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, 1997.
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.)
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 January 31, 1998 was 7,845,524.
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VIASAT, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheet at December 31, 1997 and
March 31, 1997 2
Condensed Statement of Income for the three and nine
months ended December 31, 1997 and 1996 3
Condensed Statement of Cash Flows for the nine months
ended December 31, 1997 and 1996 4
Condensed Statement of Stockholders' Equity for the nine
months ended December 31, 1997 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
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VIASAT, INC.
CONDENSED BALANCE SHEET
DECEMBER 31, MARCH 31,
1997 1997
------------ ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 13,071,000 $ 12,673,000
Accounts receivable 15,279,000 10,315,000
Inventory 5,058,000 4,478,000
Deferred income taxes 1,495,000 863,000
Other current assets 419,000 1,825,000
------------ ------------
Total current assets 35,322,000 30,154,000
Property and equipment, net 6,810,000 5,085,000
Other assets 462,000 435,000
------------ ------------
Total assets $ 42,594,000 $ 35,674,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,187,000 $ 4,844,000
Accrued liabilities 6,201,000 3,769,000
Current portion of notes payable 1,037,000 1,135,000
------------ ------------
Total current liabilities 12,425,000 9,748,000
------------ ------------
Notes payable 1,269,000 1,428,000
Other liabilities 936,000 879,000
------------ ------------
Total long-term liabilities 2,205,000 2,307,000
------------ ------------
Contingencies (Note 8)
Stockholders' equity:
Common stock 81,000 81,000
Paid in capital 16,580,000 16,044,000
Stockholders' notes receivable (80,000)
Retained earnings 11,303,000 7,574,000
------------ ------------
Total stockholders' equity 27,964,000 23,619,000
------------ ------------
Total liabilities and stockholders' equity $ 42,594,000 $ 35,674,000
============ ============
See accompanying notes to condensed financial statements
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VIASAT, INC.
CONDENSED STATEMENT OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
Revenues $ 15,991,000 $ 12,079,000 $ 46,398,000 $ 33,661,000
Cost of revenues 10,234,000 8,247,000 30,106,000 23,580,000
------------ ------------ ------------ ------------
Gross profit 5,757,000 3,832,000 16,292,000 10,081,000
Operating expenses:
Selling, general and
administrative 1,866,000 1,160,000 5,482,000 3,472,000
Independent research and
development 1,885,000 1,384,000 5,338,000 3,602,000
------------ ------------ ------------ ------------
Income from operations 2,006,000 1,288,000 5,472,000 3,007,000
Other income (expense):
Interest income 189,000 80,000 604,000 149,000
Interest expense (55,000) (61,000) (157,000) (187,000)
------------ ------------ ------------ ------------
Income before income taxes 2,140,000 1,307,000 5,919,000 2,969,000
Provision for income taxes 789,000 454,000 2,190,000 1,034,000
------------ ------------ ------------ ------------
Net income $ 1,351,000 $ 853,000 $ 3,729,000 $ 1,935,000
============ ============ ============ ============
Basic net income per share $ .17 $ .13 $ .48 $ .32
============ ============ ============ ============
Diluted net income per share $ .16 $ .13 $ .46 $ .31
============ ============ ============ ============
Basic common equivalent shares 7,810,233 6,426,022 7,781,976 6,098,790
============ ============ ============ ============
Diluted common equivalent shares 8,214,789 6,652,228 8,164,806 6,290,700
============ ============ ============ ============
See accompanying notes to condensed financial statements.
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VIASAT, INC.
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED
DECEMBER 31,
-------------------------------
1997 1996
------------ ------------
Cash flows from operating activities:
Net income $ 3,729,000 $ 1,935,000
Adjustments to reconcile net income
to net cash provided by (used) in operating
activities:
Depreciation 1,509,000 972,000
Deferred income taxes (633,000) (560,000)
Increase (decrease) in cash resulting from changes in:
Accounts receivable (4,964,000) (1,528,000)
Inventory (580,000) (3,738,000)
Other assets 1,380,000 (216,000)
Accounts payable 343,000 4,000
Accrued liabilities 2,432,000 1,263,000
Other liabilities 57,000 372,000
------------ ------------
Net cash provided by (used in) operating
activities 3,273,000 (1,496,000)
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (3,234,000) (2,012,000)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of notes payable 878,000 462,000
Repayment of notes payable (1,135,000) (565,000)
Proceeds from issuance of common stock 616,000 15,137,000
------------ ------------
Net cash provided by financing activities 359,000 15,034,000
------------ ------------
Net increase in cash and cash equivalents 398,000 11,526,000
Cash and cash equivalents at beginning of period 12,673,000 2,297,000
------------ ------------
Cash and cash equivalents at end of period $ 13,071,000 $ 13,823,000
============ ============
Supplemental information:
Cash paid for interest $ 157,000 $ 187,000
============ ============
Cash paid for income taxes $ 2,144,000 $ 1,291,000
============ ============
See accompanying notes to condensed financial statements
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VIASAT, INC.
