VIASAT, INC. Company Overview
We are an innovator in communications technologies and services, focused on making connectivity accessible, available and secure for all. Our end-to-end platform of high-capacity Ka-band satellites, ground infrastructure and user terminals enables us to provide cost-effective, high-speed, high-quality broadband solutions to enterprises, consumers and government users around the globe, whether on the ground, in the air or at sea. In addition, our government business includes a market-leading portfolio of military tactical data link systems, satellite communication products and services and cybersecurity and information assurance products and services. Our product, system and service offerings are often linked through common underlying technologies, customer applications and market relationships. We believe that our portfolio of products and services, combined with our vertical integration strategy and ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provides us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.
We conduct our business through three segments: satellite services, commercial networks and government systems.
Acquisitions
OnApril 30, 2021 , subsequent to fiscal year end, we purchased the remaining 51% interest inEuro Infrastructure Co. from Eutelsat for approximately €142.6 million, or approximately$172.7 million (subject to customary post-closing net working capital and net debt adjustments). The purchase price was funded with available cash, resulting in a cash outlay of approximately €41.6 million, or$50.4 million , net of approximately €101.0 million, or$122.3 million , ofEuro Infrastructure Co.'s cash on hand. OnApril 30, 2021 , subsequent to fiscal year end, we acquired RigNet in exchange for the issuance of approximately 4.0 million shares of our common stock and a de minimis amount of cash in respect of fractional shares. RigNet is a leading provider of ultra-secure, intelligent networking solutions and specialized applications. Given the timing of the closing of these acquisitions, we are currently in the process of valuing the assets acquired and liabilities assumed in each of the business combinations. Therefore, we are not yet able to provide the amounts to be recognized for the major classes of assets acquired and liabilities assumed and other disclosures required by ASC 805, Business Combinations. We will disclose this and other related information in our Quarterly Report on Form 10-Q for the quarter endingJune 30, 2021 .
Private Placement
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.
COVID-19
InMarch 2020 , the global outbreak of COVID-19 was declared a pandemic by theWorld Health Organization and a national emergency by theU.S. Government . The COVID-19 pandemic and attempts to contain it, such as mandatory closures, "shelter-in-place" orders and travel restrictions, have caused significant disruptions and adverse effects onU.S. and global economies, including impacts to supply chains, customer demand and financial markets. We have taken measures to protect the health and safety of our employees and to work with our customers, employees, suppliers, subcontractors, distributors, resellers and communities to address the disruptions from the pandemic. Although our financial results for the year endedMarch 31, 2021 were impacted by the pandemic, the impact was not material to our financial position, results of operations or cash flows in such period, with negative impacts particularly in our commercial aviation business offset by strong demand in our fixed broadband services business and other parts of our business. We continue to expect our diversified businesses to provide resiliency as we enter fiscal year 2022. Our government systems segment, which represented 47% and 49% of our total revenues during fiscal years 2021 and 2020, respectively, continued to perform in line with our expectations. Demand for products and services in our government systems segment remained strong despite the evolving COVID-19 pandemic, although our government business experienced some administrative delays on certain contractual vehicles as government customers continue to adjust to the challenges inherent in the remote work environment resulting from the COVID-19 pandemic. 40
-------------------------------------------------------------------------------- During fiscal year 2021, through the COVID-19 pandemic, we experienced increased demand for our premium high-speed plans in our fixed broadband services business, reflecting customers' increased bandwidth needs in a remote working/distance schooling environment. However, the pandemic also caused a severe decline in global air traffic during fiscal year 2021, which reduced demand for our in-flight services and IFC systems in our satellite services and commercial networks segments, respectively. While current global airline traffic is still a fraction of the activity in fiscal year 2020, domestic airline traffic is showing signs of improvement. As a result, our in-flight services business showed modest improvement in the quarter endedMarch 31, 2021 compared to the quarter endedDecember 31, 2020 with increased planes in service and passenger volumes. We expect to continue to see negative impacts on revenues and operating cash flows from our IFC businesses in fiscal year 2022 and potentially beyond, but for the effects to continue to lessen over time with increases in passenger air traffic and the return to service of additional currently inactive aircraft. In each of fiscal years 2021 and 2020, less than 10% of our total revenues were generated by services and products provided to commercial airlines reported in our satellite services and commercial networks segments. The extent of the impact of the COVID-19 pandemic on our business in fiscal year 2022 and potentially beyond will depend on many factors, including the duration and scope of the public health emergency, the extent, duration and effectiveness of containment actions taken, the speed and extent of vaccination programs, the extent of disruption to important global, regional and local supply chains and economic markets, and the impact of the pandemic on overall supply and demand, global air travel, consumer confidence, discretionary spending levels and levels of economic activity. Satellite Services Our satellite services segment uses our proprietary technology platform to provide satellite-based high-speed broadband services around the globe for use in commercial applications. Our proprietary Ka-band satellites are at the core of our technology platform. The primary services offered by our satellite services segment are comprised of:
• Fixed broadband services, which provide consumers and businesses with
high-speed, high-quality broadband internet access and VoIP services,
primarily in
to approximately 590,000
• In-flight services, which provide industry-leading IFC, W-IFE and aviation
software services. As of
and in service on approximately 1,480 commercial aircraft, of which, due
to impacts of the COVID-19 pandemic, approximately 200 were inactive at
fiscal year end. We anticipate that approximately 1,190 additional
commercial aircraft under existing customer agreements with commercial
airlines will be put into service with our IFC systems. However, the
timing of installation and entry into service for additional aircraft
under existing customer agreements may be delayed due to COVID-19 impacts.
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. See the section entitled "COVID-19"
above for a discussion of the impact of the COVID-19 pandemic on our
in-flight services business.
• Community Internet services, which offer innovative, affordable,
satellite-based connectivity in communities with poor or no other means of
internet access. 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. Our Community Internet services are currently offered in
in other countries, including
• Other mobile broadband services, which include high-speed, satellite-based
internet services to seagoing vessels (such as energy offshore vessels,
cruise ships, consumer ferries and yachts), as well as L-band managed
services enabling real-time machine-to-machine (M2M) position tracking,
management of remote assets and operations, and visibility into critical
areas of the supply chain.
