0001558370-20-011109 | 10-Q | XBRL Viewer

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Aug. 01, 2020	Sep. 02, 2020
Document and Entity Information
Entity Registrant Name	AEROVIRONMENT, INC.
Entity File Number	001-33261
Entity Central Index Key	0001368622
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Aug. 01, 2020
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	95-2705790
Amendment Flag	false
Trading Symbol	AVAV
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--04-30
Entity Address, Address Line One	900 Innovators Way
Entity Address, City or Town	Simi Valley
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	93065
City Area Code	805
Local Phone Number	520-8350
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		24,104,319
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Small Business	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Current assets:
Cash and cash equivalents	$ 246,839	$ 255,142
Short-term investments	71,334	47,507
Accounts receivable, net of allowance for doubtful accounts of $1,054 at August 1, 2020 and $1,190 at April 30, 2020	43,357	73,660
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $28,143 at August 1, 2020 and $15,779 at April 30, 2020)	73,791	75,837
Inventories	45,530	45,535
Prepaid expenses and other current assets	5,941	6,246
Total current assets	486,792	503,927
Long-term investments	20,338	15,030
Property and equipment, net	22,907	21,694
Operating lease right-of-use assets	13,612	8,793
Deferred income taxes	5,262	4,928
Intangibles, net	12,928	13,637
Goodwill	6,340	6,340
Other assets	9,640	10,605
Total assets	577,819	584,954
Current liabilities:
Accounts payable	11,740	19,859
Wages and related accruals	13,025	23,972
Customer advances	5,725	7,899
Current operating lease liabilities	4,478	3,380
Income taxes payable	2,620	1,065
Other current liabilities	8,735	10,778
Total current liabilities	46,323	66,953
Non-current operating lease liabilities	10,344	6,833
Other non-current liabilities	243	250
Liability for uncertain tax positions	1,017	1,017
Commitments and contingencies
Stockholders' equity:
Authorized shares-10,000,000; none issued or outstanding at August 1, 2020 and April 30, 2020
Issued and outstanding shares-24,104,564 shares at August 1, 2020 and 24,063,639 shares at April 30, 2020	2	2
Additional paid-in capital	181,406	181,481
Accumulated other comprehensive income	351	328
Retained earnings	338,170	328,090
Total AeroVironment, Inc. stockholders' equity	519,929	509,901
Noncontrolling interest	(37)
Total equity	519,892	509,901
Total liabilities and stockholders' equity	$ 577,819	$ 584,954

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 1,054	$ 1,190
Due from Related Parties	$ 28,143	$ 15,779
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, Authorized shares	10,000,000	10,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, Authorized shares	100,000,000	100,000,000
Common stock, Issued shares	24,104,564	24,063,639
Common stock, outstanding shares	24,104,564	24,063,639

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Revenue:
Total revenue	$ 87,450	$ 86,911
Cost of sales:
Cost of sales	52,039	45,639
Gross margin:
Total gross margin	35,411	41,272
Selling, general and administrative	12,011	13,668
Research and development	11,103	8,709
Income from continuing operations	12,297	18,895
Other income:
Interest income, net	208	1,329
Other income, net	33	355
Income from continuing operations before income taxes	12,538	20,579
Provision for income taxes	1,207	2,133
Equity method investment loss, net of tax	(1,288)	(1,347)
Net income from continuing operations	10,043	17,099
Discontinued operations:
Net income	10,043	17,099
Net loss attributable to noncontrolling interest	37	11
Net income attributable to AeroVironment, Inc.	$ 10,080	$ 17,110
Net income per share attributable to AeroVironment, Inc.--Basic
Net income per share attributable to AeroVironment, Inc.-Basic	$ 0.42	$ 0.72
Net income per share attributable to AeroVironment, Inc.-Diluted
Net income per share attributable to AeroVironment, Inc.-Diluted	$ 0.42	$ 0.71
Weighted-average shares outstanding:
Basic (in shares)	23,893,001	23,745,199
Diluted (in shares)	24,186,228	24,069,933
Product sales
Revenue:
Revenue	$ 58,357	$ 65,839
Cost of sales:
Cost of sales	32,084	30,408
Gross margin:
Total gross margin	26,273	35,431
Contract services
Revenue:
Revenue	29,093	21,072
Cost of sales:
Cost of sales	19,955	15,231
Gross margin:
Total gross margin	$ 9,138	$ 5,841

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Consolidated Statements of Operations
Related party revenue	$ 16,386	$ 12,335

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Consolidated Statements of Comprehensive Income
Net income	$ 10,043	$ 17,099
Other comprehensive income:
Change in foreign currency translation adjustments	75	169
Unrealized loss on investments, net of deferred tax expense of $4 for the three months ended August 1, 2020	(52)
Total comprehensive income	10,066	17,268
Net loss attributable to noncontrolling interest	37	11
Comprehensive income attributable to AeroVironment, Inc.	$ 10,103	$ 17,279

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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+ Details

Consolidated Statements of Comprehensive Income (Parenthetical) $ in Thousands	3 Months Ended
	Aug. 01, 2020 USD ($)
Consolidated Statements of Comprehensive Income
Unrealized loss on investments, net of deferred tax expense	$ 4

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Parent	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income	Non-controlling Interest	Total
Balance at Apr. 30, 2019	$ 462,571	$ 2	$ 176,216	$ 286,351	$ 2	$ 4	$ 462,575
Balance (in shares) at Apr. 30, 2019		23,946,293
Increase (Decrease) in Stockholders' Equity
Net income (loss)	17,110			17,110		(11)	17,099
Net loss attributable to noncontrolling interest							11
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest							17,099
Foreign currency translation	169				169		169
Stock options exercised	93		93				93
Stock options exercised (in shares)		3,000
Restricted stock awards (in shares)		57,861
Restricted stock awards forfeited (in shares)		(4,720)
Tax withholding payment related to net share settlement of equity awards	(668)		(668)				(668)
Tax withholding payment related to net share settlement of equity awards (in shares)		(11,975)
Stock-based compensation	1,566		1,566				1,566
Balance at Jul. 27, 2019	481,506	$ 2	177,207	304,126	171	(7)
Balance (in shares) at Jul. 27, 2019		23,990,459
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Jul. 27, 2019							481,499
Increase (Decrease) in Stockholders' Equity
Adoption of ASU \| ASU 2018-09	665			665			665
Balance at Apr. 30, 2020	509,901	$ 2	181,481	328,090	328		509,901
Balance (in shares) at Apr. 30, 2020		24,063,639
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Beginning Balance at Apr. 30, 2020							509,901
Increase (Decrease) in Stockholders' Equity
Net income (loss)	10,080			10,080		(37)	10,043
Net loss attributable to noncontrolling interest							37
Net Income (Loss), Including Portion Attributable to Nonredeemable Noncontrolling Interest							10,043
Unrealized loss on investments	(52)				(52)		(52)
Foreign currency translation	75				75		75
Stock options exercised	86		86				86
Stock options exercised (in shares)		3,500
Restricted stock awards (in shares)		60,592
Restricted stock awards forfeited (in shares)		(270)
Tax withholding payment related to net share settlement of equity awards	(1,756)		(1,756)				(1,756)
Tax withholding payment related to net share settlement of equity awards (in shares)		(22,897)
Stock-based compensation	1,595		1,595				1,595
Balance at Aug. 01, 2020	$ 519,929	$ 2	$ 181,406	$ 338,170	$ 351	$ (37)	519,929
Balance (in shares) at Aug. 01, 2020		24,104,564
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest, Ending Balance at Aug. 01, 2020							$ 519,892

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Operating activities
Net income	$ 10,043	$ 17,099
Adjustments to reconcile net income from continuing operations to cash provided by operating activities from continuing operations:
Depreciation and amortization	2,779	2,079
Losses from equity method investments	1,288	1,347
Realized gain from sale of available-for-sale investments	(11)
Provision for doubtful accounts	(136)	11
Other non-cash expense		32
Non-cash lease expense (income)	1,190	(251)
Loss on foreign currency transactions	1	1
Deferred income taxes	(339)	(349)
Stock-based compensation	1,595	1,566
Loss (gain) on sale of property and equipment	2	(75)
Amortization of debt securities	(43)	(527)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	30,439	(11,557)
Unbilled receivables and retentions	2,046	5,112
Inventories	5	(1,946)
Income tax receivable		821
Prepaid expenses and other assets	324	(616)
Accounts payable	(7,338)	(5,110)
Other liabilities	(15,004)	(4,524)
Net cash provided by operating activities	26,841	3,113
Investing activities
Acquisition of property and equipment	(4,067)	(1,902)
Equity method investments	(1,173)	(4,569)
Business acquisition, net of cash acquired		(18,641)
Proceeds from sale of property and equipment		81
Redemptions of held-to-maturity investments		65,035
Purchases of held-to-maturity investments		(70,463)
Redemptions of available-for-sale investments	41,727
Purchases of available-for-sale investments	(69,961)	(2,693)
Net cash provided by (used in) investing activities	(33,474)	(33,152)
Financing activities
Tax withholding payment related to net settlement of equity awards	(1,756)	(668)
Exercise of stock options	86	93
Net cash used in financing activities from continuing operations	(1,670)	(575)
Net increase in cash, cash equivalents, and restricted cash	(8,303)	(30,614)
Cash, cash equivalents, and restricted cash at beginning of period	255,142	172,708
Cash, cash equivalents, and restricted cash at end of period	246,839	142,094
Cash refunded (paid), net during the period for:
Income taxes	10	(294)
Non-cash activities
Unrealized loss on investments, net of deferred tax expense of $4 for the three months ended August 1, 2020	52
Change in foreign currency translation adjustments	75	169
Acquisitions of property and equipment included in accounts payable	$ 643	$ 1,253

Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	3 Months Ended
	Jul. 27, 2019 USD ($)
Consolidated Statements of Cash Flows
related party revenue	$ 4

Organization and Significant Accounting Policies

3 Months Ended

Aug. 01, 2020

Organization and Significant Accounting Policies

Organization and Significant Accounting Policies

1. Organization and Significant Accounting Policies

Organization

AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, support and operation of unmanned aircraft systems (“UAS”) for various industries and governmental agencies.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the three months ended August 1, 2020 are not necessarily indicative of the results for the full year ending April 30, 2021. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2020, included in the Company’s Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

In December 2017, the Company and SoftBank Corp. (“SoftBank”) formed a joint venture, HAPSMobile, Inc. (“HAPSMobile”). As the Company has the ability to exercise significant influence over the operating and financial policies of HAPSMobile, the Company’s investment has been accounted for as an equity method investment. The Company has presented its proportion of HAPSMobile’s net loss in equity method investment activity, net of tax in the consolidated statements of operations. The carrying value of the investment in HAPSMobile was recorded in other assets. Refer to Note 6—Equity Method Investments for further details.

On June 10, 2019, the Company purchased 100% of the issued and outstanding member units of Pulse Aerospace, LLC (“Pulse”) pursuant to the terms of a Unit Purchase Agreement (the “Pulse Purchase Agreement”). The assets, liabilities and operating results of Pulse have been included in the Company’s consolidated financial statements. Refer to Note 17—Business Acquisitions for further details.

During the three months ended October 27, 2019, the Company dissolved its wholly-owned subsidiary, Skytower, Inc., the results of which were not material to the consolidated financial statements.

Recently Adopted Accounting Standards

Effective May 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, along with several additional clarification ASU’s issued during 2018 and 2019, collectively “CECL”. CECL requires the reporting entity to estimate expected credit losses over the life of a financial asset. CECL requires the credit loss to be recognized upon initial recognition of the financial asset. ASU 2016-13 requires the entity to adopt CECL using the modified retrospective transition approach through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As part of the assessment of the adequacy of the Company’s allowances for credit losses, the Company

considered a number of factors including, but not limited to, customer credit ratings, age of receivables, and expected loss rates. However, the adoption of CECL did not have a material impact to retained earnings for the Company.

Effective May 1, 2020, the Company adopted ASU 2018-15, “Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). ASU 2018-15 provides guidance on the treatment of accounting for fees paid by a customer in a cloud computing arrangement. This guidance includes the requirements for capitalizing implementation costs incurred in a hosting arrangement. The Company adopted ASU 2018-15 using the prospective method, applying the new guidance to all implementation costs incurred after adoption. The adoption of ASU 2018-15 did not have an impact on the Company’s consolidated financial statements.

Revenue Recognition

The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of the customers. These contracts may be firm fixed price (“FFP”), cost plus fixed fee (“CPFF”), or time and materials (“T&M”). The Company considers all such contracts to be within the scope of ASC Topic 606.

Performance Obligations

A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its observable standalone selling price for products and services. When the standalone selling price is not directly observable, the Company uses its best estimate of the standalone selling price of each distinct good or service in the contract using the cost plus margin approach. This approach estimates the Company’s expected costs of satisfying the performance obligation and then adds an appropriate margin for that distinct good or service.

Contract modifications are routine in the performance of the Company’s contracts. In most instances, contract modifications are for additional goods and/or services that are distinct and, therefore, accounted for as new contracts.

The Company’s performance obligations are satisfied over time or at a point in time, which accounted for 38% and 62% of revenue during the three months ended August 1, 2020, respectively. Performance obligations are satisfied over time if the customer receives the benefits as the Company performs, if the customer controls the asset as it is being developed or produced, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for the Company’s costs incurred to date plus a reasonable margin. The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. Revenue for tactical missile systems (“TMS”) product deliveries and Customer-Funded Research and Development contracts is recognized over time as costs are incurred. Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, and technical support services. Contract services revenue is recognized over time as services are rendered. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Training services are recognized over time using an output method based on days of training completed.

For performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with, and thereby best depict, transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts.

For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is

recognized at the point in time in which each performance obligation is fully satisfied. The Company’s small UAS product sales revenue is composed of revenue recognized on contracts for the delivery of small UAS systems and spare parts. Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.

On August 1, 2020, the Company had approximately $154,418,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog. The Company currently expects to recognize approximately 95% of the remaining performance obligations as revenue in fiscal 2021, an additional 5% in fiscal 2022, and the balance thereafter.

The Company collects sales, value added, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer.

Contract Estimates

Accounting for contracts and programs primarily with a duration of less than six months involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts.

Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer.

The nature of the Company’s contracts gives rise to several types of variable consideration, including penalty fees and incentive awards generally for late delivery and early delivery, respectively. The Company generally estimates such variable consideration as the most likely amount. In addition, the Company includes the estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved. These estimates are based on historical award experience, anticipated performance and the Company’s best judgment at the time. Because of the certainty in estimating these amounts, they are included in the transaction price of the Company’s contracts and the associated remaining performance obligations.

As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company regularly reviews and updates its contract-related estimates. Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations recognized over time. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was not significant for the three month period ended August 1, 2020 or the three month period ended July 27, 2019. No adjustment on any one contract was material to the Company’s unaudited consolidated financial statements for the three month period ended August 1, 2020 or the three month period ended and July 27, 2019.

Revenue by Category

The following tables present the Company’s revenue disaggregated by major product line, contract type, customer category and geographic location (in thousands):


	Three Months Ended
	August 1,		July 27,
Revenue by major product line/program	2020		2019
Small UAS	$	56,202	$	66,745
TMS		9,534		5,587
HAPS		16,386		12,335
Other		5,328		2,244
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by contract type	2020		2019
FFP	$	60,875	$	67,944
CPFF		26,569		18,264
T&M		6		703
Total revenue	$	87,450	$	86,911

Each of these contract types presents advantages and disadvantages. Typically, the Company assumes more risk with FFP contracts. However, these types of contracts generally offer additional profits when the Company completes the work for less than originally estimated. CPFF contracts generally subject the Company to lower risk. Accordingly, the associated base fees are usually lower than fees on FFP contracts. Under T&M contracts, the Company’s profit may vary if actual labor hour rates vary significantly from the negotiated rates.


	Three Months Ended
	August 1,		July 27,
Revenue by customer category	2020		2019
U.S. government	$	53,796	$	49,134
Non-U.S. government		33,654		37,777
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by geographic location	2020		2019
Domestic	$	53,430	$	38,808
International		34,020		48,103
Total revenue	$	87,450	$	86,911

Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables, and customer advances and deposits on the consolidated balance sheet. In the Company’s services contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, which is generally monthly, or upon the achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets recorded in unbilled receivables and retentions on the consolidated balance sheet. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities recorded in customer advances on the consolidated balance sheet. Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. For the Company’s

product revenue, the Company generally receives cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable. Changes in the contract asset and liability balances during the three month period ended August 1, 2020 were not materially impacted by any other factors. For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

Revenue recognized for the three month periods ended August 1, 2020 and July 27, 2019 that was included in contract liability balances at the beginning of each year was $1,973,000 and $830,000, respectively.

Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM, who is the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the focus of research and development (“R&D”), on a consolidated basis for the Company’s continuing operations. Accordingly, the Company operates its business as a single reportable segment.

Investments

The Company’s investments are accounted for as available-for-sale and are reported at fair value. Unrealized gains and losses are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes for available-for-sale investments. Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

Investments are considered to be impaired if the fair value of the investment is less than its amortized cost basis. On a quarterly basis, the Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, the Company evaluates if the decline in fair value resulted from a credit loss or other factors. The Company considers factors such as general market conditions and potential adverse conditions related to the financial health of the issuer based on rating agency actions. Impairments relating to credit losses are recorded in earnings through an allowance for credit losses. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairments not related to credit losses are recorded through other comprehensive income, net of applicable taxes.

Fair Values of Financial Instruments

Fair values of cash and cash equivalents, accounts receivable, unbilled receivables and retentions, and accounts payable approximate cost due to the short period of time to maturity.

Government Contracts

Payments to the Company on government CPFF or T&M contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company for CPFF and T&M contracts.

For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. Historically, the Company has not experienced material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future.

The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured. During the fiscal year ended April 30, 2020, the Company settled rates for its incurred cost claims with the DCAA for fiscal year 2015 for an amount not significant. At August 1, 2020 and April 30, 2020, the Company had no reserve for incurred cost claim audits.

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock.

The reconciliation of basic to diluted shares is as follows (in thousands except share data):


		Three Months Ended
	August 1, 2020		July 27, 2019
Denominator for basic earnings per share:
Weighted average common shares		23,893,001		23,745,199
Dilutive effect of employee stock options, restricted stock and restricted stock units		293,227		324,734
Denominator for diluted earnings per share		24,186,228		24,069,933

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 844 and 3,675 for the three months ended August 1, 2020 and July 27, 2019,

respectively.

