Nov. 4, 2008  LITTLE ROCK, Ark., Nov 04, 2008 (BUSINESS WIRE) -- Alltel achieved strong customer growth in the third quarter, adding more than 1 million gross customers for the fourth consecutive quarter. Net customer additions increased 63 percent year-over-year. "The Alltel team delivered another terrific quarter, and I continue to admire their ability to execute in a fiercely competitive marketplace," said President and Chief Executive Officer Scott Ford. "Once again we had strong customer additions and record consolidated EBITDA." Alltel announced plans on June 5 to be acquired by Verizon Wireless. The deal is awaiting final regulatory approval and is expected to close before year's end. Among Alltel's highlights for the third quarter: -- Revenues were $2.5 billion, a 10 percent increase from the same period a year ago. The company reported a loss of $55.2 million, due primarily to significant increases in interest costs and depreciation and amortization expense following the completion of the company's November 2007 merger with an affiliate of TPG Capital and GS Capital Partners. -- Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) was $929.8 million, a 13 percent increase from the same period a year ago. -- Alltel added more than 1 million gross customers through internal growth, a 28 percent increase from a year ago. Post-pay net additions were 255,299, up 20 percent year-over-year, and prepay net adds were 52,722. Reseller net adds were 27,131. Total net adds were 335,152. -- Post-pay churn was 1.33 percent, and total churn was 2.02 percent. -- Average revenue per wireless customers (ARPU) was $55.62. Data revenue per wireless customer was $8.99, up 42 percent year-over-year. A table describing consolidated EBITDA and reconciling net income to consolidated EBITDA is included in the schedules accompanying this release. Alltel operates America's largest wireless network, which delivers voice and advanced data services nationwide to nearly 14 million customers. Headquartered in Little Rock, Ark., Alltel is a Forbes 500 company with annual revenues of nearly $9 billion. Alltel claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results. Actual future events and results may differ materially from those expressed in these forward-looking statements as a result of a number of important factors. Representative examples of these factors include (without limitation) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with Cellco Partnership and AirTouch Cellular (both doing business as Verizon Wireless); the inability to complete the merger due to the failure to satisfy conditions to the completion of the merger, including receipt of all regulatory approvals related to the merger; risks that the proposed transaction disrupts current plans and operations; adverse changes in economic conditions in the markets served by Alltel; the extent, timing, and overall effects of competition in the communications business; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers; failure of our suppliers, contractors and third-party retailers to provide the agreed upon services; changes in communications technology; the effects of a high rate of customer churn; adverse changes in the terms and conditions of the wireless roaming agreements of Alltel; our withdrawal from the bidding for licenses in the 700 MHz spectrum auction; potential increased costs due to perceived health risks from radio frequency emissions; the effects of declines in operating performance, including impairment of certain assets; risks relating to the renewal and potential revocation of our wireless licenses; potential higher than anticipated inter-carrier costs; potential increased credit risk from first-time wireless customers; the potential for adverse changes in the ratings given to Alltel's debt securities by nationally accredited ratings organizations; risks relating to our substantially increased indebtedness following the private equity merger and related transactions, including a potential inability to generate sufficient cash to service our debt obligations, and potential restrictions on the Company's operations contained in its debt agreements; potential conflicts of interest and other risks relating to the private equity sponsors having control of the Company; loss of the Company's key management and other personnel or inability to attract such management and other personnel; the effects of litigation, including relating to telecommunications technology patents and other intellectual property; the effects of federal and state legislation, rules, and regulations governing the communications industry; and potential unforeseen failure of the Company's technical infrastructure and system. In addition to these factors, actual future performance, outcomes, and results may differ materially because of more general factors including (without limitation) general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.

ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS AND SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
(Dollars in millions, except per customer amounts)
THREE MONTHS ENDED
Increase
September 30, September 30, (Decrease)
2008 2007 Amount %
Service revenues $ 2,279.9 $ 2,071.5 $ 208.4 10
Total revenues and sales $ 2,507.5 $ 2,281.5 $ 226.0 10
Operating income $ 353.1 $ 434.0 $ (80.9 ) (19 )
Income (loss) from continuing operations
$ (55.2 ) $ 278.7 $ (333.9 ) (120 )
Net income (loss) $ (55.2 ) $ 282.6 $ (337.8 ) (120 )
Consolidated EBITDA $ 929.8 $ 820.2 $ 109.6 13
Capital expenditures(A) $ 271.8 $ 249.6 $ 22.2 9
Service revenue operating margin(B)
15.5% 20.9% (5.4% ) (26 )
Operating margin(C) 14.1% 19.0% (4.9% ) (26 )
Service revenue consolidated EBITDA margin(D)
40.8% 39.6% 1.2% 3
Controlled POPs 79,383,821 79,575,793 (191,972 ) -
Customers 13,824,973 12,447,085 1,377,888 11
Penetration rate 17.4% 15.6% 1.8% 12
Average customers 13,663,065 12,338,361 1,324,704 11
Average retail customers (excludes reseller customers)
12,846,823 11,576,094 1,270,729 11
Gross customer additions:
Postpay 694,265 644,055 50,210 8
Prepay 367,478 260,746 106,732 41
Reseller 99,775 - 99,775 -
Total internal 1,161,518 904,801 256,717 28
Net customer additions (losses):
Postpay 255,299 212,791 42,508 20
Prepay 52,722 (7,772 ) 60,494 778
Reseller 27,131 - 27,131 -
Total internal 335,152 205,019 130,133 63
Cash costs:
Cost of services $ 715.9 $ 682.2 $ 33.7 5
Cost of products sold 343.4 300.0 43.4 14
Selling, general, administrative and other
557.6 496.1 61.5 12
Less product sales 227.6 210.0 17.6 8
Total $ 1,389.3 $ 1,268.3 $ 121.0 10
Cash costs per unit per month(E)
$33.89 $34.26 $(.37 ) (1 )
Revenues:
Service revenues $ 2,279.9 $ 2,071.5 $ 208.4 10
Less wholesale roaming revenues
204.0 196.5 7.5 4
Less wholesale transport revenues
32.9 38.1 (5.2 ) (14 )
Less reseller revenues 4.8 8.1 (3.3 ) (41 )
Retail revenues $ 2,038.2 $ 1,828.8 $ 209.4 11
Average revenue per customer per month(F)
$55.62 $55.96 $(.34 ) (1 )
Retail revenue per customer per month(G)
$52.88 $52.66 $.22 -
Retail minutes of use per customer per month(H)
804 746 58 8
Postpay churn excluding resellers
1.33% 1.31% .02% 2
Total churn 2.02% 1.90% .12% 6
Note: Since January 1, 2002, the number of reseller customers
included in the customer base has not changed and Alltel has not
included the effects of reseller activity in its reported gross
and net customer additions for any period subsequent to 2001.
Revenues earned from resellers had been classified as retail
revenues. Effective January 1, 2008, Alltel changed its
classification of reseller activity from retail to wholesale
operations and prospectively has included reseller customers in
its reported gross and net customer additions, consistent with
industry practice. Prior period retail revenue per unit statistics
were adjusted to reflect the reclassification of the reseller
operations. Prior period average and total customer counts were
not adjusted for reseller customers because the effects were
immaterial.
(A) Includes capitalized software development costs.
(B) Service revenue operating margin is calculated by dividing
operating income by service revenues.
(C) Operating margin is calculated by dividing operating income by
total revenues and sales.
(D) Service revenue consolidated EBITDA margin is calculated by
dividing consolidated EBITDA by service revenues.
(E) Cash costs per unit per month is calculated by dividing the sum
of the reported cost of services, cost of products sold, selling,
general, administrative and other expenses less product sales by
average customers for the period.
(F) Average revenue per customer per month is calculated by dividing
service revenues by average customers for the period.
(G) Retail revenue per customer per month is calculated by dividing
retail revenues (service revenues less wholesale and reseller
revenues) by average retail customers for the period.
