What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2023-05-22 compared with 2022-05-31 · 299 added, 177 removed, 427 unchanged (53% of the section changed)

14 unchanged sentences

Our end-to-end platform of high-capacity Ka-band satellites, ground infrastructure and user terminals enables us to provide cost-effective, high-speed, high-quality broadband solutions to enterprises, consumers, military and government users around the globe, whether on the ground, in the air or at sea.

In addition, our government business includes a market-leading portfolio of military tactical data link systems, satellite communication products and services, and cybersecurity and information assurance products and services.

We believe that our diversification strategy—anchored in a broad portfolio of products and services—our vertical integration approach and our ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.

In addition, our government business includes a portfolio of communications gateways, situational awareness products and services, Ka-band, Ku-band and UHF satellite communication products and services, cybersecurity and information assurance products and services and tactical data link solutions.

We believe that our diversification strategy—anchored in a broad portfolio of customer-centric products and services—our vertical integration approach and our ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.

We conduct our business through three segments:

7 unchanged sentences

Prepaid Internet services, which offer innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet.

The services help foster digital inclusion by enabling millions of people to connect to affordable high-quality internet services via a centralized community hotspot connected to the internet via satellite.

These services help foster digital inclusion by enabling millions of people to connect to affordable, high-quality internet services via a centralized terminal connected to the internet via satellite, that is then used to provide community hotspots, home broadband and mobile broadband.

We provide Prepaid Internet services in multiple regions in Mexico and Brazil and are trialing services in advance of full-service launch in various other countries in South America and Central America.

1 unchanged sentence

Energy services , which include ultra-secure solutions spanning global IP connectivity, bandwidth-optimized over-the-top applications, industrial internet-of-things, big data enablement and industry-leading machine learning analytics.

The assets and results of operations of our recent acquisitions, EBI and RigNet, are primarily included in our satellite services segment (with insignificant amounts included in our commercial networks segment).

The assets and results of operations of EBI and RigNet are primarily included in our satellite services segment (with insignificant amounts included in our commercial networks segment).

Commercial Networks

Our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services.

Our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and network and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services.

We design, develop and produce space system solutions for multiple orbital regimes, including GEO, MEO and LEO.

The primary products, systems, solutions and services offered by our commercial networks segment are comprised of:

Mobile broadband satellite communication systems, designed for use in aircraft and seagoing vessels

Fixed broadband satellite communication systems, including next-generation satellite network infrastructure and ground terminals.

Antenna systems, including state-of-the-art ground and airborne terminals, antennas and gateways for terrestrial and satellite customer applications, mobile satellite communication, Ka-band earth stations and other multi-band antennas.

Satellite networking development, including specialized design and technology services covering all aspects of satellite communication system architecture and technology.

Space systems, including the design and development of high-capacity Ka-band satellites and associated payload technologies for our own satellite fleet as well as for third parties.

Mobile broadband satellite communication systems, designed for use in aircraft, land-mobile and seagoing vessels.

Fixed broadband satellite communication systems, including next-generation satellite network infrastructure, ground terminals and design and implementation for customer telecommunication systems.

Space systems design and satellite networking development, including the design and development of the architecture of high-capacity Ka-band geosynchronous satellites and associated payload technologies (both for our own satellite fleet as well as for third parties) and special purpose LEO and MEO satellites and other small satellite platforms, as well as semiconductor design for ASIC and MMIC chips.

Satellite networking development includes specialized design and technology services covering all aspects of satellite communication system architecture, networks and technology.

Government Systems

Our government systems segment offers a broad array of products and services designed to enable the collection and transmission of secure real-time digital information and communications between fixed and mobile command centers, intelligence and defense platforms and individuals in the field.

The primary products and services of our government systems segment include:

Our government systems segment offers a broad array of products and services, including:

Government mobile broadband products and services, which provide military and government users with high-speed, real-time, broadband and multimedia connectivity in key regions of the world, as well as line-of-sight and beyond-line-of-sight ISR missions.

Government satellite communication systems, which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems, and include products designed for manpacks, aircraft, UAVs, seagoing vessels, ground-mobile vehicles and fixed applications.

Secure networking, cybersecurity and information assurance products and services, which provide advanced, high-speed IP-based “Type 1”

and HAIPE-compliant encryption solutions that enable military and government users to communicate information securely over networks, and that protect the integrity of data stored on computers and storage devices.

Tactical data links, including our BATS-D handheld Link 16 radios, our STT 2-channel radios for manned and unmanned applications, “disposable”

defense data links, and our MIDS and MIDS-JTRS terminals for military fighter jets.

and HAIPE-compliant encryption solutions that enable military and government users to communicate information securely, and that protect the integrity of data stored on computers and storage devices.

Tactical data link solutions, which continue to provide certain solutions in the tactical data link space, including our MOJO tactical gateway family of products and simulation environments via our radio frequency generators which test our customers' tactical data links.

On January 3, 2023 we sold the remainder of our Link-16 TDL Business to L3Harris.

See Note 4 —

Discontinued Operations to our consolidated financial statements for additional information.

Factors and Trends Affecting our Results of Operations

We believe that the performance of our business and our results of operations in a given period are driven by various factors, including:

the timing and impact of acquisitions, including our acquisitions of RigNet and EBI in fiscal year 2022 and the Inmarsat Transaction, as well as the payment of transaction consideration and the incurrence of transaction and integration costs or additional indebtedness in connection therewith (see the discussion below under “Inmarsat Acquisition”);

the extent and stage of our satellite design, construction and launch activities (as discussed further below), the associated level of investment required, the impact of any construction or launch delays or operational or launch failures, and the impact of bringing newly launched satellites into commercial service and associated ramp-up activities and costs (see the discussion below under “Satellite-Related Activities”);

our ability to manage available bandwidth ahead of the ViaSat-3 global constellation entering service;

the timing and impact of acquisitions and divestitures, such as the pending Inmarsat Transaction and recently completed Link-16 TDL Sale, as well as the payment of transaction consideration and the incurrence of transaction-related or integration costs and any incurrence or repayment of indebtedness in connection therewith (see the discussion below under “Inmarsat Acquisition”);

the extent and stage of our satellite design, construction and launch activities, the associated level of investment required, the impact of any construction or launch delays or operational or launch failures, and the impact of bringing newly launched satellites into commercial service and associated ramp-up activities and costs (see the discussion below under “Satellite-Related Activities”);

our ability to manage available bandwidth ahead of new satellites entering commercial service;

our ability to maintain the health, capacity, control and level of service of our satellite fleet, or the existence or occurrence of any malfunctions or anomalies in or other disruptions to our satellites;

9 unchanged sentences

varying subscriber addition, churn and average revenue per user (ARPU) rates for our fixed broadband businesses and mix of wholesale and retail subscribers;

the complex and lengthy procurement process for most of our commercial networks and government systems customers and potential customers, and the impact of a failure to receive an expected order or a deferral of an order to a later period, and the timing of return to normalization of government acquisition processes that were disrupted by COVID-19;

the difficulty in estimating costs over the life of a contract, which may require adjustment in future periods, and the impact of cost overruns on fixed-price development contracts;

the complex and lengthy procurement process for most of our commercial networks and government systems customers and potential customers, the impact of a failure to receive an expected order or a deferral of an order to a later period, and the timing of or effect of delays in obtaining government product certifications;

the difficulty in estimating costs over the life of a contract, which may require adjustment in future periods, and the impact of cost overruns (due to inflation or otherwise) on fixed-price development contracts;

the timing of customer payments under significant contracts;

2 unchanged sentences

our reliance on a global supply chain, including contract manufacturers and single-source or limited groups of suppliers;

one-time charges to operating income arising from items such as acquisition costs and expenses, impairment of assets and write-offs of assets related to customer non-payments or obsolescence;

the impact of supply chain bottlenecks, and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events;

one-time charges to operating income arising from items such as costs and expenses, relating to acquisitions or divestitures, impairment of assets and write-offs of assets related to customer non-payments or obsolescence;

changes in laws, regulations and interpretations affecting our business, including changes affecting spectrum availability or permitted uses;

our ability to generate sufficient cash flows to repay our indebtedness;

the impact of public health crises, such as the COVID-19 pandemic, general economic and political conditions, and other trends that affect the industries in which we operate.

the impact of public health crises, such as the COVID-19 pandemic, general economic and political conditions, and other trends that affect the industries in which we operate, and the return to normalization after associated disruptions, such as the timing of return to normalization of government acquisition processes and pre-pandemic global airline traffic levels following COVID-19-related disruptions.

