<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 June 30, 2000.
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)
DELAWARE 33-0174996
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6155 EL CAMINO REAL, CARLSBAD, CALIFORNIA 92009
(760) 476-2200
(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 August 7, 2000 was 21,804,514.
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VIASAT, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at March 31, 2000
and June 30, 2000 3
Condensed Consolidated Statement of Income for the three
months ended June 30, 1999 and 2000 4
Condensed Consolidated Statement of Cash Flows for the three
months ended June 30, 1999 and 2000 5
Condensed Consolidated Statement of Stockholders' Equity
for the three months ended June 30, 2000 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 14
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
2
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VIASAT, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 2000
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 19,520,000 $ 29,430,000
Short-term investments 121,000 --
Accounts receivable 26,268,000 59,802,000
Inventory 3,122,000 15,314,000
Deferred income taxes 1,813,000 1,967,000
Other current assets 2,167,000 1,352,000
------------ ------------
Total current assets 53,011,000 107,865,000
Property and equipment, net 8,164,000 18,973,000
Intangible assets, net -- 22,909,000
Other assets 755,000 3,974,000
------------ ------------
Total assets $ 61,930,000 $153,721,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,934,000 $ 14,925,000
Accrued liabilities 5,001,000 14,016,000
Current portion of notes payable 907,000 816,000
------------ ------------
Total current liabilities 14,842,000 29,757,000
------------ ------------
Notes payable 336,000 168,000
Other liabilities 755,000 755,000
------------ ------------
Total long-term liabilities 1,091,000 923,000
------------ ------------
Contingencies (Note 6)
Stockholders' equity:
Common stock 1,000 1,000
Paid in capital 18,933,000 94,022,000
Retained earnings 27,063,000 29,018,000
------------ ------------
Total stockholders' equity 45,997,000 123,041,000
------------ ------------
Total liabilities and stockholders' equity $ 61,930,000 $153,721,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
3
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VIASAT, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------------------
1999 2000
------------ ------------
<S> <C> <C>
Revenues $ 17,035,000 $ 36,626,000
Cost of revenues 9,709,000 23,979,000
------------ ------------
Gross profit 7,326,000 12,647,000
Operating expenses:
Selling, general and administrative 2,948,000 5,764,000
Independent research and development 1,590,000 1,654,000
Acquired in-process research and development -- 2,193,000
Amortization of intangible assets -- 550,000
------------ ------------
Income from operations 2,788,000 2,486,000
Other income (expense):
Interest income 256,000 507,000
Interest expense (47,000) (32,000)
------------ ------------
Income before income taxes 2,997,000 2,961,000
Provision for income taxes 1,192,000 1,006,000
------------ ------------
Net income $ 1,805,000 $ 1,955,000
============ ============
Basic net income per share $ .11 $ .10
============ ============
Diluted net income per share $ .11 $ .09
============ ============
Shares used in basic net income per share computation 16,069,016 19,927,982
============ ============
Shares used in diluted net income per share computation 16,415,110 21,220,642
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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VIASAT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
-------------------------------
1999 2000
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,805,000 $ 1,955,000
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 885,000 1,653,000
Acquired in-process research and development -- 2,193,000
Deferred taxes 184,000 (1,135,000)
Increase (decrease) in cash resulting from changes in:
Accounts receivable (5,910,000) (14,773,000)
Inventory (313,000) (3,714,000)
Other assets 41,000 (1,203,000)
Accounts payable (285,000) 5,991,000
Accrued liabilities (147,000) 5,596,000
Other liabilities (81,000) --
------------ ------------
Net cash used in operating activities (3,821,000) (3,437,000)
------------ ------------
Cash flows from investing activities:
Acquisition of a business -- (59,411,000)
Proceeds from sale of short-term investments 2,952,000 121,000
Purchases of property and equipment (498,000) (978,000)
------------ ------------
Net cash provided by (used in) investing activities 2,454,000 (60,268,000)
------------ ------------
Cash flows from financing activities:
Repayment of notes payable (352,000) (259,000)
Proceeds from issuance of common stock, net of
issuance costs 257,000 73,874,000
------------ ------------
Net cash (used in) provided by financing activities (95,000) 73,615,000
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,462,000) 9,910,000
Cash and cash equivalents at beginning of period 6,005,000 19,520,000
------------ ------------
Cash and cash equivalents at end of period $ 4,543,000 $ 29,430,000
============ ============
Supplemental information:
Cash paid for interest $ 47,000 $ 33,000
============ ============
Cash paid for income taxes $ 584,000 $ 226,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE> 6
VIASAT, INC.
