UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 4, 2014
AEROVIRONMENT, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-33261 |
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95-2705790 |
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(State or other jurisdiction of |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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incorporation or organization) |
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181 W. Huntington Drive, Suite 202 |
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Monrovia, CA |
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91016 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (626) 357-9983
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
On March 4, 2014, AeroVironment, Inc. issued a press release announcing third quarter financial results for the period ended January 25, 2014, a copy of which is attached hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K, including the exhibit, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing of AeroVironment, Inc. under the Securities Act of 1933, as amended, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such filing.
In addition to historic information, this report, including the exhibit, contains forward-looking statements regarding events, performance and financial trends. Various factors could affect future results and could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Some of those factors are identified in the exhibit, and in our periodic reports filed with the Securities and Exchange Commission.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
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Exhibit |
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Number |
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Description |
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99.1 |
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Press release issued by AeroVironment, Inc., dated March 4, 2014. |
SIGNATURE
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 hereunto duly authorized.
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AEROVIRONMENT, INC. | |
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Date: March 4, 2014 |
By: |
/s/ Timothy E. Conver |
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Timothy E. Conver |
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Chairman, President and Chief Executive Officer |
Exhibit 99.1
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AeroVironment, Inc. Announces Fiscal 2014 Third Quarter Results
MONROVIA, Calif., March 4, 2014 — AeroVironment, Inc. (NASDAQ: AVAV) today reported financial results for its third quarter ended January 25, 2014.
“During the third quarter we continued to execute on our strategic priorities successfully, delivering strong results with revenue up nearly 50 percent and a 100 percent increase in adjusted earnings per share on a year over year basis,” said Tim Conver, AeroVironment chairman and chief executive officer. “We are confident that our strong customer relationships, diverse set of capabilities and well-established positions in high potential growth opportunities will advance our leadership in each of our target markets and enhance value for our shareholders.”
FISCAL 2014 THIRD QUARTER RESULTS
Revenue for the third quarter of fiscal 2014 was $69.2 million, up 47% from third quarter fiscal 2013 revenue of $47.1 million. The increase in revenue resulted from increased sales in our Unmanned Aircraft Systems (UAS) segment of $19.8 million and in our Efficient Energy Systems (EES) segment of $2.3 million.
Income from operations for the third quarter of fiscal 2014 was $8.6 million compared to loss from operations for the third quarter of fiscal 2013 of $1.1 million. The higher income from operations was a result of higher revenue, resulting in $7.4 million higher gross margin, and lower research and development (R&D) expense of $5.1 million, offset by higher selling, general & administrative (SG&A) expense of $2.7 million.
Other income for the third quarter of fiscal 2014 was $4.9 million compared to other income for the third quarter of fiscal 2013 of $0.2 million. The increase in other income was primarily due to the increase in fair value of the conversion option in the amount of $4.7 million of our CybAero convertible bond investment.
Net income for the third quarter of fiscal 2014 was $11.2 million compared to net income for the third quarter of fiscal 2013 of $3.9 million.
Earnings per diluted share for the third quarter of fiscal 2014 was $0.49 compared to earnings per diluted share for the third quarter of fiscal 2013 of $0.17. Earnings per diluted share for the third quarter of fiscal 2014 included an increase of $0.15 per share due to the increase in fair value of the conversion option of our CybAero convertible bond investment. Earnings per diluted share for the third quarter of fiscal 2013 did not include any changes in the fair value of the CybAero convertible bonds as the investment was made during the fourth quarter of fiscal 2013.
FISCAL 2014 YEAR-TO-DATE RESULTS
Revenue for the first nine months of fiscal 2014 was $178.2 million, down 4% from the first nine months of fiscal 2013 revenue of $186.0 million. The decrease in revenue resulted from lower sales in our UAS segment of $3.1 million and in our EES segment of $4.7 million.