• Advanced software and communication infrastructure services, which include
ultra-secure solutions spanning global IP connectivity,
bandwidth-optimized over-the-top applications, industrial
Internet-of-Things big data enablement and industry-leading machine
learning analytics. These services support the full evolution of digital
enablement, and primarily result from our acquisition of RigNet subsequent
to fiscal year end.
The assets and results of operations ofEuro Infrastructure Co. and RigNet, which were acquired subsequent to fiscal year end (see discussion above), will primarily be included in our satellite services segment (with insignificant amounts included in our commercial networks segment), commencing with the first quarter of fiscal year 2022. 41
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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. 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, seagoing vessels and land-mobile systems.
• Fixed broadband satellite communication systems, including next-generation
satellite network infrastructure and ground terminals.
• Antenna systems, including state-of-the-art ground and airborne terminals,
antennas and gateways for terrestrial and satellite customer applications,
mobile satellite communication, Ka-band earth stations and other
multi-band antennas.
• Satellite networking development, including specialized design and
technology services covering all aspects of satellite communication system
architecture and technology.
• Space systems, including the design and development of high-capacity
Ka-band satellites and associated payload technologies for our own
satellite fleet as well as for third parties.
Government Systems
Our government systems segment offers a broad array of products and services designed to enable the collection and transmission of secure real-time digital information and communications between fixed and mobile command centers, intelligence and defense platforms and individuals in the field. The primary products and services of our government systems segment include:
• 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.
Sources of Revenues
Our satellite services segment revenues are primarily derived from our fixed broadband services and in-flight services.
Revenues in our commercial networks and government systems segments are
primarily derived from three types of contracts: fixed-price, cost-reimbursement
and time-and-materials contracts. Fixed-price contracts (which require us to
provide products and services under a contract at a specified price) comprised
approximately 89%, 88% and 90% of our total revenues for these segments for
fiscal years 2021, 2020 and 2019, respectively. The remainder of our revenues in
these segments for such periods was derived primarily from cost-reimbursement
contracts (under which we are reimbursed for all actual costs incurred in
performing the contract to the extent such costs are within the contract ceiling
and allowable under the terms of the contract, plus a fee or profit) and from
time-and-materials contracts (which reimburse us for the number of labor hours
expended at an established hourly rate negotiated in the contract, plus the cost
of materials utilized in providing such products or services).
Our ability to grow and maintain our revenues in our commercial networks and
government systems segments has to date depended on our ability to identify and
target markets where the customer places a high priority on the technology
solution, and our ability to obtain additional sizable contract awards. Due to
the nature of this process, it is difficult to predict the probability and
timing of obtaining awards in these markets.
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Historically, a significant portion of our revenues in our commercial networks
and government systems segments has been derived from customer contracts that
include the development of products. The development efforts are conducted in
direct response to the customer's specific requirements and, accordingly,
expenditures related to such efforts are included in cost of sales when incurred
and the related funding (which includes a profit component) is included in
revenues. Revenues for our funded development from our customer contracts were
approximately 23%, 24% and 19% of our total revenues during fiscal years 2021,
2020 and 2019, respectively.
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. IR&D expenses were approximately 5%, 6% and 6% of total revenues
in fiscal years 2021, 2020 and 2019, respectively. As a government contractor,
we are able to recover a portion of our IR&D expenses pursuant to our government
contracts.
Approximately 9%, 11% and 11% of our total revenues in fiscal years 2021, 2020
and 2019, respectively, were derived from international sales. Doing business
internationally creates additional risks related to global political and
economic conditions and other factors identified under the heading "Risk
Factors" in Part I, Item 1A and elsewhere in this report.
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 inthe United States of America (GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We consider the policies discussed below to be critical to an understanding of our financial statements because their application places the most significant demands on management's judgment, with financial reporting results relying on estimation about the effect of matters that are inherently uncertain. We describe the specific risks for these critical accounting policies in the following paragraphs. 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. Under this model, we (1) identify the contract with the customer, (2)
identify our performance obligations in the contract, (3) determine the
transaction price for the contract, (4) allocate the transaction price to our
performance obligations and (5) recognize revenue when or as we satisfy our
performance obligations. These performance obligations generally include the
purchase of services (including broadband capacity and the leasing of broadband
equipment), the purchase of products, and the development and delivery of
complex equipment built to customer specifications under long-term contracts.
The timing of satisfaction of performance obligations may require judgment. 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. 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. As discussed in Note 1 - The Company and a Summary of Its
Significant Accounting Policies - Leases to our consolidated financial
statements, for broadband equipment leased to fixed broadband customers in
conjunction with the delivery of connectivity services, we account for the lease
and non-lease components of connectivity services arrangement as a single
performance obligation as the connectivity services represent the predominant
component.
We also derive a portion of our revenues from contracts with customers to
provide products. Performance obligations to provide products are satisfied at
the point in time when control is transferred to the customer. These contracts
typically require payment by the customer upon passage of control and
determining the point at which control is transferred may require judgment. To
identify the point at which control is transferred to the customer, we consider
indicators that include, but are not limited to, whether (1) we have the present
right to payment for the asset, (2) the customer has legal title to the asset,
(3) physical possession of the asset has been transferred to the customer, (4)
the customer has the significant risks and rewards of ownership of the asset,
and (5) the customer has accepted the asset. For product revenues, control
generally passes to the customer upon delivery of goods to the customer.
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The 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. Government typically
are subject to the Federal Acquisition Regulation (FAR) and are priced based on
estimated or actual costs of producing goods or providing services. The FAR
provides guidance on the types of costs that are allowable in establishing
prices for goods and services provided under U.S. Government contracts. The
pricing for non-U.S. Government contracts is based on the specific negotiations
with each customer. Under the typical payment terms of our U.S. Government
fixed-price contracts, the customer pays us either performance-based payments
(PBPs) or progress payments. PBPs are interim payments based on quantifiable
measures of performance or on the achievement of specified events or milestones.
