Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-28082 | |
Entity Registrant Name | KVH Industries, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 05-0420589 | |
Entity Address, Address Line One | 50 Enterprise Center, | |
Entity Address, City or Town | Middletown | |
Entity Address, State or Province | RI | |
Entity Address, Postal Zip Code | 02842 | |
City Area Code | 401 | |
Local Phone Number | 847-3327 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | KVHI | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,993,244 | |
Entity Central Index Key | 0001007587 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 18,542 | $ 18,365 |
Marketable securities | 22,487 | 29,907 |
Accounts receivable, net of allowance for doubtful accounts of $1,722 and $1,589 as of March 31, 2020 and December 31, 2019, respectively | 28,968 | 32,891 |
Inventories, net | 25,555 | 23,465 |
Prepaid expenses and other current assets | 3,422 | 3,188 |
Current contract assets | 1,424 | 1,458 |
Total current assets | 100,398 | 109,274 |
Property and equipment, net | 54,756 | 53,584 |
Intangible assets, net | 4,432 | 4,943 |
Goodwill | 14,730 | 15,408 |
Right of use asset operating lease | 5,026 | 6,286 |
Other non-current assets | 6,644 | 6,443 |
Non-current contract assets | 3,259 | 3,408 |
Non-current deferred income tax asset | 40 | 45 |
Total assets | 189,285 | 199,391 |
Current liabilities: | ||
Accounts payable | 13,818 | 15,031 |
Accrued compensation and employee-related expenses | 5,129 | 5,637 |
Accrued other | 8,551 | 7,733 |
Accrued product warranty costs | 2,212 | 2,194 |
Contract liabilities | 4,933 | 4,443 |
Current operating lease liability | 1,634 | 2,831 |
Liability for uncertain tax positions | 532 | 521 |
Total current liabilities | 36,809 | 38,390 |
Other long-term liabilities | 1,138 | 1,292 |
Long-term operating lease liability | 3,422 | 3,482 |
Long-term contract liabilities | 5,221 | 5,476 |
Non-current deferred income tax liability | 818 | 762 |
Total liabilities | 47,408 | 49,402 |
Stockholders’ equity: | ||
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued | 0 | 0 |
Common stock, $0.01 par value. Authorized 30,000,000 shares; 19,419,121 and 19,398,699 shares issued at March 31, 2020 and December 31, 2019, respectively; and 17,986,427 and 18,001,261 shares outstanding at March 31, 2020 and December 31, 2019, respectively | 194 | 194 |
Additional paid-in capital | 145,457 | 144,485 |
Retained earnings | 13,324 | 19,538 |
Accumulated other comprehensive loss | (5,247) | (2,767) |
Stockholders equity before treasury stock adjustment | 153,728 | 161,450 |
Less: treasury stock at cost, common stock, 1,432,694 and 1,397,438 shares as of March 31, 2020 and December 31, 2019, respectively | (11,851) | (11,461) |
Total stockholders’ equity | 141,877 | 149,989 |
Total liabilities and stockholders’ equity | $ 189,285 | $ 199,391 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,722 | $ 1,589 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, shares issued (in shares) | 19,419,121 | 19,398,699 |
Common stock, shares outstanding (in shares) | 17,986,427 | 18,001,261 |
Treasury stock, shares outstanding (in shares) | 1,432,694 | 1,397,438 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Sales: | |||
Net sales | $ 36,568 | $ 36,376 | |
Costs and expenses: | |||
Cost of goods and services sold | 8,284 | ||
Research and development | 4,287 | 3,868 | |
Sales, marketing and support | 8,700 | 8,130 | |
General and administrative | 6,398 | 6,955 | |
Total costs and expenses | 44,216 | 42,610 | |
Loss from operations | (7,648) | (6,234) | |
Interest income | 313 | 175 | |
Interest expense | 4 | 385 | |
Other income (expense), net | 1,502 | (97) | |
Loss from continuing operations before income tax expense (benefit) | (5,837) | (6,541) | |
Income tax expense (benefit) | 377 | (44) | |
Net loss from continuing operations | (6,214) | (6,497) | |
Income from discontinued operations, net of tax | 0 | 243 | |
Net loss | $ (6,214) | $ (6,254) | |
Net loss from continuing operations per common share | |||
Basic and diluted (in USD per share) | [1] | $ (0.35) | $ (0.38) |
Net income from discontinued operations per common share | |||
Basic and diluted (in USD per share) | [1] | 0 | 0.01 |
Net loss per common share | |||
Basic and diluted (in USD per share) | [1] | $ (0.35) | $ (0.36) |
Weighted average number of common shares outstanding: | |||
Basic and diluted (in shares) | 17,529 | 17,302 | |
Product | |||
Sales: | |||
Net sales | $ 13,094 | $ 13,215 | |
Costs and expenses: | |||
Cost of goods and services sold | 9,636 | 8,284 | |
Service | |||
Sales: | |||
Net sales | 23,474 | 23,161 | |
Costs and expenses: | |||
Cost of goods and services sold | $ 15,195 | $ 15,373 | |
[1] | Earnings per share components for 2019 do not sum due to rounding. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (6,214) | $ (6,254) | |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation adjustment | (2,480) | 1,080 | |
Unrealized gain on derivative instruments, net | 0 | 8 | |
Other comprehensive (loss) income, net of tax | [1] | (2,480) | 1,088 |
Total comprehensive loss | $ (8,694) | $ (5,166) | |
[1] | Tax impact was nominal for all periods. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity Statement - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Treasury Stock | |
Beginning balance (in shares) at Dec. 31, 2018 | 19,026,000 | ||||||
Beginning balance at Dec. 31, 2018 | $ 99,515 | $ 190 | $ 139,617 | $ (15,397) | $ (14,731) | $ (10,164) | |
Beginning balance, treasury stock (in shares) at Dec. 31, 2018 | (1,282,000) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | (6,254) | (6,254) | |||||
Other comprehensive income (loss), net of tax | 1,088 | [1] | 1,088 | ||||
Stock-based compensation | 874 | 874 | |||||
Issuance of common stock under employee stock purchase plan (in shares) | 23,000 | ||||||
Issuance of common stock under employee stock purchase plan | 218 | 218 | |||||
Exercise of stock options and issuance of restricted stock awards, net of forfeitures (in shares) | 85,000 | ||||||
Exercise of stock options and issuance of restricted stock awards, net of forfeitures | 82 | $ 1 | 81 | ||||
Ending balance (in shares) at Mar. 31, 2019 | 19,134,000 | ||||||
Ending balance at Mar. 31, 2019 | $ 97,203 | $ 191 | 140,790 | (19,971) | (13,643) | $ (10,164) | |
Ending balance, treasury stock (in shares) at Mar. 31, 2019 | (1,282,000) | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 18,001,261 | 19,399,000 | |||||
Beginning balance at Dec. 31, 2019 | $ 149,989 | $ 194 | 144,485 | 19,538 | (2,767) | $ (11,461) | |
Beginning balance, treasury stock (in shares) at Dec. 31, 2019 | (1,397,438) | (1,397,000) | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net loss | $ (6,214) | (6,214) | |||||
Other comprehensive income (loss), net of tax | (2,480) | [1] | (2,480) | ||||
Stock-based compensation | 805 | 805 | |||||
Issuance of common stock under employee stock purchase plan (in shares) | 20,000 | ||||||
Issuance of common stock under employee stock purchase plan | 156 | 156 | |||||
Acquisition of treasury stock (in shares) | (36,000) | ||||||
Acquisition of treasury stock | (390) | $ (390) | |||||
Exercise of stock options and issuance of restricted stock awards, net of forfeitures | $ 11 | 11 | |||||
Ending balance (in shares) at Mar. 31, 2020 | 17,986,427 | 19,419,000 | |||||
Ending balance at Mar. 31, 2020 | $ 141,877 | $ 194 | $ 145,457 | $ 13,324 | $ (5,247) | $ (11,851) | |
Ending balance, treasury stock (in shares) at Mar. 31, 2020 | (1,432,694) | (1,433,000) | |||||
[1] | Tax impact was nominal for all periods. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (6,214) | $ (6,254) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Provision for doubtful accounts | 238 | (65) |
Depreciation and amortization | 2,650 | 3,527 |
Deferred income taxes | 0 | 71 |
Loss on disposals of fixed assets | 54 | 56 |
Compensation expense related to stock-based awards and employee stock purchase plan | 805 | 874 |
Unrealized currency translation (gain) loss | (1,065) | 1,082 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 3,577 | 944 |
Inventories | (2,094) | (3,117) |
Prepaid expenses, other current assets and current contract assets | (243) | 952 |
Other non-current assets and non-current contract assets | (47) | 1,236 |
Accounts payable | (1,174) | 2,627 |
Contract liabilities and long-term contract liabilities | 317 | (1,254) |
Accrued compensation, product warranty and other | 246 | (1,738) |
Other long-term liabilities | 2 | (15) |
Net cash used in operating activities | (2,948) | (1,074) |
Cash flows from investing activities: | ||
Capital expenditures | (3,277) | (3,027) |
Cash paid for acquisition of intangible asset | (22) | (25) |
Purchases of marketable securities | (79) | 0 |
Maturities and sales of marketable securities | 7,500 | 0 |
Net cash provided by (used in) investing activities | 4,122 | (3,052) |
Cash flows from financing activities: | ||
Repayments of long-term debt | 0 | (31) |
Proceeds from stock options exercised and employee stock purchase plan | 156 | 314 |
Repurchase of common stock | (390) | 0 |
Payment of finance lease | (156) | (152) |
Net cash (used in) provided by financing activities | (390) | 131 |
Effect of exchange rate changes on cash and cash equivalents | (607) | 204 |
Net increase (decrease) in cash and cash equivalents | 177 | (3,791) |
Cash and cash equivalents at beginning of period | 18,365 | 18,050 |
Cash and cash equivalents at end of period | 18,542 | 14,259 |
Supplemental disclosure of non-cash investing activities: | ||
Changes in accrued other and accounts payable related to property and equipment additions | $ 423 | $ 161 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business KVH Industries, Inc. (together with its subsidiaries, the Company or KVH) designs, develops, manufactures and markets mobile connectivity products and services for the marine and land markets, and inertial navigation products for both the commercial and defense markets. KVH's reporting segments are as follows: • the mobile connectivity segment and • the inertial navigation segment KVH’s mobile connectivity products enable customers to receive voice and Internet services, and live digital television via satellite services in marine vessels, recreational vehicles, buses and automobiles. KVH sells and leases its mobile connectivity products through an extensive international network of dealers and distributors. KVH also sells and leases products directly to end users. KVH’s mobile connectivity service sales represent primarily sales earned from satellite voice and Internet airtime services. KVH provides, for monthly fixed and usage fees, satellite connectivity services, including broadband Internet, data and VoIP services, to its TracPhone V-series customers. AgilePlans, a mini-VSAT Broadband service offering, is a monthly subscription model providing global connectivity to commercial maritime customers, including hardware, installation, broadband Internet, Voice over Internet Protocol (VoIP), entertainment and training content and global support for a monthly fee with no minimum commitment. KVH offers AgilePlans customers a variety of airtime data plans with varying data speeds and fixed data usage levels with overage charges per megabyte, which is similar to the plans that the Company offers to its other customers. The Company recognizes the monthly subscription fee as service revenue over the service delivery period. The Company retains ownership of the hardware that it provides to AgilePlans customers, who must return the hardware to KVH if they decide to terminate the service. Because KVH does not sell the hardware under AgilePlans, the Company does not recognize any product revenue when the hardware is deployed to an AgilePlans customer. KVH records the cost of the hardware used by AgilePlans customers as revenue-generating assets and depreciates the cost over an estimated useful life of five years. Since the Company is retaining ownership of the hardware, it does not accrue any warranty costs for AgilePlans hardware; however, any maintenance costs on the hardware are expensed in the period these costs are incurred. Mobile connectivity service sales also include the distribution of commercially licensed entertainment, including news, sports, music, and movies to commercial and leisure customers in the maritime, hotel, and retail markets through KVH Media Group. KVH also earns monthly usage fees from third-party satellite connectivity services, including voice, data and Internet services, provided to its Inmarsat and Iridium customers who choose to activate their subscriptions with KVH. Mobile connectivity service sales also include engineering services provided under development contracts, sales from product repairs, and extended warranty sales. On May 13, 2019, the Company and its wholly owned subsidiary, KVH Media Group Limited (KMG), entered into a Share Purchase Agreement (the Purchase Agreement) with Pelican Holdco Limited, an affiliate of Oakley Capital IV Master SCSp, a UK company (together, Oakley), pursuant to which KMG sold all of the issued share capital of Super Dragon Limited and Videotel Marine Asia Limited (together referred to as Videotel) to Oakley for $89,387 in cash, on a cash-free, debt-free basis, subject to a working capital adjustment. Videotel comprised the Company’s maritime training business, which offered video, animation, eLearning computer-based training and interactive distance learning services to the maritime industry. The sale was completed immediately upon execution of definitive agreements. The Company received payment of the initial purchase price pursuant to a loan agreement (the Bridge Loan) on June 21, 2019. The Bridge Loan was secured by a charge (a type of foreign security interest) over the shares of Super Dragon Limited and Videotel Marine Asia Limited and was further backed by an equity commitment letter from Oakley Capital IV Master SCSp. The Bridge Loan’s interest rate was 5% per year during the period from closing until and including the 15th business day after the closing and increased to 12% per year during the period after the 15th business day until the maturity date. In December 2019, the Company finalized the working capital adjustment, which reduced the proceeds from the sale of Videotel to $88,447. The Company does not have any continuing involvement in these operations other than to provide short-term transition services, which are being recorded in other income in continuing operations. The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20. Please see Note 20 for the discontinued operations disclosures. KVH's inertial navigation products offer precision fiber optic gyro (FOG)-based systems that enable platform and optical stabilization, navigation, pointing and guidance. KVH’s inertial navigation products also include tactical navigation systems that provide uninterrupted access to navigation and pointing information in a variety of military vehicles, including tactical trucks and light armored vehicles. KVH’s inertial navigation products are sold directly to U.S. and foreign governments and government contractors, as well as through an international network of authorized independent sales representatives. In addition, KVH's inertial navigation technology is used in numerous commercial products, such as navigation and positioning systems for various applications including precision mapping, dynamic surveying, autonomous vehicles, train location control and track geometry measurement systems, industrial robotics and optical stabilization. KVH’s inertial navigation service sales include product repairs, engineering services provided under development contracts and extended warranty sales. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements of KVH Industries, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America. The Company has evaluated all subsequent events through the date of this filing. All significant intercompany accounts and transactions have been eliminated in consolidation. The 2019 consolidated interim financial statements reflect the sale of Videotel as discontinued operations. See Notes 1 and 20 for further information on the sale of Videotel. The consolidated interim financial statements have not been audited by the Company’s independent registered public accounting firm and include all adjustments (consisting of only normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial condition, results of operations, and cash flows for the periods presented. These consolidated interim financial statements do not include all disclosures associated with annual financial statements and accordingly should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed on February 28, 2020 with the Securities and Exchange Commission. The results for the three months ended March 31, 2020 are not necessarily indicative of operating results for the remainder of the year. Significant Estimates and Assumptions and Other Significant Non-Recurring Transactions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. As described in the Company’s annual report on Form 10-K, the most significant estimates and assumptions by management affect the Company’s revenue recognition, valuation of accounts receivable, valuation of inventory, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets and goodwill, estimated fair values of long-lived assets, including goodwill, amortization methods and periods, certain accrued expenses and other related charges, stock-based compensation, contingent liabilities, forfeitures and key valuation assumptions for its share-based awards, estimated fulfillment costs for warranty obligations, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance, and the valuation of right-of-use assets and lease liabilities. The Company has reviewed these estimates and determined that these remain the most significant estimates for the three months ended March 31, 2020. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. During the second quarter of 2019, the Company sold Videotel. Please see Notes 1 and 20 for further discussion. During the third quarter of 2019, the Company identified an out-of-period immaterial error related to the implementation and application of ASC 606 with respect to the recognition of revenue associated with sales-type leases, which impacted our March 31, 2019 consolidated interim financial statements. Please see Note 16 for further discussion. |
Accounting Standards Issued and
Accounting Standards Issued and Not Yet Adopted | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Accounting Standards Issued and Not Yet Adopted | Accounting Standards Issued and Not Yet Adopted ASC Update No. 2016-13, ASC Update No. 2018-19, ASC Update No. 2019-04, ASC Update No. 2019-05, ASC Update No. 2019-10, ASC Update No. 2019-11 and ASC Update No. 2020-02. In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. The purpose of Update No. 2016-13 is to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. In November 2018, the FASB issued ASC Update No. 2018-19, Codification Improvements: Financial Instruments – Credit Losses (Topic 326) . This update introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. The amendment also clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In May 2019, the FASB issued ASC Update No. 2019-04, Codification Improvements: Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Financial Instruments (Topic 825). This update introduced clarifications of the Board’s intent with respect to accrued interest, the transfer between classifications or categories for loans and debt securities, recoveries, reinsurance recoverables, projects of interest rate environments for variable-rate financial instruments, costs to sell when foreclosure is probable, consideration of expected prepayments when determining the effective interest rate, vintage disclosures, and extension and renewal options. In May 2019, the FASB issued ASC Update No. 2019-05, Financial Instruments – Credit Losses ( Topic 326 ): Targeted Transition Relief . The amendments in the update ease the transition for entities adopting ASC Update 2016-13 and increase the comparability of financial statement information. With the exception of held-to-maturity debt securities, the amendments allow entities to irrevocably elect to apply the fair value option to financial instruments that were previously recorded at amortized cost basis within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost . In November 2019, the FASB issued ASC Update No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The amendments in this update change some effective dates for certain new accounting standards for certain types of entities. The update amends ASC 326 and ASC 350's effective date for all SEC filers other than smaller reporting companies to be the fiscal years beginning after December 15, 2019, and interim periods therein. The effective date for all other entities, including smaller reporting companies, will be the fiscal years beginning after December 15, 2022, and interim periods therein. The update does not change the effective date of ASC 815 and ASC 842 for public business entities (PBEs), but amends the effective date for all other entities to be the fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. In November 2019, the FASB issued ASC Update No. 2019-11, Codification Improvements: Financial Instruments – Credit Losses ( Topic 326 ) . The update is effective for entities that have adopted ASU 2016-13, and the amendments in ASU 2019-11 are effective for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted in any interim period after issuance of this update as long as an entity has adopted the amendments in Update 2016-13. The purpose of Update No. 2019-11 is to clarify the scope of the recovery guidance to purchased financial assets with credit deterioration. In February 2020, the FASB issued ASC Update No. 2020-02, Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842) . The purpose of Update No. 2020-02 is to amend SEC paragraphs in the ASC that describe SEC guidance or SEC staff views that the Financial Accounting Standards Board (FASB) includes as a convenience to Codification users. As a current smaller reporting entity, the effective date will be the fiscal years beginning after December 15, 2022. The adoption of Update Nos. 2016-13, 2018-19, 2019-04, 2019-05, 2019-10, 2019-11 and 2020-02 are not expected to have a material impact on the Company's financial position or results of operations. ASC Update No. 2019-12 In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740) . The update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period, for public business entities for periods for which financial statements have not yet been issued. The purpose of Update No. 2019-12 is to remove certain exceptions for recognizing deferred taxes for investments and simplify the accounting for income taxes in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. It amends the requirements relating to the accounting for "hybrid" tax regimes. Update No. 2019-12 is not expected to have a material impact on the Company's financial position or results of operations. |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable Securities Marketable securities as of March 31, 2020 and December 31, 2019 consisted of the following: March 31, 2020 Amortized Gross Gross Fair Money market mutual funds $ 22,487 $ — $ — $ 22,487 Total marketable securities designated as available-for-sale $ 22,487 $ — $ — $ 22,487 December 31, 2019 Amortized Gross Gross Fair Money market mutual funds $ 29,907 $ — $ — $ 29,907 Total marketable securities designated as available-for-sale $ 29,907 $ — $ — $ 29,907 Interest income from marketable securities was $113 and less than $1 during the three months ended March 31, 2020 and 2019, respectively. |
Stockholder's Equity
Stockholder's Equity | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stockholder's Equity | Stockholder's Equity (a) Stock Equity and Incentive Plan The Company recognizes stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation . Stock-based compensation expense, excluding compensation charges related to our employee stock purchase plan, or the ESPP, was $789 and $860 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $2,724 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.41 years. As of March 31, 2020, there was $2,869 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.29 years. Stock Options During the three months ended March 31, 2020, no stock options were exercised for common stock, and no shares of common stock were delivered to the Company as payment for the exercise price or related minimum tax withholding obligations for the exercise of such options. During the three months ended March 31, 2020, no stock options were granted and 95 stock options expired, were canceled or were forfeited. The Company estimates the fair value of each option grant on the date of grant using the Black-Scholes option-pricing model. As of March 31, 2020, there were 1,529 options outstanding with a weighted average exercise price of $9.68 per share and 370 options exercisable with a weighted average exercise price of $9.60 per share. Restricted Stock During the three months ended March 31, 2020, no shares of restricted stock were granted and no shares of restricted stock were forfeited. Additionally, during the three months ended March 31, 2020, 102 shares of restricted stock vested, none of which were surrendered to the Company to satisfy minimum tax withholding obligations for the vesting of such shares. As of March 31, 2020, there were 397 shares of restricted stock outstanding that were subject to service-based vesting conditions. As of March 31, 2020, the Company had no unvested outstanding options and no shares of restricted stock that were subject to performance-based or market-based vesting conditions. (b) Employee Stock Purchase Plan The Company's Amended and Restated 1996 Employee Stock Purchase Plan (ESPP) affords eligible employees the right to purchase common stock, via payroll deductions, through various offering periods at a purchase price equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. During the three months ended March 31, 2020 and 2019, 20 and 23 shares were issued under the ESPP plan, respectively. The Company recorded compensation charges of $16 and $14 for the three months ended March 31, 2020 and 2019, respectively, related to the ESPP. (c) Stock-Based Compensation Expense The following table presents stock-based compensation expense, including under the ESPP, in the Company's consolidated statements of operations for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Cost of product sales $ 40 $ 41 Cost of service sales — — Research and development 153 172 Sales, marketing and support 154 182 General and administrative 458 479 $ 805 $ 874 (d) Accumulated Other Comprehensive Loss (AOCI) Comprehensive income (loss) includes net income (loss), unrealized gains and losses from foreign currency translation, unrealized gains and losses from available for sale marketable securities and changes in fair value related to interest rate swap derivative instruments, net of tax attributes. The components of the Company’s comprehensive income (loss) and the effect on earnings for the periods presented are detailed in the accompanying consolidated statements of comprehensive income (loss). Foreign Currency Translation Total Accumulated Other Comprehensive Loss Balance, December 31, 2019 $ (2,767) $ (2,767) Other comprehensive loss (2,480) (2,480) Net other comprehensive loss (2,480) (2,480) Balance, March 31, 2020 $ (5,247) $ (5,247) Foreign Currency Translation Interest Rate Swaps Total Accumulated Other Comprehensive Loss Balance, December 31, 2018 $ (14,720) $ (11) $ (14,731) Other comprehensive income before reclassifications 1,080 — 1,080 Amounts reclassified from AOCI — 8 8 Net other comprehensive income 1,080 8 1,088 Balance, March 31, 2019 $ (13,640) $ (3) $ (13,643) |