Income from operations for the first nine months of fiscal 2014 was $5.5 million compared to income from operations for the first nine months of fiscal 2013 of $9.8 million. The lower income from operations
resulted from lower revenue, resulting in $11.3 million lower gross margin and higher SG&A expense of $1.5 million, offset by lower R&D expense of $8.5 million.
Other expense, net, for the first nine months of fiscal 2014 was $0.4 million compared to other income for the first nine months of fiscal 2013 of $0.5 million. The increase in other expense, net, was primarily due to the decrease in fair value of the conversion option in the amount of $1.0 million of our CybAero convertible bond investment.
Net income for the first nine months of fiscal 2014 was $5.7 million compared to net income for the first nine months of fiscal 2013 of $11.2 million.
Earnings per diluted share for the first nine months of fiscal 2014 was $0.25 compared to earnings per diluted share for the first nine months of fiscal 2013 of $0.50. Earnings per diluted share for the first nine months of fiscal 2014 included a reduction of $0.03 per share due to the decrease in fair value of the conversion option of our CybAero convertible bond investment. Earnings per diluted share for the first nine months of fiscal 2013 did not include any changes in the fair value of the CybAero convertible bonds as the investment was made during the fourth quarter of fiscal 2013.
BACKLOG
As of January 25, 2014, funded backlog (unfilled firm orders for which funding is currently appropriated to us under a customer contract) was $95.5 million compared to $59.4 million as of April 30, 2013.
FISCAL 2014 — OUTLOOK FOR THE FULL YEAR
For fiscal 2014, the company continues to expect to generate revenue of between $230 million and $250 million, and earnings per diluted share of between $0.35 and $0.50, excluding any change in value of the Company’s CybAero convertible bond investment.
The foregoing estimates are forward looking and reflect management’s view of current and future market conditions, including certain assumptions with respect to our ability to obtain and retain government contracts, changes in the timing and/or amount of government spending, changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates.
CONFERENCE CALL
In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday, March 4, 2014, at 1:30 pm Pacific Time that will be broadcast live over the Internet. Timothy E. Conver, chairman and chief executive officer, Jikun Kim, chief financial officer, Tom Herring, chief operating officer and Steven A. Gitlin, vice president of investor relations, will host the call.
4:30 PM ET
3:30 PM CT
2:30 PM MT
1:30 PM PT
Investors may dial into the call at (877) 561-2749 (U.S.) or (678) 809-1029 (international) five to ten minutes prior to the start time to allow for registration.
Investors with Internet access may listen to the live audio webcast via the Investor Relations page of the AeroVironment, Inc. website, http://investor.avinc.com. Please allow 15 minutes prior to the call to download and install any necessary audio software.
Audio Replay Options
An audio replay of the event will be archived on the Investor Relations page of the company’s website, at http://investor.avinc.com. The audio replay will also be available via telephone from Tuesday, March 4, 2014, at approximately 4:30 p.m. Pacific Time through Tuesday, March 11, at 9:00 p.m. Pacific Time. Dial (855) 859-2056 and enter the passcode 87114227. International callers should dial (404) 537-3406 and enter the same passcode number to access the audio replay.
ABOUT AEROVIRONMENT, INC.
AeroVironment is a technology solutions provider that designs, develops, produces and supports an advanced portfolio of Unmanned Aircraft Systems (UAS) and electric transportation solutions. Agencies of the U.S. Department of Defense and allied military services use the company’s electric-powered, hand-launched unmanned aircraft systems extensively to provide situational awareness to tactical operating units through real-time, airborne reconnaissance, surveillance and communication. AeroVironment’s electric transportation solutions include a comprehensive suite of electric vehicle (EV) charging systems, installation and network services for consumers, automakers, utilities and government agencies, power cycling and test systems for EV developers and industrial electric vehicle charging systems for commercial fleets. More information about AeroVironment is available at www.avinc.com.
FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements. Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, reliance on sales to the U.S. government; changes in the timing and/or amount of government spending; changes in the supply and/or demand and/or prices for our products and services; the activities of competitors; failure of the markets in which we operate to grow; failure to expand into new markets; changes in significant operating expenses, including components and raw materials; failure to develop new products; changes in the regulatory environment; and general economic and business conditions in the United States and elsewhere in the world. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.
- Financial Tables Follow -
AeroVironment, Inc.
Consolidated Statements of Income (Unaudited)
(In thousands except share and per share data)
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Three Months Ended |
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Nine Months Ended |
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January 25, |
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January 26, |
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January 25, |
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January 26, |
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2014 |
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2013 |
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2014 |
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2013 |
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Revenue: |
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Product sales |
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$ |
57,041 |
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$ |
23,496 |
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$ |
135,752 |
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$ |
104,601 |
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Contract services |
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12,180 |
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23,591 |
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42,453 |
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81,441 |
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69,221 |
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47,087 |
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178,205 |
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186,042 |
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Cost of sales: |
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Product sales |
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33,193 |
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14,281 |
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85,891 |
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63,055 |
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Contract services |
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8,976 |
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13,133 |
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28,839 |
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48,173 |
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42,169 |
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27,414 |
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114,730 |
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111,228 |
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Gross margin |
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27,052 |
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19,673 |
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63,475 |
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74,814 |
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Selling, general and administrative |
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13,168 |
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10,433 |
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38,711 |
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37,230 |
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Research and development |
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5,241 |
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10,306 |
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19,292 |
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27,828 |
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Income (loss) from operations |
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8,643 |
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(1,066 |
) |
5,472 |
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9,756 |
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Other income (expense): |
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Interest income |
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197 |
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164 |
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597 |
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498 |
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Other income (expense) |
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4,675 |
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49 |
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(1,026 |
) |
49 |
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Income (loss) before income taxes |
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13,515 |
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(853 |
) |
5,043 |
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10,303 |
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Provision (benefit) for income taxes |
|
2,299 |
|
(4,722 |
) |
(618 |
) |
(918 |
) | ||||
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Net income |
|
$ |
11,216 |
|
$ |
3,869 |
|
$ |
5,661 |
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$ |
11,221 |
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Earnings per share data: |
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Basic |
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$ |
0.50 |
|
$ |
0.17 |
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$ |
0.25 |
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$ |
0.51 |
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|
Diluted |
|
$ |
0.49 |
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$ |
0.17 |
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$ |
0.25 |
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$ |
0.50 |
|
|
Weighted average shares outstanding: |
|
|
|
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|
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|
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Basic |
|
22,321,368 |
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22,142,917 |
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22,278,225 |
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22,035,007 |
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Diluted |
|
22,883,583 |
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22,408,377 |
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22,722,795 |
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22,375,126 |
| ||||
AeroVironment, Inc.
Reconciliation of Earnings per Share (Unaudited)
|
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Three Months Ended |
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Nine Months Ended |
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January 25, |
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January 26, |
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January 25, |
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January 26, |
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2014 |
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2013 |
|
2014 |
|
2013 |
| ||||
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Earnings per diluted share as adjusted |
|
$ |
0.34 |
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$ |
0.17 |
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$ |
0.28 |
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$ |
0.50 |
|
|
Increase (decrease) in fair value of conversion option of CybAero convertible bond investment |
|
0.15 |
|
— |
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(0.03 |
) |
— |
| ||||
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Earnings per diluted share as reported |
|
$ |
0.49 |
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$ |
0.17 |
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$ |
0.25 |
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$ |
0.50 |
|
AeroVironment, Inc.