Recently Issued Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods therein, with early adoption permitted. The adoption method is dependent on the specific amendment included in this update as certain amendments require retrospective adoption, modified retrospective adoption, an option of retrospective or modified retrospective, and prospective adoption. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (Topic 321, Topic 323, and Topic 815). This ASU clarifies accounting certain topics impacted by Topic 321 Investments—Equity Securities. These topics include measuring equity securities using the measurement alternative, how the measurement alternative should be applied to equity method accounting, and certain forward contracts and purchased options which would be accounted for under the equity method of accounting upon settlement or exercise. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods therein, with early adoption permitted. The amendments should be adopted prospectively. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

Discontinued Operations

3 Months Ended

Aug. 01, 2020

Discontinued Operations.

Discontinued Operations

2. Discontinued Operations

On June 29, 2018, the Company completed the sale of the substantially all of the assets and related liabilities of its efficient energy systems business segment (the “EES Business”) to Webasto Charging Systems, Inc. (“Webasto”) pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) between Webasto and the Company. In accordance with the terms of the Purchase Agreement, as amended by a side letter agreement executed at the closing, the Company received cash consideration of $31,994,000 upon closing, which resulted in a gain of $11,420,000 and has been recorded in gain on sale of business, net of tax in the consolidated statements of income. During the year ended April 30, 2019, the Company recorded a reduction to the gain resulting from a working capital adjustment of $486,000. During the year ended April 30, 2020, the Company and Webasto engaged an independent accounting firm to resolve a

working capital dispute with a maximum exposure of $922,000 pursuant to the terms of the Purchase Agreement. In June 2020, the independent accounting firm determined the final adjustment to the working capital dispute to be $341,000 which has been recorded net of tax as discontinued operations in the consolidated statements of income for the year ended April 30, 2020.

The Company is entitled to receive additional cash consideration of $6,500,000 (the “Holdback”) upon tendering consents to assignment of two remaining customer contracts to Webasto. The Holdback was not recorded in the Company’s consolidated financial statements as the amount was not realized or realizable as of August 1, 2020. The Company’s satisfaction of the requirements for the payment of the Holdback is currently in dispute.

On February 22, 2019, Webasto filed a lawsuit alleging several claims against the Company for breach of contract, indemnity, and bad faith, including allegations regarding inaccuracy of certain diligence disclosures, failure to provide certain consents to contract assignments and related to a previously announced product recall. Webasto seeks to recover the costs of the recall and other damages totaling a minimum of $6,500,000 in addition to attorneys’ fees, costs, and punitive damages. On August 16, 2019, the Company filed a counterclaim against Webasto seeking payment of the Holdback and declaratory relief regarding Webasto’s cancellation of an assigned contract. The Company believes that the allegations are generally meritless and is mounting a vigorous defense.

During the three months ended October 27, 2018, Webasto filed a recall report with the National Highway Traffic Safety Administration that named certain of the Company’s EES products as subject to the recall. The Company is continuing to assess the facts giving rise to the recall. Under the terms of the Purchase Agreement, the Company may be responsible for certain costs of such recall of named products the Company manufactured, sold or serviced prior to the closing of the sale of the EES Business. On August 14, 2019, Benchmark Electronics, Inc. (“Benchmark”), the company that assembled the products subject to the recall, served a demand for arbitration to the Company and Webasto, and a third-party part supplier pursuant to its contracts with the Company and Webasto, respectively. The Company filed a responsive pleading in the Benchmark arbitration on October 29, 2019, consisting of a general denial, affirmative defenses, and a reservation of the right to file counter-claims at a later date. Webasto challenged the validity of the Benchmark arbitration by filing an action in New York Superior Court. In December 2019, Webasto and Benchmark reached a settlement of their disputed claims. Benchmark withdrew its Notice of Arbitration against Webasto and the Company, but reserved its right to pursue indemnity claims against suppliers. The recall remains a significant part of the Webasto lawsuit.

Concurrent with the execution of the Purchase Agreement, the Company entered into a transition services agreement (the “TSA”) to provide certain general and administrative services to Webasto for a defined period. Income from performing services under the TSA was $38,000 and $444,000 and has been recorded in other income, net in the consolidated statements of income for three months ended August 1, 2020 and July 27, 2019, respectively.

Investments

3 Months Ended

Aug. 01, 2020

Investments

Investments

3. Investments

Investments consist of the following (in thousands):


	August 1,		April 30,
	2020		2020
Short-term investments:
Available-for-sale securities:
Municipal securities		1,348		5,244
U.S. government securities		69,986		33,771
Corporate bonds		—		8,492
Total short-term investments	$	71,334	$	47,507
Long-term investments:
Available-for-sale securities:
Municipal securities		—		1,592
U.S. government securities		15,004		8,996
Total available-for-sale investments		15,004		10,588
Equity method investments
Investment in limited partnership fund		5,334		4,442
Total equity method investments		5,334		4,442
Total long-term investments	$	20,338	$	15,030

Available-For-Sale Securities

As of August 1, 2020 and April 30, 2020, the balance of available-for-sale securities consisted of state and local government municipal securities, U.S. government securities, U.S. government agency securities, and investment grade corporate bonds. Interest earned from these investments is recorded in interest income. Realized gains on sales of these investments on the basis of specific identification is recorded in interest income.

The following table is a summary of the activity related to the available-for-sale investments recorded in short-term and long-term investments as of August 1, 2020 and April 30, 2020, respectively (in thousands):


	August 1, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	1,345	$	3	$	—	$	1,348
U.S. government securities		84,977		14		(1)		84,990
Corporate bonds		—		—		—		—
Total available-for-sale investments	$	86,322	$	17	$	(1)	$	86,338


	April 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	6,807	$	29	$	—	$	6,836
U.S. government securities		42,730		41		(4)		42,767
Corporate bonds		8,495		—		(3)		8,492
Total available-for-sale investments	$	58,032	$	70	$	(7)	$	58,095

The amortized cost and fair value of the available-for-sale debt securities by contractual maturity at August 1, 2020 were as follows (in thousands):


	Cost		Fair Value
Due within one year	$	71,322	$	71,334
Due after one year through five years		15,000		15,004
Total	$	86,322	$	86,338

Fair Value Measurements

3 Months Ended

Aug. 01, 2020

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

●Level 1—Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.

●Level 2—Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data.

●Level 3—Inputs to the valuation that are unobservable inputs for the asset or liability.

The Company’s financial assets measured at fair value on a recurring basis at August 1, 2020, were as follows (in thousands):


	Fair Value Measurement Using
			Significant
	Quoted prices in		other		Significant
	active markets for		observable		unobservable
	identical assets		inputs		inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities	$	—	$	86,338	$	—	$	86,338
Total	$	—	$	86,338	$	—	$	86,338

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2020, were as follows (in thousands):


	Fair Value Measurement Using
			Significant
	Quoted prices in		other		Significant
	active markets for		observable		unobservable
	identical assets		inputs		inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities	$	—	$	58,095	$	—	$	58,095
Total	$	—	$	58,095	$	—	$	58,095

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Inventories, net

3 Months Ended

Aug. 01, 2020

Inventories, net

Inventories, net

5. Inventories, net

Inventories consist of the following (in thousands):


	August 1,		April 30,
	2020		2020
Raw materials	$	15,136	$	15,988
Work in process		12,958		10,340
Finished goods		26,640		29,439
Inventories, gross		54,734		55,767
Reserve for inventory excess and obsolescence		(9,204)		(10,232)
Inventories, net	$	45,530	$	45,535

Equity Method Investments

3 Months Ended

Aug. 01, 2020

Equity Method Investments

Equity Method Investments

6. Equity Method Investments

In December of 2017, the Company and SoftBank formed a joint venture, HAPSMobile, which is a Japanese corporation. As of August 1, 2020, the Company’s ownership stake in HAPSMobile was approximately 7%, with the remaining 93% held by SoftBank. In connection with the formation of the joint venture on December 27, 2017, the Company initially purchased shares of HAPSMobile representing a 5% ownership interest in exchange for an investment of 210,000,000 yen ($1,860,000). The Company subsequently purchased additional shares of HAPSMobile in order to maintain a 5% ownership stake in the joint venture. The first such purchase occurred on April 17, 2018, at which time the Company invested 150,000,000 yen ($1,407,000) for the purchase of additional shares of HAPSMobile. On January 29, 2019, the Company invested an additional 209,500,000 yen ($1,926,000) to maintain its 5% ownership stake. On February 9, 2019, the Company elected to purchase 632,800,000 yen ($5,671,000) of additional shares of HAPSMobile to increase the Company’s ownership in the joint venture from 5% to 10%, and on May 10, 2019, the Company purchased 500,000,000 yen ($4,569,000) of additional shares of HAPSMobile to maintain its 10% ownership stake. The Company’s ownership percentage was subsequently diluted from 10% to approximately 5%. On December 4, 2019, the Company purchased 540,050,000 yen ($4,982,000) of additional shares of HAPSMobile to increase its ownership stake to approximately 7%.