(H) Retail minutes of use per customer per month represents the
average monthly minutes that Alltel's customers use on both the
Company's network and while roaming on other carriers' networks.
Consolidated EBITDA has been reconciled to net income (loss) on
page 5.

ALLTEL CORPORATION
CONSOLIDATED HIGHLIGHTS AND SUPPLEMENTAL OPERATING INFORMATION
(UNAUDITED)
(Dollars in millions, except per customer amounts)
NINE MONTHS ENDED
Increase
September 30, September 30, (Decrease)
2008 2007 Amount %
Service revenues $ 6,543.7 $ 5,923.2 $ 620.5 10
Total revenues and sales $ 7,216.5 $ 6,535.1 $ 681.4 10
Operating income $ 965.1 $ 1,166.8 $ (201.7 ) (17 )
Income (loss) from continuing operations
$ (249.6 ) $ 707.5 $ (957.1 ) (135 )
Net income (loss) $ (250.0 ) $ 708.4 $ (958.4 ) (135 )
Consolidated EBITDA $ 2,675.4 $ 2,323.3 $ 352.1 15
Capital expenditures(A) $ 653.4 $ 744.6 $ (91.2 ) (12 )
Service revenue operating margin(B)
14.7% 19.7% (5.0% ) (25 )
Operating margin(C) 13.4% 17.9% (4.5% ) (25 )
Service revenue consolidated EBITDA margin(D)
40.9% 39.2% 1.7% 4
Average customers 13,319,588 12,140,297 1,179,291 10
Average retail customers (excludes reseller customers)
12,519,463 11,378,030 1,141,433 10
Gross customer additions:
Postpay 1,892,956 1,732,101 160,855 9
Prepay 1,156,488 830,134 326,354 39
Reseller 287,633 - 287,633 -
Total internal 3,337,077 2,562,235 774,842 30
Net customer additions (losses):
Postpay 635,272 502,585 132,687 26
Prepay 334,978 120,562 214,416 178
Reseller 69,530 - 69,530 -
Total internal 1,039,780 623,147 416,633 67
Cash costs:
Cost of services $ 2,052.0 $ 1,933.4 $ 118.6 6
Cost of products sold 1,006.7 876.1 130.6 15
Selling, general, administrative and other
1,573.5 1,445.5 128.0 9
Less product sales 672.8 611.9 60.9 10
Total $ 3,959.4 $ 3,643.1 $ 316.3 9
Cash costs per unit per month(E)
$33.03 $33.34 $(.31 ) (1 )
Revenues:
Service revenues $ 6,543.7 $ 5,923.2 $ 620.5 10
Less wholesale roaming revenues
581.0 520.8 60.2 12
Less wholesale transport revenues
107.4 127.4 (20.0 ) (16 )
Less reseller revenues 14.3 21.8 (7.5 ) (34 )
Retail revenues $ 5,841.0 $ 5,253.2 $ 587.8 11
Average revenue per customer per month(F)
$54.59 $54.21 $.38 1
Retail revenue per customer per month(G)
$51.84 $51.30 $.54 1
Retail minutes of use per customer per month(H)
792 708 84 12
Postpay churn excluding resellers
1.29% 1.27% .02% 2
Total churn 1.92% 1.78% .14% 8
Note: Since January 1, 2002, the number of reseller customers
included in the customer base has not changed and Alltel has not
included the effects of reseller activity in its reported gross and
net customer additions for any period subsequent to 2001. Revenues
earned from resellers had been classified as retail revenues.
Effective January 1, 2008, Alltel changed its classification of
reseller activity from retail to wholesale operations and
prospectively has included reseller customers in its reported gross
and net customer additions, consistent with industry practice. Prior
period retail revenue per unit statistics were adjusted to reflect
the reclassification of the reseller operations. Prior period
average and total customer counts were not adjusted for reseller
customers because the effects were immaterial.
(A) Includes capitalized software development costs.