CONDENSED CONSOLIDATED 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, 2000 16,393,208 $ 1,000 $18,933,000 $27,063,000
Exercise of stock options 144,338 454,000
Issuance of shares for Employee Stock
Purchase Plan 17,338 368,000
Issuance of shares for Secondary Offering,
net of issuance costs of $1,000,000 5,224,150 73,052,000
Issuance of warrants to purchase 100,000
shares of common stock 1,215,000
Net Income 1,955,000
---------- ------- ----------- -----------
Balance at June 30, 2000 21,779,034 $ 1,000 $94,022,000 $29,018,000
========== ======= =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
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NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet as of June 30, 2000 and
condensed consolidated statements of income and of cash flows for the three
month periods ended June 30, 1999 and 2000, and the condensed consolidated
statement of stockholders' equity for the three months ended June 30, 2000 have
been prepared by the management of ViaSat, Inc., 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,
2000 included in our 2000 Annual Report on Form 10-K. Interim operating results
are not necessarily indicative of operating results for the full year.
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 2 - SECONDARY PUBLIC STOCK OFFERING AND ACQUISITION OF SATELLITE NETWORKS
BUSINESS
On April 24, 2000, we completed a secondary public stock offering for the sale
of 5,224,150 shares of common stock for net proceeds of approximately $73.0
million.
On April, 25, 2000, we completed the acquisition of the satellite networks
business (the "Satellite Networks Business") of Scientific-Atlanta, Inc. for an
aggregate purchase price of approximately $59.4 million in cash (including
post-closing adjustments), plus warrants to purchase 100,000 shares of common
stock valued at $1.2 million.
The Satellite Networks Business is a significant DAMA-based VSAT supplier with
additional product lines addressing the non-DAMA VSAT market, the gateway
market, the asset tracking and meter reading market, and the telemetry and
antenna systems market. In addition, the Satellite Networks Business brings us a
larger and more experienced commercial sales force, a significant customer base,
additional research and development, and engineering capabilities. We have moved
the headquarters of our commercial business to the Satellite Networks Business
facilities in Norcross, Georgia.
7
<PAGE> 8
The acquisition has been accounted for by the purchase method of accounting as
defined in APB Opinion No. 16. The purchase price of the acquisition has been
allocated to the estimated fair value of the tangible and intangible assets
acquired and liabilities assumed of the Satellite Networks Business. The
purchase price allocation for certain assets is preliminary and further
refinements are likely to be made on the completion of final valuation studies.
In connection with this acquisition, a charge of $2.2 million for acquired in
process research and development was included in our first quarter results. This
charge represented the fair value of certain acquired research and development
projects that were determined to have not reached technological feasibility and
have no alternative future use. The estimated fair value of assets acquired and
liabilities assumed, which is subject to further refinement, is as follows:
<TABLE>
<S> <C>
Accounts receivable $ 18,761,000
Inventory 8,478,000
Property, plant and equipment 10,934,000
Intangible assets 23,679,000
Acquired in-process research and development 2,193,000
Liabilities (3,419,000)
------------
Total $ 60,626,000
============
</TABLE>
The following unaudited pro forma condensed combined financial information gives
effect to the acquisition as of April 1, 1999. Because the Satellite Networks
Business had been operated as division of Scientific-Atlanta, its results may
not reflect those that would have resulted had it operated as an independent
entity or as a part of ViaSat. The pro forma information for the three months
ended June 30, 1999 and June 30, 2000 does not reflect the effects of
anticipated post-acquisition cost savings or restructuring efficiencies.
The pro forma condensed combined financial information combines information from
ViaSat's unaudited income statement for the three months ended June 30, 1999
with the Satellite Networks Business' unaudited income statement for the three
months ended June 30, 1999.
The pro forma condensed combined financial information combines information from
ViaSat's unaudited income statement for the three months ended June 30, 2000
with the Satellite Networks Business' unaudited income statement for the three
months ended June 30, 2000.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
------------------------------
1999 2000
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues $41,172,000 $44,009,000
Net Income 1,246,000 2,410,000
Earnings per share
Basic $ 0.06 $ 0.11
Diluted $ 0.06 $ 0.10
Weighted average number of shares*
Basic 21,293,166 21,669,366
Diluted 21,639,260 22,962,026
</TABLE>
* The weighted average number of shares include 5,224,150 shares related to
the secondary offering.
The unaudited pro forma financial information presented is not necessarily
indicative of either the results of operations that would have occurred had the
acquisition taken place on April 1, 1999 or the future results of operations of
the combined entities.
