# Viasat Inc: Form 10-Q for the period ended Sep 30, 2023

- Company: [Viasat Inc](/companies/vsat.md) (CIK 797721)
- Form: 10-Q
- Filed: 2023-11-09
- Accepted by EDGAR: Nov 9, 2023, 21:34 ET
- Period: 2023-09-30
- Accession: 0000950170-23-062152
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/797721/000095017023062152/vsat-20230930.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/797721/000095017023062152/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-07-01 to 2023-09-30 | $1.23bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-04-01 to 2023-09-30 | $2.01bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2023-07-01 to 2023-09-30 | $33.4m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2023-04-01 to 2023-09-30 | $62.4m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2023-07-01 to 2023-09-30 | $1.15bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-04-01 to 2023-09-30 | $1.37bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$804.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-04-01 to 2023-09-30 | −$846.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $86.2m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-04-01 to 2023-09-30 | $142.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$93.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-04-01 to 2023-09-30 | −$93.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$767.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-04-01 to 2023-09-30 | −$844.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$6.16 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-04-01 to 2023-09-30 | −$7.75 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$6.16 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-04-01 to 2023-09-30 | −$7.75 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 124,529,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-04-01 to 2023-09-30 | 108,903,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-04-01 to 2023-09-30 | $322.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-04-01 to 2023-09-30 | $740.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $1.96bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $4.06bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $17.07bn | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $1.55bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $11.84bn | us-gaap:Liabilities |
| Current portion of debt | at 2023-09-30 | $62.6m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2023-09-30 | $5.19bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 92,152 characters.

### Forward-Looking Statements

This Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933 and the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts and projections about the industries in which we operate and the beliefs and assumptions of our management. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words and similar expressions to identify forward-looking statements. In addition, statements regarding the expected benefits, synergies, growth opportunities and other financial and operating benefits of the Inmarsat Acquisition (as defined below), and the expected charges and costs resulting from associated integration efforts; projections of earnings, revenue, costs or other financial items; anticipated growth and trends in our business or key markets; future economic conditions and performance; the development, customer acceptance and anticipated performance of technologies, products or services; the construction, completion, testing, launch, commencement of commercial service, expected performance and benefits of satellites (including future satellites planned or under construction) and the timing thereof; the extent and impact of anomalies on the ViaSat-3 F1 and Inmarsat-6 (I-6) F2 satellites, the anticipated functionality or performance of such satellites and any potential remedial or mitigating measures that may be undertaken or insurance proceeds that may be recoverable in connection therewith; the expected capacity, coverage, service speeds and other features of our satellites, and the timing, cost, economics and other benefits associated therewith; anticipated subscriber growth; plans, objectives and strategies for future operations; international growth opportunities; the number of additional aircraft under existing contracts with commercial airlines anticipated to be put into service with our in-flight connectivity (IFC) systems; and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ materially include: risks that the Inmarsat Acquisition disrupts current plans and operations or diverts management's attention from our business; the effect of the Inmarsat Acquisition on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers and others with whom we do business; our ability to successfully integrate the operations, technologies and employees of Inmarsat (as defined herein); the ability to realize anticipated benefits and synergies of the Inmarsat Acquisition and our other acquisitions, including the expectation of enhancements to our products and services, greater revenue or growth opportunities, and the realization of operating efficiencies and cost savings (including the timing and amount thereof); the ability to ensure continued performance and market growth of our business following the closing of the Inmarsat Acquisition; our ability to realize the anticipated benefits of any existing or future satellite; unexpected expenses related to our satellite projects; our ability to successfully implement our business plan for our broadband services on our anticipated timeline or at all; capacity constraints in our business in the lead-up to the launch of services on our ViaSat-3 satellites; risks associated with the construction, launch and operation of satellites, including the effect of any anomaly, operational failure or degradation in satellite performance; our ability to successfully develop, introduce and sell new technologies, products and services; audits by the U.S. Government; changes in the global business environment and economic conditions; delays in approving U.S. Government budgets and cuts in government defense expenditures; our reliance on U.S. Government contracts, and on a small number of contracts which account for a significant percentage of our revenues; reduced demand for products and services as a result of continued constraints on capital spending by customers; changes in relationships with, or the financial condition of, key customers or suppliers; our reliance on a limited number of third parties to manufacture and supply our products; increased competition; introduction of new technologies and other factors affecting the communications and defense industries generally; the effect of adverse regulatory changes (including changes affecting spectrum availability or permitted uses) on our ability to sell or deploy our products and services; changes in the way others use spectrum; our inability to access additional spectrum, use spectrum for additional purposes, and/or operate satellites at additional orbital locations; competing uses of the same spectrum or orbital locations that we utilize or seek to utilize; the effect of changes to global tax laws; our level of indebtedness and ability to comply with applicable debt covenants; our involvement in litigation, including intellectual property claims and litigation to protect our proprietary technology; our dependence on a limited number of key employees; and other factors identified under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (as updated by our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023) and under the heading “Risk Factors” in Part II, Item 1A of this report, elsewhere in this report and our other filings with the Securities and Exchange Commission (the SEC). Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

### Company Overview

We are an innovative, global provider of communications technologies and services, focused on making connectivity accessible, available and secure for all. Our end-to-end platform of satellites, ground infrastructure and user terminals enables us to provide cost-effective, high-speed, high-quality broadband and other connectivity solutions to enterprises, consumers, military and government users around the globe, whether on the ground, in the air or at sea. In addition, our government business includes a portfolio of communications gateways; situational awareness products and services; satellite communication products and services, across using various frequency bands; cybersecurity and information assurance products and services; and tactical data link solutions. We believe that our diversification strategy— anchored in a broad portfolio of customer-centric products and services and supported by our fleet of broadband and narrowband satellites—our vertical integration 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. Viasat, Inc. was incorporated in California in 1986, and reincorporated as a Delaware corporation in 1996.

We conduct our business through three segments: satellite services, commercial networks and government systems.