See also “Business–Segments”

in Part I, Item 1 of this report for a discussion of what we believe to be key drivers for future growth in each of our segments.

In March 2020, the global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S.

The COVID-19 pandemic and attempts to contain it, such as mandatory closures, “shelter-in-place”

orders and travel restrictions, have caused significant disruptions and adverse effects on U.S.

and global economies, including impacts to supply chains, customer demand and financial markets.

We have taken measures to protect the health and safety of our employees and to work with our customers, employees, suppliers, subcontractors, distributors, resellers and communities to address the disruptions from the pandemic.

Although our financial results for fiscal years 2021 and 2022 were impacted by the pandemic, the impact was not material to our financial position, results of operations or cash flows in such periods, with continued negative impacts particularly in our commercial aviation business offset by strong demand in our fixed broadband services business and other parts of our business.

Although the COVID-19 pandemic impacted our financial results for fiscal years ended March 31, 2023, 2022 and 2021 (mostly due to the resulting disruption to regional and local supply chains, as well as its impact on overall supply and demand, global air travel, consumer confidence, discretionary spending levels and levels of economic activity), the impact was not material to our financial position, results of operations or cash flows in such periods.

We continue to expect our diversified businesses to provide resiliency in fiscal year 2024.

The extent of the impact of the COVID-19 pandemic on our business in fiscal year 2023 and beyond will depend on many factors, including the duration and scope of the public health emergency, the extent, duration and effectiveness of containment actions taken, the extent of disruption to important global, regional and local supply chains and economic markets, and the impact of the pandemic on overall supply and demand, global air travel, consumer confidence, discretionary spending levels and levels of economic activity.

Inmarsat Acquisition

1 unchanged sentence

Pursuant to the Purchase Agreement, we 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 total consideration payable by us under the Purchase Agreement consists of $850.0 million in cash, subject to adjustments (including for certain dividends, see below), and approximately 46.36 million unregistered shares of our common stock.

In April 2022, Inmarsat paid a dividend of $299.3 million to the Sellers, resulting in a $299.3 million reduction in the cash consideration payable by us at the

closing of the Inmarsat Transaction.

The total consideration payable by us under the Purchase Agreement consists of $850.0 million in cash, subject to adjustments (such as the dividend paid by Inmarsat in April 2022, see below), and approximately 46.36 million unregistered shares of our common stock.

On April 6, 2022, Inmarsat paid a dividend of $299.3 million to the Sellers, resulting in a $299.3 million reduction in the cash consideration payable by us at the closing of the Inmarsat Transaction.

Our board of directors has unanimously approved the Purchase Agreement and the proposed Inmarsat Transaction.

The closing of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances, and approval by our stockholders of the issuance of shares in the Inmarsat Transaction and an amendment to our certificate of incorporation to increase the number of shares of our common stock authorized for issuance.

Our stockholders approved the issuance of shares in the Inmarsat Transaction and an amendment to our certificate of incorporation to increase the number of shares of our common stock authorized for issuance at a special meeting held on June 21, 2022.

The closing of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances.

The Purchase Agreement contains certain termination rights for both us and certain of the Sellers and further provides that, upon termination of the Purchase Agreement under certain circumstances, we 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.

We have 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 we entered into on March 4, 2022 to fund our standalone growth expenditures.

In light of the $299.3 million reduction in the cash purchase price payable in the Inmarsat Transaction due to the dividend paid by Inmarsat to the Sellers in April 2022, we currently expect 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 available cash from other sources is higher than expected.

We have 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.

We also plan 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.

In addition, we 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 had been obtained under the Revolving Credit Facility and Inmarsat’s $2.4 billion senior secured credit facilities as of the date of this report.

Based on information available as of the date of this report, we currently estimate that Viasat may incur approximately $250 million in Transaction costs (including financing costs) through the closing of the Inmarsat Transaction, including (but not limited to) fees paid to investment banking, legal and accounting advisors, regulatory and public relations advisors, rating agency fees, filing fees, printing costs and other costs and expenses, although actual amounts could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs.

A significant portion of these transaction-related costs is contingent upon the closing of the Inmarsat Transaction occurring, although some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated.

We have incurred and expect to incur non-recurring costs associated with the Inmarsat Transaction and combining the operations of the two companies, as well as transaction fees and other costs (including financing costs) related to the Inmarsat Transaction, including (but not limited to) fees paid to investment banking, legal and accounting advisors, regulatory and public relations advisors, rating agency fees, filing fees, printing costs and other costs and expenses.

Although a significant portion of these costs is contingent upon the closing of the Inmarsat Transaction occurring, some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated.

In addition, the combined company will also incur significant restructuring and integration costs in connection with the Inmarsat Transaction.

The costs related to restructuring will be expensed as a cost of the ongoing results of operations of either us or the combined company.

Costs related to restructuring will be expensed as a cost of the ongoing results of operations of either us or the combined company.

There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Inmarsat Transaction and the integration of Inmarsat’s business.

Based on information available as of the date of this report, we currently estimate that we will incur approximately $50 million in integration costs and investments to realize synergies and efficiencies during each of the first two years following the closing of the Inmarsat Transaction.

While we have assumed a certain level of expenses would be incurred to integrate the two companies and achieve synergies and efficiencies and we continue to assess the magnitude of these costs, many of these expenses are, by their nature, difficult to estimate accurately and there are many factors beyond our control that could affect the total amount or timing of these costs.

Although we expect that the elimination of duplicative costs, as well as the realization of strategic benefits, additional income, synergies and other efficiencies, should allow the combined company to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

Other Acquisitions

Other Transactions

On January 3, 2023, we completed the sale of our Link-16 TDL Business in our government systems segment to L3Harris in exchange for approximately $1.96 billion in cash, subject to adjustments.

Unless otherwise noted, discussion throughout this Item 7 relates to our continuing operations only and excludes the Link-16 TDL Business.

See Note 4 —

Discontinued Operations to our consolidated financial statements for additional information.

On April 30, 2021, we completed our acquisition of the remaining 51% interest in EBI, a satellite broadband internet service provider in EMEA, from Eutelsat.

We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (resulting in a cash outlay of approximately $51.0 million, net of approximately $121.7 million of EBI’s cash on hand).

We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (net of approximately $121.7 million of EBI's cash on hand, resulting in a cash outlay of approximately $51.0 million).

On April 30, 2021, we completed our acquisition of RigNet, a leading provider of ultra-secure, intelligent networking solutions and specialized applications.

In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility , paid a de minimis amount of cash in respect of fractional shares and paid an insignificant amount of other consideration.

We retained approximately $20.6 million of RigNet’s cash on hand .

In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility, and retained approximately $20.6 million of RigNet’s cash on hand.

The assets and results of operations of EBI and RigNet are primarily included in our satellite services segment, with insignificant amounts included in our commercial networks segment.

Satellite-Related Activities

7 unchanged sentences

In connection with the launch of any new satellite and the commencement of commercial service on the satellite, we expect to incur additional operating costs that negatively impact our financial results.

For example, when ViaSat-2 was placed in service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs in our satellite services segment during the ramp-up period prior to service launch and in the fiscal year following service launch.

For example, when ViaSat-2 was placed in commercial service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs in our satellite services segment during the ramp-up period prior to service launch and in the fiscal year following service launch.

These increased operating costs included depreciation, amortization of capitalized software development, earth station connectivity, marketing and advertising costs, logistics, customer care and various support systems.

In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction of ViaSat-2 and the related gateway and networking equipment once the satellite was in service.

