0001558370-22-002839 | 10-Q | XBRL Viewer

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Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Consolidated Statements of Comprehensive (Loss) Income
Unrealized (loss) gain on available-for-sale investments, deferred tax benefit	$ 1	$ 2	$ 1	$ 2

Debt - Long-term debt (Details) - USD ($) $ in Thousands	9 Months Ended
Debt - Long-term debt (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Long-term debt
Total debt	$ 192,500
Less current portion	10,000
Total long-term debt, less current portion	182,500
Less unamortized debt issuance costs - term loans	2,102
Total long-term debt, net of unamortized debt issuance costs - term loans	180,398	$ 187,512
Unamortized debt issuance costs - revolving credit facility	1,046
Term loans
Long-term debt
Total debt	$ 192,500
Revolving credit facility
Long-term debt
Current period interest rate	2.50%

Share Repurchase (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Share Repurchase (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021	Sep. 30, 2015
Share Repurchase
Stock Repurchase Program, Authorized Amount						$ 25,000
Shares repurchased and retired	0	0	0	0
Share authorized for future repurchases	$ 21,200		$ 21,200		$ 21,200

Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Consolidated Statements of Comprehensive (Loss) Income
Net (loss) income	$ (35)	$ 258	$ (11,397)	$ 12,373
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the three months ended January 29, 2022 and January 30, 2021, respectively; and $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively	(3)	5	(6)	(56)
Change in foreign currency translation adjustments	(1,754)		(3,771)	75
Total comprehensive (loss) income	(1,792)	263	(15,174)	12,392
Net loss (income) attributable to noncontrolling interest	45	(47)	(49)	12
Comprehensive (loss) income attributable to AeroVironment, Inc.	$ (1,747)	$ 216	$ (15,223)	$ 12,404

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income (loss) and other comprehensive income (loss), attributable to noncontrolling interests. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- Definition

Amount after tax of increase (decrease) in equity from transactions and other events and circumstances from net income and other comprehensive income. Excludes changes in equity resulting from investments by owners and distributions to owners.

+ References + Details

- 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

Business Acquisitions - Telerob (Details) € in Thousands, $ in Thousands			3 Months Ended		9 Months Ended
	May 03, 2021 USD ($)	May 03, 2021 EUR (€)	Jan. 29, 2022 USD ($)	Jan. 30, 2021 USD ($)	Jan. 29, 2022 USD ($)	Jan. 30, 2021 USD ($)	May 03, 2021 EUR (€)	Apr. 30, 2021 USD ($)
Business Acquisitions
Number of months until escrow will be release	30 months	30 months
Fair value of assets acquired:
Goodwill			$ 335,164		$ 335,164			$ 314,205
Supplemental Pro Forma Information (unaudited)
Revenue				$ 110,425
Net income (loss)				(4,945)
Telerob [Member]
Business Acquisitions
Total paid	$ 45,400	€ 37,455
Amount held in escrow	3,636						€ 3,000
Amount of indebtedness paid	9,468	7,811
Period to obtain target					36 months
Fair value of assets acquired:
Accounts receivable	1,045
Unbilled receivable	829
Prepaid and other current assets	314
Operating lease assets	(1,508)
Other assets	154
Other intangible asset	102
Goodwill	21,140
Total assets acquired	60,637
Fair value of liabilities assumed:
Accounts payable	1,136
Wages and related accruals	560
Current operating lease liabilities	361
Customer advances	1,243
Other current liabilities	3,310
Non-current operating lease liabilities	1,147
Other non-current liabilities	224
Deferred income taxes, net	5,617
Total liabilities assumed	13,598
Total identifiable net assets	47,039
Fair value of consideration transferred:
Cash consideration, net of cash acquired	46,150
Equity consideration	889
Total	47,039
Supplemental Pro Forma Information (unaudited)
Revenue			90,093	92,538	$ 313,110	$ 288,762
Net income (loss)			1,753	$ 1,187	(6,091)	$ 10,319
SG&A \| Telerob [Member]
Business Acquisitions
Acquisition-related costs			$ 113		$ 661
Technology \| Telerob [Member]
Fair value of assets acquired:
Intangible assets	11,500
Backlog \| Telerob [Member]
Fair value of assets acquired:
Intangible assets	2,400
Customer relationships \| Telerob [Member]
Fair value of assets acquired:
Intangible assets	5,000
In-process research and development \| Telerob [Member]
Fair value of assets acquired:
Inventories, net	15,074
Non-compete agreements \| Telerob [Member]
Fair value of assets acquired:
Property and equipment, net	1,571
Business Combination, Specific Revenue Targets Achieved In First Earnout Year [Member] \| Telerob [Member]
Business Acquisitions
Contingent consideration paid	$ 2,424	€ 2,000
Period to obtain target	12 months	12 months
Business Combination, Specific Revenue Targets Achieved Following The First Earnout Year [Member] \| Telerob [Member]
Business Acquisitions
Contingent consideration paid	$ 2,424	€ 2,000
Period to obtain target	12 months	12 months
Business Combination, Specific Awards Or Orders From US Military Are Achieved Prior To 36 Month Post Closing Period [Member] \| Telerob [Member]
Business Acquisitions
Contingent consideration paid	$ 2,424	€ 2,000
Period to obtain target	36 months	36 months

Share Repurchase

9 Months Ended

Jan. 29, 2022

Share Repurchase

Share Repurchase

16. 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 and nine months ended January 29, 2022 or January 30, 2021. As of January 29, 2022 and April 30, 2021, approximately $21,200,000 remained authorized for future repurchases under this program.

Discontinued Operations (Details) $ in Thousands				3 Months Ended	9 Months Ended	12 Months Ended
Discontinued Operations (Details) $ in Thousands	Dec. 16, 2021 USD ($)	Feb. 22, 2019 USD ($)	Jun. 29, 2018 USD ($)	Oct. 30, 2021 USD ($)	Jan. 29, 2022 USD ($) contract	Apr. 30, 2021 USD ($)
Other expense
Discontinued operations
Litigation reserve expense						$ 9,300
Discontinued Operations
Discontinued operations
Amount of alleged damages		$ 6,500
EES Business
Discontinued operations
Litigation reserve expense				$ 10,000
Amount of existing claims settled	$ 20,000
Settlement paid					$ 5,000
Payment period	24 months
EES Business \| Disposed of by sale
Discontinued operations
Cash consideration received			$ 31,994
Gain on sale of business			$ 11,420
Holdback \| Disposed of by sale
Discontinued operations
Cash consideration received					$ 6,500
Number of remaining contracts \| contract					2

Leases (Details)	9 Months Ended
Leases (Details)	Jan. 29, 2022
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

Business Acquisitions - Arcturus (Details) - USD ($)		3 Months Ended		9 Months Ended
Business Acquisitions - Arcturus (Details) - USD ($)	Feb. 19, 2021	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Jul. 30, 2021	Apr. 30, 2021
Fair value of assets acquired:
Goodwill		$ 335,164,000		$ 335,164,000			$ 314,205,000
Supplemental Pro Forma Information (unaudited)
Revenue			$ 110,425,000
Net income (loss)			$ (4,945,000)
Arcturus UAV Inc.
Business Acquisitions
Total	$ 422,602,000
Cash on hand	150,218,000
Fair market value of shares issued	72,384,000
Amount of representation and warranty insurance coverage	40,000,000
Acquisition-related costs		$ 41,000		1,533,000
Fair value of assets acquired:
Accounts receivable	6,050,000
Unbilled receivable	4,176,000
Inventories, net	21,701,000
Prepaid and other current assets	2,709,000
Property and equipment, net	38,739,000
Operating lease assets	11,429,000
Other assets	136,000
Goodwill	290,006,000
Total assets acquired	458,146,000
Fair value of liabilities assumed:
Accounts payable	3,085,000
Wages and related accruals	1,698,000
Customer advances	1,818,000
Other current liabilities	9,562,000
Operating lease liabilities	12,297,000
Other non-current liabilities	1,190,000
Deferred income taxes, net	5,869,000
Total liabilities assumed	35,519,000
Total identifiable net assets	422,627,000
Fair value of consideration transferred:
Cash consideration, net of cash acquired	350,243,000
Equity consideration	72,384,000
Total paid	422,627,000
Supplemental Pro Forma Information (unaudited)
Revenue					$ 339,115,000
Net income (loss)					$ 16,065,000
Arcturus UAV Inc. \| Technology
Fair value of assets acquired:
Intangible assets	20,500,000
Arcturus UAV Inc. \| Customer relationships
Fair value of assets acquired:
Intangible assets	62,700,000
Arcturus UAV Inc. \| Adjustment Escrow
Business Acquisitions
Amount held in escrow	6,500,000					$ 6,500,000
Amount of post-closing adjustments						$ 509,000
Arcturus UAV Inc. \| Indemnification Escrow
Business Acquisitions
Amount held in escrow	1,822,500
Term loans
Business Acquisitions
Fair market value of shares issued				50,000,000
Fair value of consideration transferred:
Equity consideration				$ 50,000,000
Term loans \| Arcturus UAV Inc.
Business Acquisitions
Amount of loan	$ 200,000,000

Pension

9 Months Ended

Jan. 29, 2022

Pension

Pension

19. Pension

As part of the Telerob acquisition, the Company acquired a small foreign-based defined benefit pension plan. The Rheinmetall-Zusatzversorgung (“RZV”) service plan covers three former employees based on individual contracts issued to the employees. No other employees are eligible to participate. The Company has reinsurance policies were taken out for participating former employees, which were pledged to the employees. The measurement date for the Company’s pension plan was May 3, 2021 in conjunction with the acquisition.

The table below includes the projected benefit obligation and fair value of plan assets as of May 3, 2021. The net projected benefit obligation (in thousands) is recorded in other non-current liabilities on the unaudited consolidated balance sheet.


Projected benefit obligation	$	(4,126)
Fair value of plan assets		3,951
Unfunded status of the plan	$	(175)

The projected benefit obligation includes assumptions of a discount rate of 1% and pension increase for in-payment benefits of 1.5% for May 3, 2021 and January 29, 2022. The accumulated benefit obligation is approximately equal to our projected benefit obligation. The plan assets consist of reinsurance policies for each of the three pension commitments. The reinsurance policies are fixed-income investments considered a level 2 fair value hierarchy based on observable inputs of the policy. The Company does not expect to make any contributions to the Plan in the fiscal year ending April 30, 2022. The Company assumed expected return on plan assets of 2.15% for May 3, 2021 and January 29, 2022.

Expected benefits payments as of May 3, 2021 (in thousands):


2022	$	182
2023		183
2024		183
2025		184
2026		184
2027-2031		920
Total expected benefit payments	$	1,836

Net periodic benefit cost (in thousands) is recorded in interest (expense) income, net.


	Three Months Ended		Nine Months Ended
	January 29,		January 29,
	2022		2022
	(In thousands)		(In thousands)
Expected return on plan assets	$	30	$	93
Interest cost		(14)		(44)
Foreign currency exchange rate changes		4		10
Net periodic benefit cost	$	20	$	59

- Definition

The entire disclosure for retirement benefits.

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-Section 50
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-URI http://asc.fasb.org/extlink&oid=123447040&loc=d3e1928-114920

+ Details

Leases (Tables)

9 Months Ended

Jan. 29, 2022

Leases

Schedule of components of lease costs


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
Operating lease cost	$	5,033	$	3,592
Short term lease cost		684		369
Variable lease cost		434		3
Sublease income		(132)		(48)
Total lease costs, net	$	6,019	$	3,916

Schedule of supplemental lease information


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
	(In thousands)		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	5,119	$	3,470
Right-of-use assets obtained in exchange for new lease liabilities	$	6,705	$	5,760

Weighted average remaining lease term		67 months		43 months
Weighted average discount rate		3.4%		3.4%

Schedule of maturities of operating lease liabilities

Maturities of operating lease liabilities as of January 29, 2022 were as follows (in thousands):


2022	$	1,301
2023		6,453
2024		5,750
2025		4,795
2026		3,472
Thereafter		8,025
Total lease payments		29,796
Less: imputed interest		(2,968)
Total present value of operating lease liabilities	$	26,828

Debt - (Details)			9 Months Ended
Debt - (Details)	Feb. 04, 2022	Feb. 19, 2021 USD ($) payment	Jan. 29, 2022
Revolving credit facility
Debt
Additional interest rate if default occurs (as a percentage)	2.00%
Revolving credit facility \| Minimum \| Fiscal quarter ended January 29, 2022 and April, 2022
Debt
Consolidated leverage ratio	4.00%
Revolving credit facility \| Minimum \| Fiscal quarters ending during the period from May 1, 2022 to October 31, 2022
Debt
Consolidated leverage ratio	3.50%
Revolving credit facility \| Minimum \| Fiscal quarter ending thereafter which is after October 31, 2022
Debt
Consolidated leverage ratio	3.00%
Revolving credit facility \| Maximum \| Fiscal quarter ended January 29, 2022 and April, 2022
Debt
Consolidated leverage ratio	1.00%
Revolving credit facility \| Maximum \| Fiscal quarters ending during the period from May 1, 2022 to October 31, 2022
Debt
Consolidated leverage ratio	1.00%
Revolving credit facility \| Maximum \| Fiscal quarter ending thereafter which is after October 31, 2022
Debt
Consolidated leverage ratio	1.00%
Revolving credit facility \| London Interbank Offered Rate (LIBOR)
Debt
Interest rate	0.00%
Revolving credit facility \| Base Rate
Debt
Interest rate	0.50%
Revolving credit facility \| Base Rate \| Minimum
Debt
Interest rate	0.50%
Revolving credit facility \| Base Rate \| Maximum
Debt
Interest rate	1.50%
Revolving credit facility \| SOFR
Debt
Interest rate	1.00%
SOFR adjustment	0.10%
Revolving credit facility \| SOFR \| Minimum
Debt
Interest rate	1.50%
Revolving credit facility \| SOFR \| Maximum
Debt
Interest rate	2.50%
Revolving credit facility \| Consolidated Leverage Ratio \| Minimum
Debt
Interest rate			3.00%
Commitment fees (as a percentage)	0.20%
Revolving credit facility \| Consolidated Leverage Ratio \| Maximum
Debt
Interest rate			1.00%
Commitment fees (as a percentage)	0.35%
Revolving credit facility \| Consolidated Fixed Charge Coverage Ratio \| Minimum
Debt
Interest rate			1.25%
Revolving credit facility \| Consolidated Fixed Charge Coverage Ratio \| Maximum
Debt
Interest rate			1.00%
Revolving credit facility \| Arcturus UAV Inc.
Debt
Term of loan		5 years
Amount of loan		$ 100,000,000
Revolving credit facility \| Arcturus UAV Inc. \| Maximum
Debt
Percentage of outstanding equity interests in foreign subsidiaries		65.00%
Standby Letters of Credit \| Arcturus UAV Inc.
Debt
Amount of sublimit		$ 10,000,000
Term loans \| Arcturus UAV Inc.
Debt
Amount of loan		$ 200,000,000
Term of amortization		5 years
Term loans \| Arcturus UAV Inc. \| Period One Through Four
Debt
Amount of annual required payment expressed as a percent of the outstanding obligation		5.00%
Term loans \| Arcturus UAV Inc. \| Period Five
Debt
Amount of annual required payment expressed as a percent of the outstanding obligation		80.00%
Number of quarterly payments \| payment		3
Amount of quarterly required payment expressed as a percentage of outstanding obligation		1.25%

