3 unchanged sentences
Index to Consolidated Financial Statements and Supplementary Data
−Removed: Reports of Independent Registered Public Accounting Firm s
+Added: Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheets at April 30, 2021 and 2020
11 unchanged sentences
To the Stockholders and the Board of Directors of AeroVironment, Inc.
−Removed: and subsidiaries
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of AeroVironment, Inc.
−Removed: and subsidiaries (the "Company") as of April 30, 2020, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for the year ended April 30, 2020, and the related notes and schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have audited the accompanying consolidated balance sheets of AeroVironment, Inc.
+Added: (the "Company") as of April 30, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows, for each of the two years in the period ended April 30, 2021, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements").
+Added: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 29, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
4 unchanged sentences
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Critical Audit Matt ers
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
+Added: Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
10 unchanged sentences
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 reasonable margin approach.
−Removed: As of April 30, 2020, revenue was $367.3 million, of which 42% relates to contracts recognized over time.
+Added: As of April 30, 2021, revenue was $394.9 million, of which 43% relates to revenue recognized over time.
We identified the assumptions related to estimating total costs and profit to be a critical audit matter given the inherent judgement involved in estimating the total costs including labor, materials, subcontractors’ costs, other direct costs and indirect costs.
−Removed: Auditing such estimates of total costs and profit required extensive audit effort and high degree of auditor judgment.
+Added: Auditing such estimates of total costs and profit required extensive audit effort and a high degree of auditor judgment.
How the Critical Audit Matter Was Addressed in the Audit
12 unchanged sentences
Critical Audit Matter Description
−Removed: 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 for $21.88 million.
−Removed: The Company accounted for the acquisition under the acquisition method of accounting for business combinations.
−Removed: Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including technology of $14.95 million, in-process R&D of $0.55 million and goodwill of $6.34 million.
−Removed: Management estimated the fair value of the intangible assets using a discounted cash flow analysis, which was 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.
−Removed: Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows and the selected discount rate.
−Removed: We identified the assumptions related to estimating the amount and timing of expected future cash flows and discount rate to be a critical audit matter given the inherent judgment involved in estimating these amounts.
+Added: On February 19, 2021, the Company closed its acquisition of Arcturus for total consideration of approximately $422.6 million, net of cash acquired.
+Added: Additionally, on February 23, 2021 the Company purchased certain assets of, and assumed certain liabilities of, ISG for total consideration of approximately $35.4 million, which includes the Company’s estimate of contingent consideration of $5.5 million based on the achievement of certain revenue targets by ISG during the 3 years following closing.
+Added: The Company accounted for the acquisitions under the acquisition method of accounting for business combinations.
+Added: Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, resulting in technology of $31.9 million, customer relationships of $67.2 million and goodwill of $307.9 million.
+Added: Management estimated the fair value of the intangible assets using discounted cash flow analyses, which were based on the Company’s best estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.
+Added: Determining the fair value of the intangible assets acquired required significant judgment, including the amount and timing of expected future cash flows and the selected discount rates.
+Added: We identified the assumptions related to estimating the amount and timing of expected future cash flows and discount rates to be a critical audit matter given the inherent judgment involved in estimating these amounts.
Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
2 unchanged sentences
● We tested the effectiveness of controls over the valuation of intangibles, including management’s controls over the amount and timing of expected future cash flows and the selection of discount rates.
−Removed: ● We assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to historical results, certain peer companies, third-party industry forecasts, and internal communications to management and board of directors.
+Added: ● We assessed the reasonableness of management’s forecasts of future cash flows by performing inquiries of appropriate individuals outside of the finance organization, comparing the projections to historical results, contractual agreements, certain peer companies, third-party industry forecasts, and internal communications to management and board of directors.
● With the assistance of our fair value specialists, we evaluated the reasonableness of (1) the valuation methodology and (2) the discount rates utilized, including testing the source information underlying the determination of the discount rates, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rates selected by management.
8 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of AeroVironment, Inc.
−Removed: and subsidiaries (the Company) as of April 30, 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the two years in the period ended April 30, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2019, and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2019, in conformity with U.S.
+Added: We have audited the accompanying consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows of AeroVironment, Inc.
+Added: and subsidiaries (the Company) for the year ended April 30, 2019, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Company’s operations and its cash flows for the year ended April 30, 2019, in conformity with U.S.
generally accepted accounting principles.
−Removed: Adoption of ASU No.
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for revenue from contracts with customers in fiscal year 2019 due to the adoption of ASU No.
−Removed: 2014-09, Revenue from Contracts with Customers .
Basis for Opinion
These financial statements are the responsibility of the Company’s management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audit provides a reasonable basis for our opinion.
/s/ Ernst & Young LLP
7 unchanged sentences
Cash and cash equivalents
−Removed: Held-to-maturity short-term investments
−Removed: Available-for-sale short-term investments
+Added: Short-term investments
Accounts receivable, net of allowance for doubtful accounts of $ 595 at April 30, 2021 and $ 1,190 at April 30, 2020
1 unchanged sentence
Prepaid expenses and other current assets
−Removed: Income taxes receivable
Total current assets
−Removed: Held-to-maturity long-term investments
−Removed: Available-for-sale long-term investments
+Added: Long-term investments
Property and equipment, net
7 unchanged sentences
Customer advances
+Added: Current portion of long-term debt
Current operating lease liabilities
2 unchanged sentences
Total current liabilities
−Removed: Deferred rent
+Added: Long-term debt, net of current portion
Non-current operating lease liabilities
Other non-current liabilities
−Removed: Deferred tax liability
Liability for uncertain tax positions
31 unchanged sentences
Other income:
−Removed: Interest income, net
−Removed: Other income (expense), net
−Removed: Income from continuing operations before income taxes
+Added: Interest (expense) income, net
+Added: Other (expense) income, net
+Added: Income before income taxes
Provision for income taxes
5 unchanged sentences
Net (loss) income from discontinued operations
−Removed: Net loss attributable to noncontrolling interest
+Added: Net (income) loss attributable to noncontrolling interest
Net income attributable to AeroVironment, Inc.
14 unchanged sentences
Other comprehensive income:
+Added: Unrealized (loss) gain on investments, net of deferred tax expense of $ 1 , $ 14 and $ 51 for the fiscal years ended 2021, 2020 and 2019, respectively
Change in foreign currency translation adjustments
−Removed: Unrealized gain on investments, net of deferred tax expense of $ 14 , $ 51 and $ 25 for the fiscal years ended 2020, 2019 and 2018, respectively
Total comprehensive income
−Removed: Net loss attributable to noncontrolling interest
+Added: Net (income) loss attributable to noncontrolling interest
Comprehensive income attributable to AeroVironment, Inc.