As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions.

In addition, we may experience bandwidth supply constraints in the lead-up to the commencement of commercial service on new satellites.

We anticipate that we will incur a similar cycle of increased operating costs and constrained bandwidth supply as we prepare for and launch commercial services on future satellites, including our ViaSat-3 constellation, followed by increases in revenue base and in scale.

However, there can be no assurance that we will be successful in significantly increasing revenues or achieving or maintaining operating profit in our satellite services segment, and any such gains may also be offset by investments in our global business.

Russia and Ukraine

The invasion of Ukraine and the resulting sanctions imposed by the United States and other countries on Russia have not had a material impact on our business, and are not expected to have a material impact on our cash flows, financial position or results of operations.

We do not have material assets, operations, investments or human capital resources in Russia, Ukraine or Belarus and our business does not rely on goods or services sourced in Russia, Ukraine or Belarus.

Prior to the invasion, we provided fixed broadband services through a wholesale distributor to a very small number of subscribers in Russia through our KA-SAT satellite.

In response to the invasion, we terminated these services.

We have no active fixed broadband customers in Russia, are not supplying new products or services to customers located in Russia and have no planned infrastructure projects in the country.

Although we continue to provide fixed broadband services to users in Ukraine through our KA-SAT satellite, these services are provided by third party wholesale distributors and we have limited exposure to revenue generation in Ukraine.

Revenues derived from Ukraine and Russia were de minimis in amount for the year ended March 31, 2022.

However, the invasion of Ukraine has exacerbated inflationary and supply chain issues, and may also worsen the current semiconductor chip shortage (since Russia and Ukraine are both critical suppliers of neon gas and palladium used in chip production) and increase cybersecurity threats.

While we do not currently anticipate material delays or material increased costs due to these factors, we cannot assure you that our business will not be materially impaired by any of these factors in the future.

The long-term impacts of the conflict and the sanctions imposed on Russia remain uncertain and will depend on future developments, and we continue to monitor the evolving situation.

See “Risk Factors—Our Reputation and Business Could Be Materially Harmed as a Result of Data Breaches, Data Theft, Unauthorized Access or Hacking”

in Part I, Item 1A of this report for a discussion of a cyberattack that occurred on February 24, 2022 involving our KA-SAT network.

The cyberattack and resulting loss of service to certain fixed broadband customers in Europe and North Africa had a de minimis impact on our revenues and results of operations for affected periods and has not had a material impact on our business.

Based on our comprehensive investigation efforts to date, there is no evidence that any end-user data or customer personal equipment was accessed, nor is there any evidence that the KA-SAT satellite itself or its supporting satellite ground infrastructure was directly involved, impaired or

Since the incident, we have worked with the operator of the affected partition of the KA-SAT network to implement mitigation and recovery actions to restore network stability, preserve continuing service for unaffected end-users and mitigate or prevent similar attacks.

In addition, in fiscal year 2023 we experienced (and we may in the future experience) capacity constraints on our existing satellites in the lead-up to the commencement of commercial service on new satellites.

Sources of Revenues

1 unchanged sentence

Revenues in our 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 us to provide products and services under a contract at a specified price) comprised approximately 90%, 89% and 88% of our total revenues for these segments for fiscal years 2022, 2021 and 2020, respectively.

The remainder of our revenues in these segments for such periods was derived primarily from cost-reimbursement contracts (under which we are 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 (which reimburse us 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).

Our ability to grow and maintain our revenues in our commercial networks and government systems segments has to date depended on our ability to identify and target markets where the customer places a high priority on the technology solution, and our ability to obtain additional sizable contract awards.

Due to the nature of this process, it is difficult to predict the probability and timing of obtaining awards in these markets.

fixed-price contracts (which require us to provide products and services under a contract at a specified price), cost-reimbursement contracts (under which we are 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 time-and-materials contracts (which reimburse us 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 our revenues in our 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 our funded development from our customer contracts were approximately 23%, 23% and 24% of our total revenues during fiscal years 2022, 2021 and 2020, respectively.

Approximately 15%, 9% and 11% of our total revenues in fiscal years 2022, 2021 and 2020, respectively, were derived from international sales.

Doing business internationally creates additional risks related to global political and economic conditions and other factors identified under the heading “Risk Factors”

in Part I, Item 1A and elsewhere in this report.

See Note 1 —

The Company and a Summary of Its Significant Accounting Policies to our consolidated financial statements for additional information.

To date, our ability to grow and maintain our revenues in our commercial networks and government systems segments has depended on our ability to identify and target markets where the customer places a high priority on the technology solution, and our ability to obtain additional sizable contract awards.

Due to the nature of this process, it is difficult to predict the probability and timing of obtaining awards in these markets.

Critical Accounting Policies and Estimates

5 unchanged sentences

Revenue recognition

We apply the five-step revenue recognition model under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (commonly referred to as Accounting Standards Codification (ASC) 606) to our contracts with our customers.

We apply the five-step revenue recognition model under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (commonly referred to as ASC 606) to our contracts with our customers.

Under this model, we (1) identify the contract with the customer, (2) identify our performance obligations in the contract, (3) determine the transaction price for the contract, (4) allocate the transaction price to our performance obligations and (5) recognize revenue when or as we satisfy our performance obligations.

3 unchanged sentences

These contracts typically require advance or recurring monthly payments by the customer.

Our obligation to provide connectivity services

is satisfied over time as the customer simultaneously receives and consumes the benefits provided.

Our 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).

We evaluate whether broadband equipment provided to our customer as part of the delivery of connectivity services represents a lease in accordance with ASC 842.

We evaluate whether broadband equipment provided to our customer as part of the delivery of connectivity services represents a lease in accordance with the authoritative guidance for leases (ASC 842).

As discussed in Note 1 –

37 unchanged sentences

Our 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.

These amounts, which are sometimes variable, can be dictated by performance metrics, program milestones or cost targets, the timing of payments, and customer discretion.

We estimate variable consideration at the amount to which we expect to be entitled.

29 unchanged sentences

We also construct earth stations, network operations systems and other assets to support our satellites, and those construction costs, including interest, are capitalized as incurred.

At the time satellites are placed in service, we estimate the useful life of our 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.

At the time satellites are placed in commercial service, we estimate the useful life of our 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.

We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary.

For contracts entered into on or after April 1, 2019, we assess at contract inception whether the contract is, or contains, a lease.

In accordance with ASC 842, we assess at contract inception whether the contract is, or contains, a lease.

Generally, we determine that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) we obtain the right to substantially all economic benefits from use of the asset, and (3) we have the right to direct the use of the asset.

21 unchanged sentences

Business combinations

The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, including goodwill, and assumed liabilities, where applicable.

The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, and assumed liabilities, where applicable.

Additionally, we recognize 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.

5 unchanged sentences

We recognize an impairment loss 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 us for fiscal years 2022, 2021 and 2020.

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 us for fiscal years 2023, 2022 and 2021 other than the impairment of certain right-of-use assets in the fourth quarter of fiscal year 2023.

See Note 7 —

Leases to our consolidated financial statements for additional information.

We account for our 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 we early adopted in fiscal year 2020.

8 unchanged sentences

total enterprise value metrics, and (6) additional factors such as management turnover, changes in regulation and changes in litigation matters.

Based on our qualitative assessment performed during the fourth quarter of fiscal year 2022, we concluded that it was more likely than not that the estimated fair value of our reporting units exceeded their carrying value as of March 31, 2022, and therefore, determined it was not necessary to perform a quantitative goodwill impairment test.

Furthermore, in addition to qualitative analysis, we believe it is appropriate to conduct a quantitative analysis periodically as a prudent review of our reporting unit goodwill fair values.

Our quantitative analysis estimates the fair values of the reporting units using discounted cash flows and other indicators of fair value.

The forecast of future cash flow is based on our best estimate of each reporting unit’s future revenue and operating costs, based primarily on existing firm orders, expected future orders, contracts with suppliers, labor resources, general market conditions, and other relevant factors.

