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Share Name | Share Symbol | Market | Type |
---|---|---|---|
KVH Industries Inc | NASDAQ:KVHI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.03 | -0.66% | 4.51 | 4.49 | 4.56 | 4.66 | 4.51 | 4.58 | 6,976 | 15:58:52 |
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ý
|
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
|
|
|
Delaware
|
05-0420589
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification Number)
|
50 Enterprise Center, Middletown, RI 02842
(Address of Principal Executive Offices) (Zip Code) |
|
(401) 847-3327
(Registrant’s Telephone Number, Including Area Code)
|
|
Large accelerated filer
|
o
|
Accelerated filer
|
ý
|
Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
Date
|
Class
|
Outstanding shares
|
November 2, 2016
|
Common Stock, par value $0.01 per share
|
16,556,098
|
|
|
Page No.
|
|
||
ITEM 1.
|
|
|
|
Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015
|
|
|
Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (unaudited)
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015 (unaudited)
|
|
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Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)
|
|
|
||
ITEM 2.
|
||
ITEM 3.
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||
ITEM 4.
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||
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ITEM 1.
|
||
ITEM 1A.
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||
ITEM 2.
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||
ITEM 6.
|
||
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September 30,
2016 |
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December 31,
2015 |
||||
ASSETS
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
25,099
|
|
|
$
|
22,719
|
|
Marketable securities
|
28,684
|
|
|
22,619
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $3,698 and $3,534 as of September 30, 2016 and December 31, 2015, respectively
|
31,815
|
|
|
43,895
|
|
||
Inventories
|
21,139
|
|
|
21,589
|
|
||
Prepaid expenses and other assets
|
7,477
|
|
|
4,271
|
|
||
Total current assets
|
114,214
|
|
|
115,093
|
|
||
Property and equipment, less accumulated depreciation of $48,614 and $43,202 as of September 30, 2016 and December 31, 2015, respectively
|
37,927
|
|
|
39,900
|
|
||
Intangible assets, less accumulated amortization of $15,068 and $11,390 as of September 30, 2016 and
December 31, 2015, respectively |
20,080
|
|
|
26,755
|
|
||
Goodwill
|
32,741
|
|
|
36,747
|
|
||
Other non-current assets
|
4,987
|
|
|
3,096
|
|
||
Non-current deferred income tax asset
|
3,747
|
|
|
4,686
|
|
||
Total assets
|
$
|
213,696
|
|
|
$
|
226,277
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
7,703
|
|
|
$
|
8,975
|
|
Accrued compensation and employee-related expenses
|
4,779
|
|
|
6,588
|
|
||
Accrued other
|
12,326
|
|
|
13,516
|
|
||
Accrued product warranty costs
|
2,256
|
|
|
1,880
|
|
||
Deferred revenue
|
9,281
|
|
|
5,962
|
|
||
Current portion of long-term debt
|
7,890
|
|
|
6,638
|
|
||
Total current liabilities
|
44,235
|
|
|
43,559
|
|
||
Other long-term liabilities
|
1,127
|
|
|
1,391
|
|
||
Long-term debt, excluding current portion
|
52,132
|
|
|
58,054
|
|
||
Non-current deferred income tax liability
|
4,153
|
|
|
5,097
|
|
||
Total liabilities
|
$
|
101,647
|
|
|
$
|
108,101
|
|
Commitments and contingencies (Notes 2, 9 and 11)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued
|
|
|
|
|
|
||
