What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-08-09 · 289 added, 101 removed, 426 unchanged (48% of the section changed)

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We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words and similar expressions to identify forward-looking statements.

In addition, statements that refer to the impact of the novel coronavirus (COVID-19) pandemic on our business;

In addition, statements that refer to the proposed acquisition of Inmarsat (the Transaction) and any statements regarding the expected timing, benefits, synergies, growth opportunities and other financial and operating benefits thereof, the closing of the Transaction and timing or satisfaction of regulatory and other closing conditions, or the anticipated operations, financial position, liquidity, performance, prospects or growth and scale opportunities of the combined company;

the impact of the novel coronavirus (COVID-19) pandemic on our business;

our expectations regarding an end to the pandemic and a lessening of its effects on our business, including expectations for increased airline passenger traffic and in-flight connectivity (IFC) growth;

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future economic conditions and performance;

the anticipated benefits of our acquisitions RigNet, Inc.

the anticipated benefits of our acquisitions of RigNet, Inc.

(RigNet) and Euro Broadband Infrastructure Sàrl (Euro Infrastructure Co.);

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Factors that could cause actual results to differ materially include:

risks and uncertainties related to the Transaction, including the failure to obtain, or delays in obtaining, required regulatory approvals or clearances;

the risk that any such approval may result in the imposition of conditions that could adversely affect Viasat, the combined company or the expected benefits of the Transaction;

the failure to satisfy any of the closing conditions to the Transaction on a timely basis or at all;

any adverse impact on the business of Viasat or Inmarsat as a result of uncertainty surrounding the Transaction;

the nature, cost and outcome of any legal proceedings related to the Transaction;

the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement for the Transaction, including in circumstances requiring Viasat to pay a termination fee;

the risk that Viasat’s stock price may decline significantly if the Transaction is not consummated;

the failure to obtain the necessary debt financing arrangements set forth in the commitment letters received in connection with the Transaction;

risks that the Transaction disrupts current plans and operations or diverts management’s attention from its ongoing business;

the effect of the announcement of the Transaction on the ability of Viasat to retain and hire key personnel and maintain relationships with its customers, suppliers and others with whom it does business;

the ability of Viasat to successfully integrate Inmarsat operations, technologies and employees;

the ability to realize anticipated benefits and synergies of the Transaction, including the expectation of enhancements to Viasat’s products and services, greater revenue or growth opportunities, operating efficiencies and cost savings;

the ability to ensure continued performance and market growth of the combined company’s business;

our ability to realize the anticipated benefits of the ViaSat-2 and ViaSat-3 class satellites and any future satellite we may construct or acquire;

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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.

different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.

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.

was incorporated in California in 1986, and reincorporated as a Delaware corporation in 1996.

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satellite services, commercial networks and government systems.

Inmarsat Acquisition

On November 8, 2021, we 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, 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 in the Share Purchase Agreement (the Transaction).

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

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

The closing of the 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 Transaction and an amendment to our 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 us and certain of the Sellers and further provides that, upon termination of the Share 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 $2.3 billion of new debt facilities in connection with the Transaction.

We also plan 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.

We have 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.

For more detail about the Transaction, please see our Current Report on Form 8-K filed with the SEC on November 8, 2021.

Other Acquisitions

On April 30, 2021, we completed our acquisition of the remaining 51% interest in Euro Infrastructure Co., a leading KA-SAT satellite broadband internet service provider in Europe, Middle East and Africa (EMEA) from Eutelsat.

The acquisition is expected to facilitate the diversification of our business portfolio in Europe, while establishing operations, distribution and sales of satellite-based broadband services, ahead of the anticipated ViaSat-3 (EMEA) satellite launch.

The acquisition is expected to facilitate the diversification of our business portfolio in Europe, while establishing operations,

distribution and sales of satellite-based broadband services, ahead of the anticipated ViaSat-3 (EMEA) satellite launch.

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 Euro Infrastructure Co.’s cash on hand) and the fair value of previously held equity method investment of approximately $160.4 million.

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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 the three months ended June 30, 2021 were impacted by the pandemic, the impact was not material to our financial position, results of operations or cash flows in such period, with 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 our financial results for the three and six months ended September 30, 2021 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.

We continue to expect our diversified businesses to provide resiliency for the remainder of fiscal year 2022.

Our government systems segment, which represented 41% of our total revenues during the three months ended June 30, 2021, continued to perform in line with our expectations.

Demand for products and services in our government systems segment remained strong despite the evolving COVID-19 pandemic, although our government business continued to experience some administrative delays on certain contractual vehicles as government customers continue to adjust to the challenges inherent in the remote work environment resulting from the COVID-19 pandemic.

Since the onset of pandemic lockdowns in March 2020, we have experienced increased demand for our premium high-speed plans in our fixed broadband services business, reflecting customers’ increased bandwidth needs in a remote working/distance schooling environment.

Our government systems segment, which represented 38% and 39% of our total revenues during the three and six months ended September 30, 2021, respectively, continued to perform in line with our expectations.

Demand for products and services in our government systems segment remained strong despite the COVID-19 pandemic, although our government business continued to experience some administrative delays on certain contractual vehicles as government customers continue to adjust to the challenges inherent in the remote work environment resulting from the COVID-19 pandemic.