Net loss per Common Share
Net loss per Common Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss per Common Share | Net Loss per Common Share Basic net loss per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted net loss per share incorporates the dilutive effect of common stock equivalent options, warrants and other convertible securities, if any, as determined with the treasury stock accounting method. For the three months ended March 31, 2020 and 2019, since there was a net loss from continuing operations, the Company excluded 1,341 and 1,042, respectively, in outstanding stock options and non-vested restricted shares from its diluted loss per share calculation, as inclusion of these securities would have reduced the net loss per share. A reconciliation of the basic and diluted weighted average common shares outstanding is as follows: Three Months Ended March 31, 2020 2019 Weighted average common shares outstanding—basic 17,529 17,302 Dilutive common shares issuable in connection with stock plans — — Weighted average common shares outstanding—diluted 17,529 17,302 |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories, net are stated at the lower of cost and net realizable value using the first-in first-out costing method. Inventories as of March 31, 2020 and December 31, 2019 include the costs of material, labor, and factory overhead. Components of inventories consist of the following: March 31, December 31, Raw materials $ 14,203 $ 12,755 Work in process 2,793 3,117 Finished goods 8,559 7,593 $ 25,555 $ 23,465 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net, as of March 31, 2020 and December 31, 2019 consist of the following: March 31, December 31, Land $ 3,828 $ 3,828 Building and improvements 24,185 24,172 Leasehold improvements 499 501 Machinery and equipment 18,381 18,022 Revenue-generating assets 49,810 47,010 Office and computer equipment 14,259 14,054 Motor vehicles 31 31 110,993 107,618 Less accumulated depreciation (56,237) (54,034) $ 54,756 $ 53,584 Depreciation expense was $2,402 and $2,093 for the three months ended March 31, 2020 and 2019, respectively. |
Product Warranty
Product Warranty | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Product Warranty | Product Warranty The Company’s products carry standard limited warranties that range from one The following table summarizes product warranty activity during 2020 and 2019: Three Months Ended March 31, 2020 2019 Beginning balance $ 2,194 $ 1,916 Charges to expense 470 453 Costs incurred (452) (348) Ending balance $ 2,212 $ 2,021 |
Debt
Debt | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | Debt Term Note and Line of Credit Effective October 30, 2018, the Company entered into an amended and restated three On May 13, 2019, the Company entered into a consent with Bank of America, N.A., as Administrative Agent, authorizing the Purchase Agreement and Bridge Loan, as discussed in Note 1. On June 27, 2019, the Company used the proceeds of the sale of Videotel to repay in full the then-outstanding balance of $21,375 under the 2018 Term Loan and to repay $13,000 of the then-outstanding balance under the 2018 Revolver. Under the terms of the consent, the 2018 Revolver will remain at $20,000 through the term of the Credit Agreement. On October 30, 2021, the entire principal balance of any outstanding loans under the 2018 Revolver will be due and payable, together with all accrued and unpaid interest, fees and any other amounts due and payable under the 2018 Credit Agreement. As of March 31, 2020, no amounts were outstanding under the 2018 Revolver. Borrowings of up to $20,000 under the 2018 Revolver are subject to the satisfaction of various conditions precedent at the time of each borrowing, including the continued accuracy of the Company’s representations and warranties and the absence of any default under the 2018 Credit Agreement. As of March 31, 2020, the Company is not able to draw on these funds due to covenant restrictions. The 2018 Credit Agreement contains two financial covenants, a maximum Consolidated Leverage Ratio and a minimum Consolidated Fixed Charge Coverage Ratio, each as defined in the 2018 Credit Agreement. The Consolidated Leverage Ratio may not be greater than 2.50:1.00 on December 31, 2019 and declines to 2.00:1.00 on December 31, 2020. The Consolidated Fixed Charge Coverage Ratio may not be less than 1.25:1.00. The 2018 Credit Agreement imposes certain other affirmative and negative covenants, including without limitation covenants with respect to the payment of taxes and other obligations, compliance with laws, performance of material contracts, creation of liens, incurrence of indebtedness, investments, dispositions, fundamental changes, restricted payments, changes in the nature of the Company’s business, transactions with affiliates, corporate and accounting changes, and sale and leaseback arrangements. Mortgage Loan The Company previously had a mortgage loan (Mortgage Loan) related to its headquarters facility in Middletown, Rhode Island. On April 1, 2019, on the Mortgage Loan’s original termination date, the Company repaid in full the outstanding balance of $2,551. As discussed in Note 17 to the consolidated interim financial statements, in April 2010 the Company entered into two interest rate swap agreements that were intended to hedge its mortgage interest obligations over the term of the Mortgage Loan by fixing the interest rates specified in the Mortgage Loan to 5.91% for half of the principal amount outstanding as of April 1, 2010 and 6.07% for the remaining half. Both interest rate swap agreements were also settled upon repayment of the Mortgage Loan. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Reporting The financial results of each segment are based on revenues from external customers, cost of revenue and operating expenses that are directly attributable to the segment and an allocation of costs from shared functions. These shared functions include, but are not limited to, facilities, human resources, information technology, and engineering. Allocations are made based on management’s judgment of the most relevant factors, such as head count, number of customer sites, or other operational data that contribute to the shared costs. Certain corporate-level costs have not been allocated as they are not directly attributable to either segment. These costs primarily consist of broad corporate functions, including executive, legal, finance, and costs associated with corporate actions. Segment-level asset information has not been provided as such information is not reviewed by the chief operating decision-maker for purposes of assessing segment performance and allocating resources. There are no inter-segment sales or transactions. As discussed in Note 1, the Company’s Videotel business, which had previously been included in the mobile connectivity segment, has been classified as discontinued operations and therefore excluded from the segment information below. The Company's performance is impacted by the levels of activity in the marine and land mobile markets and defense sectors, among others. Performance in any particular period could be impacted by the timing of sales to certain large customers. The mobile connectivity segment primarily manufactures and distributes a comprehensive family of mobile satellite antenna products and services that provide access to television, the Internet and voice services while on the move. Product sales within the mobile connectivity segment accounted for 18% and 20% of the Company's consolidated net sales for the three months ended March 31, 2020 and 2019, respectively. Sales of mini-VSAT Broadband airtime service accounted for 53% and 50% of the Company's consolidated net sales for the three months ended March 31, 2020 and 2019, respectively. The inertial navigation segment manufactures and distributes a portfolio of digital compass and fiber optic gyro (FOG)-based systems that address the rigorous requirements of military and commercial customers and provide reliable, easy-to-use and continuously available navigation and pointing data. The principal product categories in this segment include the FOG-based inertial measurement units (IMUs) for precision guidance, FOGs for tactical navigation as well as pointing and stabilization systems, and digital compasses that provide accurate heading information for demanding applications, security, automation and access control equipment and systems. Sales of FOG-based guidance and navigation systems within the inertial navigation segment accounted for 14% and 13% of the Company's consolidated net sales for the three months ended March 31, 2020 and 2019, respectively. No other single product class accounts for 10% or more of the Company's consolidated net sales. The Company operates in a number of major geographic areas across the globe. The Company generates international net sales, based upon customer location, primarily from customers located in Canada, Europe, Africa, Asia/Pacific, the Middle East, and India. International revenues represented 58% of the Company's consolidated net sales for each of the three months ended March 31, 2020 and 2019. Sales to Singapore represented 11% of the Company's consolidated net sales for the three months ended March 31, 2020. No other individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended March 31, 2020. No individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended March 31, 2019. As of March 31, 2020 and December 31, 2019, the long-lived tangible assets related to the Company’s international subsidiaries were less than 10% of the Company’s long-lived tangible assets and were deemed not material. Net sales and operating (loss) income for the Company's reporting segments and the Company's loss before income tax expense for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Net sales: Mobile connectivity $ 28,896 $ 28,914 Inertial navigation 7,672 7,462 Consolidated net sales $ 36,568 $ 36,376 Operating (loss) income: Mobile connectivity $ (2,299) $ (1,444) Inertial navigation (821) 443 Subtotal (3,120) (1,001) Unallocated, net (4,528) (5,233) Loss from operations (7,648) (6,234) Net interest and other income (expense) 1,811 (307) Loss from continuing operations before income tax expense (benefit) $ (5,837) $ (6,541) Depreciation expense and amortization expense for the Company's reporting segments for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Depreciation expense: Mobile connectivity $ 1,958 $ 1,670 Inertial navigation 293 286 Unallocated 151 137 Total consolidated depreciation expense $ 2,402 $ 2,093 Amortization expense: Mobile connectivity $ 248 $ 248 Inertial navigation — — Unallocated — — Total consolidated amortization expense $ 248 $ 248 |
Legal Matters
Legal Matters | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Matters | Legal Matters From time to time, the Company is involved in litigation incidental to the conduct of its business. In the ordinary course of business, the Company is a party to inquiries, legal proceedings and claims including, from time to time, disagreements with vendors and customers. The Company is not a party to any lawsuit or proceeding that, in management's opinion, is likely to materially harm the Company's business, results of operations, financial condition or cash flows. |
Share Buyback Program
Share Buyback Program | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Repurchase Agreements [Abstract] | |
Share Buyback Program | Share Buyback Program On November 26, 2008, the Company’s Board of Directors authorized a program to repurchase up to 1,000 shares of the Company’s common stock. The program was superseded on October 4, 2019. On October 4, 2019, the Company's Board of Directors authorized a new share repurchase program pursuant to which the Company may purchase up to 1,000 shares of the Company’s common stock. The repurchase program is expected to be funded using the Company’s existing cash, cash equivalents, marketable securities and future cash flows. Under the repurchase program, the Company, at management’s discretion, may repurchase shares on the open market from time to time, in privately negotiated transactions or block transactions, or through an accelerated repurchase agreement. The timing of such repurchases depends on availability of shares, price, market conditions, alternative uses of capital, and applicable regulatory requirements. The program may be modified, suspended or terminated at any time without prior notice. The repurchase program has a duration of one year. Under the Company's 2018 Credit Agreement, the Company may not repurchase more than $5,000 of shares before October 31, 2021 without appropriate consent. During the three months ended March 31, 2020, the Company repurchased 36 shares of common stock in open market transactions at a cost of approximately $390. The total amount the Company repurchased on the open market since the inception of the October 4, 2019 repurchase program was 151 shares of common stock for an approximate cost of $1,690. Except as noted above, there were no other repurchase programs outstanding. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: 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. 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 has no Level 2 assets or liabilities. 