Based on a quantitative analysis for fiscal year 2023, we concluded that estimated fair values of our reporting units significantly exceed their respective carrying values.

Based on our qualitative and quantitative assessment performed during the fourth quarter of fiscal year 2023, we concluded that it was more likely than not that the estimated fair value of our reporting units exceeded their carrying value as of March 31, 2023.

Income taxes and valuation allowance on deferred tax assets

2 unchanged sentences

In the event that our 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.

Our valuation allowance against deferred tax assets increased from $47.1 million at March 31, 2021 to $78.1 million at March 31, 2022.

The valuation allowance relates to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards and foreign tax credit carryforwards.

Our analysis of the need for a valuation allowance on deferred tax assets considered historical as well as forecasted future operating results.

9 unchanged sentences

We believe we have adequately provided for income tax issues not yet resolved with federal, state and foreign tax authorities.

However, if these provided amounts prove to be more than what is necessary, the reversal of the reserves would result in tax benefits

being recognized in the period in which we determine that provision for the liabilities is no longer necessary.

However, if these provided amounts prove to be more than what is necessary, the reversal of the reserves would result in tax benefits being recognized in the period in which we determine that provision for the liabilities is no longer necessary.

If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional charge to expense would result.

Results of Operations

The following table presents, as a percentage of total revenues, income statement data for the periods indicated:

The following table presents, as a percentage of total revenues, income statement data of our continuing operations for the periods indicated:

Fiscal Years Ended

7 unchanged sentences

Amortization of acquired intangible assets

Income from operations

Interest expense, net

(Loss) income before income taxes

Benefit from (provision for) income taxes

Net (loss) income

Net (loss) income attributable to Viasat, Inc.

Income (loss) from continuing operations

Interest (expense) income, net

Income (loss) from continuing operations before income taxes

(Provision for) benefit from income taxes from continuing operations

Net income (loss) from continuing operations

Net income (loss) from discontinued operations, net of tax

Net income (loss) attributable to Viasat, Inc.

Fiscal Year 2023 Compared to Fiscal Year 2022

4 unchanged sentences

Total revenues

Our total revenues increased by $139.0 million as a result of a $93.4 million increase in product revenues and a $45.6 million increase in service revenues.

The product revenue increase was driven primarily by an $86.9 million increase in our commercial networks segment, which was primarily the result of the Cisco Systems, Inc.

(Cisco) settlement.

Cisco, which previously acquired Acacia Communications, Inc.

(Acacia), paid us $62.2 million during the second quarter of fiscal year 2023 in order to fully satisfy the July 2019 judgment previously entered against Acacia (the Cisco Settlement), of which we recorded $55.8 million as product revenue in our commercial networks segment (see Note 14 —

Contingencies to our consolidated financial statements for more information).

The service revenue increase was due to increases of $21.9 million in our satellite services segment, $13.6 million in our commercial networks segment and $10.1 million in our government systems segment.

Cost of revenues

Fiscal Years Ended

(In millions, except percentages)

Cost of product revenues

Cost of service revenues

Total cost of revenues

Cost of revenues increased by $123.5 million due to an increase of $86.6 million in cost of service revenues and $36.9 million in cost of product revenues.

A portion of the cost of service revenue increase was driven by lower margins, primarily from our satellite services segment, driven mainly by a decline in U.S.

fixed broadband revenue due to fewer residential subscribers as we manage our bandwidth capacity in support of our growing mobility service ahead of the launch of commercial services on the ViaSat-3 Americas satellite.

Similar to our prior satellite launch cycles, once commercial service on ViaSat-3 Americas commences and as services using the new satellite scale, we expect the margins from our satellite services segment to improve (see the section captioned “Satellite-Related Activities”

for further information).

The increase in cost of service revenue was further driven by increased service revenues, also mainly from our satellite services segment.

This increase was primarily attributable to an increase in our in-flight services business, causing a $29.6 million increase in cost of service revenues on a constant margin basis.

The cost of product revenue increase was mainly due to increased product revenues, causing a $30.6 million increase in cost of product revenues on a constant margin basis, prior to the effects of product revenues related to the Cisco Settlement described above.

This cost of product revenues increase was mainly from our commercial networks segment.

The remainder of the increase in cost of product revenues was driven by lower margins, primarily driven by mobile broadband satellite communication systems in our commercial networks segment and government satellite communication systems in our government systems segment.

Selling, general and administrative expenses

Fiscal Years Ended

(In millions, except percentages)

Selling, general and administrative

The $77.8 million increase in selling, general and administrative (SG&A) expenses reflected an increase in support costs across all three segments of $74.3 million, including an increase in acquisition-related expenses of approximately $7.4 million (mainly related to the Inmarsat Transaction).

The increase in SG&A expenses was also driven by higher proposal costs, primarily in our commercial networks segment.

SG&A expenses consisted primarily of personnel costs and expenses for business development, marketing and sales, bid and proposal, facilities, finance, contract administration and general management.

Independent research and development

Fiscal Years Ended

(In millions, except percentages)

Independent research and development

The $20.6 million decrease in IR&D expenses was mainly the result of a decrease of $22.2 million in IR&D efforts in our commercial networks segment (primarily related to decreased IR&D expenses for next-generation satellite payload technologies and next-generation consumer broadband integrated networking technologies, partially offset by an increase in IR&D efforts on mobile broadband satellite communication systems for commercial airline platforms).

This overall decrease was slightly offset by an insignificant increase in our government systems segment.

Amortization of acquired intangible assets

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years.

Amortization of acquired intangible assets in fiscal year 2023 compared to fiscal year 2022 increased by an insignificant amount.

Expected amortization expense for acquired intangible assets for each of the following periods is as follows:

(In thousands)

Expected for fiscal year 2024

Expected for fiscal year 2025

Expected for fiscal year 2026

Expected for fiscal year 2027

Expected for fiscal year 2028

Interest income

The $19.0 million increase in interest income for fiscal year 2023 compared to fiscal year 2022 was primarily due to the interest earned on the invested portion of the cash related to proceeds of approximately $1.9 billion received from L3Harris in the Link-16 TDL Sale at the beginning of the fourth quarter of fiscal year 2023.

The increase also reflected the Cisco Settlement described above, of which we recorded $6.4 million as interest income.

Please refer to Note 14 —

Contingencies to our consolidated financial statements for more information.

Interest expense

The $2.6 million decrease in interest expense in fiscal year 2023 compared to fiscal year 2022 was primarily due to an increase in the amount of interest capitalized compared to the prior year period.

This decrease in interest expense was partially offset by the addition of interest expense related to the Term Loan Facility which was entered into during the fourth quarter of fiscal year 2022.

The income tax provision in fiscal year 2023 primarily reflected the establishment of a valuation allowance on the deferred tax asset for California R&D tax credits and the expense for tax deficiencies upon settlement of stock-based compensation during the period, partially offset by the benefit of federal R&D tax credits.

Our valuation allowance against deferred tax assets increased from $78.1 million at March 31, 2022 to $150.0 million at March 31, 2023.

The valuation allowance relates to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards and foreign tax credit carryforwards.

The income tax benefit in fiscal year 2022 primarily reflected the benefit of federal R&D tax credits, the reversal of a deferred tax liability recorded for EBI’s outside basis difference upon assertion made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings offset by tax expense for non-deductible compensation and the tax expense for tax deficiencies upon settlement of stock-based compensation during the period.

Segment Results for Fiscal Year 2023 Compared to Fiscal Year 2022

Satellite services segment

Fiscal Years Ended

(In millions, except percentages)

Segment product revenues

Segment service revenues

Total segment revenues

Our satellite services segment revenues increased by $21.9 million due to an increase in service revenues.

The increase in service revenues was primarily attributable to an increase in our in-flight services business, partially offset by lower fixed broadband revenues in the United States as we allocated a greater proportion of our bandwidth to our IFC business due to bandwidth constraints ahead of commercial launch of the ViaSat-3 Americas satellite.

The increase in in-flight service revenue was driven primarily by an increase in the number of commercial aircraft receiving our in-flight services through our IFC systems, an increase in passenger air traffic and the continued return to service of aircraft that were previously inactive as a result of the COVID-19 pandemic.

