Annual report pursuant to Section 13 and 15(d)

Quarterly Financial Data (Unaudited)

v3.8.0.1
Quarterly Financial Data (Unaudited)
12 Months Ended
Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]  
Quarterly Financial Data (Unaudited)
Quarterly Financial Data (Unaudited)

The following quarterly Consolidated Statements of Operations for the years December 31, 2016 and 2015 are unaudited, and have been prepared on a basis consistent with our audited consolidated annual financial statements, and include, in the opinion of management, all normal recurring adjustments necessary for the fair statement of the financial information contained in those statements. The results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period (in thousands, except per share amounts).

 
Quarter Ended
 
Mar. 31, 2015
 
June 30, 2015
 
Sept. 30, 2015 (1)
 
Dec. 31, 2015
 
Mar. 31, 2016
 
June 30, 2016
 
Sept. 30, 2016(2)
 
Dec. 31, 2016
Revenue
$
100,305

 
$
102,376

 
$
110,114

 
$
113,235

 
$
113,817

 
$
112,265

 
$
146,909

 
$
156,764

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
69,426

 
66,083

 
71,456

 
72,191

 
76,768

 
75,086

 
103,348

 
110,268

Sales and marketing
3,275

 
4,964

 
4,819

 
4,647

 
4,672

 
6,491

 
8,390

 
11,388

Product development (7)
7,230

 
6,451

 
7,766

 
7,163

 
8,746

 
8,416

 
7,916

 
12,640

General and administrative (1) (2) (3)
18,119

 
17,576

 
18,602

 
23,418

 
19,220

 
18,447

 
44,728

 
32,800

Provision for legal settlements (3)

 
750

 
3,500

 

 
2,001

 
38,142

 
1,545

 
1,758

Amortization of intangible assets
5,983

 
6,005

 
7,286

 
7,720

 
7,403

 
7,486

 
9,166

 
11,593

Goodwill impairment

 

 

 

 

 

 

 
64,000

Restructuring charges
302

 

 
66

 
43

 

 

 

 

Total operating expenses
104,335

 
101,829

 
113,495

 
115,182

 
118,810

 
154,068

 
175,093

 
244,447

Income (loss) from operations
(4,030
)
 
547

 
(3,381
)
 
(1,947
)
 
(4,993
)
 
(41,803
)
 
(28,184
)
 
(87,683
)
Interest expense, net
(245
)
 
(583
)
 
(803
)
 
(861
)
 
(804
)
 
(613
)
 
(6,412
)
 
(10,369
)
Income from equity method investments (2)

 

 

 

 

 

 
2,065

 
1,764

Change in fair value of derivatives
954

 
14,789

 
(1,877
)
 
(1,928
)
 
5,865

 
10,926

 
1,191

 
7,533

Other income (expense), net (4)
(796
)
 
(443
)
 
(576
)
 
675

 
680

 
(5,934
)
 
631

 
(1,703
)
Income (loss) before income taxes
(4,117
)
 
14,310

 
(6,637
)
 
(4,061
)
 
748

 
(37,424
)
 
(30,709
)
 
(90,458
)
Income tax expense (benefit) (2)
(686
)
 
1,323

 
235

 
749

 
3,160

 
736

 
(50,063
)
 
1,256

Net income (loss)
$
(3,431
)
 
$
12,987

 
$
(6,872
)
 
$
(4,810
)
 
$
(2,412
)
 
$
(38,160
)
 
$
19,354

 
$
(91,714
)
Net income (loss) per share (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.04
)
 
$
0.17

 
$
(0.09
)
 
$
(0.06
)
 
$
(0.03
)
 
$
(0.49
)
 
$
0.23

 
$
(1.07
)
Diluted
$
(0.06
)
 
$
(0.02
)
 
$
(0.09
)
 
$
(0.06
)
 
$
(0.03
)
 
$
(0.49
)
 
$
0.23

 
$
(1.07
)
Weighted average shares outstanding (6):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
76,874

 
77,111

 
77,753

 
78,476

 
78,643

 
78,127

 
82,874

 
85,369

Diluted
78,725

 
78,518

 
77,753

 
78,476

 
78,643

 
78,127

 
85,081

 
85,369



(1)
The Company acquired WOI (Media & Content segment) and RMG (Media & Content segment) on July 1, 2015 and masFlight (Aviation Connectivity segment) and navAero (Aviation Connectivity segment) on August 6, 2015. The financial data from the quarter ended September 30, 2015 includes the operating results of these acquired businesses for the periods beginning on their respective acquisition dates through September 30, 2015. The Company reported transaction expenses related to these acquisitions totaling $1.3 million during the quarter ended September 30, 2015 in General and administrative in the above quarterly Consolidated Statement of Operations.

(2)
On July 27, 2016, the Company acquired EMC (Maritime & Land Connectivity segment). The financial data for the quarter ended September 30, 2016 includes the operating results of EMC from the acquisition date through September 30, 2016. In connection with this acquisition, the Company released the valuation allowance due to the deferred tax liabilities created of $53.9 million, offset by foreign income taxes of $4.8 million resulting from the foreign subsidiaries’ contribution to pretax income, withholding taxes of $2.7 million and effects of permanent differences. Also, in connection with this acquisition, the Company acquired interests in two equity method investments. The related transaction and integration expenses of $12.7 million, $1.9 million and $0.8 million were incurred during the quarters ended September 30, 2016, June 30, 2016 and March 31, 2016, respectively, and $1.8 million was incurred during the quarter ended December 31, 2015, in General and administrative in the quarterly Consolidated Statements of Operations.

(3)
During the quarter ended June 30, 2016, the Company recorded a one-time charge of $38.1 million to settle sound-recording liabilities under the Sound-Recording Settlements. The Company also engaged in settlement negotiations with airlines regarding related liabilities. The presentation of the Provision for legal settlements for applicable prior quarters have been reclassified from General and administrative to conform with this presentation.

(4)
Other income (expense), net, for the quarter ended June 30, 2016 includes a one-time $4.4 million write-off of a related party note receivable and accrued interest and a $0.9 million impairment of internally developed software.

(5)
Quarterly and year-to-date computations of net income (loss) per common share amounts are calculated independently. Therefore, the sum of the per share amounts for the quarters may not agree with the per share amounts for the year.

(6)
During the quarter ended June 30, 2016, the Company repurchased 0.6 million shares of its common stock for consideration of $5.2 million in the aggregate under the stock repurchase program authorized by the Board of Directors in March 2016. In connection with the EMC Acquisition on July 27, 2016, the Company issued approximately 5.5 million shares of its common stock at the closing as part of the purchase price. In addition, as a result of the Sound-Recording Settlements entered into with major record labels and publishers in 2016, including UMG, the Company issued 1.8 million shares of its common stock during the quarter ended September 30, 2016 as part of the settlement payments.

(7)
Product development for the quarter ended December 31, 2016 includes an impairment of internally developed software of $3.2 million.