Common stock, $0.01 par value. Authorized 30,000,000 shares; 18,193,589 and 17,793,752 shares issued at September 30, 2016 and December 31, 2015, respectively; and 16,534,598 and 16,134,761 shares outstanding at September 30, 2016 and December 31, 2015, respectively
|
182
|
|
|
178
|
|
||
Additional paid-in capital
|
126,577
|
|
|
124,614
|
|
||
Retained earnings
|
13,400
|
|
|
14,134
|
|
||
Accumulated other comprehensive loss
|
(14,960
|
)
|
|
(7,600
|
)
|
||
|
125,199
|
|
|
131,326
|
|
||
Less: treasury stock at cost, common stock, 1,658,991 shares as of September 30, 2016 and December 31, 2015
|
(13,150
|
)
|
|
(13,150
|
)
|
||
Total stockholders’ equity
|
112,049
|
|
|
118,176
|
|
||
Total liabilities and stockholders’ equity
|
$
|
213,696
|
|
|
$
|
226,277
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
19,020
|
|
|
$
|
15,622
|
|
|
$
|
54,464
|
|
|
$
|
48,954
|
|
Service
|
26,826
|
|
|
28,833
|
|
|
77,728
|
|
|
81,661
|
|
||||
Net sales
|
45,846
|
|
|
44,455
|
|
|
132,192
|
|
|
130,615
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Costs of product sales
|
11,001
|
|
|
10,275
|
|
|
34,660
|
|
|
32,777
|
|
||||
Costs of service sales
|
13,576
|
|
|
14,454
|
|
|
39,826
|
|
|
41,407
|
|
||||
Research and development
|
3,940
|
|
|
3,472
|
|
|
11,760
|
|
|
10,704
|
|
||||
Sales, marketing and support
|
7,978
|
|
|
7,889
|
|
|
25,870
|
|
|
24,251
|
|
||||
General and administrative
|
6,338
|
|
|
8,159
|
|
|
21,130
|
|
|
23,436
|
|
||||
Total costs and expenses
|
42,833
|
|
|
44,249
|
|
|
133,246
|
|
|
132,575
|
|
||||
Income (loss) from operations
|
3,013
|
|
|
206
|
|
|
(1,054
|
)
|
|
(1,960
|
)
|
||||
Interest income
|
130
|
|
|
129
|
|
|
353
|
|
|
421
|
|
||||
Interest expense
|
353
|
|
|
363
|
|
|
1,081
|
|
|
1,097
|
|
||||
Other (expense) income, net
|
(56
|
)
|
|
(382
|
)
|
|
11
|
|
|
654
|
|
||||
Income (loss) before income tax expense (benefit)
|
2,734
|
|
|
(410
|
)
|
|
(1,771
|
)
|
|
(1,982
|
)
|
||||
Income tax (benefit) expense
|
(129
|
)
|
|
53
|
|
|
(1,037
|
)
|
|
(134
|
)
|
||||
Net income (loss)
|
$
|
2,863
|
|
|
$
|
(463
|
)
|
|
$
|
(734
|
)
|
|
$
|
(1,848
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.18
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.12
|
)
|
Diluted
|
$
|
0.18
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.12
|
)
|
Weighted average number of common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
15,845
|
|
|
15,661
|
|
|
15,798
|
|
|
15,608
|
|
||||
Diluted
|
15,915
|
|
|
15,661
|
|
|
15,798
|
|
|
15,608
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
2,863
|
|
|
$
|
(463
|
)
|
|
$
|
(734
|
)
|
|
$
|
(1,848
|
)
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized loss on available-for-sale securities
|
—
|
|
|
(109
|
)
|
|
—
|
|
|
(111
|
)
|
||||
Foreign currency translation adjustment
|
(2,238
|
)
|
|
(2,641
|
)
|
|
(7,386
|
)
|
|
(3,906
|
)
|
||||
Unrealized gain (loss) on derivative instruments
|
37
|
|
|
(13
|
)
|
|
26
|
|
|
5
|
|
||||
Other comprehensive loss, net of tax
|
(2,201
|
)
|
|
(2,763
|
)
|
|
(7,360
|
)
|
|
(4,012
|
)
|
||||
Total comprehensive income (loss)
|
$
|
662
|
|
|
$
|
(3,226
|
)
|
|
$
|
(8,094
|
)
|
|
$
|
(5,860
|
)
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(734
|
)
|
|
$
|
(1,848
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Provision for doubtful accounts
|
379
|
|
|
742
|
|
||
Depreciation and amortization
|
9,090
|
|
|
9,427
|
|
||
Deferred income taxes
|
(888
|
)
|
|
(45
|
)
|
||
Loss on disposal of fixed assets
|
799
|
|
|
38
|
|
||
Compensation expense related to stock-based awards and employee stock purchase plan
