considerations S-24
Underwriting.................................. S-27
Legal Matters................................. S-29
Prospectus
Page
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About This Prospectus.......................................................................... 1
Where You Can Find More Information............................................................ 1
Special Note Regarding Forward-Looking Information............................................. 2
ALLTEL Corporation............................................................................. 3
Use of Proceeds................................................................................ 4
Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends 4
Description of Debt Securities................................................................. 6
Description of Capital Stock................................................................... 12
Description of Warrants........................................................................ 16
Description of Depositary Shares............................................................... 17
Description of Stock Purchase Contracts and Equity Units....................................... 19
Plan of Distribution........................................................................... 20
Legal Opinions................................................................................. 21
Experts........................................................................................ 21
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You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference is accurate only as of
their respective dates. Our business, financial condition, results of
operations and prospects may have changed since those dates.
---------------------
We are offering each series of notes globally for sale in those
jurisdictions in the United States, Europe, Asia and elsewhere where it is
lawful to make such offers. The distribution of this prospectus supplement and
the accompanying prospectus and the offering of such notes in some
jurisdictions may be restricted by law. Persons who receive this prospectus
supplement and the accompanying prospectus should inform themselves about and
observe any such restrictions. This prospectus supplement and the accompanying
prospectus do not constitute, and may not be used in connection with, an offer
or solicitation by anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom it is unlawful
to make such offer or solicitation.
S-2
A person may only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning of Section 21
of the Financial Services and Markets Act 2000 (UK) (the "FSMA")) received by
it in connection with the issue or sale of any notes in circumstances in which
Section 21(1) of the FSMA does not apply to ALLTEL.
This communication is directed only at persons who (i) are outside the
United Kingdom or (ii) have professional experience in matters relating to
investments or (iii) are persons falling within Article 49(2) (a) to (d) ("high
net worth companies, unincorporated associations etc") of The Financial
Services and Markets Act 2000 (Financial Promotion) Order 2001 (UK) (all such
persons together being referred to as "relevant persons"). This communication
must not be acted on or relied on by persons who are not relevant persons. Any
investment or investment activity to which this communication relates is
available only to relevant persons and will be engaged in only with relevant
persons.
S-3
ABOUT THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first is this prospectus supplement,
which describes the specific terms of the notes we are offering and other
matters relating to us and our financial condition. The second part, the
accompanying prospectus, gives more general information about securities we may
offer from time to time, some of which may not apply to the notes offered by
this prospectus supplement and the accompanying prospectus.
If the description of the offering varies between this prospectus supplement
and the accompanying prospectus, you should rely on the information in this
prospectus supplement.
---------------------
Unless we have indicated otherwise, or the context otherwise requires,
references in this prospectus supplement and the accompanying prospectus to
"ALLTEL Corporation," "ALLTEL," "we," "us" and "our" or similar terms are to
ALLTEL Corporation and its predecessors, and references to the "notes" are to
the 7% Senior Notes due 2012 and the 7.875% Senior Notes due 2032.
S-4
PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary in conjunction with the more detailed
information contained elsewhere in this prospectus supplement, the accompanying
prospectus, and the documents incorporated by reference in this prospectus
supplement and the accompanying prospectus.
ALLTEL CORPORATION
ALLTEL is a customer-focused information technology company that provides
communications and information services. We own subsidiaries that provide
wireless and wireline local, long-distance, network access and internet
services, information processing management services and advanced application
software and wide area paging services. For the three months ended March 31,
2002, we had $1.8 billion in revenues, $408 million in operating income and
$214 million in net income, and for the year ended December 31, 2001, we had
$7.5 billion in revenues, $1.7 billion in operating income and $1.1 billion in
net income.
As of March 31, 2002, we provided wireless communications services to
approximately 6.8 million customers in 21 states. We own majority interests in
wireless operations in 69 metropolitan statistical areas, or MSAs, covering a
population of approximately 33.5 million potential customers, or POPs. We also
own majority interests in wireless operations in 132 rural statistical areas,
or RSAs, representing approximately 17.6 million wireless POPs. We hold
minority interests in operations in 35 other wireless markets, including the
Chicago, Illinois and Houston, Texas MSAs. At March 31, 2002, our wireless
penetration rate (that is, the number of our customers as a percentage of the
total population in our service areas) was 13.2%. Wireless revenues and sales
comprised approximately 51% and 50% of our total operating revenues from
business segments during the three months ended March 31, 2002 and the year
ended December 31, 2001, respectively.
Our wireline operations consist of subsidiaries that are incumbent local
exchange carriers, or ILECs and competitive local exchange carriers, or CLECs.
Through these subsidiaries, we provide local telephone service to more than 2.6
million customers primarily located in rural areas in 15 states. Local
telephone services include basic dial-tone, DSL (Digital Subscriber Line),
internet, and other enhanced services including call waiting, call forwarding,
three-way calling and voicemail. Our wireline subsidiaries also offer
facilities for private line, data transmission and other communications
services. Wireline revenues, which consist of local service, network access and
long-distance and miscellaneous revenues, comprised approximately 27% and 26%
of our total operating revenues from business segments during the three months
ended March 31, 2002 and the year ended December 31, 2001, respectively.
Our information services subsidiary, ALLTEL Information Services, Inc.,
provides a wide range of information processing services primarily to the
financial services and telecommunications industries through information
processing centers that it staffs, equips and operates. ALLTEL Information
Services, Inc. also develops and markets software worldwide to financial
services and telecommunications companies operating their own information
processing departments. Information services revenues and sales comprised
approximately 13% of our total operating revenues from business segments during
each of the three months ended March 31, 2002 and the year ended December 31,
2001.
Our communications support services business provides long-distance,
directory publishing and product supply. As of March 31, 2002, we provided
long-distance service to more than 1.3 million customers. As of that date, our
directory publishing business coordinated advertising, sales, printing and
distribution for 438 telephone directory contracts in 34 states. Our product
supply business distributes telecommunications equipment and materials to
affiliated and non-affiliated communications and other companies.
Communications support services revenues comprised 9% and 11% of our total
operating revenues from business segments during the three months ended March
31, 2002 and the year ended December 31, 2001, respectively.
S-5
We are incorporated in Delaware. Our principal executive offices are located
at One Allied Drive, Little Rock, Arkansas 72202, and our telephone number is
(501) 905-8000. Our website is located at www.alltel.com. Information on our
website does not form part of this prospectus supplement or the accompanying
prospectus.
RECENT DEVELOPMENTS
EQUITY UNIT OFFERING
On May 6, 2002, we completed an offering of $1.25 billion of publicly traded
equity units. The equity units consisted of units referred to as corporate
units, each with a stated amount of $50. Each corporate unit includes a
purchase contract pursuant to which the purchaser agrees to purchase from us
shares of our common stock on May 17, 2005, and we will make quarterly contract
adjustment payments to the purchaser at the rate of 1.50% of the stated amount
per year. Each corporate unit also includes $50 principal amount of our senior
notes due May 17, 2007. These notes bear interest at a rate of 6.25% per year,
which rate is expected to be reset on or after February 17, 2005. These notes,
which form part of the corporate units, are pledged to secure the holders'
obligations under the relevant purchase contract. Such notes do not trade
separately from the corporate units unless and until a collateral substitution
is made or following an early settlement of the purchase contract. On May 8,
2002, the underwriters for the equity units exercised their option to purchase
approximately $135.0 million in additional equity units to cover
over-allotments and completed such over-allotment on May 10, 2002. We refer to
the above transaction in this prospectus supplement as the "Equity Unit
Offering."
CHANGE OF AUDITORS
On May 7, 2002, our audit committee authorized the appointment of
PricewaterhouseCoopers LLP as our independent auditors to replace Arthur
Andersen LLP. In connection with Arthur Andersen LLP's audit of the
consolidated financial statements for the fiscal years ended December 31, 2000
and 2001, and in connection with the subsequent period up to their dismissal,
there were no disagreements with Arthur Andersen LLP on any matters regarding
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, and there were no reportable events. Arthur Andersen LLP's
report on our consolidated financial statements for the fiscal years ended
December 31, 2000 and 2001 contained no adverse opinion or any disclaimer of
opinion and was not modified or qualified as to uncertainty, audit scope or
accounting principles applied.
PENDING ACQUISITIONS
On October 31, 2001, we signed an agreement with Verizon Communications Inc.
to purchase local telephone properties located in the State of Kentucky. Under
the terms of the purchase agreement, we will acquire approximately 600,000
access lines for $1.9 billion in cash. The acquired wireline properties will
overlap with our existing wireless service in northeastern Kentucky and will
increase our total access lines by approximately 25% to more than 3.0 million
wireline customers. Upon the signing of this purchase agreement, we paid
Verizon Communications Inc. a deposit equal to 10% of the total purchase price,
or $190.7 million, with the balance of the cash payment (net of interest on the
$190.7 million deposit) due at the time the transaction is completed. We have
received the approvals of the Kentucky Public Service Commission and the
Federal Communications Commission (the "FCC") for this transaction. The
transaction is also subject to certain other closing conditions and is expected
to be completed in the third quarter of 2002. We refer to this transaction in
this prospectus supplement as the "Verizon Wireline Acquisition."
On March 19, 2002, we announced an agreement to purchase all the wireless
properties owned by CenturyTel, Inc. for $1.65 billion in cash. In connection
with this purchase, we expect to add more than 700,000 customers and expand our
wireless footprint into new markets across Arkansas, Louisiana, Michigan,
Mississippi, Texas and Wisconsin. Following the completion of the transaction,
we expect to have approximately 7.5 million wireless customers. Also included
in this transaction are minority partnership interests in cellular
S-6
operations of approximately 2.0 million proportionate POPs and Personal
Communications Services, or PCS, licenses covering 1.3 million POPs in
Wisconsin and Iowa. The transaction is subject to certain closing conditions,
including FCC regulatory approval, and is expected to close in the third
quarter of 2002. We refer to this transaction in this prospectus supplement as
the "CenturyTel Wireless Acquisition."
S-7
THE OFFERING
Issuer................ ALLTEL Corporation
Notes Offered......... $800,000,000 principal amount of 7% Senior Notes due 2012 and
$700,000,000 principal amount of 7.875% Senior Notes due 2032.
Maturity Date......... The 2012 notes will mature on July 1, 2012 and the 2032 notes
will mature on July 1, 2032, in each case subject to the redemption
provisions described herein.
Interest Rate......... The 2012 notes will bear interest at the rate of 7% per year and the
2032 notes will bear interest at the rate of 7.875% per year, in each
case accruing from June 19, 2002, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for.
Interest Payment Dates Interest on the notes will be payable semi-annually in arrears on
January 1 and July 1 of each year, commencing January 1, 2003,
and at maturity or, if applicable, their earlier redemption.
Optional Redemption... The notes will be redeemable, as a whole or in part, at our option,
at any time or from time to time, on at least 30 days, but not more
than 60 days, prior notice mailed to the registered address of each
holder of the notes. The "make-whole" redemption price will be
equal to the greater of (1) 100% of the aggregate principal amount
of the notes being redeemed, plus accrued and unpaid interest to
the date of redemption, or (2) the sum of the remaining scheduled
payments of principal and interest in respect of the notes being
redeemed (not including any portion of the payments of interest
accrued as of the date of redemption) discounted to its present
value, on a semi-annual basis, at the Treasury Rate plus 25 basis
points in the case of the 2012 notes, and 30 basis points in the case
of the 2032 notes, plus, in each case, accrued and unpaid interest to
the date of redemption. See "Description of the Senior Notes--
Optional Redemption."
Ranking............... The notes of each series will be unsecured obligations and rank
equally with our unsecured senior indebtedness from time to time
outstanding. The notes will be effectively subordinated to all our
existing and future secured indebtedness to the extent of the assets
securing that indebtedness. The notes will also be structurally
subordinated to the indebtedness and other liabilities of our
subsidiaries.
Trustee............... J. P. Morgan Trust Company, National Association
Use of Proceeds....... We expect to use the net proceeds from this offering for general
corporate purposes and to fund a portion of the remaining
$1.7 billion cash purchase price for the Verizon Wireline
Acquisition and a portion of the $1.65 billion cash purchase price
for the CenturyTel Wireless Acquisition. See "Use of Proceeds."
S-8
SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS EXCEPT PER SHARE DATA AND RATIOS)
The following table sets forth certain consolidated financial information
for ALLTEL and its subsidiaries. The periods presented include merger and
integration expenses, gain on disposal of assets and other special charges and
unusual items. You should read the following table together with the
consolidated financial statements and accompanying notes of ALLTEL and its
subsidiaries, incorporated by reference into this prospectus supplement.
Three Months Ended
March 31, Year Ended December 31,
-------------------- ---------------------------------
2002 2001 2001 2000 1999
------- ------- ------- ------- -------
(Unaudited)
Income Statement Data:
Total revenues and sales:
Wireless..................................................... $ 944 $ 919 $ 3,832 $ 3,536 $ 3,034
Wireline..................................................... 499 485 1,965 1,856 1,751
Communications support services.............................. 183 198 824 907 777
Information services......................................... 239 260 1,035 1,015 1,002
Intercompany eliminations.................................... (32) (35) (150) (154) (62)
------- ------- ------- ------- -------
Total...................................................... $ 1,833 $ 1,827 $ 7,506 $ 7,160 $ 6,502
Operating income:
Wireless..................................................... $ 220 $ 190 $ 828 $ 867 $ 862
Wireline..................................................... 190 178 733 659 615
Communications support services.............................. 14 22 91 63 35
Information services......................................... 35 34 146 144 143
Corporate expenses........................................... (51) (78) (133) (66) (130)
------- ------- ------- ------- -------
Total...................................................... $ 408 $ 346 $ 1,665 $ 1,667 $ 1,525
Income before taxes............................................ $ 343(1) $ 633(2) $ 1,752(3) $ 3,351(4) $ 1,331(5)
Net income..................................................... 214(1) 396(2) 1,067(3) 1,929(4) 784(5)
Diluted earnings per share..................................... 0.68(1) 1.25(2) 3.40(3) 6.08(4) 2.47(5)
Cash Flow Data:
Net cash provided from operations.............................. $ 603 $ 527 $ 2,071 $ 1,496 $ 1,500
Additions to property, plant and equipment..................... (201) (207) (1,232) (1,165) (1,007)
Purchases of property, net of cash acquired.................... (29) (16) (218) (1,040) (100)
Proceeds from the lease of cell site towers.................... 8 -- 524 -- --
Proceeds from the sale of assets............................... -- 411 411 329 --
Proceeds from the sale of investments.......................... -- 3 3 630 45
Other Data:
EBITDA(6)...................................................... $ 676 $ 631 $ 2,832 $ 2,656 $ 2,387
Ratio of earnings to fixed charges............................. 5.37(1) 7.75(2) 5.92(3) 10.01(4) 4.81(5)
Ratio of earnings to combined fixed charges and preferred stock
dividends..................................................... 5.37(1) 7.75(2) 5.92(3) 10.00(4) 4.79(5)
Balance Sheet Data (at period end):
Net property, plant and equipment.............................. $ 6,726 $ 6,514 $ 6,781 $ 6,549 $ 5,735
Total assets................................................... $12,527 $11,748 $12,609 $12,182 $10,774
Total redeemable preferred stock and long-term debt............ $ 3,186 $ 3,990 $ 3,863 $ 4,613 $ 3,752
Total shareholders' equity..................................... $ 5,682 $ 5,361 $ 5,566 $ 5,095 $ 4,206
Long-term debt as a percentage of total capitalization......... 39.3 % 43.0 % 41.3 % 47.9 % 47.6 %
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Note: On January 1, 2002, ALLTEL, as required, adopted Statement of Financial
Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible
Assets." This standard changed the accounting for goodwill and other
indefinite-lived intangible assets from an
S-9
(footnotes continued from prior page)
amortization method to an impairment-only approach. As of January 1, 2002,
ALLTEL ceased amortization of goodwill, including goodwill recorded in past
business combinations. In addition, we conducted a review of our other
identifiable intangible assets and determined that our wireless franchise
rights and cellular and PCS licenses met the indefinite life criteria
outlined in SFAS No. 142, as we expect both the renewal by the granting
authorities and the cash flows generated from these intangible assets to
continue indefinitely. Accordingly, ALLTEL also ceased amortization of the
franchise rights and wireless licenses as of January 1, 2002. Assuming the
change in accounting for goodwill and other intangible assets was applied
retroactively, pro forma net income and diluted earnings per share would
have been $416 million and $1.32, respectively, for the three months ended
March 31, 2001. Pro forma net income for the twelve months ended December
31, 2001, 2000 and 1999 would have been $1,160 million, $2,021 million and
$838 million, respectively, while pro forma diluted earnings per share
would have been $3.70 for 2001, $6.73 for 2000 and $2.64 for 1999.