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating profit (loss)

Percentage of segment revenues

The change in our satellite services segment operating profit to an operating loss was primarily driven by lower earnings contributions of $45.3 million, primarily from our fixed broadband services business, driven mainly by a decline in U.S.

for further information).

The increase in our satellite services segment operating loss was further driven by higher SG&A costs of $27.2 million (partially attributable to acquisition expenses related to the Inmarsat Transaction), higher expenditures associated with activating more of the ViaSat-3 ground network and supporting international expansion, and increased expenses as a result of supply chain shortages.

Commercial networks segment

Fiscal Years Ended

(In millions, except percentages)

Segment product revenues

Segment service revenues

Total segment revenues

Our commercial networks segment revenues increased by $100.5 million, due to a $86.9 million increase in product revenues and a $13.6 million increase in service revenues.

The increase in product revenues was primarily the result of the Cisco Settlement described above, of which we recorded $55.8 million as product revenue in our commercial networks segment.

Please refer to Note 14 —

Contingencies to our consolidated financial statements for more information.

The remainder of the increase in product revenues was primarily attributable to an increase in mobile broadband satellite communication systems products due to increased IFC terminal deliveries.

The increase in service revenues was primarily driven by an increase in mobile broadband satellite communication systems services.

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating profit (loss)

Percentage of segment revenues

The $63.8 million reduction in our commercial networks segment operating loss was driven primarily by higher earnings contributions of $61.3 million, primarily due to higher revenues as described above.

The reduction in operating loss was also due to a $22.2 million decrease in IR&D expenses (primarily related to next-generation satellite payload technologies and next-generation consumer broadband integrated networking technologies, partially offset by an increase in IR&D efforts on mobile broadband satellite communication systems for commercial airline platforms).

The decrease in operating loss was partially offset by higher SG&A costs of $19.7 million, which includes legal and other expenses related to the Cisco Settlement described above.

Government systems segment

Fiscal Years Ended

(In millions, except percentages)

Segment product revenues

Segment service revenues

Total segment revenues

Our government systems segment revenues increased by $16.5 million due to an increase of $10.1 million in service revenues, and an increase of $6.5 million in product revenues.

The service revenue increase was primarily due to a $19.6 million increase in government satellite communication systems services and a $2.8 million increase in tactical satcom radio services, partially offset by a $14.6 million decrease in government mobile broadband services.

The product revenue increase was primarily driven by a $35.1 million increase in cybersecurity and information assurance products, a $4.9 million increase in tactical data link solutions and a $3.1 million increase in government mobile broadband products.

The increase in product revenues was partially offset by a $19.3 million decrease in government satellite communication systems and a $18.3 million decrease in tactical satcom radio products.

Our government systems segment continued to show some impacts from the COVID-19 pandemic, due to continuing certification delays and supply chain component shortages, but government systems segment awards remained strong in the fiscal year.

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating profit (loss)

Percentage of segment revenues

The $32.9 million decrease in our government systems segment operating profit was primarily driven by a $30.9 million increase in SG&A costs (partially related to acquisition expenses related to the Inmarsat Transaction).

Fiscal Year 2022 Compared to Fiscal Year 2021

Fiscal Years Ended

(In millions, except percentages)

Product revenues

Service revenues

Total revenues

Our total revenues increased by $496.3 million as a result of a $374.9 million increase in service revenues and a $121.4 million increase in product revenues.

10 unchanged sentences

The cost of product revenue increase was mainly due to increased product revenues, causing a $95.9 million increase in cost of product revenues on a constant margin basis, mainly from our commercial networks segment.

The remainder of the increase in cost of product revenues was due to lower margins, primarily driven by cybersecurity and information assurance products in our government systems segment.

The remainder of the increase in cost of product revenues was driven by lower margins, primarily driven by cybersecurity and information assurance products in our government systems segment.

Selling, general and administrative expenses

2 unchanged sentences

Selling, general and administrative

The $144.9 million increase in selling, general and administrative (SG&A) expenses reflected an increase in support costs of $97.7 million, driven primarily by support costs related to RigNet, as well as acquisition-related expenses of approximately $34.0 million primarily related to the Inmarsat Transaction.

The $143.7 million increase in SG&A expenses reflected an increase in support costs of $96.5 million, driven primarily by support costs related to RigNet, as well as acquisition-related expenses of approximately $34.0 million primarily related to the Inmarsat Transaction.

The increase in SG&A expenses was also driven by $43.7 million of higher selling costs, reflected primarily in our satellite services segment, but was also reflected across our two other segments.

4 unchanged sentences

Independent research and development

The $37.4 million increase in IR&D expenses was mainly the result of an increase of $24.3 million in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and a $14.1 million increase in our government systems segment (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).

The $41.0 million increase in IR&D expenses was mainly the result of an increase of $23.6 million in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and an $18.4 million increase in our government systems segment (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).

Amortization of acquired intangible assets

13 unchanged sentences

This decrease in interest expense was partially offset by the addition of interest expense related to the 2028 Notes, which were issued in the first quarter of fiscal year 2021, and interest expense related to the Term Loan Facility which was entered into on March 4, 2022.

The income tax benefit in fiscal year 2022 primarily reflected the benefit of federal and state R&D tax credits, the reversal of a deferred tax liability recorded for EBI’s outside basis difference upon assertion made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings offset by tax expense for non-deductible compensation and the tax expense for tax deficiencies upon settlement of stock-based compensation during the period.

The income tax provision in fiscal year 2021 primarily reflected the tax expense from our income before income taxes, the tax expense for

tax deficiencies upon settlement of stock-based compensation during the period, and non-deductible compensation, partially offset by benefit from federal and state R&D tax credits .

The income tax benefit in fiscal year 2021 primarily reflected the tax benefit from our loss before income taxes and the benefit of federal R&D tax credits, partially offset by the tax expense for tax deficiencies upon settlement of stock-based compensation during the period and tax expense for non-deductible compensation.

Segment Results for Fiscal Year 2022 Compared to Fiscal Year 2021

10 unchanged sentences

The increase in fixed broadband service revenues was primarily attributable to the acquisition of the remaining 51% interest in EBI, which also closed during the first quarter of fiscal year 2022, with EBI contributing approximately $38.5 million of service revenues in fiscal year 2022.

Segment operating profit

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating profit

Segment operating profit (loss)

Percentage of segment revenues

11 unchanged sentences

The increase in service revenues was primarily driven by an increase in mobile broadband satellite communication services.

Segment operating loss

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating loss

Segment operating profit (loss)

Percentage of segment revenues

Our commercial networks segment operating loss decreased by an insignificant amount year-over-year.

The decrease in operating loss was driven primarily by higher earnings contributions of $38.0 million, driven by increased revenues and improved margins from our mobile broadband satellite communication systems products.

The decrease in commercial networks segment operating loss was offset by a $24.3 million increase in IR&D expenses (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and a $13.3 million increase in SG&A expenses (primarily related to higher support costs).

The $2.7 million increase in our commercial networks segment operating loss was driven primarily by a $23.6 million increase in IR&D expenses (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and a $15.0 million increase in SG&A expenses (primarily related to higher support costs).

The increase in commercial networks segment operating loss was offset by higher earnings contributions of $35.9 million, driven by increased revenues and improved margins from our mobile broadband satellite communication systems products.

Government systems segment

4 unchanged sentences

Total segment revenues

Our government systems segment revenues increased by $20.4 million due to an increase of $29.1 million in service revenues, partially offset by a decrease of $8.6 million in product revenues.

The service revenue increase was primarily due to a $18.3 million increase in government mobile broadband services, a $14.8 million increase in government satellite communication systems services, a $6.7 million increase in cybersecurity and information assurance services, partially offset by a $11.0 million decrease in tactical data link services.

The product revenue decrease was primarily driven by a $24.5 million decrease in government satellite communication systems products and a $17.8 million decrease in government mobile broadband products.