|
2,792
|
|
|
2,832
|
|
||
Unrealized loss on foreign currency transactions
|
894
|
|
|
191
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
10,819
|
|
|
644
|
|
||
Inventories
|
421
|
|
|
(3,807
|
)
|
||
Prepaid expenses and other assets
|
(2,932
|
)
|
|
(2,282
|
)
|
||
Other non-current assets
|
(2,190
|
)
|
|
1,043
|
|
||
Accounts payable
|
(1,168
|
)
|
|
(2,145
|
)
|
||
Deferred revenue
|
3,829
|
|
|
355
|
|
||
Accrued expenses
|
(2,029
|
)
|
|
5,602
|
|
||
Other long-term liabilities
|
(113
|
)
|
|
(96
|
)
|
||
Net cash provided by operating activities
|
$
|
18,969
|
|
|
$
|
10,651
|
|
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(4,791
|
)
|
|
(4,881
|
)
|
||
Purchases of marketable securities
|
(10,629
|
)
|
|
(13,807
|
)
|
||
Maturities and sales of marketable securities
|
4,563
|
|
|
11,719
|
|
||
Net cash used in investing activities
|
$
|
(10,857
|
)
|
|
$
|
(6,969
|
)
|
Cash flows from financing activities:
|
|
|
|
||||
Repayments of term note borrowings
|
(3,656
|
)
|
|
(3,656
|
)
|
||
Repayments of other long-term debt
|
(1,014
|
)
|
|
(980
|
)
|
||
Payment of employee restricted stock withholdings
|
(313
|
)
|
|
(345
|
)
|
||
Proceeds from stock options exercised and employee stock purchase plan
|
390
|
|
|
260
|
|
||
Net cash used in financing activities
|
$
|
(4,593
|
)
|
|
$
|
(4,721
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
(1,139
|
)
|
|
(627
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
2,380
|
|
|
(1,666
|
)
|
||
Cash and cash equivalents at beginning of period
|
22,719
|
|
|
25,289
|
|
||
Cash and cash equivalents at end of period
|
$
|
25,099
|
|
|
$
|
23,623
|
|
(4)
|
Marketable Securities
|
September 30, 2016
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Money market mutual funds
|
$
|
23,868
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,868
|
|
Certificates of deposit
|
4,816
|
|
|
—
|
|
|
—
|
|
|
4,816
|
|
||||
Total marketable securities designated as available-for-sale
|
$
|
28,684
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,684
|
|
December 31, 2015
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
||||||||
Money market mutual funds
|
$
|
13,244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,244
|
|
United States treasuries
|
1,002
|
|
|
—
|
|
|
—
|
|
|
1,002
|
|
||||
Corporate notes
|
2,283
|
|
|
1
|
|
|
—
|
|
|
2,284
|
|
||||
Certificates of deposit
|
6,089
|
|
|
—
|
|
|
—
|
|
|
6,089
|
|
||||
Total marketable securities designated as available-for-sale
|
$
|
22,618
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
22,619
|
|
September 30, 2016
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in less than one year
|
$
|
4,275
|
|
|
$
|
4,275
|
|
Due after one year and within two years
|
541
|
|
|
541
|
|
||
|
$
|
4,816
|
|
|
$
|
4,816
|
|
December 31, 2015
|
Amortized
Cost
|
|
Fair
Value
|
||||
Due in less than one year
|
$
|
5,515
|
|
|
$
|
5,516
|
|
Due after one year and within two years
|
3,859
|
|
|
3,859
|
|
||
|
$
|
9,374
|
|
|
$
|
9,375
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Weighted average common shares outstanding—basic
|
15,845
|
|
|
15,661
|
|
|
15,798
|
|
|
15,608
|
|
Dilutive common shares issuable in connection with stock plans
|
70
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Weighted average common shares outstanding—diluted
|
15,915
|
|
|
15,661
|
|
|
15,798
|
|
|
15,608
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Raw materials
|
$
|
12,910
|
|
|
$
|
12,833
|
|
Work in process
|
2,288
|
|
|
2,778
|
|
||