During the pandemic, we experienced increased demand for our premium high-speed plans in our fixed broadband services business, reflecting customers’ increased bandwidth needs in a remote working/distance schooling environment.

However, the pandemic also caused a severe decline in global air traffic, which reduced demand for our in-flight services and IFC systems in our satellite services and commercial networks segments, respectively.

While current global airline traffic is still a fraction of pre-pandemic activity, domestic airline traffic continues to show signs of improvement.

As a result, our in-flight services business showed modest improvement in the quarter ended June 30, 2021 compared to the quarter ended March 31, 2021, with increased planes in service and passenger volumes.

While domestic airline traffic has continued to increase during calendar year 2021 (with increased planes in service and higher passenger volumes), global airline traffic is still a fraction of pre-pandemic activity.

We expect to continue to see negative impacts on revenues and operating cash flows from our IFC businesses in the remainder of fiscal year 2022 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.

In fiscal year 2020, prior to the pandemic, less than 10% of our total revenues were generated by services and products provided to commercial airlines reported in our satellite services and commercial networks segments.

effectiveness of containment actions taken, the efficacy and extent of vaccination programs, 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.

The extent of the impact of the COVID-19 pandemic on our business in fiscal year 2022 and potentially 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 efficacy and extent of vaccination programs, 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.

Satellite Services

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In-flight services, which provide industry-leading IFC, wireless in-flight entertainment and aviation software services.

As of June 30, 2021, we had our IFC systems installed and in service on approximately 1,550 commercial aircraft, of which, due to impacts of the COVID-19 pandemic approximately 150 were inactive at quarter end.

As of September 30, 2021, we had our IFC systems installed and in service on approximately 1,700 commercial aircraft, of which, due to impacts of the COVID-19 pandemic approximately 80 were inactive at quarter end.

We anticipate that approximately 1,070 additional commercial aircraft under existing customer agreements with commercial airlines will be put into service with our IFC systems.

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Since launch, our Community Internet services have reached approximately 2 million people living and working in thousands of rural, suburban and urban communities in Mexico.

W e are trialing services in advance of full commercial launch in other countries, including Brazil, Guatemala and Nigeria.

We are trialing services in advance of full commercial launch in other countries, including Br azil, Guatemala and Nigeria.

Other mobile broadband services, which include high-speed, satellite-based internet services to seagoing vessels (such as energy offshore vessels, cruise ships, consumer ferries and yachts), as well as L-band managed services enabling real-time machine-to-machine (M2M) position tracking, management of remote assets and operations, and visibility into critical areas of the supply chain.

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Sources of Revenues

Our satellite services segment revenues are primarily derived from our fixed broadband services and in-flight services.

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

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 89% and 85% of our total revenues for these segments for the three months ended June 30, 2021 and 2020, respectively.

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

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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% and 27% of our total revenues for the three months ended June 30, 2021 and 2020, respectively.

Revenues for our funded development from our customer contracts were approximately 23% of our total

revenues for both the three months ended September 30, 2021 and 2020 , and approximately 2 3 % and 25 % of our total revenue s for the six months ended September 30, 2021 and 2020 , respectively .

We also incur independent research and development (IR&D) expenses, which are not directly funded by a third party.

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

IR&D expenses were approximately 5% of total revenues during both the three months ended June 30, 2021 and 2020.

IR&D expenses were approximately 6% and 5% of total revenues during the three months ended September 30, 2021 and 2020, respectively, and approximately 5% of total revenues during both the six months ended September 30, 2021 and 2020.

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

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These contracts typically require payment by the customer upon passage of control and determining the point at which control is transferred may require judgment.

To identify the point at which control is transferred to the customer, we consider indicators that include, but are not limited to, whether (1) we have the present right to payment for the asset, (2) the customer has legal title to the asset, (3) physical possession of the asset has been transferred to the customer, (4) the

customer has the significant risks and rewards of ownership of the asset, and (5) the customer has accepted the asset.

For product revenues, control generally passes to the customer upon delivery of goods to the customer.

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The pricing for non-U.S.

Government contracts is based on the specific negotiations with each customer.

Government contracts is based on the specific negotiations with

each customer.

Under the typical payment terms of our U.S.

Government fixed-price contracts, the customer pays us either performance-based payments (PBPs) or progress payments.

G overnment fixed-price contracts, the customer pays us either performance-based payments (PBPs) or progress payments.

PBPs are interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones.

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Because the customer can often retain a portion of the contract price until completion of the contract, our U.S.

Government fixed-price contracts generally result in revenue recognized in excess of billings which we present as unbilled accounts receivable on the balance sheet.

G overnment fixed-price contracts generally result in revenue recognized in excess of billings which we present as unbilled accounts receivable on the balance sheet.

Amounts billed and due from our customers are classified as receivables on the balance sheet.

The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer.

Government cost-type contracts, the customer generally pays us for our actual costs incurred within a short period of time.

Government contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment.

G overnment cost-type contracts, the customer generally pays us for our actual costs incurred within a short period of time.

G overnment contracts, we typically receive interim payments as work progresses, although for some contracts, we may be entitled to receive an advance payment.

We recognize a liability for these advance payments in excess of revenue recognized and present it as collections in excess of revenues and deferred revenues on the balance sheet.

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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.

