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What changed in VIASAT INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of VIASAT INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+438 added−410 removedSource: 10-K (2023-05-22) vs 10-K (2022-05-31)

Top changes in VIASAT INC's 2023 10-K

438 paragraphs added · 410 removed · 337 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

155 edited+29 added−33 removed166 unchanged
Biggest changeExecutive Officers Set forth below is information concerning our executive officers and their ages: Name Age Position Mark Dankberg 67 Executive Chairman Richard Baldridge 64 President & Chief Executive Officer and Board Director Doug Abts 48 Senior Vice President, Strategic Planning and Corporate Development Robert Blair 48 Senior Vice President, General Counsel and Secretary Girish Chandran 57 Vice President and Chief Technical Officer Evan Dixon 41 President, Global Fixed Broadband James Dodd 60 Senior Vice President and President, Global Enterprise & Mobility Shawn Duffy 52 Senior Vice President and Chief Financial Officer Kevin Harkenrider 66 Executive Vice President and Chief Operating Officer Melinda Kimbro 49 Senior Vice President, People & Culture and Chief People Officer Keven Lippert 50 Executive Vice President, Strategic Initiatives and Chief Commercial Officer Craig Miller 50 President, Government Systems Mark Miller 62 Executive Vice President and Chief Technical Officer Krishna Nathan 60 Chief Information Officer David Ryan 67 Senior Vice President and President, Space & Commercial Networks Mark Dankberg is a founder of Viasat and has served as Executive Chairman since November 2020, and previously served as Chairman of the Board and Chief Executive Officer of Viasat since its inception in May 1986.
Biggest changeGuru Gowrappan 42 President Kevin Harkenrider 67 Executive Vice President and Chief Operating Officer Keven Lippert 51 Executive Vice President, Strategic Initiatives and Chief Commercial Officer Craig Miller 51 President, Government Systems Mark Miller 63 Executive Vice President and Chief Technical Officer Krishna Nathan 61 Chief Information Officer David Ryan 68 Senior Vice President and President, Space & Commercial Networks Mark Dankberg is a founder of Viasat and has served as Chairman of the Board and Chief Executive Officer since its inception in May 1986, except for the period from November 2020 to June 2022 when he served as Executive Chairman.
In February 2015, the FCC adopted new rules intended to preserve the openness of the internet, a concept generally referred to as “net neutrality” or “open internet.” The FCC’s “net neutrality” rules, among other things, prohibited all ISPs from: (i) blocking access to legal content, applications, services, or non-harmful devices (subject to an 18 exception for “reasonable network management”); (ii) impairing or degrading lawful internet traffic on the basis of content, applications, services, or non-harmful devices (subject to the same exception); (iii) favoring some lawful internet traffic over other lawful traffic in exchange for consideration of any kind whatsoever; and (iv) unreasonably interfering with or unreasonably disadvantaging the ability of end users to access content or the ability of content providers to access end users (again subject to the exception for “reasonable network management”).
In February 2015, the FCC adopted new rules intended to preserve the openness of the internet, a concept generally referred to as “net neutrality” or “open internet.” The FCC’s “net neutrality” rules, among other things, prohibited all ISPs from: (i) blocking access to legal content, applications, services, or non-harmful devices (subject to an exception for “reasonable network management”); (ii) impairing or degrading lawful internet traffic on the basis of content, applications, services, or non-harmful devices (subject to the same exception); (iii) favoring some lawful internet traffic over other lawful traffic in exchange for consideration of any kind whatsoever; and (iv) unreasonably interfering with or unreasonably disadvantaging the ability of end users to access content or the ability of content providers to access end users (again subject to the exception for “reasonable network management”).
The flexibility, high data throughput and broad geographic coverage area of our ViaSat-2 and our even more powerful ViaSat-3 class satellites (once in service), combined with our ability to dynamically allocate capacity based on demand, enable us to support a wide range of high-speed broadband services addressing multiple markets, provide innovative new services creating new market opportunities, tailor our service offerings to market needs, and compete more effectively in the markets we serve. • Diverse Portfolio of Market-Leading Military and Government Offerings.
The flexibility, high data throughput and broad geographic coverage area of our ViaSat-2 and our even more powerful ViaSat-3 class satellites (once in commercial service), combined with our ability to dynamically allocate capacity based on demand, enable us to support a wide range of high-speed broadband services addressing multiple markets, provide innovative new services creating new market opportunities, tailor our service offerings to market needs, and compete more effectively in the markets we serve. • Diverse Portfolio of Market-Leading Military and Government Offerings.
We design, develop and produce space system solutions for multiple orbital regimes, including geostationary (GEO), medium earth orbit (MEO) and low earth orbit (LEO). Our products, systems and solutions are generally developed through a combination of customer and discretionary internal research and development (R&D) funding, and products are often linked through common underlying technologies, customer applications and market relationships.
We design, develop and produce space system solutions for multiple orbital regimes, including geostationary (GEO), medium earth orbit (MEO) and low earth orbit (LEO). Our products, systems and solutions are generally developed through a combination of customer funding and discretionary internal research and development (R&D) funding, with products often linked through common underlying technologies, customer applications and market relationships.
For example, during fiscal year 2021, revenue impacts to our commercial aviation business in our satellite services and commercial networks segments resulting from the global disruption in the airline industry caused by the COVID-19 pandemic were offset by strong demand in our fixed broadband services business and other parts of our business. • Broad Array of Broadband Service Offerings, Tailored to Market Demand .
For example, during fiscal year 2021, revenue impacts to our commercial aviation business in our satellite services and commercial networks segments resulting from the global disruption in the airline industry caused by the COVID-19 pandemic were offset by strong demand in our fixed broadband services business and other parts of our business. 9 • Broad Array of Broadband Service Offerings, Tailored to Market Demand .
Our future revenues and income could be materially affected by changes in government procurement policies and related 12 oversight, a reduction in expenditures for the products and services we provide, and other risks generally associated with federal government contracts. We provide products under federal government contracts that usually require performance over a period of several months to multiple years.
Our future revenues and income could be materially affected by changes in government procurement policies and related oversight, a reduction in expenditures for the products and services we provide, and other risks generally associated with federal government contracts. We provide products and services under federal government contracts that usually require performance over a period of several months to multiple years.
This is an ongoing effort that will continue to be an investment and nurture opportunity for us. 10 • Continue to Expand into New Markets and Geographies o Enter and Disrupt New and Adjacent Markets through Technology Innovation: We continue to create or address new and adjacent markets using our technological advancements to disrupt existing business models and drive shifts in target markets or user demand.
This is an ongoing effort that will continue to be an investment and nurture opportunity for us. • Continue to Expand into New Markets and Geographies o Enter and Disrupt New and Adjacent Markets through Technology Innovation: We continue to create or address new and adjacent markets using our technological advancements to disrupt existing business models and drive shifts in target markets and user demand.
Finally, we expect our ViaSat-3 and ViaSat-4 global constellations will be enablers for the scalable, long-term global expansion of our business, providing the platform for us to deliver high-quality and affordable broadband connectivity worldwide. Demand profile differs by geographic market, reflecting geographic, economic, political, regulatory and other factors.
Finally, we expect our ViaSat-3 and ViaSat-4 global constellations will be enablers for the scalable, long-term global expansion of our business, providing the platform for us to deliver 12 high-quality and affordable broadband connectivity worldwide. Demand profile differs by geographic market, reflecting geographic, economic, political, regulatory and other factors.
Accordingly, while these legal protections are important, they must be supported by other factors such as the expanding knowledge, ability and experience of our personnel, and the continued development of new products and product enhancements. Certain of our products include software or other intellectual property licensed from third parties.
Accordingly, while these legal protections are important, they must be supported by other factors such as the expanding knowledge, ability and experience of our personnel, and the continued development of new products and product enhancements. Certain of our products and services include software or other intellectual property licensed from third parties.
We intend to limit our internal manufacturing capacity to supporting new product development activities, building customized products that need to be manufactured in strict accordance with a customer’s specifications or delivery schedules, and building proprietary, highly sensitive Viasat-designed products and components for use in our proprietary technology platform.
We intend to limit our internal manufacturing capacity to supporting new product development activities, building customized products that need to be manufactured in strict accordance with a customer’s specifications or delivery 17 schedules, and building proprietary, highly sensitive Viasat-designed products and components for use in our proprietary technology platform.
Additionally, due to the nature of commercial 4 airline contracts, there can be no assurance that anticipated IFC services will be activated on all such additional commercial aircraft. • Prepaid Internet Services, which offer innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet.
Additionally, due to the nature of commercial airline contracts, there can be no assurance that anticipated IFC services will be activated on all such additional commercial aircraft. • Prepaid Internet Services, which offer innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet.
In addition to developing our own proprietary high-capacity Ka-band satellite systems, our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services.
In addition to developing our own proprietary high-capacity Ka-band satellite systems, our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and network and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services.
We interact with the FAA regarding aircraft modification through two main activities: (1) supporting Type Certificate (TC) activity with an aircraft original equipment manufacturer (OEM) to obtain linefit certification of our IFC and W-IFE equipment and (2) obtaining a Supplemental Type Certificate (STC) to enable the retrofit of our IFC and W-IFE equipment.
We interact with the FAA regarding aircraft modification through two main activities: (1) supporting Type Certificate (TC) activity with an aircraft original equipment manufacturer (OEM) to obtain linefit installation certification of our IFC and W-IFE equipment and (2) obtaining a Supplemental Type Certificate (STC) to enable the retrofit installation of our IFC and W-IFE equipment.
We own four Ka-band satellites in service — three over North America (our second-generation ViaSat-2 satellite (launched in 2017), our first-generation ViaSat-1 satellite (launched in 2011) and the WildBlue-1 satellite (launched in 2007)), and the KA-SAT satellite (launched in 2010) over EMEA. In addition, we have lifetime leases of Ka-band capacity on two satellites.
We own four Ka-band satellites in commercial service — three over North America (our second-generation ViaSat-2 satellite (launched in 2017), our first-generation ViaSat-1 satellite (launched in 2011) and the WildBlue-1 satellite (launched in 2007)), and the KA-SAT satellite (launched in 2010) over EMEA. In addition, we have lifetime leases of Ka-band capacity on two satellites.
We also seek to maintain our trade secrets and confidential information through nondisclosure policies, the use of appropriate confidentiality agreements and other security measures. We have registered a number of patents and trademarks in the United States and in other countries 13 and have a substantial number of patent filings pending determination.
We also seek to maintain our trade secrets and confidential information through nondisclosure policies, the use of appropriate confidentiality agreements and other security measures. We have registered a number of patents and trademarks in the United States and in other countries and have a substantial number of patent filings pending determination.
By improving satellite speed, availability and geographic coverage area, our ViaSat-2 satellite enabled us to provide compelling premium retail service plans in select markets that can compete against traditional terrestrial broadband service providers and to significantly expand our IFC services business.
By improving satellite speed, capacity, availability and geographic coverage area, our ViaSat-2 satellite enabled us to provide compelling premium retail service plans in select markets that can compete against traditional terrestrial broadband service providers and to significantly expand our IFC services business.
The primary products, systems, solutions and services offered by our commercial networks segment are comprised of: • Mobile Broadband Satellite Communication Systems , which include systems and products designed for use in aircraft and seagoing vessels, such as the IFC systems we install on business and commercial aircraft.
The primary products, systems, solutions and services offered by our commercial networks segment are comprised of: • Mobile Broadband Satellite Communication Systems , which include systems and products designed for use in aircraft, land-mobile and seagoing vessels, such as the IFC systems we install on business and commercial aircraft.
Our range of SATCOM broadband modems, terminals and systems support high-speed broadband and multimedia transmissions over point-to-point, mesh and hub-and-spoke satellite networking systems, and include products designed for manpacks, aircraft, unmanned aerial vehicles (UAVs), seagoing vessels, ground-mobile vehicles and fixed applications. • Secure Networking, Cybersecurity and Information Assurance Products and Services , which provide advanced, high-speed IP-based “Type 1” and High Assurance Internet Protocol Encryption (HAIPE®)-compliant encryption solutions that enable military and government users to communicate information securely over networks, and that protect the integrity of data stored on computers and storage devices.
Our range of SATCOM broadband modems, terminals and systems support high-speed broadband and multimedia transmissions over point-to-point, mesh and hub-and-spoke satellite networking systems, and include products designed for manpacks, aircraft, unmanned aerial vehicles (UAVs), seagoing vessels, ground-mobile vehicles, space-based systems and fixed applications. • Secure Networking, Cybersecurity and Information Assurance Products and Services , which provide advanced, high-speed IP-based “Type 1” and High Assurance Internet Protocol Encryption (HAIPE®)-compliant encryption solutions that enable military and government users to communicate information securely, and that protect the integrity of data stored on computers and storage devices.
Customers of our satellite services segment reflect the diversity in our broadband service offerings and include residential customers, small and medium-sized businesses, enterprise customers, commercial airlines and Prepaid Internet hotspot users. Customers of our fixed broadband services are obtained through either our direct or partner distribution channels.
Customers of our satellite services segment reflect the diversity in our broadband service offerings and include residential customers, small and medium-sized businesses, enterprise customers, commercial airlines and Prepaid Internet users. Customers of our fixed broadband services are obtained through either our direct or partner distribution channels.
All such filings are available free of charge. They are also available free of charge on the SEC’s website at www.sec.gov . We webcast our earnings calls and post the materials used in meetings with members of the investment community on the Investor Relations section of our website.
All such filings are available free of charge. They are also available free of charge on the SEC’s website at www.sec.gov . 23 We webcast our earnings calls and post the materials used in meetings with members of the investment community on the Investor Relations section of our website.
As part of our manufacturing process, we conduct extensive testing and quality control procedures for all products before they are delivered to customers. Contract manufacturers produce products for many different customers and are able to pass on the benefits of large-scale manufacturing to their customers.
As part of our manufacturing process, we conduct extensive testing and quality control procedures for all products before they are delivered to customers. Contract manufacturers produce products for many different customers and pass on the benefits of large-scale manufacturing to their customers.
Higher capacity, more flexible satellites will allow us to offer a broader array of cost-effective, high-quality broadband services that can be tailored to different geographic regions and bandwidth usage demand. o Think Beyond Current Customer Requirements to Open New Markets: In our government systems business, we actively identify market or operational needs that are not currently served by existing communications and encryption products and services, with a view to developing unique or disruptive products and services and creating new addressable markets.
Higher capacity, more flexible satellites will allow us to offer a broader array of cost-effective, high-quality broadband services that can be tailored to different geographic regions and bandwidth usage demands. o Think Beyond Current Customer Requirements to Open New Markets: In our government systems business, we actively identify market or operational needs that are not currently served by existing communications and encryption products and services, with a view to developing unique or disruptive products and services and creating new addressable markets.
Material changes in earth station operations would require prior approval by the FCC. The operation of our earth stations is subject to various license conditions, as well as the technical and operational requirements of the FCC’s rules and regulations. Space Stations.
Material changes in earth station operations would require prior approval by the FCC. The operation of our earth stations is subject to various license conditions, as well as the technical and operational requirements of the FCC’s rules and regulations. 19 Space Stations.
In the United States, the FCC authorizes the launch and operation of commercial spacecraft, and also authorizes non-U.S. licensed spacecraft to be used to serve the United States. The FCC has authorized the use of the ViaSat-1, ViaSat-2, WildBlue-1, Anik F2 and one ViaSat-3 class spacecraft to serve the United States.
In the United States, the FCC authorizes the launch and operation of commercial spacecraft, and also authorizes non-U.S. licensed spacecraft to be used to serve the United States. The FCC has authorized the use of the ViaSat-1, ViaSat-2, WildBlue-1, Anik F2 and one ViaSat-3 class spacecraft (ViaSat-3 Americas) to serve the United States.
To date, these regulations have not had a material effect on our business, as we have neither incurred significant costs to maintain compliance nor to remedy past noncompliance, and we do not expect such regulations to have a material effect on our business in the current fiscal year.