Long-Term Incentive Awards (Details) - Performance based restricted stock units - USD ($)	3 Months Ended						9 Months Ended		12 Months Ended
	Jan. 29, 2022	Jul. 31, 2021	Jul. 30, 2021	Jan. 30, 2021	Jul. 31, 2020	Jul. 27, 2019	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Fiscal 2022 LTIP
Stock Based Compensation
Stock based compensation expense	$ 205,000			$ 0			$ 714,000	$ 0
Exercisable period from grant date			3 years
Fiscal 2022 LTIP \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)		100.00%
Fiscal 2022 LTIP \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)		50.00%
Fiscal 2022 LTIP \| 250% Vested
Stock Based Compensation
Vesting (as a percentage)		250.00%
Fiscal 2022 LTIP \| Maximum
Stock Based Compensation
Stock based compensation expense							12,704,000
Fiscal 2021 LTIP
Stock Based Compensation
Stock based compensation expense	(29,000)			126,000			(536,000)	564,000
Exercisable period from grant date					3 years
Fiscal 2021 LTIP \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)					100.00%
Fiscal 2021 LTIP \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)					50.00%
Fiscal 2021 LTIP \| 250% Vested
Stock Based Compensation
Vesting (as a percentage)					250.00%
Fiscal 2021 LTIP \| Maximum
Stock Based Compensation
Stock based compensation expense							6,931,000
Fiscal 2020 LTIP
Stock Based Compensation
Stock based compensation expense	(30,000)			(26,000,000)			(648,000)	319,000,000
Exercisable period from grant date						3 years
Fiscal 2020 LTIP \| 100% Vested
Stock Based Compensation
Vesting (as a percentage)						100.00%
Fiscal 2020 LTIP \| 50% Vested
Stock Based Compensation
Vesting (as a percentage)						50.00%
Fiscal 2020 LTIP \| 200% Vested
Stock Based Compensation
Vesting (as a percentage)						200.00%
Fiscal 2020 LTIP \| Maximum
Stock Based Compensation
Stock based compensation expense							3,758,000
Fiscal 2019 LTIP
Stock Based Compensation
Stock based compensation expense	$ 0			$ 27,000			$ 0	$ 291,000
Exercisable period from grant date									3 years
Issue of fully-vested shares of common stock to settle		12,101

Long-Term Incentive Awards

9 Months Ended

Jan. 29, 2022

Long-Term Incentive Awards.

Long-Term Incentive Awards

14. Long-Term Incentive Awards

During the three months ended July 31, 2021, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2022 LTIP”). Awards under the Fiscal 2022 LTIP consist of: (i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2022, July 2023 and July 2024, 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, 2024. 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 and nine months ended January 29, 2022, the Company recorded $205,000 and $714,000 of compensation expense related to the Fiscal 2022 LTIP. The Company recorded no compensation expense related to the Fiscal 2022 LTIP for the three and nine months ended January 30, 2021. At January 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2022 LTIP is $12,704,000.

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 and nine months ended January 29, 2022, the Company recorded a reversal of $(29,000) and $(536,000) of compensation expense related to the Fiscal 2021 LTIP, respectively. For the three and nine months ended January 30. 2021, the Company recorded $126,000 and $564,000 of compensation expense related to the Fiscal 2021 LTIP, respectively. At January 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $6,931,000.

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 and nine months ended January 29, 2022, the Company recorded a reversal of $(30,000) and $(648,000) of compensation expense related to the Fiscal 2020 LTIP, respectively. For the three months ended January 30, 2021, the Company recorded a reversal of

$(26,000) of compensation expense related to the Fiscal 2020 LTIP, and for the nine months ended January 30, 2021, the Company recorded $319,000 of compensation expense related to the Fiscal 2020 LTIP. At January 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2020 LTIP is $3,758,000.

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. During the three months ended July 31, 2021, the Company issued a total of 12,101 fully-vested shares of common stock to settle the PRSUs in the Fiscal 2019 LTIP. For the three and nine months ended January 29, 2022, the Company recorded no compensation expense. For the three and nine months ended January 30, 2021, the Company recorded $27,000 and $291,000 of compensation expense related to the Fiscal 2019 LTIP, 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.

Goodwill (Tables)

9 Months Ended

Jan. 29, 2022

Goodwill.

Schedule of the changes in goodwill balances

The following table presents the changes in the Company’s goodwill balance (in thousands):


	Small UAS		TMS		MUAS		All other		Total
Balance at April 30, 2021	$	6,340	$	—	$	288,611	$	19,254	$	314,205
Additions to goodwill		—		—		1,395		19,564		20,959
Impairment of goodwill		—		—		—		—		—
Balance at January 29, 2022	$	6,340	$	-	$	290,006	$	38,818	$	335,164

Inventories, net (Tables)

9 Months Ended

Jan. 29, 2022

Inventories, net

Schedule of inventories, net

Inventories consist of the following (in thousands):


	January 29,		April 30,
	2022		2021


Raw materials	$	37,898	$	23,997
Work in process		24,695		13,825
Finished goods		39,939		44,113
Inventories, gross		102,532		81,935
Reserve for inventory excess and obsolescence		(12,916)		(10,289)
Inventories, net	$	89,616	$	71,646

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Long-Term Incentive Awards
Revenue	$ 9,543	$ 7,480	$ 30,237	$ 35,318
Unbilled related party receivables	5,944		5,944		$ 544
HAPSMobile \| Design and Development Agreement
Long-Term Incentive Awards
Maximum net value	185,202		185,202
Revenue	9,543		30,237
Unbilled related party receivables	5,944		5,944		$ 544
SoftBank \| Design and Development Agreement
Long-Term Incentive Awards
Maximum net value	$ 51,200		$ 51,200
Revenue		$ 7,480		$ 35,318

- Definition

For an unclassified balance sheet, amounts due from related parties including affiliates, employees, joint ventures, officers and stockholders, immediate families thereof, and pension funds.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
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+ Details

- Definition

Amount of revenue, fees and commissions earned from transactions between (a) a parent company and its subsidiaries; (b) subsidiaries of a common parent; (c) an entity and trusts for the benefit of employees, for example, but not limited to, pension and profit-sharing trusts that are managed by or under the trusteeship of the entity's management; (d) an entity and its principal, owners, management, or members of their immediate families; and (e) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Consolidated Statements of Cash Flows
Unrealized (loss) gain on available-for-sale investments, deferred tax benefit	$ 1	$ 2	$ 1	$ 2

Pension - Net benefit income (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Jan. 29, 2022	Jan. 29, 2022
Pension
Expected return on plan assets	$ 30	$ 93
Interest cost	(14)	(44)
Foreign currency exchange rate changes	4	10
Net periodic benefit cost	$ 20	$ 59

Organization and Significant Accounting Policies - Contract Estimates (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022 USD ($) contract	Jan. 30, 2021 USD ($) contract	Jan. 29, 2022 USD ($) contract	Jan. 30, 2021 USD ($) contract
Organization and Significant Accounting Policies
Material adjustment to any one contract \| $	$ 0	$ 0	$ 0	$ 0
Number of active contracts \| contract	1	1	1	1

Pension - Expected benefits paid (Details) $ in Thousands	May 03, 2021 USD ($)
Pension
2022	$ 182
2023	183
2024	183
2025	184
2026	184
2027-2031	920
Total expected benefit payments	$ 1,836

Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Consolidated Statements of Operations
Related party revenue	$ 9,543	$ 7,480	$ 30,237	$ 35,318

- Definition

+ References

+ Details

Fair Value Measurements (Tables)

9 Months Ended

Jan. 29, 2022

Fair Value Measurements

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

The Company’s financial assets measured at fair value on a recurring basis at January 29, 2022, 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	$	—	$	3,969	$	—	$	3,969
Contingently returnable consideration		—		—		216		216
Total	$	—	$	3,969	$	216	$	4,185

The Company’s financial liabilities measured at fair value on a recurring basis at January 29, 2022, 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
Contingent consideration	$	—	$	—	$	889	$	889
Total	$	—	$	—	$	889	$	889

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2021, 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	$	—	$	36,959	$	—	$	36,959
Contingently returnable consideration		—		—		479		479
Total	$	—	$	36,959	$	479	$	37,438

Schedule of reconciliation between beginning and ending balances of items measured at fair value on recurring basis that used significant unobservable inputs (Level 3)

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value

on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):


	Fair Value		Fair Value
	Measurements Using		Measurements Using
	Significant		Significant
	Unobservable Inputs		Unobservable Inputs
		Assets		Liabilities
Description	(Level 3)		(Level 3)
Balance at May 1, 2021	$	479	$	—
Business acquisition		—		889
Transfers to Level 3		—		—
Total losses (realized or unrealized)
Included in selling, general and administrative		263		—
Settlements		—		—
Balance at January 29, 2022	$	216	$	889
The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at January 29, 2022	$	—	$	—

Fair Value Measurements - Reconciliation (Details) - Significant unobservable inputs (Level 3) $ in Thousands	9 Months Ended
	Jan. 29, 2022 USD ($)
Reconciliation between beginning and ending balances of items measured at fair value on recurring basis
Balance at the beginning of the period	$ 479
Total (gains) losses (realized or unrealized)	$ 263
Included in selling, general and administrative	us-gaap:GeneralAndAdministrativeExpense
Balance at the end of the period	$ 216
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Business acquisition	889
Settlements	$ 889

Related Party Transactions

9 Months Ended

Jan. 29, 2022

Related Party Transactions

Related Party Transactions

17. 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. Under the DDA and related efforts with HAPSMobile, the Company designed and built prototype solar powered high altitude aircraft and ground control stations for HAPSMobile and conducted low altitude and high altitude flight tests of the prototype aircraft on a best efforts basis, up to a maximum net value of $185,202,000. The Company will continue the development of Solar HAPS with Softbank under the MDDA. Upon the execution of the MDDA, SoftBank issued the first order under the MDDA, which has a maximum value of approximately $51,200,000.

The Company recorded revenue under both the MDDA and DDA of $9,543,000 and $30,237,000 for the three and nine months ended January 29, 2022, respectively. The Company recorded revenue under the DDA and preliminary design agreements between the Company and SoftBank of $7,480,000 and $35,318,000 for the three and nine months ended January 30, 2021, respectively. At January 29, 2022 and April 30, 2021, the Company had unbilled related party

receivables from HAPSMobile of $5,944,000 and $544,000 recorded in unbilled receivables and retentions on the consolidated balance sheets, respectively. Refer to Note 6—Equity Method Investments for further details.

Customer-Funded Research & Development

9 Months Ended

Jan. 29, 2022

Customer-Funded Research & Development

Customer-Funded Research & Development

13. 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 is recognized in accordance with Topic 606 over time as costs are incurred. Revenue from customer-funded R&D was approximately $20,451,000 and $56,537,000 for the three and nine months ended January 29, 2022, respectively. Revenue from customer-funded R&D was approximately $14,811,000 and $58,979,000 for the three and nine months ended January 30, 2021, respectively.

Pension - Projected benefit obligation and fair value of plan assets (Details) $ in Thousands	May 03, 2021 USD ($)
Pension
Defined Benefit Plan, Funding Status [Extensible List]	us-gaap:UnderfundedPlanMember
Pension Plan
Pension
Projected benefit obligation	$ (4,126)
Fair value of plan assets	3,951
Unfunded status of plan	$ (175)

- Definition

Amount of asset segregated and restricted to provide benefit under defined benefit plan. Asset includes, but is not limited to, stock, bond, other investment, earning from investment, and contribution by employer and employee.

+ References + Details

- Definition

Indicates status of funding for defined benefit plan designed to provide retirement benefits.

+ References

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+ Details

Segments (Tables)

9 Months Ended

Jan. 29, 2022

Segments

Schedule of segment results


	Three Months Ended January 29, 2022
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	24,366	$	18,603	$	21,168	$	25,956	$	90,093
Gross margin		8,656		5,209		335		7,236		21,436

Income (loss) from operations		(3,606)		(1,289)		(8,623)		(608)		(14,126)
Acquisition-related expenses		99		54		41		174		368
Amortization of acquired intangible assets and other purchase accounting adjustments		707		-		5,641		3,035		9,383
Adjusted income (loss) from operations	$	(2,800)	$	(1,235)	$	(2,941)	$	2,601	$	(4,375)


	Three Months Ended January 30, 2021
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	50,536	$	19,598	$	-	$	8,648	$	78,782
Gross margin		22,017		4,889		-		1,735		28,641

Income (loss) from operations		6,702		(2,314)		-		(5,030)		(642)
Acquisition-related expenses		1,408		773		477		750		3,408
Amortization of acquired intangible assets and other purchase accounting adjustments		661		-		-		1		662
Adjusted income (loss) from operations	$	8,771	$	(1,541)	$	477	$	(4,279)	$	3,428


	Nine Months Ended January 29, 2022
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	119,004	$	56,197	$	70,072	$	67,837	$	313,110
Gross margin		53,330		17,420		5,739		16,125		92,614

Income (loss) from operations		11,729		(1,705)		(22,004)		(10,920)		(22,900)
Acquisition-related expenses		819		468		1,533		1,649		4,469
Amortization of acquired intangible assets and other purchase accounting adjustments		2,121		-		17,190		9,526		28,837
Adjusted income (loss) from operations	$	14,669	$	(1,237)	$	(3,281)	$	255	$	10,406


	Nine Months Ended January 30, 2021
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	165,003	$	48,093	$	-	$	45,801	$	258,897
Gross margin		79,195		12,752		-		12,956		104,903

Income (loss) from operations		37,285		(7,454)		-		(4,278)		25,553
Acquisition-related expenses		1,579		867		535		841		3,822
Amortization of acquired intangible assets and other purchase accounting adjustments		2,037		-		-		-		2,037
Adjusted income (loss) from operations	$	40,901	$	(6,587)	$	535	$	(3,437)	$	31,412

Schedule of identifiable assets by segment


	January 29, 2022
	Small UAS		TMS		MUAS		All other		Corporate		Total
Identifiable assets	$	85,119	$	89,497	$	388,833	$	104,889	$	236,925	$	905,263


	April 30, 2021
	Small UAS		TMS		MUAS		All other		Corporate		Total
Identifiable assets	$	113,072	$	71,707	$	402,037	$	39,581	$	302,169	$	928,566

Intangibles, net (Tables)

9 Months Ended

Jan. 29, 2022

Intangibles, net

Schedule of components of intangibles

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


	January 29,		April 30,
	2022		2021
Technology	$	57,495	$	46,850
Licenses		1,008		1,008
Customer relationships		72,702		68,073
Backlog		2,223		—
In-process research and development		550		550
Non-compete agreements		320		320
Trademarks and tradenames		68		68
Other		105		3
Intangibles, gross		134,471		116,872
Less accumulated amortization		(30,646)		(10,604)
Intangibles, net	$	103,825	$	106,268