Consolidated Balance Sheets
(In thousands except share data)
|
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January 25, |
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April 30, |
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(Unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
|
$ |
92,749 |
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$ |
75,332 |
|
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Short-term investments |
|
74,830 |
|
73,241 |
| ||
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Accounts receivable, net of allowance for doubtful accounts of $1,108 at January 25, 2014 and $936 at April 30, 2013 |
|
42,617 |
|
19,770 |
| ||
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Unbilled receivables and retentions |
|
8,636 |
|
11,304 |
| ||
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Inventories, net |
|
55,441 |
|
62,561 |
| ||
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Income tax receivable |
|
5,852 |
|
11,777 |
| ||
|
Deferred income taxes |
|
5,499 |
|
5,166 |
| ||
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Prepaid expenses and other current assets |
|
3,755 |
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4,303 |
| ||
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Total current assets |
|
289,379 |
|
263,454 |
| ||
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Long-term investments |
|
45,877 |
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68,916 |
| ||
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Property and equipment, net |
|
24,492 |
|
24,429 |
| ||
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Deferred income taxes |
|
5,548 |
|
5,606 |
| ||
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Other assets |
|
1,585 |
|
1,060 |
| ||
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Total assets |
|
$ |
366,881 |
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$ |
363,465 |
|
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Liabilities and Stockholders’ Equity |
|
|
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Current liabilities: |
|
|
|
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Accounts payable |
|
$ |
15,135 |
|
$ |
16,144 |
|
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Wages and related accruals |
|
10,718 |
|
12,116 |
| ||
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Customer advances |
|
3,642 |
|
7,519 |
| ||
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Other current liabilities |
|
6,486 |
|
6,408 |
| ||
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Total current liabilities |
|
35,981 |
|
42,187 |
| ||
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Deferred rent |
|
1,031 |
|
771 |
| ||
|
Liability for uncertain tax positions |
|
5,211 |
|
5,321 |
| ||
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Commitments and contingencies |
|
|
|
|
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Stockholders’ equity: |
|
|
|
|
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Preferred stock, $0.0001 par value: |
|
|
|
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Authorized shares — 10,000,000; none issued or outstanding |
|
— |
|
— |
| ||
|
Common stock, $0.0001 par value: |
|
|
|
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Authorized shares — 100,000,000 |
|
|
|
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Issued and outstanding shares — 22,765,820 at January 25, 2014 and 22,614,315 at April 30, 2013 |
|
2 |
|
2 |
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Additional paid-in capital |
|
134,251 |
|
130,527 |
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Accumulated other comprehensive loss |
|
(618 |
) |
(705 |
) | ||
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Retained earnings |
|
191,023 |
|
185,362 |
| ||
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Total stockholders’ equity |
|
324,658 |
|
315,186 |
| ||
|
Total liabilities and stockholders’ equity |
|
$ |
366,881 |
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$ |
363,465 |
|
AeroVironment, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
|
|
