45 unchanged sentences
Other Information
+Added: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
+Added: Not applicable.
We have omitted the information required in Part III of this annual report because we intend to include that information in our definitive proxy statement for our 2022 annual meeting of stockholders, which we expect to file before 120 days after the end of fiscal 2021.
18 unchanged sentences
Financial Statements
−Removed: Report of Independent Registered Public Accounting Firm
+Added: Report of Independent Registered Public Accounting Fir m ( PCAOB ID Number 248 )
Consolidated Balance Sheets as of December 31, 202 1 and 20 20
Consolidated Statements of Operations for the years ended December 31, 202 1 and 20 20
−Removed: Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 20 20 and 20 19
+Added: Consolidated Statements of Comprehensive Loss for the years ended December 31, 202 1 and 20 20
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 202 1 and 20 20
5 unchanged sentences
Form Filing Date Exhibit No.
−Removed: Share Purchase Agreement dated as of May 13, 2019 among KVH Industries, Inc., KVH Media Group Limited and Pelican Holdco Limited relating to the sale of the entire issued share capital of Super Dragon Limited and Videotel Marine Asia Limited 8-K May 16, 2019 2.1
−Removed: Tax Deed of Covenant dated as of May 13, 2019 among KVH Industries, Inc., KVH Media Group Limited and Pelican Holdco Limited relating to the sale of the entire issued share capital of Super Dragon Limited and Videotel Marine Asia Limited 8-K May 16, 2019 2.2
Amended and Restated Certificate of Incorporation, as amended 10-Q August 6,
23 unchanged sentences
July 31, 2020 10.3
+Added: Second Amendment to Amended and Restated Credit Agreement dated as of October 29, 2021 by and among KVH Industries, Inc., and Bank of America, N.A.
+Added: November 4, 2021 10.1
Cooperation Agreement, dated as of April 8, 2020, by and among KVH Industries, Inc., Vintage Capital Management, LLC, and Kahn Capital Management, LLC
7 unchanged sentences
Rule 1350 certification X
−Removed: 101.1 Interactive Data File regarding (a) our Consolidated Balance Sheets as of December 31, 2020 and 2019, (b) our Consolidated Statements of Operations for the years ended December 31, 2020 and 2019, (c) our Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2020 and 2019, (d) our Consolidated Statements of Stockholders' Equity for the years ended December 31, 2020 and 2019, (e) our Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019, and (e) the Notes to such Consolidated Financial Statements X
+Added: 101.1 Interactive Data File regarding (a) our Consolidated Balance Sheets as of December 31, 2021 and 2020, (b) our Consolidated Statements of Operations for the years ended December 31, 2021 and 2020, (c) our Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021 and 2020, (d) our Consolidated Statements of Stockholders' Equity for the years ended December 31, 2021 and 2020, (e) our Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020, and (e) the Notes to such Consolidated Financial Statements X
104.1 Cover Page Interactive Data File (embedded within the Inline XBRL document) X
4 unchanged sentences
March 11, 2022 By:
−Removed: / S / M ARTIN A.
−Removed: K ITS V AN H EYNINGEN
−Removed: Kits van Heyningen
−Removed: President, Chief Executive Officer and Chairman of the Board
+Added: / S / BRENT C.
+Added: Interim President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.
Name Title Date
−Removed: /S/ MARTIN A.
−Removed: KITS VAN HEYNINGEN President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) March 3, 2021
−Removed: Kits van Heyningen
−Removed: BRUUN Interim Chief Financial Officer (Principal Financial Officer) and Chief Operating Officer March 3, 2021
+Added: BRUUN Interim President and Chief Executive Officer (Principal Executive Officer) March 11, 2022
+Added: KUEBEL Chief Financial Officer (Principal Financial Officer) March 11, 2022
/S/ JENNIFER L.
−Removed: BAKER Vice President and Chief Accounting Officer (Principal Accounting Officer) March 3, 2021
−Removed: AIN Director March 3, 2021
+Added: BAKER Vice President, Chief Accounting Officer (Principal Accounting Officer) March 11, 2022
+Added: /S/ CATHY-ANN MARTINE-DOLECKI Chair of the Board of Directors March 11, 2022
+Added: Cathy-Ann Martine-Dolecki
/S/ DANELLE M.
1 unchanged sentence
DODEZ Director March 11, 2022
−Removed: /S/ STANLEY K.
−Removed: HONEY Director March 3, 2021
−Removed: /S/ ROBERT E.
−Removed: TAVARES Director March 3, 2021
+Added: HERNANDEZ Director March 11, 2022
/S/ CHARLES R.
5 unchanged sentences
We have audited the accompanying consolidated balance sheets of KVH Industries, Inc.
−Removed: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).
+Added: (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
12 unchanged sentences
Critical audit matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
−Removed: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: Quantitative impairment assessments – goodwill
−Removed: As described in Note 1(k) to the financial statements, the Company evaluates goodwill for impairment at the reporting unit level annually on October 1 of each year, or more frequently if events or circumstances indicate the carrying value of a reporting unit that includes goodwill might exceed the fair value of that reporting unit.
−Removed: Due to the impacts of the COVID-19 pandemic and the decline of the forecasted revenue particularly in the KVH Media Group, which has been impacted in part by a global reduction in travel, the Company determined that a quantitative impairment assessment should be performed for each of its two reporting units with goodwill at the annual impairment test date of October 1, 2020.
−Removed: As a result of these assessments, management concluded that the carrying value of the KVH Media Group reporting unit exceeded its fair value and recorded an impairment charge of $8.7M as of the annual impairment test date.
−Removed: We identified the estimation of the fair values of the reporting units in the quantitative goodwill impairment assessments as a critical audit matter.
−Removed: The principal considerations for our determination that this matter is a critical audit matter are the significant management estimates and judgments related to forecasts of expected future cash flows used in the estimation of the reporting units’ fair value.
−Removed: Management’s significant estimates and judgments include the determination of revenue growth rates, gross profit growth rates, operating expenses, capital expenditures, projected long-term growth rates and discount rates.
−Removed: Changes in these assumptions could materially affect the fair values of the reporting units.
−Removed: Our audit procedures related to quantitative impairment testing of the reporting units included the following procedures, among others:
−Removed: • Tested the design and operating effectiveness of certain internal controls relating to management’s quantitative goodwill impairment assessment, including those over management’s forecasts of future revenue, operating income margins and long-term growth rates and the determination of the discount rate.
−Removed: • Tested management’s process for determining the fair values of the reporting units.
−Removed: This included evaluating the appropriateness of the valuation methods, testing the completeness, accuracy and relevance of data used by management, and evaluating management’s significant assumptions used to project future cash flows, which included forecasted gross profit, operating expenses, capital expenditures and discount rates.
−Removed: • We performed sensitivity analyses on the future revenue, operating margins and discount rates used to evaluate the impact changes in these assumptions have on management’s conclusion.
−Removed: • With the assistance of our valuation professionals with specialized skills and knowledge, we evaluated the valuation methodologies utilized by management.
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
+Added: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
Recognition of satellite connectivity services revenue
1 unchanged sentence
We identified satellite connectivity services revenue as a critical audit matter.
−Removed: The principal considerations for our determination that satellite connectivity service sales transactions are a critical audit matter is the complexity of the process used by management for recognizing revenue, given the diversity of data sources, and the number of systems involved, which includes third party systems.
+Added: The principal consideration for our determination that satellite connectivity service sales transactions are a critical audit matter is the complexity of the process used by management for recognizing revenue, given the diversity of data sources, and the number of systems involved, which includes third party systems.
This requires a high degree of audit subjectivity and effort in designing and performing audit procedures to evaluate whether the satellite connectivity services revenue is recognized properly.
1 unchanged sentence
• We tested the design and operating effectiveness of controls related to management’s review and validation of data coming from third parties that is used as an input in revenue recognition as well as the controls over review of appropriate revenue recognition for this revenue stream.
−Removed: • We performed detailed transaction testing over the occurrence and accuracy of the revenue recognized by validating usage data from third party reports which is utilized in customer billing.
+Added: • We performed detailed transaction testing over the occurrence and accuracy of a sample of the revenue recognized by validating usage data from third party reports which is utilized in customer billing.
• We obtained the billing service provider's SOC-1 report, bridge letter (as applicable), and Management's internal control review of the SOC-1 report.
2 unchanged sentences
In addition, we tested key controls that were responsive to the CUECs.
−Removed: • We tested the design and operating effectiveness of IT general controls related to management’s ERP system used to record the related revenue for this stream.
