What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-09 · 258 added, 183 removed, 782 unchanged (36% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2021

September 30, 2021

March 31, 2021

31 unchanged sentences

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

(In thousands, except per share data)

8 unchanged sentences

Amortization of acquired intangible assets

Income (loss) from operations

Income from operations

Other income (expense):

23 unchanged sentences

Foreign currency translation adjustments, net

Other comprehensive loss, net of tax

Comprehensive income (loss)

Other comprehensive (loss) income, net of tax

Comprehensive (loss) income

comprehensive income attributable

to noncontrolling interest, net of tax

Comprehensive income (loss) attributable to

Comprehensive (loss) income attributable to

See accompanying notes to the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

(In thousands)

26 unchanged sentences

to tax withholdings for stock-based compensation

Proceeds from common stock issued in private placement, net

of issuance costs

Other financing activities

1 unchanged sentence

Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

9 unchanged sentences

(In thousands, except share data)

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Balance at June 30, 2021

Exercise of stock options

Stock-based compensation

RSU awards vesting, net of shares withheld for taxes

which have been retired

Other comprehensive loss, net of tax

Balance at September 30, 2021

For the Three Months Ended September 30, 2020

Balance at June 30, 2020

Common stock issued in private placement, net of

issuance costs

Stock-based compensation

RSU awards vesting, net of shares withheld for taxes

which have been retired

Other comprehensive income, net of tax

Balance at September 30, 2020

See accompanying notes to the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Comprehensive

Income (Loss)

Noncontrolling

(In thousands, except share data)

For the Six Months Ended September 30, 2021

Balance at March 31, 2021

6 unchanged sentences

which have been retired

Shares issued in connection with acquisition of

Shares issued in connection with acquisition of business

Other comprehensive loss, net of tax

Balance at June 30, 2021

For the Three Months Ended June 30, 2020

Balance at September 30, 2021

For the Six Months Ended September 30, 2020

Balance at March 31, 2020

Issuance of stock under Employee Stock Purchase

Common stock issued in private placement, net of

issuance costs

Stock-based compensation

4 unchanged sentences

Net (loss) income

Other comprehensive loss, net of tax

Balance at June 30, 2020

Other comprehensive income, net of tax

Balance at September 30, 2020

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Note 1 — Basis of Presentation

The accompanying condensed consolidated balance sheet at June 30, 2021, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2021 and 2020, the condensed consolidated statements of cash flows for the three months ended June 30, 2021 and 2020 and the condensed consolidated statements of equity for the three months ended June 30, 2021 and 2020 have been prepared by the management of Viasat, Inc.

The accompanying condensed consolidated balance sheet at September 30, 2021, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended September 30, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended September 30, 2021 and 2020 and the condensed consolidated statements of equity for the three and six months ended September 30, 2021 and 2020 have been prepared by the management of Viasat, Inc.

(also referred to hereafter as the Company or Viasat), and have not been audited.

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Investments in entities in which the Company can exercise significant influence, but does not own a majority equity interest or otherwise control, are accounted for using the equity method and are included as investment in unconsolidated affiliate in other assets (long-term) on the condensed consolidated balance sheets.

During the second quarter of fiscal year 2021, the Company issued and sold an aggregate of 4,474,559 shares of the Company’s 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.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period.

9 unchanged sentences

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

The Company’s obligation to provide connectivity services is satisfied over time as the customer simultaneously receives and consumes the benefits provided.

The measure of progress over time is based upon either a period of time (e.g., over the estimated contractual term) or usage (e.g., bandwidth used/bytes of data processed).

The Company evaluates whether broadband equipment provided to its customers as part of the delivery of connectivity services represents a lease in accordance with ASC 842.

The Company’s obligation to provide

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

discussed further below under “Leases - Lessor accounting”, for broadband equipment leased to consumer broadband customers in conjunction with the delivery of connectivity services, the Company accounts for the lease and non-lease components of connectivity service arrangements as a single performance obligation as the connectivity services represent the predominant component.

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

The measure of progress over time is based upon either a period of time (e.g., over the estimated contractual term) or usage (e.g., bandwidth used/bytes of data processed).

The Company evaluates whether broadband equipment provided to its customer s as part of the delivery of connectivity services represents a lease in accordance with ASC 842.

As discussed further below under “Leases - Lessor accounting”, for broadband equipment leased to consumer broadband customers in conjunction with the delivery of connectivity services, the Company accounts for the lease and non-lease components of connectivity service arrangements as a single performance obligation as the connectivity services represent the predominant component.

The Company also derives a portion of its revenues from contracts with customers to provide products.

31 unchanged sentences

When estimates of total costs to be incurred on a contract exceed total estimates of revenue to be earned, a provision for the entire loss on the contract is recognized in the period the loss is determined.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Contract costs on U.S.

3 unchanged sentences

The Company’s incurred cost audits by the DCAA have not been concluded for fiscal years 2020 or 2021.

As of June 30, 2021, the DCAA had completed its incurred cost audit for

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

fiscal year s 2004 and 2016 and approved the Company’s incurred costs for those fiscal years, as well as approved the Company’s incurred costs for fiscal years 2005 through 2015 , 2017 and 2018 without further audit based on the determination of low risk.

As of September 30, 2021, the DCAA had completed its incurred cost audit for fiscal years 2004, 2016 and 2019 and approved the Company’s incurred costs for those fiscal years, as well as approved the Company’s incurred costs for fiscal years 2005 through 2015, 2017 and 2018 without further audit based on the determination of low risk.

Although the Company has recorded contract revenues subsequent to fiscal year 2019 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected.

As of June 30, 2021 and March 31, 2021 , the Company had $ 10.9 million and $ 10.3 million , respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S.

G overnment cost reimbursable contracts (see Note 8 — Commitments and Contingencies for more information ).

As of September 30, 2021 and March 31, 2021, the Company had $ 10.9 million and $ 10.3 million, respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S.

Government cost reimbursable contracts (see Note 8 — Commitments and Contingencies for more information).

Evaluation of transaction price

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The Company’s future recurring in-flight connectivity service contracts in its satellite services segment do not have minimum service purchase requirements and therefore are not included in the Company’s remaining performance obligations.

As of June 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.2 billion, of which the Company expects to recognize a little over half over the next 12 months, with the balance recognized thereafter .

As of September 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.3 billion, of which the Company expects to recognize approximately half over the next 12 months, with the balance recognized thereafter .

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3 unchanged sentences

Revenue is disaggregated by products and services, customer type, contract type, and geographic area, respectively, as the Company believes this approach best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

The following sets forth disaggregated reported revenue by segment and product and services for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30, 2021

The following sets forth disaggregated reported revenue by segment and product and services for the three and six months ended September 30, 2021 and 2020:

Three Months Ended September 30, 2021

(In thousands)

2 unchanged sentences

Total revenues

Three Months Ended June 30, 2020

Six Months Ended September 30, 2021

(In thousands)

2 unchanged sentences

Total revenues

Three Months Ended September 30, 2020

(In thousands)

Product revenues

Service revenues

Total revenues

Six Months Ended September 30, 2020

(In thousands)

Product revenues

Service revenues

Total revenues

Revenues from the U.S.

Government as an individual customer comprised approximately 28 % and 31 % of total revenues for the three months ended June 30, 2021 and 2020, respectively, mainly reported within the government systems segment.

Revenues from the Company’s other customers, mainly reported within the commercial networks and satellite services segments, comprised approximately 72 % and 69 % of total revenues for the three months ended June 30, 2021 and 2020, respectively.