Progress payments are interim payments based on a percentage of the costs
incurred as the work progresses. Because the customer can often retain a portion
of the contract price until completion of the contract, our U.S. Government
fixed-price contracts generally result in revenue recognized in excess of
billings which we present as unbilled accounts receivable on the balance sheet.
Amounts billed and due from our customers are classified as receivables on the
balance sheet. The portion of the payments retained by the customer until final
contract settlement is not considered a significant financing component because
the intent is to protect the customer. For our U.S. Government cost-type
contracts, the customer generally pays us for our actual costs incurred within a
short period of time. For non-U.S. Government contracts, we typically receive
interim payments as work progresses, although for some contracts, we may be
entitled to receive an advance payment. We recognize a liability for these
advance payments in excess of revenue recognized and present it as collections
in excess of revenues and deferred revenues on the balance sheet. An advance
payment is not typically considered a significant financing component because it
is used to meet working capital demands that can be higher in the early stages
of a contract and to protect us from the other party failing to adequately
complete some or all of its obligations under the contract.
Performance obligations related to developing and delivering complex equipment
built to customer specifications under long-term contracts are recognized over
time as these performance obligations do not create assets with an alternative
use to us and we have an enforceable right to payment for performance to date.
To measure the transfer of control, revenue is recognized based on the extent of
progress towards completion of the performance obligation. The selection of the
method to measure progress towards completion requires judgment and is based on
the nature of the products or services to be provided. We generally use the
cost-to-cost measure of progress for our contracts because that best depicts the
transfer of control to the customer which occurs as we incur costs on our
contracts. Under the cost-to-cost measure of progress, the extent of progress
towards completion is measured based on the ratio of costs incurred to date to
the total estimated costs at completion of the performance obligation.
Estimating the total costs at completion of a performance obligation requires
management to make estimates related to items such as subcontractor performance,
material costs and availability, labor costs and productivity and the costs of
overhead. When estimates of total costs to be incurred on a contract exceed
total estimates of revenue to be earned, a provision for the entire loss on the
contract is recognized in the period the loss is determined. A one percent
variance in our future cost estimates on open fixed-price contracts as of
March 31, 2021 would change our income before income taxes by an insignificant
amount.
The evaluation of transaction price, including the amounts allocated to
performance obligations, may require significant judgments. Due to the nature of
the work required to be performed on many of our performance obligations, the
estimation of total revenue, and where applicable the cost at completion, is
complex, subject to many variables and requires significant judgment. 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. We estimate variable consideration
at the amount to which we expect to be entitled. We include estimated amounts in
the transaction price to the extent it is probable that a significant reversal
of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is resolved. Our estimates of variable
consideration and determination of whether to include estimated amounts in the
transaction price are based largely on an assessment of our anticipated
performance and all information (historical, current and forecasted) that is
reasonably available to us. In the event an agreement includes embedded
financing components, we recognize interest expense or interest income on the
embedded financing components using the effective interest method. This
methodology uses an implied interest rate which reflects the incremental
borrowing rate which would be expected to be obtained in a separate financing
transaction. 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.
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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. 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. If a standalone selling price is not
directly observable, we estimate the standalone selling price by considering all
information (including market conditions, specific factors, and information
about the customer or class of customer) that is reasonably available.
Deferred costs to obtain or fulfill contract
Under ASC 340-40, Other Assets and Deferred Costs - Contracts with Customers, we recognize an asset from the incremental costs of obtaining a contract with a customer if we expect to recover those costs. The incremental costs of obtaining a contract are those costs that we incur to obtain a contract with a customer that we would not have incurred if the contract had not been obtained. ASC 340-40 also requires the recognition of an asset from the costs incurred to fulfill a contract when (1) the costs relate directly to a contract or to an anticipated contract that we can specifically identify, (2) the costs generate or enhance our resources that will be used in satisfying (or in continuing to satisfy) performance obligations in the future, and (3) the costs are expected to be recovered. We recognize an asset related to commission costs incurred primarily in our satellite services segment and recognize an asset related to costs incurred to fulfill contracts. Costs to acquire customer contracts are amortized over the estimated customer contract life. Costs to fulfill customer contracts are amortized in proportion to the revenue to which the costs relate. For contracts with an estimated amortization period of less than one year, we expense incremental costs immediately.
Warranty reserves
We provide limited warranties on our products for periods of up to five years. We record a liability for our warranty obligations when we ship the products or they are included in long-term construction contracts based upon an estimate of expected warranty costs. Amounts expected to be incurred within 12 months are classified as accrued liabilities and amounts expected to be incurred beyond 12 months are classified as other liabilities in the consolidated financial statements. For mature products, we estimate the warranty costs based on historical experience with the particular product. For newer products that do not have a history of warranty costs, we base our estimates on our experience with the technology involved and the types of failures that may occur. It is possible that our underlying assumptions will not reflect the actual experience, and, in that case, we will make future adjustments to the recorded warranty obligation.