8
<PAGE> 9
NOTE 3 - REVENUE RECOGNITION
The majority of our revenues are derived from products and services performed
under a variety of contracts including cost-plus-fixed fee, fixed-price, and
time and materials type contracts. Generally, revenues are recognized as
contracts 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. We provide for
anticipated losses on contracts by a charge to income during the period in which
they are first identified.
Contract costs with the U. S. Government and its prime contractors, 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 346,094 and 1,292,660 shares for the three months
ended June 30, 1999 and 2000, respectively, were used to calculate diluted
earnings per share. Antidilutive shares excluded from the calculation were
1,128,346 and 301,648 shares for the three months ended June 30, 1999 and 2000,
respectively. Common stock equivalents are primarily comprised of options
granted under our stock option plan.
NOTE 5 - COMPOSITION OF CERTAIN BALANCE SHEET CAPTIONS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 2000
------------ ------------
(UNAUDITED)
<S> <C> <C>
Accounts receivable:
Billed $ 13,031,000 $ 37,590,000
Unbilled 13,237,000 22,212,000
------------ ------------
$ 26,268,000 $ 59,802,000
============ ============
Inventory:
Raw materials $ 2,263,000 $ 7,509,000
Work in process 484,000 3,864,000
Finished goods 375,000 3,941,000
------------ ------------
$ 3,122,000 $ 15,314,000
============ ============
Intangible assets:
Technology -- $ 8,964,000
Contracts and relationships -- 8,964,000
Acquired work force -- 5,531,000
Accumulated amortization -- (550,000)
------------ ------------
-- $ 22,909,000
============ ============
Accrued liabilities:
Current portion of warranty reserve $ 799,000 $ 1,578,000
Accrued vacation 1,188,000 1,432,000
Accrued bonus 1,004,000 345,000
Accrued 401(k) matching contribution 917,000 345,000
Income taxes payable -- 1,837,000
Collections in excess of revenues 694,000 8,412,000
Other 399,000 67,000
------------ ------------
$ 5,001,000 $ 14,016,000
============ ============
</TABLE>
9
<PAGE> 10
NOTE 6 - CONTINGENCIES
We are currently a party to various government and commercial contracts which
require us to meet performance covenants and project milestones. Under the
terms of these contracts, failure by us 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. We are currently
not in compliance, or in the past were not in compliance, with the performance
or milestone requirements of certain of these contracts. Historically, our
customers have not elected to terminate such contracts or seek liquidated
damages from us and management does not believe that its existing customers will
do so; therefore, we have not accrued for any potential liquidated damages or
penalties.
We may be in involved in legal proceedings arising in the ordinary course of
business, none of which is expected to have a material adverse effect on our
business, financial condition, results of operations or cash flows.
NOTE 7 - SEGMENT INFORMATION
We are organized primarily based on the basis of products with commercial and
defense communication applications, represented by ViaSat Satellite Networks
which operates primarily in the commercial market and Electronic Systems Group
which operates primarily in the defense market.
The following table summarizes revenues and operating profits by operating
segment for the three month period ended June 30, 2000. The acquisition of the
Satellite Networks Business resulted in a second operating segment. Certain
corporate general and administrative costs, amortization of intangible assets
and the charge of acquired in-process research and development are not allocated
to either segment and accordingly, are shown as reconciling items from segment
operating profit and consolidated operating profit.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000
------------------
(UNAUDITED)
<S> <C>
Revenues
ViaSat Satellite Networks $ 22,544,000
Electronic Systems Group 14,082,000
------------
Total revenues 36,626,000
Operating Profits
ViaSat Satellite Networks 2,201,000
Electronic Systems Group 3,387,000
------------
Segment operating profit before Corporate 5,588,000
Corporate (359,000)
Amortization of Intangibles (550,000)
Acquired in-process research and development (2,193,000)
------------
Total operating profits $ 2,486,000
============
</TABLE>
10
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Revenue information by geographic area for the three months ended June 30, 2000
is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 2000
------------------
(UNAUDITED)
<S> <C>
North America $29,225,000
Europe 3,952,000
Asia Pacific 2,495,000
Latin America 954,000
-----------
$36,626,000
===========
</TABLE>
We distinguish revenues from external customers by geographic areas based on
customer location.
The net book value of long-lived assets located outside North America was
$69,000 at June 30, 2000.
