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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Global Eagle Entertainment Inc | NASDAQ:ENT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.90 | 1.91 | 1.98 | 0 | 01:00:00 |
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
FOR THE TRANSITION PERIOD FROM __________ TO ________
|
DELAWARE
|
|
27-4757800
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
6080 Center Drive, Suite 1200
|
|
|
Los Angeles, California
|
|
90045
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Securities Registered pursuant to Section 12(b) of the Act:
|
||||
Title of each class
|
|
Ticker
|
|
Name of exchange on which registered
|
Common Stock, $0.0001 par value
|
|
ENT
|
|
The Nasdaq Stock Market LLC
|
Large accelerated filer
|
o
|
Accelerated filer
|
þ
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
þ
|
Emerging growth company
|
o
|
(Class)
|
|
(Outstanding as of July 30, 2019)
|
||
COMMON STOCK, $0.0001 PAR VALUE
|
|
92,821,420
|
|
SHARES
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
ITEM 1.
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
ITEM 2.
|
|
|
||
ITEM 3.
|
|
|
||
ITEM 4.
|
|
|
||
|
|
|
|
|
|
|
|||
|
|
|
|
|
ITEM 1.
|
|
|
||
ITEM 1A.
|
|
|
||
|
|
|
|
|
ITEM 6.
|
|
|
||
|
|
|
||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Licensing and services
|
$
|
145,129
|
|
|
$
|
156,428
|
|
|
$
|
295,607
|
|
|
$
|
302,954
|
|
Equipment
|
12,338
|
|
|
9,534
|
|
|
28,479
|
|
|
19,505
|
|
||||
Total revenue
|
157,467
|
|
|
165,962
|
|
|
324,086
|
|
|
322,459
|
|
||||
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Licensing and services
|
116,308
|
|
|
122,304
|
|
|
239,577
|
|
|
234,795
|
|
||||
Equipment
|
7,909
|
|
|
4,427
|
|
|
18,834
|
|
|
10,415
|
|
||||
Total cost of sales
|
124,217
|
|
|
126,731
|
|
|
258,411
|
|
|
245,210
|
|
||||
Gross margin
|
33,250
|
|
|
39,231
|
|
|
65,675
|
|
|
77,249
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
7,365
|
|
|
10,877
|
|
|
15,614
|
|
|
20,492
|
|
||||
Product development
|
6,125
|
|
|
9,872
|
|
|
13,104
|
|
|
18,206
|
|
||||
General and administrative
|
27,161
|
|
|
29,799
|
|
|
55,141
|
|
|
68,235
|
|
||||
Provision for (gain from) legal settlements
|
25
|
|
|
(141
|
)
|
|
533
|
|
|
375
|
|
||||
Amortization of intangible assets
|
7,800
|
|
|
10,357
|
|
|
15,599
|
|
|
20,920
|
|
||||
Total operating expenses
|
48,476
|
|
|
60,764
|
|
|
99,991
|
|
|
128,228
|
|
||||
Loss from operations
|
(15,226
|
)
|
|
(21,533
|
)
|
|
(34,316
|
)
|
|
(50,979
|
)
|
||||
Other (expense) income:
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(22,329
|
)
|
|
(19,755
|
)
|
|
(43,606
|
)
|
|
(35,352
|
)
|
||||
Income from equity method investments
|
2,517
|
|
|
428
|
|
|
4,646
|
|
|
1,589
|
|
||||
Change in fair value of derivatives
|
—
|
|
|
(655
|
)
|
|
938
|
|
|
(91
|
)
|
||||
Other expense, net
|
(105
|
)
|
|
(673
|
)
|
|
(284
|
)
|
|
(347
|
)
|
||||
Loss before income taxes
|
(35,143
|
)
|
|
(42,188
|
)
|
|
(72,622
|
)
|
|
(85,180
|
)
|
||||
Income tax expense (benefit)
|
3,317
|
|
|
3,722
|
|
|
3,447
|
|
|
(987
|
)
|
||||
Net loss
|
$
|
(38,460
|
)
|
|
$
|
(45,910
|
)
|
|
$
|
(76,069
|
)
|
|
$
|
(84,193
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share – basic and diluted
|
$
|
(0.42
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.93
|
)
|
Weighted average shares outstanding – basic and diluted
|
92,259
|
|
|
91,057
|
|
|
92,046
|
|
|
90,925
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss
|
$
|
(38,460
|
)
|
|
$
|
(45,910
|
)
|
|
$
|
(76,069
|
)
|
|
$
|
(84,193
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
||||||||
Unrealized foreign currency translation adjustments
|
10
|
|
|
199
|
|
|
243
|
|
|
199
|
|
||||
Other comprehensive income
|
10
|
|
|
199
|
|
|
243
|
|
|
199
|
|
||||
Comprehensive loss
|
$
|
(38,450
|
)
|
|
$
|
(45,711
|
)
|
|
$
|
(75,826
|
)
|
|
$
|
(83,994
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
|
|
Subscriptions
|
|
Accumulated
|
|
Accumulated Other
|
|
Total
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Receivable
|
|
Deficit
|
|
Comprehensive Loss
|
|
Stockholders’ Deficit
|
||||||||||||||||
Balance at December 31, 2017
|
93,835
|
|
|
$
|
10
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
779,565
|
|
|
$
|
(578
|
)
|
|
$
|
(773,791
|
)
|
|
$
|
(22
|
)
|
|
$
|
(25,475
|
)
|
Adoption of ASC 606 - Cumulative Adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
933
|
|
|
—
|
|
|
933
|
|
|||||||
Equity warrants issued in connection with Second Lien Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,196
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,196
|
|
|||||||
Restricted stock units vested and distributed, net of tax
|
62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,644
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,644
|
|
|||||||
Interest income on subscription receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,284
|
)
|
|
—
|
|
|
(38,284
|
)
|
|||||||
Balance at March 31, 2018
|
93,897
|
|
|
$
|
10
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
807,355
|
|
|
$
|
(584
|
)
|
|
$
|
(811,142
|
)
|
|
$
|
(22
|
)
|
|
$
|
(35,042
|
)
|
Restricted stock units vested and distributed, net of tax
|
440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,224
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,224
|
|
|||||||
Interest income on subscription receivable
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,910
|
)
|
|
—
|
|
|
(45,910
|
)
|
|||||||
Comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
199
|
|
|
199
|
|
|||||||
Balance at June 30, 2018
|
94,337
|
|
|
10
|
|
|
(3,054
|
)
|
|
(30,659
|
)
|
|
809,369
|
|
|
(591
|
)
|
|
(857,052
|
)
|
|
177
|
|
|
(78,746
|
)
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional
|
|
Subscriptions
|
|
Accumulated
|
|
Accumulated Other
|
|
Total
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Receivable
|
|
Deficit
|
|
Comprehensive Loss
|
|
Stockholders’ Deficit
|
||||||||||||||||
Balance at December 31, 2018
|
94,835
|
|
|
$
|
10
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
814,488
|
|
|
$
|
(597
|
)
|
|
$
|
(1,009,458
|
)
|
|
$
|
(119
|
)
|
|
$
|
(226,335
|
)
|
Restricted stock units vested and distributed, net of tax
|
330
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(117
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,389
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,389
|
|
|||||||
Tax effect relating to the beneficial conversion feature of Second Lien Notes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,688
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,688
|
)
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37,609
|
)
|
|
—
|
|
|
(37,609
|
)
|
|||||||
Unrealized foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|
233
|
|
|||||||
Balance at March 31, 2019
|
95,165
|
|
|
$
|
10
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
814,072
|
|
|
$
|
(597
|
)
|
|
$
|
(1,047,067
|
)
|
|
$
|
114
|
|
|
$
|
(264,127
|
)
|
Restricted stock units vested and distributed, net of tax
|
515
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,194
|
|
|||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(38,460