### Inmarsat Acquisition

On May 30, 2023, we purchased all of the issued and outstanding shares of Connect Topco Limited, a private company limited by shares and incorporated in Guernsey (Inmarsat Holdings and, together with its subsidiaries, Inmarsat), in exchange for approximately $550.7 million in cash and 46.36 million unregistered shares of our common stock (the Inmarsat Acquisition). In connection with the closing of the Inmarsat Acquisition, we entered into a $616.7 million senior secured term loan facility (the 2023 Term Loan Facility) and a $733.4 million unsecured bridge loan facility (the Bridge Facility), which were fully drawn at closing. On September 28, 2023, we repaid and discharged the Bridge Facility in full with the net proceeds of the issuance of our 7.500% Senior Notes due 2031, together with cash on hand.

### Sale of Link-16 TDL Business

On January 3, 2023, we completed the sale of certain assets and liabilities comprising our Link-16 Tactical Data Links business (the Link-16 TDL Business) to L3Harris Technologies, Inc. (L3Harris) in exchange for approximately $1.96 billion in cash, subject to certain adjustments (the Link-16 TDL Sale). Unless otherwise noted, discussion throughout this Quarterly Report on Form 10-Q relates to our continuing operations only and excludes the Link-16 TDL Business. See Note 5 — Discontinued Operations to our condensed consolidated financial statements for additional information.

### Satellite Services

Our satellite services segment uses our proprietary technology platform to provide both high-speed broadband and narrowband services via satellite around the globe for use in commercial applications.

Our complementary fleet of 21 satellites in space spans the Ka-, L- and S- bands. In addition to Viasat’s legacy satellite fleet, the closing of the Inmarsat Acquisition added: five additional high-bandwidth Ka-band satellites, eight high-availability L-band satellites (three of which are contingency satellites in orbit but not currently in service), an S-band satellite that supports the European Aviation Network (EAN) to provide IFC services to commercial airlines in Europe, and an I-6 class hybrid Ka-/L-band satellite (the I-6 F1 satellite), with additional satellites under development. Our expanded satellite fleet enables us to provide near global coverage (including strong oceanic coverage and polar reach) with greater redundancy and resiliency. We launched the first of our third-generation ViaSat-3 class satellites, ViaSat-3 F1, into orbit on April 30, 2023. On July 12, 2023, we reported a reflector deployment issue that materially impacted the performance of the ViaSat-3 F1 satellite, and on August 24, 2023, we reported the I-6 F2 satellite suffered a power subsystem anomaly during its orbit raising phase, and concluded that the satellite would not operate as intended (see Note 1 — Basis of Presentation — Property, equipment and satellites to our condensed consolidated financial statements for more information).

The primary services offered by our satellite services segment are comprised of:

- In-flight services, which provide industry-leading IFC services and wireless in-flight entertainment services, as well as cockpit, data safety, surveillance, electronic flightbag and other aviation software services. As of September 30, 2023, we had our IFC systems installed and in service on approximately 3,390 commercial aircraft of which approximately 40 were inactive at quarter end (mostly due to standard aircraft maintenance). We anticipate that approximately 1,600 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 lingering impacts of the COVID-19 pandemic on the global airline industry. 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.

- Fixed broadband services, which provide consumers and businesses with high-speed, high-quality broadband internet access and Voice over Internet Protocol services, primarily in the United States as well as in various countries in Europe and Latin America.
- Maritime services (acquired through the Inmarsat Acquisition), which offer satellite-based Ka-band high-speed broadband and L-band narrowband communications services, including safety services, to seagoing vessels (such as commercial shipping vessels, energy offshore vessels, cruise ships, consumer ferries and yachts).
- Prepaid Internet services, which offer innovative, affordable, satellite-based connectivity in communities that have little or no access to the internet. 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. We provide Prepaid Internet services in multiple regions in Mexico and Brazil.
- Other broadband and narrowband services, which include high-speed, satellite-based internet, Internet-of-Things (IoT), telemetry, push-to-talk communications and L-band satellite phone services, as well as L-band managed services that enable real-time machine-to-machine (M2M) position tracking, management of remote assets and operations, and visibility into critical areas of the supply chain.
- Energy services, which include ultra-secure solutions spanning global IP connectivity, bandwidth-optimized over-the-top applications, industrial IoT, big data enablement and industry-leading machine learning analytics.

The assets and results of operations of Inmarsat's commercial business are primarily included in our satellite services segment (with an insignificant amount included in our commercial networks segment and Inmarsat's government business included in our government systems segment) for the period following the closing of the Inmarsat Acquisition on May 30, 2023.

### 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 geostationary (GEO), medium earth orbit (MEO) and low earth orbit (LEO). 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 communication 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.
- 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 application-specific integrated circuit and monolithic microwave integrated circuit chips. Satellite networking development includes specialized design and technology services covering all aspects of satellite communication system architecture, networks and technology.

### 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 Intelligence Surveillance and Reconnaissance (ISR) missions.
- Government narrowband products and services (primarily provided by Inmarsat prior to the Inmarsat Acquisition), which provide military and government users with L-band narrowband products and services such as Tactical Beyond Line of Sight (L-TAC) communications, L-band airborne ISR services and L-band Advanced Communications Element (LACE) terminals.
- 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, unmanned aerial vehicles, 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.
- Tactical data link solutions, which continue to provide certain solutions in the tactical data link space, including our Move Out/Jump Off tactical gateway family of products and simulation environments via our radio frequency generators which test our customers' tactical data links. On January 3, 2023 we sold the remainder of our Link-16 TDL Business to L3Harris. See Note 5 — Discontinued Operations to our condensed consolidated financial statements for additional information.

### Factors and Trends Affecting our Results of Operations

For a summary of factors and trends affecting our results of operations, see Part II, Item 7, "Factors and Trends Affecting our Results of Operations" in our Annual Report on Form 10-K for the year ended March 31, 2023.

### Sources of Revenues

Our satellite services segment revenues are primarily derived from our in-flight services, fixed broadband services, maritime and narrowband services (primarily acquired through the Inmarsat Acquisition), and energy 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).

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. See Note 1 — Basis of Presentation to our condensed consolidated financial statements for additional information.