The decrease in product revenues was partially offset by a $24.3 million increase in tactical data link products, a $6.8 million increase in cybersecurity and information assurance products and a $2.6 million increase in tactical satcom radio products.

Our government systems segment revenues decreased by $14.8 million due to a decrease of $53.3 million in product revenues, partially offset by an increase of $38.4 million in service revenues.

The product revenue decrease was primarily driven by a $24.5 million decrease in government satellite communication systems products, a $20.5 million decrease in government mobile broadband products, and a $17.6 million decrease in tactical data link solutions products.

The decrease in product revenues was partially offset by a $6.8 million increase in cybersecurity and information assurance products and a $2.6 million increase in tactical satcom radio products.

The service revenue increase was primarily due to a $18.3 million increase in government mobile broadband services, a $14.8 million increase in government satellite communication systems services, and a $6.7 million increase in cybersecurity and information assurance services.

As a result of the COVID-19 pandemic, our government systems segment continued to experience complications in product manufacturing and shipments and some administrative delays on certain contractual vehicles reflecting inherent challenges in the remote work environment.

In addition, product revenues in the segment were negatively impacted in fiscal year 2022 by anticipated delays in certification of certain information security and tactical data link products, as well as certain unanticipated supply chain issues that affected certain product shipments.

In addition, product revenues in the segment were negatively impacted in fiscal year 2022 by anticipated delays in certification of certain information security products, as well as certain unanticipated supply chain issues that affected certain product shipments.

Despite these obstacles, new government systems segment awards remained strong through the end of fiscal year 2022.

Segment operating profit

Segment operating profit (loss)

Fiscal Years Ended

(In millions, except percentages)

Segment operating profit

Segment operating profit (loss)

Percentage of segment revenues

The $46.6 million decrease in our government systems segment operating profit was driven by a $32.5 million increase in SG&A costs (including $10.5 million of acquisition-related expenses related to the Inmarsat Transaction) and a $18.4 million increase in IR&D expenses (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).

The decrease in operating profit was partially offset by higher earnings contributions of $17.4 million, primarily due to an increase in revenues.

Fiscal Year 2021 Compared to Fiscal Year 2020

For a discussion of our results of operations for fiscal year 2021 as compared to fiscal year 2020, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

As reflected in the table below, our overall firm and funded backlog decreased during fiscal year 2022.

March 31, 2022

The decrease in operating profit was partially offset by higher earnings contributions of $4.3 million, primarily due to a decrease in cost of revenues.

Our firm and funded backlog as of March 31, 2023 is reflected in the table below.

March 31, 2023

8 unchanged sentences

The firm backlog does not include contract options.

Of the $2.0 billion in firm backlog, a little over half is expected to be delivered during the next 12 months, with the balance delivered thereafter.

As of March 31, 2023, a little over half of the firm backlog is expected to be delivered during the next 12 months, with the balance delivered thereafter.

We include in our backlog only those orders for which we have accepted purchase orders, and not anticipated purchase orders and requests.

In our satellite services segment, our backlog includes fixed broadband service revenues under our subscriber agreements, but does not include future recurring IFC service revenues under our agreements with commercial airlines.

As of March 31, 2022, our IFC systems were installed and in service on approximately 1,910 commercial aircraft, of which, due to impacts of the COVID-19 pandemic, approximately 80 were inactive at fiscal year end.

While domestic airline traffic increased during fiscal year 2022 (with increased planes in service and higher passenger volumes), global airline traffic has not yet recovered to pre-pandemic levels.

We expect to continue to see some negative impacts on revenues and operating cash flows from our IFC businesses in fiscal year 2023 and potentially beyond, but for the effects to continue to lessen over time with increases in passenger air traffic and the return to service of additional currently inactive aircraft.

As of March 31, 2023, our IFC systems were installed and in service on approximately 2,270 commercial aircraft, of which approximately 40 were inactive at fiscal year end (mostly due to standard aircraft maintenance).

We anticipate that approximately 1,310 additional commercial aircraft under existing customer agreements with commercial airlines will be put into service with our IFC systems.

However, the timing of installation and entry into service of IFC systems on additional aircraft under existing customer agreements may be delayed as a result of the impact of the COVID-19 pandemic on the global airline industry.

However, the timing of installation and entry into service of IFC systems on additional aircraft under existing customer agreements may be delayed as a result of the lingering impacts of the COVID-19 pandemic on the global airline industry.

Accordingly, there can be no assurance that all anticipated purchase orders and requests will be placed or that anticipated IFC services will be activated.

Our total new awards exclude future revenue under recurring consumer commitment arrangements and were approximately $2.6 billion, $2.7 billion and $2.3 billion for fiscal years 2022, 2021 and 2020, respectively.

Our total new awards (including discontinued operations but excluding future revenue under recurring consumer commitment arrangements) were approximately $3.2 billion (of which $384.4 million was attributable to discontinued operations) and $2.6 billion (of which $349.3 million was attributable to discontinued operations) for fiscal years 2023 and 2022, respectively.

Backlog is not necessarily indicative of future sales.

11 unchanged sentences

We have financed our operations to date primarily with cash flows from operations, bank line of credit financing, debt financing, export credit agency financing and equity financing.

At March 31, 2022, we had $310.5 million in cash and cash equivalents, $389.1 million in working capital, and no outstanding borrowings and borrowing availability of $637.0 million under our Revolving Credit Facility.

In January 2023, we used a portion of the proceeds from the Link-16 TDL Sale to repay all then-outstanding borrowings under our Revolving Credit Facility.

In addition, we expect the remaining portion of the net cash proceeds from the Link-16 TDL Sale to be used to support our operations and provide additional liquidity given the current conditions of credit markets and the 2025 Notes maturity.

At March 31, 2023, we had $1.4 billion in cash and cash equivalents and restricted cash, $1.3 billion in working capital, and no outstanding borrowings and borrowing availability of $657.4 million under our Revolving Credit Facility.

We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market accounts.

During the second quarter of fiscal year 2021, we issued and sold an aggregate of 4,474,559 shares of

our common stock at a purchase price of $39.11 per share to certain accredited investors in a private placement transaction exempt from registration under the Securities Act of 1933, as amended, resulting in net proceeds of approximately $174.7 million after deducting offering expenses.

We currently expect to incur $1.3 billion of additional indebtedness under the financing commitments we obtained in connection with the Inmarsat Transaction (see the discussion above under “Inmarsat Acquisition”).

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.

We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market funds primarily investing in U.S.

government-backed securities and treasuries.

During the second quarter of fiscal year 2021, we issued and sold an aggregate of 4,474,559 shares of our common stock at a purchase price of $39.11 per share to certain accredited investors in a private placement transaction exempt from registration under the Securities Act of 1933, as amended, resulting in net proceeds of approximately $174.7 million after deducting offering expenses.

We have 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).

We also plan 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.

We 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 had been obtained under the Revolving Credit Facility and Inmarsat’s $2.4 billion senior secured credit facilities as of the date of this report.

The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly and our future capital requirements will depend upon many factors, including the timing and amount of cash required to consummate the Inmarsat Transaction (including the cash portion of the purchase price, transaction-related costs and integration-related costs, see the discussion above under "Inmarsat Acquisition"), as well as cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our R&D and marketing efforts, and the nature and timing of orders.

The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly and our future capital requirements will depend upon many factors, including the timing and amount of cash required to consummate the Inmarsat Transaction (including the cash portion of the purchase price, transaction-related costs and integration-related costs, see the discussion above under "Inmarsat Acquisition"), cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our IR&D and marketing efforts, and the nature and timing of orders.

In particular:

6 unchanged sentences

Additionally, we will continue to evaluate other possible acquisitions of, or investments in complementary businesses, products and technologies which may require the use of cash or additional financing.

We believe we have adequate sources of funding for the ViaSat-3 constellation and consummation of the Inmarsat Transaction, which include, but are not limited to, our cash on hand, borrowing capacity, financing commitments obtained in connection with the Inmarsat Transaction and the cash we expect to generate from operations.