|
)
|
|
—
|
|
|
(38,460
|
)
|
|||||||
Unrealized foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|||||||
Balance at June 30, 2019
|
95,680
|
|
|
$
|
10
|
|
|
(3,054
|
)
|
|
$
|
(30,659
|
)
|
|
$
|
816,119
|
|
|
$
|
(597
|
)
|
|
$
|
(1,085,527
|
)
|
|
$
|
124
|
|
|
$
|
(300,530
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
OPERATING ACTIVITIES:
|
|
|
|
||||
Net loss
|
$
|
(76,069
|
)
|
|
$
|
(84,193
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operations:
|
|
|
|
||||
Depreciation and amortization of property and equipment and intangibles
|
43,477
|
|
|
50,035
|
|
||
Amortization of right-of-use asset
|
2,557
|
|
|
—
|
|
||
Amortization of content library
|
3,570
|
|
|
5,909
|
|
||
Non-cash interest expense, net
|
14,220
|
|
|
8,294
|
|
||
Change in fair value of derivatives
|
(938
|
)
|
|
91
|
|
||
Stock-based compensation
|
3,616
|
|
|
5,868
|
|
||
Tax effect of Second Lien Notes’ beneficial conversion feature
|
(2,688
|
)
|
|
—
|
|
||
Loss (gain) on disposal of fixed assets
|
357
|
|
|
(16
|
)
|
||
Earnings from equity method investments
|
(4,646
|
)
|
|
(1,589
|
)
|
||
Provision for (recovery of) bad debts
|
830
|
|
|
(802
|
)
|
||
Deferred income taxes
|
(624
|
)
|
|
(7,906
|
)
|
||
Others
|
388
|
|
|
(650
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
4,992
|
|
|
5,211
|
|
||
Inventories
|
(1,420
|
)
|
|
(7,336
|
)
|
||
Prepaid expenses and other current assets
|
4,087
|
|
|
138
|
|
||
Content library
|
(1,647
|
)
|
|
(4,817
|
)
|
||
Other non-current assets
|
(12,463
|
)
|
|
(598
|
)
|
||
Accounts payable and accrued liabilities
|
11,474
|
|
|
(14,972
|
)
|
||
Deferred revenue
|
2,378
|
|
|
2,157
|
|
||
Other liabilities
|
10,521
|
|
|
2,349
|
|
||
Net cash provided by/(used in) operating activities
|
$
|
1,972
|
|
|
$
|
(42,827
|
)
|
INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
$
|
(13,442
|
)
|
|
$
|
(24,472
|
)
|
Net cash used in investing activities
|
$
|
(13,442
|
)
|
|
$
|
(24,472
|
)
|
FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from issuance of Second Lien Notes and equity warrants
|
$
|
—
|
|
|
$
|
150,000
|
|
Proceeds from borrowings on revolving credit facility
|
34,650
|
|
|
—
|
|
||
Repayment of revolving credit facility
|
(46,250
|
)
|
|
(78,000
|
)
|
||
Issuance costs
|
—
|
|
|
(6,968
|
)
|
||
Repayments of indebtedness
|
(9,399
|
)
|
|
(6,712
|
)
|
||
Borrowings from related party
|
7,350
|
|
|
—
|
|
||
Principal payments of finance leases
|
(710
|
)
|
|
—
|
|
||
Payment of satellite purchase financing
|
(2,300
|
)
|
|
—
|
|
||
Net cash (used in)/provided by financing activities
|
(16,659
|
)
|
|
58,320
|
|
||
Effects of exchange rate changes on cash, cash equivalents and restricted cash
|
199
|
|
|
(96
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(27,930
|
)
|
|
(9,075
|
)
|
||
Cash, cash equivalents and restricted cash at January 1
|
39,955
|
|
|
51,868
|
|
||
Cash, cash equivalents and restricted cash at June 30
|
$
|
12,025
|
|
|
$
|
42,793
|
|
SIGNIFICANT NON-CASH ACTIVITIES:
|
|
|
|
||||
Purchase consideration for equipment included in accounts payable
|
$
|
1,530
|
|
|
$
|
6,290
|
|
Conversion of PIK interest on our Second Lien Notes to additional principal
|
9,507
|
|
|
—
|
|
||
Financing of purchased satellite transponders included in property and equipment
|
8,500
|
|
|
—
|
|
||
Distributions from equity method investments offset against demand promissory note
|
4,410
|
|
|
3,430
|
|
•
|
Media & Content
– specific to the sale and/or licensing of media content and the related technical services, such as digital delivery of media advertising, encoding of video and music products, development of graphical interfaces and provision of materials, we consider control to have transferred when: (i) the content has been delivered, and (ii) the services required under the contract have been performed. Revenue recognition is dependent on the nature of the customer contract. Content licenses to customers are typically categorized into usage-based or flat fee-based fee structures. For usage-based fee structures, revenue is recognized as the usage occurs. For flat-fee based structures, revenue is recognized upon the available date of the license, typically at the beginning of each cycle, or straight-line over the license period.
|
•
|
Connectivity
– we provide satellite-based Internet services and related technical and network support services, as well as the physical equipment to enable connectivity. For Aviation, the revenue is recognized over time as control is transferred to the customer (
i.e.
the airline), which occurs continuously as customers receive the bandwidth/ connectivity services. Equipment revenue is recognized when control passes to the customer, which is at the later of shipment of the equipment to the customer or obtaining regulatory certification for the operation of such equipment, as applicable. For Maritime and Land, revenue is recognized over time as the customer receives the bandwidth/ connectivity services. Certain of the Company’s contracts involve a revenue sharing or reseller arrangement to distribute the connectivity services. The Company assesses these services under the principal versus agent criteria and determined that the Company acts in the role of an agent and accordingly records such revenues on a net basis.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Media & Content -- Licensing and Services
|
$
|
74,013
|
|
|
$
|
83,455
|
|
|
$
|
154,023
|
|
|
$
|
158,369
|
|
Connectivity -- Aviation Services
|
30,621
|
|
|
29,423
|
|
|
61,862
|
|
|
58,749
|
|
||||
Connectivity -- Aviation Equipment
|
8,719
|
|
|
6,712
|
|
|
22,779
|
|
|
14,310
|
|
||||
Connectivity -- Maritime & Land Services
|
40,495
|
|
|
43,550
|
|
|
79,722
|
|
|
85,836
|
|
||||
Connectivity -- Maritime & Land Equipment
|
3,619
|
|
|
2,822
|
|
|
5,700
|
|
|
5,195
|
|
||||
Total Revenues
|
$
|
157,467
|
|
|
$
|
165,962
|
|
|
$
|
324,086
|
|
|
$
|
322,459
|
|
|
June 30, 2019
|
||
Opening balance as of January 1
|
$
|
8,546
|
|
Revenue recognized during the period relating to opening balance
|
(5,006
|
)
|
|
Increase due to collections, excluding amounts recognized as revenue during the period
|
7,384
|
|
|
Closing Balance
|
$
|
10,924
|
|
|
|
||
Deferred revenue, current
|
10,672
|
|
|
Deferred revenue, non-current
|
252
|
|
|
|
$
|
10,924
|
|
|
Impact of Change in Accounting Policy --
as of June 30, 2019
|
||||||||||
|
As reported
|
|
ASC 842 Impact
|
|
Legacy GAAP
|
||||||
ASSETS
|
|||||||||||
Right-of-use assets, net
|
|
|
|
|
|
||||||
Operating leases
(1)(4)
|
$
|
23,820
|
|
|
$
|
(23,820
|
)
|
|
$
|
—
|
|
Finance lease
(2)(4)
|
10,731
|
|
|
(10,731
|
)
|
|
—
|
|
|||
Total Right-of-Use Assets
|
$
|
34,551
|
|
|
$
|
(34,551
|
)
|
|
$
|
—
|
|
Net lease investment
-- other non-current assets
(3)(4)
|
1,267
|
|
|
(1,267
|
)
|
|
—
|
|
|||
Total Lease Assets
|
$
|
35,818
|
|
|
$
|
(35,818
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Property and equipment
, net
(4)
|
—
|
|
|
1,065
|
|
|
1,065
|
|
|||
|
|
|
|
|
|
||||||
LIABILITIES
|
|||||||||||
Operating lease liabilities
(1)
-- current portion
|
$
|
4,806
|
|
|
$
|
(4,806
|
)
|
|
$
|
—
|
|
-- long-term