The Company’s satellite services segment revenues are primarily derived from the Company’s fixed broadband services and in-flight services.

Government as an individual customer comprised approximately 25 % and 27 % of total revenues for the three and six months ended September 30, 2021, respectively, and approximately 32 % and 31 % of total revenues for the three and six months ended September 30, 2020, respectively, mainly reported within the government systems segment.

Revenues from the Company’s other customers, mainly reported within the commercial networks and satellite services segments, comprised approximately 75 % and 73 % of total revenues for the three and six months ended September 30, 2021, respectively, and approximately 68 % and 69 % of total revenues for the three and six months ended September 30, 2020, respectively.

The Company’s satellite services segment revenues are primarily derived from the Company’s fixed broadband services, in-flight services and advanced software and communication infrastructure services (acquired through the RigNet acquisition).

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenues in the Company’s commercial networks and government systems segments are primarily derived from three types of contracts:

fixed-price, cost-reimbursement and time-and-materials contracts.

Fixed-price contracts (which require the Company to provide products and services under a contract at a specified price) comprised approximately 89 % and 85 % of the Company’s total revenues for these segments for the three months ended June 30, 2021 and 2020, respectively.

Fixed-price contracts (which require the Company to provide products and services under a contract at a specified price) comprised approximately 91 % and 90 % of the Company’s total revenues for these segments for the three and six months ended September 30, 2021, respectively, and approximately 87 % and 86 % of the Company’s total revenues for these segments for the three and six months ended September 30, 2020, respectively.

The remainder of the Company’s revenues in these segments for such periods was derived primarily from cost-reimbursement contracts (under which the Company is reimbursed for all actual costs incurred in performing the contract to the extent such costs are within the contract ceiling and allowable under the terms of the contract, plus a fee or profit) and from time-and-materials contracts (under which the Company is reimbursed for the number of labor hours expended at an established hourly rate negotiated in the contract, plus the cost of materials utilized in providing such products or services).

1 unchanged sentence

The development efforts are conducted in direct response to the customer’s specific requirements and, accordingly, expenditures related to such efforts are included in cost of sales when incurred and the related funding (which includes a profit component) is included in revenues.

Revenues for the Company’s funded development from its customer contracts were approximately 23 % and 27 % of its total revenues for the three months ended June 30, 2021 and 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenues for the Company’s funded development from its customer contracts were approximately 23 % of its total revenues for both the three and six months ended September 30, 2021, and approximately 23 % and 25 % of its total revenues for the three and six months ended September 30, 2020, respectively.

Contract balances

6 unchanged sentences

Reductions in the collections in excess of revenues or deferred revenues will be recorded as the Company satisfies the performance obligations.

The following table presents contract assets and liabilities as of June 30, 2021 and March 31, 2021:

June 30, 2021

The following table presents contract assets and liabilities as of September 30, 2021 and March 31, 2021:

September 30, 2021

March 31, 2021

3 unchanged sentences

Deferred revenues, long-term portion

Unbilled accounts receivable increased $ 34.6 million during the three months ended June 30, 2021, primarily driven by revenue recognized in the Company’s commercial networks and satellite services segments in excess of billings.

The acquisition of RigNet contributed to $ 20.6 million of the increase in unbilled accounts receivable.

Collections in excess of revenues and deferred revenues decreased $ 14.9 million during the three months ended June 30, 2021, primarily driven by revenue recognized in excess of advances on goods or services in the Company’s commercial networks and government systems segments.

During the three months ended June 30, 2021, the Company recognized revenue of $ 78.2 million that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2021.

During the three months ended June 30, 2020, the Company recognized revenue of $ 57.6 million that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2020.

Unbilled accounts receivable increased $ 31.3 million during the six months ended September 30, 2021, primarily driven by revenue recognized in the Company’s commercial networks and satellite services segments in excess of billings.

The acquisition of RigNet contributed $ 17.5 million of unbilled accounts receivable.

Collections in excess of revenues and deferred revenues decreased $ 15.5 million during the six months ended September 30, 2021, primarily driven by revenue recognized in excess of advances on goods or services received in the Company’s commercial networks segment.

During the three and six months ended September 30, 2021, the Company recognized revenue of $ 43.8 million and $ 122.0 million, respectively, that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2021.

During the three and six months ended September 30, 2020, the Company recognized revenue of $ 17.0 million and $ 74.6 million, respectively, that was previously included in the Company’s collections in excess of revenues and deferred revenues at March 31, 2020.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Property, equipment and satellites

9 unchanged sentences

Leasehold improvements are capitalized and amortized using the straight-line method over the shorter of the lease term or the life of the improvement.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Costs related to internally developed software for internal uses are capitalized after the preliminary project stage is complete and are amortized over the estimated useful lives of the assets, which are approximately three to seven years .

1 unchanged sentence

Interest expense is capitalized on the carrying value of assets under construction, in accordance with the authoritative guidance for the capitalization of interest (ASC 835-20).

With respect to the ViaSat-3 class satellites, gateway and networking equipment and other assets under construction, the Company capitalized $ 23.6 million and $ 15.9 million of interest expense for the three months ended June 30, 2021 and 2020, respectively.

With respect to the construction of satellites, gateway and networking equipment and other assets under construction, the Company capitalized $ 24.8 million and $ 48.4 million of interest expense for the three and six months ended September 30, 2021, respectively, and $ 20.0 million and $ 35.9 million for the three and six months ended September 30, 2020, respectively.

The Company owns three satellites in service over North America (ViaSat-2, ViaSat-1 and WildBlue-1) and, after acquiring the remaining interest in Euro Infrastructure Co.

5 unchanged sentences

The Company depreciates the satellites, earth stations and networking equipment, CPE units and related installation costs over their estimated useful lives.

The total cost and accumulated depreciation of CPE units included in property, equipment and satellites, net , as of June 30, 2021 were $ 409.8 million and $ 198.9 million, respectively.

The total cost and accumulated depreciation of CPE units included in property, equipment and satellites, net , as of September 30, 2021 were $ 405.3 million and $ 201.4 million, respectively.

The total cost and accumulated depreciation of CPE units included in property, equipment and satellites, net , as of March 31, 2021 were $ 409.9 million and $ 193.7 million, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Occasionally, the Company may enter into finance lease arrangements for various machinery, equipment, computer-related equipment, software, furniture , fixtures , or satellites .

The Company records amortization of assets leased under finance lease arrangements within depreciation expense (see Note 1 — Basis of Presentation – Leases for more information).

The Company’s finance leases consist primarily of satellite lifetime Ka-band capacity leases and have remaining terms from less than one year to five year s.

The Company records amortization of assets leased under finance lease arrangemen ts within depreciation expense ( see Note 1 — Basis of Presentation – Leases for more information) .

The Company’s finance leases consist primarily of satellite lifetime Ka-band capacity leases and have remaining terms from less than one year to f i ve year s.

The Company reports assets obtained under finance leases in property, equipment and satellites, net and the current and non-current portions of its finance lease liabilities in current portion of long-term debt and other long-term debt, respectively.

11 unchanged sentences

The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement.

10 unchanged sentences

Lessor accounting

For broadband equipment leased to fixed broadband customers in conjunction with the delivery of connectivity services, the Company has made an accounting policy election not to separate the broadband equipment from the related connectivity services.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

connectivity services.

The connectivity services are the predominant component of these arrangements.

6 unchanged sentences

Amortization of intangible assets that have finite lives is provided for by the straight-line method over the shorter of the legal or estimated economic life.

Total capitalized costs of $ 3.5 million related to patents were included in other assets as of both June 30, 2021 and March 31, 2021.