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,
2022	$	7,565
2023		27,719
2024		26,870
2025		18,156
2026		13,114
	$	93,424

Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Segments (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Segment Reporting Information [Line Items]
Gross margin	$ 21,436	$ 28,641	$ 92,614	$ 104,903
Income (loss) from operations	(14,126)	(642)	(22,900)	25,553
Total assets	905,263		905,263		$ 928,566
Product segments
Segment Reporting Information [Line Items]
Revenue	90,093	78,782	313,110	258,897
Gross margin	21,436	28,641	92,614	104,903
Income (loss) from operations	(14,126)	(642)	(22,900)	25,553
Acquisition-related costs	368	3,408	4,469	3,822
Amortization of acquired intangible assets and other purchase accounting adjustments	9,383	662	28,837	2,037
Adjusted income (loss) from operations	(4,375)	3,428	10,406	31,412
Total assets	905,263		905,263		928,566
Small UAS \| Product segments
Segment Reporting Information [Line Items]
Revenue	24,366	50,536	119,004	165,003
Gross margin	8,656	22,017	53,330	79,195
Income (loss) from operations	(3,606)	6,702	11,729	37,285
Acquisition-related costs	99	1,408	819	1,579
Amortization of acquired intangible assets and other purchase accounting adjustments	707	661	2,121	2,037
Adjusted income (loss) from operations	(2,800)	8,771	14,669	40,901
Total assets	85,119		85,119		113,072
TMS \| Product segments
Segment Reporting Information [Line Items]
Revenue	18,603	19,598	56,197	48,093
Gross margin	5,209	4,889	17,420	12,752
Income (loss) from operations	(1,289)	(2,314)	(1,705)	(7,454)
Acquisition-related costs	54	773	468	867
Adjusted income (loss) from operations	(1,235)	(1,541)	(1,237)	(6,587)
Total assets	89,497		89,497		71,707
MUAS \| Product segments
Segment Reporting Information [Line Items]
Revenue	21,168		70,072
Gross margin	335		5,739
Income (loss) from operations	(8,623)		(22,004)
Acquisition-related costs	41	477	1,533	535
Amortization of acquired intangible assets and other purchase accounting adjustments	5,641		17,190
Adjusted income (loss) from operations	(2,941)	477	(3,281)	535
Total assets	388,833		388,833		402,037
All other \| Product segments
Segment Reporting Information [Line Items]
Revenue	25,956	8,648	67,837	45,801
Gross margin	7,236	1,735	16,125	12,956
Income (loss) from operations	(608)	(5,030)	(10,920)	(4,278)
Acquisition-related costs	174	750	1,649	841
Amortization of acquired intangible assets and other purchase accounting adjustments	3,035	1	9,526
Adjusted income (loss) from operations	2,601	$ (4,279)	255	$ (3,437)
Total assets	104,889		104,889		39,581
Corporate \| Product segments
Segment Reporting Information [Line Items]
Total assets	$ 236,925		$ 236,925		$ 302,169

Goodwill

9 Months Ended

Jan. 29, 2022

Goodwill.

Goodwill

9. Goodwill

The following table presents the changes in the Company’s goodwill balance (in thousands):


	Small UAS		TMS		MUAS		All other		Total
Balance at April 30, 2021	$	6,340	$	—	$	288,611	$	19,254	$	314,205
Additions to goodwill		—		—		1,395		19,564		20,959
Impairment of goodwill		—		—		—		—		—
Balance at January 29, 2022	$	6,340	$	-	$	290,006	$	38,818	$	335,164

The goodwill balance at April 30, 2021 is attributable to the acquisitions of Pulse, ISG, and Arcturus acquisitions. The MUAS addition to goodwill relates to measurement period adjustments for pre-acquisition tax returns. The addition to

All other goodwill is attributable to the Telerob acquisition, which was recorded in Euros and translated to dollars at each reporting date. Refer to Note 18—Business Acquisitions for further details.

Equity Methods Investments - Investment in Limited Partnership Fund (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Equity Method Investments
Equity method investment income (loss), net of tax	$ 171	$ (81)	$ 163	$ (10,891)
Carrying value of investment	12,388		12,388		$ 7,168
Limited Partnership Fund
Equity Method Investments
Capital contributions			2,377	2,150
Limited Partnership Fund \| Equity method investment loss, net of tax
Equity Method Investments
Equity method investment income (loss), net of tax	478	81	2,843	361
Income tax expense from equity method investments	108		636
Limited Partnership Fund \| Long term investments
Equity Method Investments
Carrying value of investment	$ 12,388		$ 12,388		$ 7,168
HAPSMobile \| Equity method investment loss, net of tax
Equity Method Investments
Equity method investment income (loss), net of tax		$ 0		$ (10,810)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021
Operating activities
Net (loss) income	$ (11,397)	$ 12,373
Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:
Depreciation and amortization	47,437	8,650
(Income) loss from equity method investments, net	(799)	10,891
Amortization of debt issuance costs	386
Realized gain from sale of available-for-sale investments		(11)
Provision for doubtful accounts	(20)	(145)
Other non-cash expense (income)	440	(473)
Non-cash lease expense	5,033	3,592
Loss on foreign currency transactions	34	1
Deferred income taxes	(1,195)	(897)
Stock-based compensation	3,957	4,754
Loss on disposal of property and equipment	5,063	2
Amortization of debt securities	117	143
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	21,901	47,184
Unbilled receivables and retentions	(25,597)	14,753
Inventories	(21,590)	(7,569)
Income taxes receivable	(26,208)
Prepaid expenses and other assets	1,789	(1,622)
Accounts payable	(10,720)	(3,346)
Other liabilities	(11,807)	(9,318)
Net cash (used in) provided by operating activities	(23,176)	78,962
Investing activities
Acquisition of property and equipment	(17,064)	(8,472)
Equity method investments	(6,884)	(2,150)
Business acquisitions, net of cash acquired	(46,150)
Redemptions of available-for-sale investments	35,851	130,066
Purchases of available-for-sale investments	(2,987)	(125,644)
Other	225
Net cash used in investing activities	(37,009)	(6,200)
Financing activities
Principal payments of loan	(7,500)
Holdback and retention payments for business acquisition	(5,991)	(1,492)
Tax withholding payment related to net settlement of equity awards	(1,176)	(1,955)
Exercise of stock options	2,776	86
Other	(23)
Net cash used in financing activities	(11,914)	(3,361)
Effects of currency translation on cash and cash equivalents	(613)
Net (decrease) increase in cash, cash equivalents, and restricted cash	(72,712)	69,401
Cash, cash equivalents and restricted cash at beginning of period	157,063	255,142
Cash, cash equivalents and restricted cash at end of period	84,351	324,543
Cash paid, net during the period for:
Income taxes	1,923	2,364
Interest	3,465
Non-cash activities
Unrealized loss on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively	6	56
Change in foreign currency translation adjustments	(3,771)	75
Issuances of inventory to property and equipment, ISR in-service assets	16,680
Acquisitions of property and equipment included in accounts payable	$ 626	$ 746

Income Taxes

9 Months Ended

Jan. 29, 2022

Income Taxes

Income Taxes

15. Income Taxes

For the three and nine months ended January 29, 2022, the Company recorded a benefit from income taxes of $(15,396,000) and $(25,864,000), respectively, yielding effective tax rates of 98.7% and 69.1%, respectively. For the three and nine months ended January 30, 2021, the Company recorded a (benefit from) and provision for income taxes of $(924,000) and $2,774,000, respectively, yielding effective tax rates of 157.9% and 10.7%, respectively. The variance from statutory rates for the three and nine months ended January 29, 2022 was primarily due to federal R&D credits 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 and nine months ended January 30, 2021 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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Investments - Available For Sale Securities - Amortized Cost and Fair Value (Details) $ in Thousands	Jan. 29, 2022 USD ($)
Amortized cost of available-for-sale securities by contractual maturity
Due within one year	$ 3,972
Total	3,972
Fair value of available-for-sale securities by contractual maturity
Due within one year	3,969
Total	$ 3,969

Organization and Significant Accounting Policies (Policies)

9 Months Ended

Jan. 29, 2022

Organization and Significant Accounting Policies

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 and nine months ended January 29, 2022 are not necessarily indicative of the results for the full year ending April 30, 2022. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2021, 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 unaudited consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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

On February 19, 2021, the Company closed its acquisition of Arcturus UAV, Inc. (“Arcturus”), a California corporation, pursuant to a Stock Purchase Agreement (the “Arcturus Purchase Agreement”) with Arcturus and each of the shareholders and other equity interest holders of Arcturus (collectively, the “Arcturus Sellers”), purchasing 100% of the issued and outstanding equity interests of Arcturus (the “Arcturus Acquisition”). The assets, liabilities and operating results of Arcturus have been included in the Company’s unaudited consolidated financial statements. Refer to Note 18—Business Acquisitions for further details.

On February 23, 2021, the Company purchased certain assets of, and assumed certain liabilities of, the Intelligent Systems Group business segment (“ISG”) of Progeny Systems Corporation, a Virginia corporation (the “ISG Seller”), pursuant to the terms of an Asset Purchase Agreement (the “ISG Purchase Agreement”) of the same date, by and among the Company, ISG Seller and the sole shareholder of ISG Seller (the “Beneficial Owner,” and such acquisition of ISG, the “ISG Acquisition”). The assets, liabilities and operating results of ISG have been included in the Company’s unaudited consolidated financial statements. Refer to Note 18—Business Acquisitions for further details.

On May 3, 2021, the Company closed its acquisition of Telerob Gesellschaft für Fernhantierungstechnik mbH, a German company based in Ostfildern (near Stuttgart), Germany (“Telerob GmbH”), including Telerob GmbH’s wholly-owned

subsidiary, Telerob USA, Inc. (“Telerob USA,” and collectively with Telerob GmbH, “Telerob”) pursuant to its previously announced Share Purchase Agreement (the “Telerob Purchase Agreement”) with Unmanned Systems Investments GmbH, a German limited liability company incorporated under the laws of Germany (the “Telerob Seller”), and each of the unit holders of the Seller (collectively, the “Telerob Shareholders”), to purchase 100% of the issued and outstanding shares of Telerob Seller’s wholly-owned subsidiary Telerob GmbH (the “Telerob Acquisition”). The assets, liabilities and operating results of Telerob GmbH have been included in the Company’s unaudited consolidated financial statements. Refer to Note 18—Business Acquisitions for further details.

On September 15, 2021, the Company entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”) with Toygun Savunma Sanayi ve Havacilik Anonim Sirketi (“Toygun”) whereby the Company sold 35% of the common shares of Altoy to Toygun. As a result of the sale, the Company decreased its interest in Altoy from 85% to 50%. The Company is considered to still have control of Altoy and therefore consolidates Altoy into the consolidated financial statements of the Company as of January 29, 2022. Under the terms of the Purchase Agreement, the Company is expected to sell additional shares to Toygun during the fiscal year ending April 30, 2023 at which point the Company is expected to no longer control, and therefore, expected to no longer consolidate Altoy in the Company’s consolidated financial statements. At that time, the Company is expected to account for its investment in Altoy as an equity method investment and record its proportion of any gains or losses of Altoy in equity method investments, net of tax.

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, Revenue from Contracts with Customers (“ASC 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. 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 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. Contract services revenue, including revenue from intelligence, surveillance, and reconnaissance (“ISR”) services, is recognized over time as services are rendered. In accordance with ASC Topic 606, the Company elected the right to invoice practical expedient in which if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, such as flight hours for ISR services, the entity may recognize revenue in the amount to which the entity has a right to invoice. 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, medium UAS (“MUAS”) and UGV product sales revenue is composed of revenue recognized on contracts for the delivery of small UAS, MUAS and UGV systems and spare parts, respectively. 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.

Performance obligations satisfied over time accounted for 66% and 58% of revenue during the three and nine months ended January 29, 2022, respectively. Performance obligations satisfied over time accounted for 39% of revenue during the three and nine months ended January 30, 2021. Performance obligations satisfied at a point in time accounted for 34% and 42% of revenue during the three and nine months ended January 29, 2022, respectively. Performance obligations satisfied at a point in time accounted for 61% of revenue during the three and nine months ended January 30, 2021.

On January 29, 2022, the Company had approximately $226,318,000 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 48% of the remaining performance obligations as revenue in fiscal 2022 and the remaining 52% in fiscal 2023.

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. Based on experience 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 or nine month periods ended January 29, 2022 and January 30, 2021. No adjustment on any one contract was material to the Company’s unaudited consolidated financial statements for the three or nine month periods ended January 29, 2022 and the three or nine month periods ended January 30, 2021.

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				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by major product line/program	2022		2021		2022		2021
Small UAS	$	24,366	$	50,536	$	119,004	$	165,003
TMS		18,603		19,598		56,197		48,093
MUAS		21,168		—		70,072		—
Other		25,956		8,648		67,837		45,801
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by contract type	2022		2021		2022		2021
FFP	$	66,639	$	61,230	$	245,798	$	190,530
CPFF		21,788		17,530		62,499		68,329
T&M		1,666		22		4,813		38
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

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				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by customer category	2022		2021		2022		2021
U.S. government	$	60,956	$	60,633	$	204,107	$	170,023
Non-U.S. government		29,137		18,149		109,003		88,874
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by geographic location	2022		2021		2022		2021
Domestic	$	56,480	$	51,062	$	193,531	$	150,890
International		33,613		27,720		119,579		108,007
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

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 nine month period ended January 29, 2022 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 and nine month periods ended January 29, 2022 that was included in contract liability balances at the beginning of April 30, 2021 was $1,521,000 and $2,409,000, and revenue recognized for the three and nine month periods ended January 30, 2021 that was included in contract liability balances at the beginning of April 30, 2020 was $0 and $5,423,000.

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 assess performance. As of January 29, 2022, the Company’s CODM, collectively the Chief Executive Officer and Chief Operations Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for research and development (“R&D”). Accordingly, the Company identifies three reportable segments. Refer to Note 20—Segments for further details.

Subsequent to January 29, 2022, the Company's Chief Executive Officer functions as the CODM, concurrent with the stepping down of the Chief Operations Officer. The Company does not expect any changes to its reportable segments.

Recently Adopted Accounting Standards

Effective May 1, 2021, the Company adopted 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 including removing the requirement to limit income tax expense (benefit) in an interim period to the full year projected amounts. The Company adopted ASU 2019-12 using the prospective method, applying the new guidance accounting for income taxes after adoption. The adoption of ASU 2019-12 did not have an impact on the Company’s consolidated financial statements.

Restricted Cash

The Company classifies cash accounts which are not available for general use as restricted cash. Pursuant to the terms of the Arcturus Purchase Agreement, the Company maintains escrow accounts to address final purchase price adjustments post-Arcturus Closing, if any and to address Arcturus UAV’s and/or the Sellers’ indemnification obligations. The restricted funds in the escrow account are recorded in other assets on the consolidated balance sheet. As of January 29, 2022 and April 30, 2021 restricted cash was $1,823,000 and $8,322,000, respectively.