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Nine Months Ended |
| ||||
|
|
|
January 25, |
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January 26, |
| ||
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Operating activities |
|
|
|
|
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Net income |
|
$ |
5,661 |
|
$ |
11,221 |
|
|
Adjustments to reconcile net income to cash provided by operating activities: |
|
|
|
|
| ||
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Depreciation and amortization |
|
6,799 |
|
8,340 |
| ||
|
Provision for doubtful accounts |
|
269 |
|
338 |
| ||
|
Deferred income taxes |
|
(333 |
) |
(407 |
) | ||
|
Stock-based compensation |
|
2,687 |
|
2,629 |
| ||
|
Change in fair value of conversion feature of convertible bonds |
|
1,032 |
|
— |
| ||
|
Unrealized foreign currency gain |
|
— |
|
(53 |
) | ||
|
Tax benefit from exercise of stock options |
|
304 |
|
1,536 |
| ||
|
Changes in operating assets and liabilities: |
|
|
|
|
| ||
|
Accounts receivable |
|
(23,116 |
) |
24,479 |
| ||
|
Unbilled receivables and retentions |
|
2,668 |
|
11,625 |
| ||
|
Inventories |
|
7,120 |
|
(20,058 |
) | ||
|
Income tax receivable |
|
5,925 |
|
(8,349 |
) | ||
|
Other assets |
|
662 |
|
(282 |
) | ||
|
Accounts payable |
|
(1,009 |
) |
(4,436 |
) | ||
|
Other liabilities |
|
(5,197 |
) |
(21,518 |
) | ||
|
Net cash provided by operating activities |
|
3,472 |
|
5,065 |
| ||
|
Investing activities |
|
|
|
|
| ||
|
Acquisitions of property and equipment |
|
(6,751 |
) |
(6,528 |
) | ||
|
Acquisitions of distribution and licensing rights |
|
(750 |
) |
(850 |
) | ||
|
Investment in CybAero AB convertible notes |
|
— |
|
(3,037 |
) | ||
|
Net redemptions of held-to-maturity investments |
|
20,388 |
|
4,690 |
| ||
|
Net sales of available-for-sale investments |
|
175 |
|
250 |
| ||
|
Net cash provided by (used in) investing activities |
|
13,062 |
|
(5,475 |
) | ||
|
Financing activities |
|
|
|
|
| ||
|
Exercise of stock options |
|
883 |
|
165 |
| ||
|
Net cash provided by financing activities |
|
883 |
|
165 |
| ||
|
Net increase (decrease) in cash and cash equivalents |
|
17,417 |
|
(245 |
) | ||
|
Cash and cash equivalents at beginning of period |
|
75,332 |
|
64,220 |
| ||
|
Cash and cash equivalents at end of period |
|
$ |
92,749 |
|
$ |
63,975 |
|
|
|
|
|
|
|
| ||
|
Supplemental disclosure: |
|
|
|
|
| ||
|
Unrealized gain on long-term investments recorded in other comprehensive income, net of deferred taxes of $57 and $28, respectively |
|
$ |
87 |
|
$ |
42 |
|
|
Reclassification from share-based liability compensation to equity |
|
$ |
— |
|
$ |
401 |
|
Reportable Segment Results are as Follows (Unaudited):
(In thousands)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
January 25, |
|
January 26, |
|
January 25, |
|
January 26, |
| ||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
| ||||
|
Revenue: |
|
|
|
|
|
|
|
|
| ||||
|
UAS |
|
$ |
57,491 |
|
$ |
37,665 |
|
$ |
148,781 |
|
$ |
151,904 |
|
|
EES |
|
11,730 |
|
9,422 |
|
29,424 |
|
34,138 |
| ||||
|
Total |
|
69,221 |
|
47,087 |
|
178,205 |
|
186,042 |
| ||||
|
Cost of sales: |
|
|
|
|
|
|
|
|
| ||||
|
UAS |
|
33,565 |
|
20,585 |
|
93,444 |
|
88,620 |
| ||||
|
EES |
|
8,604 |
|
6,829 |
|
21,286 |
|
22,608 |
| ||||
|
Total |
|
42,169 |
|
27,414 |
|
114,730 |
|
111,228 |
| ||||
|
Gross margin: |
|
|
|
|
|
|
|
|
| ||||
|
UAS |
|
23,926 |
|
17,080 |
|
55,337 |
|
63,284 |
| ||||
|
EES |
|
3,126 |
|
2,593 |
|
8,138 |
|
11,530 |
| ||||
|
Total |
|
27,052 |
|
19,673 |
|
63,475 |
|
74,814 |
| ||||
|
Selling, general and administrative |
|
13,168 |
|
10,433 |
|
38,711 |
|
37,230 |
| ||||
|
Research and development |
|
5,241 |
|
10,306 |
|
19,292 |
|
27,828 |
| ||||
|
Income (loss) from operations |
|
8,643 |
|
(1,066 |
) |
5,472 |
|
9,756 |
| ||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
|
Interest income |
|
197 |
|
164 |
|
597 |
|
498 |
| ||||
|
Other income (expense) |
|
4,675 |
|
49 |
|
(1,026 |
) |
49 |
| ||||
|
Income (loss) before income taxes |
|
$ |
13,515 |
|
$ |
(853 |
) |
$ |
5,043 |
|
$ |
10,303 |
|
##
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Steven Gitlin
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ir@avinc.com