VIASAT INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As required by SEC Rule 13a-15(b), we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of March 31, 2022, the end of the period covered by this report. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2022. Management’s Report on Internal Control Over Financial Reporting The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under the supervision and with the participation of the company’s management, including our Chief Executive Officer and Chief Financial Officer, the company conducted an evaluation of the effectiveness of its internal control over financial reporting based on criteria established in the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the company’s management concluded that its internal control over financial reporting was effective as of March 31, 2022. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We excluded RigNet and EBI from our assessment of internal control over financial reporting as of March 31, 2022 because we acquired RigNet and EBI in purchase business combinations during fiscal year 2022. RigNet and EBI are wholly-owned subsidiaries whose total assets and total revenues represent approximately 6% and 3% of total assets, respectively, and approximately 6% and 1% of total revenues, respectively, as of and for the year ended March 31, 2022. The company’s independent registered public accounting firm has audited the effectiveness of the company’s internal control over financial reporting as of March 31, 2022, as stated in their report which appears on page F-1. Changes in Internal Control Over Financial Reporting We regularly review our system of internal control over financial reporting and make changes to our processes and systems to improve controls and increase efficiency, while ensuring that we maintain an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes. During the quarter ended March 31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION On May 27, 2022, the Compensation and Human Resources Committee of our Board of Directors approved a form of amendment to the Change in Control Severance Agreement to be entered into with each of our executive officers (each, an Amendment). Pursuant to the existing Change in Control Severance Agreements, each executive officer is entitled to receive certain severance payments and benefits in the event of such executive officer’s termination of employment by us without “cause” or the executive officer’s resignation for “good reason”, in either case, within two months prior to or within 18 months following a “change in control” of Viasat (as defined in the applicable Change in 62 Control Severance Agreement). Each Amendment broadens the definition of a “change in control” of Viasat to include the consummation of the Inmarsat Transaction. The foregoing description of the Amendments is qualified in its entirety by reference to the form of Change in Control Severance Agreement, a copy of which has been previously filed as Exhibit 10.1 to Viasat’s Current Report on Form 8-K filed with the SEC on August 4, 2010, and the form of Amendment, a copy of which is filed hereto as Exhibit 10.12.1 and is incorporated herein by reference. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 63 PART III ITEM 10. DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE The information required by this item is included in our definitive Proxy Statement to be filed with the SEC in connection with our 2022 Annual Meeting of Stockholders (the Proxy Statement) under the headings “Corporate Governance Principles and Board Matters,” “Election of Directors” and “Ownership of Securities,” and is incorporated herein by reference. The information required by this item relating to our executive officers is included under the caption “Executive Officers” in Part I of this Form 10-K and is incorporated herein by reference into this section. We have adopted a code of ethics applicable to all of our employees (including our principal executive officer, principal financial officer, principal accounting officer and controller). The code of ethics is designed to deter wrongdoing and to promote honest and ethical conduct and compliance with applicable laws and regulations. The full text of our code of ethics is published on our website at www.viasat.com . We intend to disclose future amendments to certain provisions of our code of ethics, or waivers of such provisions granted to executive officers and directors, on our website within four business days following the date of such amendment or waiver. ITEM 11. EXECUTI VE COMPENSATION The information required by this item is included in the Proxy Statement under the heading “Executive Compensation” and is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWN ERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this item is included in the Proxy Statement under the headings “Ownership of Securities” and “Executive Compensation — Equity Compensation Plan Information,” and is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item is included in the Proxy Statement under the headings “Corporate Governance Principles and Board Matters” and “Certain Relationships and Related Transactions,” and is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUN TING FEES AND SERVICES The information required by this item is included in the Proxy Statement under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” and is incorporated herein by reference. 64 PART IV ITEM 15. EXHIBITS, FINAN CIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this report: (1) Consolidated Financial Statements Page Number Report of Independent Registered Public Accounting Firm F- 1 Consolidated Balance Sheets as of March 31, 2022 and March 31, 2021 F- 4 Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended March 31, 2022, March 31, 2021 and March 31, 2020 F- 5 Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2022, March 31, 2021 and March 31, 2020 F- 6 Consolidated Statements of Equity for the fiscal years ended March 31, 2022, March 31, 2021 and March 31, 2020 F- 7 Notes to the Consolidated Financial Statements F- 8 (2) Schedule II — Valuation and Qualifying Accounts for the three fiscal years ended March 31, 2022 II- 1 All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) Exhibits Exhibit Number Incorporated by Reference Filed or Furnished Herewith Exhibit Description Form File No. Exhibit Filing Date 2.1 Agreement and Plan of Merger, dated as of December 20, 2020, by and among Viasat, Inc., Royal Acquisition Sub, Inc. and RigNet, Inc. 8-K 000-21767 2.1 12/21/2020 2.2* Share Purchase Agreement, dated as of November 8, 2021, by and among Viasat, Inc. and the shareholders of Connect Topco Limited party thereto 8-K 000-21767 2.1 11/08/2021 3.1 Second Amended and Restated Certificate of Incorporation of ViaSat, Inc. 10-Q 000-21767 3.1 11/14/2000 3.2 Second Amended and Restated Bylaws of ViaSat, Inc. 8-K 000-21767 3.1 12/04/2012 4.1 Form of Common Stock Certificate (p) S-1/A 333-13183 4.1 11/05/1996 4.2 Indenture dated as of September 21, 2017, between ViaSat, Inc. and Wilmington Trust, National Association, as trustee 8-K 000-21767 4.1 09/21/2017 4.3 Form of 5.625% Senior Note due 2025 of ViaSat, Inc. (attached as Exhibit A to the Indenture filed as Exhibit 4.2 hereto) 8-K 000-21767 4.1 09/21/2017 4.4 Indenture, dated as of March 27, 2019, between Viasat, Inc. and Wilmington Trust, National Association, as trustee and as collateral trustee 8-K 000-21767 4.1 03/27/2019 4.5 Form of 5.625% Senior Secured Note due 2027 of Viasat, Inc. (attached as Exhibit A to the Indenture filed as Exhibit 4.4 hereto) 8-K 000-21767 4.1 03/27/2019 4.6 Indenture, dated as of June 24, 2020, between Viasat, Inc. and Wilmington Trust, National Association, as trustee. 8-K 000-21767 4.1 06/24/2020 4.7 Form of 6.500% Senior Note due 2028 of Viasat, Inc. (attached as Exhibit A to the Indenture filed as Exhibit 4.6 hereto) 8-K 000-21767 4.1 06/24/2020 65 4.8 Description of Registered Securities 10-K 000-21767 4.6 05/29/2020 10.1 Voting and Support Agreement, dated as of November 8, 2021, by and among Viasat, Inc., Baupost Group Securities, L.L.C. and the shareholders of Connect Topco Limited party thereto 8-K 000-21767 10.1 11/08/2021 10.2 Form of Voting and Support Agreement (executive officers and directors) 8-K 000-21767 10.2 11/08/2021 10.3* Stockholders Agreement, dated as of November 8, 2021, by and among Viasat, Inc. and the shareholders of Connect Topco Limited party thereto 8-K 000-21767 10.3 11/08/2021 10.4 Form of Indemnification Agreement between ViaSat, Inc. and each of its directors and officers 8-K 000-21767 99.1 03/07/2008 10.5** Viasat, Inc. Employee Stock Purchase Plan (As Amended and Restated Effective September 2, 2021) 8-K 000-21767 10.2 09/03/2021 10.6** 1996 Equity Participation Plan of Viasat, Inc. (As Amended and Restated Effective September 2, 2021) 8-K 000-21767 10.1 09/03/2021 10.7** Form of Stock Option Agreement for the 1996 Equity Participation Plan of ViaSat, Inc. 10-K 000-21767 10.4 05/26/2015 10.8** Form of Performance Stock Option Agreement for the 1996 Equity Participation Plan of ViaSat, Inc. 10-Q 000-21767 10.1 02/9/2018 10.9** Form of Restricted Stock Unit Award Agreement for the 1996 Equity Participation Plan of ViaSat, Inc.—Global 10-K 000-21767 10.5 05/25/2017 10.10** Form of Restricted Stock Unit Award Agreement for the 1996 Equity Participation Plan of ViaSat, Inc.—Independent Director 10-K 000-21767 10.6 05/26/2015 10.11** Form of Restricted Stock Unit Award Agreement for the 1996 Equity Participation Plan of ViaSat, Inc.—Executive 10-K 000-21767 10.7 05/26/2015 10.12** Form of Change in Control Severance Agreement between ViaSat, Inc. and each of its executive officers 8-K 000-21767 10.1 08/04/2010 10.12.1** Form of First Amendment to Change in Control Severance Agreement between ViaSat, Inc. and each of its executive officers X 10.13** RigNet, Inc. 2010 Omnibus Incentive Plan S-8 333-255690 10.3 04/30/2021 66 10.13.1** Amendment to RigNet, Inc. 2010 Omnibus Incentive Plan S-8 333-255690 10.4 04/30/2021 10.14** RigNet, Inc. 2019 Omnibus Incentive Plan S-8 333-255690 10.5 04/30/2021 10.14.1** Amendment to RigNet, Inc. 2019 Omnibus Incentive Plan S-8 333-255690 10.6 04/30/2021 10.15** Restricted Stock Unit Award Agreement, by and between RigNet, Inc. and Errol Olivier, effective as of January 8, 2020 S-8 333-255690 10.8 04/30/2021 10.16 Credit Agreement dated as of November 26, 2013, by and among ViaSat, Inc., Union Bank, N.A. (as agent) and the other lenders party thereto 8-K 000-21767 10.1 11/26/2013 10.16.1 First Amendment to Credit Agreement and Other Loan Documents dated as of March 12, 2015, by and among ViaSat, Inc., Union Bank, N.A. (as agent) and the other lenders party thereto 8-K 000-21767 10.2 03/13/2015 10.16.2 Second Amendment to Credit Agreement and Other Loan Documents dated as of May 24, 2016, by and among Viasat, Inc., MUFG Union Bank, N.A. (as agent) and the other lenders party thereto 8-K 000-21767 10.1 05/24/2016 10.16.3 Third Amendment to Credit Agreement dated as of May 24, 2018 by and among Viasat, Inc., MUFG Union Bank, N.A. (as agent) and the other lenders party thereto 10-K 000-21767 10.10.3 05/30/2018 10.16.4 Fourth Amendment to Credit Agreement dated as of January 18, 2019, by and among Viasat, Inc., MUFG Union Bank, N.A. (as administrative agent and collateral agent) and the other lenders party thereto 8-K 000-21767 10.1 01/22/2019 10.16.5 Fifth Amendment to Credit Agreement, dated as of November 23, 2021, by and among Viasat, Inc., MUFG Union Bank, N.A. (as administrative agent and collateral agent), and the other lenders party thereto 8-K 000-21767 10.1 11/30/2021 10.16.6 Sixth Amendment to Credit Agreement, dated as of March 4, 2022, by and among Viasat, Inc., MUFG Union Bank, N.A. (as administrative agent and collateral agent), and the other lenders party thereto 8-K 000-21767 10.2 03/04/2022 10.17 Credit Agreement dated as of March 12, 2015, by and among ViaSat Technologies Limited, ViaSat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im facility agent) and the Export-Import Bank of the United States 8-K 000-21767 10.1 03/13/2015 67 10.17.1 First Amendment to Credit Agreement, dated as of June 12, 2015, by and among ViaSat Technologies Limited, ViaSat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im Facility Agent) and the Export-Import Bank of the United States 10-Q 000-21767 10.1 08/10/2015 10.17.2 Second Amendment Agreement, dated as of March 23, 2016, by and among ViaSat Technologies Limited, ViaSat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im Facility Agent) and the Export-Import Bank of the United States 8-K 000-21767 10.1 03/24/2016 10.17.3 Third Amendment Agreement, dated as of October 11, 2016, by and among ViaSat Technologies Limited, ViaSat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im Facility Agent) and the Export-Import Bank of the United States 8-K 000-21767 10.1 10/12/2016 10.17.4 Fourth Amendment to Credit Agreement, dated as of July 17, 2018, by and among Viasat Technologies Limited, Viasat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im Facility Agent) and the Export-Import Bank of the United States 8-K 000-21767 10.1 07/23/2018 10.17.5 Fifth Amendment Agreement, dated as of February 28, 2019, by and among Viasat Technologies Limited, Viasat, Inc., JPMorgan Chase Bank, National Association (as Ex-Im Facility Agent) and the Export-Import Bank of the United States 8-K 000-21767 10.1 02/28/2019 10.18 Credit Agreement, dated as of March 4, 2022, by and among Viasat, Inc., Bank of America, N.A. (as administrative agent and collateral agent), and the other lenders party thereto 8-K 000-21767 10.1 03/04/2022 21.1 Subsidiaries X 23.1 Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm X 24.1 Power of Attorney (see signature page) X 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer X 68 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer X 32.1 Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. X 101.SCH Inline XBRL Taxonomy Extension Schema X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase X 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase X 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) X * Certain schedules to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2) or 601(a)(5) (as applicable). The registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request; provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished. ** Indicates management contract, compensatory plan or arrangement. (p) Filed in paper. ITEM 16 . FORM 10-K SUMMARY None. 69 SIGNAT URES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VIASAT, INC. By: /s/ RICHARD BALDRIDGE President and Chief Executive Officer Date: May 27, 2022 Know all persons by these presents, that ea ch person whose signature appears below constitutes and appoints Richard Baldridge and Shawn Duffy, jointly and severally, his or her attorneys-in-fact, each with the full power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection the rewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ RICHARD BALDRIDGE President, Chief Executive Officer and Director May 27, 2022 Richard Baldridge (Principal Executive Officer) /s/ SHAWN DUFFY Senior Vice President and May 27, 2022 Shawn Duffy Chief Financial Officer (Principal Financial and Accounting Officer) /s/ MARK DANKBERG Executive Chairman May 27, 2022 Mark Dankberg /s/ JAMES BRIDENSTINE Director May 27, 2022 James Bridenstine /s/ ROBERT JOHNSON Director May 27, 2022 Robert Johnson /s/ SEAN PAK Director May 27, 2022 Sean Pak /s/ VARSHA RAO Director May 27, 2022 Varsha Rao /s/ JOHN STENBIT Director May 27, 2022 John Stenbit /s/ THERESA WISE Director May 27, 2022 Theresa Wise 70 Report of Independent Registe red Public Accounting Firm To the Board of Directors and Stockholders of Viasat, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Viasat, Inc. and its subsidiaries (the “Company”) as of March 31, 2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), of equity, and of cash flows for each of the three years in the period ended March 31, 2022, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Changes in Accounting Principles As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal year 2020. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. As described in Management's Report on Internal Control Over Financial Reporting, management has excluded RigNet, Inc. and Euro Broadband Infrastructure Sàrl from its assessment of internal control over financial reporting as of March 31, 2022, because they were acquired by the Company in purchase business combinations during fiscal year 2022. We have also excluded RigNet, Inc. and Euro Broadband Infrastructure Sàrl from our audit of internal control over financial reporting. RigNet, Inc. and Euro Broadband Infrastructure Sàrl are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 6% and 3% of total assets, respectively, and approximately 6% and 1% of total revenues, respectively, of the related consolidated financial statement amounts as of and for the year ended March 31, 2022. F- 1 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated 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. Revenue Recognition – Estimated Costs at Completion As described in Note 1 to the consolidated financial statements, the vast majority of the Company’s revenues from long-term contracts to develop and deliver complex equipment built to customer specifications are derived from contracts with the U.S. government. A portion of the Company’s total revenues of $2.8 billion for the year ended March 31, 2022 are from long-term contracts. Performance obligations related to developing and delivering complex equipment built to customer specifications under long-term contracts are recognized over time as these performance obligations do not create assets with an alternative use to the Company and the Company has an enforceable right to payment for performance to date. To measure the transfer of control, revenue is recognized based on the extent of progress towards completion of the performance obligation. The Company generally uses the cost-to-cost measure of progress for its contracts because that best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. The principal considerations for our determination that performing procedures relating to revenue recognition – estimated costs at completion is a critical audit matter are the significant judgment by management when developing the estimated costs at completion on individual fixed-price contracts, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating the estimated costs at completion related to the assessment of management’s judgment as it relates to the subcontractor performance, material costs and availability, labor costs and productivity, and the costs of overhead. F- 2 Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the completeness and accuracy of estimated costs at completion. The procedures also included, among others, (i) evaluating and testing management’s process for developing estimates of total estimated costs at completion for long-term contracts for a sample of contracts; (ii) testing the completeness and accuracy of costs incurred to date and (iii) evaluating the reasonableness of significant estimates used by management related to subcontractor performance, material costs, labor costs, and overhead costs, and considering factors that could affect the accuracy of those estimates. Evaluating the reasonableness of the significant assumptions used involved assessing management’s ability to reasonably estimate costs at completion by (i) testing samples of third-party quotes or bids for materials and subcontractor services; (ii) assessing the reasonableness of estimates of total costs at completion in comparison to actual total costs incurred to date; (iii) recalculating estimated labor and overhead, and (iv) evaluating the timely identification of circumstances that may warrant a modification to estimated costs to complete, including actual costs in excess of estimates. Valuation of the customer relationships intangible asset - Acquisition of RigNet, Inc. As described in Note 16 to the consolidated financial statements, on April 30, 2021, the Company completed the acquisition of all outstanding shares of RigNet, Inc. for consideration of approximately $317.9 million, which resulted in recording of a customer relationships intangible asset valued at $101.9 million. Management determined the fair value of the acquired customer relationships intangible asset by applying the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to forecasted revenue growth rate, gross margin, contributory asset charges, customer attrition rate and discount rate. The principal considerations for our determination that performing procedures relating to the valuation of the customer relationships intangible asset from the acquisition of RigNet, Inc. is a critical audit matter are the significant judgment by management when determining the fair value of the customer relationships intangible asset, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasted revenue growth rate, gross margin, customer attrition rate, and discount rate. In addition, the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships intangible asset and controls over the development of significant assumptions related to the forecasted revenue growth rate, gross