14 unchanged sentences
Tax withholding payment related to net share settlement of equity awards
−Removed: Reclassification from share-based liability compensation to equity
Stock-based compensation
Balance at April 30, 2019
+Added: Adoption of ASU 2018-09
Net income (loss)
7 unchanged sentences
Balance at April 30, 2020
−Removed: Adoption of ASU 2018-09
−Removed: Net income (loss)
−Removed: Unrealized gain on investments
+Added: Unrealized loss on investments
Foreign currency translation
2 unchanged sentences
Restricted stock awards forfeited
+Added: Business acquisition
Tax withholding payment related to net share settlement of equity awards
12 unchanged sentences
Depreciation and amortization
−Removed: Losses from equity method investments
+Added: Losses from equity method investments, net
+Added: Amortization of debt issuance costs
Realized gain from sale of available-for-sale investments
1 unchanged sentence
Provision for doubtful accounts
−Removed: Impairment of intangible assets and goodwill
Other non-cash gain, net
Non-cash lease expense
−Removed: Loss (gain) on foreign currency transactions
+Added: Loss on foreign currency transactions
Deferred income taxes
Stock-based compensation
−Removed: (Gain) loss on sale of property and equipment
+Added: Loss (gain) on sale of property and equipment
Amortization of debt securities
6 unchanged sentences
Other liabilities
−Removed: Net cash provided by operating activities of continuing operations
+Added: Net cash provided by operating activities
Investing activities
1 unchanged sentence
Equity method investments
−Removed: Business acquisition, net of cash acquired
+Added: Business acquisitions, net of cash acquired
Proceeds from sale of business
4 unchanged sentences
Purchases of available-for-sale investments
−Removed: Net cash provided by (used in) investing activities from continuing operations
+Added: Net cash (used in) provided by investing activities
Financing activities
2 unchanged sentences
Tax withholding payment related to net settlement of equity awards
+Added: Holdback and retention payments for business acquisition
Exercise of stock options
−Removed: Net cash (used in) provided by financing activities from continuing operations
+Added: Payment of debt issuance costs
+Added: Proceeds from long-term debt
+Added: Net cash provided by (used in) financing activities
Discontinued operations
2 unchanged sentences
Net cash used in discontinued operations
−Removed: Net increase in cash, cash equivalents, and restricted cash
+Added: Net (decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
3 unchanged sentences
Non-cash activities
−Removed: Unrealized gain on investments, net of deferred tax expense of $ 14 , $ 51 and $ 25 for the fiscal years ended 2020, 2019 and 2018, respectively
−Removed: Reclassification from share-based liability compensation to equity
+Added: Unrealized (loss) gain on investments, net of deferred tax expense of $ 1 , $ 14 and $ 51 for the fiscal years ended 2021, 2020 and 2019, respectively
+Added: Issuance of common stock for business acquisition
Change in foreign currency translation adjustments
+Added: Issuances of inventory to property and equipment, ISR in-service assets
Acquisitions of property and equipment included in accounts payable
3 unchanged sentences
Organization and Significant Accounting Policies
−Removed: AeroVironment, Inc., a Delaware corporation, is engaged in the design, development, production, marketing, support and operation of unmanned aircraft systems (“UAS”) for various industries and governmental agencies.
+Added: AeroVironment, Inc., a Delaware corporation, is engaged in the design, development, production, delivery and support of a technologically advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses.
+Added: AeroVironment, Inc.
+Added: supplies unmanned aircraft systems (“UAS”), tactical missile systems (“TMS”) and related services primarily to organizations within the U.S.
+Added: Department of Defense (“DoD”) and to international allied governments.
Significant Accounting Policies
2 unchanged sentences
and its wholly-owned subsidiaries:
−Removed: Pulse Aerospace, LLC (“Pulse”) and AeroVironment, Inc.
+Added: Arcturus UAV, Inc.
+Added: (“Arcturus”) and AeroVironment, Inc.
(Afghanistan), as well as the Company’s Turkish joint venture, Altoy Savunma Sanayi ve Havacilik Anonim Sirketi (“Altoy”) (collectively referred to herein as the “Company”).
−Removed: In February 2018, the Company dissolved AeroVironment GmbH, the results of which were not material to the consolidated financial statements.
In February 2019, the Company dissolved AeroVironment International PTE.
8 unchanged sentences
The assets, liabilities and operating results of Pulse have been included in the Company’s consolidated financial statements.
+Added: In February 2021, the Company dissolved its wholly-owned subsidiary, Pulse Aerospace, LLC, the results of which were not material to the consolidated financial statements.
Refer to Note 21—Business Acquisitions for further details.
+Added: On February 19, 2021, the Company closed its acquisition of Arcturus, a California corporation pursuant to a Stock Purchase Agreement (the “Arcturus Purchase Agreement”) with Arcturus and each of the shareholders and other equity interest holders of Arcturus (collectively, the “Arcturus Sellers”), to purchase 100 % of the issued and outstanding equity of Arcturus (the “Arcturus Acquisition”).
+Added: The assets, liabilities and operating results of Arcturus have been included in the Company’s consolidated financial statements.
+Added: Refer to Note 21—Business Acquisitions for further details.
+Added: On February 23, 2021, the Company purchased certain assets of, and assumed certain liabilities of, the Intelligent Systems Group business segment (“ISG”) of Progeny Systems Corporation, a Virginia corporation (the “ISG Seller”), pursuant to the terms of an Asset Purchase Agreement (the “ISG Purchase Agreement”) of the same date by and among the Company, ISG Seller and the sole shareholder of ISG Seller (the “Beneficial Owner,” and such acquisition of ISG, the “ISG Acquisition”).
+Added: The assets, liabilities and operating results of ISG have been included in the Company’s consolidated financial statements.
+Added: Refer to Note 21—Business Acquisitions for further details.
Investments in Companies Accounted for Using the Equity or Cost Method
4 unchanged sentences
When an investment accounted for using the equity method issues its own shares, the subsequent reduction in the Company’s proportionate interest in the investee is reflected in equity as an adjustment to paid-in-capital.
−Removed: Company evaluates its investments in companies accounted for by the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary.
+Added: The Company evaluates its investments in companies accounted for by the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary.
In December of 2017, the Company and SoftBank Corp.
3 unchanged sentences
The Company has presented its proportion of HAPSMobile’s net loss in equity method investment loss, net of tax in the consolidated statement of operations.
−Removed: The carrying value of the investment in HAPSMobile was recorded in other assets, long-term.
+Added: The carrying value of the investment in HAPSMobile was recorded in other assets.
Refer to Note 9 – Equity Method Investments for further details.
3 unchanged sentences
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.
−Removed: 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.
−Removed: Accordingly, the Company operates its business as a single reportable segment.
+Added: 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”), based on UAS and MUAS operating units.
+Added: Accordingly, the Company operates its business as two reportable segments, UAS and MUAS.
Use of Estimates
11 unchanged sentences
Treasury bills.
+Added: Restricted Cash
+Added: The Company classifies cash accounts which are not available for general use as restricted cash.
+Added: Pursuant to the terms of the Arcturus Purchase Agreement, the Company maintains escrow accounts to address final purchase price adjustments post-Arcturus Closing, if any and to address Arcturus UAV’s and/or the Sellers’ indemnification obligations.
+Added: The restricted funds in the escrow account are recorded in other assets on the consolidated balance sheet.
+Added: As of April 30, 2021 restricted cash was $ 8,322,000 .
+Added: The Company had no restricted cash as of April 30, 2020.
The Company’s investments are accounted for as held-to-maturity reported at amortized cost and available-for-sale reported at fair value.
16 unchanged sentences
The Company currently invests the majority of its cash in municipal bonds, U.S.
−Removed: government securities, U.S.
+Added: securities, U.S.
government-guaranteed agency securities, U.S.
14 unchanged sentences
At April 30, 2021 and 2020, the retention balances were $ 700,000 and $ 717,000 , respectively.
−Removed: The Company determines the allowance for doubtful accounts based on historical customer experience and other currently available evidence.
+Added: The Company determines the allowance for doubtful accounts based on historical customer experience, age of receivable and other currently available evidence.
When a specific account is deemed uncollectible, the account is written off against the allowance.
−Removed: The allowance for doubtful accounts reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance;
+Added: The allowance for doubtful accounts reflects the Company’s best estimate of expected credit losses over the life of the receivable;
such losses have historically been within management’s expectations.
9 unchanged sentences
Computer equipment and software
+Added: In-service ISR assets
Furniture and fixtures
7 unchanged sentences
If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made.
−Removed: During the three months ended April 30, 2019, the Company recorded an impairment loss of $ 4,398,000 related to the long-lived assets of its commercial UAS Quantix solution.
+Added: During the fiscal
+Added: year ended April 30, 2019, the Company recorded an impairment loss of $ 4,398,000 related to the long-lived assets of its commercial UAS Quantix solution.
Refer to Note 8 – Property and equipment, net.
7 unchanged sentences
In-process research and development
+Added: Trademarks and tradenames
Non-compete agreements
1 unchanged sentence
The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period.
−Removed: The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying
−Removed: amount may not be recoverable.
