Annual report pursuant to Section 13 and 15(d)

Business Segments (Notes)

v2.4.1.9
Business Segments (Notes)
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
Business Segments
Business Segments
The Company reports its operations under two segments, its Connectivity and Content businesses. The Company's Connectivity operating segment provides airline partners and their passengers Wi-Fi connectivity over Ku-band satellite transmissions through Row 44. The Company's Content operating segment selects, manages, and distributes owned and licensed media content, video and music programming, applications, and video games to the airline industry through AIA, PMG, IFES and Purple.
The decision to report two segments is principally based upon the Company's chief operating decision maker (“CODM”), and how he manages the Company's operations as two segments from a consolidated basis for purposes of evaluating financial performance and allocating resources. The CODM reviews revenue, expense, and contribution profit income (loss) information separately for its Connectivity and Content businesses. Total segment contribution profit income (loss) 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 (loss) for the years ended December 31, 2014, 2013, and 2012 derived from the Company's Connectivity and Content operating segments were as follows (in thousands):
 
Year Ended December 31,
 
2014
 
2013
 
2012
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
 
Consolidated
 
Content
 
Connectivity
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
License
$
231,521

 
$
—

 
$
231,521

 
$
153,973

 
$
—

 
$
153,973

 
$
—

 
$
—

Service
45,868

 
74,839

 
120,707

 
27,912

 
51,350

 
79,262

 
—

 
11,365

Equipment
—

 
35,507

 
35,507

 
—

 
26,487

 
26,487

 
—

 
57,845

Total Revenue
277,389

 
110,346

 
387,735

 
181,885

 
77,837

 
259,722

 
—

 
69,210

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of Sales
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Licensing and Services
195,454

 
54,881

 
250,335

 
134,207

 
42,590

 
176,797

 
—

 
22,327

Equipment
—

 
31,538

 
31,538

 
—

 
21,141

 
21,141

 
—

 
54,570

Total Cost of Sales
195,454

 
86,419

 
281,873

 
134,207

 
63,731

 
197,938

 
—

 
76,897

Contribution Profit (Loss)
81,935

 
23,927

 
105,862

 
47,678

 
14,106

 
61,784

 
—

 
(7,687
)
Other Operating Expenses
 
 
 
 
142,845

 
 
 
 
 
107,308

 
 
 
21,149

Loss from Operations
 
 
 
 
(36,983
)
 
 
 
 
 
(45,524
)
 
 
 
(28,836
)
Other income (expense)
 
 
 
 
(9,637
)
 
 
 
 
 
(67,378
)
 
 
 
(13,967
)
Loss before income taxes
 
 
 
 
(46,620
)
 
 
 
 
 
(112,902
)
 
 
 
(42,803
)
Income tax provision
 
 
 
 
10,574

 
 
 
 
 
1,839

 
 
 
—

Net loss
 
 
 
 
$
(57,194
)
 
 
 
 
 
$
(114,741
)
 
 
 
$
(42,803
)

At December 31, 2014 and 2013, the Company’s net assets and liabilities by segment were as follows (in thousands):
 
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

 
112,155

 
—

 
112,904

Other
41,053

 
39,081

 
4,378

 
84,512

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


 
December 31, 2013
 
Connectivity
 
Content
 
Corporate
 
Total
Cash
$
8,167

 
$
38,843

 
$
211,786

 
$
258,796

Accounts receivable, net
12,274

 
51,942

 
—

 
64,216

Goodwill
—

 
52,345

 
—

 
52,345

Intangibles
—

 
136,414

 
—

 
136,414

Other
32,261

 
31,864

 
2,987

 
67,112

Assets
52,702

 
311,408

 
214,773

 
578,883

 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
8,043

 
70,850

 
3,068

 
81,961

Deferred tax liability
—

 
26,378

 
—

 
26,378

Notes payable
38

 
10,763

 
—

 
10,801

Derivative fair value
—

 
—

 
71,570

 
71,570

Other
14,777

 
8,644

 
8,568

 
31,989

Liabilities
22,858

 
116,635

 
83,206

 
222,699

Total net assets
$
29,844

 
$
194,773

 
$
131,567

 
$
356,184


Geographical revenues by segment for the years ended December 31, 2014, 2013, and 2012 were as follows (in thousands):
 
2014
 
2013
 
2012
Connectivity:
 
 
 
 
 
  United States
$
92,914

 
$
77,837

 
$
69,210

  Europe
13,807

 
—

 
—

  Other
3,625

 
—

 
—

Total Connectivity revenue by region
110,346

 
77,837

 
69,210

Content:
 
 
 
 
 
  United States and Canada
59,317

 
89,520

 
—

  Europe
47,917

 
58,889

 
—

  Asia and the Middle East
114,886

 
29,871

 
—

  Other
55,269

 
3,605

 
—

Total Content revenue by region
$
277,389

 
$
181,885

 
$
—