Annual report pursuant to Section 13 and 15(d)

Quarterly Financial Data (Unaudited) (Tables)

v3.8.0.1
Quarterly Financial Data (Unaudited) (Tables)
12 Months Ended
Dec. 31, 2017
Quarterly Financial Information Disclosure [Abstract]  
Schedule of Quarterly Financial Information
December 31, 2017 and 2016 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, 2016
 
June 30, 2016
 
Sept. 30, 2016(1)
 
Dec. 31, 2016
 
Mar. 31, 2017
 
June 30, 2017
 
Sept. 30, 2017
 
Dec. 31, 2017
Revenue
$
113,817

 
$
112,265

 
$
146,909

 
$
156,764

 
$
152,592

 
$
155,742

 
$
151,537

 
$
159,598

Cost of sales
76,768

 
75,086

 
103,348

 
110,268

 
110,540

 
118,090

 
112,951

 
120,539

Gross margin
37,049

 
37,179

 
43,561

 
46,496

 
42,052

 
37,652

 
38,586

 
39,059

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sales and marketing
4,672

 
6,491

 
8,390

 
11,388

 
11,012

 
10,029

 
9,332

 
10,565

Product development (6)
8,746

 
8,416

 
7,916

 
12,640

 
7,649

 
7,942

 
11,328

 
8,689

General and administrative (1) (2)
19,220

 
18,447

 
44,728

 
32,800

 
35,321

 
34,929

 
39,129

 
38,842

Provision for legal settlements (2)
2,001

 
38,142

 
1,545

 
1,758

 
475

 

 
310

 
650

Amortization of intangible assets
7,403

 
7,486

 
9,166

 
11,593

 
11,008

 
10,860

 
10,981

 
11,106

Goodwill impairment (7)

 

 

 
64,000

 
78,000

 

 

 
89,000

Total operating expenses
42,042

 
78,982

 
71,745

 
134,179

 
143,465

 
63,760

 
71,080

 
158,852

Income (loss) from operations
(4,993
)
 
(41,803
)
 
(28,184
)
 
(87,683
)
 
(101,413
)
 
(26,108
)
 
(32,494
)
 
(119,793
)
Interest expense, net
(804
)
 
(613
)
 
(6,412
)
 
(10,369
)
 
(10,964
)
 
(14,807
)
 
(18,164
)
 
(14,519
)
Loss from extinguishment of debt

 

 

 

 
(14,389
)
 

 

 

Income from equity method investments (1) (9)

 

 
2,065

 
1,764

 
1,539

 
601

 
1,770

 
(16,334
)
Change in fair value of derivatives
5,865

 
10,926

 
1,191

 
7,533

 
2,920

 
(445
)
 
196

 
839

Other income (expense), net (3)
680

 
(5,934
)
 
631

 
(1,703
)
 
(488
)
 
653

 
(123
)
 
(478
)
Income (loss) before income taxes
748

 
(37,424
)
 
(30,709
)
 
(90,458
)
 
(122,795
)
 
(40,106
)
 
(48,815
)
 
(150,285
)
Income tax expense (benefit) (1)
3,160

 
736

 
(50,063
)
 
1,256

 
2,816

 
4,024

 
4,153

 
(15,880
)
Net income (loss)
$
(2,412
)
 
$
(38,160
)
 
$
19,354

 
$
(91,714
)
 
$
(125,611
)
 
$
(44,130
)
 
$
(52,968
)
 
$
(134,405
)
Net income (loss) per share (4):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.03
)
 
$
(0.49
)
 
$
0.23

 
$
(1.07
)
 
$
(1.47
)
 
$
(0.52
)
 
$
(0.59
)
 
$
(1.51
)
Diluted
$
(0.03
)
 
$
(0.49
)
 
$
0.23

 
$
(1.07
)
 
$
(1.47
)
 
$
(0.52
)
 
$
(0.59
)
 
$
(1.51
)
Weighted average shares outstanding (5):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
78,643

 
78,127

 
82,874

 
85,369

 
85,440

 
85,496

 
89,194

 
89,222

Diluted
78,643

 
78,127

 
85,081

 
85,369

 
85,440

 
85,496

 
89,194

 
89,222



(1)
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, in General and administrative in the quarterly Consolidated Statements of Operations.

(2)
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.

(3)
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.

(4)
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.

(5)
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. On the first anniversary of the EMC Acquisition, on July 27, 2017, the Company issued to the EMC seller approximately 5.1 million additional shares of the Company’s common stock. Pursuant to the EMC purchase agreement, 50% of the newly issued shares were valued at $8.40 per share, and the other 50% was valued at the volume-weighted average price of a share of Company common stock measured two days prior to the first anniversary date. 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.

(6)
Product development for the quarter ended December 31, 2016 includes an impairment of internally developed software of $3.2 million.

(7)
During the quarter ended December 31, 2017 we determined that goodwill relating to our Maritime & Land Connectivity and Aviation Connectivity reporting units was impaired and we recognized an impairment loss of $45.0 million and $44.0 million, respectively. Additionally, during the quarter ended March 31, 2017 we recorded a goodwill impairment loss of $78.0 million in our Maritime & Land Connectivity reporting unit. During the quarter ended December 31, 2016 we recorded an impairment loss of $64.0 million to our Maritime & Land Connectivity reporting unit. See Note 5. Goodwill.

(8)
In January 2017 we entered into a new credit agreement consisting of a $500 million senior secured term loan facility and a five-year $85 million senior secured revolving credit facility and concurrently paid-off in full the indebtedness assumed upon the EMC Acquisition of $412.4 million. In connection with this refinancing transaction we incurred a loss on extinguishment of debt of $14.4 million recorded in the statement of operations during the quarter ended March 31, 2017. See Note 9. Financing Arrangements.

(9)
During the fourth quarter of 2017 we completed an assessment of the recoverability of our equity method investments and determined that the carrying value of our interest in WMS exceeded the estimated fair value of our interest and accordingly we recorded an impairment loss of $16.7 million. See Note 7. Equity Method Investments.