Annual report pursuant to Section 13 and 15(d)

Industry Segments Data

v2.4.0.6
Industry Segments Data
 12 Months Ended
Dec. 31, 2011
Industry Segments Data [Abstract]  
Industry Segments Data [Text Block]

(10)       Industry Segments Data

 

Our reportable segments are business units that offer different products and are each managed separately.

 

A description of our reportable segments follows:

 

Consumer - We offer a full range of voice, video, data and wireless services to residential customers.

 

Network Access - We offer a full range of voice, data and wireless services to common carrier customers.

 

Commercial - We offer a full range of voice, video, data and wireless services to small businesses, local, national and global businesses, governmental entities and public and private educational institutions.

 

Managed Broadband - We offer data services to rural school districts, hospitals and health clinics through our SchoolAccess® and ConnectMD® initiatives and managed video conferencing.

 

Regulated Operations - We offer voice and data services to residential, business, and governmental customers in areas of rural Alaska.

       

Corporate related expenses including engineering, information technology, accounting, legal and regulatory, human resources, and other general and administrative expenses for the years ended December 31, 2011, 2010 and 2009, are allocated to our segments using segment margin for the years ended December 31, 2010, 2009 and 2008, respectively. Bad debt expense for the years ended December 31, 2011, 2010 and 2009, is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the years ended December 31, 2011, 2010 and 2009, respectively. Corporate related expenses and bad debt expense are specifically identified for our Regulated Operations segment and therefore, are not included in the allocations.

 

We evaluate performance and allocate resources based on earnings before depreciation and amortization expense, net interest expense, income taxes, share-based compensation expense, accretion expense, loss attributed to non-controlling interest, and non-cash contribution adjustment (“Adjusted EBITDA”). Management believes that this measure is useful to investors and other users of our financial information in evaluating operating profitability as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected EBITDA are used to estimate current or prospective enterprise value. The accounting policies of the reportable segments are the same as those described in Note 1, “Business and Summary of Significant Accounting Policies” of this Form 10-K. Intersegment sales are recorded at cost plus an agreed upon intercompany profit.

 

We earn all revenues through sales of services and products within the United States. All of our long-lived assets are located within the United States of America, except approximately 82% of our undersea fiber optic cable systems which transit international waters and all of our satellite transponders.

 

Summarized financial information for our reportable segments for the years ended December 31, 2011 2010 and 2009 follows (amounts in thousands):

 

                     
                     
      Consumer Network Access Commercial Managed Broadband Regulated Operations Total Reportable Segments
  2011              
  Revenues:              
    Intersegment $ - - 5,710 - 607 6,317
    External   352,574 105,456 136,101 63,248 22,002 679,381
      Total revenues   352,574 105,456 141,811 63,248 22,609 685,698
  Cost of Goods Sold:              
    Intersegment   - 600 2,283 - 561 3,444
    External   110,693 28,744 65,170 17,021 5,771 227,399
      Total Cost of Goods Sold   110,693 29,344 67,453 17,021 6,332 230,843
  Contribution:              
    Intersegment   - (600) 3,427 - 46 2,873
    External   241,881 76,712 70,931 46,227 16,231 451,982
      Total contribution   241,881 76,112 74,358 46,227 16,277 454,855
  Less SG&A   134,951 27,837 41,085 18,246 13,402 235,521
  Plus share-based compensation   3,457 1,214 1,276 657 16 6,620
  Plus loss attributable to non-controlling interest   - - - 238 - 238
  Less loss attributable to equity investment   - - - (297) - (297)
  Plus accretion   347 120 100 52 - 619
  Adjusted EBITDA $ 110,734 50,209 31,222 28,631 2,845 223,641
                     
  2010              
  Revenues:              
    Intersegment $ - - 5,442 - 176 5,618
    External   342,898 107,227 128,458 49,962 22,705 651,250
      Total revenues   342,898 107,227 133,900 49,962 22,881 656,868
  Cost of Goods Sold:              
    Intersegment   - 600 2,515 - 176 3,291
    External   104,481 25,030 59,885 14,012 4,409 207,817
      Total Cost of Goods Sold   104,481 25,630 62,400 14,012 4,585 211,108
  Contribution:              
    Intersegment   - (600) 2,927 - - 2,327
    External   238,417 82,197 68,573 35,950 18,296 443,433
      Total contribution   238,417 81,597 71,500 35,950 18,296 445,760
  Less SG&A   127,130 33,566 38,838 17,338 11,936 228,808
  Plus share-based compensation   3,361 1,598 1,117 651 6 6,733
  Plus non-cash contribution expense   (81) (41) (24) (14) - (160)
  Plus accretion   149 71 43 26 - 289
  Adjusted EBITDA $ 114,716 50,259 30,871 19,275 6,366 221,487
                     
  2009              
  Revenues:              
    Intersegment $ - 419 5,729 - 192 6,340
    External   294,925 122,072 110,135 44,875 23,804 595,811
      Total revenues   294,925 122,491 115,864 44,875 23,996 602,151
  Cost of Goods Sold:              
    Intersegment   419 600 2,694 - 192 3,905
    External   96,894 27,253 52,245 11,135 6,149 193,676
      Total Cost of Goods Sold   97,313 27,853 54,939 11,135 6,341 197,581
  Contribution:              
    Intersegment   (419) (181) 3,035 - - 2,435
    External   198,031 94,819 57,890 33,740 17,655 402,135
      Total contribution   197,612 94,638 60,925 33,740 17,655 404,570
  Less SG&A   112,883 38,348 35,363 14,450 11,627 212,671
  Plus share-based compensation   1,145 891 549 219 - 2,804
  Plus non-cash contribution expense   294 201 98 47 - 640
  Adjusted EBITDA $ 86,587 57,563 23,174 19,556 6,028 192,908

A reconciliation of reportable segment revenues to consolidated revenues follows (amounts in thousands):

  Years Ended December 31,   2011 2010 2009
  Reportable segment revenues $ 685,698 656,868 602,151
  Less intersegment revenues eliminated in consolidation   6,317 5,618 6,340
    Consolidated revenues $ 679,381 651,250 595,811

A reconciliation of reportable segment Adjusted EBITDA to consolidated income before income taxes follows (amounts in thousands):

  Years Ended December 31,   2011 2010 2009
  Reportable segment Adjusted EBITDA $ 223,641 221,487 192,908
  Less depreciation and amortization expense   (125,742) (126,114) (123,362)
  Less share-based compensation expense   (6,620) (6,733) (2,804)
  Plus (less) non-cash contribution expense   - 160 (640)
  Less net loss attributable to non-controlling interest   (238) - -
  Plus net loss attributable to equity investment   297 - -
  Less accretion expense   (619) (289) -
    Consolidated operating income   90,719 88,511 66,102
  Less other expense, net   (77,633) (70,068) (58,650)
    Consolidated income before income tax expense $ 13,086 18,443 7,452

Assets at December 31, 2011, 2010 and 2009, and capital expenditures for the years ended December 31, 2011, 2010 and 2009 are not allocated to reportable segments as our Chief Operating Decision Maker does not review a balance sheet or capital expenditures by segment to make decisions about resource allocations or to evaluate segment performance.

 

We did not have any major customers for the years ended December 31, 2011 and 2010. We earned revenues included in the Network Access segment from a major customer for the year ended December 31, 2009, net of discounts, of $64.5 million. As a percentage of total revenues, our major customer's revenues totaled 11% for the year ended December 31, 2009.