The Company capitalized costs of $ 60.3 million and $ 53.8 million related to acquiring and obtaining orbital slots and other licenses included in other assets as of June 30, 2021 and March 31, 2021, respectively.

Accumulated amortization related to these assets was $ 4.5 million and $ 4.4 million as of June 30, 2021 and March 31, 2021, respectively.

Amortization expense related to these assets was an insignificant amount for the three months ended June 30, 2021 and 2020.

Total capitalized costs of $ 3.5 million related to patents were included in other assets as of both September 30, 2021 and March 31, 2021.

The Company capitalized costs of $ 60.4 million and $ 53.8 million related to acquiring and obtaining orbital slots and other licenses included in other assets as of September 30, 2021 and March 31, 2021, respectively.

Accumulated amortization related to these assets was $ 4.6 million and $ 4.4 million as of September 30, 2021 and March 31, 2021, respectively.

Amortization expense related to these assets was an insignificant amount for the three and six months ended September 30, 2021 and 2020.

If a patent, orbital slot or other license is rejected, abandoned or otherwise invalidated, the unamortized cost is expensed in that period.

During the three months ended June 30, 2021 and 2020, the Company did not write off any significant costs due to abandonment or impairment.

During the three and six months ended September 30, 2021 and 2020, the Company did not write off any significant costs due to abandonment or impairment.

Debt issuance costs

Debt issuance costs are amortized and recognized as interest expense using the effective interest rate method, or, when the results are not materially different, on a straight-line basis over the expected term of the related debt.

During the three months ended June 30, 2021 and 2020, no debt issuance costs and $ 5.1 million of debt issuance costs were capitalized, respectively.

During the six months ended September 30, 2021 and 2020, no debt issuance costs and $ 5.1 million of debt issuance costs were capitalized, respectively.

Unamortized debt issuance costs related to extinguished debt are expensed at the time the debt is extinguished and recorded in loss on extinguishment of debt in the condensed consolidated statements of operations and comprehensive income (loss).

Debt issuance costs related to the Company’s revolving credit facility (the Revolving Credit Facility) are recorded in prepaid expenses and other current assets and in other long-term assets in the condensed consolidated balance sheets in accordance with the authoritative guidance for imputation of interest (ASC 835-30).

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the carrying amount of the related debt, consistent with debt discounts, in accordance with the authoritative guidance for imputation of interest (ASC 835-30).

Debt issuance costs related to the Company’s 5.625% Senior Notes due 2025 (the 2025 Notes), the Company’s 5.625% Senior Secured Notes due 2027 (the 2027 Notes), the Company’s 6.500% Senior Notes due 2028 (the 2028 Notes and, together with the 2025 Notes and the 2027 Notes, the Notes) and the Ex-Im Credit Facility are recorded as a direct deduction from the carrying amount of the related debt, consistent with debt discounts, in accordance with the authoritative guidance for imputation of interest (ASC 835-30).

Software development

2 unchanged sentences

Once the product is available for general release, the software development costs are amortized based on the ratio of current to future revenue for each product with an annual minimum equal to straight-line amortization over the remaining estimated economic life of the product, generally within five years .

Capitalized costs, net, of $ 232.5 million and $ 237.1 million related to software developed for resale were included in other assets as of June 30, 2021 and March 31, 2021, respectively.

The Company capitalized $ 9.9 million and $ 14.3 million of costs related to software developed for resale for the three months ended June 30, 2021 and 2020, respectively.

Amortization expense for capitalized software development costs was $ 14.5 million and $ 13.1 million for the three months ended June 30, 2021 and 2020, respectively.

Capitalized costs, net, of $ 228.9 million and $ 237.1 million related to software developed for resale were included in other assets as of September 30, 2021 and March 31, 2021, respectively.

The Company capitalized $ 11.0 million and $ 20.9 million of costs related to software developed for resale for the three and six months ended September 30, 2021, respectively.

The Company capitalized $ 14.2 million and $ 28.5 million of costs related to software developed for resale for the three and six months ended September 30, 2020, respectively.

Amortization expense for capitalized software development costs was $ 14.6 million and $ 29.1 million for the three and six months ended September 30, 2021, respectively, and $ 14.9 million and $ 28.0 million for the three and six months ended September 30, 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Self-insurance liabilities

2 unchanged sentences

The Company utilizes internal actuarial methods as well as other historical information for the purpose of estimating ultimate costs for a particular plan year.

Based on these actuarial methods, along with currently available information and insurance industry statistics, the Company has recorded self-insurance liability for its plans of $ 6.9 million in accrued and other liabilities in the condensed consolidated balance sheets as of both June 30, 2021 and March 31, 2021.

Based on these actuarial methods, along with currently available information and insurance industry statistics, the Company has recorded self-insurance liability for its plans of $ 7.0 million and $ 6.9 million in accrued and other liabilities in the condensed consolidated balance sheets as of September 30, 2021 and March 31, 2021, respectively.

The Company’s estimate, which is subject to inherent variability, is based on average claims experience in the Company’s industry and its own experience in terms of frequency and severity of claims, including asserted and unasserted claims incurred but not reported, with no explicit provision for adverse fluctuation from year to year.

7 unchanged sentences

A claim would be accrued when a loss is considered probable and the amount can be reasonably estimated.

At June 30, 2021 and March 31, 2021, no such amounts were accrued related to the aforementioned provisions.

At September 30, 2021 and March 31, 2021, no such amounts were accrued related to the aforementioned provisions.

Noncontrolling interests

1 unchanged sentence

Revenues, expenses, gains, losses, net income (loss) and other comprehensive income (loss) are reported in the condensed consolidated financial statements at the consolidated amounts, which include the amounts attributable to both the controlling and noncontrolling interest.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments in unconsolidated affiliate — equity method

4 unchanged sentences

Common stock held in treasury

As of June 30, 2021 and March 31, 2021, the Company had no shares of common stock held in treasury.

During the three months ended June 30, 2021 and 2020, the Company issued 29,060 and 24,294 shares of common stock, respectively, based on the vesting terms of certain restricted stock unit agreements.

In order for employees to satisfy minimum statutory employee tax withholding requirements related to the issuance of common stock underlying these restricted stock unit agreements, during the three months ended June 30, 2021 and 2020, the Company repurchased 8,721 and 8,548 shares of common stock, respectively, at cost and with a total value of an insignificant amount in both periods.

As of September 30, 2021 and March 31, 2021, the Company had no shares of common stock held in treasury.

During the three months ended September 30, 2021 and 2020, the Company issued 99,947 and 40,676 shares of common stock, respectively, based on the vesting terms of certain restricted stock unit agreements.

During the six months ended September 30, 2021 and 2020, the Company issued 129,007 and 64,970 shares of common stock, respectively, based on the vesting terms of certain restricted stock unit agreements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and 8,367 share s of common stock, respectively, at cost and with a total value of $ 1.3 million and an insignificant amount , respectively .

During the six months ended September 30, 2021 and 2020 , the Company repurchased 33,338 and 16,915 shares of common stock, respectively, at cost and with a total value of $ 1.7 million and an insignificant amount , respectively.

Although shares withheld for employee withholding taxes are technically not issued, they are treated as common stock repurchases for accounting purposes (with such shares deemed to be repurchased and then immediately retired), as they reduce the number of shares that otherwise would have been issued upon vesting of the restricted stock units.

6 unchanged sentences

The Company accounts for forfeitures as they occur.

The Company recognized $ 22.2 million and $ 20.9 million of stock-based compensation expense for the three months ended June 30, 2021 and 2020, respectively.

