Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.8.0.1
Segment Information
12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Segment Information
Segment Information

The Company reports its operations through three reportable segments: Media & Content, Aviation Connectivity and Maritime & Land Connectivity. Prior to the EMC Acquisition in the third quarter of 2016, the Company operated through two operating segments: Media & Content and Connectivity. During the fourth quarter of 2016, as a result of the EMC Acquisition, the Company formed a Maritime & Land Connectivity segment. The Company added a significant number of customers in different markets and geographic areas of operations under a different management structure and made corresponding organizational changes. As a result, the Company re-evaluated its reportable segments and concluded that the changes to its reportable segments was appropriate and consistent with how its chief operating decision maker (“CODM”) would continue to manage the Company’s operations for purposes of evaluating financial performance and allocating resources.

The CODM evaluates financial performance and allocates resources by reviewing revenue, costs of sales and contribution profit separately for the Media & Content, Aviation Connectivity and Maritime & Land Connectivity segments. Total segment contribution profit provides the CODM a measure to analyze operating performance of each of the Company’s operating 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. During the second quarter of 2017, due to the changes in management and organizational structures, the Company reorganized its operations into two operating segments: Media & Content and Connectivity.

Revenue and contribution profit by segment were as follows (in thousands):

 
Year Ended December 31,
 
2016
 
2015
 
2014
Revenue:
 
 
 
 
 
Media & Content
 
 
 
 
 
Licensing
$
261,912

 
$
252,775

 
$
231,521

Services
56,152

 
55,292

 
45,868

Total
318,064

 
308,067

 
277,389

Aviation Connectivity
 
 
 
 
 
Services
109,507

 
96,912

 
74,839

Equipment
28,977

 
21,051

 
35,507

Total
138,484

 
117,963

 
110,346

Maritime & Land Connectivity
 
 
 
 
 
Services
68,964

 

 

Equipment
4,243

 

 

Total
73,207

 

 

Total revenue
$
529,755

 
$
426,030

 
$
387,735

Contribution profit (1):
 
 
 
 
 
Media & Content
$
104,036

 
$
104,374

 
$
82,393

Aviation Connectivity
46,739

 
42,500

 
23,469

Maritime & Land Connectivity
13,510

 

 

Total contribution profit
164,285

 
146,874

 
105,862

Other operating expenses
326,948

 
155,685

 
142,845

Loss from operations
$
(162,663
)
 
$
(8,811
)
 
$
(36,983
)

(1)
Includes depreciation expense of $0.7 million (Media & Content), $4.5 million (Aviation Connectivity) and $5.6 million (Maritime & Land Connectivity), $0.7 million (Media & Content) and $2.2 million (Aviation Connectivity), and $1.2 million (Media & Content) and $1.7 million (Aviation Connectivity) for the years ended December 31, 2016, 2015, and 2014, respectively. Also includes amortization expense of $0.2 million (Media & Content) and $2.7 million (Media & Content) for the years ended December 31, 2015 and 2014, respectively.

The Company’s total assets by segment were as follows (in thousands):

 
December 31,
 
2016
 
2015
Segment assets:
 
 
 
Media & Content
$
391,668

 
$
432,250

Aviation Connectivity
151,136

 
95,379

Maritime & Land Connectivity
539,327

 

Total segment assets
1,082,131

 
527,629

Corporate assets
17,304

 
110,232

Total assets
$
1,099,435

 
$
637,861


Geographical revenue by segment as presented below is based on the billing location of the customer. Revenue from external customers was as follows (in thousands):

 
Year Ended December 31,
 
2016
 
2015
 
2014
Media & Content:
 
 
 
 
 
United States and Canada
$
80,765

 
$
78,662

 
$
59,317

Europe
48,527

 
39,738

 
47,917

Asia and Middle East
152,758

 
155,818

 
114,886

Other
36,014

 
33,849

 
55,269

Total
$
318,064

 
$
308,067

 
$
277,389

Aviation Connectivity:
 
 
 
 
 
United States
$
119,198

 
$
102,598

 
$
92,914

Europe
15,231

 
14,833

 
13,807

Other
4,055

 
532

 
3,625

Total
$
138,484

 
$
117,963

 
$
110,346

Maritime & Land Connectivity:
 
 
 
 
 
United States
$
31,334

 
$

 
$

Europe
22,088

 

 

Africa, Middle East and Asia
13,759

 

 

Other
6,026

 

 

