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 21% and 19% of the Company's consolidated net sales for the three months ended September 30, 2019 and 2018, respectively, and 21% of the Company's consolidated net sales for both the nine months ended September 30, 2019 and 2018. Sales of mini-VSAT Broadband airtime service accounted for 51% and 46% of the Company's consolidated net sales for the three months ended September 30, 2019 and 2018, respectively, and 50% and 46% of the Company's consolidated net sales for the nine months ended September 30, 2019 and 2018, 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 16% and 21% of the Company's consolidated net sales for the three months ended September 30, 2019 and 2018, respectively, and 15% and 18% of the Company's consolidated net sales for the nine months ended September 30, 2019 and 2018, 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 59% and 55% of the Company's consolidated net sales for the three months ended September 30, 2019 and 2018, respectively, and 53% and 54% of the Company's consolidated net sales for the nine months ended September 30, 2019 and 2018, respectively. Sales to Singapore represented 10% of the Company's consolidated net sales for the three months ended September 30, 2019. No other individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended September 30, 2019. No individual foreign country represented 10% or more of the Company's consolidated net sales for the three months ended September 30, 2018 or the nine months ended September 30, 2019 or 2018.

As of September 30, 2019 and December 31, 2018, 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 from continuing operations before income tax (benefit) expense for the three and nine months ended September 30, 2019 and 2018 were as follows:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net sales:
Mobile connectivity	$	31,642		$	29,220		$	92,025		$	86,277
Inertial navigation	7,669			10,092			23,392			27,072
Consolidated net sales	$	39,311		$	39,312		$	115,417		$	113,349

Operating (loss) income:
Mobile connectivity	$	(267	)	$	506		$	(4,075	)	$	682
Inertial navigation	(171		)	1,920			24			3,818
Subtotal	(438		)	2,426			(4,051		)	4,500
Unallocated, net	(4,420		)	(4,283		)	(13,720		)	(12,769		)
Loss from operations	(4,858		)	(1,857		)	(17,771		)	(8,269		)
Net interest and other income (expense)	1,058			(66		)	1,532			(372		)
Loss from continuing operations before income tax (benefit) expense	$	(3,800	)	$	(1,923	)	$	(16,239	)	$	(8,641	)

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



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Depreciation expense:
Mobile connectivity	$	1,824	$	1,367	$	5,163	$	3,848
Inertial navigation	280		260		874		766
Unallocated	142		133		416		402
Total consolidated depreciation expense	$	2,246	$	1,760	$	6,453	$	5,016

Amortization expense:
Mobile connectivity	$	237	$	246	$	732	$	764
Inertial navigation	—		—		—		—
Unallocated	—		—		—		—
Total consolidated amortization expense	$	237	$	246	$	732	$	764