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. Assets and liabilities measured at fair value are based on the valuation techniques identified in the table below. The following tables present financial assets and liabilities at March 31, 2020 and December 31, 2019 for which the Company measures fair value on a recurring basis, by level, within the fair value hierarchy: March 31, 2020 Total Level 1 Level 2 Level 3 Valuation Assets Money market mutual funds $ 22,487 $ 22,487 $ — $ — (a) December 31, 2019 Total Level 1 Level 2 Level 3 Valuation Assets Money market mutual funds $ 29,907 $ 29,907 $ — $ — (a) (a) Market approach—prices and other relevant information generated by market transactions involving identical or comparable assets. Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses. The carrying amount of the Company's operating and financing lease liabilities approximates fair value based on currently available quoted rates of similarly structured borrowings. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company's non-financial assets, such as goodwill, intangible assets, and other long-lived assets resulting from business combinations, are measured at fair value using income approach valuation methodologies at the date of acquisition and subsequently re-measured if an impairment exists. There were no impairments of the Company’s non-financial assets noted as of March 31, 2020. The Company does not have any liabilities that are recorded at fair value on a non-recurring basis. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The following table sets forth the changes in the carrying amount of goodwill for the three months ended March 31, 2020: Amounts Balance at December 31, 2019 $ 15,408 Foreign currency translation adjustment (678) Balance at March 31, 2020 $ 14,730 Intangible Assets The changes in the carrying amount of intangible assets during the three months ended March 31, 2020 are as follows: Amounts Balance at December 31, 2019 $ 4,943 Amortization expense (248) Intangible assets acquired in asset acquisition 22 Foreign currency translation adjustment (285) Balance at March 31, 2020 $ 4,432 Intangible assets arose from an acquisition made prior to 2013 and the acquisition of KVH Media Group (acquired as Headland Media Limited) in May 2013. Intangibles arising from the acquisition made prior to 2013 were amortized on a straight-line basis over an estimated useful life of 7 years. Intangibles arising from the acquisition of KVH Media Group are being amortized on a straight-line basis over the estimated useful life of: (i) 10 years for acquired subscriber relationships and (ii) 15 years for distribution rights. The intangibles arising from the KVH Media Group acquisition were recorded in pounds sterling and fluctuations in exchange rates could cause these amounts to increase or decrease from time to time. In January 2017, the Company completed the acquisition of certain subscriber relationships from a third party. This acquisition did not meet the definition of a business under ASC 2017-01, Business Combinations (Topic 805)-Clarifying the Definition of a Business , which the Company adopted on October 1, 2016. The Company ascribed $100 of the initial purchase price to the acquired subscriber relationships definite-lived intangible assets with an initial estimated useful life of 10 years. Under the asset purchase agreement, the purchase price includes a component of contingent consideration under which the Company is required to pay a percentage of recurring revenues received from the acquired subscriber relationships through 2026 up to a maximum annual payment of $114. As of March 31, 2020, the carrying value of the intangible assets acquired in the asset acquisition was $293. As the acquisition did not represent a business combination, the contingent consideration arrangement is recognized only when the contingency is resolved and the consideration is paid or becomes payable. The amounts payable under the contingent consideration arrangement, if any, will be included in the measurement of the cost of the acquired subscriber relationships. During the three months ended March 31, 2020, $22 additional consideration was earned under the contingent consideration arrangement. Acquired intangible assets are subject to amortization. The following table summarizes acquired intangible assets at March 31, 2020 and December 31, 2019, respectively: Gross Carrying Amount Accumulated Amortization Net Carrying Value March 31, 2020 Subscriber relationships $ 7,739 $ 5,411 $ 2,328 Distribution rights 4,171 2,067 2,104 Internally developed software 446 446 — Proprietary content 153 153 — Intellectual property 2,284 2,284 — $ 14,793 $ 10,361 $ 4,432 December 31, 2019 Subscriber relationships $ 7,860 $ 5,231 $ 2,629 Distribution rights 4,313 1,999 2,314 Internally developed software 446 446 — Proprietary content 153 153 — Intellectual property 2,284 2,284 — $ 15,056 $ 10,113 $ 4,943 Amortization expense related to intangible assets was $248 for the three months ended March 31, 2020 and 2019 and was categorized as general and administrative expense. As of March 31, 2020, the total weighted average remaining useful lives of the definite-lived intangible assets was 4.3 years and the weighted average remaining useful lives by the definite-lived intangible asset category are as follows: Intangible Asset Weighted Average Remaining Useful Life in Years Subscriber relationships 3.2 Distribution rights 8.1 Estimated future amortization expense remaining at March 31, 2020 for intangible assets acquired was as follows: Years ending December 31, Amortization Expense Remainder of 2020 720 2021 959 2022 959 2023 534 2024 300 Thereafter 960 Total future amortization expense $ 4,432 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers (ASC 606) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customer (ASC 606) | Revenue from Contracts with Customers (ASC 606) The adoption of ASC 606 represents a change in accounting principle that was intended to more closely align revenue recognition with the delivery of the Company's products and services and provide enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised products and services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these products and services. During the three months ended September 30, 2019, the Company identified an out-of-period immaterial error related to the implementation and application of ASC 606 with respect to the recognition of revenue associated with sales-type leases. During the implementation of ASC 606 effective January 1, 2018, the Company treated the leased products and services for these contracts as single performance obligations as if they were not distinct in the context of the contract; however, the leased product portion should have continued to have been accounted for under ASC 840 (now ASC 842). In general, the error was to defer recognition of product revenue and associated expenses for sales-type leases rather than to recognize those items upon shipment. The following table reflects these financial statement line items for the three months ended March 31, 2019, as reported and as adjusted (in thousands): Three Months Ended March 31, 2019 As reported As adjusted Product sales $ 12,874 $ 13,215 Cost of product sales 7,853 8,284 Net loss (6,179) (6,254) The Company has evaluated this error and does not believe the amounts are material for the three months ended March 31, 2019. Disaggregation of Revenue The following table summarizes net sales from contracts with customers for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Mobile connectivity product, transferred at point in time $ 5,986 $ 6,922 Mobile connectivity product, transferred over time 606 481 Mobile connectivity service 22,304 21,511 Inertial navigation product 6,502 5,812 Inertial navigation service 1,170 1,650 Total net sales $ 36,568 $ 36,376 Revenue recognized du ring the three months ended March 31, 2020 and 2019 from amounts included in contract liabilities at the beginning of the period was $606 and $473, respectively. For mobile connectivity product sales, the delivery of the Company’s performance obligations, and associated revenue, are generally transferred to the customer at a point in time , with the exception of certain mini-VSAT contracts which are transferred to customers over time. For mobile connectivity service sales, the delivery of the Company’s performance obligations and associated revenue are transferred to the customer over time. For inertial navigation product sales, the delivery of the Company’s performance obligations, and associated revenue, are generally transferred to the customer at a point in time. For inertial navigation service sales, the Company's performance obligations, and associated revenue, are generally transferred to customers over time. Business and Credit Concentrations Concentrations of risk with respect to trade accounts receivable are generally limited due to the large number of customers and their dispersion across several geographic areas. Although the Company does not foresee that credit risk associated with these receivables will deviate from historical experience, repayment is dependent upon the financial stability of those individual customers. The Company establishes allowances for potential bad debts and evaluates, on a monthly basis, the adequacy of those reserves based upon historical experience and its expectations for future collectability concerns. The Company performs ongoing credit evaluations of the financial condition of its customers and generally does not require collateral. No single customer accounted for 10% or more of consolidated net sales for the first quarter of 2020 or 2019 or accounts receivable at March 31, 2020 or December 31, 2019. Certain components from third parties used in the Company’s products are procured from single sources of supply. The failure of a supplier, including a subcontractor, to deliver on schedule could delay or interrupt the Company’s delivery of products and thereby materially adversely affect the Company’s revenues and operating results. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2020 | |
General Discussion of Derivative Instruments and Hedging Activities [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging ActivitiesEffective April 1, 2010, in order to reduce the volatility of cash outflows that arise from changes in interest rates, the Company entered into two interest rate swap agreements. These interest rate swap agreements were intended to hedge the Company’s mortgage loan related to its headquarters facility in Middletown, Rhode Island by fixing the interest rates specified in the mortgage loan to 5.9% for half of the principal amount outstanding and 6.1% for the remaining half of the principal amount outstanding as of April 1, 2010 until the mortgage loan expired on April 1, 2019. The Company does not use derivatives for speculative purposes. For a derivative that is designated as a cash flow hedge, changes in the fair value of the derivative are recognized in accumulated other comprehensive (loss) income (AOCI) to the extent the derivative is effective at offsetting the changes in the cash flows being hedged until the hedged item affects earnings. As the Company made the required principal and interest payments under the mortgage loan and the related interest rate swaps were settled, the Company reclassified the amounts recorded in AOCI related to the changes in the fair value of the settled interest rate swaps to earnings. To the extent there was any hedge ineffectiveness, changes in fair value relating to the ineffective portion were immediately recognized in earnings in other income (expense) in the consolidated statements of operations. The interest rate swap was recorded within accrued other liabilities on the balance sheet. The critical terms of the interest rate swaps were designed to mirror the terms of the Company’s mortgage loans. The Company designated these derivatives as cash flow hedges of the variability of the LIBOR-based interest payments on principal over a nine |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s effective tax rate for the three months ended March 31, 2020 was (6.5)% compared with 0.7% for the corresponding period in the prior year. The effective income tax rate is based on estimated income for the year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable periods, including retroactive changes in tax legislation, settlements of tax audits or assessments, and the resolution or identification of tax position uncertainties. For the three months ended March 31, 2020 and 2019, the effective tax rates were lower than the statutory tax rate primarily due to the Company maintaining a valuation allowance reserve on its US deferred tax assets and to the composition of income from foreign jurisdictions taxed at lower rates. As of March 31, 2020 and December 31, 2019, the Company had reserves for uncertain tax positions of $532 and $521, respectively. There were no material changes during the three months ended March 31, 2020 to the Company’s reserve for uncertain tax positions. The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of March 31, 2020 may decrease $32 in the next twelve months as a result of a lapse of statutes of limitations and settlements with taxing authorities. The Company’s tax jurisdictions include the United States, the United Kingdom, Denmark, Cyprus, Norway, Brazil, Singapore, Belgium, the Netherlands, Hong Kong, India and Japan. In general, the statute of limitations with respect to the Company's United States federal income taxes has expired for years prior to 2016, and the relevant state and foreign statutes vary. However, preceding years remain open to examination by United States federal and state and foreign taxing authorities to the extent of future utilization of net operating losses and research and development tax credits generated in each preceding year. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company has operating leases for office facilities, equipment, and satellite service capacity and related equipment. Lease expense for the three months ended March 31, 2020 and 2019 was $1,262 and $1,265, respectively. Short-term operating lease costs for the three months ended March 31, 2020 and 2019 was $61 and $48, respectively. Sublease income for the three months ended March 31, 2020 and 2019 was $34. The future minimum lease payments under our operating leases as of March 31, 2020 are: Remainder of 2020 $ 1,804 2021 1,392 2022 1,298 2023 463 2024 and thereafter 589 Total minimum lease payments $ 5,546 Less amount representing interest $ (490) Present value of net minimum operating lease payments $ 5,056 Less current installments of obligation under current-operating lease liabilities $ 1,634 Obligations under long term - operating lease liabilities, excluding current installments $ 3,422 Weighted-average remaining lease term - operating leases (years) 3.24 Weighted-average discount rate - operating leases 5.50 % During the first quarter of 2018, the Company entered into a five The property and equipment held under this financing lease are amortized on a straight-line basis over the seven . Amortization of assets held under financing leases is included within depreciation expense. Depreciation expense for these capital assets was $110 for both three months ended March 31, 2020 and 2019. The future minimum lease payments under this financing lease as of March 31, 2020 are: Remainder of 2020 $ 468 2021 624 2022 624 2023 45 Total minimum lease payments $ 1,761 Less amount representing interest $ (16) Present value of net minimum financing lease payments $ 1,745 Less current installments of obligation under accrued other $ 615 Obligations under other long-term liabilities, excluding current installments $ 1,130 Weighted-average remaining lease term - finance leases (years) 2.92 Weighted-average discount rate - finance leases 1.53 % Lessor The Company enters into leases with certain customers primarily of the TracPhone mini-VSAT systems. These leases are classified as sales-type leases as title of the equipment transfers to the customer at the end of the lease term. The Company records the leases at a price typically equivalent to normal selling price and in excess of the cost or carrying amount. Upon delivery, the Company records the net present value of all payments under these leases as revenue, and the related costs of the product are charged to cost of sales. Interest income is recognized throughout the lease term (typically three The current portion of the net investment in these leases was $4,238 as of March 31, 2020 and the non-current portion of the net investment in these leases was $6,597 as of March 31, 2020. The current portion of the net investment in the leases is included in accounts receivable, net of allowance for doubtful accounts on the accompanying consolidated balance sheets and the non-current portion of the net investment in these leases is included in other non-current assets on the accompanying consolidated balance sheets. Interest income from sales-type leases was $197 and $168 during the three months ended March 31, 2020 and 2019, respectively. The future undiscounted cash flows from these leases as of March 31, 2020 are: Remainder of 2020 $ 3,657 2021 3,407 2022 2,452 2023 1,776 2024 1,007 2025 53 Total undiscounted cash flows $ 12,352 Present value of lease payments $ 10,835 Difference between undiscounted cash flows and discounted cash flows $ 1,517 |
Leases | Leases The Company has operating leases for office facilities, equipment, and satellite service capacity and related equipment. Lease expense for the three months ended March 31, 2020 and 2019 was $1,262 and $1,265, respectively. Short-term operating lease costs for the three months ended March 31, 2020 and 2019 was $61 and $48, respectively. Sublease income for the three months ended March 31, 2020 and 2019 was $34. The future minimum lease payments under our operating leases as of March 31, 2020 are: Remainder of 2020 $ 1,804 2021 1,392 2022 1,298 2023 463 2024 and thereafter 589 Total minimum lease payments $ 5,546 Less amount representing interest $ (490) Present value of net minimum operating lease payments $ 5,056 Less current installments of obligation under current-operating lease liabilities $ 1,634 Obligations under long term - operating lease liabilities, excluding current installments $ 3,422 Weighted-average remaining lease term - operating leases (years) 3.24 Weighted-average discount rate - operating leases 5.50 % During the first quarter of 2018, the Company entered into a five The property and equipment held under this financing lease are amortized on a straight-line basis over the seven . Amortization of assets held under financing leases is included within depreciation expense. Depreciation expense for these capital assets was $110 for both three months ended March 31, 2020 and 2019. The future minimum lease payments under this financing lease as of March 31, 2020 are: Remainder of 2020 $ 468 2021 624 2022 624 2023 45 Total minimum lease payments $ 1,761 Less amount representing interest $ (16) Present value of net minimum financing lease payments $ 1,745 Less current installments of obligation under accrued other $ 615 Obligations under other long-term liabilities, excluding current installments $ 1,130 Weighted-average remaining lease term - finance leases (years) 2.92 Weighted-average discount rate - finance leases 1.53 % Lessor The Company enters into leases with certain customers primarily of the TracPhone mini-VSAT systems. These leases are classified as sales-type leases as title of the equipment transfers to the customer at the end of the lease term. The Company records the leases at a price typically equivalent to normal selling price and in excess of the cost or carrying amount. Upon delivery, the Company records the net present value of all payments under these leases as revenue, and the related costs of the product are charged to cost of sales. Interest income is recognized throughout the lease term (typically three The current portion of the net investment in these leases was $4,238 as of March 31, 2020 and the non-current portion of the net investment in these leases was $6,597 as of March 31, 2020. The current portion of the net investment in the leases is included in accounts receivable, net of allowance for doubtful accounts on the accompanying consolidated balance sheets and the non-current portion of the net investment in these leases is included in other non-current assets on the accompanying consolidated balance sheets. Interest income from sales-type leases was $197 and $168 during the three months ended March 31, 2020 and 2019, respectively. The future undiscounted cash flows from these leases as of March 31, 2020 are: Remainder of 2020 $ 3,657 2021 3,407 2022 2,452 2023 1,776 2024 1,007 2025 53 Total undiscounted cash flows $ 12,352 Present value of lease payments $ 10,835 Difference between undiscounted cash flows and discounted cash flows $ 1,517 |
Leases | Leases The Company has operating leases for office facilities, equipment, and satellite service capacity and related equipment. Lease expense for the three months ended March 31, 2020 and 2019 was $1,262 and $1,265, respectively. Short-term operating lease costs for the three months ended March 31, 2020 and 2019 was $61 and $48, respectively. Sublease income for the three months ended March 31, 2020 and 2019 was $34. The future minimum lease payments under our operating leases as of March 31, 2020 are: Remainder of 2020 $ 1,804 2021 1,392 2022 1,298 2023 463 2024 and thereafter 589 Total minimum lease payments $ 5,546 Less amount representing interest $ (490) Present value of net minimum operating lease payments $ 5,056 Less current installments of obligation under current-operating lease liabilities $ 1,634 Obligations under long term - operating lease liabilities, excluding current installments $ 3,422 Weighted-average remaining lease term - operating leases (years) 3.24 Weighted-average discount rate - operating leases 5.50 % During the first quarter of 2018, the Company entered into a five The property and equipment held under this financing lease are amortized on a straight-line basis over the seven . Amortization of assets held under financing leases is included within depreciation expense. Depreciation expense for these capital assets was $110 for both three months ended March 31, 2020 and 2019. The future minimum lease payments under this financing lease as of March 31, 2020 are: Remainder of 2020 $ 468 2021 624 2022 624 2023 45 Total minimum lease payments $ 1,761 Less amount representing interest $ (16) Present value of net minimum financing lease payments $ 1,745 Less current installments of obligation under accrued other $ 615 Obligations under other long-term liabilities, excluding current installments $ 1,130 Weighted-average remaining lease term - finance leases (years) 2.92 Weighted-average discount rate - finance leases 1.53 % Lessor The Company enters into leases with certain customers primarily of the TracPhone mini-VSAT systems. These leases are classified as sales-type leases as title of the equipment transfers to the customer at the end of the lease term. The Company records the leases at a price typically equivalent to normal selling price and in excess of the cost or carrying amount. Upon delivery, the Company records the net present value of all payments under these leases as revenue, and the related costs of the product are charged to cost of sales. Interest income is recognized throughout the lease term (typically three The current portion of the net investment in these leases was $4,238 as of March 31, 2020 and the non-current portion of the net investment in these leases was $6,597 as of March 31, 2020. The current portion of the net investment in the leases is included in accounts receivable, net of allowance for doubtful accounts on the accompanying consolidated balance sheets and the non-current portion of the net investment in these leases is included in other non-current assets on the accompanying consolidated balance sheets. Interest income from sales-type leases was $197 and $168 during the three months ended March 31, 2020 and 2019, respectively. The future undiscounted cash flows from these leases as of March 31, 2020 are: Remainder of 2020 $ 3,657 2021 3,407 2022 2,452 2023 1,776 2024 1,007 2025 53 Total undiscounted cash flows $ 12,352 Present value of lease payments $ 10,835 Difference between undiscounted cash flows and discounted cash flows $ 1,517 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations During the second quarter of 2019, the Company sold its Videotel business. The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20. Please see Note 1 for further discussion. The following table presents a reconciliation of the major financial line items constituting the results for discontinued operations to the net income from discontinued operations, net of tax, presented separately in the Company's consolidated statements of operations and comprehensive income (loss): Three Months Ended March 31, 2020 2019 Sales: Service sales $ — $ 3,937 Costs, expenses and other expense, net: Costs of service sales — 1,324 Sales, marketing and support — 1,169 General and administrative — 1,125 Other expense, net — (9) Income from discontinued operations before tax expense — 310 Gain on sale of discontinued operations before tax expense — — Total income from discontinued operations before tax expense $ — $ 310 Income tax expense on discontinued operations — 67 Income from discontinued operations, net of taxes $ — $ 243 Net income from discontinued operations per common share Basic and diluted $ — $ 0.01 Weighted average number of common shares outstanding: Basic and diluted 17,529 17,302 The following table presents supplemental cash flow information of the discontinued operations: Three Months Ended March 31, 2020 2019 Cash provided by operating activities—discontinued operations $ — $ 3,057 Cash used in investing activities—discontinued operations $ — $ (535) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsAs a result of the COVID-19 pandemic, which has disrupted businesses around the world and led to the start of a global economic recession, we have developed and are implementing a plan to reduce costs and conserve cash balances in the event that the COVID-19 health crisis continues unabated through the remainder of this year or beyond. These plans include, among other things, a reduction in global salaries and benefits at most levels, implementation of a shortened work week in many areas, elimination of most non-essential or discretionary spending, and the indefinite delay of all capital outlays (except in connection with our AgilePlans program and Photonic Integrated Chip initiative). We have also developed contingent action plans that we may implement based on the duration of the health crisis and its continued negative global economic impact which includes furloughing some amount of our workforce or increasing the salary reduction at some or all levels of the Company. We are continuing to monitor global developments and are prepared to implement these and other actions should we consider it necessary. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements of KVH Industries, Inc. and its wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America. The Company has evaluated all subsequent events through the date of this filing. All significant intercompany accounts and transactions have been eliminated in consolidation. The 2019 consolidated interim financial statements reflect the sale of Videotel as discontinued operations. See Notes 1 and 20 for further information on the sale of Videotel. |