During the first quarter of 2002, ALLTEL changed its business segment
reporting presentation by reclassifying the operating units of its emerging
communications businesses to better align its financial reporting with its
business segment mix and to provide clear comparisons to other
communications companies within ALLTEL's peer group. Under the new
reporting presentation, there was no change to ALLTEL's wireless segment
which includes its cellular, PCS and paging operations. Our CLEC operations
and internet access operations have been combined and reported as part of
the wireline business segment. ALLTEL's information services segment no
longer includes services provided to ALLTEL affiliates. These affiliate
transactions have been reported in the corresponding communications
segments and, accordingly, information services operating results only
reflect ALLTEL's financial services business and non-affiliated
telecommunications operations. All other segments, which include
long-distance and network management services, communications products and
directory publishing, have been reported together under a new segment
classification titled "Communications support services." These
reclassifications did not affect previously reported consolidated operating
income, net income or earnings per share of ALLTEL and its subsidiaries.
Consolidated revenues and sales for prior periods were reduced as a result
of reclassifying information services revenues previously billed to the
wireline operations that were not eliminated pursuant to SFAS No. 71
"Accounting for the Effects of Certain Types of Regulation." All prior
period business segment information that is included in this prospectus
supplement has been restated to give effect to ALLTEL's current business
segment presentation. In the first quarter of 2002, ALLTEL also changed to
a gross basis the reporting presentation for reimbursements of
out-of-pocket expenses received from customers under the terms of its
information services agreements in accordance with Emerging Issues Task
Force Topic D-103. Previously, ALLTEL netted these reimbursements against
expenses incurred to provide data processing and consulting services and
included the net amount in operations expense. Prior period revenue and
expense information has been reclassified to conform to the new reporting
presentation. This change does not affect previously reported operating or
net income of ALLTEL and its subsidiaries.
(1) Income before taxes for the three months ended March 31, 2002 included
pretax charges totaling $42.9 million consisting of $32.4 million incurred
in connection with the restructuring of our CLEC, call center and retail
store operations, write-downs of $7.1 million in the carrying value of cell
site equipment and $3.4 million of costs associated with the conversion and
integration of the Kentucky wireline properties. These items decreased net
income by $26.1 million and diluted earnings per share by $0.09. Excluding
these items, the ratio of earnings to fixed charges and the ratio of
earnings to combined fixed charges and preferred stock dividends both would
have been 5.92 for the three months ended March 31, 2002.
(2) Income before taxes for the three months ended March 31, 2001 included
pretax gains totaling $362.5 million and consisted of a $345.4 million
pretax gain from the sale of PCS licenses, a pretax gain of $13.9 million
from the dissolution of a wireless partnership and a pretax gain of $3.2
million from the sale of certain investments. Income before taxes also
included pretax charges totaling $69.0 million incurred in connection with
the restructuring of our operations. These items increased net income by
$174.7 million and diluted earnings per share by $0.55. Excluding these
items, the ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preferred stock dividends both would have been
4.63 for the three months ended March 31, 2001.
(3) Income before taxes for the year ended 2001 included pretax gains totaling
$360.5 million comprised of a $347.8 million pretax gain from the sale of
PCS licenses, a pretax gain of $9.5 million from the dissolution of a
wireless partnership and a pretax gain of $3.2 million from the sale of
certain investments. Income before taxes also included pretax charges
totaling $95.1 million comprised of termination fees of $2.9 million
incurred in connection with the early retirement of long-term debt, charges
of $77.1 million incurred in connection with the restructuring of
operations of ALLTEL and its subsidiaries, and write-downs of $15.1 million
in the carrying value of cell site equipment. These items increased net
income by $157.9 million and diluted earnings per share by $0.50. Excluding
these items, the ratio of earnings to fixed charges and the ratio of
earnings to combined fixed charges and preferred stock dividends both would
have been 5.16 for 2001.
(4) Income before taxes for the year ended 2000 included pretax gains totaling
$1,943.5 million comprised of a pretax gain of $1,345.5 million from the
exchange of wireless properties with Bell Atlantic and GTE, a pretax gain
of $36.0 million from the sale of certain PCS assets and a pretax gain of
$562.0 million from the sale of investments, principally consisting of
WorldCom common stock.
S-10
(footnotes continued from prior page)
Income before taxes also included pretax charges totaling $51.9 million
comprised of a $15.0 million write-down of an investment, integration and
other charges of $25.4 million incurred in connection with the acquisition
of wireless assets and certain restructuring activities of the information
services business of ALLTEL and its subsidiaries, and an $11.5 million
charge incurred in connection with a litigation settlement. These items
increased net income by $1,102.3 million and diluted earnings per share by
$3.48. Excluding these items, the ratio of earnings to fixed charges would
have been 4.85 for 2000 and the ratio of earnings to combined fixed charges
and preferred stock dividends would have been 4.84 for 2000.
(5) Income before taxes for the year ended 1999 included a pretax gain of $43.1
million from the sale of WorldCom common stock. Income before taxes also
included a pretax charge of $90.5 million in connection with the closing of
ALLTEL's and/or subsidiaries' mergers with Aliant Communications Inc.,
Liberty Cellular Inc., Advanced Information Resources Limited, and Southern
Data Systems and with certain loss contingencies and other restructuring
activities. These items decreased net income by $38.9 million and diluted
earnings per share by $0.12. Excluding these items, the ratio of earnings
to fixed charges would have been 4.95 for 1999 and the ratio of earnings to
combined fixed charges and preferred stock dividends would have been 4.93
for 1999.
(6) EBITDA means earnings before interest, taxes, depreciation and
amortization. Although EBITDA is a widely accepted financial concept, it
should not be considered as an alternative to operating income or to cash
flows from operating activities. All companies do not calculate EBITDA in
the same manner. As a result, EBITDA as presented here may not be
comparable to a similarly titled measure presented by other companies. Our
management and some investors use EBITDA as an indication of operating
performance.
S-11
RISK FACTORS
Before purchasing the notes, you should carefully consider the following
risk factors together with the other information contained and incorporated by
reference into this prospectus supplement and the accompanying prospectus in
order to evaluate an investment in the notes.
WE FACE INTENSE COMPETITION IN OUR WIRELESS BUSINESS THAT COULD REDUCE OUR
MARKET SHARE OR ADVERSELY AFFECT OUR FINANCIAL PERFORMANCE.
Currently, the FCC allows up to 10 wireless carriers to operate in the same
geographic area. A majority of our markets have five or more wireless carriers.
The presence of multiple competitors within our wireless markets has made it
increasingly difficult to attract new customers and retain existing ones. As a
result of increased competition, we anticipate that the price per minute for
wireless voice services will decline while costs to acquire customers,
including handset subsidies and advertising and promotion costs, may increase.
Our ability to continue to compete effectively will depend upon our ability to
successfully market our products and services and to identify and respond to
various competitive factors affecting the wireless industry, including changes
in rate plans, introduction of new services and technologies, changes in
consumer preferences and demographics and economic trends. Failure to
successfully market our products and services or to adequately and timely
respond to competitive factors could reduce our market share or adversely
affect our revenue or net income.
In the current market, our ability to compete also depends on our ability to
offer regional and national calling plans to our customers. We rely on roaming
agreements with other wireless carriers to provide roaming capabilities in
areas not covered by our network. These agreements are subject to renewal and
termination if certain events occur, including if network quality standards are
not maintained. If we are unable to maintain or renew these agreements, our
ability to continue to provide competitive regional and nationwide wireless
service to our customers could be impaired, which, in turn, would have an
adverse impact on our wireless operations.
WE ARE SUBJECT TO GOVERNMENT REGULATION OF THE TELECOMMUNICATIONS INDUSTRY.
As a provider of wireless communication services, we are subject to
regulation by the FCC. The FCC has rules governing the construction and
operation of wireless communications systems and licensing and technical
standards for the provision of wireless communications services. In addition,
the FCC and the Federal Aviation Administration regulate the siting, lighting,
and construction of transmitter towers and antennae. Tower siting and
construction is also subject to state and local zoning as well as federal
statutes regarding environmental and historic preservation.
Licenses granted to us by the FCC to provide wireless communications
services were originally issued for 10-year terms and may be renewed for
additional 10-year terms subject to FCC approval of the renewal applications.
Failure to comply with FCC requirements in a given service area could result in
the revocation of our license for that area or in the imposition of fines.
As a provider of wireline communication services, we have been granted
franchises by each of the 15 states in which we operate. We are subject to
regulation from the regulatory commissions in each of these 15 states as well
as from the FCC. State regulatory commissions have primary jurisdiction over
local and intrastate rates that we charge customers, including other
telecommunications companies, and service quality standards. The FCC has
primary jurisdiction over the interstate access rates that we charge other
telecommunications companies that use our network and issues related to
interstate service. Future revenues, costs, and capital investment in our
wireline business could be adversely affected by material changes to these
regulations.
RAPID AND SIGNIFICANT CHANGES IN TECHNOLOGY COULD REQUIRE US TO SIGNIFICANTLY
INCREASE CAPITAL INVESTMENT OR COULD RESULT IN REDUCED DEMAND FOR OUR SERVICES.
Technologies for communications and information services are rapidly
changing. In our wireless business, we employ Code Division Multiple Access, or
CDMA, digital technology in the majority of our markets. This
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technology is still evolving and we expect further developments that would
allow us to provide new products and services to our customers. However, if
this happens, we may be required to make significant capital investments to
implement this new technology.
New communications technologies may also impact our wireline and
long-distance businesses. For example, we may be unable to retain existing
wireline customers who decide to replace their wireline telephone service with
wireless telephone service. Furthermore, the development and deployment of
fixed wireless technology in our wireline markets could provide our competitors
with an alternative means to access the home and provide local telephone
service to our wireline customers. In the long-distance business, new
technologies such as voice over internet protocol could provide our
long-distance customers with a lower cost alternative to our long-distance
services.
Finally, changing technologies may impact our information services business.
Our information services business has developed and continues to develop
products that are utilized in a UNIX based environment. New technologies, as
well as changes in regulation and the development of new products, create the
need to continually update and modify our software and systems offered to our
customers. Developing and adapting to these new technologies may require
significant investment by us, and our success in doing so will determine our
ability to retain existing customers and attract new ones.
The failure to invest in and deploy new technologies for our wireless or
information services businesses, or the proliferation of replacement
technologies impacting our wireline or long-distance businesses, could require
us to make significant additional capital investment or could result in reduced
demand for our services, both of which could adversely impact our financial
performance and results of operations.
OUR FINANCIAL RESULTS COULD BE ADVERSELY IMPACTED IF WE ARE UNABLE TO
SUCCESSFULLY INTEGRATE PENDING OR COMPLETED ACQUISITIONS.
We have made several acquisitions over the past several years as part of our
strategy to grow the scale and scope of each of our primary businesses. On
October 31, 2001, we signed a definitive agreement to acquire Verizon
Communications Inc.'s approximately 600,000 local telephone lines in Kentucky
for $1.9 billion in cash. On March 19, 2002, we announced a definitive
agreement to acquire CenturyTel, Inc.'s approximately 700,000 wireless
customers and certain other assets for $1.65 billion in cash. We expect each of
these acquisitions to close in the third quarter of 2002 (see "Prospectus
Supplement Summary--Recent Developments").
We expect certain benefits to arise from these acquisitions, including
revenue and market penetration improvements and certain efficiencies and
synergies. Our ability to realize these benefits will depend on the successful
completion and integration of the acquisitions. The acquisitions are subject to
various closing conditions and there can be no assurance that such conditions
will be met. Further, our success in integrating the acquisitions will involve,
among other things, the conversion of network and billing systems, changes in
branding and product offerings, and combining our operations with those of the
acquired properties. If we are not successful in this integration, our
financial results could be adversely impacted. Additionally, our management may
be required to dedicate significant time and effort to this integration process
which could divert their attention from other business concerns.
OUR HOLDING COMPANY STRUCTURE RESULTS IN STRUCTURAL SUBORDINATION AND MAY
AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE NOTES.
The notes are obligations exclusively of ALLTEL. We are a holding company
and, accordingly, substantially all of our operations are conducted through our
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the notes, depends upon the earnings of our subsidiaries. In
addition, we depend on the distribution of earnings, loans or other payments by
our subsidiaries to us.
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Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans
or other payments. In addition, any payment of dividends, distributions, loans
or advances by our subsidiaries to us could be subject to statutory or
contractual restrictions. Payments to us by our subsidiaries will also be
contingent upon our subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
THERE HAS NOT BEEN, AND THERE MAY NOT BE, A PUBLIC MARKET FOR THE NOTES.
Prior to this offering, no public market existed for each series of notes.
We cannot assure you that any liquid market will develop for each series of
notes, that holders of the notes of each series will be able to sell their
notes, or at what price holders would be able to sell their notes. The
liquidity of any trading market in each series of notes and the market price
quoted for such notes may be affected adversely by changes in the overall
markets for corporate debt securities and by changes in our financial
performance or prospects or prospects for companies in our industry generally.
We have been informed by the underwriters that they intend to make a market in
each series of notes after this offering is completed, although none of them is
obligated to do so, and each of them may cease their market making at any time
without notice. We do not intend to apply for listing of any series of notes on
any securities exchange.
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USE OF PROCEEDS
We estimate that the net proceeds from the sale of the notes in this
offering will be approximately $1.48 billion, after deducting the underwriting
discount and estimated offering expenses payable by us. We expect to use the
net proceeds from this offering for general corporate purposes, including
working capital and the expansion of our business through strategic
acquisitions as opportunities arise. Currently, it is anticipated that a
significant portion of the net proceeds (together with proceeds from the Equity
Unit Offering as described in "Recent Developments") will be used to fund a
portion of the remaining $1.7 billion cash purchase price for the Verizon
Wireline Acquisition and a portion of the $1.65 billion cash purchase price for
the CenturyTel Wireless Acquisition. In addition to the net proceeds from this
offering and the Equity Unit Offering, we also have available to fund the
remaining cost of these acquisitions funds borrowed or received under our
commercial paper program and a related revolving credit facility that supports
borrowings under our commercial paper program.