|
22,277
|
|
|
(22,277
|
)
|
|
—
|
|
|||
Finance lease liabilities
(2)
-- current portion
|
1,996
|
|
|
(1,996
|
)
|
|
—
|
|
|||
-- long-term
|
17,117
|
|
|
(17,117
|
)
|
|
—
|
|
|||
Total Lease Liabilities
|
$
|
46,196
|
|
|
$
|
(46,196
|
)
|
|
$
|
—
|
|
|
Three and Six Months Ended June 30, 2019
|
||
Amortization of right-of-use asset
|
$
|
675
|
|
Interest accretion on finance lease liabilities
|
470
|
|
|
Total lease cost
|
$
|
1,145
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2019
|
|
June 30, 2019
|
||||
Bandwidth service and equipment revenues
(1)
|
$
|
36,154
|
|
|
$
|
70,261
|
|
Earned revenues on sales-type leases at commencement
(2)
|
977
|
|
|
1,310
|
|
||
Total Licensing and Service Revenues -- Maritime and Land Connectivity
|
$
|
37,131
|
|
|
$
|
71,571
|
|
|
Six Months Ended June 30, 2019
|
||
Supplemental cash flow information
|
|
||
Cash paid for amounts included in measurement of operating lease liabilities
|
$
|
3,103
|
|
Cash paid for amounts included in measurement of finance lease liabilities
|
$
|
940
|
|
Right-of-use-assets obtained in exchange for operating lease obligations
|
$
|
2,795
|
|
Right-of-use-assets obtained in exchange for finance lease obligations
|
$
|
19,582
|
|
Weighted average remaining lease term
-- real estate operating leases
|
7.5 years
|
|
|
Weighted average remaining lease term
-- teleport co-location operating leases
|
5.7 years
|
|
|
Weighted average remaining lease term
-- finance lease
|
7.0 years
|
|
|
Weighted average IBR
-- real estate operating leases
|
9.57
|
%
|
|
Weighted average IBR
-- teleport co-location operating leases
|
9.07
|
%
|
|
Weighted average IBR
-- finance lease
|
9.85
|
%
|
|
As a Lessee
|
|
As a Lessor
|
||||||||||||||||
Years Ending December 31,
|
Real Estate
|
|
Satellite Capacity
|
|
Teleport
Co-Location |
|
Total
|
|
Equipment Held by Customers
|
||||||||||
Lease Classification
|
Operating
|
|
Finance
|
|
Operating
|
|
|
Sales-Type
|
|||||||||||
2019 (remaining six months)
|
$
|
2,349
|
|
|
$
|
1,879
|
|
|
$
|
385
|
|
|
$
|
4,613
|
|
|
$
|
157
|
|
2020
|
4,766
|
|
|
3,758
|
|
|
722
|
|
|
9,246
|
|
|
314
|
|
|||||
2021
|
4,713
|
|
|
3,758
|
|
|
528
|
|
|
8,999
|
|
|
314
|
|
|||||
2022
|
4,412
|
|
|
3,758
|
|
|
438
|
|
|
8,608
|
|
|
314
|
|
|||||
2023
|
4,007
|
|
|
3,758
|
|
|
433
|
|
|
8,198
|
|
|
258
|
|
|||||
Thereafter
|
15,312
|
|
|
9,398
|
|
|
834
|
|
|
25,544
|
|
|
222
|
|
|||||
Total Future Lease Payments
|
$
|
35,559
|
|
|
$
|
26,309
|
|
|
$
|
3,340
|
|
|
$
|
65,208
|
|
|
$
|
1,579
|
|
Less: Imputed interest
|
(11,073
|
)
|
|
(7,196
|
)
|
|
(743
|
)
|
|
(19,012
|
)
|
|
(312
|
)
|
|||||
Present Value of Lease Liabilities
|
$
|
24,486
|
|
|
$
|
19,113
|
|
|
$
|
2,597
|
|
|
$
|
46,196
|
|
|
|
||
Net Investment in Sales-Type Leases
|
|
|
|
|
|
|
|
|
$
|
1,267
|
|
Years Ending December 31,
|
Amount
|
||
2019
|
$
|
4,941
|
|
2020
|
4,593
|
|
|
2021
|
4,359
|
|
|
2022
|
3,818
|
|
|
2023
|
3,541
|
|
|
Thereafter
|
13,115
|
|
|
Total minimum lease payments
|
$
|
34,367
|
|
Years Ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
59,287
|
|
2020
|
53,423
|
|
|
2021
|
29,166
|
|
|
2022
|
6,953
|
|
|
Total Maritime and Land Monthly Recurring Charges
|
$
|
148,829
|
|
Years Ending December 31,
|
Amount
|
||
2019
|
$
|
89,111
|
|
2020
|
34,885
|
|
|
2021
|
20,594
|
|
|
2022
|
4,864
|
|
|
2023
|
2,396
|
|
|
Total Maritime and Land Monthly Recurring Charges
|
$
|
151,850
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Equipment
|
|
|
|
||||
Gross balance
|
$
|
57,611
|
|
|
$
|
62,012
|
|
Accumulated depreciation
|
(25,807
|
)
|
|
(25,232
|
)
|
||
Net Book Value
|
$
|
31,804
|
|
|
$
|
36,780
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Leasehold improvements
|
$
|
11,112
|
|
|
$
|
6,579
|
|
Furniture and fixtures
|
2,729
|
|
|
2,147
|
|
||
Equipment
|
156,483
|
|
|
156,029
|
|
||
Computer equipment
|
16,993
|
|
|
18,561
|
|
||
Computer software
|
47,468
|
|
|
38,475
|
|
||
Automobiles
|
303
|
|
|
293
|
|
||
Buildings
|
7,065
|
|
|
8,005
|
|
||
Albatross (Company-owned aircraft)
|
456
|
|
|
447
|
|
||
Satellite transponders
|
70,806
|
|
|
62,306
|
|
||
Construction in-progress
|
3,600
|
|
|
7,771
|
|
||
Total property and equipment
|
$
|
317,015
|
|
|
$
|
300,613
|
|
Accumulated depreciation
|
(146,969
|
)
|
|
(124,036
|
)
|
||
Property and equipment, net
|
$
|
170,046
|
|
|
$
|
176,577
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of sales
|
$
|
8,662
|
|
|
$
|
11,475
|
|
|
$
|
17,596
|
|
|
$
|
19,557
|
|
Sales and marketing
|
912
|
|
|
1,065
|
|
|
1,914
|
|
|
1,830
|
|
||||
Product development
|
772
|
|
|
967
|
|
|
1,607
|
|
|
1,629
|
|
||||
General and administrative
|
3,378
|
|
|
2,925
|
|
|
6,760
|
|
|
6,099
|
|
||||
Total depreciation expense
|
$
|
13,724
|
|
|
$
|
16,432
|
|
|
$
|
27,877
|
|
|
$
|
29,115
|
|
|
Aviation Connectivity
|
|
Maritime & Land Connectivity
|
|
Media & Content
|
|
Total
|
||||||||
Balance as of December 31, 2018, net
|
$
|
54,022
|
|
|
$
|
22,130
|
|
|
$
|
83,410
|
|
|
$
|
159,562
|
|
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||
Balance at June 30, 2019, net
|
$
|
54,022
|
|
|
$
|
22,130
|
|
|
$
|
83,461
|
|
|
$
|
159,613
|
|
|
|
|
June 30, 2019
|
||||||||||
|
Weighted Average Useful Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Intangible assets:
|
|
|
|
|
|
|
|
||||||
Existing technology -- software
|
5.2 years
|
|
$
|
36,799
|
|
|
$
|
26,806
|
|
|
$
|
9,993
|
|
Developed technology
|
8.0 years
|
|
7,317
|
|
|
5,259
|
|
|
2,058
|
|
|||
Customer relationships
|
8.7 years
|
|
138,358
|
|
|
82,839
|
|
|
55,519
|
|
|||
Backlog
|
3.0 years
|
|
18,300
|
|
|
17,793
|
|
|
507
|
|
|||
Other
|
5.1 years
|
|
1,248
|
|
|
791
|
|
|
457
|
|
|||
Total
|
|
|
$
|
202,022
|
|
|
$
|
133,488
|
|
|
$
|
68,534
|
|
|
|
|
December 31, 2018
|
||||||||||
|
Weighted Average Useful Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Intangible assets:
|
|
|
|
|
|
|
|
||||||
Existing technology -- software
|
5.2 years
|
|
$
|
36,799
|
|
|
$
|
23,114
|
|
|
$
|
13,685
|
|
Developed technology
|
8.0 years
|
|
7,317
|
|
|
4,802
|
|
|
2,515
|
|
|||
Customer relationships
|
8.7 years
|
|
138,358
|
|
|
74,558
|
|
|
63,800
|
|
|||
Backlog
|
3.0 years
|
|
18,300
|
|
|
14,742
|
|
|
3,558
|
|
|||
Other
|
5.1 years
|
|
1,249
|
|
|
671
|
|
|
578
|
|
|||
Total
|
|
|
$
|
202,023
|
|
|
$
|
117,887
|
|
|
$
|
84,136
|
|
Year ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
13,045
|
|
2020
|
22,263
|
|
|
2021
|
13,824
|
|
|
2022
|
7,907
|
|
|
2023
|
6,890
|
|
|
Thereafter
|
4,605
|
|
|
Total
|
$
|
68,534
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Current assets
|
$
|
44,359
|
|
|
$
|
40,224
|
|
Non-current assets
|
26,420
|
|
|
26,115
|
|
||
Current liabilities
|
18,056
|
|
|
15,880
|
|
||
Non-current liabilities
|
2,453
|
|
|
2,581
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
37,548
|
|
|
$
|
29,068
|
|
|
$
|
69,589
|
|
|
$
|
64,905
|
|
Net income
|
8,077
|
|
|
4,200
|
|
|
14,842
|
|
|
10,098
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Carrying value in our equity method investments
|
$
|
83,369
|
|
|
$
|
83,135
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Senior secured term loan facility, due January 2023