A one percent variance in our future cost estimates on open fixed-price contracts as of June 30, 2021 would change our income (loss) before income taxes by an insignificant amount.

A one percent variance in our future cost estimates on open fixed-price contracts as of September 30, 2021 would change our income (loss) before income taxes by an insignificant amount.

The evaluation of transaction price, including the amounts allocated to performance obligations, may require significant judgments.

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Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred.

Lease expense for finance leases consists of the depreciation of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement.

Lease expense for finance leases consists of the depreciation of asset s obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement.

For both operating and finance leases, lease payments are allocated between a reduction of the lease liability and interest expense.

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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 the three months ended June 30, 2021 and 2020.

No material impairments were recorded by us for the three and six months ended September 30, 2021 and 2020.

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.

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Income taxes and valuation allowance on deferred tax assets

Management evaluates the realizability of our deferred tax assets and assesses the need for a valuation allowance on a quarterly basis to determine if the weight of available evidence suggests that an additional valuation allowance is

In accordance with the authoritative guidance for income taxes (ASC 740), net deferred tax assets are reduced by a valuation allowance if, based on all the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

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 $23.5 million fro m $ 4 7 .

1 million at March 31, 2021 to $ 70 .

6 million at June 30, 2021 .

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

Our valuation allowance against deferred tax assets increased from $47.1 million at March 31, 2021 to $66.0 million at September 30, 2021.

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.

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Three Months Ended

Six Months Ended

September 30,

Product revenues

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Amortization of acquired intangible assets

Income (loss) from operations

Income from operations

Interest expense, net

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Net income (loss) attributable to Viasat, Inc.

Three Months Ended June 30, 2021 vs.

Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 vs.

Three Months Ended September 30, 2020

Three Months Ended

(In millions, except percentages)

September 30,

Product revenues

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Total revenues

Our total revenues grew by $134.4 million as a result of a $91.7 million increase in service revenues and a $42.6 million increase in product revenues.

The service revenue increase was due to increases of $72.1 million in our satellite services segment, $14.6 million in our government systems segment and $5.0 million in our commercial networks segment.

The product revenue increase was driven primarily by an increase of $46.4 million in our commercial networks segment, partially offset by a $3.8 million decrease in our government systems segment.

Our total revenues increased by $147.1 million as a result of a $94.4 million increase in service revenues and a $52.7 million increase in product revenues.

The service revenue increase was driven by increases of $84.2 million in our satellite services segment, $6.4 million in our government systems segment and $3.8 million in our commercial networks segment.

The product revenue increase was driven primarily by a $52.2 million increase in our commercial networks segment.

Cost of revenues

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(In millions, except percentages)

September 30,

Cost of product revenues

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The increase in cost of service revenues was partially offset by improved margins, primarily driven by our IFC services in our satellite services segment.

The cost of product revenue increase primarily related to increased product revenues, causing a $32.0 million increase in cost of product revenues on a constant margin basis, mainly in our commercial networks segment.

The increase in cost of product revenues was mostly driven by increased product revenues, causing a $39.5 million increase in cost of product revenues on a constant margin basis, mainly in our mobile broadband satellite communication systems products in our commercial networks segment.

Selling, general and administrative expenses

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(In millions, except percentages)

September 30,

Selling, general and administrative

The $33.2 million increase in selling, general and administrative (SG&A) expenses reflected an increase in support costs of $25.6 million, which was reflected in all three segments, with the highest increase in our satellite services segment.

The $31.2 million increase in selling, general and administrative (SG&A) expenses reflected an increase in support costs of $19.0 million, reflected mainly in our satellite services and government systems segments.

The increase in SG&A expenses was also driven by $10.3 million of higher selling costs, reflected primarily in our satellite services and government systems segments.

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(In millions, except percentages)

September 30,

Independent research and development

The $6.8 million increase in IR&D expenses was primarily the result of increases in our commercial networks and government systems segments primarily related to an increase in IR&D expenses related to next-generation satellite platforms and payload technologies.

The $13.0 million increase in IR&D expenses was primarily the result of an $8.5 million increase in our commercial networks segment (primarily related to next-generation satellite payload technologies) and a $4.5 million increase in our government systems segment (primarily related to the advancement of integrated government satellite communications platforms).

Amortization of acquired intangible assets

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 12 years.

The $4.4 million increase in amortization of acquired intangible assets in the first quarter of fiscal year 2022 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the acquisition of the remaining 51% interest in Euro Infrastructure Co.

and of RigNet in April 2021.

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

The $6.1 million increase in amortization of acquired intangible assets in the second quarter of fiscal year 2022 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the acquisition of RigNet and of the remaining 51% interest in Euro Infrastructure Co.

in April 2021.

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

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Interest income

The decrease in interest income for the three months ended June 30, 2021 compared to the prior year period was mainly the result of lower average invested cash balances during the first quarter of fiscal year 2022 compared to the prior year period.

The slight decrease in interest income for the three months ended September 30, 2021 compared to the prior year period was mainly the result of lower interest rates and lower average invested cash balances during the second quarter of fiscal year 2022 compared to the prior year period.

Interest expense

The $3.2 million decrease in interest expense for the three months ended June 30, 2021 compared to the prior year period was primarily the result of an increase in the amount of interest capitalized compared to the period year period, partially offset by an increase in interest expense attributable to our 6.500% Senior Notes due 2028 (the 2028 Notes), which were issued in late June 2020.

