<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ____________
to____________.
Commission File Number ( 0-21767 )
VIASAT, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 33-0174996
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
2290 COSMOS COURT, CARLSBAD, CALIFORNIA 92009
(760) 438-8099
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the issuer's common stock, $.0001 par
value, as of February 2, 1999 was 8,025,272.
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VIASAT, INC.
INDEX
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<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Balance Sheet at December 31, 1998 and March 31, 1998 3
Condensed Statement of Income for the three and nine months ended
December 31, 1998 and 1997 4
Condensed Statement of Cash Flows for the nine months ended
December 31, 1998 and 1997 5
Condensed Statement of Stockholders' Equity for the nine months
ended December 31, 1998 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
2
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VIASAT, INC.
CONDENSED BALANCE SHEET
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<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
------------ ---------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,835,000 $ 3,290,000
Short-term investments 12,510,000 5,918,000
Accounts receivable 18,328,000 19,056,000
Inventory 4,109,000 4,687,000
Deferred income taxes 1,748,000 1,548,000
Other current assets 403,000 479,000
----------- -----------
Total current assets 40,933,000 34,978,000
Property and equipment, net 7,021,000 6,986,000
Other assets 904,000 829,000
----------- -----------
Total assets $48,858,000 $42,793,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,403,000 $ 4,555,000
Accrued liabilities 5,927,000 5,087,000
Current portion of notes payable 1,318,000 1,060,000
----------- -----------
Total current liabilities 11,648,000 10,702,000
----------- -----------
Notes payable 1,501,000 1,544,000
Other liabilities 1,020,000 937,000
----------- -----------
Total long-term liabilities 2,521,000 2,481,000
----------- -----------
Contingencies (Note 6)
Stockholders' equity:
Common stock 81,000 81,000
Paid in capital 17,324,000 16,668,000
Retained earnings 17,284,000 12,861,000
----------- -----------
Total stockholders' equity 34,689,000 29,610,000
----------- -----------
Total liabilities and
stockholders' equity $48,858,000 $42,793,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
3
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VIASAT, INC.
CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $18,928,000 $15,991,000 $53,269,000 $46,398,000
Cost of revenues 12,401,000 10,234,000 33,461,000 30,106,000
----------- ----------- ----------- -----------
Gross profit 6,527,000 5,757,000 19,808,000 16,292,000
Operating expenses:
Selling, general and
administrative 2,371,000 1,866,000 7,246,000 5,482,000
Independent research and
development 1,671,000 1,885,000 5,773,000 5,338,000
----------- ----------- ----------- -----------
Income from operations 2,485,000 2,006,000 6,789,000 5,472,000
Other income (expense):
Interest income 185,000 189,000 593,000 604,000
Interest expense (63,000) (55,000) (199,000) (157,000)
----------- ----------- ----------- -----------
Income before income taxes 2,607,000 2,140,000 7,183,000 5,919,000
Provision for income taxes 950,000 789,000 2,760,000 2,190,000
----------- ----------- ----------- -----------
Net income $ 1,657,000 $ 1,351,000 $ 4,423,000 $ 3,729,000
=========== =========== =========== ===========
Basic net income per share $ .21 $ .17 $ .56 $ .48
=========== =========== =========== ===========
Diluted net income per share $ .20 $ .16 $ .54 $ .46
=========== =========== =========== ===========
Shares used in basic net income
per share computation 7,987,508 7,810,233 7,960,529 7,781,976
=========== =========== =========== ===========
Shares used in diluted net income
per share computation 8,153,782 8,214,789 8,190,970 8,164,806
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
4
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VIASAT, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,423,000 $ 3,729,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 2,045,000 1,509,000
Tax Benefit from exercise of stock options 82,000 --
Deferred Taxes (379,000) (633,000)
Increase (decrease) in cash resulting
from changes in:
Accounts receivable 728,000 (4,964,000)
Inventory 578,000 (580,000)
Other assets 179,000 1,380,000
Accounts payable (152,000) 343,000
Accrued liabilities 840,000 2,432,000
Other liabilities 83,000 57,000
----------- -----------
Net cash provided by operating activities 8,427,000 3,273,000
----------- -----------
