Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.6.0.2
Segment Information
12 Months Ended
Dec. 31, 2016
Segment Information [Abstract]  
SEGMENT INFORMATION
19. SEGMENT INFORMATION

 

The Company has acquired three material companies since January 1, 2014. With each acquisition, the Company evaluated the newly-acquired company’s sources of revenues and costs of revenues. Due to continued expansion, the Company evaluated its recent acquisitions and their impact upon the existing segment structure. As of December 31, 2014, the Company operated within four operating segments that were aggregated into three reportable segments. During the year ended December 31, 2015, the Company determined that its activities within the cloud services operating segment were of a material nature to the Company as a whole and had different margins than the other components of the managed services segment. As such, the Company determined that the cloud services and managed services segments should be presented separately within the consolidated financial statements. During the year ended December 31, 2016, the Company sold VaultLogix and Axim, which had constituted a majority of the Company’s cloud services segment. As of December 31, 2016, the Company determined that it has three reportable segments: applications and infrastructure, professional services, and managed services. The results of VaultLogix and Axim, the former cloud services segment, are included in discontinued operations on the consolidated statement of operations for the years ended December 31, 2016 and 2015.

 

The Company identified its operating segments based on the services provided by its various operations and the financial information used by its chief operating decision maker to make decisions regarding the allocation of resources to and the financial performance of the operating segments. The reporting segments represent an aggregation of individual operating segments with similar economic characteristics. The applications and infrastructure operating segment is an aggregation of the component operations of TNS, the AWS Entities, Tropical, RM Leasing, and RM Engineering. The professional services operating segment is an aggregation of the operations of the ADEX Entities and SDNE. The managed services operating segment is primarily comprised of the operations of IPC and RentVM.

 

In addition to the operating segments, the Company has determined that certain costs related to the general operations of the Company cannot be reasonably allocated to each individual segment. These costs are not part of the factors that the chief operating decision maker uses to calculate gross margin. As such, the Company has chosen to present those costs within a general “Corporate” line item for presentation purposes. The Company’s former VaultLogix and Axim subsidiaries, which were included in the Company’s former cloud services segment, were reclassified as “discontinued operations” to conform to classifications used in the current period related to the sale of VaultLogix, VaultLogix’s subsidiaries and Axim. The segment information as of and for the year ended December 31, 2015 has been retrospectively updated to reflect this change. 

Segment information relating to the Company's results of continuing operations was as follows:

 

    Year Ended December 31,  
    2016     2015  
             
Revenue by Segment            
Applications and infrastructure   $ 22,173     $ 21,263  
Professional services     36,937       26,655  
Managed services     18,890       26,190  
Total   $ 78,000     $ 74,108  
                 
Gross Profit by Segment                
Applications and infrastructure   $ 3,632     $ 6,384  
Professional services     10,474       5,651  
Managed services     5,699       8,209  
Total   $ 19,805     $ 20,244  
                 
Operating Income (Loss) by Segment                
Applications and infrastructure   $ (1,755 )   $ 1,092  
Professional services     1,991       765  
Managed services     (6,105 )     (13,992 )
Corporate     (12,755 )     (13,811 )
Total   $ (18,624 )   $ (25,946 )
                 
Interest Expense by Segment                
Applications and infrastructure   $ 21     $ 22  
Professional services     -       -  
Managed services     30       20  
Corporate     13,733       9,355  
 Total   $ 13,784     $ 9,397  
                 
Total Assets by Segment                
Applications and infrastructure   $ 16,177     $ 19,593  
Professional services     21,334       18,449  
Managed services     15,820       24,718  
Corporate     1,238       7,628  
Assets of discontinued operations     -       21,843  
Total   $ 54,569     $ 92,231  
                 
Goodwill by Segment                
Applications and infrastructure   $ 6,906     $ 6,906  
Professional services     10,081       9,257  
Managed services     6,381       7,495  
 Total   $ 23,368     $ 23,658  
                 
Depreciation and Amortization Expense by Segment                
Applications and infrastructure   $ 789     $ 962  
Professional services     516       267  
Managed services     787       2,140  
Corporate     21       16  
Total   $ 2,113     $ 3,385  

    Year Ended December 31, 2016  
    Domestic     Foreign     Total  
Revenues by Segment by Geographic Region                  
Applications and infrastructure   $ 21,254     $ 919     $ 22,173  
Professional services     36,582       355       36,937  
Managed services     18,890       -       18,890  
Total   $ 76,726     $ 1,274     $ 78,000  

 

    Year Ended December 31, 2015  
    Domestic     Foreign     Total  
Revenues by Segment by Geographic Region                  
Applications and infrastructure   $ 20,271     $ 992     $ 21,263  
Professional services     26,535       120       26,655  
Managed services     26,190       -       26,190  
Total   $ 72,996     $ 1,112     $ 74,108  

 

    Year Ended December 31, 2016  
    Domestic     Foreign     Total  
Gross Profit by Segment by Geographic Region                  
Applications and infrastructure   $ 3,427     $ 205     $ 3,632  
Professional services     10,417       57       10,474  
Managed services     5,699       -       5,699  
Total   $ 19,543     $ 262     $ 19,805  

 

    Year Ended December 31, 2015  
    Domestic     Foreign     Total  
Gross Profit by Segment by Geographic Region                  
Applications and infrastructure   $ 6,218     $ 166     $ 6,384  
Professional services     5,621       30       5,651  
Managed services     8,209       -       8,209  
Total   $ 20,048     $ 196     $ 20,244  

 

    Year Ended December 31, 2016  
    Domestic     Foreign     Total  
Operating Income (Loss) by Segment by Geographic Region                  
Applications and infrastructure   $ (1,854 )   $ 99     $ (1,755 )
Professional services     1,944       47       1,991  
Managed services     (6,105 )     -       (6,105 )
Corporate     (12,755 )     -       (12,755 )
Total   $ (18,770 )   $ 146     $ (18,624 )

 

    Year Ended December 31, 2015  
    Domestic     Foreign     Total  
Operating Income (Loss) by Segment by Geographic Region                  
Applications and infrastructure   $ 1,082     $ 10     $ 1,092  
Professional services     799       (34 )     765  
Managed services     (13,992 )     -       (13,992 )
Corporate     (13,811 )     -       (13,811 )
Total   $ (25,922 )   $ (24 )   $ (25,946 )

 

For the year ended December 31, 2016, revenues from the largest customer of the applications and infrastructure, professional services and managed services segments were $5,761, $4,929 and $1,981, respectively, which represented 7%, 6% and 3%, respectively, of the Company’s consolidated revenue.

 

For the year ended December 31, 2015, revenues from the largest customer of the applications and infrastructure, professional services, and managed services segments were $6,072, $10,847 and $3,613, respectively, which represented 8%, 15% and 5%, respectively, of the Company’s consolidated revenue.