To date, the current regulations have not had a material effect on our business, as we have neither incurred significant costs to maintain compliance nor to remedy past noncompliance, and we do not expect such regulations to have a material effect on our business in the current fiscal year.
In some cases a strategic ally may be the prime contractor for a system or network installation and will subcontract a portion of the project to us. In other cases, 14 the strategic ally may recommend us as the prime contractor for the design and integration of the network.
In some cases a strategic ally may be the prime contractor for a system or network installation and will subcontract a portion of the project to us. In other cases, the strategic ally may recommend us as the prime contractor for the design and integration of the network.
Although we believe the protection afforded by our patents, copyrights, trademarks, trade secrets and contracts has value, the rapidly changing technology in the networking, satellite and wireless communications industries and uncertainties in the legal process make our future success dependent primarily on the innovative skills, technological expertise and management abilities of our employees rather than on the protections afforded by patent, copyright, trademark and trade secret laws and contractual rights.
Although we believe the protection afforded by our patents, copyrights, trademarks, trade secrets and contractual provisions has value, the rapidly changing technology in the networking, satellite and wireless communications industries and uncertainties in the legal process make our future success dependent primarily on the innovative skills, technological expertise and management abilities of our employees rather than on the protections afforded by patent, copyright, trademark and trade secret laws and contractual rights.
The failure to comply with current or future regulations could result in the imposition of substantial fines on us, suspension of production, alteration of our manufacturing processes or cessation of operations.
The failure to comply with current or future laws or regulations could result in the imposition of substantial fines on us, suspension of production, alteration of our manufacturing processes or cessation of operations.
Our service offerings include premium data plans with download speeds of up to 100 Mbps in select areas in the United States. We also offer wholesale and retail fixed broadband services to our distribution partners. • In-Flight Services , which provide industry-leading IFC, wireless in-flight entertainment (W-IFE) and aviation software services to commercial airlines and private business jets.
Our service offerings include premium data plans with download speeds of up to 150 Mbps in select areas in the United States. We also offer wholesale and retail fixed broadband services to our distribution partners. • In-Flight Services , which provide industry-leading IFC, wireless in-flight entertainment (W-IFE) and aviation software services to commercial airlines and private business jets.
However, the timing of installation and entry into service for additional aircraft under existing customer agreements may be delayed due to COVID-19 impacts.
However, the timing of installation and entry into service for additional aircraft under existing customer agreements may be delayed due to lingering COVID-19 impacts.
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.
We believe that our diversification strategy—anchored in a broad portfolio of customer-centric products and services—our vertical integration approach and our ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.
We expect to continue to see some negative impacts on revenues and operating cash flows from our IFC businesses in fiscal year 2023 and potentially beyond, but for the effects to continue to lessen over time with increases in passenger air traffic and the return to service of additional currently inactive aircraft.
We expect to continue to see some negative impacts on revenues and operating cash flows from our IFC businesses in fiscal year 2024 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.
ViaSat-1 was the highest capacity communications satellite at the time of its launch; ViaSat-2 almost doubled the capacity of ViaSat-1; and the ViaSat-3 constellation is anticipated to have approximately eight times more capacity than the capacity of the ViaSat-1 and ViaSat-2 satellites combined and to enable us to deliver affordable connectivity across most of the world. o Customer-Centricity Evolution: We are focused on increasing our customer interactions and have incorporated new technologies, tools and learnings from artificial intelligence and machine learning to enhanced customer intimacy techniques and customer advisory councils.
ViaSat-1 was the highest capacity communications satellite at the time of its launch; ViaSat-2 almost doubled the capacity of ViaSat-1; and the ViaSat-3 constellation is anticipated to have approximately eight times more capacity than the capacity of the ViaSat-1 and ViaSat-2 satellites combined and to enable us to deliver affordable connectivity across most of the world. o Customer-Centricity Evolution: We are focused on continuing to increase our customer interactions and have incorporated new technologies, tools and learnings from artificial intelligence and machine learning to enhanced customer intimacy techniques and customer advisory councils.
Accordingly, we are 19 reliant upon ManSat Limited and Telesat Canada maintaining their respective governmental rights on which our operating rights are based.
Accordingly, we are reliant upon ManSat Limited and Telesat Canada maintaining their respective governmental rights on which our operating rights are based.
We also work with U.S. Government agencies, major airlines and others on multiple continents to help ensure end-users have great — and affordable — broadband experiences on our network. Our ViaSat-3 constellation will help meet increasing end-user demand and the need for global reach.
We also work with U.S. Government agencies, major airlines and others on multiple continents to help ensure end-users have satisfying — and affordable — broadband experiences on our network. Our ViaSat-3 constellation will help meet increasing end-user demand and the need for global reach.
In addition, certain states have established specific consumer privacy and data security requirements, including the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act that will amend the CCPA in January 2023, which combined give California residents, among other things, the right to receive certain disclosures regarding the collection, use, and disclosure of personal information, as well as rights to access, delete, and restrict the sale and sharing of certain personal information collected about them by us and our service providers.
In addition, certain states have established specific consumer privacy and data security requirements, including the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act that amended the CCPA in January 2023, which combined give California residents, among other things, the right to receive certain disclosures regarding the collection, use, and disclosure of personal information, as well as rights to access, delete, and restrict the sale and sharing of certain personal information collected about them by us and our service providers.
Our mobile satellite broadband offerings leverage our innovative satellite technologies and proprietary Ka-band satellite platform, allowing us to provide high-speed, high-quality internet services to government and military aircraft, ships and land vehicles. In September 2018, we were awarded an eight-year, firm fixed-price contract to provide in-flight broadband and connectivity services to U.S. Government Senior Leader and VIP aircraft.
Our mobile satellite broadband offerings leverage our innovative satellite technologies and proprietary Ka-band satellite platforms, allowing us to provide high-speed, high-quality internet services to government and military personnel, aircraft, ships and land vehicles. In September 2018, we were awarded an eight-year, firm fixed-price contract to provide in-flight broadband and connectivity services to U.S. Government Senior Leader and VIP aircraft.
Our R&D efforts are supported by a global employee base that includes approximately 3,400 engineers and a culture that deeply values and supports innovation. o Follow Our Path of Proven Performance: We have an enviable track record for identifying and bringing to market impactful communications technologies in space systems.
Our R&D efforts are supported by a global employee base that includes approximately 3,500 engineers and a culture that deeply values and supports innovation. 11 o Follow Our Path of Proven Performance: We have an enviable track record for identifying and bringing to market impactful communications technologies in space systems.
Our high-capacity, secure mobile broadband products and services are enabled by our next-generation satellite network infrastructure, which will be further enhanced following the launch of our ViaSat-3 constellation. • Government Satellite Communication (SATCOM) Systems , which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems using a range of satellite frequency bands for Command and Control (C2) missions, satellite networking services and network management systems for Wi-Fi and other internet access networks.
Our high-capacity, secure mobile broadband products and services are enabled by our next-generation satellite network infrastructure, which will be further enhanced following the launch of commercial service on our ViaSat-3 constellation. 7 • Government Satellite Communication (SATCOM) Systems , which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems using a range of satellite frequency bands for Command and Control (C2) missions, satellite networking services, and network management systems for Wi-Fi and other internet access networks.
In 2018, ViaSat-2 was selected as a winner in the ‘Space, Platforms’ category of Aviation Week’s 61st Annual Laureate Awards, honoring extraordinary achievements in the global aerospace arena. Our third-generation ViaSat-3 class satellites will offer a new satellite architecture with miniaturized electronics and more productive and efficient antenna designs.
In 2018, ViaSat-2 was selected as a winner in the ‘Space, Platforms’ category of Aviation Week’s 61st Annual Laureate Awards, honoring extraordinary achievements in the global aerospace arena. Our third-generation ViaSat-3 class satellites utilize a new satellite architecture with miniaturized electronics and more productive and efficient antenna designs.
Our fixed broadband services range from premium residential services at high data speeds to Prepaid Internet services designed to provide affordable internet access via satellite-powered centralized community hotspots in countries with significant unserved or underserved populations. Our IFC systems and services support high-speed broadband services for commercial, private and military aircraft around the globe.
Our fixed broadband services range from premium residential services at high data speeds to Prepaid Internet services designed to provide affordable internet access via satellite-powered centralized terminals in countries with significant unserved or underserved populations. Our IFC systems and services support high-speed broadband services for commercial, private and military aircraft around the globe.
However, the flexibility, high data capacity and broad geographic coverage area of our second- and third-generation proprietary Ka-band satellites allow us to tailor our service offerings for the opportunities and needs of different geographic markets. 11 • Prioritize the End-User o Recognize Broadband Connectivity is a Means to an End, not an End in Itself.
However, the flexibility, high bandwidth capacity and broad geographic coverage area of our second- and third-generation proprietary Ka-band satellites allow us to tailor our service offerings for the opportunities and needs of different geographic markets. • Prioritize the End-User o Recognize Broadband Connectivity is a Means to an End, not an End in Itself.
Ahead of the ViaSat-3 constellation launch, we have leveraged third-party partner satellites (such as Telebras in Brazil, Avanti in EMEA, nbn in Australia and China Satcom in China) to create a runway for Viasat to begin offering and trialing service plans internationally as well as build brand presence and name recognition.
Ahead of the launch of commercial service on our ViaSat-3 constellation, we have leveraged third-party partner satellites (such as Telebras in Brazil, Avanti in EMEA, nbn in Australia and China Satcom in China) to create a runway for Viasat to begin offering and trialing service plans internationally as well as build brand presence and name recognition.
Government contractor, we also are able to recover a portion of our IR&D expenses, consisting primarily of salaries and other personnel-related expenses, supplies and prototype materials related to R&D programs. Intellectual Property We seek to establish and maintain our proprietary rights in our technology and products through a combination of patents, copyrights, trademarks, trade secrets and contractual rights.
Government contractor, we may also recover a portion of our IR&D expenses, consisting primarily of salaries and other personnel-related expenses, supplies and prototype materials related to R&D programs. Intellectual Property We seek to establish and maintain our proprietary rights in our technology and products through a combination of patents, copyrights, trademarks, trade secrets and contractual rights.
Our SATCOM systems, products and services are designed to support high-throughput broadband data links, to increase available bandwidth using existing satellite capacity, and to be resilient in order to withstand certain catastrophic events.
Our SATCOM systems, products and services are designed to support high-throughput broadband data links, to increase available bandwidth using existing satellite capacity, and to be resilient to withstand certain catastrophic events.
We actively seek strategic relationships and joint ventures with companies whose financial, marketing, operational or technological resources can accelerate the introduction of new technologies, service offerings and/or the penetration of new markets.
We actively seek strategic relationships and joint ventures with companies whose financial, marketing, operational or technological resources may accelerate the introduction of new technologies, service offerings and/or the penetration of new markets.
Our offerings include fixed broadband services to residential and enterprise customers, market-leading mobility services to aircraft utilizing our IFC systems, and Prepaid Internet services that provide affordable and reliable high-speed connectivity via satellite-powered centralized community hotspots in unserved and underserved areas.
Our offerings include fixed broadband services to residential and enterprise customers, market-leading mobility services to aircraft utilizing our IFC systems, and Prepaid Internet services that provide affordable and reliable high-speed connectivity via satellite-powered centralized terminals in unserved and underserved areas.
Further growth in our in-flight services business is expected to be driven by the installation of our IFC systems on additional commercial aircraft and the expansion of airlines and flight routes covered by the footprint of our satellite fleet following the launch of our ViaSat-3 constellation.
Further growth in our in-flight services business is expected to be driven by the installation of our IFC systems on additional commercial aircraft and the expansion of airlines and flight routes covered by the footprint of our satellite fleet following the commencement of commercial service on our ViaSat-3 constellation.
Ryan held several roles at Northrop Grumman Corporation from 2005 to 2014, including Sector Vice President and General Manager of the Intelligence Systems Division. He also served in various roles at Boeing from 1990 to 2005, including President of Boeing Space Systems International. Mr. Ryan earned a B.S.E.E and an M.E.E degree from Rice University. 24
Ryan held several roles at Northrop Grumman Corporation from 2005 to 2014, including Sector Vice President and General Manager of the Intelligence Systems Division. He also served in various roles at Boeing from 1990 to 2005, including President of Boeing Satellite Systems International. Mr. Ryan earned a B.S.E.E and an M.E.E degree from Rice University. 27
This percentage is set each calendar quarter by the FCC, and currently is 23.8%. Current FCC rules permit us to pass this universal service contribution through to our customers. The FCC has established universal service funding mechanisms to support the provision of voice and broadband services in certain high-cost areas of the United States.
This percentage is set each calendar quarter by the FCC, and currently is 29.0%. Current FCC rules permit us to pass this universal service contribution through to our customers. The FCC has established universal service funding mechanisms to support the provision of voice and broadband services in certain high-cost areas of the United States.
These services support the evolution of digital enablement, and primarily result from our acquisition of RigNet in April 2021. Our ViaSat-3 class satellites are our third-generation, high-capacity Ka-band satellite design and are expected to further improve the speed, availability and cost-efficiency of our proprietary Ka-band satellite network.
These services support the evolution of always-on digital enablement and primarily derive from our acquisition of RigNet in April 2021. Our ViaSat-3 class satellites are our third-generation, high-capacity Ka-band satellite design and are expected to further improve the speed, availability and cost-efficiency of our proprietary Ka-band satellite network.
Our ViaSat-3 class satellites are expected to further drive scale and operational efficiencies through their enhanced ability to efficiently and dynamically match supply and demand through the flexible allocation of capacity by service, time and geography within the satellite footprint, as well as through their expected global geographic reach. • Focus on Relentless Execution o Maintain Focus on Technology Leadership: We continue to focus on R&D to bring high-capacity, high-speed broadband communications to the global market.
Our ViaSat-3 class satellites are expected to further drive scale and operational efficiencies through their enhanced ability to efficiently and dynamically match supply and demand through the flexible allocation of capacity by service, time and geography within the satellite footprint, as well as through their expected global geographic reach. • Focus on Relentless Execution o Maintain Focus on Technology Leadership: We continue to focus on strategic R&D to bring more efficient, effective and customer-centric high-capacity, high-speed broadband communications to the global market.
Our marketing team works closely with our corporate and segment leadership, customer account executives, and business development, sales and operations organizations to increase the awareness of the Viasat brand through a mix of positive program performance, agile, results-oriented multichannel marketing campaigns that reflect new and evolving customer journeys, public relations, paid media, live and virtual trade show participation and conference speaking engagements that keep the market current on our services, products and features.
Our marketing team works closely with our corporate and segment leadership, customer account executives, and business development, sales and operations organizations to increase the awareness and value of the Viasat brand through a mix of positive program performance, agile, results-oriented multichannel marketing campaigns that reflect new and evolving customer journeys, public relations, paid and owned media, live and virtual events, and conference speaking engagements that keep the market current on our services, products and features.
Our marketing team also identifies and sizes new and adjacent target markets for our products and services, creates awareness of our company and our portfolio of offerings, and generates contacts and leads within these targeted markets.
Our marketing team also identifies and sizes new and adjacent target markets for our products and services, evaluates our customer experience, creates awareness of our company and our portfolio of offerings, and generates contacts and leads within these targeted markets.
Other Acquisitions On April 30, 2021, we completed our acquisition of the remaining 51% interest in EBI, a satellite broadband internet service provider in Europe, Middle East and Africa (EMEA), from Eutelsat.
Other Acquisitions On April 30, 2021, we completed our acquisition of the remaining 51% interest in Euro Broadband Infrastructure Sàrl (EBI), a satellite broadband internet service provider in Europe, Middle East and Africa (EMEA), from Eutelsat.