Property, equipment and satellites
Satellites and other property and equipment are recorded at cost or in the case of certain satellites and other property acquired, the fair value at the date of acquisition, net of accumulated depreciation. Capitalized satellite costs consist primarily of the costs of satellite construction and launch, including launch insurance and insurance during the period of in-orbit testing, the net present value of performance incentive payments expected to be payable to the satellite manufacturers (dependent on the continued satisfactory performance of the satellites), costs directly associated with the monitoring and support of satellite construction, and interest costs incurred during the period of satellite construction. We also construct earth stations, network operations systems and other assets to support our satellites, and those construction costs, including interest, are capitalized as incurred. At the time satellites are placed in service, we estimate the useful life of our satellites for depreciation purposes based upon an analysis of each satellite's performance against the original manufacturer's orbital design life, estimated fuel levels and related consumption rates, as well as historical satellite operating trends. We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary. We own three satellites in service overNorth America (ViaSat -2,ViaSat -1 and WildBlue-1) and, after acquiring the remaining interest inEuro Infrastructure Co. subsequent to fiscal year end, we also own the KA-SAT satellite over EMEA. In addition, we have lifetime leases of Ka-band capacity on two satellites. We also have a global constellation of three third-generationViaSat -3 class satellites under construction. In addition, we own related earth stations and networking equipment for all of our satellites. Property, equipment and satellites, net also includes the customer premise equipment units leased to subscribers under a retail leasing program as part of our satellite services segment. Leases For contracts entered into on or afterApril 1, 2019 , we assess at contract inception whether the contract is, or contains, a lease. Generally, we determine that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) we obtain the right to substantially all economic benefits from use of the asset, and (3) we have the right to direct the use of the asset. A lease is classified as a finance lease when one or more of the following criteria are met: (1) 45 -------------------------------------------------------------------------------- the lease transfers ownership of the asset by the end of the lease term, (2) the lease contains an option to purchase the asset that is reasonably certain to be exercised, (3) the lease term is for a major part of the remaining useful life of the asset, (4) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset or (5) the asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. A lease is classified as an operating lease if it does not meet any of these criteria. At the lease commencement date, we recognize a right-of-use asset and a lease liability for all leases, except short-term leases with an original term of 12 months or less. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All right-of-use assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of our incremental borrowing rate for a collateralized loan with the same term as the underlying leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. Certain of our real estate lease agreements require variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments based on a rate or index are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the depreciation of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. For both operating and finance leases, lease payments are allocated between a reduction of the lease liability and interest expense. For broadband equipment leased to fixed broadband customers in conjunction with the delivery of connectivity services, we have made an accounting policy election not to separate the broadband equipment from the related connectivity services. The connectivity services are the predominant component of these arrangements. The connectivity services are accounted for in accordance ASC 606. 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.
Impairment of long-lived and other long-term assets (property, equipment and satellites, and other assets, including goodwill)
In accordance with the authoritative guidance for impairment or disposal of
long-lived assets (ASC 360), we assess potential impairments to our long-lived
assets, including property, equipment and satellites and other assets, when
there is evidence that events or changes in circumstances indicate that the
carrying value may not be recoverable. We recognize an impairment loss when the
undiscounted cash flows expected to be generated by an asset (or group of
assets) are less than the asset's carrying value. Any required impairment loss
would be measured as the amount by which the asset's carrying value exceeds its
fair value, and would be recorded as a reduction in the carrying value of the
related asset and charged to results of operations. No material impairments were
recorded by us for fiscal years 2021, 2020 and 2019.
We account for our goodwill under the authoritative guidance for goodwill and
other intangible assets (ASC 350) and the provisions of ASU 2017-04, Simplifying
the Test for Goodwill Impairment, which we early adopted in fiscal year 2020.
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. Alternatively, if we
determine in the qualitative assessment that it is more likely than not that the
fair value is less than its carrying value, then we perform a quantitative
goodwill impairment test to identify both the existence of an impairment and the
amount of impairment loss, by comparing the fair value of the reporting unit
with its carrying amount, including goodwill. If the estimated fair value of the
reporting unit is less than the carrying value, then a goodwill impairment
charge will be recognized in the amount by which the carrying amount exceeds the
fair value, limited to the total amount of goodwill allocated to that reporting
unit. We test goodwill for impairment during the fourth quarter every fiscal
year and when an event occurs or circumstances change such that it is reasonably
possible that an impairment may exist.
In accordance with ASC 350, we assess qualitative factors to determine whether
goodwill is impaired. The qualitative analysis includes assessing the impact of
changes in certain factors including: (1) changes in forecasted operating
results and comparing actual results to projections, (2) changes in the industry
or our competitive environment
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since the acquisition date, (3) changes in the overall economy, our market share
and market interest rates since the acquisition date, (4) trends in the stock
price and related market capitalization and enterprise values, (5) trends in
peer companies' total enterprise value metrics, and (6) additional factors such
as management turnover, changes in regulation and changes in litigation matters.
Based on our qualitative assessment performed during the fourth quarter of
fiscal year 2021, we concluded that it was more likely than not that the
estimated fair value of our reporting units exceeded their carrying value as of
Income taxes and valuation allowance on deferred tax assets
Management evaluates the realizability of our deferred tax assets and assesses the need for a valuation allowance on a quarterly basis to determine if the weight of available evidence suggests that an additional valuation allowance is needed. In accordance with the authoritative guidance for income taxes (ASC 740), net deferred tax assets are reduced by a valuation allowance if, based on all the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the event that our estimate of taxable income is less than that required to utilize the full amount of any deferred tax asset, a valuation allowance is established, which would cause a decrease to income in the period such determination is made. Our valuation allowance against deferred tax assets increased from$42.6 million atMarch 31, 2020 to$47.1 million atMarch 31, 2021 . The valuation allowance relates to state and foreign net operating loss carryforwards, state R&D tax credit carryforwards and foreign tax credit carryforwards. Our analysis of the need for a valuation allowance on deferred tax assets considered historical as well as forecasted future operating results. In addition, our evaluation considered other factors, including our contractual backlog, our history of positive earnings, current earnings trends assuming our satellite services segment continues to grow, taxable income adjusted for certain items, and forecasted income by jurisdiction. We also considered the period over which these net deferred tax assets can be realized and our history of not having federal tax loss carryforwards expire unused. Accruals for uncertain tax positions are provided for in accordance with the authoritative guidance for accounting for uncertainty in income taxes (ASC 740). Under the authoritative guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. 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 inthe United States and numerous foreign jurisdictions. In the ordinary course of business, there are calculations and transactions where the ultimate tax determination is uncertain. In addition, changes in tax laws and regulations as well as adverse judicial rulings could adversely affect the income tax provision. We believe we have adequately provided for income tax issues not yet resolved with federal, state and foreign tax authorities. However, if these provided amounts prove to be more than what is necessary, the reversal of the reserves would result in tax benefits being recognized in the period in which we determine that provision for the liabilities is no longer necessary. If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional charge to expense would result. 47
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Results of Operations
The following table presents, as a percentage of total revenues, income statement data for the periods indicated:
Fiscal Years Ended
March 31, March 31, March 31,
2021 2020 2019
Revenues: 100.0 % 100.0 % 100.0 %
Product revenues 46 51 53
Service revenues 54 49 47
Operating expenses:
Cost of product revenues 34 37 40
Cost of service revenues 35 33 34
Selling, general and administrative 23 23 22
Independent research and development 5 6 6
Amortization of acquired intangible assets - - -
Income (loss) from operations 3 2 (3 )
Interest expense, net (1 ) (2 ) (2 )
Income (loss) before income taxes 1 - (5 )
(Provision for) benefit from income taxes (- ) - 2
Net income (loss) 1 1 (3 )
Net income (loss) attributable to Viasat, Inc. - - (3 )
Fiscal Year 2021 Compared to Fiscal Year 2020
Revenues
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Product revenues $ 1,044.5 $ 1,172.5 $ (128.1 ) (11 )%
Service revenues 1,211.7 1,136.7 75.0 7 %
Total revenues $ 2,256.1 $ 2,309.2 $ (53.1 ) (2 )%
Our total revenues decreased by $53.1 million as a result of a $128.1 million
decrease in product revenues, partially offset by a $75.0 million increase in
service revenues. The product revenue decrease was driven primarily by decreases
of $107.0 million in our government systems segment and $21.1 million in our
commercial networks segment. The service revenue increase was due to increases
of $42.4 million in our satellite services segment and $35.2 million in our
government systems segment, partially offset by a $2.6 million decrease in our
commercial networks segment.
