AllTel Pension Bargaining Update #2

May 24, 2005

Thus far, we have had two (2) face to face meetings with AllTel concerning Pension Plan bargaining.

The Unions, CWA and IBEW, have passed fair and objective demands that were denied by the Company. AllTel's position is that they don't want to add any additional costs to the Plan for competitive reasons.

As you know in this year's discussions, AllTel agreed to discuss retiree health care issues. The Union's attempt to improve retiree health benefits have fallen on deaf ears.

The Pension Plan Agreement expires May 31, 2005, and, because our next meeting isn't until June 13th, the parties have agreed to a short-term extension of present benefit levels.

The parties have not yet agreed on the length of the new Pension Plan Agreement. The last time the Plan was bargained, it was a five (5) year agreement and the only change was to provide a 401(k) Thrift Plan. The 401(k) was introduced to employees in January of 2000. While the Plan is a benefit to most because employees are permitted to make pre-tax salary deferrals at a minimum of one percent (1%) and a maximum of 14%, there are no employer contributions.

As a side issue, the Union recently found out certain employees that have a choice of retiring under a Plan other than the AllTel Corporate Pension Plan are actually disadvantaged if they have pre-taxed dollars being deducted and forwarded to the 401(k) Plan. At least the "Newark" Pension Plan discounts pre-taxed dollars when the amount of a pension is calculated.

The Union doesn't agree with AllTel's interpretation and are attempting to correct the problem. It doesn't appear that many of our retirees are affected as yet. We are reviewing copies of plans to determine if plans other than the "Newark" Plan are involved.

The case that brought this unjust provision to the Union's attention involved a long-term employee who asked for a pension calculation and it was about $150.00 a month short of his own calculation because he contributed to the 401(k) Thrift Plan. Remember, if you believe your Pension benefit formula or any other Plan aspect is in error, you must appeal to the AllTel Corporation Pension Plan and Benefits Committee.

Thus far, AllTel has denied the Union's request for a VEBA Trust. To qualify for a VEBA Trust, the Pension Plan must be funded over the 125% level to transfer funds to pay for retiree health care. Presently, AllTel's Plan is funded at 113% and without adding funds, the Plan doesn't qualify for an IRS Section 420 transfer.

Also denied was the Union's demand for a non-discounted pension at age 50 or older with 30 years of service and the three items below:

ò A pension COLA formula based on increases in the CPI that matches Social Security cost-of-living annual increases.

ò AllTel to provide matching funds to the 401(k) of $.50 for every $1.00.

ò Provide monthly reimbursement for Medicare Part B which is presently $78.20 per month.

At this time, the Union has one open demand that would provide $11.60 per month to present Medicare premium payments by AllTel which would make up for the Bush Administration's 17.4% increase for 2005 in Medicare premiums.