Finished goods
|
5,941
|
|
|
5,978
|
|
||
|
$
|
21,139
|
|
|
$
|
21,589
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
1,880
|
|
|
$
|
1,853
|
|
Charges to expense
|
1,543
|
|
|
811
|
|
||
Costs incurred
|
(1,167
|
)
|
|
(961
|
)
|
||
Ending balance
|
$
|
2,256
|
|
|
$
|
1,703
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Term note
|
$
|
55,250
|
|
|
$
|
58,906
|
|
Mortgage loan
|
2,993
|
|
|
3,114
|
|
||
Equipment loan
|
1,779
|
|
|
2,672
|
|
||
Total
|
60,022
|
|
|
64,692
|
|
||
Less amounts classified as current
|
7,890
|
|
|
6,638
|
|
||
Long-term debt, excluding current portion
|
$
|
52,132
|
|
|
$
|
58,054
|
|
|
|
Sales Originating From
|
||||||||||
Three months ended September 30, 2016
|
|
Americas
|
|
Europe and
Asia
|
|
Total
|
||||||
Mobile communication sales to the United States
|
|
$
|
25,093
|
|
|
$
|
708
|
|
|
$
|
25,801
|
|
Mobile communication sales to Canada
|
|
166
|
|
|
75
|
|
|
241
|
|
|||
Mobile communication sales to Europe
|
|
123
|
|
|
6,179
|
|
|
6,302
|
|
|||
Mobile communication sales to other geographic areas
|
|
643
|
|
|
3,467
|
|
|
4,110
|
|
|||
Guidance and stabilization sales to the United States
|
|
2,720
|
|
|
—
|
|
|
2,720
|
|
|||
Guidance and stabilization sales to Canada
|
|
4,768
|
|
|
—
|
|
|
4,768
|
|
|||
Guidance and stabilization sales to Europe
|
|
659
|
|
|
—
|
|
|
659
|
|
|||
Guidance and stabilization sales to other geographic areas
|
|
1,245
|
|
|
—
|
|
|
1,245
|
|
|||
Intercompany sales
|
|
539
|
|
|
754
|
|
|
1,293
|
|
|||
Subtotal
|
|
35,956
|
|
|
11,183
|
|
|
47,139
|
|
|||
Eliminations
|
|
(539
|
)
|
|
(754
|
)
|
|
(1,293
|
)
|
|||
Net sales
|
|
$
|
35,417
|
|
|
$
|
10,429
|
|
|
$
|
45,846
|
|
Segment net income
|
|
$
|
553
|
|
|
$
|
2,310
|
|
|
$
|
2,863
|
|
Depreciation and amortization
|
|
$
|
1,140
|
|
|
$
|
1,695
|
|
|
$
|
2,835
|
|
Total assets
|
|
$
|
136,175
|
|
|
$
|
77,521
|
|
|
$
|
213,696
|
|
|
|
Sales Originating From
|
||||||||||
Three months ended September 30, 2015
|
|
Americas
|
|
Europe and
Asia
|
|
Total
|
||||||
Mobile communication sales to the United States
|
|
$
|
22,755
|
|
|
$
|
361
|
|
|
$
|
23,116
|
|
Mobile communication sales to Canada
|
|
326
|
|
|
29
|
|
|
355
|
|
|||
Mobile communication sales to Europe
|
|
113
|
|
|
4,937
|
|
|
5,050
|
|
|||
Mobile communication sales to other geographic areas
|
|
1,607
|
|
|
7,461
|
|
|
9,068
|
|
|||
Guidance and stabilization sales to the United States
|
|
2,425
|
|
|
—
|
|
|
2,425
|
|
|||
Guidance and stabilization sales to Canada
|
|
2,424
|
|
|
—
|
|
|
2,424
|
|
|||
Guidance and stabilization sales to Europe
|
|
1,200
|
|
|
—
|
|
|
1,200
|
|
|||
Guidance and stabilization sales to other geographic areas
|
|
817
|
|
|
—
|
|
|
817
|
|
|||
Intercompany sales
|
|
1,198
|
|
|
1,137
|
|
|
2,335
|
|
|||
Subtotal
|
|
32,865
|
|
|
13,925
|
|
|
46,790
|
|
|||
Eliminations
|
|
(1,198
|
)
|
|
(1,137
|
)
|
|
(2,335
|
)
|
|||
Net sales
|
|
$
|
31,667
|
|
|
$
|
12,788
|
|
|
$
|
44,455
|
|
Segment net (loss) income
|
|
$
|
(728
|
)
|
|
$
|
265
|
|
|
$
|
(463
|
)
|
Depreciation and amortization
|
|
$
|
1,211
|
|
|
$
|
1,984
|
|
|
$
|
3,195
|
|
Total assets
|
|
$
|
143,297
|
|
|
$
|
87,795
|
|
|
$
|
231,092
|
|
|
|
Sales Originating From
|
||||||||||
Nine months ended September 30, 2016
|
|
Americas
|
|
Europe and
Asia
|
|
Total
|
||||||
Mobile communication sales to the United States
|
|
$
|
69,948
|
|
|
$
|
1,983
|
|
|
$
|
71,931
|
|
Mobile communication sales to Canada
|
|
865
|
|
|
463
|
|
|
1,328
|
|
|||
Mobile communication sales to Europe
|
|
712
|
|
|
