Industry Segments Data

6 Months Ended

Jun. 30, 2012

Industry Segments Data [Abstract]

Industry Segments Data [Text Block]

(6)       Industry Segments Data

Our reportable segments are business units that offer different products and are each managed separately.

A description of our reportable segments follows:

Consumer - We offer a full range of voice, video, data and wireless services to residential customers.

Network Access - We offer a full range of voice, data and wireless services to common carrier customers.

Commercial - We offer a full range of voice, video, data and wireless services to small businesses, local, national and global businesses, governmental entities and public and private educational institutions.

Managed Broadband - We offer data services to rural school districts, hospitals and health clinics through our SchoolAccess® and ConnectMD® initiatives and managed video conferencing.

Regulated Operations - We offer voice and data services to residential, business, and governmental customers in areas of rural Alaska.

Corporate related expenses including engineering, information technology, accounting, legal and regulatory, human resources, and other general and administrative expenses for the three and six months ended June 30, 2012 and 2011 are allocated to our segments using segment margin for the years ended December 31, 2011 and 2010, respectively. Bad debt expense for the three and six months ended June 30, 2012 and 2011 is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the three and six months ended June 30, 2012 and 2011, respectively. Corporate related expenses and bad debt expense are specifically identified for our Regulated Operations segment and therefore, are not included in the allocations.

We evaluate performance and allocate resources based on earnings before depreciation and amortization, net interest expense, income taxes, share-based compensation expense, accretion expense, loss attributable to non-controlling interest, 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 and six months ended June 30, 2012 and 2011 follows (amounts in thousands):

Three months ended June 30,				Consumer	Network Access	Commercial	Managed Broadband	Regulated Operations	Total Reportable Segments
2012
Revenues:
	Intersegment		$	(168)	82	1,426	-	59	1,399
	External			88,495	26,017	34,466	21,717	5,409	176,104
		Total revenues		88,327	26,099	35,892	21,717	5,468	177,503
Adjusted EBITDA			$	24,008	13,442	8,625	12,063	1,283	59,421
2011
Revenues:
	Intersegment		$	-	-	1,416	-	44	1,460
	External			88,554	25,151	34,216	14,639	5,529	168,089
		Total revenues		88,554	25,151	35,632	14,639	5,573	169,549
Adjusted EBITDA			$	28,258	12,344	7,401	5,709	1,221	54,933
Six months ended June 30,				Consumer	Network Access	Commercial	Managed Broadband	Regulated Operations	Total Reportable Segments
2012
Revenues:
	Intersegment		$	356	165	2,811	-	98	3,430
	External			176,307	51,205	68,807	40,746	10,946	348,011
		Total revenues		176,663	51,370	71,618	40,746	11,044	351,441
Adjusted EBITDA			$	48,802	25,852	17,066	20,312	2,218	114,250
2011
Revenues:
	Intersegment		$	-	-	2,825	-	113	2,938
	External			176,971	50,248	66,045	28,634	10,968	332,866
		Total revenues		176,971	50,248	68,870	28,634	11,081	335,804
Adjusted EBITDA			$	56,651	24,224	14,063	11,420	1,921	108,279

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

			Three Months Ended June 30,		Six Months Ended June 30,
			2012	2011	2012	2011
Reportable segment revenues		$	177,503	169,549	351,441	335,804
Less intersegment revenues eliminated in consolidation			1,399	1,460	3,430	2,938
	Consolidated revenues	$	176,104	168,089	348,011	332,866

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

			Three Months Ended		Six Months Ended
			June 30,		June 30,
			2012	2011	2012	2011
Reportable segment Adjusted EBITDA		$	59,421	54,933	114,250	108,279
Less depreciation and amortization expense			(33,350)	(30,779)	(65,730)	(62,645)
Less share-based compensation expense			(865)	(1,670)	(2,595)	(2,840)
Less non-cash contribution expense			(160)	-	(960)	-
Less net loss attributable to non-controlling interest			(177)	-	(354)	-
Plus net loss (income) attributable to equity investment			(84)	9	47	33
Less accretion expense			(152)	(194)	(340)	(266)
	Consolidated operating income		24,633	22,299	44,318	42,561
Less other expense, net			(16,860)	(26,410)	(34,144)	(43,882)
	Consolidated income (loss) before income tax (expense) benefit	$	7,773	(4,111)	10,174	(1,321)