Our business model delivers advanced capabilities significantly faster, at lower lifecycle costs and with lower risk to the customer when compared to traditional defense acquisition programs and timelines. o Target International Expansion. With the impending launch of our ViaSat-3 constellation, we have placed tremendous effort on growing our operations, sales/distribution, customer/partner base and regulatory framework globally.
Our business model delivers advanced capabilities significantly faster, at lower lifecycle costs and with lower risk to the customer when compared to traditional defense acquisition programs and timelines. o Target International Expansion. With the expected upcoming commencement of commercial service on our ViaSat-3 constellation, we have placed tremendous effort on growing our operations, sales/distribution, customer/partner base and regulatory framework globally.
Our portfolio of government and military offerings leverages our technological investments in our commercial business, and includes tactical data links, small satellite development, fixed and mobile satellite broadband systems and services, cybersecurity and information assurance products and services.
Our portfolio of government and military offerings leverages our technological investments in our commercial business, and includes expeditionary tactical gateways, small satellite development, fixed and mobile satellite broadband systems and services, cybersecurity and information assurance products and services.
State laws continue to multiply and evolve, and as various states pass their own comprehensive privacy laws, we and our business customers and partners could be exposed to additional regulatory complexities and obligations.
State laws similar to those in California continue to multiply and evolve, and as various states pass their own comprehensive privacy laws, we and our business customers and partners could be exposed to additional regulatory complexities and obligations.
From August 2012 until April 2013, Ms. Duffy also served as interim Chief Financial Officer. She assumed her current position as Senior Vice President and Chief Financial Officer in June 2014. Prior to joining Viasat, Ms. Duffy was a Senior Manager at Ernst & Young, LLP, serving the technology and consumer product markets. Ms.
Duffy also served as interim Chief Financial Officer. She assumed her current position as Senior Vice President and Chief Financial Officer in June 2014. Prior to joining Viasat, Ms. Duffy was a Senior Manager at Ernst & Young, LLP, serving the technology and consumer product markets. Ms.
We believe our innovative ecosystem of high-capacity Ka-band satellites, ground infrastructure and user terminals provides a vertically integrated end-to-end platform that creates significant synergies in our business and uniquely positions us to drive operational efficiencies and cost-effectively deliver a diverse portfolio of high-speed, high-quality broadband solutions and applications to enterprises, consumers, military and government users.
We believe our innovative ecosystem of high-capacity Ka-band satellites, ground infrastructure and user terminals creates significant synergies in our business and positions us to drive operational efficiencies and cost-effectively deliver a diverse portfolio of high-speed, high-quality broadband solutions and applications to enterprises, consumers, military and government users.
Our ViaSat-2 satellite significantly expanded the geographic coverage area of our broadband services over North and Central America and the primary aeronautical and maritime routes across the Atlantic Ocean, allowing us to bring high-value in-flight services to many more commercial, business and government aircraft within the expanded satellite footprint and launch new, innovative ground-based services in new markets, such as our Prepaid Internet services using satellite-powered community hotspots.
Our ViaSat-2 satellite significantly expanded the geographic coverage area of our broadband services over North and Central America and the primary aeronautical and maritime routes across the Atlantic Ocean, allowing us to bring high-value in-flight services to many more commercial, business and government aircraft within the expanded satellite footprint and launch new, innovative ground-based services in new markets, such as our Prepaid Internet services which offer community hotspots, home broadband and mobile broadband in unserved and underserved areas using satellite-powered centralized terminals.
Mr. Dodd earned an M.B.A. degree from Seattle University and a B.S. degree in Physics from Arkansas State University. 23 Shawn Duffy joined Viasat in 2005 as Corporate Controller. In 2009, she was appointed Viasat’s Vice President and Corporate Controller and in 2012 was appointed Vice President — Corporate Controller and Chief Accounting Officer.
Mr. Dodd earned an M.B.A. degree from Seattle University and a B.S. degree in Physics from Arkansas State University. Shawn Duffy joined Viasat in 2005 as Corporate Controller. In 2009, she was appointed Viasat’s Vice President and Corporate Controller and in 2012 was appointed Vice President — Corporate Controller and Chief Accounting Officer. From August 2012 until April 2013, Ms.
The COVID-19 pandemic continues to impact our mobile broadband satellite communications system business, as global airline traffic has not yet recovered to pre-pandemic levels. • Fixed Broadband Satellite Communication Systems , which include next-generation satellite network infrastructure and ground terminals designed to enable satellite-based broadband access for residential, enterprise and Prepaid Internet hotspot users.
The lingering impacts of the COVID-19 pandemic continue to affect our mobile broadband satellite communications system business, as global airline traffic has not yet recovered to pre-pandemic levels. • Fixed Broadband Satellite Communication Systems , which include next-generation satellite network infrastructure and ground terminals designed to enable satellite-based broadband access for residential, enterprise and Prepaid Internet users.
We have been able to obtain PMA on our entire fleet of current IFC and W-IFE product offerings due to multiple licensing agreements with both OEMs for linefit installations and ODAs for retrofit installations. 20 FAA Part 145 Repair Stations .
We have been able to obtain PMA on all of our current IFC and W-IFE product offerings due to multiple agreements with both major OEMs for linefit installations and ODAs for retrofit installations. FAA Part 145 Repair Stations .
To compete, we emphasize: • the high-speed, high-quality and broad geographic availability of our broadband services; • our deep understanding of our customers’ unique expectations and requirements; • our proven designs and network integration services for complex, customized network needs; • our demonstrated performance in uniquely challenging environments; • the increased bandwidth efficiency offered by our networks, products and services; • our advanced security and information assurance capabilities; • the innovative and flexible features integrated into our products and services; • our network management experience; • our end-to-end network implementation capabilities; • the distinct advantages of satellite data networks; • the technical advantages and advanced features of our antenna systems as compared to our competitors’ offerings; and • the overall cost-effectiveness of our communications systems, products and services.
To compete, we emphasize: • the high-speed, high-quality and broad geographic availability of our broadband services; • our deep understanding of our customers’ unique expectations and requirements; • our proven designs and network integration services for complex, customized network needs; • our demonstrated performance in uniquely challenging environments; • the increased bandwidth efficiency offered by our networks, products and services; • our advanced security and information assurance capabilities; • the innovative and flexible features integrated into our products and services; • our network management experience; • our end-to-end network implementation capabilities; • the distinct advantages of satellite data networks; • the technical advantages and advanced features of our antenna systems as compared to our competitors’ offerings; and • the overall cost-effectiveness of our communications systems, products and services. 16 While we believe we compete successfully on each of these factors, we expect to continue to face intense competition in each of our markets.
There can be no assurance, however, that these rights can be successfully enforced against competitive products in any particular jurisdiction.
There can be no assurance, however, that these rights can be successfully enforced in any particular jurisdiction.
Products and solutions in this category include space-to-earth connectivity systems, ground network infrastructure and user terminals. We also offer related products and services to enterprise customers to address bandwidth constraints, latency and other issues.
Products and solutions in this category include space-to-earth connectivity systems, ground network infrastructure, user terminals and design and implementation for customer telecommunication systems. We also offer related products and services to enterprise customers to address bandwidth constraints and other issues.
In fiscal year 2022, approximately 11% of our total government revenues were generated from cost-reimbursement contracts with the federal government or our prime contractors, less than 1% from time-and-materials contracts and approximately 89% from fixed-price contracts.
In fiscal year 2023, approximately 10% of our total government revenues were generated from cost-reimbursement contracts with the federal government or our prime contractors, less than 1% from time-and-materials contracts and approximately 90% from fixed-price contracts.
We believe the battlefield of the future will require a resilient communications architecture capable of supporting tomorrow’s Multi-Domain Command and Control (MDC2), the Internet of Battlefield Things (IoBT), and high-velocity, data-rich network-centric operations, enabling secure, reliable and ubiquitous connectivity while under attack, on the move or at fixed locations around the globe.
We believe the battlefield of the future will require a resilient communications architecture capable of supporting tomorrow’s Joint All-Domain Command and Control (JADC2) and high-velocity, data-rich network-centric operations, enabling secure, reliable and ubiquitous connectivity while under attack, on the move or at a pause, or at fixed locations around the globe.
In many countries, portions of the spectrum on which we rely also are shared with terrestrial wireless services. 17 If the deployment of new terrestrial or satellite networks results in harmful interference into our satellite operations, or if the implementation of those networks under newly adopted terms and conditions constrains or prohibits the types of spectrum uses for which we have planned in a manner that we do not anticipate, such developments could have a material adverse effect on our business, financial condition and results of operations.
If the deployment of new terrestrial or satellite networks results in harmful interference into our satellite operations, or if the implementation of those networks under newly adopted terms and conditions constrains or prohibits the types of spectrum uses for which we have planned in a manner that we do not anticipate, such developments could have a material adverse effect on our business, financial condition and results of operations.
Our blue-chip customer base includes customers such as the U.S. Government, leading aerospace and defense prime contractors, allied foreign governments, civil agencies, satellite network integrators, large communications service providers, commercial airlines and enterprises requiring complex communications and networking solutions and services. We believe that the credit strength of these key customers helps support more consistent financial performance.
Government, leading aerospace and defense prime contractors, allied foreign governments, civil agencies, satellite network integrators, large communications service providers, commercial airlines and enterprises requiring complex communications and networking solutions and services. We believe that the credit strength of these key customers helps support more consistent financial performance.
From 1995 to 2001, he held several roles, including Vice President of Systems Engineering, at Tiernan Communications Inc. (acquired by Radyne Comstream Inc.), a provider of video compression and transmission solutions. Mr.
Chandran served as Vice President of Engineering at Newtec America Inc., a satellite communications equipment provider. From 1995 to 2001, he held several roles, including Vice President of Systems Engineering, at Tiernan Communications Inc. (acquired by Radyne Comstream Inc.), a provider of video compression and transmission solutions. Mr.
Our proprietary Ka-band satellites are at the core of our technology platform, and we also have access to a number of Ka-band and Ku-band satellites in service globally.
Our proprietary Ka-band satellites are at the core of our technology platform, and we also have access to various Ka-band and Ku-band satellites globally.
The increasing demand for wireless communications has exerted pressure on regulatory bodies worldwide to adopt new standards for these products, generally following extensive investigation and deliberation over competing technologies.
Applicable laws and regulatory requirements vary from country to country, and jurisdiction to jurisdiction. The increasing demand for wireless communications has exerted pressure on regulatory bodies worldwide to adopt new standards for these products, generally following extensive investigation and deliberation over competing technologies.
We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (net of approximately $121.7 million of EBI’s cash on hand, resulting in a cash outlay of approximately $51.0 million).
We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (net of approximately $121.7 million of EBI’s cash on hand, resulting in a cash outlay of approximately $51.0 million). On April 30, 2021, we completed our acquisition of RigNet, Inc.
Government and other military and government users around the world. Our government systems segment offers a broad array of products and services designed to enable the collection and transmission of secure real-time digital information and communications between fixed and mobile command centers, intelligence and defense platforms and individuals in the field. Customers of our government systems segment include the U.S.
Our government systems segment offers a broad array of products and services designed to enable the collection and transmission of secure real-time digital information and communications between fixed and mobile command centers, intelligence and defense platforms and individuals in a dispersed environment. Customers of our government systems segment include the U.S. Department of Defense (DoD), U.S.
In the U.S. residential broadband market, our 8 ViaSat-2 satellite supports retail service plans offering data capacity in select markets of up to 100 Mbps. We expect our ViaSat-3 satellites to support a wide array of premium service offerings in more geographic areas.
In the U.S. residential broadband market, our ViaSat-2 satellite supports retail service plans offering download speeds in selected markets of up to 150 Mbps. We expect our ViaSat-3 satellites to support a wide array of premium service offerings in more geographic areas.
Most of the spectrum on which we rely is shared with other satellite networks, including those operating in different orbits that could cross our orbital location and result in interference conditions.
Most of the spectrum on which we rely is shared with other satellite networks, including those operating in different orbits that could cross our orbital location and result in interference conditions. In many countries, portions of the spectrum on which we rely also are shared with terrestrial wireless services.
In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility, and retained approximately $20.6 million of RigNet’s cash on hand.
(RigNet), a leading provider of ultra-secure, intelligent networking solutions and specialized applications. In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility, and retained approximately $20.6 million of RigNet’s cash on hand.
In particular, audits and reviews have become more rigorous and the standards to which we are held are being more strictly interpreted, increasing the likelihood of an audit or review resulting in an adverse outcome.
Government agencies conducting these audits and reviews have come under increased scrutiny. In particular, audits and reviews have become more rigorous and the standards to which we are held are being more strictly interpreted, increasing the likelihood of an audit or review resulting in an adverse outcome.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

56 edited+16 added−3 removed187 unchanged
Biggest changeWe cannot assure you that we would have sufficient funds to repay all the outstanding amounts under our Credit Facilities or the Indentures, and any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition. 38 Additional Risks Related to the Inmarsat Transaction The Inmarsat Transaction is Subject to Closing Conditions and May Not Be Completed, the Purchase Agreement May Be Terminated in Accordance with its Terms, and We May Be Required to Pay a Termination Fee Upon Termination The Inmarsat Transaction is subject to customary closing conditions that must be satisfied or waived prior to the completion of the Inmarsat Transaction, including receipt of regulatory approvals and clearances and approval by our stockholders of both the issuance of shares of our common stock in the Inmarsat Transaction and an amendment to our certificate of incorporation to increase the number of shares of our common stock authorized for issuance.
Biggest changeAdditional Risks Related to the Inmarsat Transaction The Inmarsat Transaction is Subject to Closing Conditions and May Not Be Completed, the Purchase Agreement May Be Terminated in Accordance with its Terms, and We May Be Required to Pay a Termination Fee Upon Termination The Inmarsat Transaction is subject to customary closing conditions that must be satisfied or waived prior to the completion of the Inmarsat Transaction, including receipt of regulatory approvals and clearances.
Trading prices may continue to fluctuate in response to a number of events and factors, including quarterly variations in operating results (or operating results falling below the expectations of analysts and investors), significant announcements by us or our competitors (including with respect to technological innovations, satellite construction and launch activities, acquisitions and other material transactions), regulatory developments, or changes in market conditions in our industry or the economy as a whole.
Trading prices may continue to fluctuate in response to a number of events and factors, including quarterly variations in operating results (or operating results falling below the expectations of analysts and investors), significant announcements by us or our competitors (including with respect to technological innovations, satellite construction and launch activities, acquisitions and other material transactions), regulatory developments, or changes in 35 market conditions in our industry or the economy as a whole.
In addition, our products are complex and are designed to be deployed across complex networks, which in some cases may include over a million users. Because of the nature of these products, there is no assurance that our 29 pre-shipment testing programs will be adequate to detect all defects.
In addition, our products are complex and are designed to be deployed across complex networks, which in some cases may include over a million users. Because of the nature of these products, there is no assurance that our pre-shipment testing programs will be adequate to detect all defects.
Additionally, we may be required to pay a termination fee of $200.0 million if either we or certain Sellers terminate the Purchase Agreement due to the Inmarsat Transaction not being completed by the long-stop date and at the time of termination the regulatory conditions have not been satisfied.
Additionally, we may be required to pay a termination fee of up to $200.0 million if either we or certain Sellers terminate the Purchase Agreement due to the Inmarsat Transaction not being completed by the long-stop date and at the time of termination the regulatory conditions have not been satisfied.
We assume greater financial risk on fixed-price contracts than on other types of contracts because if we do not anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract, it may significantly reduce our net profit or cause a loss on the contract.
We assume greater financial risk on fixed-price contracts than on other types of contracts because if we do not 33 anticipate technical problems, estimate costs accurately or control costs during performance of a fixed-price contract, it may significantly reduce our net profit or cause a loss on the contract.
We are not currently, nor have we always been, in compliance with all outstanding performance obligations and project milestones in our contracts. We cannot assure you that the other parties 30 to any such contract will not terminate the contract or seek damages from us.