(B) Service revenue operating margin is calculated by dividing
operating income by service revenues.
(C) Operating margin is calculated by dividing operating income by
total revenues and sales.
(D) Service revenue consolidated EBITDA margin is calculated by
dividing consolidated EBITDA by service revenues.
(E) Cash costs per unit per month is calculated by dividing the
sum of the reported cost of services, cost of products sold,
selling, general, administrative and other expenses less product
sales by average customers for the period.
(F) Average revenue per customer per month is calculated by dividing
service revenues by average customers for the period.
(G) Retail revenue per customer per month is calculated by dividing
retail revenues (service revenues less wholesale and reseller
revenues) by average retail customers for the period.
(H) Retail minutes of use per customer per month represents the
average monthly minutes that Alltel's customers use on both the
Company's network and while roaming on other carriers' networks.
Consolidated EBITDA has been reconciled to net income (loss) on
page 5.

ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS-Page 2
(Millions)
THREE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Revenues and sales:
Service revenues $ 2,279.9 $ 2,071.5
Product sales 227.6 210.0
Total revenues and sales 2,507.5 2,281.5
Costs and expenses:
Cost of services 715.9 682.2
Cost of products sold 343.4 300.0
Selling, general, administrative and other
557.6 496.1
Depreciation and amortization 535.4 358.2
Integration expenses, restructuring and other charges
2.1 11.0
Total costs and expenses 2,154.4 1,847.5
Operating income 353.1 434.0
Equity earnings in unconsolidated partnerships
19.6 17.1
Minority interest in consolidated partnerships
(14.5 ) (8.8 )
Other income, net 7.2 5.9
Interest expense (449.1 ) (46.2 )
Gain on disposal of assets - -
Income (loss) from continuing operations before income taxes
(83.7 ) 402.0
Income tax expense (benefit) (28.5 ) 123.3
Income (loss) from continuing operations (55.2 ) 278.7
Income (loss) from discontinued operations - 3.9
Net income (loss) $ (55.2 ) $ 282.6
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS-Page 2
(Millions)
NINE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Revenues and sales:
Service revenues $ 6,543.7 $ 5,923.2
Product sales 672.8 611.9
Total revenues and sales 7,216.5 6,535.1
Costs and expenses:
Cost of services 2,052.0 1,933.4
Cost of products sold 1,006.7 876.1
Selling, general, administrative and other
1,573.5 1,445.5
Depreciation and amortization 1,594.5 1,060.0
Integration expenses, restructuring and other charges
24.7 53.3
Total costs and expenses 6,251.4 5,368.3
Operating income 965.1 1,166.8
Equity earnings in unconsolidated partnerships
53.9 48.5
Minority interest in consolidated partnerships
(37.5 ) (27.4 )
Other income, net 29.3 19.2
Interest expense (1,399.1 ) (140.3 )
Gain on disposal of assets - 56.5
Income (loss) from continuing operations before income taxes
(388.3 ) 1,123.3
Income tax expense (benefit) (138.7 ) 415.8
Income (loss) from continuing operations (249.6 ) 707.5
Income (loss) from discontinued operations (0.4 ) 0.9
Net income (loss) $ (250.0 ) $ 708.4
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS-Page 3
(Millions)
ASSETS
September 30, December 31,
2008 2007
CURRENT ASSETS:
Cash and short-term investments $ 1,297.6 $ 833.3
Accounts receivable (less allowance for doubtful accounts of $52.6
and $32.6, respectively)
852.8 831.1
Inventories 206.8 196.0
Prepaid expenses and other 86.1 142.8
Assets related to discontinued
operations - 0.3
Total current assets 2,443.3 2,003.5
Investments 540.0 536.1
Goodwill 16,941.2 16,917.4
Other intangibles 6,227.3 6,784.6
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements 264.7 251.1
Buildings and improvements 895.0 836.4
Operating plant and equipment 4,158.6 3,650.3
Information processing 456.7 368.8