As the Company has the ability to exercise significant influence over the operating and financial policies of HAPSMobile pursuant to the applicable Joint Venture Agreement and related organizational documents, the Company’s investment is accounted for as an equity method investment. For the three months ended August 1, 2020 and July 27, 2019, the Company recorded its ownership percentage of the net loss of HAPSMobile, or $1,008,000 and $1,347,000, respectively, in equity method investment loss, net of tax in the unaudited consolidated statement of income. At August 1, 2020 and April 30, 2020, the carrying value of the investment in HAPSMobile of $9,522,000 and $10,455,000, respectively, was recorded in other assets.

Investment in Limited Partnership Fund

In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets. On July 15, 2020, the Company made an additional contribution of $1,173,000. Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $3,880,000 to the fund. The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest. For the three months ended August 1, 2020, the Company recorded its ownership percentage of the net loss of the limited partnership, or $280,000, in equity method investment loss in the consolidated statements of income. For the three months ended July 27, 2019, the Company recorded no net loss of the limited partnership. At August 1, 2020 and April 30, 2020, the carrying value of the investment in the limited partnership of $5,334,000 and $4,442,000, respectively, was recorded in long-term investments.

Warranty Reserves

3 Months Ended

Aug. 01, 2020

Warranty Reserves

Warranty Reserves

7. Warranty Reserves

The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. The warranty reserve is included in other current liabilities. The related expense is

included in cost of sales. Warranty reserve activity is summarized as follows for the three months ended August 1, 2020 and July 27, 2019, respectively (in thousands):


	Three Months Ended
	August 1,		July 27,
	2020		2019
Beginning balance	$	2,015	$	1,704
Warranty expense		451		549
Changes in estimates related to pre-existing warranties		—		—
Warranty costs settled		(435)		(540)
Ending balance	$	2,031	$	1,713

Intangibles, net

3 Months Ended

Aug. 01, 2020

Intangibles, net

Intangibles, net

8. Intangibles, net

The components of intangibles are as follows (in thousands):


	August 1,		April 30,
	2020		2020
Technology	$	14,950	$	14,950
Licenses		1,006		1,006
Customer relationships		873		873
In-process research and development		550		550
Non-compete agreements		320		320
Trademarks and tradenames		68		68
Other		3		3
Intangibles, gross		17,770		17,770
Less accumulated amortization		(4,842)		(4,133)
Intangibles, net	$	12,928	$	13,637

The weighted average amortization period at August 1, 2020 and April 30, 2020 was four years. Amortization expense for the three months ended August 1, 2020 and July 27, 2019 was $709,000 and $552,000, respectively.

Technology, in-process research and development, customer relationships, trademarks and tradenames, and non-compete agreements were recognized in conjunction with the Company’s acquisition of Pulse on June 10, 2019. Refer to Note 17—Business Acquisitions for further details.

Estimated amortization expense for the next five years is as follows (in thousands):


	Year ending
	April 30,
2021	$	2,079
2022		2,829
2023		2,688
2024		2,629
2025		2,492
	$	12,717

Goodwill

3 Months Ended

Aug. 01, 2020

Goodwill.

Goodwill

9. Goodwill

At August 1, 2020 and April 30, 2020, the goodwill balance was $6,340,000, which represents the goodwill attributable to the acquisition of Pulse. Refer to Note 17—Business Acquisitions for further details.

Leases

3 Months Ended

Aug. 01, 2020

Leases

Leases

10. Leases

The Company leases certain buildings, land and equipment. At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The Company defines the initial lease term to include renewal options determined to be reasonably certain. The Company’s leases have remaining lease terms of less than one year to six years, some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease after two years. None of the Company’s options to extend or terminate are reasonably certain of being exercised, and are therefore not included in the Company’s determination of lease assets and liabilities. For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records incentive as a reduction to fixed lease payments thereby reducing rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease. For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

The Company does not have any finance leases. The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease. Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease.

The components of lease costs recorded in cost of sales for product sales and contract services and selling, general and administrative (“SG&A”) expense were as follows (in thousands):


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
Operating lease cost	$	1,190	$	1,120
Short term lease cost		110		237
Variable lease cost		1		89
Sublease income		(38)		(117)
Total lease costs, net	$	1,263	$	1,329

Supplemental lease information were as follows:


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
	(In thousands)		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,400	$	1,389
Right-of-use assets obtained in exchange for new lease liabilities	$	5,883	$	10,561

Weighted average remaining lease term		46 months		37 months
Weighted average discount rate		3.4%		3.7%

Maturities of operating lease liabilities as of August 1, 2020 were as follows (in thousands):


2021	$	3,576
2022		4,653
2023		3,247
2024		2,615
2025		1,668
Thereafter		773
Total lease payments		16,532
Less: imputed interest		(1,710)
Total present value of operating lease liabilities	$	14,822

Accumulated Other Comprehensive Income and Reclassifications Adjustments

3 Months Ended

Aug. 01, 2020

Accumulated Other Comprehensive Income and Reclassifications Adjustments

Accumulated Other Comprehensive Income and Reclassifications Adjustments

11. Accumulated Other Comprehensive Income and Reclassifications Adjustments

The components of accumulated other comprehensive income and adjustments are as follows (in thousands):


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
Balance, net of $0 deferred taxes, as of April 30, 2020 and April 30, 2019	$	328	$	2
Changes in foreign currency translation adjustments		75		169
Unrealized losses, net of $4 of deferred taxes for the three months ended August 1, 2020		(52)		—
Balance, net of $4 and $0 deferred taxes, as of August 1, 2020 and July 27, 2019, respectively	$	351	$	171

Customer-Funded Research & Development

3 Months Ended

Aug. 01, 2020

Customer-Funded Research & Development

Customer-Funded Research & Development

12. Customer-Funded Research & Development

Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform R&D activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales as costs are incurred. Revenue from customer-funded R&D contracts are recognized in accordance with Topic 606 over time as costs are incurred. Revenue from customer-funded R&D was approximately $23,426,000 and $15,120,000 for the three months ended August 1, 2020 and July 27, 2019, respectively.

Long-Term Incentive Awards

3 Months Ended

Aug. 01, 2020

Long-Term Incentive Awards.

Long-Term Incentive Awards

13. Long-Term Incentive Awards

During the three months ended August 1, 2020, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2021 LTIP”). Awards under the Fiscal 2021 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2021, July 2022 and July 2023, and (ii) performance-based restricted stock units (“PRSUs”), which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2023. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100% for each such metric. Threshold achievement levels for which the PRSUs would vest at 50% for each such metric and maximum achievement levels for which such awards would vest at 250% for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three months ended August 1, 2020, the Company recorded $91,000 of compensation expense related to the Fiscal 2021 LTIP. At August 1, 2020, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $7,946,000.

During the three months ended July 27, 2019, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2020 LTIP”). Awards under the Fiscal 2020 LTIP consist of: (i) time-based restricted stock awards,

which vest in equal tranches in July 2020, July 2021 and July 2022, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2022. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100% for each such metric. Threshold achievement levels for which the PRSUs would vest at 50% for each such metric and maximum achievement levels for which such awards would vest at 200% for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three months ended August 1, 2020 and July 27, 2019, the Company recorded $80,000 and $131,000 of compensation expense related to the Fiscal 2020 LTIP, respectively. At August 1, 2020, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2020 LTIP is $4,263,000.

During the three months ended July 28, 2018, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2019 LTIP”). Awards under the Fiscal 2019 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2019, July 2020 and July 2021, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2021. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100% for each such metric. Threshold achievement levels for which the PRSUs would vest at 50% for each such metric and maximum achievement levels for which such awards would vest at 200% for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three months ended August 1, 2020 and July 27, 2019, the Company recorded $75,000 and $33,000 of compensation expense related to the Fiscal 2019 LTIP, respectively. At August 1, 2020, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2019 LTIP is $2,478,000.

During the three months ended July 29, 2017, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2018 LTIP”). Awards under the Fiscal 2018 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2018, July 2019 and July 2020, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2020. During the three months ended August 1, 2020, the Company issued a total of 16,228 fully-vested shares of common stock to settle the PRSUs in the Fiscal 2018 LTIP. For the three months ended August 1, 2020 and July 27, 2019, the Company recorded no compensation expense and $8,000 of compensation expense related to the Fiscal 2018 LTIP, respectively.

At August 1, 2020 and April 30, 2020, the Company recorded cumulative stock-based compensation expense from the Fiscal 2021 LTIP, Fiscal 2020 LTIP and Fiscal 2019 LTIP of $1,853,000 and $1,607,000, respectively. At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs. The estimation of whether the performance targets will be achieved requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

Income Taxes

3 Months Ended

Aug. 01, 2020

Income Taxes

Income Taxes

14. Income Taxes

For the three months ended August 1, 2020 and July 27, 2019, the Company recorded a provision for income taxes of $1,207,000 and $2,133,000, respectively, yielding an effective tax rate of 9.6% and 10.4%, respectively. The variance from statutory rates for the three months ended August 1, 2020 was primarily due to federal R&D credits, foreign derived intangible income deductions and the recording of discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options. The variance from statutory rates for the three months ended July 27, 2019 was primarily due to federal R&D credits, foreign derived intangible income deduction and the recording of discrete excess tax benefits, resulting from the vesting of restricted stock awards and exercises of stock options.