+Added: The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable.
The original estimate of an asset's useful life and the impact of an event or circumstance on either an asset's useful life or carrying value involve significant judgment.
+Added: No impairment was recorded for the fiscal years ended April 30, 2021, 2020 or 2019.
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets.
1 unchanged sentence
Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business or political climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.
+Added: No impairment was recorded for the fiscal years ended April 30, 2021, 2020 or 2019.
Product Warranty
5 unchanged sentences
The Company is self-insured for employee medical claims, subject to individual and aggregate stop loss policies.
−Removed: The Company estimates a liability for claims filed and incurred but not reported based upon recent claims experience and an analysis of the average period of time between the occurrence of a claim and the time it is reported to and paid by the Company.
+Added: The Company estimates a liability for claims filed and incurred but not reported based upon recent claims experience and an analysis of the average period of time between the occurrence of a claim and the time it is reported to
+Added: and paid by the Company.
As of April 30, 2021 and 2020, the Company estimated and recorded a self-insurance liability in wages and related accruals of approximately $ 1,181,000 and $ 753,000 , respectively.
5 unchanged sentences
Where applicable, associated interest and penalties are also recorded.
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code.
−Removed: Changes include, but are not limited to, a corporate tax rate decrease from 35 % to 21 % effective for tax years beginning after December 31, 2017, repeal of the corporate alternative minimum tax, repeal of the deduction for domestic production activities, and limitation on the deductibility of certain executive compensation.
−Removed: In accordance with U.S.
−Removed: GAAP as determined by ASC 740, Income Taxes, the Company is required to record the effects of tax law changes in the period enacted.
−Removed: The Company remeasured its existing deferred tax assets and liabilities at the rate the Company expects to be in effect when those deferred taxes will be realized and recorded a one-time deferred tax expense of approximately $ 3,300,000 during the year ended April 30, 2018.
−Removed: On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in an effort to curtail the effect of COVID-19.
−Removed: While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are not expected to impact the Company’s financial statements including the removal of certain limitations on utilization of net operating losses, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense.
−Removed: The Company does expect to benefit in the future, however, from the technical correction made to the previously enacted Tax Cuts and Jobs Act in relation to tax depreciation of qualified improvement property.
Customer Advances and Amounts in Excess of Cost Incurred
1 unchanged sentence
government resulting in contract liabilities.
−Removed: These advances are classified as advances from customers and will be offset against billings.
+Added: These advances are classified as customer advances and will be offset against billings.
Revenue Recognition
14 unchanged sentences
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.
−Removed: Revenue for tactical missile systems (“TMS”) product deliveries and Customer-Funded R&D contracts is recognized over time as costs are incurred.
−Removed: 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.
+Added: Revenue for TMS product deliveries and Customer-Funded R&D contracts is recognized over time as costs are incurred.
+Added: Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs
+Added: 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.
+Added: Contract services revenue, including ISR services, is recognized over time as services are rendered.
+Added: The Company elected the right to invoice practical expedient in which if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, such as flight hours for ISR services, the entity may recognize revenue in the amount to which the entity has a right to invoice.
Training services are recognized over time using an output method based on days of training completed.
3 unchanged sentences
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.
−Removed: 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.
+Added: The Company’s small and medium UAS product sales revenue is composed of revenue recognized on contracts for the delivery of small UAS systems and spare parts.
Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.
On April 30, 2021, the Company had approximately $ 211,796,000 of remaining performance obligations under contracts with its customers, which the Company also refers to as backlog.
−Removed: The Company currently expects to recognize approximately 96 % of the remaining performance obligations as revenue in fiscal 2021 , an additional 4 % in fiscal 2022 , and the balance thereafter.
+Added: The Company currently expects to recognize approximately 94 % of the remaining performance obligations as revenue in fiscal 2022 and an additional 6 % in fiscal 2023 .
The Company collects sales, value add, 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.
16 unchanged sentences
The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses or revenue.
−Removed: 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 years ended April
−Removed: 30, 2020, 2019 or 2018.
+Added: 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 years ended April 30, 2021, 2020 or 2019.
+Added: During the year ended April 30, 2021, the Company revised its estimates of the total expected costs to complete a TMS contract.
+Added: The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease to revenue of approximately $ 1,041,000 .
During the year ended April 30, 2020, the Company revised its estimates of the total expected costs to complete a TMS contract and a contract associated with a design and development agreement.
1 unchanged sentence
No adjustment on any one contract was material to the Company’s consolidated financial statements for the years ended April 30, 2019.
−Removed: During the year ended April 30, 2018, the Company revised its estimates of the total expected costs to complete a TMS variant contract.
−Removed: The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease of approximately $ 1,255,000 .
Revenue by Category
10 unchanged sentences
CPFF contracts generally subject the Company to lower risk.
−Removed: Accordingly, the associated base fees are usually lower than fees on FFP contracts.
+Added: 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.
17 unchanged sentences
Revenue recognized for the years ended April 30, 2021, 2020, and 2019 that was included in contract liability balances at the beginning of each year were $ 5,468,000 , $ 1,670,000 and $ 1,587,000 , respectively.
+Added: Cost to Fulfill a Contract with a Customer
+Added: The Company recognizes assets for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered in accordance with ASC 340-40 Other Assets and Deferred Costs:
+Added: Contracts with Customers .
+Added: The assets related to costs to fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied.
+Added: As of April 30, 2021 and 2020, the Company had $ 1,729,000 and $ 0 of costs to fulfill future performance obligations on contracts considered to be probable of occurrence.
+Added: Costs to fulfill a contract are recorded in prepaid expenses and other current assets on the consolidated balance sheets.
Stock-Based Compensation
15 unchanged sentences
Revenue from customer-funded research and development was approximately $ 74,218,000 , $ 80,934,000 and $ 76,407,000 for the years ended April 30, 2021, 2020 and 2019, respectively.
−Removed: cost of sales for customer-funded research and development totaled approximately $ 56,440,000 , $ 54,824,000 and $ 36,855,000 for the years ended April 30, 2020, 2019 and 2018, respectively.
+Added: The related cost of sales for customer-funded research and development totaled approximately $ 51,395,000 , $ 56,440,000 and $ 54,824,000 for the years ended April 30, 2021, 2020 and 2019, respectively.
In January 2017, the Company executed a cost sharing Other Transaction Agreement type contract funded by the US Federal Government to perform certain system design, development and functional testing activities specific to a new prototype UAS on a best-efforts basis.
−Removed: Costs of $ 21,933,000 will be reimbursed to the Company as the activities are performed, while the Company is responsible for funding a minimum of $ 11,225,000 .
−Removed: The term of the agreement is through December 2020.
+Added: The term of the agreement was completed as of December 2020.
+Added: Costs of $ 21,833,000 have been reimbursed to the Company as the activities were performed, while the Company was responsible for funding a minimum of $ 11,225,000 .
The Company has determined that the contract meets the criteria of ASC 912-730-05 Contractors – Federal Government and, therefore, all reimbursements are recorded as an offset to research and development expense in the consolidated statements of income.
19 unchanged sentences
Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease.
−Removed: Prior to adoption of the New Lease Standard, the Company accounted for its leases and subsequent amendments as operating leases or capital leases for financial reporting purposes.
−Removed: Certain operating leases contained rent escalation clauses, which were recorded on a straight-line basis over the initial term of the lease with the difference between the rent paid and the straight-line rent recorded as a deferred rent liability.
−Removed: Lease incentives received from landlords were recorded as deferred rent liabilities and are amortized on a straight-line basis over the lease term as a reduction to rent expense.
−Removed: Deferred rent liabilities were approximately $ 1,173,000 and $ 1,536,000 as of April 30, 2019 and 2018, respectively.
Advertising Costs
3 unchanged sentences
Foreign currency transaction gains and losses are charged or credited to earnings as incurred.
