Quarterly report pursuant to Section 13 or 15(d)

Segments

v2.4.0.8
Segments
 9 Months Ended
Sep. 30, 2014
Segment Reporting [Abstract]  
Segments
Segments
Our reportable segments are business units that offer different products and are each managed separately.

A description of our reportable segments follows:

Wireless - We offer wholesale wireless services.  

Wireline - We offer 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 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 rural communities primarily in Southwest Alaska.

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, income or loss attributable to non-controlling interest resulting from New Markets Tax Credit ("NMTC") transactions, non-cash contribution adjustment, and other non-cash adjustments (“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.  We have no intersegment sales.

Wireless segment revenue for the three and nine months ended September 30, 2013 has been reduced $2.5 million from that previously reported to classify cash incentives consistent with our audited consolidated financial statements for the year ended December 31, 2013. Adjusted EBITDA for our Wireless and Wireline segments increased and decreased, respectively, for the three and nine months ended September 30, 2013, $5.2 million to classify wireless handset subsidies into our Wireline segment consistent with our audited consolidated financial statements for the year ended December 31, 2013.

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 nine months ended September 30, 2014 and 2013 follows (amounts in thousands):
 
Three Months Ended
 
Nine Months Ended
 
Wireless
 
Wireline
 
Total Reportable Segments
 
Wireless
 
Wireline
 
Total Reportable Segments
September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
76,398

 
164,327

 
240,725

 
208,312

 
473,095

 
681,407

Adjusted EBITDA
$
47,279

 
45,915

 
93,194

 
125,475

 
126,987

 
252,462

 
 
 
 
 
 
 
 
 
 
 
 
September 30, 2013
 

 
 

 
 

 
 
 
 
 
 

Revenues
$
65,613

 
152,330

 
217,943

 
135,009

 
458,811

 
593,820

Adjusted EBITDA
$
42,498

 
36,219

 
78,717

 
71,960

 
127,545

 
199,505



A reconciliation of reportable segment Adjusted EBITDA to consolidated income before income taxes follows (amounts in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2014
 
2013
 
2014
 
2013
Reportable segment Adjusted EBITDA
$
93,194

 
78,717

 
252,462

 
199,505

Less depreciation and amortization
  expense
(41,705
)
 
(38,029
)
 
(127,843
)
 
(106,424
)
Less share-based compensation
  expense
(2,153
)
 
(1,823
)
 
(6,124
)
 
(4,729
)
Less accretion expense
(359
)
 
(178
)
 
(961
)
 
(460
)
Other
359

 
(3
)
 
481

 
(453
)
Consolidated operating income
49,336

 
38,684

 
118,015

 
87,439

Less other expense
(18,411
)
 
(17,702
)
 
(55,938
)
 
(52,080
)
Consolidated income before
  income tax expense
$
30,925

 
20,982

 
62,077

 
35,359