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. Due to the nature of this process, it is difficult to predict the probability and timing of obtaining awards in these markets.

### Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the 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 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 the authoritative guidance for leases (ASC 842). As discussed in Note 1 – Basis of Presentation – Leases to our condensed consolidated financial statements, for broadband equipment leased to 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.

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 September 30, 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. 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.

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.

### Property, equipment and satellites

Property, equipment and satellites, net includes our owned and leased satellites and the associated earth stations and networking equipment, as well as the customer premise equipment units which are leased to customers as part of our satellite services segment.

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 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. We periodically review the remaining estimated useful life of our satellites to determine if revisions to the estimated useful lives are necessary.

### Leases

In accordance with ASC 842, 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) 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 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.

### 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. Additionally, we recognize technology, contracts and customer relationships, orbital slots and spectrum assets, trade names and other as identifiable intangible assets, which are recorded at fair value as of the transaction date. Goodwill is recorded when consideration transferred exceeds the fair value of identifiable assets and liabilities. Measurement-period adjustments to assets acquired and liabilities assumed with a corresponding offset to goodwill are recorded in the period they occur, which may include up to one year from the acquisition date. Contingent consideration is recorded at fair value at the acquisition date.

### 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. Except for the impairment related to certain of our satellites under construction and satellite programs (discussed in Note 1 — Basis of Presentation – Property, equipment and satellites above), no material impairments were recorded for the three and six months ended September 30, 2023 and 2022.

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 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 and quantitative assessments 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.

### 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 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. Additionally, in our analysis, we also considered the fact that ASC 740 places more weight on the objectively verifiable evidence of current pre-tax losses and recent events than forecasts of future profitability.

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 in the 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.

### Results of Operations

The following table presents, as a percentage of total revenues, income statement data of our continuing operations for the periods indicated:

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Six Months Ended September 30, 2023 | September 30, 2022 |
| --- | ---: | ---: | ---: | ---: |
| Revenues: | 100% | 100% | 100% | 100% |
| Product revenues | 33 | 39 | 32 | 35 |
| Service revenues | 67 | 61 | 68 | 65 |
| Operating expenses: |  |  |  |  |
| Cost of product revenues | 21 | 26 | 22 | 26 |
| Cost of service revenues | 42 | 40 | 43 | 43 |
| Selling, general and administrative | 94 | 27 | 68 | 28 |
| Independent research and development | 3 | 5 | 3 | 5 |
| Amortization of acquired intangible assets | 7 | 1 | 5 | 1 |
| Income (loss) from continuing operations | (66) | 1 | (42) | (4) |
| Interest (expense) income, net | (4) | — | (5) | — |
| Income (loss) from continuing operations before income taxes | (70) | 1 | (47) | (4) |
| (Provision for) benefit from income taxes from continuing operations | 8 | (12) | 5 | (4) |
| Net income (loss) from continuing operations | (62) | (11) | (42) | (9) |
| Net income (loss) from discontinued operations, net of tax | — | 3 | — | 3 |
| Net income (loss) attributable to Viasat, Inc. | (63) | (7) | (42) | (6) |

### Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022

#### Revenues

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Product revenues | $401.7 | $261.0 | $140.8 | 54% |
| Service revenues | 823.7 | 402.6 | 421.1 | 105% |
| Total revenues | $1,225.4 | $663.6 | $561.9 | 85% |

Our total revenues increased by $561.9 million as a result of a $421.1 million increase in service revenues and a $140.8 million increase in product revenues. The service revenue increase was driven by increases of $284.8 million in our satellite services segment, $132.4 million in our government systems segment and $3.9 million in our commercial networks segment. The product revenue increase was driven primarily by a $91.3 million increase in our commercial networks segment and a $49.5 million increase in our government systems segment.

#### Cost of revenues

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Cost of product revenues | $254.0 | $174.2 | $79.8 | 46% |
| Cost of service revenues | 512.3 | 267.7 | 244.6 | 91% |
| Total cost of revenues | $766.3 | $441.9 | $324.4 | 73% |

Cost of revenues increased by $324.4 million due to increases of $244.6 million in cost of service revenues and a $79.8 million in cost of product revenues. The cost of service revenues increase was primarily due to increased service revenues, mainly from our satellite services and government systems segments, causing a $280.0 million increase in cost of service revenues on a constant margin basis. The increase in cost of service revenues was partially offset by higher margins within each of our segments. The cost of product revenues increase was primarily due to increased product revenues, mainly from our commercial networks and government systems segments, causing an $82.1 million increase in cost of product revenues on a constant margin basis, prior to the effects of product revenues related to the Acacia litigation (see Note 10 — Commitments and Contingencies to our condensed consolidated financial statements for more information). The increase in cost of product revenues was partially offset by higher margins, primarily in our commercial networks and government systems segments.

#### Selling, general and administrative expenses

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $1,149.0 | $177.2 | $971.8 | 548% |

The $971.8 million increase in selling, general and administrative (SG&A) expenses was driven primarily by a net loss of $900.0 million related to satellite impairment, including liabilities associated with the termination of certain subcontractor agreements, net of estimated insurance claim receivables recorded in our satellite service segment. See Note 1 — Basis of Presentation — Property, equipment and satellites to our condensed consolidated financial statements for more information. Additionally, we experienced an increase in support costs of $55.3 million, reflected across all three of our segments. The increase in SG&A expenses was also driven by $17.6 million in higher selling costs, reflected primarily in our satellite services and government systems segments. SG&A expenses consisted primarily of personnel costs and expenses for business development, marketing and sales, bid and proposal, acquisition and transaction related expenses, facilities, finance, contract administration and general management.

#### Independent research and development

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Independent research and development | $33.4 | $32.4 | $1.0 | 3% |

Independent research and development (IR&D) for the three months ended September 30, 2023 was relatively flat compared to the prior year period.