−Removed: For the fiscal years ended April 30, 2020, 2019 and 2018, foreign currency transaction gains and losses that are included in other income (expense) in the accompanying statements of income were $( 1,000 ), $( 38,000 ), and $ 87,000 , respectively.
+Added: For the fiscal years ended April 30, 2021, 2020 and 2019, foreign currency transaction losses that are included in other (expense) income, net in the accompanying statements of income were $ 1,000 , $ 1,000 , and $ 38,000 , respectively.
Earnings Per Share
5 unchanged sentences
Discontinued operations, net of tax
−Removed: ( 3,887,000 )
Net income attributable to AeroVironment, Inc.
6 unchanged sentences
Recently Adopted Accounting Standards
−Removed: Effective May 1, 2019, the Company adopted the New Lease Standard.
−Removed: This New Lease Standard requires the lessee to recognize the assets and liabilities for the rights and obligations created by leases.
−Removed: The Company elected to adopt the New Lease Standard using the modified retrospective transition approach through a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.
−Removed: As such the Company did not recast comparative consolidated financial statements.
−Removed: The Company also elected the package of practical expedients which allows the Company to not reassess existing or expired contracts for existence of a lease, lease classification, or amortization of previously capitalized initial direct leasing cost.
−Removed: Additionally, the Company elected the short-term lease exception to not record right-of-use assets and lease liabilities for leases with a term less than 12 months and the practical expedient to not separate lease and non-lease components for property.
−Removed: Adoption of the New Lease Standard resulted in the recording of lease assets and lease liabilities on the consolidated balance sheet with no cumulative impact to retained earnings and did not have a material impact on the consolidated statement of cash flows.
−Removed: Refer to Note 10—Leases for additional information required as part of the adoption of the New Lease Standard.
−Removed: In July 2018, the FASB issued ASU 2018-09, “Codification Improvements” (“ASU 2018-09”).
−Removed: ASU 2018-09 provides technical corrections, clarifications and other improvements across a variety of accounting topics.
−Removed: Among the clarifications, ASU 2018-09 clarifies that an entity should recognize excess tax benefits in the period in which the amount of the deduction is determined.
−Removed: This includes deductions that are taken on the entity’s return in a different period from when the event that gives rise to the tax deduction occurs and the uncertainty about whether the entity will receive a tax deduction and the amount of the tax deduction is resolved.
−Removed: Certain amendments were applicable immediately while others provide transition guidance and are effective in the Company’s first quarter of fiscal year 2020.
−Removed: The Company adopted ASU 2018-09 on May 1, 2019 using the modified retrospective method.
−Removed: The adoption of ASU 2018-09 resulted in a cumulative adjustment to increase retained earnings by $ 665,000 at May 1, 2019.
+Added: Effective May 1, 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments—Credit Losses (Topic 326):
+Added: Measurement of Credit Losses on Financial Instruments , along with several additional clarification ASU’s issued during 2018 and 2019, collectively “CECL”.
+Added: CECL requires the reporting entity to estimate expected credit losses over the life of a financial asset.
+Added: CECL requires the credit loss to be recognized upon initial recognition of the financial asset.
+Added: 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.
+Added: 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.
+Added: However, the adoption of CECL did not have a material impact to retained earnings for the Company.
+Added: 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”).
+Added: ASU 2018-15 provides guidance on the treatment of accounting for fees paid by a customer in a cloud computing arrangement.
+Added: This guidance includes the requirements for capitalizing implementation costs incurred in a hosting arrangement.
+Added: The Company adopted ASU 2018-15 using the prospective method, applying the new guidance to all implementation costs incurred after adoption.
+Added: The adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements.
Recently Issued Accounting Standards
−Removed: In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326).
−Removed: This ASU, and several related amendments the FASB has issued to provide additional supplemental guidance on certain aspects of the original pronouncement, is intended to replace the incurred loss impairment methodology under GAAP with a methodology that reflects using a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments, and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates.
−Removed: The guidance is effective for fiscal years beginning after December 15, 2019 and the interim periods therein, with early adoption permitted.
−Removed: The Company plans to adopt the guidance effective May 1, 2020 using the modified retrospective approach.
−Removed: The Company does not believe the guidance will have a material impact the Company’s allowance for doubtful accounts for accounts receivable.
−Removed: The Company is still evaluating the potential impact on its consolidated financial statements for remaining financial instruments within the scope of this guidance, primarily the debt securities in the Company’s investment portfolio.
−Removed: In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820).
−Removed: This ASU removes or modifies current disclosures while adding certain new disclosure requirements.
−Removed: The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods therein, with early adoption permitted for the removed or modified disclosures.
−Removed: The removed and modified disclosures can be adopted retrospectively, and the added disclosures should be adopted prospectively.
−Removed: The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
−Removed: In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (Topic 350-40).
−Removed: This ASU allows for capitalization of implementation costs associated with certain cloud computing arrangements.
−Removed: The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods therein, with early adoption permitted.
−Removed: The Company plans to adopt the guidance effective May 1, 2020 using the prospective approach.
−Removed: The Company is evaluating the potential impact of this adoption on its consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740).
10 unchanged sentences
Discontinued Operations
−Removed: On June 29, 2018, the Company completed the sale of the EES Business to Webasto.
+Added: 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.
+Added: (“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.
1 unchanged sentence
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.
−Removed: In June 2020, the independent accounting firm determined the final adjustment to the working capital dispute to be $341,000 which has been recorded net of tax as discontinued operations in the consolidated statements of income.
+Added: 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.
1 unchanged sentence
The Company’s satisfaction of the requirements for the payment of the Holdback is currently in dispute.
−Removed: 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.
+Added: On February 22, 2019, Webasto filed a lawsuit, which was amended in April 2019, alleging several claims against the Company for breach of contract, indemnity, and bad faith, including allegations regarding inaccuracy of certain diligence disclosures, 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.
+Added: Webasto again amended the complaint in May 2021 to include additional claims.
+Added: The Company has not filed an answer to Webasto’s amended complaint filed in May 2021.
The Company believes that the allegations are generally meritless and is mounting a vigorous defense.
+Added: In order to avoid the future cost, expense, and distraction of continued litigation, the Company engaged in settlement negotiations with Webasto, however, the negotiations did not result in a settlement of any of the Company’s or Webasto’s claims.
+Added: As a result of the settlement negotiations, the Company established a litigation reserve, which reserve reflects the scope of a rejected offer intended to communicate the Company’s serious and good faith intention to attempt to reach a settlement for the stated purposes.
+Added: The offer did not reflect the Company’s view of the merits of the claims made, and the Company continues to vigorously defend all claims.
+Added: However, as a result of the preparation of the good faith offer and the Company’s willingness to pursue settlement for that amount, the Company recorded litigation reserve expenses in the amount of $ 9,300,000 during the year ended April 30, 2021 recorded in other expense on the consolidated statements of operations.
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.
11 unchanged sentences
The Company determined that the EES Business met the criteria for classification as an asset held for sale as of April 30, 2018 and represents a strategic shift in the Company’s operations.
−Removed: Therefore, the results of operations of the
−Removed: EES Business are reported as discontinued operations for all periods presented.
+Added: Therefore, the results of operations of the EES Business are reported as discontinued operations for all periods presented.
The table below presents the statements of income data for the EES Business (in thousands).
10 unchanged sentences
Investments consist of the following:
−Removed: (In thousands)
Short-term investments:
−Removed: Held-to-maturity securities:
−Removed: Municipal securities
−Removed: government securities
−Removed: Corporate bonds
−Removed: Total held-to-maturity investments
Available-for-sale securities:
2 unchanged sentences
Corporate bonds
−Removed: Total available-for-sale investments
Total short-term investments
Long-term investments:
−Removed: Held-to-maturity securities:
−Removed: government securities
−Removed: Corporate bonds
−Removed: Total held-to-maturity investments
Available-for-sale securities:
6 unchanged sentences
Total long-term investments
−Removed: Held-To-Maturity Securities
−Removed: As of April 30, 2019, the balance of held-to-maturity securities consisted of state and local government municipal securities, U.S.