NOTE 8 - SUBSEQUENT EVENT
In August 2000, the Board of Directors approved a 2-for-1 split of our common
stock. All share and per share information in the financial statements have
been adjusted to reflect the stock split on a retroactive basis, as if the split
had taken place in the prior quarter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
When used in this discussion, the words "believes," "anticipates," "expects,"
"intends" 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. We undertake 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 us
which attempt to advise interested parties of the factors which affect our
business, including without limitation the disclosures made under Item 1.
Business - "Factors That May Affect Future Performance" in our Annual Report on
Form 10-K for our fiscal year ended March 31, 2000, 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
JUNE 30,
----------------------
<S> <C> <C>
1999 2000
------ ------
Revenues 100.0% 100.0%
Cost of revenues 57.0 65.5
------ ------
Gross profit 43.0 34.5
Operating expenses:
Selling, general, and administrative 17.3 15.7
Independent research and development 9.3 4.5
Acquired in-process research and development -- 6.0
Amortization of intangible assets -- 1.5
------ ------
Income from operations 16.4 6.8
Income before income taxes 17.6 8.1
Net income 10.6 5.3
</TABLE>
11
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THREE MONTHS ENDED JUNE 30, 1999 VS. THREE MONTHS ENDED JUNE 30, 2000
Revenues. Revenues increased 115% from $17.0 million for the three months
ended June 30, 1999 to $36.6 million for the three months ended June 30, 2000.
This increase was primarily due to the acquisition of the Satellite Networks
Business as well as improvements in revenues generated by commercial sales and
other development programs including the multifunction information distribution
system (MIDS). These increases were partially offset by a decrease in revenues
derived from completion of UHF modem production contracts.
Gross Profit. Gross profit increased 72.6% from $7.3 million (43.0% of
revenues) for the three months ended June 30, 1999 to $12.6 million (34.5% of
revenues) for the three months ended June 30, 2000. This increase was primarily
due to higher volumes related to the acquisition of the Satellite Networks
Business. The decrease as a percentage of revenues resulted from lower volumes
of high margin defense products and increased volumes of lower margin
development projects offset in part by improvements in the margins on commercial
products.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased 95.5% from $2.9 million (17.3% of
revenues) for the three months ended June 30, 1999 to $5.8 million (15.7% of
revenues) for the three months ended June 30, 2000. The increase was primarily
due to the additional costs from the Satellite Networks Business, including
transition costs related to the acquisition. The decrease in expenses as a
percentage of revenues reflects efficiencies from improved commercial sales
volumes. SG&A expenses consist primarily of personnel costs and expenses for
business development, marketing and sales, bid and proposal, finance, contract
administration and general management. Certain of these expenses are difficult
to predict and vary based on specific government and commercial sales
opportunities.
Independent Research and Development. Independent research and development
expenses increased 4.0% from $1.6 million (9.3% of revenues) for the three
months ended June 30, 1999, to $1.7 million (4.5% of revenues) for the three
months ended June 30, 2000. This decrease as a percentage of sales resulted from
a higher level of funded development programs and by completion of features
under development in the prior fiscal period.
Acquired In-process Research and Development. The acquisition of the
Satellite Networks Business was accounted for by the purchase method of
accounting. In connection with this acquisition, a charge of $2.2 million for
purchased in process research and development was included in our first quarter
results. This charge represented the fair value of certain acquired research and
development projects that were determined to have not reached technological
feasibility.
Amortization of Intangible Assets. Intangible assets are being amortized
over useful lives ranging from three to nine years. For the three months ended
June 30, 2000, amortization expense was $550,000 for the period from April 25,
2000 to the end of the quarter.
Interest Expense. Interest expense decreased from $47,000 for the three
months ended June 30, 1999 to $32,000 for the three months ended June 30, 2000.
Interest expense relates to loans for the purchase of capital equipment, which
are generally three year variable rate term loans, and to short-term borrowings
under our line of credit to cover working capital requirements. Total
outstanding equipment loans were $2.1 million at June 30, 1999, and $1.0 million
at June 30, 2000. There were no outstanding borrowings under our line of credit
as of June 30, 1999 or 2000.
Interest Income. Interest income increased from $256,000 for the three
months ended June 30, 1999 to $507,000 for the three months ended June 30, 2000.
This increase resulted from increased invested balances. Interest income relates
largely to interest earned on short-term deposits of cash.
12
<PAGE> 13
Provision for Income Taxes. Our effective income tax rate decreased from
39.8% for the three months ended June 30, 1999 to 34.0% for the three months
ended June 30, 2000. The difference relates primarily to increases in research
and development tax credits.