Pending the application of the net proceeds as described immediately above,
we will apply such proceeds to either (a) reduce our outstanding commercial
paper borrowings or (b) purchase short-term marketable securities. As of March
31, 2002, we had $21.0 million of commercial paper borrowings outstanding (with
a weighted averaged interest rate of 2.05%). Affiliates of the underwriters are
lenders under our existing revolving credit facility which supports borrowings
under our commercial paper program. Those affiliates may receive some of the
proceeds of this offering.
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CAPITALIZATION
The following table sets forth our capitalization (a) at March 31, 2002, (b)
on a pro forma basis to reflect the completion of the Equity Unit Offering and
(c) as further adjusted to reflect the sale of the notes and the application of
the net proceeds therefrom as described under "Use of Proceeds." When you read
this data, you should also read the detailed information and financial
statements appearing in documents incorporated by reference in this prospectus
supplement and the accompanying prospectus.
As of March 31, 2002
------------------------------
Actual Pro Forma As Adjusted
------ --------- -----------
(Dollars in millions)
Long-term debt (including current maturities):
Equity units................................................. $ -- $ 1,385(1) $ 1,385(1)
Other long-term debt......................................... 3,685 3,685 3,685
2012 notes offered hereby, net of discount................... -- -- 797(2)
2032 notes offered hereby, net of discount................... -- -- 697(3)
------ ------- -------
Total long-term debt................................... 3,685 5,070 6,564
Shareholders' equity:
Common stock:
$1 par value; 1.0 billion shares authorized, 311 million
issued and outstanding (4)................................. 311 311 311
Other shareholders' equity................................... 5,371 5,278(5) 5,278(5)
------ ------- -------
Total shareholders' equity............................. 5,682 5,589 5,589
------ ------- -------
Total capitalization................................ $9,367 $10,659 $12,153
====== ======= =======
--------
(1) For a description of the Equity Unit Offering, see "Recent Developments."
(2) Reflects 2012 notes with $800 million principal amount less unamortized
discount of approximately $3.0 million.
(3) Reflects 2032 notes with $700 million principal amount less unamortized
discount of approximately $3.0 million.
(4) Amount excludes the common stock issuable upon settlement of the purchase
contracts underlying the corporate units issued in connection with the
Equity Unit Offering and common stock issuable upon the exercise of 16.3
million outstanding options.
(5) Reflects an adjustment of approximately $56.9 million representing the
present value of the contract adjustment payments payable in connection
with the purchase contracts underlying the corporate units issued in
connection with the Equity Unit Offering and approximately $36.0 million
representing a portion of the issuance costs allocated to the purchase
contracts in connection with the Equity Unit Offering.
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DESCRIPTION OF THE SENIOR NOTES
GENERAL
The notes are an issue of the debt securities described in the accompanying
prospectus. The notes will be issued as separate series of securities under an
Indenture dated January 1, 1987, and as supplemented by supplemental indentures
to be entered into between us and J. P. Morgan Trust Company, National
Association, as trustee (the "Indenture"). The 2012 notes initially are limited
to $800,000,000 in aggregate principal amount, and the 2032 notes initially are
limited to $700,000,000 in aggregate principal amount. The 2012 notes will
mature on July 1, 2012 and the 2032 notes will mature on July 1, 2032.
Each series of notes may not be redeemed prior to their stated maturity
except as described below. Each series of notes will not have the benefit of
any sinking fund. The notes of each series constitute senior debt securities as
described in the accompanying prospectus. We may, at any time, without the
consent of the holders of each series of notes, issue additional notes having
the same ranking and the same interest rate, maturity and other terms as either
the 2012 notes or the 2032 notes, and any such additional notes will be taken
to constitute the same single series of the applicable notes under the
Indenture.
In addition to the notes, we may issue from time to time other series of
senior debt securities under the Indenture. Such other series will be separate
from and independent of the notes. The following description of the terms of
the notes supplements and modifies the description of the general terms of the
debt securities set forth in the accompanying prospectus, which we request that
you read. Capitalized terms used but not defined in this section have the
meanings assigned to such terms in the Indenture.
The notes of each series will be unsecured obligations of ours and will rank
equally with all of our other unsecured and unsubordinated indebtedness from
time to time outstanding. The notes of each series will be effectively
subordinated to all of our existing and future secured indebtedness to the
extent of assets securing that indebtedness. The notes of each series will also
be structurally subordinated to all indebtedness of our subsidiaries.
INTEREST
Interest on the 2012 notes will accrue at 7% per year and for the 2032 notes
at 7.875% per year, in each case, from June 19, 2002, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, and
will be payable in U.S. dollars semi-annually in arrears on January 1 and July
1 each year, commencing January 1, 2003 and, if applicable, at maturity or
their earlier redemption. Interest payable on an Interest Payment Date will be
paid to the Person in whose name the applicable note is registered at the close
of business on December 15 or June 15, as the case may be (whether or not a
Business Day in The City of New York), immediately preceding such Interest
Payment Date. Interest payable at maturity or earlier redemption will be paid
against presentation and surrender of the related notes. Interest on the notes
will be computed on the basis of a 360-day year consisting of twelve 30-day
months.
If any Interest Payment Date, the maturity date or any redemption date is
not a Business Day in New York, New York, the required payment shall be made on
the next succeeding day that is a Business Day as if it were made on the date
such payment was due and no interest shall accrue on the amount so payable for
the period from and after such Interest Payment Date, maturity date or
redemption date, as the case may be, to such next Business Day.
OPTIONAL REDEMPTION
The notes of each series will be redeemable, as a whole or in part, at our
option, at any time or from time to time, on at least 30 days, but not more
than 60 days, prior notice mailed to the registered address of each holder of
the notes. The "make-whole" redemption price will be equal to the greater of
(a) 100% of the aggregate principal amount of the notes being redeemed, plus
accrued and unpaid interest to the date of redemption and
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(b) the sum of the remaining scheduled payments of principal and interest in
respect of the notes being redeemed (not including any portion of the payments
of interest accrued as of the date of redemption) discounted to their present
value, on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months), at the Treasury Rate plus 25 basis points in the case of the
2012 notes and 30 basis points in the case of the 2032 notes, plus, in each
case, accrued and unpaid interest to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury Price
for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a comparable maturity to the
remaining term of such notes.
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the Trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of three Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest of five such Reference Treasury
Dealer Quotations, (B) if the Trustee obtains four such Reference Treasury
Dealer Quotations, the average of two Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest of four such
Reference Treasury Dealer Quotations, or (C) if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any Redemption Date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York
City time, on the third Business Day preceding such redemption date.
"Reference Treasury Dealer" means each of Banc of America Securities LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.
Incorporated, Salomon Smith Barney Inc., and Goldman, Sachs & Co., or their
respective affiliates, which are primary U.S. Government securities dealers,
and their respective successors; provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer (a
"Primary Treasury Dealer"), we shall substitute therefor another Primary
Treasury Dealer.
Notwithstanding the foregoing, we will pay any interest installment due on
an Interest Payment Date that occurs on or prior to any redemption date to
Holders as of the close of business on the record date immediately preceding
such Interest Payment Date.
If notice has been given as provided in the Indenture and funds for the
redemption of any notes (or any portion thereof) called for redemption shall
have been made available on the redemption date referred to in such notice,
such notes (or any portion thereof) will cease to bear interest on the date
fixed for such redemption specified in such notice and the only right of the
Holders of such notes will be to receive payment of the redemption price.
Notice of any optional redemption of notes (or any portion thereof) of a
series will be given to Holders at their addresses, as shown in the Security
Register for such notes, not more than 60 nor less than 30 days prior to the
date fixed for redemption. The notice of redemption will specify, among other
items, the redemption price and the principal amount of the notes held by such
Holder to be redeemed. If less than all of the notes of such
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series are to be redeemed at our option, the Trustee shall select, in such
manner as it shall deem fair and appropriate, the notes to be redeemed.
GLOBAL NOTE
The notes of each series will be issued in the form of one or more global
notes in definitive, fully registered form (a "Global Note"). Each Global Note
will be deposited with, or on behalf of, The Depository Trust Company ("DTC")
and registered in the name of DTC or its nominee. Investors may hold their
beneficial interests in a Global Note directly through DTC in the United
States, or Clearstream Banking Luxembourg ("Clearstream Luxembourg") or
Euroclear System ("Euroclear") in Europe if they are participants in those
systems or indirectly through organizations which are participants in those
systems. Clearstream Luxembourg and Euroclear will hold interests on behalf of
their participants through customers' securities accounts in Clearstream
Luxembourg's and Euroclear's names on the books of their respective
depositaries, which in turn will hold such interests in customers' securities
accounts in the depositaries' names on the books of DTC. At the present time,
Citibank, N.A. acts as U.S. depositary for Clearstream Luxembourg and JPMorgan
Chase Bank acts as U.S. depositary for Euroclear (the "U.S. Depositaries").
Beneficial interests in the Global Notes will be held in denominations of
$1,000 and integral multiples of $1,000. Except as set forth below, the Global
Notes may be transferred, in whole but not in part, only to another nominee of
DTC or to a successor of DTC or its nominee.
BOOK-ENTRY SYSTEM
So long as DTC or its nominee is the registered owner of a Global Note, DTC
or its nominee, as the case may be, will be considered the sole Holder of the
notes represented by such Global Note for all purposes under the Indenture and
the beneficial owners of interests in such Global Notes will be entitled only
to those rights and benefits afforded to them in accordance with DTC's regular
operating procedures. Except as provided below, owners of beneficial interests
in a Global Note will not be entitled to have notes registered in their names,
will not receive or be entitled to receive physical delivery of notes in
certificated form and will not be considered the registered owners or Holders
thereof under the Indenture.
DTC has advised us and the underwriters that it is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides
asset servicing for over 2 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over 85
countries that DTC's participants ("Direct Participants") deposit with DTC. DTC
also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing
Corporation, Government Securities Clearing Corporation, MBS Clearing
Corporation, and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC, and
EMCC, also subsidiaries of DTCC), as well as by The New York Stock Exchange,
Inc., the American Stock Exchange LLC, and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The
DTC Rules applicable to its participants are on file with the Securities and
Exchange Commission.
Purchases of notes of either series under the DTC system must be made by or
through Direct Participants, which will receive a credit for such notes on
DTC's records. The ownership interest of each actual purchaser of each Global
Note (each, a "beneficial owner") is in turn recorded on the Direct and
Indirect Participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchase, but beneficial owners are
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expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which such beneficial owner entered into the transaction.
Transfers of ownership interests in Global Notes are accomplished by entries
made on the books of Direct and Indirect Participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in the Global Notes, except in limited circumstances
explained below in this section. The laws of some states require that certain
persons take physical delivery in definitive form of securities that they own.
Such limits and such laws may impair the ability of such persons to own,
transfer or pledge beneficial interests in a Global Note.
To facilitate subsequent transfers, Global Notes are registered in the name
of DTC's partnership nominee, Cede & Co. or such other name as may be requested
by an authorized representative of DTC. The deposit of each Global Note with
DTC and its registration in the name of Cede & Co. or such other nominee
effects no change in beneficial ownership. DTC has no knowledge of the actual
beneficial owners of the Global Notes; DTC's records reflect only the identity
of the Direct Participants to whose accounts the Global Notes are credited,
which may or may not be the beneficial owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Delivery of notices and other communications by DTC to Direct Participants,
by Direct Participants to Indirect Participants and by Direct and Indirect
Participants to beneficial owners is governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. (nor such other nominee) will consent or vote
with respect to the notes. Under its usual procedures, DTC mails an omnibus
proxy to the issuer as soon as possible after the record date. The omnibus
proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Global Notes are credited on the record date
(identified on a list attached to the omnibus proxy).
Principal, premium, if any, and interest payments in respect of the Global
Notes will be made by us to the Trustee and from the Trustee to DTC. DTC's
practice is to credit Direct Participants' accounts, upon DTC's receipts of
funds and corresponding detailed information from us or the Trustee, on the
payment date in accordance with their respective holdings as shown on DTC's
records. Payments by Direct and Indirect Participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such Participant and not of
DTC, the Trustee or ours, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment of principal of, premium, if
any, and interest on, the Global Notes to DTC is our responsibility or the
Trustee's, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the beneficial
owners is the responsibility of Direct and Indirect Participants.
Beneficial interests in the Global Notes will trade in DTC's Same-Day Funds
Settlement System until maturity or earlier redemption, and secondary market
trading activity in the Global Notes will therefor settle in immediately
available funds, subject in all cases to the rules and operating procedures of
DTC. Transfers between Direct and Indirect Participants in DTC will be effected
in the ordinary way in accordance with DTC's rules and operating procedures and
will be settled in same-day funds.
Redemption notices shall be sent to DTC. If less than the entire principal
amount of notes of a series represented by Global Notes is being redeemed,
DTC's practice is to determine by lot the amount of the interest of each Direct
Participant to be redeemed.
Clearstream Luxembourg has advised us that it is incorporated under the laws
of Luxembourg as a professional depositary. Clearstream Luxembourg holds
securities for its participating organizations ("Clearstream Luxembourg
Participants") and facilitates the clearance and settlement of securities
transactions between Clearstream Luxembourg Participants through electronic
book-entry changes in accounts of Clearstream
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Luxembourg Participants, thereby eliminating the need for physical movement of
certificates. Clearstream Luxembourg provides to Clearstream Luxembourg
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Clearstream Luxembourg interfaces with domestic markets
in several countries. As a professional depositary, Clearstream Luxembourg is
subject to regulation by the Luxembourg Commission for the Supervision of the
Financial Sector, also known as the Commission de Surveillance du Secteur
Financier. Clearstream Luxembourg Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations and may include the underwriters or their affiliates. Indirect
access to Clearstream Luxembourg is also available to others, such as banks,
brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Clearstream Luxembourg Participant either
directly or indirectly.
Distributions with respect to the notes of each series held beneficially
through Clearstream Luxembourg will be credited to cash accounts of Clearstream
Luxembourg Participants in accordance with its rules and procedures, to the
extent received by the U.S. Depositary for Clearstream Luxembourg.
Euroclear has advised us that it was created in 1968 to hold securities for
participants of Euroclear ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Euroclear provides various other services, including
securities lending and borrowing and interfaces with domestic markets in
several countries. Euroclear is operated by Euroclear Bank S.A./N.V. (the
"Euroclear Operator"), under contract with Euroclear Clearance Systems S.C., a
Belgian cooperative corporation (the "Cooperative"). All operations are
conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks (including
central banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters or their affiliates. Indirect
access to Euroclear is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities
and cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to the notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary
for Euroclear.