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
COMMON STOCK
------------------------ STOCKHOLDERS'
NUMBER OF PAID IN NOTES RETAINED
SHARES AMOUNT CAPITAL RECEIVABLE EARNINGS
--------- ----------- ----------- ----------- -----------
Balance at March 31, 1997 7,742,274 $ 81,000 $16,044,000 $ (80,000) $ 7,574,000
Purchase of common stock 95,783 536,000
Payment for shares subscribed 80,000
Net income 3,729,000
--------- ----------- ----------- ----------- -----------
Balance at December 31, 1997 7,838,057 $ 81,000 $16,580,000 $ -- $11,303,000
========= =========== =========== =========== ===========
See accompanying notes to condensed financial statements.
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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, 1997 and the
condensed statements of income and of cash flows for the three and nine month
periods ended December 31, 1997 and 1996, and the statement of stockholders'
equity for the nine months ended December 31, 1997 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, 1997 included in the Company's 1997 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. 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 1994. Contract revenues and accounts receivable are
stated at amounts which are expected to be realized upon final settlement.
NOTE 4 - INVESTMENTS
At December 31, 1997, the Company held investments in investment grade
securities with maturities of three months or less. Management determines the
appropriate classification of its investments in debt securities at the time of
purchase and reevaluates such designation as of each balance sheet date. The
Company has included these securities, net of amortization, in cash and cash
equivalents and has designated them as held to maturity.
NOTE 5 - EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share", which
establishes new standards for computing earnings per share and which became
effective for financial statements for periods ending after December 31, 1997,
including interim periods. Under the new requirements, historically reported
"primary" and "fully diluted" earnings per share have been replaced with "basic"
and "diluted" earnings per share.
Basic earnings per share is computed based upon the weighted average number of
common shares outstanding during the period. Diluted earnings per share is based
upon the weighted average number of
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VIASAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
common shares outstanding and dilutive common stock equivalents during the
period. Common stock equivalents are options granted under the Company's stock
option plans which are included in the earnings per share calculations using the
treasury stock method and common shares expected to be issued under the
Company's employee stock purchase plan.
Common stock equivalents of 404,556 and 226,206 shares for the three months
ending December 31, 1997 and 1996 were used to calculate diluted earnings per
share. Common stock equivalents of 382,830 and 191,910 shares for the nine
months ending December 31, 1997 and 1996 were used to calculate diluted earnings
per share. There are no reconciling items in calculating the numerator for basic
and diluted earnings per share for any of the periods presented.
NOTE 6 - COMPOSITION OF CERTAIN BALANCE SHEET CAPTIONS
DECEMBER 31, MARCH 31,
1997 1997
----------- -----------
(UNAUDITED)
Accounts receivable:
Billed $11,299,000 $ 6,860,000
Unbilled 3,980,000 3,455,000
----------- -----------
$15,729,000 $10,315,000
=========== ===========
Inventory:
Raw materials $ 1,972,000 $ 1,418,000
Work in process 2,755,000 2,662,000
Finished goods 332,000 398,000
----------- -----------
$ 5,058,000 $ 4,478,000
=========== ===========
Accrued liabilities:
Collections in excess of
revenues $ 1,890,000 $ 355,000
Current portion of warranty
reserve 1,279,000 806,000
Income taxes payable 929,000 252,000
Accrued vacation 802,000 821,000
Accrued 401(k) matching
contribution 569,000 553,000
Accrued bonus 480,000 762,000
Other 252,000 220,000
----------- -----------
$ 6,201,000 $ 3,769,000
=========== ===========
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VIASAT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 7 - INCOME TAXES
The provision (benefit) for income taxes is as follows:
NINE MONTHS
ENDED DECEMBER 31,
-----------------------------
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
Current tax provision:
Federal $ 2,312,000 $ 1,291,000
State 509,000 304,000
----------- -----------
2,821,000 1,595,000
----------- -----------
Deferred tax provision:
Federal (528,000) (443,000)
State (103,000) (118,000)
----------- -----------
(630,000) (561,000)
----------- -----------
Total provision for income
Taxes $ 2,190,000 $ 1,034,000
=========== ===========
Significant components of the Company's deferred tax assets and liabilities are
as follows:
DECEMBER 31, MARCH 31,
1997 1997
---------- ----------
(UNAUDITED)
Deferred tax assets:
Warranty reserve $ 738,000 $ 528,000
Accrued vacation 320,000 247,000
Inventory reserve 336,000 280,000
Other 497,000 203,000
---------- ----------
Total deferred tax assets $1,891,000 $1,258,000
========== ==========
NOTE 8 - 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 many 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.