21,680
|
|
|
22,392
|
|
|||
Mobile communication sales to other geographic areas
|
|
2,601
|
|
|
10,355
|
|
|
12,956
|
|
|||
Guidance and stabilization sales to the United States
|
|
6,416
|
|
|
—
|
|
|
6,416
|
|
|||
Guidance and stabilization sales to Canada
|
|
11,391
|
|
|
—
|
|
|
11,391
|
|
|||
Guidance and stabilization sales to Europe
|
|
2,601
|
|
|
—
|
|
|
2,601
|
|
|||
Guidance and stabilization sales to other geographic areas
|
|
3,177
|
|
|
—
|
|
|
3,177
|
|
|||
Intercompany sales
|
|
3,885
|
|
|
2,167
|
|
|
6,052
|
|
|||
Subtotal
|
|
101,596
|
|
|
36,648
|
|
|
138,244
|
|
|||
Eliminations
|
|
(3,885
|
)
|
|
(2,167
|
)
|
|
(6,052
|
)
|
|||
Net sales
|
|
$
|
97,711
|
|
|
$
|
34,481
|
|
|
$
|
132,192
|
|
Segment net (loss) income
|
|
$
|
(3,593
|
)
|
|
$
|
2,859
|
|
|
$
|
(734
|
)
|
Depreciation and amortization
|
|
$
|
3,572
|
|
|
$
|
5,518
|
|
|
$
|
9,090
|
|
Total assets
|
|
$
|
136,175
|
|
|
$
|
77,521
|
|
|
$
|
213,696
|
|
|
|
Sales Originating From
|
||||||||||
Nine months ended September 30, 2015
|
|
Americas
|
|
Europe and
Asia
|
|
Total
|
||||||
Mobile communication sales to the United States
|
|
$
|
67,076
|
|
|
$
|
1,220
|
|
|
$
|
68,296
|
|
Mobile communication sales to Canada
|
|
1,282
|
|
|
63
|
|
|
1,345
|
|
|||
Mobile communication sales to Europe
|
|
432
|
|
|
16,120
|
|
|
16,552
|
|
|||
Mobile communication sales to other geographic areas
|
|
4,021
|
|
|
21,657
|
|
|
25,678
|
|
|||
Guidance and stabilization sales to the United States
|
|
5,496
|
|
|
—
|
|
|
5,496
|
|
|||
Guidance and stabilization sales to Canada
|
|
6,216
|
|
|
—
|
|
|
6,216
|
|
|||
Guidance and stabilization sales to Europe
|
|
3,592
|
|
|
—
|
|
|
3,592
|
|
|||
Guidance and stabilization sales to other geographic areas
|
|
3,440
|
|
|
—
|
|
|
3,440
|
|
|||
Intercompany sales
|
|
4,874
|
|
|
2,982
|
|
|
7,856
|
|
|||
Subtotal
|
|
96,429
|
|
|
42,042
|
|
|
138,471
|
|
|||
Eliminations
|
|
(4,874
|
)
|
|
(2,982
|
)
|
|
(7,856
|
)
|
|||
Net sales
|
|
$
|
91,555
|
|
|
$
|
39,060
|
|
|
$
|
130,615
|
|
Segment net loss
|
|
$
|
(1,805
|
)
|
|
$
|
(43
|
)
|
|
$
|
(1,848
|
)
|
Depreciation and amortization
|
|
$
|
3,552
|
|
|
$
|
5,875
|
|
|
$
|
9,427
|
|
Total assets
|
|
$
|
143,297
|
|
|
$
|
87,795
|
|
|
$
|
231,092
|
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company’s Level 1 assets are investments in money market mutual funds, United States treasuries, and certificates of deposit.
|
Level 2:
|
Quoted prices for similar assets or liabilities in active markets; or observable prices that are based on observable market data, based on directly or indirectly market-corroborated inputs. The Company’s Level 2 assets are investments in corporate notes and its Level 2 liabilities are interest rate swaps.
|
Level 3:
|
Unobservable inputs that are supported by little or no market activity, and are developed based on the best information available given the circumstances. The Company has no Level 3 assets.
|
(a)
|
Market approach—prices and other relevant information generated by market transactions involving identical or comparable assets.
|
(b)
|
The valuations of the interest rate swaps intended to mitigate the Company’s interest rate risk are determined with the assistance of a third-party financial institution using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each instrument. This analysis utilizes observable market-based inputs, including interest rate curves and interest rate volatility, and reflects the contractual terms of these instruments, including the period to maturity.