Share Repurchase

3 Months Ended

Aug. 01, 2020

Share Repurchase

Share Repurchase

15. Share Repurchase

In September 2015, the Company’s Board of Directors authorized a program to repurchase up to $25,000,000 of the Company’s common stock with no specified termination date for the program. No shares were repurchased under the program during the three months ended August 1, 2020 or July 27, 2019. As of August 1, 2020 and April 30, 2020, approximately $21,200,000 remained authorized for future repurchases under this program.

Related Party Transactions

3 Months Ended

Aug. 01, 2020

Related Party Transactions

Related Party Transactions

16. Related Party Transactions

Related party transactions are defined as transactions between the Company and entities either controlled by the Company or that the Company can significantly influence. Although SoftBank has a controlling interest in HAPSMobile, the Company determined that it has the ability to exercise significant influence over HAPSMobile. As such, HAPSMobile and SoftBank are considered related parties of the Company. Concurrent with the formation of HAPSMobile, the Company executed a Design and Development Agreement (the “DDA”) with HAPSMobile. Under the DDA and related efforts, the Company will use its best efforts, up to a maximum net value of $166,108,000, to design and build prototype solar powered high altitude aircraft and ground control stations for HAPSMobile and conduct low altitude and high altitude flight tests of the prototype aircraft.

The Company recorded revenue under the DDA and preliminary design agreements between the Company and SoftBank of $16,386,000 and $12,335,000 for the three months ended August 1, 2020 and July 27, 2019, respectively. At August 1, 2020 and April 30, 2020, the Company had unbilled related party receivables from HAPSMobile of $28,143,000 and $15,779,000 recorded in unbilled receivables and retentions on the consolidated balance sheets, respectively. At April 30, 2019, the Company owned a 10% stake in accordance with the Joint Venture Agreement which was diluted to approximately 5% during the first three months ended July 27, 2019. On December 4, 2019, the Company purchased 540,050,000 yen ($4,982,000) of additional shares of HAPSMobile to increase its ownership stake to approximately 7%. Refer to Note 6—Equity Method Investments for further details.

Business Acquisitions

3 Months Ended

Aug. 01, 2020

Business Acquisitions

Business Acquisitions

17. Business Acquisitions

On June 10, 2019, the Company purchased 100% of the issued and outstanding member units of Pulse pursuant to the terms of the Pulse Purchase Agreement. The Company’s acquisition of Pulse’s helicopter UAS product family strengthens AeroVironment’s leading family of fixed-wing small unmanned aircraft systems and increases the mission capabilities of AeroVironment’s family of systems.

Pursuant to the Pulse Purchase Agreement, at closing, the Company paid $20,650,000 in cash, less closing indebtedness and transaction costs as defined in the Pulse Purchase Agreement, less a $250,000 retention to cover any post-closing indemnification claims, and less a $1,250,000 holdback amount, with the retention and holdback to be released to the member unit holders of Pulse, less any amounts paid or reserved, 18 months after the closing of the transactions in accordance with the terms of the Pulse Purchase Agreement. The closing cash consideration included the payoff of the outstanding indebtedness of Pulse as of the closing date. The Company financed the acquisition entirely from available cash on hand.

In addition to the consideration paid at closing, the acquisition of Pulse included contingent consideration arrangements that required additional consideration to be paid by the Company to the sellers of Pulse if two specified research and development milestones were achieved by December 10, 2021 and the continued employment of specified employees. Amounts were payable upon the achievement of the milestones. The range of the undiscounted amounts the Company could pay under each of the contingent consideration agreements were zero or $2,500,000 ($5,000,000 in total if both milestones are achieved and specific key employees continued employment). The fair value of the contingent consideration recognized on the acquisition date of $1,703,000 was estimated by applying the income approach. That measure was based on significant Level 3 inputs not observable in the market. Key assumptions include (1) a discount rate of 4.5% and (2) the probability that each of the milestones would be achieved.

During the year ended April 30, 2020, one of the research and development milestones was achieved, and the requirements for the payout of remaining contingent consideration were concluded to not have been met. As a result, the Company recorded a gain of $832,000 which was recorded in selling, general, and administrative expense in the consolidated statements of income. On February 26, 2020, $2,500,000 of contingent consideration was paid to the sellers for the achieved milestone.

During the fiscal year ended April 30, 2020, the Company finalized its determination of the fair value of the assets and liabilities assumed as of the acquisition date which is summarized in the following table (in thousands):


	June 10,
	2019
Technology	$	14,950
Goodwill		6,340
In-process R&D		550
Inventory		334
Non-compete agreements		320
Other assets, net of liabilities assumed		(614)
Total net identified assets acquired	$	21,880

Fair value of consideration:
Cash	$	18,677
Holdback		1,250
Retention		250
Contingent consideration		1,703
Total	$	21,880

Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The fair value of the intangibles assets was determined using a discounted cash flow analysis, which were based on the Company’s best estimate of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance. Use of different estimates and judgments could yield materially different results.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Pulse and expected future customers in the helicopter UAS market. For tax purposes the acquisition was treated as an asset purchase and the goodwill is deductible ratably over a period of fifteen years.

Supplemental Pro Forma Information (unaudited)

The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2018 (in thousands):


	Three Months Ended
	July 27,		July 28,
	2019		2018
Revenue	$	87,138	$	79,313
Net income attributable to AeroVironment, Inc.	$	17,393	$	26,369

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 28, 2018, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2018 with the consequential tax effects, and including the results of Pulse prior to acquisition.

The Company incurred approximately $341,000 of acquisition-related expenses for the three months ended July 27, 2019. These expenses are included in selling, general and administrative, research and development, and product cost of sales on the Company’s consolidated income statement.

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable and are not necessarily indicative of the results that have been realized had the acquisitions been consolidated in the tables above as of May 1, 2018, nor are they indicative of results of operations that may occur in the future.

Organization and Significant Accounting Policies (Policies)

3 Months Ended

Aug. 01, 2020

Organization and Significant Accounting Policies

Basis of Presentation

The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

During the three months ended October 27, 2019, the Company dissolved its wholly-owned subsidiary, Skytower, Inc., the results of which were not material to the consolidated financial statements.

Recently Adopted Accounting Standards

Revenue Recognition

Performance Obligations

For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is

Contract Estimates

Revenue by Category

The following tables present the Company’s revenue disaggregated by major product line, contract type, customer category and geographic location (in thousands):


	Three Months Ended
	August 1,		July 27,
Revenue by major product line/program	2020		2019
Small UAS	$	56,202	$	66,745
TMS		9,534		5,587
HAPS		16,386		12,335
Other		5,328		2,244
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by contract type	2020		2019
FFP	$	60,875	$	67,944
CPFF		26,569		18,264
T&M		6		703
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by customer category	2020		2019
U.S. government	$	53,796	$	49,134
Non-U.S. government		33,654		37,777
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by geographic location	2020		2019
Domestic	$	53,430	$	38,808
International		34,020		48,103
Total revenue	$	87,450	$	86,911

Contract Balances

Segments

Investments

Fair Values of Financial Instruments

Fair values of cash and cash equivalents, accounts receivable, unbilled receivables and retentions, and accounts payable approximate cost due to the short period of time to maturity.

Government Contracts

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock.

The reconciliation of basic to diluted shares is as follows (in thousands except share data):


		Three Months Ended
	August 1, 2020		July 27, 2019
Denominator for basic earnings per share:
Weighted average common shares		23,893,001		23,745,199
Dilutive effect of employee stock options, restricted stock and restricted stock units		293,227		324,734
Denominator for diluted earnings per share		24,186,228		24,069,933

respectively.

Recently Issued Accounting Standards

Organization and Significant Accounting Policies (Tables)

3 Months Ended

Aug. 01, 2020

Organization and Significant Accounting Policies

Schedule of revenue by category


	Three Months Ended
	August 1,		July 27,
Revenue by major product line/program	2020		2019
Small UAS	$	56,202	$	66,745
TMS		9,534		5,587
HAPS		16,386		12,335
Other		5,328		2,244
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by contract type	2020		2019
FFP	$	60,875	$	67,944
CPFF		26,569		18,264
T&M		6		703
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by customer category	2020		2019
U.S. government	$	53,796	$	49,134
Non-U.S. government		33,654		37,777
Total revenue	$	87,450	$	86,911


	Three Months Ended
	August 1,		July 27,
Revenue by geographic location	2020		2019
Domestic	$	53,430	$	38,808
International		34,020		48,103
Total revenue	$	87,450	$	86,911

Schedule of reconciliation of basic to diluted shares


		Three Months Ended
	August 1, 2020		July 27, 2019
Denominator for basic earnings per share:
Weighted average common shares		23,893,001		23,745,199
Dilutive effect of employee stock options, restricted stock and restricted stock units		293,227		324,734
Denominator for diluted earnings per share		24,186,228		24,069,933

Investments (Tables)

3 Months Ended

Aug. 01, 2020

Investments

Schedule of investments


	August 1,		April 30,
	2020		2020
Short-term investments:
Available-for-sale securities:
Municipal securities		1,348		5,244
U.S. government securities		69,986		33,771
Corporate bonds		—		8,492
Total short-term investments	$	71,334	$	47,507
Long-term investments:
Available-for-sale securities:
Municipal securities		—		1,592
U.S. government securities		15,004		8,996
Total available-for-sale investments		15,004		10,588
Equity method investments
Investment in limited partnership fund		5,334		4,442
Total equity method investments		5,334		4,442
Total long-term investments	$	20,338	$	15,030

