UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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, 2002. | ||
| 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.
| Delaware (State or other jurisdiction of incorporation or organization) |
33-0174996 (I.R.S. Employer 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 [ ]
Indicate by check mark whether the registrant is an accelerated filer(as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
The number of shares outstanding of the registrant’s Common Stock, $.0001 par value, as of February 7, 2003 was 26,123,427.
VIASAT, INC.
INDEX
| Page | ||||||||
| PART I. | Financial Information |
|||||||
| Item 1. | Financial Statements |
|||||||
Condensed Consolidated Balance Sheets at March 31, 2002 and December 31, 2002 |
3 | |||||||
Condensed Consolidated Statements of Operations for the three and nine months ended
December 31, 2001 and 2002 |
4 | |||||||
Condensed Consolidated Statements of Cash Flows for the nine months ended December
31, 2001 and 2002 |
5 | |||||||
Condensed Consolidated Statement of Stockholders’ Equity for the nine months ended
December 31, 2002 |
6 | |||||||
Notes to Condensed Consolidated Financial Statements |
7 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
31 | ||||||
| Item 4. | Controls and Procedures |
31 | ||||||
| PART II. | Other Information |
|||||||
| Item 1. | Legal Proceedings |
32 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K |
32 | ||||||
Signatures |
33 | |||||||
Certifications |
34 | |||||||
2
VIASAT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, 2002 | December 31, 2002 | |||||||||||
| (Unaudited) | ||||||||||||
Assets |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
$ | 6,464 | $ | 4,240 | ||||||||
Short-term investments |
156 | 158 | ||||||||||
Accounts receivable, net |
80,170 | 81,069 | ||||||||||
Inventory |
30,116 | 33,008 | ||||||||||
Deferred income taxes |
2,974 | 7,117 | ||||||||||
Prepaid expenses and other current assets |
7,343 | 10,850 | ||||||||||
Total current assets |
127,223 | 136,442 | ||||||||||
Goodwill |
19,456 | 19,493 | ||||||||||
Other intangible assets, net |
43,922 | 37,587 | ||||||||||
Property and equipment, net |
31,117 | 32,918 | ||||||||||
Other assets |
16,949 | 18,115 | ||||||||||
Total assets |
$ | 238,667 | $ | 244,555 | ||||||||
Liabilities and Stockholders’ Equity |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable |
$ | 16,069 | $ | 23,669 | ||||||||
Accrued liabilities |
17,796 | 18,841 | ||||||||||
Line of credit |
9,900 | 14,350 | ||||||||||
Total current liabilities |
43,765 | 56,860 | ||||||||||
Other liabilities |
2,549 | 2,163 | ||||||||||
Total liabilities |
46,314 | 59,023 | ||||||||||
Contingencies (Note 8) |
||||||||||||
Minority interest in consolidated subsidiary |
414 | 418 | ||||||||||
Stockholders’ equity: |
||||||||||||
Common stock |
2 | 3 | ||||||||||
Paid in capital |
152,775 | 154,222 | ||||||||||
Retained earnings |
39,485 | 31,136 | ||||||||||
Unearned compensation |
(138 | ) | (9 | ) | ||||||||
Accumulated other comprehensive income (loss) |
(185 | ) | (238 | ) | ||||||||
Total stockholders’ equity |
191,939 | 185,114 | ||||||||||
Total liabilities and stockholders’ equity |
$ | 238,667 | $ | 244,555 | ||||||||
See accompanying notes to condensed consolidated financial statements.
3
VIASAT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share data)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| 2001 | 2002 | 2001 | 2002 | ||||||||||||||||
Revenues |
$ | 50,089 | $ | 48,962 | $ | 148,447 | $ | 131,322 | |||||||||||
Cost of revenues |
34,040 | 39,718 | 101,960 | 100,996 | |||||||||||||||
Gross profit |
16,049 | 9,244 | 46,487 | 30,326 | |||||||||||||||
Operating expenses: |
|||||||||||||||||||
Selling, general and administrative |
9,272 | 9,102 | 25,637 | 26,728 | |||||||||||||||
Independent research and development |
2,532 | 2,517 | 5,643 | 11,704 | |||||||||||||||
Acquired in-process research and development |
— | — | 2,500 | — | |||||||||||||||
Amortization of intangible assets |
1,379 | 2,112 | 3,094 | 6,335 | |||||||||||||||
Amortization of goodwill |
435 | — | 1,307 | — | |||||||||||||||
Income (loss) from operations |
2,431 | (4,487 | ) | 8,306 | (14,441 | ) | |||||||||||||
Other income (expense): |
|||||||||||||||||||
Interest income |
75 | 3 | 481 | 33 | |||||||||||||||
Interest expense |
(101 | ) | (324 | ) | (198 | ) | (633 | ) | |||||||||||
Minority interest |
(5 | ) | (10 | ) | (95 | ) | (26 | ) | |||||||||||
Equity in loss of joint venture |
(810 | ) | (463 | ) | (2,250 | ) | (1,622 | ) | |||||||||||
Income (loss) before income taxes |
1,590 | (5,281 | ) | 6,244 | (16,689 | ) | |||||||||||||
Provision (benefit) for income taxes |
(849 | ) | (2,669 | ) | 654 | (8,340 | ) | ||||||||||||
Net income (loss) |
$ | 2,439 | $ | (2,612 | ) | $ | 5,590 | $ | (8,349 | ) | |||||||||
Basic net income (loss) per share |
$ | .11 | $ | (.10 | ) | $ | .25 | $ | (.32 | ) | |||||||||
Diluted net income (loss) per share |
$ | .10 | $ | (.10 | ) | $ | .24 | $ | (.32 | ) | |||||||||
Shares used in basic net income (loss) per
share computation |
22,635,141 | 26,018,458 | 22,381,145 | 25,979,377 | |||||||||||||||
Shares used in diluted net income (loss) per
share computation |
23,440,711 | 26,018,458 | 23,281,104 | 25,979,377 | |||||||||||||||
See accompanying notes to condensed consolidated financial statements.