|
September 30, 2016
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Valuation
Technique
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
23,868
|
|
|
$
|
23,868
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(a)
|
Certificates of deposit
|
4,816
|
|
|
4,816
|
|
|
—
|
|
|
—
|
|
|
(a)
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
212
|
|
|
—
|
|
|
212
|
|
|
—
|
|
|
(b)
|
December 31, 2015
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Valuation
Technique
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Money market mutual funds
|
$
|
13,244
|
|
|
$
|
13,244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(a)
|
United States treasuries
|
1,002
|
|
|
1,002
|
|
|
—
|
|
|
—
|
|
|
(a)
|
||||
Corporate notes
|
2,284
|
|
|
—
|
|
|
2,284
|
|
|
—
|
|
|
(a)
|
||||
Certificates of deposit
|
6,089
|
|
|
6,089
|
|
|
—
|
|
|
—
|
|
|
(a)
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
238
|
|
|
—
|
|
|
238
|
|
|
—
|
|
|
(b)
|
|
|
Amounts
|
||
Balance at December 31, 2015
|
|
$
|
36,747
|
|
Foreign currency translation adjustment
|
|
(4,006
|
)
|
|
Balance at September 30, 2016
|
|
$
|
32,741
|
|
|
|
Amounts
|
||
Balance at December 31, 2015
|
|
$
|
26,755
|
|
Amortization expense
|
|
(3,678
|
)
|
|
Foreign currency translation adjustment
|
|
(2,997
|
)
|
|
Balance at September 30, 2016
|
|
$
|
20,080
|
|
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
September 30, 2016
|
|
|
|
|
|
|
||||||
Subscriber relationships
|
|
$
|
17,450
|
|
|
$
|
5,971
|
|
|
$
|
11,479
|
|
Distribution rights
|
|
4,277
|
|
|
1,114
|
|
|
3,163
|
|
|||
Internally developed software
|
|
2,335
|
|
|
1,620
|
|
|
715
|
|
|||
Proprietary content
|
|
8,160
|
|
|
4,075
|
|
|
4,085
|
|
|||
Intellectual property
|
|
2,284
|
|
|
1,974
|
|
|
310
|
|
|||
Favorable lease
|
|
642
|
|
|
314
|
|
|
328
|
|
|||
|
|
$
|
35,148
|
|
|
$
|
15,068
|
|
|
$
|
20,080
|
|
December 31, 2015
|
|
|
|
|
|
|
||||||
Subscriber relationships
|
|
$
|
19,161
|
|
|
$
|
4,426
|
|
|
$
|
14,735
|
|
Distribution rights
|
|
4,736
|
|
|
895
|
|
|
3,841
|
|
|||
Internally developed software
|
|
2,457
|
|
|
1,244
|
|
|
1,213
|
|
|||
Proprietary content
|
|
8,812
|
|
|
2,879
|
|
|
5,933
|
|
|||
Intellectual property
|
|
2,283
|
|
|
1,729
|
|
|
554
|
|
|||
Favorable lease
|
|
696
|
|
|
217
|
|
|
479
|
|
|||
|
|
$
|
38,145
|
|
|
$
|
11,390
|
|
|
$
|
26,755
|
|
|
Year Ending
|
||
|
December 31,
|
||
2016
|
$
|
1,134
|
|
2017
|
4,435
|
|
|
2018
|
4,002
|
|
|
2019
|
2,989
|
|
|
2020
|
2,191
|
|
|
Thereafter
|
5,329
|
|
|
Total future amortization expense
|
$
|
20,080
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Net sales to foreign customers outside the U.S. and Canada
|
26.9
|
%
|
|
36.2
|
%
|
|
31.1
|
%
|
|
37.7
|
%
|
Interest Rate Derivatives
|
Notional
(in thousands)
|
|
Asset
(Liability)
|
|
Effective Date
|
|
Maturity Date
|
|
Index
|
|
Strike Rate
|
||||
Interest rate swap
|
$
|
1,496
|
|
|
(103
|
)
|
|
April 1, 2010
|
|
April 1, 2019
|
|
1-month LIBOR
|
|
5.91
|
%
|
Interest rate swap
|
$
|
1,496
|
|
|
(109
|
)
|
|
April 1, 2010
|
|
April 1, 2019
|
|
1-month LIBOR
|
|
6.07
|
%
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Mobile communication
|
$
|
36,454
|
|
|
$
|
37,589
|
|
|
$
|
108,607
|
|
|
$
|
111,871
|
|
Guidance and stabilization
|
9,392
|
|
|
6,866
|
|
|
23,585
|
|
|
18,744
|
|
||||
Net sales
|
$
|
45,846
|
|
|
$
|
44,455
|
|
|
$
|
132,192
|
|
|
$
|
130,615
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30,
|
|
September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Sales:
|
|
|
|
|
|
|
|
||||
Product
|
41.5
|
%
|
|
35.1
|
%
|
|
41.2
|
%
|
|
37.5
|
%
|
Service
|
58.5
|
|
|
64.9
|
|
|
58.8
|
|
|
62.5
|
|
Net sales
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Cost and expenses:
|
|
|
|
|
|
|
|
|
|||
Costs of product sales
|
24.0
|
|
|
23.1
|
|
|
26.2
|
|
|
25.1
|
|
Costs of service sales
|
29.6
|
|
|
32.5
|
|
|
30.1
|
|
|
31.7
|
|
Research and development
|
8.6
|
|
|
7.8
|
|
|
8.9
|
|
|
8.2
|
|
Sales, marketing and support
|
17.4
|
|
|
17.7
|
|
|
19.6
|
|
|
18.6
|
|
General and administrative
|
13.8
|
|
|
18.3
|
|
|
16.0
|
|
|
17.9
|
|
Total costs and expenses
|
93.4
|
|
|
99.4
|
|
|
100.8
|
|
|
101.5
|
|
Income (loss) from operations
|
6.6
|
|
|
0.6
|
|
|
(0.8
|
)
|
|
(1.5
|
)
|
Interest income
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
|
0.3
|
|
Interest expense
|
0.8
|
|
|
0.8
|
|
|
0.8
|
|
|
0.7
|
|
Other (expense) income, net
|
(0.1
|
)
|
|
(0.9
|
)
|
|
—
|
|
|
0.5
|
|
Income (loss) before income tax expense (benefit)
|
6.0
|
|
|
(0.8
|
)
|
|
(1.3
|
)
|
|
(1.4
|
)
|