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.

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. At January 29, 2022 and April 30, 2021, the Company had no reserve for incurred cost claim audits.

Earnings (Loss) Per Share

Earnings (Loss) Per Share

Basic earnings (loss) 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				Nine Months Ended
	January 29, 2022		January 30, 2021		January 29, 2022		January 30, 2021
Net income (loss) attributable to AeroVironment, Inc.	$	10	$	211	$	(11,446)	$	12,385
Denominator for basic earnings (loss) per share:
Weighted average common shares		24,710,991		23,942,782		24,657,846		23,924,017
Dilutive effect of employee stock options, restricted stock and restricted stock units		168,652		318,092		—		292,354
Denominator for diluted earnings (loss) per share		24,879,643		24,260,874		24,657,846		24,216,371

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 20,554 for the three months ended January 29, 2022. Due to the net loss for the nine months ended January 29, 2022, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive. Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive 237,909 for the nine months ended January 29, 2022. Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 0 and 24 for the three and nine months ended January 30, 2021, respectively.

Recently Issued Accounting Standards

Accounting pronouncements issued but not effective until after January 29, 2022 are not expected to be applicable to the Company.

Organization and Significant Accounting Policies - Government Contracts (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Numerator for basic earnings per share:
Net income (loss) attributable to AeroVironment, Inc.	$ 10	$ 211	$ (11,446)	$ 12,385
Denominator for basic earnings per share:
Weighted average common shares	24,710,991	23,942,782	24,657,846	23,924,017
Dilutive effect of employee stock options, restricted stock and restricted stock units	168,652	318,092		292,354
Denominator for diluted earnings (loss) per share	24,879,643	24,260,874	24,657,846	24,216,371
Number of shares reserved for issuance	0		0
Number of anti-dilutive shares	20,554	0	237,909	24

- Definition

Amount after tax of income (loss) from continuing operations attributable to the parent.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 810
-SubTopic 10
-Section 45
-Paragraph 18
-URI http://asc.fasb.org/extlink&oid=123454820&loc=SL4613673-111683

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 50
-Paragraph 1
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=124432515&loc=d3e3550-109257

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 60B
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=125511455&loc=SL5780133-109256

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22595-107794

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03.13)
-URI http://asc.fasb.org/extlink&oid=123367319&loc=SL114868664-224227

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 230
-SubTopic 10
-Section 45
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=123570139&loc=d3e3602-108585

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=124431687&loc=d3e22583-107794

+ Details

Fair Value Measurements

9 Months Ended

Jan. 29, 2022

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 January 29, 2022, 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	$	—	$	3,969	$	—	$	3,969
Contingently returnable consideration		—		—		216		216
Total	$	—	$	3,969	$	216	$	4,185

The Company’s financial liabilities measured at fair value on a recurring basis at January 29, 2022, 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
Contingent consideration	$	—	$	—	$	889	$	889
Total	$	—	$	—	$	889	$	889

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2021, 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	$	—	$	36,959	$	—	$	36,959
Contingently returnable consideration		—		—		479		479
Total	$	—	$	36,959	$	479	$	37,438

The following table provides a reconciliation between the beginning and ending balances of items measured at fair value

on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):


	Fair Value		Fair Value
	Measurements Using		Measurements Using
	Significant		Significant
	Unobservable Inputs		Unobservable Inputs
		Assets		Liabilities
Description	(Level 3)		(Level 3)
Balance at May 1, 2021	$	479	$	—
Business acquisition		—		889
Transfers to Level 3		—		—
Total losses (realized or unrealized)
Included in selling, general and administrative		263		—
Settlements		—		—
Balance at January 29, 2022	$	216	$	889
The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at January 29, 2022	$	—	$	—

The fair value measurement tables above have been corrected to present the fair value of the contingently returnable consideration associated with the acquisition of ISG of $479,000 as of April 30, 2021 and subsequent changes in fair value, which is recorded in other assets on the consolidated balance sheet. The tables previously included the fair value of the contingent consideration, rather than the returnable contingent consideration. The returnable contingent consideration represents the difference between the $6,000,000 cash consideration paid to the sellers in escrow and the fair value of the contingent consideration of $5,521,000 as of April 30, 2021.

Pursuant to the ISG Purchase Agreement, the sellers may receive up to a maximum of $6,000,000 in additional cash consideration (“contingent consideration”), if certain revenue targets are achieved during the 3 years following closing. The contingent consideration was valued using a Black-Scholes option-pricing model. The analysis considered, among other items, contractual terms of the ISG Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue targets required for payment of the contingent consideration will be achieved. During the three months ended October 30, 2021, the target for the first year was achieved. During the three months ended January 29, 2022, the related consideration of $2,000,000 was released from an escrow account that is not controlled by the Company and therefore not recorded on the consolidated balance sheet. The fair value of the contingently returnable consideration is equal to the difference between the maximum value of the contingent consideration and the fair value of the contingent consideration and is recorded in other assets on the consolidated balance sheet.

Pursuant to the Telerob Purchase Agreement, the Telerob Sellers may receive up to a maximum of €6,000,000 (approximately $7,272,000) in additional cash consideration if specific revenue and contract award targets for Telerob are achieved during the 36 month period after closing. The contingent consideration was valued using a Black-Scholes option-pricing model. The analysis considered, among other items, contractual terms of the Telerob Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and contract award targets required for payment of the contingent consideration will be achieved. The fair value of the contingent consideration is recorded in other current liabilities on the consolidated balance sheet.

Refer to Note 18—Business Acquisitions.

- 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

Warranty Reserves

9 Months Ended

Jan. 29, 2022

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 on the unaudited consolidated balance sheet. The related expense is included in cost of sales. Warranty reserve activity is summarized as follows for the three and nine months ended January 29, 2022 and January 30, 2021, respectively (in thousands):


	Three Months Ended				Nine Months Ended
	January 29,			January 30,	January 29,		January 30,
	2022		2021		2022		2021
Beginning balance	$	2,650	$	2,126	$	2,341	$	2,015
Balance acquired from acquisition		—		—		256		—
Warranty expense		(192)		277		704		1,038
Warranty costs settled		(352)		(231)		(1,195)		(881)
Ending balance	$	2,106	$	2,172	$	2,106	$	2,172

Business Acquisitions

9 Months Ended

Jan. 29, 2022

Business Acquisitions

Business Acquisitions

18. Business Acquisitions

Telerob Acquisition

On May 3, 2021, the Company closed its acquisition of Telerob pursuant to the terms of the Telerob Purchase Agreement. Telerob develops, manufactures, sells, and services remote-controlled unmanned ground robots and transport vehicles for civil and defense applications.

Pursuant to the Telerob Purchase Agreement at closing, the Company paid €37,455,000 (approximately $45,400,000) in cash to the Telerob Seller (subject to certain purchase price adjustments as set forth in the Telerob Purchase Agreement), less (a) €3,000,000 (approximately $3,636,000) to be held in escrow for breaches of the Telerob Seller’s fundamental warranties or any other of Telerob Seller’s warranties to the extent not covered by a representation and warranty insurance policy (the “RWI Policy”) obtained by the Company in support of certain indemnifications provided by the Telerob Seller; (b) transaction-related fees and costs incurred by the Telerob Seller, including change in control payments triggered by the transaction; and (c) 50% of the cost of obtaining the RWI Policy. In addition, at closing the Company paid off approximately €7,811,000 (approximately $9,468,000), of certain indebtedness of Telerob, which amount was paid in combination to the Telerob Seller and the lender under an agreement between Telerob GmbH and the lender providing for a reduced payoff amount. This indebtedness was offset by cash on hand at Telerob at closing. The escrow amount is to be released to the Telerob Seller, less any amounts paid or reserved, 30 months following the closing date.

In addition to the consideration paid at closing, the Telerob Seller may receive €2,000,000 (approximately $2,424,000) in additional cash consideration if specific revenue targets for Telerob are achieved during the 12 month period after closing beginning on the first day of the calendar month following the closing (the “First Earnout Year”) and an additional €2,000,000 (approximately $2,424,000) in cash consideration if specific revenue targets for Telerob are achieved in the 12 month period following the First Earnout Year. The Telerob Seller may also receive up to €2,000,000 (approximately $2,424,000) in additional cash consideration if specific awards and/or orders from the U.S. military are achieved prior to the end of a 36-month post-closing period.

The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Telerob (in thousands):


	May 3,
	2021
Fair value of assets acquired:
Accounts receivable	$	1,045
Unbilled receivable		829
Inventories, net		15,074
Prepaid and other current assets		314
Property and equipment, net		1,571
Operating lease assets		1,508
Other assets		154
Technology		11,500
Backlog		2,400
Customer relationships		5,000
Other intangible assets		102
Goodwill		21,140
Total assets acquired	$	60,637

Fair value of liabilities assumed:
Accounts payable	$	1,136
Wages and related accruals		560
Customer advances		1,243
Current operating lease liabilities		361
Other current liabilities		3,310
Non-current operating lease liabilities		1,147
Other non-current liabilities		224
Deferred income taxes		5,617
Total liabilities assumed		13,598
Total identifiable net assets	$	47,039

Fair value of consideration:
Cash consideration, net of cash acquired	$	46,150
Contingent consideration		889
Total	$	47,039

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 Telerob and expected future customers in the UGV market. For tax purposes the acquisition was treated as a stock purchase and the goodwill is not deductible.

Telerob 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, 2020 (in thousands):


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
	2022		2021		2022		2021
Revenue	$	90,093	$	92,538	$	313,110	$	288,762
Net (loss) income attributable to AeroVironment, Inc.	$	1,753	$	1,187	$	(6,091)	$	10,319

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 August 1, 2020, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2020 with the consequential tax effects and including the results of Telerob prior to acquisition.

The Company incurred approximately $113,000 and $661,000 of acquisition-related expenses for the three and nine months ended January 29, 2022. These expenses are included in selling, general and administrative on the Company’s unaudited consolidated statement of operations.

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 acquisition been consolidated in the tables above as of May 1, 2020, nor are they indicative of results of operations that may occur in the future.

Arcturus Acquisition

On February 19, 2021, the Company closed its acquisition of Arcturus pursuant to the terms of the Arcturus Purchase Agreement. Arcturus, headquartered in Petaluma, California, designs, engineers, tools, and manufactures unmanned aerial and aircraft systems including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related generally to unmanned aircraft systems.

Pursuant to the Arcturus Purchase Agreement at the closing of the Arcturus Acquisition, the Company paid approximately $422,602,000, net of cash acquired (subject to certain customary adjustments and escrow arrangements set forth in the Arcturus Purchase Agreement), financed with a combination of approximately $150,218,000 of cash-on-hand, $200,000,000 of financing pursuant to the Term Loan Facility and the issuance of approximately $72,384,000 of unregistered, restricted shares of common stock. As specified in the Arcturus Purchase agreement, the number of shares issued was determined based on a value of $50,000,000 and a calculated average price as of the last business day prior to execution of the Arcturus Purchase Agreement.

The final cash consideration is subject to certain customary adjustments, including for net working capital, cash, debt and unpaid transaction expenses (including change in control related payments triggered by the transaction) of Arcturus at the Arcturus closing, less $6,500,000 to be held in escrow to address final purchase price adjustments post-Arcturus closing, if any (the “Adjustment Escrow”), and $1,822,500 to be held in escrow to address Arcturus’s and/or the Sellers’ indemnification obligations (the “Indemnification Escrow”). During the three months ended July 31, 2021, the Adjustment Escrow of $6,500,000, less $509,000 of post-closing adjustments, was released to the Arcturus Sellers. To further address potential breaches of Arcturus’s and the Sellers’ representations and warranties beyond the application of the Indemnification Escrow, the Company also obtained representation and warranty insurance policies providing $40,000,000 in coverage, subject to customary terms, exclusions and retention amounts.

The following table summarizes the allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Arcturus (in thousands):


	February 19,
	2021
Fair value of assets acquired:
Accounts receivable	$	6,050
Unbilled receivable		4,176
Inventories, net		21,701
Prepaid and other current assets		2,709
Property and equipment, net		38,739
Operating lease assets		11,429
Other assets		136
Technology		20,500
Customer relationships		62,700
Goodwill		290,006
Total assets acquired	$	458,146

Fair value of liabilities assumed:
Accounts payable	$	3,085
Wages and related accruals		1,698
Customer advances		1,818
Other current liabilities		9,562
Operating lease liabilities		12,297
Other non-current liabilities		1,190
Deferred income taxes, net		5,869
Total liabilities assumed		35,519
Total identifiable net assets	$	422,627

Fair value of consideration transferred:
Cash consideration, net of cash acquired	$	350,243
Equity consideration		72,384
Total consideration	$	422,627

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 preliminary estimates 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 Arcturus and expected future customers in the MUAS market. For tax purposes the acquisition was treated as a stock purchase and the goodwill is not deductible.

Arcturus 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, 2019 (in thousands):


	Three Months Ended			Nine Months Ended
		January 30,			January 30,
		2021			2021
Revenue		$	110,425		$	339,115
Net income attributable to AeroVironment, Inc.		$	(4,945)		$	16,065

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 27, 2019, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2019 with the consequential tax effects, and including the results of Arcturus prior to acquisition.

The Company incurred approximately $41,000 and $1,533,000 acquisition-related expenses for the three and nine months ended January 29, 2022, respectively. These expenses are included in selling, general and administrative expense on the Company’s unaudited consolidated statement of operations.

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 acquisition been consolidated in the tables above as of May 1, 2019, nor are they indicative of results of operations that may occur in the future.

ISG Acquisition

On February 23, 2021, the Company purchased certain assets of, and assumed certain liabilities of, ISG pursuant to the terms of the ISG Purchase Agreement. ISG is engaged in development of artificial intelligence-enabled computer vision, machine learning and perceptive autonomy technologies and provides related services to United States government customers.

In connection with the ISG Acquisition, the Company (i) paid a base purchase price of $29,700,000 in cash at closing and (ii) may pay additional cash consideration of up to $6,000,000, which is held in escrow account not controlled by the Company, based on the achievement of certain revenue targets by ISG during the 3 years following closing, in each case, subject to the terms and conditions of the ISG Purchase Agreement, including certain customary adjustments. During the three months ended October 30, 2021, the target for the first year was achieved. During the three months ended January 29, 2022 the related consideration of $2,000,000 was released from an escrow account that is not controlled by the Company and, therefore, not recorded on the consolidated balance sheet.

As a condition to closing pursuant to the ISG Purchase Agreement, the Company and the ISG Seller entered into certain ancillary agreements, including a transition services agreement and two subleases pursuant to which the ISG Seller will provide the Company certain services and facilities space to accommodate the transition of ISG to the Company.