Cash flows from investing activities:
Purchases of short-term investments, net (6,592,000) --
Purchases of property and equipment (2,079,000) (3,234,000)
----------- -----------
Net cash used in investing activities (8,671,000) (3,234,000)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of notes payable 1,092,000 878,000
Repayment of notes payable (877,000) (1,135,000)
Proceeds from issuance of common stock 574,000 616,000
----------- -----------
Net cash provided by financing activities 789,000 359,000
----------- -----------
Net increase in cash and cash equivalents 545,000 398,000
Cash and cash equivalents at beginning of period 3,290,000 12,673,000
----------- -----------
Cash and cash equivalents at end of period $ 3,835,000 $13,071,000
=========== ===========
Supplemental information:
Cash paid for interest $ 199,000 $ 157,000
=========== ===========
Cash paid for income taxes $ 2,668,000 $ 2,144,000
=========== ===========
</TABLE>
See accompanying notes to condensed financial statements
5
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VIASAT, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NUMBER OF PAID IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
--------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at March 31, 1998 7,920,639 $ 81,000 $16,668,000 $12,861,000
Tax benefit from exercise of stock
options 82,000
Exercise of stock options 49,265 313,000
Issuance of shares for Employee
Stock Purchase Plan 22,187 261,000
Net Income 4,423,000
--------- --------- ----------- -----------
Balance at December 31, 1998 7,992,091 $ 81,000 $17,324,000 $17,284,000
========= ========= =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
6
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VIASAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
The accompanying condensed balance sheet as of December 31, 1998, the condensed
statement of income for the three and nine month periods ended December 31, 1998
and 1997, the condensed statement of cash flows for the nine month periods ended
December 31, 1998 and 1997, and the statement of stockholders' equity for the
nine months ended December 31, 1998 have been prepared by ViaSat, Inc. (the
"Company"), and have not been audited. These financial statements, in the
opinion of management, include all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the financial position,
results of operations and cash flows for all periods presented. These financial
statements should be read in conjunction with the financial statements and notes
thereto for the year ended March 31, 1998 included in the Company's 1998 Annual
Report on Form 10-K. Interim operating results are not necessarily indicative of
operating results for the full year.
NOTE 2 -- MANAGEMENT ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Estimates
have been prepared on the basis of the most current and best available
information, and actual results could differ from those estimates.
NOTE 3 -- REVENUE RECOGNITION
The majority of the Company's revenues are derived from services performed for
the United States Government and its prime contractors under a variety of
contracts including cost-plus-fixed fee, fixed-price, and time and materials
type contracts. Generally, revenues are recognized as services are performed
using the percentage of completion method, measured primarily by costs incurred
to date compared with total estimated costs at completion or based on the number
of units delivered. The Company provides for anticipated losses on contracts by
a charge to income during the period in which they are first identified.
Contract costs, including indirect costs, are subject to audit and negotiations
with Government representatives. These audits have been completed and agreed
upon through fiscal year 1996. Contract revenues and accounts receivable are
stated at amounts which are expected to be realized upon final settlement.
NOTE 4 -- EARNINGS PER SHARE
Common stock equivalents of 166,274 and 404,556 shares for the three months
ended December 31, 1998 and 1997, respectively, and 230,441 and 382,830 for the
nine months ended December 31, 1998 and 1997, respectively, were used to
calculate diluted earnings per share. Antidilutive shares excluded from the
calculation were 515,381 and 24,000 shares for the three months ended December
31, 1998 and 1997, respectively, and 216,642 and 13,000 shares for the nine
months ended December 31, 1998 and 1997, respectively. Common stock equivalents
are primarily comprised of options granted under the Company's stock option
plan. There are no reconciling items in calculating the numerator for basic and
diluted earnings per share for any of the periods presented.