/s/ GRANT THORNTON LLP
11 unchanged sentences
33,648 33,687
−Removed: Inventories 24,674 23,465
+Added: Inventories, net 24,640 24,674
Prepaid expenses and other current assets 3,789 3,894
35 unchanged sentences
Additional paid-in capital 156,199 149,170
−Removed: Accumulated (deficit) retained earnings ( 2,402 ) 19,538
+Added: Accumulated deficit ( 12,165 ) ( 2,402 )
Accumulated other comprehensive loss ( 3,409 ) ( 3,232 )
140,828 143,735
−Removed: treasury stock at cost, 1,432,694 and 1,397,438 shares as of December 31, 2020 and December 31, 2019, respectively
+Added: treasury stock at cost, 1,432,694 shares as of December 31, 2021 and December 31, 2020
( 11,851 ) ( 11,851 )
23 unchanged sentences
Other income, net 7,245 193
−Removed: Loss from continuing operations before income tax expense (benefit) ( 21,766 ) ( 20,012 )
−Removed: Income tax expense (benefit) from continuing operations 174 ( 4,003 )
−Removed: Net loss from continuing operations ( 21,940 ) ( 16,009 )
−Removed: Income from discontinued operations, net of tax — 49,264
−Removed: Net (loss) income $ ( 21,940 ) $ 33,255
−Removed: Net loss from continuing operations per common share
−Removed: Basic and diluted $ ( 1.24 ) $ ( 0.92 )
−Removed: Net income from discontinued operations per common share
−Removed: Basic and diluted $ 0.00 $ 2.82
−Removed: Net (loss) income per common share
+Added: Loss before income tax (benefit) expense ( 9,871 ) ( 21,766 )
+Added: Income tax (benefit) expense ( 108 ) 174
+Added: Net loss $ ( 9,763 ) $ ( 21,940 )
+Added: Net loss per common share
Basic and diluted $ ( 0.54 ) $ ( 1.24 )
−Removed: Number of shares used in per share calculation:
+Added: Weighted average number of shares outstanding:
Basic and diluted 18,217 17,669
2 unchanged sentences
AND SUBSIDIARIES
−Removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
+Added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Year Ended December 31,
−Removed: Net (loss) income $ ( 21,940 ) $ 33,255
−Removed: Other comprehensive (loss) income, net of tax:
+Added: Net loss $ ( 9,763 ) $ ( 21,940 )
+Added: Other comprehensive loss, net of tax:
Foreign currency translation adjustment ( 177 ) ( 465 )
−Removed: Unrealized gain on derivative instruments, net — 11
−Removed: Other comprehensive (loss) income, net of tax (1)
+Added: Other comprehensive loss, net of tax (1)
( 177 ) ( 465 )
−Removed: Total comprehensive (loss) income $ ( 22,405 ) $ 45,219
+Added: Total comprehensive loss $ ( 9,940 ) $ ( 22,405 )
(1) Tax impact was nominal for all periods.
5 unchanged sentences
Common Stock Additional
−Removed: Capital (Accumulated Deficit) Retained Earnings Accumulated
+Added: Capital Retained Earnings (Accumulated Deficit) Accumulated
Comprehensive
4 unchanged sentences
19,399 $ 194 $ 144,485 $ 19,538 $ ( 2,767 ) ( 1,397 ) $ ( 11,461 ) $ 149,989
−Removed: Net income — — — 33,255 — — — 33,255
−Removed: Other comprehensive income — — — — 11,964 — — 11,964
−Removed: ASC 606 correction (FN 11) — — — 1,680 — — — 1,680
+Added: Net loss — — — ( 21,940 ) — — — ( 21,940 )
+Added: Other comprehensive loss — — — — ( 465 ) — — ( 465 )
Stock-based compensation — — 3,462 — — — — 3,462
8 unchanged sentences
Issuance of common stock under employee stock purchase plan 26 — 215 — — — — 215
−Removed: Acquisition of treasury stock — — — — — ( 36 ) ( 390 ) ( 390 )
Exercise of stock options and issuance of restricted stock awards, net of forfeitures 454 4 2,705 — — — — 2,709
7 unchanged sentences
Cash flows from operating activities:
−Removed: Net (loss) income $ ( 21,940 ) $ 33,255
−Removed: Adjustments to reconcile net (loss) income to net cash used in operating activities:
+Added: Net loss $ ( 9,763 ) $ ( 21,940 )
+Added: Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Provision for doubtful accounts
3 unchanged sentences
Deferred income taxes
+Added: ( 186 ) ( 283 )
Loss on disposals of fixed assets
−Removed: Gain on sale of Videotel
Compensation expense related to stock-based awards and employee stock purchase plan
−Removed: Unrealized currency translation loss
+Added: Unrealized currency translation (gain) loss ( 112 ) 151
+Added: PPP loan forgiveness ( 6,979 ) —
Changes in operating assets and liabilities:
1 unchanged sentence
( 506 ) ( 1,123 )
−Removed: ( 1,205 ) ( 553 )
Prepaid expenses, other current assets, and current contract assets
−Removed: ( 314 ) ( 307 )
Other non-current assets and non-current contract assets
−Removed: ( 484 ) ( 1,042 )
Accounts payable
( 251 ) ( 3,274 )
−Removed: Deferred revenue, contract liabilities, and long-term contract liabilities
−Removed: ( 817 ) 1,170
+Added: Contract liabilities and long-term contract liabilities ( 665 ) ( 817 )
Accrued compensation, product warranty and other 945 ( 458 )
−Removed: ( 458 ) ( 2,691 )
Other long-term liabilities
−Removed: Net cash used in operating activities $ ( 3,079 ) $ ( 14,165 )
+Added: Net cash provided by (used in) operating activities $ 2,909 $ ( 3,079 )
Cash flows from investing activities:
2 unchanged sentences
Proceeds from sale of fixed assets 100 80
−Removed: Proceeds from sale of Videotel, net of cash sold — 88,447
Purchases of marketable securities ( 6 ) ( 8,734 )
Maturities and sales of marketable securities 12,000 13,500
−Removed: Net cash (used in) provided by investing activities $ ( 9,295 ) $ 46,048
+Added: Net cash used in investing activities $ ( 6,708 ) $ ( 9,295 )
Cash flows from financing activities:
−Removed: Repayments of long-term debt — ( 2,597 )
Proceeds from PPP loan — 6,927
−Removed: Repayments of term note borrowings — ( 21,938 )
−Removed: Repayments of line of credit borrowings — ( 15,000 )
−Removed: Proceeds from line of credit borrowings — 10,000
Proceeds from stock options exercised and employee stock purchase plan 2,939 1,216
1 unchanged sentence
Payment of finance lease ( 294 ) ( 624 )
−Removed: Net cash provided by (used in) financing activities $ 7,129 $ ( 30,756 )
+Added: Net cash provided by financing activities $ 2,645 $ 7,129
Effect of exchange rate changes on cash and cash equivalents ( 48 ) ( 542 )
−Removed: Net (decrease) increase in cash and cash equivalents ( 5,787 ) 315
+Added: Net decrease in cash and cash equivalents ( 1,202 ) ( 5,787 )
Cash and cash equivalents at beginning of period 12,578 18,365
1 unchanged sentence
Supplemental disclosure of cash flow information:
−Removed: Cash paid for interest $ — $ 929
Cash paid for income taxes, net of refunds $ 419 $ 1,051
30 unchanged sentences
Mobile connectivity service sales also include engineering services provided under development contracts, sales from product repairs, and extended warranty sales.
−Removed: 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.
−Removed: 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.
−Removed: The sale was completed immediately upon execution of definitive agreements.
−Removed: The Company received payment of the initial purchase price pursuant to a loan agreement (the Bridge Loan) on June 21, 2019.
−Removed: 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.
−Removed: The Bridge Loan’s interest rate was 5 % per year during the period from closing until and including the 15 th business day after the closing and increased to 12 % per year during the period after the 15 th business day until the maturity date.
−Removed: In December 2019, we finalized the working capital adjustment which reduced the proceeds from the sale of Videotel to $ 88,447 .
−Removed: 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.
−Removed: The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20.
−Removed: Please see Note 18 for the discontinued operations disclosures.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
KVH's inertial navigation products offer precision fiber optic gyro (FOG)-based systems that enable platform and optical stabilization, navigation, pointing and guidance.
2 unchanged sentences
and foreign governments and government contractors, as well as through an international network of authorized independent sales representatives.
−Removed: 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.
+Added: In addition, KVH's inertial navigation technology is used in numerous commercial products, such as navigation and positioning systems for various applications including autonomous platforms, precision mapping, dynamic surveying, 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.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(b) Principles of Consolidation
5 unchanged sentences
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.
−Removed: The 2020 consolidated financial statements reflect an impairment charge on the KVH Media Group reporting unit within the mobile connectivity segment.
+Added: The 2021 consolidated financial statements reflect a $ 6,979 gain in other income related to the U.S.
