Quarterly report pursuant to Section 13 or 15(d)

Industry Segments Data

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Industry Segments Data
 3 Months Ended
Mar. 31, 2012
Industry Segments Data [Abstract]  
Industry Segments Data [Text Block]

(6)       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 three months ended March 31, 2012 and 2011 are allocated to our segments using segment margin for the years ended December 31, 2011 and 2010, respectively. Bad debt expense for the three months ended March 31, 2012 and 2011 is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the three months ended March 31, 2012 and 2011, 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 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 earnings before depreciation and amortization, net interest expense, and income taxes (“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-Q. 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 three months ended March 31, 2012 and 2011 follows (amounts in thousands):

      Consumer Network Access Commercial Managed Broadband Regulated Operations Total Reportable Segments
  2012              
  Revenues:              
    Intersegment $ 524 83 1,385 - 39 2,031
    External   87,812 25,188 34,341 19,029 5,537 171,907
      Total revenues   88,336 25,271 35,726 19,029 5,576 173,938
  Adjusted EBITDA $ 24,794 12,410 8,441 8,249 935 54,829
                     
  2011              
  Revenues:              
    Intersegment $ - - 1,409 - 69 1,478
    External   88,417 25,097 31,829 13,995 5,439 164,777
      Total revenues   88,417 25,097 33,238 13,995 5,508 166,255
  Adjusted EBITDA $ 28,393 11,880 6,662 5,711 700 53,346
                     

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

  Three Months Ended March 31,   2012 2011
  Reportable segment revenues $ 173,938 166,255
  Less intersegment revenues eliminated in consolidation   2,031 1,478
    Consolidated revenues $ 171,907 164,777

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

  Three Months Ended March 31,   2012 2011
  Reportable segment Adjusted EBITDA $ 54,829 53,346
  Less depreciation and amortization expense   (32,380) (31,866)
  Less share-based compensation expense   (1,730) (1,170)
  Less non-cash contribution expense   (800) -
  Less net loss attributable to non-controlling interest   (177) -
  Plus net loss attributable to equity investment   131 -
  Less accretion expense   (188) (72)
  Plus other expense   - 24
    Consolidated operating income   19,685 20,262
  Less other expense, net   (17,284) (17,472)
    Consolidated income before income tax expense $ 2,401 2,790