Annual report pursuant to Section 13 and 15(d)

Industry Segments Data

v2.4.0.6
Industry Segments Data
 12 Months Ended
Dec. 31, 2012
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 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, 2012, 2011 and 2010, are allocated to our segments using segment margin for the years ended December 31, 2011, 2010 and 2009, respectively. Bad debt expense for the years ended December 31, 2012, 2011 and 2010, is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the years ended December 31, 2012, 2011 and 2010, 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 attributable to non-controlling interests, 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-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, 2012, 2011 and 2010 follows (amounts in thousands):

                     
                     
      Consumer Network Access Commercial Managed Broadband Regulated Operations Total Reportable Segments
  2012              
  Revenues:              
    Intersegment $ - 259 5,760 - 246 6,265
    External   352,972 105,447 143,575 86,562 21,625 710,181
      Total revenues   352,972 105,706 149,335 86,562 21,871 716,446
  Cost of Goods Sold:              
    Intersegment   146 114 2,253 - 265 2,778
    External   128,324 24,356 66,895 21,298 6,628 247,501
      Total Cost of Goods Sold   128,470 24,470 69,148 21,298 6,893 250,279
  Contribution:              
    Intersegment   (146) 145 3,507 - (19) 3,487
    External   224,648 81,091 76,680 65,264 14,997 462,680
      Total contribution   224,502 81,236 80,187 65,264 14,978 466,167
  Less SG&A   139,191 26,841 42,014 24,087 11,115 243,248
  Plus share-based compensation   2,586 790 1,041 595 28 5,040
  Plus non-cash contribution expense   533 169 156 102 - 960
  Plus loss attributable to non-controlling interests   - - - 867 - 867
  Plus net income attributable to equity investment   - - - 2 - 2
  Plus accretion   282 89 83 54 - 508
  Adjusted EBITDA $ 88,858 55,298 35,946 42,797 3,910 226,809
                     
  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

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

  Years Ended December 31,   2012 2011 2010
  Reportable segment revenues $ 716,446 685,698 656,868
  Less intersegment revenues eliminated in consolidation   6,265 6,317 5,618
    Consolidated revenues $ 710,181 679,381 651,250

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

  Years Ended December 31,   2012 2011 2010
  Reportable segment Adjusted EBITDA $ 226,809 223,641 221,487
  Less depreciation and amortization expense   (130,452) (125,937) (126,699)
  Less share-based compensation expense   (5,040) (6,620) (6,733)
  Plus (less) non-cash contribution expense   (960) - 160
  Less net loss attributable to non-controlling interests   (867) (238) -
  Plus net loss (income) attributable to equity investment   (2) 297 -
  Less accretion expense   (508) (619) (289)
    Consolidated operating income   88,980 90,524 87,926
  Less other expense, net   (67,730) (77,633) (70,068)
    Consolidated income before income tax expense $ 21,250 12,891 17,858

Assets at December 31, 2012, 2011 and 2010, and capital expenditures for the years ended December 31, 2012, 2011 and 2010 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, 2012, 2011 and 2010.