Euroclear has advised that investors that acquire, hold and transfer
interests in the notes by book-entry through accounts with the Euroclear
Operator or any other securities intermediary are subject to the laws and
contractual provisions governing their relationship with their intermediary, as
well as the laws and contractual provisions governing the relationship between
such an intermediary and each other intermediary, if any, standing between
themselves and the notes. The Euroclear Operator has advised that under Belgian
law, investors that are credited with securities on the records of the
Euroclear Operator have a co-property right in the fungible pool of interests
in securities on deposit with the Euroclear Operator in an amount equal to the
amount of interests in securities credited to their accounts. In the event of
the insolvency of the Euroclear Operator, Euroclear Participants would have a
right under Belgian law to the return of the amount and type of interests in
securities
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credited to their accounts with the Euroclear Operator. If the Euroclear
Operator did not have a sufficient amount of interests in securities on deposit
of a particular type to cover the claims of all Euroclear Participants credited
with such interests in securities on the Euroclear Operator's records, all
Euroclear Participants having an amount of interests in securities of such type
credited to their accounts with the Euroclear Operator would have the right
under Belgian law to the return of their pro rata share of the amount of
interest in securities actually on deposit.
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it, such
as dividends, voting rights and other entitlements, to any person credited with
such interests in securities on its records.
Secondary market trading between Clearstream Luxembourg Participants and
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through DTC on the one hand, and directly or indirectly through Clearstream
Luxembourg or Euroclear Participants, on the other, will be effected through
DTC in accordance with DTC's rules on behalf of the relevant European
international clearing system by its U.S. Depositary; however, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time).
The relevant European international clearing system will, if the transaction
meets its settlement requirements, deliver instructions to its U.S. Depositary
to take action to effect final settlement on its behalf by delivering or
receiving the notes in DTC, and making or receiving payment in accordance with
normal procedures for same-day funds settlement applicable to DTC. Clearstream
Luxembourg Participants and Euroclear Participants may not deliver instructions
directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of the notes received in
Clearstream Luxembourg or Euroclear as a result of a transaction with a Direct
Participant will be made during subsequent securities settlement processing and
dated the business day following DTC settlement date. Such credits, or any
transactions in the notes settled during such processing, will be reported to
the relevant Euroclear Participants or Clearstream Luxembourg Participants on
that business day. Cash received in Clearstream Luxembourg or Euroclear as a
result of sales of notes by or through a Clearstream Luxembourg Participant or
a Euroclear Participant to a Direct Participant will be received with value on
the business day of settlement in DTC but will be available in the relevant
Clearstream Luxembourg or Euroclear cash account only as of the business day
following settlement in DTC.
Title to book-entry interests in the notes will pass by book-entry
registration of the transfer within the records of Clearstream Luxembourg,
Euroclear or DTC, as the case may be, in accordance with their respective
procedures. Book-entry interests in the notes may be transferred within
Clearstream Luxembourg and within Euroclear and between Clearstream Luxembourg
and Euroclear in accordance with procedures established for these purposes by
Clearstream Luxembourg and Euroclear. Book-entry interests in the notes may be
transferred within DTC in accordance with procedures established for this
purpose by DTC. Transfers of book-entry interests in the notes among
Clearstream Luxembourg and Euroclear and DTC may be effected in accordance with
procedures established for this purpose by Clearstream Luxembourg, Euroclear
and DTC.
Although DTC, Clearstream Luxembourg and Euroclear have agreed to the
foregoing procedures in order to facilitate transfers of securities among
participants of DTC, Clearstream Luxembourg and Euroclear, they are under no
obligation to perform or continue to perform such procedures and they may
discontinue the procedures at any time. Under such circumstances, in the event
that a successor securities depositary is not appointed, note certificates are
required to be printed and delivered.
S-22
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, note
certificates will be printed and delivered.
Neither we nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
interests in a Global Note, or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
The information in this section concerning DTC, Clearstream Luxembourg,
Euroclear and their respective book-entry systems has been obtained from
sources that we believe to be reliable, but we take no responsibility for the
accuracy thereof.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
Notes represented by a Global Note will be exchangeable for Certificated
Notes if (a) DTC notifies us that it is unwilling or unable to continue as
depositary for the Global Notes or we determine that DTC is unable to continue
as depositary, and we thereupon fail to appoint a successor to DTC within 90
days, (b) we in our discretion at any time determine not to have notes
represented by Global Notes or (c) a default entitling the registered holders
of the notes to accelerate the maturity thereof has occurred and is continuing.
Any note that is exchangeable pursuant to the preceding sentence will be
exchangeable for Certificated Notes of like tenor in authorized denominations
and registered in such names as DTC shall direct.
GOVERNING LAW
Each supplemental indenture will specify that the notes covered by this
prospectus supplement will be governed by, and construed in accordance with,
the laws of the State of New York.
S-23
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain material U.S. federal
income tax consequences of the purchase, ownership and disposition of the notes
by holders who acquire notes of any series at original issuance for cash at
their face value. This discussion is limited to holders who hold notes of any
series as capital assets, within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended. This discussion does not address all aspects
of U.S. federal income taxation that may be applicable to investors in light of
their particular circumstances, or to investors subject to special treatment
under U.S. federal income tax law (including, without limitation, certain
financial institutions, insurance companies, tax-exempt entities, dealers in
securities, persons who have acquired notes as part of a straddle, hedge,
conversion transaction or other integrated investment or constructive sale or
persons whose functional currency is not the U.S. dollar). This discussion is
based on provisions of the Internal Revenue Code, Treasury regulations
promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which are subject to
change, possibly with retroactive effect.
EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO SUCH INVESTOR OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF NOTES OF ANY SERIES INCLUDING THE APPLICABILITY OF ANY FEDERAL
ESTATE OR GIFT TAX LAWS, ANY STATE, LOCAL OR FOREIGN TAX LAWS, ANY CHANGES IN
APPLICABLE TAX LAWS AND ANY PENDING OR PROPOSED LEGISLATION OR REGULATIONS.
As used in this section, the term "U.S. holder" means a beneficial owner of
a note that is, for U.S. federal income tax purposes,
. a citizen or resident of the United States,
. a corporation or partnership created or organized under the laws of the
United States or of any political subdivision thereof,
. an estate the income of which is subject to U.S. federal income taxation
regardless of its source, or
. a trust, if a U.S. court is able to exercise primary supervision over
the administration of such trust and one or more U.S. persons have the
authority to control all substantial decisions of such trust or the
trust has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a domestic trust for U.S. federal income
tax purposes.
The term "non-U.S. holder" means a beneficial owner of a note other than a
U.S. holder.
U.S. TAXATION OF U.S. HOLDERS
Payments of Interest. Stated interest payable on notes of each series
generally will be included in the gross income of a U.S. holder as ordinary
interest income at the time accrued or received, in accordance with such U.S.
holder's method of accounting for U.S. federal income tax purposes.
Disposition of the Notes. On the sale, exchange, redemption, retirement at
maturity or other disposition of a note, a U.S. holder generally will recognize
capital gain or loss equal to the difference between the amount realized (less
any portion attributable to accrued and unpaid interest) and the U.S. holder's
adjusted tax basis in the note. The capital gain or loss will be long-term
capital gain or loss if the holding period for the note exceeds one year at the
time of the disposition. Generally, the maximum federal tax rate for
individuals on long term capital gain is 20%.
U.S. TAXATION OF NON-U.S. HOLDERS
Payments of Interest. In general, under current U.S. tax law, payments of
interest received by a non-U.S. holder will not be subject to U.S. withholding
tax, provided that the non-U.S. holder:
. does not actually or constructively own 10% or more of the total
combined voting power of all of our classes of stock entitled to vote,
S-24
. is not a bank whose receipt of interest is described in Section
881(c)(3)(A) of the Internal Revenue Code,
. is not a controlled foreign corporation that is related to us actually
or constructively through stock ownership, and
. either
. the beneficial owner of a note of any series provides us or our
paying agent with a properly executed certification on Internal
Revenue Service form W-8BEN (or suitable substitute form), signed
under penalties of perjury, that the beneficial owner is not a "U.S.
person" for U.S. federal income tax purposes and that provides the
beneficial owner's name and address, or
. a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course
of its business, holds a note of any series and certifies to us or
our agent under penalties of perjury that the Internal Revenue
Service form W-8BEN (or a suitable substitute form) has been received
from the beneficial owner of such note or a qualifying intermediary
and furnishes the payor a copy thereof.
Payments of interest not exempt from U.S. federal withholding tax as
described above, or not exempt because of a change of law effective after the
date of the original issuance of a note of any series, will be subject to
withholding tax at the rate of 30%, unless reduced or eliminated under an
applicable income tax treaty, and unless the beneficial owner of such note
provides us or our paying agent, as the case may be, with a properly executed:
. Internal Revenue Service Form W-8BEN (or successor form) claiming an
exemption from or reduction of withholding under the benefit of a tax
treaty, or
. Internal Revenue Service Form W-8ECI (or successor form) stating that
interest paid on such note is not subject to withholding tax because it
is effectively connected with the beneficial owner's conduct of a trade
or business in the United States.
Disposition of the Notes. A non-U.S. holder generally will not be subject
to U.S. federal income tax (and no tax will be withheld) with respect to gain
realized on the sale or other disposition of a note of either series, unless:
. the gain is effectively connected with a U.S. trade or business
conducted by the non-U.S. holder; or
. the non-U.S. holder is an individual who is present in the United States
for 183 or more days during the taxable year of the disposition and
certain other conditions are met.
Effectively Connected Income. If interest and other payments received by a
non-U.S. holder with respect to notes of any series, including proceeds from
the sale, exchange or other disposition of such notes, are effectively
connected with the conduct by the non-U.S. holder of a trade or business within
the United States (or the non-U.S. holder is otherwise subject to U.S. federal
income taxation on a net basis with respect to such holder's ownership of the
notes), the non-U.S. holder will generally be subject to the rules described
above under "U.S. Taxation of U.S. Holders" (subject to any modification
provided under an applicable income tax treaty). The non-U.S. holder may also
be subject to the U.S. "branch profits tax" if the holder is a corporation.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal and interest paid on a note and to the proceeds of sale
of a note of any series paid to U.S. holders other than certain exempt
recipients (such as corporations). U.S. holders also may be subject to backup
withholding at a rate of 30% on
S-25
payments of principal and interest on, and the proceeds of the sale of, notes
of any series. In general, backup withholding will apply to the payments if the
U.S. holder:
. fails to furnish a taxpayer identification number (TIN) which, for an
individual, would be his or her Social Security number,
. furnishes an incorrect TIN, or
. fails to report in full payments of interest or dividends.
Information reporting and backup withholding generally will not apply to
payments made to a non-U.S. holder who provides the certification described
under "U.S. Taxation of Non-U.S. Holders--Payments of Interest" or otherwise
establishes an exemption from backup withholding, provided that neither we nor
the paying agent have actual knowledge that the holder is a U.S. holder.
S-26
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement,
among us and the underwriters named below, we have agreed to sell to the
underwriters, and each underwriter has severally agreed to purchase from us,
the principal amount of the notes set forth opposite each of their respective
names below.
Principal Amount of Principal Amount of
7% Senior 7.875% Senior
Notes due Notes due
Underwriters July 1, 2012 July 1, 2032
------------ ------------------- -------------------
Banc of America Securities LLC....... $205,000,000 $179,375,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................ 205,000,000 179,375,000
Stephens Inc......................... 200,000,000 175,000,000
First Union Securities, Inc.......... 52,000,000 45,500,000
Banc One Capital Markets, Inc........ 36,000,000 31,500,000
McDonald Investments Inc............. 36,000,000 31,500,000
SunTrust Capital Markets Inc......... 36,000,000 31,500,000
Morgan Keegan & Company, Inc......... 14,000,000 12,250,000
The Williams Capital Group, L.P...... 14,000,000 12,250,000
Salomon Smith Barney Inc............. 2,000,000 1,750,000
------------ ------------
Total....................... $800,000,000 $700,000,000
============ ============
In the underwriting agreement, subject to the conditions thereof, the
underwriters have agreed to purchase the 2012 notes at 99.155% of their
aggregate principal amount, and the 2032 notes at 98.709% of their aggregate
principal amount, and to resell such securities in minimum denominations of
$1,000 and integral multiples of $1,000.
The underwriters have advised us that they propose initially to offer each
series of notes directly to investors at the offering prices set forth on the
cover page of this prospectus supplement. The underwriters may also offer the
notes to certain dealers at such price less a concession not in excess of 0.25%
of the principal amount of the 2012 notes and 0.50% of the principal amount of
the 2032 notes. The underwriters may allow, and such dealers may re-allow, a
concession not in excess of 0.225% of the principal amount of the 2012 notes
and 0.25% of the principal amount of the 2032 notes to certain other dealers.
After the initial offering of the notes, the underwriters may from time to time
vary the prices to investors and other selling terms.
In connection with the offering of each series of notes, certain of the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of such notes. Specifically, the underwriters may overallot in
connection with the offering, creating a short position. In addition, the
underwriters may bid for, and purchase, such notes in the open market to cover
short positions or to stabilize the price of such notes. Any of these
activities may stabilize or maintain the market price of such notes above
independent market levels, but no representation is made hereby of the
magnitude of any effect that the transactions described above may have on the
market price of such notes. The underwriters will not be required to engage in
these activities, and may engage in these activities, and may end any of these
activities at any time without notice.
The underwriting agreement provides that we will indemnify the underwriters
against certain liabilities, including liabilities incurred in connection with
this prospectus supplement and under the Securities Act of 1933, or will
contribute to payments that the underwriters may be required to make in respect
of those liabilities. The underwriters have agreed to reimburse us for certain
expenses of the offering.
In the ordinary course of their respective businesses, each of the
underwriters and their affiliates has performed, and may in the future perform,
investment banking, and/or commercial banking services for us and our
affiliates. Affiliates of the underwriters are lenders under our existing
multi-year revolving credit facility and have entered into commitments with us
for a 364-day revolving credit facility.
The notes of each series will be a new issue of securities for which
currently there is no market. Although the underwriters intend to make a market
in such notes in a manner permitted under applicable securities laws,
S-27
the underwriters are not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no assurance
as to the development or liquidity of any market for the notes of each series.
We do not intend to seek a listing of the notes on any securities exchange or
on the Nasdaq National Market.
Each underwriter acknowledges that it will not offer, sell, or deliver any
of the notes, directly or indirectly, or distribute the prospectus supplement
or accompanying prospectus, or any other offering material relating to the
notes, in or from any jurisdiction outside the United States except under
circumstances that will, to the best knowledge and belief of such underwriter,
result in compliance with the applicable laws and regulations thereof and which
will not impose any obligations on us, except as set forth in the underwriting
agreement.
Each underwriter has represented and agreed that (a) it has not offered or
sold and, prior to the expiration of the period of six months from the closing
date for the issue of the notes, will not offer or sell any notes to persons in
the United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances which
have not resulted and will not result in an offer to the public in the United
Kingdom, within the meaning of the Public Offers of Securities Regulations
1995, (b) it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000 (the "FSMA")) received by it in connection with
the issue or sale of any notes in circumstances in which section 21(1) of the
FSMA does not apply to ALLTEL, and (c) it has complied with and will comply
with all applicable provisions of the FSMA with respect to anything done by it
in relation to the notes in, from or otherwise involving the United Kingdom.