+Added: Small Business Administration’s forgiveness of the PPP loan during the third quarter of 2021.
+Added: The 2020 consolidated financial statements reflect a $ 10,490 goodwill and intangible impairment charge on the KVH Media Group reporting unit within the mobile connectivity segment.
See Note 1(k) and Note 9.
3 unchanged sentences
The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.
−Removed: During the second quarter of 2019, the Company sold Videotel.
−Removed: Please see Note 18 for further discussion.
−Removed: 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.
−Removed: Please see Note 11 for further discussion.
−Removed: During the fourth quarter of 2020, the Company recorded $ 10,490 of goodwill and intangible impairment charges mostly driven by the ongoing impacts of COVID-19 on the KVH Media Group reporting unit.
−Removed: Please see Note 1(k) and Note 9 for further discussion.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
(d) Concentration of Credit Risk and Single Source Suppliers
17 unchanged sentences
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.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(e) Revenue Recognition
−Removed: In accordance with ASC 606, revenue is recognized when a customer obtains control of promised products and services.
+Added: In accordance with Accounting Standards Codification (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.
7 unchanged sentences
If these criteria are not met, the promised products and services are accounted for as a combined performance obligation.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
3) Determine the transaction price
11 unchanged sentences
Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
Product sales
13 unchanged sentences
The Company recognizes product revenue under these arrangements over the estimated satellite connectivity customer life, which is estimated to be five years based on historical evidence.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
Satellite connectivity and media content service sales
11 unchanged sentences
All associated regulatory service fees and costs are recorded net in the consolidated financial statements.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
The Company sells prepaid airtime services in the form of prepaid cards.
9 unchanged sentences
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.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
Inertial navigation service sales
13 unchanged sentences
Product service sales including extended warranties are not a significant portion of the Company’s total sales.
−Removed: The Company adopted ASC 842 on January 1, 2019.
−Removed: ASC 842 requires the recognition of lease assets and lease liabilities for leases classified as operating leases.
−Removed: The original guidance required application of ASC 842 on a modified retrospective basis with the earliest period presented.
−Removed: In August 2018, the FASB issued ASU 2018-11, Targeted Improvements to ASC 842 , which included an option to not restate comparative periods in transition and elect to use the effective date as the date of initial application of transition.
−Removed: The Company elected not to restate comparative periods and, accordingly, the financial results reported for periods prior to January 1, 2019 have not been restated.
−Removed: The new lease accounting standard did not have an impact on the amounts reported in the consolidated statement of operations but resulted in the recording of $ 10,469 of new right of use (ROU) assets and additional liabilities for operating leases on the consolidated balance sheet as of January 1, 2019.
+Added: Sales-type leases
+Added: Revenue is recognized on sales-type leases primarily from the TracPhone mini-VSAT products.
+Added: In accordance with ASC 842, the Company records the leases at a price typically equivalent to normal selling price and in excess of the cost or carrying amount.
+Added: Upon delivery, the Company records the net present value of all payments under these leases as product revenue, and the related costs of the product are charged to cost of sales.
+Added: In accordance with ASC 842, the Company recognizes all leases greater than one year in duration on the balance sheet as right-of-use assets and lease liabilities.
In ASC 842, a lease is defined as follows:
“[a] contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.”
−Removed: Upon adoption, the Company recognized all leases greater than one year in duration on the balance sheet as right-of-use assets and lease liabilities.
−Removed: The Company made certain assumptions and judgments when applying ASC 842.
−Removed: The Company elected practical expedients available for the transition, such as whether expired or existing contracts contain leases under the new definition of a lease, lease classification for expired or existing leases, and whether previously capitalized initial direct costs would qualify for capitalization under ASC 842.
−Removed: For all asset classes, the Company elected to not separate non-lease components from lease components to which they relate and have accounted for the combined lease and non-lease components as a single lease component.
−Removed: Many of our lease agreements contain renewal options which are recognized if it is determined that the Company is reasonably certain to renew the lease at inception or when a triggering event occurs.
−Removed: Some of our lease agreements contain rent escalation clauses, rent holidays, capital improvement funding or other lease concessions.
−Removed: The Company recognizes the minimum rental expense on a straight-line basis based on the fixed components of a lease arrangement and amortize such expense over the term of the lease beginning with the commencement date.
−Removed: Variable lease components that are not fixed at the beginning of the lease are recognized as incurred.
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
+Added: Many of our lease agreements contain renewal options which are recognized if it is determined that the Company is reasonably certain to renew the lease at inception or when a triggering event occurs.
+Added: Some of our lease agreements contain rent escalation clauses, rent holidays, capital improvement funding or other lease concessions.
+Added: The Company recognizes the minimum rental expense on a straight-line basis based on the fixed components of a lease arrangement and amortize such expense over the term of the lease beginning with the commencement date.
+Added: Variable lease components that are not fixed at the beginning of the lease are recognized as incurred.
Under certain third-party service agreements, the Company controls a specific space or underlying asset used in providing the service by the third-party service provider.
41 unchanged sentences
Any impairment charges would be based on the quantitative analysis.
−Removed: Prior to 2020, the Company has not recorded or incurred goodwill impairment charges.
−Removed: For the October 1, 2019 test, the Company performed a qualitative assessment of goodwill impairment and concluded that it was more likely than not that the reporting units' fair values exceeded their carrying values.
−Removed: Accordingly, it was not necessary for the Company to perform the quantitative analysis.
−Removed: For the October 1, 2020 test, however, due to the uncertainty that the global pandemic presented during 2020, the Company determined that it should perform a quantitative analysis of goodwill impairment.
+Added: As a result of the 2020 annual impairment test, the Company recorded goodwill impairment charges of $ 8,732 and intangible asset impairment charges of $ 1,758 related to its KVH Media Group reporting unit.
+Added: Prior to 2020, the Company had not recorded or incurred goodwill impairment charges.
+Added: For the October 1, 2020 test, due to the uncertainty that the global pandemic presented during 2020, the Company determined that it should perform a quantitative analysis of goodwill impairment.
The Company performed this full quantitative analysis in the fourth quarter of 2020 in conjunction with its annual budgeting and long-term planning cycle.
−Removed: The last full quantitative analysis was completed in 2017.
−Removed: The COVID-19 pandemic has impacted various aspects of the Company's operations and it has been monitoring the impact of this global crisis carefully throughout the year.
−Removed: The Company has particularly monitored the operations of KVH Media Group which depends heavily on travel and travel-related industries.
The revenues and cash flows of KVH Media Group have been significantly impacted by the global reduction in travel since the start of the pandemic.
−Removed: Prior to the annual impairment test in the fourth quarter of 2020, based on the Company's quarterly review of the impact of this global crisis on its forecasted revenues and cash flows, there was no indication of impairment to the carrying value of goodwill or other intangible assets.
−Removed: However, in the fourth quarter of 2020, there were increases in the number of reported COVID-19 cases, and substantial shutdowns were reinstated in the United States, UK and Europe, which caused continued disruptions to the KVH Media Group business as the global travel and related industries remained at historically depressed levels.
−Removed: In response to the impact of the pandemic, particularly with respect to the KVH Media Group business, during the Company's annual budgeting and long-term planning process, the Company conducted detailed discussions with many of its largest customers in the KVH Media Group to validate its assumptions, which indicated further expected delays in recovery, and certain areas of the KVH Media Group business that may not recover completely or at all.
−Removed: Accordingly, in connection with the annual goodwill assessment, the Company updated its long-term revenue and cash flow forecast to reflect these most recent observations, which were used in the annual goodwill test.
−Removed: With the assistance of valuation specialists, the Company utilized an income approach and market approach to estimate the fair value of its reporting units.
−Removed: The Company believes that the assumptions used to estimate the fair value of its reporting units were reasonable.
+Added: With the assistance of valuation specialists, the Company utilized an income approach and market approach to estimate the fair value of its reporting units, based on assumptions the Company believed to be reasonable.
As an additional corroborative test of the reasonableness of those assumptions, the Company completed a reconciliation of its market capitalization and overall enterprise value to the fair value of all of its reporting units as of October 1, 2020.
4 unchanged sentences
As a result, the Company recognized an impairment charge to KVH Media Group’s goodwill in the amount of $ 8,732 , the remaining amount by which the carrying value exceeded its fair value.
−Removed: After recording this impairment, the Company's consolidated balance sheet continues to include $ 8,846 of goodwill and other intangible assets of which $ 4,445 relates to KVH Media Group.
+Added: For the October 1, 2021 test, the Company performed a qualitative assessment of goodwill impairment (Step 0) and concluded that for the mobile broadband reporting unit, it was more likely than not that, for this reporting unit, the fair value exceeded the carrying value.
