Segment Reporting

The Company's reportable segments are mobile connectivity and inertial navigation. 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.

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 18%, 20% and 23% of our consolidated net sales for 2018, 2017, and 2016, respectively. Sales of mini-VSAT Broadband airtime service accounted for approximately 41%, 41%, and 37% of our consolidated net sales for 2018, 2017, and 2016, respectively. Sales of content and training services within the mobile connectivity segment accounted for approximately 17%, 20% and 20% of our consolidated net sales for 2018, 2017, and 2016, 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 16%, 13%, and 10% of consolidated net sales for 2018, 2017, and 2016, 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 61%, 62%, and 63% of consolidated net sales for 2018, 2017, and 2016, respectively. No individual foreign country represented 10% or more of the Company's consolidated net sales for 2018, 2017 or 2016 except that sales to Canada represented 11% of net sales for 2016.

As of December 31, 2018 and 2017, 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 income (loss) for the Company's reporting segments and the Company's loss before income tax expense for the years ended December 31, 2018, 2017, and 2016 were as follows:



	For the year ended December 31,
	2018			2017			2016
Net sales:
Mobile connectivity	$	133,658		$	132,227		$	141,507
Inertial navigation	37,103			27,861			34,615
Consolidated net sales	$	170,761		$	160,088		$	176,122

Operating income (loss):
Mobile connectivity	$	4,163		$	7,334		$	10,041
Inertial navigation	4,917			556			5,272
Subtotal	9,080			7,890			15,313
Unallocated, net	(16,244		)	(16,654		)	(16,635		)
Loss from operations	(7,164		)	(8,764		)	(1,322		)
Net interest and other income (expense)	(503		)	(1,174		)	(648		)
Loss before income tax expense	$	(7,667	)	$	(9,938	)	$	(1,970	)

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,
	2018		2017		2016
Depreciation expense:
Mobile connectivity	$	7,224	$	5,720	$	6,084
Inertial navigation	1,048		928		1,063
Unallocated	538		77		461
Total consolidated depreciation expense	$	8,810	$	6,725	$	7,608

Amortization expense:
Mobile connectivity	$	4,047	$	4,312	$	4,956
Inertial navigation	—		—		—
Unallocated	—		—		—
Total consolidated amortization expense	$	4,047	$	4,312	$	4,956