Quarterly report pursuant to Section 13 or 15(d)

Segments

v2.4.0.6
Segments
 3 Months Ended
Mar. 31, 2013
Segments [Abstract]  
Segments [Text Block]

(6)       Segments

 

Effective January 1, 2013, we refocused our business and now have two reportable segments, Wireless and Wireline. The Wireless segment's revenue is derived from wholesale wireless services. The Wireline segment's revenue includes all of our other revenue, specifically a full range of retail wireless, data, video and voice services to residential, local, national and global businesses, governmental entities and public and private educational institutions; wholesale data and voice services to other common carrier customers; Internet, data network and managed services to rural schools and health organizations and regulated voice services to residential and commercial customers in 61 rural communities primarily in Southwest Alaska. This change reflects our plan to strategically focus on our wireless network and is how our chief operating decision maker now measures performance and makes resource allocation decisions. Prior to 2013 we had operated our business under five reportable segments – Consumer, Network Access, Commercial, Managed Broadband and Regulated Operations. The historical segment data has been reclassified to conform to the revised reportable segments.

 

Selling, general and administrative expenses for the three months ended March 31, 2013 and 2012, are allocated to our segments using specific identification and is allocated to our Wireless segment based upon a shared services agreement.

 

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-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, 2013 and 2012 follows (amounts in thousands):

               
               
      Wireless Wireline Total Reportable Segments
  2013        
  Revenues:        
    Intersegment $ - 1,418 1,418
    External   33,837 152,379 186,216
      Total revenues   33,837 153,797 187,634
  Adjusted EBITDA $ 15,189 43,460 58,649
               
  2012        
  Revenues:        
    Intersegment $ - 2,031 2,031
    External   29,444 142,463 171,907
      Total revenues   29,444 144,494 173,938
  Adjusted EBITDA $ 13,073 41,756 54,829

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

  Three Months Ended March 31,   2013 2012
  Reportable segment revenues $ 187,634 173,938
  Less intersegment revenues eliminated in consolidation   1,418 2,031
    Consolidated revenues $ 186,216 171,907

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

  Three Months Ended March 31,   2013 2012
  Reportable segment Adjusted EBITDA $ 58,649 54,829
  Less depreciation and amortization expense   (33,999) (32,380)
  Less share-based compensation expense   (1,259) (1,730)
  Less non-cash contribution expense   - (800)
  Less net loss attributable to non-controlling interests   (200) (177)
  Plus net loss (income) attributable to equity investment   (4) 131
  Less accretion expense   (127) (188)
    Consolidated operating income   23,060 19,685
  Less other expense   (16,904) (17,284)
    Consolidated income before income tax expense $ 6,156 2,401