4
VIASAT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
| Nine Months Ended | ||||||||||||
| December 31, | ||||||||||||
| 2001 | 2002 | |||||||||||
Cash flows from operating activities: |
||||||||||||
Net income (loss) |
$ | 5,590 | $ | (8,349 | ) | |||||||
Adjustments to reconcile net income to net cash provided by operating
activities: |
||||||||||||
Depreciation |
4,916 | 7,469 | ||||||||||
Amortization of goodwill, intangible assets and software |
4,466 | 7,155 | ||||||||||
Acquired in-process research and development |
2,500 | — | ||||||||||
Deferred income taxes |
(1,055 | ) | (3,593 | ) | ||||||||
Equity in loss of joint venture |
2,250 | 1,622 | ||||||||||
Minority interest in consolidated subsidiary |
61 | 4 | ||||||||||
Non-cash compensation |
15 | 129 | ||||||||||
Tax benefit from exercise of stock options |
— | 11 | ||||||||||
Increase (decrease) in cash resulting from changes in, net of effects of
acquisitions: |
||||||||||||
Accounts receivable |
(9,843 | ) | (866 | ) | ||||||||
Inventory |
(4,301 | ) | (3,059 | ) | ||||||||
Other assets |
4,916 | (928 | ) | |||||||||
Accounts payable |
(56 | ) | 7,599 | |||||||||
Accrued liabilities |
(853 | ) | 1,032 | |||||||||
Other liabilities |
1,504 | (311 | ) | |||||||||
Net cash provided by operating activities |
10,110 | 7,915 | ||||||||||
Cash flows from investing activities: |
||||||||||||
Acquisition of a business |
(11,424 | ) | — | |||||||||
Investment in joint venture |
(2,250 | ) | (1,622 | ) | ||||||||
Purchases of short-term investments, net |
(153 | ) | (2 | ) | ||||||||
Investment in capitalized software |
(6,912 | ) | (5,149 | ) | ||||||||
Purchases of property and equipment, net |
(13,996 | ) | (9,269 | ) | ||||||||
Net cash used in investing activities |
(34,735 | ) | (16,042 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||
Proceeds from line of credit |
10,799 | 8,450 | ||||||||||
Payments on line of credit |
— | (4,000 | ) | |||||||||
Repayment of notes payable |
(336 | ) | — | |||||||||
Forfeited unexercised options |
— | (53 | ) | |||||||||
Proceeds from issuance of common stock, net of issuance costs |
1,674 | 1,490 | ||||||||||
Net cash provided by financing activities |
12,137 | 5,887 | ||||||||||
Effect of exchange rate changes on cash |
(86 | ) | 16 | |||||||||
Net decrease in cash and cash equivalents |
(12,574 | ) | (2,224 | ) | ||||||||
Cash and cash equivalents at beginning of period |
17,721 | 6,464 | ||||||||||
Cash and cash equivalents at end of period |
$ | 5,147 | $ | 4,240 | ||||||||
See accompanying notes to condensed consolidated financial statements.
5
VIASAT, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In thousands, except share data)
| Common Stock | Accumulated | ||||||||||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||
| Number of | Paid in | Retained | Unearned | Comprehensive | Comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Compensation | Income (Loss) | Total | Income (Loss) | ||||||||||||||||||||||||||
Balance at March 31, 2002 |
25,908,373 | $ | 2 | $ | 152,775 | $ | 39,485 | $ | (138 | ) | $ | (185 | ) | $ | 191,939 | ||||||||||||||||||
Tax benefit from exercise of
stock options |
11 | 11 | |||||||||||||||||||||||||||||||
Exercise of stock options |
22,487 | 163 | 163 | ||||||||||||||||||||||||||||||
Issuance of stock under
Employee Stock Purchase Plan |
189,820 | 1 | 1,326 | 1,327 | |||||||||||||||||||||||||||||
Forfeited unexercised options |
(53 | ) | (53 | ) | |||||||||||||||||||||||||||||
Amortization of stock based
compensation |
129 | 129 | |||||||||||||||||||||||||||||||
Net (loss) |
(8,349 | ) | (8,349 | ) | $ | (8,349 | ) | ||||||||||||||||||||||||||
Foreign currency translation |
(53 | ) | (53 | ) | (53 | ) | |||||||||||||||||||||||||||
Comprehensive (loss) |
$ | (8,402 | ) | ||||||||||||||||||||||||||||||