+Added: For the KVH Media Group reporting unit, the Company determined that it was necessary to perform the Step 1 quantitative analysis due to the ongoing global pandemic and its impacts.
+Added: The Company utilized an income approach to estimate the fair value of the reporting unit.
+Added: The Company believes that the assumptions used to estimate the fair value of its KVH Media Group reporting unit were reasonable.
+Added: The Company estimated that, as of October 1, 2021, the fair value of its KVH Media Group exceeded its carrying value by more than 20%.
A negative trend of operating results or material changes to forecasted operating results could result in the requirement for additional interim goodwill impairment tests and the potential of future goodwill impairment charges, which could be material.
+Added: The Company did not identify any impairment indicators that required an interim goodwill impairment test as of December 31, 2021.
+Added: Intangible assets with estimated lives and other long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
+Added: Recoverability of intangible assets with estimated lives and other long-lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted cash flows expected to be generated by the asset or asset group.
+Added: If these comparisons indicate that an asset is not recoverable, the Company will recognize an impairment loss for the amount by which the carrying value of the asset or asset group exceeds the related estimated fair value.
+Added: Estimated fair value is based on either discounted future operating cash flows or appraised values, depending on the nature of the asset.
+Added: During 2021, there were no events or changes in circumstances that indicated any of the carrying amounts of the Company’s intangible assets or other long-lived assets may not be recoverable.
See Note 9 for further discussion of goodwill and intangible assets.
41 unchanged sentences
(in thousands, except per share amounts)
−Removed: The financial statements of the Company’s foreign subsidiaries located in the United Kingdom, Brazil, Norway, Cyprus and Japan use the foreign subsidiaries’ respective local currencies as the functional currency.
+Added: The financial statements of the Company’s foreign subsidiaries located in the United Kingdom, Brazil, Norway, Cyprus, India and Japan use the foreign subsidiaries’ respective local currencies as the functional currency.
The Company translates the assets and liabilities of these foreign subsidiaries at the exchange rates in effect at year-end.
17 unchanged sentences
Diluted net income per share incorporates the dilutive effect of common stock equivalent options, warrants and other convertible securities, if any, as determined in accordance with the treasury stock accounting method.
−Removed: For the years ended December 31, 2020 and 2019 since there was a net loss from continuing operations, the Company excluded all 1,566 and 1,209 shares, 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.
+Added: For the years ended December 31, 2021 and 2020 since there was a net loss, the Company excluded all 747 and 1,566 shares, 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:
4 unchanged sentences
The Company estimates the amount of potential exposure it may have with respect to claims, assessments and litigation in accordance with ASC 450, Contingencies .
−Removed: As of December 31, 2020 and 2019, the Company was not party to any lawsuit or proceeding that, in management's opinion, was likely to materially harm the Company's business, results of operations, financial condition or cash flows, as described in Note 16.
+Added: As of December 31, 2021 and 2020, the Company was not party to any lawsuit or proceeding that, in management's opinion, was likely to materially harm the Company's business, results of operations, financial condition or cash flows.
It is not always possible to predict the outcome of litigation, as it is subject to many uncertainties.
10 unchanged sentences
The Company operates in a number of major geographic areas, including internationally.
−Removed: 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 South America (see Note 12, " Segment Reporting ").
+Added: Revenues are generated 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 South America (see Note 12, " Segment Reporting ").
(v) Recently Issued Accounting Standards
2 unchanged sentences
Prior to their effective date, the Company evaluates the pronouncements to determine the potential effects of adoption on our consolidated financial statements.
−Removed: Standards Implemented
−Removed: ASC Update No.
−Removed: In August 2018, the FASB issued ASC Update No.
−Removed: 2018-13, Fair Value Measurement (Topic 820):
−Removed: Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.
−Removed: The update is effective for annual periods beginning on or after December 15, 2019.
−Removed: The purpose of Update No.
−Removed: 2018-13 is to modify and eliminate some of the disclosure requirements on fair value measurements found in Topic 820, Fair Value Measurement .
−Removed: Through the inclusion of this update, FASB aims to facilitate a clear communication of the information required by GAAP that is most important to users of each entity's financial statements, thus helping to improve the effectiveness of disclosures in the notes to financial statements.
−Removed: The adoption of Update No.
−Removed: 2018-13 did not have a material impact on the Company's financial position or results of operations.
+Added: Standard Implemented
ASC Update No.
−Removed: In August 2018, the FASB issued ASC Update No.
−Removed: 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Topic 350-40):
−Removed: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.
−Removed: The update is effective for annual periods beginning on or after December 15, 2019.
+Added: In December 2019, the FASB issued ASC Update No.
+Added: 2019-12, Income Taxes (Topic 740) .
+Added: The update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
The purpose of Update No.
−Removed: 2018-15 is to provide a new guideline to the accounting of a customer of a cloud computing arrangement hosted by a vendor when the customer incurs costs associated with the implementation, set-up, and other upfront costs.
−Removed: Specifically, customers will follow the same criteria found in an arrangement with a software license when they capitalize the implementation costs.
−Removed: The new guidance also affects the classification of the capitalized implementation costs and related amortization expense found in a company's balance sheet, income statement, and cash flow statement, and the update also requires additional quantitative and qualitative disclosures.
−Removed: The adoption of Update No.
+Added: 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.
+Added: It amends the requirements relating to the accounting for "hybrid" tax regimes.
2019-12 did not have a material impact on the Company's financial position or results of operations.
5 unchanged sentences
2019-05, ASC Update No.
+Added: 2019-10, ASC Update No.
2019-11 and ASC Update No.
4 unchanged sentences
2016-13 is to replace the 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.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
In November 2018, the FASB issued ASC Update No.
8 unchanged sentences
2019-05, Financial Instruments—Credit Losses (Topic 326):
−Removed: The amendments in the update ease the transition for entities adopting ASC Update 2016-13 and increase the comparability of financial statement information.
+Added: Targeted Transition Relief .
+Added: The amendments in the update ease the transition for entities adopting ASC Update 2016-13 and increase the
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
+Added: 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 .
1 unchanged sentence
2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842):
+Added: Effective Dates.
The amendments in this update change some effective dates for certain new accounting standards including those pertaining to Topic 326 discussed above, for certain types of entities.
In November 2019, the FASB issued ASC Update No.
−Removed: 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses.
+Added: 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (Topic 326).
The update is effective for entities that have adopted ASU 2016-13.
1 unchanged sentence
2019-11 is to clarify the scope of the recovery guidance to purchased financial assets with credit deterioration.
−Removed: As a smaller reporting entity, for ASC 815 and ASC 842, the effective dates will be the fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021 and for ASC 326, the effective date will be the fiscal years beginning after December 15, 2022.
+Added: In February 2020, the FASB issued ASC Update No.
+Added: 2020-02, Financial Instruments – Credit Losses (Topic 326) and
+Added: Leases (Topic 842).
+Added: The purpose of Update No.
+Added: 2020-02 is to clarify the scope and interpretation of the standard.
+Added: As a smaller reporting entity, the effective date for Topic 326 will be the fiscal year 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 is not expected to have a material impact on the Company's financial position or results of operations.
−Removed: ASC Update No.
−Removed: In December 2019, the FASB issued ASC Update No.
−Removed: 2019-12, Income Taxes (Topic 740) .
−Removed: The update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
−Removed: 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.
−Removed: The purpose of Update No.
−Removed: 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.
−Removed: It amends the requirements relating to the accounting for "hybrid" tax regimes.
−Removed: 2019-12 is not expected to have a material impact on the Company's financial position or results of operations.
There are no other recent accounting pronouncements issued by the FASB that the Company expects would have a material impact on the Company's financial statements.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
(2) Marketable Securities
2 unchanged sentences
Money market mutual funds $ 13,147 $ — $ — $ 13,147
−Removed: United States treasuries 4,999 — — 4,999
Total marketable securities designated as available-for-sale $ 13,147 $ — $ — $ 13,147
1 unchanged sentence
Money market mutual funds $ 20,142 $ — $ — $ 20,142
+Added: United States treasuries 4,999 — — 4,999
Total marketable securities designated as available-for-sale $ 25,141 $ — $ — $ 25,141
1 unchanged sentence
Interest income from marketable securities was $ 6 and $ 135 for the years ended December 31, 2021 and 2020, respectively.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(3) Inventories
6 unchanged sentences
$ 24,640 $ 24,674
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
(4) Property and Equipment
18 unchanged sentences
Long-term debt, excluding current portion $ — $ 1,935
−Removed: Paycheck Protection Program Loan
−Removed: In May 2020, the Company received a $ 6,927 loan (the PPP Loan) from Bank of America, N.A., under the Paycheck Protection Program, which was established under the Coronavirus Aid, Relief, and Economic Security Act (as modified by the Paycheck Protection Flexibility Act of 2020, the CARES Act) and is administered by the U.S.
