Quarterly report pursuant to Section 13 or 15(d)

Industry Segments Data

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Industry Segments Data
 6 Months Ended
Jun. 30, 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 and six months ended June 30, 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 and six months ended June 30, 2012 and 2011 is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the three and six months ended June 30, 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 earnings before depreciation and amortization, net interest expense, income taxes, share-based compensation expense, accretion expense, loss attributable 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 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 and six months ended June 30, 2012 and 2011 follows (amounts in thousands):

  Three months ended June 30,   Consumer Network Access Commercial Managed Broadband Regulated Operations Total Reportable Segments
  2012              
  Revenues:              
    Intersegment $ (168) 82 1,426 - 59 1,399
    External   88,495 26,017 34,466 21,717 5,409 176,104
      Total revenues   88,327 26,099 35,892 21,717 5,468 177,503
  Adjusted EBITDA $ 24,008 13,442 8,625 12,063 1,283 59,421
                     
  2011              
  Revenues:              
    Intersegment $ - - 1,416 - 44 1,460
    External   88,554 25,151 34,216 14,639 5,529 168,089
      Total revenues   88,554 25,151 35,632 14,639 5,573 169,549
  Adjusted EBITDA $ 28,258 12,344 7,401 5,709 1,221 54,933
                     
                     
                     
  Six months ended June 30,   Consumer Network Access Commercial Managed Broadband Regulated Operations Total Reportable Segments
  2012              
  Revenues:              
    Intersegment $ 356 165 2,811 - 98 3,430
    External   176,307 51,205 68,807 40,746 10,946 348,011
      Total revenues   176,663 51,370 71,618 40,746 11,044 351,441
  Adjusted EBITDA $ 48,802 25,852 17,066 20,312 2,218 114,250
                     
  2011              
  Revenues:              
    Intersegment $ - - 2,825 - 113 2,938
    External   176,971 50,248 66,045 28,634 10,968 332,866
      Total revenues   176,971 50,248 68,870 28,634 11,081 335,804
  Adjusted EBITDA $ 56,651 24,224 14,063 11,420 1,921 108,279

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

        Three Months Ended June 30,   Six Months Ended June 30,
        2012 2011   2012 2011
  Reportable segment revenues $ 177,503 169,549   351,441 335,804
  Less intersegment revenues eliminated in consolidation   1,399 1,460   3,430 2,938
    Consolidated revenues $ 176,104 168,089   348,011 332,866

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

                 
        Three Months Ended   Six Months Ended
        June 30,   June 30,
        2012 2011   2012 2011
  Reportable segment Adjusted EBITDA $ 59,421 54,933   114,250 108,279
  Less depreciation and amortization expense   (33,350) (30,779)   (65,730) (62,645)
  Less share-based compensation expense   (865) (1,670)   (2,595) (2,840)
  Less non-cash contribution expense   (160) -   (960) -
  Less net loss attributable to non-controlling interest   (177) -   (354) -
  Plus net loss (income) attributable to equity investment   (84) 9   47 33
  Less accretion expense   (152) (194)   (340) (266)
    Consolidated operating income   24,633 22,299   44,318 42,561
  Less other expense, net   (16,860) (26,410)   (34,144) (43,882)
    Consolidated income (loss) before income tax (expense) benefit $ 7,773 (4,111)   10,174 (1,321)