The parties to the ISG Purchase Agreement have made representations, warranties, and covenants that are customary for a transaction of this type, including, among other things, restrictions on the ISG Seller and the Beneficial Owner from engaging in certain competitive activities, as well as mutual indemnification obligations between the Company and the ISG Seller. To supplement certain indemnifications provided by the ISG Seller, the Company obtained a representation and warranty insurance policy.

The following table summarizes the allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the ISG Acquisition (in thousands):


	February 23,
	2021
Fair value of assets acquired:
Technology	$	11,400
Customer relationships		4,500
Other assets		217
Goodwill		19,254
Total identifiable net assets	$	35,371

Fair value of consideration transferred:
Cash	$	29,700
Holdback		150
Contingent consideration		5,521
Total consideration	$	35,371

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 preliminary estimates 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. For tax purposes the acquisition was treated as an asset purchase and the goodwill is deductible ratably over a period of fifteen years.

ISG 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, 2019 (in thousands):


	Three Months Ended			Nine Months Ended
		January 30,			January 30,
		2021			2021
Revenue		$	81,665		$	267,546
Net income attributable to AeroVironment, Inc.		$	517		$	13,303

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.

The Company incurred approximately $42,000 and $778,000 acquisition-related expenses for the three and nine months ended January 29, 2022, respectively. These expenses are included in selling, general and administrative expenses on the Company’s unaudited consolidated statement of operations.

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 acquisition been consolidated in the tables above as of May 1, 2019, nor are they indicative of results of operations that may occur in the future.

Discontinued Operations

9 Months Ended

Jan. 29, 2022

Discontinued Operations.

Discontinued Operations

2. Discontinued Operations

On June 29, 2018, the Company completed the sale of 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 operations.

The Company was 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 unaudited consolidated financial statements as the amount was not realized or realizable as of January 29, 2022.

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. 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.

On February 22, 2019, Webasto filed a lawsuit, which was amended in April 2019, alleging several claims against the Company for breach of contract, indemnity, and bad faith, including allegations regarding inaccuracy of certain diligence disclosures and 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. Webasto again amended the complaint in May 2021 to include additional claims. On June 2, 2021, the Company filed an answer to Webasto’s second amended complaint filed in May 2021.

In order to avoid the future cost, expense, and distraction of continued litigation, the Company engaged in settlement negotiations with Webasto in May 2021. While the negotiations did not result in a settlement of any of the Company’s or Webasto’s claims at such time, as a result of the settlement negotiations, the Company established a litigation reserve, which reflected the scope of a rejected offer intended to communicate the Company’s serious and good faith intention to attempt to reach a settlement for the stated purposes. The offer did not reflect the Company’s view of the merits of the claims made; however, as a result of the preparation of the good faith offer and the Company’s willingness to pursue settlement for that amount, the Company recorded litigation reserve expenses in the amount of $9,300,000 during the year ended April 30, 2021 recorded in other expense on the consolidated statements of operations and in other non-current liabilities on the consolidated balance sheet. On December 2, 2021, the Company agreed in principle, subject to formal documentation with Webasto, to settle all existing claims related to the sale of our former EES business for $20,000,000 and Webasto keeping the Holdback. As a result of the agreement in principle to settle the litigation, the Company recorded additional litigation reserve expenses in the amount of $10,000,000 during the three months ended October 30, 2021 in other expense on the consolidated statements of operations and in other current liabilities on the consolidated balance sheet. The Company executed a written settlement agreement with Webasto effective December 16, 2021 to officially and fully settle all claims in the lawsuit. Under the terms of the written settlement agreement, the Company’s payment of the settlement amount of $20,000,000 will occur over a 24 month period from the effective date of the settlement agreement and Webasto will retain the Holdback. As of January 29, 2022, $5,000,000 of the settlement has been paid.

Investments

9 Months Ended

Jan. 29, 2022

Investments

Investments

3. Investments

Investments consist of the following (in thousands):


	January 29,		April 30,
	2022		2021
Short-term investments:
Available-for-sale securities:
Municipal securities		3,969		22,245
U.S. government securities		—		4,009
Corporate bonds		—		5,717
Total short-term investments	$	3,969	$	31,971
Long-term investments:
Available-for-sale securities:
Municipal securities		—		988
U.S. government securities		—		4,000
Total long-term available-for-sale investments		—		4,988
Equity method investments
Investment in limited partnership fund		12,388		7,168
Total equity method investments		12,388		7,168
Total long-term investments	$	12,388	$	12,156

Available-For-Sale Securities

As of January 29, 2022 and April 30, 2021, 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 are recorded in interest (expense) 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 January 29, 2022 and April 30, 2021, respectively (in thousands):


	January 29, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	3,972	$	—	$	(3)	$	3,969
Total available-for-sale investments	$	3,972	$	—	$	(3)	$	3,969


	April 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	23,227	$	8	$	(2)	$	23,233
U.S. government securities		8,008		1		—		8,009
Corporate bonds		5,718		—		(1)		5,717
Total available-for-sale investments	$	36,953	$	9	$	(3)	$	36,959

The amortized cost and fair value of the available-for-sale debt securities by contractual maturity at January 29, 2022 were as follows (in thousands):


	Cost		Fair Value
Due within one year	$	3,972	$	3,969
Due after one year through five years		—		—
Total	$	3,972	$	3,969

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments - Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021	Apr. 30, 2020
Accumulated other comprehensive loss
Unrealized losses, tax portion	$ 1	$ 2	$ 1	$ 2
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss
Other comprehensive income, tax			$ 2	$ 2	$ 1	$ 0

- Definition

Amount of tax expense (benefit) allocated to other comprehensive income (loss).

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 20
-Section 45
-Paragraph 11
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123586238&loc=d3e39076-109324

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 17
-URI http://asc.fasb.org/extlink&oid=118261656&loc=d3e32136-110900

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 45
-Paragraph 20
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=118261656&loc=d3e32211-110900

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 20
-Section 45
-Paragraph 2
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123586238&loc=d3e38679-109324

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=124431353&loc=SL124442407-227067

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(23))
-URI http://asc.fasb.org/extlink&oid=120399700&loc=SL114874048-224260

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(21))
-URI http://asc.fasb.org/extlink&oid=123367319&loc=SL114868664-224227

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32672-109319

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 830
-SubTopic 30
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6450520&loc=d3e32583-110901

Reference 10: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=124509347&loc=d3e640-108580

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 220
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(19))
-URI http://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

+ Details

Consolidated Balance Sheets - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Current assets:
Cash and cash equivalents	$ 82,528	$ 148,741
Short-term investments	3,969	31,971
Accounts receivable, net of allowance for doubtful accounts of $577 at January 29, 2022 and $595 at April 30, 2021	41,739	62,647
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $5,944 at January 29, 2022 and $544 at April 30, 2021)	97,993	71,632
Inventories	89,616	71,646
Income taxes receivable	26,578
Prepaid expenses and other current assets	12,099	15,001
Total current assets	354,522	401,638
Long-term investments	12,388	12,156
Property and equipment, net	65,377	58,896
Operating lease right-of-use assets	24,848	22,902
Deferred income taxes	3,258	2,061
Intangibles, net	103,825	106,268
Goodwill	335,164	314,205
Other assets	5,881	10,440
Total assets	905,263	928,566
Current liabilities:
Accounts payable	15,118	24,841
Wages and related accruals	21,207	28,068
Customer advances	6,864	7,183
Current portion of long-term debt	10,000	10,000
Current operating lease liabilities	6,150	6,154
Income taxes payable	247	861
Other current liabilities	27,897	19,078
Total current liabilities	87,483	96,185
Long-term debt, net of current portion	180,398	187,512
Non-current operating lease liabilities	20,678	19,103
Other non-current liabilities	5,273	10,141
Liability for uncertain tax positions	3,518	3,518
Deferred income taxes	5,198
Commitments and contingencies
Stockholders' equity:
Authorized shares-10,000,000; none issued or outstanding at January 29, 2022 and April 30, 2021
Issued and outstanding shares-24,915,105 shares at January 29, 2022 and 24,777,295 shares at April 30, 2021	2	2
Additional paid-in capital	265,885	260,327
Accumulated other comprehensive (loss) income	(3,434)	343
Retained earnings	339,975	351,421
Total AeroVironment, Inc. stockholders' equity	602,428	612,093
Noncontrolling interest	287	14
Total equity	602,715	612,107
Total liabilities and stockholders' equity	$ 905,263	$ 928,566

Customer-Funded Research & Development (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Customer-Funded Research & Development
Revenue from customer funded research and development	$ 20,451	$ 14,811	$ 56,537	$ 58,979

Investments - Available For Sale Securities (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Available-For-Sale Securities.
Amortized Cost	$ 3,972	$ 36,953
Gross Unrealized Gains		9
Gross Unrealized Losses	(3)	(3)
Total	3,969	36,959
Municipal securities
Available-For-Sale Securities.
Amortized Cost	3,972	23,227
Gross Unrealized Gains		8
Gross Unrealized Losses	(3)	(2)
Total	$ 3,969	23,233
U.S. government securities
Available-For-Sale Securities.
Amortized Cost		8,008
Gross Unrealized Gains		1
Total		8,009
Corporate bonds
Available-For-Sale Securities.
Amortized Cost		5,718
Gross Unrealized Losses		(1)
Total		$ 5,717

Fair Value Measurements - (Details) - USD ($) $ in Thousands		12 Months Ended
	Feb. 23, 2021	Apr. 30, 2021	Jan. 29, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities		$ 36,959	$ 3,969
Intelligent Systems Group
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingently returnable consideration		479
Contingent consideration		(5,521)
Contingent consideration paid	$ 6,000	6,000
Fair value of contingent consideration		5,521
Released from escrow			2,000
Recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities		36,959	3,969
Contingently returnable consideration		479	216
Total		37,438	4,185
Contingent consideration			(889)
Total			889
Fair value of contingent consideration			889
Recurring basis \| Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities		36,959	3,969
Total		36,959	3,969
Recurring basis \| Significant unobservable inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingently returnable consideration		479	216
Total		$ 479	216
Contingent consideration			(889)
Total			889
Fair value of contingent consideration			$ 889

Warranty Reserves (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Warranty Reserves (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Warranty Reserves
Beginning balance	$ 2,650	$ 2,126	$ 2,341	$ 2,015
Balance acquired from acquisition			256
Warranty expense	(192)	277	704	1,038
Warranty costs settled	(352)	(231)	(1,195)	(881)
Ending balance	$ 2,106	$ 2,172	$ 2,106	$ 2,172

Goodwill (Details) $ in Thousands	9 Months Ended
Goodwill (Details) $ in Thousands	Jan. 29, 2022 USD ($)
Goodwill
Goodwill, Beginning Balance	$ 314,205
Additions to goodwill	20,959
Goodwill, Ending Balance	335,164
Small UAS
Goodwill
Goodwill, Beginning Balance	6,340
Goodwill, Ending Balance	6,340
MUAS
Goodwill
Goodwill, Beginning Balance	288,611
Additions to goodwill	1,395
Goodwill, Ending Balance	290,006
All other
Goodwill
Goodwill, Beginning Balance	19,254
Additions to goodwill	19,564
Goodwill, Ending Balance	$ 38,818

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Consolidated Balance Sheets
Accounts receivable, allowance for doubtful accounts (in dollars)	$ 577	$ 595
Due from Related Parties	$ 5,944	$ 544
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	24,915,105	24,777,295
Common stock, outstanding shares	24,915,105	24,777,295

Leases - Maturities of operating lease liabilities (Details) $ in Thousands	Jan. 29, 2022 USD ($)
Maturities of operating lease liabilities:
2022	$ 1,301
2023	6,453
2024	5,750
2025	4,795
2026	3,472
Thereafter	8,025
Total lease payments	29,796
Less: imputed interest	(2,968)
Total present value of operating lease liabilities	$ 26,828

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Revenue:
Revenue	$ 90,093	$ 78,782	$ 313,110	$ 258,897
Cost of sales:
Cost of sales	68,657	50,141	220,496	153,994
Gross margin:
Total gross margin	21,436	28,641	92,614	104,903
Selling, general and administrative	22,549	15,652	74,496	42,640
Research and development	13,013	13,631	41,018	36,710
(Loss) income from operations	(14,126)	(642)	(22,900)	25,553
Other (loss) income:
Interest (expense) income, net	(1,510)	94	(4,164)	417
Other income (expense), net	34	(37)	(10,360)	68
(Loss) income before income taxes	(15,602)	(585)	(37,424)	26,038
(Benefit from) provision for income taxes	(15,396)	(924)	(25,864)	2,774
Equity method investment income (loss), net of tax	171	(81)	163	(10,891)
Net (loss) income	(35)	258	(11,397)	12,373
Net loss (income) attributable to noncontrolling interest	45	(47)	(49)	12
Net income (loss) attributable to AeroVironment, Inc.	$ 10	$ 211	$ (11,446)	$ 12,385
Net income (loss) per share attributable to AeroVironment-Basic
Net income (loss) per share attributable to AeroVironment-basic		$ 0.01	$ (0.46)	$ 0.52
Net income (loss) per share attributable to AeroVironment-Diluted
Net income (loss) per share attributable to AeroVironment, Inc.-Diluted		$ 0.01	$ (0.46)	$ 0.51
Weighted-average shares outstanding:
Basic (in shares)	24,710,991	23,942,782	24,657,846	23,924,017
Diluted (in shares)	24,879,643	24,260,874	24,657,846	24,216,371
Product sales
Revenue:
Revenue	$ 42,599	$ 58,348	$ 166,713	$ 182,233
Cost of sales:
Cost of sales	29,294	35,746	100,821	102,039
Gross margin:
Total gross margin	13,305	22,602	65,892	80,194
Contract services
Revenue:
Revenue	47,494	20,434	146,397	76,664
Cost of sales:
Cost of sales	39,363	14,395	119,675	51,955
Gross margin:
Total gross margin	$ 8,131	$ 6,039	$ 26,722	$ 24,709

Intangibles, net

9 Months Ended

Jan. 29, 2022

Intangibles, net

Intangibles, net

8. Intangibles, net

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


	January 29,		April 30,
	2022		2021
Technology	$	57,495	$	46,850
Licenses		1,008		1,008
Customer relationships		72,702		68,073
Backlog		2,223		—
In-process research and development		550		550
Non-compete agreements		320		320
Trademarks and tradenames		68		68
Other		105		3
Intangibles, gross		134,471		116,872
Less accumulated amortization		(30,646)		(10,604)
Intangibles, net	$	103,825	$	106,268

The weighted average amortization period at January 29, 2022 and April 30, 2021 was four and five years, respectively. Amortization expense for the three and nine months ended January 29, 2022 was $6,911,000 and $20,486,000, respectively. Amortization expense for the three and nine months ended January 30, 2021 was $622,000 and $2,086,000, respectively.

Technology, backlog and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of Telerob on May 3, 2021. The intangibles recognized in conjunction with the acquisition of Telerob are recorded in Euros, and the balances change in accordance with the foreign currency translation at reporting date. Technology and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of Arcturus on February 19, 2021. Technology and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of ISG on February 23, 2021. Refer to Note 18—Business Acquisitions for further details.