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

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

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

The $3.7 million decrease in interest expense for the three months ended September 30, 2021 compared to the prior year period was primarily the result of an increase in the amount of interest capitalized during the second quarter of fiscal year 2022 compared to the prior year period, partially offset by an increase in interest expense attributable to higher borrowings under our Revolving Credit Facility compared to the prior year period.

For the three months ended September 30, 2021, we recorded an income tax benefit of $2.9 million, resulting in an effective tax benefit rate of negative 126%.

For the three months ended September 30, 2020, we recorded an income tax benefit of an insignificant amount, resulting in an effective tax benefit rate of negative 23%.

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.

In addition, the effective tax rate for the three months ended June 30, 2021 included a tax benefit for the reversal of a deferred tax liability recorded for Euro Infrastructure Co.’s outside basis difference upon assertion to indefinitely reinvest future earnings.

Ordinarily, the effective tax rate at the end of an interim period is calculated using an estimate of the annual effective tax rate expected to be applicable for the full fiscal year.

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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, we have computed our provision for income taxes for the three months ended June 30, 2021 and 2020 by applying the actual effective tax rates to the income (loss) for the three-month periods.

Segment Results for the Three Months Ended June 30, 2021 vs.

Three Months Ended June 30, 2020

As a result, and in accordance with the authoritative guidance for accounting for income taxes in interim periods, we have computed our provision for income taxes for the three months ended September 30, 2021 and 2020 by applying the actual effective tax rates to the income for the three-month periods.

Segment Results for the Three Months Ended September 30, 2021 vs.

Three Months Ended September 30, 2020

Satellite services segment

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(In millions, except percentages)

September 30,

Segment product revenues

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Total segment revenues

Our satellite services segment revenues increased by $72.1 million due to an increase in service revenues.

The increase in service revenues was primarily attributable to the acquisition of RigNet in April 2021, as well as increases in our in-flight services and fixed broadband businesses.

The acquisition of RigNet contributed approximately $27.5 million of service revenues in the first quarter of fiscal year 2022 since the date of acquisition.

The increase in in-flight service revenue of $19.9 million was driven primarily by an increase in the number of commercial aircraft receiving our in-flight services through our IFC systems, as passenger air traffic increased and aircraft that were previously inactive as a result of the COVID-19 pandemic returned to service.

The increase in fixed broadband service revenues was driven by a higher mix of new and existing subscribers choosing Viasat’s premium highest speed plans.

In addition, the acquisition of the remaining 51% interest in Euro Infrastructure Co.

contributed approximately $8.4 million of service revenues in the first quarter of fiscal year 2022 since the date of its acquisition in April 2021.

Segment operating profit (loss)

Our satellite services segment revenues increased by $84.2 million for the three months ended September 30, 2021 compared to the prior year period due to an increase in service revenues.

The increase in service revenues was primarily attributable to the acquisition of RigNet in the first quarter of fiscal year 2022, as well as increases in our in-flight services and fixed broadband businesses.

The acquisition of RigNet contributed approximately $42.5 million of service revenues in the three months ended September 30, 2021.

The increase in in-flight service revenue of $22.0 million was driven primarily by an increase in the number of commercial aircraft receiving our in-flight services through our IFC systems, as the number of aircraft in service increased, passenger air traffic continued to increase and aircraft that were previously inactive as a result of the COVID-19 pandemic continued to return to service.

The increase in fixed broadband service revenues was primarily attributable to the acquisition of the remaining 51% interest in Euro Infrastructure Co.

during the first quarter of fiscal year 2022, which contributed approximately $11.6 million of service revenues in the second quarter of fiscal year 2022.

In addition, the increase in fixed broadband service revenues was also driven by a higher mix of new and existing subscribers choosing our premium highest speed plans.

Segment operating profit

Three Months Ended

(In millions, except percentages)

Segment operating profit (loss)

September 30,

Segment operating profit

Percentage of segment revenues

The change in our satellite services segment operating loss to an operating profit was driven primarily by higher earnings contributions of $39.9 million, mainly due to an increase in revenues and improved margins from our in-flight services and fixed broadband services, as both businesses continue to scale.

The change from operating loss to operating profit was partially offset by higher SG&A costs of $25.8 million, of which $7.0 million related to the acquisitions of RigNet and Euro Infrastructure Co.

during the first quarter of fiscal year 2022.

The $5.6 million increase in our satellite services segment operating profit was driven primarily by higher earnings contributions of $29.0 million, primarily due to an increase in revenues and improved margins from our in-flight services as the business continues to scale.

The increase in our satellite services segment operating profit was partially offset by higher SG&A costs of $23.5 million (mainly attributable to the acquisition of RigNet during the first quarter of fiscal year 2022).

Commercial networks segment

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(In millions, except percentages)

September 30,

Segment product revenues

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Our commercial networks segment revenues increased by $55.9 million, due to a $52.2 million increase in product revenues and a $3.8 million increase in service revenues.

The increase in product revenues was primarily due to increases of $30.6 million in mobile broadband satellite communication systems products, $11.3 million in antenna systems products and $6.5 million in RigNet products since the date of acquisition.