7
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NOTE 5 -- COMPOSITION OF CERTAIN BALANCE SHEET CAPTIONS
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<CAPTION>
DECEMBER 31, MARCH 31,
1998 1998
------------ -----------
(UNAUDITED)
<S> <C> <C>
Accounts receivable:
Billed $11,483,000 $12,077,000
Unbilled 6,845,000 6,979,000
----------- -----------
$18,328,000 $19,056,000
=========== ===========
Inventory:
Raw materials $ 1,472,000 $ 1,564,000
Work in process 1,880,000 2,372,000
Finished goods 757,000 751,000
----------- -----------
$ 4,109,000 $ 4,687,000
=========== ===========
Accrued liabilities:
Current portion of warranty
reserve $ 1,599,000 $ 1,279,000
Accrued vacation 973,000 974,000
Accrued bonus 905,000 500,000
Accrued 401(k) matching
contribution 677,000 671,000
Other employee liabilities 560,000 236,000
Other 523,000 188,000
Collections in excess of revenues 487,000 930,000
Income taxes payable 203,000 309,000
------------ -----------
$ 5,927,000 $ 5,087,000
=========== ===========
</TABLE>
NOTE 6 -- CONTINGENCIES
The Company is currently a party to various government and commercial contracts
which require the Company to meet performance covenants and project milestones.
Under the terms of these contracts, failure by the Company to meet such
performance covenants and milestones permit the other party to terminate the
contract and, under certain circumstances, recover liquidated damages or other
penalties. The Company is currently not in compliance, or in the past was not in
compliance, with the performance or milestone requirements of certain of these
contracts. Historically, the Company's customers have not elected to terminate
such contracts or seek liquidated damages from the Company and management does
not believe that its existing customers will do so; therefore, the Company has
not accrued for any potential liquidated damages or penalties.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
When used in this discussion, the words "believes," "anticipated" and similar
expressions are intended to identify forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak only as of the
date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. Readers are also
urged to carefully review and consider the various disclosures made by the
Company which attempt to advise interested parties of the factors which affect
the Company's business, including without limitation the disclosures made under
the caption "Risk Factors" in the Company's Annual Report on Form 10-K for its
fiscal year ended March 31, 1998 filed with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
The following table sets forth, as a percentage of total revenues, certain
income data for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenue 100.0 100.0 100.0 100.0
Cost of revenue 65.5 64.0 62.8 64.9
Gross profit 34.5 36.0 37.2 35.1
Operating expenses:
Selling, general, and administrative 12.5 11.7 13.6 11.8
Independent research and development 8.8 11.8 10.8 11.5
Income from operations 13.1 12.5 12.7 11.8
Income before income taxes 13.8 13.4 13.5 12.8
Net income 8.8 8.4 8.3 8.0
</TABLE>
THREE MONTHS ENDED DECEMBER 31, 1998 VS. THREE MONTHS ENDED DECEMBER 31, 1997
Revenues. Revenues increased 18.4% from $16.0 million for the three months
ended December 31, 1997 to $18.9 million for the three months ended December 31,
1998. This increase was primarily due to increases in revenues generated by
several product lines including UHF DAMA modems, MIDS (Multifunction Information
Distribution System) and JCS (Joint Communication Simulator). These increases
were partially offset by a decrease in revenues derived from UHF DAMA network
control stations and from commercial products.
Gross Profit. Gross profit increased 13.4% from $5.8 million (36% of
revenues) for the three months ended December 31, 1997 to $6.5 million (34.5% of
revenues) for the three months ended December 31, 1998. The Company's gross
margin for the three months ended December 31, 1998 was impacted by lower
profitability than initially expected on certain percent complete contracts.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased 27% from $1.9 million (11.7% of
revenues) for the three months ended December 31, 1997 to $2.4 million (12.5% of
revenues) for the three months ended December 31, 1998. The increase in SG&A
expenses as a percentage of revenues reflects increased expenditures relating to
marketing of commercial products, increased business development and bid and
proposal efforts for defense programs, and additional administrative staffing to
support the Company's growth. SG&A expenses consist primarily of personnel costs
and expenses for business development, marketing and sales, bid and proposal,
finance, contract
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administration and general management. Certain SG&A expenses are difficult to
predict and vary based on specific government and commercial sales
opportunities.