We are not currently, nor have we always been, in compliance with all outstanding performance obligations and project milestones in our contracts. We cannot assure you that the other parties to any such contract will not terminate the contract or seek damages from us.
We generally rely on a combination of patents, copyrights, trademarks and trade secret laws and contractual rights to protect our proprietary rights. We also enter into confidentiality agreements with our employees, consultants and corporate partners, and control access to and distribution of our proprietary information.
We generally rely on a combination of patents, copyrights, trademarks and trade secret laws and contractual 38 rights to protect our proprietary rights. We also enter into confidentiality agreements with our employees, consultants and corporate partners, and control access to and distribution of our proprietary information.
Moreover, spectrum availability varies from country to country, and even within countries, within our service areas. 34 Laws and regulations affecting our business are subject to change in response to industry developments, new technology, and political considerations, among other things.
Moreover, spectrum availability varies from country to country, and even within countries, within our service areas. Laws and regulations affecting our business are subject to change in response to industry developments, new technology, and political considerations, among other things.
Our Term Loan Facility, Revolving Credit Facility and the 2027 Notes are equally and ratably secured by first-priority liens on substantially all of the assets of our company, including the stock of our significant subsidiaries, and the assets of any future subsidiary guarantors.
Our Term Loan Facility, Revolving Credit Facility and the 2027 Notes 40 are equally and ratably secured by first-priority liens on substantially all of the assets of our company, including the stock of our significant subsidiaries, and the assets of any future subsidiary guarantors.
Many of the closing conditions are not within our control. No assurance can be given that the required regulatory approvals and clearances and stockholder approvals will be obtained or that the required conditions to closing will be satisfied in a timely manner or at all.
Many of the closing conditions are not within our control. No assurance can be given that the required regulatory approvals and clearances will be obtained or that the required conditions to closing will be satisfied in a timely manner or at all.
For example, high unemployment levels or energy costs may impact our customer base in our satellite services segment by reducing 26 consumers’ discretionary income and affecting their ability to subscribe for our broadband services.
For example, high unemployment levels or energy costs may impact our customer base in our satellite services segment by reducing consumers’ discretionary income and affecting their ability to subscribe for our broadband services.
Moreover, if the Inmarsat Transaction is not completed for any reason, including because required regulatory approvals and clearances or our stockholder approvals are not obtained, our ongoing businesses may be adversely affected and, without realizing any of the expected benefits of having completed the Inmarsat Transaction, we would be subject to a number of risks, including the following: • we may experience negative reactions from the financial markets, including negative impacts on our stock price; • we may experience negative reactions from our customers, suppliers, distributors and employees; • we will be required to pay our costs relating to the Inmarsat Transaction, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the Inmarsat Transaction is completed; • the Purchase Agreement places certain restrictions on the conduct of our business prior to completion of the Inmarsat Transaction and such restrictions, the waiver of which are subject to the consent of certain of the Sellers, may have prevented us from taking actions during the pendency of the Inmarsat Transaction that would have been beneficial; and • matters relating to the Inmarsat Transaction (including integration planning) will require substantial commitments of time and resources by management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to us as an independent company. 39 We Must Obtain Certain Regulatory Approvals and Clearances to Consummate the Inmarsat Transaction, Which, If Delayed, Not Granted or Granted with Burdensome or Unacceptable Conditions, Could Prevent, Substantially Delay or Impair Consummation of the Inmarsat Transaction, Result in Additional Expenditures of Money and Resources or Reduce the Anticipated Benefits of the Inmarsat Transaction The completion of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances in various jurisdictions.
Moreover, if the Inmarsat Transaction is not completed for any reason, including because required regulatory approvals and clearances are not obtained, our ongoing businesses may be adversely affected and, without realizing any of the expected benefits of having completed the Inmarsat Transaction, we would be subject to a number of risks, including the following: • we may experience negative reactions from the financial markets, including negative impacts on our stock price; • we may experience negative reactions from our customers, suppliers, distributors and employees; • we will be required to pay our costs relating to the Inmarsat Transaction, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the Inmarsat Transaction is completed; • the Purchase Agreement places certain restrictions on the conduct of our business prior to completion of the Inmarsat Transaction and such restrictions, the waiver of which are subject to the consent of certain of the Sellers, may have prevented us from taking actions during the pendency of the Inmarsat Transaction that would have been beneficial; and • matters relating to the Inmarsat Transaction will require substantial commitments of time and resources by management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to us as an independent company. 41 We Must Obtain Certain Regulatory Approvals and Clearances to Consummate the Inmarsat Transaction, Which, If Delayed, Not Granted or Granted with Burdensome or Unacceptable Conditions, Could Prevent, Substantially Delay or Impair Consummation of the Inmarsat Transaction, Result in Additional Expenditures of Money and Resources or Reduce the Anticipated Benefits of the Inmarsat Transaction The completion of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances in various jurisdictions.
Although we expect that the elimination of duplicative costs, as well as the realization of strategic benefits, additional income, synergies and other efficiencies, should allow the combined company to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. ITEM 1B. UNRESOLVE D STAFF COMMENTS None. 40
Although we expect that the elimination of duplicative costs, as well as the realization of strategic benefits, additional income, synergies and other efficiencies, should allow the combined company to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. ITEM 1B. UNRESOLVE D STAFF COMMENTS None. 42
Our commercial networks segment similarly depends on the economic health and willingness of our customers and potential customers to make and adhere to capital and financial commitments to purchase our products and services.
Our commercial networks segment similarly depends on the economic health and willingness of our customers and potential customers to 29 make and adhere to capital and financial commitments to purchase our products and services.
As a result, our customers may discover errors or defects in our hardware or software, or our products may not operate as expected after they have been fully deployed.
As a result, our customers may discover errors or 32 defects in our hardware or software, or our products may not operate as expected after they have been fully deployed.
In particular, we believe our success depends to a significant degree on our ability to attract and retain highly skilled personnel, including our Executive Chairman, Mark Dankberg, and our Chief Executive Officer, Richard Baldridge, and those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes.
In particular, we believe our success depends to a significant degree on our ability to attract and retain highly skilled personnel, including our Chairman of the Board and Chief Executive Officer (Mark Dankberg), our Vice Chairman (Richard Baldridge), and those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes.
For example, between April 1, 2019 and March 31, 2022, the market price of our common stock ranged from $97.31 to $25.10 (the low price occurred during the fourth quarter of fiscal year 2020, during a period when the COVID-19 pandemic drove significant volatility and dislocation in the stock market generally).
For example, between April 1, 2019 and March 31, 2023, the market price of our common stock ranged from $97.31 to $25.10 (the low price occurred during the fourth quarter of fiscal year 2020, during a period when the COVID-19 pandemic drove significant volatility and dislocation in the stock market generally).
A violation of specific laws and regulations could result in the imposition of fines and penalties, the termination of our contracts or debarment from bidding on contracts. 28 Substantially all of our U.S. Government backlog scheduled for delivery can be terminated at the convenience of the U.S. Government because our contracts with the U.S.
A violation of specific laws and regulations could result in the imposition of fines and penalties, the termination of our contracts or debarment from bidding on contracts. 31 Substantially all of our U.S. Government backlog scheduled for delivery can be terminated at the convenience of the U.S. Government because our contracts with the U.S.
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 us, 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. 35 Government agencies.
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 us, 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.
Moreover, the anticipated growth, cost savings, synergies and other benefits of the Inmarsat Transaction or any other 27 transaction we may undertake may not be realized fully, or at all, or may take longer to realize than expected.
Moreover, the anticipated growth, cost savings, synergies and other benefits of the Inmarsat Transaction or any other 30 transaction we may undertake may not be realized fully, or at all, or may take longer to realize than expected.
For example, it could: • make it more difficult for us to satisfy our debt obligations; • increase our vulnerability to general adverse economic and industry conditions; • impair our ability to obtain additional debt or equity financing in the future for working capital, capital expenditures, product development, satellite construction, acquisitions or general corporate or other purposes; • require us to dedicate a material portion of our cash flows to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital needs, capital expenditures, product development, satellite construction, acquisitions and other general corporate purposes; • expose us to variable interest rate risk with respect to borrowings under our Term Loan Facility and Revolving Credit Facility; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a disadvantage compared to our competitors that have less indebtedness; and • limit our ability to adjust to changing market conditions.
For example, it could: • make it more difficult for us to satisfy our debt obligations; • increase our vulnerability to general adverse economic and industry conditions; 39 • impair our ability to obtain additional debt or equity financing in the future for working capital, capital expenditures, product development, satellite construction, acquisitions or general corporate or other purposes, or to refinance existing debt on commercially reasonable terms (or at all); • require us to dedicate a material portion of our cash flows to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital needs, capital expenditures, product development, satellite construction, acquisitions and other general corporate purposes; • expose us to variable interest rate risk with respect to borrowings under our Term Loan Facility and Revolving Credit Facility; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • place us at a disadvantage compared to our competitors that have less indebtedness; and • limit our ability to adjust to changing market conditions.
Those authorities regulate, among other things, the launch and operation of satellites, the use of radio spectrum, the ability to operate satellites at specific orbital locations in space, the licensing of earth stations and other radio transmitters, the provision of communications services, and the design, manufacture and marketing of communications systems and networking infrastructure.
Those authorities regulate, among other things, the launch and operation of satellites, the use of radio spectrum, the ability to operate satellites at specific orbital locations in space, the licensing of earth stations and other radio transmitters, the provision of communications services, privacy and data security, and the design, manufacture and marketing of communications systems and networking infrastructure.
Many of these risks are amplified in new and emerging markets where we do not currently operate or have limited operations, but which present opportunities for international expansion following the launch of our ViaSat-3 global constellation.
Many of these risks are amplified in new and emerging markets where we do not currently operate or have limited operations, but which present opportunities for international expansion following the launch of commercial service on our ViaSat-3 global constellation.
In addition, if we fail to obtain an “adequate” determination of our various accounting and management internal control business systems from applicable U.S.
Government agencies. In addition, if we fail to obtain an “adequate” determination of our various accounting and management internal control business systems from applicable U.S.
Launch vehicles may also under perform, in which case the satellite may still be able to be placed into service by using its onboard propulsion systems to reach the desired orbital location, but this would cause a reduction in its useful life.
Launch vehicles may also underperform, in which case the satellite may still be able to be placed into service by using its onboard propulsion systems to reach the desired orbital location, but this would cause a reduction in its useful life.
Our Development Contracts May Be Difficult for Us to Comply with and May Expose Us to Third-Party Claims for Damages, and We May Experience Losses from Fixed-Price Contracts We are often party to government and commercial contracts involving the development of new products. We derived approximately 23% of our total revenues for fiscal year 2022 from these development contracts.
Our Development Contracts May Be Difficult for Us to Comply with and May Expose Us to Third-Party Claims for Damages, and We May Experience Losses from Fixed-Price Contracts We are often party to government and commercial contracts involving the development of new products. We derived approximately 16% of our total revenues for fiscal year 2023 from these development contracts.
Moreover, acquisitions like the Inmarsat Transaction are frequently subject to litigation or other legal proceedings, including actions alleging that our board of directors breached their fiduciary duties to our stockholders by entering into the Purchase Agreement. Litigation can be expensive, lengthy and disruptive to normal business operations, including through the possible diversion of company resources or distraction of key personnel.
Moreover, significant transactions like the Inmarsat Transaction are frequently subject to litigation or other legal proceedings, including actions alleging that our board of directors breached their fiduciary duties to our stockholders by entering into the transaction. Litigation can be expensive, lengthy and disruptive to normal business operations, including through the possible diversion of company resources or distraction of key personnel.
Because We Conduct Business Internationally, We Face Additional Risks, including Risks Related to Global Political and Economic Conditions, Changes in Regulation and Currency Fluctuations Approximately 15% of our total revenues in fiscal year 2022 were derived from international sales.
Because We Conduct Business Internationally, We Face Additional Risks, including Risks Related to Global Political and Economic Conditions, Changes in Regulation and Currency Fluctuations Approximately 16% of our total revenues in fiscal year 2023 were derived from international sales.
The overall historical loss rate in the satellite industry for all launches of commercial satellites in fixed orbits in the last five years is estimated by some industry participants to be approximately 1% but could at any time be higher.
The overall historical loss rate in the satellite industry for all launches of commercial satellites in fixed orbits in the last five years is estimated by some industry participants to be close to 0% but could at any time be higher.
Unlike our ViaSat-1 and ViaSat-2 satellites, 25 which were constructed in their entirety by the satellite manufacturer, we are constructing the payload for our ViaSat-3 class satellites ourselves at our own facilities, with Boeing then integrating the completed payload into the satellite bus at their facilities.
Unlike our ViaSat-1 and ViaSat-2 satellites, which were constructed in their entirety by the satellite manufacturer, we construct the payload for our ViaSat-3 class 28 satellites ourselves at our own facilities, with Boeing then integrating the completed payload into the satellite bus at their facilities.
As of March 31, 2022, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 5.625% Senior Notes due 2025 (the 2025 Notes), $600.0 million in principal amount of 5.625% Senior Secured Notes due 2027 (the 2027 Notes), $400.0 million in principal amount of 6.500% Senior Notes due 2028 (the 2028 Notes), $700.0 million in outstanding borrowings under the Term Loan Facility, no outstanding borrowings under the Revolving Credit Facility, $78.6 million in principal amount of outstanding borrowings under the Ex-Im Credit Facility and $45.8 million of finance lease obligations.
As of March 31, 2023, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 5.625% Senior Notes due 2025 (the 2025 Notes), $600.0 million in principal amount of 5.625% Senior Secured Notes due 2027 (the 2027 Notes), $400.0 million in principal amount of 6.500% Senior Notes due 2028 (the 2028 Notes), $694.8 million in principal amount of outstanding borrowings under the Term Loan Facility, no outstanding borrowings under the Revolving Credit Facility, $59.0 million in principal amount of outstanding borrowings under the Ex-Im Credit Facility and $36.4 million of finance lease obligations.
Government Contracts Exposes Us to Significant Risks Our government systems segment revenues typically represent a significant percentage of our total revenues, including close to half of our total revenues in prior years, and are derived primarily from U.S. Government applications. Therefore, any significant disruption or deterioration of our relationship with the U.S. Government would significantly reduce our revenues. U.S.
Government Contracts Exposes Us to Significant Risks Our government systems segment revenues typically represent a significant percentage of our total revenues, and are derived primarily from U.S. Government applications. Therefore, any significant disruption or deterioration of our relationship with the U.S. Government would significantly reduce our revenues. U.S.
A Significant Portion of Our Revenues Is Derived from a Few of Our Contracts A small number of our contracts account for a significant percentage of our revenues. Our five largest contracts generated approximately 20% of our total revenues in fiscal year 2022.
A Significant Portion of Our Revenues Is Derived from a Few of Our Contracts A small number of our contracts account for a significant percentage of our revenues. Our five largest contracts generated approximately 17% of our total revenues in fiscal year 2023.
For example, we have agreed to issue 46.36 million unregistered shares of our common stock as consideration in the Inmarsat Transaction, and during fiscal year 2022 we issued 4.0 million shares of our common stock as consideration for the acquisition of RigNet.
We may also issue additional shares of common stock to finance future acquisitions. For example, we have agreed to issue 46.36 million unregistered shares of our common stock as consideration in the Inmarsat Transaction, and during fiscal year 2022 we issued 4.0 million shares of our common stock as consideration for the acquisition of RigNet.
For example, during fiscal year 2017 we sold 7.5 million shares of our common stock in an underwritten public offering, and during fiscal year 2021 we sold 4.5 million shares of our common stock to certain accredited investors in a private placement transaction exempt from registration under the Securities Act of 1933, as amended. 32 We may also issue additional shares of common stock to finance future acquisitions.
For example, during fiscal year 2017 we sold 7.5 million shares of our common stock in an underwritten public offering, and during fiscal year 2021 we sold 4.5 million shares of our common stock to certain accredited investors in a private placement transaction exempt from registration under the Securities Act of 1933, as amended.