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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. 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 "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in this report, as well as under the caption "Risk
Factors" in the Company's Annual Report on Form 10-K for its fiscal year ended
March 31, 1997 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.
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
Revenue 100.0 100.0 100.0 100.0
Cost of revenue 64.0 68.3 64.9 70.1
----- ----- ----- -----
Gross profit 36.0 31.7 35.1 29.9
Operating expenses:
Selling, general, and administrative 11.7 9.6 11.8 10.3
Independent research and development 11.8 11.5 11.5 10.7
----- ----- ----- -----
Income from operations 12.5 10.7 11.8 8.9
Income before income taxes 13.4 10.8 12.8 8.8
Net income 8.4 7.1 8.0 5.7
THREE MONTHS ENDED DECEMBER 31, 1997 VS. THREE MONTHS ENDED DECEMBER 31, 1996
Revenues. Revenues increased 32.4% from $12.1 million for the three months
ended December 31, 1996 to $16.0 million for the three months ended December 31,
1997. This increase was primarily due to increases in revenues generated by
VM-200's (UHF DAMA stand-alone modems), Starwire(R) satellite networking systems
and Joint Communication Simulator ("JCS") products. These increases were
partially offset by a decrease in revenues derived from Enhanced Manpack UHF
Terminal ("EMUT") production and UHF DAMA network control stations and modems.
Revenue from commercial customers grew from $642,000 for the three months
ended December 31, 1996 to $2.5 million for the three months ended December 31,
1997. JCS business area revenues grew from $1.1 million for the three months
ended December 31, 1996 to $2.3 million for the three months ended December 31,
1997. UHF business area revenues grew from $7.6 million for the three months
ended December 31, 1996 to $7.8 million for the three months ended December 31,
1997.
Gross Profit. Gross profit increased 24.1% from $3.8 million (31.7% of
revenues) for the three months ended December 31, 1996 to $5.8 million (36.0% of
revenues) for the three months ended December 31, 1997. The increase in gross
profit was primarily the result of a larger content of higher margin products in
the Company's sales for the three months ended December 31, 1997 relative to the
same quarter of the prior year. In addition, certain long-term contracts
realized higher profits than initial estimates used to recognize revenue on a
percent complete basis.
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Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased 60.9% from $1.2 million (9.6% of
revenues) for the three months ended December 31, 1996 to $1.9 million (11.7% of
revenues) for the three months ended December 31, 1997. The increase in SG&A
expenses as a percentage of revenues reflects increased expenditures relating to
the introduction and marketing of commercial products, increased business
development staff 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 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 increased 36.2% from $1.4 million (11.5% of revenues) for the
three months ended December 31, 1996 to $1.9 million (11.8% of revenues) for the
three months ended December 31, 1997. This increase resulted primarily from
higher IR&D expenses related to the Company's StarWire(R) DAMA product, which
represented approximately 90.2% of total IR&D for the three months ended
December 31, 1997.
Interest Expense. Interest expense decreased 9.8% from $61,000 for the three
months ended December 31, 1996 to $55,000 for the three months ended December
31, 1997. 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 $2.4 million at
December 31, 1996 and $2.3 million at December 31, 1997. There were no
outstanding borrowings under the Company's line of credit as of December 31,
1996 and 1997.
Interest Income. Interest income increased from $80,000 for the three months
ended December 31, 1996 to $189,000 for the three months ended December 31,
1997. 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 35% for the three months ended December 31, 1996 to 37% for the three
months ended December 31, 1997. 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.
NINE MONTHS ENDED DECEMBER 31, 1997 VS. NINE MONTHS ENDED DECEMBER 31, 1996
Revenues. Revenues increased 37.8% from $33.7 million for the nine months
ended December 31, 1996 to $46.4 million for the nine months ended December 31,
1997. This increase was primarily due to increases in revenues generated by
VM-200's (UHF DAMA stand-alone modems), Starwire(R) satellite networking systems
and JCS products. These increases were partially offset by a decrease in
revenues derived from EMUT production and UHF DAMA network control stations and
modems.
JCS business area revenues grew from $3.0 million for the nine months ended
December 31, 1996 to $7.6 million for the nine months ended December 31, 1997.
Revenue from commercial customers grew from $902,000 for the nine months ended
December 31, 1996 to $5.5 million for the nine months ended December 31, 1997.
UHF business area revenues grew from $23.0 million for the nine months ended
December 31, 1996 to $26.1 million for the nine months ended December 31, 1997.