Cost of revenues
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Cost of product revenues $ 774.9 $ 845.8 $ (70.9 ) (8 )%
Cost of service revenues 789.4 763.9 25.5 3 %
Total cost of revenues $ 1,564.3 $ 1,609.7 $ (45.4 ) (3 )%
Cost of revenues decreased by $45.4 million due to a decrease of $70.9 million
in cost of product revenues, partially offset by a $25.5 million increase in
cost of service revenues. The cost of product revenue decrease was mainly due to
decreased revenues, causing a $92.4 million decrease in cost of product revenues
on a constant margin basis, mainly from revenue decreases in our government
systems and commercial networks segments. The decrease in cost of product
revenues was partially offset by lower margins, primarily driven by our mobile
broadband satellite communication systems products in our commercial networks
segment and our government mobile broadband products and tactical data link
products in our government systems segment. The cost of service revenue increase
primarily related to increased revenues from our fixed broadband services
business, partially offset by improved margins in our fixed broadband services
business, reflecting the strength of the low variable costs structure of our
fixed broadband services business as the business continues to scale.
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Selling, general and administrative expenses
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020
(Decrease) (Decrease)
Selling, general and administrative
(2 )%
The $10.8 million decrease in SG&A expenses was primarily due to a decrease in
selling costs of $13.4 million and a decrease in bid and proposal costs of $6.6
million , partially offset by an increase in support costs of $9.2 million . The
decrease in selling costs was mainly driven by our satellite services segment,
but was reflected across all three segments. The decrease in bid and proposal
costs was mainly from our government systems segment. The increase in support
costs reflected increases across all three segments. SG&A expenses consisted
primarily of personnel costs and expenses for business development, marketing
and sales, bid and proposal, facilities, finance, contract administration and
general management.
Independent research and development
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020
(Decrease) (Decrease)
Independent research and development
(11 )%
The $14.6 million decrease in IR&D expenses was mainly the result of a decrease
of $16.7 million in IR&D efforts in our commercial networks segment (primarily
related to next-generation satellite payload technologies and mobile broadband
satellite communication systems).
Amortization of acquired intangible assets
We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to ten years. The$2.1 million decrease in amortization of acquired intangible assets in fiscal year 2021 compared to fiscal year 2020 was primarily the result of certain acquired intangibles in our satellite services segment becoming fully amortized during the prior fiscal year. Expected amortization expense for acquired intangible assets for each of the following periods is as follows: Amortization (In thousands) Expected for fiscal year 2022 $ 3,300 Expected for fiscal year 2023 2,993 Expected for fiscal year 2024 2,472 Expected for fiscal year 2025 803 Expected for fiscal year 2026 - Thereafter - $ 9,568 Interest income The$1.2 million decrease in interest income for fiscal year 2021 compared to fiscal year 2020 was primarily the result of lower interest rates during fiscal year 2021 compared to fiscal year 2020.
Interest expense
The$6.0 million decrease in interest expense in fiscal year 2021 compared to fiscal year 2020 was primarily due to an increase in the amount of interest capitalized compared to the prior year period. This decrease in interest expense was partially offset by the addition of interest expense related to the 2028 Notes, which were issued in the first quarter of fiscal year 2021.
Income taxes
The income tax provision in fiscal year 2021 primarily reflected the tax expense
from our income before income taxes, the tax expense for tax deficiencies upon
settlement of stock-based compensation during the period, and non-deductible
compensation, partially offset by benefit from federal and state R&D tax
credits. The income tax benefit in fiscal
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year 2020 primarily reflected the tax benefit from federal and state R&D tax credits, partially offset by the tax expense from our income before income taxes.
Segment Results for Fiscal Year 2021 Compared to Fiscal Year 2020
Satellite services segment
Revenues
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Segment product revenues $ - $ - $ - - %
Segment service revenues 868.9 826.6 42.4 5 %
Total segment revenues $ 868.9 $ 826.6 $ 42.4 5 %
Our satellite services segment revenues increased by $42.4 million due to an
increase in service revenues. The increase in service revenues was primarily
driven by higher ARPU in the United States in our fixed broadband business when
compared to the prior year period, partially offset by a decrease in service
revenues from our in-flight services. The increase in ARPU reflected a higher
mix of new and existing subscribers choosing Viasat's premium highest speed
plans. The in-flight service revenue decrease was driven primarily by an 8%
decrease in the number of commercial aircraft using in-flight services through
our IFC systems as of year end as a result of the COVID-19 pandemic. In
addition, our fiscal year 2021 in-flight service revenues were impacted by the
reductions in passenger air traffic and the number of inactive installed
aircraft, as well as lower capacity on active installed aircraft as a result of
the COVID-19 pandemic.