Significant Estimates and Assumptions and Other Significant Non-Recurring Transactions | Significant Estimates and Assumptions and Other Significant Non-Recurring Transactions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of sales and expenses during the reporting periods. As described in the Company’s annual report on Form 10-K, the most significant estimates and assumptions by management affect the Company’s revenue recognition, valuation of accounts receivable, valuation of inventory, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets and goodwill, estimated fair values of long-lived assets, including goodwill, amortization methods and periods, certain accrued expenses and other related charges, stock-based compensation, contingent liabilities, forfeitures and key valuation assumptions for its share-based awards, estimated fulfillment costs for warranty obligations, tax reserves and recoverability of the Company’s net deferred tax assets and related valuation allowance, and the valuation of right-of-use assets and lease liabilities. The Company has reviewed these estimates and determined that these remain the most significant estimates for the three months ended March 31, 2020. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. |
Accounting Standards Issued and Not Yet Adopted | Accounting Standards Issued and Not Yet Adopted ASC Update No. 2016-13, ASC Update No. 2018-19, ASC Update No. 2019-04, ASC Update No. 2019-05, ASC Update No. 2019-10, ASC Update No. 2019-11 and ASC Update No. 2020-02. In June 2016, the FASB issued ASC Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The update is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for fiscal years beginning after December 15, 2018. The purpose of Update No. 2016-13 is to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates. In November 2018, the FASB issued ASC Update No. 2018-19, Codification Improvements: Financial Instruments – Credit Losses (Topic 326) . This update introduced an expected credit loss methodology for the impairment of financial assets measured at amortized cost basis. The amendment also clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. In May 2019, the FASB issued ASC Update No. 2019-04, Codification Improvements: Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Financial Instruments (Topic 825). This update introduced clarifications of the Board’s intent with respect to accrued interest, the transfer between classifications or categories for loans and debt securities, recoveries, reinsurance recoverables, projects of interest rate environments for variable-rate financial instruments, costs to sell when foreclosure is probable, consideration of expected prepayments when determining the effective interest rate, vintage disclosures, and extension and renewal options. In May 2019, the FASB issued ASC Update No. 2019-05, Financial Instruments – Credit Losses ( Topic 326 ): Targeted Transition Relief . The amendments in the update ease the transition for entities adopting ASC Update 2016-13 and increase the comparability of financial statement information. With the exception of held-to-maturity debt securities, the amendments allow entities to irrevocably elect to apply the fair value option to financial instruments that were previously recorded at amortized cost basis within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost . In November 2019, the FASB issued ASC Update No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The amendments in this update change some effective dates for certain new accounting standards for certain types of entities. The update amends ASC 326 and ASC 350's effective date for all SEC filers other than smaller reporting companies to be the fiscal years beginning after December 15, 2019, and interim periods therein. The effective date for all other entities, including smaller reporting companies, will be the fiscal years beginning after December 15, 2022, and interim periods therein. The update does not change the effective date of ASC 815 and ASC 842 for public business entities (PBEs), but amends the effective date for all other entities to be the fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. In November 2019, the FASB issued ASC Update No. 2019-11, Codification Improvements: Financial Instruments – Credit Losses ( Topic 326 ) . The update is effective for entities that have adopted ASU 2016-13, and the amendments in ASU 2019-11 are effective for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted in any interim period after issuance of this update as long as an entity has adopted the amendments in Update 2016-13. The purpose of Update No. 2019-11 is to clarify the scope of the recovery guidance to purchased financial assets with credit deterioration. In February 2020, the FASB issued ASC Update No. 2020-02, Financial Instruments – Credit Losses (Topic 326) and Leases (Topic 842) . The purpose of Update No. 2020-02 is to amend SEC paragraphs in the ASC that describe SEC guidance or SEC staff views that the Financial Accounting Standards Board (FASB) includes as a convenience to Codification users. As a current smaller reporting entity, the effective date will be the fiscal years beginning after December 15, 2022. The adoption of Update Nos. 2016-13, 2018-19, 2019-04, 2019-05, 2019-10, 2019-11 and 2020-02 are not expected to have a material impact on the Company's financial position or results of operations. ASC Update No. 2019-12 In December 2019, the FASB issued ASC Update No. 2019-12, Income Taxes (Topic 740) . The update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in any interim period, for public business entities for periods for which financial statements have not yet been issued. The purpose of Update No. 2019-12 is to remove certain exceptions for recognizing deferred taxes for investments and simplify the accounting for income taxes in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. It amends the requirements relating to the accounting for "hybrid" tax regimes. Update No. 2019-12 is not expected to have a material impact on the Company's financial position or results of operations. |
Share-based Compensation, Option and Incentive Plans | The Company recognizes stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation . Stock-based compensation expense, excluding compensation charges related to our employee stock purchase plan, or the ESPP, was $789 and $860 for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $2,724 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.41 years. As of March 31, 2020, there was $2,869 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.29 years. |
Fair Value Measurement | ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820), provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: 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. 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 has no Level 2 assets or liabilities. 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. |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | Marketable securities as of March 31, 2020 and December 31, 2019 consisted of the following: March 31, 2020 Amortized Gross Gross Fair Money market mutual funds $ 22,487 $ — $ — $ 22,487 Total marketable securities designated as available-for-sale $ 22,487 $ — $ — $ 22,487 December 31, 2019 Amortized Gross Gross Fair Money market mutual funds $ 29,907 $ — $ — $ 29,907 Total marketable securities designated as available-for-sale $ 29,907 $ — $ — $ 29,907 |
Stockholder's Equity (Tables)
Stockholder's Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Schedule of Share-based Compensation, Activity | The following table presents stock-based compensation expense, including under the ESPP, in the Company's consolidated statements of operations for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Cost of product sales $ 40 $ 41 Cost of service sales — — Research and development 153 172 Sales, marketing and support 154 182 General and administrative 458 479 $ 805 $ 874 |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of the Company’s comprehensive income (loss) and the effect on earnings for the periods presented are detailed in the accompanying consolidated statements of comprehensive income (loss). Foreign Currency Translation Total Accumulated Other Comprehensive Loss Balance, December 31, 2019 $ (2,767) $ (2,767) Other comprehensive loss (2,480) (2,480) Net other comprehensive loss (2,480) (2,480) Balance, March 31, 2020 $ (5,247) $ (5,247) Foreign Currency Translation Interest Rate Swaps Total Accumulated Other Comprehensive Loss Balance, December 31, 2018 $ (14,720) $ (11) $ (14,731) Other comprehensive income before reclassifications 1,080 — 1,080 Amounts reclassified from AOCI — 8 8 Net other comprehensive income 1,080 8 1,088 Balance, March 31, 2019 $ (13,640) $ (3) $ (13,643) |
Net Loss per Common Share (Tabl
Net Loss per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of basic and diluted weighted average common shares outstanding | A reconciliation of the basic and diluted weighted average common shares outstanding is as follows: Three Months Ended March 31, 2020 2019 Weighted average common shares outstanding—basic 17,529 17,302 Dilutive common shares issuable in connection with stock plans — — Weighted average common shares outstanding—diluted 17,529 17,302 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Components of inventories | Components of inventories consist of the following: March 31, December 31, Raw materials $ 14,203 $ 12,755 Work in process 2,793 3,117 Finished goods 8,559 7,593 $ 25,555 $ 23,465 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Property and equipment, net, as of March 31, 2020 and December 31, 2019 consist of the following: March 31, December 31, Land $ 3,828 $ 3,828 Building and improvements 24,185 24,172 Leasehold improvements 499 501 Machinery and equipment 18,381 18,022 Revenue-generating assets 49,810 47,010 Office and computer equipment 14,259 14,054 Motor vehicles 31 31 110,993 107,618 Less accumulated depreciation (56,237) (54,034) $ 54,756 $ 53,584 |
Product Warranty (Tables)
Product Warranty (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Product Warranties Disclosures [Abstract] | |
Summary of product warranty activity | The following table summarizes product warranty activity during 2020 and 2019: Three Months Ended March 31, 2020 2019 Beginning balance $ 2,194 $ 1,916 Charges to expense 470 453 Costs incurred (452) (348) Ending balance $ 2,212 $ 2,021 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of operations by geographic segment | Net sales and operating (loss) income for the Company's reporting segments and the Company's loss before income tax expense for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Net sales: Mobile connectivity $ 28,896 $ 28,914 Inertial navigation 7,672 7,462 Consolidated net sales $ 36,568 $ 36,376 Operating (loss) income: Mobile connectivity $ (2,299) $ (1,444) Inertial navigation (821) 443 Subtotal (3,120) (1,001) Unallocated, net (4,528) (5,233) Loss from operations (7,648) (6,234) Net interest and other income (expense) 1,811 (307) Loss from continuing operations before income tax expense (benefit) $ (5,837) $ (6,541) Depreciation expense and amortization expense for the Company's reporting segments for the three months ended March 31, 2020 and 2019 were as follows: Three Months Ended 2020 2019 Depreciation expense: Mobile connectivity $ 1,958 $ 1,670 Inertial navigation 293 286 Unallocated 151 137 Total consolidated depreciation expense $ 2,402 $ 2,093 Amortization expense: Mobile connectivity $ 248 $ 248 Inertial navigation — — Unallocated — — Total consolidated amortization expense $ 248 $ 248 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of assets and liabilities measured at fair value on recurring basis | The following tables present financial assets and liabilities at March 31, 2020 and December 31, 2019 for which the Company measures fair value on a recurring basis, by level, within the fair value hierarchy: March 31, 2020 Total Level 1 Level 2 Level 3 Valuation Assets Money market mutual funds $ 22,487 $ 22,487 $ — $ — (a) December 31, 2019 Total Level 1 Level 2 Level 3 Valuation Assets Money market mutual funds $ 29,907 $ 29,907 $ — $ — (a) (a) Market approach—prices and other relevant information generated by market transactions involving identical or comparable assets. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table sets forth the changes in the carrying amount of goodwill for the three months ended March 31, 2020: Amounts Balance at December 31, 2019 $ 15,408 Foreign currency translation adjustment (678) Balance at March 31, 2020 $ 14,730 |
Schedule of finite-lived intangible assets | The changes in the carrying amount of intangible assets during the three months ended March 31, 2020 are as follows: Amounts Balance at December 31, 2019 $ 4,943 Amortization expense (248) Intangible assets acquired in asset acquisition 22 Foreign currency translation adjustment (285) Balance at March 31, 2020 $ 4,432 Acquired intangible assets are subject to amortization. The following table summarizes acquired intangible assets at March 31, 2020 and December 31, 2019, respectively: Gross Carrying Amount Accumulated Amortization Net Carrying Value March 31, 2020 Subscriber relationships $ 7,739 $ 5,411 $ 2,328 Distribution rights 4,171 2,067 2,104 Internally developed software 446 446 — Proprietary content 153 153 — Intellectual property 2,284 2,284 — $ 14,793 $ 10,361 $ 4,432 December 31, 2019 Subscriber relationships $ 7,860 $ 5,231 $ 2,629 Distribution rights 4,313 1,999 2,314 Internally developed software 446 446 — Proprietary content 153 153 — Intellectual property 2,284 2,284 — $ 15,056 $ 10,113 $ 4,943 Amortization expense related to intangible assets was $248 for the three months ended March 31, 2020 and 2019 and was categorized as general and administrative expense. As of March 31, 2020, the total weighted average remaining useful lives of the definite-lived intangible assets was 4.3 years and the weighted average remaining useful lives by the definite-lived intangible asset category are as follows: Intangible Asset Weighted Average Remaining Useful Life in Years Subscriber relationships 3.2 Distribution rights 8.1 |