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


	Year ending
	April 30,
2022	$	7,565
2023		27,719
2024		26,870
2025		18,156
2026		13,114
	$	93,424

Business Acquisitions (Tables)

9 Months Ended

Jan. 29, 2022

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

The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Telerob (in thousands):


	May 3,
	2021
Fair value of assets acquired:
Accounts receivable	$	1,045
Unbilled receivable		829
Inventories, net		15,074
Prepaid and other current assets		314
Property and equipment, net		1,571
Operating lease assets		1,508
Other assets		154
Technology		11,500
Backlog		2,400
Customer relationships		5,000
Other intangible assets		102
Goodwill		21,140
Total assets acquired	$	60,637

Fair value of liabilities assumed:
Accounts payable	$	1,136
Wages and related accruals		560
Customer advances		1,243
Current operating lease liabilities		361
Other current liabilities		3,310
Non-current operating lease liabilities		1,147
Other non-current liabilities		224
Deferred income taxes		5,617
Total liabilities assumed		13,598
Total identifiable net assets	$	47,039

Fair value of consideration:
Cash consideration, net of cash acquired	$	46,150
Contingent consideration		889
Total	$	47,039

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, 2020 (in thousands):


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
	2022		2021		2022		2021
Revenue	$	90,093	$	92,538	$	313,110	$	288,762
Net (loss) income attributable to AeroVironment, Inc.	$	1,753	$	1,187	$	(6,091)	$	10,319

Arcturus UAV Inc.

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

The following table summarizes the allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Arcturus (in thousands):


	February 19,
	2021
Fair value of assets acquired:
Accounts receivable	$	6,050
Unbilled receivable		4,176
Inventories, net		21,701
Prepaid and other current assets		2,709
Property and equipment, net		38,739
Operating lease assets		11,429
Other assets		136
Technology		20,500
Customer relationships		62,700
Goodwill		290,006
Total assets acquired	$	458,146

Fair value of liabilities assumed:
Accounts payable	$	3,085
Wages and related accruals		1,698
Customer advances		1,818
Other current liabilities		9,562
Operating lease liabilities		12,297
Other non-current liabilities		1,190
Deferred income taxes, net		5,869
Total liabilities assumed		35,519
Total identifiable net assets	$	422,627

Fair value of consideration transferred:
Cash consideration, net of cash acquired	$	350,243
Equity consideration		72,384
Total consideration	$	422,627

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, 2019 (in thousands):


	Three Months Ended			Nine Months Ended
		January 30,			January 30,
		2021			2021
Revenue		$	110,425		$	339,115
Net income attributable to AeroVironment, Inc.		$	(4,945)		$	16,065

Intelligent Systems Group

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

The following table summarizes the allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the ISG Acquisition (in thousands):


	February 23,
	2021
Fair value of assets acquired:
Technology	$	11,400
Customer relationships		4,500
Other assets		217
Goodwill		19,254
Total identifiable net assets	$	35,371

Fair value of consideration transferred:
Cash	$	29,700
Holdback		150
Contingent consideration		5,521
Total consideration	$	35,371

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, 2019 (in thousands):


	Three Months Ended			Nine Months Ended
		January 30,			January 30,
		2021			2021
Revenue		$	81,665		$	267,546
Net income attributable to AeroVironment, Inc.		$	517		$	13,303

Debt

9 Months Ended

Jan. 29, 2022

Debt

Debt

10. Debt

In connection with the consummation of the Arcturus Acquisition on February 19, 2021, the Company, as borrower, and Arcturus, as guarantor, entered into a Credit Agreement with certain lenders, letter of credit issuers, Bank of America, N.A., as the administrative agent and the swingline lender, and BofA Securities, Inc., JPMorgan Chase Bank, N.A., and U.S. Bank National Association, as joint lead arrangers and joint bookrunners (the “Credit Agreement”).

The Credit Agreement and its associated Security and Pledge Agreement set forth the terms and conditions for (i) a five-year $100 million revolving credit facility, which includes a $10 million sublimit for the issuance of standby and commercial letters of credit (the “Revolving Facility”), and (ii) a five-year amortized $200 million term A loan (the “Term Loan Facility”, and together with the Revolving Facility, the “Credit Facilities”). Certain existing letters of credit issued by JPMorgan Chase Bank were reserved for under the Revolving Facility at closing and remain outstanding under the terms thereof. Upon execution of the Credit Agreement, the Company drew the full principal of the Term Loan Facility for use in the acquisition of Arcturus. The Term Loan Facility requires payment of 5% of the outstanding obligations in each of the first four loan years, with the remaining 80% payable in loan year five, consisting of three quarterly payments of 1.25% each, with the remaining outstanding principal amount of the Term Loan Facility due and payable on the final maturity date. Proceeds from the Term Loan Facility were used in part to finance a portion of the cash consideration for the Arcturus Acquisition. Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes.

Any borrowing under the Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage costs, and any amounts repaid under the Revolving Facility may be reborrowed. Mandatory prepayments are required under the revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders. Mandatory prepayments are also required in connection with the disposition of assets to the extent not reinvested and unpermitted debt transactions.

In support of its obligations pursuant to the Credit Facilities, the Company has granted security interests in substantially all of the personal property of the Company and its domestic subsidiaries, including a pledge of the equity interests in its subsidiaries (limited to 65% of outstanding equity interests in the case of foreign subsidiaries), and the proceeds thereof, with customary exclusions and exceptions. The Company’s existing and future domestic subsidiaries, including Arcturus, are guarantors for the Credit Facilities.

The Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Company and its subsidiaries (as defined in the Credit Agreement) to incur any additional indebtedness or guarantee indebtedness of others, to create liens on properties or assets, or to enter into certain asset and stock-based transactions. In addition, the Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

On February 4, 2022, the Company entered into a First Amendment to Credit Agreement and Waiver relating to its existing Credit Agreement (the “First Amendment to Credit Agreement”). The First Amendment to Credit Agreement waives any event of default that may have occurred as a result of the potential failure by the Company to comply with the consolidated leverage ratio covenant set forth in the Credit Agreement for the fiscal quarter ended January 29, 2022. In addition, the parties amended the maximum permitted Consolidated Leverage Ratio, such that such ratio may not exceed 4.00 to 1.00 for the Company’s fiscal quarters ended January 29, 2022 and April 30, 2022; 3.50 to 1.00 for any of the Company’s fiscal quarters ending during the period from May 1, 2022 to October 31, 2022; and 3.00 to 1.00 for any fiscal quarter ending thereafter.

The First Amendment to Credit Agreement also implemented certain secured overnight financing rate (SOFR) interest rate mechanics and interest rate reference benchmark replacement provisions in order to effectuate the transition from

LIBOR as a reference interest rate. Following the First Amendment to Credit Agreement, the Company has a choice of interest rates between (a) Term SOFR (with a 0% floor) plus the Applicable Margin; or (b) Base Rate (defined as the highest of (a) the Federal Funds Rate plus one-half percent (0.50%), (b) the Bank of America prime rate, and (c) the one (1) month SOFR plus one percent (1.00%)) plus the Applicable Margin. The Applicable Margin is based upon the Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects SOFR (ranging from 1.50 - 2.50%) or Base Rate (ranging from 0.50 - 1.50%). The Company may choose interest periods of one, three or six months with respect to Term SOFR and all such rates will include a 0.10% SOFR adjustment. The Company also remains responsible for certain commitment fees from 0.20-0.35% depending on the Consolidated Leverage Ratio, and administrative agent expenses incurred in relation to the Credit Facilities. In the event of a default, an additional 2% default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified. As of January 29, 2022, the Company is in compliance with all amended covenants.

The Credit Agreement Amendment also implemented certain secured overnight financing rate (SOFR) interest rate mechanics and interest rate reference benchmark replacement provisions in order to effectuate the transition from LIBOR as a reference interest rate. Following the Credit Agreement Amendment, the Company has a choice of interest rates between (a) Term SOFR (with a 0% floor) plus the Applicable Margin; or (b) Base Rate (defined as the highest of (a) the Federal Funds Rate plus one-half percent (0.50%), (b) the Bank of America prime rate, and (c) the one (1) month SOFR plus one percent (1.00%)) plus the Applicable Margin. The Applicable Margin is based upon the Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects SOFR (ranging from 1.50 - 2.50%) or Base Rate (ranging from 0.50 - 1.50%). The Company may choose interest periods of one, three or six months with respect to Term SOFR and all such rates will include a .10% SOFR adjustment. The Company is also responsible for certain commitment fees from 0.20-0.35% depending on the Consolidated Leverage Ratio, and administrative agent expenses incurred in relation to the Credit Facilities. In the event of a default, an additional 2% default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

The Credit Agreement, as amended by the First Amendment to Credit Agreement, contains certain customary events of default, which include failure to make payments when due thereunder, the material inaccuracy of representations or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain judgments, certain ERISA-related events, invalidity of loan documents, or a Change of Control (as defined in the Credit Agreement). Upon the occurrence and continuation of an event of default, the Lenders may cease making future loans under the Credit Agreement and may declare all amounts owing under the Credit Agreement to be immediately due and payable.

Long-term debt and the current period interest rates were as follows:


	Nine Months Ended
	January 29,
	2022
	(In thousands)
Term loans	$	192,500
Revolving credit facility		—
Total debt		192,500
Less current portion		10,000
Total long-term debt, less current portion		182,500
Less unamortized debt issuance costs - term loans		2,102
Total long-term debt, net of unamortized debt issuance costs - term loans	$	180,398
Unamortized debt issuance costs - revolving credit facility	$	1,046
Current period interest rate		2.5%

Future long-term debt principal payments at January 29, 2022 were as follows:


	(In thousands)
2022	$	2,500
2023		10,000
2024		10,000
2025		10,000
2026		160,000
	$	192,500

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Investments (Tables)

9 Months Ended

Jan. 29, 2022

Investments

Schedule of investments

Investments consist of the following (in thousands):


	January 29,		April 30,
	2022		2021
Short-term investments:
Available-for-sale securities:
Municipal securities		3,969		22,245
U.S. government securities		—		4,009
Corporate bonds		—		5,717
Total short-term investments	$	3,969	$	31,971
Long-term investments:
Available-for-sale securities:
Municipal securities		—		988
U.S. government securities		—		4,000
Total long-term available-for-sale investments		—		4,988
Equity method investments
Investment in limited partnership fund		12,388		7,168
Total equity method investments		12,388		7,168
Total long-term investments	$	12,388	$	12,156

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


	January 29, 2022
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	3,972	$	—	$	(3)	$	3,969
Total available-for-sale investments	$	3,972	$	—	$	(3)	$	3,969


	April 30, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Municipal securities	$	23,227	$	8	$	(2)	$	23,233
U.S. government securities		8,008		1		—		8,009
Corporate bonds		5,718		—		(1)		5,717
Total available-for-sale investments	$	36,953	$	9	$	(3)	$	36,959

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 January 29, 2022 were as follows (in thousands):


	Cost		Fair Value
Due within one year	$	3,972	$	3,969
Due after one year through five years		—		—
Total	$	3,972	$	3,969

Debt (Tables)

9 Months Ended

Jan. 29, 2022

Debt

Schedule of long-term debt and the current period interest rates

Long-term debt and the current period interest rates were as follows:


	Nine Months Ended
	January 29,
	2022
	(In thousands)
Term loans	$	192,500
Revolving credit facility		—
Total debt		192,500
Less current portion		10,000
Total long-term debt, less current portion		182,500
Less unamortized debt issuance costs - term loans		2,102
Total long-term debt, net of unamortized debt issuance costs - term loans	$	180,398
Unamortized debt issuance costs - revolving credit facility	$	1,046
Current period interest rate		2.5%

Schedule of Future long-term debt principle payments

Future long-term debt principal payments at January 29, 2022 were as follows:


	(In thousands)
2022	$	2,500
2023		10,000
2024		10,000
2025		10,000
2026		160,000
	$	192,500

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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+ Details

Leases - Supplemental lease information (Details) - USD ($) $ in Thousands	9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021
Leases
Cash paid for amounts included in the measurement of operating lease liabilities	$ 5,119	$ 3,470
Right-of-use assets obtained in exchange for new lease liabilities	$ 6,705	$ 5,760
Weighted average remaining lease term	67 months	43 months
Weighted average discount rate	3.40%	3.40%

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Income taxes
(Benefit from) provision for income taxes	$ (15,396)	$ (924)	$ (25,864)	$ 2,774
Effective tax benefit rate (as a percent)	98.70%	157.90%	69.10%	10.70%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Pension (Tables)

9 Months Ended

Jan. 29, 2022

Pension

Schedule of projected benefit obligation and fair value of plan assets


Projected benefit obligation	$	(4,126)
Fair value of plan assets		3,951
Unfunded status of the plan	$	(175)

Schedule of expected benefits payments

Expected benefits payments as of May 3, 2021 (in thousands):


2022	$	182
2023		183
2024		183
2025		184
2026		184
2027-2031		920
Total expected benefit payments	$	1,836

Schedule Net periodic benefit cost (in thousands) is recorded in interest (expense) income, net

Net periodic benefit cost (in thousands) is recorded in interest (expense) income, net.


	Three Months Ended		Nine Months Ended
	January 29,		January 29,
	2022		2022
	(In thousands)		(In thousands)
Expected return on plan assets	$	30	$	93
Interest cost		(14)		(44)
Foreign currency exchange rate changes		4		10
Net periodic benefit cost	$	20	$	59

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Accumulated other comprehensive loss
Balance, net of $1 and $0 deferred taxes, as of April 30, 2021 and April 30, 2020, respectively			$ 343
Unrealized (loss) gain on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the three months ended January 29, 2022 and January 30, 2021, respectively; and $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively	$ (3)	$ 5	(6)	$ (56)
Change in foreign currency translation adjustments	(1,754)		(3,771)	75
Balance, net of $2 and $2 deferred taxes, as of January 29, 2022 and January 30, 2021, respectively	(3,434)		(3,434)
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss
Balance, net of $1 and $0 deferred taxes, as of April 30, 2021 and April 30, 2020, respectively			343	328
Unrealized (loss) gain on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the three months ended January 29, 2022 and January 30, 2021, respectively; and $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively	(3)	5	(6)	(56)
Change in foreign currency translation adjustments			(3,771)	75
Balance, net of $2 and $2 deferred taxes, as of January 29, 2022 and January 30, 2021, respectively	$ (3,434)	$ 347	$ (3,434)	$ 347

- Definition

Accumulated change in equity from transactions and other events and circumstances from non-owner sources, net of tax effect, at period end. Excludes Net Income (Loss), and accumulated changes in equity from transactions resulting from investments by owners and distributions to owners. Includes foreign currency translation items, certain pension adjustments, unrealized gains and losses on certain investments in debt and equity securities, other than temporary impairment (OTTI) losses related to factors other than credit losses on available-for-sale and held-to-maturity debt securities that an entity does not intend to sell and it is not more likely than not that the entity will be required to sell before recovery of the amortized cost basis, as well as changes in the fair value of derivatives related to the effective portion of a designated cash flow hedge.