Schedule of activity related to available-for-sale investments recorded in short-term and long-term investments


	August 1, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	1,345	$	3	$	—	$	1,348
U.S. government securities		84,977		14		(1)		84,990
Corporate bonds		—		—		—		—
Total available-for-sale investments	$	86,322	$	17	$	(1)	$	86,338


	April 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	6,807	$	29	$	—	$	6,836
U.S. government securities		42,730		41		(4)		42,767
Corporate bonds		8,495		—		(3)		8,492
Total available-for-sale investments	$	58,032	$	70	$	(7)	$	58,095

Schedule of amortized cost and fair value of the available-for-sale debt securities by contractual maturity

The amortized cost and fair value of the available-for-sale debt securities by contractual maturity at August 1, 2020 were as follows (in thousands):


	Cost		Fair Value
Due within one year	$	71,322	$	71,334
Due after one year through five years		15,000		15,004
Total	$	86,322	$	86,338

Fair Value Measurements (Tables)

3 Months Ended

Aug. 01, 2020

Fair Value Measurements

Schedule of financial assets measured at fair value on a recurring basis

The Company’s financial assets measured at fair value on a recurring basis at August 1, 2020, were as follows (in thousands):


	Fair Value Measurement Using
			Significant
	Quoted prices in		other		Significant
	active markets for		observable		unobservable
	identical assets		inputs		inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities	$	—	$	86,338	$	—	$	86,338
Total	$	—	$	86,338	$	—	$	86,338

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2020, were as follows (in thousands):


	Fair Value Measurement Using
			Significant
	Quoted prices in		other		Significant
	active markets for		observable		unobservable
	identical assets		inputs		inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Available-for-sale securities	$	—	$	58,095	$	—	$	58,095
Total	$	—	$	58,095	$	—	$	58,095

Inventories, net (Tables)

3 Months Ended

Aug. 01, 2020

Inventories, net

Schedule of inventories


	August 1,		April 30,
	2020		2020
Raw materials	$	15,136	$	15,988
Work in process		12,958		10,340
Finished goods		26,640		29,439
Inventories, gross		54,734		55,767
Reserve for inventory excess and obsolescence		(9,204)		(10,232)
Inventories, net	$	45,530	$	45,535

Warranty Reserves (Tables)

3 Months Ended

Aug. 01, 2020

Warranty Reserves

Summary of warranty reserve activity


	Three Months Ended
	August 1,		July 27,
	2020		2019
Beginning balance	$	2,015	$	1,704
Warranty expense		451		549
Changes in estimates related to pre-existing warranties		—		—
Warranty costs settled		(435)		(540)
Ending balance	$	2,031	$	1,713

Intangibles, net (Tables)

3 Months Ended

Aug. 01, 2020

Intangibles, net

Schedule of components of intangibles

The components of intangibles are as follows (in thousands):


	August 1,		April 30,
	2020		2020
Technology	$	14,950	$	14,950
Licenses		1,006		1,006
Customer relationships		873		873
In-process research and development		550		550
Non-compete agreements		320		320
Trademarks and tradenames		68		68
Other		3		3
Intangibles, gross		17,770		17,770
Less accumulated amortization		(4,842)		(4,133)
Intangibles, net	$	12,928	$	13,637

Schedule of estimated amortization expense for the next five years

Estimated amortization expense for the next five years is as follows (in thousands):


	Year ending
	April 30,
2021	$	2,079
2022		2,829
2023		2,688
2024		2,629
2025		2,492
	$	12,717

Leases (Tables)

3 Months Ended

Aug. 01, 2020

Leases

Schedule of components of lease costs

The components of lease costs recorded in cost of sales for product sales and contract services and selling, general and administrative (“SG&A”) expense were as follows (in thousands):


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
Operating lease cost	$	1,190	$	1,120
Short term lease cost		110		237
Variable lease cost		1		89
Sublease income		(38)		(117)
Total lease costs, net	$	1,263	$	1,329

Schedule of supplemental lease information


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
	(In thousands)		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,400	$	1,389
Right-of-use assets obtained in exchange for new lease liabilities	$	5,883	$	10,561

Weighted average remaining lease term		46 months		37 months
Weighted average discount rate		3.4%		3.7%

Schedule of maturities of operating lease liabilities

Maturities of operating lease liabilities as of August 1, 2020 were as follows (in thousands):


2021	$	3,576
2022		4,653
2023		3,247
2024		2,615
2025		1,668
Thereafter		773
Total lease payments		16,532
Less: imputed interest		(1,710)
Total present value of operating lease liabilities	$	14,822

Accumulated Other Comprehensive Income and Reclassifications Adjustments (Tables)

3 Months Ended

Aug. 01, 2020

Accumulated Other Comprehensive Income and Reclassifications Adjustments

Schedule of components of accumulated other comprehensive loss

The components of accumulated other comprehensive income and adjustments are as follows (in thousands):


	Three Months Ended		Three Months Ended
	August 1,		July 27,
	2020		2019
Balance, net of $0 deferred taxes, as of April 30, 2020 and April 30, 2019	$	328	$	2
Changes in foreign currency translation adjustments		75		169
Unrealized losses, net of $4 of deferred taxes for the three months ended August 1, 2020		(52)		—
Balance, net of $4 and $0 deferred taxes, as of August 1, 2020 and July 27, 2019, respectively	$	351	$	171

Business Acquisitions (Tables)

3 Months Ended

Aug. 01, 2020

Business Acquisitions

Schedule of the fair value of the assets acquired and liabilities assumed at the acquisition date


	June 10,
	2019
Technology	$	14,950
Goodwill		6,340
In-process R&D		550
Inventory		334
Non-compete agreements		320
Other assets, net of liabilities assumed		(614)
Total net identified assets acquired	$	21,880

Fair value of consideration:
Cash	$	18,677
Holdback		1,250
Retention		250
Contingent consideration		1,703
Total	$	21,880

Schedule of unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred

The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2018 (in thousands):


	Three Months Ended
	July 27,		July 28,
	2019		2018
Revenue	$	87,138	$	79,313
Net income attributable to AeroVironment, Inc.	$	17,393	$	26,369

Organization and Significant Accounting Policies - Pulse Aerospace, LLC (Details)	Jun. 10, 2019
Organization and Significant Accounting Policies
Ownership interest acquired	100.00%

Organization and Significant Accounting Policies - Performance Obligations (Details)	Aug. 01, 2020 USD ($)
Organization and Significant Accounting Policies
Remaining performance obligations	$ 154,418,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-04-30
Organization and Significant Accounting Policies
Remaining performance obligations (as a percentage)	95.00%
Performance Obligations
Year of performance obligations	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30
Organization and Significant Accounting Policies
Remaining performance obligations (as a percentage)	5.00%
Performance Obligations
Year of performance obligations	1 year

Organization and Significant Accounting Policies - Contract Estimates (Details)	3 Months Ended
	Aug. 01, 2020 USD ($) contract	Jul. 27, 2019 USD ($) contract
Organization and Significant Accounting Policies
Material adjustment to any one contract \| $	$ 0	$ 0
Number of active contracts \| contract	1	1

Organization and Significant Accounting Policies - Revenue by Category (Details) - USD ($)	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Contract Liability
Disaggregation of revenue
Revenue	$ 1,973,000	$ 830,000
Domestic
Disaggregation of revenue
Revenue	53,430,000	38,808,000
International
Disaggregation of revenue
Revenue	34,020,000	48,103,000
U.S. government
Disaggregation of revenue
Revenue	53,796,000	49,134,000
Non-U.S. government
Disaggregation of revenue
Revenue	33,654,000	37,777,000
FFP
Disaggregation of revenue
Revenue	60,875,000	67,944,000
CPFF
Disaggregation of revenue
Revenue	26,569,000	18,264,000
T&M
Disaggregation of revenue
Revenue	6,000	703,000
Small UAS
Disaggregation of revenue
Revenue	56,202,000	66,745,000
TMS
Disaggregation of revenue
Revenue	9,534,000	5,587,000
HAPS
Disaggregation of revenue
Revenue	16,386,000	12,335,000
Other
Disaggregation of revenue
Revenue	$ 5,328,000	$ 2,244,000

Organization and Significant Accounting Policies - Government Contracts (Details) - shares	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Denominator for basic earnings per share:
Weighted average common shares	23,893,001	23,745,199
Dilutive effect of employee stock options, restricted stock and restricted stock units	293,227	324,734
Denominator for diluted earnings per share	24,186,228	24,069,933
Number of anti-dilutive shares	844	3,675

Discontinued Operations (Details)			3 Months Ended		12 Months Ended
Discontinued Operations (Details)	Feb. 22, 2019 USD ($)	Jun. 29, 2018 USD ($)	Aug. 01, 2020 USD ($) contract	Jul. 27, 2019 USD ($)	Apr. 30, 2020 USD ($)	Apr. 30, 2019 USD ($)
Discontinued operations
Amount of alleged damages	$ 6,500,000
EES Business \| Disposed of by sale
Discontinued operations
Cash consideration received		$ 31,994,000
Gain on sale of business		11,420,000
Amount of reduction to gain resulting from a working capital adjustment						$ 486,000
Working capital dispute					$ 922,000
Amounts recorded in the consolidated financial statements					$ 341,000
EES Business \| Disposed of by sale \| Other income (expense)
Statement of operations
Net Sales			$ 38,000	$ 444,000
Holdback \| Disposed of by sale
Discontinued operations
Cash consideration received		$ 6,500,000
Number of remaining contracts \| contract			2

