SEC Filing | Viasat, Inc.

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vsat-10q_20201231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020.

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number (000-21767)

VIASAT, INC.

(Exact name of registrant as specified in its charter)

Delaware

33-0174996

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

6155 El Camino Real

Carlsbad, California 92009

(760) 476-2200

(Address of principal executive offices and telephone number)

Securities registered pursuant to Section 12(b) of the Act:

(Title of Each Class)		(Trading Symbol)		(Name of Each Exchange on which Registered)
Common Stock, par value $0.0001 per share		VSAT		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, $0.0001 par value, as of January 22, 2021 was 68,505,328.

VIASAT, INC.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		3
Condensed Consolidated Balance Sheets		3
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)		4
Condensed Consolidated Statements of Cash Flows		5
Condensed Consolidated Statements of Equity		6
Notes to the Condensed Consolidated Financial Statements		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Item 3. Quantitative and Qualitative Disclosures About Market Risk		58
Item 4. Controls and Procedures		59
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		59
Item 1A. Risk Factors		59
Item 6. Exhibits		60
Signatures		61

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

VIASAT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	As of December 31, 2020		As of March 31, 2020
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	317,344	$	304,309
Accounts receivable, net		202,792		330,698
Inventories		334,919		294,416
Prepaid expenses and other current assets		112,548		116,281
Total current assets		967,603		1,045,704

Property, equipment and satellites, net		2,973,733		2,586,735
Operating lease right-of-use assets		331,066		308,441
Other acquired intangible assets, net		11,079		14,439
Goodwill		122,448		121,197
Other assets		842,777		807,352
Total assets	$	5,248,706	$	4,883,868
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	122,342	$	183,601
Accrued and other liabilities		485,565		391,190
Current portion of long-term debt		33,735		29,788
Total current liabilities		641,642		604,579

Senior notes		1,682,523		1,285,497
Other long-term debt		121,225		536,166
Non-current operating lease liabilities		303,950		286,550
Other liabilities		152,040		120,934
Total liabilities		2,901,380		2,833,726
Commitments and contingencies (Note 8)
Equity:
Viasat, Inc. stockholders’ equity
Common stock		7		6
Paid-in capital		2,070,353		1,788,456
Retained earnings		241,707		245,373
Accumulated other comprehensive income (loss)		6,614		(6,048	)
Total Viasat, Inc. stockholders’ equity		2,318,681		2,027,787
Noncontrolling interest in subsidiary		28,645		22,355
Total equity		2,347,326		2,050,142
Total liabilities and equity	$	5,248,706	$	4,883,868

See accompanying notes to the condensed consolidated financial statements.

VIASAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	Three Months Ended						Nine Months Ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
	(In thousands, except per share data)
Revenues:
Product revenues	$	266,514		$	303,090		$	773,128		$	873,535
Service revenues		309,045			285,134			887,197			843,982
Total revenues		575,559			588,224			1,660,325			1,717,517
Operating expenses:
Cost of product revenues		196,895			214,098			576,677			634,113
Cost of service revenues		194,394			190,132			587,494			564,675
Selling, general and administrative		132,394			136,005			378,884			388,528
Independent research and development		28,803			32,164			83,970			99,952
Amortization of acquired intangible assets		1,313			1,856			4,171			5,920
Income from operations		21,760			13,969			29,129			24,329
Other income (expense):
Interest income		114			179			474			1,517
Interest expense		(7,880	)		(9,276	)		(27,194	)		(29,990	)
Income (loss) before income taxes		13,994			4,872			2,409			(4,144	)
(Provision for) benefit from income taxes		(7,008	)		3,911			(573	)		8,731
Equity in income of unconsolidated affiliate, net		774			1,807			788			4,328
Net income		7,760			10,590			2,624			8,915
Less: net income attributable to noncontrolling interest, net of tax		1,000			4,114			6,290			10,713
Net income (loss) attributable to Viasat, Inc.	$	6,760		$	6,476		$	(3,666	)	$	(1,798	)
Basic net income (loss) per share attributable to Viasat, Inc. common stockholders	$	0.10		$	0.10		$	(0.06	)	$	(0.03	)
Diluted net income (loss) per share attributable to Viasat, Inc. common stockholders	$	0.10		$	0.10		$	(0.06	)	$	(0.03	)
Shares used in computing basic net income (loss) per share		67,995			61,813			65,704			61,405
Shares used in computing diluted net income (loss) per share		68,668			62,916			65,704			61,405
Comprehensive income (loss):
Net income	$	7,760		$	10,590		$	2,624		$	8,915
Other comprehensive income (loss), net of tax:
Unrealized gain on hedging, net of tax		—			184			—			232
Foreign currency translation adjustments, net of tax		9,047			(2,371	)		12,662			(6,091	)
Other comprehensive income (loss), net of tax		9,047			(2,187	)		12,662			(5,859	)
Comprehensive income		16,807			8,403			15,286			3,056
Less: comprehensive income attributable to noncontrolling interest, net of tax		1,000			4,114			6,290			10,713
Comprehensive income (loss) attributable to Viasat, Inc.	$	15,807		$	4,289		$	8,996		$	(7,657	)