(+)
|
$
|
468,750
|
|
|
$
|
478,125
|
|
Senior secured revolving credit facility, due January 2022
(+)(1)
|
42,415
|
|
|
54,015
|
|
||
2.75% convertible senior notes due 2035
(2)
|
82,500
|
|
|
82,500
|
|
||
Second Lien Notes, due June 2023
(3)
|
167,957
|
|
|
158,450
|
|
||
Other debts
(4)
|
29,847
|
|
|
1,707
|
|
||
Unamortized bond discounts, fair value adjustments and issue costs, net
|
(61,183
|
)
|
|
(65,186
|
)
|
||
Total carrying value of debt
|
730,286
|
|
|
709,611
|
|
||
Less: current portion, net
|
(17,005
|
)
|
|
(22,673
|
)
|
||
Total non-current
|
$
|
713,281
|
|
|
$
|
686,938
|
|
Years Ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
11,133
|
|
2020
|
29,430
|
|
|
2021
|
25,041
|
|
|
2022
|
67,457
|
|
|
2023
|
575,500
|
|
|
Thereafter
|
82,908
|
|
|
Total
|
$
|
791,469
|
|
Years Ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
23,997
|
|
2020
|
14,453
|
|
|
2021
|
4,394
|
|
|
2022
|
800
|
|
|
Total
|
$
|
43,644
|
|
Years Ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
102,533
|
|
2020
|
73,321
|
|
|
2021
|
46,816
|
|
|
2022
|
34,473
|
|
|
2023
|
33,013
|
|
|
Thereafter
|
91,613
|
|
|
Total Future Payments
|
$
|
381,769
|
|
•
|
Music Infringement and Related Claims
. On May 6, 2014, UMG Recordings, Inc., Capitol Records, Universal Music Corp. and entities affiliated with the foregoing (collectively, “UMG”) filed suit in the United States District Court for the Central District of California against us and Inflight Productions Ltd. (“IFP”), our indirect subsidiary, for copyright infringement and related claims and unspecified money damages. In August 2016, we entered into settlement agreements with major record labels and publishers, including UMG, to settle music copyright infringement and related claims (the “Sound Recording Settlements”). As a result of the Sound Recording Settlements, we paid approximately
$18.0 million
in cash and issued approximately
1.8 million
shares of our common stock to settle lawsuits and other claims. Under the settlement agreement with UMG, we paid UMG an additional
$5.0 million
in cash in March 2017 and agreed to issue
500,000
additional shares of our common stock when and if our closing price of our common stock exceeds
$10.00
per share and
400,000
additional shares of our common stock when and if the closing price of our common stock exceeds
$12.00
per share.
|
•
|
SwiftAir Litigation
. On August 14, 2014, SwiftAir, LLC filed suit against our wholly owned subsidiary Row 44 and against Southwest Airlines for breach of contract,
quantum meruit
, unjust enrichment and similar claims and money damages in the Superior Court of California for the County of Los Angeles. SwiftAir and Row 44 had a contractual relationship whereby Row 44 agreed to give SwiftAir access to Row 44’s Southwest Airlines portal so that SwiftAir could market its destination deal product to Southwest Airlines’ passengers. In 2013, after Southwest Airlines decided not to proceed with the destination deal product, Row 44 terminated its contract with SwiftAir. In its lawsuit, SwiftAir seeks approximately
$9 million
in monetary damages against Row 44 and Southwest Airlines. In January 2018, the court granted Row 44’s motions
in limine
and thereby limited SwiftAir’s damages claims against Row 44 to nominal damages. Southwest Airlines however remains exposed to SwiftAir’s damages claims. If Southwest Airlines is not successful in its defense against those claims, then Southwest Airlines may seek indemnification from Row 44 for its loss. The trial in this lawsuit is currently scheduled to commence in August 2019. We intend to vigorously defend ourselves against SwiftAir’s claims as well as against any indemnification claim that Southwest Airlines may later assert against us. We do not believe that a material loss relating to this matter is probable, and due to the speculative nature of SwiftAir’s damages claims (and, therefore, Southwest Airlines’ potential indemnification claim), we are currently unable to estimate the amount of any potential loss; as such, we have not accrued any amount for this loss contingency.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of services
|
$
|
89
|
|
|
$
|
80
|
|
|
$
|
116
|
|
|
$
|
260
|
|
Sales and marketing
|
34
|
|
|
98
|
|
|
87
|
|
|
291
|
|
||||
Product development
|
112
|
|
|
139
|
|
|
180
|
|
|
450
|
|
||||
General and administrative
|
2,092
|
|
|
1,913
|
|
|
3,233
|
|
|
4,867
|
|
||||
Total
|
$
|
2,327
|
|
|
$
|
2,230
|
|
|
$
|
3,616
|
|
|
$
|
5,868
|
|
•
|
Media & Content:
selects, manages, provides lab services and distributes wholly owned and licensed media content, video and music programming, advertising, applications and interactive games to the airline, maritime and other “away from home” non-theatrical markets.
|
•
|
Connectivity:
provides customers, including their passengers, crew, remote workers and soldiers, as applicable, with (i) Wi-Fi connectivity via L, C, Ka and Ku-band satellite and terrestrial wireless transmissions that enable access to the Internet, live television, on-demand content, shopping and travel-related information and (ii) operational solutions that allow customers to improve the management of their internal operations and passenger service delivery.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Media & Content -- Licensing and Services
|
$
|
74,013
|
|
|
$
|
83,455
|
|
|
$
|
154,023
|
|
|
$
|
158,369
|
|
Connectivity -- Services
|
71,116
|
|
|
72,973
|
|
|
141,584
|
|
|
144,585
|
|
||||
Connectivity -- Equipment
|
12,338
|
|
|
9,534
|
|
|
28,479
|
|
|
19,505
|
|
||||
Total revenue
|
$
|
157,467
|
|
|
$
|
165,962
|
|
|
$
|
324,086
|
|
|
$
|
322,459
|
|
Cost of sales:
|
|
|
|
|
|
|
|
||||||||
Media & Content -- Licensing and Services
|
$
|
57,604
|
|
|
$
|
58,456
|
|
|
$
|
115,273
|
|
|
$
|
112,910
|
|
Connectivity -- Services
|
58,704
|
|
|
63,848
|
|
|
124,304
|
|
|
121,885
|
|
||||
Connectivity -- Equipment
|
7,909
|
|
|
4,427
|
|
|
18,834
|
|
|
10,415
|
|
||||
Total
|
66,613
|
|
|
68,275
|
|
|
143,138
|
|
|
132,300
|
|
||||
Total cost of sales
|
$
|
124,217
|
|
|
$
|
126,731
|
|
|
$
|
258,411
|
|
|
$
|
245,210
|
|
Gross Margin:
|
|
|
|
|
|
|
|
||||||||
Media & Content
|
$
|
16,409
|
|
|
$
|
24,999
|
|
|
$
|
38,750
|
|
|
$
|
45,459
|
|
Connectivity
|
16,841
|
|
|
14,232
|
|
|
26,925
|
|
|
31,790
|
|
||||
Total Gross Margin
|
33,250
|
|
|
39,231
|
|
|
65,675
|
|
|
77,249
|
|
||||
Other operating expenses
|
48,476
|
|
|
60,764
|
|
|
99,991
|
|
|
128,228
|
|
||||
Loss from operations
|
$
|
(15,226
|
)
|
|
$
|
(21,533
|
)
|
|
$
|
(34,316
|
)
|
|
$
|
(50,979
|
)
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Media & Content
|
|
$
|
319,157
|
|
|
$
|
346,280
|
|
Connectivity
|
|
359,825
|
|
|
355,144
|
|
||
Total segment assets
|
|
678,982
|
|
|
701,424
|
|
||
Corporate assets
|
|
23,947
|
|
|
15,663
|
|
||
Total assets
|
|
$
|
702,929
|
|
|
$
|
717,087
|
|
•
|
Level 1
: Observable quoted prices in active markets for identical assets and liabilities.
|
•
|
Level 2
: Observable quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
|
•
|
Level 3
: Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models, and similar techniques.