Schedule of future expected amortization expense | Estimated future amortization expense remaining at March 31, 2020 for intangible assets acquired was as follows: Years ending December 31, Amortization Expense Remainder of 2020 720 2021 959 2022 959 2023 534 2024 300 Thereafter 960 Total future amortization expense $ 4,432 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (ASC 606) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The following table reflects these financial statement line items for the three months ended March 31, 2019, as reported and as adjusted (in thousands): Three Months Ended March 31, 2019 As reported As adjusted Product sales $ 12,874 $ 13,215 Cost of product sales 7,853 8,284 Net loss (6,179) (6,254) |
Disaggregation of Revenue | The following table summarizes net sales from contracts with customers for the three months ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Mobile connectivity product, transferred at point in time $ 5,986 $ 6,922 Mobile connectivity product, transferred over time 606 481 Mobile connectivity service 22,304 21,511 Inertial navigation product 6,502 5,812 Inertial navigation service 1,170 1,650 Total net sales $ 36,568 $ 36,376 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Operating Lease, Liability, Maturity | The future minimum lease payments under our operating leases as of March 31, 2020 are: Remainder of 2020 $ 1,804 2021 1,392 2022 1,298 2023 463 2024 and thereafter 589 Total minimum lease payments $ 5,546 Less amount representing interest $ (490) Present value of net minimum operating lease payments $ 5,056 Less current installments of obligation under current-operating lease liabilities $ 1,634 Obligations under long term - operating lease liabilities, excluding current installments $ 3,422 Weighted-average remaining lease term - operating leases (years) 3.24 Weighted-average discount rate - operating leases 5.50 % |
Finance Lease, Liability, Maturity | The future minimum lease payments under this financing lease as of March 31, 2020 are: Remainder of 2020 $ 468 2021 624 2022 624 2023 45 Total minimum lease payments $ 1,761 Less amount representing interest $ (16) Present value of net minimum financing lease payments $ 1,745 Less current installments of obligation under accrued other $ 615 Obligations under other long-term liabilities, excluding current installments $ 1,130 Weighted-average remaining lease term - finance leases (years) 2.92 Weighted-average discount rate - finance leases 1.53 % |
Sales-type Lease, Lease Income | The future undiscounted cash flows from these leases as of March 31, 2020 are: Remainder of 2020 $ 3,657 2021 3,407 2022 2,452 2023 1,776 2024 1,007 2025 53 Total undiscounted cash flows $ 12,352 Present value of lease payments $ 10,835 Difference between undiscounted cash flows and discounted cash flows $ 1,517 |
Discontinued Operations and Dis
Discontinued Operations and Disposal Groups (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | The following table presents a reconciliation of the major financial line items constituting the results for discontinued operations to the net income from discontinued operations, net of tax, presented separately in the Company's consolidated statements of operations and comprehensive income (loss): Three Months Ended March 31, 2020 2019 Sales: Service sales $ — $ 3,937 Costs, expenses and other expense, net: Costs of service sales — 1,324 Sales, marketing and support — 1,169 General and administrative — 1,125 Other expense, net — (9) Income from discontinued operations before tax expense — 310 Gain on sale of discontinued operations before tax expense — — Total income from discontinued operations before tax expense $ — $ 310 Income tax expense on discontinued operations — 67 Income from discontinued operations, net of taxes $ — $ 243 Net income from discontinued operations per common share Basic and diluted $ — $ 0.01 Weighted average number of common shares outstanding: Basic and diluted 17,529 17,302 The following table presents supplemental cash flow information of the discontinued operations: Three Months Ended March 31, 2020 2019 Cash provided by operating activities—discontinued operations $ — $ 3,057 Cash used in investing activities—discontinued operations $ — $ (535) |
Description of Business (Detail
Description of Business (Details) - USD ($) $ in Thousands | May 13, 2019 | Dec. 31, 2019 | Mar. 31, 2020 | Jun. 04, 2019 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Useful life | 5 years | |||
Bridge Loan | Oakley | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Interest rate | 5.00% | 12.00% | ||
Videotel | Discontinued Operations, Disposed of by Sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Cash proceeds | $ 89,387 | $ 88,447 |
Marketable Securities - Summary
Marketable Securities - Summary of Marketable Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 22,487 | $ 29,907 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 22,487 | 29,907 |
Money Market Funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 22,487 | 29,907 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 22,487 | $ 29,907 |
Marketable Securities - Narrati
Marketable Securities - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Investments, Debt and Equity Securities [Abstract] | ||
Interest income | $ 113 | $ 1 |
Stockholder's Equity (Details)
Stockholder's Equity (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 805,000 | $ 874,000 |
Stock options exercised (in shares) | 0 | |
Stock options granted (in shares) | 0 | |
Stock options expired (in shares) | 95,000 | |
Stock options outstanding (in shares) | 1,529,000 | |
Stock options outstanding, weighted average exercise price (in USD per share) | $ 9.68 | |
Stock options exercisable (in shares) | 370,000 | |
Exercisable stock options, weighted average exercise price (in US per share) | $ 9.60 | |
Restricted stock surrendered (in shares) | 0 | |
Stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 789,000 | 860,000 |
Unrecognized compensation expense | $ 2,724,000 | |
Weighted-average period of recognition | 2 years 4 months 28 days | |
Restricted stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 2,869,000 | |
Weighted-average period of recognition | 2 years 3 months 14 days | |
Restricted stock options (in shares) | 0 | |
Restricted stock award, forfeitures | $ 0 | |
Restricted stock vested (in shares) | 102,000 | |
Restricted stock outstanding, nonvested (in shares) | 397,000 | |
Employee Stock | ESPP Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 16,000 | $ 14,000 |
Restricted stock options (in shares) | 20,000 | 23,000 |
Percentage of Company's common stock share price | 85.00% |
Stockholder's Equity - Schedule
Stockholder's Equity - Schedule of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 805 | $ 874 |
Cost of product sales | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 40 | 41 |
Cost of service sales | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 0 | 0 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 153 | 172 |
Sales, marketing and support | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | 154 | 182 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated share-based compensation expense | $ 458 | $ 479 |
Stockholder's Equity - Schedu_2
Stockholder's Equity - Schedule of AOCI (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
AOCI Attributable to Parent [Roll Forward] | |||
Beginning balance | $ 149,989 | $ 99,515 | |
Other comprehensive (loss) income, net of tax | [1] | (2,480) | 1,088 |
Ending balance | 141,877 | 97,203 | |
Foreign Currency Translation | |||
AOCI Attributable to Parent [Roll Forward] | |||
Beginning balance | (2,767) | (14,720) | |
Other comprehensive income (loss) before reclassifications | (2,480) | 1,080 | |
Amounts reclassified from AOCI | 0 | ||
Other comprehensive (loss) income, net of tax | (2,480) | 1,080 | |
Ending balance | (5,247) | (13,640) | |
Interest Rate Swaps | |||
AOCI Attributable to Parent [Roll Forward] | |||
Beginning balance | (11) | ||
Other comprehensive income (loss) before reclassifications | 0 | ||
Amounts reclassified from AOCI | 8 | ||
Other comprehensive (loss) income, net of tax | 8 | ||
Ending balance | (3) | ||
Total Accumulated Other Comprehensive Loss | |||
AOCI Attributable to Parent [Roll Forward] | |||
Beginning balance | (2,767) | (14,731) | |
Other comprehensive income (loss) before reclassifications | (2,480) | 1,080 | |
Amounts reclassified from AOCI | 8 | ||
Other comprehensive (loss) income, net of tax | (2,480) | 1,088 | |
Ending balance | $ (5,247) | $ (13,643) | |
[1] | Tax impact was nominal for all periods. |
Net Loss per Common Share (Deta
Net Loss per Common Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from earnings per share calculation (in shares) | 1,341 | 1,042 |
Net Loss per Common Share - Rec
Net Loss per Common Share - Reconciliation of Basic and Diluted Weighted Average Common Shares Outstanding (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Weighted average common shares outstanding—basic (in shares) | 17,529 | 17,302 |
Dilutive common shares issuable in connection with stock plans (in shares) | 0 | 0 |
Weighted average common shares outstanding - diluted (in shares) | 17,529 | 17,302 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Components of inventories | ||
Raw materials | $ 14,203 | $ 12,755 |
Work in process | 2,793 | 3,117 |
Finished goods | 8,559 | 7,593 |
Inventories, net | $ 25,555 | $ 23,465 |
Property and Equipment - Summar
Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 110,993 | $ 107,618 |
Less accumulated depreciation | (56,237) | (54,034) |
Total | 54,756 | 53,584 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 3,828 | 3,828 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 24,185 | 24,172 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 499 | 501 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 18,381 | 18,022 |
Revenue-generating assets | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 49,810 | 47,010 |
Office and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 14,259 | 14,054 |
Motor vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 31 | $ 31 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 2,402 | $ 2,093 |
Product Warranty - Summary of P
Product Warranty - Summary of Product Warranty Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Summary of product warranty activity | ||
Beginning balance | $ 2,194 | $ 1,916 |
Charges to expense | 470 | 453 |
Costs incurred | (452) | (348) |
Ending balance | $ 2,212 | $ 2,021 |
Product Warranty (Details)
Product Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Product Warranty (Textual) [Abstract] | ||
Accrued product warranty costs | $ 2,212 | $ 2,194 |
Minimum | ||
Product Warranty (Textual) [Abstract] | ||
Limited warranty period on product | 1 year | |
Maximum | ||
Product Warranty (Textual) [Abstract] | ||
Limited warranty period on product | 2 years |
Debt (Details)
Debt (Details) | Jun. 27, 2019USD ($) | Oct. 30, 2018USD ($)covenant | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | Apr. 01, 2019USD ($) | Apr. 01, 2010Contract |
Debt Instrument [Line Items] | |||||||
Repayments of long-term debt | $ 0 | $ 31,000 | |||||
Interest rate swap | |||||||
Debt Instrument [Line Items] | |||||||
Number of Interest rate swap agreements | Contract | 2 | ||||||
2018 Term Notes | |||||||
Debt Instrument [Line Items] | |||||||
Repayments of long-term debt | $ 21,375,000 | ||||||
Term note | Senior Credit Facility | Term note | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated fixed charge coverage ratio | 1.25 | ||||||
Term note | Senior Credit Facility | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, current borrowing capacity | 20,000,000 | $ 20,000,000 | $ 15,000,000 | ||||
Line of credit facility, amount outstanding | 0 | ||||||
Remaining balance available for borrowing | 20,000 | ||||||
Term note | Senior Credit Facility | 2018 Term Notes | |||||||
Debt Instrument [Line Items] | |||||||
Line of credit facility, current borrowing capacity | $ 42,500,000 | ||||||
Repayments of Term Loan | $ 13,000,000 | ||||||
Term note | Senior Credit Facility | Term Loan | |||||||
Debt Instrument [Line Items] | |||||||
Term of debt instrument | 3 years | ||||||
Line of credit facility, current borrowing capacity | $ 22,500,000 | ||||||
Mortgages | Mortgage Loan On Headquarters Facility | |||||||
Debt Instrument [Line Items] | |||||||
Balloon payment | $ 2,551,000 | ||||||
Debt Covenant Period, One | Term note | Senior Credit Facility | Term note | |||||||
Debt Instrument [Line Items] | |||||||
Number of financial covenants | covenant | 2 | ||||||
Debt Covenant Period, Two | Term note | Senior Credit Facility | Term note | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio | 2.50 | ||||||
Debt Covenant Period, Three | Term note | Senior Credit Facility | Term note | |||||||
Debt Instrument [Line Items] | |||||||
Consolidated leverage ratio | 2 | ||||||
Debt Instrument, Redemption, Period One | Mortgages | Mortgage Loan On Headquarters Facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 5.91% | ||||||
Debt Instrument, Redemption, Period Two | Mortgages | Mortgage Loan On Headquarters Facility | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate | 6.07% |
Segment Reporting (Details)
Segment Reporting (Details) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Mobile Connectivity | Product Concentration Risk | Revenue from Contract with Customer Benchmark | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 18.00% | 20.00% | |
Mobile Connectivity | Product Concentration Risk | Revenue from Contract with Customer Benchmark | VSAT Airtime Service Sales | |||
Segment Reporting Information [Line Items] | |||
Concentration risk | 53.00% | 50.00% | |
Intertial Navigation | FOG System Sales | |||
Segment Reporting Information [Line Items] | |||
Percent of consolidated net sales | 14.00% | 13.00% | |
Non-US | |||
Segment Reporting Information [Line Items] | |||
Percent of consolidated net sales | 58.00% | 58.00% | |
Percent of consolidated long-lived tangible assets (less than) | 10.00% | 10.00% | |
Singapore | |||
Segment Reporting Information [Line Items] | |||
Percent of consolidated net sales | 11.00% |
Segment Reporting - Net Sales a
Segment Reporting - Net Sales and Operating Earnings (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 36,568 | $ 36,376 |
Operating (loss) income | (7,648) | (6,234) |
Net interest and other income (expense) | 1,811 | (307) |
Loss from continuing operations before income tax expense (benefit) | (5,837) | (6,541) |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Operating (loss) income | (3,120) | (1,001) |
Operating Segments | Mobile Connectivity | ||
Segment Reporting Information [Line Items] | ||
Net sales | 28,896 | 28,914 |
Operating (loss) income | (2,299) | (1,444) |
Operating Segments | Intertial Navigation | ||
Segment Reporting Information [Line Items] | ||
Net sales | 7,672 | 7,462 |
Operating (loss) income | (821) | 443 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Operating (loss) income | $ (4,528) | $ (5,233) |
Segment Reporting - Deprecation
Segment Reporting - Deprecation and Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Depreciation | $ 2,402 | $ 2,093 |
Amortization expense | 248 | 248 |
Operating Segments | Mobile Connectivity | ||
Segment Reporting Information [Line Items] | ||
Depreciation | 1,958 | 1,670 |
Amortization expense | 248 | 248 |
Operating Segments | Intertial Navigation | ||
Segment Reporting Information [Line Items] | ||
Depreciation | 293 | 286 |
Amortization expense | 0 | 0 |
Segment Reconciling Items | ||
Segment Reporting Information [Line Items] | ||
Depreciation | 151 | 137 |
Amortization expense | $ 0 | $ 0 |
Share Buyback Program (Details)
Share Buyback Program (Details) - USD ($) | Oct. 04, 2019 | Mar. 31, 2020 | Nov. 26, 2008 |
Share Buyback Program (Textual) [Abstract] | |||
Common stock available for repurchase (in shares) | 1,000,000 | 1,000,000 | |
Share repurchase program, term | 1 year | ||
Stock repurchase program, authorized amount | $ 5,000,000 | ||
Stock repurchased (in shares) | 151,000 | 36,000 | |
Stock repurchased | $ 1,690,000 | $ 390,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Money Market Funds - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 22,487 | $ 29,907 |
Fair Value, Inputs, Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 22,487 | 29,907 |
Fair Value, Inputs, Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | 0 | 0 |
Fair Value, Inputs, Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value | $ 0 | $ 0 |
Goodwill and Intangibles Assets
Goodwill and Intangibles Assets - Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2019 | $ 15,408 |
Foreign currency translation adjustment | (678) |
Balance at March 31, 2020 | $ 14,730 |
Goodwill and Intangibles Asse_2
Goodwill and Intangibles Assets - Carrying Amount of Intangible Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |
Jan. 31, 2017 | Mar. 31, 2020 | Mar. 31, 2019 | |
Finite-lived Intangible Assets [Roll Forward] | |||
Beginning balance | $ 4,943 | ||
Amortization expense | (248) | $ (248) | |
Intangible assets acquired in asset acquisition | $ 100 | 22 | |
Foreign currency translation adjustment | (285) | ||
Ending balance | $ 4,432 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2017 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2026 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Assets acquired | $ 100,000 | $ 22,000 | |||
Intangible assets, gross (excluding goodwill) | 4,432,000 | $ 4,943,000 | |||
Additional consideration | 22,000 | ||||
Amortization expense | 248,000 | $ 248,000 | |||
Impairment | 0 | ||||
Goodwill | 14,730,000 | $ 15,408,000 | |||
KVH Media Group | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Goodwill | 10,329,000 | ||||
Other intangible assets | $ 4,432,000 | ||||
Intellectual Property | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life | 7 years | ||||
Subscriber relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Definite-lived intangible assets, weighted average remaining useful life | 3 years 2 months 12 days | ||||
Distribution Rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Definite-lived intangible assets, weighted average remaining useful life | 8 years 1 month 6 days | ||||
Finite-Lived Intangible Assets | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Definite-lived intangible assets, weighted average remaining useful life | 4 years 3 months 18 days | ||||
Headland Media Limited | Subscriber relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life | 10 years | ||||
Headland Media Limited | Distribution Rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life | 15 years | ||||
Q1 2017 Acquisition | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, gross (excluding goodwill) | $ 293,000 | ||||
Q1 2017 Acquisition | Subscriber relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Useful life | 10 years | ||||
Scenario, Forecast | Q1 2017 Acquisition | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Maximum annual payment | $ 114,000 |
Goodwill and Intangibles Asse_3
Goodwill and Intangibles Assets - Acquired Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 14,793 | $ 15,056 |
Intangible assets, accumulated amortization | 10,361 | 10,113 |
Finite-lived intangible assets, net | 4,432 | 4,943 |
Subscriber relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 7,739 | 7,860 |
Intangible assets, accumulated amortization | 5,411 | 5,231 |
Finite-lived intangible assets, net | 2,328 | 2,629 |
Distribution rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 4,171 | 4,313 |
Intangible assets, accumulated amortization | 2,067 | 1,999 |
Finite-lived intangible assets, net | 2,104 | 2,314 |
Internally developed software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 446 | 446 |
Intangible assets, accumulated amortization | 446 | 446 |
Finite-lived intangible assets, net | 0 | 0 |
Proprietary content | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 153 | 153 |
Intangible assets, accumulated amortization | 153 | 153 |
Finite-lived intangible assets, net | 0 | 0 |
Intellectual property | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 2,284 | 2,284 |
Intangible assets, accumulated amortization | 2,284 | 2,284 |
Finite-lived intangible assets, net | $ 0 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Asset Remaining Useful Life (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Subscriber relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average remaining useful life | 3 years 2 months 12 days |
Distribution rights | |
Finite-Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average remaining useful life | 8 years 1 month 6 days |
Goodwill and Intangibles Asse_4
Goodwill and Intangibles Assets - Future Amortization Expense (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2020 | $ 720 |
2021 | 959 |
2022 | 959 |
2023 | 534 |
2024 | 300 |
Thereafter | 960 |
Total future amortization expense | $ 4,432 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (ASC 606) - Schedule of Error Correction (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statements of Operations | ||
Product sales | $ 13,215 | |
Cost of goods and services sold | 8,284 | |
Net loss | $ (6,214) | (6,254) |
Previously Reported | ||
Statements of Operations | ||
Product sales | 12,874 | |
Cost of goods and services sold | 7,853 | |
Net loss | $ (6,179) |
Revenue from Contracts with C_4
Revenue from Contracts with Customers (ASC 606) - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | $ 36,568 | $ 36,376 |
Product | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 13,094 | 13,215 |
Product | Intertial Navigation | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 6,502 | 5,812 |
Service | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 23,474 | 23,161 |
Service | Mobile Connectivity | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 22,304 | 21,511 |
Service | Intertial Navigation | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 1,170 | 1,650 |
Transferred at Point in Time | Product | Mobile Connectivity | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | 5,986 | 6,922 |
Transferred over Time | Product | Mobile Connectivity | ||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||
Net sales | $ 606 | $ 481 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers (ASC 606) - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue recognized | $ 606 | $ 473 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Details Textual) - Interest rate swap - Contract | 3 Months Ended | |
Mar. 31, 2020 | Apr. 01, 2010 | |
Derivative Instruments and Hedging Activities (Textual) [Abstract] | ||
Number of Interest rate swap agreements | 2 | |
Mortgage loan | ||
Derivative Instruments and Hedging Activities (Textual) [Abstract] | ||
Term of contract | 9 years | |
First half of mortgage | ||
Derivative Instruments and Hedging Activities (Textual) [Abstract] | ||
Strike rate | 5.90% | |
Second half of mortgage | ||
Derivative Instruments and Hedging Activities (Textual) [Abstract] | ||
Strike rate | 6.10% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Effective income tax rate | (6.50%) | 0.70% | |
Liability for uncertain tax positions | $ 532 | $ 521 | |
Decrease in unrecognized tax benefits reasonably possible | $ 32 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018hub | |
Lessee, Lease, Description [Line Items] | |||
Lease expense | $ 1,262 | $ 1,265 | |
Short-term lease cost | 61 | 48 | |
Sublease income | $ 34 | 34 | |
Financing lease term | 5 years | ||
Number of satellite hubs leased | hub | 3 | ||
Useful life | 7 years | ||
Amortization expense | $ 110 | 110 | |
Net investment in lease, current | 4,238 | ||
Net investment in lease, noncurrent | 6,597 | ||
Sales-type lease, interest income | $ 197 | $ 168 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Sales-type lease, term | 3 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Sales-type lease, term | 5 years | ||
Revenue-generating assets | |||
Lessee, Lease, Description [Line Items] | |||
Revenue generating assets | $ 3,068 | ||
Accumulated depreciation | $ 955 |
Leases - Future Minimum Operati
Leases - Future Minimum Operating Lease Payments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Future minimum lease payments under operating leases | ||
Remainder of 2020 | $ 1,804 | |
2021 | 1,392 | |
2022 | 1,298 | |
2023 | 463 | |
2024 and thereafter | 589 | |
Total minimum lease payments | 5,546 | |
Less amount representing interest | (490) | |
Present value of net minimum operating lease payments | 5,056 | |
Less current installments of obligation under current-operating lease liabilities | 1,634 | $ 2,831 |
Obligations under long term - operating lease liabilities, excluding current installments | $ 3,422 | $ 3,482 |
Weighted-average remaining lease term - operating leases (years) | 3 years 2 months 26 days | |
Weighted-average discount rate - operating leases | 5.50% |
Leases - Future Minimum Finance
Leases - Future Minimum Finance Lease Payments (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Future minimum lease payments under financing leases | |
Remainder of 2020 | $ 468 |
2021 | 624 |
2022 | 624 |
2023 | 45 |
Total minimum lease payments | 1,761 |
Less amount representing interest | (16) |
Present value of net minimum financing lease payments | 1,745 |
Less current installments of obligation under accrued other | 615 |
Obligations under other long-term liabilities, excluding current installments | $ 1,130 |
Weighted-average remaining lease term - finance leases (years) | 2 years 11 months 1 day |
Weighted-average discount rate - finance leases | 1.53% |
Leases - Lessor Future Minimum
Leases - Lessor Future Minimum Payments Receivable (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Leases [Abstract] | |
Remainder of 2020 | $ 3,657 |
2021 | 3,407 |
2022 | 2,452 |
2023 | 1,776 |
2024 | 1,007 |
2025 | 53 |
Total undiscounted cash flows | 12,352 |
Present value of lease payments | 10,835 |
Difference between undiscounted cash flows and discounted cash flows | $ 1,517 |
Results for Discontinued Operat
Results for Discontinued Operations to the Net income (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Revenues [Abstract] | |||
Service sales | $ 0 | $ 3,937 | |
Costs, expenses and other expense, net: | |||
Costs of service sales | 0 | 1,324 | |
Sales, marketing and support | 0 | 1,169 | |
General and administrative | 0 | 1,125 | |
Other expense, net | 0 | (9) | |
Income from discontinued operations before tax expense | 0 | 310 | |
Gain on sale of discontinued operations before tax expense | 0 | 0 | |
Total income from discontinued operations before tax expense | 0 | 310 | |
Income tax expense on discontinued operations | 0 | 67 | |
Income from discontinued operations, net of taxes | $ 0 | $ 243 | |
Net income from discontinued operations per common share | |||
Basic and diluted (in USD per share) | [1] | $ 0 | $ 0.01 |
Weighted average number of common shares outstanding: | |||
Basic and diluted (in shares) | 17,529 | 17,302 | |
[1] | Earnings per share components for 2019 do not sum due to rounding. |
Supplemental Cash Flow for Disc
Supplemental Cash Flow for Discontinued Operations (Details) - Discontinued Operations, Disposed of by Sale - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Cash provided by operating activities—discontinued operations | $ 0 | $ 3,057 |
Cash used in investing activities—discontinued operations | $ 0 | $ (535) |
Uncategorized Items - kvhi-2020
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,680,000 |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,680,000 |