Furniture and fixtures 110.5 99.8
Under construction 316.0 360.1
Total property, plant and equipment 6,201.5 5,566.5
Less accumulated depreciation 1,211.5 164.9
Net property, plant and equipment 4,990.0 5,401.6
Other assets 410.4 485.3
Assets related to discontinued operations - 7.0
TOTAL ASSETS $ 31,552.2 $ 32,135.5
ALLTEL CORPORATION
CONSOLIDATED BALANCE SHEETS-Page 3
(Millions)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2008 2007
CURRENT LIABILITIES:
Current maturities of long-term debt $ 140.1 $ 140.1
Accounts payable 544.7 603.6
Advance payments and customer deposits 226.9 195.9
Accrued taxes 157.4 120.4
Accrued interest 168.8 187.1
Other current liabilities 275.6 271.9
Liabilities related to discontinued operations
- 0.2
Total current liabilities 1,513.5 1,519.2
Long-term debt 23,292.2 23,374.7
Deferred income taxes 2,286.0 2,542.7
Other liabilities 277.2 266.4
Total liabilities 27,368.9 27,703.0
SHAREHOLDERS' EQUITY:
Common stock 4.5 4.5
Additional paid-in capital 4,543.8 4,536.7
Accumulated other comprehensive loss (11.6 ) (5.3 )
Retained deficit (353.4 ) (103.4 )
Total shareholders' equity 4,183.3 4,432.5
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 31,552.2 $ 32,135.5

ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS-Page 4
(Millions)
THREE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Cash Flows from Operating Activities:
Net income (loss) $ (55.2 ) $ 282.6
Adjustments to reconcile net income (loss) to net cash provided
from operating activities:
Loss (income) from discontinued operations - (3.9 )
Depreciation and amortization 535.4 358.2
Provision for doubtful accounts 38.9 54.1
Amortization of deferred financing costs 45.5 0.7
Non-cash portion of gain on disposal of assets - -
Change in deferred income taxes (70.2 ) (16.7 )
Adjustment to income tax liabilities, including contingency - (33.8 )
reserves
Other, net 2.2 (9.2 )
Changes in operating assets and liabilities, net of effects of
acquisitions and dispositions:
Accounts receivable (41.1 ) (86.7 )
Inventories (32.8 ) 39.6
Accounts payable 55.3 27.3
Other current liabilities 58.9 101.8
Other, net 5.7 12.1
Net cash provided from operating activities 542.6 726.1
Cash Flows from Investing Activities:
Additions to property, plant and equipment (265.2 ) (242.5 )
Additions to capitalized software development costs (6.6 ) (7.1 )
Purchases of property, net of cash acquired - -
Proceeds from the sale of assets - -
Proceeds from the sale of investments - -
Proceeds from the return on investments 21.8 15.4
Other, net 2.3 0.3
Net cash used in investing activities (247.7 ) (233.9 )
Cash Flows from Financing Activities:
Dividends paid on common and preferred stock - (43.0 )
Repayments of long-term debt (35.0 ) (100.6 )
Repurchases of common stock - -
Distributions to minority investors (15.0 ) (10.7 )
Excess tax benefits from stock option exercises - 20.5
Long-term debt issued - -
Common stock issued - 6.0
Net cash used in financing activities (50.0 ) (127.8 )
Cash Flows from Discontinued Operations:
Cash provided from (used in) operating activities - 4.0
Cash provided from (used in) investing activities - (0.1 )
Cash provided from (used in) financing activities - -
Net cash provided from discontinued operations - 3.9
Increase (decrease) in cash and short-term investments 244.9 368.3
Cash and Short-term Investments:
Beginning of the period 1,052.7 456.3
End of the period $ 1,297.6 $ 824.6
ALLTEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS-Page 4
(Millions)
NINE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Cash Flows from Operating Activities:
Net income (loss) $ (250.0 ) $ 708.4
Adjustments to reconcile net income (loss) to net cash provided
from operating activities:
Loss (income) from discontinued operations 0.4 (0.9 )
Depreciation and amortization 1,594.5 1,060.0
Provision for doubtful accounts 93.0 140.9
Amortization of deferred financing costs 136.6 2.1