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

The increase in product revenues was primarily due to increases of $37.9 million in mobile broadband satellite communication systems products, related to increased IFC terminal deliveries as passenger air traffic continued to increase compared to the severe decline in passenger traffic in the prior year period as a result of the COVID-19 pandemic.

There was also an increase of $15.0 million in antenna systems products.

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

Segment operating loss

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(In millions, except percentages)

September 30,

Segment operating loss

Percentage of segment revenues

The $13.7 million reduction in our commercial networks segment operating loss was driven primarily by higher earnings contributions of $18.9 million, primarily due to higher revenues and improved margins in our mobile broadband satellite communications systems products, slightly offset by an increase in IR&D investments.

Our commercial networks segment operating loss was relatively flat when compared to the same period last year.

Our commercial networks segment operating loss experienced higher earnings contributions of $7.9 million, primarily due to higher revenues and improved margins in our mobile broadband satellite communication products, offset by an increase in IR&D expenses (primarily related to next-generation satellite payload technologies).

Government systems segment

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(In millions, except percentages)

September 30,

Segment product revenues

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Total segment revenues

Our government systems segment revenues increased by $10.8 million due to an increase of $14.6 million in service revenues, partially offset by a decrease of $3.8 million in product revenues.

The service revenue increase was primarily due to an $8.1 million increase in government mobile broadband services, a $4.2 million increase in government satellite communication systems services and a $1.9 million increase in cybersecurity and information assurance services.

The decrease in product revenues was mainly due to an $11.9 million decrease in tactical satcom radio products and a $4.3 million decrease in government satellite communication systems products, partially offset by a $9.2 million increase in tactical data link products, a $1.7 million increase in government mobile broadband products and a $1.6 million increase in cybersecurity and information assurance products.

Our government systems segment continued to show some impacts from the pandemic, which has somewhat complicated product manufacturing and shipments, but new government systems segment awards remained very strong in the first quarter of fiscal year 2022.

Our government systems segment revenues increased by $6.9 million due to a $6.4 million increase in service revenues.

The service revenue increase was primarily due to a $4.1 million increase in government mobile broadband services, a $2.7 million increase in government satellite communication systems services, a $1.8 million increase in cybersecurity and information assurance services and a $1.7 million increase in tactical satcom radio services, offset by a $3.5 million decrease in tactical data link services.

The increase in product revenues was mainly due to a $10.9 million increase in tactical data link products, offset by a $7.4 million decrease in government satellite communication systems products and a $3.2 million decrease in government mobile broadband products.

Our government systems segment continued to show some impacts from the COVID-19 pandemic, due to complications in product manufacturing and shipments, but new government systems segment awards remained very strong through the end of the second quarter of fiscal year 2022.

Segment operating profit

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(In millions, except percentages)

September 30,

Segment operating profit

Percentage of segment revenues

The $2.1 million decrease in our government systems segment operating profit was driven by a $5.3 million increase in SG&A costs and a $4.0 million increase in IR&D investments.

The $3.9 million decrease in our government systems segment operating profit was driven by an $8.4 million increase in SG&A costs and a $4.5 million increase in IR&D expenses.

The decrease in operating profit was partially offset by higher earnings contributions of $9.0 million, primarily due to an increase in revenues and improved margins in our tactical data link products.

Six Months Ended September 30, 2021 vs.

Six Months Ended September 30, 2020

Six Months Ended

(In millions, except percentages)

September 30,

Product revenues

Service revenues

Total revenues

Our total revenues grew by $281.4 million as a result of a $186.1 million increase in service revenues and a $95.3 million increase in product revenues.

The service revenue increase was due to increases of $156.4 million in our satellite services segment, $21.0 million in our government systems segment and $8.8 million in our commercial networks segment.

The increase in product revenues was driven primarily by a $98.6 million increase in our commercial networks segment, slightly offset by a $3.3 million decrease in our government systems segment.

Cost of revenues

Six Months Ended

(In millions, except percentages)

September 30,

Cost of product revenues

Cost of service revenues

Total cost of revenues

Cost of revenues increased by $169.5 million due to increases of $95.3 million in cost of service revenues and $74.3 million in cost of product revenues.

The cost of service revenue increase primarily related to increased service revenues, mainly from our in-flight services business, causing a $126.6 million increase in cost of service revenues on a constant margin basis.

The increase in cost of service revenues was partially offset by improved margins in our in-flight services business.

The cost of product revenue increase was due to increased product revenues, causing a $71.5 million increase in cost of product revenues on a constant margin basis, mainly from our mobile broadband satellite communication systems products in our commercial networks segment.

Selling, general and administrative expenses

Six Months Ended

(In millions, except percentages)

September 30,

Selling, general and administrative

The $64.4 million increase in SG&A expenses reflected an increase in support costs of $44.7 million, which was reflected in all three segments, with the highest increase in our satellite services segment.

The increase in SG&A expenses was also driven by higher selling costs of $17.9 million, reflected primarily in our satellite services and government systems segments.

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

Six Months Ended

(In millions, except percentages)

September 30,

Independent research and development

The $19.8 million increase in IR&D expenses was mainly the result of an increase of $11.3 million in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies) and an increase of $8.5 million in our government systems segment (primarily related to the advancement of integrated government satellite communication platforms and tactical satcom radio products).

Amortization of acquired intangible assets

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 12 years.