Although a significant portion of transaction-related costs relating to the Inmarsat Transaction is contingent upon the closing of the Inmarsat Transaction occurring, some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated.

To further enhance our liquidity position or to finance the construction and launch of any future satellites, acquisitions, strategic partnering arrangements, joint ventures or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets.

As a result of the divestiture of the Link-16 TDL Business, we have taken measures to mitigate the impact of stranded costs and to right-size our remaining businesses by reducing discretionary spending and by undertaking cost-reduction measures, including reducing our real estate footprint and workforce, which measures resulted in approximately $40 million of expenses during the fourth quarter of fiscal year 2023, primarily recorded in our SG&A.

capital markets.

From time to time, we file 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 us, 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.

Although we can give no assurances concerning our future liquidity, we believe that our current cash balances and net cash expected to be provided by operating activities along with availability under our Revolving Credit Facility will be sufficient to meet our anticipated operating requirements for at least the next 12 months.

Additionally, we consider strategic divestitures from time to time, such as the Link-16 TDL Sale that was completed in January 2023 for approximately $1.96 billion in cash, subject to adjustments.

Although we can give no assurances concerning our future liquidity, we believe that we have adequate sources of funding to meet our anticipated operating requirements for the next 12 months, as well as to fund the consummation of the Inmarsat Transaction, which include, but are not limited to, cash on hand, borrowing capacity, cash expected to be provided by operating activities and financing commitments obtained in connection with the Inmarsat Transaction.

Cash provided by operating activities for fiscal year 2023 was $367.9 million compared to $505.6 million for fiscal year 2022.

This $221.6 million decrease was primarily driven by a $290.1 million year-over-year increase in cash used to fund net operating assets, partially offset by our operating results (net loss adjusted for depreciation, amortization and other non-cash changes) which resulted in $68.5 million of higher cash provided by operating activities year-over-year.

The increase in cash used to fund net operating assets during fiscal year 2022 when compared to fiscal year 2021 was primarily due to a decrease in cash inflows year-over-year from combined billed and unbilled accounts receivable, net, primarily attributable to increased billings for IFC terminals in our commercial networks segment and a decrease in cash inflows year-over-year from our collections in excess of revenues and deferred revenues included in accrued liabilities

primarily due to the timing of milestone billings for certain larger development projects in our commercial networks segment.

Cash used in investing activities for fiscal year 2022 was $1,129.8 million compared to $885.3 million for fiscal year 2021.

This $244.6 million increase in cash used in investing activities year-over year reflects $138.7 million in cash used for the RigNet and EBI acquisitions in the first quarter of fiscal year 2022, an increase of approximately $78.4 million primarily related to cash used for the construction of earth stations and network operation systems and an increase of approximately $22.9 million in cash used for construction of satellites .

Cash provided by financing activities for fiscal year 2022 was $643.6 million compared to $149.7 million for fiscal year 2021.

This $493.9 million increase in cash provided by financing activities year-over-year primarily reflects $686.0 million of proceeds received (net of issue discount) from borrowings under the Term Loan Facility, which was entered into in March 2022 , partially offset by the repayment of outstanding borrowings under the Revolving Credit Facility in March 2022 with the net proceeds of the Term Loan Facility and $174.7 million in net proceeds from a private placement of common stock in the second quarter of fiscal year 2021 (after deducting offering expenses).

Cash provided by financing activities for both periods included cash received from employee stock purchase plan purchases and the repurchase of common stock related to net share settlement of certain employee tax liabilities in connection with the vesting of restricted stock unit awards.

This $137.8 million decrease was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $215.3 million of lower cash provided by operating activities year-over-year, partially offset by a $77.6 million year-over-year decrease in cash used to fund net operating assets.

The decrease in cash used to fund net operating assets during fiscal year 2023 when compared to the prior year period was primarily due to an increase in taxes payable related to the $1.7 billion gain recognized as a result of the Link-16 TDL Sale in the fourth quarter of fiscal year 2023, as well as an increase in cash inflows year-over-year from our collections in excess of revenues and deferred revenues included in accrued liabilities, primarily due to the timing of milestone billings for certain larger development projects in our government systems segment.

This decrease in cash used to fund net operating assets during fiscal year 2023 when compared to the prior year period was partially offset by a higher increase in cash used for IFC terminal inventory in our commercial networks segment in expectation of a related revenue ramp-up over the first part of fiscal year 2024 for commercial airline customers.

Cash provided by investing activities for fiscal year 2023 was $768.0 million compared to cash used in investing activities of $1.1 billion for fiscal year 2022.

Cash provided by investing activities for fiscal year 2023 was primarily comprised of $1.9 billion recorded as cash proceeds in our consolidated statement of cash flows for fiscal year 2023 received from the Link-16 TDL Sale in the fourth quarter of fiscal year 2023.

Cash used in investing activities related to our discontinued operations was slightly higher in fiscal year 2023 compared to fiscal year 2022, and slightly lower in fiscal year 2022 compared to fiscal year 2021, in each case related to changes in cash used for capital expenditures for property and other general purpose equipment.

Cash used in financing activities for fiscal year 2023 was $66.1 million compared to cash provided by financing activities of $643.6 million for fiscal year 2022.

Cash used in financing activities for fiscal year 2023 was primarily comprised of debt repayments of $576.5 million, and a payment of $30.0 million by our majority-owned subsidiary, TrellisWare Technologies, Inc., to repurchase shares of its common stock from its stockholders in the second quarter of fiscal year 2023 (see Note 1 —

The Company and a Summary of Its Significant Accounting Policies –

Noncontrolling interests to our consolidated financial statements for further information), partially offset by proceeds from debt borrowings of $540.0 million.

Cash provided by financing activities for fiscal year 2022 was primarily comprised of proceeds from debt borrowings of approximately $1.3 billion, partially offset by debt repayments of $610.4 million.

Capital Expenditures and IR&D Investments

Our total capital expenditures in fiscal year 2023 are expected to be higher than fiscal year 2022, as we continue to invest in building and expanding our global network and satellite fleet, as well as costs related to the roll-out of related earth station infrastructure and increased ground network investments related to international expansion and other growth opportunities.

Capital expenditures in fiscal year 2023 of $1.2 billion were 18% higher than fiscal year 2022, primarily due to higher expenditures on customer premise equipment in anticipation of the launch of commercial service on ViaSat-3 Americas, partially offset by lower expenditures on the ViaSat-3 program compared to the prior fiscal year.

Despite the capital expenditures in fiscal year 2023 related to the launch of ViaSat-3 Americas as well as ViaSat-3 EMEA, our total capital expenditures in fiscal year 2024 are expected to remain flat compared to fiscal year 2023, as we continue to invest in building and expanding our global network and satellite fleet, as well as incurring costs related to the roll-out of related earth station infrastructure and increased ground network investments related to international expansion and other growth opportunities.

See Note 13 —

2 unchanged sentences

IR&D expenses consist primarily of salaries and other personnel-related expenses, supplies, prototype materials, testing and certification related to R&D projects.

Our IR&D investments are expected to continue through fiscal year 2023 and beyond and support our government and commercial air mobility businesses.

Additionally, we expect to continue to invest in building and expanding our global network and satellite fleet.

IR&D expenses were approximately 5%, 5% and 6% of total revenues in fiscal years 2022, 2021 and 2020, respectively.

Our IR&D investments are expected to continue through fiscal year 2024 and beyond to support our growth and acceleration of new opportunities in our government and commercial air mobility businesses.

IR&D expenses were

approximately 5%, 6% and 6% of total revenues in fiscal years 2023, 2022 and 2021, respectively.

As a government contractor, we are able to recover a portion of our IR&D expenses pursuant to our government contracts.

Long-Term Debt

As of March 31, 2022, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 2025 Notes, $600.0 million in principal amount of 2027 Notes, $400.0 million in principal amount of 2028 Notes, $700.0 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our $700.0 million Revolving Credit Facility, $78.6 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility and $45.8 million of finance lease obligations.