Non-cash portion of gain on disposal of assets - (56.5 )
Change in deferred income taxes (186.6 ) 30.4
Adjustment to income tax liabilities, including contingency - (33.8 )
reserves
Other, net 1.7 (26.8 )
Changes in operating assets and liabilities, net of effects of
acquisitions and dispositions:
Accounts receivable (112.9 ) (207.5 )
Inventories (10.9 ) 51.8
Accounts payable (58.9 ) (54.4 )
Other current liabilities (30.1 ) 235.6
Other, net (2.9 ) (10.5 )
Net cash provided from operating activities 1,173.9 1,838.8
Cash Flows from Investing Activities:
Additions to property, plant and equipment (629.6 ) (720.3 )
Additions to capitalized software development costs (23.8 ) (24.3 )
Purchases of property, net of cash acquired - (6.2 )
Proceeds from the sale of assets 18.0 -
Proceeds from the sale of investments - 188.7
Proceeds from the return on investments 49.2 40.2
Other, net 12.3 0.9
Net cash used in investing activities (573.9 ) (521.0 )
Cash Flows from Financing Activities:
Dividends paid on common and preferred stock - (133.5 )
Repayments of long-term debt (255.0 ) (36.9 )
Repurchases of common stock - (1,360.3 )
Distributions to minority investors (37.4 ) (31.8 )
Excess tax benefits from stock option exercises - 25.7
Long-term debt issued 150.0 -
Common stock issued - 59.0
Net cash used in financing activities (142.4 ) (1,477.8 )
Cash Flows from Discontinued Operations:
Cash provided from (used in) operating activities (0.2 ) 2.8
Cash provided from (used in) investing activities 6.9 47.6
Cash provided from (used in) financing activities - -
Net cash provided from discontinued operations 6.7 50.4
Increase (decrease) in cash and short-term investments 464.3 (109.6 )
Cash and Short-term Investments:
Beginning of the period 833.3 934.2
End of the period $ 1,297.6 $ 824.6
ALLTEL CORPORATION
RECONCILIATION OF NET INCOME (LOSS) TO CONSOLIDATED EBITDA
(UNAUDITED)-Page 5
(Millions)
THREE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Net income (loss) $ (55.2 ) $ 282.6
Loss (income) from discontinued operations (A) - (3.9 )
Income tax expense (benefit) (28.5 ) 123.3
Interest expense, net of interest income 442.1 40.2
Depreciation and amortization 535.4 358.2
EBITDA 893.8 800.4
Minority interest in consolidated partnerships 14.5 8.8
Equity earnings in unconsolidated partnerships, net of cash 2.3 (1.6 )
distributions received
Gain on disposal of assets (B) - -
Stock-based compensation expense, net of restricted shares 2.4 9.1
surrendered for tax (C)
Integration expenses, restructuring and other charges (D) 2.1 11.0
Non-cash rental income, net of amortization of related deferred - (8.4 )
leasing costs (E)
Management fee payable to Sponsors (F) 9.1 -
Other non-cash items 5.6 0.9
Consolidated EBITDA $ 929.8 $ 820.2
ALLTEL CORPORATION
RECONCILIATION OF NET INCOME (LOSS) TO CONSOLIDATED EBITDA
(UNAUDITED)-Page 5
(Millions)
NINE MONTHS ENDED
September 30, September 30,
2008 2007
(Successor) (Predecessor)
Net income (loss) $ (250.0 ) $ 708.4
Loss (income) from discontinued operations (A) 0.4 (0.9 )
Income tax expense (benefit) (138.7 ) 415.8
Interest expense, net of interest income 1,372.5 122.6
Depreciation and amortization 1,594.5 1,060.0
EBITDA 2,578.7 2,305.9
Minority interest in consolidated partnerships 37.5 27.4
Equity earnings in unconsolidated partnerships, net of cash (5.1 ) (8.6 )
distributions received
Gain on disposal of assets (B) - (56.5 )
Stock-based compensation expense, net of restricted shares 7.1 22.3
surrendered for tax (C)
Integration expenses, restructuring and other charges (D) 24.7 53.3
Non-cash rental income, net of amortization of related deferred - (25.4 )
leasing costs (E)
Management fee payable to Sponsors (F) 27.1 -
Other non-cash items 5.4 4.9
Consolidated EBITDA $ 2,675.4 $ 2,323.3

ALLTEL CORPORATION
NOTES TO RECONCILIATION OF NET INCOME (LOSS) TO CONSOLIDATED EBITDA
(UNAUDITED)-Page 6
On November 16, 2007, Alltel Corporation ("Alltel" or the