#### Amortization of acquired intangible assets

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $74.0 million increase in amortization of acquired intangible assets in the second quarter of fiscal year 2024 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the Inmarsat Acquisition in May 2023. The current and expected amortization for acquired intangible assets for each of the following periods is as follows:

*(In thousands)*

|  | Amortization |
| --- | ---: |
| For the six months ended September 30, 2023 | $109,185 |
| Expected for the remainder of fiscal year 2024 | $161,981 |
| Expected for fiscal year 2025 | 322,731 |
| Expected for fiscal year 2026 | 322,579 |
| Expected for fiscal year 2027 | 322,579 |
| Expected for fiscal year 2028 | 307,594 |
| Expected for fiscal year 2029 | 252,656 |
| Thereafter | 1,081,717 |
|  | $2,771,837 |

#### Interest income

The $25.7 million increase in interest income for the three months ended September 30, 2023 compared to the prior year period was primarily due to the interest earned on the invested portion of the cash related to proceeds of approximately $1.9 billion received from L3Harris in the Link-16 TDL Sale.

#### Interest expense

The $81.5 million increase in interest expense for the three months ended September 30, 2023 compared to the prior year period was primarily the result of the effects of increased interest expense arising from our increased level of indebtedness following the closing of the Inmarsat Acquisition on May 30, 2023. The increase in interest expense was partially offset by an increase in the amount of interest capitalized during the second quarter of fiscal year 2024 compared to the prior year period.

#### Income taxes

For the three months ended September 30, 2023, we recorded an income tax benefit of $93.1 million, resulting in an effective tax rate of 11%. The effective tax rate for the period differed from the U.S statutory rate primarily due to a valuation allowance recorded against our U.S. net deferred tax assets. For the three months ended September 30, 2022, we recorded an income tax provision of $76.6 million, resulting in an effective tax rate of 1,104%. The effective tax rate for the period differed from the U.S. statutory rate due primarily to the establishment of a valuation allowance on the deferred tax asset for California R&D tax credits that was partially offset by the benefit of federal R&D tax credits.

### Segment Results for the Three Months Ended September 30, 2023 vs. Three Months Ended September 30, 2022

### Satellite services segment

#### Revenues

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $— | $— | $— | —% |
| Segment service revenues | 585.3 | 300.5 | 284.8 | 95% |
| Total segment revenues | $585.3 | $300.5 | $284.8 | 95% |

The increase of $284.8 million in our satellite services segment revenues for the three months ended September 30, 2023 compared to the prior year period was primarily due to the Inmarsat Acquisition in May 2023 and an increase in our in-flight services business. The Inmarsat Acquisition contributed approximately $277.7 million of service revenues (nearly half from maritime services) in our satellite services segment in the second quarter of fiscal year 2024. Our in-flight services business service revenue increased $84.4 million as the number of commercial aircraft receiving our in-flight services through our IFC systems and passenger air traffic both continued to increase. The increase in our satellite services segment revenues was partially offset by lower fixed broadband revenues in the United States as we allocated a greater proportion of our bandwidth to our IFC business due to bandwidth constraints.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar (Increase) Decrease | Percentage (Increase) Decrease |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $(832.0) | $(6.1) | $(826.0) | (13,617)% |
| Percentage of segment revenues | (142)% | (2)% |  |  |

The increase in our satellite services segment operating loss is primarily due to the recording of satellite impairment and related charges, net, of $900.0 million in the current year period, as described above, partially offset by increased earnings contributions of $100.9 million, mainly due to an increase in revenues from the Inmarsat Acquisition in May 2023 and improved margins from our in-flight services business as it continued to scale.

### Commercial networks segment

#### Revenues

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $251.1 | $159.8 | $91.3 | 57% |
| Segment service revenues | 24.1 | 20.2 | 3.9 | 19% |
| Total segment revenues | $275.2 | $180.0 | $95.2 | 53% |

50

Our commercial networks segment revenues increased by $95.2 million, due to a $91.3 million increase in product revenues and a $3.9 million increase in service revenues. The increase in product revenues was primarily the result of an increase in revenues recognized as a result of settlement payments from the Acacia litigation (see Note 10 — Commitments and Contingencies to our condensed consolidated financial statements for more information). The increase in product revenues was also driven by an increase of $25.3 million in antenna systems products and $9.6 million in mobile broadband satellite communication systems products, related to higher IFC terminal shipments. The increase in service revenues was primarily driven by increases in mobile broadband satellite communication systems services.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $43.1 | $(0.8) | $43.9 | 5,512% |
| Percentage of segment revenues | 16% | —% |  |  |

The change in our commercial networks segment operating loss to an operating profit was primarily due to higher earnings contributions of $51.1 million and a decrease in IR&D expenses of $2.6 million (primarily related to next-generation consumer broadband integrated networking technologies and next-generation satellite payload technologies). The decrease in commercial networks segment operating loss was partially offset by higher SG&A costs of $9.8 million.

### Government systems segment

#### Revenues

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $150.6 | $101.1 | $49.5 | 49% |
| Segment service revenues | 214.3 | 81.9 | 132.4 | 162% |
| Total segment revenues | $364.9 | $183.0 | $181.9 | 99% |

Our government systems segment revenues increased by $181.9 million due to a $132.4 million increase in service revenues, and a $49.5 million increase in product revenues. The service revenue increase was primarily due to the Inmarsat Acquisition in May 2023 and a $4.1 million increase in government mobile broadband services. The Inmarsat Acquisition contributed approximately $126.9 million of service revenues in our government systems segment in the second quarter of fiscal year 2024. The product revenue increase was primarily driven by a $36.0 million increase in cybersecurity and information assurance products and $14.6 million due to the Inmarsat Acquisition.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Three Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $65.7 | $18.9 | $46.7 | 247% |
| Percentage of segment revenues | 18% | 10% |  |  |

The $46.7 million increase in our government systems segment operating profit was primarily driven by increased earnings contributions of $85.5 million, primarily due to increased revenues from the Inmarsat Acquisition in May 2023. The increase in operating profit was partially offset by a $35.2 million increase in SG&A costs, of which $29.1 million related to the Inmarsat Acquisition.

