Property, Plant And Equipment

12 Months Ended

Dec. 31, 2012

Property, Plant And Equipment [Abstract]

NOTE 11: PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at cost, consisted of the following as of December 31:


($ in thousands)		2012		2011

Land, buildings and other support equipment	$	10,647	$	10,908
Network communications equipment		35,183		36,187
Telephone plant		28,030		30,571
Online plant		5,905		6,885
Plant in service		79,765		84,551
Plant under construction		34		297
		79,799		84,848
Less: Accumulated depreciation		63,353		59,423
Property, plant and equipment, net	$	16,446	$	25,425

Depreciation expense is principally based on the composite group method. Depreciation expense for the years ended December 31, 2012, 2011, and 2010 was $4.2 million, $4.8 million, and $5.7 million, respectively.

The Company reviews the recoverability of its long-lived assets, including buildings, equipment, internal-use software and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset from the expected future cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The primary measure of fair value is based on discounted cash flows, which are considered to be a Level 3 input.

Fair values are determined by using a combination of the market approach and income approach. The Company's fair value calculations are based on projected financial results that are prepared in connection with the Company's forecasting process. The fair value calculations are also based on other assumptions including long-term growth rates and weighted average cost of capital.

In 2012, the Company determined that there was triggering event in its Telephone segment due to the continued decline in access lines resulting in declining revenue. Accordingly, the Company performed an undiscounted cash flow analysis on its Telephone assets. As the Company did not pass the recoverability test, it proceeded to perform an discounted cash flow to measure the assets fair value. The fair value calculations for the Telephone segment assumed long-term revenue declines ranging from approximately 3 to 7 percent and weighted average cost of capital of approximately 10 percent. Due to the impact to the industry from ILEC customers, the Company's 2012 impairment test for long-lived assets indicated that the carrying value of its Telephone segment exceeded its fair value.

As a result of the impairment testing, the Company recorded, in operating expenses, a long-lived asset impairment charges of $8.9 million in the Telephone segment in 2012.

For the year ended December 31, 2010, the Company determined that its landline video assets, consisting of head-end equipment, related network equipment and customer premise equipment, were impaired. The Company recorded an asset impairment charge of $2.3 million, which represents 100% of the carrying net value of the landline video assets. This impairment charge resulted from customers who migrated to DIRECTV under the Company's reseller agreement with DIRECTV or to a competitor, resulting in lost landline video revenue.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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