The Company recognized $ 21.0 million and $ 43.2 million of stock-based compensation expense for the three and six months ended September 30, 2021, respectively.

The Company recognized $ 22.4 million and $ 43.3 million of stock-based compensation expense for the three and six months ended September 30, 2020, respectively.

The Company recognizes excess tax benefits or deficiencies on vesting or settlement of awards as discrete items within income tax benefit or provision within net income (loss) and the related cash flows are classified within operating activities.

9 unchanged sentences

This variability provides an unreliable estimate of the annual effective tax rate.

As a result, and in accordance with the

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision for income taxes for the three months ended June 30, 2021 and 2020 by applying the actual effective tax rate to the pretax income (loss) for the three-month period s .

As a result, and in accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision for income taxes for the three and six months ended September 30, 2021 and 2020 by applying the actual effective tax rate to the pretax income (loss) for the three-month and six-month periods.

A deferred income tax asset or liability is established for the expected future tax consequences resulting from differences in the financial reporting and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax credit and loss carryforwards.

5 unchanged sentences

The Company adopted the new guidance in the first quarter of fiscal year 2022 on a prospective basis and as a result upon purchase of the remaining 51 % interest in Euro Infrastructure Co.

from Eutelsat (see Note 12 — Acquisitions for more information), and assertion to permanently reinvest future earnings, the deferred tax liability recorded for Euro Infrastructure Co.’s outside basis difference of $ 8.1 million was reversed and recorded in the first quarter of fiscal year 2022 as an income tax benefit in the condensed consolidated statements of operations and comprehensive income (loss).

from Eutelsat (see Note 12 — Acquisitions for more information), and assertion to

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

permanently reinvest future earnings, the deferred tax liability recorded for Euro Infrastructure Co.’s outside basis difference of $ 8.1 million was reversed and recorded in the first quarter of fiscal year 2022 as an income tax benefit in the condensed consolidated statements of operations and comprehensive income (loss) .

In January 2020, the FASB issued ASU 2020-01, Investments – Equity Securities (ASC 321), Investments – Equity Method and Joint Ventures (ASC 323) and Derivatives and Hedging (ASC 815).

12 unchanged sentences

Note 2 — Composition of Certain Balance Sheet Captions

June 30, 2021

September 30, 2021

March 31, 2021

12 unchanged sentences

Leasehold improvements (estimated useful life of 2 - 17 years )

Building (estimated useful life of 12 years)

Buildings (estimated useful life of 12 - 38 years )

Construction in progress

25 unchanged sentences

Satellite performance incentive obligations, long-term portion

Deferred income taxes, long-term

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7 unchanged sentences

The inputs are unobservable in the market and significant to the instrument’s valuation.

The Company had $ 5.0 million in cash equivalents (Level 1) and no liabilities measured at fair value on a recurring basis as of both June 30, 2021 and March 31, 2021.

The Company had $ 5.0 million in cash equivalents (Level 1) and no liabilities measured at fair value on a recurring basis as of both September 30, 2021 and March 31, 2021.

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value:

6 unchanged sentences

The fair value amount is currently recorded in other assets on the condensed consolidated balance sheets and any change to fair value is recorded in the Company’s condensed consolidated statements of operations each reporting period.

As of and for the three-month period ended June 30, 2021, the Company’s fair value estimate, and change in fair value of the contingent consideration since the acquisition date, was immaterial.

In connection with the RigNet acquisition on April 30, 2021 (see Note 12 — Acquisitions for more information), the Company assumed a contingent liability associated with a RigNet predecessor subsidiary of approximately $ 13.8 million.

As of June 30, 2021, after a partial payment, the fair value of $ 9.5 million was estimated and recorded in accrued and other liabilities, as the maximum amount payable under the terms of the agreement has been achieved.

The amount is payable in September 2021 in cash or stock at the Company’s discretion (with the intent to pay in cash).

Due to the proximity of the payable date, the fair value approximates the actual payment amount (Level 1).

Foreign currency forward contracts — The Company uses derivative financial instruments to manage foreign currency risk relating to foreign exchange rates.

The Company does not use these instruments for speculative or trading purposes.

The Company’s objective is to reduce the risk to earnings and cash flows associated with changes in foreign currency exchange rates.

Derivative instruments are recognized as either assets or liabilities in the accompanying condensed consolidated financial statements and are measured at fair value.

Gains and losses resulting from changes in the fair values of those derivative instruments are recorded to earnings or other comprehensive income (loss) depending on the use of the derivative instrument and whether it qualifies for hedge accounting.

The Company’s foreign currency forward contracts are valued using standard calculations/models that are primarily based on observable inputs, such as foreign currency exchange rates, or can be corroborated by observable market data (Level 2).

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long-term debt — The Company’s long-term debt consists of borrowings under its Revolving Credit Facility and Ex-Im Credit Facility (collectively, the Credit Facilities), $ 700.0 million in aggregate principal amount of 2025 Notes, $ 600.0 m illion in aggregate principal amount of 2027 Notes, $ 400.0 million in aggregate principal amount of 2028 Notes and finance lease obligations reported at the present value of future minimum lease payments with current accrued interest .

As of and for the three-month and six-month periods ended September 30, 2021, the Company’s fair value estimate, and change in fair value of the contingent consideration since the acquisition date, were immaterial.

Long-term debt — The Company’s long-term debt consists of borrowings under its Revolving Credit Facility and Ex-Im Credit Facility (collectively, the Credit Facilities), $ 700.0 million in aggregate principal amount of 2025 Notes, $ 600.0 million in aggregate principal amount of 2027 Notes, $ 400.0 million in aggregate principal amount of 2028 Notes and finance lease obligations reported at the present value of future minimum lease payments with current accrued interest.

Long-term debt related to the Revolving Credit Facility is reported at the outstanding principal amount of borrowings, while long-term debt related to the Ex-Im Credit Facility, the 2025 Notes, the 2027 Notes and the 2028 Notes is reported at amortized cost.

1 unchanged sentence

The fair value of the Company’s long-term debt related to the Revolving Credit Facility approximates its carrying amount due to its variable interest rate, which approximates a market interest rate.

As of June 30, 2021 and March 31, 2021 , the fair value of the Company’s long-term debt related to the Ex-Im Credit Facility was determined based on a discounted cash flow analysis using observable market interest rates for instruments with similar terms (Level 2) and was approximately $ 89.5 million and $ 100.1 million, respectively.

As of June 30, 2021 and March 31, 2021 , the estimated fair value of the Company’s outstanding long-term debt related to each series of Notes was determined based on actual or estimated bids and offers for such series of Notes in an over-the-counter market (Level 2) and was $ 714.0 million and $ 709.6 million, respectively , for the 2025 Notes, $ 626.3 million and $ 629.2 million, respectively , for the 2027 Notes, and $ 426.6 million and $ 420.5 million, respectively , for the 2028 Notes .

Satellite performance incentive obligations — The Company’s contracts with the manufacturers of the ViaSat-1 and ViaSat-2 satellites require the Company to make monthly in-orbit satellite performance incentive payments, including interest, through fiscal year 2027 and fiscal year 2028 , respectively, subject to the continued satisfactory performance of the applicable satellites.

The Company records the net present value of these expected future payments as a liability and as a component of the cost of the satellites.

However, for disclosure purposes, the Company is required to measure the fair value of outstanding satellite performance incentive obligations on a recurring basis.

The fair value of the Company’s outstanding satellite performance incentive obligations is estimated to approximate their carrying value based on current rates (Level 2).