### Six Months Ended September 30, 2023 vs. Six Months Ended September 30, 2022

#### Revenues

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Product revenues | $638.1 | $433.5 | $204.6 | 47% |
| Service revenues | 1,367.1 | 805.2 | 561.9 | 70% |
| Total revenues | $2,005.2 | $1,238.6 | $766.6 | 62% |

51

Our total revenues grew by $766.6 million as a result of a $561.9 million increase in service revenues and a $204.6 million increase in product revenues. The service revenue increase was due to increases of $371.2 million in our satellite services segment, $185.4 million in our government systems segment, and $5.4 million in our commercial networks segment. The increase in product revenue was driven primarily by a $125.6 million increase in our commercial networks segment and a $79.1 million increase in our government systems segment.

#### Cost of revenues

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Cost of product revenues | $451.1 | $323.3 | $127.8 | 40% |
| Cost of service revenues | 860.1 | 536.4 | 323.7 | 60% |
| Total cost of revenues | $1,311.2 | $859.7 | $451.5 | 53% |

Cost of revenues increased by $451.5 million due to increases of $323.7 million in cost of service revenues and $127.8 million in cost of product revenues. The cost of service revenues increase was primarily due to increased service revenues across each of our segments, causing a $374.3 million increase in cost of service revenues on a constant margin basis. The increase in cost of service revenues was partially offset by higher margins, primarily driven by our satellite services and government systems segments. The cost of product revenues increase was primarily due to increased product revenues, mainly from our commercial networks and government systems segments, causing a $137.4 million increase in cost of product revenues on a constant margin basis, prior to the effects of product revenues related to the Acacia litigation (see Note 10 — Commitments and Contingencies to our condensed consolidated financial statements for more information). The increase in cost of product revenues was also partially offset by higher margins, primarily driven by our commercial networks and government systems segments.

#### Selling, general and administrative expenses

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Selling, general and administrative | $1,368.6 | $348.8 | $1,019.8 | 292% |

The $1,019.8 million increase in SG&A expenses was driven primarily by a net loss of $900.0 million related to satellite impairment, including liabilities associated with the termination of certain subcontractor agreements, net of estimated insurance claim receivables recorded in our satellite service segment. See Note 1 — Basis of Presentation — Property, equipment and satellites to our condensed consolidated financial statements for more information. Additionally, we experienced an increase in support costs of $99.6 million, reflected across all three of our segments. The increase in SG&A expenses was also driven by $22.4 million in higher selling costs, reflected primarily in our satellite services and government systems segments. SG&A expenses consisted primarily of personnel costs and expenses for business development, marketing and sales, bid and proposal, acquisition and transaction related expenses, facilities, finance, contract administration and general management.

#### Independent research and development

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Independent research and development | $62.4 | $67.2 | $(4.7) | (7)% |

The $4.7 million decrease in IR&D expenses was mainly the result of a $10.1 million decrease in IR&D efforts in our commercial networks segment (primarily related to next-generation satellite payload technologies and next-generation consumer broadband integrated technologies). This overall decrease was partially offset by a $5.4 million increase in our government systems segment (primarily related to information assurance projects).

#### Amortization of acquired intangible assets

We amortize our acquired intangible assets from prior acquisitions over their estimated useful lives, which range from two to 20 years. The $94.3 million increase in amortization of acquired intangible assets in the first six months of fiscal year 2024 compared to the prior year period was primarily related to the amortization of new intangibles acquired as a result of the Inmarsat Acquisition in May 2023. The current and expected amortization for acquired intangible assets for each of the following periods is as follows:

*(In thousands)*

|  | Amortization |
| --- | ---: |
| For the six months ended September 30, 2023 | $109,185 |
| Expected for the remainder of fiscal year 2024 | $161,981 |
| Expected for fiscal year 2025 | 322,731 |
| Expected for fiscal year 2026 | 322,579 |
| Expected for fiscal year 2027 | 322,579 |
| Expected for fiscal year 2028 | 307,594 |
| Expected for fiscal year 2029 | 252,656 |
| Thereafter | 1,081,717 |
|  | $2,771,837 |

#### Interest income

The $44.7 million in interest income for the six months ended September 30, 2023 compared to the prior year period was primarily due to the interest earned on the invested portion of the cash related to proceeds of approximately $1.9 billion received from L3Harris in the Link-16 TDL Sale.

#### Interest expense

The $131.6 million increase in interest expense in the six months ended September 30, 2023 compared to the prior year period was primarily the result of the effects of increased interest expense arising from our increased level of indebtedness following the closing of the Inmarsat Acquisition on May 30, 2023. The increase in interest expense was partially offset by an increase in the amount of interest capitalized during the first six months of fiscal year 2024 compared to the prior year period.

#### Income taxes

For the six months ended September 30, 2023, we recorded an income tax benefit of $93.6 million, resulting in an effective tax rate of 10%. The effective tax rate for the period differed from the U.S. statutory rate primarily due to a valuation allowance recorded against our U.S. net deferred tax assets. For the six months ended September 30, 2022, we recorded an income tax provision of $53.8 million, resulting in an effective tax rate of negative 99%. The effective tax rate for the period differed from the U.S. statutory rate due primarily to the establishment of a valuation allowance on the deferred tax asset for California R&D tax credits that was partially offset by the benefit of federal R&D tax credits.

### Segment Results for the Six Months Ended September 30, 2023 vs. Six Months Ended September 30, 2022

### Satellite services segment

#### Revenues

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $— | $— | $— | —% |
| Segment service revenues | 983.8 | 612.6 | 371.2 | 61% |
| Total segment revenues | $983.8 | $612.6 | $371.2 | 61% |

53

The increase of $371.2 million in our satellite services segment revenues for the six months ended September 30, 2023 compared to the prior year period was primarily due to the Inmarsat Acquisition in May 2023 and an increase in our in-flight services business. The Inmarsat Acquisition contributed approximately $363.5 million of service revenues (nearly half from maritime services) in our satellite services segment in the six months ended September 30, 2023. Our in-flight services business service revenue increased $133.7 million as the number of commercial aircraft receiving our in-flight services through IFC systems and passenger air traffic both continued to increase. The increase in our satellite services segment revenues was partially offset by lower fixed broadband revenues in the United States as we allocated a greater proportion of our bandwidth to our IFC business due to bandwidth constraints.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar (Increase) Decrease | Percentage (Increase) Decrease |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $(820.6) | $(4.7) | $(815.9) | (17,282)% |
| Percentage of segment revenues | (83)% | (1)% |  |  |

The increase in our satellite services segment operating loss is primarily due to the recording of satellite impairment and related charges, net of $900.0 million in the current year period, as described above, partially offset by increased earnings contributions of $130.1 million, mainly due to an increase in revenues from the Inmarsat Acquisition in May 2023 and improved margins from our in-flight services business as it continued to scale.