Gross Profit. Gross profit increased 61.6% from $10.1 million (29.9% of
revenues) for the nine months ended December 31, 1996 to $16.3 million (35.1% of
revenues) for the nine months ended December 31, 1997. Gross profit increased as
a result of certain long-term contracts realizing higher profits then initial
estimates used to recognize revenue on a percent complete basis. In addition,
the Company's sales for the nine months ended December 31, 1997 were comprised
of higher margin products relative to the same period of the prior year.
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Selling, General and Administrative Expenses. SG&A expenses increased 57.9%
from $3.5 million (10.3% of revenues) for the nine months ended December 31,
1996 to $5.5 million (11.8% of revenues) for the nine months ended December 31,
1997. The increase in SG&A expenses as a percentage of revenues reflects
increased expenditures relating to the introduction and marketing of commercial
products, increased business development staff for defense programs, and
additional administrative staffing to support the Company's growth.
Independent Research and Development. IR&D expenses increased 48.2% from $3.6
million (10.7% of revenues) for the nine months ended December 31, 1996 to $5.4
million (11.5% of revenues) for the nine months ended December 31, 1997. This
increase resulted primarily from higher IR&D expenses related to the Company's
StarWire(R) DAMA product, which represented approximately 89.6% of total IR&D
for the nine months ended December 31, 1997.
Interest Expense. Interest expense decreased 19.1% from $187,000 for the nine
months ended December 31, 1996 to $157,000 for the nine months ended December
31, 1997.
Interest Income. Interest income increased from $149,000 for the nine months
ended December 31, 1996 to $604,000 for the nine months ended December 31, 1997
Provision for Income Taxes. The Company's effective income tax rate increased
from 35% for the nine months ended December 31, 1996 to 37% for the nine months
ended December 31, 1997. 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, 1997, the Company had firm backlog of $67.0 million, of which
$51.9 million was funded. The firm backlog of $67.0 million does not include
contract options of $24.3 million. Of the $67.0 million in firm backlog,
approximately $18 million is expected to be delivered in the fiscal year ending
March 31, 1998, $35 million is expected to be delivered in the fiscal year
ending March 31, 1999 and the balance is expected to be delivered in the fiscal
year ending March 31, 2000 and thereafter. The Company had firm backlog of $78.4
million, of which $67.6 million was funded, not including options of $24.9
million, at March 31, 1997. 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 flow from
operations, bank line of credit financing, equity financing and loans for the
purchase of capital equipment. Cash provided/(used) by operating activities for
the nine months ended December 31, 1997 and 1996 was $3.3 million and ($1.5)
million, respectively. The relative increase in cash provided by operating
activities for the nine months ended December 31, 1997 compared to the same
period of the prior year was primarily due to a $1.8 million increase in net
income and higher levels of accrued liabilities and lower levels of other assets
which were partially offset by higher levels of receivables and inventories.
Accrued liabilities increased primarily as a result of an advance received from
a customer. Other assets decreased primarily due to the collection of a
non-trade receivable. The increase in accounts receivable resulted from an
increase in the Company's revenues. Inventory levels increased due to the
growing share of revenues derived from production contracts, which require the
Company to build inventory levels to support production demands. The Company
anticipates that in future periods the level of inventories will be higher than
historical levels.
Cash used in investing activities for the nine months ended December 31, 1997
and 1996 was $3.2 million and $2.0 million, respectively. The increase was the
result of purchases of property and equipment, primarily consisting of test
equipment and computers.
Cash provided by financing activities for the nine months ended December 31,
1997 and 1996 was $359,000 and $15.1 million, respectively. This decrease was
primarily the result of $15.1 million of capital raised in the Company's initial
public offering which closed in December 1996.
At December 31, 1997, the Company had $13.3 million in cash and cash
equivalents, $20.4 million in working capital and $2.6 million in long-term
debt, which consisted of equipment financing. The Company had a zero balance
under its line of credit at December 31, 1997.
The Company's credit facility with Union Bank includes a $6.0 million line of
credit and $4.5 million in commitments for equipment financing. The line of
credit allows the Company to borrow, for general working capital purposes, the
greater of $2.0 million or 80% of eligible accounts receivable plus 50% of the
Company's eligible inventory. At the Company's option, interest accrues either
at the bank's prime rate or at the bank's LIBOR rate plus 1.75%. The credit
facility expires on September 15, 1998. The Company is required to pay a fee
equal to 0.09% of the unused portion of the line of credit on a quarterly basis.
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
commercial 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 intends to
invest the Company's 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
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11.1 - Computation of Earnings Per Share Exhibit 27.1 - Financial
Data Schedule
(b) The Company filed no reports on Form 8-K during the quarter ended December
31, 1997.
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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.
Date: February 13, 1998 /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
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