margin, customer attrition rate, and discount rate. These procedures also included, among others (i) reading the purchase agreement; (ii) testing management’s process for estimating the fair value of the customer relationships intangible asset; (iii) evaluating the appropriateness of the multi-period excess earnings method; (iv) testing the completeness and accuracy of underlying data provided by management; and (v) evaluating the reasonableness of significant assumptions related to the forecasted revenue growth rate, gross margin, customer attrition rate, and discount rate. Evaluating management’s significant assumptions related to the forecasted revenue growth rate and gross margin involved evaluating whether the significant assumptions used were reasonable considering (i) the current and past performance of RigNet, Inc.; (ii) consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the multi-period excess earnings method and the reasonableness of the significant assumptions related to the customer attrition rate and discount rate. /s/ PricewaterhouseCoopers LLP San Diego, California May 27, 2022 We have served as the Company’s auditor since 1992. F- 3 VIASAT, INC. CONSOLIDATED BA LANCE SHEETS As of March 31, 2022 As of March 31, 2021 (In thousands, except share data) ASSETS Current assets: Cash and cash equivalents $ 310,459 $ 295,949 Accounts receivable, net 359,269 238,652 Inventories 341,890 336,672 Prepaid expenses and other current assets 147,854 119,960 Total current assets 1,159,472 991,233 Property, equipment and satellites, net 3,741,912 3,050,483 Operating lease right-of-use assets 356,176 340,456 Other acquired intangible assets, net 236,043 9,568 Goodwill 190,113 122,300 Other assets 705,630 835,427 Total assets $ 6,389,346 $ 5,349,467 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 219,088 $ 145,134 Accrued and other liabilities 516,422 532,831 Current portion of long-term debt 34,911 30,472 Total current liabilities 770,421 708,437 Senior notes 1,686,225 1,683,264 Other long-term debt 764,991 119,420 Non-current operating lease liabilities 327,664 313,762 Other liabilities 157,451 137,350 Total liabilities 3,706,752 2,962,233 Commitments and contingencies (Notes 12 and 13) Equity: Viasat, Inc. stockholders’ equity Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding at March 31, 2022 and 2021, respectively — — Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 74,428,816 and 68,529,133 shares outstanding at March 31, 2022 and 2021, respectively 7 7 Paid-in capital 2,421,950 2,092,595 Retained earnings 233,530 249,064 Accumulated other comprehensive (loss) income ( 21,621 ) 9,803 Total Viasat, Inc. stockholders’ equity 2,633,866 2,351,469 Noncontrolling interest in subsidiary 48,728 35,765 Total equity 2,682,594 2,387,234 Total liabilities and equity $ 6,389,346 $ 5,349,467 See accompanying notes to the consolidated financial statements. F- 4 VIASAT, INC. CONSOLIDATED STATEMENTS OF OPERATION S AND COMPREHENSIVE INCOME (LOSS) Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands, except per share data) Revenues: Product revenues $ 1,210,411 $ 1,044,450 $ 1,172,541 Service revenues 1,577,224 1,211,657 1,136,697 Total revenues 2,787,635 2,256,107 2,309,238 Operating expenses: Cost of product revenues 914,323 774,893 845,757 Cost of service revenues 1,025,799 789,391 763,930 Selling, general and administrative 657,251 512,316 523,085 Independent research and development 153,203 115,792 130,434 Amortization of acquired intangible assets 28,729 5,482 7,611 Income from operations 8,330 58,233 38,421 Other income (expense): Interest income 504 440 1,648 Interest expense ( 29,391 ) ( 32,687 ) ( 38,641 ) Other income, net 4,118 — — (Loss) income before income taxes ( 16,439 ) 25,986 1,428 Benefit from (provision for) income taxes 14,237 ( 9,441 ) 7,915 Equity in (loss) income of unconsolidated affiliates, net ( 281 ) 556 4,470 Net (loss) income ( 2,483 ) 17,101 13,813 Less: net income attributable to noncontrolling interest, net of tax 13,051 13,410 14,025 Net (loss) income attributable to Viasat, Inc. $ ( 15,534 ) $ 3,691 $ ( 212 ) Net (loss) income per share attributable to Viasat, Inc. common stockholders: Basic net (loss) income per share attributable to Viasat, Inc. common stockholders $ ( 0.21 ) $ 0.06 $ ( 0.00 ) Diluted net (loss) income per share attributable to Viasat, Inc. common stockholders $ ( 0.21 ) $ 0.06 $ ( 0.00 ) Shares used in computing basic net (loss) income per share 73,397 66,444 61,632 Shares used in computing diluted net (loss) income per share 73,397 67,020 61,632 Comprehensive income (loss): Net (loss) income $ ( 2,483 ) $ 17,101 $ 13,813 Other comprehensive (loss) income, net of tax: Unrealized gain on hedging, net of tax — — 235 Foreign currency translation adjustments, net of tax ( 31,424 ) 15,851 ( 11,621 ) Other comprehensive (loss) income, net of tax ( 31,424 ) 15,851 ( 11,386 ) Comprehensive (loss) income ( 33,907 ) 32,952 2,427 Less: comprehensive income attributable to noncontrolling interest, net of tax 13,051 13,410 14,025 Comprehensive (loss) income attributable to Viasat, Inc. $ ( 46,958 ) $ 19,542 $ ( 11,598 ) See accompanying notes to the consolidated financial statements. F- 5 VIASAT, INC. CONSOLIDATED STATEME NTS OF CASH FLOWS Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Cash flows from operating activities: Net (loss) income $ ( 2,483 ) $ 17,101 $ 13,813 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 407,376 330,861 279,733 Amortization of intangible assets 88,071 66,241 62,445 Stock-based compensation expense 86,808 84,879 86,553 Loss on disposition of fixed assets 46,793 39,442 45,622 Other non-cash adjustments ( 11,772 ) 7,773 ( 3,154 ) Increase (decrease) in cash resulting from changes in operating assets and liabilities, net of effect of acquisitions: Accounts receivable ( 60,488 ) 84,411 ( 44,807 ) Inventories ( 2,300 ) ( 42,460 ) ( 58,997 ) Other assets 26,854 36,431 ( 3,313 ) Accounts payable 25,444 ( 24,363 ) 28,175 Accrued liabilities ( 48,827 ) 154,898 55,126 Other liabilities ( 49,835 ) ( 27,999 ) ( 24,260 ) Net cash provided by operating activities 505,641 727,215 436,936 Cash flows from investing activities: Purchase of property, equipment and satellites ( 938,280 ) ( 827,241 ) ( 693,966 ) Cash paid for patents, licenses and other assets ( 52,030 ) ( 58,030 ) ( 67,112 ) Payments related to acquisition of businesses, net of cash acquired ( 139,533 ) — — Proceeds from insurance claims on ViaSat-2 satellite — — 2,277 Net cash used in investing activities ( 1,129,843 ) ( 885,271 ) ( 758,801 ) Cash flows from financing activities: Proceeds from debt borrowings, net of discount 1,266,000 400,000 420,000 Payments on debt borrowings ( 610,401 ) ( 420,552 ) ( 59,691 ) Payment of debt issuance costs ( 6,261 ) ( 5,060 ) ( 2,479 ) Proceeds from issuance of common stock under equity plans 20,549 19,101 38,410 Purchase of common stock in treasury (immediately retired) related to tax withholdings for stock-based compensation ( 22,969 ) ( 13,676 ) ( 28,802 ) Proceeds from common stock issued in private placement, net of issuance costs — 174,749 — Other financing activities ( 3,288 ) ( 4,871 ) ( 2,253 ) Net cash provided by financing activities 643,630 149,691 365,185 Effect of exchange rate changes on cash ( 4,918 ) 5 ( 712 ) Net increase (decrease) in cash and cash equivalents 14,510 ( 8,360 ) 42,608 Cash and cash equivalents at beginning of fiscal year 295,949 304,309 261,701 Cash and cash equivalents at end of fiscal year $ 310,459 $ 295,949 $ 304,309 Supplemental information: Cash paid for interest (net of amounts capitalized) $ 14,627 $ 23,526 $ 27,805 Cash paid for income taxes, net $ 17,144 $ 6,670 $ 10,950 Non-cash investing and financing activities: Issuance of common stock in connection with acquisition $ 207,169 $ — $ — Issuance of common stock in satisfaction of certain accrued employee compensation liabilities $ 24,488 $ 25,406 $ 22,829 Capital expenditures not paid for $ 67,931 $ 32,616 $ 43,606 See accompanying notes to the consolidated financial statements. F- 6 VIASAT, INC. CONSOLIDATED STATE MENTS OF EQUITY Viasat, Inc. Stockholders Common Stock Number of Shares Issued Amount Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Noncontrolling Interest in Subsidiary Total (In thousands, except share data) Balance at March 31, 2019 60,550,093 $ 6 $ 1,656,819 $ 245,585 $ 5,338 $ 8,330 $ 1,916,078 Exercise of stock options 340,373 — 21,060 — — — 21,060 Issuance of stock under Employee Stock Purchase Plan 311,137 — 17,350 — — — 17,350 Stock-based compensation — — 99,200 — — — 99,200 Shares issued in settlement of certain accrued employee compensation liabilities 255,615 — 22,829 — — — 22,829 RSU awards vesting, net of shares withheld for taxes which have been retired 689,922 — ( 28,802 ) — — — ( 28,802 ) Net (loss) income — — — ( 212 ) — 14,025 13,813 Other comprehensive loss, net of tax — — — — ( 11,386 ) — ( 11,386 ) Balance at March 31, 2020 62,147,140 $ 6 $ 1,788,456 $ 245,373 $ ( 6,048 ) $ 22,355 $ 2,050,142 Issuance of stock under Employee Stock Purchase Plan 638,792 — 19,101 — — — 19,101 Common stock issued in private placement, net of issuance costs 4,474,559 1 174,748 — — — 174,749 Stock-based compensation — — 98,560 — — — 98,560 Shares issued in settlement of certain accrued employee compensation liabilities 580,846 — 25,406 — — — 25,406 RSU awards vesting, net of shares withheld for taxes which have been retired 687,796 — ( 13,676 ) — — — ( 13,676 ) Net income — — — 3,691 — 13,410 17,101 Other comprehensive income, net of tax — — — — 15,851 — 15,851 Balance at March 31, 2021 68,529,133 $ 7 $ 2,092,595 $ 249,064 $ 9,803 $ 35,765 $ 2,387,234 Exercise of stock options 27,107 — 1,526 — — — 1,526 Issuance of stock under Employee Stock Purchase Plan 586,203 — 19,023 — — — 19,023 Stock-based compensation — — 100,118 — — — 100,118 Shares issued in settlement of certain accrued employee compensation liabilities 457,130 — 24,488 — — — 24,488 RSU awards vesting, net of shares withheld for taxes which have been retired 829,054 — ( 22,969 ) — — — ( 22,969 ) Shares issued in connection with acquisition of business 4,000,189 — 207,169 — — — 207,169 Other — — — — — ( 88 ) ( 88 ) Net income — — — ( 15,534 ) — 13,051 ( 2,483 ) Other comprehensive income, net of tax — — — — ( 31,424 ) — ( 31,424 ) Balance at March 31, 2022 74,428,816 $ 7 $ 2,421,950 $ 233,530 $ ( 21,621 ) $ 48,728 $ 2,682,594 See accompanying notes to the consolidated financial statements. F- 7 VIASAT, INC. NOTES TO THE CONSOLIDATE D FINANCIAL STATEMENTS Note 1 — The Company and a Summary of Its Significant Accounting Policies The Company Viasat, Inc. (also referred to hereafter as the “Company” or “Viasat”) is an innovator in communications technologies and services, including high-speed and cost-effective broadband and advanced communications products and services. Principles of consolidation The Company’s consolidated financial statements include the assets, liabilities and results of operations of Viasat, its wholly owned subsidiaries and its majority-owned subsidiary, TrellisWare Technologies, Inc. (TrellisWare). During the first quarter of fiscal year 2022, the Company completed the acquisitions of the remaining 51 % interest in Euro Broadband Infrastructure Sàrl (EBI) and RigNet, Inc. (RigNet) (see Note 16 — Acquisitions for more information). The acquisitions were accounted for as purchases and accordingly, the consolidated financial statements include the operating results of EBI and RigNet from the dates of acquisition. All significant intercompany amounts have been eliminated. Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included as investment in unconsolidated affiliate in other assets (long-term) on the consolidated balance sheets. Certain prior period amounts have been reclassified to conform to the current period presentation. Management estimates and assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information and actual results could differ from those estimates. Significant estimates made by management include revenue recognition, stock-based compensation, allowance for doubtful accounts, valuation of goodwill and other intangible assets, patents, orbital slots and other licenses, software development, property, equipment and satellites, long-lived assets, contingencies and income taxes including the valuation allowance on deferred tax assets. Cash equivalents Cash equivalents consist of highly liquid investments with original maturities of three months or less at the date of purchase. Accounts receivable and allowance for doubtful accounts The Company records any unconditional rights to consideration as receivables at net realizable value including an allowance for estimated uncollectible accounts. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. Amounts determined to be uncollectible are charged or written off against the reserve. Historically, the Company’s allowance for doubtful accounts has been minimal primarily because a significant portion of its sales has been to the U.S. Government or with respect to its satellite services commercial business, the Company bills and collects in advance. Concentration of risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash equivalents and accounts receivable which are generally not collateralized. The Company limits its exposure to credit loss by placing its cash equivalents with high credit quality financial institutions and investing in high quality short-term debt instruments. The Company establishes customer credit policies related to its accounts receivable based on historical collection experiences within the various markets in which the Company operates, historical past due amounts and any specific information that the Company becomes aware of such as bankruptcy or liquidity issues of customers. F- 8 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Revenues from the U.S. Government as an individual customer comprised approximately 25 % , 30 % and 30 % of total revenues for fiscal years 2022, 2021 and 2020, respectively. Billed accounts receivable to the U.S. Government as of March 31, 2022 and 2021 were approximately 18 % and 27 %, respectively, of total billed receivables. In addition, none of the Company’s commercial customers comprised 10% or more of total revenues for fiscal years 2022, 2021 and 2020. The Company’s five largest contracts generated approximately 20 % , 16 % and 18 % of the Company’s total revenues for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. The Company relies on a limited number of contract manufacturers to produce its products. Inventory Inventory is valued at the lower of cost and net realizable value, cost being determined by the weighted average cost method. Property, equipment and satellites Satellites and other property and equipment, including internally developed software, are recorded at cost or, in the case of certain satellites and other property acquired, the fair value at the date of acquisition, net of accumulated depreciation. Capitalized satellite costs consist primarily of the costs of satellite construction and launch, including launch insurance and insurance during the period of in-orbit testing, the net present value of performance incentives expected to be payable to satellite manufacturers (dependent on the continued satisfactory performance of the satellites), costs directly associated with the monitoring and support of satellite construction, and interest costs incurred during the period of satellite construction. The Company also constructs earth stations, network operations systems and other assets to support its satellites, and those construction costs, including interest, are capitalized as incurred. At the time satellites are placed in service, the Company estimates the useful life of its satellites for depreciation purposes based upon an analysis of each satellite’s performance against the original manufacturer’s orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends. The Company periodically reviews the remaining estimated useful life of its satellites to determine if revisions to estimated useful lives are necessary. Costs incurred for additions to property, equipment and satellites, together with major renewals and betterments, are capitalized and depreciated over the remaining life of the underlying asset. Costs incurred for maintenance, repairs and minor renewals and betterments are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and related accumulated depreciation or amortization are removed from the accounts and any resulting gain or loss is recognized in operations, which for the periods presented, primarily related to losses incurred for unreturned customer premise equipment (CPE). The Company computes depreciation using the straight-line method over the estimated useful lives of the assets ranging from two to 38 years. Leasehold improvements are capitalized and amortized using the straight-line method over the shorter of the lease term or the life of the improvement. Costs related to internally developed software for internal uses are capitalized after the preliminary project stage is complete and are amortized over the estimated useful lives of the assets, which are approximately three to seven years . Capitalized costs for internal-use software are included in property, equipment and satellites, net in the Company’s consolidated balance sheets. Interest expense is capitalized on the carrying value of assets under construction, in accordance with the authoritative guidance for the capitalization of interest (Accounting Standards Codification (ASC) 835-20). With respect to the construction of satellites, gateway and networking equipment and other assets under construction, the Company capitalized $ 102.1 million, $ 81.0 million and $ 54.1 million of interest expense for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. The Company owns four satellites in service — three over North America (ViaSat-2, ViaSat-1 and WildBlue-1) and, the KA-SAT satellite over Europe, Middle East, and Africa (EMEA). In addition, the Company has lifetime leases of Ka-band capacity on two satellites. The Company is also planning to launch a global constellation of three third-generation ViaSat-3 class satellites under construction. In addition, the Company owns related earth stations and networking equipment for all of its satellites. The Company procures indoor and outdoor CPE units leased to subscribers under a retail leasing program as part of the Company’s satellite services segment, which are reflected in investing activities and property, equipment and satellites, net in the accompanying consolidated financial statements. The Company depreciates the satellites, earth stations and networking equipment, CPE units and related installation costs over their estimated useful lives. The total cost and accumulated depreciation of CPE units included in property, equipment and satellites, net, as of March 31, 2022 were $ 395.5 million and $ 210.6 million, respectively. The total cost and accumulated depreciation of F- 9 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) CPE units included in property, equipment and satellites, net, as of March 31, 2021 were $ 409.9 million and $ 193.7 million, respectively. Occasionally, the Company may enter into finance lease arrangements for various machinery, equipment, computer-related equipment, software, furniture, fixtures, or satellites. The Company records amortization of assets leased under finance lease arrangements within depreciation expense (see Note 1 — The Company and a Summary of Its Significant Accounting Policies – Leases and Note 5 — Leases for more information). Leases Lessee accounting The Company adopted Accounting Standards Update (ASU) 2016-02, Leases, as amended, commonly referred to as ASC 842, on April 1, 2019 using the optional transition method. Under the optional transition method, the Company applied the new guidance to all leases that commenced before and were existing as of April 1, 2019. For contracts entered into on or after April 1, 2019, the Company assesses at contract inception whether the contract is, or contains, a lease. Generally, the Company determines that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right to substantially all economic benefits from use of the asset, and (3) the Company has the right to direct the use of the asset. A lease is classified as a finance lease when one or more of the following criteria are met: (1) the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset, (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset or (5) the asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease is classified as an operating lease if it does not meet any of these criteria. At the lease commencement date, the Company recognizes a right-of-use asset and a lease liability for all leases, except short-term leases with an original term of 12 months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. Certain of the Company’s real estate lease agreements require variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments based on a rate or index are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the depreciation of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. For both operating and finance leases, lease payments are allocated between a reduction of the lease liability and interest expense. Lessor accounting For broadband equipment leased to fixed broadband customers in conjunction with the delivery of connectivity services, the Company has made an accounting policy election not to separate the broadband equipment from the related connectivity services. The connectivity services are the predominant component of these arrangements. The connectivity services are accounted for in accordance with ASC 606. The Company is also a lessor for certain insignificant communications equipment. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material. Business combinations The authoritative guidance for business combinations (ASC 805) requires that all business combinations be accounted for using the purchase method. The purchase price for business combinations is allocated to the estimated fair F- 10 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) values of acquired tangible and intangible assets, including goodwill, and assumed liabilities, where applicable. The Company recognizes technology, contracts and customer relationships, satellite co-location rights, trade names and other as identifiable intangible assets, which are recorded at fair value as of the transaction date. Goodwill is recorded when consideration transferred exceeds the fair value of identifiable assets and liabilities. Measurement-period adjustments to assets acquired and liabilities assumed with a corresponding offset to goodwill are recorded in the period they occur, which may include up to one year from the acquisition date. Contingent consideration is recorded at fair value at the acquisition date. Goodwill and intangible assets The authoritative guidance for business combinations (ASC 805) specifies criteria for recognizing and reporting intangible assets apart from goodwill; however, acquired workforce must be recognized and reported in goodwill. The authoritative guidance for goodwill and other intangible assets (ASC 350) requires that intangible assets with an indefinite life should not be amortized until their life is determined to be finite. All other intangible assets must be amortized over their useful life. The authoritative guidance for goodwill and other intangible assets prohibits the amortization of goodwill and indefinite-lived intangible assets, but instead requires these assets to be tested for impairment at least annually and more frequently upon the occurrence of specified events. In addition, all goodwill must be assigned to reporting units for purposes of impairment testing. Patents, orbital slots and other licenses The Company capitalizes the costs of obtaining or acquiring patents, orbital slots and other licenses. Amortization of intangible assets that have finite lives is provided for by the straight-line method over the shorter of the legal or estimated economic life. Total capitalized costs of $ 3.5 million related to patents were included in other assets as of both March 31, 2022 and March 31, 2021. The Company capitalized costs of $ 64.1 million and $ 53.8 million related to acquiring and obtaining orbital slots and other licenses included in other assets as of March 31, 2022 and 2021 , respectively. Accumulated amortization related to these assets was $ 5.4 million and $ 4.4 million as of March 31, 2022 and 2021 , respectively. Amortization expense related to these assets was $ 1.1 million for the fiscal year ended March 31, 2022 and an insignificant amount for the fiscal years ended March 31, 2021 and 2020. If a patent, orbital slot or other license is rejected, abandoned or otherwise invalidated, the unamortized cost is expensed in that period. During fiscal years 2022, 2021 and 2020 , the Company did not write off any significant costs due to abandonment or impairment. Debt issuance costs Debt issuance costs are amortized and recognized as interest expense using the effective interest rate method, or, when the results are not materially different, on a straight-line basis over the expected term of the related debt. The Company capitalized $ 7.8 million and $ 5.1 million of debt issuance costs during fiscal years 2022 and 2021, respectively. During fiscal year 2020 , no debt issuance costs were capitalized. Unamortized debt issuance costs related to extinguished debt are expensed at the time the debt is extinguished and recorded in loss on extinguishment of debt in the consolidated statements of operations and comprehensive income (loss). Debt issuance costs related to the Company’s revolving credit facility (the Revolving Credit Facility) are recorded in prepaid expenses and other current assets and in other long-term assets in the consolidated balance sheets in accordance with the authoritative guidance for imputation of interest (ASC 835-30). Debt issuance costs related to the Company’s term loan facility (the Term Loan Facility), 5.625% Senior Notes due 2025 (the 2025 Notes), the Company’s 5.625% Senior Secured Notes due 2027 (the 2027 Notes), the Company’s 6.500% Senior Notes due 2028 (the 2028 Notes and, together with the 2025 Notes and the 2027 Notes, the Notes) and the Ex-Im Credit Facility are recorded as a direct deduction from the carrying amount of the related debt, consistent with debt discounts, in accordance with the authoritative guidance for imputation of interest (ASC 835-30). Software development Costs of developing software for sale are charged to independent research and development expense when incurred, until technological feasibility has been established. Software development costs incurred from the time technological feasibility is reached until the product is available for general release to customers are capitalized and reported at the lower of unamortized cost or net realizable value. Once the product is available for general release, the software development costs are amortized based on the ratio of current to future revenue for each product with an annual minimum equal to straight-line amortization over the remaining estimated economic life of the product, generally within five years . Capitalized costs, net, of $ 221.6 million and $ 237.1 million related to software developed for resale were included in other assets as of March 31, 2022 and 2021 , respectively. The Company capitalized $ 42.6 million and $ 54.0 million of costs related to software developed for resale for the fiscal years ended March 31, 2022 and 2021 , respectively. F- 11 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Amortization expense for capitalized software development costs was $ 58.1 million, $ 59.6 million and $ 53.0 million during fiscal years 2022, 2021 and 2020 , respectively. Impairment of long-lived and other long-term assets (property, equipment, and satellites, and other assets, including goodwill) In accordance with the authoritative guidance for impairment or disposal of long-lived assets (ASC 360), the Company assesses potential impairments to long-lived assets, including property, equipment and satellites, and other assets, when there is evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) are less than the asset’s carrying value. Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. No material impairments were recorded by the Company for fiscal years 2022, 2021 and 2020. The Company accounts for its goodwill under the authoritative guidance for goodwill and other intangible assets (ASC 350) and the provisions of ASU 2017-04, Simplifying the Test for Goodwill Impairment, which the Company early adopted in the third quarter of fiscal year 2020. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after completing the qualitative assessment, the Company determines that it is more likely than not that the estimated fair value is greater than the carrying value, the Company concludes that no impairment exists. Alternatively, if the Company determines in the qualitative assessment that it is more likely than not that the fair value is less than its carrying value, then the Company performs a quantitative goodwill impairment test to identify both the existence of an impairment and the amount of impairment loss, by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the estimated fair value of the reporting unit is less than the carrying value, then a goodwill impairment charge will be recognized in the amount by which the carrying amount exceeds the fair value, limited to the total amount of goodwill allocated to that reporting unit. The Company tests goodwill for impairment during the fourth quarter every fiscal year and when an event occurs or circumstances change such that it is reasonably possible that an impairment may exist. In accordance with ASC 350, the Company assesses qualitative factors to determine whether goodwill is impaired. The qualitative analysis includes assessing the impact of changes in certain factors including (1) changes in forecasted operating results and comparing actual results to projections, (2) changes in the industry or its competitive environment since the acquisition date, (3) changes in the overall economy, its market share and market interest rates since the acquisition date, (4) trends in the stock price and related market capitalization and enterprise values, (5) trends in peer companies total enterprise value metrics, and (6) additional factors such as management turnover, changes in regulation and changes in litigation matters. Based on the Company’s qualitative assessment performed during the fourth quarter of fiscal year 2022, the Company concluded that it was more likely than not that the estimated fair value of the Company’s reporting units exceeded their carrying values as of March 31, 2022 , and therefore, determined it was not necessary to perform a quantitative impairment analysis. No impairments were recorded by the Company related to goodwill and other intangible assets for fiscal years 2022, 2021 and 2020 . Warranty reserves The Company provides limited warranties on its products for periods of up to five years . The Company records a liability for its warranty obligations when the Company ships the products or they are included in long-term construction contracts based upon an estimate of expected warranty costs. Amounts expected to be incurred within 12 months are classified as accrued liabilities and amounts expected to be incurred beyond 12 months are classified as other liabilities in the consolidated financial statements. For mature products, the Company estimates the warranty costs based on historical experience with the particular product. For newer products that do not have a history of warranty costs, the Company bases its estimates on its experience with the technology involved and the types of failures that may occur. It is possible that the Company’s underlying assumptions will not reflect the actual experience, and in that case, the Company will make future adjustments to the recorded warranty obligation (see Note 14 — Product Warranty). Fair value of financial instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, receivables, accounts payable and accrued liabilities, approximate their fair values due to their short-term maturities. The estimated fair value of F- 12 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) the Company’s long-term borrowings and other long-term interest bearing liabilities is determined by using available market information for those securities or similar financial instruments (see Note 3 – Fair Value Measurements). Self-insurance liabilities The Company has self-insurance plans to retain a portion of the exposure for losses related to employee medical benefits and workers’ compensation. The self-insurance plans include policies which provide for both specific and aggregate stop-loss limits. The Company utilizes internal actuarial methods as well as other historical information for the purpose of estimating ultimate costs for a particular plan year. Based on these actuarial methods, along with currently available information and insurance industry statistics, the Company has recorded self-insurance liability for its plans of $ 6.5 million and $ 6.9 million in accrued and other liabilities in the consolidated balance sheets as of March 31, 2022 and 2021 , respectively. The Company’s estimate, which is subject to inherent variability, is based on average claims experience in the Company’s industry and its own experience in terms of frequency and severity of claims, including asserted and unasserted claims incurred but not reported, with no explicit provision for adverse fluctuation from year to year. This variability may lead to ultimate payments being either greater or less than the amounts presented above. Self-insurance liabilities have been classified as a current liability in accrued and other liabilities in accordance with the estimated timing of the projected payments. Indemnification provisions In the ordinary course of business, the Company includes indemnification provisions in certain of its contracts, generally relating to parties with which the Company has commercial relations. Pursuant to these agreements, the Company will indemnify, hold harmless and agree to reimburse the indemnified party for losses suffered or incurred by the indemnified party, including but not limited to losses relating to third-party intellectual property claims. To date, there have not been any material costs incurred in connection with such indemnification clauses. The Company’s insurance policies do not necessarily cover the cost of defending indemnification claims or providing indemnification, so if a claim was filed against the Company by any party that the Company has agreed to indemnify, the Company could incur substantial legal costs and damages. A claim would be accrued when a loss is considered probable and the amount can be reasonably estimated. At March 31, 2022 and 2021 , no such amounts were accrued related to the aforementioned provisions. Noncontrolling interests A noncontrolling interest represents the equity interest in a subsidiary that is not attributable, either directly or indirectly, to the Company and is reported as equity of the Company, separately from the Company’s controlling interest. Revenues, expenses, gains, losses, net income (loss) and other comprehensive income (loss) are reported in the consolidated financial statements at the consolidated amounts, which include the amounts attributable to both the controlling and noncontrolling interest. Investments in unconsolidated affiliate — equity method Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included as investment in unconsolidated affiliate in other assets (long-term) on the consolidated balance sheets. The Company records its share of the results of such entities within equity in income (loss) of unconsolidated affiliate, net on the consolidated statements of operations and comprehensive income (loss). The Company monitors such investments for other-than-temporary impairment by considering factors including the current economic and market conditions and the operating performance of the entities and records reductions in carrying values when necessary. The fair value of privately held investments is estimated using the best available information as of the valuation date, including current earnings trends, undiscounted cash flows, quoted stock prices of comparable public companies, and other company specific information, including recent financing rounds. F- 13 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Common stock held in treasury As of March 31, 2022 and 2021 , the Company had no shares of common stock held in treasury. During fiscal years 2022, 2021 and 2020 , the Company issued 1,274,311 , 1,064,680 and 1,075,526 shares of common stock, respectively, based on the vesting terms of certain restricted stock unit agreements. In order for employees to satisfy minimum statutory employee tax withholding requirements related to the issuance of common stock underlying these restricted stock unit agreements, the Company repurchased 445,257 , 376,884 and 385,604 shares of common stock at cost and with a total value of $ 23.0 million, $ 13.7 million and $ 28.8 million during fiscal years 2022, 2021 and 2020, respectively. Although shares withheld for employee withholding taxes are technically not issued, they are treated as common stock repurchases for accounting purposes (with such shares deemed to be repurchased and then immediately retired), as they reduce the number of shares that otherwise would have been issued upon vesting of the restricted stock units. These retired shares remain as authorized stock and are considered to be unissued. The retirement of treasury stock had no impact on the Company’s total consolidated stockholders’ equity. Foreign currency In general, the functional currency of a foreign operation is deemed to be the local country’s currency. Consequently, assets and liabilities of operations outside the United States are generally translated into U.S. dollars, and the effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) within Viasat, Inc. stockholders’ equity. Other comprehensive loss related to the effects of foreign currency translation adjustments attributable to Viasat, Inc. during fiscal year 2022 was $ 37.3 million, or $ 31.4 million net of tax. Other comprehensive income related to the effects of foreign currency translation adjustments attributable to Viasat, Inc. during fiscal year 2021 was $ 20.4 million, or $ 15.9 million net of tax. Other comprehensive loss related to the effects of foreign currency translation adjustments attributed to Viasat, Inc. during fiscal year 2020 was $ 12.8 million, or $ 11.6 million net of tax. Revenue recognition In accordance with the authoritative guidance for revenue from contracts with customers (ASC 606), the Company applies the five-step model to its contracts with its customers. Under this model the Company (1) identifies the contract with the customer, (2) identifies its performance obligations in the contract, (3) determines the transaction price for the contract, (4) allocates the transaction price to its performance obligations and (5) recognizes revenue when or as it satisfies its performance obligations. These performance obligations generally include the purchase of services (including broadband capacity and the leasing of broadband equipment), the purchase of products, and the development and delivery of complex equipment built to customer specifications under long-term contracts. Performance obligations The timing of satisfaction of performance obligations may require judgment. The Company derives a substantial portion of its revenues from contracts with customers for services, primarily consisting of connectivity services. These contracts typically require advance or recurring monthly payments by the customer. The Company’s obligation to provide connectivity services is satisfied over time as the customer simultaneously receives and consumes the benefits provided. The measure of progress over time is based upon either a period of time (e.g., over the estimated contractual term) or usage (e.g., bandwidth used/bytes of data processed). The Company evaluates whether broadband equipment provided to its customers as part of the delivery of connectivity services represents a lease in accordance with ASC 842. As discussed further above under “Leases - Lessor accounting”, for broadband equipment leased to consumer broadband customers in conjunction with the delivery of connectivity services, the Company accounts for the lease and non-lease components of connectivity service arrangements as a single performance obligation as the connectivity services represent the predominant component. F- 14 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company also derives a portion of its revenues from contracts with customers to provide products. Performance obligations to provide products are satisfied at the point in time when control is transferred to the customer. These contracts typically require payment by the customer upon passage of control and determining the point at which control is transferred may require judgment. To identify the point at which control is transferred to the customer, the Company considers indicators that include, but are not limited to, whether (1) the Company has the present right to payment for the asset, (2) the customer has legal title to the asset, (3) physical possession of the asset has been transferred to the customer, (4) the customer has the significant risks and rewards of ownership of the asset, and (5) the customer has accepted the asset. For product revenues, control generally passes to the customer upon delivery of goods to the customer. The vast majority of the Company’s revenues from long-term contracts to develop and deliver complex equipment built to customer specifications are derived from contracts with the U.S. Government (including foreign military sales contracted through the U.S. Government). The Company’s contracts with the U.S. Government typically are subject to the Federal Acquisition Regulation (FAR) and are priced based on estimated or actual costs of producing goods or providing services. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods and services provided under U.S. Government contracts. The pricing for non-U.S. Government contracts is based on the specific negotiations with each customer. Under the typical payment terms of the Company’s U.S. Government fixed-price contracts, the customer pays the Company either performance-based payments (PBPs) or progress payments. PBPs are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments based on a percentage of the costs incurred as the work progresses. Because the customer can often retain a portion of the contract price until completion of the contract, the Company’s U.S. Government fixed-price contracts generally result in revenue recognized in excess of billings which the Company presents as unbilled accounts receivable on the balance sheet. Amounts billed and due from the Company’s customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer. For the Company’s U.S. Government cost-type contracts, the customer generally pays the Company for its actual costs incurred within a short period of time. For non-U.S. Government contracts, the Company typically receives interim payments as work progresses, although for some contracts, the Company may be entitled to receive an advance payment. The Company recognizes a liability for these advance payments in excess of revenue recognized and presents it as collections in excess of revenues and deferred revenues on the balance sheet. An advance payment is not typically considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the Company from the other party failing to adequately complete some or all of its obligations under the contract. Performance obligations related to developing and delivering complex equipment built to customer specifications under long-term contracts are recognized over time as these performance obligations do not create assets with an alternative use to the Company and the Company has an enforceable right to payment for performance to date. To measure the transfer of control, revenue is recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the cost-to-cost measure of progress for its contracts because that best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Estimating the total costs at completion of a performance obligation requires management to make estimates related to items such as subcontractor performance, material costs and availability, labor costs and productivity and the costs of overhead. When estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is determined. Contract costs on U.S. Government contracts are subject to audit and review by the Defense Contracting Management Agency (DCMA), the Defense Contract Audit Agency (DCAA), and other U.S. Government agencies, as well as negotiations with U.S. Government representatives. The Company’s incurred cost audits by the DCAA has not been concluded for fiscal year 2021. As of March 31, 2022, the DCAA had completed its incurred cost audit for fiscal years 2004, 2016, 2019, and 2020 and approved the Company’s incurred costs for those fiscal years, as well as approved the Company’s incurred costs for fiscal years 2005 through 2015, 2017 and 2018 without further audit based on the determination of low risk. Although the Company has recorded contract revenues subsequent to fiscal year 2020 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected. As of March 31, 2022 and March 31, 2021 , the F- 15 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Company had $ 12.1 million and $ 10.3 million, respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S. Government cost reimbursable contracts (see Note 13 — Contingencies for more information). Evaluation of transaction price The evaluation of transaction price, including the amounts allocated to performance obligations, may require significant judgments. Due to the nature of the work required to be performed on many of the Company’s performance obligations, the estimation of total revenue, and, where applicable, the cost at completion, is complex, subject to many variables and requires significant judgment. The Company’s contracts may contain award fees, incentive fees, or other provisions, including the potential for significant financing components, that can either increase or decrease the transaction price. These amounts, which are sometimes variable, can be dictated by performance metrics, program milestones or cost targets, the timing of payments, and customer discretion. The Company estimates variable consideration at the amount to which it expects to be entitled. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available to the Company. In the event an agreement includes embedded financing components, the Company recognizes interest expense or interest income on the embedded financing components using the effective interest method. This methodology uses an implied interest rate which reflects the incremental borrowing rate which would be expected to be obtained in a separate financing transaction. The Company has elected the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at contract inception, that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. If a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. Estimating standalone selling prices may require judgment. When available, the Company utilizes the observable price of a good or service when the Company sells that good or service separately in similar circumstances and to similar customers. If a standalone selling price is not directly observable, the Company estimates the standalone selling price by considering all information (including market conditions, specific factors, and information about the customer or class of customer) that is reasonably available. Transaction price allocated to remaining performance obligations The Company’s remaining performance obligations represent the transaction price of firm contracts and orders for which work has not been performed. The Company includes in its remaining performance obligations only those contracts and orders for which it has accepted purchase orders. Remaining performance obligations associated with the Company’s subscribers for fixed consumer and business broadband services in its satellite services segment exclude month-to-month service contracts in accordance with a practical expedient and are estimated using a portfolio approach in which the Company reviews all relevant promotional activities and calculates the remaining performance obligation using the average service component for the portfolio and the average time remaining under the contract. The Company’s future recurring in-flight connectivity service contracts in its satellite services segment do not have minimum service purchase requirements and therefore are not included in the Company’s remaining performance obligations. As of March 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.0 billion, of which the Company expects to recognize a little over half over the next 12 months, with the balance recognized thereafter . Disaggregation of revenue The Company operates and manages its business in three reportable segments: satellite services, commercial networks and government systems. Revenue is disaggregated by products and services, customer type, contract type, and geographic area, respectively, as the Company believes this approach best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. F- 16 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following sets forth disaggregated reported revenue by segment and product and services for the fiscal years ended March 31, 2022, 2021 and 2020: Fiscal Year Ended March 31, 2022 Satellite Services Commercial Networks Government Systems Total Revenues (In thousands) Product revenues $ — $ 443,435 $ 766,976 $ 1,210,411 Service revenues 1,188,816 68,664 319,744 1,577,224 Total revenues $ 1,188,816 $ 512,099 $ 1,086,720 $ 2,787,635 Fiscal Year Ended March 31, 2021 Satellite Services Commercial Networks Government Systems Total Revenues (In thousands) Product revenues $ — $ 268,830 $ 775,620 $ 1,044,450 Service revenues 868,943 52,026 290,688 1,211,657 Total revenues $ 868,943 $ 320,856 $ 1,066,308 $ 2,256,107 Fiscal Year Ended March 31, 2020 Satellite Services Commercial Networks Government Systems Total Revenues (In thousands) Product revenues $ — $ 289,959 $ 882,582 $ 1,172,541 Service revenues 826,583 54,598 255,516 1,136,697 Total revenues $ 826,583 $ 344,557 $ 1,138,098 $ 2,309,238 Revenues from the U.S. Government as an individual customer comprised approximately, 25 % , 30 % and 30 % of total revenues for the fiscal years ended March 31, 2022, 2021 and 2020, respectively, mainly reported within the government systems segment. Revenues from the Company’s other customers, mainly reported within the commercial networks and satellite services segments, comprised approximately 75 % , 70 % and 70 % of total revenues for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. The Company’s satellite services segment revenues are primarily derived from the Company’s fixed broadband services, in-flight services and energy services (acquired through the RigNet acquisition). Revenues in the Company’s commercial networks and government systems segments are primarily derived from three types of contracts: fixed-price, cost-reimbursement and time-and-materials contracts. Fixed-price contracts (which require the Company to provide products and services under a contract at a specified price) comprised approximately 90 % , 89 % and 88 % of the Company’s total revenues for these segments for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. The remainder of the Company’s revenues in these segments for such periods was derived primarily from cost-reimbursement contracts (under which the Company is reimbursed for all actual costs incurred in performing the contract to the extent such costs are within the contract ceiling and allowable under the terms of the contract, plus a fee or profit) and from time-and-materials contracts (under which the Company is reimbursed for the number of labor hours expended at an established hourly rate negotiated in the contract, plus the cost of materials utilized in providing such products or services). Historically, a significant portion of the Company’s revenues in its commercial networks and government systems segments has been derived from customer contracts that include the development of products. The development efforts are conducted in direct response to the customer’s specific requirements and, accordingly, expenditures related to such efforts are included in cost of sales when incurred and the related funding (which includes a profit component) is included in revenues. Revenues for the Company’s funded development from its customer contracts were approximately 23 % , 23 % and 24 % of its total revenues for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. F- 17 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Contract balances Contract balances consist of contract assets and contract liabilities. A contract asset, or with respect to the Company, an unbilled accounts receivable, is recorded when revenue is recognized in advance of the Company’s right to bill and receive consideration, typically resulting from sales under long-term contracts. Unbilled accounts receivable are generally expected to be billed and collected within one year. The unbilled accounts receivable will decrease as provided services or delivered products are billed. The Company receives payments from customers based on a billing schedule established in the Company’s contracts. When consideration is received in advance of the delivery of goods or services, a contract liability, or with respect to the Company, collections in excess of revenues or deferred revenues, is recorded. Reductions in the collections in excess of revenues or deferred revenues will be recorded as the Company satisfies the performance obligations. The following table presents contract assets and liabilities as of March 31, 2022 and March 31, 2021: As of March 31, 2022 As of March 31, 2021 (In thousands) Unbilled accounts receivable $ 103,045 $ 70,785 Collections in excess of revenues and deferred revenues 148,906 216,594 Deferred revenues, long-term portion 90,151 84,654 Unbilled accounts receivable increased $ 32.3 million during fiscal year 2022 , primarily driven by revenue recognized in the Company’s satellite services and commercial networks segments. The acquisition of RigNet contributed $ 17.5 million of unbilled accounts receivable. Collections in excess of revenues and deferred revenues decreased $ 67.7 million during fiscal year 2022, primarily driven by revenue recognized in excess of advances received on goods or services in the Company’s commercial networks and government systems segments. During the fiscal year ended March 31, 2022 , the Company recognized revenue of $ 193.2 million that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2021. During the fiscal year ended March 31, 2021 , the Company recognized revenue of $ 98.6 million that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2020 . Other assets and deferred costs – contracts with customers Per ASC 340-40, Other Assets and Deferred Costs – Contracts with Customers, the Company recognizes an asset from the incremental costs of obtaining a contract with a customer if the Company expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Company incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. ASC 340-40 also requires the recognition of an asset from the costs incurred to fulfill a contract when (1) the costs relate directly to a contract or to an anticipated contract that the Company can specifically identify, (2) the costs generate or enhance resources of the Company that will be used in satisfying (or in continuing to satisfy) performance obligations in the future, and (3) the costs are expected to be recovered. Adoption of the standard has resulted in the recognition of an asset related to commission costs incurred primarily in the Company’s satellite services segment, and recognition of an asset related to costs incurred to fulfill contracts. Costs to acquire customer contracts are amortized over the estimated customer contract life. Costs to fulfill customer contracts are amortized in proportion to the revenue to which the costs relate. For contracts with an estimated amortization period of less than one year, the Company elected the practical expedient and expenses incremental costs immediately. The Company’s deferred customer contract acquisition costs and costs to fulfill contract balances were $ 49.7 million and $ 35.0 million, respectively as of March 31, 2022 . Of the Company’s total deferred customer contract acquisition costs and costs to fulfill contracts, $ 24.6 million was included in prepaid expenses and other current assets and $ 60.1 million was included in other assets on the Company’s consolidated balance sheet as of March 31, 2022 . The Company’s deferred customer contract acquisition costs and costs to fulfill contract balances were $ 60.4 million and $ 24.2 million, respectively, as of March 31, 2021 . Of the Company’s total deferred customer contract acquisition costs and costs to fulfill contracts, $ 26.8 million was included in prepaid expenses and other current assets and $ 57.8 million was included in other assets on the Company’s consolidated balance sheet as of March 31, 2021 . For total deferred customer contract acquisition costs and contract fulfillment costs, the Company’s amortization and reduction of carrying value associated F- 18 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) with contract termination was $ 56.9 million, $ 50.5 million and $ 46.4 million for the fiscal years ended March 31, 2022, 2021 and 2020 , respectively. Advertising costs In accordance with the authoritative guidance for advertising costs (ASC 720-35), advertising costs are expensed as incurred and included in selling, general and administrative expenses. Advertising expenses for fiscal years 2022, 2021 and 2020 were $ 23.1 million, $ 12.0 million and $ 25.8 million, respectively. Stock-based compensation In accordance with the authoritative guidance for share-based payments (ASC 718), the Company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award. Expense for restricted stock units and stock options is recognized on a straight-line basis over the employee’s requisite service period. Expense for total shareholder return (TSR) performance stock options that vest is recognized regardless of the actual TSR outcome achieved and is recognized on a graded-vesting basis. The Company accounts for forfeitures as they occur. The Company recognizes excess tax benefits or deficiencies on vesting or settlement of awards as discrete items within income tax benefit or provision within net income (loss) and the related cash flows are classified within operating activities. Independent research and development Independent research and development (IR&D), which is not directly funded by a third party, is expensed as incurred. IR&D expenses consist primarily of salaries and other personnel-related expenses, supplies, prototype materials and other expenses related to research and development programs. Income taxes Accruals for uncertain tax positions are provided for in accordance with the authoritative guidance for accounting for uncertainty in income taxes (ASC 740). The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative guidance for accounting for uncertainty in income taxes also provides guidance on derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. A deferred income tax asset or liability is established for the expected future tax consequences resulting from differences in the financial reporting and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax credit and loss carryforwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s analysis of the need for a valuation allowance on deferred tax assets considered historical as well as forecasted future operating results. In addition, the Company’s evaluation considered other factors, including the Company’s contractual backlog, history of positive earnings, current earnings trends assuming the Company’s satellite services segment continues to grow, taxable income adjusted for certain items, and forecasted income by jurisdiction. The Company also considered the period over which these net deferred tax assets can be realized and the Company’s history of not having federal tax loss carryforwards expire unused. Earnings per share Basic earnings per share is computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share is based upon the weighted average number of common shares outstanding and potential common stock, if dilutive during the period. Potential common stock includes options granted (including TSR performance stock options) and restricted stock units awarded under the Company’s equity compensation plan which are included in the earnings per share calculations using the treasury stock method, common shares expected to be issued under the Company’s employee stock purchase plan, and shares potentially issuable under the Viasat 401(k) Profit Sharing Plan in connection with the Company’s decision to pay a discretionary match in common stock or cash. F- 19 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Segment reporting The Company’s reporting segments, namely its satellite services, commercial networks and government systems segments, are primarily distinguished by the type of customer and the related contractual requirements. The Company’s satellite services segment provides satellite-based broadband services to customers, enterprises, commercial airlines and mobile broadband customers. The Company’s commercial networks segment develops and offers advanced satellite and wireless broadband platforms, ground networking equipment, radio frequency and advanced microwave solutions, Application-Specific Integrated Circuit (ASIC) chip design, satellite payload development and space-to-earth connectivity systems, some of which are ultimately used by the Company’s satellite services segment. The Company’s government systems segment develops and offers network-centric, Internet Protocol (IP)-based fixed and mobile secure government communications systems, products, services and solutions and provides global mobile broadband service and product offerings. The more regulated government environment is subject to unique contractual requirements and possesses economic characteristics which differ from the satellite services and commercial networks segments. The Company’s segments are determined consistent with the way management currently organizes and evaluates financial information internally for making operating decisions and assessing performance (see Note 15 — Segment Information). Recent authoritative guidance In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various areas related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. The Company adopted the new guidance in the first quarter of fiscal year 2022 on a prospective basis and as a result upon purchase of the remaining 51% interest in EBI from Eutelsat (see Note 16 — Acquisitions for more information), and assertion to permanently reinvest future earnings, the deferred tax liability recorded for EBI’s outside basis difference of $ 8.1 million was reversed and recorded in the first quarter of fiscal year 2022 as an income tax benefit in the consolidated statements of operations and comprehensive income (loss). In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (ASC 321), Investments – Equity Method and Joint Ventures (ASC 323) and Derivatives and Hedging (ASC 815). ASU 2020-01 clarifies the interaction of the accounting for equity securities under ASC 321 and investments accounted for under the equity method of accounting under ASC 323, and the accounting for certain forward contracts and purchased options accounted for under ASC 815. The Company adopted the new guidance in the first quarter of fiscal year 2022 on a prospective basis and the guidance did not have a material impact on the Company's consolidated financial statements and disclosures. In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (ASC 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40). ASU 2020-06 simplifies the accounting for convertible instruments by removing the beneficial conversion and cash conversion accounting models for convertible instruments and removes certain settlement conditions that are required for contracts to qualify for equity classification. This new standard also simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method for convertible instruments and requires that the effect of potential share settlement be included in diluted earnings per share calculations when an instrument may be settled in cash or shares. The new standard requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments. The new standard will become effective for the Company beginning in fiscal year 2023, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. ASU 2020-08 clarifies that a company should reevaluate whether a callable debt security is within the scope of ASC paragraph 310-20-35-33 for each reporting period. The Company adopted the new guidance in the first quarter of fiscal year 2022 on a prospective basis and the guidance did not have a material impact on the Company's consolidated financial statements and disclosures. In October 2021, the FASB issued ASU 2021-08, Business Combinations (ASC 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with ASC 606 as if the acquirer had originated the contracts. The new standard will become effective for the Company beginning in fiscal year 2024, with early F- 20 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. In November 2021, the FASB issued ASU 2021-10, Government Assistance (ASC 832): Disclosures by Business Entities about Government Assistance. ASU 2021-10 requires annual disclosures when an entity accounts for a transaction with a government by applying a grant or contribution accounting model by analogy to other accounting guidance. The new standard will become effective for the Company in fiscal year 2023. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (ASC 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022-01 made targeted improvements to the optional hedge accounting model with the objective of improving hedge accounting to better portray the economic results of an entity’s risk management activities in its financial statements. The new standard will become effective for the Company beginning in fiscal year 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. I n March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (ASC 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 eliminates the accounting guidance for troubled debt restructurings by creditors in Subtopic 310-40, Receivables – Troubled Debt Restructurings by Creditors, while enhancing certain disclosure requirements for loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Furthermore, it requires that an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments – Credit Losses – Measured at Amortized Cost. The new standard will become effective for the Company beginning in fiscal year 2024. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures. F- 21 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 2 — Composition of Certain Balance Sheet Captions As of March 31, 2022 As of March 31, 2021 (In thousands) Accounts receivable, net: Billed $ 263,383 $ 172,559 Unbilled 103,045 70,785 Allowance for doubtful accounts ( 7,159 ) ( 4,692 ) $ 359,269 $ 238,652 Inventories: Raw materials $ 92,650 $ 98,338 Work in process 64,371 71,875 Finished goods 184,869 166,459 $ 341,890 $ 336,672 Prepaid expenses and other current assets: Prepaid expenses $ 107,885 $ 94,405 Other 39,969 25,555 $ 147,854 $ 119,960 Property, equipment and satellites, net: Equipment and software (estimated useful life of 3 - 7 years) $ 1,750,855 $ 1,505,697 CPE leased equipment (estimated useful life of 4 - 5 years) 395,539 409,942 Furniture and fixtures (estimated useful life of 7 years) 58,602 57,433 Leasehold improvements (estimated useful life of 2 - 17 years) 151,508 149,324 Buildings (estimated useful life of 12 - 38 years) 12,440 8,923 Land 3,944 2,291 Construction in progress 387,668 219,482 Satellites (estimated useful life of 7 - 17 years) 1,059,182 969,952 Satellite Ka-band capacity obtained under finance leases (estimated useful life of 7 - 11 years) 173,480 173,467 Satellites under construction 1,808,474 1,338,408 5,801,692 4,834,919 Less: accumulated depreciation and amortization ( 2,059,780 ) ( 1,784,436 ) $ 3,741,912 $ 3,050,483 Other assets: Deferred income taxes $ 304,642 $ 273,288 Capitalized software costs, net 221,647 237,100 Patents, orbital slots and other licenses, net 62,200 52,889 Investment in unconsolidated affiliate 840 176,938 Other 116,301 95,212 $ 705,630 $ 835,427 Accrued and other liabilities: Collections in excess of revenues and deferred revenues $ 148,906 $ 216,594 Accrued employee compensation 113,554 87,153 Accrued vacation 51,675 59,509 Warranty reserve, current portion 5,043 6,693 Operating lease liabilities 52,122 48,896 Other 145,122 113,986 $ 516,422 $ 532,831 Other liabilities: Deferred revenues, long-term portion $ 90,151 $ 84,654 Warranty reserve, long-term portion 5,675 5,193 Satellite performance incentive obligations, long-term portion 18,651 22,191 Deferred income taxes 16,869 — Other 26,105 25,312 $ 157,451 $ 137,350 F- 22 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 3 — Fair Value Measurements In accordance with the authoritative guidance for financial assets and liabilities measured at fair value on a recurring basis (ASC 820), the Company determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants, and prioritizes the inputs used to measure fair value from market-based assumptions to entity specific assumptions: • Level 1 — Inputs based on quoted market prices for identical assets or liabilities in active markets at the measurement date. • Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3 — Inputs which reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. The Company had $ 5.0 million in cash equivalents (Level 1) and no liabilities measured at fair value on a recurring basis as of both March 31, 2022 and March 31, 2021. The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value: Cash equivalents — The Company’s cash equivalents consist of money market funds. Money market funds are valued using quoted prices for identical assets in an active market with sufficient volume and frequency of transactions (Level 1). Contingencies — In connection with the acquisition of the remaining 51 % interest in EBI on April 30, 2021 (see Note 16 — Acquisitions for more information), part of the purchase price consideration will not be determined until two years after the closing date, when the Company may pay or receive up to € 20.0 million, or approximately $ 22.3 million, in cash . The consideration to be paid in the future is contingent based on certain outcomes as defined in the acquisition agreement. Each reporting period, the Company estimates the fair value of the contingent consideration based on unobservable inputs and probability weightings using standard valuation techniques (Level 3). The fair value amount is currently recorded in other assets on the consolidated balance sheets and any change to fair value is recorded in the Company’s consolidated statements of operations each reporting period. As of and for the fiscal year ended March 31, 2022, the Company’s fair value estimate, and change in fair value of the contingent consideration since the acquisition date, were immaterial. Long-term debt — The Company’s long-term debt consists of borrowings under its Term Loan Facility, Revolving Credit Facility and Ex-Im Credit Facility (collectively, the Credit Facilities), $ 700.0 million in aggregate principal amount of 2025 Notes, $ 600.0 million in aggregate principal amount of 2027 Notes, $ 400.0 million in aggregate principal amount of 2028 Notes and finance lease obligations reported at the present value of future minimum lease payments with current accrued interest. Long-term debt related to the Revolving Credit Facility is reported at the outstanding principal amount of borrowings, while long-term debt related to the Term Loan Facility, the Ex-Im Credit Facility, the 2025 Notes, the 2027 Notes and the 2028 Notes is reported at amortized cost. However, for disclosure purposes, the Company is required to measure the fair value of outstanding debt on a recurring basis. The fair value of the Company’s long-term debt related to the Term Loan Facility and the Revolving Credit Facility approximates its carrying amount due to its variable interest rate, which approximates a market interest rate. As of March 31, 2022 and 2021 , the fair value of the Company’s long-term debt related to the Ex-Im Credit Facility was determined based on a discounted cash flow analysis using observable market interest rates for instruments with similar terms (Level 2) and was approximately $ 78.0 million and $ 100.1 million, respectively. As of March 31, 2022 and 2021 , the estimated fair value of the Company’s outstanding long-term debt related to each series of Notes was determined based on actual or estimated bids and offers for such series of Notes in an over-the-counter market (Level 2) and was $ 682.5 million and $ 709.6 million, respectively, for the 2025 Notes, $ 588.8 million and $ 629.2 million, respectively, for the 2027 Notes, and $ 382.7 million and $ 420.5 million, respectively, for the 2028 Notes. F- 23 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Satellite performance incentive obligations — The Company’s contracts with satellite manufacturers require the Company to make monthly in-orbit satellite performance incentive payments with respect to certain satellites in service, including interest, through fiscal year 2028 , subject to the continued satisfactory performance of the applicable satellites. The Company records the net present value of these expected future payments as a liability and as a component of the cost of the satellites. However, for disclosure purposes, the Company is required to measure the fair value of outstanding satellite performance incentive obligations on a recurring basis. The fair value of the Company’s outstanding satellite performance incentive obligations is estimated to approximate their carrying value based on current rates (Level 2). As of March 31, 2022 and 2021 , the Company’s estimated satellite performance incentive obligations relating to certain satellites in service, including accrued interest, were $ 23.7 million and $ 27.1 million, respectively. Note 4 — Goodwill and Acquired Intangible Assets During fiscal year 2022 , the increase in the Company’s goodwill primarily related to the acquisitions of the remaining 51 % interest in EBI and of RigNet on April 30, 2021 (see Note 16 — Acquisitions for more information), partially offset by foreign currency translation effects recorded within all three of the Company’s segments. During fiscal year 2021, the increase in the Company’s goodwill related to the insignificant amount of the effects of foreign currency translation recorded within all three of the Company’s segments. Other acquired intangible assets are amortized using the straight-line method over their estimated useful lives of two to 20 years (which approximates the economic pattern of benefit). Amortization expense related to other acquired intangible assets was $ 28.7 million, $ 5.5 million and $ 7.6 million for the fiscal years ended March 31, 2022, 2021 and 2020, respectively. The expected amortization expense of amortizable acquired intangible assets may change due to the effects of foreign currency fluctuations as a result of international businesses acquired. Expected amortization expense for acquired intangible assets for each of the following periods is as follows: Amortization (In thousands) Expected for fiscal year 2023 $ 31,383 Expected for fiscal year 2024 30,002 Expected for fiscal year 2025 27,880 Expected for fiscal year 2026 26,366 Expected for fiscal year 2027 25,805 Thereafter 94,607 $ 236,043 Other acquired intangible assets and the related accumulated amortization as of March 31, 2022 and 2021 is as follows: As of March 31, 2022 As of March 31, 2021 Weighted Average Useful Life Total Accumulated Amortization Net Book Value Total Accumulated Amortization Net Book Value (In years) (In thousands) Technology 7 $ 154,624 $ ( 71,582 ) $ 83,042 $ 78,185 $ ( 71,549 ) $ 6,636 Contracts and customer relationships 10 164,635 ( 53,250 ) 111,385 55,161 ( 52,229 ) 2,932 Satellite co-location rights 9 8,600 ( 8,600 ) — 8,600 ( 8,600 ) — Trade name 7 32,463 ( 9,097 ) 23,366 5,940 ( 5,940 ) — Other 11 22,263 ( 4,013 ) 18,250 3,663 ( 3,663 ) — Total other acquired intangible assets 9 $ 382,585 $ ( 146,542 ) $ 236,043 $ 151,549 $ ( 141,981 ) $ 9,568 In fiscal years 2022 and 2021, the gross amount and accumulated amortization for acquired identifiable intangible assets were reduced by the retirement of fully amortized assets that were no longer in use. F- 24 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 5 — Leases The Company’s operating leases consist primarily of leases for office space, data centers and satellite ground facilities and have remaining terms from less than one year to 11 years , some of which include renewal options, and some of which include options to terminate the leases within one year. Certain earth station leases have renewal terms that have been deemed to be reasonably certain to be exercised and as such have been recognized as part of the Company’s right-of-use assets and lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company recognized right-of-use assets and lease liabilities for such leases in connection with its adoption of ASC 842 as of April 1, 2019 (see Note 1 — The Company and a Summary of Its Significant Accounting Policies — Leases for more information). The Company reports operating lease right-of-use assets in operating lease right-of-use assets and the current and non-current portions of its operating lease liabilities in accrued and other liabilities and non-current operating lease liabilities, respectively. The Company’s finance leases consist primarily of satellite lifetime Ka-band capacity leases and have remaining terms from less than one year to four years . The Company reports assets obtained under finance leases in property, equipment and satellites, net and the current and non-current portions of its finance lease liabilities in current portion of long-term debt and other long-term debt, respectively. The components of the Company's lease costs, weighted average lease terms and discount rates are presented in the tables below: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Lease cost: Operating lease cost $ 71,499 $ 65,732 $ 60,861 Finance lease cost: Depreciation of assets obtained under finance leases 11,961 13,656 11,328 Interest on lease liabilities 2,749 3,314 2,144 Short-term lease cost 10,514 5,618 4,750 Variable lease cost 8,752 7,176 8,608 Net lease cost $ 105,475 $ 95,496 $ 87,691 As of As of As of March 31, 2022 March 31, 2021 March 31, 2020 Lease term and discount rate: Weighted average remaining lease term (in years): Operating leases 7.0 7.4 7.0 Finance leases 4.4 5.3 6.3 Weighted average discount rate: Operating leases 5.4 % 5.4 % 5.4 % Finance leases 5.4 % 5.4 % 5.4 % F- 25 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following table details components of the consolidated statements of cash flows for operating and finance leases: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 71,335 $ 64,676 $ 58,987 Operating cash flows from finance leases 3,024 3,108 1,856 Financing cash flows from finance leases 10,749 10,900 8,044 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 61,599 $ 78,393 $ 25,420 Finance leases — 2,076 72,711 The following table presents maturities of the Company’s lease liabilities as of March 31, 2022: Operating Leases Finance Leases (In thousands) Expected for fiscal year 2023 $ 71,235 $ 12,220 Expected for fiscal year 2024 70,286 12,030 Expected for fiscal year 2025 64,609 12,000 Expected for fiscal year 2026 62,296 12,000 Expected for fiscal year 2027 59,699 3,000 Thereafter 130,109 — Total future lease payments required 458,234 51,250 Less: interest 78,448 5,498 Total $ 379,786 $ 45,752 As of March 31, 2022 , the Company had $ 55.5 million of additional lease commitments that will commence in fiscal year 2023 with lease terms of five to sixteen years . F- 26 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 6 — Senior Notes and Other Long-Term Debt Total long-term debt consisted of the following as of March 31, 2022 and 2021: As of March 31, 2022 As of March 31, 2021 (In thousands) 2028 Notes $ 400,000 $ 400,000 2027 Notes 600,000 600,000 2025 Notes 700,000 700,000 Term Loan Facility 700,000 — Revolving Credit Facility — — Ex-Im Credit Facility 78,609 98,261 Finance lease obligations (see Note 5) 45,752 56,336 Total debt 2,524,361 1,854,597 Unamortized discount and debt issuance costs ( 38,234 ) ( 21,441 ) Less: current portion of long-term debt 34,911 30,472 Total long-term debt $ 2,451,216 $ 1,802,684 The estimated aggregate amounts and timing of payments on the Company’s long-term debt obligations as of March 31, 2022 for the next five fiscal years and thereafter were as follows (excluding the effects of discount accretion under the 2025 Notes, the 2027 Notes, the 2028 Notes, the Term Loan Facility and the Ex-Im Credit Facility): For the Fiscal Years Ending (In thousands) 2023 $ 34,911 2024 37,017 2025 37,555 2026 738,155 2027 9,973 Thereafter 1,666,750 2,524,361 Plus: unamortized discount and debt issuance costs ( 38,234 ) Total $ 2,486,127 Term Loan Facility On March 4, 2022, the Company entered into a $ 700.0 million Term Loan Facility, which was fully drawn at closing and matures on March 4, 2029 . The Company received $ 686.0 million in proceeds, net of issue discount, from the borrowings under the Term Loan Facility. The Company used a portion of the net proceeds to repay all outstanding borrowings under the Revolving Credit Facility. At March 31, 2022, the Company had $ 700.0 million in principal amount of outstanding borrowings under the Term Loan Facility. Borrowings under the Term Loan Facility are required to be repaid in quarterly installments of $ 1.75 million each, which commence on September 30, 2022 , followed by a final installment of $ 654.5 million at maturity. Borrowings under the Term Loan Facility bear interest, at the Company’s option, at either (1) a base rate equal to the greater of the administrative agent’s prime rate as announced from time to time, the federal funds effective rate plus 0.50%, and the forward-looking SOFR term rate administered by CME for a one-month interest period plus 1.00%, subject to a floor of 1.50% for the initial term loans, plus an applicable margin of 3.50%, or (2) the forward-looking SOFR term rate administered by CME for the applicable interest period, subject to a floor of 0.50% for the initial term loans, plus an applicable margin of 4.50%. As of March 31, 2022, the effective interest rate on the Company’s outstanding borrowings under the Term Loan Facility was 5.51 % . The Term Loan Facility is required to be guaranteed by certain significant domestic subsidiaries of the Company (as defined in the Term Loan Facility) and secured by substantially all of the Company’s and any such subsidiaries’ assets. As of March 31, 2022, none of the Company’s subsidiaries guaranteed the Term Loan Facility. The Term Loan Facility contains covenants that restrict, among other things, the ability of Company and its restricted subsidiaries to incur additional debt, grant liens, sell assets, make investments, pay dividends and make certain other restricted payments. F- 27 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Borrowings under the Term Loan Facility are recorded as current portion of long-term debt and as other long-term debt, net of unamortized discount and debt issuance costs, in the Company’s consolidated financial statements. The Term Loan Facility was issued with an original issue discount of 2.00 %, or $ 14.0 million. The original issue discount and deferred financing cost associated with the issuance of the borrowings under the Term Loan Facility are amortized to interest expense on a straight-line basis over the term of the Term Loan Facility, the results of which are not materially different from the effective interest rate basis. Revolving Credit Facility As of March 31, 2022 , the Revolving Credit Facility provided a $ 700.0 million revolving line of credit (including up to $ 150.0 million of letters of credit), with a maturity date of January 18, 2024 . At March 31, 2022, the Company had no outstanding borrowings under the Revolving Credit Facility and $ 63.0 million outstanding under standby letters of credit, leaving borrowing availability under the Revolving Credit Facility as of March 31, 2022 of $ 637.0 million. Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (1) the highest of the Federal Funds rate plus 0.50%, the Eurodollar rate plus 1.00%, or the administrative agent’s prime rate as announced from time to time, or (2) the Eurodollar rate, plus, in the case of each of (1) and (2), an applicable margin that is based on the Company’s total leverage ratio. The Company has capitalized certain amounts of interest expense on the Revolving Credit Facility in connection with the construction of various assets during the construction period. The Revolving Credit Facility is required to be guaranteed by certain significant domestic subsidiaries of the Company (as defined in the Revolving Credit Facility) and secured by substantially all of the Company’s and any such subsidiaries’ assets. As of March 31, 2022, none of the Company’s subsidiaries guaranteed the Revolving Credit Facility. The Revolving Credit Facility contains financial covenants regarding a maximum total leverage ratio and a minimum interest coverage ratio. In addition, the Revolving Credit Facility contains covenants that restrict, among other things, the Company’s ability to sell assets, make investments and acquisitions, make capital expenditures, grant liens, pay dividends and make certain other restricted payments. The Company was in compliance with its financial covenants under the Revolving Credit Facility as of March 31, 2022. In November 2021, the Company amended the Revolving Credit Facility to, among other matters, permit the consummation of the Inmarsat Transaction and provide additional covenant flexibility following the completion of the Inmarsat Transaction. These amendments will become effective at and are conditional upon the closing of the Inmarsat Transaction. In March 2022, the Company further amended the Revolving Credit Facility to provide additional covenant flexibility and permit the incurrence of the Term Loan Facility. Ex-Im Credit Facility The Ex-Im Credit Facility originally provided a $ 362.4 million senior secured direct loan facility, which was fully drawn. Of the $ 362.4 million in principal amount of borrowings made under the Ex-Im Credit Facility, $ 321.2 million was used to finance up to 85 % of the costs of construction, launch and insurance of the ViaSat-2 satellite and related goods and services (including costs incurred on or after September 18, 2012), with the remaining $ 41.2 million used to finance the total exposure fees incurred under the Ex-Im Credit Facility (which included all previously accrued completion exposure fees). As of March 31, 2022, the Company had $ 78.6 million in principal amount of outstanding borrowings under the Ex-Im Credit Facility. Borrowings under the Ex-Im Credit Facility bear interest at a fixed rate of 2.38 %, payable semi-annually in arrears. The effective interest rate on the Company’s outstanding borrowings under the Ex-Im Credit Facility, which takes into account timing and amount of borrowings and payments, exposure fees, debt issuance costs and other fees, is 4.54 %. Borrowings under the Ex-Im Credit Facility are required to be repaid in 16 semi-annual principal installments, which commenced on April 15, 2018 , with a maturity date of October 15, 2025 . Pursuant to the terms of the Ex-Im Credit Facility, certain insurance proceeds related to the ViaSat-2 satellite must be used to pay down outstanding borrowings under the Ex-Im Credit Facility upon receipt. The Ex-Im Credit Facility is guaranteed by Viasat and is secured by first-priority liens on the ViaSat-2 satellite and related assets, as well as a pledge of the capital stock of the borrower under the facility. The Ex-Im Credit Facility contains financial covenants regarding Viasat’s maximum total leverage ratio and minimum interest coverage ratio. In addition, the Ex-Im Credit Facility contains covenants that restrict, among other things, the Company’s ability to sell assets, make investments and acquisitions, make capital expenditures, grant liens, pay dividends F- 28 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) and make certain other restricted payments. The Company was in compliance with its financial covenants under the Ex-Im Credit Facility as of March 31, 2022. Borrowings under the Ex-Im Credit Facility are recorded as current portion of long-term debt and as other long-term debt, net of unamortized discount and debt issuance costs, in the Company’s consolidated financial statements. The discount of $ 42.3 million (consisting of the initial $ 6.0 million pre-exposure fee, $ 35.3 million of completion exposure fees, and other customary fees) and deferred financing cost associated with the issuance of the borrowings under the Ex-Im Credit Facility are amortized to interest expense on an effective interest rate basis over the weighted average term of the Ex-Im Credit Facility and in accordance with the related payment obligations. Senior Notes Senior Notes due 2028 In June 2020, the Company issued $ 400.0 million in principal amount of 2028 Notes in a private placement to institutional buyers. The 2028 Notes were issued at face value and are recorded as long-term debt, net of debt issuance costs, in the Company’s consolidated financial statements. The 2028 Notes bear interest at the rate of 6.500 % per year, payable semi-annually in cash in arrears, which interest payments commenced in January 2021. Debt issuance costs associated with the issuance of the 2028 Notes are amortized to interest expense on a straight-line basis over the term of the 2028 Notes, the results of which are not materially different from the effective interest rate basis. The 2028 Notes are required to be guaranteed on an unsecured senior basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility. As of March 31, 2022, none of the Company’s subsidiaries guaranteed the 2028 Notes. The 2028 Notes are the Company’s general senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future unsecured unsubordinated debt. The 2028 Notes are effectively junior in right of payment to the Company’s existing and future secured debt, including under the Credit Facilities and the 2027 Notes (to the extent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries that do not guarantee the 2028 Notes, and are senior in right of payment to all of the Company’s existing and future subordinated indebtedness. The indenture governing the 2028 Notes limits, among other things, the Company’s and its restricted subsidiaries’ ability to: incur, assume or guarantee additional debt; issue redeemable stock and preferred stock; pay dividends, make distributions or redeem or repurchase capital stock; prepay, redeem or repurchase subordinated debt; make loans and investments; grant or incur liens; restrict dividends, loans or asset transfers from restricted subsidiaries; sell or otherwise dispose of assets; enter into transactions with affiliates; reduce the Company’s satellite insurance; and consolidate or merge with, or sell substantially all of their assets to, another person. Prior to July 15, 2023, the Company may redeem up to 40% of the 2028 Notes at a redemption price of 106.500 % of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, from the net cash proceeds of specified equity offerings. The Company may also redeem the 2028 Notes prior to July 15, 2023, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof plus the applicable premium and any accrued and unpaid interest, if any, thereon to the redemption date. The applicable premium is calculated as the greater of: (i) 1.0% of the principal amount of such 2028 Notes and (ii) the excess, if any, of (a) the present value at such date of redemption of (1) the redemption price of such 2028 Notes on July 15, 2023 plus (2) all required interest payments due on such 2028 Notes through July 15, 2023 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the treasury rate (as defined under the indenture governing the 2028 Notes) plus 50 basis points, over (b) the then-outstanding principal amount of such 2028 Notes. The 2028 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on July 15, 2023 at a redemption price of 103.250 % , during the 12 months beginning on July 15, 2024 at a redemption price of 101.625 % , and at any time on or after July 15, 2025 at a redemption price of 100 %, in each case plus accrued and unpaid interest, if any, thereon to the redemption date. In the event a change of control triggering event occurs (as defined in the indenture governing the 2028 Notes), each holder will have the right to require the Company to repurchase all or any part of such holder’s 2028 Notes at a purchase price in cash equal to 101 % of the aggregate principal amount of the 2028 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). F- 29 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Senior Secured Notes due 2027 In March 2019, the Company issued $ 600.0 million in principal amount of 2027 Notes in a private placement to institutional buyers. The 2027 Notes were issued at face value and are recorded as long-term debt, net of debt issuance costs, in the Company’s consolidated financial statements. The 2027 Notes bear interest at the rate of 5.625 % per year, payable semi-annually in cash in arrears, which interest payments commenced in October 2019. Debt issuance costs associated with the issuance of the 2027 Notes are amortized to interest expense on a straight-line basis over the term of the 2027 Notes, the results of which are not materially different from the effective interest rate basis. The 2027 Notes are required to be guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility. As of March 31, 2022, none of the Company’s subsidiaries guaranteed the 2027 Notes. The 2027 Notes are secured, equally and ratably with the Revolving Credit Facility and any future parity lien debt, by liens on substantially all of the Company’s assets. The 2027 Notes are the Company’s general senior secured obligations and rank equally in right of payment with all of its existing and future unsubordinated debt. The 2027 Notes are effectively senior to all of the Company’s existing and future unsecured debt (including the 2025 Notes and the 2028 Notes) as well as to all of any permitted junior lien debt that may be incurred in the future, in each case to the extent of the value of the assets securing the 2027 Notes. The 2027 Notes are effectively subordinated to any obligations that are secured by liens on assets that do not constitute a part of the collateral securing the 2027 Notes, are structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries that do not guarantee the 2027 Notes, and are senior in right of payment to all of the Company’s existing and future subordinated indebtedness. The indenture governing the 2027 Notes limits, among other things, the Company’s and its restricted subsidiaries’ ability to: incur, assume or guarantee additional debt; issue redeemable stock and preferred stock; pay dividends, make distributions or redeem or repurchase capital stock; prepay, redeem or repurchase subordinated debt; make loans and investments; grant or incur liens; restrict dividends, loans or asset transfers from restricted subsidiaries; sell or otherwise dispose of assets; enter into transactions with affiliates; reduce the Company’s satellite insurance; and consolidate or merge with, or sell substantially all of their assets to, another person. The 2027 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on April 15, 2022 at a redemption price of 102.813 % , during the 12 months beginning on April 15, 2023 at a redemption price of 101.406 % , and at any time on or after April 15, 2024 at a redemption price of 100 %, in each case plus accrued and unpaid interest, if any, thereon to the redemption date. In the event a change of control triggering event occurs (as defined in the indenture governing the 2027 Notes), each holder will have the right to require the Company to repurchase all or any part of such holder’s 2027 Notes at a purchase price in cash equal to 101 % of the aggregate principal amount of the 2027 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Senior Notes due 2025 In September 2017, the Company issued $ 700.0 million in principal amount of 2025 Notes in a private placement to institutional buyers. The 2025 Notes were issued at face value and are recorded as long-term debt, net of debt issuance costs, in the Company’s consolidated financial statements. The 2025 Notes bear interest at the rate of 5.625 % per year, payable semi-annually in cash in arrears, which interest payments commenced in March 2018. Debt issuance costs associated with the issuance of the 2025 Notes are amortized to interest expense on a straight-line basis over the term of the 2025 Notes, the results of which are not materially different from the effective interest rate basis. The 2025 Notes are required to be guaranteed on an unsecured senior basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility. As of March 31, 2022, none of the Company’s subsidiaries guaranteed the 2025 Notes. The 2025 Notes are the Company’s general senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future unsecured unsubordinated debt. The 2025 Notes are effectively junior in right of payment to the Company’s existing and future secured debt, including under the Credit Facilities and the 2027 Notes (to the extent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries that do not guarantee the 2025 Notes, and are senior in right of payment to all of the Company’s existing and future subordinated indebtedness. F- 30 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The indenture governing the 2025 Notes limits, among other things, the Company’s and its restricted subsidiaries’ ability to: incur, assume or guarantee additional debt; issue redeemable stock and preferred stock; pay dividends, make distributions or redeem or repurchase capital stock; prepay, redeem or repurchase subordinated debt; make loans and investments; grant or incur liens; restrict dividends, loans or asset transfers from restricted subsidiaries; sell or otherwise dispose of assets; enter into transactions with affiliates; reduce the Company’s satellite insurance; and consolidate or merge with, or sell substantially all of their assets to, another person. The 2025 Notes may be redeemed, in whole or in part, at any time prior to September 15, 2022 at a redemption price of 101.406 % , and at any time thereafter at a redemption price of 100 %, in each case plus accrued and unpaid interest, if any, thereon to the redemption date. In the event a change of control triggering event occurs (as defined in the indenture governing the 2025 Notes), each holder will have the right to require the Company to repurchase all or any part of such holder’s 2025 Notes at a purchase price in cash equal to 101 % of the aggregate principal amount of the 2025 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). Note 7 — Common Stock and Stock Plans From time to time, the Company files universal shelf registration statements with the SEC for the future sale of an unlimited amount of common stock, preferred stock, debt securities, depositary shares, warrants and rights, which securities may be offered from time to time, separately or together, directly by the Company, by selling security holders, or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering. In November 1996, the Company adopted the 1996 Equity Participation Plan (the Equity Participation Plan). The Equity Participation Plan provides for the grant to executive officers, other key employees, consultants and non-employee directors of the Company a broad variety of stock-based compensation alternatives such as nonqualified stock options, incentive stock options, restricted stock units and performance awards. From November 1996 to September 2021 through various amendments of the Equity Participation Plan, the Company increased the maximum number of shares reserved for issuance under this plan to 41,315,000 shares. The Company believes that such awards align the interests of its executive officers, employees, consultants and non-employee directors with those of its stockholders. Shares of the Company’s common stock granted under the Equity Participation Plan in the form of stock options or stock appreciation right are counted against the Equity Participation Plan share reserve on a one for one basis and performance-based stock options are calculated assuming “maximum” performance. Shares of the Company’s common stock granted under the Equity Participation Plan as an award other than as an option or as a stock appreciation right with a per share purchase price lower than 100% of fair market value on the date of grant are counted against the Equity Participation Plan share reserve as two shares for each share of common stock subject to such awards. Restricted stock units are granted to eligible employees and directors and represent rights to receive shares of common stock at a future date. F- 31 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In November 1996, the Company adopted the Viasat, Inc. Employee Stock Purchase Plan (the Employee Stock Purchase Plan) to assist employees in acquiring a stock ownership interest in the Company and to encourage them to remain in the employment of the Company. The Employee Stock Purchase Plan is intended to qualify under Section 423 of the Internal Revenue Code. From November 1996 to September 2021 through various amendments of the Employee Stock Purchase Plan, the Company increased the maximum number of shares reserved for issuance under the Employee Stock Purchase Plan to 6,950,000 shares. To facilitate participation for employees located outside of the United States in light of non-U.S. law and other considerations, the amended Employee Stock Purchase Plan also provides for the grant of purchase rights that are not intended to be tax-qualified. The Employee Stock Purchase Plan permits eligible employees to purchase common stock at a discount through payroll deductions during specified six-month offering periods. No employee may purchase more than $25,000 worth of stock in any calendar year. The price of shares purchased under the Employee Stock Purchase Plan is equal to 85 % of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. Total stock-based compensation expense recognized in accordance with the authoritative guidance for share-based payments was as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Stock-based compensation expense before taxes $ 86,808 $ 84,879 $ 86,553 Related income tax benefits ( 20,228 ) ( 19,485 ) ( 20,388 ) Stock-based compensation expense, net of taxes $ 66,580 $ 65,394 $ 66,165 In accordance with the authoritative guidance for share-based payments (ASC 718), the Company recognizes excess tax benefits or deficiencies on vesting or settlement of awards as discrete items within income tax benefit or provision within net income (loss) and the related cash flows classified within operating activities. The compensation cost that has been charged against income for the Equity Participation Plan under the authoritative guidance for share-based payments was $ 81.0 million, $ 77.9 million and $ 81.5 million, and for the Employee Stock Purchase Plan was $ 5.8 million, $ 6.9 million and $ 5.0 million, for the fiscal years ended March 31, 2022, 2021 and 2020 , respectively. The Company capitalized $ 10.8 million, $ 13.7 million and $ 12.6 million of stock-based compensation expense as a part of the cost for software development for resale included in other assets and as a part of the equipment and software for internal use and satellites included in property, equipment and satellites, net for fiscal years 2022, 2021 and 2020, respectively. As of March 31, 2022 , total unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the Equity Participation Plan (including stock options, TSR performance stock options and restricted stock units) and the Employee Stock Purchase Plan was $ 192.6 million and $ 1.6 million, respectively. These costs are expected to be recognized over a weighted average period of 0.7 years, 1.7 years and 2.8 years, for stock options, TSR performance stock options and restricted stock units, respectively, under the Equity Participation Plan and less than six months under the Employee Stock Purchase Plan. F- 32 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Stock options, TSR performance stock options and employee stock purchase plan. The Company’s stock options typically have a simple four-year vesting schedule (except for one - and three-year vesting schedules for options granted to the members of the Company’s Board of Directors) and a six-year contractual term. The Company grants TSR performance stock options to executive officers under the Equity Participation Plan. The number of shares of TSR performance stock options that will become eligible to vest based on the time-based vesting schedule described below is based on a comparison over a four-year performance period of the Company’s TSR to the TSR of the companies included in the S&P Mid Cap 400 Index. The number of options that may become vested and exercisable will range from 0% to 175% of the target number of options based on the Company’s relative TSR ranking for the performance period. The Company’s TSR performance stock options have a four-year time-based vesting schedule and a six-year contractual term. The TSR performance stock options must be vested under both the time-based vesting schedule and the performance-based vesting conditions in order to become exercisable. Expense for TSR performance stock options