Dear Fellow Shareholders In 2017, we continued to (cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:17)(cid:3)(cid:47)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:23)(cid:19)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:663)(cid:72)(cid:72)(cid:87)(cid:3) execute on our mission to be of approximately 21,000 commercial aircraft and (cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:21)(cid:24)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3)(cid:663)(cid:72)(cid:72)(cid:87)(cid:3) the leading global provider of approximately 23,000 business aircraft are (cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:69)(cid:85)(cid:82)(cid:68)(cid:71)(cid:69)(cid:68)(cid:81)(cid:71)(cid:3) currently broadband connected. We expect that connectivity and wireless nearly all of the world’s commercial aircraft and (cid:68)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:662)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:76)(cid:85)(cid:70)(cid:85)(cid:68)(cid:73)(cid:87)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3) entertainment services. be broadband connected over the next decade, providing growth opportunities for Gogo. We made important progress executing on our strategic priorities and continued to add Since our founding, we have been focused on (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:662)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:69)(cid:68)(cid:81)(cid:71)(cid:90)(cid:76)(cid:71)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:68)(cid:83)(cid:76)(cid:71)(cid:3) meeting the needs of our aviation partners and deployment of 2Ku, our next generation have built a comprehensive portfolio of solutions to global satellite connectivity system. connect passengers and airlines to the Internet as if they’ve never left the ground. Today, Gogo is the During the year, our services connected approximately only company that offers network solutions suitable 3,200 commercial aircraft and approximately 4,700 for operation on most of the world’s business and (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:76)(cid:85)(cid:70)(cid:85)(cid:68)(cid:73)(cid:87)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:662)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:85)(cid:88)(cid:81)(cid:90)(cid:68)(cid:92)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3) (cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:68)(cid:76)(cid:85)(cid:70)(cid:85)(cid:68)(cid:73)(cid:87)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:76)(cid:81)(cid:16)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:81)(cid:72)(cid:87)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3) growth ahead of us as Gogo operates in a large, engineered to provide industry-leading cost, capacity, attractive and underpenetrated global aviation coverage, reliability, and aero-performance. Strategic priorities While we are encouraged with the strong position We are highly focused on aligning our resources to Gogo has established in a highly valuable and achieve operational excellence and deliver superior attractive market, we also recognize the work ahead quality and service for airlines and passengers. of us, and we are moving forward with urgency We are committed to continuing to rollout 2Ku and (cid:87)(cid:82)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:93)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:662)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) improving its availability to provide a great user opportunities in our markets. Shortly after I became (cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:68)(cid:76)(cid:85)(cid:70)(cid:85)(cid:68)(cid:73)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:17)(cid:3)(cid:3) CEO in March 2018, we introduced four strategic priorities that will drive the actions we are taking to Our air-to-ground network, which is currently optimize Gogo’s position for long-term success: supporting more than 7,000 business and commercial aircraft operating in North America, will receive a › Driving quality for airlines ten-fold increase in speed once ATG-NG is deployed. and passengers Globally, our Ku network supports more than 800 Ku and 2Ku aircraft and will support more than › Sharpening our operational focus 2,200 within a few years based on awarded aircraft as of 2017. These additional 2Ku equipped aircraft › (cid:36)(cid:70)(cid:75)(cid:76)(cid:72)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:82)(cid:662)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) and greater use of high throughput satellites money we have in the bank (HTS) will deliver an unprecedented amount of › Driving shareholder value bandwidth to the aviation industry that we intend (cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:81)(cid:72)(cid:87)(cid:76)(cid:93)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:662)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:17)(cid:3)(cid:3)(cid:3) Focused on the future Looking ahead, we expect to build on Gogo’s strong as we install the large base of already awarded (cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:72)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) aircraft