−Removed: government securities, U.S.
−Removed: government agency securities, and corporate bonds.
−Removed: Interest earned from these investments is recorded in interest income.
−Removed: During the three months ended April 30, 2020, in consideration of the impact of the COVID-19 pandemic, the Company made the strategic decision to sell a significant portion of its corporate and municipal held-to-maturity securities and invested the proceeds in cash and cash equivalents and U.S.
−Removed: government and U.S.
−Removed: government agency securities.
−Removed: As such the investments were transferred from held-to-maturity classification to available-for-sale classification.
−Removed: Prior to the three months ended April 30, 2020, the Company had the intent and ability to hold its investments classified as held-to-maturity to their maturity dates.
−Removed: The net carrying
−Removed: amount and net unrealized gains of held to maturity securities transferred to available-for-sale securities or cash equivalents at the time of transfer are as follows (in thousands):
−Removed: Municipal securities
−Removed: government securities
−Removed: Corporate bonds
−Removed: Certificate of deposits
−Removed: Total held-to-maturity investments
−Removed: The Company held no held-to maturity securities at April 30, 2020.
−Removed: The amortized cost, gross unrealized losses, and estimated fair value of the held-to-maturity securities as of April 30, 2019 are as follows (in thousands):
−Removed: Municipal securities
−Removed: government securities
−Removed: Corporate bonds
−Removed: Total held-to-maturity investments
Available-For-Sale Securities
−Removed: As of April 30, 2020, the balance of available-for-sale securities consisted of state and local government municipal securities, U.S.
+Added: As of April 30, 2021 and 2020, the balance of available-for-sale securities consisted of state and local government municipal securities, U.S.
government securities, U.S.
2 unchanged sentences
Realized gains on sales of these investments on the basis of specific identification is recorded in interest income.
−Removed: The Company held no available-for-sale securities at April 30, 2019.
−Removed: The following table is a summary of the activity related to the available-for-sale investments recorded in short-term and long-term investments (in thousands):
+Added: 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 April 30, (in thousands):
April 30, 2021
+Added: April 30, 2020
Municipal securities
1 unchanged sentence
Corporate bonds
−Removed: Total held-to-maturity investments
−Removed: The amortized cost and fair value of the Company’s available-for-sale securities by contractual maturity at
−Removed: April 30, 2020, are as follows:
+Added: Total available-for-sale investments
+Added: The amortized cost and fair value of the Company’s available-for-sale securities by contractual maturity at April 30, 2021, are as follows:
Due within one year
Due after one year through five years
−Removed: Auction Rate Securities
−Removed: As of April 30, 2018, the balance of available-for-sale auction rate securities consisted of two investment grade auction rate municipal bonds with maturities ranging from 1 to 16 years.
−Removed: These investments have characteristics similar to short term investments.
−Removed: During the three months ended July 28, 2018, the remaining investment grade auction rate municipal bonds were redeemed at par value.
Fair Value Measurements
10 unchanged sentences
Available-for-sale securities
+Added: Contingent consideration
The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands):
5 unchanged sentences
Total (gains) losses (realized or unrealized)
−Removed: Included in product cost of sales
−Removed: Included in selling, general and administrative
−Removed: Included in research and development
−Removed: Included in other comprehensive income
Balance at April 30, 2021
The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at April 30, 2021
−Removed: Pursuant to the Pulse Purchase Agreement, the sellers may have received up to a maximum of $ 5,000,000 in additional cash consideration (“contingent consideration”), if specific research and development milestones were achieved by December 10, 2021 and the continued employment of specific key employees.
−Removed: The contingent consideration was valued using a probability weighted discounted cash flow model.
−Removed: The analysis considered, among other items, contractual terms of the Pulse Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the milestones required for payment of the contingent consideration will be achieved.
+Added: Pursuant to the ISG Purchase Agreement, the sellers may receive up to a maximum of $ 6,000,000 in additional cash consideration (“contingent consideration”), if certain revenue targets are achieved during the 3 years following closing.
+Added: The contingent consideration was valued using a Black-Scholes option-pricing model.
+Added: The analysis considered, among other items, contractual terms of the ISG Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue targets required for payment of the contingent consideration will be achieved.
See Note 21—Business Acquisitions.
−Removed: During the fiscal year ended April 30, 2020, one of the research and development milestones was achieved, and the requirements for the payout of remaining contingent consideration were concluded to not have been met.
−Removed: 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.
−Removed: On February 26, 2020, $ 2,500,000 of contingent consideration was paid to the sellers for the achieved milestone, and the remaining $ 2,500,000 will not be paid.
Inventories, net
6 unchanged sentences
Inventories, net
−Removed: During the fiscal year ended April 30, 2020, the Company recorded inventory reserve charges of approximately $ 2,600,000 to impair the remaining net book value of the Company’s Quantix commercial UAS solution.
−Removed: For the fiscal
−Removed: years ended April 30, 2020, 2019 and 2018, the Company recorded inventory reserve charges of $ 5,377,000 , $ 5,054,000 and $ 2,758,000 , respectively.
+Added: For the fiscal years ended April 30, 2021, 2020 and 2019, the Company recorded inventory reserve charges of $ 1,178,000 , $ 5,377,000 and $ 5,054,000 , respectively.
+Added: Of the $ 5,377,000 inventory reserve recorded during fiscal year ended April 30, 2020, approximately $ 2,600,000 related to an impairment of the remaining net book value of the Company’s Quantix commercial UAS solution.
+Added: Intangibles, net
Intangibles are included in other assets on the balance sheet.
8 unchanged sentences
The Company tests identifiable intangible assets and goodwill for impairment in the fourth quarter of each fiscal year unless there are interim indicators that suggest that it is more likely than not that either the identifiable intangible assets or goodwill may be impaired.
−Removed: Due to the political situation within Turkey and the increased uncertainty in the relations between the U.S.
−Removed: and Turkey during the fiscal year ended April 30, 2018, the Company significantly lowered its cash flow expectations for its Altoy operations.
−Removed: As a result of the decline in the Company’s cash flow forecast, the Company performed an interim assessment of impairment of Altoy’s long-lived assets, excluding goodwill during the three months ended October 28, 2017.
−Removed: Based on the analysis, the Company determined that the fair value of Altoy had declined below its carrying value, excluding goodwill.
−Removed: As a result, the Company performed an additional analysis to determine the amount of the impairment loss and recorded an impairment loss totaling $ 899,000 during the three months ended October 28, 2017, which is included in selling, general and administrative expense on the consolidated statements of income.
−Removed: The fair value of the Altoy asset group was determined based on a discounted cash flow model reflective of the revised cash flow estimates.
−Removed: The weighted average amortization period at April 30, 2020 and 2019 was four years and one year , respectively.
+Added: The weighted average amortization period at April 30, 2021 and 2020 was five years and four years , respectively.
Amortization expense for the years ended April 30, 2021, 2020 and 2019 was $ 6,469,000 , $ 2,822,000 and $ 357,000 , respectively.
+Added: Technology and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of Arcturus on February 19, 2021.
+Added: Technology and customer relationship intangible assets were recognized in conjunction with the Company’s acquisition of ISG on February 23, 2021.
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.
1 unchanged sentence
Estimated amortization expense for the next five years is as follows (in thousands):
+Added: The following table presents the changes in the Company’s goodwill balance (in thousands):
+Added: Balance at April 30, 2020
+Added: Additions to goodwill
+Added: Impairment of goodwill
+Added: Balance at April 30, 2021
+Added: The goodwill balance at April 30, 2020 is attributable to the acquisition of Pulse.
+Added: The UAS segment goodwill addition is attributable to the ISG acquisition.
+Added: The MUAS goodwill addition is attributable to the Arcturus acquisition.
+Added: Refer to Note 21—Business Acquisitions for further details.
Property and Equipment, net
1 unchanged sentence
(In thousands)
+Added: In-service ISR assets
Leasehold improvements
18 unchanged sentences
On January 29, 2019, the Company invested an additional 209,500,000 yen ($ 1,926,000 ) to maintain its 5 % ownership stake.
−Removed: 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.
+Added: 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 %.
1 unchanged sentence
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.
−Removed: At April 30, 2020, 2019 and 2018, the Company recorded its ownership percentage of the net loss of HAPSMobile, or $ 4,982,000 , $ 3,944,000 and $ 1,283,000 , respectively, in equity method investment loss, net of tax in the consolidated statements of income.
+Added: At April 30, 2021, 2020 and 2019, the Company recorded
+Added: its ownership percentage of the net loss of HAPSMobile, or $ 10,530,000 , $ 4,982,000 and $ 3,944,000 , respectively, in equity method investment loss, net of tax in the consolidated statements of income.
+Added: During the fiscal year ended April 30, 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 .
+Added: HAPSMobile initially made its investment in Loon LLC in April 2019.
+Added: The impairment recorded by HAPSMobile is included in realized and unrealized losses on investments in the summarized financial information shown below.
At April 30, 2021 and 2020, the carrying value of the investment in HAPSMobile of $ 0 and $ 10,455,000 , respectively, was recorded in other assets, long-term.
1 unchanged sentence
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.
−Removed: Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 5.0 million to the fund.
+Added: The Company made additional contributions of $ 1,173,000 , $ 977,000 and $ 525,000 on July 15, 2020, January 4, 2021 and March 24, 2021, respectively.
+Added: Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 2,377,000 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.
−Removed: At April 30, 2020, the Company recorded its ownership percentage of the net loss of the limited partnership, or $ 394,000 , in equity method investment loss, net of deferred taxes of $ 111,000 in the consolidated statements of income.
−Removed: At April 30, 2020, the carrying value of the investment in the limited partnership of $ 4,442,000 , was recorded in available-for-sale long-term investments.
+Added: At April 30, 2021 and 2020, the Company recorded its ownership percentage of the net (gain) loss of the limited partnership, or $( 49,000 ) and $ 394,000 , respectively, in equity method investment loss, net of deferred taxes of $ 11 and $ 111,000 , respectively, in the consolidated statements of income.
+Added: At April 30, 2021 and 2020, the carrying value of the investment in the limited partnership of $ 7,168,000 and $ 4,442,000 , respectively, was recorded in available-for-sale long-term investments.
Summarized financial information of the equity method investments are as follows:
16 unchanged sentences
During the fiscal year ended April 30, 2020, the Company revised its estimates based on the results of additional engineering studies to $ 302,000 .
−Removed: As April 30, 2020 and 2019, the Company had no remaining warranty reserve related to the estimated costs to repair the impacted UAS and $ 251,000 , respectively.
−Removed: As of April 30, 2020 and 2019, the Company incurred total costs related to this warranty of $ 288,000 and $ 240,000 , respectively.
+Added: As of April 30, 2020 and 2019, the Company had no remaining warranty reserve related to the estimated costs to repair the impacted UAS and $ 251,000 , respectively.
+Added: During the fiscal year ended April 30, 2020, the Company incurred total costs related to this warranty of $ 288,000 .
Employee Savings Plan
1 unchanged sentence
The Company expensed approximately $ 5,764,000 , $ 4,744,000 and $ 3,961,000 in contributions to the plan for the years ended April 30, 2021, 2020 and 2019, respectively.
+Added: In connection with the consummation of the Arcturus Acquisition on February 19, 2021, the Company, as borrower, and Arcturus, as guarantor, entered into a Credit Agreement with certain lenders, letter of credit issuers, Bank of America, N.A., as the administrative agent and the swingline lender, and BofA Securities, Inc., JPMorgan Chase Bank, N.A., and U.S.
+Added: Bank National Association, as joint lead arrangers and joint bookrunners (the “Credit Agreement”).
+Added: 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”).
+Added: 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.
+Added: Upon execution of the Credit Agreement, the Company drew the full principal of the Term Loan Facility for use in the acquisition of Arcturus.
+Added: The Term Loan Facility requires payment of 5 % of the outstanding obligations in each of the first four loan years, with the remaining 80 % payable in loan year five, consisting of three quarterly payments of 1.25 % each, with the remaining outstanding principal amount of the Term Loan Facility due and payable on the final maturity date.
+Added: Proceeds from the Term Loan Facility were used in part to finance a portion of the cash consideration for the Arcturus acquisition.
+Added: Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes.
+Added: The Credit Facilities provide the Company with a choice of interest rates between (a) LIBOR (with a 0 % floor) plus the Applicable Margin;
+Added: 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.
+Added: 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%).
+Added: 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.
+Added: In the event of a default, an additional 2 % default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.
+Added: 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.
+Added: Mandatory prepayments are required under the revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders.
+Added: Mandatory prepayments are also required in connection with the disposition of assets to the extent not reinvested and unpermitted debt transactions.
+Added: 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
+Added: proceeds thereof, with customary exclusions and exceptions.
+Added: The Company’s existing and future domestic subsidiaries, including Arcturus (as of the closing of its acquisition by the Company), will be guarantors for the Credit Facilities.
+Added: 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.
+Added: 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.
+Added: As of April 30, 2021, the Company is in compliance with all covenants.
+Added: 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).
+Added: 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.
+Added: Long-term debt and the current period interest rates were as follows:
+Added: (In thousands)
+Added: Revolving credit facility
+Added: Less current portion
+Added: Total long-term debt, less current portion
+Added: Less unamortized debt issuance costs - term loans
+Added: Total long-term debt, net of unamortized debt issuance costs - term loans
+Added: Unamortized debt issuance costs - revolving credit facility
+Added: Future long-term debt principle payments at April 30, 2021 were as follows:
+Added: (In thousands)
The Company leases certain buildings, land and equipment.
−Removed: Under the New Lease Standard, 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.
+Added: 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.
1 unchanged sentence
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.
−Removed: The Company defines the initial lease term to include renewal options determined to be reasonably certain.
−Removed: 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 .
−Removed: 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.
+Added: The Company defines the initial lease term to include renewal
+Added: options determined to be reasonably certain.
+Added: The Company’s leases have remaining lease terms of less than one year to nine 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 .
+Added: If the Company determines it is reasonably certain of exercising an option to extend or terminate, the option is 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.
13 unchanged sentences
Total lease costs, net
−Removed: Supplemental lease information were as follows:
+Added: Supplemental lease information was as follows:
(In thousands)
+Added: (In thousands)
Cash paid for amounts included in the measurement of operating lease liabilities
6 unchanged sentences
Total present value of operating lease liabilities
−Removed: Maturities of operating lease liabilities as of April 30, 2019 were as follows:
−Removed: Total lease payments
−Removed: Rental expense under operating leases was approximately $ 4,609,000 and $ 4,011,000 for the years ended April 30, 2019 and 2018, respectively.
+Added: Rental expense under operating leases was approximately $ 4,609,000 for the year ended April 30, 2019.
Stock-Based Compensation
24 unchanged sentences
The expected volatility is based on historical volatility for the Company’s stock.
−Removed: The risk free interest rate is based on the
−Removed: implied yield on a U.S.
−Removed: Treasury zero-coupon bond with a remaining term that approximates the expected term of the option.
+Added: The risk free interest rate is based on the implied yield on a U.S.
+Added: Treasury zero-coupon bond with a remaining term that approximates the expected term of the
The expected dividend yield of zero reflects that the Company has not paid any cash dividends since inception and does not anticipate paying cash dividends in the foreseeable future.
40 unchanged sentences
Long-Term Incentive Awards
−Removed: During the three months ended July 27, 2019, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2020 LTIP”).
+Added: 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:
−Removed: (i) time-based restricted stock awards, which vest in equal tranches in July 2020, July 2021 and
−Removed: July 2022, 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, 2022.
+Added: (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.