Independent Research and Development. Independent research and development
("IR&D") expenses decreased 11.4% from $1.9 million (11.8% of revenues) for the
three months ended December 31, 1997 to $1.7 million (8.8% of revenues) for the
three months ended December 31, 1998. This decrease resulted from the award of
funded development contracts related to both the Company's defense and
commercial products.
Interest Expense. Interest expense increased from $55,000 for the three
months ended December 31, 1997 to $63,000 for the three months ended December
31, 1998. Interest expense relates to loans for the purchase of capital
equipment, which are generally four year fixed-rate term loans, and to
short-term borrowings under the Company's line of credit to cover working
capital requirements. Total outstanding equipment loans were $2.1 million at
December 31, 1997 and $2.8 million at December 31, 1998. There were no
outstanding borrowings under the Company's line of credit as of December 31,
1997 and 1998.
Interest Income. Interest income decreased from $189,000 for the three
months ended December 31, 1997 to $185,000 for the three months ended December
31, 1998. This decrease resulted from a lower yield on invested balances.
Interest income relates largely to interest earned on short-term deposits of
cash.
Provision for Income Taxes. The Company's effective income tax rate
decreased from 36.9% for the three months ended December 31, 1997 to 36.4% for
the three months ended December 31, 1998. The difference relates primarily to
the retroactive reinstatement of the federal research and development tax credit
in October 1998.
NINE MONTHS ENDED DECEMBER 31, 1998 VS. NINE MONTHS ENDED DECEMBER 31, 1997
Revenues. Revenues increased 14.8% from $46.4 million for the nine months
ended December 31, 1997 to $53.3 million for the nine months ended December 31,
1998. This increase was primarily due to increases in revenues generated by
several product lines including JCS (Joint Communication Simulator) and MIDS
(Multifunction Information Distribution System) and UHF DAMA modems. These
increases were partially offset by a decrease in revenues derived from UHF DAMA
network control stations and from commercial products.
Gross Profit. Gross profit increased 21.6% from $16.3 million (35.1% of
revenues) for the nine months ended December 31, 1997 to $19.8 million (37.2% of
revenues) for the nine months ended December 31, 1998. The Company's sales for
the nine months ended December 31, 1998 were comprised of higher margin products
relative to the same period of the prior year.
Selling, General and Administrative Expenses. SG&A expenses increased 32.2%
from $5.5 million (11.8% of revenues) for the nine months ended December 31,
1997 to $7.2 million (13.6% of revenues) for the nine months ended December 31,
1998. The increase in SG&A expenses reflects increased expenditures relating to
marketing of commercial products, increased business development and bid and
proposal efforts for defense programs, and additional administrative staffing to
support the Company's growth.
Independent Research and Development. IR&D expenses increased 8.2% from
$5.3 million (11.5% of revenues) for the nine months ended December 31, 1997 to
$5.8 million (10.8% of revenues) for the nine months ended December 31, 1998.
This increase resulted primarily from higher IR&D expenses related to the
Company's defense products and to the development of Paired Carrier Multiple
Access (PCMA) technology. The decrease as a percent of sales resulted from the
award of funded development contracts related to the Company's defense and
commercial products.
Interest Expense. Interest expense increased from $157,000 for the nine
months ended December 31, 1997 to $200,000 for the nine months ended December
31, 1998. Interest expense relates to loans for the purchase of capital
equipment, which are generally four year fixed-rate term loans, and to
short-term
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borrowings under the Company's line of credit to cover working capital
requirements. There were no outstanding borrowings under the Company's line of
credit as of December 31, 1997 and 1998.
Interest Income. Interest income decreased from $604,000 for the nine
months ended December 31, 1997 to $593,000 for the nine months ended December
31, 1998. This decrease resulted from a lower yield on invested balances.
Interest income relates to interest earned on short-term deposits of cash.