Investments (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Short-term investments:
Total short-term investments	$ 71,334	$ 47,507
Long-term investments:
Equity Method Investments.	5,334	4,442
Total long-term investments	20,338	15,030
Investment in limited partnership fund
Long-term investments:
Equity Method Investments.	5,334	4,442
Available-for-sale securities
Short-term investments:
Total short-term investments	71,334	47,507
Long-term investments:
Total long-term investments	15,004	10,588
Available-for-sale securities \| Municipal securities
Short-term investments:
Total short-term investments	1,348	5,244
Long-term investments:
Total long-term investments		1,592
Available-for-sale securities \| U.S. government securities
Short-term investments:
Total short-term investments	69,986	33,771
Long-term investments:
Total long-term investments	$ 15,004	8,996
Available-for-sale securities \| Corporate bonds
Short-term investments:
Total short-term investments		$ 8,492

Investments - Available For Sale Securities (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Available-For-Sale Securities
Amortized Cost	$ 86,322	$ 58,032
Gross Unrealized Gains	17	70
Gross Unrealized Losses	(1)	(7)
Total	86,338	58,095
Municipal securities
Available-For-Sale Securities
Amortized Cost	1,345	6,807
Gross Unrealized Gains	3	29
Total	1,348	6,836
U.S. government securities
Available-For-Sale Securities
Amortized Cost	84,977	42,730
Gross Unrealized Gains	14	41
Gross Unrealized Losses	(1)	(4)
Total	$ 84,990	42,767
Corporate bonds
Available-For-Sale Securities
Amortized Cost		8,495
Gross Unrealized Losses		(3)
Total		$ 8,492

Investments - Available For Sale Securities - Amortized Cost and Fair Value (Details) $ in Thousands	Aug. 01, 2020 USD ($)
Amortized cost of available-for-sale securities by contractual maturity
Due within one year	$ 71,322
Due after one year through five years	15,000
Total	86,322
Fair value of available-for-sale securities by contractual maturity
Due within one year	71,334
Due after one year through five years	15,004
Total	$ 86,338

Fair Value Measurements - (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Fair Value Measurement
Available for sale securities	$ 86,338	$ 58,095
Recurring basis
Fair Value Measurement
Available for sale securities	86,338	58,095
Total	86,338	58,095
Recurring basis \| Significant other observable inputs (Level 2)
Fair Value Measurement
Available for sale securities	86,338	58,095
Total	$ 86,338	$ 58,095

Inventories, net (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020
Inventories, net
Raw materials	$ 15,136	$ 15,988
Work in process	12,958	10,340
Finished goods	26,640	29,439
Inventories, gross	54,734	55,767
Reserve for inventory excess and obsolescence	(9,204)	(10,232)
Inventories, net	$ 45,530	$ 45,535

Equity Method Investments (Details) ¥ in Thousands	3 Months Ended
Equity Method Investments (Details) ¥ in Thousands	Aug. 01, 2020 USD ($)	Jul. 27, 2019 USD ($)	Apr. 30, 2020 USD ($)	Dec. 04, 2019 USD ($)	Dec. 04, 2019 JPY (¥)	May 10, 2019 USD ($)	May 10, 2019 JPY (¥)	Apr. 30, 2019	Feb. 09, 2019 USD ($)	Feb. 09, 2019 JPY (¥)	Feb. 08, 2019	Jan. 29, 2019 USD ($)	Jan. 29, 2019 JPY (¥)	Apr. 17, 2018 USD ($)	Apr. 17, 2018 JPY (¥)	Dec. 27, 2017 USD ($)	Dec. 27, 2017 JPY (¥)
Equity Method Investments
Equity method investment loss, net of tax	$ (1,288,000)	$ (1,347,000)
Carrying value of investment	5,334,000		$ 4,442,000
HAPSMobile
Equity Method Investments
Ownership percentage		5.00%		7.00%	7.00%	10.00%	10.00%	10.00%	10.00%	10.00%	5.00%	5.00%	5.00%			5.00%	5.00%
Payments for purchase of interest				$ 4,982,000	¥ 540,050	$ 4,569,000	¥ 500,000		$ 5,671,000	¥ 632,800		$ 1,926,000	¥ 209,500	$ 1,407,000	¥ 150,000	$ 1,860,000	¥ 210,000
HAPSMobile \| Equity method investment loss, net of tax
Equity Method Investments
Equity method investment loss, net of tax	280,000	$ 0
HAPSMobile \| Equity method investment activity, net of tax
Equity Method Investments
Equity method investment loss, net of tax	(1,008,000)	$ (1,347,000)
HAPSMobile \| Other assets, long term
Equity Method Investments
Carrying value of investment	$ 9,522,000		$ 10,455,000
HAPSMobile \| SoftBank
Equity Method Investments
Ownership percentage	93.00%
HAPSMobile \| Aerovironment
Equity Method Investments
Ownership percentage	7.00%

Equity Method Investments - Investment in Limited Partnership Fund (Details) - USD ($) $ in Thousands		3 Months Ended
	Jul. 15, 2020	Aug. 01, 2020	Jul. 27, 2019	Apr. 30, 2020
Equity Method Investments
Equity method investment loss, net of tax		$ (1,288)	$ (1,347)
Provision for income taxes		1,207	2,133
Carrying value of investment		5,334		$ 4,442
Limited Partnership Fund
Equity Method Investments
Capital contributions	$ 1,173	3,880
HAPSMobile \| Equity method investment loss, net of tax
Equity Method Investments
Equity method investment loss, net of tax		$ 280	$ 0

Warranty Reserves (Details) - USD ($) $ in Thousands	3 Months Ended
Warranty Reserves (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Jul. 27, 2019
Warranty Reserves
Beginning balance	$ 2,015	$ 1,704
Warranty expense	451	549
Warranty costs settled	(435)	(540)
Ending balance	$ 2,031	$ 1,713

Intangibles, net - Intangibles included in other assets on the balance sheet (Details) - USD ($)	3 Months Ended		12 Months Ended
	Aug. 01, 2020	Jul. 27, 2019	Apr. 30, 2020
Intangibles, net
Intangibles, gross	$ 17,770,000		$ 17,770,000
Less accumulated amortization	(4,842,000)		(4,133,000)
Intangibles, net	12,928,000		$ 13,637,000
Amortization expense	$ 709,000	$ 552,000
Weighted average
Intangibles, net
Weighted average amortization period	4 years		4 years
Technology
Intangibles, net
Intangibles, gross	$ 14,950,000		$ 14,950,000
Licenses
Intangibles, net
Intangibles, gross	1,006,000		1,006,000
Customer relationships
Intangibles, net
Intangibles, gross	873,000		873,000
In-process research and development
Intangibles, net
Intangibles, gross	550,000		550,000
Non-compete agreements
Intangibles, net
Intangibles, gross	320,000		320,000
Trademarks and tradenames
Intangibles, net
Intangibles, gross	68,000		68,000
Other
Intangibles, net
Intangibles, gross	$ 3,000		$ 3,000

Intangibles, net (Details) - USD ($)	3 Months Ended		12 Months Ended
Intangibles, net (Details) - USD ($)	Aug. 01, 2020	Jul. 27, 2019	Apr. 30, 2020
Intangibles, net
Amortization expense	$ 709,000	$ 552,000
Weighted average
Intangibles, net
Weighted average amortization period	4 years		4 years

Intangibles, net - Estimated amortization expense (Details) $ in Thousands	Apr. 30, 2020 USD ($)
Estimated amortization expense
2021	$ 2,079
2022	2,829
2023	2,688
2024	2,629
2025	2,492
Total	$ 12,717

Goodwill (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Apr. 30, 2020	Jun. 10, 2019
Goodwill
Goodwill	$ 6,340	$ 6,340
Pulse Aerospace, LLC
Goodwill
Goodwill	$ 6,340	$ 6,340	$ 6,340

Leases (Details)	3 Months Ended
Leases (Details)	Aug. 01, 2020
Leases
Option to extend	true
Option to terminate	true
Option to terminate period (in years)	2 years
Minimum
Leases
Remaining lease terms (in years)	1 year
Maximum
Leases
Remaining lease terms (in years)	6 years
Option to extend period (in years)	10 years

Leases - Components of lease costs (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Components of lease costs
Operating lease cost	$ 1,190	$ 1,120
Short term lease cost	110	237
Variable lease cost	1	89
Sublease income	(38)	(117)
Total lease costs, net	$ 1,263	$ 1,329

Leases - Supplemental lease information (Details) - USD ($) $ in Thousands	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Leases
Cash paid for amounts included in the measurement of operating lease liabilities	$ 1,400	$ 1,389
Right-of-use assets obtained in exchange for new lease liabilities	$ 5,883	$ 10,561
Weighted average remaining lease term	46 months	37 months
Weighted average discount rate	3.40%	3.70%

Leases - Maturities of operating lease liabilities (Details) $ in Thousands	Aug. 01, 2020 USD ($)
Maturities of operating lease liabilities:
2021	$ 3,576
2022	4,653
2023	3,247
2024	2,615
2025	1,668
Thereafter	773
Total lease payments	16,532
Less: imputed interest	(1,710)
Total present value of operating lease liabilities	$ 14,822

Accumulated Other Comprehensive Income and Reclassifications Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Aug. 01, 2020	Jul. 27, 2019	Apr. 30, 2020	Apr. 30, 2019
Accumulated other comprehensive loss
Balance, net of $0 deferred taxes, as of April 30, 2020 and April 30, 2019	$ 328
Balance, net of $4 and $0 deferred taxes, as of August 1, 2020 and July 27, 2019, respectively	351		$ 328
Unrealized loss on investments, net of deferred tax expense	4
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss
Balance, net of $0 deferred taxes, as of April 30, 2020 and April 30, 2019	328	$ 2	2
Changes in foreign currency translation adjustments	75	169
Unrealized losses, net of $4 of deferred taxes for the three months ended August 1, 2020	(52)
Balance, net of $4 and $0 deferred taxes, as of August 1, 2020 and July 27, 2019, respectively	351	171	328	$ 2
Other comprehensive income, tax	4	$ 0	$ 0	$ 0
Unrealized loss on investments, net of deferred tax expense	$ 4

- Definition

Accumulated adjustment, net of tax, that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency from the functional currency of the reporting entity, net of reclassification of realized foreign currency translation gains or losses.