"Company") was acquired by Atlantis Holdings LLC, a Delaware
limited liability company ("Atlantis Holdings" or "Parent") and an
affiliate of private investment funds TPG Partners V, L.P. and GS
Capital Partners VI Fund, L.P. (together the "Sponsors"). The
acquisition was completed through the merger of Atlantis Merger
Sub, Inc., a Delaware corporation and wholly-owned subsidiary of
Parent, with and into Alltel (the "Merger"), with Alltel surviving
the Merger as a privately-held, majority-owned subsidiary of
Parent. Although Alltel continues as the same legal entity after
the Merger, Atlantis Holdings' cost of acquiring Alltel has been
pushed-down to establish a new accounting basis for Alltel.
Accordingly, the accompanying consolidated financial statements
are presented for two periods, Predecessor and Successor, which
relate to the accounting periods preceding and succeeding the
consummation of the Merger.
Alltel also has presented calculations of earnings before interest,
taxes and depreciation and amortization expense ("EBITDA") and
Consolidated EBITDA. Alltel has included this presentation of
Consolidated EBITDA because covenants in Alltel Communications, LLC's
senior secured credit facilities contain ratios based on this
measure. Measurements of Consolidated EBITDA are based on the Company's
calculation of EBITDA (net income (loss), excluding the effects of
discontinued operations, and before net interest expense, provision
for income taxes and depreciation and amortization) adjusted to
exclude unusual items, certain non-cash charges and other items
permitted in calculating covenant compliance under the indenture and
the credit facilities. Alltel believes that the application of these
supplementary adjustments to EBITDA in determining Consolidated
EBITDA are appropriate to provide additional information to
investors to demonstrate compliance with its financing covenants. If
the Company's Consolidated EBITDA were to
decline below certain levels, covenants in the senior secured credit
facilities that are based on Consolidated EBITDA, including the
maximum senior secured leverage ratio covenant, may be violated and
could cause, among other things, an inability to incur further
indebtedness and in certain circumstances a default or mandatory
prepayment of amounts outstanding under the senior secured term loan
facility.
EBITDA and Consolidated EBITDA are not measures calculated in
accordance with GAAP and should not be considered a substitute for
operating income, net income (loss) or any other measure of
financial performance reported in accordance with GAAP or as
measures of operating cash flows or liquidity. The presentation of
EBITDA has limitations as an analytical tool, and should not be
considered in isolation, or as a substitute for analysis of the
Company's results of operations or cash
flows as reported under GAAP. In particular, EBITDA and Consolidated
EBITDA should not be viewed as a reliable indicator of Alltel's
ability to generate cash to service its debt obligations because
certain of the items added to net income (loss) to determine EBITDA
and Consolidated EBITDA involve outlays of cash. As a result, actual
cash available to service the Company's
debt obligations will be different from Consolidated EBITDA. In
addition to demonstrating compliance with its financing covenants,
Alltel believes that the presentation of EBITDA and Consolidated
EBITDA is helpful in highlighting operational trends because these
measures exclude certain non-cash charges and other non-operating
items that are not representative of the Company's
core business operations.
(A) The following are included in discontinued operations:
On November 7, 2007, Alltel signed a definitive agreement to sell
one of its wireless markets for cash. Accordingly, this market has
been classified from that date as discontinued operations. The sale
of this property was completed on May 30, 2008.