Segment operating profit
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Segment operating profit $ 35.9 $ 7.0 $ 28.8 411 %
Percentage of segment revenues 4 % 1 %
The $28.8 million increase in our satellite services segment operating profit
was driven primarily by higher earnings contributions of $24.4 million , mainly
due to increased revenues, with significant flow through resulting in improved
margins, reflecting the strength of the low variable costs structure of our
fixed broadband services business as the business continues to scale. The
increase in operating profit was also driven by lower selling costs. This
increase was partially offset by lower margins resulting from the negative
impact of the COVID-19 pandemic on our in-flight services business and an
increase in costs related to our investments in emerging global broadband
businesses.
Commercial networks segment
Revenues
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Segment product revenues $ 268.8 $ 290.0 $ (21.1 ) (7 )%
Segment service revenues 52.0 54.6 (2.6 ) (5 )%
Total segment revenues $ 320.9 $ 344.6 $ (23.7 ) (7 )%
Our commercial networks segment revenues decreased by $23.7 million , primarily
due to a $21.1 million decrease in product revenues and a $2.6 million decrease
in service revenues. The decrease in product revenues was primarily due to a
decrease of $44.9 million in mobile broadband satellite communication systems
products due to decreased IFC terminal deliveries resulting from the severe
decline in global air traffic and resulting downturn in the commercial aviation
market as a result of the COVID-19 pandemic, as well as a decrease of $5.4
million in satellite networking development programs products. The product
revenue decrease was partially offset by increases of $22.7 million in antenna
systems products and $4.0 million in fixed satellite networks products. The
decrease in service revenues was primarily due to a $5.3 million decrease in
mobile broadband satellite communication systems services, partially offset by a
$2.9 million increase in fixed satellite network services.
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Segment operating loss
Fiscal Years Ended Dollar Percentage
March 31, March 31, (Increase) (Increase)
(In millions, except percentages) 2021 2020 Decrease Decrease
Segment operating loss $ (180.7 ) $ (186.9 ) $ 6.1 3 %
Percentage of segment revenues (56 )% (54 )%
Our commercial networks segment operating loss decreased by $6.1 million
year-over-year. The decrease in operating loss was driven primarily by a $16.7
million decrease in IR&D expenses (primarily related to next-generation
satellite payload technologies and mobile broadband satellite communication
systems) and careful management of SG&A expenses, partially offset by lower
earnings contributions of $12.4 million , driven by decreased revenues and lower
margins from our mobile broadband satellite communication systems products.
Government systems segment
Revenues
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Segment product revenues $ 775.6 $ 882.6 $ (107.0 ) (12 )%
Segment service revenues 290.7 255.5 35.2 14 %
Total segment revenues $ 1,066.3 $ 1,138.1 $ (71.8 ) (6 )%
Our government systems segment revenues decreased by $71.8 million due to a
decrease of $107.0 million in product revenues, partially offset by an increase
of $35.2 million in service revenues. The product revenue decrease was primarily
driven by a $62.0 million decrease in government mobile broadband products, a
$37.4 million decrease in government satellite communication systems products
and a $21.2 million decrease in tactical satcom radio products. The decrease in
product revenues was partially offset by an increase of $10.1 million in
cybersecurity and information assurance products and a $3.8 million increase in
tactical data link products. Our government systems segment continued to show
some impacts from the COVID-19 pandemic, which has somewhat complicated product
manufacturing and shipments, but new government systems segment awards remained
very strong through the end of the fiscal year. The service revenue increase was
primarily due to a $20.4 million increase in government mobile broadband
services, a $5.2 million increase in tactical data link services, a $4.8 million
increase in government satellite communication systems services, a $2.5 million
increase in cybersecurity and information assurance services and a $2.2 million
increase in tactical satcom radio services. In the second half of fiscal year
2021, we experienced higher usage demand for our services across all major
government customer verticals.
Segment operating profit
Fiscal Years Ended Dollar Percentage
March 31, March 31, Increase Increase
(In millions, except percentages) 2021 2020 (Decrease) (Decrease)
Segment operating profit $ 208.6 $ 225.9 $ (17.3 ) (8 )%
Percentage of segment revenues 20 % 20 %
The $17.3 million decrease in our government systems segment operating profit
was primarily due to lower earnings contributions of $19.8 million , primarily
due to a decrease in revenues and lower margins from our government mobile
broadband products and higher IR&D investments, partially offset by SG&A expense
management resulting in lower costs of $3.6 million .
Fiscal Year 2020 Compared to Fiscal Year 2019
For a discussion of our results of operations for fiscal year 2020 as compared to fiscal year 2019, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year endedMarch 31, 2020 . 51
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Backlog
As reflected in the table below, our overall firm and funded backlog increased
during fiscal year 2021.
As of As of
March 31, 2021 March 31, 2020
(In millions)
Firm backlog
Satellite services segment $ 633.7 $ 611.3
Commercial networks segment 733.2 408.1
Government systems segment 939.4 851.3
Total $ 2,306.3 $ 1,870.7
Funded backlog
Satellite services segment $ 633.7 $ 611.3
Commercial networks segment 639.6 408.1
Government systems segment 846.9 858.7
Total $ 2,120.2 $ 1,878.1
The firm backlog does not include contract options. Of the $2.3 billion in firm
backlog, a little over half is expected to be delivered during the next twelve
months, with the balance delivered thereafter. We include in our backlog only
those orders for which we have accepted purchase orders, and not anticipated
purchase orders and requests. In our satellite services segment, our backlog
includes fixed broadband service revenues under our subscriber agreements, but
does not include future recurring IFC service revenues under our agreements with
commercial airlines. As of March 31, 2021 , our IFC systems were installed and in
service on approximately 1,480 commercial aircraft, of which, due to impacts of
the COVID-19 pandemic, approximately 200 were inactive at fiscal year end. While
current global airline traffic is still a fraction of the activity in fiscal
year 2020, domestic airline traffic is showing signs of improvement. As a
result, our in-flight services business showed modest improvement in the quarter
ended March 31, 2021 , with increased planes in service and passenger volumes. We
expect the negative impact on our IFC business from the pandemic to continue
into fiscal year 2022 and potentially beyond due to the severe decline in global
air traffic and associated grounding of installed aircraft, but to lessen over
time with increases in passenger air traffic. We anticipate that approximately
1,190 additional commercial aircraft under existing customer agreements with
commercial airlines will be put into service with our IFC systems. However, the
timing of installation and entry into service of IFC systems on additional
aircraft under existing customer agreements may be delayed as a result of the
impact of the COVID-19 pandemic on the global airline industry. Accordingly,
there can be no assurance that all anticipated purchase orders and requests will
be placed or that anticipated IFC services will be activated.
Our total new awards exclude future revenue under recurring consumer commitment
arrangements and were approximately $2.7 billion , $2.3 billion and $2.4 billion
for fiscal years 2021, 2020 and 2019, respectively.
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. In addition,
purchase orders may present product specifications that would require us to
complete additional product development. A failure to develop products meeting
such specifications could lead to a termination of the related contract.
Firm backlog amounts are comprised of funded and unfunded components. Funded
backlog represents the sum of contract amounts for which funds have been
specifically obligated by customers to contracts. Unfunded backlog represents
future amounts that customers may obligate over the specified contract
performance periods. Our customers allocate funds for expenditures on long-term
contracts on a periodic basis. 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.
Liquidity and Capital Resources
Overview
We have financed our operations to date primarily with cash flows from operations, bank line of credit financing, debt financing, export credit agency financing and equity financing. AtMarch 31, 2021 , we had$295.9 million in cash and cash equivalents,$282.8 million in working capital, and no outstanding borrowings and borrowing availability of$673.7 million under our Revolving Credit Facility. OnJuly 23, 2020 , 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 52 -------------------------------------------------------------------------------- exempt from registration under the Securities Act of 1933, as amended, resulting in net proceeds of approximately$174.7 million after deducting offering expenses. AtMarch 31, 2020 , we had$304.3 million in cash and cash equivalents,$441.1 million in working capital, and$390.0 million in principal amount of outstanding borrowings and borrowing availability of$292.7 million under our Revolving Credit Facility. We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market accounts. Our future capital requirements will depend upon many factors, including the timing and amount of cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our R&D and marketing efforts, and the nature and timing of orders. Additionally, we will continue to evaluate possible acquisitions of, or investments in complementary businesses, products and technologies which may require the use of cash or additional financing. The general cash needs of our satellite services, commercial networks and government systems segments can vary significantly. The cash needs of our satellite services segment tend to be driven by the timing and amount of capital expenditures (e.g., payments under satellite construction and launch contracts and investments in ground infrastructure roll-out), investments in joint ventures, strategic partnering arrangements and network expansion activities, as well as the quality of customer, type of contract and payment terms. In our commercial networks segment, cash needs tend to be driven primarily by the type and mix of contracts in backlog, the nature and quality of customers, the timing and amount of investments in IR&D activities (including with respect to next-generation satellite payload technologies) and the payment terms of customers (including whether advance payments are made or customer financing is required). In our government systems segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production) and timing of payments (including restrictions on the timing of cash payments underU.S. Government procurement regulations). Other factors affecting the cash needs of our commercial networks and government systems segments include contract duration and program performance. For example, if a program is performing well and meeting its contractual requirements, then its cash flow requirements are usually lower. 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. InFebruary 2019 , we filed a universal shelf registration statement with theSEC for the future sale of an unlimited amount of common stock, preferred stock, debt securities, depositary shares, warrants and rights. The securities may be offered from time to time, separately or together, directly by us, by selling security holders, or through underwriters, dealers or agents at amounts, prices, interest rates and other terms to be determined at the time of the offering. To date, COVID-19 has not had a significant impact on our liquidity, cash flows or capital resources. However, we have taken measures to mitigate the impact of COVID-19 on our business and financial position, including deferring certain capital expenditures, reducing discretionary expenditures and undertaking cost-reduction actions. Given our current cash position, outlook for funds generated from operations, borrowing availability under our Revolving Credit Facility of$673.7 million , cash needs and debt structure, we have not experienced to date, and do not expect to experience, any material issues with liquidity. Although we can give no assurances concerning our future liquidity, we believe that our current cash balances and net cash expected to be provided by operating activities along with availability under our Revolving Credit Facility will be sufficient to meet our anticipated operating requirements for at least the next 12 months. Cash flows Cash provided by operating activities for fiscal year 2021 was$727.2 million compared to$436.9 million for fiscal year 2020. This$290.3 million increase was primarily driven by a$229.0 million year-over-year decrease in cash used to fund net operating assets and our operating results (net income adjusted for depreciation, amortization and other non-cash changes) which resulted in$61.3 million of higher cash provided by operating activities year-over-year. The decrease in cash used to fund net operating assets during fiscal year 2021 when compared to fiscal year 2020 was primarily due to an increase in cash inflows year-over-year from combined billed and unbilled accounts receivable, net, attributable to the timing of contractual milestones for certain larger development programs in our government systems segment as well as revenue decreases in our mobile broadband satellite communication systems products and services business in our commercial networks and satellite services segments due to decreased IFC terminal deliveries resulting from the severe decline in global air traffic and resulting downturn in the commercial aviation market as a result of the COVID-19 pandemic and an increase in our collections in excess of revenues and deferred revenues included in accrued liabilities due to the timing of milestone billings for certain larger development projects in our commercial networks and government systems segments. 53
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Cash used in investing activities for fiscal year 2021 was