Each underwriter has acknowledged that offers and sales of the notes in
Germany are subject to the restrictions provided in the German Securities
Prospectus Act (Wertpapier-Verkaufsprospektgesetz) with respect to
Euro-securities (Euro-Wertpapiere); in particular, the notes may not be offered
in Germany by way of public promotion.
Each underwriter has represented and agreed that it has not, directly or
indirectly, offered or sold and will not, directly or indirectly, offer or sell
in The Netherlands any notes other than to persons who trade or invest in
securities in the conduct of a profession or business (which include banks,
stockbrokers, insurance companies, pension funds, other institutional investors
and finance companies and treasury departments of large enterprises) or
otherwise in compliance with any other applicable laws or regulations of The
Netherlands.
The notes have not been and will not be registered under the Securities and
Exchange Law of Japan, as amended ("SEL"). Each of the underwriters has agreed
that it has not directly or indirectly offered or sold, and it will not
directly or indirectly offer or sell, any notes in Japan or to, or for the
benefit of, any resident of Japan (which term as used in this paragraph means
any person resident in Japan, including any corporation or other entity
organized under the laws of Japan) or to others for re-offering or re-sale,
directly or indirectly, in Japan or to, or for the benefit of, any resident of
Japan, except pursuant to an exemption from the registration requirements of,
and in compliance with, the SEL and any other applicable laws, regulations and
guidelines of Japan.
Each underwriter has represented and agreed that the notes are being issued
and sold outside the Republic of France and that, in connection with their
initial distribution, it and each of its affiliates have not offered or sold
and will not offer or sell, directly or indirectly, any notes to the public in
the Republic of France within the meaning of Article L. 411-1 of Code monetaire
et financier and that it and each of its affiliates have not distributed and
will not distribute or cause to be distributed to the public in the Republic of
France this prospectus supplement, the accompanying prospectus or any other
offering material relating to the notes, and that such offers, sales and
distributions have been and shall be made in France only to (a) qualified
investors (investisseurs qualfies) and/or (b) a restricted group of investors
(cercle restreint d'investisseurs), in both cases acting for their own account,
as those qualified investors are defined in Article L. 411-2 of the Code
monetaire et financier and decret no. 98-880 dated October 1, 1998.
S-28
Each underwriter acknowledges that this prospectus supplement and the
accompanying prospectus has not been registered with the Registrar of Companies
and Business in Singapore and that the notes are offered in Singapore pursuant
to an exemption invoked under sections 106C and 106D of the Companies Act,
Chapter 50 of Singapore (the "Singapore Companies Act"). Accordingly, each
underwriter has represented and agreed that the notes may not be offered or
sold, nor may this prospectus supplement and the accompanying prospectus or any
other offering document or material relating to the notes or offering be
circulated or distributed, directly or indirectly, to the public or any member
of the public in Singapore other than (a) to an institutional investor or other
body or person specified in section 106C of the Singapore Companies Act, or (b)
to a sophisticated investor specified in section 106D of the Singapore
Companies Act, or (c) otherwise pursuant to, and in accordance with the
conditions of section 106E(2) of the Singapore Companies Act or any other
applicable exemption invoked under Division 5A of Part IV of the Singapore
Companies Act.
Each underwriter acknowledges that (a) the offering has not been registered
in Spain, (b) it has not distributed, and will not distribute, this prospectus
supplement and the accompanying prospectus in Spain in connection with the
offering of the notes, and (c) it has not made and will not make any offers or
sales of notes in Spain except in accordance with the Spanish Securities Law
and the decrees and regulations made thereunder.
Stephens Inc., an affiliate of Stephens Group, Inc., is an underwriter in
this offering. As of June 13, 2002, Stephens Group, Inc. beneficially owned
15,495,626 shares of our common stock. Warren Stephens, an executive officer of
Stephens Inc., is a member of the board of directors of ALLTEL.
First Union Securities, Inc., one of the underwriters, is an indirect,
wholly owned subsidiary of Wachovia Corporation. Wachovia Corporation conducts
its investment banking, institutional, and capital markets businesses through
its various bank, broker-dealer and non-bank subsidiaries (including First
Union Securities, Inc.) under the trade name of Wachovia Securities. Any
references to Wachovia Securities in this prospectus supplement, however, do
not include Wachovia Securities, Inc., member NASD/SIPC and a separate
broker-dealer subsidiary of Wachovia Corporation and an affiliate of First
Union Securities, Inc., which may or may not be participating as a selling
dealer in the distribution of the securities offered by this prospectus
supplement.
A prospectus in electronic format may be made available on the website
maintained by one or more of the underwriters participating in this offering.
The underwriters may allocate a number of notes of each series for sale to
their online brokerage account holders. Internet distributions will be
allocated by the underwriters that will make internet distributions on the same
basis as other allocations. Merrill Lynch, Pierce, Fenner & Smith Incorporated
will be facilitating distribution for this offering to certain of its internet
subscription customers. Merrill Lynch, Pierce, Fenner & Smith Incorporated
intends to allocate a limited number of notes of each series for sale to its
online brokerage customers. An electronic prospectus supplement and
accompanying prospectus is available on the internet website maintained by
Merrill Lynch, Pierce, Fenner & Smith Incorporated. Other than the prospectus
supplement and the accompanying prospectus in electronic format, the
information on the Merrill Lynch website is not intended to be part of this
prospectus supplement or the accompanying prospectus.
LEGAL MATTERS
Certain legal matters with respect to the offering of the notes will be
passed on for us by Kutak Rock LLP, Little Rock, Arkansas, and for the
underwriters by Shearman & Sterling, New York, New York. At June 13, 2002, the
attorneys of Kutak Rock LLP who are or may be participating in the matters
contemplated by this prospectus supplement, beneficially owned a total of 4,652
shares of our common stock.
S-29
PROSPECTUS
ALLTEL CORPORATION
[LOGO] ALLTEL
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
DEPOSITARY SHARES
STOCK PURCHASE CONTRACTS
EQUITY UNITS
This prospectus provides you with a general description of securities in
an aggregate amount not to exceed $5,000,000,000 that we may offer from time to
time. These securities include debt securities, common stock, preferred stock,
warrants, depositary shares, stock purchase contracts and equity units. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of the sale and that may add to or
update the information in this prospectus. You should read this prospectus and
the accompanying prospectus supplement carefully before you invest.
ALLTEL common stock, is listed on the New York Stock Exchange and Pacific
Stock Exchange under the symbol "AT." Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We may offer the securities in amounts, at prices and on terms determined
by market conditions at the time of offering. We may sell the securities
through agents we select or through underwriters and dealers we select. If we
use agents, underwriters or dealers to sell the securities, we will name them
and describe their compensation in a prospectus supplement.
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate as
of any date other than the date of this prospectus or of such supplement.
This Prospectus is dated April 10, 2002.
TABLE OF CONTENTS
PAGE
----
About this Prospectus......................................................................... 1
Where You Can Find More Information........................................................... 1
Special Note Regarding Forward-Looking Information............................................ 2
ALLTEL Corporation............................................................................ 3
Use of Proceeds............................................................................... 4
Ratio of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends 4
Description of Debt Securities................................................................ 6
Description of Capital Stock.................................................................. 12
Description of Warrants....................................................................... 16
Description of Depositary Shares.............................................................. 17
Description of Stock Purchase Contracts and Equity Units...................................... 19
Plan of Distribution.......................................................................... 20
Legal Opinions................................................................................ 21
Experts....................................................................................... 21
(i)
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC using a "shelf" registration process. Under this shelf process, we may
sell any combination of the following securities:
. debt securities,
. common stock,
. preferred stock,
. warrants,
. depositary shares,
. stock purchase contracts, and
. equity units,
in one or more offerings up to a total dollar amount of $5,000,000,000. This
prospectus provides you with a general description of the securities we may
sell. Each time we sell securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement also may add, update or change information contained in
this prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the caption
"Where You Can Find More Information." We may only use this prospectus to sell
securities if it is accompanied by a prospectus supplement.
References in this prospectus to the terms "we," "us," "the company," or
"ALLTEL" mean ALLTEL Corporation, unless we state otherwise or the context
indicates otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy documents at the SEC's public reference room
located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for information about the operation of the public reference
room. You may also read our SEC filings, including the complete registration
statement and all of the exhibits to it, through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" information filed with
them, which means that we can disclose important information to you by
referring you directly to those documents. The information incorporated by
reference is considered to be part of this prospectus. In addition, information
we file with the SEC in the future will automatically update and supersede
information contained and incorporated by reference in this prospectus and the
accompanying prospectus supplement. We incorporate by reference the documents
listed below and any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"),
prior to the termination of this offering:
. ALLTEL's Annual Report on Form 10-K for the year ended December 31,
2001;
. ALLTEL's Current Report on Form 8-K dated March 19, 2002;
. The description of ALLTEL common stock contained in ALLTEL's
Registration Statement on Form 8-A (File No. 1-4996) filed February
9, 1987; and
. The description of the Rights Agreement (discussed below under the
caption "Description of Equity Securities") contained in ALLTEL's
Registration Statement on Form 8-A (File No. 1-4996) filed February
4, 1997.
1
We will provide free copies of any of these documents, if you write or
telephone us at:
Investor Relations
One Allied Drive
Little Rock, Arkansas 72202
Telephone (501) 905-8999
We have filed this prospectus as part of a registration statement on Form
S-3 with the SEC. The registration statement contains exhibits and other
information that are not contained in this prospectus. Descriptions in this
prospectus of the provisions of documents filed as exhibits to the registration
statement or otherwise filed with the SEC are only summaries of the documents'
material terms. If you want a complete description of the content of the
documents, you should obtain the documents yourself by following the procedures
described above.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes and incorporates by reference forward-looking
statements within the meaning of the securities laws. All statements that are
not historical facts are "forward-looking statements." The words "estimate,"
"project," "intend," "expect," "believe," "anticipate," "plans," "continues,"
"may, "will," "would," "should," "could," "potential" and similar expressions
identify forward-looking statements. These forward-looking statements include
statements regarding the expected financial position, business, financing
plans, business prospects, revenues, working capital, liquidity, capital needs,
interest costs and income, relating to ALLTEL.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that could cause our actual future results to
be materially different from historical results or from any future results
expressed or implied by such forward-looking statements. These forward-looking
statements are based on estimates, projections, beliefs and assumptions and do
not guarantee the future or our expressed beliefs. Important factors that could
cause actual results to differ materially from the results expressed or implied
by the forward-looking statements include, but are not limited to:
. the effects of intense competition in the markets and businesses in
which we operate;
. the costs and business risks associated with providing new services
or entering new markets;
. unexpected changes in demand for our products or services;
. the effects of mergers and consolidations within the
telecommunications industry;
. our ability to achieve projected synergies and financial results
expected from pending or completed acquisitions;
. rapid and significant changes in technology and the substantial
capital requirements associated with meeting the existing and future
technological requirements of our business;
. the effects of ongoing changes in the regulation of the
telecommunications industry;
. unexpected results of litigation filed against us;
. the effects of more general factors such as changes in interest
rates, in general market or economic conditions or in legislation,
regulation or public policy; and
. those factors listed in any applicable prospectus supplement under
the caption "Risk Factors."
Forward-looking statements speak only as of the date they are made, and
we disclaim any obligation to update or revise any forward-looking statement
based on the occurrence of future events, the receipt of new information or
otherwise.
2
ALLTEL CORPORATION
ALLTEL Corporation is a customer-focused information technology company
that provides communications and information services. ALLTEL conducts its
operations primarily through subsidiaries that provide wireless and wireline
local, long-distance, network access and Internet services, wide-area paging
service and information processing management services and advanced application
software. Telecommunications products are warehoused and sold by ALLTEL's
distribution subsidiary. Another subsidiary publishes telephone directories for
affiliates and other independent telephone companies. The company is
incorporated in Delaware. ALLTEL's principal executive offices are located at
One Allied Drive, Little Rock, Arkansas 72202, and our telephone number is
(501) 905-8000. ALLTEL's website is located at www.alltel.com. Information on
our website does not form part of this prospectus.
3
USE OF PROCEEDS
We intend to use the net proceeds from the sale of these securities for
general corporate purposes which may include refinancing existing debt,
financing acquisitions, capital expenditures or other working capital
requirements. Further details relating to the uses of the net proceeds of any
such offering will be set forth in the applicable prospectus supplement.
RATIOS OF EARNINGS TO FIXED CHARGES AND TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to fixed charges
and to combined fixed charges and preferred stock dividends for ALLTEL, which
includes our subsidiaries on a consolidated basis.
For the purpose of calculating the ratios,
(1) earnings include:
. income before taxes and adjustments for minority interest in
consolidated subsidiaries; plus
. income from equity investments, fixed charges, and distributed income
of equity investments; less
. amounts for capitalized interest and the minority interest in pretax
income of subsidiaries that have not incurred fixed charges; and
(2) fixed charges include:
. interest on all debt;
. amortization of debt issuance costs; and
. the interest component of operating rents.
For purposes of calculating the ratio of earnings to combined fixed
charges and preferred stock dividends, preferred stock dividends include the
amount of pre-tax earnings required to pay the dividends on outstanding
preferred stock.
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
2001 2000 1999 1998 1997
---- ----- ---- ---- ----
Ratio of earnings to fixed charges............................. 5.92(1) 10.01(2) 4.81(3) 4.17(4) 4.30(5)
Ratio of earnings to combined fixed charges and preferred stock
dividends.................................................... 5.92(1) 10.00(2) 4.79(3) 4.14(4) 4.28(5)
--------
(1)Income before taxes for 2001 included pretax gains totaling $360.5 million
and consisted of a $347.8 million pretax gain from the sale of PCS licenses,
a pretax gain of $9.5 million from the dissolution of a wireless partnership
and a pretax gain of $3.2 million from the sale of certain investments.
Income before taxes also included pretax charges totaling $95.1 million
consisting of termination fees of $2.9 million incurred in connection with
the early retirement of long-term debt, charges of $77.1 million incurred in
connection with the restructuring of the Company's operations and
write-downs of $15.1 million in the carrying value of cell site equipment.
Excluding these items, the ratio of earnings to fixed charges and the ratio
of earnings to combined fixed charges and preferred stock dividends both
would have been 5.16 for 2001.
(2)Income before taxes for 2000 included pretax gains totaling $1,943.5 million
and consisted of a pretax gain of $1,345.5 million from the exchange of
wireless properties with Bell Atlantic and GTE, a pretax gain of $36.0
million from the sale of certain PCS assets and a pretax gain of $562.0
million from the sale of
4
investments, principally consisting of WorldCom common stock. Income before
taxes also included pretax charges totaling $51.9 million consisting of a
$15.0 million write-down of an investment, integration and other charges of
$25.4 million incurred in connection with the acquisition of wireless assets
and certain restructuring activities of the Company's information services
business and a $11.5 million charge incurred in connection with a litigation
settlement. Excluding these items, the ratio of earnings to fixed charges
would have been 4.85 for 2000 and the ratio of earnings to combined fixed
charges and preferred stock dividends would have been 4.84 for 2000.