In addition, natural disasters, political instability, civil unrest, terrorist activity, acts of war, and public health issues such as the COVID-19 pandemic or epidemics could disrupt supplies and raise prices globally which, in turn, may have adverse effects on the world and U.S. economies.
Moreover, natural disasters (including those resulting from climate change), political instability, civil unrest, terrorist activity, acts of war, and public health issues such as the COVID-19 pandemic or epidemics could disrupt supplies and raise prices globally which, in turn, may have adverse effects on the world and U.S. economies.
Conducting business internationally involves additional risks, including unexpected changes in laws, policies and regulatory requirements (including regulations related to import-export control); increased cost of localizing systems in foreign countries; increased sales and marketing and R&D expenses; availability of suitable export financing; timing and availability of export licenses; imposition of taxes, tariffs, embargoes and other trade barriers; political and economic instability, including as a result of the United Kingdom’s “Brexit” withdrawal from the EU; issues related to the political relationship between the United States and other countries; fluctuations in currency exchange rates (including their effect on sales denominated in foreign currencies), foreign exchange controls and restrictions on cash repatriation; compliance with international laws and U.S. laws affecting the activities of U.S. companies abroad; challenges in staffing and managing foreign operations; difficulties in managing distributors; requirements for additional liquidity to fund our international operations; ineffective legal protection of our intellectual property rights in certain countries; potentially adverse tax consequences; potential difficulty in making adequate payment arrangements; and potential difficulty in collecting accounts receivable.
Conducting business internationally involves additional risks, including unexpected changes in laws, 34 policies and regulatory requirements (including regulations related to import-export control); increased cost of localizing systems in foreign countries; increased sales and marketing and R&D expenses; availability of suitable export financing; timing and availability of export licenses; imposition of taxes, tariffs, embargoes, sanctions and other trade barriers; political and economic instability, wars, insurrections and other conflicts, such as the ongoing conflict between Russia and Ukraine; issues related to the political relationship between the United States and other countries; fluctuations in currency exchange rates (including their effect on sales denominated in foreign currencies), foreign exchange controls and restrictions on cash repatriation; compliance with international laws and U.S. laws affecting the activities of U.S. companies abroad, including existing and future privacy and cyber-related laws; challenges in staffing and managing foreign operations; difficulties in managing distributors; requirements for additional liquidity to fund our international operations; ineffective legal protection of our intellectual property rights in certain countries; potentially adverse tax consequences; potential difficulty in making adequate payment arrangements; and potential difficulty in collecting accounts receivable.
On February 24, 2022, a cyberattack involving our KA-SAT network resulted in a partial interruption of consumer-oriented fixed broadband services provided through our KA-SAT satellite, affecting thousands of fixed broadband customers in Europe and North Africa.
In late fiscal year 2022, a cyberattack involving our KA-SAT network resulted in a partial interruption of consumer-oriented fixed broadband services provided through our KA-SAT satellite, affecting thousands of fixed broadband customers in Europe and North Africa.
We may also incur significant additional indebtedness in the future, which may include financing relating to future satellites, potential acquisitions, joint ventures and strategic alliances, working capital, capital expenditures or general corporate purposes. For example, we currently expect to incur $1.3 billion of additional indebtedness under the financing commitments we obtained in connection with the Inmarsat Transaction.
We may also incur significant additional indebtedness in the future, which may include financing relating to future satellites, potential acquisitions, joint ventures and strategic alliances, working capital, capital expenditures or general corporate purposes. For example, we obtained financing commitments for an additional $1.6 billion of new debt facilities in connection with the Inmarsat Transaction.
Additionally, either we or certain Sellers may terminate the Purchase Agreement under certain circumstances, including, among other reasons, if the Inmarsat Transaction is not completed by May 8, 2023 (subject to extension by six months at our option under certain circumstances).
Additionally, either we or certain Sellers may terminate the Purchase Agreement under certain circumstances, including, among other reasons, if the Inmarsat Transaction is not completed by May 30, 2023 (subject to extension under certain circumstances).
As of March 31, 2022, we had undrawn availability of $637.0 million under our Revolving Credit Facility. Our high level of indebtedness could have important consequences.
As of March 31, 2023, we had undrawn availability of $657.4 million under our Revolving Credit Facility. Our high level of indebtedness could have important consequences.
Our Credit Facilities and the Indentures restrict our ability to dispose of assets and use the proceeds from the disposition, and may also restrict our ability to raise debt or equity capital to repay or service our indebtedness. 37 If we cannot make scheduled payments on our debt, we will be in default and, as a result, the lenders under our Credit Facilities and the holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under our Credit Facilities could terminate their commitments to loan money and foreclose against the assets securing the borrowings under our Credit Facilities, and we could be forced into bankruptcy or liquidation, which could result in you losing your investment in our company.
If we cannot make scheduled payments on our debt, we will be in default and, as a result, the lenders under our Credit Facilities and the holders of the Notes could declare all outstanding principal and interest to be due and payable, the lenders under our Credit Facilities could terminate their commitments to loan money and foreclose against the assets securing the borrowings under our Credit Facilities, and we could be forced into bankruptcy or liquidation, which could result in you losing your investment in our company.
The spacecraft we use in our business are subject to the regulatory authority of, and conditions imposed by, foreign governments, as well as contractual arrangements with third parties and the regulations and procedures of the ITU governing access to orbital and spectrum rights and the international coordination of satellite networks.
Any of these circumstances could have a material adverse impact on our business, financial condition and results of operations. 36 The spacecraft we use in our business are subject to the regulatory authority of, and conditions imposed by, foreign governments, as well as contractual arrangements with third parties and the regulations and procedures of the ITU governing access to orbital and spectrum rights and the international coordination of satellite networks.
Factors that cause our quarter-to-quarter operating results to be unpredictable include the status of satellite-related activities (including the construction, launch and bringing into service of satellites and the associated levels of investment); impact of any construction or launch delays, operational or launch failures or other disruptions to our satellites; timing, quantity and mix of products and services sold; unpredictability or length of procurement processes; timing of customer payments; cost overruns; and impact of one-time charges.
Factors that cause our quarter-to-quarter operating results to be unpredictable include the status of satellite-related activities (including the construction, launch and bringing into service of satellites and the associated levels of investment); impact of any construction or launch delays, operational or launch failures or other disruptions to our satellites; timing, quantity and mix of products and services sold; unpredictability or length of procurement processes; timing of customer payments; cost overruns (due to inflation or otherwise); impact of one-time charges; and other factors described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Factors and Trends Affecting our Results of Operations” in Part II, Item 7 of this report.
Following the completion of the Inmarsat Transaction, we expect that a significantly greater percentage of our business and sales will be conducted internationally.
Following the completion of the Inmarsat Transaction and the commencement of commercial service on the ViaSat-3 EMEA and ViaSat-3 APAC satellites, we expect that a significantly greater percentage of our business and sales will be conducted internationally.
Because many of these contracts involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, fluctuations in the price of raw materials, problems with our suppliers and cost overruns, can result in the contractual price becoming less favorable or even unprofitable to us over time.
Because many of these contracts involve new technologies and applications and can last for years, unforeseen events, such as technological difficulties, fluctuations in the price of raw materials, a significant increase in or a sustained period of increased inflation, problems with our suppliers and cost overruns, can result in the contractual price becoming less favorable or even unprofitable to us over time (which, especially in the case of sharp increases in or significant sustained inflation, could happen quickly and have long-lasting impacts).
In the event that an ownership change occurs, our ability to utilize our net operating loss and tax credit carryforwards would be negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations. 33 Provisions in Our Certificate of Incorporation and Bylaws, under Delaware Law and in Our Credit Facilities May Discourage, Delay or Prevent a Change in Control or Prevent an Acquisition of Our Business at a Premium Price Some of the provisions of our certificate of incorporation, our bylaws and Delaware law could discourage, delay or prevent an acquisition of our business, even if a change in control of Viasat would be beneficial to the interests of our stockholders and was made at a premium price.
Provisions in Our Certificate of Incorporation and Bylaws, under Delaware Law and in Our Credit Facilities May Discourage, Delay or Prevent a Change in Control or Prevent an Acquisition of Our Business at a Premium Price Some of the provisions of our certificate of incorporation, our bylaws and Delaware law could discourage, delay or prevent an acquisition of our business, even if a change in control of Viasat would be beneficial to the interests of our stockholders and was made at a premium price.
Failure to obtain the necessary clearances and approvals in the United States or any other relevant jurisdictions could substantially delay or prevent the consummation of the Inmarsat Transaction, which could have a material adverse effect on us.
There is no assurance that we and Inmarsat will obtain all required regulatory clearances or approvals on a timely or acceptable basis, or at all. Failure to obtain the necessary clearances and approvals in any relevant jurisdictions could substantially delay or prevent the consummation of the Inmarsat Transaction, which could have a material adverse effect on us.
For example, our ViaSat-2 satellite experienced an antenna deployment issue which reduced its output capabilities. We have also experienced delays in satellite construction and launch, such as the delay in launching our ViaSat-2 satellite caused by civil unrest in French Guiana (the location of the satellite launch) and the construction delays in our ViaSat-3 satellites caused by the COVID-19 pandemic.
We have also experienced delays in satellite construction and launch, such as the delay in launching our ViaSat-2 satellite caused by civil unrest in French Guiana (the location of the satellite launch), construction delays in our ViaSat-3 satellites caused by the COVID-19 pandemic and delays in the launch of the ViaSat-3 Americas satellite due to high priority launch missions and adverse weather conditions at the launch site.
Our inability to maintain or obtain any third-party license required to sell or develop our products and product enhancements could require us to obtain substitute technology of lower quality or performance standards, or at greater cost. 36 Risks Related to Our Indebtedness Our Level of Indebtedness May Adversely Affect Our Ability to Operate Our Business, Remain in Compliance with Debt Covenants, React to Changes in Our Business or the Industry in which We Operate, or Prevent Us from Making Payments on Our Indebtedness We have a significant amount of indebtedness.
Risks Related to Our Indebtedness Our Level of Indebtedness May Adversely Affect Our Ability to Operate Our Business, Remain in Compliance with Debt Covenants, React to Changes in Our Business or the Industry in which We Operate, or Prevent Us from Making Payments on Our Indebtedness We have a significant amount of indebtedness.
In the event of satellite failure or loss, amounts recovered under satellite insurance policies may be insufficient to adequately service our debt obligations. Moreover, there can be no assurance that we will be able to refinance our debt obligations on commercially reasonable terms, or at all.
In the event of satellite failure or loss, amounts recovered under satellite insurance policies may be insufficient to adequately service our debt obligations.
For example, the business and financial condition of our commercial airline customers were materially impacted during the COVID-19 pandemic by the severe decline in global air travel.
For example, the business and financial condition of our commercial airline customers were materially impacted during the COVID-19 pandemic by the severe decline in global air travel. In addition, current supply chain and labor market challenges and inflationary pressures have negatively affected and may continue to negatively affect our performance as well as the performance of our suppliers and customers.
In addition, a delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers’ needs and may have an adverse effect upon our profitability. 31 We Depend on a Limited Number of Key Employees Who Would Be Difficult to Replace We depend on a limited number of key technical, marketing and management personnel to manage and operate our business.
In addition, a delay in our ability to obtain components and equipment parts from our suppliers may affect our ability to meet our customers’ needs and may have an adverse effect upon our profitability.
We cannot assure you that our existing or future third-party licenses will be available to us on commercially reasonable terms, if at all.
We cannot assure you that our existing or future third-party licenses will be available to us on commercially reasonable terms, if at all. Our inability to maintain or obtain any third-party license required to sell or develop our products and product enhancements could require us to obtain substitute technology of lower quality or performance standards, or at greater cost.
Moreover, an outbreak of a pandemic such as the COVID-19 pandemic and associated quarantines, closures and travel restrictions or other major event may cause temporary or long-term disruptions in our supply chain and distribution systems and/or delays in the delivery of inventory.
Significant events such as an outbreak of a pandemic such as the COVID-19 pandemic and its lingering effects, natural disasters or extreme weather events (including as a result of climate change), acts of terrorism or civil unrest, cyberattacks, labor market instability or global shortages of components or materials may cause temporary or long-term disruptions in our supply chain and distribution systems and/or delays in the delivery of inventory.
In addition, the combined company will also incur significant restructuring and integration costs in connection with the Inmarsat Transaction. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Inmarsat Acquisition” for additional information.
Although a significant portion of these costs is contingent upon the closing of the Inmarsat Transaction occurring, some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated. In addition, the combined company will also incur significant restructuring and integration costs in connection with the Inmarsat Transaction.
Removed
Some of our vendors have manufacturing facilities in areas that may be prone to natural disasters and other natural occurrences that may affect their ability to perform and deliver under our contract.
Added
For example, our ViaSat-2 satellite experienced an antenna deployment issue which reduced its output capabilities.
Removed
Any of these circumstances could have a material adverse impact on our business, financial condition and results of operations.
Added
We Depend on a Limited Number of Key Employees Who Would Be Difficult to Replace We depend on a limited number of key technical, marketing and management personnel to manage and operate our business.
Removed
There is no assurance that we and Inmarsat will obtain all required regulatory clearances or approvals on a timely or acceptable basis, or at all.
Added
In the event that an ownership change occurs, our ability to utilize our net operating loss and tax credit carryforwards would be negatively impacted, which could have a material adverse effect on our business, financial condition and results of operations.
Added
For example, cybersecurity and data privacy security and protection laws and regulations are evolving and present increasing compliance challenges, which may increase our costs, affect our competitiveness, cause reputational harm and expose us to substantial fines or other penalties.
Added
Risks Associated with Environmental, Social and Governance Matters, Including Global Climate Change, and Legal, Regulatory or Market Responses to These Matters Could Harm Our Reputation and Business Increasing shareholder environmental, social and governance (ESG) expectations, physical and transition risks associated with climate change, emerging ESG regulation, contractual requirements and policy requirements present short, medium and long-term risks to our business and financial condition.
Added
Changes in environmental and climate change laws or regulations could lead to additional operational restrictions and compliance requirements upon us.
Added
For example, in our government systems segment, changes in government procurement laws that mandate or include climate change considerations, such as the contractor’s greenhouse gas (GHG) emissions, lower emission products or other climate risks, in evaluating bids could result in costly changes to our operations or affect our competitiveness on future bids.
Added
In addition, in our commercial networks segment, increased awareness and adverse publicity in the global marketplace about the GHGs emitted by companies in the airline and transportation industries could adversely impact our business.
Added
If consumers reduce their use of air travel in response to new environmental regulations or changes in public perception 37 about the impact of air travel on climate change, consumers may reduce their usage of our services, which may have a material negative effect on the demand for our products and services.
Added
Compliance with current and future environmental laws and regulations may require significant operating and capital costs. Environmental laws and regulations may institute substantial fines and criminal sanctions to address violations and may require the installation of costly pollution control equipment or operational changes to limit emissions or discharges.
Added
Our suppliers may face similar business interruptions and incur additional costs that may be passed on to us. In addition, customers, shareholders and institutional investors continue to increase their focus on ESG, including our environmental sustainability practices and commitments with respect to our business and operations.
Added
If our responses to new or evolving legal and regulatory requirements or other sustainability concerns are unsuccessful or perceived as inadequate for the U.S. or our international markets, we also may suffer damage to our reputation, which could have a material adverse impact on our business, financial condition and results of operations.
Added
In addition, borrowings under our Term Loan Facility and Revolving Credit Facility are subject to variable rates of interest and expose us to interest rate risk, and therefore high prevailing interest rates may adversely impact our levels of interest expense.
Added
Moreover, there can be no assurance that we will be able to refinance our debt obligations on commercially reasonable terms, or at all.
Added
Our Credit Facilities and the Indentures restrict our ability to dispose of assets and use the proceeds from the disposition, and may also restrict our ability to raise debt or equity capital to repay or service our indebtedness.