+ References + Details

Customer-Funded Research & Development (Details) - USD ($)	3 Months Ended
	Aug. 01, 2020	Jul. 27, 2019
Customer-Funded Research & Development
Revenue from customer funded research and development	$ 23,426,000	$ 15,120,000

Long-Term Incentive Awards (Details) - USD ($)	3 Months Ended				12 Months Ended
Long-Term Incentive Awards (Details) - USD ($)	Aug. 01, 2020	Jul. 27, 2019	Jul. 28, 2018	Jul. 29, 2017	Apr. 30, 2020
Stock Based Compensation
Stock based compensation expense	$ 0				$ 0
Fiscal 2021 LTIP \| Performance based restricted stock units
Stock Based Compensation
Stock based compensation expense	$ 91,000
Exercisable period from grant date	3 years
Fiscal 2021 LTIP \| Performance based restricted stock units \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)	100.00%
Fiscal 2021 LTIP \| Performance based restricted stock units \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)	50.00%
Fiscal 2021 LTIP \| Performance based restricted stock units \| 250% Vested
Stock Based Compensation
Vesting (as a percentage)	250.00%
Fiscal 2021 LTIP \| Performance based restricted stock units \| Maximum
Stock Based Compensation
Stock based compensation expense	$ 7,946,000
Fiscal 2020 LTIP \| Performance based restricted stock units
Stock Based Compensation
Stock based compensation expense	80,000	$ 131,000
Exercisable period from grant date		3 years
Fiscal 2020 LTIP \| Performance based restricted stock units \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)		100.00%
Fiscal 2020 LTIP \| Performance based restricted stock units \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)		50.00%
Fiscal 2020 LTIP \| Performance based restricted stock units \| 200% Vested
Stock Based Compensation
Vesting (as a percentage)		200.00%
Fiscal 2020 LTIP \| Performance based restricted stock units \| Maximum
Stock Based Compensation
Stock based compensation expense	4,263,000
Fiscal 2019 LTIP \| Performance based restricted stock units
Stock Based Compensation
Stock based compensation expense	75,000		$ 33,000
Exercisable period from grant date			3 years
Fiscal 2019 LTIP \| Performance based restricted stock units \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)			100.00%
Fiscal 2019 LTIP \| Performance based restricted stock units \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)			50.00%
Fiscal 2019 LTIP \| Performance based restricted stock units \| 200% Vested
Stock Based Compensation
Vesting (as a percentage)			200.00%
Fiscal 2019 LTIP \| Performance based restricted stock units \| Maximum
Stock Based Compensation
Stock based compensation expense	2,478,000
Fiscal 2018 LTIP \| Performance based restricted stock units
Stock Based Compensation
Stock based compensation expense	$ 0	$ 8,000
Exercisable period from grant date				3 years
Issue of fully-vested shares of common stock to settle	16,228
Fiscal 2021 LTIP, Fiscal 2020 LTIP and Fiscal 2019 LTIP
Stock Based Compensation
Stock based compensation expense	$ 1,853,000				$ 1,607,000

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Aug. 01, 2020	Jul. 27, 2019
Income taxes
Provision for income taxes	$ 1,207	$ 2,133
Effective tax benefit rate (as a percent)	9.60%	10.40%

Share Repurchase (Details) - USD ($)	3 Months Ended
Share Repurchase (Details) - USD ($)	Aug. 01, 2020	Jul. 27, 2019	Apr. 30, 2020	Sep. 30, 2015
Share Repurchase
Stock Repurchase Program, Authorized Amount				$ 25,000,000
Shares repurchased and retired	0	0
Share authorized for future repurchases	$ 21,200,000		$ 21,200,000

Related Party Transactions (Details) ¥ in Thousands	3 Months Ended
Related Party Transactions (Details) ¥ in Thousands	Aug. 01, 2020 USD ($)	Jul. 27, 2019 USD ($)	Apr. 30, 2020 USD ($)	Dec. 04, 2019 USD ($)	Dec. 04, 2019 JPY (¥)	May 10, 2019 USD ($)	May 10, 2019 JPY (¥)	Apr. 30, 2019	Feb. 09, 2019 USD ($)	Feb. 09, 2019 JPY (¥)	Feb. 08, 2019	Jan. 29, 2019 USD ($)	Jan. 29, 2019 JPY (¥)	Apr. 17, 2018 USD ($)	Apr. 17, 2018 JPY (¥)	Dec. 27, 2017 USD ($)	Dec. 27, 2017 JPY (¥)
Long-Term Incentive Awards
Revenue	$ 16,386,000	$ 12,335,000
Unbilled related party receivables	28,143,000		$ 15,779,000
Design and Development Agreement
Long-Term Incentive Awards
Maximum net value	166,108,000
HAPSMobile \| Design and Development Agreement
Long-Term Incentive Awards
Revenue	16,386,000	$ 12,335,000
Unbilled related party receivables	$ 28,143,000		$ 15,779,000
HAPSMobile
Long-Term Incentive Awards
Payments for purchase of interest				$ 4,982,000	¥ 540,050	$ 4,569,000	¥ 500,000		$ 5,671,000	¥ 632,800		$ 1,926,000	¥ 209,500	$ 1,407,000	¥ 150,000	$ 1,860,000	¥ 210,000
Ownership percentage		5.00%		7.00%	7.00%	10.00%	10.00%	10.00%	10.00%	10.00%	5.00%	5.00%	5.00%			5.00%	5.00%

Business Acquisitions (Details)		3 Months Ended			12 Months Ended
Business Acquisitions (Details)	Jun. 10, 2019 USD ($) item	Aug. 01, 2020 USD ($)	Jul. 27, 2019 USD ($)	Jul. 28, 2018 USD ($)	Apr. 30, 2020 USD ($)	Feb. 26, 2020 USD ($)
Business Acquisitions
Ownership interest acquired	100.00%
Fair value of contingent consideration						$ 2,500,000
Business Combinations, Assets Acquired and Liabilities Assumed at Acquisition Date
Goodwill		$ 6,340,000			$ 6,340,000
Fair value of consideration transferred:
Period of goodwill deduction		15 years
Supplemental Pro forma Information
Amortization of Intangible Assets		$ 709,000	$ 552,000
SG&A
Business Acquisitions
Business acquisitions gain					832,000
Supplemental Pro forma Information
Acquisition-related costs			341,000
Pulse Aerospace, LLC
Business Acquisitions
Ownership interest acquired	100.00%
Amount of cash less closing indebtedness and transaction costs	$ 20,650,000
Amount of retention to cover post closing indemnification claims	250,000
Amount of holdback	$ 1,250,000
Number of months after closing holdback will be paid	18 months
Number of research and development milestones \| item	2
Total milestone achievement	$ 5,000,000
Contingent consideration	1,703,000
Business Combinations, Assets Acquired and Liabilities Assumed at Acquisition Date
Inventory	334,000
Goodwill	6,340,000	$ 6,340,000			$ 6,340,000
Other assets and liabilities assumed	(614,000)
Total net identified assets acquired	21,880,000
Fair value of consideration transferred:
Cash	18,677,000
Holdback	1,250,000
Retention	$ 250,000
Supplemental Pro forma Information
Revenue			87,138,000	$ 79,313,000
Net income attributable to AeroVironment			$ 17,393,000	$ 26,369,000
Pulse Aerospace, LLC \| Discount rate
Business Acquisitions
Measurement input	4.5
Pulse Aerospace, LLC \| Minimum
Business Acquisitions
Each milestone achievement	$ 0
Pulse Aerospace, LLC \| Maximum
Business Acquisitions
Each milestone achievement	2,500,000
Pulse Aerospace, LLC \| Technology
Business Combinations, Assets Acquired and Liabilities Assumed at Acquisition Date
Intangible assets	14,950,000
Pulse Aerospace, LLC \| In-process research and development
Business Combinations, Assets Acquired and Liabilities Assumed at Acquisition Date
Intangible assets	550,000
Pulse Aerospace, LLC \| Non-compete agreements
Business Combinations, Assets Acquired and Liabilities Assumed at Acquisition Date
Intangible assets	$ 320,000