Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

v2.4.0.8
Basis of Presentation and Summary of Significant Accounting Policies (Tables)
 6 Months Ended
Jun. 30, 2014
Accounting Policies [Abstract]  
Schedule of Segment Reporting Information, by Segment
Segment revenue, expenses and contribution profit for the three and six month periods ended June 30, 2014 and 2013 derived from the Company's Content and Connectivity segments were as follows (in thousands):

 
Three Months Ended June 30,
 
2014
 
2013
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Licensing
$
59,110

 
—

 
$
59,110

 
$
38,405

 
$
—

 
$
38,405

Service
12,253

 
17,308

 
29,561

 
5,678

 
12,379

 
18,057

Equipment
177

 
9,297

 
9,474

 
—

 
6,369

 
6,369

Total revenue
71,540

 
26,605

 
98,145

 
44,083

 
18,748

 
62,831

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
52,737

 
21,871

 
74,608

 
32,845

 
16,975

 
49,820

Contribution profit
18,803

 
4,734

 
23,537

 
11,238

 
1,773

 
13,011

Other operating expenses
 
 
 
 
31,076

 
 
 
 
 
20,487

Loss from operations
 
 
 
 
$
(7,539
)
 
 
 
 
 
$
(7,476
)

 
Six Months Ended June 30,
 
2014
 
2013
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
 
Consolidated
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Licensing
$
111,441

 
—

 
$
111,441

 
$
61,709

 
$
—

 
$
61,709

Service
23,314

 
33,802

 
57,116

 
9,550

 
18,673

 
28,223

Equipment
376

 
15,180

 
15,556

 
—

 
15,412

 
15,412

Total revenue
135,131

 
48,982

 
184,113

 
71,259

 
34,085

 
105,344

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Cost of sales
98,880

 
40,844

 
139,724

 
53,348

 
32,221

 
85,569

Contribution profit
36,251

 
8,138

 
44,389

 
17,911

 
1,864

 
19,775

Other operating expenses
 
 
 
 
61,321

 
 
 
 
 
49,403

Loss from operations
 
 
 
 
$
(16,932
)
 
 
 
 
 
$
(29,628
)

Schedule of Earnings Per Share, Basic and Diluted
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
Net income (loss) (numerator):
 
 
 
 
 
 
 
 
Net income (loss)
 
$
11,996

 
$
(13,029
)
 
$
(14,153
)
 
$
(40,050
)
Income allocable to noncontrolling interests
 
—

 
108

 
194

 
69

Net income (loss) for basic EPS
 
11,996

 
(13,137
)
 
(14,347
)
 
(40,119
)
 
 
 
 
 
 
 
 
 
Less: adjustment for change in fair value on warrants liability for diluted EPS after assumed exercise of warrants liability
 
21,326

 
—

 
5,808

 
—

Net loss for dilutive EPS
 
$
(9,330
)
 
$
(13,137
)
 
$
(20,155
)
 
$
(40,119
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares (denominator):
 
 
 
 
 
 
 
 
Weighted-average shares for basic EPS
 
71,988

 
54,843

 
71,983

 
49,094

Effect of assumed exercise of warrants liability
 
480

 
—

 
2,942

 
—

Adjusted weighted-average share for diluted EPS
 
72,468

 
54,843

 
74,925

 
49,094

 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
 
$
0.17

 
$
(0.24
)
 
$
(0.20
)
 
$
(0.82
)
Diluted earnings (loss) per share
 
$
(0.13
)
 
$
(0.24
)
 
$
(0.27
)
 
$
(0.82
)
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share
Securities not included in the calculation of diluted earnings (loss) per share were as follow:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
Stock options and restricted stock units
 
3,026

 
3,396

 
1,471

 
2,610

Restricted stock units
 
50

 
—

 
29

 
—

Non-employees stock options
 
1

 
—

 
2

 
—

Equity warrants
 
32

 
7,365

 
32

 
7,365

Liability warrants
 
—

 
19,260

 
—

 
19,179

Fair Value Measurements, Recurring and Nonrecurring
The following tables summarize the Company's financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2014, and December 31, 2013, respectively (in thousands):

 
June 30, 2014
 
Quotes Prices in Active Markets (Level 1)
 
 Significant Other Observable Inputs (Level 2)
 
 Significant Other Unobservable Inputs (Level 3)
Earn-out liability (1)
$
1,726

 
$
—

 
$
—

 
$
1,726

Global Eagle warrants (2)
64,316

 
64,316

 
—

 
—

Total financial liabilities
$
66,042

 
$
64,316

 
$
—

 
$
1,726


(1) Includes $1.7 million earn-out liability for EIM, a subsidiary of AIA assumed in the Business Combination.
(2) Includes 15,497,929 public warrants.

 
December 31, 2013
 
Quotes Prices in Active Markets (Level 1)
 
 Significant Other Observable Inputs (Level 2)
 
 Significant Other Unobservable Inputs (Level 3)
Earn-out liability (1)
$
1,421

 
$
—

 
$
—

 
$
1,421

Global Eagle warrants (2)
71,570

 
71,570

 
—

 
—

Total financial liabilities
$
72,991

 
$
71,570

 
$
—

 
$
1,421


(1) Includes $1.4 million earn-out liability for EIM, a subsidiary of AIA assumed in the Business Combination.
(2) Includes 15,567,650 public warrants.
Fair Value, by Balance Sheet Grouping
The following table shows both the carrying amounts, which approximate the fair values, of the Company's financial assets and liabilities in the consolidated financial statements at June 30, 2014 and December 31, 2013, respectively (in thousands):

 
June 30, 2014
 
December 31, 2013
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Financial liabilities:
 
 
 
 
 
 
 
Notes payable
$
3,596

 
$
3,596

 
$
10,801

 
$
10,801


Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
The following table presents the fair value roll-forward reconciliation of level 3 assets and liabilities measured at fair value basis for the period ended June 30, 2014, (in thousands):

 
Earn-Out Liability
Balance, December 31, 2013
$
1,421

  Change in value
305

Balance, June 30, 2014
$
1,726