Added
We cannot assure you that we would have sufficient funds to repay all the outstanding amounts under our Credit Facilities or the Indentures, and any acceleration of amounts due would have a material adverse effect on our liquidity and financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAlthough we believe that our existing facilities are suitable and adequate for our present purposes, we anticipate operating additional regional sales offices in fiscal year 2023 and beyond. Each of our segments uses each of these facilities.
Biggest changeAlthough we believe that our existing facilities are suitable and adequate for our present purposes, we anticipate operating additional regional sales offices in fiscal year 2024 and beyond. Each of our segments uses each of these facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of business, including government investigations and claims, and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters.
Biggest changeITEM 3. LEGAL PROCEEDINGS Periodically, we are involved in a variety of claims, suits, investigations and proceedings arising in the ordinary course of business, including government investigations and claims, and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters.
For further information on the risks we face from existing and future claims, suits, investigations and proceedings, see “Risk Factors” in Part I, Item 1A of this report. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 41 PART II
For further information on the risks we face from existing and future claims, suits, investigations and proceedings, see “Risk Factors” in Part I, Item 1A of this report. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 43 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Select Market under the symbol “VSAT.” As of May 13, 2022, there were approximately 442 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Nasdaq Global Select Market under the symbol “VSAT.” As of May 5, 2023, there were approximately 391 holders of record of our common stock.
In addition, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, the existing terms of our Credit Facilities and the Indentures restrict our ability to declare or pay dividends on our common stock. ITEM 6. [RESERVED] 42
In addition, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, the existing terms of our Credit Facilities and the Indentures restrict our ability to declare or pay dividends on our common stock. ITEM 6. [RESERVED] 44

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

112 edited+56 added−36 removed98 unchanged
Biggest changeResults of Operations The following table presents, as a percentage of total revenues, income statement data for the periods indicated: Fiscal Years Ended March 31, 2022 March 31, 2021 March 31, 2020 Revenues: 100.0 % 100.0 % 100.0 % Product revenues 43 46 51 Service revenues 57 54 49 Operating expenses: Cost of product revenues 33 34 37 Cost of service revenues 37 35 33 Selling, general and administrative 24 23 23 Independent research and development 5 5 6 Amortization of acquired intangible assets 1 — — Income from operations — 3 2 Interest expense, net (1 ) (1 ) (2 ) (Loss) income before income taxes (1 ) 1 — Benefit from (provision for) income taxes 1 (— ) — Net (loss) income (— ) 1 1 Net (loss) income attributable to Viasat, Inc.
Biggest changeResults of Operations The following table presents, as a percentage of total revenues, income statement data of our continuing operations for the periods indicated: Fiscal Years Ended March 31, 2023 March 31, 2022 March 31, 2021 Revenues: 100 % 100 % 100 % Product revenues 37 36 38 Service revenues 63 64 62 Operating expenses: Cost of product revenues 29 29 30 Cost of service revenues 43 42 40 Selling, general and administrative 28 27 26 Independent research and development 5 6 6 Amortization of acquired intangible assets 1 1 — Income (loss) from continuing operations (6 ) (5 ) (2 ) Interest (expense) income, net — (1 ) (2 ) Income (loss) from continuing operations before income taxes (6 ) (6 ) (4 ) (Provision for) benefit from income taxes from continuing operations (2 ) 2 1 Net income (loss) from continuing operations (8 ) (4 ) (3 ) Net income (loss) from discontinued operations, net of tax 51 4 4 Net income (loss) attributable to Viasat, Inc. 42 (1 ) — Fiscal Year 2023 Compared to Fiscal Year 2022 Revenues Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2023 March 31, 2022 Increase (Decrease) Increase (Decrease) Product revenues $ 954.1 $ 860.7 $ 93.4 11 % Service revenues 1,602.0 1,556.5 45.6 3 % Total revenues $ 2,556.2 $ 2,417.2 $ 139.0 6 % Our total revenues increased by $139.0 million as a result of a $93.4 million increase in product revenues and a $45.6 million increase in service revenues.
The costs related to restructuring will be expensed as a cost of the ongoing results of operations of either us or the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Inmarsat Transaction and the integration of Inmarsat’s business.
Costs related to restructuring will be expensed as a cost of the ongoing results of operations of either us or the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Inmarsat Transaction and the integration of Inmarsat’s business.
We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (resulting in a cash outlay of approximately $51.0 million, net of approximately $121.7 million of EBI’s cash on hand).
We paid approximately $167.0 million in cash, net of what is currently estimated to be an immaterial amount of estimated purchase price consideration (net of approximately $121.7 million of EBI's cash on hand, resulting in a cash outlay of approximately $51.0 million).
Our ability to grow and maintain our revenues in our commercial networks and government systems segments has to date depended on our ability to identify and target markets where the customer places a high priority on the technology solution, and our ability to obtain additional sizable contract awards.
To date, our ability to grow and maintain our revenues in our commercial networks and government systems segments has depended on our ability to identify and target markets where the customer places a high priority on the technology solution, and our ability to obtain additional sizable contract awards.
During the second quarter of fiscal year 2021, we issued and sold an aggregate of 4,474,559 shares of 57 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.
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.
Income taxes The income tax benefit in fiscal year 2022 primarily reflected the benefit of federal and state R&D tax credits, the reversal of a deferred tax liability recorded for EBI’s outside basis difference upon assertion made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings offset by tax expense for non-deductible compensation and the tax expense for tax deficiencies upon settlement of stock-based compensation during the period.
Income taxes The income tax benefit in fiscal year 2022 primarily reflected the benefit of federal R&D tax credits, the reversal of a deferred tax liability recorded for EBI’s outside basis difference upon assertion made during the first quarter of fiscal year 2022 to indefinitely reinvest future earnings offset by tax expense for non-deductible compensation and the tax expense for tax deficiencies upon settlement of stock-based compensation during the period.
Expected amortization expense for acquired intangible assets for each of the following periods is as follows: Amortization (In thousands) Expected for fiscal year 2023 $ 31,383 Expected for fiscal year 2024 30,002 Expected for fiscal year 2025 27,880 Expected for fiscal year 2026 26,366 Expected for fiscal year 2027 25,805 Thereafter 94,607 $ 236,043 Interest income Interest income for fiscal year 2022 was relatively flat compared to fiscal year 2021.
Expected amortization expense for acquired intangible assets for each of the following periods is as follows: Amortization (In thousands) Expected for fiscal year 2023 $ 31,383 Expected for fiscal year 2024 30,002 Expected for fiscal year 2025 27,880 Expected for fiscal year 2026 26,366 Expected for fiscal year 2027 25,805 Thereafter 94,607 $ 236,043 60 Interest income Interest income for fiscal year 2022 was relatively flat compared to fiscal year 2021.
For all of these policies, we caution that future events rarely develop exactly as forecast, and even the best estimates routinely require adjustment. Revenue recognition We apply the five-step revenue recognition model under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (commonly referred to as Accounting Standards Codification (ASC) 606) to our contracts with our customers.
For all of these policies, we caution that future events rarely develop exactly as forecast, and even the best estimates routinely require adjustment. Revenue recognition We apply the five-step revenue recognition model under Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (commonly referred to as ASC 606) to our contracts with our customers.
Commercial Networks Our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services. We design, develop and produce space system solutions for multiple orbital regimes, including GEO, MEO and LEO.
Commercial Networks Our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and network and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services. We design, develop and produce space system solutions for multiple orbital regimes, including GEO, MEO and LEO.
Our contracts may contain award fees, incentive fees, or other provisions, including the potential for significant financing components, that can either increase or decrease the transaction price. These amounts, 49 which are sometimes variable, can be dictated by performance metrics, program milestones or cost targets, the timing of payments, and customer discretion.
Our contracts may contain award fees, incentive fees, or other provisions, including the potential for significant financing components, that can either increase or decrease the transaction price. These amounts, which are sometimes variable, can be dictated by performance metrics, program milestones or cost targets, the timing of payments, and customer discretion.
However, if these provided amounts prove to be more than what is necessary, the reversal of the reserves would result in tax benefits 52 being recognized in the period in which we determine that provision for the liabilities is no longer necessary. If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional charge to expense would result.
However, if these provided amounts prove to be more than what is necessary, the reversal of the reserves would result in tax benefits being recognized in the period in which we determine that provision for the liabilities is no longer necessary. If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional charge to expense would result.
To further enhance our liquidity position or to finance the construction and launch of any future satellites, acquisitions, strategic partnering arrangements, joint ventures or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and capital markets.
To further enhance our liquidity position or to finance the construction and launch of any future satellites, acquisitions, strategic partnering arrangements, joint ventures or other business investment initiatives, we may obtain additional financing, which could consist of debt, convertible debt or equity financing from public and/or private credit and 64 capital markets.
We derive a substantial portion of our revenues from contracts with customers for services, primarily consisting of connectivity services. These contracts typically require advance or recurring monthly payments by the customer. Our obligation to provide connectivity services 48 is satisfied over time as the customer simultaneously receives and consumes the benefits provided.
We derive a substantial portion of our revenues from contracts with customers for services, primarily consisting of connectivity services. These contracts typically require advance or recurring monthly payments by the customer. Our obligation to provide connectivity services is satisfied over time as the customer simultaneously receives and consumes the benefits provided.
For product revenues, control generally passes to the customer upon delivery of goods to the customer. The vast majority of our revenues from long-term contracts to develop and deliver complex equipment built to customer specifications are derived from contracts with the U.S. Government (including foreign military sales contracted through the U.S. Government). Our contracts with the U.S.
For product revenues, control generally passes to the customer upon delivery of goods to the customer. 50 The vast majority of our revenues from long-term contracts to develop and deliver complex equipment built to customer specifications are derived from contracts with the U.S. Government (including foreign military sales contracted through the U.S. Government). Our contracts with the U.S.
A significant portion of these transaction-related costs is contingent upon the closing of the Inmarsat Transaction occurring, although some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated. In addition, the combined company will also incur significant restructuring and integration costs in connection with the Inmarsat Transaction.
Although a significant portion of these costs is contingent upon the closing of the Inmarsat Transaction occurring, some have been and will be incurred regardless of whether the Inmarsat Transaction is consummated. In addition, the combined company will also incur significant restructuring and integration costs in connection with the Inmarsat Transaction.
For example, when ViaSat-2 was placed in service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs in our satellite services segment during the ramp-up period prior to service launch and in the fiscal year following service launch.
For example, when ViaSat-2 was placed in commercial service in the fourth quarter of fiscal year 2018, this resulted in additional operating costs in our satellite services segment during the ramp-up period prior to service launch and in the fiscal year following service launch.
In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction of ViaSat-2 and the related gateway and networking equipment once the satellite was in service.
In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction of ViaSat-2 and the related gateway and networking equipment once the satellite was in commercial service.
The authoritative guidance addresses the derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. We are subject to income taxes in the United States and numerous foreign jurisdictions.
The authoritative guidance addresses the derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. 54 We are subject to income taxes in the United States and numerous foreign jurisdictions.
Recent Authoritative Guidance For information regarding recently adopted and issued accounting pronouncements, see Note 1 — The Company and a Summary of Its Significant Accounting Policies to the consolidated financial statements .
Recent Authoritative Guidance For information regarding recently adopted and issued accounting pronouncements, see Note 1 — The Company and a Summary of Its Significant Accounting Policies to the consolidated financial statements . 66
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.
We believe that our diversification strategy—anchored in a broad portfolio of customer-centric products and services—our vertical integration approach and our ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.
We are also a lessor for certain insignificant communications equipment. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material. Business combinations The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, including goodwill, and assumed liabilities, where applicable.
We are also a lessor for certain insignificant communications equipment. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material. Business combinations The purchase price for business combinations is allocated to the estimated fair values of acquired tangible and intangible assets, and assumed liabilities, where applicable.
At the time satellites are placed in service, we estimate the useful life of our satellites for depreciation purposes based upon an analysis of each satellite’s performance against 50 the original manufacturer’s orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends.
At the time satellites are placed in commercial service, we estimate the useful life of our satellites for depreciation purposes based upon an analysis of each satellite’s performance against the original manufacturer’s orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends.
A one percent variance in our future cost estimates on open fixed-price contracts as of March 31, 2022 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.
A one percent variance in our future cost estimates on open fixed-price contracts as of March 31, 2023 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.
Off-Balance Sheet Arrangements We had no material off-balance sheet arrangements at March 31, 2022 as defined in Regulation S-K Item 303(b) other than as discussed under “Contractual Obligations” above or disclosed in the notes to our consolidated financial statements included in this report.
Off-Balance Sheet Arrangements We had no material off-balance sheet arrangements at March 31, 2023 as defined in Regulation S-K Item 303(b) other than as discussed under “Contractual Obligations” above or disclosed in the notes to our consolidated financial statements included in this report.
The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly and our future capital requirements will depend upon many factors, including the timing and amount of cash required to consummate the Inmarsat Transaction (including the cash portion of the purchase price, transaction-related costs and integration-related costs, see the discussion above under "Inmarsat Acquisition"), as well as cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our R&D and marketing efforts, and the nature and timing of orders.
The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly and our future capital requirements will depend upon many factors, including the timing and amount of cash required to consummate the Inmarsat Transaction (including the cash portion of the purchase price, transaction-related costs and integration-related costs, see the discussion above under "Inmarsat Acquisition"), cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our IR&D and marketing efforts, and the nature and timing of orders.
In April 2022, Inmarsat paid a dividend of $299.3 million to the Sellers, resulting in a $299.3 million reduction in the cash consideration payable by us at the 45 closing of the Inmarsat Transaction. Our board of directors has unanimously approved the Purchase Agreement and the proposed Inmarsat Transaction.
On April 6, 2022, Inmarsat paid a dividend of $299.3 million to the Sellers, resulting in a $299.3 million reduction in the cash consideration payable by us at the closing of the Inmarsat Transaction. Our board of directors has unanimously approved the Purchase Agreement and the proposed Inmarsat Transaction.
The measure of progress over time is based upon either a period of time (e.g., over the estimated contractual term) or usage (e.g., bandwidth used/bytes of data processed). We evaluate whether broadband equipment provided to our customer as part of the delivery of connectivity services represents a lease in accordance with ASC 842.
The measure of progress over time is based upon either a period of time (e.g., over the estimated contractual term) or usage (e.g., bandwidth used/bytes of data processed). We evaluate whether broadband equipment provided to our customer as part of the delivery of connectivity services represents a lease in accordance with the authoritative guidance for leases (ASC 842).
The assets and results of operations of our recent acquisitions, EBI and RigNet, are primarily included in our satellite services segment (with insignificant amounts included in our commercial networks segment).
The assets and results of operations of EBI and RigNet are primarily included in our satellite services segment (with insignificant amounts included in our commercial networks segment).
See Note 12 — Commitments to our consolidated financial statements for information as of March 31, 2022 regarding our future minimum payments under our satellite construction contracts and other satellite-related purchase commitments (including satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites) for the next five fiscal years and thereafter.
See Note 13 — Commitments to our consolidated financial statements for information as of March 31, 2023 regarding our future minimum payments under our satellite construction contracts and other satellite-related purchase commitments (including satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites) for the next five fiscal years and thereafter.
See Note 12 — Commitments to our consolidated financial statements for information as of March 31, 2022 regarding our future minimum payments under our satellite construction contracts and other satellite-related purchase commitments (including satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites) for the next five fiscal years and thereafter.
See Note 13 — Commitments to our consolidated financial statements for information as of March 31, 2023 regarding our future minimum payments under our satellite construction contracts and other satellite-related purchase commitments (including satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites) for the next five fiscal years and thereafter.
However, the timing of installation and entry into service of IFC systems on additional aircraft under existing customer agreements may be delayed as a result of the impact of the COVID-19 pandemic on the global airline industry.