+ References + Details

Organization and Significant Accounting Policies - Revenue by Category (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Disaggregation of revenue
Revenue	$ 90,093	$ 78,782	$ 313,110	$ 258,897
Contract Liability
Disaggregation of revenue
Revenue	1,521	0	2,409	5,423
Domestic
Disaggregation of revenue
Revenue	56,480	51,062	193,531	150,890
International
Disaggregation of revenue
Revenue	33,613	27,720	119,579	108,007
U.S. government
Disaggregation of revenue
Revenue	60,956	60,633	204,107	170,023
Non-U.S. government
Disaggregation of revenue
Revenue	29,137	18,149	109,003	88,874
FFP
Disaggregation of revenue
Revenue	66,639	61,230	245,798	190,530
CPFF
Disaggregation of revenue
Revenue	21,788	17,530	62,499	68,329
T&M
Disaggregation of revenue
Revenue	1,666	22	4,813	38
Small UAS
Disaggregation of revenue
Revenue	24,366	50,536	119,004	165,003
TMS
Disaggregation of revenue
Revenue	18,603	19,598	56,197	48,093
MUAS.
Disaggregation of revenue
Revenue	21,168		70,072
Other.
Disaggregation of revenue
Revenue	$ 25,956	$ 8,648	$ 67,837	$ 45,801

Leases

9 Months Ended

Jan. 29, 2022

Leases

Leases

11. 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 on the unaudited consolidated balance sheet.

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. If the Company determines the option to extend or terminate is reasonably certain, it is included in the 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 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 and selling, general and administrative (“SG&A”) expense were as follows (in thousands):


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
Operating lease cost	$	5,033	$	3,592
Short term lease cost		684		369
Variable lease cost		434		3
Sublease income		(132)		(48)
Total lease costs, net	$	6,019	$	3,916

Supplemental lease information were as follows:


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
	(In thousands)		(In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities	$	5,119	$	3,470
Right-of-use assets obtained in exchange for new lease liabilities	$	6,705	$	5,760

Weighted average remaining lease term		67 months		43 months
Weighted average discount rate		3.4%		3.4%

Maturities of operating lease liabilities as of January 29, 2022 were as follows (in thousands):


2022	$	1,301
2023		6,453
2024		5,750
2025		4,795
2026		3,472
Thereafter		8,025
Total lease payments		29,796
Less: imputed interest		(2,968)
Total present value of operating lease liabilities	$	26,828

Fair Value Measurements - Pulse purchase agreement (Details) - 9 months ended Jan. 29, 2022 - Maximum € in Thousands, $ in Thousands	USD ($)	EUR (€)
Pulse Aerospace, LLC
Fair Value Measurement
Total	$ 6,000,000
Telerob
Fair Value Measurement
Additional cash consideration	$ 7,272,000	€ 6,000,000

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustment

9 Months Ended

Jan. 29, 2022

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments

12. Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments

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


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
Balance, net of $1 and $0 deferred taxes, as of April 30, 2021 and April 30, 2020, respectively	$	343	$	328
Unrealized loss on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively		(6)		(56)
Change in foreign currency translation adjustments		(3,771)		75
Balance, net of $2 and $2 deferred taxes, as of January 29, 2022 and January 30, 2021, respectively	$	(3,434)	$	347

Organization and Significant Accounting Policies - (Details) - USD ($) $ in Thousands	Sep. 15, 2021	Jan. 29, 2022	Apr. 30, 2021	Feb. 19, 2019
Restricted cash		$ 1,823	$ 8,322
Altoy
Ownership interest	85.00%
Toygun Savunma Sanayi ve Havacilik Anonim Sirketi
Percentage of shares sold	35.00%
Toygun Savunma Sanayi ve Havacilik Anonim Sirketi \| Altoy
Ownership interest	50.00%
Arcturus UAV Inc.
Ownership interest acquired				100.00%

Inventories, net

9 Months Ended

Jan. 29, 2022

Inventories, net

Inventories, net

5. Inventories, net

Inventories consist of the following (in thousands):


	January 29,		April 30,
	2022		2021


Raw materials	$	37,898	$	23,997
Work in process		24,695		13,825
Finished goods		39,939		44,113
Inventories, gross		102,532		81,935
Reserve for inventory excess and obsolescence		(12,916)		(10,289)
Inventories, net	$	89,616	$	71,646

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments (Tables)

9 Months Ended

Jan. 29, 2022

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments

Schedule of components of accumulated other comprehensive income

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


	Nine Months Ended		Nine Months Ended
	January 29,		January 30,
	2022		2021
Balance, net of $1 and $0 deferred taxes, as of April 30, 2021 and April 30, 2020, respectively	$	343	$	328
Unrealized loss on available-for-sale investments, net of deferred tax benefit of $1 and $2 for the nine months ended January 29, 2022 and January 30, 2021, respectively		(6)		(56)
Change in foreign currency translation adjustments		(3,771)		75
Balance, net of $2 and $2 deferred taxes, as of January 29, 2022 and January 30, 2021, respectively	$	(3,434)	$	347

Segments

9 Months Ended

Jan. 29, 2022

Segments

Segments

20. Segments

The Company’s reportable segments are as follows:

Small Unmanned Aircraft Systems —The Small UAS segment focuses primarily on products designed to operate reliably at very low altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support services including training, spare parts, product repair, product replacement, and the customer contracted operation.

Tactical Missile Systems – The TMS segment focuses primarily on TMS products, which are tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement. The TMS segment also includes customer-funded research and development programs.

Medium Unmanned Aircraft Systems—The MUAS segment, which originates with the acquisition of Arcturus, focuses on designs, engineers, tools, and manufactures unmanned aerial and aircraft systems including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related generally to unmanned aircraft systems including ISR services.

All other—All other segments include HAPS, MacCready Works and the recently acquired ISG and Telerob businesses.

The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other. The following table (in thousands) sets forth segment revenue, gross margin, operating (loss) income and adjusted operating (loss) income from operations for the periods indicated. Adjusted operating (loss) income is defined as operating (loss) income before intangible amortization, amortization of purchase accounting adjustment related to increasing the carrying value of certain assets to fair value, and acquisition related expenses.


	Three Months Ended January 29, 2022
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	24,366	$	18,603	$	21,168	$	25,956	$	90,093
Gross margin		8,656		5,209		335		7,236		21,436

Income (loss) from operations		(3,606)		(1,289)		(8,623)		(608)		(14,126)
Acquisition-related expenses		99		54		41		174		368
Amortization of acquired intangible assets and other purchase accounting adjustments		707		-		5,641		3,035		9,383
Adjusted income (loss) from operations	$	(2,800)	$	(1,235)	$	(2,941)	$	2,601	$	(4,375)


	Three Months Ended January 30, 2021
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	50,536	$	19,598	$	-	$	8,648	$	78,782
Gross margin		22,017		4,889		-		1,735		28,641

Income (loss) from operations		6,702		(2,314)		-		(5,030)		(642)
Acquisition-related expenses		1,408		773		477		750		3,408
Amortization of acquired intangible assets and other purchase accounting adjustments		661		-		-		1		662
Adjusted income (loss) from operations	$	8,771	$	(1,541)	$	477	$	(4,279)	$	3,428


	Nine Months Ended January 29, 2022
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	119,004	$	56,197	$	70,072	$	67,837	$	313,110
Gross margin		53,330		17,420		5,739		16,125		92,614

Income (loss) from operations		11,729		(1,705)		(22,004)		(10,920)		(22,900)
Acquisition-related expenses		819		468		1,533		1,649		4,469
Amortization of acquired intangible assets and other purchase accounting adjustments		2,121		-		17,190		9,526		28,837
Adjusted income (loss) from operations	$	14,669	$	(1,237)	$	(3,281)	$	255	$	10,406


	Nine Months Ended January 30, 2021
	Small UAS		TMS		MUAS		All other		Total
Revenue	$	165,003	$	48,093	$	-	$	45,801	$	258,897
Gross margin		79,195		12,752		-		12,956		104,903

Income (loss) from operations		37,285		(7,454)		-		(4,278)		25,553
Acquisition-related expenses		1,579		867		535		841		3,822
Amortization of acquired intangible assets and other purchase accounting adjustments		2,037		-		-		-		2,037
Adjusted income (loss) from operations	$	40,901	$	(6,587)	$	535	$	(3,437)	$	31,412

Segment assets are summarized in the table below. Corporate assets primarily consist of cash and cash equivalents, short-term investments, prepaid expenses and other current assets, long-term investments, property and equipment, net, operating lease right-of-use assets, deferred income taxes and other assets managed centrally on behalf of the business segments.


	January 29, 2022
	Small UAS		TMS		MUAS		All other		Corporate		Total
Identifiable assets	$	85,119	$	89,497	$	388,833	$	104,889	$	236,925	$	905,263


	April 30, 2021
	Small UAS		TMS		MUAS		All other		Corporate		Total
Identifiable assets	$	113,072	$	71,707	$	402,037	$	39,581	$	302,169	$	928,566

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Intangibles, net - Intangibles included in other assets on the balance sheet (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Intangibles, net
Intangibles, gross	$ 134,471	$ 116,872
Less accumulated amortization	(30,646)	(10,604)
Intangibles, net	103,825	106,268
Technology
Intangibles, net
Intangibles, gross	57,495	46,850
Licenses
Intangibles, net
Intangibles, gross	1,008	1,008
Backlog
Intangibles, net
Intangibles, gross	2,223
Customer relationships
Intangibles, net
Intangibles, gross	72,702	68,073
In-process research and development
Intangibles, net
Intangibles, gross	550	550
Non-compete agreements
Intangibles, net
Intangibles, gross	320	320
Trademarks and tradenames
Intangibles, net
Intangibles, gross	68	68
Other
Intangibles, net
Intangibles, gross	$ 105	$ 3

Warranty Reserves (Tables)

9 Months Ended

Jan. 29, 2022

Warranty Reserves

Summary of warranty reserve activity

Warranty reserve activity is summarized as follows for the three and nine months ended January 29, 2022 and January 30, 2021, respectively (in thousands):


	Three Months Ended				Nine Months Ended
	January 29,			January 30,	January 29,		January 30,
	2022		2021		2022		2021
Beginning balance	$	2,650	$	2,126	$	2,341	$	2,015
Balance acquired from acquisition		—		—		256		—
Warranty expense		(192)		277		704		1,038
Warranty costs settled		(352)		(231)		(1,195)		(881)
Ending balance	$	2,106	$	2,172	$	2,106	$	2,172

Intangibles, net - Estimated amortization expense (Details) $ in Thousands	Apr. 30, 2021 USD ($)
Estimated amortization expense
2022	$ 7,565
2023	27,719
2024	26,870
2025	18,156
2026	13,114
Total	$ 93,424

Organization and Significant Accounting Policies

9 Months Ended

Jan. 29, 2022

Organization and Significant Accounting Policies

Organization and Significant Accounting Policies

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

1. Organization and Significant Accounting Policies

Organization

AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, delivery and support of a technologically advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses. AeroVironment, Inc. supplies unmanned aircraft systems (“UAS”), tactical missile systems (“TMS”), unmanned ground vehicles (“UGV”) and related services primarily to organizations within the U.S. Department of Defense (“DoD”) and to international allied governments.

Basis of Presentation

Recently Adopted Accounting Standards

Revenue Recognition

Performance Obligations

Contract Estimates

Contract estimates are based on various assumptions to project the outcome of future events that may span several years.

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				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by major product line/program	2022		2021		2022		2021
Small UAS	$	24,366	$	50,536	$	119,004	$	165,003
TMS		18,603		19,598		56,197		48,093
MUAS		21,168		—		70,072		—
Other		25,956		8,648		67,837		45,801
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by contract type	2022		2021		2022		2021
FFP	$	66,639	$	61,230	$	245,798	$	190,530
CPFF		21,788		17,530		62,499		68,329
T&M		1,666		22		4,813		38
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by customer category	2022		2021		2022		2021
U.S. government	$	60,956	$	60,633	$	204,107	$	170,023
Non-U.S. government		29,137		18,149		109,003		88,874
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by geographic location	2022		2021		2022		2021
Domestic	$	56,480	$	51,062	$	193,531	$	150,890
International		33,613		27,720		119,579		108,007
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

Contract Balances

Segments

Restricted Cash

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 (Loss) Per Share

Basic earnings (loss) 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				Nine Months Ended
	January 29, 2022		January 30, 2021		January 29, 2022		January 30, 2021
Net income (loss) attributable to AeroVironment, Inc.	$	10	$	211	$	(11,446)	$	12,385
Denominator for basic earnings (loss) per share:
Weighted average common shares		24,710,991		23,942,782		24,657,846		23,924,017
Dilutive effect of employee stock options, restricted stock and restricted stock units		168,652		318,092		—		292,354
Denominator for diluted earnings (loss) per share		24,879,643		24,260,874		24,657,846		24,216,371

Recently Issued Accounting Standards

Accounting pronouncements issued but not effective until after January 29, 2022 are not expected to be applicable to the Company.