|
|
June 30, 2019
|
|
Quotes Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Other Unobservable Inputs
(Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earn-out liability
(1)
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
114
|
|
Contingently issuable shares
(2)
|
396
|
|
|
—
|
|
|
—
|
|
|
396
|
|
||||
Phantom stock options
(3)
|
634
|
|
|
—
|
|
|
—
|
|
|
630
|
|
||||
Total
|
$
|
1,144
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,144
|
|
|
December 31, 2018
|
|
Quotes Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Other Unobservable Inputs
(Level 3)
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Earn-out liability
(1)
|
$
|
114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
114
|
|
Contingently issuable shares
(2)
|
1,371
|
|
|
—
|
|
|
—
|
|
|
1,371
|
|
||||
Phantom stock options
(3)
|
1,564
|
|
|
—
|
|
|
—
|
|
|
1,564
|
|
||||
Total
|
$
|
3,049
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,049
|
|
(1)
|
Represents aggregate earn-out liabilities assumed in business combinations for the year ended December 31, 2015.
|
(2)
|
In connection with the Sound-Recording Settlements (as described in Note 10. Commitments and Contingencies above), the Company is obligated to issue to UMG (as defined in that Note)
500,000
shares of its common stock when and if the closing price of the Company's common stock exceeds
$10.00
per share and an additional
400,000
shares of common stock when and if the closing price of the Company’s common stock exceeds
$12.00
per share. Such contingently issuable shares are classified as liabilities and are re-measured to fair value each reporting period.
|
(3)
|
Our cash-settled phantom stock options are accounted for as liability awards and are re-measured at fair value each reporting period with changes flowing through statement of operations. As of
June 30, 2019
, the aggregate estimated fair value of our cash-settled phantom stock options was
$1.5 million
, of which the amortized portion recognized as a liability in our condensed consolidated balance sheet was
$634,000
.
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
Carrying Amount
(7)
|
|
Fair Value
|
|
Carrying Amount
(7)
|
|
Fair Value
|
||||||||
Senior secured term loan facility, due January 2023
(+)(1)
|
$
|
468,750
|
|
|
$
|
448,828
|
|
|
$
|
478,125
|
|
|
$
|
473,344
|
|
Senior secured revolving credit facility, due January 2022
(+)(2)
|
42,415
|
|
|
42,415
|
|
|
54,015
|
|
|
54,015
|
|
||||
2.75% convertible senior notes due 2035
(1)(3)
|
82,500
|
|
|
37,125
|
|
|
82,500
|
|
|
49,064
|
|
||||
Second Lien Notes, due June 2023
(4)(5)
|
167,957
|
|
|
106,803
|
|
|
158,450
|
|
|
112,230
|
|
||||
Other debt
(6)
|
29,847
|
|
|
29,847
|
|
|
1,707
|
|
|
1,707
|
|
||||
|
$
|
791,469
|
|
|
$
|
665,018
|
|
|
$
|
774,797
|
|
|
$
|
690,360
|
|
(+)
|
This facility is a component of the 2017 Credit Agreement.
|
(1)
|
The estimated fair value is classified as Level 2 financial instrument and was determined based on quoted prices of the instrument in a similar over-the-counter market.
|
(2)
|
The estimated fair value is considered to approximate carrying value and is classified as Level 3 financial instruments. We expect to draw on the 2017 Revolving Loans from time to time to fund our working capital needs and for other general corporate purposes.
|
(3)
|
The fair value of the
2.75%
Convertible Notes is exclusive of the conversion feature therein, which was originally allocated for reporting purposes at
$13.0 million
, and is included in the condensed consolidated balance sheets within “Additional paid-in capital”. The principal amount outstanding of the Convertible Notes was
$82.5 million
as of
June 30, 2019
, and the carrying amount in the foregoing table reflect this outstanding principal amount net of debt issuance costs and discount associated with the equity component.
|
(4)
|
The principal amount outstanding of the Second Lien Notes, due June 2023 as set forth in the foregoing table was
$168.0 million
as of
June 30, 2019
, and is not the carrying amount of the indebtedness (
i.e.
outstanding principal amount net of debt issuance costs and discount associated with the equity component and includes approximately
$9.5 million
of payment-in-kind (“PIK”) interest converted to principal during the six months ended
June 30, 2019
). The value allocated to the attached penny warrants and market warrants for financial reporting purposes was
$14.9 million
and
$9.3 million
, respectively. These qualify for classification in stockholders’ equity and are included in the condensed consolidated balance sheets within “Additional paid-in capital” (see
Note 8. Financing Arrangements
).
|
(5)
|
The fair value of the Second Lien Notes was determined based on a Black-Derman-Toy interest rate Lattice model. The key inputs of the valuation model contain certain Level 3 inputs.
|
(6)
|
The estimated fair value is considered to approximate carrying value given the short-term maturity and is classified as Level 3 financial instruments. For
June 30, 2019
, Other debts primarily consisted of (i)
$8.5 million
financing for transponder purchases; and (ii)
$3.1 million
remaining advance against future dividends from related party (refer to
Note 9. Related Party Transactions
for further details), and (iii)
$19.1 million
of finance lease liability relating to an assessed right-of-use over a satellite bandwidth capacity (refer to
Note 3. Leases
for further details).
|
(7)
|
The carrying amounts presented above at
June 30, 2019
and
December 31, 2018
exclude
$61.2 million
and
$65.2 million
of unamortized bond discounts and issuance costs, respectively.
|
|
Six Months Ended June 30,
|
||||
|
2019
|
|
2018
|
||
Southwest Airlines as a percentage of total revenue
|
20
|
%
|
|
18
|
%
|
Southwest Airlines as a percentage of Connectivity revenue
|
38
|
%
|
|
35
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net loss (numerator):
|
|
|
|
|
|
|
|
||||||||
Net loss – basic and diluted
|
$
|
(38,460
|
)
|
|
$
|
(45,910
|
)
|
|
$
|
(76,069
|
)
|
|
$
|
(84,193
|
)
|
Shares (denominator):
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares – basic and diluted
|
92,259
|
|
|
91,057
|
|
|
92,046
|
|
|
90,925
|
|
||||
Loss per share -- basic and diluted
|
$
|
(0.42
|
)
|
|
$
|
(0.50
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.93
|
)
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||
Employee stock options
|
4,517
|
|
|
5,436
|
|
4,809
|
|
|
5,880
|
|
Restricted stock units (including performance stock units)
|
5,989
|
|
|
2,379
|
|
4,471
|
|
|
2,304
|
|
Public SPAC Warrants
(1)
|
—
|
|
|
—
|
|
—
|
|
|
1,066
|
|
2.75% convertible senior notes due 2035
|
4,447
|
|
|
4,447
|
|
4,447
|
|
|
4,447
|
|
Contingently issuable shares
(2)
|
900
|
|
|
900
|
|
900
|
|
|
900
|
|
Searchlight Penny Warrants
(3)
|
18,066
|
|
|
18,066
|
|
18,066
|
|
|
9,482
|
|
Searchlight Market Warrants
(3)
|
13,000
|
|
|
13,000
|
|
13,000
|
|
|
6,823
|
|
(1)
|
6,173,228
of our publicly traded warrants (the “Public SPAC Warrants”) expired on January 31, 2018 and are no longer exercisable.
|
(2)
|
In connection with the Sound Recording Settlement, we are obligated to issue
500,000
shares of our common stock to UMG when and if the closing price of our common stock exceeds
$10.00
per share, and
400,000
shares of our common stock to UMG when and if the closing price of our common stock exceeds
$12.00
per share.
|
(3)
|
On March 27, 2018, we sold to Searchlight (and associated entities)
$150.0 million
in aggregate principal amount of our Second Lien Notes as well as warrants to acquire an aggregate of
18,065,775
shares of the Company’s common stock at an exercise price of
$0.01
per share (the “Penny Warrants”) and warrants to acquire an aggregate of
13,000,000
shares of Common Stock at an exercise price of
$1.57
per share (the “Market Warrants”). See Note 8. Financing Arrangements to our 2018 Form 10-K.