(3)Income before taxes for 1999 included a pretax gain of $43.1 million from
the sale of WorldCom common stock. Income before taxes also included a
pretax charge of $90.5 million in connection with the closing of the
Company's mergers with Aliant Communications Inc., Liberty Cellular Inc.,
Advanced Information Resources Limited, and Southern Data Systems and with
certain loss contingencies and other restructuring activities. Excluding
these items, the ratio of earnings to fixed charges would have been 4.95 for
1999 and the ratio of earnings to combined fixed charges and preferred stock
dividends would have been 4.93 for 1999.
(4)Income before taxes for 1998 included a pretax gain of $296.2 million,
principally from the sale of WorldCom common stock. Income before taxes also
included pretax charges totaling $310.5 million consisting of merger and
integration expenses of $252.0 million incurred in connection with the
closing of the Company's merger with 360 Communications Company, a
write-down of $55.0 million resulting from changes in a customer care and
billing contract with a major customer and termination fees of $3.5 million
incurred due to the early retirement of long-term debt. Excluding these
items, the ratio of earnings to fixed charges would have been 4.21 for 1998
and the ratio of earnings to combined fixed charges and preferred stock
dividends would have been 4.18 for 1998.
(5)Income before taxes for 1997 included pretax gains of $209.6 million,
principally from the sale of WorldCom common stock and the Company's
healthcare operations. Income before taxes also included a pretax write-down
of $16.9 million to reflect the fair value less cost to sell the Company's
wire and cable operations. Excluding these items, the ratio of earnings to
fixed charges would have been 3.69 for 1997 and the ratio of earnings to
combined fixed charges and preferred stock dividends would have been 3.66
for 1997.
5
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the debt securities to which any prospectus supplement may relate. A
prospectus supplement will describe the particular terms and provisions of, and
the extent to which the general terms and provisions described below may apply
to, a series of debt securities.
ALLTEL will issue the debt securities under an indenture as supplemented
and amended from time to time between ALLTEL and J. P. Morgan Trust Company,
National Association, which acts as trustee. The indenture and its associated
documents contain the full legal text of the matters described in this section.
Because this section is a summary, it does not describe every aspect of the
securities, and it is subject to and qualified in its entirety by reference to
all of the provisions of the indenture, including the definition of certain
terms used in the indenture. We include references in parentheses to certain
sections of the indenture.
GENERAL
The indenture:
. does not limit the amount of debt securities that we may issue;
. allows us to issue debt securities in one or more series;
. does not require us to issue all of the debt securities of a series
at the same time; and
. allows us to reopen a series to issue additional debt securities
without the consent of the debt security holders of such series.
Each series of debt securities will constitute unsecured and
unsubordinated indebtedness of ALLTEL and will rank on an equal basis with
ALLTEL's other unsecured and unsubordinated indebtedness. Any secured
indebtedness of ALLTEL will rank ahead of the debt securities. Also, we conduct
operations primarily through our subsidiaries and substantially all of our
consolidated assets are held by our subsidiaries. Accordingly, our cash flow
and our ability to meet our obligations under the debt securities will be
largely dependent on the earnings of our subsidiaries and the distribution or
other payment of these earnings to us in the form of dividends or loans or
advances and repayment of loans and advances from us. Our subsidiaries are
separate and distinct legal entities and have no obligation to pay the amounts
which will be due on our debt securities, or to make any funds available for
payment of amounts which will be due on our debt securities. Because we are a
holding company, our obligations under our debt securities will be effectively
subordinated to all existing and future liabilities of our subsidiaries.
Therefore, our rights, and the rights of our creditors, including the rights of
the holders of the debt securities to participate in any distribution of assets
of any of our subsidiaries, when such subsidiary is liquidated or reorganized,
is subject to the prior claims of the subsidiary's creditors. To the extent
that we may be a creditor with recognized claims against our subsidiaries, our
claims will still be effectively subordinated to any security interest in, or
mortgages or other liens on, the assets of the subsidiary that are senior to us.
You should refer to the prospectus supplement for the terms of the
particular series of debt securities that we are offering, including:
. the title of the debt securities of the series;
. the principal amount of the debt securities being offered and any
limit upon the aggregate principal amount;
. the date or dates on which the principal will be payable;
. the price or prices at which the debt securities will be issued;
6
. the fixed or variable rate or rates of the debt securities, or manner
of calculation, if any, at which the debt securities of the series
will bear interest, the date or dates from which any such interest
will accrue and on which such interest will be payable, and, with
respect to securities of the series in registered form, the record
date for the interest payable on any interest payment date;
. whether the amount of payments of principal of, and any premium or
make-whole amount, which is the amount in addition to principal and
interest that is required to be paid to the holder of a debt security
as a result of any optional redemption or accelerated payment of such
debt security, or interest on, the debt securities may be determined
according to an index, formula or other method and how such amounts
will be determined;
. the date or dates on which, and the place or places where the
principal of the debt securities will be payable;
. any redemption, repurchase, sinking fund, or analogous provisions;
. if other than the principal amount thereof, the portion of the
principal amount that will be payable upon declaration of
acceleration of the maturity thereof;
. whether we will issue debt securities of the series in registered or
bearer form, or both;
. the terms upon which a holder may exchange bearer securities for
securities in registered form and vice versa;
. whether we will issue debt securities in the form of one or more
"global securities" through the book-entry system of The Depository
Trust Company, New York, New York;
. whether and under what circumstances ALLTEL will pay additional
amounts on the debt securities of the series held by a person who is
not a U.S. person in respect of taxes or similar charges withheld or
deducted and, if so, whether ALLTEL will have the option to redeem
such securities rather than pay such additional amounts;
. the denominations of the debt securities, if other than $1,000 or an
integral multiple of $1,000;
. whether the debt securities will be convertible into or exchangeable
for any other securities and the terms and conditions upon which a
conversion or exchange may occur, including the initial conversion or
exchange price or rate, the conversion or exchange period and any
other additional provisions;
. the currency in which we will make payments to the holder and, if a
foreign currency, the manner of conversion from United States dollars;
. the applicability, if any, of covenant defeasance provisions
described in this prospectus or in the indenture; and
. any additional provisions or other special terms not inconsistent
with the provisions of the indenture, including any terms that may be
required by or advisable under United States law or regulations or
advisable in connection with the marketing of debt securities of such
series.
To the extent not described in this prospectus, principal and interest,
if any, will be payable, and the debt securities of a particular series will be
transferable, in the manner described in the prospectus supplement relating to
such series.
Debt securities of any series may be issued as registered securities or
bearer securities, or both. In this prospectus and the prospectus supplement we
refer to the person in whose name a registered security is registered and the
bearer of a bearer security as a "holder." A registered security is a security
registered in the name of the holder in the records of the registrar. A global
security is a registered security representing the debt of the series
registered in the name of a depositary. Unless otherwise provided in the
applicable prospectus supplement, we
7
will issue each series of debt securities in the form of one or more global
securities that will be deposited with, or on behalf of, The Depository Trust
Company, as depositary. We will not offer, sell, resell, or deliver bearer
securities to U.S. persons in connection with their original issuance.
If appropriate, the prospectus supplement will describe federal income
tax consequences applicable to a series of debt securities.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the prospectus supplement relating to such
series. Global securities, if any, are expected to be deposited with The
Depository Trust Company, as depositary. ALLTEL may issue global securities in
either registered or bearer form and in either temporary or permanent form.
Unless the applicable prospectus supplement provides otherwise, the following
provisions will apply to depositary arrangements.
Once a global security is issued, the depositary for such global security
or its nominee will credit on its book-entry registration and transfer system
the respective principal amounts of the individual debt securities represented
by such global security to the accounts of participants that have accounts with
such depositary. Such accounts shall be designated by the underwriters, dealers
or agents with respect to such debt securities or by ALLTEL if the debt
securities are offered directly. Ownership of beneficial interests in such
global security will be limited to participants with the depositary or persons
that may hold interests through those participants.
Ownership of beneficial interests in any global security will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the depositary or its nominee (with respect to beneficial
interests of participants with the depositary) and records of participants
(with respect to beneficial interests of persons who hold through participants
with the depositary). Neither ALLTEL nor the trustee will have any
responsibility or liability for any aspect of the records of the depositary or
its nominee or for maintaining, supervising or reviewing any records of the
depositary or its nominee or records of participants relating to beneficial
ownership interests in the debt securities. The laws of some states require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such laws, as well as limits on participation in the
depositary's book-entry system, may impair the ability to own, pledge or
transfer beneficial interest in a global security.
So long as the depositary for a global security or its nominee is the
registered owner of such global security, the depositary or its nominee, as the
case may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the indenture.
Accordingly, except as described in the applicable prospectus supplement,
owners of beneficial interest in a global security will not be entitled to have
any of the individual debt securities represented by such global security
registered in their names, will not receive or be entitled to receive physical
delivery of any such debt securities in definitive form and will not be
considered the owners or holders thereof under the indenture. Each person
owning a beneficial interest in a global security must rely on the procedures
of the depositary or its nominee and, if such person is not a participant with
the depositary, on the procedures of the participant through which such person
owns its interests, to exercise any rights of a holder under the indenture.
Payments of principal of, and any premium (or make-whole amount) and
interest on, individual debt securities represented by a global security
registered in the name of a depositary or its nominee will be made to or at the
direction of the depositary or its nominee, as the case may be, as the
registered owner of the global security under the indenture. ALLTEL expects
that the depositary for a series of debt securities, or its nominee, upon
receipt of any payment of principal, premium or interest, will immediately
credit the accounts of relevant participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant global security as shown on the records of the depositary or its
nominee. ALLTEL also expects that
8
payments by participants to owners of beneficial interests in such global
security held through such participants will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in street name, and will
be the responsibility of such participants. Neither ALLTEL nor the trustee have
or will have any responsibility or liability for the payment of such amounts to
beneficial owners of debt securities including principal, any premium (or
make-whole amount) or interest.
If the depositary for any debt securities is at any time unwilling,
unable or ineligible to continue as depositary and ALLTEL does not appoint a
successor depositary within 90 days, ALLTEL will issue individual debt
securities in exchange for the global security representing such debt
securities. In addition, ALLTEL may at any time and in its sole discretion,
subject to any limitations described in the prospectus supplement relating to
such debt securities, determine not to have any of such debt securities
represented by one or more global securities and in such event will issue
individual debt securities in exchange for the global security or securities
representing such debt securities.
LIEN ON ASSETS
If at any time ALLTEL subjects any part of its property to a lien, ALLTEL
will provide equal and proportionate security to the debt securities.
Exceptions to this covenant include the creation, extension, renewal or
refunding of purchase-money mortgages or liens, or other liens to which any
property or asset acquired by ALLTEL is subject as of the date of its
acquisition by ALLTEL, and the making of any deposit or pledge to secure public
or statutory obligations.
Nothing contained in the indenture prevents an affiliate of ALLTEL,
including any or all subsidiaries of ALLTEL holding substantially all the
assets of ALLTEL and its consolidated subsidiaries, from mortgaging, pledging,
or subjecting to any lien any property or assets, whether or not acquired by
such person from ALLTEL. (Section 4.02.) Except as described in this section,
the indenture does not contain any covenants or other provisions which would
afford holders protection in the event of a highly leveraged transaction
involving ALLTEL.
AMENDMENT AND WAIVER
Subject to certain exceptions, ALLTEL and the trustee may amend or
supplement the indenture or the debt securities with the consent of the holders
of a majority in principal amount of the outstanding debt securities of each
series affected by the amendment or supplement, with each series voting as a
class. The trustee may waive compliance with any provision with the consent of
the holders of a majority in principal amount of the outstanding debt
securities of each series affected by such waiver, with each series voting as a
class. Without the consent of each holder affected, any such amendment or
waiver may not:
. reduce the amount of debt securities whose holders must consent to an
amendment or waiver;
. change the rate of or change the time of payment of interest on any
debt security;
. change the principal of or change the fixed maturity of any debt
security;
. waive a default in the payment of the principal of or interest on any
debt security;
. make any security payable in money other than that stated in the debt
security;
. reduce any premium payable upon redemption of any debt security; or
. impair the right to institute suit for the enforcement of any payment
on or with respect to any debt security. (Section 9.02.)
ALLTEL and the trustee may amend or supplement the indenture without the
consent of any holder to:
. cure any ambiguity, defect, or inconsistency in the indenture or in
the debt securities of any series;
9
. provide for the assumption of all the obligations of ALLTEL under the
securities and the indenture by any corporation in connection with a
merger, consolidation, transfer, or lease of ALLTEL's property and
assets substantially as an entirety, as provided for in the indenture;
. secure the debt securities;
. provide for uncertificated securities in addition to or in place of
certificated debt securities;
. make any change that does not adversely affect the rights of any
holder;
. provide for the issuance of, and establish the form and terms and
conditions of, a series of debt securities or to establish the form
of any certifications required to be furnished pursuant to the terms
of the indenture or any series of securities; or
. add to rights of holders. (Section 9.01.)
CONSOLIDATION, MERGER AND CONVEYANCES
ALLTEL may not consolidate with or merge into, or transfer or lease its
property and assets substantially as an entity to another entity unless:
. the successor entity is a U.S. corporation and assumes all of
ALLTEL's obligations under the debt securities and the indenture; and
. after giving effect to the transaction, no default under the
indenture shall have occurred and be continuing.
If ALLTEL completes a transaction as described in the previous sentence
(other than a lease), ALLTEL's obligations under the securities and the
indenture terminate after the transaction is completed. (Section 5.01.)
DEPOSIT OF MONEY OR GOVERNMENT OBLIGATIONS TO PAY SECURITIES
ALLTEL has the right to terminate certain of its obligations under the
debt securities and the indenture with respect to the debt securities of any
series or any installment of principal of or interest on that series if ALLTEL:
. irrevocably deposits with the trustee, in trust for the benefit of
the holders of that series or portions thereof, money or non-callable
obligations of the United States of America sufficient to pay, when
due, principal of and interest on the debt securities with respect to
which a deposit is made to maturity; or redemption or such
installment of principal or interest, as the case may be; and
. all other conditions set forth in the securities of that series are
met.
In such event, however, ALLTEL's obligation to pay the principal of and
interest on the debt securities shall survive until the securities are no
longer outstanding. (Section 8.01; Section 4.01.)
EVENTS OF DEFAULT
Holders will have special rights if an event of default occurs and is not
cured. The following events are defined in the indenture as events of default:
. default in the payment of interest for 90 days;
. default in the payment of the principal of any security of such
series;
. failure by ALLTEL for 90 days following sufficient notice to comply
with any of its other agreements in the debt securities of such
series or in the indenture; and
. certain events of bankruptcy or insolvency. (Section 6.01.)
10
If an event of default occurs with respect to the debt securities of any
series and is continuing, the trustee or the holders of at least 25% in
principal amount of all of the outstanding debt securities of that series may
declare the principal to be due and payable. Upon such declaration, such
principal and all accrued interest thereon shall be due and payable
immediately. (Section 6.02.)
Subject to the provisions in the indenture for the indemnification of the
trustee, the holders of at least a majority in aggregate principal amount of
the outstanding debt securities of each series affected may direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the trustee. The trustee
may refuse to follow any such direction that conflicts with law or the
indenture, that is unduly prejudicial to the rights of holders of that series
or that would subject the trustee to personal liability. (Section 6.05.)