BACKLOG
At June 30, 2000 we had firm backlog of $165.0 million of which $136.7 million
was funded. The firm backlog of $165.0 million does not include contract options
of $54.3 million. Of the $165.0 million in firm backlog, approximately $74.1
million is expected to be delivered in the fiscal year ending March 31, 2001,
and the balance is expected to be delivered in the fiscal year ending March 31,
2002 and thereafter. We had firm backlog of $88.2 million, of which $58.6
million was funded, not including options of $53.3 million, at March 31, 2000.
We include in our backlog only those orders for which we have accepted purchase
orders. However, backlog is not necessarily indicative of future sales. A
majority of our government backlog scheduled for delivery can be terminated at
the convenience of the government since 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 set
forth 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 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. Our government customers allocate funds for
expenditures on long-term contracts on a periodic basis. Our ability to realize
revenues from government contracts in backlog is dependent upon adequate funding
for such contracts. Although funding of government contracts is not within our
control, our experience indicates that actual contract fundings have ultimately
been approximately equal to the aggregate amounts of the contracts.
LIQUIDITY AND CAPITAL RESOURCES
We have financed our operations to date primarily with cash flows from
operations, bank line of credit financing, equity financing and loans for the
purchase of capital equipment. Cash used in operating activities for the three
months ended June 30, 1999 was $3.8 million and cash used in operating
activities for the three months ended June 30, 2000 was $3.4 million. Increases
in accounts receivable and inventories due to the new business were offset by
increases in accounts payable and accrued liabilities.
Cash provided by investing activities for the three months ended June 30, 1999
was $2.5 million and cash used in investing activities for the three months
ended June 30, 2000 was $60.3 million. During the three months ended June 30,
2000, we acquired the Satellite Networks business for cash of $59.4 million plus
warrants to purchase 100,000 shares of common stock valued at $1.2 million. In
addition. we acquired $1.0 million in equipment in the three months ended June
30, 2000 compared to $500,000 of equipment during the three months ended June
30, 1999, excluding the acquisition of the Satellite Networks Business.
Cash used in financing activities for the three months ended June 30, 1999 was
$95,000 and cash provided by financing activities for the three months ended
June 30, 2000 was $73.6 million. This increase was primarily the result of
completing a secondary public stock offering for $73.0 million.
At June 30, 2000, we had $29.4 million in cash, cash equivalents and short-term
investments, $78.1 million in working capital and $984,000 in equipment
financing. We had no outstanding borrowings under our line of credit at June 30,
2000.
13
<PAGE> 14
We received a commitment from Union Bank of California and Washington Mutual
Bank to provide a total credit facility of $50 million for the acquisition of
the Satellite Networks Business. This facility also provided for a secured
revolving credit facility of $25 million for general working capital. We did not
elect to use the financing for the acquisition and are now in the process of
negotiating the terms of the $25 million revolving line of credit facility.
Our future capital requirements will depend upon many factors, including the
progress of our research and development efforts, expansion of our marketing
efforts, and the nature and timing of orders. We believe that our current cash
balances and net cash expected to be provided by operating activities will be
sufficient to meet our working capital and capital expenditure requirements for
at least the next 12 months. We invest our cash in excess of current operating
requirements in short-term, interest-bearing, investment-grade securities.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On April 25, 2000, we issued to Scientific-Atlanta, Inc. warrants to purchase
100,000 shares of common stock in connection with the acquisition of the
Satellite Networks Business. The warrants may be exercised by Scientific-Atlanta
at any time within two years from the date of issuance and are divided into four
equal installments of 25,000 shares each, with the following per share exercise
prices: $26.25, $31.25, $36.25 and $41.25. The issuance of the warrants was
exempt from registration under Section 4(2) of the Securities Act of 1933, as
amended, as a transaction not involving a public offering.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 - The ViaSat, Inc. Employee Purchase Plan, as amended.
(b) Exhibit 27.1 - Financial Data Schedule
(c) Reports on Form 8-K
A Current Report on Form 8-K was filed with the Commission on May 8, 2000,
regarding our acquisition of the Satellite Networks Business from
Scientific-Atlanta, Inc.
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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.
August 14, 2000
/s/ MARK D. DANKBERG
-------------------------------------------------
Mark D. Dankberg
Chairman of the Board, President and Chief
Executive Officer (Principal Executive Officer)
/s/ RICHARD A. BALDRIDGE
-------------------------------------------------
Richard A. Baldridge
Executive Vice President, Chief Financial
Officer and Chief Operating Officer
(Principal Financial and Accounting Officer)
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