−Removed: Small Business Administration.
−Removed: The Company believes it has used the proceeds from the PPP Loan in accordance with the requirements of the CARES Act, primarily for payroll costs and to retain workers.
−Removed: The term of the PPP Loan is two years from the funding date of the PPP Loan.
−Removed: The interest rate on the PPP Loan is 1.00%.
−Removed: Under the terms of the PPP Loan, interest accrues from the funding date of the PPP Loan but is deferred until the lender determines the amount of loan forgiveness, but the deferral period will end if the Company fails to apply for loan forgiveness within ten months after the loan forgiveness covered period.
−Removed: Principal and interest on the PPP Loan will be payable in monthly installments in accordance with the repayment letter.
−Removed: If forgiveness is determined, then there is no repayment.
−Removed: The promissory note evidencing the PPP Loan contains various events of default relating to, among other things, insolvency, bankruptcy or the like, payment defaults under the PPP Loan or other loans by the lender, certain defaults under other indebtedness, breach of representations and warranties, the occurrence of a material adverse event, changes in ownership, or breach of other provisions of the promissory note.
−Removed: Upon an event of default, all principal and accrued interest on the PPP Loan and any and all other loans
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
−Removed: made by the lender to the Company would at the lender’s option become immediately due and payable.
−Removed: The Company agreed that it will not receive any other loan under the Paycheck Protection Program.
−Removed: Pursuant to the terms of the CARES Act, the Company can apply for and may be granted forgiveness for all or a portion of the PPP Loan, if and to the extent that the Company satisfies all of the requirements applicable to forgiveness of the PPP Loan.
−Removed: Such forgiveness will be determined in part based on the use of PPP Loan proceeds in accordance with the terms of the CARES Act during the 24-week period after loan origination and the maintenance or achievement of certain employee and compensation levels.
−Removed: The Company has not decided whether to apply for forgiveness and can provide no assurance that any portion of the PPP Loan will be forgiven should it seek forgiveness.
−Removed: Term Note and Line of Credit
−Removed: Effective October 30, 2018, the Company entered into an amended and restated three-year senior secured credit facility agreement (the 2018 Credit Agreement) with Bank of America, N.A., as Administrative Agent, and the lenders named from time to time as parties thereto (the 2018 Lenders), for an aggregate amount of up to $ 42,500 , including a term loan (2018 Term Loan) of $ 22,500 and a reducing revolving credit facility (the 2018 Revolver) of up to $ 20,000 initially and reducing to $ 15,000 on December 31, 2019, each to be used for general corporate purposes, including the refinancing of indebtedness under the Company’s then-outstanding senior credit facility agreement.
−Removed: The Company's obligations under the 2018 Credit Agreement are secured by substantially all of our assets and the pledge of equity interests in certain of our subsidiaries.
−Removed: 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.
−Removed: The 2018 Revolver remained at $ 20,000 through December 31, 2019 and then reduced to $ 15,000 for the remaining term of the 2018 Credit Agreement.
−Removed: 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.
+Added: Paycheck Protection Program Loan
+Added: In May 2020, the Company received a $ 6,927 loan (the PPP Loan) from Bank of America, N.A., (the Lender) under the Paycheck Protection Program (PPP), which was established under the Coronavirus Aid, Relief, and Economic Security Act (as modified by the Paycheck Protection Flexibility Act of 2020, the CARES Act) and is administered by the U.S.
+Added: Small Business Administration (the SBA).
+Added: The term of the PPP Loan was two years from the funding date, and the interest rate was 1.00%.
+Added: Interest on the loan accrued from the funding date, but was deferred.
+Added: In August 2021, the Company applied for forgiveness of the full amount of the PPP Loan.
+Added: On September 24, 2021, the Company received notification from the Lender that, on September 19, 2021, the SBA had determined that the PPP Loan forgiveness application was approved, and the PPP Loan, including all accrued interest thereon, was paid in full by the SBA.
+Added: The forgiveness of the PPP Loan including all interest accrued of $ 6,979 is recognized in Other income, net in the accompanying consolidated statements of operations for the year ended December 31, 2021.
+Added: Line of Credit
+Added: Effective October 30, 2018, the Company entered into an amended and restated three-year senior secured credit facility agreement (the 2018 Credit Agreement) with Bank of America, N.A., as Administrative Agent, and the lenders named from time to time as parties thereto (the 2018 Lenders), which included a reducing revolving credit facility (the 2018 Revolver) of up to $ 20,000 initially and reducing to $ 15,000 on December 31, 2019, to be used for general corporate purposes.
+Added: The Company's obligations under the 2018 Credit Agreement are secured by substantially all of its assets and the pledge of equity interests in certain of its subsidiaries.
As of December 31, 2021, no amounts were outstanding under the 2018 Revolver.
−Removed: Borrowings of up to $ 15,000 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.
−Removed: As of December 31, 2020, the Company is only able to draw on $ 9,400 of the $ 15,000 facility due to covenant restrictions.
−Removed: 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.
+Added: Borrowings 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.
+Added: As of December 31, 2021, the Company was only able to draw on $ 10,900 of the $ 15,000 facility due to covenant restrictions.
+Added: The 2018 Credit Agreement contained 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 could not exceed 2.50 :1.00 through December 31, 2020 and may not exceed 2.00 :1.00 after December 31, 2020.
1 unchanged sentence
On July 30, 2020, the Company amended the 2018 Credit Agreement to reflect the incurrence of the PPP Loan.
−Removed: Under the amended agreement, the principal and interest on the PPP Loan are not included in the maximum Consolidated Leverage Ratio or the minimum Consolidated Fixed Charge Coverage Ratio calculations except as to any portion of the PPP Loan that is not ultimately forgiven.
+Added: Under the amended facility, the principal and interest on the PPP Loan were not included in the maximum Consolidated Leverage Ratio or the minimum Consolidated Fixed Charge Coverage Ratio calculations except as to any portion of the PPP Loan that is not ultimately forgiven.
+Added: In September 2021, the PPP Loan was forgiven in full.
+Added: On October 29, 2021, the Company amended the 2018 Credit Agreement to maintain the $ 15,000 2018 Revolver, extend the maturity date of the 2018 Revolver to October 28, 2022, eliminate the Consolidated Fixed Charge Coverage Ratio financial covenant, add a minimum trailing four-quarter Consolidated Adjusted EBITDA financial covenant of $ 3,000 , modify the definition of Consolidated Adjusted EBITDA, modify the interest rate margins and certain lender fees, and transition the interest rate provisions based on LIBOR to the Bloomberg Short Term Bank Yield Index.
+Added: In addition, Bank of America became the sole lender under the 2018 Credit Agreement.
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.
4 unchanged sentences
(in thousands, except per share amounts)
−Removed: Mortgage Loan
−Removed: The Company previously had a mortgage loan (Mortgage Loan) related to its headquarters facility in Middletown, Rhode Island.
−Removed: On April 1, 2019, on the Mortgage Loan’s original termination date, the Company repaid in full the outstanding balance of $ 2,551 .
−Removed: As discussed in Note 15 to the consolidated 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.
−Removed: Both interest rate swap agreements were also settled upon repayment of the Mortgage Loan.
(6) Commitments and Contingencies
3 unchanged sentences
2022 $ 29,679
−Removed: Thereafter 97
Total minimum payments $ 62,956
5 unchanged sentences
The Company did not have any off-balance sheet commitments, guarantees, or standby repurchase obligations as of December 31, 2021.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
(7) Stockholders’ Equity
The Company recognizes stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation .
−Removed: Stock-based compensation expense, excluding compensation charges related to our employee stock purchase plan, or the ESPP, was $ 3,414 and $ 4,099 for the year ended December 31, 2020 and 2019, respectively.
+Added: Stock-based compensation expense, excluding compensation charges related to our employee stock purchase plan, or the ESPP, was $ 4,053 and $ 3,414 for the years ended December 31, 2021 and 2020, respectively.
The Company is authorized to grant stock options, restricted stock awards and other stock-based awards under its Amended and Restated 2016 Equity and Incentive Plan (the 2016 Plan) with respect to up to 4,800 shares of common stock, an increase of 1,800 shares reserved for issuance under the previous 2016 Plan as approved by our shareholders on June 10, 2020.
6 unchanged sentences
The Compensation Committee of the Board of Directors administers the equity compensation plans, approves the individuals to whom awards will be granted and determines the number of shares and other terms of each award.
−Removed: Outstanding options under the Company's equity compensation plans at December 31, 2020 expire from November 2021 through August 2025.
+Added: Outstanding options under the Company's equity compensation plans at December 31, 2021 expire from March 2022 through March 2026.