See accompanying notes to the condensed consolidated financial statements.

VIASAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Nine Months Ended
	December 31, 2020			December 31, 2019
	(In thousands)
Cash flows from operating activities:
Net income	$	2,624		$	8,915
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		241,935			207,950
Amortization of intangible assets		50,181			47,159
Stock-based compensation expense		64,967			64,236
Loss on disposition of fixed assets		29,841			33,578
Other non-cash adjustments		3,611			(9,394	)
Increase (decrease) in cash resulting from changes in operating assets and liabilities:
Accounts receivable		123,374			(23,596	)
Inventories		(39,988	)		(47,897	)
Other assets		24,017			4,075
Accounts payable		(39,004	)		8,384
Accrued liabilities		102,603			16,596
Other liabilities		(6,787	)		(16,644	)
Net cash provided by operating activities		557,374			293,362
Cash flows from investing activities:
Purchase of property, equipment and satellites		(655,672	)		(548,225	)
Cash paid for patents, licenses and other assets		(47,164	)		(49,613	)
Proceeds from insurance claims on ViaSat-2 satellite		—			2,277
Net cash used in investing activities		(702,836	)		(595,561	)
Cash flows from financing activities:
Proceeds from debt borrowings		400,000			110,000
Payments of debt borrowings		(414,604	)		(27,142	)
Payment of debt issuance costs		(5,060	)		(2,479	)
Proceeds from issuance of common stock under equity plans		19,101			38,093
Purchase of common stock in treasury (immediately retired) related to tax withholdings for stock-based compensation		(13,013	)		(28,268	)
Proceeds from common stock issued in private placement, net of issuance costs		174,749			—
Other financing activities		(4,280	)		(1,746	)
Net cash provided by financing activities		156,893			88,458
Effect of exchange rate changes on cash		1,604			(182	)
Net increase (decrease) in cash and cash equivalents		13,035			(213,923	)
Cash and cash equivalents at beginning of period		304,309			261,701
Cash and cash equivalents at end of period	$	317,344		$	47,778
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	55,717		$	17,900
Right-of-use assets obtained in exchange for finance lease liabilities	$	1,931		$	72,711

See accompanying notes to the condensed consolidated financial statements.

VIASAT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

	Viasat, Inc. Stockholders
	Common Stock
	Number of Shares Issued		Amount			Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest in Subsidiary		Total
	(In thousands, except share data)
For the Three Months Ended December 31, 2020
Balance at September 30, 2020		67,532,869	$	7		$	2,047,525		$	234,947	$	(2,433	)	$	27,645	$	2,307,691
Issuance of stock under Employee Stock Purchase Plan		356,523		—			9,895			—		—			—		9,895
Stock-based compensation		—		—			25,199			—		—			—		25,199
RSU awards vesting, net of shares withheld for taxes which have been retired		614,936		—			(12,266	)		—		—			—		(12,266	)
Net income		—		—			—			6,760		—			1,000		7,760
Other comprehensive income, net of tax		—		—			—			—		9,047			—		9,047
Balance at December 31, 2020		68,504,328	$	7		$	2,070,353		$	241,707	$	6,614		$	28,645	$	2,347,326

For the Three Months Ended December 31, 2019
Balance at September 30, 2019		61,352,560	$	6		$	1,751,924		$	237,311	$	1,666		$	14,929	$	2,005,836
Exercise of stock options		33,642		—			2,033		—		—			—			2,033
Issuance of stock under Employee Stock Purchase Plan		145,367		—			9,044		—		—			—			9,044
Stock-based compensation	—			—			25,135		—		—			—			25,135
RSU awards vesting, net of shares withheld for taxes which have been retired		591,689		—	<