However, the timing of installation and entry into service of IFC systems on additional aircraft under existing customer agreements may be delayed as a result of the lingering impacts of the COVID-19 pandemic on the global airline industry.
Government funding, and the timing of product deliveries and customer acceptance in our government systems segment, as well as subscriber activity for our fixed broadband services related to traditional retail selling periods and increased demand for IFC services from airline passengers during peak holiday travel periods in our satellite services segment; • the rate of growth in worldwide demand for mobile and fixed broadband connectivity, including growth in number internet users, applications and connected devices; • the rate of technological innovation and change in the industries in which we operate, and the introduction of new competing technologies, products and services by new and existing competitors; • the marketing and pricing strategies of our competitors with respect to competing technologies, products and services; • our ability to implement (on a timely basis) our technology roadmap and the associated investments and costs, as well as market acceptance and the timing of availability of our new products and services; 44 • the timing, quantity and mix of products and services sold in each of our segments; • the uptake of our in-flight services by commercial airlines and number of aircraft retrofitted or installed with our IFC systems, and the rate of revenue growth in our IFC-related businesses in our satellite services and commercial networks segments resulting from the normalization of or growth in global air traffic; • varying subscriber addition, churn and average revenue per user (ARPU) rates for our fixed broadband businesses and mix of wholesale and retail subscribers; • the complex and lengthy procurement process for most of our commercial networks and government systems customers and potential customers, and the impact of a failure to receive an expected order or a deferral of an order to a later period, and the timing of return to normalization of government acquisition processes that were disrupted by COVID-19; • the difficulty in estimating costs over the life of a contract, which may require adjustment in future periods, and the impact of cost overruns on fixed-price development contracts; • the timing of customer payments under significant contracts; • our reliance on a few significant customers, particularly agencies of the U.S.
Government funding, and the timing of product deliveries and customer acceptance in our government systems segment, as well as subscriber activity for our fixed broadband services related to traditional retail selling periods and increased demand for IFC services from airline passengers during peak holiday travel periods in our satellite services segment; • the rate of growth in worldwide demand for mobile and fixed broadband connectivity, including growth in number internet users, applications and connected devices; • the rate of technological innovation and change in the industries in which we operate, and the introduction of new competing technologies, products and services by new and existing competitors; • the marketing and pricing strategies of our competitors with respect to competing technologies, products and services; 46 • our ability to implement (on a timely basis) our technology roadmap and the associated investments and costs, as well as market acceptance and the timing of availability of our new products and services; • the timing, quantity and mix of products and services sold in each of our segments; • the uptake of our in-flight services by commercial airlines and number of aircraft retrofitted or installed with our IFC systems, and the rate of revenue growth in our IFC-related businesses in our satellite services and commercial networks segments resulting from the normalization of or growth in global air traffic; • varying subscriber addition, churn and average revenue per user (ARPU) rates for our fixed broadband businesses and mix of wholesale and retail subscribers; • the complex and lengthy procurement process for most of our commercial networks and government systems customers and potential customers, the impact of a failure to receive an expected order or a deferral of an order to a later period, and the timing of or effect of delays in obtaining government product certifications; • the difficulty in estimating costs over the life of a contract, which may require adjustment in future periods, and the impact of cost overruns (due to inflation or otherwise) on fixed-price development contracts; • the timing of customer payments under significant contracts; • our reliance on a few significant customers, particularly agencies of the U.S.
The income tax provision in fiscal year 2021 primarily reflected the tax expense from our income before income taxes, the tax expense for 54 tax deficiencies upon settlement of stock-based compensation during the period, and non-deductible compensation, partially offset by benefit from federal and state R&D tax credits .
The income tax benefit in fiscal year 2021 primarily reflected the tax benefit from our loss before income taxes and the benefit of federal R&D tax credits, partially offset by the tax expense for tax deficiencies upon settlement of stock-based compensation during the period and tax expense for non-deductible compensation.
The product revenue increase was driven primarily by an increase of $174.6 million in our commercial networks segment, partially offset by an $8.6 million decrease in our government systems segment.
The product revenue increase was driven primarily by an increase of $174.6 million in our commercial networks segment, partially offset by an $53.3 million decrease in our government systems segment.
See Note 12 — Commitments to our consolidated financial statements for additional information regarding satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites. See Note 14 — Product Warranty to our consolidated financial statements for a discussion of our product warranties.
See Note 13 — Commitments to our consolidated financial statements for additional information regarding satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites. See Note 15 — Product Warranty to our consolidated financial statements for a discussion of our product warranties.
The cost of service revenue increase was primarily due to increased service revenues, mainly from our satellite services segment, causing a $238.2 million increase in cost of service revenues on a constant margin basis.
The cost of service revenue increase was primarily due to increased service revenues, mainly from our satellite services segment, causing a $244.8 million increase in cost of service revenues on a constant margin basis.
The cost of product revenue increase was mainly due to increased product revenues, causing a $123.1 million increase in cost of product revenues on a constant margin basis, mainly from our commercial networks segment.
The cost of product revenue increase was mainly due to increased product revenues, causing a $95.9 million increase in cost of product revenues on a constant margin basis, mainly from our commercial networks segment.
The service revenue increase was due to increases of $319.9 million in our satellite services segment, $29.1 million in our government systems segment and $16.6 million in our commercial networks segment.
The service revenue increase was due to increases of $319.9 million in our satellite services segment, $38.4 million in our government systems segment and $16.6 million in our commercial networks segment.
Our valuation allowance against deferred tax assets increased from $47.1 million at March 31, 2021 to $78.1 million at March 31, 2022. The valuation allowance relates to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards and foreign tax credit carryforwards.
Our valuation allowance against deferred tax assets increased from $78.1 million at March 31, 2022 to $150.0 million at March 31, 2023. The valuation allowance relates to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards and foreign tax credit carryforwards.
The decrease in product revenues was partially offset by a $24.3 million increase in tactical data link products, a $6.8 million increase in cybersecurity and information assurance products and a $2.6 million increase in tactical satcom radio products.
The decrease in product revenues was partially offset by a $6.8 million increase in cybersecurity and information assurance products and a $2.6 million increase in tactical satcom radio products.
Our consolidated balance sheets included $157.5 million and $137.4 million of “other liabilities” as of March 31, 2022 and March 31, 2021, respectively, which primarily consisted of the long-term portion of deferred revenues, the long-term portion of our satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites, deferred income taxes and our long-term warranty obligations.
Our consolidated balance sheets included $218.5 million and $153.2 million of “other liabilities” as of March 31, 2023 and March 31, 2022, respectively, which primarily consisted of deferred income taxes, the long-term portion of deferred revenues, the long-term portion of our satellite performance incentive obligations relating to the ViaSat-1 and ViaSat-2 satellites and our long-term warranty obligations.
Segment operating profit Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment operating profit $ 42.9 $ 35.9 $ 7.0 20 % Percentage of segment revenues 4 % 4 % The $7.0 million increase in our satellite services segment operating profit was driven primarily by higher earnings contributions of $100.3 million, primarily due to an increase in revenues and improved margins from our in-flight services as the business continued to scale.
Segment operating profit (loss) Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment operating profit (loss) $ 31.6 $ 26.3 $ 5.3 20 % Percentage of segment revenues 3 % 3 % The $5.3 million increase in our satellite services segment operating profit was driven primarily by higher earnings contributions of $100.4 million, primarily due to an increase in revenues and improved margins from our in-flight services as the business continued to scale.
Of the $2.0 billion in firm backlog, a little over half is expected to be delivered during the next 12 months, with the balance delivered thereafter. We include in our backlog only those orders for which we have accepted purchase orders, and not anticipated purchase orders and requests.
As of March 31, 2023, a little over half of the firm backlog is expected to be delivered during the next 12 months, with the balance delivered thereafter. We include in our backlog only those orders for which we have accepted purchase orders, and not anticipated purchase orders and requests.
Factors and Trends Affecting our Results of Operations We believe that the performance of our business and our results of operations in a given period are driven by various factors, including: • the timing and impact of acquisitions, including our acquisitions of RigNet and EBI in fiscal year 2022 and the Inmarsat Transaction, as well as the payment of transaction consideration and the incurrence of transaction and integration costs or additional indebtedness in connection therewith (see the discussion below under “Inmarsat Acquisition”); • the extent and stage of our satellite design, construction and launch activities (as discussed further below), the associated level of investment required, the impact of any construction or launch delays or operational or launch failures, and the impact of bringing newly launched satellites into commercial service and associated ramp-up activities and costs (see the discussion below under “Satellite-Related Activities”); • our ability to manage available bandwidth ahead of the ViaSat-3 global constellation entering service; • our ability to maintain the health, capacity, control and level of service of our satellite fleet, or the existence or occurrence of any malfunctions or anomalies in or other disruptions to our satellites; • changes in the levels of our R&D spending, including the effects of associated tax credits; • seasonal effects related to the timing of contract awards, the timing and availability of U.S.
Factors and Trends Affecting our Results of Operations We believe that the performance of our business and our results of operations in a given period are driven by various factors, including: • the timing and impact of acquisitions and divestitures, such as the pending Inmarsat Transaction and recently completed Link-16 TDL Sale, as well as the payment of transaction consideration and the incurrence of transaction-related or integration costs and any incurrence or repayment of indebtedness in connection therewith (see the discussion below under “Inmarsat Acquisition”); • the extent and stage of our satellite design, construction and launch activities, the associated level of investment required, the impact of any construction or launch delays or operational or launch failures, and the impact of bringing newly launched satellites into commercial service and associated ramp-up activities and costs (see the discussion below under “Satellite-Related Activities”); • our ability to manage available bandwidth ahead of new satellites entering commercial service; • our ability to maintain the health, capacity, control and level of service of our satellite fleet, or the existence or occurrence of any malfunctions or anomalies in or other disruptions to our satellites; • changes in the levels of our R&D spending, including the effects of associated tax credits; • seasonal effects related to the timing of contract awards, the timing and availability of U.S.
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).
Revenues in our commercial networks and government systems segments are primarily derived from three types of contracts: fixed-price contracts (which require us to provide products and services under a contract at a specified price), cost-reimbursement contracts (under which we are reimbursed for all actual costs incurred in performing the contract to the extent such costs are within the contract ceiling and allowable under the terms of the contract, plus a fee or profit), and time-and-materials contracts (which reimburse us for the number of labor hours expended at an established hourly rate negotiated in the contract, plus the cost of materials utilized in providing such products or services).
We retained approximately $20.6 million of RigNet’s cash on hand . Satellite-Related Activities 46 We expect to continue to invest in IR&D as we continue our focus on leadership and innovation in satellite and space technologies, including for the development of any new generation satellite designs and next-generation satellite network solutions.
Satellite-Related Activities We expect to continue to invest in IR&D as we continue our focus on leadership and innovation in satellite and space technologies, including for the development of any new generation satellite designs and next-generation satellite network solutions.
Government, for a significant percentage of our revenues, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable; • our reliance on a global supply chain, including contract manufacturers and single-source or limited groups of suppliers; • one-time charges to operating income arising from items such as acquisition costs and expenses, impairment of assets and write-offs of assets related to customer non-payments or obsolescence; • changes in laws, regulations and interpretations affecting our business, including changes affecting spectrum availability or permitted uses; • our ability to generate sufficient cash flows to repay our indebtedness; and • the impact of public health crises, such as the COVID-19 pandemic, general economic and political conditions, and other trends that affect the industries in which we operate.
Government, for a significant percentage of our revenues, as a result of which the loss or decline in business with any of these customers may negatively impact our revenue and collectability of related accounts receivable; • our reliance on a global supply chain, including contract manufacturers and single-source or limited groups of suppliers; the impact of supply chain bottlenecks, and our ability to purchase component parts that are periodically subject to shortages resulting from surges in demand, natural disasters or other events; • one-time charges to operating income arising from items such as costs and expenses, relating to acquisitions or divestitures, impairment of assets and write-offs of assets related to customer non-payments or obsolescence; • changes in laws, regulations and interpretations affecting our business, including changes affecting spectrum availability or permitted uses; • our ability to generate sufficient cash flows to repay our indebtedness; and • the impact of public health crises, such as the COVID-19 pandemic, general economic and political conditions, and other trends that affect the industries in which we operate, and the return to normalization after associated disruptions, such as the timing of return to normalization of government acquisition processes and pre-pandemic global airline traffic levels following COVID-19-related disruptions.
Based on our qualitative assessment performed during the fourth quarter of fiscal year 2022, we concluded that it was more likely than not that the estimated fair value of our reporting units exceeded their carrying value as of March 31, 2022, and therefore, determined it was not necessary to perform a quantitative goodwill impairment test.
Based on our qualitative and quantitative assessment performed during the fourth quarter of fiscal year 2023, we concluded that it was more likely than not that the estimated fair value of our reporting units exceeded their carrying value as of March 31, 2023.
The product revenue decrease was primarily driven by a $24.5 million decrease in government satellite communication systems products and a $17.8 million decrease in government mobile broadband products.
The product revenue decrease was primarily driven by a $24.5 million decrease in government satellite communication systems products, a $20.5 million decrease in government mobile broadband products, and a $17.6 million decrease in tactical data link solutions products.
The service revenue increase was primarily due to a $18.3 million increase in government mobile broadband services, a $14.8 million increase in government satellite communication systems services, a $6.7 million increase in cybersecurity and information assurance services, partially offset by a $11.0 million decrease in tactical data link services.
The service revenue increase was primarily due to a $18.3 million increase in government mobile broadband services, a $14.8 million increase in government satellite communication systems services, and a $6.7 million increase in cybersecurity and information assurance services.
When available, we utilize the observable price of a good or service when we sell that good or service separately in similar circumstances and to similar customers.
Estimating standalone selling prices may require judgment. When available, we utilize the observable price of a good or service when we sell that good or service separately in similar circumstances and to similar customers.
There was also an increase of $52.5 million in antenna systems products and $25.7 million in RigNet products, partially offset by a $14.8 million decrease in fixed satellite networks products.
There was also an increase of $52.5 million in antenna systems products and $25.7 million in RigNet products, partially offset by a $14.8 million decrease in fixed satellite networks products. The increase in service revenues was primarily driven by an increase in mobile broadband satellite communication services.
Independent research and development Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Independent research and development $ 153.2 $ 115.8 $ 37.4 32 % The $37.4 million increase in IR&D expenses was mainly the result of an increase of $24.3 million in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and a $14.1 million increase in our government systems segment (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).
Independent research and development Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Independent research and development $ 149.5 $ 108.5 $ 41.0 38 % The $41.0 million increase in IR&D expenses was mainly the result of an increase of $23.6 million in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies and mobile broadband satellite communication systems) and an $18.4 million increase in our government systems segment (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).
The primary products, systems, solutions and services offered by our commercial networks segment are comprised of: • Mobile broadband satellite communication systems, designed for use in aircraft and seagoing vessels • Fixed broadband satellite communication systems, including next-generation satellite network infrastructure and ground terminals. • Antenna systems, including state-of-the-art ground and airborne terminals, antennas and gateways for terrestrial and satellite customer applications, mobile satellite communication, Ka-band earth stations and other multi-band antennas. 43 • Satellite networking development, including specialized design and technology services covering all aspects of satellite communication system architecture and technology. • Space systems, including the design and development of high-capacity Ka-band satellites and associated payload technologies for our own satellite fleet as well as for third parties.
The primary products, systems, solutions and services offered by our commercial networks segment are comprised of: • Mobile broadband satellite communication systems, designed for use in aircraft, land-mobile and seagoing vessels. • Fixed broadband satellite communication systems, including next-generation satellite network infrastructure, ground terminals and design and implementation for customer telecommunication systems. • Antenna systems, including state-of-the-art ground and airborne terminals, antennas and gateways for terrestrial and satellite customer applications, mobile satellite communication, Ka-band earth stations and other multi-band/multi-function antennas. 45 • Space systems design and satellite networking development, including the design and development of the architecture of high-capacity Ka-band geosynchronous satellites and associated payload technologies (both for our own satellite fleet as well as for third parties) and special purpose LEO and MEO satellites and other small satellite platforms, as well as semiconductor design for ASIC and MMIC chips.
The total consideration payable by us under the Purchase Agreement consists of $850.0 million in cash, subject to adjustments (including for certain dividends, see below), and approximately 46.36 million unregistered shares of our common stock.
The total consideration payable by us under the Purchase Agreement consists of $850.0 million in cash, subject to adjustments (such as the dividend paid by Inmarsat in April 2022, see below), and approximately 46.36 million unregistered shares of our common stock.
Long-Term Debt As of March 31, 2022, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 2025 Notes, $600.0 million in principal amount of 2027 Notes, $400.0 million in principal amount of 2028 Notes, $700.0 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our $700.0 million Revolving Credit Facility, $78.6 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility and $45.8 million of finance lease obligations.
Long-Term Debt As of March 31, 2023, the aggregate principal amount of our total outstanding indebtedness was $2.5 billion, which was comprised of $700.0 million in principal amount of 2025 Notes, $600.0 million in principal amount of 2027 Notes, $400.0 million in principal amount of 2028 Notes (together with the 2025 Notes and 2027 Notes, the Notes), $694.8 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our $700.0 million Revolving Credit Facility, $59.0 million in principal amount of outstanding borrowings under our direct loan facility with the Export-Import Bank of the United States (the Ex-Im Credit Facility) and $36.4 million of finance lease obligations.
Any required impairment loss would be measured as the amount by 51 which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations. No material impairments were recorded by us for fiscal years 2022, 2021 and 2020.
Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and charged to results of operations.
The primary products and services of our government systems segment include: • Government mobile broadband products and services, which provide military and government users with high-speed, real-time, broadband and multimedia connectivity in key regions of the world, as well as line-of-sight and beyond-line-of-sight ISR missions. • Government satellite communication systems, which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems, and include products designed for manpacks, aircraft, UAVs, seagoing vessels, ground-mobile vehicles and fixed applications. • Secure networking, cybersecurity and information assurance products and services, which provide advanced, high-speed IP-based “Type 1” and HAIPE-compliant encryption solutions that enable military and government users to communicate information securely over networks, and that protect the integrity of data stored on computers and storage devices. • Tactical data links, including our BATS-D handheld Link 16 radios, our STT 2-channel radios for manned and unmanned applications, “disposable” defense data links, and our MIDS and MIDS-JTRS terminals for military fighter jets.
Government Systems Our government systems segment offers a broad array of products and services, including: • Government mobile broadband products and services, which provide military and government users with high-speed, real-time, broadband and multimedia connectivity in key regions of the world, as well as line-of-sight and beyond-line-of-sight ISR missions. • Government satellite communication systems, which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems, and include products designed for manpacks, aircraft, UAVs, seagoing vessels, ground-mobile vehicles, space-based systems and fixed applications. • Secure networking, cybersecurity and information assurance products and services, which provide advanced, high-speed IP-based “Type 1” and HAIPE-compliant encryption solutions that enable military and government users to communicate information securely, and that protect the integrity of data stored on computers and storage devices. • Tactical data link solutions, which continue to provide certain solutions in the tactical data link space, including our MOJO tactical gateway family of products and simulation environments via our radio frequency generators which test our customers' tactical data links.
The closing of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances, and approval by our stockholders of the issuance of shares in the Inmarsat Transaction and an amendment to our certificate of incorporation to increase the number of shares of our common stock authorized for issuance.
Our stockholders approved the issuance of shares in the Inmarsat Transaction and an amendment to our certificate of incorporation to increase the number of shares of our common stock authorized for issuance at a special meeting held on June 21, 2022. 47 The closing of the Inmarsat Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances.
Capital Expenditures and IR&D Investments Our total capital expenditures in fiscal year 2023 are expected to be higher than fiscal year 2022, as we continue to invest in building and expanding our global network and satellite fleet, as well as costs related to the roll-out of related earth station infrastructure and increased ground network investments related to international expansion and other growth opportunities.
Despite the capital expenditures in fiscal year 2023 related to the launch of ViaSat-3 Americas as well as ViaSat-3 EMEA, our total capital expenditures in fiscal year 2024 are expected to remain flat compared to fiscal year 2023, as we continue to invest in building and expanding our global network and satellite fleet, as well as incurring costs related to the roll-out of related earth station infrastructure and increased ground network investments related to international expansion and other growth opportunities.
The decrease in operating loss was driven primarily by higher earnings contributions of $38.0 million, driven by increased revenues and improved margins from our mobile broadband satellite communication systems products.
The increase in commercial networks segment operating loss was offset by higher earnings contributions of $35.9 million, driven by increased revenues and improved margins from our mobile broadband satellite communication systems products.
In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility , paid a de minimis amount of cash in respect of fractional shares and paid an insignificant amount of other consideration.
In connection with the acquisition, we issued approximately 4.0 million shares of our common stock to RigNet former shareholders, paid down $107.3 million of outstanding borrowings of RigNet’s revolving credit facility, and retained approximately $20.6 million of RigNet’s cash on hand.
Inmarsat Acquisition On November 8, 2021, we entered into a Purchase Agreement with the Sellers to combine Viasat with Inmarsat. Pursuant to the Purchase Agreement, we will purchase all of the issued and outstanding shares of Inmarsat from the Sellers upon the terms and subject to the conditions set forth therein.
Pursuant to the Purchase Agreement, we will purchase all of the issued and outstanding shares of Inmarsat from the Sellers upon the terms and subject to the conditions set forth therein.
We also incur 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 R&D projects. Our IR&D investments are expected to continue through fiscal year 2023 and beyond and support our government and commercial air mobility businesses.
We also incur 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 R&D projects.
This $221.6 million decrease was primarily driven by a $290.1 million year-over-year increase in cash used to fund net operating assets, partially offset by our operating results (net loss adjusted for depreciation, amortization and other non-cash changes) which resulted in $68.5 million of higher cash provided by operating activities year-over-year.
This $137.8 million decrease was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $215.3 million of lower cash provided by operating activities year-over-year, partially offset by a $77.6 million year-over-year decrease in cash used to fund net operating assets.
Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
Due to the nature of this process, it is difficult to predict the probability and timing of obtaining awards in these markets. 49 Critical Accounting Policies and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
In addition, product revenues in the segment were negatively impacted in fiscal year 2022 by anticipated delays in certification of certain information security and tactical data link products, as well as certain unanticipated supply chain issues that affected certain product shipments. Despite these obstacles, new government systems segment awards remained strong through the end of fiscal year 2022.
In addition, product revenues in the segment were negatively impacted in fiscal year 2022 by anticipated delays in certification of certain information security products, as well as certain unanticipated supply chain issues that affected certain product shipments.
At March 31, 2022, we had $310.5 million in cash and cash equivalents, $389.1 million in working capital, and no outstanding borrowings and borrowing availability of $637.0 million under our Revolving Credit Facility.
At March 31, 2023, we had $1.4 billion in cash and cash equivalents and restricted cash, $1.3 billion in working capital, and no outstanding borrowings and borrowing availability of $657.4 million under our Revolving Credit Facility.
We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary. Leases For contracts entered into on or after April 1, 2019, we assess at contract inception whether the contract is, or contains, a lease.
We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary. 52 Leases In accordance with ASC 842, we assess at contract inception whether the contract is, or contains, a lease.
Segment operating profit Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment operating profit $ 174.5 $ 208.6 $ (34.1 ) (16 )% Percentage of segment revenues 16 % 20 % The $34.1 million decrease in our government systems segment operating profit was driven by a $37.3 million increase in SG&A costs (including $10.5 million of acquisition-related expenses related to the Inmarsat Transaction) and a $14.1 million increase in IR&D expenses (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).
Despite these obstacles, new government systems segment awards remained strong through the end of fiscal year 2022. 62 Segment operating profit (loss) Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment operating profit (loss) $ 93.1 $ 139.7 $ (46.6 ) (33 )% Percentage of segment revenues 13 % 19 % The $46.6 million decrease in our government systems segment operating profit was driven by a $32.5 million increase in SG&A costs (including $10.5 million of acquisition-related expenses related to the Inmarsat Transaction) and a $18.4 million increase in IR&D expenses (primarily related to the development of next-generation dual band mobility solutions and the advancement of integrated government satellite communications platforms).
Our ability to realize revenues from contracts in backlog is dependent upon adequate funding for such contracts. Although we do not control the funding of our contracts, our experience indicates that actual contract funding has ultimately been approximately equal to the aggregate amounts of the contracts.
Although we do not control the funding of our contracts, our experience indicates that actual contract funding has ultimately been approximately equal to the aggregate amounts of the contracts.
The services help foster digital inclusion by enabling millions of people to connect to affordable high-quality internet services via a centralized community hotspot connected to the internet via satellite.
These services help foster digital inclusion by enabling millions of people to connect to affordable, high-quality internet services via a centralized terminal connected to the internet via satellite, that is then used to provide community hotspots, home broadband and mobile broadband.
Other Acquisitions On April 30, 2021, we completed our acquisition of the remaining 51% interest in EBI, a satellite broadband internet service provider in EMEA, from Eutelsat.
See Note 4 — Discontinued Operations to our consolidated financial statements for additional information. On April 30, 2021, we completed our acquisition of the remaining 51% interest in EBI, a satellite broadband internet service provider in EMEA, from Eutelsat.
As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions. In addition, we may experience bandwidth supply constraints in the lead-up to the commencement of commercial service on new satellites.
As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions.
Due to the nature of this process, it is difficult to predict the probability and timing of obtaining awards in these markets. Historically, a significant portion of our revenues in our commercial networks and government systems segments has been derived from customer contracts that include the development of products.
Historically, a significant portion of our revenues in our commercial networks and government systems segments has been derived from customer contracts that include the development of products.
Commercial networks segment Revenues Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment product revenues $ 443.4 $ 268.8 $ 174.6 65 % Segment service revenues 68.7 52.0 16.6 32 % Total segment revenues $ 512.1 $ 320.9 $ 191.2 60 % Our commercial networks segment revenues increased by $191.2 million, due to a $174.6 million increase in product revenues and a $16.6 million increase in service revenues.
The increase in our satellite services segment operating profit was partially offset by higher SG&A costs of $96.1 million (mainly attributable to RigNet, which was acquired during the first quarter of fiscal year 2022, as well as acquisition-related expenses related to the Inmarsat Transaction). 61 Commercial networks segment Revenues Fiscal Years Ended Dollar Percentage (In millions, except percentages) March 31, 2022 March 31, 2021 Increase (Decrease) Increase (Decrease) Segment product revenues $ 443.4 $ 268.8 $ 174.6 65 % Segment service revenues 68.7 52.0 16.6 32 % Total segment revenues $ 512.1 $ 320.9 $ 191.2 60 % Our commercial networks segment revenues increased by $191.2 million, due to a $174.6 million increase in product revenues and a $16.6 million increase in service revenues.
Cash provided by financing activities for fiscal year 2022 was $643.6 million compared to $149.7 million for fiscal year 2021.
Cash used in financing activities for fiscal year 2023 was $66.1 million compared to cash provided by financing activities of $643.6 million for fiscal year 2022.
We have elected the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
We have elected the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less. 51 If a contract is separated into more than one performance obligation, the total transaction price is allocated to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
If, after completing the qualitative assessment, we determine that it is more likely than not that the estimated fair value is greater than the carrying value, we conclude that no impairment exists.
Current authoritative guidance allows us to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. If, after completing the qualitative assessment, we determine that it is more likely than not that the estimated fair value is greater than the carrying value, we conclude that no impairment exists.
Backlog is not necessarily indicative of future sales. A majority of our contracts can be terminated at the convenience of the customer. Orders are often made substantially in advance of delivery, and our contracts typically provide that orders may be terminated with limited or no penalties.
A majority of our contracts can be terminated at the convenience of the customer. Orders are often made substantially in advance of delivery, and our contracts typically provide that orders may be terminated with limited or no penalties. In addition, purchase orders may present product specifications that would require us to complete additional product development.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−1 removed6 unchanged
Biggest changeOur primary interest rate under the Revolving Credit Facility is the Eurodollar rate plus an applicable margin that is based on our total leverage ratio. As of 60 March 31, 2022, the effective interest rate on our outstanding borrowings under the Term Loan Facility was 5.51%.
Biggest changeAs of March 31, 2023, the effective interest rate on our outstanding borrowings under the Term Loan Facility was 9.95%. Our primary interest rate under the Revolving Credit Facility is the Eurodollar rate plus an applicable margin that is based on our total leverage ratio.
Accordingly, assuming the outstanding balance under the Term Loan Facility remained constant and we continued to have no outstanding borrowings under the Revolving Credit Facility over a year, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest, by approximately $3.5 million over a 12-month period.
Accordingly, assuming the outstanding balance under the Term Loan Facility remained constant over a year and we continued to have no outstanding borrowings under the Revolving Credit Facility, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest, by approximately $3.5 million over a 12-month period.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and short-term and long-term obligations (including the Credit Facilities and the Notes).
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and short-term and long-term obligations (including the Credit Facilities and the Notes).
A five percent variance in foreign currencies in which our international business is conducted would change our (loss) income before income taxes by $1.3 million and $1.1 million for the fiscal years ended March 31, 2022 and 2021, respectively.
A five percent variance in foreign currencies in which our international business is conducted would change our income (loss) before income taxes by $1.8 million and $1.3 million for the fiscal years ended March 31, 2023 and 2022, respectively.
As of March 31, 2022 and March 31, 2021, we had no foreign currency forward contracts outstanding.
As of March 31, 2023 and March 31, 2022, we had no foreign currency forward contracts outstanding.
If the underlying weighted average interest rate on our cash and cash equivalents, assuming balances remain constant over a year, changed by 50 basis points, interest income would have increased or decreased by an insignificant amount for the fiscal years ended March 31, 2022 and 2021.
If the underlying weighted average interest rate on our cash and cash equivalents, assuming balances remain constant over a year, changed by 50 basis points, interest income would have increased or decreased by $2.1 million and an insignificant amount for the fiscal years ended March 31, 2023 and 2022, respectively.
Under the Revolving Credit Facility, the effective interest rate as of March 31, 2022 that would have been applied to any new Eurodollar-based borrowings under the Revolving Credit Facility was approximately 3.85%. As of March 31, 2022, we had no outstanding borrowings under our Revolving Credit Facility.
As of March 31, 2023, the effective interest rate that would have been applied to any new Eurodollar-based borrowings under the Revolving Credit Facility was approximately 7.31%. As of March 31, 2023, we had no outstanding borrowings under our Revolving Credit Facility.
The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. To minimize this risk, we maintain a significant amount of our cash balance in money market accounts.
The primary objective of our investment activities is to preserve principal while at the same time to maximize the income we receive from our investments without significantly increasing risk. To minimize this risk, we maintain a significant amount of our cash balance in money market accounts, with a significant portion held in U.S. government-backed qualified money-market securities.
We consider investments in highly liquid instruments purchased with a remaining maturity of three months or less at the date of purchase to be cash equivalents.
We consider investments in highly liquid instruments purchased with a remaining maturity of three months or less at the date of purchase to be cash equivalents. As of March 31, 2023, we held no short-term investments. Our indebtedness for borrowed money comprises borrowings under our Credit Facilities and the aggregate principal amount outstanding under our Notes.
Removed
As of March 31, 2022, we had $700.0 million in principal amount of outstanding borrowings under our Term Loan Facility, no outstanding borrowings under our Revolving Credit Facility, $78.6 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility, $700.0 million in aggregate principal amount outstanding of the 2025 Notes, $600.0 million in aggregate principal amount outstanding of the 2027 Notes and $400.0 million in aggregate principal amount outstanding of the 2028 Notes, and we held no short-term investments.

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