### Commercial networks segment

#### Revenues

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $379.0 | $253.4 | $125.6 | 50% |
| Segment service revenues | 44.8 | 39.4 | 5.4 | 14% |
| Total segment revenues | $423.8 | $292.8 | $131.0 | 45% |

Our commercial networks segment revenues increased by $131.0 million, due to a $125.6 million increase in product revenues and a $5.4 million increase in service revenues. The increase in product revenues was primarily the result of an increase in revenues recognized as a result of settlement payments from the Acacia litigation (see Note 10 — Commitments and Contingencies to our condensed consolidated financial statements for more information). The increase in product revenues was also driven by an increase of $34.3 million in mobile broadband satellite communication systems products related to higher IFC terminal shipments and $33.4 million in antenna systems products. The increase in service revenues was primarily driven by increases in mobile broadband satellite communication systems services.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar (Increase) Decrease | Percentage (Increase) Decrease |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $(3.6) | $(50.2) | $46.5 | 93% |
| Percentage of segment revenues | (1)% | (17)% |  |  |

The $46.5 million decrease in our commercial networks operating loss was driven primarily by an increase in earnings contributions of $52.6 million and a decrease of $10.1 million in IR&D expenses (primarily related to next-generation satellite payload technologies and next-generation consumer broadband integrated networking technologies). The decrease in commercial networks segment operating loss was partially offset by higher SG&A costs of $16.2 million.

### Government systems segment

#### Revenues

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment product revenues | $259.1 | $180.0 | $79.1 | 44% |
| Segment service revenues | 338.5 | 153.1 | 185.4 | 121% |
| Total segment revenues | $597.6 | $333.2 | $264.4 | 79% |

Our government systems segment revenues increased by $264.4 million due to increases of $185.4 million in service revenues and $79.1 million in product revenues. The service revenue increase was primarily due to the Inmarsat Acquisition in May 2023 and a $10.9 million increase in government mobile broadband services. The Inmarsat Acquisition contributed approximately $167.1 million of service revenues in our government systems segment in the second quarter of fiscal year 2024 following the closing of the acquisition. The product revenue increase was primarily driven by a $61.2 million increase in cybersecurity and information assurance products and $19.3 million increase due to the Inmarsat Acquisition.

#### Segment operating profit (loss)

*(In millions, except percentages)*

|  | Six Months Ended September 30, 2023 | September 30, 2022 | Dollar Increase (Decrease) | Percentage Increase (Decrease) |
| --- | ---: | ---: | ---: | ---: |
| Segment operating profit (loss) | $87.2 | $17.8 | $69.4 | 389% |
| Percentage of segment revenues | 15% | 5% |  |  |

The $69.4 million increase in our government systems segment operating profit was primarily driven by higher earnings contributions of $132.3 million, primarily due to increased revenues from the Inmarsat Acquisition in May 2023. The increase in operating profit was partially offset by a $57.6 million increase in SG&A costs, of which $39.0 million related to the Inmarsat Acquisition.

### Backlog

Our firm and funded backlog as of September 30, 2023 is reflected in the table below.

*(In millions)*

| Firm backlog | As of September 30, 2023 |
| --- | ---: |
| Satellite services segment | $1,931.7 |
| Commercial networks segment | 688.5 |
| Government systems segment | 1,024.0 |
| Total | $3,644.2 |
| **Funded backlog** |  |
| Satellite services segment | $1,931.7 |
| Commercial networks segment | 646.7 |
| Government systems segment | 938.3 |
| Total | $3,516.7 |

The firm backlog does not include contract options. As of September 30, 2023, almost 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. 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 September 30, 2023, our IFC systems were installed and in service on approximately 3,390 commercial aircraft of which approximately 40 were inactive at quarter end (mostly due to standard aircraft maintenance). We anticipate that approximately 1,600 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 lingering impacts 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 which exclude future revenue under recurring consumer commitment arrangements were approximately $1.0 billion and $1.8 billion for the three and six months ended September 30, 2023, respectively, compared to approximately $1.1 billion (of which $226.4 million was attributable to discontinued operations related to the Link-16 TDL Business) and $1.9 billion (of which $344.4 million was attributable to discontinued operations related to the Link-16 TDL Business) for the three and six months ended September 30, 2022, 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. At September 30, 2023, we had $2.0 billion in cash and cash equivalents and restricted cash, $2.5 billion in working capital, no outstanding borrowings and borrowing availability of $599.3 million under Viasat's $647.5 million revolving credit facility (the Viasat Revolving Credit Facility), and no outstanding borrowings and borrowing availability of $700.0 million under Inmarsat's $700.0 million revolving line of credit (the Inmarsat Revolving Credit Facility and, together with the Viasat Revolving Credit Facility, the Revolving Credit Facilities). 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 the Viasat Revolving Credit Facility. We invest our cash in excess of current operating requirements in short-term, highly liquid bank money market funds primarily investing in U.S. government-backed securities and treasuries.

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 cash required for our satellite projects and any future broadband satellite projects we may engage in, expansion of our IR&D and marketing efforts, the nature and timing of orders and integration-related costs related to the Inmarsat Acquisition. In particular:

- 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, and timing and amount of recoveries under satellite insurance claims.
- In our commercial networks segment, cash needs tend to be driven primarily by the type and mix of contracts in backlog, the nature and quality of customers, the timing and amount of investments in IR&D activities (including with respect to next-generation satellite payload technologies) and the payment terms of customers (including whether advance payments are made or customer financing is required).
- In our government systems segment, the primary factors determining cash needs tend to be the type and mix of contracts in backlog (e.g., product or service, development or production) and timing of payments (including restrictions on the timing of cash payments under U.S. 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.