The $10.5 million increase in amortization of acquired intangible assets in the first six months of fiscal year 2022 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the acquisition of RigNet and of the remaining 51% interest in Euro Infrastructure Co.

in April 2021.

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

(In thousands)

For the six months ended September 30, 2021

Expected for the remainder of fiscal year 2022

Expected for fiscal year 2023

Expected for fiscal year 2024

Expected for fiscal year 2025

Expected for fiscal year 2026

Interest income

The insignificant decrease in interest income for the six months ended September 30, 2021 compared to the prior year period was the result of lower interest rates and lower average invested cash balances during the first six months of fiscal year 2022 compared to the prior year period.

Interest expense

The $6.9 million decrease in interest expense in the six months ended September 30, 2021 compared to the prior year period was primarily due to an increase in the amount of interest capitalized during the first six months of fiscal year 2021 compared to the prior year period, partially offset by an increase in interest expense attributable to our 6.500% Senior Notes due 2028 (the 2028 Notes), which were issued in the first quarter of fiscal year 2021.

For the six months ended September 30, 2021, we recorded an income tax benefit of $7.0 million, resulting in an effective tax benefit rate of negative 42%.

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

statutory rate due primarily 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 made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings.

For the six months ended September 30, 2020, we recorded an income tax benefit of $6.4 million, resulting in an effective tax benefit rate of 56%.

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

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

Ordinarily, the effective tax rate at the end of an interim period is calculated using an estimate of the annual effective tax rate expected to be applicable for the full fiscal year.

However, when a reliable estimate cannot be made, we compute our provision for income taxes using the actual effective tax rate (discrete method) for the year-to-date period.

Our effective tax rate is highly influenced by the amount of our R&D tax credits.

A small change in estimated annual pretax income (loss) can produce a significant variance in the annual effective tax rate given our expected amount of R&D tax credits.

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, we have computed our provision for income taxes for the six months ended September 30, 2021 and 2020 by applying the actual effective tax rates to the income (loss) for the six-month periods.

Segment Results for the Six Months Ended September 30, 2021 vs.

Six Months Ended September 30, 2020

Satellite services segment

Six Months Ended

(In millions, except percentages)

September 30,

Segment product revenues

Segment service revenues

Total segment revenues

Our satellite services segment revenues increased by $156.4 million due to an increase in service revenues.

The increase in service revenues was primarily attributable to the acquisition of RigNet in April 2021, as well as increases in our in-flight services and fixed broadband businesses.

The acquisition of RigNet contributed approximately $69.9 million of service revenues in the six months ended September 30, 2021.

The increase in in-flight service revenue of $38.5 million was driven primarily by an increase in the number of commercial aircraft receiving our in-flight services through our IFC systems, as the number of aircraft in service increased, passenger air traffic increased and aircraft that were previously inactive as a result of the COVID-19 pandemic returned to service.

The increase in fixed broadband service revenues was primarily attributable to the acquisition of the remaining 51% interest in Euro Infrastructure Co., during the first quarter of fiscal year 2022, which contributed approximately $20.0 million of service revenues in the first six months of fiscal year 2022.

The additional increase in fixed broadband services was driven by a higher mix of new and existing subscribers choosing our premium highest speed plans.

Segment operating profit

Six Months Ended

(In millions, except percentages)

September 30,

Segment operating profit

Percentage of segment revenues

The $19.9 million increase in our satellite services segment operating profit was driven primarily by higher earnings contributions of $68.9 million, mainly due to an increase in revenues and improved margins from our in-flight services as the business continued to scale.

The increase in operating profit was offset by higher SG&A costs of $49.3 million, of which $7.5 million related to the acquisition costs of RigNet and Euro Infrastructure Co.

during fiscal year 2022.

Commercial networks segment

Six Months Ended

(In millions, except percentages)

September 30,

Segment product revenues

Segment service revenues

Total segment revenues

Our commercial networks segment revenues increased by $107.4 million, due to a $98.6 million increase in product revenues and a $8.8 million increase in service revenues.

The increase in product revenues was primarily due to increases of $68.5 million in mobile broadband satellite communication systems products, $26.3 million in antenna systems products and $9.3 million in RigNet products in connection with the acquisition of RigNet in the first quarter of fiscal year 2022.

This was slightly offset by a $4.5 million decrease in fixed satellite networks products.

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

Segment operating loss

Six Months Ended

(In millions, except percentages)

September 30,

Segment operating loss

Percentage of segment revenues

The $13.7 million reduction in our commercial networks operating loss was driven primarily by higher earnings contributions of $26.8 million, primarily due to higher revenues and improved margins in our mobile broadband satellite communications systems products, offset by an $11.3 million increase in IR&D expenses (primarily related to next-generation satellite payload technologies).

Government systems segment

Six Months Ended

(In millions, except percentages)

September 30,

Segment product revenues

Segment service revenues

Total segment revenues

Our government systems segment revenues increased by $17.7 million due to an increase of $21.0 million in service revenues, partially offset by a $3.3 million decrease in product revenues.

The service revenue increase was primarily due to a $12.1 million increase in government mobile broadband services, a $7.0 million increase in government satellite communication systems services, a $3.7 million increase in cybersecurity and information assurance services and a $3.1 million increase in tactical satcom radio services.

