Annual report pursuant to Section 13 and 15(d)

Business Segments

v3.3.1.900
Business Segments
 12 Months Ended
Dec. 31, 2015
Segment Reporting [Abstract]  
Business Segments
Business Segments

The Company reports its operations under two segments, Connectivity and Content. The Company's Connectivity segment provides airline customers and their passengers Wi-Fi connectivity over Ku-band satellite transmissions and to a lesser extent operations data solutions. The Company's Content segment selects, manages, and distributes owned and licensed media content, certain digital media offerings, video and music programming, applications, and video games to the airline, maritime and non-theatrical markets.

The decision to report two segments is principally based upon how the Company's chief operating decision maker (“CODM”) manages the Company's operations as two segments for purposes of evaluating financial performance and allocating resources. The CODM reviews revenue, cost of sales expense, and contribution profit information separately for the Company's Connectivity and Content businesses. Total segment contribution profit provides the CODM, investors and equity analysts a measure to analyze operating performance of each of the Company's business segments and its enterprise value against historical data and competitors' data, although historical results may not be indicative of future results, as operating performance is highly contingent on many factors, including customer tastes and preferences. All other financial information is reviewed by the CODM on a consolidated basis.

Segment revenue, expenses and contribution profit for the years ended December 31, 2015, 2014, and 2013 derived from the Company's Connectivity and Content segments were as follows (in thousands):

 
Year Ended December 31,
 
2015
 
2014
 
2013
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Licensing and services
$
308,153

 
$
96,906

 
$
405,059

 
$
277,389

 
$
74,839

 
$
352,228

 
$
181,885

 
$
51,350

 
$
233,235

Equipment
—

 
20,971

 
20,971

 
—

 
35,507

 
35,507

 
—

 
26,487

 
26,487

Total Revenue
308,153

 
117,877

 
426,030

 
277,389

 
110,346

 
387,735

 
181,885

 
77,837

 
259,722

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Licensing and Services
203,693

 
57,942

 
261,635

 
195,454

 
54,881

 
250,335

 
134,207

 
42,590

 
176,797

Equipment
—

 
17,521

 
17,521

 
—

 
31,538

 
31,538

 
—

 
21,141

 
21,141

Total Cost of Sales
203,693

 
75,463

 
279,156

 
195,454

 
86,419

 
281,873

 
134,207

 
63,731

 
197,938

Contribution Profit
104,460

 
42,414

 
146,874

 
81,935

 
23,927

 
105,862

 
47,678

 
14,106

 
61,784

Other Operating Expenses
 
 
 
 
155,685

 
 
 
 
 
142,845

 
 
 
 
 
107,308

Loss from Operations
 
 
 
 
(8,811
)
 
 
 
 
 
(36,983
)
 
 
 
 
 
(45,524
)
Other income (expense)
 
 
 
 
8,306

 
 
 
 
 
(9,637
)
 
 
 
 
 
(67,378
)
Loss before income taxes
 
 
 
 
(505
)
 
 
 
 
 
(46,620
)
 
 
 
 
 
(112,902
)
Income tax provision
 
 
 
 
1,621

 
 
 
 
 
10,574

 
 
 
 
 
1,839

Net loss
 
 
 
 
$
(2,126
)
 
 
 
 
 
$
(57,194
)
 
 
 
 
 
$
(114,741
)


At December 31, 2015 and 2014, the Company’s net assets and liabilities by segment were as follows (in thousands):

 
December 31, 2015
 
Connectivity
 
Content
 
Corporate
 
Total
Cash
$
3,404

 
$
119,487

 
$
100,661

 
$
223,552

Accounts receivable, net
15,577

 
77,774

 
98

 
93,449

Goodwill
19,273

 
74,523

 
—

 
93,796

Intangibles
7,696

 
126,071

 
—

 
133,767

Other
49,429

 
34,395

 
11,151

 
94,975

Total assets
95,379

 
432,250

 
111,910

 
639,539

 
 
 
 
 
 
 
—

Accounts payable and accrued expenses
10,187

 
97,699

 
22,755

 
130,641

Deferred tax liability
1,946

 
20,022

 
356

 
22,324

Notes payable
—

 
885

 
71,357

 
72,242

Derivative fair value
—

 
—

 
24,076

 
24,076

Other
11,623

 
21,336

 
3,536

 
36,495

Total liabilities
23,756

 
139,942

 
122,080

 
285,778

Total net assets
$
71,623

 
$
292,308

 
$
(10,170
)
 
$
353,761


 
December 31, 2014
 
Connectivity
 
Content
 
Corporate
 
Total
Cash
$
8,350

 
$
74,447

 
$
114,851

 
$
197,648

Accounts receivable, net
18,422

 
66,882

 
213

 
85,517

Goodwill
—

 
53,014

 
—

 
53,014

Intangibles
749

 
121,725

 
—

 
122,474

Other
41,053

 
29,511

 
4,378

 
74,942

Assets
68,574

 
345,579

 
119,442

 
533,595

 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
13,366

 
78,592

 
7,370

 
99,328

Deferred tax liability
39

 
23,367

 
4

 
23,410

Notes payable
—

 
981

 
2,034

 
3,015

Derivative fair value
—

 
—

 
52,671

 
52,671

Other
11,800

 
30,783

 
(41
)
 
42,542

Liabilities
25,205

 
133,723

 
62,038

 
220,966

Total net assets
$
43,369

 
$
211,856

 
$
57,404

 
$
312,629



Geographical revenues by segment for the years ended December 31, 2015, 2014, and 2013 were as follows (in thousands):

 
2015
 
2014
 
2013
Connectivity:
 
 
 
 
 
  United States
$
102,598

 
$
92,914

 
$
77,837

  Europe
14,833

 
13,807

 
—

  Other
446

 
3,625

 
—

Total Connectivity revenue by region
117,877

 
110,346

 
77,837

Content:
 
 
 
 
 
  United States and Canada
78,662

 
59,317

 
89,520

  Europe
39,738

 
47,917

 
58,889

  Asia and the Middle East
155,818

 
114,886

 
29,871

  Other
33,935

 
55,269

 
3,605

Total Content revenue by region
$
308,153

 
$
277,389

 
$
181,885