and execute on our four strategic priorities. strategic value we have created in our Commercial As passenger engagement increases and Aviation and Business Aviation businesses. Connectivity (cid:68)(cid:76)(cid:85)(cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:72)(cid:73)(cid:662)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3) and the Internet of Things (IoT) is transforming our connectivity provides, our platforms and services very lives from touching how we operate our cars will become even more invaluable to aviation. And (cid:87)(cid:82)(cid:3)(cid:75)(cid:82)(cid:80)(cid:72)(cid:86)(cid:15)(cid:3)(cid:80)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:71)(cid:72)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:73)(cid:662)(cid:70)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:76)(cid:85)(cid:83)(cid:79)(cid:68)(cid:81)(cid:72)(cid:86)(cid:17)(cid:3) by combining our talent and customer focus, we are (cid:42)(cid:82)(cid:74)(cid:82)(cid:587)(cid:86)(cid:3)(cid:76)(cid:81)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:72)(cid:87)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3) establishing a peerless position in our industry. roadmap deliver the most comprehensive and forward looking set of solutions in the industry and I would like to close by thanking the Board for we are well positioned to capitalize on our growth their trust in me as I begin my journey as CEO. In and market opportunities. Our networks, systems, addition, on behalf of everyone at Gogo, we also and solutions are supported by approximately thank and acknowledge Michael Small for his 1,200 dedicated employees providing the tools and years of service that helped establish the Company (cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:87)(cid:76)(cid:86)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:68)(cid:91)(cid:76)(cid:80)(cid:76)(cid:93)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:663)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:72)(cid:87)(cid:17)(cid:3)(cid:3) as a global leader. Most of all, I want to thank our employees, customers and shareholders for As we prioritize our efforts and resources on our supporting Gogo. We take our responsibilities very (cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:83)(cid:85)(cid:82)(cid:80)(cid:76)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:88)(cid:81)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:662)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3) seriously, and we are working hard every day to that our results will improve. We believe that connect aircraft and win in the marketplace. Gogo has a clear path to achieving our objectives Sincerely, Oakleigh Thorne UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K (MarkOne): È ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF 1934. ForthefiscalyearendedDecember31,2017 OR ‘ TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACT OF1934. Forthetransitionperiodfrom to CommissionFileNumber:001-35975 Gogo Inc. (Exactnameofregistrantasspecifiedinitscharter) Delaware 27-1650905 (Stateorotherjurisdictionof (I.R.S.Employer IncorporationorOrganization) IdentificationNo.) 111NorthCanalSt.,Suite1500 Chicago,IL60606 (Addressofprincipalexecutiveoffices) TelephoneNumber(312)517-5000 (Registrant’stelephonenumber,includingareacode) Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecurities Act. Yes ‘ No È IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)ofthe Act. Yes ‘ No È Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecurities ExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and (2)hasbeensubjecttosuchfilingrequirementsforthepast90days. Yes È No ‘ IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,every InteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationS-T(§232.405ofthischapter)duringthe preceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles). Yes È No ‘ IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-K(§229.405ofthischapter)isnot containedherein,andwillnotbecontained,tothebestofregistrant’sknowledge,indefinitiveproxyorinformationstatements incorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K. ‘ Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfilerorasmaller reportingcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler”and“smallerreportingcompany”inRule12b-2of theExchangeAct. Largeacceleratedfiler ‘ Acceleratedfiler È Non-acceleratedfiler ‘ (Donotcheckifsmallerreportingcompany) Smallerreportingcompany ‘ Emerginggrowthcompany ‘ Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodfor complyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct. ‘ Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct). Yes ‘ No È Theaggregatemarketvalueofthevotingandnon-votingstockheldbynon-affiliatesoftheregistrantasofJune30,2017,thelast businessdayoftheregistrant’smostrecentlycompletedsecondfiscalquarter,was$667,993,801basedupontheclosingpricereportedfor suchdateontheNASDAQGlobalSelectMarket. AsofFebruary16,2018,86,843,928sharesof$0.0001parvaluecommonstockwereoutstanding. DocumentsIncorporatedByReference Portionsoftheregistrant’sdefinitiveProxyStatementforitsAnnualMeetingofStockholdersscheduledtobeheldJune8,2018are incorporatedbyreferenceintoPartIIIofthisForm10-K.SuchproxystatementwillbefiledwiththeSecuritiesandExchangeCommission within120daysoftheregistrant’sfiscalyearendedDecember31,2017. GogoInc. INDEX Page PartI. Item1. Business 2 Item1A. RiskFactors 19 Item1B. UnresolvedStaffComments 51 Item2. Properties 51 Item3. LegalProceedings 51 Item4. MineSafetyDisclosures 51 PartII. Item5. MarketforRegistrant’sCommonEquity,RelatedStockholderMattersandIssuerPurchasesof EquitySecurities 52 Item6. SelectedFinancialData 54 Item7. Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations 56 Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk 91 Item8. FinancialStatementsandSupplementaryData 93 Item9. ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosure 131 Item9A. ControlsandProcedures 131 Item9B. OtherInformation 131 PartIII. Item10. Directors,ExecutiveOfficersandCorporateGovernance 133 Item11. ExecutiveCompensation 133 Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholder Matters 133 Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence 133 Item14. PrincipalAccountingFeesandServices 133 PartIV. Item15. Exhibits,FinancialStatementSchedules 134 Item16. Form10-KSummary 141 1 INTRODUCTORYNOTE Unlessthecontextotherwiseindicatesorrequires,asusedinthisAnnualReportonForm10-Kforthe fiscalyearendedDecember31,2017referencesto:(i)“we,”“us,”“our,”“Gogo,”orthe“Company”referto GogoInc.anditsdirectlyandindirectlyownedsubsidiariesasacombinedentity,exceptwhereotherwisestated orwhereitisclearthatthetermmeansonlyGogoInc.exclusiveofitssubsidiaries;(ii)“CA,”“CAbusiness”or “commercialaviation”refertoourCommercialAviationNorthAmerica,orCA-NA,segmentandour CommercialAviationRestofWorld,orCA-ROW,segment,takenasawholeand(iii)“fiscal,”whenusedin referencetoanytwelve-monthperiodendedDecember31,referstoourfiscalyearendedDecember31.Unless otherwiseindicated,informationcontainedinthisAnnualReportisasofDecember31,2017.Wehavemade roundingadjustmentstoreachsomeofthefiguresincludedinthisAnnualReportand,unlessotherwise indicated,percentagespresentedinthisAnnualReportareapproximate. CautionaryNoteRegardingForward-LookingStatements Certainstatementsinthisreportmayconstitute“forward-looking”statementswithinthemeaningofthe PrivateSecuritiesLitigationReformActof1995.Theseforward-lookingstatementsinclude,withoutlimitation, statementsregardingourindustry,businessstrategy,plans,goalsandexpectationsconcerningourmarket position,internationalexpansion,futuretechnologies,futureoperations,margins,profitability,future efficiencies,capitalexpenditures,liquidityandcapitalresourcesandotherfinancialandoperatinginformation. Whenusedinthisdiscussion,thewords“anticipate,”“assume,”“believe,”“budget,”“continue,”“could,” “estimate,”“expect,”“forecast”,“intend,”“may,”“plan,”“potential,”“predict,”“project,”“should,”“will,” “future”andthenegativeoftheseorsimilartermsandphrasesareintendedtoidentifyforward-looking statementsinthisAnnualReportonForm10-K.Forward-lookingstatementsarebasedoncurrentexpectations andassumptionsthataresubjecttorisksanduncertaintiesthatmaycauseactualresultstodiffermaterially.We describerisksanduncertaintiesthatcouldcauseactualresultsandeventstodiffermateriallyunder“Risk Factors,”“QuantitativeandQualitativeDisclosuresaboutMarketRisk,”and“Management’sDiscussionand Analysis”inthisreport.Weundertakenoobligationtoupdateorrevisepubliclyanyforward-lookingstatements, whetherbecauseofnewinformation,futureevents,orotherwise. Item1. Business WhoWeAre GogoistheinflightInternetcompany.Ourmissionistoprovideground-likeconnectivitytoeverydeviceon everyflightaroundtheglobe,enablingsuperiorpassengerexperiencesandefficientflightoperations.To accomplishourmission,wedesign,buildandoperatededicatedsatelliteandair-togroundnetworks,engineer, installandmaintaininflightsystemsofproprietaryhardwareandsoftware,anddelivercustomizableconnectivity andwirelessentertainmentservicesandglobalsupportcapabilitiestoouraviationpartners. Wearetheleadingglobalproviderofinflightbroadbandconnectivityandwirelessentertainmentservices, withourequipmentinstalledandservicesprovidedonapproximately3,200commercialaircraftand approximately4,700businessaircraftasofDecember31,2017.Ourindustryischaracterizedbyrapid technologicaldevelopment,andwecontinuallyinvestinresearchanddevelopmenttomaintainourleading globalmarketshareandsupportouraviationpartners’needs.In2014,weannouncedournextgeneration2Ku globalsatellitesystem(“2Ku”),whichhasbecomethemostrapidlyadoptedtechnologyintheindustry.Sixteen domesticandinternationalairlineshaveselected2Kuforinstallationonapproximately2,000commercialaircraft andasofDecember31,2017,our2Kusystemhadbeeninstalledonmorethan550aircraft.Oftheaircraft installedwith2Kuin2017,298wereupgradesfromcurrently-installedGogosystems.The2Kusystemis currentlycapableofdeliveringpeakspeedsof100Mbpstotheaircraft.Wealsocontinuetoinnovateand improveourNorthAmericanterrestrialnetworksbydevelopinganddeployinganext-generationair-to-ground network(“ATG-NG”),whichwillbecommerciallyavailablein2018forbothcommercialaviationandbusiness 2
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