As of June 30, 2021 and March 31, 2021, the Company’s estimated satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites, including accrued interest, were $ 26.4 million and $ 27.1 million, respectively.

As of September 30, 2021 and March 31, 2021, the fair value of the Company’s long-term debt related to the Ex-Im Credit Facility was determined based on a discounted cash flow analysis using observable market interest rates for instruments with similar terms (Level 2) and was approximately $ 89.5 million and $ 100.1 million, respectively.

As of September 30, 2021 and March 31, 2021, the estimated fair value of the Company’s outstanding long-term debt related to each series of Notes was determined based on actual or estimated bids and offers for such series of Notes in an over-the-counter market (Level 2) and was $ 708.1 million and $ 709.6 million, respectively, for the 2025 Notes, $ 624.0 million and $ 629.2 million, respectively, for the 2027 Notes, and $ 420.3 million and $ 420.5 million, respectively, for the 2028 Notes.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the applicable satellite s .

The Company records the net present value of these expected future payments as a liability and as a component of the cost of the satellite s .

However, for disclosure purposes, the Company is required to measure the fair value of outstanding satellite performance incentive obligation s on a recurring basis.

The fair value of the Company’s outstanding satellite performance incentive obligation s is estimated to approximate their carrying value based on current rates (Level 2).

As of September 30, 2021 and March 31, 2021 , the Company’s estimated satellite performance incentive obligation s relating to the ViaSat-1 and ViaSat-2 satellite s , including accrued interest, w ere $ 25.6 million and $ 27.1 million, respectively.

Note 4 — Shares Used In Computing Diluted Net Income (Loss) Per Share

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

(In thousands)

23 unchanged sentences

common stockholders

Antidilutive shares excluded from the calculation for the three months ended June 30, 2021 consisted of 960,080 shares related to stock options (other than TSR performance stock options), zero shares related to TSR performance stock options, and 1,390,251 shares related to restricted stock units.

Antidilutive shares excluded from the calculation for the three months ended September 30, 2021 and 2020 consisted of 983,561 and 1,221,537 shares related to stock options (other than TSR performance stock options), respectively, no shares related to TSR performance stock options, 848,711 and 2,539,518 shares related to restricted stock units, respectively, and 8,861 and 15,572 shares related to certain terms of the Employee Stock Purchase Plan, respectively.

Antidilutive shares excluded from the calculation for the six months ended September 30, 2021 consisted of 971,884 shares related to stock options (other than TSR performance stock options), zero shares related to TSR performance stock options, 917,918 shares related to restricted stock units, and 6,194 shares related to certain terms of the Employee Stock Purchase Plan.

The weighted average number of shares used to calculate basic and diluted net loss per share attributable to Viasat, Inc.

common stockholders is the same for the three months ended June 30, 2020, as the Company incurred a net loss attributable to Viasat, Inc.

common stockholders for the period and inclusion of potentially dilutive weighted average shares of common stock would be antidilutive.

Potentially dilutive weighted average shares excluded from the calculation for the three months ended June 30, 2020 consisted of 1,225,233 shares related to stock options (other than TSR performance stock options), zero shares related to TSR performance stock options, 2,575,374 shares related to restricted stock units, and 529,909 shares related to certain terms of the Viasat 401(k) Profit Sharing Plan and Employee Stock Purchase Plan.

common stockholders is the same for the six months ended September 30, 2020, as the Company incurred a net loss attributable to Viasat, Inc.

common stockholders for such periods and inclusion of potentially dilutive weighted average shares of common stock would be antidilutive.

Potentially dilutive weighted average shares excluded from the calculation for the six months ended September 30, 2020 consisted of 1,223,375 shares related to stock options (other than TSR performance stock options), no shares related to TSR performance stock options, 2,623,634 shares related to restricted stock units and 416,650 shares related to certain terms of the Viasat 401(k) Profit Sharing Plan and Employee Stock Purchase Plan.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5 — Goodwill and Acquired Intangible Assets

During the three months ended June 30, 2021, the increase in the Company’s goodwill primarily related to the acquisitions of the remaining 51% interest in Euro Infrastructure Co.

During the six months ended September 30, 2021, the increase in the Company’s goodwill primarily related to the acquisitions of the remaining 51% interest in Euro Infrastructure Co.

and of RigNet on April 30, 2021 (see Note 12 – Acquisitions for more information) and an insignificant effect of foreign currency translation recorded within all three of the Company’s segments.

During the three months ended June 30, 2020, the insignificant increase in the Company’s goodwill related to the effects of foreign currency translation recorded within all three of the Company’s segments.

During the six months ended September 30, 2020, the increase in the Company’s goodwill related to the effects of foreign currency translation recorded within all three of the Company’s segments.

Other acquired intangible assets are amortized using the straight-line method over their estimated useful lives of two to 12 years (which approximates the economic pattern of benefit).

Amortization expense related to other acquired intangible assets was $ 5.9 million and $ 1.6 million for the three months ended June 30, 2021 and 2020, respectively.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amortization expense related to other acquired intangible assets was $ 7.4 million and $ 1.3 million for the three months ended September 30, 2021 and 2020, respectively, and $ 13.3 million and $ 2.9 million for the six months ended September 30, 2021 and 2020, respectively.

The expected amortization expense of amortizable acquired intangible assets may change due to the effects of foreign currency fluctuations as a result of international businesses acquired.

Current and expected amortization expense for acquired intangible assets for each of the following periods is as follows:

The current and expected amortization expense for acquired intangible assets for each of the following periods is as follows:

(In thousands)

For the three months ended June 30, 2021

For the six months ended September 30, 2021

Expected for the remainder of fiscal year 2022

5 unchanged sentences

Note 6 — Senior Notes and Other Long-Term Debt

Total long-term debt consisted of the following as of June 30, 2021 and March 31, 2021:

June 30, 2021

Total long-term debt consisted of the following as of September 30, 2021 and March 31, 2021:

September 30, 2021

March 31, 2021

6 unchanged sentences

Total long-term debt

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revolving Credit Facility

As of June 30, 2021, the Revolving Credit Facility provided a $ 700.0 million revolving line of credit (including up to $ 150.0 million of letters of credit), with a maturity date of January 18, 2024 .

At June 30, 2021, the Company had $ 320.0 million in principal amount of outstanding borrowings under the Revolving Credit Facility and $ 59.7 million outstanding under standby letters of credit, leaving borrowing availability under the Revolving Credit Facility as of June 30, 2021 of $ 320.3 million.

As of September 30, 2021, the Revolving Credit Facility provided a $ 700.0 million revolving line of credit (including up to $ 150.0 million of letters of credit), with a maturity date of January 18, 2024 .

At September 30, 2021, the Company had $ 320.0 million in principal amount of outstanding borrowings under the Revolving Credit Facility and $ 52.8 million outstanding under standby letters of credit, leaving borrowing availability under the Revolving Credit Facility as of September 30, 2021 of $ 327.2 million.

Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at either (1) the highest of the Federal Funds rate plus 0.50%, the Eurodollar rate plus 1.00%, or the administrative agent’s prime rate as announced from time to time, or (2) the Eurodollar rate, plus, in the case of each of (1) and (2), an applicable margin that is based on the Company’s total leverage ratio.

As of June 30, 2021, the weighted average effective interest rate on the Company’s outstanding borrowings under the Revolving Credit Facility was 1.59 %.

As of September 30, 2021, the weighted average effective interest rate on the Company’s outstanding borrowings under the Revolving Credit Facility was 1.84 %.

The Company has capitalized certain amounts of interest expense on the Revolving Credit Facility in connection with the construction of various assets during the construction period.