Leases - Components of lease costs (Details) - USD ($) $ in Thousands	9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021
Components of lease costs
Operating lease cost	$ 5,033	$ 3,592
Short term lease cost	684	369
Variable lease cost	434	3
Sublease income	(132)	(48)
Total lease costs, net	$ 6,019	$ 3,916

Organization and Significant Accounting Policies (Tables)

9 Months Ended

Jan. 29, 2022

Organization and Significant Accounting Policies

Schedule of 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				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by major product line/program	2022		2021		2022		2021
Small UAS	$	24,366	$	50,536	$	119,004	$	165,003
TMS		18,603		19,598		56,197		48,093
MUAS		21,168		—		70,072		—
Other		25,956		8,648		67,837		45,801
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by contract type	2022		2021		2022		2021
FFP	$	66,639	$	61,230	$	245,798	$	190,530
CPFF		21,788		17,530		62,499		68,329
T&M		1,666		22		4,813		38
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897


	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by customer category	2022		2021		2022		2021
U.S. government	$	60,956	$	60,633	$	204,107	$	170,023
Non-U.S. government		29,137		18,149		109,003		88,874
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

	Three Months Ended				Nine Months Ended
	January 29,		January 30,		January 29,		January 30,
Revenue by geographic location	2022		2021		2022		2021
Domestic	$	56,480	$	51,062	$	193,531	$	150,890
International		33,613		27,720		119,579		108,007
Total revenue	$	90,093	$	78,782	$	313,110	$	258,897

Schedule of reconciliation of basic to diluted shares

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


		Three Months Ended				Nine Months Ended
	January 29, 2022		January 30, 2021		January 29, 2022		January 30, 2021
Net income (loss) attributable to AeroVironment, Inc.	$	10	$	211	$	(11,446)	$	12,385
Denominator for basic earnings (loss) per share:
Weighted average common shares		24,710,991		23,942,782		24,657,846		23,924,017
Dilutive effect of employee stock options, restricted stock and restricted stock units		168,652		318,092		—		292,354
Denominator for diluted earnings (loss) per share		24,879,643		24,260,874		24,657,846		24,216,371

Organization and Significant Accounting Policies - Performance Obligations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021
Organization and Significant Accounting Policies
Remaining performance obligations satisfied over time (as a percentage)	66.00%	39.00%	58.00%	39.00%
Remaining performance obligations at a point in time (as a percentage)	34.00%	61.00%	42.00%	61.00%
Performance Obligations
Remaining performance obligations	$ 226,318		$ 226,318
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)	48.00%		48.00%
Performance Obligations
Year of performance obligations	1 year		1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-30
Organization and Significant Accounting Policies
Remaining performance obligations (as a percentage)	52.00%		52.00%
Performance Obligations
Year of performance obligations	2 years		2 years

Investments (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Short-term investments:
Total short-term investments	$ 3,969	$ 31,971
Long-term investments:
Equity Method Investments.	12,388	7,168
Total long-term investments	12,388	12,156
Investment in limited partnership fund
Long-term investments:
Equity Method Investments.	12,388	7,168
Available-for-sale securities
Short-term investments:
Total short-term investments	3,969	31,971
Long-term investments:
Total long-term investments		4,988
Available-for-sale securities \| Municipal securities
Short-term investments:
Total short-term investments	$ 3,969	22,245
Long-term investments:
Total long-term investments		988
Available-for-sale securities \| U.S. government securities
Short-term investments:
Total short-term investments		4,009
Long-term investments:
Total long-term investments		4,000
Available-for-sale securities \| Corporate bonds
Short-term investments:
Total short-term investments		$ 5,717

Inventories, net (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Apr. 30, 2021
Inventories, net
Raw materials	$ 37,898	$ 23,997
Work in process	24,695	13,825
Finished goods	39,939	44,113
Inventories, gross	102,532	81,935
Reserve for inventory excess and obsolescence	(12,916)	(10,289)
Inventories, net	$ 89,616	$ 71,646

Pension (Details) - Pension Plan		9 Months Ended
Pension (Details) - Pension Plan	May 03, 2021	Jan. 29, 2022
Pension
Discount rate assumption	1.00%	1.00%
Percentage of expected return on plan assets	2.15%	2.15%
Pension increase for in-payment benefits	1.50%	1.50%

Intangibles, net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
Intangibles, net (Details) - USD ($) $ in Thousands	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Intangibles, net
Amortization expense	$ 6,911	$ 622	$ 20,486	$ 2,086
Weighted average
Intangibles, net
Weighted average amortization period			4 years		5 years

Equity Method Investments (Details) ¥ in Thousands								3 Months Ended		9 Months Ended
Equity Method Investments (Details) ¥ in Thousands	Oct. 29, 2021 USD ($)	Oct. 29, 2021 JPY (¥)	Aug. 13, 2021 USD ($)	Aug. 13, 2021 JPY (¥)	Jun. 07, 2021 USD ($)	Jun. 07, 2021 JPY (¥)	May 29, 2021 USD ($)	Jan. 29, 2022 USD ($)	Jan. 30, 2021 USD ($)	Jan. 29, 2022 USD ($)	Jan. 30, 2021 USD ($)	Mar. 01, 2022 USD ($)	Mar. 01, 2022 JPY (¥)	May 29, 2021 JPY (¥)	Apr. 30, 2021 USD ($)	Dec. 04, 2019 USD ($)	Dec. 04, 2019 JPY (¥)	May 10, 2019 USD ($)	May 10, 2019 JPY (¥)	Feb. 09, 2019 USD ($)	Feb. 09, 2019 JPY (¥)	Feb. 08, 2019	Jan. 29, 2019 USD ($)	Jan. 29, 2019 JPY (¥)	May 09, 2018	Apr. 17, 2018 USD ($)	Apr. 17, 2018 JPY (¥)	Dec. 27, 2017 USD ($)	Dec. 27, 2017 JPY (¥)
Equity Method Investments
Equity method investment income (loss), net of tax								$ 171,000	$ (81,000)	$ 163,000	$ (10,891,000)
Carrying value of investment								12,388,000		12,388,000					$ 7,168,000
HAPSMobile
Equity Method Investments
Ownership percentage																7.00%	7.00%	5.00%	5.00%	10.00%	10.00%	5.00%	5.00%	5.00%	10.00%			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
Amount of loss from impairment of investment											8,363,000
Equity method investment income (loss), net of tax									$ 0		$ (10,810,000)
HAPSMobile \| Equity method investment activity, net of tax
Equity Method Investments
Equity method investment income (loss), net of tax								(200,000)		(2,044,000)
HAPSMobile \| Other assets, long term
Equity Method Investments
Carrying value of investment								$ 2,435,000		$ 2,435,000					$ 0
HAPSMobile \| SoftBank
Equity Method Investments
Ownership percentage								93.00%		93.00%
HAPSMobile \| Aerovironment
Equity Method Investments
Ownership percentage								7.00%		7.00%
MDDA
Equity Method Investments
Term of MDDA							5 years
MDDA \| SoftBank
Equity Method Investments
Maximum value under MDDA							$ 51,200,000
MDDA \| HAPSMobile
Equity Method Investments
Amount of loan repayment												$ 4,345,000	¥ 503,832
Execution of MDDA \| ¥														¥ 500,000
Amount funded	$ 1,674,000	¥ 190,000	$ 1,638,000	¥ 180,000	$ 1,195,000	¥ 130,000

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Parent	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Non-controlling Interest	Total
Balance at Apr. 30, 2020	$ 509,901	$ 2	$ 181,481	$ 328,090	$ 328
Balance, Beginning at Apr. 30, 2020							$ 509,901
Balance (in shares) at Apr. 30, 2020		24,063,639
Increase (Decrease) in Stockholders' Equity
Net income (loss)	12,385			12,385			12,385
Net loss (income) attributable to noncontrolling interest						$ (12)	12
Net Income (loss) including non-controlling interest							12,373
Unrealized (loss) gain on investments	(56)				(56)		(56)
Foreign currency translation	75				75		75
Stock options exercised	86		86				86
Stock options exercised (in shares)		3,500
Restricted stock awards (in shares)		62,675
Restricted stock awards forfeited (in shares)		1,833
Tax withholding payment related to net share settlement of equity awards	(1,955)		(1,955)				(1,955)
Tax withholding payment related to net share settlement of equity awards (in shares)		(25,290)
Stock-based compensation	4,754		4,754				4,754
Balance at Jan. 30, 2021	525,190	$ 2	184,366	340,475	347	(12)
Balance, Ending at Jan. 30, 2021							525,178
Balance (in shares) at Jan. 30, 2021		24,102,691
Balance at Oct. 31, 2020	523,906	$ 2	183,298	340,264	342	(59)
Balance, Beginning at Oct. 31, 2020							523,847
Balance (in shares) at Oct. 31, 2020		24,103,980
Increase (Decrease) in Stockholders' Equity
Net income (loss)	211			211			211
Net loss (income) attributable to noncontrolling interest						47	(47)
Net Income (loss) including non-controlling interest							258
Unrealized (loss) gain on investments	5				5		5
Restricted stock awards (in shares)		2,083
Restricted stock awards forfeited (in shares)		(1,318)
Tax withholding payment related to net share settlement of equity awards	(177)		(177)				(177)
Tax withholding payment related to net share settlement of equity awards (in shares)		(2,054)
Stock-based compensation	1,245		1,245				1,245
Balance at Jan. 30, 2021	525,190	$ 2	184,366	340,475	347	(12)
Balance, Ending at Jan. 30, 2021							525,178
Balance (in shares) at Jan. 30, 2021		24,102,691
Balance at Apr. 30, 2021	612,093	$ 2	260,327	351,421	343	14	612,093
Balance, Beginning at Apr. 30, 2021							612,107
Balance (in shares) at Apr. 30, 2021		24,777,295
Increase (Decrease) in Stockholders' Equity
Net income (loss)	(11,446)			(11,446)			(11,446)
Net loss (income) attributable to noncontrolling interest						49	(49)
Net Income (loss) including non-controlling interest							(11,397)
Unrealized (loss) gain on investments	(6)				(6)		(6)
Foreign currency translation	(3,771)				(3,771)		(3,771)
Stock options exercised	2,777		2,777				2,777
Stock options exercised (in shares)		114,362
Restricted stock awards (in shares)		55,592
Restricted stock awards forfeited (in shares)		20,203
Tax withholding payment related to net share settlement of equity awards	(1,176)		(1,176)				(1,176)
Tax withholding payment related to net share settlement of equity awards (in shares)		(11,941)
Change in non-controlling interest						224	224
Stock-based compensation	3,957		3,957				3,957
Balance at Jan. 29, 2022	602,428	$ 2	265,885	339,975	(3,434)	287	602,428
Balance, Ending at Jan. 29, 2022							602,715
Balance (in shares) at Jan. 29, 2022		24,915,105
Balance at Oct. 30, 2021	599,902	$ 2	261,612	339,965	(1,677)	332
Balance, Beginning at Oct. 30, 2021							600,234
Balance (in shares) at Oct. 30, 2021		24,805,829
Increase (Decrease) in Stockholders' Equity
Net income (loss)	10			10			10
Net loss (income) attributable to noncontrolling interest						(45)	45
Net Income (loss) including non-controlling interest							(35)
Unrealized (loss) gain on investments	(3)				(3)		(3)
Foreign currency translation	(1,754)				(1,754)		(1,754)
Stock options exercised	2,657		2,657				2,657
Stock options exercised (in shares)		110,362
Restricted stock awards (in shares)		3,366
Restricted stock awards forfeited (in shares)		4,452
Stock-based compensation	1,616		1,616				1,616
Balance at Jan. 29, 2022	$ 602,428	$ 2	$ 265,885	$ 339,975	$ (3,434)	$ 287	602,428
Balance, Ending at Jan. 29, 2022							$ 602,715
Balance (in shares) at Jan. 29, 2022		24,915,105

Debt - Future principle payments (Details) $ in Thousands	Jan. 29, 2022 USD ($)
Future principle payments
2022	$ 2,500
2023	10,000
2024	10,000
2025	10,000
2026	160,000
Total	$ 192,500

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Business Acquisitions - ISG (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 23, 2021	Jan. 29, 2022	Jan. 30, 2021	Jan. 29, 2022	Jan. 30, 2021	Apr. 30, 2021
Business Acquisitions
Goodwill		$ 335,164		$ 335,164		$ 314,205
Supplemental Pro Forma Information (unaudited)
Revenue			$ 110,425
Net income (loss)			(4,945)
Intelligent Systems Group
Business Acquisitions
Total	$ 29,700
Contingent consideration paid	6,000					$ 6,000
Additional cash consideration paid		2,000
Acquisition-related costs		$ 42		$ 778
Other assets	217
Goodwill	19,254
Total assets acquired	35,371
Fair value of consideration transferred:
Cash	29,700
Holdback	150
Contingent consideration	5,521
Total paid	35,371
Supplemental Pro Forma Information (unaudited)
Revenue			81,665		$ 267,546
Net income (loss)			$ 517		$ 13,303
Intelligent Systems Group \| Technology
Business Acquisitions
Intangible assets	11,400
Intelligent Systems Group \| Customer relationships
Business Acquisitions
Intangible assets	$ 4,500

Equity Method Investments

9 Months Ended

Jan. 29, 2022

Equity Method Investments

Equity Method Investments

6. Equity Method Investments

In December 2017, the Company and SoftBank Corp. (“Softbank”) formed a joint venture, HAPSMobile Inc. (“HAPSMobile”), which is a Japanese corporation. Concurrent with the formation of HAPSMobile, the Company executed a Design and Development Agreement (the “DDA”) with HAPSMobile. As of January 29, 2022, 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%.

On May 29, 2021, the Company entered into an amendment to the DDA with HAPSMobile. The parties agreed to the amendment in anticipation of the Company and SoftBank entering into a Master Design and Development Agreement (“MDDA”) with each other to continue the design and development of the Solar High Altitude Pseudo-Satellite (“Solar HAPS”) aircraft developed under the DDA.

On May 29, 2021, the Company and SoftBank entered into a MDDA to continue the development of Solar HAPS. Pursuant to the MDDA, which has a five-year term, SoftBank will issue orders to the Company for the Company to perform design and development services and produce deliverables as specified in the applicable order(s). Upon the execution of the MDDA, SoftBank issued to the Company, and the Company accepted, the first order under the MDDA which has a maximum value of approximately $51,200,000. Concurrent with the execution of the MDDA, each of SoftBank and the Company agreed to lend HAPSMobile loans which are convertible into shares of HAPSMobile under certain conditions, and to cooperate with each other to explore restructuring and financing options for HAPSMobile to continue the development of Solar HAPS. The Company committed to lend 500,000,000 yen. On June 7, 2021 the Company funded 130,000,000 yen ($1,195,000) of the loan agreement. On August 13, 2021, the Company made the second payment of the loan agreement in the amount of 180,000,000 yen ($1,638,000). On October 29, 2021, the Company made the final payment under the loan agreement in the amount of 190,000,000 yen ($1,674,000). On March 1, 2022, HAPSMobile repaid the Company the loan in full plus accrued interest in the amount of 503,832,000 yen ($4,345,000). The repayment results in a gain for the Company during the three months ended April 30, 2022, offsetting the losses recorded for the nine months ended January 29, 2022.

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 and nine months ended January 29, 2022, the

Company recorded its proportionate net loss of HAPSMobile, or $200,000 and $2,044,000, respectively, in equity method investment loss, net of tax in the unaudited consolidated statement of operations. For the three and nine months ended January 30, 2021, the Company recorded its ownership percentage of the net loss of HAPSMobile, or $0 and $10,810,000, respectively, in equity method investment income (loss), net of tax in the unaudited consolidated statement of operations, of which $8,363,000 related to the Company’s proportion of a loss for HAPSMobile’s impairment of its investment in Loon LLC. At January 29, 2022 and April 30, 2021, the carrying value of the investment in HAPSMobile was $2,435,000 and $0, respectively, was recorded in other assets on the unaudited consolidated balance sheet.

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. During the nine months ended January 29, 2022 and January 30, 2021, the Company made additional contributions of $2,377,000 and $2,150,000, respectively. Under the terms of the limited partnership agreement, there are no further contribution commitments to the fund as of January 29, 2022. 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 and nine months ended January 29, 2022, the Company recorded its ownership percentage of the net gain of the limited partnership, or $478,000 and $2,843,000, respectively, net of $108,000 and $636,000 of tax expense, respectively, in equity method investment income (loss) in the unaudited consolidated statements of operations. For the three and nine months ended January 30, 2021, the Company recorded its ownership percentage of the net loss of the limited partnership, or $81,000 and $361,000, respectively, in equity method investment income (loss) in the unaudited consolidated statements of operations. At January 29, 2022 and April 30, 2021, the carrying value of the investment in the limited partnership of $12,388,000 and $7,168,000, respectively, was recorded in long-term investments on the unaudited consolidated balance sheet.