that time-vest is recognized regardless of the actual TSR outcome achieved and is recognized on a graded-vesting basis. The weighted average estimated fair value of TSR performance stock options granted during fiscal years 2022, 2021 and 2020 was $ 31.11 , $ 19.25 and $ 30.41 per share, respectively, using the Monte Carlo simulation. The weighted average estimated fair value of stock options granted and employee stock purchase plan shares issued during fiscal year 2022 was $ 13.50 and $ 12.37 per share, respectively, during fiscal year 2021 was $ 12.81 and $ 11.60 per share, respectively, and during fiscal year 2020 was $ 20.15 and $ 17.15 per share, respectively, using the Black-Scholes model. The weighted average assumptions (annualized percentages) used in the Black-Scholes model and Monte Carlo simulation were as follows: Stock Options TSR Performance Stock Options Employee Stock Purchase Plan Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Volatility 49.5 % 39.1 % 27.9 % 42.5 % 39.8 % 27.7 % 42.1 % 64.8 % 24.6 % Risk-free interest rate 0.4 % 0.2 % 1.3 % 1.2 % 0.4 % 1.7 % 0.1 % 0.1 % 1.8 % Dividend yield 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Expected life 3.2 years 5.0 years 5.0 years 5.0 years 5.0 years 5.0 years 0.5 years 0.5 years 0.5 years The Company’s expected volatility is a measure of the amount by which its stock price is expected to fluctuate over the expected term of the stock-based award. The estimated volatilities for stock options and TSR performance options are based on the historical volatility calculated using the daily stock price of the Company’s stock over a recent historical period equal to the expected term. The risk-free interest rate that the Company uses in determining the fair value of its stock-based awards is based on the implied yield on U.S. Treasury zero-coupon issues with remaining terms equivalent to the expected term of its stock-based awards. The expected terms or lives of stock options and TSR performance stock options represent the expected period of time from the date of grant to the estimated date that the stock options under the Company’s Equity Participation Plan would be fully exercised. The expected term assumption is estimated based primarily on the options’ vesting terms and remaining contractual life and employees’ expected exercise and post-vesting employment termination behavior. A summary of stock option activity for fiscal year 2022 is presented below: Number of Shares Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value (In thousands) Outstanding at March 31, 2021 956,733 $ 65.18 Options granted 99,222 79.41 Options expired ( 388,119 ) 62.61 Options exercised ( 27,107 ) 56.33 Outstanding at March 31, 2022 640,729 $ 69.32 1.6 $ 483 Vested and exercisable at March 31, 2022 598,994 $ 70.58 1.3 $ 431 F- 33 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The total intrinsic value of stock options exercised during fiscal years 2022, 2021 and 2020 was an insignificant amount, zero and $ 7.9 million, respectively. All options issued under the Company’s Equity Participation Plan have an exercise price equal to the fair market value of the Company’s stock on the date of the grant. The Company recorded no excess tax benefits during fiscal years 2022 and 2021 and an insignificant amount of excess tax benefit during fiscal year 2020 related to stock option exercises. A summary of TSR performance stock option activity for fiscal year 2022 is presented below: Number of Shares (1) Weighted Average Exercise Price per Share Weighted Average Remaining Contractual Term in Years Aggregate Intrinsic Value (In thousands) Outstanding at March 31, 2021 2,415,459 $ 59.87 TSR performance options granted 599,292 53.43 TSR performance options canceled ( 578,764 ) 70.50 TSR performance options exercised — — Outstanding at March 31, 2022 2,435,987 $ 55.76 4.2 $ 9,690 Vested and exercisable at March 31, 2022 — $ — — $ — (1) Number of shares is based on the target number of options under each TSR performance stock option. Restricted stock units. Restricted stock units represent a right to receive shares of common stock at a future date determined in accordance with the participant’s award agreement. There is no exercise price and no monetary payment required for receipt of restricted stock units or the shares issued in settlement of the award. Instead, consideration is furnished in the form of the participant’s services to the Company. Restricted stock units generally vest over four years (except for one - and three-year vesting schedules for restricted stock units granted to the members of the Company’s Board of Directors). Compensation cost for these awards is based on the fair value on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period. For fiscal years 2022, 2021 and 2020 , the Company recognized $ 64.7 million, $ 59.4 million and $ 62.4 million, respectively, in stock-based compensation expense related to these restricted stock unit awards. The per unit weighted average grant date fair value of restricted stock units granted during fiscal years 2022, 2021 and 2020 was $ 52.85 , $ 36.57 and $ 71.59 , respectively. A summary of restricted stock unit activity for fiscal year 2022 is presented below: Number of Restricted Stock Units Weighted Average Grant Date Fair Value per Share Outstanding at March 31, 2021 3,431,561 $ 53.44 Awarded 2,080,700 52.85 Forfeited ( 217,024 ) 52.93 Vested ( 1,274,311 ) 58.65 Outstanding at March 31, 2022 4,020,926 $ 51.51 Vested and deferred at March 31, 2022 194,641 $ 48.96 The total fair value of shares vested related to restricted stock units during the fiscal years 2022, 2021 and 2020 was $ 66.0 million, $ 38.8 million and $ 80.4 million, respectively. F- 34 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 8 — Shares Used In Computing Diluted Net (Loss) Income Per Share Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Weighted average: Common shares outstanding used in calculating basic net (loss) income per share attributable to Viasat, Inc. common stockholders 73,397 66,444 61,632 Restricted stock units to acquire common stock as determined by application of the treasury stock method — 170 — Potentially issuable shares in connection with certain terms of the Viasat 401(k) Profit Sharing Plan and Employee Stock Purchase Plan — 406 — Shares used in computing diluted net (loss) income per share attributable to Viasat, Inc. common stockholders 73,397 67,020 61,632 The weighted average number of shares used to calculate basic and diluted net loss per share attributable to Viasat, Inc. common stockholders is the same for the fiscal years ended March 31, 2022 and 2020, as the Company incurred a net loss attributable to Viasat, Inc. common stockholders for such periods and inclusion of potentially dilutive weighted average shares of common stock would be antidilutive. Potentially dilutive weighted average shares excluded from the calculation for fiscal years 2022 and 2020, respectively, consisted of 848,791 and 591,396 shares related to stock options (other than TSR performance stock options), 264,645 and 138,026 shares related to TSR performance stock options, 2,150,449 and 841,890 shares related to restricted stock units, and 417,308 and 446,603 shares related to certain terms of the Viasat 401(k) Profit Sharing Plan and Employee Stock Purchase Plan. Antidilutive shares excluded from the calculation for the fiscal year ended March 31, 2021 consisted of 1,119,819 shares related to stock options (other than TSR performance stock options), 475,371 shares related to TSR performance stock options and 2,205,085 shares related to restricted stock units. Note 9 — Income Taxes The components of (loss) income before income taxes by jurisdiction are as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) United States $ 2,222 $ 48,443 $ 27,000 Foreign ( 18,661 ) ( 22,457 ) ( 25,572 ) $ ( 16,439 ) $ 25,986 $ 1,428 F- 35 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The benefit from (provision for) income taxes includes the following: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Current tax provision Federal $ ( 7,097 ) $ ( 8,573 ) $ ( 5,935 ) State ( 2,041 ) ( 3,386 ) ( 1,465 ) Foreign ( 4,042 ) 449 ( 327 ) ( 13,180 ) ( 11,510 ) ( 7,727 ) Deferred tax benefit Federal 12,961 708 9,889 State 11,865 823 5,797 Foreign 2,591 538 ( 44 ) 27,417 2,069 15,642 Total benefit from (provision for) income taxes $ 14,237 $ ( 9,441 ) $ 7,915 Significant components of the Company’s net deferred tax assets are as follows: As of March 31, 2022 March 31, 2021 (In thousands) Deferred tax assets: Net operating loss carryforwards $ 251,276 $ 187,900 Tax credit carryforwards 299,165 272,126 Operating lease liabilities 93,580 88,259 Deferred revenue 21,546 21,345 Other 99,074 82,222 Valuation allowance ( 78,071 ) ( 47,076 ) Total deferred tax assets 686,570 604,776 Deferred tax liabilities: Intangible assets ( 119,299 ) ( 71,335 ) Property, equipment and satellites ( 163,560 ) ( 142,899 ) Operating lease assets ( 87,677 ) ( 83,065 ) Other ( 28,261 ) ( 34,208 ) Total deferred tax liabilities ( 398,797 ) ( 331,507 ) Net deferred tax assets $ 287,773 $ 273,269 F- 36 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) A reconciliation of the benefit from (provision for) income taxes to the amount computed by applying the statutory federal income tax rate to (loss) income before income taxes is as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Tax benefit (provision) at federal statutory rate $ 3,455 $ ( 5,457 ) $ ( 300 ) State tax provision, net of federal benefit ( 653 ) ( 5,067 ) ( 1,093 ) Tax credits, net of valuation allowance 27,052 24,272 25,153 Non-deductible compensation ( 5,771 ) ( 5,728 ) ( 7,150 ) Non-deductible transaction costs ( 1,361 ) — — Non-deductible meals and entertainment ( 337 ) ( 386 ) ( 1,075 ) Stock-based compensation ( 7,569 ) ( 9,901 ) 780 Change in state effective tax rate 539 ( 2,360 ) ( 14 ) Foreign effective tax rate differential, net of valuation allowance ( 6,201 ) ( 3,046 ) ( 5,707 ) Unremitted subsidiary gains ( 1,565 ) ( 1,682 ) ( 2,742 ) Change to indefinite reinvestment assertion (EBI) 8,071 — — Change in federal tax rate due to 2020 CARES Act — — 567 Other ( 1,423 ) ( 86 ) ( 504 ) Total benefit from (provision for) income taxes $ 14,237 $ ( 9,441 ) $ 7,915 As of March 31, 2022 , the Company had federal and state research & development (R&D) tax credit carryforwards of $ 242.9 million and $ 192.8 million, respectively, which begin to expire in fiscal year 2026 and fiscal year 2023 , respectively. As of March 31, 2022 , the Company had federal and state net operating loss carryforwards of $ 854.7 million and $ 546.5 million, respectively, both of which begin to expire in fiscal year 2023 . In accordance with the authoritative guidance for income taxes (ASC 740), net deferred tax assets are reduced by a valuation allowance if, based on all the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Future realization of existing deferred tax assets ultimately depends on future profitability and the existence of sufficient taxable income of appropriate character (for example, ordinary income versus capital gains) within the carryforward period available under tax law. In the event that the Company’s estimate of taxable income is less than that required to utilize the full amount of any deferred tax asset, a valuation allowance is established, which would cause a decrease to income in the period such determination is made. A valuation allowance of $ 78.1 million at March 31, 2022 and $ 47.1 million at March 31, 2021 has been established relating to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards, and foreign tax credit carryforwards that, based on management’s estimate of future taxable income attributable to such jurisdictions and generation of additional research credits, are considered more likely than not to expire unused. The following table summarizes the activity related to the Company’s unrecognized tax benefits: As of March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Balance, beginning of fiscal year $ 92,962 $ 80,591 $ 68,156 Increase (decrease) related to prior year tax positions 7,486 ( 828 ) ( 949 ) Increases related to current year tax positions 12,358 13,199 13,384 Balance, end of fiscal year $ 112,806 $ 92,962 $ 80,591 Of the total unrecognized tax benefits at March 31, 2022 , $ 102.5 million would reduce the Company’s annual effective tax rate if recognized, subject to valuation allowance consideration. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of March 31, 2022, the Company has accrued interest and penalties of approximately $ 2.0 million. The Company recognized a tax benefit of $ 1.2 million for reductions of interest and penalties in income tax expense for the year ended March 31, 2022. No interest or penalties were accrued as of March 31, 2021. F- 37 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) In the next 12 months it is reasonably possible that the amount of unrecognized tax benefits will not change significantly. The Company is subject to periodic audits by domestic and foreign tax authorities. By statute, the Company’s U.S. federal and state income tax returns are subject to examination by the tax authorities for fiscal years 2019 and thereafter . Additionally, net operating loss and R&D tax credit carryovers that were generated in prior years may also be subject to examination. With few exceptions, fiscal years 2018 and thereafter remain open to examination by foreign tax authorities. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations. Note 10 — Equity Method Investments and Related-Party Transactions Euro Broadband Infrastructure Sàrl In March 2017, the Company acquired a 49 % interest in EBI for $ 139.5 million as part of the consummation of the Company’s strategic partnering arrangement with Eutelsat. On April 30, 2021, EBI became a consolidated subsidiary when the Company purchased the remaining 51 % interest in EBI from Eutelsat (see Note 16 — Acquisitions — EBI for more information). Prior to the purchase of the remaining 51 % interest on April 30, 2021, the Company’s investment in EBI was accounted for under the equity method and the total investment, including basis difference allocated to tangible assets, identifiable intangible assets, deferred income taxes and goodwill, was classified as a single line item, as an investment in unconsolidated affiliate, in the Company’s consolidated balance sheets. Because the underlying net assets in EBI and the related excess carrying value of investment over the proportionate share of net assets was denominated in Euros, foreign currency translation gains or losses impacted the recorded value of the Company’s investment. Prior to the purchase, the Company’s investment in EBI was presented at cost of investment plus its accumulated proportional share of income or loss, including amortization of the difference in the historical basis of the Company’s contribution, less any distributions it has received. The difference between the Company’s carrying value of its investment in EBI and its proportionate share of the net assets of EBI as of March 31, 2021 is summarized as follows: As of March 31, 2021 (In thousands) Carrying value of investment in EBI $ 176,938 Less: proportionate share of net assets of EBI 159,394 Excess carrying value of investment over proportionate share of net assets $ 17,544 The excess carrying value has been primarily assigned to: Goodwill $ 23,978 Identifiable intangible assets 8,332 Tangible assets ( 15,781 ) Deferred income taxes 1,015 $ 17,544 As of March 31, 2021, the identifiable intangible assets had useful lives of up to 11 years and a weighted average useful life of approximately ten years , and tangible assets had useful lives of up to 11 years and a weighted average useful life of approximately 11 years. Goodwill is not deductible for tax purposes. The Company’s share of earnings or losses on its investment in EBI was an insignificant amount of loss for the fiscal year ended March 31, 2022, and an insignificant amount of earnings and $ 4.5 million of earnings for the fiscal years ended March 31, 2021 and 2020 , respectively, consisting of the Company’s share of equity in EBI’s income (loss), including amortization of the difference in the historical basis of the Company’s contribution. Prior to the purchase of the remaining 51 % interest on April 30, 2021, the Company recorded its proportionate share of the results of EBI, and any related basis difference amortization expense, within equity in income of unconsolidated affiliate, net, one quarter in F- 38 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) arrears. Subsequent to April 30, 2021, the results of EBI have been included within the consolidated results of the Company and will no longer be recorded in arrears with no material impact. Since acquiring its initial interest in EBI through the purchase date, the Company recorded $ 10.4 million in retained earnings of undistributed cumulative earnings in equity interests, net of tax, as of April 30, 2021. Related-party transactions Transactions with the equity method investee are considered related-party transactions. In the first quarter of fiscal year 2022, the Company acquired the remaining 51 % interest in its former equity method investee, EBI. Refer to Note 16 — Acquisitions — EBI for further information. The following tables set forth the material related-party transactions entered into between EBI and its subsidiaries, on the one hand, and the Company and its subsidiaries, on the other hand, in the ordinary course of business for the time periods presented: Fiscal Years Ended March 31, 2021 March 31, 2020 (In thousands) Revenue – EBI $ 10,619 $ 9,993 Expense – EBI 16,341 18,854 Cash received – EBI 10,800 12,848 Cash paid – EBI 27,079 13,463 As of March 31, 2021 (In thousands) Collections in excess of revenues and deferred revenues – EBI $ 6,013 Note 11 — Employee Benefits The Company is a sponsor of a voluntary deferred compensation plan under Section 401(k) of the Internal Revenue Code. Under the plan, the Company may make discretionary contributions to the plan which vest over three years. The Company’s discretionary matching contributions to the plan are based on the amount of employee contributions and can be made in cash or the Company’s common stock at the Company’s election. Subsequent to the 2022 fiscal year end, the Company elected to settle the discretionary contributions liability in shares of the Company’s common stock, consistent with fiscal year 2021. Based on the closing price of the Company’s common stock at the 2022 fiscal year end, the Company would issue approximately 571,721 shares of common stock at this time. Discretionary contributions accrued by the Company as of March 31, 2022 and 2021 amounted to $ 27.9 million and $ 24.5 million, respectively. F- 39 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Note 12 — Commitments From time to time, the Company enters into satellite construction agreements as well as various other satellite-related purchase commitments, including with respect to the provision of launch services, operation of its satellites and satellite insurance. As of March 31, 2022, future minimum payments under the Company’s satellite construction contracts and other satellite-related purchase commitments for the next five fiscal years and thereafter were as follows: Fiscal Years Ending (In thousands) 2023 $ 481,694 2024 212,642 2025 56,892 2026 5,974 2027 1,714 Thereafter 7,401 $ 766,317 The Company’s contracts with satellite manufacturers require the Company to make monthly in-orbit satellite performance incentive payments with respect to certain satellites in service, including interest, through fiscal year 2028, subject to the continued satisfactory performance of the applicable satellite. The Company records the net present value of these expected future payments as a liability and as a component of the cost of the satellites. As of March 31, 2022 , the Company’s estimated satellite performance incentive obligations and accrued interest for the applicable satellites were approximately $ 23.7 million, of which $ 5.0 million and $ 18.7 million have been classified as current in accrued liabilities and non-current in other liabilities, respectively. Under these satellite construction contracts, the Company may incur up to $ 27.6 million in total costs for satellite performance incentive obligations and related interest earned with potential future minimum payments of $ 5.4 million, $ 5.3 million, $ 5.5 million, $ 5.8 million and $ 4.7 million in fiscal years 2023, 2024, 2025, 2026 and 2027, respectively, with an insignificant amount in commitments thereafter. The Company has various other purchase commitments under satellite capacity agreements which are used to provide satellite networking services to its customers for future minimum payments of approximately $ 51.9 million, $ 19.3 million, $ 5.7 million, $ 9.7 million and $ 14.5 million in fiscal years 2023, 2024, 2025, 2026 and 2027 , respectively, and $ 52.6 million of further minimum payments thereafter. Note 13 — Contingencies From time to time, the Company is involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of business, including government investigations and claims, and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters. Such matters could result in fines; penalties, compensatory, treble or other damages; or non-monetary relief. A violation of government contract laws and regulations could also result in the termination of its government contracts or debarment from bidding on future government contracts. Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its current pending matters will not have a material adverse effect on its business, financial condition, results of operations or liquidity. F- 40 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company has contracts with various U.S. Government agencies. Accordingly, the Company is routinely subject to audit and review by the DCMA, the DCAA and other U.S. Government agencies of its performance on government contracts, indirect rates and pricing practices, accounting and management internal control business systems, and compliance with applicable contracting and procurement laws, regulations and standards. An adverse outcome to a review or audit or other failure to comply with applicable contracting and procurement laws, regulations and standards could result in material civil and criminal penalties and administrative sanctions being imposed on the Company, which may include termination of contracts, forfeiture of profits, triggering of price reduction clauses, suspension of payments, significant customer refunds, fines and suspension, or a prohibition on doing business with U.S. Government agencies. In addition, if the Company fails to obtain an “adequate” determination of its various accounting and management internal control business systems from applicable U.S. Government agencies or if allegations of impropriety are made against it, the Company could suffer serious harm to its business or its reputation, including its ability to bid on new contracts or receive contract renewals and its competitive position in the bidding process. The Company’s incurred cost audits by the DCAA has not been concluded for fiscal year 2021. As of March 31, 2022, the DCAA had completed its incurred cost audit for fiscal years 2004, 2016, 2019 and, 2020 and approved the Company’s incurred costs for those fiscal years, as well as approved the Company’s incurred costs for fiscal years 2005 through 2015, 2017 and 2018 without further audit based on the determination of low risk. Although the Company has recorded contract revenues subsequent to fiscal year 2020 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected. As of March 31, 2022 and 2021 , the Company had $ 12.1 million and $ 10.3 million, respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S. Government cost reimbursable contracts. This reserve is classified as either an element of accrued liabilities or as a reduction of unbilled accounts receivable based on the status of the related contracts. Note 14 — Product Warranty The Company provides limited warranties on its products for periods of up to five years . The Company records a liability for its warranty obligations when products are shipped or they are included in long-term construction contracts based upon an estimate of expected warranty costs. Amounts expected to be incurred within 12 months are classified as accrued liabilities and amounts expected to be incurred beyond 12 months are classified as other liabilities in the consolidated financial statements. For mature products, the warranty cost estimates are based on historical experience with the particular product. For newer products that do not have a history of warranty costs, the Company bases its estimates on its experience with the technology involved and the types of failures that may occur. It is possible that the Company’s underlying assumptions will not reflect the actual experience and, in that case, future adjustments will be made to the recorded warranty obligation. The following table reflects the change in the Company’s warranty accrual in fiscal years 2022, 2021 and 2020. Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Balance, beginning of period $ 11,886 $ 11,643 $ 7,584 Change in liability for warranties issued in period 5,140 5,328 9,107 Settlements made (in cash or in kind) during the period ( 6,308 ) ( 5,085 ) ( 5,048 ) Balance, end of period $ 10,718 $ 11,886 $ 11,643 Note 15 — Segment Information The Company’s reporting segments, comprised of the satellite services, commercial networks and government systems segments, are primarily distinguished by the type of customer and the related contractual requirements. The Company’s satellite services segment provides satellite-based broadband and related services to residential customers, Prepaid Internet hotspot users, enterprises, commercial airlines and other mobile broadband customers. The Company’s commercial networks segment develops and offers advanced satellite and wireless broadband platforms, ground networking equipment, radio frequency and advanced microwave solutions, Application-Specific Integrated Circuit chip design, satellite payload development and space-to-earth connectivity systems, some of which are ultimately used by the Company’s satellite services segment. The Company’s government systems segment provides global mobile broadband services to military and government users and develops and offers network-centric, internet protocol-based fixed and mobile secure communications products and solutions. The more regulated government environment is subject to unique contractual requirements and possesses economic characteristics which differ from the satellite services and commercial F- 41 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) networks segments. The Company’s segments are determined consistent with the way management currently organizes and evaluates financial information internally for making operating decisions and assessing performance. Segment revenues and operating profits (losses) for the fiscal years ended March 31, 2022, 2021 and 2020 were as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Revenues: Satellite services Product $ — $ — $ — Service 1,188,816 868,943 826,583 Total 1,188,816 868,943 826,583 Commercial networks Product 443,435 268,830 289,959 Service 68,664 52,026 54,598 Total 512,099 320,856 344,557 Government systems Product 766,976 775,620 882,582 Service 319,744 290,688 255,516 Total 1,086,720 1,066,308 1,138,098 Elimination of intersegment revenues — — — Total revenues $ 2,787,635 $ 2,256,107 $ 2,309,238 Operating profits (losses): Satellite services $ 42,862 $ 35,853 $ 7,015 Commercial networks ( 180,298 ) ( 180,749 ) ( 186,877 ) Government systems 174,495 208,611 225,894 Elimination of intersegment operating profits — — — Segment operating profit before corporate and amortization of acquired intangible assets 37,059 63,715 46,032 Corporate — — — Amortization of acquired intangible assets ( 28,729 ) ( 5,482 ) ( 7,611 ) Income from operations $ 8,330 $ 58,233 $ 38,421 F- 42 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Assets identifiable to segments include: accounts receivable, unbilled accounts receivable, inventory, acquired intangible assets and goodwill. The Company’s property and equipment, including its satellites, earth stations and other networking equipment, are assigned to corporate assets as they are available for use by the various segments throughout their estimated useful lives. Segment assets as of March 31, 2022 and 2021 were as follows: As of March 31, 2022 As of March 31, 2021 (In thousands) Segment assets: Satellite services $ 444,976 $ 64,048 Commercial networks 202,941 168,334 Government systems 479,166 470,389 Total segment assets 1,127,083 702,771 Corporate assets 5,262,263 4,646,696 Total assets $ 6,389,346 $ 5,349,467 Other acquired intangible assets, net and goodwill included in segment assets as of March 31, 2022 and 2021 were as follows: Other Acquired Intangible Assets, Net Goodwill As of March 31, 2022 As of March 31, 2021 As of March 31, 2022 As of March 31, 2021 (In thousands) Satellite services $ 233,740 $ 5,738 $ 81,972 $ 13,814 Commercial networks — — 44,050 44,044 Government systems 2,303 3,830 64,091 64,442 Total $ 236,043 $ 9,568 $ 190,113 $ 122,300 Amortization of acquired intangible assets by segment for the fiscal years ended March 31, 2022, 2021 and 2020 was as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) Satellite services $ 27,220 $ 2,164 $ 2,897 Commercial networks — 257 1,539 Government systems 1,509 3,061 3,175 Total amortization of acquired intangible assets $ 28,729 $ 5,482 $ 7,611 Revenues by geographic area for the fiscal years ended March 31, 2022, 2021 and 2020 were as follows: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 (In thousands) U.S. customers $ 2,376,252 $ 2,063,832 $ 2,057,458 Non U.S. customers (each country individually insignificant) 411,383 192,275 251,780 Total revenues $ 2,787,635 $ 2,256,107 $ 2,309,238 F- 43 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company distinguishes revenues from external customers by geographic area based on customer location. The net book value of long-lived assets located outside the United States was $ 148.4 million at March 31, 2022 and $ 74.6 million at March 31, 2021 . Note 16 — Acquisitions Inmarsat Transaction On November 8, 2021, the Company entered into a Share Purchase Agreement to combine Viasat with Connect Topco Limited, a private company limited by shares and incorporated in Guernsey (Inmarsat), with the shareholders of Inmarsat and certain management and employees who hold options and shares of a subsidiary of Inmarsat whose options and shares will be exchanged for shares of Inmarsat prior to closing (collectively, the Sellers). Pursuant to the Share Purchase Agreement, the Company will purchase all of the issued and outstanding shares of Inmarsat from the Sellers upon the terms and subject to the conditions set forth therein (the Inmarsat Transaction). The total consideration payable by the Company under the Share Purchase Agreement consists of $ 850.0 million in cash, subject to adjustments (including a reduction of $ 299.3 million as a result of the dividend paid by Inmarsat in April 2022), and approximately 46.36 million unregistered shares of the Company’s common stock. The closing of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances, and approval by the stockholders of the Company of the issuance of shares in the transaction and an amendment to the Company’s certificate of incorporation to increase the number of shares of common stock authorized for issuance. The Share Purchase Agreement contains certain termination rights for both the Company and certain of the Sellers and further provides that, upon termination of the Share Purchase Agreement under certain circumstances, the Company may be obligated to pay a termination fee of up to $ 200.0 million or to reimburse certain out-of-pocket expenses of certain Sellers up to $ 40.0 million. The Company has obtained financing commitments for an additional $ 1.6 billion of new debt facilities in connection with the Inmarsat Transaction (which may be secured and/or unsecured), which amount excludes the commitments that were obtained with respect to the $ 700.0 million Term Loan Facility that the Company entered into on March 4, 2022 to fund the Company’s standalone growth expenditures. In light of the $ 299.3 million reduction in the cash purchase price payable in the Inmarsat Transaction, the Company currently expects to incur $ 1.3 billion of additional indebtedness under these commitments. However, the total amount of indebtedness incurred under these commitments may change, including in the event that available cash from other sources is higher than expected. The Company also plans to assume $ 2.1 billion in principal amount of Inmarsat senior secured bonds and the outstanding indebtedness under Inmarsat’s $ 2.4 billion senior secured credit facilities. The Company had also obtained commitments of $ 3.2 billion to backstop certain amendments required under the Revolving Credit Facility and Ex-Im Credit Facility and Inmarsat’s $ 2.4 billion senior secured credit facilities, which amendments have been obtained under the Revolving Credit Facility and Inmarsat’s $ 2.4 billion senior secured credit facilities. Euro Broadband Infrastructure Sàrl On April 30, 2021, the Company acquired the remaining 51 % interest in EBI, a broadband services provider, from Eutelsat. By completing the acquisition, the Company gained 100 % ownership and control of EBI and the KA-SAT satellite over EMEA and related ground infrastructure, which is expected to facilitate the diversification of the Company’s business portfolio in Europe, while establishing operations, distribution and sales of satellite-based broadband services, ahead of the anticipated ViaSat-3 (EMEA) satellite launch. The benefits and additional opportunities of the acquisition were among the factors that contributed to a purchase price resulting in the recognition of goodwill, which was recorded within the Company’s satellite services segment. The goodwill recognized is not deductible for U.S. and foreign income tax purposes. Prior to the acquisition date, the Company owned a 49 % interest in EBI and accounted for the investment using the equity method of accounting (see Note 10 — Equity Method Investments and Related-Party Transactions for more information). The acquisition of the remaining equity interest in EBI was accounted for as a step acquisition in accordance with the authoritative guidance for business combinations (ASC 805). Accordingly, the Company allocated the purchase price of the acquired company to the net tangible assets and intangible assets acquired based upon their estimated fair values. The Company remeasured the previously held equity method investment to its fair value based upon a valuation of the acquired business, as of the date of acquisition. The Company considered multiple factors in determining the fair value of the previously held equity method investment, including, (i) the price negotiated with the selling shareholder for F- 44 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) the remaining 51 % interest in EBI and (ii) an income valuation model (discounted cash flow). As a result of the equity method investment remeasurement, recognition of previously unrecognized foreign currency gain and settlement of insignificant preexisting relationships, the Company recognized an insignificant total net gain included in other income, net, in the consolidated statements of operations and comprehensive income (loss) in the first quarter of fiscal year 2022. The purchase price of $ 327.4 million was primarily comprised of $ 167.0 million of cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration to be settled among the parties over the next 24 months ( up to plus or minus € 20.0 million , or approximately $ 22.3 million, see Note 3 — Fair Value Measurements for more information) from the closing date (which after consideration of approximately $ 121.7 million of EBI’s cash on hand, resulted in a net cash outlay of approximately $ 51.0 million) and the fair value of previously held equity method investment of approximately $ 160.4 million. The purchase price allocation of the acquired assets and assumed liabilities based on the estimated fair values as of April 30, 2021, slightly adjusted since the close of the acquisition, primarily between goodwill, identifiable intangible assets and property, equipment and satellites, is as follows: (In thousands) Current assets $ 154,207 Property, equipment and satellites 109,028 Identifiable intangible assets 26,574 Other assets 795 Total assets acquired $ 290,604 Total liabilities assumed $ ( 5,914 ) Goodwill 42,662 Total consideration transferred $ 327,352 Amounts assigned to identifiable intangible assets are being amortized on a straight-line basis over their determined useful lives (which approximates the economic pattern of benefit) and are as follows as of April 30, 2021: Weighted Fair Value Average Useful Life (In thousands) (In years) Customer relationships $ 17,877 8 Other 7,851 7 Trade name 846 2 Total identifiable intangible assets $ 26,574 8 At the closing of the acquisition, EBI became a wholly owned subsidiary of the Company and EBI’s operations have been included in the Company’s consolidated financial statements in the Company’s satellite services segment (with an insignificant amount included in its commercial networks segment) commencing on the acquisition date. As EBI’s results of operations are not material to the Company’s consolidated results of operations, pro forma results of operations for this acquisition have not been presented. RigNet, Inc. On April 30, 2021, the Company completed the acquisition of all outstanding shares of RigNet, a publicly held leading provider of ultra-secure, intelligent networking solutions and specialized applications. The acquisition of RigNet is beneficial to the Company as it enables the Company to expand into new and adjacent industries, including renewable energy, transportation, maritime, mining and other enterprise markets. These benefits and additional opportunities were among the factors that contributed to a purchase price resulting in the recognition of goodwill, which was recorded within the Company’s satellite services segment. The goodwill recognized is not deductible for U.S. and foreign income tax purposes. The consideration transferred of approximately $ 317.9 million was primarily comprised of $ 207.2 million of the fair value of approximately 4.0 million shares of the Company’s common stock issued at the closing date, $ 107.3 million related to the pay down of outstanding borrowings of RigNet’s revolving credit facility, a de minimis amount in cash consideration in respect of fractional shares to the former shareholders of RigNet and an insignificant amount of other F- 45 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) consideration. In connection with the RigNet acquisition, the Company recorded merger-related transaction costs of approximately $ 7.2 million, respectively, for the fiscal year ended March 31, 2022, included in selling, general and administrative expenses. The purchase price allocation of the acquired assets and assumed liabilities based on the estimated fair values as of April 30, 2021 is as follows: (In thousands) Current assets $ 88,166 Property, equipment and satellites 63,191 Identifiable intangible assets 221,540 Other assets 13,350 Total assets acquired $ 386,247 Current liabilities ( 66,006 ) Other long-term liabilities ( 31,433 ) Total liabilities assumed $ ( 97,439 ) Goodwill 29,132 Total consideration transferred $ 317,940 Amounts assigned to identifiable intangible assets are being amortized on a straight-line basis over their determined useful lives (which approximates the economic pattern of benefit) and are as follows as of April 30, 2021: Weighted Fair Value Average Useful Life (In thousands) (In years) Technology $ 85,440 8 Customer relationships 101,920 12 Trade name 25,540 8 Other 8,640 12 Total identifiable intangible assets $ 221,540 10 Management determined the fair value of acquired customer relationships intangible asset by applying the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to forecasted revenue growth rate, gross margin, contributory asset charges, customer attrition rate and discount rate. In connection with the acquisition, the Company assumed a contingent liability associated with a RigNet predecessor subsidiary of approximately $ 13.8 million, which represented the maximum amount payable under the terms of the agreement. As of March 31, 2022 , no amount remains payable as the maximum amount payable was paid during the first and second quarters of fiscal year 2022. The consolidated financial statements include the operating results of RigNet from the date of acquisition. Since the acquisition date, the Company recorded approximately $ 180.2 million in revenue for the fiscal year ended March 31, 2022 , and $ 31.2 million of net losses for the fiscal year ended March 31, 2022, with respect to the RigNet business primarily in the Company’s satellite services segment (with a portion included in its commercial networks segment) in the consolidated statements of operations. Unaudited Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations for the Company and RigNet on a pro forma basis, as though the companies had been combined as of the beginning of fiscal year 2021, April 1, 2020. The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the related fiscal periods. The pro forma financial information for the fiscal years ended March 31, 2022 and 2021 include the F- 46 VIASAT, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued) business combination accounting effects primarily related to the amortization and depreciation changes from acquired intangible and tangible assets, acquisition-related transaction costs and related tax effects. Fiscal Years Ended March 31, 2022 March 31, 2021 (In thousands) Total revenues $ 2,799,252 $ 2,449,881 Net (loss) income attributable to Viasat, Inc. $ ( 19,957 ) $ ( 43,866 ) F- 47 SCHEDU LE II VALUATION AND QUALIFYING ACCOUNTS For the Three Fiscal Years Ended March 31, 2022 Deferred Tax Asset Valuation Allowance (In thousands) Balance, March 31, 2019 $ 33,499 Charged to costs and expenses 9,122 Deductions — Balance, March 31, 2020 $ 42,621 Charged to costs and expenses 4,455 Deductions — Balance, March 31, 2021 $ 47,076 Charged to costs and expenses 5,119 Charged to goodwill* 25,876 Deductions — Balance, March 31, 2022 $ 78,071 * Related to the acquisitions of RigNet and EBI II- 1