The Revolving Credit Facility is required to be guaranteed by certain significant domestic subsidiaries of the Company (as defined in the Revolving Credit Facility) and secured by substantially all of the Company’s and any such subsidiaries’ assets.

As of June 30, 2021, none of the Company’s subsidiaries guaranteed the Revolving Credit Facility.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 2021, none of the Company’s subsidiaries guaranteed the Revolving Credit Facility.

The Revolving Credit Facility contains financial covenants regarding a maximum total leverage ratio and a minimum interest coverage ratio.

In addition, the Revolving Credit Facility contains covenants that restrict, among other things, the Company’s ability to sell assets, make investments and acquisitions, make capital expenditures, grant liens, pay dividends and make certain other restricted payments.

The Company was in compliance with its financial covenants under the Revolving Credit Facility as of June 30, 2021.

The Company was in compliance with its financial covenants under the Revolving Credit Facility as of September 30, 2021.

Ex-Im Credit Facility

1 unchanged sentence

Of the $ 362.4 million in principal amount of borrowings made under the Ex-Im Credit Facility, $ 321.2 million was used to finance up to 85 % of the costs of construction, launch and insurance of the ViaSat-2 satellite and related goods and services (including costs incurred on or after September 18, 2012), with the remaining $ 41.2 million used to finance the total exposure fees incurred under the Ex-Im Credit Facility (which included all previously accrued completion exposure fees).

As of June 30, 2021, the Company had $ 88.4 million in principal amount of outstanding borrowings under the Ex-Im Credit Facility.

As of September 30, 2021, the Company had $ 88.4 million in principal amount of outstanding borrowings under the Ex-Im Credit Facility.

Borrowings under the Ex-Im Credit Facility bear interest at a fixed rate of 2.38 %, payable semi-annually in arrears.

5 unchanged sentences

In addition, the Ex-Im Credit Facility contains covenants that restrict, among other things, the Company’s ability to sell assets, make investments and acquisitions, make capital expenditures, grant liens, pay dividends and make certain other restricted payments.

The Company was in compliance with its financial covenants under the Ex-Im Credit Facility as of June 30, 2021.

The Company was in compliance with its financial covenants under the Ex-Im Credit Facility as of September 30, 2021.

Borrowings under the Ex-Im Credit Facility are recorded as current portion of long-term debt and as other long-term debt, net of unamortized discount and debt issuance costs, in the Company’s condensed consolidated financial statements.

The discount of $ 42.3 million (consisting of the initial $ 6.0 million pre-exposure fee, $ 35.3 million of completion exposure fees, and other customary fees) and deferred financing cost associated with the issuance of the borrowings under the Ex-Im Credit Facility are amortized to interest expense on an effective interest rate basis over the weighted average term of the Ex-Im Credit Facility and in accordance with the related payment obligations.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Notes due 2028

4 unchanged sentences

The 2028 Notes are required to be guaranteed on an unsecured senior basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility.

As of June 30, 2021, none of the Company’s subsidiaries guaranteed the 2028 Notes.

As of September 30, 2021, none of the Company’s subsidiaries guaranteed the 2028 Notes.

The 2028 Notes are the Company’s general senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future unsecured unsubordinated debt.

The 2028 Notes are effectively junior in right of payment to the Company’s existing and future secured debt, including under the Credit Facilities and the 2027 Notes (to the extent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries that do not guarantee the 2028 Notes, and are senior in right of payment to all of the Company’s existing and future subordinated indebtedness.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The indenture governing the 2028 Notes limits, among other things, the Company’s and its restricted subsidiaries’ ability to:

22 unchanged sentences

The 2027 Notes are required to be guaranteed on a senior secured basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility.

As of June 30, 2021, none of the Company’s subsidiaries guaranteed the 2027 Notes.

As of September 30, 2021, none of the Company’s

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

subsidiaries guaranteed the 2027 Notes.

The 2027 Notes are secured, equally and ratably with the Revolving Credit Facility and any future parity lien debt, by liens on substantially all of the Company’s assets.

14 unchanged sentences

and consolidate or merge with, or sell substantially all of their assets to, another person.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prior to April 15, 2022, the Company may redeem up to 40% of the 2027 Notes at a redemption price of 105.625 % of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the redemption date, from the net cash proceeds of specified equity offerings.

10 unchanged sentences

The 2025 Notes are required to be guaranteed on an unsecured senior basis by each of the Company’s existing and future subsidiaries that guarantees the Revolving Credit Facility.

As of June 30, 2021, none of the Company’s subsidiaries guaranteed the 2025 Notes.

As of September 30, 2021, none of the Company’s subsidiaries guaranteed the 2025 Notes.

The 2025 Notes are the Company’s general senior unsecured obligations and rank equally in right of payment with all of the Company’s existing and future unsecured unsubordinated debt.

The 2025 Notes are effectively junior in right of payment to the Company’s existing and future secured debt, including under the Credit Facilities and the 2027 Notes (to the extent of the value of the assets securing such debt), are structurally subordinated to all existing and future liabilities (including trade payables) of the Company’s subsidiaries that do not guarantee the 2025 Notes, and are senior in right of payment to all of the Company’s existing and future subordinated indebtedness.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The indenture governing the 2025 Notes limits, among other things, the Company’s and its restricted subsidiaries’ ability to:

10 unchanged sentences

and consolidate or merge with, or sell substantially all of their assets to, another person.

The 2025 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on September 15, 2020 at a redemption price of 102.813 % , during the 12 months beginning on September 15, 2021 at a redemption price of 101.406 % , and at any time on or after September 15, 2022 at a redemption price of 100 %, in each case plus accrued and unpaid interest, if any, thereon to the redemption date.

The 2025 Notes may be redeemed, in whole or in part, at any time during the 12 months beginning on September 15, 2021 at a redemption price of 101.406 % , and at any time on or after September 15, 2022 at a redemption price of 100 %, in each case plus accrued and unpaid interest, if any, thereon to the redemption date.

In the event a change of control triggering event occurs (as defined in the indenture governing the 2025 Notes), each holder will have the right to require the Company to repurchase all or any part of such holder’s 2025 Notes at a purchase price in cash equal to 101 % of the aggregate principal amount of the 2025 Notes repurchased, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7 — Product Warranty

5 unchanged sentences

It is possible that the Company’s underlying assumptions will not reflect the actual experience and, in that case, future adjustments will be made to the recorded warranty obligation.

The following table reflects the change in the Company’s warranty accrual during the three months ended June 30, 2021 and 2020:

Three Months Ended

The following table reflects the change in the Company’s warranty accrual during the six months ended September 30, 2021 and 2020:

Six Months Ended

September 30,

(In thousands)

12 unchanged sentences

Although claims, suits, investigations and proceedings are inherently uncertain and their results cannot be predicted with certainty, the Company believes that the resolution of its current pending matters will not have a material adverse effect on its business, financial condition, results of operations or liquidity.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has contracts with various U.S.

Government agencies.

G overnment agencies.

Accordingly, the Company is routinely subject to audit and review by the DCMA, the DCAA and other U.S.

Government agencies of its performance on government contracts, indirect rates and pricing practices, accounting and management internal control business systems, and compliance with applicable contracting and procurement laws, regulations and standards.

G overnment agencies of its performance on government contracts, indirect rates and pricing practices, accounting and management internal control business systems, and compliance with applicable contracting and procurement laws, regulations and standards.

An adverse outcome to a review or audit or other failure to comply with applicable contracting and procurement laws, regulations and standards could result in material civil and criminal penalties and administrative sanctions being imposed on the Company, which may include termination of contracts, forfeiture of profits, triggering of price reduction clauses, suspension of payments, significant customer refunds, fines and suspension, or a prohibition on doing business with U.S.