4 unchanged sentences
At April 30, 2021, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $ 7,784,000 .
+Added: During the three months ended July 27, 2019, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2020 LTIP”).
+Added: Awards under the Fiscal
+Added: 2020 LTIP consist of:
+Added: (i) time-based restricted stock awards, which vest in equal tranches in July 2020, July 2021 and July 2022, 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, 2022.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: Settlement of the PRSUs will be made in fully-vested shares of common stock.
+Added: During the fiscal years ended April 30, 2021 and 2020, the Company recorded $ 620,000 and $ 649,000 of compensation expense related to the Fiscal 2020 LTIP.
+Added: At April 30, 2021, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2020 LTIP is $ 4,188,000 .
During the three months ended July 28, 2018, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2019 LTIP”).
6 unchanged sentences
During the fiscal years ended April 30, 2021, 2020 and 2019, the Company recorded $ 368,000 , $ 386,000 and $ 572,000 of compensation expense related to the Fiscal 2019 LTIP, respectively.
−Removed: At April 30, 2020, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2019 LTIP is $ 2,478,000 .
+Added: During the first quarter of fiscal 2022, the Company expects to issue a total of 18,541 fully-vested shares of common stock to settle the Fiscal 2019 LTIP.
During the three months ended July 29, 2017, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2018 LTIP”).
5 unchanged sentences
Settlement of the PRSUs will be made in fully vested shares of common stock.
−Removed: During the fiscal years ended April 30, 2020, 2019 and 2018, the Company recorded $ 193,000 , $ 588,000 and $ 269,000 of compensation expense related to the Fiscal 2018 LTIP, respectively.
−Removed: During the first quarter of fiscal 2021, the Company expects to issue a total of 27,356 fully-vested shares of common stock to settle the Fiscal 2018 LTIP.
+Added: 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.
+Added: No compensation expense was recorded during fiscal year ended April 30, 2021 for the Fiscal 2018 LTIP.
During the three months ended July 29, 2017, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2017 LTIP”).
5 unchanged sentences
At each reporting period, the Company reassesses the probability of achieving the performance targets.
−Removed: 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.
+Added: 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
+Added: estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised.
The components of income before income taxes are as follows (in thousands):
7 unchanged sentences
A reconciliation of income tax expense computed using the U.S.
−Removed: federal statutory rates to actual income tax expense (benefit) is as follows:
+Added: federal statutory rates to actual income tax expense is as follows:
Year Ended April 30,
3 unchanged sentences
Valuation allowance
−Removed: Foreign rate differential
Return to provision adjustments
3 unchanged sentences
Effective income tax rate
−Removed: The components of the provision (benefit) for income taxes are as follows (in thousands):
+Added: The components of the provision for income taxes are as follows (in thousands):
Year Ended April 30,
15 unchanged sentences
Right-of-use asset
+Added: Intangibles basis
Total deferred income tax liabilities
4 unchanged sentences
At April 30, 2021 the Company had state credit carryforwards of $ 28,530,000 that do not expire and federal tax credit carryforwards of $ 2,260,000 that expire in 2041.
−Removed: At April 30, 2020, the Company had a state and foreign net operating loss carryforward of approximately $ 10,000 and $ 660,000 , respectively.
−Removed: The state net operating loss carryforwards carry forward indefinitely.
−Removed: $ 320,000 of the foreign loss carryforwards expire in fiscal 2021.
+Added: At April 30, 2021, the Company had federal, state and foreign net operating loss carryforwards of approximately $ 88,719,000 , $ 24,685,000 and $ 341,000 , respectively.
+Added: The federal and $ 8,754,000 of the state net operating losses carry forward indefinitely.
+Added: $ 15,931,000 of state net operating losses will begin expiring in fiscal year 2028, and the foreign loss carryforward will begin expiring in fiscal year 2022.
+Added: Utilization of federal and state net operating loss carryforwards may be subject to substantial annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code, as amended and similar state provisions.
At April 30, 2021 and 2020, the Company had approximately $ 17,556,000 and $ 14,347,000 , respectively, of unrecognized tax benefits all of which would impact the Company’s effective tax rate if recognized.
12 unchanged sentences
The tax years 2010 to 2012 and 2016 to 2020 remain open for major state taxing jurisdictions.
−Removed: During the fiscal year ended April 30, 2020, the Company recorded a reversal of a $ 279,000 reserve for uncertain tax positions due to the lapse of prior year statue.
−Removed: On December 22, 2017, the Tax Act was signed into law, which resulted in significant changes to the Internal Revenue Code.
−Removed: Changes include, but are not limited to, a corporate tax rate decrease from 35 % to 21 % effective for tax years beginning after December 31, 2017, repeal of the corporate alternative minimum tax, repeal of the deduction for domestic production activities, a deduction for certain Foreign Derived Intangible Income (“FDII”), and limitation on the deductibility of certain executive compensation.
−Removed: In accordance with ASC 740, Income Taxes, the Company is required to record the effects of tax law changes in the period enacted.
−Removed: As the Company has an April 30 fiscal year end, its U.S.
−Removed: federal corporate income tax rate was blended in fiscal 2018, resulting in a statutory federal rate of approximately 30.4 % (8 months at 35 % and 4 months at 21 %), and 21 % for subsequent fiscal years.
−Removed: The Company remeasured its existing deferred tax assets and liabilities at the rate the Company expected to be in effect when those deferred taxes will be realized and recorded a one-time deferred tax expense of approximately $ 3,300,000 during the fiscal year ended April 30, 2018.
−Removed: The Company followed the guidance in SEC Staff Accounting Bulletin 118 (“SAB 118”), which provided additional clarification regarding the application of ASC Topic 740 in situations where the Company does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act for the reporting period in which the Act was enacted.
−Removed: SAB 118 provides for a measurement period beginning in the reporting period that includes the Act’s enactment date and ending when the Company has obtained, prepared, and analyzed the information needed in order to complete the accounting requirements but in no circumstances should the measurement period extend beyond one year from the enactment date.
−Removed: The measurement period under SAB 118 closed during the year ended April 30, 2019.
−Removed: The Company has finalized its accounting for the impact of the Tax Act during and reached the following conclusions on the previous provisional estimates.
−Removed: The Company has concluded it will be eligible to claim the FDII deduction and has reflected a rate benefit in the provision for income taxes.
−Removed: The Company expects the IRS will be issuing additional guidance that could ultimately impact the size of the benefit.
−Removed: In addition, the Company has concluded that its foreign subsidiaries are in a cumulative earnings and profits deficit and, therefore, has confirmed that it will not have an income tax payable as a result of the one-time deemed repatriation tax.
−Removed: Accumulated Other Comprehensive Loss
−Removed: The components of accumulated other comprehensive loss are as follows (in thousands):
+Added: On March 27, 2020, the U.S.
+Added: government enacted the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, a $2 trillion relief package comprising a combination of tax provisions and other stimulus measures.
+Added: The CARES Act broadly provides entities tax payment relief and significant business incentives and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act, or the Tax Act.
+Added: The tax relief measures for entities include a five-year net operating loss carry back, increases interest expense deduction limits, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property.
+Added: The Act also provides other non-income tax benefits, including federal funding for a range of stabilization measures and emergency funding to assist those impacted by the COVID-19 pandemic.
+Added: Similar legislation is being enacted in other jurisdictions in which the Company operates.
+Added: ASC Topic 740, Income Taxes, requires the effect of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new legislation is enacted.
+Added: The enactment of the CARES Act and similar legislation in other jurisdictions in which the Company operates was not material to the Company’s income tax benefit for the year ended April 30, 2021.