A holder may pursue a remedy with respect to the indenture or the debt
securities of any series only if:
. such holder has previously given to the trustee written notice of a
continuing event of default with respect to the debt securities of
such series;
. the holders of at least 25% in aggregate principal amount of
outstanding debt securities of such series shall have made written
request to the trustee to pursue the remedy;
. such holder or holders have offered to the trustee indemnity
reasonably satisfactory to the trustee against any loss, liability or
expense to be, or which may be, incurred by the trustee in pursuing
the remedy;
. the trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
. during such 60-day period, the holders of a majority in aggregate
principal amount of the outstanding securities of such series have
not given the trustee a direction that is inconsistent with such
written request.
A holder may not use the indenture to prejudice the rights of another
holder or to obtain a preference or priority over such other holder. (Section
6.06.).
The trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity satisfactory to it against any loss, liability or
expense. (Section 7.01(f).) The trustee may withhold from holders notice of any
continuing default, except a default in payment of principal or interest, if it
determines that withholding notice is in their interests. (Section 7.05.)
EXCHANGE OF SECURITIES
A holder of registered debt securities may exchange them for an equal
aggregate principal amount of registered debt securities. (Section 2.08(a).)
To the extent permitted by the terms of a series of debt securities
authorized to be issued in registered form and unregistered form, a holder of
unregistered debt securities may exchange them for an equal aggregate principal
amount of registered or unregistered debt securities. (Section 2.08(b).) A
holder may not exchange registered debt securities for unregistered debt
securities until ALLTEL has notified the trustee and the registrar that, as a
result of such exchange, ALLTEL will not suffer adverse consequences under
United States laws and regulations.
Any exchange of debt securities will be for debt securities of the same
series and date of maturity in such authorized denominations as the holder may
request. Securities must be surrendered for exchange at the agency ALLTEL
maintains for such purpose and all other requirements of such agent must be
fulfilled.
CONCERNING THE TRUSTEE
ALLTEL maintains banking relationships in the ordinary course of business
with the trustee.
11
DESCRIPTION OF CAPITAL STOCK
The following summary is qualified in its entirety by the Delaware
General Corporation Law, the Amended and Restated Certificate of Incorporation
of ALLTEL, as amended (the "ALLTEL Certificate") and ALLTEL's Rights Agreement
(described below). The ALLTEL Certificate and Rights Agreement are included as
exhibits to ALLTEL's Annual Report on Form 10-K on file with the SEC. See
"Where You Can Find More Information."
GENERAL
The authorized capital stock of ALLTEL consists of 1,000,000,000 shares
of ALLTEL common stock, par value $1 per share, 50,000,000 shares of voting
cumulative preferred stock, par value $25 per share (the "ALLTEL Voting
Preferred Stock") and 50,000,000 shares of cumulative non-voting preferred
stock, no par value (the "ALLTEL Non-Voting Preferred Stock").
ALLTEL COMMON STOCK AND RELATED RIGHTS
The holders of the ALLTEL common stock have one vote per share on matters
submitted to a vote of shareholders. Such holders vote as a class together with
the holders of ALLTEL Voting Preferred Stock. All shares of ALLTEL common stock
will participate equally in the distribution of property remaining after
payment of liquidation preferences on preferred stock and after satisfaction of
all other claims, on liquidation, dissolution or winding up of the affairs of
ALLTEL. Such shares will also equally participate in all dividends declared by
the ALLTEL board. The outstanding shares of ALLTEL common stock are fully paid
and non-assessable. The ALLTEL common stock has no preemptive rights, no
cumulative voting rights and no redemption, sinking fund or conversion
provisions. At February 25, 2002, there were 310,854,020 shares of ALLTEL
common stock issued and outstanding.
The ALLTEL bylaws provide for a classified board consisting of three
classes of directors with each class being elected for a term of three years.
The number of directors in each class may be fixed or changed from time to time
by either (i) a majority of stockholders represented and entitled to vote at a
meeting called for the purpose of electing directors or (ii) the affirmative
vote of the majority of directors then in office.
ALLTEL is party to a Rights Agreement (the "Rights Agreement"), dated
January 30, 1997 (the "Dividend Declaration Date") pursuant to which ALLTEL's
board declared a dividend of one right ("Right") for each share of ALLTEL
common stock outstanding on February 9, 1997 (the "Record Date") and for each
share of ALLTEL common stock issued between the Record Date and the
Distribution Date (defined below). Each holder of a Right may purchase from
ALLTEL, upon the occurrence of certain events, 1/1000 of a share of ALLTEL's
Series K Cumulative Voting Preferred Stock, par value $25 per share (the
"Series K Stock") at a price of $100.00 per 1/1000 of a share (the "Purchase
Price"). The number of Rights per share of ALLTEL common stock, the number of
shares of Series K Stock for which each Right is exercisable and the Purchase
Price are subject to adjustment as described below.
The certificates for the ALLTEL common stock evidence the Rights. A
separate certificate for each Right will be issued on the close of business on
the tenth business day after the earliest to occur of the following two events
(the earlier of such dates being called the "Distribution Date"):
(1) the public announcement that any person (other than
ALLTEL, any subsidiary of ALLTEL or any employee benefit plan of
ALLTEL) together with its affiliates and associates (an "Acquiring
Person"), beneficially owns 15% or more of ALLTEL common stock; or
(2) the close of business on the tenth business day after
any person commences a tender or exchange offer if upon completion
that person would beneficially own 15% or more of ALLTEL common
stock.
12
The Rights Agreement provides that, until the Distribution Date, the Rights
will only be transferred with the ALLTEL common stock. The Rights are not
exercisable until the Distribution Date and will expire at the close of
business on January 31, 2007 ("Final Expiration Date"), unless earlier redeemed
by ALLTEL as described below.
If an Acquiring Person acquires 15% or more of ALLTEL common stock (the
"Stock Acquisition Date") then each holder of a Right shall have the right to
purchase at the then current Purchase Price and in lieu of Series K Stock,
shares of ALLTEL common stock having a value equal to two times the Purchase
Price. If an Acquiring Person acquires 15% or more of ALLTEL common stock
pursuant to a tender offer or an exchange offer at a price and on terms
determined by at least a majority of the Rights Agreement Continuing Directors
(defined below) to be in the best interest of ALLTEL and its shareholders (a
"Qualifying Offer"), then Rights holders shall not be entitled to exercise the
Rights. The term "Rights Agreement Continuing Director" means: (a) any member
of the ALLTEL board who is not an Acquiring Person or an affiliate or associate
of such person, and who was a member of the ALLTEL board prior to the date of
the Rights Agreement or (b) any person who subsequently becomes a member of the
ALLTEL board if the member's election to the ALLTEL board is recommended or
approved by a majority of the Rights Agreement Continuing Directors.
Except for certain transactions involving a Qualifying Offer, if
following the Stock Acquisition Date either:
(a) ALLTEL engages in a merger or other business combination
transaction in which ALLTEL does not survive,
(b) ALLTEL engages in a merger or other business combination
transaction with another person in which ALLTEL survives, but in
which ALLTEL common stock is changed or exchanged, or
(c) 50% or more of ALLTEL's assets, cash flow or earning
power is sold or transferred,
the Rights Agreement provides that each holder of a Right will thereafter have
the right to purchase at the then current Purchase Price, common stock of the
acquiring company having a value equal to two times the Purchase Price.
The Purchase Price payable, and the number of shares of Series K Stock or
other securities or property issuable, on exercise of the Rights, are subject
to adjustment from time to time to prevent dilution following stock dividends,
subdivisions, combinations, reclassifications, warrant or right grants or
distributions. Also, if prior to the Distribution Date ALLTEL declares a
dividend on, subdivides or combines into a smaller number the outstanding
shares of ALLTEL common stock, then the number of Rights associated with each
share of ALLTEL common stock shall be proportionately adjusted in such a manner
that the total number of outstanding Rights is unchanged.
Until the close of business on the tenth business day following the Stock
Acquisition Date, the ALLTEL board of directors by majority vote may redeem and
terminate the Rights at a price of $0.01 per Right (the "Right Redemption
Price"). ALLTEL may, at its option, pay the Right Redemption Price in cash,
ALLTEL common stock, or any other form of consideration deemed appropriate by
the ALLTEL Board.
Until a Right is exercised, a Right holder has no rights as a shareholder
of ALLTEL, including, the right to vote or to receive dividends and such Rights
have no dilutive effect on the earnings of ALLTEL.
Prior to the Distribution Date, ALLTEL may amend the Rights Agreement
without the approval of Rights holders. Following the Distribution Date, ALLTEL
may amend the Rights Agreement without the approval of Rights holders to:
(a) cure any ambiguity;
(b) correct or supplement any defective or inconsistent
provision;
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(c) shorten or lengthen any required time period; or
(d) change any provisions in the Rights Agreement in any
manner which does not adversely affect the interests of the Rights
holders (other than an Acquiring Person).
However, the Rights Agreement may not be amended to lengthen a time period
relating to when the Rights may be redeemed if the Rights are not then
redeemable, or to lengthen any other time period unless such lengthening is for
the purpose of protecting the Rights holders. Additionally, after the
Distribution Date ALLTEL may not make any amendment to the Rights Agreement
that changes the Rights Redemption Price, the Final Expiration Date, the
Purchase Price or the number of 1/1000 of a share of Series K Stock for which
a Right is exercisable.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or a group that attempts to acquire ALLTEL
without conditioning the offer on: (a) the Rights being redeemed; (b) a
substantial number of Rights being acquired; or (c) being deemed a Qualifying
Offer under the Rights Agreement. However, the Rights should not interfere with
any merger or business combination in connection with a Qualifying Offer or
that is approved by ALLTEL.
DELAWARE ANTI-TAKEOVER STATUTE
Section 203 of the Delaware General Corporation Law restricts business
combinations with certain interested shareholders (defined under the Delaware
General Corporation Law to include persons who beneficially own or acquire 15%
or more of a Delaware corporation's voting stock, with the exception of any
person who owned and has continued to own shares in excess of the 15%
limitation since December 23, 1987, hereinafter a "Section 203 Interested
Shareholder"). Section 203, which applies to ALLTEL, prohibits business
combination transactions between a publicly held Delaware corporation and any
Section 203 Interested Shareholder for a period of three years after the date
on which the Section 203 Interested Shareholder became an interested
shareholder, unless (a) prior to that date the corporation's board of directors
approved either the proposed business combination or the transaction which
resulted in the Section 203 Interested Shareholder becoming an interested
shareholder, (b) upon consummation of the transaction which resulted in the
Section 203 Interested Shareholder becoming an interested shareholder, the
Section 203 Interested Shareholder owned at least 85% of the voting stock of
the corporation outstanding at the time the transaction commenced, excluding
for purposes of determining the number of shares outstanding those shares owned
(i) by persons who are directors and also officers and (ii) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer, or (c) on or subsequent to such date the business
combination is approved by the corporation's board of directors and authorized
at an annual or special meeting of shareholders, and not by written consent, by
the affirmative vote of at least two-thirds of the outstanding voting stock
which is not owned by the Section 203 Interested Shareholder.
FAIR PRICE PROVISIONS
In addition to the provisions of Section 203, the ALLTEL Certificate
contains certain "fair price" provisions which impose further conditions on the
consummation of business combination transactions ("Section 203 Business
Combinations"). The ALLTEL Certificate requires the holders of at least 85% of
the voting power of the outstanding shares of any class of stock of ALLTEL
entitled to vote generally in the election of directors to approve all Section
203 Business Combinations involving ALLTEL and a Section 203 Interested
Shareholder unless: (a) after becoming a Section 203 Interested Shareholder,
such person shall (i) have taken steps to ensure the ALLTEL Continuing
Directors (as defined below) maintain representation on the ALLTEL board
proportionate to the stockholdings of the holders of ALLTEL voting stock not
affiliated with the Section 203 Interested Shareholder, (ii) the Section 203
Interested Shareholder shall not have acquired newly issued securities from
ALLTEL (except in certain limited circumstances) and (iii) the Section 203
Interested Shareholder shall not have acquired any additional outstanding
voting stock, or securities convertible into voting stock, except as part
14
of the transaction that resulted in the Section 203 Interested Shareholder
becoming an interested shareholder; and (b) certain minimum price and other
procedural requirements are met in connection with the proposed transaction
with the Section 203 Interested Shareholder.
The term "ALLTEL Continuing Directors" is defined as any person who was a
member of the ALLTEL board and elected by shareholders prior to the time when
the Section 203 Interested Shareholder acquired in excess of 5% of the voting
stock of ALLTEL, or any person recommended to succeed a ALLTEL Continuing
Director by a majority of the ALLTEL Continuing Directors. Although neither
Section 203, nor the ALLTEL fair price provision or ALLTEL Certificate, would
preclude the holders of a controlling interest from exercising control over
ALLTEL and would not prevent a hostile acquisition of control of ALLTEL, such
provisions may have the effect of discouraging or making more difficult a
hostile acquisition of control.
RIGHTS OF APPRAISAL
Under the Delaware General Corporation Law, shareholders may exercise a
right to dissent from certain corporate actions and obtain payment of the fair
value of their shares. This remedy is an exclusive remedy, except where the
corporate action involves fraud or illegality. The Delaware General Corporation
Law provides appraisal rights only in certain mergers or consolidations and not
(unless the certificate of incorporation of a corporation so provides, which
the ALLTEL Certificate does not) for a sale or transfer of all or substantially
all of a corporation's assets or an amendment to its certificate of
incorporation. Moreover, the Delaware General Corporation Law does not provide
appraisal rights in connection with a merger or consolidation (unless the
certificate of incorporation so provides, which the ALLTEL Certificate does
not) to the holders of shares of a constituent corporation listed on a national
securities exchange (or designated as a national market system security by the
National Association of Securities Dealers, Inc.) or held of record by more
than 2,000 shareholders, unless the applicable agreement of merger or
consolidation requires the holders of such shares to receive, in exchange for
such shares, any property other than shares of stock of the resulting or
surviving corporation, shares of stock of any other corporation listed on a
national securities exchange (or designated as described above) or held of
record by more than 2,000 holders, cash in lieu of any fractional shares or any
combination of the foregoing. In addition, the Delaware General Corporation Law
denies appraisal rights if the shareholders of the surviving corporation in a
merger did not have to vote to approve the merger.
ALLTEL PREFERRED STOCK
The Board of Directors of ALLTEL may issue (without obtaining shareholder
approval) shares of preferred stock in such series as it deems appropriate. As
of February 25, 2002, there were no shares of ALLTEL Voting Preferred Stock and
a total of 60,843 shares of ALLTEL Non-Voting Preferred Stock issued and
outstanding. ALLTEL has reserved 500,000 shares of Series K Stock for future
issuance under the Rights Agreement discussed above.