As a condition of receiving approval from the Department of Justice
("DOJ") and the Federal Communications Commission ("FCC") for the
Company's acquisition of Midwest Wireless Holdings ("Midwest
Wireless"), on September 7, 2006, Alltel agreed to divest certain
wireless operations in four rural markets in Minnesota. Accordingly,
the four markets to be divested in Minnesota have been classified as
discontinued operations. On April 3, 2007, Alltel completed the sale
of these properties.
(B) Through its merger with Western Wireless Corporation completed
on August 1, 2005, Alltel acquired marketable equity securities. On
January 24, 2007, Alltel completed the sale of these securities for
$188.7 million in cash and recorded a pretax gain from the sale of
$56.5 million which is included in gain on disposal of assets.
(C) Compensation expense recognized by Alltel related to stock
option and restricted stock awards.
(D) The following are included in integration expenses,
restructuring and other charges:
On June 5, 2008, Verizon Wireless, a joint venture of Verizon
Communications and Vodafone, entered into an agreement with Alltel
and Atlantis Holdings to acquire Alltel in a cash merger.
Consummation of the merger is subject to certain conditions,
including the receipt of regulatory approvals. The transaction is
currently expected to close by the end of 2008, subject to
obtaining the required regulatory approvals. In connection with
this pending transaction, Alltel incurred $1.7 million and $3.1
million of incremental costs during the three and nine months
ended September 30, 2008, respectively, principally consisting of
financial advisory, legal and regulatory filing fees.
For the nine months ended September 30, 2008, Alltel incurred
$12.9 million of incremental expenses related to its participation
in the 700 MHz auction conducted by the FCC that was completed on
March 18, 2008. Alltel did not obtain any licenses in the 700 MHz
auction. The auction-related expenses primarily consisted of
consulting fees and estimated bid withdrawal payments to be
remitted to the FCC as a result of the Company withdrawing certain
bids made during the course of its participation in the auction.
In connection with the Merger, Alltel incurred $6.6 million of
incremental costs, primarily consisting of $3.8 million in
employee retention bonuses and additional legal and accounting
fees of $2.4 million. Alltel also recorded severance and employee
benefit costs of $2.1 million related to various planned workforce
reductions. Of the total expenses incurred related to these
activities, $0.4 million were recorded during the third quarter of
2008.
ALLTEL CORPORATION
NOTES TO RECONCILIATION OF NET INCOME (LOSS) TO CONSOLIDATED EBITDA
(UNAUDITED)-Page 7
In connection with the Merger transaction, Alltel incurred $2.5
million and $35.6 million during the three and nine months ended
September 30, 2007, respectively, principally consisting of
financial advisory, legal and regulatory filing fees.
For the nine months ended September 30, 2007, Alltel incurred $10.4
million of integration expenses related to its 2006 acquisitions of
Midwest Wireless and properties in Illinois, Texas and Virginia. The
system conversion and other integration expenses primarily consisted
of internal payroll, contracted services and other programming costs
incurred in converting the acquired properties to Alltel's customer
billing and operational support systems, a process that the Company
completed during the fourth quarter of 2007. Alltel also recorded
severance and employee benefit costs of $4.7 million and lease
termination costs of $2.6 million. Of the total expenses incurred
related to these activities, $8.5 million were recorded during the
third quarter of 2007.
(E) Represents non-cash rental income and amortization of deferred
leasing costs related to Alltel's agreement to lease cell site
towers to American Tower Corporation. The deferred rental income was
received in advance by Alltel under the terms of the leasing
agreement. The remaining deferred rental income and deferred leasing
costs were written-off in connection with the Merger.
(F) Represents the annual management fee and out-of-pocket expenses
payable in each case to affiliates of the Sponsors in exchange for
consulting and management advisory services. The annual management
fee is equal to one percent of Alltel's
Consolidated EBITDA.

SOURCE: Alltel