|
•
|
our ability to timely remediate material weaknesses in our internal control over financial reporting; the effect of those weaknesses on our ability to report and forecast our operations and financial performance; and the impact of our remediation efforts (and associated management time and costs) on our liquidity and financial performance;
|
•
|
our ability to maintain effective disclosure controls and internal control over financial reporting;
|
•
|
our ability to execute on our operating-expense and cost-structure realignment plan and realize the benefits of those initiatives;
|
•
|
our ability to sell certain businesses and/or assets on favorable terms or at all, and our ability to realize the anticipated benefits from any such sales;
|
•
|
the timing and conditions surrounding the return to service of the Boeing 737 MAX aircraft;
|
•
|
our ability to properly implement the new leasing standard (ASC 842);
|
•
|
our dependence on the travel industry;
|
•
|
future acts or threats of terrorism;
|
•
|
our ability to obtain new customers and renew agreements with existing customers;
|
•
|
our customers’ solvency, inability to pay and/or delays in paying us for our services;
|
•
|
our ability to retain and effectively integrate and train key members of senior management;
|
•
|
our ability to recruit, train and retain highly skilled technical employees;
|
•
|
negative external perceptions that damage our reputation among potential customers, investors, employees, advisors and vendors;
|
•
|
our ability to receive the anticipated cash distributions or other benefits from our investment in the Wireless Maritime Services joint venture;
|
•
|
customer attrition due to direct arrangements between satellite providers and customers;
|
•
|
our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited;
|
•
|
the effect of a variety of complex U.S. and foreign tax laws and regimes due to the global nature of our business;
|
•
|
our ability to continue to be able to make claims for e-business and multimedia tax credits in Canada;
|
•
|
our exposure to foreign currency risks;
|
•
|
the effect of the United Kingdom’s referendum to withdraw from the European Union;
|
•
|
our dependence on our existing relationship and agreement with Southwest Airlines;
|
•
|
our need to invest in and develop new broadband technologies and advanced communications and secure networking systems, products and services and antenna technologies as well as their market acceptance;
|
•
|
increased demand by customers for greater bandwidth, speed and performance and increased competition from new technologies and market entrants;
|
•
|
our reliance on “sole source” service providers and other third parties for key components and services that are integral to our product and service offerings;
|
•
|
the potential need to materially increase our investments in product development and equipment beyond our current investment expectations;
|
•
|
our ability to expand our international operations and the risks inherent in our international operations, especially in light of current trade and national-security disputes between the United States and China (which may adversely impact our ability to conduct business in that market);
|
•
|
service interruptions or delays, technology failures, damage to equipment or software defects or errors and the resulting impact on our reputation and ability to attract, retain and serve our customers;
|
•
|
equipment failures or software defects or errors that may damage our reputation or result in claims in excess of our insurance or warranty coverage;
|
•
|
satellite failures or degradations in satellite performance;
|
•
|
our ability to integrate businesses or technologies we have acquired or may acquire in the future;
|
•
|
increased on-board use of personal electronic devices and content accessed and downloaded prior to travel and our ability to compete as a content provider against “over the top” download services and other companies that offer in-flight entertainment products;
|
•
|
pricing pressure from suppliers and customers in our Media & Content segment and a reduction in the aviation industry’s use of intermediary content service providers (such as us);
|
•
|
a reduction in the volume or quality of content produced by studios, distributors or other content providers or their refusal to license content or other rights upon terms acceptable to us;
|
•
|
a reduction or elimination of the time between our receipt of content and it being made available to the rental or home viewing market (
i.e
., the “early release window”);
|
•
|
increased competition in the in-flight entertainment (“IFE”) and in-flight connectivity (“IFC”) system supply chain;
|
•
|
our ability to plan expenses and forecast revenue due to the long sales cycle of many of our Media & Content segment’s products;
|
•
|
the refusal of content providers to license content to us, operational complexity and increased costs or reducing content that we offer due to challenges maintaining and tracking our music content licenses and rights related thereto, which could cause a decline in customer retention or inability to win new business;
|
•
|
our use of fixed-price contracts for satellite bandwidth and potential cost differentials that may lead to losses if the market price for our services declines relative to our committed cost;
|
•
|
our use of fixed-price contracts in our Media & Content segment that may lead to losses in the future if the market price for our services declines relative to our committed cost;
|
•
|
our ability to develop new products or enhance those we currently provide in our Media & Content segment;
|
•
|
our ability to successfully implement a new enterprise resource planning system;
|
•
|
the effect on our business and customers due to disruption of the technology systems utilized in our business operations;
|
•
|
our ability to protect our intellectual property;
|
•
|
the effect of cybersecurity attacks, data or privacy breaches, data or privacy theft, unauthorized access to our internal systems or connectivity or media and content systems, or phishing or hacking, especially in light of recently publicized security incidents affecting our industry and our systems;
|
•
|
the costs to defend and/or settle current and potential future civil intellectual property lawsuits (including relating to music and other content infringement) and related claims for indemnification;
|
•
|
changes in regulations and our ability to obtain regulatory approvals to provide our services or to operate our business in particular countries or territorial waters;
|
•
|
compliance with U.S. and foreign regulatory agencies, including the Federal Aviation Administration (“FAA”), the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”), Federal Communications Commission (“FCC”), and Federal Trade Commission (“FTC”) and their foreign equivalents in the jurisdictions in which we and our customers operate;
|
•
|
regulation by foreign government agencies that increases our costs of providing services or requires us to change services:
|
•
|
changes in government regulation of the Internet, including e-commerce or online video distribution;
|
•
|
our ability to comply with trade, export, anti-money laundering and anti-bribery practices and data protection laws, especially the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and the General Data Protection Regulation;
|
•
|
changes in foreign and domestic civil aviation authorities’ orders, airworthiness directives, or other regulations that restrict our customers’ ability to operate aircraft on which we provide services;
|
•
|
our (along with our directors’ and officers’) exposure to civil stockholder litigation relating to our investor disclosures and the related costs of defending and insuring against such litigation;
|
•
|
uninsured or underinsured costs associated with stockholder litigation and any uninsured or underinsured indemnification obligations with respect to current and former executive officers and directors;
|
•
|
limitations on our cash flow available to make investments due to our substantial indebtedness and our ability to generate sufficient cash flow to make payments thereon, comply with our reporting and financial covenants, or fund our operations;
|
•
|
our ability to repay the principal amount of our bank debt, second lien notes due June 30, 2023 (the “Second Lien Notes”) and/or 2.75% convertible senior notes due 2035 (the “Convertible Notes”) at maturity, to raise the funds necessary to settle conversions of our Convertible Notes or to repurchase our Convertible Notes upon a fundamental change or on specified repurchase dates or due to future indebtedness;
|
•
|
the conditional conversion of our Convertible Notes;
|
•
|
the effect on our reported financial results of the accounting method for our Convertible Notes;
|
•
|
the impact of the fundamental change repurchase feature and change of control repurchase feature of the securities purchase agreement governing our Second Lien Notes on our price or potential as a takeover target;
|
•
|
the dilution or price depression of our common stock that may occur as a result of the conversion of our Convertible Notes and/or Searchlight warrants;
|
•
|
our ability to meet the continued listing requirements of The Nasdaq Stock Market (“Nasdaq”), in particular given our recent history of delinquent periodic filings with the U.S. Securities and Exchange Commission (“SEC”) and our receipt of a notice from Nasdaq that our stock price does not meet the minimum $1.00 per share stock price requirement pursuant to Nasdaq rules;
|
•
|
conflicts between our interests and the interests of our largest stockholders;
|
•
|
volatility of the market price of our securities;
|
•
|
anti-takeover provisions contained in our charter and bylaws;
|
•
|
the dilution of our common stock if we issue additional equity or convertible debt securities; and,
|
•
|
other risks and factors listed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the SEC on March 18, 2019 (the “2018 Form 10-K”).
