XML 30 R20.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Goodwill and Intagible Assets | 6 Months Ended
--- | ---
Jun. 30, 2017
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 six months ended June 30, 2017:
|  | Amounts
Balance at December 31, 2016 |  | $ | 31,343 |
Foreign currency translation adjustment |  | 1,459 |
Balance at June 30, 2017 |  | $ | 32,802 |
ASC Topic 350, Intangibles—Goodwill and Other (ASC 350) requires the completion of a goodwill impairment test at least annually. Historically, this goodwill impairment test was comprised of a two-step process. The first step compares the carrying value of the Company’s reporting units to their estimated fair values as of the test date. If fair value is less than carrying value, a second step is performed to quantify the amount of the impairment, if any. As of August 31, 2016 (the Company's annual goodwill impairment test date), the Company performed its annual impairment test for goodwill at the reporting unit level and, after conducting the first step, determined that it was not necessary to conduct the second step as it concluded that the fair value of its reporting units exceeded their carrying value. If different assumptions were used, particularly with respect to estimating future cash flows, weighted average costs of capital, and terminal growth rates, different estimates of fair value may have resulted. However, based on the excess of fair value over carrying value and additional sensitivity analysis considered with respect to the Company’s valuation assumptions, the Company concluded that it was more likely than not that no goodwill impairment exists. As of August 31, 2016, the Company noted that the fair value of all of the Company’s reporting units exceeded their carrying values by more than 10%. The Company notes that its one reporting unit whose fair value exceeded its carrying value by less than 100% had goodwill of approximately $4,401 at June 30, 2017. In January 2017, the FASB issued ASC Update No. 2017-04, Intangibles--Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment. This ASC simplifies the accounting for goodwill impairment for all entities by requiring impairment charges to be based on the first step of the goodwill impairment test under ASC 350. Under previous guidance, if the fair value of a reporting unit is lower than its carrying amount (Step 1), an entity calculates any impairment charge by comparing the implied fair value of goodwill with its carrying amount (Step 2). The implied fair value of goodwill is calculated by deducting the fair value of all assets and liabilities of the reporting unit from the reporting unit’s fair value as determined in Step 1. To determine the implied fair value of goodwill, entities estimate the fair value of any unrecognized intangible assets (including in-process research and development) and any corporate-level assets or liabilities that were included in the determination of the carrying amount and fair value of the reporting unit in Step 1. Under this new guidance if a reporting unit's carrying value exceeds its fair value, an entity will record an impairment charge based on that difference with such impairment charge limited to the amount of goodwill in the reporting unit. This ASC does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. This ASC will be applied prospectively and is effective for annual and interim impairment test performed in periods beginning after December 15, 2019 for public business enterprises. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The Company has elected to early adopt this ASC as of January 1, 2017. The adoption of this ASC had no impact on the Company's consolidated statements of operations, financial condition or cash flows. The Company evaluated whether any potential indicators of impairment existed as of June 30, 2017 that would require an interim goodwill impairment test. Although the Company has experienced a decline in sales within its mobile connectivity operating segment, which is the operating segment that contains all of the Company's reporting units with goodwill, the overall period and magnitude of the decline has not been significant and the operating results of its reporting units with goodwill have not differed significantly from the forecasted results utilized in the last annual goodwill impairment test completed as of August 31, 2016. In addition, the operating earnings of the Company's mobile connectivity operating segment increased by 62% for the three months ended June 30, 2017 as compared to the same period of the prior year. As a result, for the two reporting units that had over 100% excess of fair value over carrying value of the reporting unit's respective net assets as of August 31, 2016, given the current and forecasted operating trends, the Company does not believe that there is a significant risk related to a potential goodwill impairment. These two reporting units represent $28,401, or 87%, of the Company's total consolidated goodwill as of June 30, 2017. With respect to the Company other reporting unit with goodwill of $4,401 as of June 30, 2017, the Company does note that a continued further decline sales or operating results could result in a goodwill impairment. Intangible Assets The changes in the carrying amount of intangible assets during the six months ended June 30, 2017 are as follows:
|  | Amounts
Balance at December 31, 2016 |  | $ | 17,838 |
Amortization expense |  | (2,170 | )
Intangible assets acquired in asset acquisition |  | 100 |
Foreign currency translation adjustment |  | 889 |
Balance at June 30, 2017 |  | $ | 16,657 |
Intangible assets arose from an acquisition made prior to 2013, the acquisition of KVH Media Group (acquired as Headland Media Limited) in May 2013 and the acquisition of Videotel in July 2014. Intangibles arising from the acquisition made prior to 2013 are being 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, (ii) 15 years for distribution rights, (iii) 3 years for internally developed software and (iv) 2 years for proprietary content. Intangibles arising from the acquisition of Videotel are being amortized on a straight-line basis over the estimated useful life of: (i) 8 years for acquired subscriber relationships, (ii) 5 years for favorable leases, (iii) 4 years for internally developed software and (iv) 5 years for proprietary content. The intangibles arising from the KVH Media Group and Videotel acquisitions 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 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 six months ended June 30, 2017, no additional consideration was earned under the contingent consideration arrangement. Acquired intangible assets are subject to amortization. The following table summarizes acquired intangible assets at June 30, 2017 and December 31, 2016, respectively:
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net Carrying Value
June 30, 2017 |  |  |  |  |  |
Subscriber relationships |  | $ | 17,523 |  |  | $ | 7,366 |  |  | $ | 10,157 |
Distribution rights |  | 4,277 |  |  | 1,312 |  |  | 2,965 |
Internally developed software |  | 2,318 |  |  | 2,064 |  |  | 254 |
Proprietary content |  | 8,128 |  |  | 5,152 |  |  | 2,976 |
Intellectual property |  | 2,284 |  |  | 2,219 |  |  | 65 |
Favorable lease |  | 641 |  |  | 401 |  |  | 240 |
|  | $ | 35,171 |  |  | $ | 18,514 |  |  | $ | 16,657 |
December 31, 2016 |  |  |  |  |  |
Subscriber relationships |  | $ | 16,888 |  |  | $ | 6,431 |  |  | $ | 10,457 |
Distribution rights |  | 4,122 |  |  | 1,180 |  |  | 2,942 |
Internally developed software |  | 2,301 |  |  | 1,904 |  |  | 397 |
Proprietary content |  | 7,960 |  |  | 4,431 |  |  | 3,529 |
Intellectual property |  | 2,284 |  |  | 2,056 |  |  | 228 |
Favorable lease |  | 627 |  |  | 342 |  |  | 285 |
|  | $ | 34,182 |  |  | $ | 16,344 |  |  | $ | 17,838 |
Amortization expense related to intangible assets for the three and six months ended June 30, 2017 and 2016 was as follows:
| Three Months Ended |  | Six Months Ended
| June 30, |  | June 30,
Expense Category | 2017 |  | 2016 |  | 2017 |  | 2016
Cost of service sales | $ | 367 |  |  | $ | 417 |  |  | $ | 722 |  |  | $ | 869 |
General administrative expense | 735 |  |  | 833 |  |  | 1,448 |  |  | 1,664 |
Total amortization expense | $ | 1,102 |  |  | $ | 1,250 |  |  | $ | 2,170 |  |  | $ | 2,533 |
As of June 30, 2017, the total weighted average remaining useful lives of the definite-lived intangible assets was 4.7 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 | 5.3
Distribution rights | 10.8
Internally developed software | 0.9
Proprietary content | 2.0
Intellectual property | 0.3
Favorable lease | 2.0
Estimated future amortization expense remaining at June 30, 2017 for intangible assets acquired is as follows:
Remainder of 2017 | $ | 2,113 |
2018 | 3,931 |
2019 | 3,007 |
2020 | 2,206 |
2021 | 2,206 |
Thereafter | 3,194 |
Total future amortization expense | $ | 16,657 |
For intangible assets, the Company assesses the carrying value of these assets whenever events or circumstances indicate that the carrying value may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset, or asset group, to the future undiscounted cash flows expected to be generated by the asset, or asset group. There were no events or changes in circumstances during the second quarter of 2017 which indicated that an assessment of the impairment of goodwill and intangible assets was required.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration