AeroVironment Inc 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ AeroVironment, Inc. Consolidated Balance Sheet s (In thousands except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 30, April 30, ​ ​ ​ 2021 ​ 2020 ​ ​ (Unaudited) ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 324,543 ​ $ 255,142 ​ Short-term investments ​ ​ 48,499 ​ ​ 47,507 ​ Accounts receivable, net of allowance for doubtful accounts of $ 565 at January 30, 2021 and $ 1,190 at April 30, 2020 ​ 26,621 ​ 73,660 ​ Unbilled receivables and retentions (inclusive of related party unbilled receivables of $ 6,834 at January 30, 2021 and $ 15,779 at April 30, 2020) ​ 61,084 ​ 75,837 ​ Inventories ​ 53,104 ​ 45,535 ​ Prepaid expenses and other current assets ​ 7,693 ​ 6,246 ​ Total current assets ​ 521,544 ​ 503,927 ​ Long-term investments ​ ​ 11,222 ​ ​ 15,030 ​ Property and equipment, net ​ 22,920 ​ 21,694 ​ Operating lease right-of-use assets ​ ​ 11,281 ​ ​ 8,793 ​ Deferred income taxes ​ 5,821 ​ 4,928 ​ Intangibles, net ​ ​ 11,552 ​ ​ 13,637 ​ Goodwill ​ ​ 6,340 ​ ​ 6,340 ​ Other assets ​ 312 ​ 10,605 ​ Total assets ​ $ 590,992 ​ $ 584,954 ​ Liabilities and stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 15,837 ​ $ 19,859 ​ Wages and related accruals ​ 20,081 ​ 23,972 ​ Customer advances ​ 4,279 ​ 7,899 ​ Current operating lease liabilities ​ ​ 4,403 ​ ​ 3,380 ​ Income taxes payable ​ ​ 2,370 ​ ​ 1,065 ​ Other current liabilities ​ 9,158 ​ 10,778 ​ Total current liabilities ​ 56,128 ​ 66,953 ​ Non-current operating lease liabilities ​ ​ 8,426 ​ ​ 6,833 ​ Other non-current liabilities ​ ​ 243 ​ ​ 250 ​ Liability for uncertain tax positions ​ 1,017 ​ 1,017 ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock, $ 0.0001 par value: ​ ​ ​ ​ ​ ​ ​ Authorized shares— 10,000,000 ; none issued or outstanding at January 30, 2021 and April 30, 2020 ​ — ​ — ​ Common stock, $ 0.0001 par value: ​ ​ ​ ​ ​ ​ ​ Authorized shares— 100,000,000 ​ ​ ​ ​ ​ ​ ​ Issued and outstanding shares— 24,102,691 shares at January 30, 2021 and 24,063,639 shares at April 30, 2020 ​ 2 ​ 2 ​ Additional paid-in capital ​ 184,366 ​ 181,481 ​ Accumulated other comprehensive income ​ 347 ​ 328 ​ Retained earnings ​ 340,475 ​ 328,090 ​ Total AeroVironment, Inc. stockholders’ equity ​ 525,190 ​ 509,901 ​ Noncontrolling interest ​ ​ ( 12 ) ​ ​ — ​ Total equity ​ ​ 525,178 ​ ​ 509,901 ​ Total liabilities and stockholders’ equity ​ $ 590,992 ​ $ 584,954 ​ ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ 3 Table of Contents AeroVironment, Inc. Consolidated Statements of Operation s (Unaudited) (In thousands except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ January 30, ​ January 25, ​ January 30, ​ January 25, ​ ​ 2021 2020 2021 2020 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ $ 58,348 ​ $ 36,432 ​ $ 182,233 ​ $ 159,657 ​ Contract services (inclusive of related party revenue of $ 7,480 and $ 11,762 for the three months ended January 30, 2021 and January 30, 2020, respectively; and $ 35,318 and $ 37,491 for the nine months ended January 30, 2021 and January 25, 2020, respectively) ​ 20,434 ​ 25,459 ​ 76,664 ​ 72,416 ​ ​ ​ 78,782 ​ 61,891 ​ 258,897 ​ 232,073 ​ Cost of sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ 35,746 ​ 21,034 ​ 102,039 ​ 82,244 ​ Contract services ​ 14,395 ​ 17,361 ​ 51,955 ​ 49,895 ​ ​ ​ 50,141 ​ 38,395 ​ 153,994 ​ 132,139 ​ Gross margin: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Product sales ​ ​ 22,602 ​ ​ 15,398 ​ ​ 80,194 ​ ​ 77,413 ​ Contract services ​ ​ 6,039 ​ ​ 8,098 ​ ​ 24,709 ​ ​ 22,521 ​ ​ ​ ​ 28,641 ​ ​ 23,496 ​ 104,903 ​ 99,934 ​ Selling, general and administrative ​ 15,652 ​ 13,223 ​ 42,640 ​ 43,146 ​ Research and development ​ 13,631 ​ 11,381 ​ 36,710 ​ 30,948 ​ (Loss) income from operations ​ ( 642 ) ​ ( 1,108 ) ​ 25,553 ​ 25,840 ​ Other income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest income, net ​ 94 ​ 1,122 ​ 417 ​ 3,717 ​ Other (expense) income, net ​ ( 37 ) ​ 120 ​ 68 ​ 632 ​ (Loss) income before income taxes ​ ( 585 ) ​ 134 ​ 26,038 ​ 30,189 ​ (Benefit from) provision for income taxes ​ ​ ( 924 ) ​ ​ ( 38 ) ​ 2,774 ​ 3,203 ​ Equity method investment loss, net of tax ​ ( 81 ) ​ ( 1,200 ) ​ ( 10,891 ) ​ ( 3,410 ) ​ Net income (loss) ​ ​ 258 ​ ​ ( 1,028 ) ​ ​ 12,373 ​ ​ 23,576 ​ Net (income) loss attributable to noncontrolling interest ​ ​ ( 47 ) ​ ​ 20 ​ ​ 12 ​ ​ 27 ​ Net income (loss) attributable to AeroVironment, Inc. ​ $ 211 ​ $ ( 1,008 ) ​ $ 12,385 ​ $ 23,603 ​ Net income (loss) per share attributable to AeroVironment, Inc. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.01 ​ $ ( 0.04 ) ​ $ 0.52 ​ $ 0.99 ​ Diluted ​ $ 0.01 ​ $ ( 0.04 ) ​ $ 0.51 ​ $ 0.98 ​ Weighted-average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 23,942,782 ​ 23,821,145 ​ 23,924,017 ​ 23,790,788 ​ Diluted ​ 24,260,874 ​ 23,821,145 ​ 24,216,371 ​ 24,076,195 ​ ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ ​ 4 Table of Contents AeroVironment, Inc. Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ January 30, ​ January 25, ​ January 30, ​ January 25, ​ ​ 2021 2020 2021 2020 Net income (loss) ​ $ 258 ​ $ ( 1,028 ) ​ $ 12,373 ​ $ 23,576 ​ Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustments ​ ​ — ​ ​ ( 112 ) ​ ​ 75 ​ ​ 67 ​ Unrealized gain (loss) on available-for-sale investments, net of deferred tax benefit of $ 2 for the three and nine months ended January 30, 2021 ​ 5 ​ — ​ ( 56 ) ​ — ​ Total comprehensive income (loss) ​ ​ 263 ​ ​ ( 1,140 ) ​ ​ 12,392 ​ ​ 23,643 ​ Net loss (income) attributable to noncontrolling interest ​ ​ ( 47 ) ​ ​ 20 ​ ​ 12 ​ ​ 27 ​ Comprehensive income (loss) attributable to AeroVironment, Inc. ​ $ 216 ​ $ ( 1,120 ) ​ $ 12,404 ​ $ 23,670 ​ ​ See accompanying notes to consolidated financial statements (unaudited). ​ 5 Table of Contents AeroVironment, Inc. Consolidated Statements of Stockholders’ Equity For the nine months ended January 30, 2021 and January 25, 2020 (Unaudited) (In thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ Non- ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ AeroVironment, Inc. ​ Controlling ​ ​ ​ ​ Shares Amount Capital Earnings Loss ​ Equity ​ Interest Total Balance at April 30, 2020 24,063,639 ​ $ 2 ​ $ 181,481 ​ $ 328,090 ​ $ 328 ​ $ 509,901 ​ $ — ​ $ 509,901 ​ Net income (loss) — ​ — ​ — ​ 12,385 ​ — ​ ​ 12,385 ​ ​ ( 12 ) ​ 12,373 ​ Unrealized loss on investments ​ — ​ — ​ — ​ — ​ ( 56 ) ​ ​ ( 56 ) ​ ​ — ​ ( 56 ) ​ Foreign currency translation ​ — ​ — ​ — ​ — ​ 75 ​ ​ 75 ​ ​ — ​ 75 ​ Stock options exercised 3,500 ​ — ​ 86 ​ — ​ ​ — ​ ​ 86 ​ ​ — ​ 86 ​ Restricted stock awards 62,675 ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ Restricted stock awards forfeited ( 1,833 ) ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ Tax withholding payment related to net share settlement of equity awards ( 25,290 ) ​ — ​ ( 1,955 ) ​ — ​ ​ — ​ ​ ( 1,955 ) ​ ​ — ​ ( 1,955 ) ​ Stock based compensation — ​ — ​ 4,754 ​ — ​ ​ — ​ ​ 4,754 ​ ​ — ​ 4,754 ​ Balance at January 30, 2021 24,102,691 ​ $ 2 ​ $ 184,366 ​ $ 340,475 ​ $ 347 ​ $ 525,190 ​ $ ( 12 ) ​ $ 525,178 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ Non- ​ ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ AeroVironment, Inc. ​ Controlling ​ ​ ​ ​ ​ Shares Amount Capital Earnings Loss ​ Equity ​ Interest Total ​ Balance at April 30, 2019 23,946,293 ​ $ 2 ​ $ 176,216 ​ $ 286,351 ​ $ 2 ​ $ 462,571 ​ $ 4 ​ $ 462,575 ​ Adoption of ASU 2018-09 ​ — ​ ​ — ​ ​ — ​ ​ 665 ​ ​ — ​ ​ 665 ​ ​ — ​ ​ 665 ​ Net income (loss) — ​ — ​ — ​ 23,603 ​ — ​ ​ 23,603 ​ ​ ( 27 ) ​ 23,576 ​ Foreign currency translation ​ — ​ — ​ — ​ — ​ 67 ​ ​ 67 ​ ​ — ​ 67 ​ Stock options exercised 3,000 ​ — ​ 93 ​ — ​ ​ — ​ ​ 93 ​ ​ — ​ 93 ​ Restricted stock awards 74,892 ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ Restricted stock awards forfeited ( 11,769 ) ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ Tax withholding payment related to net share settlement of equity awards ( 17,307 ) ​ — ​ ( 1,009 ) ​ — ​ ​ — ​ ​ ( 1,009 ) ​ ​ — ​ ( 1,009 ) ​ Stock based compensation ​ — ​ — ​ 4,751 ​ — ​ ​ — ​ ​ 4,751 ​ ​ — ​ 4,751 ​ Balance at January 25, 2020 23,995,109 ​ $ 2 ​ $ 180,051 ​ $ 310,619 ​ $ 69 ​ $ 490,741 ​ $ ( 23 ) ​ $ 490,718 ​ ​ See accompanying notes to consolidated financial statements (unaudited). ​ 6 Table of Contents AeroVironment, Inc. Consolidated Statements of Stockholders’ Equity For the three months ended January 30, 2021 and January 25, 2020 (Unaudited) (In thousands except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ Non- ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ AeroVironment, Inc. ​ Controlling ​ ​ ​ ​ Shares Amount Capital Earnings Income ​ Equity ​ Interest Total Balance at October 31, 2020 24,103,980 ​ $ 2 ​ $ 183,298 ​ $ 340,264 ​ $ 342 ​ $ 523,906 ​ $ ( 59 ) ​ $ 523,847 Net income — ​ — ​ — ​ 211 ​ — ​ ​ 211 ​ ​ 47 ​ 258 Unrealized loss on investments — ​ — ​ — ​ — ​ 5 ​ ​ 5 ​ ​ — ​ 5 Restricted stock awards ​ 2,083 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Restricted stock awards forfeited ( 1,318 ) ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — Tax withholding payment related to net share settlement of equity awards ( 2,054 ) ​ — ​ ( 177 ) ​ — ​ ​ — ​ ​ ( 177 ) ​ ​ — ​ ( 177 ) Stock based compensation — ​ — ​ 1,245 ​ — ​ ​ — ​ ​ 1,245 ​ ​ — ​ 1,245 Balance at January 30, 2021 24,102,691 ​ $ 2 ​ $ 184,366 ​ $ 340,475 ​ $ 347 ​ $ 525,190 ​ $ ( 12 ) ​ $ 525,178 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ Non- ​ ​ ​ ​ ​ Common Stock ​ Paid-In ​ Retained ​ Comprehensive ​ AeroVironment, Inc. ​ Controlling ​ ​ ​ ​ Shares Amount Capital Earnings Income ​ Equity ​ Interest Total Balance at October 26, 2019 23,990,616 ​ ​ 2 ​ ​ 178,550 ​ ​ 311,627 ​ ​ 181 ​ ​ 490,360 ​ ​ ( 3 ) ​ ​ 490,357 Net loss — ​ — ​ — ​ ( 1,008 ) ​ — ​ ​ ( 1,008 ) ​ ​ ( 20 ) ​ ( 1,028 ) Foreign currency translation ​ — ​ — ​ — ​ — ​ ( 112 ) ​ ​ ( 112 ) ​ ​ — ​ ( 112 ) Restricted stock awards 9,200 ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — Restricted stock awards forfeited ( 764 ) ​ ​ — ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ — Tax withholding payment related to net share settlement of equity awards ( 3,943 ) ​ — ​ ( 266 ) ​ — ​ ​ — ​ ​ ( 266 ) ​ ​ — ​ ( 266 ) Stock-based compensation ​ — ​ — ​ 1,767 ​ — ​ ​ — ​ ​ 1,767 ​ ​ — ​ 1,767 Balance at January 25, 2020 23,995,109 ​ $ 2 ​ $ 180,051 ​ $ 310,619 ​ $ 69 ​ $ 490,741 ​ $ ( 23 ) ​ $ 490,718 ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ 7 Table of Contents AeroVironment, Inc. Consolidated Statements of Cash Flow s (Unaudited) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ ​ January 30, January 25, ​ ​ 2021 ​ 2020 ​ Operating activities ​ ​ ​ ​ ​ ​ Net income ​ $ 12,373 ​ $ 23,576 ​ Adjustments to reconcile net income to cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 8,650 ​ 7,107 ​ Losses from equity method investments ​ ​ 10,891 ​ ​ 3,410 ​ Realized gain from sale of available-for-sale investments ​ ​ ( 11 ) ​ ​ — ​ Provision for doubtful accounts ​ ( 145 ) ​ ( 2 ) ​ Other non-cash income ​ ​ ( 473 ) ​ ​ ( 719 ) ​ Non-cash lease expense ​ ​ 3,592 ​ ​ 3,453 ​ Loss on foreign currency transactions ​ 1 ​ — ​ Deferred income taxes ​ ( 897 ) ​ ( 946 ) ​ Stock-based compensation ​ 4,754 ​ 4,751 ​ Loss (gain) on sale of property and equipment ​ ​ 2 ​ ​ ( 71 ) ​ Amortization of debt securities ​ ​ 143 ​ ​ ( 1,291 ) ​ Changes in operating assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 47,184 ​ 3,245 ​ Unbilled receivables and retentions ​ 14,753 ​ ( 24,364 ) ​ Inventories ​ ( 7,569 ) ​ ( 10,766 ) ​ Income tax receivable ​ ​ — ​ ​ 821 ​ Prepaid expenses and other assets ​ ( 1,622 ) ​ 216 ​ Accounts payable ​ ( 3,346 ) ​ ( 1,301 ) ​ Other liabilities ​ ​ ( 9,318 ) ​ ​ 7,947 ​ Net cash provided by operating activities ​ 78,962 ​ 15,066 ​ Investing activities ​ ​ ​ ​ ​ ​ ​ Acquisition of property and equipment ​ ( 8,472 ) ​ ( 8,504 ) ​ Equity method investments ​ ​ ( 2,150 ) ​ ​ ( 9,551 ) ​ Business acquisition, net of cash acquired ​ ​ — ​ ​ ( 18,641 ) ​ Proceeds from sale of property and equipment ​ ​ — ​ ​ 81 ​ Redemptions of held-to-maturity investments ​ — ​ 166,917 ​ Purchases of held-to-maturity investments ​ ​ — ​ ​ ( 162,517 ) ​ Redemptions of available-for-sale investments ​ 130,066 ​ 41,150 ​ Purchases of available-for-sale investments ​ ​ ( 125,644 ) ​ ​ ( 59,297 ) ​ Net cash used in investing activities ​ ( 6,200 ) ​ ( 50,362 ) ​ Financing activities ​ ​ ​ ​ ​ ​ ​ Tax withholding payment related to net settlement of equity awards ​ ​ ( 1,955 ) ​ ​ ( 1,009 ) ​ Holdback and retention payments for business acquisition ​ ​ ( 1,492 ) ​ ​ — ​ Exercise of stock options ​ 86 ​ 93 ​ Net cash used in financing activities ​ ( 3,361 ) ​ ( 916 ) ​ Net increase (decrease) in cash, cash equivalents, and restricted cash ​ 69,401 ​ ( 36,212 ) ​ Cash, cash equivalents and restricted cash at beginning of period ​ 255,142 ​ 172,708 ​ Cash, cash equivalents and restricted cash at end of period ​ $ 324,543 ​ $ 136,496 ​ Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ ​ ​ Cash paid, net during the period for: ​ ​ ​ ​ ​ ​ ​ Income taxes ​ $ 2,364 ​ $ 518 ​ Non-cash activities ​ ​ ​ ​ ​ ​ ​ Unrealized loss on available-for-sale investments, net of deferred tax benefit of $2 ​ $ 56 ​ $ — ​ Change in foreign currency translation adjustments ​ $ 75 ​ $ 67 ​ Acquisitions of property and equipment included in accounts payable ​ $ 746 ​ $ 263 ​ ​ See accompanying notes to consolidated financial statements (unaudited). ​ ​ ​ ​ ​ ​ ​ 8 Table of Contents ​ AeroVironment, Inc. Notes to Consolidated Financia l Statements (Unaudited) ​ 1. Organization and Significant Accounting Policies ​ Organization ​ AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, support and operation of unmanned aircraft systems (“UAS”) for various industries and governmental agencies. ​ Basis of Presentation ​ The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the three and nine months ended January 30, 2021 are not necessarily indicative of the results for the full year ending April 30, 2021. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2020, included in the Company’s Annual Report on Form 10-K. ​ The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. ​ The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. ​ In December 2017, the Company and SoftBank Corp. (“SoftBank”) formed a joint venture, HAPSMobile Inc. (“HAPSMobile”). As the Company has the ability to exercise significant influence over the operating and financial policies of HAPSMobile, the Company’s investment has been accounted for as an equity method investment. The Company has presented its proportion of HAPSMobile’s net loss in equity method investment loss, net of tax in the consolidated statements of operations. During the nine months ended January 25, 2021, the Company recorded its proportion of a loss for HAPSMobile’s impairment of its investment in Loon LLC in the amount of $ 8,363,000 . The Company’s investment has been written down to zero. Refer to Note 6—Equity Method Investments for further details. ​ On June 10, 2019, the Company purchased 100 % of the issued and outstanding member units of Pulse Aerospace, LLC (“Pulse”) pursuant to the terms of a Unit Purchase Agreement (the “Pulse Purchase Agreement”). The assets, liabilities and operating results of Pulse have been included in the Company’s consolidated financial statements. On February 12, 2021, the Company dissolved its wholly-owned subsidiary, Pulse Aerospace, LLC, the results of which were not material to the consolidated financial statements as the Company has integrated the assets and operations. Refer to Note 17—Business Acquisitions for further details. ​ During the nine months ended January 25, 2020, the Company dissolved its wholly-owned subsidiary, Skytower, Inc., the results of which were not material to the consolidated financial statements. ​ Recently Adopted Accounting Standards ​ Effective May 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , along with several additional clarification ASU’s issued during 2018 and 2019, collectively “CECL”. CECL requires the reporting entity to estimate 9 Table of Contents expected credit losses over the life of a financial asset. CECL requires the credit loss to be recognized upon initial recognition of the financial asset. ASU 2016-13 requires the entity to adopt CECL using the modified retrospective transition approach through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. As part of the assessment of the adequacy of the Company’s allowances for credit losses, the Company considered a number of factors including, but not limited to, customer credit ratings, age of receivables, and expected loss rates. However, the adoption of CECL did not have a material impact to retained earnings for the Company. ​ Effective May 1, 2020, the Company adopted ASU 2018-15, “ Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract ” (“ASU 2018-15”). ASU 2018-15 provides guidance on the treatment of accounting for fees paid by a customer in a cloud computing arrangement. This guidance includes the requirements for capitalizing implementation costs incurred in a hosting arrangement. The Company adopted ASU 2018-15 using the prospective method, applying the new guidance to all implementation costs incurred after adoption. The adoption of ASU 2018-15 did not have an impact on the Company’s consolidated financial statements. ​ Revenue Recognition ​ The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of the customers. These contracts may be firm fixed price (“FFP”), cost plus fixed fee (“CPFF”), or time and materials (“T&M”). The Company considers all such contracts to be within the scope of ASC Topic 606. ​ Performance Obligations ​ A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC Topic 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its observable standalone selling price for products and services. When the standalone selling price is not directly observable, the Company uses its best estimate of the standalone selling price of each distinct good or service in the contract using the cost plus margin approach. This approach estimates the Company’s expected costs of satisfying the performance obligation and then adds an appropriate margin for that distinct good or service. ​ Contract modifications are routine in the performance of the Company’s contracts. In most instances, contract modifications are for additional goods and/or services that are distinct and, therefore, accounted for as new contracts. ​ The Company’s performance obligations are satisfied over time or at a point in time. Performance obligations are satisfied over time if the customer receives the benefits as the Company performs, if the customer controls the asset as it is being developed or produced, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for the Company’s costs incurred to date plus a reasonable margin. The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. Revenue for tactical missile systems (“TMS”) product deliveries and Customer-Funded Research and Development contracts is recognized over time as costs are incurred. Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, and technical support services. Contract services revenue is recognized over time as services are rendered. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Training services are recognized over time using an output method based on days of training completed. ​ For performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with, and thereby best depict, transfer of control to the customer. Contract costs include labor, materials, subcontractors’ 10 Table of Contents costs, other direct costs, and indirect costs applicable on government and commercial contracts. ​ For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is recognized at the point in time in which each performance obligation is fully satisfied. The Company’s small UAS product sales revenue is composed of revenue recognized on contracts for the delivery of small UAS systems and spare parts. Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer. ​ 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 61 % of revenue during the three and nine months ended January 30, 2021. ​ On January 30, 2021, the Company had approximately $ 103,869,000 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 73 % of the remaining performance obligations as revenue in fiscal 2021 , an additional 26 % in fiscal 2022, and the balance thereafter. ​ The Company collects sales, value added, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer. ​ Contract Estimates ​ Accounting for contracts and programs primarily with a duration of less than six months involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end. Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts. ​ Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer. ​ The nature of the Company’s contracts gives rise to several types of variable consideration, including penalty fees and incentive awards generally for late delivery and early delivery, respectively. The Company generally estimates such variable consideration as the most likely amount. In addition, the Company includes the estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved. These estimates are based on historical award experience, anticipated performance and the Company’s best judgment at the time. 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 11 Table of Contents periods ended 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 30, 2021. ​ The aggregate net favorable impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was approximately $ 1,152,000 and $ 1,169,000 for the three and nine month periods ended January 25, 2020, respectively. No adjustment on any one contract was material to the Company’s unaudited consolidated financial statements for the three month period ended January 25, 2020. During the nine month period ended January 25, 2020, the Company revised its estimates of the total expected costs to complete a contract associated with a design and development agreement. The impact of the revised estimate on this contract on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase of approximately $ 1,036,000 . ​ 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 30, ​ January 25, January 30, ​ January 25, ​ Revenue by major product line/program ​ 2021 2020 2021 2020 ​ Small UAS ​ $ 50,536 ​ $ 36,965 ​ $ 165,003 ​ $ 162,868 ​ TMS ​ ​ 19,598 ​ ​ 7,908 ​ ​ 48,093 ​ ​ 21,419 ​ HAPS ​ ​ 7,480 ​ ​ 11,762 ​ ​ 35,318 ​ ​ 37,490 ​ Other ​ 1,168 ​ 5,256 ​ 10,483 ​ 10,296 ​ Total revenue ​ $ 78,782 ​ $ 61,891 ​ $ 258,897 ​ $ 232,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ January 30, ​ January 25, January 30, ​ January 25, ​ Revenue by contract type ​ 2021 2020 ​ 2021 2020 ​ FFP ​ $ 61,230 ​ $ 40,145 ​ $ 190,530 ​ $ 168,607 ​ CPFF ​ ​ 17,530 ​ ​ 20,863 ​ ​ 68,329 ​ ​ 60,384 ​ T&M ​ 22 ​ 883 38 ​ 3,082 ​ Total revenue ​ $ 78,782 ​ $ 61,891 ​ $ 258,897 ​ $ 232,073 ​ ​ 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 30, ​ January 25, January 30, ​ January 25, ​ Revenue by customer category ​ 2021 2020 ​ 2021 2020 ​ U.S. government ​ $ 60,633 ​ $ 25,535 ​ $ 170,023 ​ $ 124,971 ​ Non-U.S. government ​ ​ 18,149 ​ ​ 36,356 ​ ​ 88,874 ​ ​ 107,102 ​ Total revenue ​ $ 78,782 ​ $ 61,891 ​ $ 258,897 ​ $ 232,073 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ ​ January 30, ​ January 25, ​ January 30, ​ January 25, ​ Revenue by geographic location ​ 2021 2020 ​ 2021 2020 ​ Domestic ​ $ 51,062 ​ $ 27,626 ​ $ 150,890 ​ $ 116,399 ​ International ​ ​ 27,720 ​ ​ 34,265 ​ ​ 108,007 ​ ​ 115,674 ​ Total revenue ​ $ 78,782 ​ $ 61,891 ​ $ 258,897 ​ $ 232,073 ​ ​ 12 Table of Contents 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 30, 2021 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 30, 2021 that was included in contract liability balances at the beginning of April 30, 2020 was $ 0 and $ 5,423,000 , respectively; and revenue recognized for the three and nine month periods ended January 25, 2020 that was included in contract liability balances at the beginning of April 30, 2019 was $ 12,000 and $ 1,670,000 , respectively. ​ Segments ​ Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM, who is the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the focus of research and development (“R&D”), on a consolidated basis for the Company’s continuing operations. Accordingly, the Company operates its business as a single reportable segment. ​ Investments ​ The Company’s investments are accounted for as available-for-sale and are reported at fair value. Unrealized gains and losses are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes for available-for-sale investments. Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. ​ Investments are considered to be impaired if the fair value of the investment is less than its amortized cost basis. On a quarterly basis, the Company considers available quantitative and qualitative evidence in evaluating potential impairment of its investments. If the cost of an investment exceeds its fair value, the Company evaluates if the decline in fair value resulted from a credit loss or other factors. The Company considers factors such as general market conditions and potential adverse conditions related to the financial health of the issuer based on rating agency actions. Impairments relating to credit losses are recorded in earnings through an allowance for credit losses. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairments not related to credit losses are recorded through other comprehensive income, net of applicable taxes. ​ Fair Values of Financial Instruments ​ Fair values of cash and cash equivalents, accounts receivable, unbilled receivables and retentions, and accounts payable approximate cost due to the short period of time to maturity. ​ 13 Table of Contents Government Contracts ​ Payments to the Company on government CPFF or T&M contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company for CPFF and T&M contracts. ​ For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. Historically, the Company has not experienced material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. ​ The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured. During the fiscal year ended April 30, 2020, the Company settled rates for its incurred cost claims with the DCAA for fiscal year 2015 for an amount that was not significant. At January 30, 2021 and April 30, 2020, the Company had no reserve for incurred cost claim audits. ​ 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ Nine Months Ended ​ January 30, 2021 January 25, 2020 January 30, 2021 January 25, 2020 Denominator for basic earnings (loss) per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average common shares ​ 23,942,782 ​ 23,821,145 ​ 23,924,017 ​ 23,790,788 ​ Dilutive effect of employee stock options, restricted stock and restricted stock units ​ 318,092 ​ — ​ 292,354 ​ 285,407 ​ Denominator for diluted earnings (loss) per share ​ ​ 24,260,874 ​ ​ 23,821,145 ​ ​ 24,216,371 ​ ​ 24,076,195 ​ ​ 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. Due to the net loss for the three months ended January 25, 2020, 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 were 287,408 and 3,076 for the three and nine months ended January 25, 2020, respectively. ​ Recently Issued Accounting Standards ​ In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) . This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods therein, with early adoption permitted. The adoption method is dependent on the specific amendment included in this update as certain amendments require retrospective adoption, modified retrospective adoption, an option of retrospective or modified retrospective, and prospective adoption. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. ​ In January 2020, the FASB issued ASU 2020-01, Clarifying the Interactions between Topic 321, Topic 323, and Topic 14 Table of Contents 815 (Topic 321, Topic 323, and Topic 815) . This ASU clarifies accounting certain topics impacted by Topic 321 Investments—Equity Securities. These topics include measuring equity securities using the measurement alternative, how the measurement alternative should be applied to equity method accounting, and certain forward contracts and purchased options which would be accounted for under the equity method of accounting upon settlement or exercise. The guidance is effective for fiscal years beginning after December 15, 2020 and interim periods therein, with early adoption permitted. The amendments should be adopted prospectively. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. ​ 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 income. During the year ended April 30, 2019, the Company recorded a reduction to the gain resulting from a working capital adjustment of $ 486,000 . During the year ended April 30, 2020, the Company and Webasto engaged an independent accounting firm to resolve a working capital dispute with a maximum exposure of $ 922,000 pursuant to the terms of the Purchase Agreement. In June 2020, the independent accounting firm determined the final adjustment to the working capital dispute to be $ 341,000 which has been recorded net of tax as a loss of discontinued operations in the consolidated statements of income for the year ended April 30, 2020. ​ The Company is entitled to receive additional cash consideration of $ 6,500,000 (the “Holdback”) upon tendering consents to assignment of two remaining customer contracts to Webasto. The Holdback was not recorded in the Company’s consolidated financial statements as the amount was not realized or realizable as of January 30, 2021. The Company’s satisfaction of the requirements for the payment of the Holdback is currently in dispute. ​ On February 22, 2019, Webasto filed a lawsuit alleging several claims against the Company for breach of contract, indemnity, and bad faith, including allegations regarding inaccuracy of certain diligence disclosures, failure to provide certain consents to contract assignments and related to a previously announced product recall. Webasto seeks to recover the costs of the recall and other damages totaling a minimum of $ 6,500,000 in addition to attorneys’ fees, costs, and punitive damages. On August 16, 2019, the Company filed a counterclaim against Webasto seeking payment of the Holdback and declaratory relief regarding Webasto’s cancellation of an assigned contract. The Company believes that the allegations are generally meritless and is mounting a vigorous defense. ​ During the three months ended October 27, 2018, Webasto filed a recall report with the National Highway Traffic Safety Administration that named certain of the Company’s EES products as subject to the recall. The Company is continuing to assess the facts giving rise to the recall. Under the terms of the Purchase Agreement, the Company may be responsible for certain costs of such recall of named products the Company manufactured, sold or serviced prior to the closing of the sale of the EES Business. On August 14, 2019, Benchmark Electronics, Inc. (“Benchmark”), the company that assembled the products subject to the recall, served a demand for arbitration to the Company and Webasto, and a third-party part supplier pursuant to its contracts with the Company and Webasto, respectively. The Company filed a responsive pleading in the Benchmark arbitration on October 29, 2019, consisting of a general denial, affirmative defenses, and a reservation of the right to file counter-claims at a later date. Webasto challenged the validity of the Benchmark arbitration by filing an action in New York Superior Court. In December 2019, Webasto and Benchmark reached a settlement of their disputed claims. Benchmark withdrew its Notice of Arbitration against Webasto and the Company, but reserved its right to pursue indemnity claims against suppliers. The recall remains a significant part of the Webasto lawsuit. ​ Concurrent with the execution of the Purchase Agreement, the Company entered into a transition services agreement (the “TSA”) to provide certain general and administrative services to Webasto for a defined period. Income from performing services under the TSA was $ 0 and $ 38,000 and has been recorded in other income, net in the consolidated statements of operations for the three and nine months ended January 30, 2021, respectively, and $ 57,000 and $ 545,000 and has been 15 Table of Contents recorded in other income, net in the consolidated statements of operations for the three and nine months ended January 25, 2020, respectively. ​ ​ ​ 3. Investments ​ Investments consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 30, ​ April 30, ​ ​ 2021 2020 Short-term investments: ​ ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ ​ Municipal securities ​ ​ 25,709 ​ ​ 5,244 ​ U.S. government securities ​ ​ 13,019 ​ ​ 33,771 ​ Corporate bonds ​ ​ 9,771 ​ ​ 8,492 ​ Total short-term investments ​ $ 48,499 ​ $ 47,507 ​ Long-term investments: ​ ​ ​ ​ ​ ​ ​ Available-for-sale securities: ​ ​ ​ ​ ​ ​ ​ Municipal securities ​ ​ 989 ​ ​ 1,592 ​ U.S. government securities ​ ​ 4,003 ​ ​ 8,996 ​ Total available-for-sale investments ​ 4,992 ​ 10,588 ​ Equity method investments ​ ​ ​ ​ ​ ​ ​ Investment in limited partnership fund ​ 6,230 ​ 4,442 ​ Total equity method investments ​ 6,230 ​ 4,442 ​ Total long-term investments ​ $ 11,222 ​ $ 15,030 ​ ​ Available-For-Sale Securities ​ As of January 30, 2021 and April 30, 2020, the balance of available-for-sale securities consisted of state and local government municipal securities, U.S. government securities, U.S. government agency securities, and investment grade corporate bonds. Interest earned from these investments is recorded in interest income. Realized gains on sales of these investments on the basis of specific identification is recorded in interest income. ​ The following table is a summary of the activity related to the available-for-sale investments recorded in short-term and long-term investments as of January 30, 2021 and April 30, 2020, respectively (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 30, 2021 ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ ​ Cost ​ Gains ​ Losses ​ Value Municipal securities ​ $ 26,691 ​ $ 12 ​ $ ( 5 ) ​ $ 26,698 U.S. government securities ​ ​ 17,017 ​ ​ 5 ​ ​ — ​ ​ 17,022 Corporate bonds ​ ​ 9,771 ​ ​ 1 ​ ​ ( 1 ) ​ ​ 9,771 Total available-for-sale investments ​ $ 53,479 ​ $ 18 ​ $ ( 6 ) ​ $ 53,491 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ April 30, 2020 ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ ​ Cost Gains ​ Losses Value Municipal securities $ 6,807 ​ $ 29 ​ $ — ​ $ 6,836 ​ U.S. government securities ​ 42,730 ​ ​ 41 ​ ​ ( 4 ) ​ ​ 42,767 ​ Corporate bonds ​ 8,495 ​ ​ — ​ ​ ( 3 ) ​ ​ 8,492 ​ Total available-for-sale investments $ 58,032 $ 70 ​ $ ( 7 ) $ 58,095 ​ ​ 16 Table of Contents The amortized cost and fair value of the available-for-sale debt securities by contractual maturity at January 30, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost Fair Value Due within one year ​ $ 48,494 ​ $ 48,499 ​ Due after one year through five years ​ 4,985 ​ 4,992 ​ Total ​ $ 53,479 ​ $ 53,491 ​ ​ ​ 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 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 ​ $ — ​ $ 53,491 ​ $ — ​ $ 53,491 ​ Total ​ $ — ​ $ 53,491 ​ $ — ​ $ 53,491 ​ ​ ​ ​ The Company’s financial assets measured at fair value on a recurring basis at April 30, 2020, were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement Using ​ ​ ​ Significant ​ ​ ​ ​ ​ ​ Quoted prices in ​ other ​ Significant ​ ​ ​ ​ ​ active markets for ​ observable ​ unobservable ​ ​ ​ ​ ​ identical assets ​ inputs ​ inputs ​ ​ ​ Description ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ Total Available-for-sale securities ​ $ — ​ $ 58,095 ​ $ — ​ $ 58,095 Total ​ $ — ​ $ 58,095 ​ $ — ​ $ 58,095 ​ ​ 17 Table of Contents 5. Inventories, net ​ Inventories consist of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 30, ​ April 30, ​ ​ 2021 2020 Raw materials ​ $ 23,608 ​ $ 15,988 ​ Work in process ​ 12,225 ​ 10,340 ​ Finished goods ​ 25,843 ​ 29,439 ​ Inventories, gross ​ 61,676 ​ 55,767 ​ Reserve for inventory excess and obsolescence ​ ( 8,572 ) ​ ( 10,232 ) ​ Inventories, net ​ $ 53,104 ​ $ 45,535 ​ ​ ​ 6. Equity Method Investments ​ In December of 2017, the Company and SoftBank formed a joint venture, HAPSMobile, which is a Japanese corporation. As of January 30, 2021, the Company’s ownership stake in HAPSMobile was approximately 7 %, with the remaining 93 % held by SoftBank. In connection with the formation of the joint venture on December 27, 2017, the Company initially purchased shares of HAPSMobile representing a 5 % ownership interest in exchange for an investment of 210,000,000 yen ($ 1,860,000 ). The Company subsequently purchased additional shares of HAPSMobile in order to maintain a 5 % ownership stake in the joint venture. The first such purchase occurred on April 17, 2018, at which time the Company invested 150,000,000 yen ($ 1,407,000 ) for the purchase of additional shares of HAPSMobile. On January 29, 2019, the Company invested an additional 209,500,000 yen ($ 1,926,000 ) to maintain its 5 % ownership stake. On February 9, 2019, the Company elected to purchase 632,800,000 yen ($ 5,671,000 ) of additional shares of HAPSMobile to increase the Company’s ownership in the joint venture from 5 % to 10 %, and on May 10, 2019, the Company purchased 500,000,000 yen ($ 4,569,000 ) of additional shares of HAPSMobile to maintain its 10 % ownership stake. The Company’s ownership percentage was subsequently diluted from 10 % to approximately 5 %. On December 4, 2019, the Company purchased 540,050,000 yen ($ 4,982,000 ) of additional shares of HAPSMobile to increase its ownership stake to approximately 7 %. ​ As the Company has the ability to exercise significant influence over the operating and financial policies of HAPSMobile pursuant to the applicable Joint Venture Agreement and related organizational documents, the Company’s investment is accounted for as an equity method investment. During the nine months ended January 25, 2021, the Company recorded its proportion of a loss for HAPSMobile’s impairment of its investment in Loon LLC in the amount of $ 8,363,000 . 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 loss, net of tax in the unaudited consolidated statement of income. HAPSMobile initially made its investment in Loon LLC in April 2019. For the three and nine months ended January 25, 2020, the Company recorded its ownership percentage of the net loss of HAPSMobile, or $ 1,200,000 and $ 3,410,000 , respectively, in equity method investment loss, net of tax in the unaudited consolidated statement of operations. At January 30, 2021 and April 30, 2020, the carrying value of the investment in HAPSMobile of $ 0 and $ 10,455,000 , respectively, was recorded in other assets. As the Company’s investment has been written down to zero, no future losses of HAPSMobile will be recorded in equity method investment loss, net of tax in subsequent periods. ​ Investment in Limited Partnership Fund ​ In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets. On July 15, 2020 and January 4, 2021, the Company made additional contributions of $ 1,173,000 and $ 977,000 , respectively. Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 2,904,000 to the fund. The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest. For the three 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 loss in the consolidated statements of income. For the three and nine months 18 Table of Contents ended January 25, 2020, the Company recorded no net loss of the limited partnership. At January 30, 2021 and April 30, 2020, the carrying value of the investment in the limited partnership of $ 6,230,000 and $ 4,442,000 , respectively, was recorded in long-term investments. ​ ​ 7. Warranty Reserves ​ The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. The warranty reserve is included in other current liabilities. The related expense is included in cost of sales. Warranty reserve activity is summarized as follows for the three and nine months ended January 30, 2021 and January 25, 2020, respectively (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ January 30, ​ ​ January 25, ​ January 30, ​ January 25, ​ ​ ​ 2021 2020 2021 2020 ​ Beginning balance ​ $ 2,126 ​ $ 1,875 ​ $ 2,015 ​ $ 1,704 ​ Warranty expense ​ 277 ​ 250 ​ 1,038 ​ 1,469 ​ Changes in estimates related to pre-existing warranties ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 189 ) ​ Warranty costs settled ​ ( 231 ) ​ ( 289 ) ​ ( 881 ) ​ ( 1,148 ) ​ Ending balance ​ $ 2,172 ​ $ 1,836 ​ $ 2,172 ​ $ 1,836 ​ ​ ​ 8. Intangibles, net ​ The components of intangibles are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ January 30, ​ April 30, ​ ​ 2021 2020 ​ Technology ​ $ 14,950 ​ $ 14,950 ​ Licenses ​ ​ 1,006 ​ ​ 1,006 ​ Customer relationships ​ ​ 873 ​ ​ 873 ​ In-process research and development ​ ​ 550 ​ ​ 550 ​ Non-compete agreements ​ ​ 320 ​ ​ 320 ​ Trademarks and tradenames ​ ​ 68 ​ ​ 68 ​ Other ​ ​ 3 ​ ​ 3 ​ Intangibles, gross ​ ​ 17,770 ​ ​ 17,770 ​ Less accumulated amortization ​ ( 6,218 ) ​ ( 4,133 ) ​ Intangibles, net ​ $ 11,552 ​ $ 13,637 ​ ​ The weighted average amortization period at January 30, 2021 and April 30, 2020 was four years . Amortization expense for the three and nine months ended January 30, 2021 was $ 662,000 and $ 2,086,000 , respectively. Amortization expense for the three and nine months ended January 25, 2020 was $ 775,000 and $ 2,102,000 , respectively. ​ Technology, in-process research and development, customer relationships, trademarks and tradenames, and non-compete agreements were recognized in conjunction with the Company’s acquisition of Pulse on June 10, 2019. Refer to Note 17—Business Acquisitions for further details. ​ Estimated amortization expense for the next five years is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Year ending ​ ​ April 30, 2021 ​ $ 707 ​ 2022 ​ 2,829 ​ 2023 ​ 2,688 ​ 2024 ​ 2,629 ​ 2025 ​ 2,492 ​ ​ ​ $ 11,345 ​ ​ 19 Table of Contents ​ 9. Goodwill ​ The following table presents the changes in the Company’s goodwill balance (in thousands): ​ ​ ​ ​ ​ Balance at April 30, 2020 $ 6,340 Additions to goodwill ​ ​ - Impairment of goodwill ​ ​ - Balance at January 30, 2021 ​ $ 6,340 ​ The goodwill balance at April 30, 2020 is attributable to the acquisition of Pulse. Refer to Note 17—Business Acquisitions for further details. ​ 10. Leases ​ The Company leases certain buildings, land and equipment. At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities. ​ The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The Company defines the initial lease term to include renewal options determined to be reasonably certain. The Company’s leases have remaining lease terms of less than one year to six years , some of which may include options to extend the lease for up to 10 years , and some of which may include options to terminate the lease after two years . None of the Company’s options to extend or terminate are reasonably certain of being exercised, and are therefore not included in the Company’s determination of lease assets and liabilities. For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term. ​ Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records incentive as a reduction to fixed lease payments thereby reducing rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease. For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use. ​ The Company does not have any finance leases. The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees. ​ In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease. Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease. ​ 20 Table of Contents The components of lease costs recorded in cost of sales for product sales and contract services and selling, general and administrative (“SG&A”) expense were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ Nine Months Ended ​ ​ January 30, ​ January 25, ​ 2021 ​ 2020 Operating lease cost ​ $ 3,592 ​ $ 3,453 Short term lease cost ​ ​ 369 ​ ​ 489 Variable lease cost ​ ​ 3 ​ ​ 609 Sublease income ​ ​ ( 48 ) ​ ​ ( 230 ) Total lease costs, net ​ $ 3,916 ​ $ 4,321 ​ Supplemental lease information were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ Nine Months Ended ​ ​ January 30, ​ January 25, ​ 2021 ​ 2020 ​ ​ (In thousands) ​ (In thousands) Cash paid for amounts included in the measurement of operating lease liabilities ​ $ 3,470 ​ $ 4,029 Right-of-use assets obtained in exchange for new lease liabilities ​ $ 5,760 ​ $ 12,634 ​ ​ ​ ​ ​ ​ ​ Weighted average remaining lease term ​ ​ 43 months ​ ​ 35 months Weighted average discount rate ​ ​ 3.4 % ​ ​ 3.6 % ​ Maturities of operating lease liabilities as of January 30, 2021 were as follows (in thousands): ​ ​ ​ ​ ​ 2021 ​ $ 896 2022 ​ 4,581 2023 ​ 3,173 2024 ​ 2,608 2025 ​ 1,661 Thereafter ​ ​ 763 Total lease payments ​ ​ 13,682 Less: imputed interest ​ ​ ( 853 ) Total present value of operating lease liabilities ​ $ 12,829 ​ ​ 11. Accumulated Other Comprehensive Income and Reclassifications Adjustments ​ The components of accumulated other comprehensive income and adjustments are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended ​ Nine Months Ended ​ ​ January 30, ​ January 25, ​ 2021 2020 Balance, net of $ 0 deferred taxes, as of April 30, 2020 and April 30, 2019 $ 328 ​ $ 2 Changes in foreign currency translation adjustments ​ ​ 75 ​ ​ 67 Unrealized losses, net of $ 2 of deferred taxes for the nine months ended January 30, 2021 ​ ​ ( 56 ) ​ ​ — Balance, net of $ 2 and $ 0 deferred taxes, as of January 30, 2021 and January 25, 2020, respectively $ 347 ​ $ 69 ​ ​ 12. Customer-Funded Research & Development ​ Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform R&D activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales as costs are 21 Table of Contents incurred. Revenue from customer-funded R&D contracts are recognized in accordance with Topic 606 over time as costs are incurred. Revenue from customer-funded R&D was approximately $ 14,811,000 and $ 58,979,000 for the three and nine months ended January 30, 2021, respectively. Revenue from customer-funded R&D was approximately $ 17,939,000 and $ 50,565,000 for the three and nine months ended January 25, 2020, respectively. ​ 13. Long-Term Incentive Awards ​ During the three months ended August 1, 2020, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2021 LTIP”). Awards under the Fiscal 2021 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2021, July 2022 and July 2023, and (ii) performance-based restricted stock units (“PRSUs”), which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2023. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric. Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three and nine months ended January 30, 2021, the Company recorded $ 126,000 and $ 564,000 of compensation expense related to the Fiscal 2021 LTIP. The Company recorded no compensation expense related to the Fiscal 2021 LTIP for the three and nine months ended January 25, 2020. At January 30, 2021, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $ 7,946,000 . ​ During the three months ended July 27, 2019, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2020 LTIP”). Awards under the Fiscal 2020 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2020, July 2021 and July 2022, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2022. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric. Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 200 % for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three months ended January 30, 2021, the Company recorded a reduction 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. For the three and nine months ended January 25, 2020, the Company recorded $215,000 and $512,000 of compensation expense related to the Fiscal 2020 LTIP, respectively. At January 30, 2021, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2020 LTIP is $ 4,263,000 . ​ During the three months ended July 28, 2018, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2019 LTIP”). Awards under the Fiscal 2019 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2019, July 2020 and July 2021, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2021. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric. Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 200 % for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. For the three 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. For the three and nine months ended January 25, 2020, the Company recorded $ 246,000 and $ 294,000 of compensation expense related to the Fiscal 2019 LTIP, respectively. At January 30, 2021, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2019 LTIP is $ 2,478,000 . ​ 22 Table of Contents During the three months ended July 29, 2017, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2018 LTIP”). Awards under the Fiscal 2018 LTIP consist of: (i) time-based restricted stock awards, which vest in equal tranches in July 2018, July 2019 and July 2020, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2020. During the three months ended August 1, 2020, the Company issued a total of 16,228 fully-vested shares of common stock to settle the PRSUs in the Fiscal 2018 LTIP. For the three and nine months ended January 30, 2021, the Company recorded no compensation expense. For the three and nine months ended January 25, 2020, the Company recorded $ 201,000 and $ 162,000 of compensation expense related to the Fiscal 2018 LTIP, respectively. ​ At January 30, 2021 and April 30, 2020, the Company recorded cumulative stock-based compensation expense from the Fiscal 2021 LTIP, Fiscal 2020 LTIP and Fiscal 2019 LTIP of $ 2,780,000 and $ 1,607,000 , respectively. At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs. The estimation of whether the performance targets will be achieved requires judgment, and to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited. ​ 14. Income Taxes ​ 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. For the three and nine months ended January 25, 2020, the Company recorded a (benefit from) and provision for income taxes of $( 38,000 ) and $ 3,203,000 , respectively, yielding effective tax rates of ( 28.4 )% and 10.6 %, respectively. 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. The variance from statutory rates for the three and nine months ended January 25, 2020 was primarily due to federal R&D credits, foreign derived intangible income deductions and the recording of discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options. ​ 15. Share Repurchase ​ In September 2015, the Company’s Board of Directors authorized a program to repurchase up to $ 25,000,000 of the Company’s common stock with no specified termination date for the program. No shares were repurchased under the program during the three and nine months ended January 30, 2021 or January 25, 2020. As of January 30, 2021 and April 30, 2020, approximately $ 21,200,000 remained authorized for future repurchases under this program. ​ 16. Related Party Transactions ​ Related party transactions are defined as transactions between the Company and entities either controlled by the Company or that the Company can significantly influence. Although SoftBank has a controlling interest in HAPSMobile, the Company determined that it has the ability to exercise significant influence over HAPSMobile. As such, HAPSMobile and SoftBank are considered related parties of the Company. Concurrent with the formation of HAPSMobile, the Company executed a Design and Development Agreement (the “DDA”) with HAPSMobile. Under the DDA and related efforts, the Company will use its best efforts, up to a maximum net value of $ 181,320,000 , to design and build prototype solar powered high altitude aircraft and ground control stations for HAPSMobile and conduct low altitude and high altitude flight tests of the prototype aircraft. ​ The Company recorded revenue under the DDA and preliminary design agreements between the Company and SoftBank of $ 7,480,000 and $ 35,318,000 for the three and nine months ended January 30, 2021, respectively. The Company recorded revenue under the DDA and preliminary design agreements between the Company and SoftBank of $ 11,762,000 and $ 37,491,000 for the three and nine months ended January 25, 2020, respectively. At January 30, 2021 and April 30, 2020, the Company had unbilled related party receivables from HAPSMobile of $ 6,834,000 and $ 15,779,000 recorded in unbilled receivables and retentions on the consolidated balance sheets, respectively. Refer to Note 6—Equity Method Investments for further details. 23 Table of Contents ​ 17. Business Acquisitions ​ On June 10, 2019, the Company purchased 100 % of the issued and outstanding member units of Pulse pursuant to the terms of the Pulse Purchase Agreement. The Company’s acquisition of Pulse’s helicopter UAS product family strengthens AeroVironment’s leading family of fixed-wing small unmanned aircraft systems and increases the mission capabilities of AeroVironment’s family of systems. ​ Pursuant to the Pulse Purchase Agreement, at closing, the Company paid $ 20,650,000 in cash, less closing indebtedness and transaction costs as defined in the Pulse Purchase Agreement, less a $ 250,000 retention to cover any post-closing indemnification claims, and less a $ 1,250,000 holdback amount, with the retention and holdback to be released to the member unit holders of Pulse, less any amounts paid or reserved, 18 months after the closing of the transactions in accordance with the terms of the Pulse Purchase Agreement. The closing cash consideration included the payoff of the outstanding indebtedness of Pulse as of the closing date. The Company financed the acquisition entirely from available cash on hand. During the three months ended January 30, 2021, the Company paid a total of $1,492,000 in holdback and retention payments. ​ In addition to the consideration paid at closing, the acquisition of Pulse included contingent consideration arrangements that required additional consideration to be paid by the Company to the sellers of Pulse if two specified research and development milestones were achieved by December 10, 2021 and the continued employment of specified employees. Amounts were payable upon the achievement of the milestones. The range of the undiscounted amounts the Company could pay under each of the contingent consideration agreements were zero or $ 2,500,000 ($ 5,000,000 in total if both milestones are achieved and specific key employees continued employment). The fair value of the contingent consideration recognized on the acquisition date of $ 1,703,000 was estimated by applying the income approach. That measure was based on significant Level 3 inputs not observable in the market. Key assumptions include (1) a discount rate of 4.5 % and (2) the probability that each of the milestones would be achieved. ​ During the three months ended January 25, 2020, one of the research and development milestones was achieved, and the requirements for the payout of remaining contingent consideration were concluded to not have been met. As a result, the Company recorded a gain of $ 832,000 which was recorded in selling, general, and administrative expense in the consolidated statements of income. On February 26, 2020, $ 2,500,000 of contingent consideration was paid to the sellers for the achieved milestone. ​ During the fiscal year ended April 30, 2020, the Company finalized its determination of the fair value of the assets and liabilities assumed as of the acquisition date, which is summarized in the following table (in thousands): ​ ​ ​ ​ ​ ​ ​ June 10, ​ ​ ​ 2019 ​ Technology $ 14,950 ​ Goodwill ​ ​ 6,340 ​ In-process R&D ​ ​ 550 ​ Inventory ​ ​ 334 ​ Non-compete agreements ​ ​ 320 ​ Other assets, net of liabilities assumed ​ ​ ( 614 ) ​ Total net identified assets acquired ​ $ 21,880 ​ ​ ​ ​ ​ ​ Fair value of consideration: ​ ​ ​ ​ Cash ​ $ 18,677 ​ Holdback ​ ​ 1,250 ​ Retention ​ ​ 250 ​ Contingent consideration ​ ​ 1,703 ​ Total ​ $ 21,880 ​ ​ 24 Table of Contents Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates. The fair value of the intangibles assets was determined using a discounted cash flow analysis, which were based on the Company’s best estimate of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance. Use of different estimates and judgments could yield materially different results. ​ The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Pulse and expected future customers in the helicopter UAS market. For tax purposes the acquisition was treated as an asset purchase and the goodwill is deductible ratably over a period of fifteen years . ​ Supplemental Pro Forma Information (unaudited) ​ The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2018 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended ​ ​ January 25 ​ January 26 ​ January 25 ​ January 26 ​ 2020 2019 2020 2019 Revenue ​ $ 61,891 ​ $ 75,922 ​ $ 232,300 ​ $ 228,533 Net income attributable to AeroVironment, Inc. ​ $ ( 726 ) ​ $ 7,244 ​ $ 24,227 ​ $ 38,471 25 Table of Contents ​ The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings. ​ These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 28, 2018, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2018 with the consequential tax effects, and including the results of Pulse prior to acquisition. ​ The Company incurred approximately $ 344,000 and $ 1,036,000 of acquisition-related expenses for the three and nine months ended January 25, 2020, respectively. These expenses are included in selling, general and administrative, research and development, and product cost of sales on the Company’s 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 acquisitions been consolidated in the tables above as of May 1, 2018, nor are they indicative of results of operations that may occur in the future. ​ 18. Subsequent Events ​ Arcturus Acquisition ​ On February 19, 2021, the Company closed its acquisition of Arcturus UAV, Inc., a California corporation (“Arcturus UAV”) pursuant to the Stock Purchase Agreement (the “Arcturus Purchase Agreement”) with Arcturus UAV and each of the shareholders and other equity interest holders of Arcturus UAV (collectively, the “Arcturus Sellers”), to purchase 100 % of the issued and outstanding equity of Arcturus UAV (the “Arcturus Acquisition”). Arcturus UAV, 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. Arcturus UAV became a wholly-owned subsidiary of the Company as of February 19, 2021. ​ Pursuant to the Arcturus Purchase Agreement, at the closing of the Arcturus Acquisition, the Company paid approximately $ 431,000,000 (subject to certain customary adjustments and escrow arrangements set forth in the Arcturus Purchase Agreement), financed with a combination of approximately $ 159,000,000 of cash-on-hand, $ 200,000,000 of financing pursuant to the Term Loan Facility, described below, and the issuance of approximately $ 72,000,000 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 UAV 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 UAV’s and/or the Sellers’ indemnification obligations (the “Indemnification Escrow”). The Adjustment Escrow, less any negative post-Closing adjustment to the cash consideration paid at Closing, is to be released to the Arcturus Sellers upon completion of the post-Arcturus Closing purchase price adjustment process; the Indemnification Escrow, less any amounts paid or reserved, is to be released to the Arcturus Sellers 12 months following the Arcturus Closing. To further address potential breaches of Arcturus UAV’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. ​ 26 Table of Contents Due to the timing of the close of the acquisition, the purchase accounting for the business combination is incomplete at the time of this filing. As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed, pre-acquisition contingencies and goodwill. In addition, the Company is unable to provide pro forma revenues and earnings of the combined entity. All required disclosures will be included in the Company's Annual Report on Form 10-K for the fiscal year quarter ending April 30, 2021. ​ Credit Facilities ​ In connection with the consummation of the Arcturus Acquisition on February 19, 2021, the Company, as borrower, and Arcturus UAV, 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 UAV. The Term Loan Facility requires payment of 5 % of the outstanding obligations in each of the first four loan years, with the remaining 80.0 % 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. ​ The Credit Facilities provide the Company with a choice of interest rates between (a) LIBOR (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 LIBOR 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 LIBOR (ranging from 1.50 - 2.25%) or Base Rate (ranging from 0.50 - 1.25%). 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 would apply. ​ 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 UAV (as of the closing of its acquisition by the Company), will be 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. 27 Table of Contents ​ The 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. ​ Intelligent Systems Group Acquisition ​ 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 (the “ISG Acquisition”), 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, Seller and the sole shareholder of Seller (the “Beneficial Owner”). 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 $ 30,000,000 in cash at closing and (ii) may pay additional cash consideration of up to $ 6,000,000 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. ​ 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. ​ Due to the timing of the close of the acquisition, the purchase accounting for the business combination is incomplete at the time of this filing. As a result, the Company is unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed, pre-acquisition contingencies and goodwill. In addition, the Company is unable to provide pro forma revenues and earnings of the combined entity. All required disclosures will be included in the Company's Annual Report on Form 10-K for the fiscal year quarter ending April 30, 2021. ​ Telerob Acquisition ​ On December 3, 2020, the Company entered into a 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 Telerob Seller (collectively, the “Shareholders”), to purchase 100% of the issued and outstanding shares of Seller’s wholly-owned subsidiary, Telerob Gesellschaft für Fernhantierungstechnik mbH, a German company based in Ostfildern (near Stuttgart), Germany (“Telerob”), including Telerob’s wholly owned subsidiary, Telerob USA, Inc. (“Telerob USA,” and collectively with Telerob, the “Telerob Group”). The Telerob Group develops, manufactures, sells, and services remote-controlled ground robots and transport vehicles for civil and defense applications. Upon closing of the transactions contemplated by the Telerob Purchase Agreement, which is anticipated in the fourth quarter, Telerob will become a wholly-owned subsidiary of the Company. ​ 28 Table of Contents Pursuant to the Telerob Purchase Agreement, the Company will pay approximately € 37,455,000 (approximately $ 45.4 million) in cash at the closing to the Telerob Seller, subject to certain purchase price adjustments, less (a) € 3,000,000 (approximately $ 3.6 million) to be held in escrow for breaches of the Telerob Seller’s warranties; (b) transaction-related fees and costs incurred by the Telerob Seller; (c) 50% of the cost of obtaining the warranty insurance policy; and (d) payments to Shareholders or outside the ordinary course of business if made after September 30, 2020. In addition, at closing the Company will pay off approximately € 7.8 million (approximately $ 9.4 million) of certain indebtedness of the Telerob Group. This indebtedness may be offset by any cash on hand at the Telerob Group 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, the Telerob Seller may receive up to a total of € 6,000,000 (approximately $ 7.3 million) in additional cash consideration over a three year period contingent upon the achievement of three distinct milestones. The first two milestones are the achievement of specific revenue targets and the third milestone is obtaining certain contract awards from the U.S. military. ​ The transactions contemplated by the Telerob Purchase Agreement are subject to certain closing conditions, including: (i) clearance by the German government; (ii) the accuracy of each party’s warranties (subject to customary materiality qualifiers); (iii) each party’s compliance with its covenants and agreements contained in the Telerob Purchase Agreement (subject to customary materiality qualifiers); and (iv) other customary closing conditions. ​