Government agencies.

G overnment agencies.

In addition, if the Company fails to obtain an “adequate” determination of its various accounting and management internal control business systems from applicable U.S.

Government agencies or if allegations of impropriety are made against it, the Company could suffer serious harm to its business or its reputation, including its ability to bid on new contracts or receive contract renewals and its competitive position in the bidding process.

The Company’s incurred cost audits by the DCAA have not been concluded for fiscal years 2019, 2020 or 2021.

As of June 30, 2021, the DCAA had completed its incurred cost audit for fiscal years 2004 and 2016 and approved the Company’s incurred costs for those fiscal years, as well as approved the Company’s incurred costs for fiscal years 2005 through 2015, 2017 and 2018 without further audit based on the determination of low risk.

Although the Company has recorded contract revenues subsequent to fiscal year 2018 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected.

As of June 30, 2021 and March 31, 2021, the Company had $ 10.9 million and $ 10.3 million, respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S.

Government cost reimbursable contracts.

G overnment agencies or if allegations of impropriety are made against it, the Company could suffer serious harm to its business or its reputation, including its ability to bid on new contracts or receive contract renewals and its competitive position in the bidding process.

The Company’s incurred cost audits by the DCAA have not been concluded for fiscal year s 2020 or 202 1 .

As of September 30, 2021 , the DCAA had completed its incurred cost audit for fiscal year s 200 4 , 2016 and 2019 and approved the Company’s incurred costs for those fiscal years , as well as approved the Company’s incurred costs for fiscal years 2005 through 2 015, 2017 and 2018 without further audit based on the determination of low risk.

Althoug h the Company has recorded contract revenues subsequent to fiscal year 201 9 based upon an estimate of costs that the Company believes will be approved upon final audit or review, the Company does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Company’s estimates, its profitability would be adversely affected.

As of September 30, 2021 and March 31, 2021 , the Company had $ 10.9 million and $ 10.3 million , respectively, in contract-related reserves for its estimate of potential refunds to customers for potential cost adjustments on several multi-year U.S.

G overnment cost reimbursable contracts.

This reserve is classified as either an element of accrued liabilities or as a reduction of unbilled accounts receivable based on the status of the related contracts.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 9 — Income Taxes

4 unchanged sentences

This variability provides an unreliable estimate of the annual effective tax rate.

As a result, and in accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision for income taxes for the three months ended June 30, 2021 and 2020 by applying the actual effective tax rate to the income (loss) for the three-month periods.

For the three months ended June 30, 2021, the Company recorded an income tax benefit of $ 4.1 million resulting in an effective tax benefit rate of 29 %.

The effective tax benefit rate for the period differed from the U.S.

statutory rate primarily due to the benefit of federal and state R&D tax credits and the reversal of a deferred tax liability recorded for Euro Infrastructure Co.’s outside basis difference upon assertion to indefinitely reinvest future earnings.

For the three months ended June 30, 2020, the Company recorded an income tax benefit of $ 5.7 million resulting in an effective tax benefit rate of 39 %.

The effective tax benefit rate for the period differed from the U.S.

As a result, and in accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company has computed its provision for income taxes for the three and six months ended September 30, 2021 and 2020 by applying the actual effective tax rate to the income (loss) for the three-month and six-month periods.

For the three and six months ended September 30, 2021, the Company recorded an income tax benefit of $ 2.9 million and $ 7.0 million, respectively, resulting in effective tax benefit rates of negative 126 % and negative 42 %, respectively.

The effective tax rates for such periods differed from the U.S.

statutory rate primarily due to the benefit of federal and state R&D tax credits and in the six months ended September 30, 2021, due to the reversal of a deferred tax liability recorded for Euro Infrastructure Co.’s outside basis difference upon assertion made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings.

For the three and six months ended September 30, 2020, the Company recorded an income tax benefit of an insignificant amount and $ 6.4 million, respectively, resulting in effective tax benefit rates of negative 23 % and positive 56 %, respectively.

The effective tax rates for the periods differed from the U.S.

statutory rate due primarily to the benefit of federal and state R&D tax credits.

1 unchanged sentence

In the event that the Company’s estimate of taxable income is less than that required to utilize the full amount of any deferred tax asset, a valuation allowance is established, which would cause a decrease to income in the period such determination is made.

For the three months ended June 30, 2021, the Company’s gross unrecognized tax benefits increased by $ 1.6 million, including interest and penalties of an insignificant amount, which were included as a component of the provision for income taxes.

For the three and six months ended September 30, 2021, the Company’s gross unrecognized tax benefits increased by $ 4.8 million and $ 6.4 million, respectively, including interest and penalties of an insignificant amount, which were

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

included as a component of the provision for income taxes .

In the next 12 months it is reasonably possible that the amount of unrecognized tax benefits will not change significantly.

13 unchanged sentences

was presented at cost of investment plus its accumulated proportional share of income or loss, including amortization of the difference in the historical basis of the Company’s contribution, less any distributions it has received.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The difference between the Company’s carrying value of its investment in Euro Infrastructure Co.

14 unchanged sentences

The Company’s share of earnings on its investment in Euro Infrastructure Co.

was an insignificant amount through the purchase date for the three months ended June 30, 2021 and for the three months ended June 30, 2020, consisting of the Company’s share of equity in Euro Infrastructure Co.’s income (loss), including amortization of the difference in the historical basis of the Company’s contribution.

was no ne and an insignificant amount for the three and six months ended September 30, 2021, respectively, and an insignificant amount for both the three and six months ended September 30, 2020, consisting of the Company’s share of equity in Euro Infrastructure Co.’s income (loss), including amortization of the difference in the historical basis of the Company’s contribution.

Prior to the purchase of the remaining 51 % interest on April 30, 2021, the Company recorded its proportionate share of the results of Euro Infrastructure Co., and any related basis difference amortization expense, within equity in income of unconsolidated affiliate, net, one quarter in arrears.

3 unchanged sentences

through the purchase date, the Company recorded $ 10.4 million in retained earnings of undistributed cumulative earnings in equity interests, net of tax, as of April 30, 2021.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Related-party transactions

6 unchanged sentences

Three Months Ended

June 30, 2020

Six Months Ended

September 30, 2020

(In thousands)

Revenue – Euro Infrastructure Co.

Expense – Euro Infrastructure Co.

4 unchanged sentences

revenues – Euro Infrastructure Co.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Amount was insignificant.

Note 11 — Segment Information

5 unchanged sentences

The Company’s segments are determined consistent with the way management currently organizes and evaluates financial information internally for making operating decisions and assessing performance.

Segment revenues and operating profits (losses) for the three months ended June 30, 2021 and 2020 were as follows:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Segment revenues and operating profits (losses) for the three and six months ended September 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

(In thousands)

9 unchanged sentences

Elimination of intersegment operating

Segment operating profit (loss) before

corporate and amortization of acquired

intangible assets

Segment operating profit before corporate

and amortization of acquired intangible

Amortization of acquired intangible

Income (loss) from operations

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income from operations

Assets identifiable to segments include:

1 unchanged sentence

The Company’s property and equipment, including its satellites, earth stations and other networking equipment, are assigned to corporate assets as they are available for use by the various segments throughout their estimated useful lives.