Cash provided by financing activities for fiscal year 2021 was$149.7 million compared to$365.2 million for fiscal year 2020. This$215.5 million decrease in cash provided by financing activities year-over-year reflects proceeds from borrowings under our Revolving Credit Facility of$420.0 million in fiscal year 2020 and an increase in payments on borrowings under our Revolving Credit Facility of$360.0 million year-over-year. This decrease was partially offset by$400.0 million of gross proceeds from our 2028 Notes inJune 2020 and$174.7 million of net proceeds from a private placement of common stock inJuly 2020 (after deducting offering expenses). Cash provided by financing activities for both periods included cash received from employee stock purchase plan purchases and the repurchase of common stock related to net share settlement of certain employee tax liabilities in connection with the vesting of restricted stock unit awards. Satellite-related activities In connection with the development of any new generation satellite design, and the launch of any new satellite and the commencement of the related service, we expect to incur additional operating costs that negatively impact our financial results. For example, whenViaSat -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. These increased operating costs included depreciation, amortization of capitalized software development, earth station connectivity, marketing and advertising costs, logistics, customer care and various support systems. In addition, interest expense increased during fiscal year 2019 as we no longer capitalized the interest expense relating to the debt incurred for the construction ofViaSat -2 and the related gateway and networking equipment once the satellite was in service. As services using the new satellite scaled, however, our revenue base for broadband services expanded and we gained operating cost efficiencies, which together yielded incremental segment earnings contributions. We anticipate that we will incur a similar cycle of increased operating costs as we prepare for and launch commercial services on future satellites, including ourViaSat -3 constellation, followed by increases in revenue base and in scale. However, there can be no assurance that we will be successful in significantly increasing revenues or achieving or maintaining operating profit in our satellite services segment, and any such gains may also be offset by investments in our global business. We currently have threeViaSat -3 class satellites under construction. We have entered into satellite construction agreements with Boeing for their construction and purchase and the integration of our payload and technologies into the satellites. In addition, we have entered into various other satellite-related purchase commitments, including with respect to the provision of launch services, satellite operation and satellite insurance. See Note 12 - Commitments to our consolidated financial statements for information as ofMarch 31, 2021 regarding our future minimum payments under our satellite construction contracts and other satellite-related purchase commitments for the next five fiscal years and thereafter. In addition, we will continue to incur costs related to the roll-out of related earth station infrastructure to support theViaSat -3 constellation, the amount of which will depend, among other matters, on the timing of roll-out and method used to procure fiber access. We believe we have adequate sources of funding for theViaSat -3 constellation, which include, but are not limited to, our cash on hand, borrowing capacity and the cash we expect to generate from operations over the next few years. Our total cash funding may be reduced through various third-party agreements, including potential joint service offerings and other strategic partnering arrangements. Our IR&D investments are expected to continue through fiscal year 2022 and beyond relating to next generation satellite network solutions and support of our government and commercial air mobility businesses. We expect to continue to invest in IR&D at a significant level as we continue our focus on leadership and innovation in satellite and space technologies. However, the level of investment in a given fiscal year will depend on a variety of factors, including the stage of development of our satellite projects, new market opportunities and our overall operating performance. Our total capital expenditures in fiscal year 2022 are expected to be higher than fiscal year 2021, as we have a thirdViaSat -3 class satellite under construction, as well as increased ground network investments related to international expansion.
Long-Term Debt
As ofMarch 31, 2021 , the aggregate principal amount of our total outstanding indebtedness was$1.9 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, no outstanding borrowings under our$700.0 million Revolving Credit Facility,$98.3 million in principal amount of outstanding borrowings under our Ex-Im Credit Facility with a maturity date ofOctober 15, 2025 and$56.3 million of finance lease obligations. For information regarding our Credit Facilities and Notes, refer to Note 6 - Senior Notes and Other Long-Term Debt to our consolidated financial statements. 54
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Contractual Obligations
The following table sets forth a summary of our obligations atMarch 31, 2021 : For the Fiscal Years Ending (In thousands, including interest where applicable) Total 2022 2023-2024 2025-2026 Thereafter Operating leases$ 444,674 $ 67,940 $ 125,686 $ 111,684 $ 139,364 Finance leases 64,575 13,567 24,008 24,000 3,000 2028 Notes 595,000 26,000 52,000 52,000 465,000 2027 Notes 819,375 33,750 67,500 67,500 650,625 2025 Notes 877,188 39,375 78,750 759,063 - Revolving Credit Facility - - - - - Ex-Im Credit Facility 104,693 21,874 42,344 40,475 - Satellite performance incentives 32,520 5,334 10,269 11,269 5,648 Purchase commitments including satellite- related agreements 1,650,828 1,087,573 436,635 46,121 80,499 Total$ 4,588,853 $ 1,295,413 $ 837,192 $ 1,112,112 $ 1,344,136 We purchase components from a variety of suppliers and use several subcontractors and contract manufacturers to provide design and manufacturing services for our products. During the normal course of business, we enter into agreements with subcontractors, contract manufacturers and suppliers that either allow them to procure inventory based upon criteria defined by us or that establish the parameters defining our requirements. We also enter into agreements and purchase commitments with suppliers for the construction, launch, and operation of our satellites. In certain instances, these agreements allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to firm orders being placed. Consequently, only a portion of our reported purchase commitments arising from these agreements are firm, non-cancelable and unconditional commitments. Our consolidated balance sheets included$137.4 million and$120.9 million of "other liabilities" as ofMarch 31, 2021 andMarch 31, 2020 , respectively, which primarily consisted of the long-term portion of deferred revenues, the long-term portion of our satellite performance incentive obligations relating to theViaSat -1 andViaSat -2 satellites and our long-term warranty obligations. With the exception of the long-term portion of our satellite performance incentive obligations relating to theViaSat -1 andViaSat -2 satellites (which is included under "Satellite performance incentives"), these remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain. See Note 12 - Commitments to our consolidated financial statements for additional information regarding satellite performance incentive obligations relating to theViaSat -1 andViaSat -2 satellites. See Note 14 - Product Warranty to our consolidated financial statements for a discussion of our product warranties.
Off-Balance Sheet Arrangements
We had no material off-balance sheet arrangements at
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.
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