Prior to the issuance of shares of any series of preferred stock, the
ALLTEL Board is required by the Delaware General Corporation Law and the ALLTEL
Certificate to fix, for each series, the designations, powers and preferences
and the relative, participating, optional or other special rights of the shares
of each series and any qualifications, limitations and restrictions thereof, as
are permitted by Delaware Law. Investors should refer to the prospectus
supplement relating to the offering of a series of preferred stock for the
specific terms of that series, including:
. the distinctive serial designation and the number of shares
constituting such series;
. the dividend rates or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if
so, from which date or dates, the payment and record date or dates
for dividends, and the participating and other rights, if any, with
respect to dividends;
. the voting powers, full or limited, if any, of the shares of such
series;
15
. whether the shares of such series shall be redeemable and, if so, the
price or prices at which, and the terms and conditions on which, such
shares may be redeemed;
. the amount or amounts payable upon the shares of such series and any
preferences applicable thereto in the event of voluntary or
involuntary liquidation, dissolution or winding up of the company;
. whether the shares of such series shall be entitled to the benefit of
a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such
fund and the manner of its application, including the price or prices
at which such shares may be redeemed or purchased through the
application of such fund;
. whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any
other series of the same or any other class or classes of stock of
ALLTEL or a subsidiary and, if so convertible or exchangeable, the
conversion price or prices, the rate or rates of exchange, and the
adjustments thereof, if any, at which such conversion or exchange may
be made, and any other terms and conditions of such conversion or
exchange;
. the price or other consideration for which the shares of such series
shall be issued;
. whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of
undesignated preferred stock (or series thereof) and whether such
shares may be reissued as shares of the same or any other class or
series of stock; and
. such other powers, preferences, rights, qualifications, limitations
and restrictions thereof as the board of directors may deem advisable.
TRANSFER AND RIGHTS AGENT, REGISTRAR
First Union National Bank serves as the registrar and transfer and rights
agent for the common stock.
STOCK EXCHANGE LISTING
Our common stock is listed on the New York Stock Exchange and the Pacific
Stock Exchange. The trading symbol for our common stock on these exchanges is
"AT."
DESCRIPTION OF WARRANTS
ALLTEL may issue warrants for the purchase of debt securities, preferred
stock or common stock. Warrants may be issued independently or together with
other securities and may be attached to or separate from any offered
securities. Each series of warrants will be issued under a separate warrant
agreement to be entered into between ALLTEL and a bank or trust company, as
warrant agent. The warrant agent will act solely as our agent in connection
with the warrants and will not have any obligation or relationship of agency or
trust for or with any holders or beneficial owners of warrants. A copy of the
warrant agreement will be filed with the SEC in connection with the offering of
warrants.
The prospectus supplement relating to a particular issue of warrants to
issue securities will describe the terms of those warrants, including the
following:
. the title of the warrants;
. the offering price for the warrants, if any;
. the aggregate number of the warrants;
. the designation and terms of the securities purchasable upon exercise
of the warrants;
16
. if applicable, the designation and terms of the securities that the
warrants are issued with and the number of warrants issued with each
security;
. if applicable, the date from and after which the warrants and any
securities issued with them will be separately transferable;
. the number or amount of securities that may be purchased upon
exercise of a warrant and the price at which the securities may be
purchased upon exercise;
. the dates on which the right to exercise the warrants will commence
and expire;
. if applicable, the minimum or maximum amount of the warrants that may
be exercised at any one time;
. whether the warrants represented by the warrant certificates or
securities that may be issued upon exercise of the warrants will be
issued in registered or bearer form;
. information relating to book-entry procedures, if any;
. the currency or currency units in which the offering price, if any,
and the exercise price are payable;
. if applicable, a discussion of material United States federal income
tax considerations;
. anti-dilution provisions of the warrants, if any;
. redemption, repurchase or analogous provisions, if any, applicable to
the warrants; and
. any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
Each warrant will entitle the holder of the warrant to purchase at the
exercise price set forth in the applicable prospectus supplement the principal
amount of debt securities or shares of preferred stock or common stock being
offered. Holders may exercise warrants at any time up to the close of business
on the expiration date set forth in the applicable prospectus supplement. After
the close of business on the expiration date, unexercised warrants are void.
Holders may exercise warrants as set forth in the prospectus supplement
relating to the warrants being offered.
Until you exercise your warrants to purchase ALLTEL debt securities,
preferred stock, or common stock, you will not have any rights as a holder of
our debt securities, preferred stock, or common stock, as the case may be, by
virtue of your ownership of warrants.
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
ALLTEL may offer fractional shares of preferred stock, rather than full
shares of preferred stock. If we do so, we may issue receipts for depositary
shares that each represent a fraction of a share of a particular series of
preferred stock. The prospectus supplement will indicate that fraction. The
shares of preferred stock represented by depositary shares will be deposited
under a depositary agreement between ALLTEL and a bank or trust company that
meets certain requirements and is selected by us (the "Bank Depositary"). Each
owner of a depositary share will be entitled to all the rights and preferences
of the preferred stock represented by the depositary share. The depositary
shares will be evidenced by depositary receipts issued pursuant to the
depositary agreement. Depositary receipts will be distributed to those persons
purchasing the fractional shares of preferred stock in accordance with the
terms of the offering.
We have summarized some common provisions of a depositary agreement and
the related depositary receipts. The forms of the depositary agreement and the
depositary receipts relating to any particular issue of depositary shares will
be filed with the SEC each time we issue depositary shares, and you should read
those documents for provisions that may be important to you.
17
DIVIDENDS AND OTHER DISTRIBUTIONS
If ALLTEL pays a cash distribution or dividend on a series of preferred
stock represented by depositary shares, the Bank Depositary will distribute
such dividends to the record holders of such depositary shares. If the
distributions are in property other than cash, the Bank Depositary will
distribute the property to the record holders of the depositary shares.
However, if the Bank Depositary determines that it is not feasible to make the
distribution of property, the Bank Depositary may, with our approval, sell such
property and distribute the net proceeds from such sale to the record holders
of the depositary shares.
REDEMPTION OF DEPOSITARY SHARES
If ALLTEL redeems a series of preferred stock represented by depositary
shares, the Bank Depositary will redeem the depositary shares from the proceeds
received by the Bank Depositary in connection with the redemption. The
redemption price per depositary share will equal the applicable fraction of the
redemption price per share of the preferred stock. If fewer than all the
depositary shares are redeemed, the depositary shares to be redeemed will be
selected by lot or pro rata as the Bank Depositary may determine.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
preferred stock represented by depositary shares are entitled to vote, the Bank
Depositary will mail the notice to the record holders of the depositary shares
relating to such preferred stock. Each record holder of these depositary shares
on the record date (which will be the same date as the record date for the
preferred stock) may instruct the Bank Depositary as to how to vote the
preferred stock represented by such holder's depositary shares. The Bank
Depositary will endeavor, insofar as practicable, to vote the amount of the
preferred stock represented by such depositary shares in accordance with such
instructions, and ALLTEL will take all action which the Bank Depositary deems
necessary in order to enable the Bank Depositary to do so. The Bank Depositary
will abstain from voting shares of the preferred stock to the extent it does
not receive specific instructions from the holders of depositary shares
representing such preferred stock.
CONVERSION OR EXCHANGE OF PREFERRED STOCK
If the deposited preferred stock is convertible into or exchangeable for
other securities, the depositary shares, as such, will not be convertible into
or exchangeable for such other securities. Rather, any holder of the depositary
shares may surrender the related depositary receipts, together with any amounts
payable by the holder in connection with the conversion or the exchange, to the
depositary with written instructions to cause conversion or exchange of the
preferred stock represented by the depositary shares into or for such other
securities. If only some of the depositary shares are to be converted or
exchanged, a new depositary receipt or receipts will be issued for any
depositary share not converted or exchanged.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the depositary agreement may be amended by agreement between the
Bank Depositary and ALLTEL. However, any amendment that materially and
adversely alters the rights of the holders of depositary shares will not be
effective unless such amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding. The depositary agreement
may be terminated by the Bank Depositary or ALLTEL only if: (1) all outstanding
depositary shares have been redeemed; or (2) there has been a final
distribution in respect of the preferred stock in connection with any
liquidation, dissolution or winding up of ALLTEL and such distribution has been
distributed to the holders of depositary receipts.
18
CHARGES OF BANK DEPOSITARY
ALLTEL will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. We will also
pay charges of the Bank Depositary in connection with the initial deposit of
the preferred stock and any redemption of the preferred stock. Holders of
depositary receipts will pay other transfer and other taxes and governmental
charges and any other charges, including a fee for the withdrawal of shares of
preferred stock upon surrender of depositary receipts, as are expressly
provided in the depositary agreement to be for their accounts.
WITHDRAWAL OF PREFERRED STOCK
Except as may be provided otherwise in the applicable prospectus
supplement, upon surrender of depositary receipts at the principal office of
the Bank Depositary, subject to the terms of the depositary agreement, the
owner of the depositary shares may demand delivery of the number of whole
shares of preferred stock and all money and other property, if any, represented
by those depositary shares. Partial shares of preferred stock will not be
issued. If the depositary receipts delivered by the holder evidence a number of
depositary shares in excess of the number of depositary shares representing the
number of whole shares of preferred stock to be withdrawn, the Bank Depositary
will deliver to such holder at the same time a new depositary receipt
evidencing the excess number of depositary shares. Holders of preferred stock
thus withdrawn may not thereafter deposit those shares under the depositary
agreement or receive depositary receipts evidencing depositary shares therefor.
MISCELLANEOUS
The Bank Depositary will forward to holders of depositary receipts all
reports and communications from ALLTEL that are delivered to the Bank
Depositary and that we are required to furnish to the holders of the preferred
stock. Neither the Bank Depositary nor ALLTEL will be liable if we are
prevented or delayed by law or any circumstance beyond our control in
performing our obligations under the depositary agreement. The obligations of
the Bank Depositary and ALLTEL under the depositary agreement will be limited
to performance in good faith of our duties thereunder, and we will not be
obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is
furnished. ALLTEL may rely upon written advice of counsel or accountants, or
upon information provided by persons presenting preferred stock for deposit,
holders of depositary receipts or other persons believed to be competent and on
documents believed to be genuine.
RESIGNATION AND REMOVAL OF BANK DEPOSITARY
The Bank Depositary may resign at any time by delivering to ALLTEL notice
of its election to do so, and we may at any time remove the Bank Depositary.
Any such resignation or removal will take effect upon the appointment of a
successor Bank Depositary and its acceptance of such appointment. The successor
Bank Depositary must be appointed within 60 days after delivery of the notice
of resignation or removal and must be a bank or trust company meeting the
requirements of the depositary agreement.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND EQUITY UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and obligating us to sell to the holders, a
specified number of shares of common stock, or other securities at a future
date or dates. We may fix the price and number of securities subject to the
stock purchase contracts at the time we issue the stock purchase contracts or
we may provide that the price and number of securities will be determined
pursuant to a formula set forth in the stock purchase contracts. The stock
purchase contracts may be issued separately or as part of units consisting of a
stock purchase contract and debt securities or debt obligations
19
of third parties, including U.S. treasury securities, securing the obligations
of the holders of the units to purchase the securities under the stock purchase
contracts. We refer to these units as equity units. The stock purchase
contracts may require holders to secure their obligations under the stock
purchase contracts in a specified manner. The stock purchase contracts also may
require us to make periodic payments to the holders of the equity units or vice
versa, and those payments may be unsecured or refunded on some basis.
The applicable prospectus supplement will describe the terms of the stock
purchase contracts or equity units offered by that prospectus supplement. The
description in the prospectus supplement will not necessarily be complete, and
reference will be made to the stock purchase contracts or equity units, and, if
applicable, collateral or depositary arrangements, relating to the stock
purchase contracts or equity units, which will be filed with the SEC each time
we issue stock purchase contracts or equity units. Material United States
federal income tax considerations applicable to the equity units and the stock
purchase contracts will also be discussed in the applicable prospectus
supplement. If we issue any stock purchase contracts or equity units, we will
file or incorporate the form of stock purchase contract and equity unit as
exhibits to the registration statement and you should read these documents for
provisions that may be important to you. You can obtain copies of any form of
stock purchase contract and equity unit by following the directions described
under the caption "Where You Can Find More Information."
PLAN OF DISTRIBUTION
We may sell the securities to or through underwriters. We also may sell
the securities directly to other purchasers or through agents. Only
underwriters named in the prospectus supplement are deemed to be underwriters
in connection with the securities.
The distribution of the securities may be effected from time to time in
one or more transactions at:
. a fixed price or prices, which may be changed;
. market prices prevailing at the time of sale;
. prices related to such prevailing market prices; or
. negotiated prices.
In connection with the sale of the securities, underwriters may receive
compensation from ALLTEL or from purchasers of the securities for whom they may
act as agents in the form of discounts, concessions, or commissions.
Underwriters and agents that participate in the distribution of the securities
may be deemed to be underwriters, and any discounts or commissions received by
them and any profit on the resale of the securities by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933. We
will identify any such underwriter or agent, and describe any such
compensation, in the prospectus supplement.
Under agreements which may be entered into by ALLTEL, underwriters and
agents who participate in the distribution of the securities may be entitled to
indemnification by ALLTEL against certain liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the underwriters or agents may be required to make in respect thereof.
Offered securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarketing firm will be identified and
the terms of its agreements, if any, with us and its compensation will be
described in the applicable prospectus supplement.
20
Unless otherwise indicated in the prospectus supplement, we do not intend
to list any of the securities on a national securities exchange, other than
common stock. In the event the securities are not listed on a national
securities exchange, certain broker-dealers may make a market in the
securities, but will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given that any
broker-dealer will make a market in the securities or as to the liquidity of
the trading market for the securities, whether or not the securities are listed
on a national securities exchange. The prospectus supplement with respect to
the securities will state, if known, whether or not any broker-dealer intends
to make a market in the securities. If no such determination has been made, the
prospectus supplement will so state.
We will set forth the place and time of delivery for the securities in
the prospectus supplement.
LEGAL OPINIONS
Kutak Rock LLP, Little Rock, Arkansas, will pass upon legal matters for
ALLTEL in connection with the issuance and sale of the securities. The
attorneys of Kutak Rock LLP who are or may be participating in the matters
contemplated by this registration statement beneficially owned as of March 28,
2002, a total of 4,652 shares of ALLTEL common stock.
EXPERTS
The audited consolidated financial statements and related financial
statement schedule, which are included in ALLTEL's 2001 Annual Report on Form
10-K for the year ended December 31, 2001 and incorporated by reference in this
prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports dated January 21, 2002, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports. Reference is made to
the January 21, 2002 report on the consolidated financial statements, which
includes an explanatory paragraph with respect to the change in the method of
accounting for computing and amortizing unrecognized actuarial gains and losses
related to a subsidiary's defined benefit pension plan, effective January 1,
2001, and the change in the method of accounting for certain communications
revenues, effective January 1, 2000, as discussed in Note 2 to the consolidated
financial statements.
21
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$1,500,000,000
[LOGO] ALLTEL
ALLTEL CORPORATION
$800,000,000 7% SENIOR NOTES DUE 2012
$700,000,000 7.875% SENIOR NOTES DUE 2032
-----------------
Prospectus Supplement
June 14, 2002
-----------------
BANC OF AMERICA SECURITIES LLC
MERRILL LYNCH & CO.
STEPHENS INC.
BANC ONE CAPITAL MARKETS, INC.
MCDONALD INVESTMENTS INC.
MORGAN KEEGAN & COMPANY, INC.
SALOMON SMITH BARNEY
SUNTRUST ROBINSON HUMPHREY
WACHOVIA SECURITIES
THE WILLIAMS CAPITAL GROUP, L.P.
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