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
157,467
|
|
|
$
|
165,962
|
|
$
|
324,086
|
|
|
$
|
322,459
|
|
Operating expenses:
|
|
|
|
|
|
|
||||||||
Cost of sales
|
124,217
|
|
|
126,731
|
|
258,411
|
|
|
245,210
|
|
||||
Sales and marketing
|
7,365
|
|
|
10,877
|
|
15,614
|
|
|
20,492
|
|
||||
Product development
|
6,125
|
|
|
9,872
|
|
13,104
|
|
|
18,206
|
|
||||
General and administrative
|
27,161
|
|
|
29,799
|
|
55,141
|
|
|
68,235
|
|
||||
Provision for (gain from) legal settlements
|
25
|
|
|
(141
|
)
|
533
|
|
|
375
|
|
||||
Amortization of intangible assets
|
7,800
|
|
|
10,357
|
|
15,599
|
|
|
20,920
|
|
||||
Total operating expenses (including cost of sales)
|
172,693
|
|
|
187,495
|
|
358,402
|
|
|
373,438
|
|
||||
Loss from operations
|
(15,226
|
)
|
|
(21,533
|
)
|
(34,316
|
)
|
|
(50,979
|
)
|
||||
Other expense
|
(19,917
|
)
|
|
(20,655
|
)
|
(38,306
|
)
|
|
(34,201
|
)
|
||||
Loss before income taxes
|
(35,143
|
)
|
|
(42,188
|
)
|
(72,622
|
)
|
|
(85,180
|
)
|
||||
Income tax expense (benefit)
|
3,317
|
|
|
3,722
|
|
3,447
|
|
|
(987
|
)
|
||||
Net loss
|
$
|
(38,460
|
)
|
|
$
|
(45,910
|
)
|
$
|
(76,069
|
)
|
|
$
|
(84,193
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Cost of sales
|
$
|
8,662
|
|
|
$
|
11,475
|
|
|
$
|
17,596
|
|
|
$
|
19,557
|
|
Sales and marketing
|
912
|
|
|
1,065
|
|
|
1,914
|
|
|
1,830
|
|
||||
Product development
|
772
|
|
|
967
|
|
|
1,607
|
|
|
1,629
|
|
||||
General and administrative
|
3,378
|
|
|
2,925
|
|
|
6,760
|
|
|
6,099
|
|
||||
Total
|
$
|
13,724
|
|
|
$
|
16,432
|
|
|
$
|
27,877
|
|
|
$
|
29,115
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
Cost of sales
|
$
|
89
|
|
|
$
|
80
|
|
$
|
116
|
|
|
$
|
260
|
|
Sales and marketing
|
34
|
|
|
98
|
|
87
|
|
|
291
|
|
||||
Product development
|
112
|
|
|
139
|
|
180
|
|
|
450
|
|
||||
General and administrative
|
2,092
|
|
|
1,913
|
|
3,233
|
|
|
4,867
|
|
||||
Total
|
$
|
2,327
|
|
|
$
|
2,230
|
|
$
|
3,616
|
|
|
$
|
5,868
|
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
2019
|
|
2018
|
||||
Revenue
|
100
|
%
|
|
100
|
%
|
100
|
%
|
|
100
|
%
|
Operating expenses:
|
|
|
|
|
|
|
||||
Cost of sales
|
79
|
%
|
|
76
|
%
|
80
|
%
|
|
76
|
%
|
Sales and marketing
|
5
|
%
|
|
7
|
%
|
5
|
%
|
|
6
|
%
|
Product development
|
4
|
%
|
|
6
|
%
|
4
|
%
|
|
6
|
%
|
General and administrative
|
17
|
%
|
|
18
|
%
|
17
|
%
|
|
21
|
%
|
Amortization of intangible assets
|
5
|
%
|
|
6
|
%
|
5
|
%
|
|
6
|
%
|
Total operating expenses
|
110
|
%
|
|
113
|
%
|
111
|
%
|
|
116
|
%
|
Loss from operations
|
(10
|
)%
|
|
(13
|
)%
|
(11
|
)%
|
|
(16
|
)%
|
Other expense
|
(13
|
)%
|
|
(12
|
)%
|
(12
|
)%
|
|
(11
|
)%
|
Loss before income taxes
|
(22
|
)%
|
|
(25
|
)%
|
(22
|
)%
|
|
(26
|
)%
|
Income tax expense (benefit)
|
2
|
%
|
|
2
|
%
|
1
|
%
|
|
—
|
%
|
Net loss
|
(24
|
)%
|
|
(28
|
)%
|
(23
|
)%
|
|
(26
|
)%
|
|
Three Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Media & Content
|
|
|
|
||||
Licensing and services
|
$
|
74,013
|
|
|
$
|
83,455
|
|
Connectivity
|
|
|
|
||||
Services
|
71,116
|
|
|
72,973
|
|
||
Equipment
|
12,338
|
|
|
9,534
|
|
||
Total
|
83,454
|
|
|
82,507
|
|
||
Total revenue
|
$
|
157,467
|
|
|
$
|
165,962
|
|
Cost of Sales:
|
|
|
|
||||
Media & Content
|
|
|
|
||||
Licensing and services
|
$
|
57,604
|
|
|
$
|
58,456
|
|
Connectivity
|
|
|
|
||||
Services
|
58,704
|
|
|
63,848
|
|
||
Equipment
|
7,909
|
|
|
4,427
|
|
||
Total
|
66,613
|
|
|
68,275
|
|
||
Total cost of sales
|
$
|
124,217
|
|
|
$
|
126,731
|
|
Gross margin:
|
|
|
|
||||
Media & Content
|
$
|
16,409
|
|
|
$
|
24,999
|
|
Connectivity
|
16,841
|
|
|
14,232
|
|
||
Total gross margin
|
33,250
|
|
|
39,231
|
|
||
Other operating expenses
|
48,476
|
|
|
60,764
|
|
||
Loss from operations
|
$
|
(15,226
|
)
|
|
$
|
(21,533
|
)
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Licensing and Services
|
$
|
74,013
|
|
|
$
|
83,455
|
|
|
(11
|
)%
|
•
|
Aviation client wins and losses
: Revenues increased by $4.5 million due to contract wins with certain leading global airlines. This increase was offset by a decrease of $6.8 million attributed to lost revenue from other CSP airline partners mostly operating within the EMEA region.
|
•
|
Repricing and volume changes
: Revenues decreased by $1.8 million due to repricing of our long-haul contracts with certain CSP airline partners operating within the Asia-Pacific and Americas’ markets. In addition, our distribution service revenues decreased by $3.4 million due to fewer titles offered for the quarter and a $1.1 million decline in games & apps revenues due to lower volume with various global airline partners. Revenues also declined by $0.8 million as a result of our airline partners’ content refresh cycle.
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Services
|
$
|
71,116
|
|
|
$
|
72,973
|
|
|
(3
|
)%
|
Equipment
|
12,338
|
|
|
9,534
|
|
|
29
|
%
|
||
Total
|
$
|
83,454
|
|
|
$
|
82,507
|
|
|
1
|
%
|
•
|
Aviation expanded revenue streams
: a $1.2 million increase in our Aviation connectivity revenues is due to: (i) introduction of repair station services, (ii) impact of new CSP airline partners and (iii) increased wifi service offerings, including at major airports in the U.S.; and,
|
•
|
MEG contract repricing and losses
: a $3.1 million decrease in our MEG connectivity revenues due to: (i) contract renegotiations on major customers in the cruise-line business, (ii) shrinkage in our yacht business (including contract repricing), and (iii) contract losses in certain of our enterprise and government customers.
|
•
|
Aviation equipment shipments
: a $2.0 million increase in our Aviation equipment revenue was primarily due to equipment shipments for major aviation customers; and,
|
•
|
Maritime equipment activations
: a $0.8 million increase in our MEG equipment revenues due to equipment activations during the quarter for a contract won at the beginning of 2019.
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Licensing and services
|
$
|
57,604
|
|
|
$
|
58,456
|
|
|
(1
|
)%
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Services
|
$
|
58,704
|
|
|
$
|
63,848
|
|
|
(8
|
)%
|
Equipment
|
7,909
|
|
|
4,427
|
|
|
79
|
%
|
||
Total
|
$
|
66,613
|
|
|
$
|
68,275
|
|
|
(2
|
)%
|
•
|
Aviation license and bandwidth cost increase
: a $5.4 million increase in our Aviation cost of sales due to: (i) higher license fees to content providers and (ii) higher costs related to increased satellite capacity to support most recent wins in our aviation business; and,
|
•
|
Maritime bandwidth cost decrease
: a $10.6 million decrease in our MEG cost of sales is due to lower satellite bandwidth and communication costs in our cruise and yacht connectivity businesses as the Company continues to negotiate more favorable rates with our satellite vendors.
|
•
|
Aviation equipment cost increase
: a $2.9 million increase in our Aviation cost of sales refers to the cost of equipment deliveries for major customers; and,
|
•
|
Maritime equipment cost increase
: $0.5 million increase in our MEG cost of sales mainly represents the cost of equipment activations during the current quarter for a contract won at the beginning of 2019.