For information regarding our Credit Facilities and Notes, refer to Note 6 –

As of March 31, 2023, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 2025 Notes, $600.0 million in principal amount of 2027 Notes, $400.0 million in principal amount of 2028 Notes (together with the 2025 Notes and 2027 Notes, the Notes), $694.8 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our $700.0 million Revolving Credit Facility, $59.0 million in principal amount of outstanding borrowings under our direct loan facility with the Export-Import Bank of the United States (the Ex-Im Credit Facility) and $36.4 million of finance lease obligations.

In January 2023, we used a portion of the proceeds from the Link-16 TDL Sale to repay all then-outstanding borrowings under our Revolving Credit Facility.

For information regarding our Term Loan Facility, Revolving Credit Facility and Ex-Im Facility (collectively, the Credit Facilities) and Notes, refer to Note 8 –

Senior Notes and Other Long-Term Debt to our consolidated financial statements.

1 unchanged sentence

The following table sets forth a summary of certain material cash requirements for known contractual obligations and commitments at March 31, 2023:

For the Periods Ending

(In thousands, including interest where applicable)

11 unchanged sentences

Our consolidated balance sheets included $218.5 million and $153.2 million of “other liabilities”

as of March 31, 2022 and March 31, 2021, respectively, which primarily consisted of the long-term portion of deferred revenues, the long-term portion of our satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites, deferred income taxes and our long-term warranty obligations.

as of March 31, 2023 and March 31, 2022, respectively, which primarily consisted of deferred income taxes, the long-term portion of deferred revenues, the long-term portion of our satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites and our long-term warranty obligations.

With the exception of the long-term portion of our satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites (which is included under “Purchase commitments including satellite-related agreements”), these remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain.

12 unchanged sentences

Interest Rate Risk

Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and short-term and long-term obligations (including the Credit Facilities and the Notes).

Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and short-term and long-term obligations (including the Credit Facilities and the Notes).

We consider investments in highly liquid instruments purchased with a remaining maturity of three months or less at the date of purchase to be cash equivalents.

As of March 31, 2022, we had $700.0 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our Revolving Credit Facility, $78.6 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility, $700.0 million in aggregate principal amount outstanding of the 2025 Notes, $600.0 million in aggregate principal amount outstanding of the 2027 Notes and $400.0 million in aggregate principal amount outstanding of the 2028 Notes, and we held no short-term investments.

As of March 31, 2023, we held no short-term investments.

Our indebtedness for borrowed money comprises borrowings under our Credit Facilities and the aggregate principal amount outstanding under our Notes.

The Notes and borrowings under our Ex-Im Credit Facility bear interest at a fixed rate and therefore our exposure to market risk for changes in interest rates relates primarily to borrowings under our Term Loan Facility and Revolving Credit Facility, cash equivalents, short-term investments and short-term obligations.

The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk.

To minimize this risk, we maintain a significant amount of our cash balance in money market accounts.

The primary objective of our investment activities is to preserve principal while at the same time to maximize the income we receive from our investments without significantly increasing risk.

To minimize this risk, we maintain a significant amount of our cash balance in money market accounts, with a significant portion held in U.S.

government-backed qualified money-market securities.

In general, money market accounts are not subject to interest rate risk because the interest paid on such funds fluctuates with the prevailing interest rate.

2 unchanged sentences

Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

If the underlying weighted average interest rate on our cash and cash equivalents, assuming balances remain constant over a year, changed by 50 basis points, interest income would have increased or decreased by an insignificant amount for the fiscal years ended March 31, 2022 and 2021.

If the underlying weighted average interest rate on our cash and cash equivalents, assuming balances remain constant over a year, changed by 50 basis points, interest income would have increased or decreased by $2.1 million and an insignificant amount for the fiscal years ended March 31, 2023 and 2022, respectively.

Because our investment policy restricts us to invest in conservative, interest-bearing investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on our investment portfolio to be material.

Our primary interest rate under the Term Loan Facility is the SOFR rate plus 4.50%.

As of March 31, 2023, the effective interest rate on our outstanding borrowings under the Term Loan Facility was 9.95%.

Our primary interest rate under the Revolving Credit Facility is the Eurodollar rate plus an applicable margin that is based on our total leverage ratio.

March 31, 2022, the effective interest rate on our outstanding borrowings under the Term Loan Facility was 5.51%.

Under the Revolving Credit Facility, the effective interest rate as of March 31, 2022 that would have been applied to any new Eurodollar-based borrowings under the Revolving Credit Facility was approximately 3.85%.

As of March 31, 2023, the effective interest rate that would have been applied to any new Eurodollar-based borrowings under the Revolving Credit Facility was approximately 7.31%.

As of March 31, 2023, we had no outstanding borrowings under our Revolving Credit Facility.

Accordingly, assuming the outstanding balance under the Term Loan Facility remained constant and we continued to have no outstanding borrowings under the Revolving Credit Facility over a year, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest, by approximately $3.5 million over a 12-month period.

Accordingly, assuming the outstanding balance under the Term Loan Facility remained constant over a year and we continued to have no outstanding borrowings under the Revolving Credit Facility, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest, by approximately $3.5 million over a 12-month period.

Foreign Exchange Risk

1 unchanged sentence

However, as our international business is conducted in a variety of foreign currencies, we are exposed to fluctuations in foreign currency exchange rates.

A five percent variance in foreign currencies in which our international business is conducted would change our (loss) income before income taxes by $1.3 million and $1.1 million for the fiscal years ended March 31, 2022 and 2021, respectively.

A five percent variance in foreign currencies in which our international business is conducted would change our income (loss) before income taxes by $1.8 million and $1.3 million for the fiscal years ended March 31, 2023 and 2022, respectively.

Our objective in managing our exposure to foreign currency risk is to reduce earnings and cash flow volatility associated with foreign exchange rate fluctuations.

9 unchanged sentences

Income (loss) from operations*

Net income (loss) from continuing operations*

Net income (loss) from discontinued operations, net of tax*

Net income (loss)

Net income (loss) attributable to Viasat, Inc.*

Basic net income (loss) per share attributable to

Diluted net income (loss) per share attributable to

Income (loss) per share attributable

to Viasat, Inc.

common stockholders - basic:

Continuing operations

Discontinued operations*

Income (loss)

Income (loss) per share attributable

to Viasat, Inc.

common stockholders - diluted:

Continuing operations

Discontinued operations*

Income (loss)

Total revenues*

(Loss) income from operations

Net (loss) income

Net (loss) income attributable to Viasat, Inc.

Basic net (loss) income per share attributable to

Diluted net (loss) income per share attributable to

Income (loss) from operations*

Net income (loss) from continuing operations*

Net income (loss) from discontinued operations, net of tax*

Net income (loss)

Net income (loss) attributable to Viasat, Inc.*

Income (loss) per share attributable

to Viasat, Inc.

common stockholders - basic:

Continuing operations

Discontinued operations*

Income (loss)

Income (loss) per share attributable

to Viasat, Inc.

common stockholders - diluted:

Continuing operations

Discontinued operations*

Income (loss)

* Certain prior period quarterly amounts have been adjusted by an insignificant amount from the amounts previously reported in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, due to the determination that certain contracts could not be novated in connection with the closing of the Link-16 TDL Sale.

On January 3, 2023, the Company completed the Link-16 TDL Sale, and as a result the fourth quarter of fiscal year 2023 included the impact of the gain of approximately $1.66 billion (net of costs to sell of $40.8 million) within net income (loss) from discontinued operations, net of tax on the consolidated statements of operations and comprehensive income (loss) for fiscal year 2023.

The summarized quarterly data above includes the operating results of RigNet and EBI from the date of acquisition on April 30, 2021.

Therefore the first quarter of fiscal year 2022 only includes two months of operating results, whereas the remaining quarters of fiscal year 2022 include a full quarter of operating results.

Therefore the first quarter of fiscal year 2022 only includes two months of operating results, whereas the remaining quarters of fiscal year 2022 and all quarters in fiscal year 2023 include a full quarter of operating results.

Basic and diluted net income (loss) per share are computed independently for each of the quarters presented.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity