Segment Reporting

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

During the fourth quarter of 2016, the Company had a change in its operating and reportable segments. This change was a result of the following:

• Changes in overall organizational structure, including appointments of a Chief Operating Officer and a new Chief Financial Officer

• Changes in how financial performance is measured and assessed based on current operating results and planned future operations driven by completion of the Company’s fiscal 2017 and long-term planning process

• Consideration regarding how incentive compensation for key executives will be measured for both 2016 and prospectively.

Therefore, in the fourth quarter of 2016, the Company concluded that it has two new operating segments, which are also reportable segments, and were organized based on products and services. The Company’s reportable segments are:

• Mobile connectivity, and

• Inertial navigation

The Company’s Chief Operating Decision Maker (CODM), whom the Company has identified as its Chief Executive Officer, primarily evaluates the business and assesses performance based on the revenue and operating income of the segments. The Company does not allocate interest, taxes, and certain corporate-level costs to its reportable segments, as discussed further below.

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 contributes to the shared costs. Certain corporate-level costs have not been allocated as they are not 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 CODM for purposes of assessing segment performance and allocating resources. There are no inter-segment sales or transactions.

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 approximately 23%, 23% and 25% of our consolidated net sales for 2016, 2015 and 2014, respectively. Sales of mini-VSAT Broadband airtime service accounted for approximately 37%, 35%, and 35% of our consolidated net sales for 2016, 2015, 2014, respectively. Sales of content and training sales within the mobile connectivity segment accounted for approximately 20%, 21% and 14% of our consolidated net sales for 2016, 2015 and 2014, 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 approximately 10%, 10%, and 12% of consolidated net sales for 2016, 2015, and 2014, respectively. Sales of tactical guidance and navigation systems within the inertial navigation segment accounted for approximately 8%, 8%, and 11% of consolidated net sales for 2016, 2015, and 2014, respectively.

No other single product class accounts for 10% or more of consolidated net sales.

The Company operates in a number of major geographic areas, including internationally. Revenues from international locations, primarily consisting of Canada, European countries, both inside and outside the European Union, as well as Africa, Asia/Pacific, the Middle East, and India. Revenues are based upon customer location and internationally represented 63%, 67%, and 58% of consolidated net sales for 2016, 2015 and 2014, respectively. Sales to Canada represented 11% and 10% of net sales for 2016 and 2015, respectively. No other individual foreign country represented 10% or more of the Company’s consolidated net sales for 2016 or 2015, respectively. No individual foreign country represented 10% or more of the Company's consolidated net sales for 2014.

As of December 31, 2016 and 2015, 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 earnings (loss) for the Company's reporting segments and the Company's loss (income) before benefit from income taxes for the years ended December 31, 2016, 2015, and 2014 were as follows:

	For the year ended December 31,
	2016			2015			2014
Net sales:
Mobile connectivity	$	141,507		$	147,809		$	129,819
Inertial navigation	34,615			36,825			42,772
Consolidated net sales	$	176,122		$	184,634		$	172,591
Operating earnings (loss):
Mobile connectivity	$	10,041		$	9,459		$	5,056
Inertial navigation	5,272			7,934			10,431
Subtotal	15,313			17,393			15,487
Unallocated, net	(16,635		)	(14,185		)	(13,565		)
Consolidated operating earnings	(1,322		)	3,208			1,922
Net interest and other expense	(648		)	(542		)	(597		)
(Loss) income before income tax expense	$	(1,970	)	$	2,666		$	1,325

Depreciation expense and amortization expense for the Company's segments are presented in the table that follows for the periods presented:

	For the year ended December 31,
	2016	2015	2014
Depreciation expense:
Mobile connectivity	6,084	5,843	4,827
Inertial navigation	1,063	961	935
Unallocated	461	389	365
Total consolidated depreciation expense	7,608	7,193	6,127
Amortization expense:
Mobile connectivity	4,956	5,526	3,859
Inertial navigation	—	—	—
Unallocated	—	—	—
Total consolidated amortization expense	4,956	5,526	3,859