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Sales and marketing
|
$
|
7,365
|
|
|
$
|
10,877
|
|
|
(32
|
)%
|
Product development
|
6,125
|
|
|
9,872
|
|
|
(38
|
)%
|
||
General and administrative
|
27,161
|
|
|
29,799
|
|
|
(9
|
)%
|
||
Provision for (gain from) legal settlements
|
25
|
|
|
(141
|
)
|
|
(118
|
)%
|
||
Amortization of intangible assets
|
7,800
|
|
|
10,357
|
|
|
(25
|
)%
|
||
Total
|
$
|
48,476
|
|
|
$
|
60,764
|
|
|
(20
|
)%
|
|
Three Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Interest expense, net
|
$
|
(22,329
|
)
|
|
$
|
(19,755
|
)
|
|
13
|
%
|
Income from equity method investments
|
2,517
|
|
|
428
|
|
|
488
|
%
|
||
Change in fair value of derivatives
|
—
|
|
|
(655
|
)
|
|
(100
|
)%
|
||
Other expense, net
|
(105
|
)
|
|
(673
|
)
|
|
(84
|
)%
|
||
Total
|
$
|
(19,917
|
)
|
|
$
|
(20,655
|
)
|
|
(4
|
)%
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Revenue:
|
|
|
|
||||
Media & Content
|
|
|
|
||||
Licensing and services
|
$
|
154,023
|
|
|
$
|
158,369
|
|
Connectivity
|
|
|
|
||||
Services
|
141,584
|
|
|
144,585
|
|
||
Equipment
|
28,479
|
|
|
19,505
|
|
||
Total
|
170,063
|
|
|
164,090
|
|
||
Total revenue
|
$
|
324,086
|
|
|
$
|
322,459
|
|
Cost of Sales:
|
|
|
|
||||
Media & Content
|
|
|
|
||||
Licensing and services
|
$
|
115,273
|
|
|
$
|
112,910
|
|
Connectivity
|
|
|
|
||||
Services
|
124,304
|
|
|
121,885
|
|
||
Equipment
|
18,834
|
|
|
10,415
|
|
||
Total
|
143,138
|
|
|
132,300
|
|
||
Total cost of sales
|
$
|
258,411
|
|
|
$
|
245,210
|
|
Gross margin:
|
|
|
|
||||
Media & Content
|
$
|
38,750
|
|
|
$
|
45,459
|
|
Connectivity
|
26,925
|
|
|
31,790
|
|
||
Total gross margin
|
65,675
|
|
|
77,249
|
|
||
Other operating expenses
|
99,991
|
|
|
128,228
|
|
||
Loss from operations
|
$
|
(34,316
|
)
|
|
$
|
(50,979
|
)
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Licensing and services
|
$
|
154,023
|
|
|
$
|
158,369
|
|
|
(3
|
)%
|
•
|
Aviation client wins and losses
: Revenues increased by $6.9 million due to contract wins with certain leading global airlines, which was offset by a decrease of $9.0 million of revenue attributed to recent losses with CSP airline partners operating within the EMEA region.
|
•
|
Repricing and volume changes
: Revenues decreased by $3.4 million due to fewer Hollywood content offerings for an Asian partner airline, which was offset by an increase of $2.4 million in revenue due to increases in content budgets for other global airline partners.
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Services
|
$
|
141,584
|
|
|
$
|
144,585
|
|
|
(2
|
)%
|
Equipment
|
28,479
|
|
|
19,505
|
|
|
46
|
%
|
||
Total
|
$
|
170,063
|
|
|
$
|
164,090
|
|
|
4
|
%
|
•
|
Aviation expanded revenue stream and volume
: a $3.1 million increase in our Aviation connectivity revenues due to: (i) introduction of repair station stream services, and (ii) growth from new CSP airline partners; offset by,
|
•
|
MEG contract repricing and losses
: a $6.1 million decrease in our MEG connectivity revenues due to: (i) contract renegotiation for two (2) major customers in the cruise-line business, (ii) shrinkage in our yacht business, and (iii) contract losses in certain of our enterprise customers.
|
•
|
Aviation equipment shipments
: a $8.5 million increase in our Aviation equipment revenue was primarily due to an increase in equipment shipments for major aviation customers, when compared to the prior year six months ended June 30; and,
|
•
|
Maritime equipment activations
: a $0.5 million increase in MEG equipment revenues due to equipment activations during the current year for a contract won at the beginning of 2019.
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Licensing and services
|
$
|
115,273
|
|
|
$
|
112,910
|
|
|
2
|
%
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Services
|
$
|
124,304
|
|
|
$
|
121,885
|
|
|
2
|
%
|
Equipment
|
18,834
|
|
|
10,415
|
|
|
81
|
%
|
||
Total
|
$
|
143,138
|
|
|
$
|
132,300
|
|
|
8
|
%
|
•
|
Aviation bandwidth cost increase
: a $10.5 million increase in Aviation cost of sales is due to higher cost for our satellite bandwidth capacity costs; and,
|
•
|
Maritime bandwidth cost decrease
: a $8.5 million decrease in our MEG segment due to lower satellite bandwidth and communication costs in our cruise and yacht connectivity businesses, including a favorable lease re-pricing for one of our satellite vendors.
|
•
|
Aviation equipment cost increase
: a $9.0 million increase in our Aviation cost of sales refers to the cost of equipment deliveries for our major customers; and,
|
•
|
Maritime equipment cost decrease
: a $0.6 million decrease in our MEG cost of sales due to lower inventory cost.
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Sales and marketing
|
$
|
15,614
|
|
|
$
|
20,492
|
|
|
(24
|
)%
|
Product development
|
13,104
|
|
|
18,206
|
|
|
(28
|
)%
|
||
General and administrative
|
55,141
|
|
|
68,235
|
|
|
(19
|
)%
|
||
Provision for (gain from) legal settlements
|
533
|
|
|
375
|
|
|
42
|
%
|
||
Amortization of intangible assets
|
15,599
|
|
|
20,920
|
|
|
(25
|
)%
|
||
Total
|
$
|
99,991
|
|
|
$
|
128,228
|
|
|
(22
|
)%
|
|
Six Months Ended June 30,
|
|
|
|||||||
|
2019
|
|
2018
|
|
Change
|
|||||
Interest expense, net
|
$
|
(43,606
|
)
|
|
$
|
(35,352
|
)
|
|
23
|
%
|
Income from equity method investments
|
4,646
|
|
|
1,589
|
|
|
192
|
%
|
||
Change in fair value of derivatives
|
938
|
|
|
(91
|
)
|
|
(1,131
|
)%
|
||
Other expense, net
|
(284
|
)
|
|
(347
|
)
|
|
(18
|
)%
|
||
Total
|
$
|
(38,306
|
)
|
|
$
|
(34,201
|
)
|
|
12
|
%
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Cash and cash equivalents
|
$
|
10,853
|
|
|
$
|
39,154
|
|
Total assets
|
702,929
|
|
|
717,087
|
|
||
Current portion of long-term debt
|
17,005
|
|
|
22,673
|
|
||
Long-term debt
|
713,281
|
|
|
686,938
|
|
||
Total stockholders’ deficit
|
$
|
(300,530
|
)
|
|
$
|
(226,335
|
)
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by/(used in) operating activities
|
$
|
1,972
|
|
|
$
|
(42,827
|
)
|
Net cash used in investing activities
|
(13,442
|
)
|
|
(24,472
|
)
|
||
Net cash (used in)/provided by financing activities
|
(16,659
|
)
|
|
58,320
|
|
||
Effects of exchange rate changes on cash, cash equivalents and restricted cash
|
199
|
|
|
(96
|
)
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(27,930
|
)
|
|
(9,075
|
)
|
||
Cash, Cash Equivalents and Restricted Cash at January 1
|
39,955
|
|
|
51,868
|
|
||
Cash, Cash Equivalents and Restricted Cash at June 30
|
$
|
12,025
|
|
|
$
|
42,793
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Senior secured term loan facility, due January 2023
|
$
|
468,750
|
|
|
$
|
478,125
|
|
Senior secured revolving credit facility, due January 2022
|
42,415
|
|
|
54,015
|
|
||
Second lien notes, due June 2023
|
167,957
|
|
|
158,450
|
|
||
2.75% convertible senior notes due 2035
|
82,500
|
|
|
82,500
|
|
||
Other debt
|
29,847
|
|
|
1,707
|
|
||
Unamortized bond discounts, fair value adjustments and issue costs, net
|
(61,183
|
)
|
|
(65,186
|
)
|
||
Total carrying value of debt
|
730,286
|
|
|
709,611
|
|
||
Less: current portion, net
|
(17,005
|
)
|
|
(22,673
|
)
|
||
Total non-current
|
$
|
713,281
|
|
|
$
|
686,938
|
|
Years Ending December 31,
|
Amount
|
||
2019 (remaining six months)
|
$
|
11,133
|
|
2020
|
29,430
|
|
|
2021
|
25,041
|
|
|
2022
|
67,457
|
|
|
2023
|
575,500
|
|
|
Thereafter
|
82,908
|
|
|
Total
|
$
|
791,469
|
|
•
|
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
|
|
|
|
|
Incorporated by Reference
|
||||||||
Exhibit No.
|
|
Exhibit Index
|
|
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
|
Filed Herewith
|
10.1
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
5/14/2019
|
|
|
|
10.2
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
7/19/2019
|
|
|
|
10.3
|
|
|
8-K
|
|
001-35176
|
|
10.2
|
|
7/19/2019
|
|
|
|
10.4
|
|
|
8-K
|
|
001-35176
|
|
10.3
|
|
7/19/2019
|
|
|
|
10.5
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
5/31/2019
|
|
|
|
10.6
|
|
|
8-K
|
|
001-35176
|
|
10.1
|
|
8/8/2019
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
GLOBAL EAGLE ENTERTAINMENT INC.
|
|
|
By:
|
/s/ CHRISTIAN MEZGER
|
|
|
Christian Mezger
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1 Year Global Eagle Entertainment Chart |
1 Month Global Eagle Entertainment Chart |
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