Provision for Income Taxes. The Company's effective income tax rate
increased from 37.0% for the nine months ended December 31, 1997 to 38.4% for
the nine months ended December 31, 1998. The Company's effective income tax rate
increased due to a limitation on qualified research and development expenditures
used to calculate the Company's research and development tax credit.
BACKLOG
At December 31, 1998, the Company had firm backlog of $58.1 million, of which
$45.9 million was funded. The firm backlog of $58.1 million does not include
contract options of $36.2 million. Of the $58.1 million in firm backlog,
approximately $16.2 million is expected to be delivered in the fiscal year
ending March 31, 1999, $26.6 million is expected to be delivered in the fiscal
year ending March 31, 2000 and the balance is expected to be delivered in the
fiscal year ending March 31, 2001 and thereafter. The Company had firm backlog
of $72.7 million, of which $48.0 million was funded, not including options of
$24.3 million, at March 31, 1998. The Company includes in its backlog only those
orders for which it has accepted purchase orders. However, backlog is not
necessarily indicative of future sales. A majority of the Company's backlog
scheduled for delivery can be terminated at the convenience of the government
since orders are often made substantially in advance of delivery, and the
Company's contracts typically provide that orders may be terminated with limited
or no penalties. In addition, purchase orders may set forth product
specifications that would require the Company to complete additional product
development. A failure to develop products meeting such specifications could
lead to a termination of the related purchase order.
The backlog amounts as presented 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. The Company's customers allocate funds for
expenditures on long-term contracts on a periodic basis. The ability of the
Company to realize revenues from government contracts in backlog is dependent
upon adequate funding for such contracts. Although funding of its government
contracts is not within the Company's control, the Company's experience
indicates that actual contract fundings have ultimately been approximately equal
to the aggregate amounts of the contracts.
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LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date primarily from cash flows from
operations, bank line of credit financing, equity financing and loans for the
purchase of capital equipment. Cash provided by operating activities for the
nine months ended December 31, 1998 and 1997 was $8.4 million and $3.3 million,
respectively. The relative increase in cash provided by operating activities for
the nine months ended December 31, 1998 compared to the same period of the prior
year was primarily due to the timing of receivable collections.
Cash used in investing activities for the nine months ended December 31, 1998
and 1997 was $8.7 million and $3.2 million, respectively. The Company purchased
$2.1 million and $3.2 million of property and equipment during the nine months
ended December 31, 1998 and 1997, respectively. The Company's purchases of
property and equipment primarily consist of test equipment and computers. During
the nine months ended December 31,1998, $6.6 million in cash equivalents matured
and were reinvested in short-term investments.
Cash provided by financing activities for the nine months ended December 31,
1998 and 1997 was $1.2 million and $19,000, respectively. This increase was
primarily the result of borrowings for equipment financing and proceeds from the
sale of common stock through the Company's employee stock option and purchase
plans.
At December 31, 1998, the Company had $16.3 million in cash, cash equivalents
and short-term investments, $29.3 million in working capital and $2.8 million in
long-term debt, which consisted of equipment financing. The Company had a zero
balance under its line of credit at December 31, 1998.
The Company's credit facilities, including the line of credit and equipment
financing, expired on December 15, 1998. The Company has received an offer to
expand its credit facility with Union Bank of California from a $6.0 million
line of credit with $4.5 million of equipment financing, to a $7.5 million line
of credit and additional commitments for increased equipment financing. The
Company is in the process of renegotiating the terms of the commitment.
The Company's future capital requirements will depend upon many factors,
including the progress of the Company's research and development efforts,
expansion of the Company's marketing efforts, and the nature and timing of
orders. The Company believes that its current cash balances, amounts available
under its credit facilities and net cash expected to be provided by operating
activities, will be sufficient to meet its working capital and capital
expenditure requirements for at least the next 12 months. Management invests the
Company's cash in excess of current operating requirements in short-term,
interest-bearing, investment-grade securities.
