Annual report pursuant to Section 13 and 15(d)

Industry Segments Data

v3.3.1.900
Industry Segments Data
 12 Months Ended
Dec. 31, 2015
Segment Reporting [Abstract]  
Industry Segments Data
Industry Segments Data
We have two reportable segments, Wireless and Wireline. 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 provide a full range of wireless, data, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska.

We evaluate performance and allocate resources based on Adjusted EBITDA, which is defined as earnings plus imputed interest on financed devices before:
•Net interest expense,
•Income taxes,
•Depreciation and amortization expense,
•Loss on extinguishment of debt,
•Software impairment charge,
•Derivative instrument unrealized income (loss),
•Share-based compensation expense,
•Accretion expense,
•Loss attributable to non-controlling interest resulting from NMTC transactions,
•Gains and impairment losses on equity and cost method investments, and
•Other non-cash adjustments.

Management believes that this measure is useful to investors and other users of our financial information in understanding and evaluating operating performance as an analytical indicator of income generated to service debt and fund capital expenditures.  In addition, multiples of current or projected Adjusted 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 of this Form 10-K.  We have no intersegment sales. 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.

Wireless plan fee and usage revenues from external customers are allocated between our Wireless and Wireline segments.  The Wireless segment recorded subsidies to the Wireline segment related to wireless equipment sales based upon equipment sales and agreed-upon subsidy rates through the AWN transaction close on July 23, 2013. Subsequent to the transaction close and through March 31, 2014, although permitted, the Wireline segment was unable to meet the requirements in order to request a wireless equipment subsidy from the Wireless segment in accordance with the AWN agreements. These subsidies, which eliminate in consolidation, increase the Wireline segment Adjusted EBITDA and reduce the Wireless segment Adjusted EBITDA.  The wireless equipment subsidy recorded by the Wireless segment was $7.7 million, $17.3 million, and $12.2 million for the years ended December 31, 2015, 2014 and 2013, respectively. Selling, general and administrative expenses are charged to the Wireless segment based upon a shared services agreement.  The remaining selling, general and administrative expenses are charged to the Wireline segment.
Summarized financial information for our reportable segments for the years ended December 31, 2015, 2014 and 2013 follows (amounts in thousands):
 
Wireless
 
Wireline
 
Total Reportable Segments
2015
 
 
 
 
 
Revenues
 
 
 
 
 
Wholesale
$
267,676

 
—

 
267,676

Consumer
—

 
351,196

 
351,196

Business Services
—

 
209,975

 
209,975

Managed Broadband
—

 
149,687

 
149,687

Total
267,676

 
710,858

 
978,534

 
 
 
 
 
 
Cost of Goods Sold
70,899

 
251,439

 
322,338

Contribution
196,777

 
459,419

 
656,196

Less SG&A
(18,137
)
 
(320,242
)
 
(338,379
)
Plus share-based compensation expense
—

 
10,902

 
10,902

Plus accretion expense
559

 
562

 
1,121

Other
—

 
511

 
511

Adjusted EBITDA
$
179,199

 
151,152

 
330,351

 
 
 
 
 
 
Capital expenditures
$
47,892

 
128,343

 
176,235

Goodwill
$
164,312

 
74,951

 
239,263

Total assets
$
594,250

 
1,388,058

 
1,982,308


 
Wireless
 
Wireline
 
Total Reportable Segments
2014
 
 
 
 
 
Revenues
 
 
 
 
 
Wholesale
$
269,977

 
—

 
269,977

Consumer
—

 
288,014

 
288,014

Business Services
—

 
225,963

 
225,963

Managed Broadband
—

 
126,244

 
126,244

Total
269,977

 
640,221

 
910,198

 
 
 
 
 
 
Cost of Good Sold
90,920

 
211,784

 
302,704

Contribution
179,057

 
428,437

 
607,494

Less SG&A
(21,631
)
 
(272,016
)
 
(293,647
)
Plus share-based compensation expense
—

 
8,392

 
8,392

Plus accretion expense
733

 
516

 
1,249

Other expense
—

 
(372
)
 
(372
)
Adjusted EBITDA
$
158,159

 
164,957

 
323,116

 
 
 
 
 
 
Capital expenditures
$
30,243

 
145,866

 
176,109

Goodwill
$
164,312

 
65,248

 
229,560

Total assets
$
625,417

 
1,376,961

 
2,002,378

 
 
 
 
 
 
2013
 

 
 

 
 

Revenues
 
 
 
 
 
Wholesale
$
197,218

 
—

 
197,218

Consumer
—

 
274,805

 
274,805

Business Services
—

 
222,814

 
222,814

Managed Broadband
—

 
116,811

 
116,811

Total
197,218

 
614,430

 
811,648

 
 
 
 
 
 
Cost of Good Sold
68,086

 
212,376

 
280,462

Contribution
129,132

 
402,054

 
531,186

Less SG&A
(20,030
)
 
(251,035
)
 
(271,065
)
Plus share-based compensation expense
—

 
6,638

 
6,638

Plus accretion expense
507

 
(430
)
 
77

Other expense
—

 
447

 
447

Adjusted EBITDA
$
109,609

 
157,674

 
267,283

 
 
 
 
 
 
Capital expenditures
$
28,156

 
152,398

 
180,554

Goodwill
$
155,445

 
63,596

 
219,041

Total assets
$
624,740

 
1,347,314

 
1,972,054






A reconciliation of reportable segment Adjusted EBITDA to consolidated income (loss) before income taxes follows (amounts in thousands):
Years Ended December 31,
2015
 
2014
 
2013
Reportable segment Adjusted EBITDA
$
330,351

 
323,116

 
267,283

Less depreciation and amortization expense
(181,767
)
 
(170,285
)
 
(147,259
)
Less software impairment charge
(29,839
)
 
—

 
—

Less share-based compensation expense
(10,902
)
 
(8,392
)
 
(6,638
)
Less accretion expense
(1,121
)
 
(1,249
)
 
(77
)
Other
(511
)
 
372

 
(447
)
Consolidated operating income
106,211

 
143,562

 
112,862

Less other expense, net
(133,924
)
 
(74,289
)
 
(70,178
)
Consolidated income (loss) before income taxes
$
(27,713
)
 
69,273

 
42,684



We earn revenues included in both the Wireless and Wireline segment from a major customer. We earned revenues from our major customer, net of discounts, of $130.8 million or 13% and $108.3 million or 12% of total consolidated revenues for the year ended December 31, 2015, and 2014, respectively. We had no major customers for the years ended December 31, 2013.