Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information

Segment Information

(11)  Segment Information

Accounting guidance for the disclosures about segments of an enterprise defines operating segments as components of an enterprise for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker, or decision making group, in deciding how to allocate resources and assess performance. The Company’s operating segments are managed separately and represent separate strategic business units that offer different products or services and serve different markets. The Company’s reportable segments include: communications and coal mining (see Note 1 — Summary of Significant Accounting Policies). Other business interests, which are not reportable segments, include corporate assets and overhead costs that are not attributable to a specific segment.

The Company evaluates performance based upon Adjusted EBITDA, as defined by the Company, as net income (loss) from the consolidated statements of operations before (1) income tax benefit (expense), (2) total other income (expense), (3) non-cash impairment charges included within restructuring and impairment charges, (4) depreciation and amortization expense and (5) non-cash stock compensation expense included within selling, general and administrative expenses on the consolidated statements of operations.

Segment information for the Company’s Communications and Coal Mining businesses is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months EndedJune 30,
	2011		2010		2011		2010
Revenue from external customers:
Communications	$	913	$	892	$	1,827	$	1,792
Coal Mining	19		16		34		26
	$	932	$	908	$	1,861	$	1,818
Adjusted EBITDA:
Communications	$	226	$	209	$	451	$	411
Coal Mining	$	—	$	—	$	—	$	(2	)

Communications revenue consists of:

1) Core Network Services includes revenue from transport, infrastructure, data, and local and enterprise voice communications services.

2) Wholesale Voice Services includes revenue from long distance voice services, including domestic voice termination, international voice termination and toll free services.

3) Other Communications Services includes revenue from managed modem and its related reciprocal compensation services and SBC Contract Services, which includes revenue from the SBC Master Services Agreement, which was obtained in the December 2005 acquisition of WilTel.

Communications revenue attributable to each of these services is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Communications Services:
Core Network Services Revenue	$	744	$	699	$	1,473	$	1,400
Wholesale Voice Services Revenue	151		163		315		328
Other Communications Revenue	18		30		39		64
Total Communications Revenue	$	913	$	892	$	1,827	$	1,792

The following information provides a reconciliation of net loss to Adjusted EBITDA by operating segment, as defined by the Company, for the three and six months ended June 30, 2011 and 2010 (in millions):

Three Months Ended June 30, 2011

	Communications			Coal Mining
Net loss	$	(178	)	$	(1	)
Income tax expense	3			—
Total other (income) expense	178			—
Depreciation and amortization expense	206			1
Non-cash compensation expense	17			—
Adjusted EBITDA	$	226		$	—
Total Net Loss for reportable segments				$	(179	)
Unallocated corporate expense				(2		)
Consolidated Net Loss				$	(181	)

Six Months Ended June 30, 2011

	Communications			Coal Mining
Net loss	$	(379	)	$	(2	)
Income tax expense	30			—
Total other (income) expense	349			—
Depreciation and amortization expense	409			2
Non-cash compensation expense	42			—
Adjusted EBITDA	$	451		$	—
Total Net Loss for reportable segments				$	(381	)
Unallocated corporate expense				(5		)
Consolidated Net Loss				$	(386	)

Three Months Ended June 30, 2010

	Communications			Coal Mining
Net loss	$	(167	)	$	(1	)
Income tax expense	—			—
Total other (income) expense	140			—
Depreciation and amortization expense	222			1
Non-cash compensation expense	14			—
Adjusted EBITDA	$	209		$	—
Total Net Loss for reportable segments				$	(168	)
Unallocated corporate income				(1		)
Consolidated Net Loss				$	(169	)

Six Months Ended June 30, 2010

	Communications			Coal Mining
Net loss	$	(402	)	$	(3	)
Income tax expense	1			—
Total other (income) expense	336			(1		)
Depreciation and amortization expense	446			2
Non-cash compensation expense	30			—
Adjusted EBITDA	$	411		$	(2	)
Total Net Loss for reportable segments				$	(405	)
Unallocated corporate expense				(2		)
Consolidated Net Loss				$	(407	)