Income tax expense (benefit)
|
(0.3
|
)
|
|
0.1
|
|
|
(0.8
|
)
|
|
(0.1
|
)
|
Net income (loss)
|
6.3
|
%
|
|
(0.9
|
)%
|
|
(0.5
|
)%
|
|
(1.3
|
)%
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
many of our primary competitors are well-established companies that generally have substantially greater financial, managerial, technical, marketing, personnel and other resources than we do, which help them to compete more effectively in the market for mobile broadband solutions for larger fleets of vessels;
|
•
|
many of our prime competitors have well-established and/or growing partner programs, which pose a threat of multiplying their market influence;
|
•
|
product and service improvements, new product and service developments or price reductions by competitors may weaken customer acceptance of, and reduce demand for, our products and services;
|
•
|
new technology or market trends may disrupt or displace a need for our products and services;
|
•
|
our competitors may have access to a broader array of media content than we do, which may cause customers to prefer competitors’ media offerings; and
|
•
|
our competitors may have lower production costs than we do, which may enable them to compete more aggressively in offering discounts and other promotions.
|
•
|
increasing budgetary pressures, which may reduce or delay funding for military programs;
|
•
|
changes in modernization plans for military equipment;
|
•
|
changes in tactical navigation requirements;
|
•
|
global conflicts impacting troop deployment, including troop withdrawals;
|
•
|
priorities for current battlefield operations;
|
•
|
new military and operational doctrines that affect military equipment needs;
|
•
|
sales cycles that are long and difficult to predict;
|
•
|
shifting response time and/or delays in the approval process associated with the export licenses we must obtain prior to the international shipment of certain of our military products;
|
•
|
delays in military procurement schedules; and
|
•
|
delays in the testing and acceptance of our products, including delays resulting from changes in customer specifications.
|
•
|
acquire other businesses or make investments;
|
•
|
raise additional capital;
|
•
|
incur additional debt or create liens on our assets;
|
•
|
pay dividends or make distributions;
|
•
|
prepay indebtedness; and
|
•
|
merge, dissolve, liquidate, consolidate, or dispose of all or substantially all of our assets.
|
•
|
technical challenges we may face in adapting our mobile communication products to function with different satellite services and technology in use in various regions around the world;
|
•
|
satisfaction of international regulatory requirements and delays and costs associated with procurement of any necessary licenses or permits;
|
•
|
the potential unavailability of content licenses covering international waters and foreign locations;
|
•
|
restrictions on the sale of certain guidance and stabilization products to foreign military and government customers;
|
•
|
increased costs of providing customer support in multiple languages;
|
•
|
increased costs of managing operations that are international in scope;
|
•
|
potentially adverse tax consequences, including restrictions on the repatriation of earnings;
|
•
|
protectionist laws and business practices that favor local competitors, which could slow our growth in international markets;
|
•
|
potentially longer sales cycles, which could slow our revenue growth from international sales;
|
•
|
potentially longer accounts receivable payment cycles and difficulties in collecting accounts receivable; and
|
•
|
economic and political instability in some international markets.
|
•
|
entry into new and unfamiliar lines of business or markets, which may present challenges or risks that we did not anticipate;
|
•
|
entry into new or unfamiliar geographic regions;
|
•
|
increased expenses associated with the amortization of acquired intangible assets;
|
•
|
increased exposure to fluctuations in foreign currency exchange rates;
|
•
|
charges related to any potential acquisition from which we may withdraw;
|
•
|
diversion of our management’s time, attention, and resources;
|
•
|
loss of key acquired personnel;
|
•
|
increased costs to improve or coordinate managerial, operational, financial, and administrative systems, including compliance with the Sarbanes-Oxley Act of 2002;
|
•
|
dilutive issuances of equity securities;
|
•
|
the assumption of legal liabilities; and
|
•
|
losses arising from impairment charges associated with goodwill or intangible assets.