The product revenue decrease was primarily driven by an $11.7 million decrease in government satellite communication systems products, an $11.1 million decrease in tactical satcom radio products and a $1.5 million decrease in government mobile broadband products.

The decrease in product revenues was partially offset by an increase of $20.1 million in tactical data link products.

Segment operating profit

Six Months Ended

(In millions, except percentages)

September 30,

Segment operating profit

Percentage of segment revenues

The $6.0 million decrease in our government systems segment operating profit was driven by a $13.7 million increase in SG&A costs and an $8.5 million increase in IR&D investments.

The decrease in operating profit was partially offset by higher earnings contributions of $16.2 million, primarily due to an increase in revenues in our tactical data link products and government mobile broadband services.

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

June 30, 2021

As reflected in the table below, our overall firm and funded backlog increased during the first six months of fiscal year 2022.

September 30, 2021

March 31, 2021

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The firm backlog does not include contract options.

Of the $2.2 billion in firm backlog, a little over half is expected to be delivered during the next 12 months, with the balance delivered thereafter.

Of the $2.3 billion in firm backlog, approximately half 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 June 30, 2021, our IFC systems were installed and in service on approximately 1,550 commercial aircraft, of which, due to impacts of the COVID-19 pandemic, approximately 150 were inactive at quarter end.

As of September 30, 2021, our IFC systems were installed and in service on approximately 1,700 commercial aircraft, of which, due to impacts of the COVID-19 pandemic, approximately 80 were inactive at quarter end.

While current global airline traffic is still a fraction of the activity in fiscal year 2020, domestic airline traffic continues to show signs of improvement.

As a result, our in-flight services business showed modest improvement in the quarter ended June 30, 2021, with increased planes in service and passenger volumes.

We expect the negative impact on our IFC business from the pandemic to continue through the remainder of fiscal year 2022 and potentially beyond due to the severe decline in global air traffic and associated grounding of installed aircraft, but to lessen over time with increases in passenger air traffic.

As a result, our in-flight services business showed modest improvement in the three months ended September 30, 2021, with increased planes in service and passenger volumes.

We expect the negative impact on our IFC business from the COVID-19 pandemic to continue through the remainder of fiscal year 2022 and potentially beyond due to the severe decline in global air traffic and associated grounding of installed aircraft, but to lessen over time with increases in passenger air traffic.

We anticipate that approximately 1,070 additional commercial aircraft under existing customer agreements with commercial airlines will be put into service with our IFC systems.

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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 $595.0 million and $736.9 million for the three months ended June 30, 2021 and 2020, respectively.

Our total new awards exclude future revenue under recurring consumer commitment arrangements and were approximately $831.7 million and $1.4 billion for the three and six months ended September 30, 2021, respectively, compared to approximately $730.6 million and $1.5 billion for the three and six months ended September 30, 2020, respectively.

Backlog is not necessarily indicative of future sales.

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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 June 30, 2021, we had $275.7 million in cash and cash equivalents, $388.5 million in working capital, and $320.0 million in principal amount of outstanding borrowings and borrowing availability of $320.3 million under our Revolving Credit Facility.

At September 30, 2021, we had $217.7 million in cash and cash equivalents, $332.1 million in working capital, and $320.0 million in principal amount of outstanding borrowings and borrowing availability of $327.2 million under our Revolving Credit Facility.

At March 31, 2021, we had $295.9 million in cash and cash equivalents, $282.8 million in working capital, and no outstanding borrowings and borrowing availability of $673.7 million under our Revolving Credit Facility.

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

In connection with the Transaction, we have obtained financing commitments for $2.3 billion of new debt facilities.

We also plan 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.

Our future capital requirements will depend upon many factors, including the timing and amount of 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.

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

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.

The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly.

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In our commercial networks segment, cash needs tend to be driven primarily by the type and mix of contracts in backlog, the nature and quality of customers, the timing and amount of investments in IR&D activities (including with respect to next-generation satellite payload technologies) and the payment terms of customers (including whether advance payments are made or customer financing is required).

In our government

systems segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production) and timing of payments (including restrictions on the timing of cash payments under U.S.

G overnment procurement regulations).

In our government systems segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production) and timing of payments (including restrictions on the timing of cash payments under U.S.

Government procurement regulations).

Other factors affecting the cash needs of our commercial networks and government systems segments include contract duration and program performance.

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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.

Cash provided by operating activities for the first three months of fiscal year 2022 was $65.1 million compared to $156.9 million in the prior year period.

Cash provided by operating activities for the first six months of fiscal year 2022 was $227.8 million compared to $333.5 million in the prior year period.

This $105.7 million decrease was primarily driven by a $182.6 million year-over-year increase in cash used to fund net operating assets, partially offset by our operating results (net income adjusted for depreciation, amortization and other non-cash charges) which resulted in $76.9 million of higher cash provided by operating activities year-over-year.

The increase in cash used to fund net operating assets during the first three months of fiscal year 2022 when compared to the prior year period was primarily due to a decrease in cash inflows year-over-year from combined billed and unbilled accounts receivable, net, attributable to billings for IFC terminals in our commercial networks segment in the first quarter of fiscal year 2022 and a decrease in cash inflows year-over-year from our collections in excess of revenues and deferred revenues included in accrued liabilities due to the timing of milestone billings for certain larger development projects in our commercial networks and government systems segments .