None of the Company’s outstanding options includes performance-based or market-based vesting conditions as of December 31, 2021.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(a) Employee Stock Options
11 unchanged sentences
Dividend yield 0 % 0 %
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
The changes in outstanding stock options for the year ended December 31, 2021 and 2020 are as follows:
18 unchanged sentences
Outstanding at December 31, 2019
−Removed: 1,276 $ 10.28
Granted 654 $ 8.12
8 unchanged sentences
The total aggregate intrinsic value of options exercised was $ 914 and $ 269 in 2021 and 2020, respectively.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
As of December 31, 2021, there was $ 3,599 of total unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 2.42 years.
8 unchanged sentences
The weighted-average grant-date fair value of restricted stock granted during 2021 and 2020 was $ 12.23 and $ 8.19 per share, respectively.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
As of December 31, 2021, there was $ 3,838 of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 2.21 years.
19 unchanged sentences
During 2021 and 2020, cash received under the ESPP was $ 230 and $ 336 , respectively.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(d) Stock-Based Compensation Expense
6 unchanged sentences
$ 4,109 $ 3,462
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
(e) Accumulated Other Comprehensive Loss (AOCI)
−Removed: Comprehensive income (loss) includes net income (loss), unrealized gains and losses from foreign currency translation, and 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.
−Removed: 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).
−Removed: Foreign Currency Translation Interest Rate Swaps Total Accumulated Other Comprehensive Loss
+Added: Comprehensive loss includes net income (loss) and unrealized gains and losses from foreign currency translation.
+Added: The components of the Company’s comprehensive loss and the effect on earnings for the periods presented are detailed in the accompanying consolidated statements of comprehensive loss.
+Added: Foreign Currency Translation Total Accumulated Other Comprehensive Loss
Balance, December 31, 2019
$ ( 2,767 ) $ ( 2,767 )
−Removed: Other comprehensive income before reclassifications 470 3 473
−Removed: Amounts reclassified from AOCI 11,483 8 11,491
−Removed: Net other comprehensive income 11,953 11 11,964
+Added: Other comprehensive loss ( 465 ) ( 465 )
+Added: Net other comprehensive loss ( 465 ) ( 465 )
Balance, December 31, 2020
4 unchanged sentences
$ ( 3,409 ) $ ( 3,409 )
−Removed: For additional information, see Note 2, "Marketable Securities", and see Note 15, "Derivative Instruments and Hedging Activities."
KVH INDUSTRIES, INC.
4 unchanged sentences
(8) Income Taxes
−Removed: Income tax expense (benefit) for the years ended December 31, 2020 and 2019 attributable to loss from operations is presented below.
+Added: Income tax (benefit) expense for the years ended December 31, 2021 and 2020 attributable to loss from operations is presented below.
Current Deferred Total
5 unchanged sentences
Federal $ 240 $ — $ 240
−Removed: State ( 28 ) ( 29 ) ( 57 )
Foreign 321 ( 387 ) ( 66 )
$ 561 $ ( 387 ) $ 174
−Removed: Actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) computed by applying the United States Federal statutory income tax rate of 21% for both 2020 and 2019 to loss before tax expense, as follows:
+Added: Actual income tax (benefit) expense differs from the “expected” income tax (benefit) expense computed by applying the United States Federal statutory income tax rate of 21% for both 2021 and 2020 to loss before tax (benefit) expense, as follows:
Year Ended December 31,
6 unchanged sentences
Non-deductible stock compensation expense ( 194 ) 19
+Added: Non-deductible compensation under 162(m) 35 —
Foreign tax rate differential 58 235
3 unchanged sentences
Change in valuation allowance 4,648 3,980
−Removed: Loss on legal entity dissolution — 244
+Added: PPP loan forgiveness ( 1,455 ) —
Impairment of goodwill and intangibles — 1,834
+Added: Prior period adjustments ( 117 ) —
Other 10 ( 8 )
−Removed: Income tax expense (benefit) $ 174 $ ( 4,003 )
+Added: Income tax (benefit) expense $ ( 108 ) $ 174
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
−Removed: Loss from continuing operations before income tax expense (benefit) determined by tax jurisdiction, are as follows:
+Added: Loss before income tax (benefit) expense determined by tax jurisdiction, are as follows:
Year Ended December 31,
43 unchanged sentences
As of December 31, 2021, the Company concluded that a net increase of $ 4,648 of the valuation allowance was appropriate.
−Removed: The change was the result of an increase in domestic tax credit and net operating loss balances offset by a decrease attributed to the derecognition of foreign net operating losses.
+Added: The change was the result of an increase in domestic tax credits, net operating loss balances, and property and equipment differences due to depreciation.
As part of the Company’s analysis, the Company evaluated, among other factors, its recent history of generating tax losses and its near-term forecasts of future taxable income or losses.
7 unchanged sentences
Unrecognized tax benefits as of January 1 $ 1,771 $ 1,897
−Removed: Gross (decrease) increase in unrecognized tax benefits - prior year tax positions ( 105 ) 1,524
−Removed: Gross increase in unrecognized tax benefits - current year tax positions — 78
+Added: Gross decrease in unrecognized tax benefits - prior year tax positions ( 104 ) ( 105 )
Lapse of statute of limitations ( 14 ) ( 21 )
6 unchanged sentences
The Company estimates that it is reasonably possible that the balance of unrecognized tax benefits as of December 31, 2021 may decrease approximately $ 19 in the next twelve months as a result of a lapse of statutes of limitation and settlements with taxing authorities.
−Removed: The Company’s tax jurisdictions include the United States, the United Kingdom, Denmark, Cyprus, Norway, Brazil, Singapore, Hong Kong, Japan, and India.
+Added: The Company’s tax jurisdictions include the United States, the United Kingdom, Denmark, Cyprus, Norway, Brazil, Singapore, Japan, and India.
In general, the statute of limitations with respect to the Company's United States federal income taxes has expired for years prior to 2018, and the relevant state and foreign statutes vary.
10 unchanged sentences
(i) 10 years for acquired subscriber relationships and (ii) 15 years for distribution rights.
−Removed: Due to the impairment of distribution rights during the Company's 2020 annual impairment test, the estimated useful life of distribution rights was reduced to 1 year.
−Removed: The intangibles arising from the KVH Media Group were recorded in pounds sterling and fluctuations in exchange rates cause these amounts to increase or decrease from time to time.
+Added: Due to the impairment of distribution rights during the Company's 2020 annual impairment test, the estimated useful life of distribution rights was reduced from 15 years to 1 year.
+Added: The intangibles arising from the KVH Media Group acquisition were recorded in pounds sterling and fluctuations in exchange rates 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.
7 unchanged sentences
Acquired intangible assets are subject to amortization.
−Removed: The following table summarizes other intangible assets as of December 31, 2020 and 2019, respectively:
+Added: The following table summarizes acquired intangible assets at December 31, 2021 and 2020, respectively:
Gross Carrying Amount Accumulated Amortization Net Carrying Value
22 unchanged sentences
Subscriber relationships 1.5
−Removed: Distribution rights 0.8
Estimated future amortization expense for intangible assets recorded by the Company at December 31, 2021 is as follows:
6 unchanged sentences
Intangibles assets acquired in asset acquisition 62
−Removed: Impairment of distribution rights ( 1,758 )
Foreign currency translation adjustment ( 2 )
5 unchanged sentences
Balance at December 31, 2020 $ 6,592
−Removed: Impairment of KVH Media Group ( 8,732 )
Foreign currency translation adjustment ( 22 )
4 unchanged sentences
Participants age 50 or older may be eligible to make additional contributions.
−Removed: As of December 31, 2020, the Company matches contributions by the Plan participants up to 6 %.
+Added: The Company matches contributions by the Plan participants up to 6 %.
The Company’s contributions vest over a five-year period from the date of hire.
9 unchanged sentences
(11) Revenue from Contracts with Customers (ASC 606)
−Removed: Revenue is recognized when a customer obtains control of promised products and services.
+Added: 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.
−Removed: Out-of-Period Error
−Removed: During the year ended December 31, 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 September 30, 2019 consolidated interim financial statements.
−Removed: In general, the error was an incorrect deferral of product revenue and associated expenses for sales-type leases rather than to recognize those items upon shipment.
−Removed: The balance sheet impact of correcting January 1, 2019 sales-type leases in effect as of January 1, 2018 was a reduction in accumulated deficit of $ 1,680 , comprised of a reduction in current contract assets of $ 2,132 , non-current contract assets of $ 3,110 , current contract liabilities of $ 2,970 , non-current contract liabilities of $ 4,018 and non-current deferred income tax asset of $ 66 .