|
•
|
match our manufacturing facilities and capacity to demand for our products and services in a timely manner;
|
•
|
secure appropriate satellite capacity to match changes in demand for airtime services in a timely manner;
|
•
|
successfully attract, train, motivate and manage appropriate numbers of employees for manufacturing, sales, marketing and customer support activities;
|
•
|
effectively manage our inventory and working capital;
|
•
|
maintain the efficiencies within our operating, administrative, financial and accounting systems; and
|
•
|
ensure that our procedures and internal controls are revised and updated to remain appropriate for the size and scale of our business operations.
|
•
|
changes in demand for our mobile communication products and services and guidance and stabilization products and services;
|
•
|
the timing and size of individual orders from military customers, which may be delayed or cancelled for various reasons;
|
•
|
the mix of products and services we sell, including the mix of fixed rate and metered contracts for airtime services;
|
•
|
our ability to manufacture, test and deliver products in a timely and cost-effective manner, including the availability and timely delivery of components and subassemblies from our suppliers;
|
•
|
our success in winning competitions for orders;
|
•
|
the timing of new product introductions by us or our competitors;
|
•
|
expenses incurred in pursuing acquisitions;
|
•
|
expenses incurred in expanding, maintaining, or improving our mini-VSAT Broadband network;
|
•
|
market and competitive pricing pressures;
|
•
|
unanticipated charges or expenses, such as increases in warranty claims;
|
•
|
general economic climate; and
|
•
|
seasonality of pleasure boat and recreational vehicle usage.
|
•
|
variations in our quarterly results of operations;
|
•
|
the introduction of new products and services by us or our competitors;
|
•
|
changing needs of military customers;
|
•
|
changes in estimates of our performance or recommendations by securities analysts;
|
•
|
the hiring or departure of key personnel;
|
•
|
acquisitions or strategic alliances involving us or our competitors;
|
•
|
market conditions in our industries; and
|
•
|
the global macroeconomic and geopolitical environment.
|
•
|
the ability of our Board of Directors to issue preferred stock, and determine its terms, without a stockholder vote;
|
•
|
the classification of our Board of Directors, which effectively prevents stockholders from electing a majority of the directors at any one annual meeting of stockholders;
|
•
|
the limitation that directors may be removed only for cause by the affirmative vote of the holders of two-thirds of our shares of capital stock entitled to vote;
|
•
|
the prohibition against stockholder actions by written consent;
|
•
|
the inability of stockholders to call a special meeting of stockholders; and
|
•
|
advance notice requirements for stockholder proposals and director nominations.
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Exhibit
No.
|
|
Description
|
|
Filed with
this Form 10-Q
|
|
Incorporated by Reference
|
|||||
|
Form
|
|
Filing Date
|
|
Exhibit No.
|
||||||
3.1
|
|
|
Amended and Restated Certificate of Incorporation, as amended
|
|
|
|
10-Q
|
|
August 6, 2010
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws
|
|
|
|
8-K
|
|
April 30, 2014
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Specimen certificate for the common stock
|
|
|
|
S-1/A
|
|
March 22, 1996
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) certification of principal executive officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) certification of principal financial officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Section 1350 certification of principal executive officer and principal financial officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
The following financial information from KVH Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive Income (Loss) (unaudited), (iv) the Consolidated Statements of Cash Flows (unaudited), and (v) the Notes to Consolidated Financial Statements (unaudited).
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: November 3, 2016
|
|
|
|
KVH Industries, Inc.
|
|
|
|
By:
|
/s/ J
OHN
F. M
C
C
ARTHY
|
|
John F. McCarthy
|
|
(Duly Authorized Officer and Interim Chief Financial
Officer)
|
Exhibit
No.
|
|
Description
|
|
Filed with
this Form 10-Q
|
|
Incorporated by Reference
|
|||||
|
Form
|
|
Filing Date
|
|
Exhibit No.
|
||||||
3.1
|
|
|
Amended and Restated Certificate of Incorporation, as amended
|
|
|
|
10-Q
|
|
August 6, 2010
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
Amended and Restated Bylaws
|
|
|
|
8-K
|
|
April 30, 2014
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
Specimen certificate for the common stock
|
|
|
|
S-1/A
|
|
March 22, 1996
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
Rule 13a-14(a)/15d-14(a) certification of principal executive officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
Rule 13a-14(a)/15d-14(a) certification of principal financial officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
Section 1350 certification of principal executive officer and principal financial officer
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
The following financial information from KVH Industries, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive Income (Loss) (unaudited), (iv) the Consolidated Statements of Cash Flows (unaudited), and (v) the Notes to Consolidated Financial Statements (unaudited).
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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