Segment assets as of June 30, 2021 and March 31, 2021 were as follows:

June 30, 2021

Segment assets as of September 30, 2021 and March 31, 2021 were as follows:

September 30, 2021

March 31, 2021

6 unchanged sentences

Corporate assets

Other acquired intangible assets, net and goodwill included in segment assets as of June 30, 2021 and March 31, 2021 were as follows:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other acquired intangible assets, net and goodwill included in segment assets as of September 30, 2021 and March 31, 2021 were as follows:

Other Acquired Intangible

June 30, 2021

September 30, 2021

March 31, 2021

June 30, 2021

September 30, 2021

March 31, 2021

3 unchanged sentences

Government systems

Amortization of acquired intangible assets by segment for the three months ended June 30, 2021 and 2020 was as follows:

Amortization of acquired intangible assets by segment for the three and six months ended September 30, 2021 and 2020 was as follows:

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

(In thousands)

4 unchanged sentences

intangible assets

Revenue information by geographic area for the three months ended June 30, 2021 and 2020 were as follows:

Revenues by geographic area for the three and six months ended September 30, 2021 and 2020 were as follows:

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

(In thousands)

customers (each country

individually insignificant)

customers (each country individually insignificant)

Total revenues

Three Months Ended

Six Months Ended

September 30, 2020

(In thousands)

customers (each country individually insignificant)

Total revenues

The Company distinguishes revenues from external customers by geographic area based on customer location.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

N ote 12 — Acquisitions

Note 12 — Acquisitions

Euro Infrastructure Co.

5 unchanged sentences

and foreign income tax purposes.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Prior to the acquisition date, the Company owned a 49 % interest in Euro Infrastructure Co.

9 unchanged sentences

The purchase price allocation is preliminary primarily due to the finalization of the Company’s valuation analysis and review of various tax attributes .

The preliminary purchase price allocation of the acquired assets and assumed liabilities based on the estimated fair values as of April 30, 2021 is as follows:

The preliminary purchase price allocation of the acquired assets and assumed liabilities based on the estimated fair values as of April 30, 2021, slightly adjusted during the second quarter of fiscal year 2022 primarily between goodwill and identifiable intangible assets, is as follows:

(In thousands)

6 unchanged sentences

Amounts assigned to identifiable intangible assets are preliminary and are being amortized on a straight-line basis over their estimated useful lives (which approximates the economic pattern of benefit) and are as follows as of April 30, 2021:

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Estimated Weighted

6 unchanged sentences

As Euro Infrastructure Co.’s results of operations are not material to the Company’s consolidated results of operations, pro forma results of operations for this acquisition have not been presented.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On April 30, 2021, the Company completed the acquisition of all outstanding shares of RigNet, a publicly held leading provider of ultra-secure, intelligent networking solutions and specialized applications.

4 unchanged sentences

The consideration transferred of approximately $ 317.9 million was primarily comprised of $ 207.2 million of the fair value of approximately 4.0 million shares of the Company’s common stock issued at the closing date, $ 107.3 million related to the pay down of outstanding borrowings of RigNet’s revolving credit facility, a de minimis amount in cash consideration in respect of fractional shares to the former shareholders of RigNet and an insignificant amount of other consideration.

In connection with the RigNet acquisition, the Company recorded merger-related transaction costs of approximately $ 6.8 million in the first quarter of fiscal year 2022 in selling, general and administrative expenses.

In connection with the RigNet acquisition, the Company recorded merger-related transaction costs of an insignificant amount and approximately $ 7.1 million, respectively, for the three and six months ended September 30, 2021, included in selling, general and administrative expenses.

The purchase price allocation is preliminary primarily due to the finalization of the Company’s valuation analysis and review of various tax attributes.

10 unchanged sentences

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Estimated Weighted

3 unchanged sentences

Total identifiable intangible assets

In connection with the acquisition, the Company assumed a contingent liability associated with a RigNet predecessor subsidiary.

The consideration is payable in cash or stock at the Company’s discretion (with the intent to pay in cash) and due in September 2021.

At June 30, 2021, the fair value of the maximum remaining earn-out consideration was $ 9.5 million (which represents the achieved maximum pay-out amount due in September 2021) and was recorded in accrued and other liabilities.

In connection with the acquisition, the Company assumed a contingent liability associated with a RigNet predecessor subsidiary of approximately $ 13.8 million, which represented the maximum amount payable under the terms of the agreement.

As of September 30, 2021, no amount remains payable as the maximum amount payable was paid during the first and second quarters of fiscal year 2022.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The condensed consolidated financial statements include the operating results of RigNet from the date of acquisition.

Since the acquisition date, the Company recorded approximately $ 34.0 million in revenue and $ 6.3 million of net losses with respect to the RigNet business primarily in the Company’s satellite services segment (with a portion included in our commercial networks segment) in the condensed consolidated statements of operations.

Since the acquisition date, the Company recorded approximately $ 45.2 million and $ 79.2 million in revenue for the three and six months ended September 30, 2021, respectively, and $ 9.9 million and $ 16.2 million of net losses for the three and six months ended September 30, 2021, respectively, with respect to the RigNet business primarily in the Company’s satellite services segment (with a portion included in its commercial networks segment) in the condensed consolidated statements of operations .

Unaudited Pro Forma Financial Information

1 unchanged sentence

The pro forma information is presented for informational purposes only and may not be indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the related fiscal periods.

The pro forma financial information for the three-month periods ended June 30, 2021, and June 30, 2020 include the business combination accounting effects primarily related to the amortization and depreciation changes from acquired intangible and tangible assets, acquisition-related transaction costs and related tax effects.

The pro forma financial information for the three-month and six-month periods ended September 30, 2021, and September 30, 2020 include the business combination accounting effects primarily related to the amortization and depreciation changes from acquired intangible and tangible assets, acquisition-related transaction costs and related tax effects.

Three Months Ended

June 30, 2021

June 30, 2020

Six Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

(In thousands)

1 unchanged sentence

Net income (loss) attributable to Viasat, Inc.

Note 13 — Subsequent Event

On November 8, 2021, the Company entered into a Share Purchase Agreement to combine with Connect Topco Limited, a private company limited by shares and incorporated in Guernsey (Inmarsat), with the shareholders of Inmarsat and certain management and employees who hold options and shares of a wholly owned subsidiary of Inmarsat whose options and shares will be exchanged for shares of Inmarsat prior to closing (collectively, the Sellers).

Pursuant to the Share Purchase Agreement, the Company will purchase all of the issued and outstanding shares of Inmarsat from the Sellers upon the terms and subject to the conditions set forth in the Share Purchase Agreement.

The total consideration payable by the Company under the Share Purchase Agreement consists of $ 850.0 million in cash, subject to adjustments, and approximately 46.36 million unregistered shares of the Company’s common stock.

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

The Share Purchase Agreement contains certain termination rights for both the Company and certain of the Sellers and further provides that, upon termination of the Share Purchase Agreement under certain circumstances, the Company may be obligated to pay a termination fee of up to $ 200.0 million or to reimburse certain out-of-pocket expenses of certain Sellers up to $ 40.0 million.

The Company has obtained financing commitments for $ 2.3 billion of new debt facilities in connection with the transaction.

The Company also plans to assume $ 2.1 billion in principal amount of Inmarsat senior secured bonds and $ 1.7 billion outstanding under Inmarsat’s $ 2.4 billion senior secured credit facilities.

The Company has also obtained commitments of $ 3.2 billion to backstop certain amendments required under the Credit Facilities and Inmarsat’s $2.4 billion senior secured credit facilities.

Additional information regarding the proposed transaction and Share Purchase Agreement is contained in the Company’s Current Report on Form 8-K filed with the SEC on November 8, 2021.

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-Q

Item 1. Financial Statements