Total
$
73,207

 
$

 
$

 
$
529,755

 
$
426,030

 
$
387,735


The following table summarizes net property, plant and equipment by country (in thousands):

 
December 31,
 
2016
 
2015
Media & Content:
 
 
 
United States and Canada
$
2,803

 
$
5,081

United Kingdom
3,023

 
3,192

India
2,013

 
1,828

Other
1,338

 
552

Total
$
9,177

 
$
10,653

Aviation Connectivity:
 
 
 
United States
$
64,800

 
$
23,638

Total
$
64,800

 
$
23,638

Maritime & Land Connectivity:
 
 
 
United States
$
66,124

 
$

Germany
16,321

 

Other
4,139

 

Total
$
86,584

 
$

Corporate
 
 
 
United States
$
5,488

 
$
4,775

Total
$
5,488

 
$
4,775

 
$
166,049

 
$
39,066


As described above, subsequent to December 31, 2016, the Company reorganized its operations into two reportable segments: Connectivity and Media & Content. The following provides the segment information based on the two reportable segments as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015 and 2014.

Revenue and contribution profit by segment were as follows (in thousands):

 
Year Ended December 31,
 
2016
 
2015
 
2014
Revenue:
 
 
 
 
 
Media & Content
 
 
 
 
 
Licensing
$
261,912

 
$
252,775

 
$
231,521

Services
56,152

 
55,292

 
45,868

Total
318,064

 
308,067

 
277,389

Connectivity
 
 
 
 
 
Services
178,471

 
96,912

 
74,839

Equipment
33,220

 
21,051

 
35,507

Total
211,691

 
117,963

 
110,346

Total revenue
$
529,755

 
$
426,030

 
$
387,735

Contribution profit (1):
 
 
 
 
 
Media & Content
$
104,036

 
$
104,374

 
$
82,393

Connectivity
60,249

 
42,500

 
23,469

Total contribution profit
164,285

 
146,874

 
105,862

Other operating expenses
326,948

 
155,685

 
142,845

Loss from operations
$
(162,663
)
 
$
(8,811
)
 
$
(36,983
)


(1)
Includes depreciation expense of $0.7 million (Media & Content) and $10.2 million (Connectivity), $0.7 million (Media & Content) and $2.2 million (Connectivity), and $1.2 million (Media & Content) and $1.7 million (Connectivity) for the years ended December 31, 2016, 2015, and 2014, respectively. Also includes amortization expense of $0.2 million (Media & Content) and $2.7 million (Media & Content) for the years ended December 31, 2015 and 2014, respectively.

The Company’s total assets by segment were as follows (in thousands):

 
December 31,
 
2016
 
2015
Segment assets:
 
 
 
Media & Content
$
391,668

 
$
432,250

Connectivity
690,463

 
95,379

Total segment assets
1,082,131

 
527,629

Corporate assets
17,304

 
110,232

Total assets
$
1,099,435

 
$
637,861



Geographical revenue by segment as presented below is based on the billing location of the customer. The revenue from external customers was as follows (in thousands):

 
Year Ended December 31,
 
2016
 
2015
 
2014
Media & Content:
 
 
 
 
 
United States and Canada
$
80,765

 
$
78,662

 
$
59,317

Europe
48,527

 
39,738

 
47,917

Asia and the Middle East
152,758

 
155,818

 
114,886

Other
36,014

 
33,849

 
55,269

Total
$
318,064

 
$
308,067

 
$
277,389

Connectivity:
 
 
 
 
 
United States
$
150,532

 
$
102,598

 
$
92,914

Europe
37,319

 
14,833

 
13,807

Other
23,840

 
532

 
3,625

Total
$
211,691

 
$
117,963

 
$
110,346

 
$
529,755

 
$
426,030

 
$
387,735



The following table summarizes net property, plant and equipment by country (in thousands):

 
December 31,
 
2016
 
2015
Media & Content:
 
 
 
United States and Canada
$
2,803

 
$
5,081

United Kingdom
3,023

 
3,192

India
2,013

 
1,828

Other
1,338

 
552

Total
$
9,177

 
$
10,653

Connectivity:
 
 
 
United States
$
130,924

 
$
23,638

Germany
16,321

 

Other
4,139

 

Total
$
151,384

 
$
23,638

Corporate
 
 
 
United States
$
5,488

 
$
4,775

Total
$
5,488

 
$
4,775

 
$
166,049

 
$
39,066