−Removed: The correction recorded during the year ended December 31, 2019 had the effect of increasing net loss by $ 250 , comprised primarily of a $ 1,350 increase in product sales, a $ 1,591 increase in costs of product sales, and a $ 15 increase in sales, marketing and support expenses.
−Removed: There was no impact to the statement of operations for December 31, 2020.
Disaggregation of Revenue
6 unchanged sentences
Total net sales $ 171,767 $ 158,733
−Removed: (1) Reflects the correction discussed above.
Revenue recognized during the years ended December 31, 2021 and 2020 from amounts included in contract liabilities at the beginning of the fiscal year was approximately $ 2,281 and $ 2,586 , respectively.
−Removed: For mobile connectivity product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and therefore associated revenue is generated, at a point in time, with the exception of certain mini-VSAT contracts which are transferred to customers over time.
−Removed: For mobile connectivity service sales, the delivery of the Company’s performance obligations are transferred to the customer over time, and therefore associated revenue is recognized over time.
−Removed: For inertial navigation product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and therefore associated revenue is generated, at a point in time.
−Removed: For inertial navigation service sales, the Company's performance obligations are generally transferred to customers over time, and therefore associated revenue is recognized over time
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
+Added: For mobile connectivity product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and associated revenue is recognized, at a point in time, with the exception of certain mini-VSAT contracts which are transferred to customers over time.
+Added: For mobile connectivity service sales, the delivery of the Company’s performance obligations are transferred to the customer, and associated revenue is recognized, over time.
+Added: For inertial navigation product sales, the delivery of the Company’s performance obligations are generally transferred to the customer, and associated revenue is recognized, at a point in time.
+Added: For inertial navigation service sales, the Company's performance obligations are generally transferred to customers, and associated revenue is recognized, over time.
Business and Credit Concentrations
3 unchanged sentences
The Company performs ongoing credit evaluations of the financial condition of its customers and generally does not require collateral.
−Removed: The Company had no customers that accounted for 10% or more of its consolidated net sales for the years ended December 31, 2020 or 2019 or accounts receivables as of December 31, 2020 or 2019.
+Added: No single customer accounted for 10% or more of consolidated net sales for the years ended December 31, 2021 or 2020 or accounts receivables as of December 31, 2021 or 2020.
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.
+Added: KVH INDUSTRIES, INC.
+Added: AND SUBSIDIARIES
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
+Added: December 31, 2021 and 2020
+Added: (in thousands, except per share amounts)
(12) Segment Reporting
The Company's reportable segments are mobile connectivity and inertial navigation.
−Removed: 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.
+Added: The financial results of each segment are based on revenues from external customers, costs 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.
4 unchanged sentences
There are no significant inter-segment sales or transactions.
−Removed: 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.
7 unchanged sentences
No other single product class accounts for 10% or more of consolidated net sales.
+Added: The Company operates in a number of major geographic areas, including internationally.
+Added: Revenues from international locations primarily include Canada, European Union countries, and other European countries, as well as countries in Africa, Asia/Pacific, the Middle East, and India.
+Added: Revenues are based upon customer location and internationally represented 60 % and 64 % of consolidated net sales for 2021 and 2020, respectively.
+Added: Sales to Singapore customers represented 11 % of the Company's consolidated net sales for 2021.
+Added: No other individual foreign country represented 10% or more of the Company's consolidated net sales for 2021.
+Added: No individual foreign country represented 10% or more of the Company's consolidated net sales for 2020.
+Added: As of December 31, 2021 and 2020, 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.
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
−Removed: The Company operates in a number of major geographic areas, including internationally.
−Removed: Revenues from international locations primarily include Canada, European Union countries, and other European countries, as well as countries in Africa, Asia/Pacific, the Middle East, and India.
−Removed: Revenues are based upon customer location and internationally represented 64 % and 54 % of consolidated net sales for 2020 and 2019, respectively.
−Removed: No individual foreign country represented 10% or more of the Company's consolidated net sales for 2020 or 2019.
−Removed: As of December 31, 2020 and 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.
−Removed: Net sales and operating income (loss) for the Company's reporting segments and the Company's loss from continuing operations before income tax expense (benefit) for the years ended December 31, 2020 and 2019 were as follows:
+Added: Net sales and operating income (loss) for the Company's reporting segments and the Company's loss before income tax (benefit) expense for the years ended December 31, 2021 and 2020 were as follows:
For the year ended December 31,
2 unchanged sentences
Consolidated net sales $ 171,767 $ 158,733
−Removed: Operating (loss) income:
+Added: Operating income (loss):
Mobile connectivity (1)
5 unchanged sentences
Net interest and other income 8,075 1,171
−Removed: Loss from continuing operations before income tax expense (benefit) $ ( 21,766 ) $ ( 20,012 )
−Removed: (1) Includes an impairment charge of $ 10,490 for the KVH Media Group reporting unit within the mobile connectivity segment as of December 31, 2020.
+Added: Loss before income tax (benefit) expense $ ( 9,871 ) $ ( 21,766 )
+Added: (1) Includes an impairment charge of $ 10,490 for the KVH Media Group reporting unit within the mobile connectivity segment for the year ended December 31, 2020.
Depreciation expense and amortization expense for the Company's segments are presented in the table that follows for the periods presented:
21 unchanged sentences
The total amount the Company repurchased under the repurchase program since the inception of the October 4, 2019 repurchase program was 151 shares of common stock for an approximate cost of $ 1,690 .
−Removed: Except as noted above, there were no other repurchase programs outstanding during 2020.
+Added: There were no repurchase programs outstanding during 2021.
(14) Fair Value Measurements
16 unchanged sentences
Money market mutual funds $ 13,147 $ 13,147 $ — $ — (a)
−Removed: United States treasuries 4,999 4,999 — — (a)
December 31, 2020 Total Level 1 Level 2 Level 3 Valuation
Money market mutual funds $ 20,142 $ 20,142 $ — $ — (a)
+Added: United States treasuries $ 4,999 $ 4,999 $ — $ — (a)
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
−Removed: Certain financial instruments are carried at cost on the consolidated balance sheets, which approximates fair value due to their short-term, highly liquid nature.
−Removed: These instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and debt obligations.
+Added: The carrying amount of certain financial instruments approximates fair value due to their short-term, highly liquid nature.
+Added: 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.
1 unchanged sentence
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.
−Removed: There was no impairment of the Company’s non-financial assets noted as of December 31, 2019.
During 2020, the Company recorded an impairment charge of $ 10,490 to goodwill and intangible assets.
+Added: There was no additional impairment of the Company's non-financial assets noted as of December 31, 2021.
See Note 1(k) and Note 9 for additional details.
The Company does not have any liabilities that are recorded at fair value on a non-recurring basis.
−Removed: (15) Derivative Instruments and Hedging Activities
−Removed: Effective 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.
−Removed: 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.
−Removed: The Company does not use derivatives for speculative purposes.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The interest rate swap was recorded within accrued other liabilities on the balance sheet.
−Removed: The critical terms of the interest rate swaps were designed to mirror the terms of the Company’s mortgage loans.
−Removed: The Company designated these derivatives as cash flow hedges of the variability of the LIBOR-based interest payments on principal over a nine-year period, which ended on April 1, 2019.
−Removed: On April 1, 2019, the two interest rate swaps matured and the Company made its final payment for its mortgage loan thereafter.
(15) Legal Matters
−Removed: 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.
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
The Company has operating leases for office facilities, equipment, and satellite service capacity and related equipment.
1 unchanged sentence
Short-term operating lease costs was $ 237 and $ 244 for the years ended December 31, 2021 and 2020, respectively.
−Removed: Sublease income was $ 134 and $ 132 for the years ended December 31, 2020 and 2019, respectively.
+Added: Sublease income was $ 134 for both the years ended December 31, 2021 and 2020.
Maturities of lease liabilities as of December 31, 2021 under operating leases having an initial or remaining non-cancelable term of one year or more are as follows:
−Removed: 2025 and thereafter
+Added: Years ending December 31,
Total undiscounted lease payments $ 3,318
6 unchanged sentences
During the first quarter of 2018, the Company entered into a five-year financing lease for three satellite hubs for its HTS network.
−Removed: As of December 31, 2020, the gross costs and accumulated depreciation associated with this lease are included in revenue generating assets and amounted to $ 3,068 and $ 1,284 , respectively.
−Removed: The obligations under financing leases are stated at the present value of minimum lease payments.
−Removed: The property and equipment held under this financing lease are amortized on a straight‑line basis over the seven-year estimated useful life of the asset, since the lease meets the bargain purchase option criteria .
−Removed: Amortization of assets held under financing leases is included within depreciation expense.
−Removed: Depreciation expense for these capital assets was $ 438 and $ 439 for the years ended December 31, 2020 and 2019, respectively.