Cash used in investing activities for the first three months of fiscal year 2022 was $399.6 million compared to $229.3 million in the prior year period.

The decrease in cash used to fund net operating assets during the first six months of fiscal year 2022 when compared to the prior year period 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 a nd 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 the first six months of fiscal year 2022 was $613.6 million compared to $459.9 million in the prior year period.

This $153.8 million increase in cash used in investing activities year-over-year reflects $138.7 million in cash used for the RigNet and Euro Infrastructure Co.

acquisitions in the first quarter of fiscal year 2022 and an increase of $26.0 million in cash used for construction of satellites.

Cash provided by financing activities for the first three months of fiscal year 2022 was $315.2 million compared to an insignificant amount for the prior year period.

This $315.1 million increase in cash provided by financing activities year-over-year reflects proceeds from borrowings under our Revolving Credit Facility of $320.0 million in the first quarter of fiscal year 2022.

acquisitions in the first quarter of fiscal year 2022 and an increase of $34.1 million in cash used for the construction of earth stations and network operation systems, partially offset by a decrease in cash used for other general purpose equipment.

Cash provided by financing activities for the first six months of fiscal year 2022 was $310.3 million compared to $171.9 million for the prior year period.

This $138.4 million increase in cash provided by financing activities year-over-year reflects proceeds from borrowings under our Revolving Credit Facility of $320.0 million in the first quarter of fiscal year 2022, partially offset by $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) .

Satellite-related activities

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We expect to continue to invest in IR&D at a significant level as we continue our focus on leadership and innovation in satellite and space technologies.

However, the level of investment in a given fiscal year will depend on a variety of factors, including the stage of development of our satellite projects, new market opportunities and our overall operating performance.

Our total capital expenditures in fiscal year 2022 are expected to be higher than fiscal year 2021, as we head into the anticipated launch of the first ViaSat-3 satellite and continue to invest in the second and third ViaSat-3 satellites, as well as increase ground network investments related to international expansion.

However, the level of investment in a given fiscal year will depend on a variety of factors,

including the stage of development of our satellite projects, new market opportunities and our overall operating performance.

Our total capital expenditures i n fiscal year 2022 are expected to be higher than fiscal year 2021 , in light of the anticipated launch of the first ViaSat-3 satellite and as we continue to invest in the second and third ViaSat-3 satellites, as well as increase d ground network investments related to international expansion and initial expenditures on our ViaSat-4 satellite program .

Long-Term Debt

As of June 30, 2021, the aggregate principal amount of our total outstanding indebtedness was $2.2 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), $320.0 million in principal amount of outstanding borrowings under our $700.0 million Revolving Credit Facility, $88.4 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility with a maturity date of October 15, 2025 (together with the Revolving Credit Facility, the Credit Facilities) and $54.0 million of finance lease obligations.

As of September 30, 2021, the aggregate principal amount of our total outstanding indebtedness was $2.2 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), $320.0 million in principal amount of outstanding borrowings under our $700.0 million Revolving Credit Facility, $88.4 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility with a maturity date of October 15, 2025 (together with the Revolving Credit Facility, the Credit Facilities) and $51.1 million of finance lease obligations.

For information regarding our Credit Facilities and Notes, refer to Note 6 – Senior Notes and Other Long-Term Debt to our condensed consolidated financial statements.

Contractual Obligations

The following table sets forth a summary of our obligations at June 30, 2021:

The following table sets forth a summary of our obligations at September 30, 2021:

For the Fiscal Years Ending

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Purchase commitments including satellite-related

To the extent that the interest rate is variable and ultimate amounts borrowed under the Revolving Credit Facility may fluctuate, amounts reflected represent estimated interest payments on our current outstanding balances based on the weighted average effective interest rate at June 30, 2021 until the maturity date in January 2024.

To the extent that the interest rate is variable and ultimate amounts borrowed under the Revolving Credit Facility may fluctuate, amounts reflected represent estimated interest payments on our current outstanding balances based on the weighted average effective interest rate at September 30, 2021 until the maturity date in January 2024.

We purchase components from a variety of suppliers and use several subcontractors and contract manufacturers to provide design and manufacturing services for our products.

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Consequently, only a portion of our reported purchase commitments arising from these agreements are firm, non-cancelable and unconditional commitments.

Our condensed consolidated balance sheets included $165.0 million and $137.4 million of “other liabilities” as of June 30, 2021 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 and our long-term warranty obligations.

Our condensed consolidated balance sheets included $163.9 million and $137.4 million of “other liabilities” as of September 30, 2021 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, our long-term warranty obligations and deferred income taxes.

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 “Satellite performance incentives”), these remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain.

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Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements at June 30, 2021 as defined in Regulation S-K Item 303(a)(4) other than as discussed under “Contractual Obligations” above or disclosed in the notes to our condensed consolidated financial statements included in this report or in our Annual Report on Form 10-K for the year ended March 31, 2021.

We had no material off-balance sheet arrangements at September 30, 2021 as defined in Regulation S-K Item 303(a)(4) other than as discussed under “Contractual Obligations” above or disclosed in the notes to our condensed consolidated financial statements included in this report or in our Annual Report on Form 10-K for the year ended March 31, 2021.

Recent Authoritative Guidance

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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 2. Management’s Discussion and Analysis