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

On November 2, 2023, following the fiscal quarter end, we announced an important milestone in our integration program following our Inmarsat Acquisition. As part of our ongoing strategy to streamline operations and better serve our growing customer base, we completed our work on the rationalization of roles in our global business, which is intended to achieve both operational and cost efficiencies. As part of the role rationalization, we reduced our global workforce by approximately 800 positions, or approximately 10%. As a result, we expect to incur charges and cash expenditures associated with the workforce reduction of approximately $45 million, primarily related to employee severance payments, benefits and related termination costs. We expect that these charges and costs will be predominantly incurred during the second half of fiscal year 2024.

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. From time to time, we file universal shelf registration statements with the SEC for the future sale of an unlimited amount of common stock, preferred stock, debt securities, depositary shares and warrants, which 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. Additionally, we consider strategic divestitures from time to time, such as the Link-16 TDL Sale that was completed in January 2023 for approximately $1.96 billion in cash, subject to adjustments.

Although we can give no assurances concerning our future liquidity, we believe that we have adequate sources of funding to meet our anticipated operating requirements for the next 12 months, which include, but are not limited to, cash on hand, borrowing capacity, and cash expected to be provided by operating activities.

### Cash flows

Cash provided by operating activities for the first six months of fiscal year 2024 was $322.6 million compared to $228.1 million in the prior year period. This $94.5 million increase was driven by our operating results (net income (loss) adjusted for depreciation, amortization and other non-cash charges) which resulted in $143.9 million of higher cash provided by operating activities year-over-year, partially offset by a $49.4 million year-over-year increase in cash used to fund net operating assets. The increase in cash used to fund net operating assets during the first six months of fiscal year 2024 when compared to the prior year period was primarily due to the timing of deferred revenue recognized under certain long-term contracts acquired through the Inmarsat Acquisition in our satellite services segment.

Cash used in investing activities for the first six months of fiscal year 2024 was approximately $1.0 billion compared to $554.8 million in the prior year period. This $446.2 million increase in cash used in investing activities year-over-year reflects $342.6 million in cash (net of cash acquired) used for the Inmarsat Acquisition in the first quarter of fiscal year 2024 and an increase in cash used for capital expenditures of approximately $198.3 million (including cash used for Inmarsat capital expenditures since the date of acquisition), partially offset by proceeds from the sale of short-term investments of $134.3 million during the first six months of fiscal year 2024.

Cash provided by financing activities for the first six months of fiscal year 2024 was approximately $1.3 billion compared to $168.4 million for the prior year period. This $1.1 billion increase in cash provided by financing activities year-over-year was mainly due to proceeds from debt borrowings of $1.3 billion in the first quarter of fiscal year 2024 (see Note 8 — Senior Notes and Other Long-Term Debt for further information).

### 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. The level of our 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.

As we continue to build and expand our global network and satellite fleet, from time to time we enter into satellite construction agreements for the construction and purchase of additional satellites and (depending on the satellite design) the integration of our payload and technologies into the satellites. See Note 13 — Commitments to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2023 for information 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, as well as purchase commitments including satellite-related agreements under the contractual obligations table below (which also includes future payment obligations assumed through the Inmarsat Acquisition). The total project cost to bring a new satellite into service will depend, among other things, on the scope and timing of the earth station infrastructure roll-out and the method used to procure fiber or other access to the earth station infrastructure. Our total cash funding of a satellite project may be reduced through third-party agreements, such as potential joint service offerings and other strategic partnering arrangements.

In connection with the launch of any new satellite and the commencement of commercial service on the satellite, we expect to incur additional operating costs that negatively impact our financial results. 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. 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 of ViaSat-2 and the related gateway and networking equipment once the satellite was in commercial 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 and constrained bandwidth supply as we prepare for and launch commercial services on future satellites, 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. In addition, we may experience capacity constraints on our existing satellites in the lead-up to the commencement of commercial service on new satellites, such as the capacity constraints we experienced during fiscal years 2023 and 2024.

### Long-term debt

As of September 30, 2023, the aggregate principal amount of our total outstanding indebtedness was $7.6 billion, which was comprised of (1) $700.0 million in principal amount of Viasat's 5.625% Senior Notes due 2025, $600.0 million in principal amount of Viasat's 5.625% Senior Secured Notes due 2027, $400.0 million in principal amount of Viasat's 6.500% Senior Notes due 2028, $733.4 million in principal amount of Viasat's 7.500% Senior Notes due 2031 and $2.08 billion in principal amount of Inmarsat's 6.750% Senior Secured Notes due 2026 (collectively, the Notes), (2) $691.3 million in principal amount of outstanding borrowings under our $700.0 million senior secured term loan facility (the Term Loan Facility), $616.7 million in principal amount of outstanding borrowings under our 2023 Term Loan Facility, $1.69 billion in principal amount of outstanding borrowings under Inmarsat's $1.75 billion senior secured term loan facility (the Inmarsat Term Loan Facility and, together with the Inmarsat Revolving Credit Facility, the Inmarsat Secured Credit Facility), no outstanding borrowings under our Revolving Credit Facilities, and $49.1 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) (collectively, the Credit Facilities), and (3) $32.8 million of finance lease obligations. For information regarding our outstanding indebtedness, refer to Note 8 – Senior Notes and Other Long-Term Debt to our condensed consolidated financial statements.

### Capital Expenditures and IR&D Investments

For a discussion of our capital expenditures and IR&D investments, see Part II, Item 7, “Liquidity and Capital Resources – Capital Expenditures and IR&D Investments” in our Annual Report on Form 10-K for the year ended March 31, 2023, as well as Note 4 – Acquisition, related to the Inmarsat Acquisition, and Note 1 – Basis of Presentation – Property, equipment and satellites, related to satellite impairment, to our condensed consolidated financial statements for more information.