+Added: During the first quarter of 2021, the terms of this lease were adjusted and the Company discontinued use of two satellite hubs and was released from the related payment obligation in exchange for additional satellite service capacity.
+Added: As of December 31, 2021, the gross costs and accumulated depreciation associated with this lease are included in revenue generating
KVH INDUSTRIES, INC.
3 unchanged sentences
(in thousands, except per share amounts)
+Added: assets and amounted to $ 1,268 and $ 710 , respectively.
+Added: The obligations under financing leases are stated at the present value of minimum lease payments.
+Added: The property and equipment held under this financing lease are amortized on a straight‑line basis over the seven-year estimated useful life of the asset, since the lease meets the bargain purchase option criteria .
+Added: Amortization of assets held under financing leases is included within depreciation expense.
+Added: Depreciation expense for the remaining capital assets was $ 181 for both the years ended December 31, 2021 and 2020.
The future undiscounted lease payments under this financing lease as of December 31, 2021 are:
6 unchanged sentences
Weighted-average discount rate - finance leases 1.53 %
−Removed: The Company enters into leases with certain customers primarily of the TracPhone mini-VSAT systems.
+Added: The Company enters into leases with certain customers primarily for 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.
−Removed: 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.
+Added: Upon delivery, the Company records the net present value of all payments under these leases as product revenue, and the related costs of the product are charged to cost of sales.
Interest income is recognized throughout the lease term (typically three to five years ) using an implicit interest rate.
12 unchanged sentences
(in thousands, except per share amounts)
−Removed: (18) Discontinued Operations
−Removed: During the second quarter of 2019, the Company sold its Videotel business.
−Removed: The Company determined that the sale met the requirements for reporting as discontinued operations in accordance with Accounting Standards Codification (ASC) 205-20.
−Removed: 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, presently separately in the Company's consolidated statements of operations:
−Removed: Service sales $ — $ 5,769
−Removed: Costs, expenses and other expense, net:
−Removed: Costs of service sales — 1,807
−Removed: Sales, marketing and support — 1,606
−Removed: General and administrative — 1,619
−Removed: Other expense, net — ( 23 )
−Removed: Income from discontinued operations before tax expense — 714
−Removed: Gain on sale of discontinued operations before tax expense — 53,711
−Removed: Total income from discontinued operations before tax expense $ — $ 54,425
−Removed: Income tax expense on discontinued operations — 5,161
−Removed: Income from discontinued operations, net of taxes $ — $ 49,264
−Removed: Net income from discontinued operations per common share
−Removed: Basic and diluted $ — $ 2.82
−Removed: Weighted average number of common shares outstanding:
−Removed: Basic and diluted 17,669 17,459
−Removed: The following table presents supplemental cash flow information of the discontinued operations:
−Removed: Cash used in operating activities—discontinued operations $ — $ ( 2,638 )
−Removed: Cash provided by investing activities—discontinued operations $ — $ 87,986
−Removed: KVH INDUSTRIES, INC.
−Removed: AND SUBSIDIARIES
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
−Removed: December 31, 2020 and 2019
−Removed: (in thousands, except per share amounts)
−Removed: (19) Quarterly Financial Results (Unaudited)
−Removed: The following financial information for interim periods includes transactions which affect comparability of the quarterly results for the years ended December 31, 2020 and 2019.
−Removed: Financial information for interim periods was as follows:
−Removed: First Quarter Second Quarter Third Quarter Fourth Quarter
−Removed: (in thousands, except per share amounts)
−Removed: Product sales $ 13,094 $ 13,949 $ 16,650 $ 20,926
−Removed: Service sales 23,474 22,977 24,462 23,201
−Removed: Cost of product sales 9,636 9,554 10,422 11,996
−Removed: Cost of service sales 15,195 14,378 14,875 15,069
−Removed: Operating expenses (a)
−Removed: 19,385 16,430 16,318 28,412
−Removed: Loss from continuing operations (a)
−Removed: ( 7,648 ) ( 3,436 ) ( 503 ) ( 11,350 )
−Removed: Net loss from continuing operations (a)
−Removed: ( 6,214 ) ( 3,552 ) ( 537 ) ( 11,637 )
−Removed: $ ( 6,214 ) $ ( 3,552 ) $ ( 537 ) $ ( 11,637 )
−Removed: Net loss continuing operations per share (b) :
−Removed: Basic $ ( 0.35 ) $ ( 0.20 ) $ ( 0.03 ) $ ( 0.65 )
−Removed: Diluted $ ( 0.35 ) $ ( 0.20 ) $ ( 0.03 ) $ ( 0.65 )
−Removed: Net loss per share (b) :
−Removed: Basic $ ( 0.35 ) $ ( 0.20 ) $ ( 0.03 ) $ ( 0.65 )
−Removed: Diluted $ ( 0.35 ) $ ( 0.20 ) $ ( 0.03 ) $ ( 0.65 )
−Removed: Product sales (c)
−Removed: $ 13,215 $ 15,189 $ 14,808 $ 18,713
−Removed: Service sales 23,161 24,541 24,503 23,763
−Removed: Cost of product sales (c)
−Removed: 8,284 12,649 10,823 11,131
−Removed: Cost of service sales 15,373 15,379 15,029 15,475
−Removed: Operating expenses (c)
−Removed: 18,953 18,381 18,317 19,195
−Removed: Loss from continuing operations (c)
−Removed: ( 6,234 ) ( 6,679 ) ( 4,858 ) ( 3,325 )
−Removed: Net loss from continuing operations (c)
−Removed: ( 6,497 ) ( 3,294 ) ( 3,308 ) ( 2,910 )
−Removed: Net income (loss) from discontinued operations 243 50,630 ( 1,036 ) ( 573 )
−Removed: Net (loss) income (c)
−Removed: $ ( 6,254 ) $ 47,336 $ ( 4,344 ) $ ( 3,483 )
−Removed: Net loss continuing operations per share (b) :
−Removed: Basic $ ( 0.38 ) $ ( 0.19 ) $ ( 0.19 ) $ ( 0.17 )
−Removed: Diluted $ ( 0.38 ) $ ( 0.19 ) $ ( 0.19 ) $ ( 0.17 )
−Removed: Net income (loss) discontinued operations per share (b) :
−Removed: Basic $ 0.01 $ 2.90 $ ( 0.06 ) $ ( 0.03 )
−Removed: Diluted $ 0.01 $ 2.90 $ ( 0.06 ) $ ( 0.03 )
−Removed: Net (loss) income per share (b) :
−Removed: Basic $ ( 0.36 ) $ 2.71 $ ( 0.25 ) $ ( 0.20 )
−Removed: Diluted $ ( 0.36 ) $ 2.71 $ ( 0.25 ) $ ( 0.20 )
−Removed: Includes an impairment charge of $ 10,490 for the KVH Media Group reporting unit within the mobile connectivity segment during the fourth quarter of 2020.
−Removed: Net loss per share is computed independently for each of the quarters.
−Removed: Therefore, the net loss per share for the four quarters may not equal the annual net loss per share data.
−Removed: The Company’s product sales, costs of product sales, sales, marketing and support expense, income tax benefit and net loss from continuing operations for 2019 include adjustments to correct immaterial prior period accounting errors related to the implementation and application of ASC 606.
−Removed: See Note 11 of our consolidated financial statements for more information.
+Added: In 2021, the Company entered into three-year leases for its TracPhone mini-VSAT systems, in which ownership of the hardware does not transfer to the lessee by the end of the lease term.
+Added: As a result, and in light of other factors indicated in ASC 842, these leases are classified as operating leases.
+Added: As of December 31, 2021, the gross costs and accumulated depreciation associated with these operating leases are included in revenue generating assets and amounted to $ 1,444 and $ 154 , respectively.
+Added: They are depreciated on a straight-line basis over a five-year estimated useful life.
+Added: Depreciation expense for these assets was $ 154 for the year ended December 31, 2021.
+Added: For the year ended December 31, 2021, lease revenue of $ 243 was recognized in service sales in the statements of operations.
+Added: As of December 31, 2021, minimum future lease payments to be received on the operating leases are as follows:
+Added: Total $ 1,091
+Added: (17) Subsequent Events
+Added: On March 6, 2022, the Company's President and Chief Executive Officer, Martin Kits van Heyningen retired from his executive and Board roles after more than 40 years of service.
+Added: The Board of Directors has engaged an executive search firm to identify a new Chief Executive Officer.
+Added: Bruun, the Company’s Chief Operating Officer, has been appointed as its interim President and Chief Executive Officer.
+Added: In March 2022, the Company also restructured its operations to reduce costs and better reflect a more focused strategy, which resulted in an approximately 10 % reduction in its workforce.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.