YEAR 2000 ISSUE
Many computer programs have been written using two digits rather than four to
define the applicable year. This poses a problem when 1/1/00 could represent
either year 2000 or year 1900. This, in turn, could result in system failures or
miscalculations, and is generally referred to as the "Year 2000 issue." The
Company has formulated a Year 2000 Plan to address the Company's Year 2000
issues. Because the Company's fiscal year 2000 begins on April 1, 1999,
applications which depend upon the fiscal year instead of the calendar year must
be free of any Year 2000 issues by April 1,1999. The Company is committed to
ensuring that all critical systems are Year 2000 compliant before April 1, 1999.
The Company's Year 2000 Plan includes four phases--evaluation, implementation of
any required changes, testing and release/installation. The evaluation phase
includes a determination of which systems rely on the fiscal year and which use
the calendar year.
The Company has conducted evaluations of its products to determine if they are
Year 2000 compliant. The Company does not believe that there are any material
Year 2000 defects in its products. The Company has been asked by some customers
to complete tests on products to determine if there are any Year 2000
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issues. The products have passed these tests. The Company does not believe that
any Year 2000 compliance issues related to its products will result in a
material adverse effect on the financial position or results of operations of
the Company.
The Company has completed extensive inquiries with significant suppliers to
evaluate their Year 2000 status to determine the extent to which the Company is
vulnerable to those third parties' failure to remedy their own Year 2000 issues.
The Company does not believe that any Year 2000 compliance issues related to its
suppliers will result in a material adverse effect on the financial position or
results of operations of the Company.
The Company has completed the evaluation of its business systems and has begun
the implementation phase for some minor modifications. These modifications will
be completed before April 1, 1999. The Company believes that the required
modifications are relatively minor and will not have a material impact on the
Company's operations.
The Company currently estimates that the total cost of implementing its Year
2000 Plan will be less than the original estimate of $1.0 million. This
preliminary estimate is based on available information and will be updated as
the Company continues its assessment and proceeds with the implementation.
The Company anticipates that the Year 2000 issue will not have a material
adverse effect on the financial position or results of operations of the
Company. There can be no assurances, however, that the systems of other
companies or the U.S. Government, on which the Company relies for supplies, cash
payments, and future business, will be timely converted, or that a failure to
convert by another company or the U.S. Government, would not have a material
adverse effect on the financial position or results of operations of the
Company. If third party service providers and vendors, due to the Year 2000
issue, fail to provide the Company with components or materials which are
necessary to manufacture its products, with sufficient electrical power and
other utilities to sustain its manufacturing process, or with adequate, reliable
means of transporting its products to its customers worldwide, then any such
failure could have a material adverse effect on the Company's ability to conduct
business, as well as the Company's financial position and results of operations.
The foregoing discussion of Year 2000 issues contains forward-looking statements
and should be read in conjunction with the Company's disclosures in the first
paragraph under the caption "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations" above.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27.1 - Financial Data Schedule
(b) The Company filed no reports on Form 8-K during the quarter ended
December 31, 1998.
13
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VIASAT, INC.
Date: February 12, 1999
/s/ Mark D. Dankberg
------------------------------------
MARK D. DANKBERG
President
Chief Executive Officer
/s/ Gregory D. Monahan
------------------------------------
GREGORY D. MONAHAN
Vice President & General Counsel
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE VIASAT,
INC. FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN
FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,835
<SECURITIES> 12,510
<RECEIVABLES> 18,328
<ALLOWANCES> 0
<INVENTORY> 4,109
<CURRENT-ASSETS> 40,933
<PP&E> 14,676
<DEPRECIATION> (7,656)
<TOTAL-ASSETS> 48,858
<CURRENT-LIABILITIES> 11,648
<BONDS> 0
0
0
<COMMON> 81
<OTHER-SE> 34,608
<TOTAL-LIABILITY-AND-EQUITY> 48,858
<SALES> 53,269
<TOTAL-REVENUES> 53,269
<CGS> 33,461
<TOTAL-COSTS> 33,461
<OTHER-EXPENSES> 13,019
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (199)
<INCOME-PRETAX> 7,183
<INCOME-TAX> 2,760
<INCOME-CONTINUING> 4,423
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,423
<EPS-PRIMARY> .56
<EPS-DILUTED> .54
</TABLE>
