Segments

3 Months Ended

Mar. 31, 2013

Segments [Abstract]

Segments [Text Block]

(6)Segments

Effective January 1, 2013, we refocused our business and now have two reportable segments, Wireless and Wireline. The Wireless segment's revenue is derived from wholesale wireless services. The Wireline segment's revenue includes all of our other revenue, specifically 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 other 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 61 rural communities primarily in Southwest Alaska. This change reflects our plan to strategically focus on our wireless networkand is how our chief operating decision maker now measures performance and makes resource allocation decisions. Prior to 2013 we had operated our business under five reportable segments – Consumer, Network Access, Commercial, Managed Broadband and Regulated Operations. The historical segment data has been reclassified to conform to the revised reportable segments.

Selling, general and administrative expenses for the three months ended March 31, 2013 and 2012,are allocated to our segments using specific identification and is allocated to our Wireless segment based upon a shared services agreement.

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, loss attributable to non-controlling interests, 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 months ended March 31, 2013 and 2012 follows (amounts in thousands):

				Wireless	Wireline	Total Reportable Segments
2013
Revenues:
	Intersegment		$	-	1,418	1,418
	External			33,837	152,379	186,216
		Total revenues		33,837	153,797	187,634
Adjusted EBITDA			$	15,189	43,460	58,649
2012
Revenues:
	Intersegment		$	-	2,031	2,031
	External			29,444	142,463	171,907
		Total revenues		29,444	144,494	173,938
Adjusted EBITDA			$	13,073	41,756	54,829

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

Three Months Ended March 31,			2013	2012
Reportable segment revenues		$	187,634	173,938
Less intersegment revenues eliminated in consolidation			1,418	2,031
	Consolidated revenues	$	186,216	171,907

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

Three Months Ended March 31,			2013	2012
Reportable segment Adjusted EBITDA		$	58,649	54,829
Less depreciation and amortization expense			(33,999)	(32,380)
Less share-based compensation expense			(1,259)	(1,730)
Less non-cash contribution expense			-	(800)
Less net loss attributable to non-controlling interests			(200)	(177)
Plus net loss (income) attributable to equity investment			(4)	131
Less accretion expense			(127)	(188)
	Consolidated operating income		23,060	19,685
Less other expense			(16,904)	(17,284)
	Consolidated income before income tax expense	$	6,156	2,401