### Contractual Obligations

The following table sets forth a summary of certain material cash requirements for known contractual obligations and commitments at September 30, 2023:

*(In thousands, including interest where applicable)*

|  | Next 12 months | Thereafter |
| --- | ---: | ---: |
| Operating leases | $98,470 | $839,466 |
| Senior Notes and Other Long-Term Debt (1) | 589,356 | 9,469,055 |
| Purchase commitments including satellite-related agreements | 1,781,566 | 1,077,866 |
| Total | $2,469,392 | $11,386,387 |

(1) To the extent that the interest rate on any long-term debt is variable, amounts reflected represent estimated interest payments on the applicable current outstanding balance based on the interest rate at September 30, 2023 until the applicable maturity date, net of interest rate cap contracts set up to hedge the variable interest rates under the

Inmarsat Term Loan Facility. The interest rate cap contracts provide protection of Compound SOFR up to 2% and cover 99% of the total nominal amount of the Inmarsat Term Loan Facility.

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. We may also cancel, reschedule or adjust our requirements based on business needs after firm orders are placed at a cost, which may be material.

Our condensed consolidated balance sheets included $2.7 billion and $218.5 million of “other liabilities” as of September 30, 2023 and March 31, 2023, respectively, which primarily consisted of deferred income taxes and the long-term portion of deferred revenues. These remaining liabilities have been excluded from the above table as the timing and/or the amount of any cash payment is uncertain.

### Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements at September 30, 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 condensed consolidated financial statements included in this report or in our Annual Report on Form 10-K for the year ended March 31, 2023.

### Recent Authoritative Guidance

For information regarding recently adopted and issued accounting pronouncements, see Note 1 — Basis of Presentation to our condensed consolidated financial statements.

## Market risk

As filed, 5,093 characters.

### Interest Rate Risk

Our financial instruments consist of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable and short-term and long-term obligations (including the Credit Facilities and the Notes), and interest rate cap contracts. 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 September 30, 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. The Notes and borrowings under our Ex-Im Credit Facility bear interest at a fixed rate and therefore our exposure to market risk for changes in interest rates relates primarily to borrowings under our remaining Credit Facilities, cash equivalents, short-term investments and short-term obligations.

The primary objectives of our investment activities are to preserve principal and 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. In general, money market accounts are not subject to interest rate risk because the interest paid on such funds fluctuates with the prevailing interest rate. Our cash and cash equivalents earn interest at variable rates. Our interest income has been and may continue to be negatively impacted by low market interest rates. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall. Because our investment policy restricts us to invest in conservative, interest-bearing investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on our investment portfolio to be material. Due to the short-term nature of our investment portfolio, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio. We therefore do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

Our primary interest rate under our variable rate Credit Facilities is the forward-looking term SOFR rate plus an applicable margin. As of September 30, 2023, the effective interest rate on our outstanding borrowings under the Term Loan Facility was 10.35%, under the 2023 Term Loan Facility was 10.91%, and under the Inmarsat Term Loan Facility was approximately 6.70%. As of September 30, 2023, the effective interest rate that would have been applied to any new SOFR-based borrowings under the Viasat Revolving Credit Facility was approximately 7.67%, and under the Inmarsat Revolving Credit Facility was approximately 8.32%. As of September 30, 2023, we had no outstanding borrowings under our Revolving Credit Facilities. Accordingly, assuming the outstanding balance under the Term Loan Facility, the 2023 Term Loan Facility and the Inmarsat Term Loan Facility remained constant over a year and we continued to have no outstanding borrowings under the Revolving Credit Facilities, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest but taking into account Inmarsat's interest rate cap contracts with respect to the Inmarsat Term Loan Facility, by approximately $6.8 million over a 12-month period.

We have entered into interest rate cap contracts to hedge the variable interest rates under the Inmarsat Term Loan Facility. The interest rate cap contracts provide protection of Compound SOFR up to 2% and cover 99% of the total nominal amount of the Inmarsat Term Loan Facility. As of September 30, 2023, a 10% increase or decrease in interest rates would increase or decrease the carrying and fair values of the interest rate cap contract by approximately $21.7 million.

### Foreign Exchange Risk

We generally conduct our business in U.S. dollars. However, as our international business is conducted in a variety of foreign currencies, we are exposed to fluctuations in foreign currency exchange rates. A five percent variance in foreign currencies in which our international business is conducted would change our income (loss) before income taxes by an insignificant amount for the three and six months ended September 30, 2023 and 2022. Our objective in managing our exposure to foreign currency risk is to reduce earnings and cash flow volatility associated with foreign exchange rate fluctuations. Accordingly, from time to time, we may enter into foreign currency forward contracts to mitigate risks associated with foreign currency denominated assets, liabilities, commitments and anticipated foreign currency transactions.

## Controls and procedures

As filed, 2,222 characters.

We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

On May 30, 2023, the Inmarsat Acquisition was completed. SEC guidance permits management to omit an assessment of an acquired business’ internal control over financial reporting from management's assessment of internal control over financial reporting and disclosure controls and procedures for a period not to exceed one year from the date of the acquisition. Management has begun integrating Inmarsat into our existing control procedures. Integration activities relating to the Inmarsat Acquisition may lead us to modify certain controls in future periods.

As required by SEC Rule 13a-15(b), we carried out an evaluation, with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of September 30, 2023, the end of the period covered by this report. Based upon the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023.

During the period covered by this report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 994 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 as supplemented by the factors discussed in Part II, Item 1A, "Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, which factors could materially affect our business, financial condition, liquidity or future results. There have been no material changes to the risk factors described in the "Risk Factors" section in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 and such Quarterly Report on Form 10-Q. The risks described in our reports on Forms 10-K and 10-Q are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.

Filed Nov 9, 2023.
Source: SEC EDGAR, the filing index for accession 0000950170-23-062152. Last ingested by Listed: Oct 24, 2026, 14:57 ET. No prices; not investment advice.