+Added: Accumulated Other Comprehensive Income
+Added: The components of accumulated other comprehensive income are as follows (in thousands):
Total Accumulated
3 unchanged sentences
Translation Adjustments
−Removed: Total accumulated other comprehensive loss balance as of April 30, 2019
+Added: Total accumulated other comprehensive income balance as of April 30, 2020
Changes in foreign currency translation adjustments
−Removed: Unrealized gains, net of $ 14 of taxes
−Removed: Total accumulated other comprehensive loss balance as of April 30, 2020
+Added: Unrealized losses, net of $ 1 of taxes
+Added: Total accumulated other comprehensive income balance as of April 30, 2021
Changes in Accounting Estimates
1 unchanged sentence
The change in estimate was a result of the Company changing the total costs required to complete the contracts due to having more accurate cost information as work progressed in subsequent periods on the various contracts.
−Removed: During the year ended April 30, 2020, the Company revised its estimates of the total expected costs to complete a TMS contract and a contract associated with a design and development agreement.
+Added: During the year ended April 30, 2021, the Company revised its estimates of the total expected costs to complete a TMS variant contract.
+Added: The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease to revenue of approximately $ 1,041,000 .
+Added: During the year ended April 30, 2020, the Company revised its estimates of the total
+Added: expected costs to complete a TMS contract and a contract associated with a design and development agreement.
The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease of approximately $ 1,403,000 and an increase of approximately $ 1,099,000 , respectively.
The changes in estimates resulted in cumulative catch-up adjustments to revenue for the years ended April 30, 2019 were not material.
−Removed: During the year ended April 30, 2018, the Company revised its estimates of the total expected costs to complete a TMS variant contract.
−Removed: The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease of approximately $ 1,255,000 .
Related Party Transactions
3 unchanged sentences
The Company recorded revenue under the DDA and preliminary design agreements between the Company and SoftBank of $ 42,426,000 , $ 60,864,000 and $ 55,407,000 for the fiscal years ended April 30, 2021, 2020 and 2019, respectively.
−Removed: At April 30, 2020 and 2019, the Company had unbilled related party receivables from HAPSMobile of
−Removed: $ 15,779,000 and $ 9,028,000 recorded in unbilled receivables and retentions on the consolidated balance sheet, respectively.
+Added: At April 30, 2021 and 2020, the Company had unbilled related party receivables from HAPSMobile of $ 544,000 and $ 15,779,000 recorded in unbilled receivables and retentions on the consolidated balance sheet, respectively.
As of April 30, 2021, the Company owned approximately a 7 % stake.
6 unchanged sentences
Although adverse decisions or settlements may occur, the Company, in consultation with legal counsel, believes that the final disposition of such matters will not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.
+Added: The Company has recorded a litigation reserve related to the settlement offer made to Webasto.
+Added: Refer to Note 2—Discontinued Operations for further details.
At April 30, 2021 and 2020, the Company had outstanding letters of credit totaling $ 5,029,000 and $ 2,716,000 , respectively.
4 unchanged sentences
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.
−Removed: Historically, the Company has not experienced material disallowed costs as a result of government audits.
+Added: Historically, the Company has not experienced material disallowed costs as a result of government
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.
−Removed: During the fiscal year ended April 30, 2017, the Company settled rates for its incurred cost claims with the DCAA for fiscal years 2011 through 2014 without payment of any consideration.
During the fiscal year ended April 30, 2019, the Company settled rates for its incurred cost claims with the DCAA for fiscal years 2016 and 2017 without payment of any consideration.
During the fiscal year ended April 30, 2020, the Company settled rates for its incurred cost claims with the DCAA for fiscal year 2015 for an amount not significant.
−Removed: At April 30, 2020 and 2019, the Company had no reserve and $ 93,000 reserved for open incurred cost claim audits, respectively.
+Added: At April 30, 2021 and 2020, the Company had no reserve for open incurred cost claim audits.
Business Acquisitions
+Added: Arcturus Acquisition
+Added: On February 19, 2021, the Company closed its acquisition of Arcturus pursuant to the terms of the Arcturus Purchase Agreement.
+Added: Arcturus, headquartered in Petaluma, California, designs, engineers, tools, and manufactures unmanned aerial and aircraft systems including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related generally to unmanned aircraft systems.
+Added: Pursuant to the Arcturus Purchase Agreement, at the closing of the Arcturus Acquisition, the Company paid approximately $ 422,602,000 , net of cash acquired (subject to certain customary adjustments and escrow arrangements set forth in the Arcturus Purchase Agreement), financed with a combination of approximately $ 150,218,000 of cash-on-hand, $ 200,000,000 of financing pursuant to the Term Loan Facility and the issuance of approximately $ 72,384,000 of unregistered, restricted shares of common stock.
+Added: 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.
+Added: The final cash consideration is subject to certain customary adjustments, including for net working capital, cash, debt and unpaid transaction expenses (including change in control related payments triggered by the transaction) of Arcturus at the Arcturus closing, less $ 6,500,000 to be held in escrow to address final purchase price adjustments post-Arcturus closing, if any (the “Adjustment Escrow”), and $ 1,822,500 to be held in escrow to address Arcturus’s and/or the Sellers’ indemnification obligations (the “Indemnification Escrow”).
+Added: 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;
+Added: the Indemnification Escrow, less any amounts paid or reserved, is to be released to the Arcturus Sellers 12 months following the Arcturus closing.
+Added: To further address potential breaches of Arcturus’s and the Sellers’ representations and warranties beyond the application of the Indemnification Escrow, the Company also obtained representation and warranty insurance policies providing $ 40,000,000 in coverage, subject to customary terms, exclusions and retention amounts.
+Added: The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Arcturus (in thousands):
+Added: Fair value of assets acquired:
+Added: Accounts receivable
+Added: Unbilled receivable
+Added: Inventories, net
+Added: Prepaid and other current assets
+Added: Property and equipment, net
+Added: Operating lease assets
+Added: Customer relationships
+Added: Total assets acquired
+Added: Fair value of liabilities assumed:
+Added: Accounts payable
+Added: Wages and related accruals
+Added: Customer advances
+Added: Other current liabilities
+Added: Operating lease liabilities
+Added: Other non-current liabilities
+Added: Deferred income taxes, net
+Added: Total liabilities assumed
+Added: Total identifiable net assets
+Added: Fair value of consideration transferred:
+Added: Cash consideration, net of cash acquired
+Added: Equity consideration
+Added: Total consideration
+Added: 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.
+Added: The fair value of the intangibles assets was determined using a discounted cash flow analysis, which were based on the Company’s preliminary estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.
+Added: Use of different estimates and judgments could yield materially different results.
+Added: The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Arcturus and expected future customers in the MUAS market.
+Added: For tax purposes the acquisition was treated as a stock purchase and the goodwill is not deductible.
+Added: Supplemental Pro Forma Information (unaudited)
+Added: Arcturus revenue and loss from operations for the year ended April 30, 2021 since acquisition on February 19, 2021 was $ 15,837,000 and $ 1,869,000 , respectively.
+Added: The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2019 (in thousands):
+Added: Net income attributable to AeroVironment, Inc.
+Added: 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.
+Added: These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 27, 2019, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2019 with the consequential tax effects, and including the results of Arcturus prior to acquisition.
+Added: The Company incurred approximately $ 6,015,000 acquisition-related expenses for the year ended April 30, 2021.
+Added: These expenses are included in selling, general and administrative expense on the Company’s consolidated statement of operations.
+Added: 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, 2019, nor are they indicative of results of operations that may occur in the future.
+Added: ISG Acquisition
+Added: On February 23, 2021, the Company purchased certain assets of, and assumed certain liabilities of, ISG pursuant to the terms of the ISG Purchase Agreement.
+Added: 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.
+Added: In connection with the ISG Acquisition, the Company (i) paid a base purchase price of $ 29,700,000 in cash at closing and (ii) may pay additional cash consideration of up to $ 6,000,000 , which is held in escrow account not controlled by the Company, based on the achievement of certain revenue targets by ISG during the 3 years following closing, in each case, subject to the terms and conditions of the ISG Purchase Agreement, including certain customary adjustments.
+Added: 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.
+Added: 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.
+Added: To supplement certain indemnifications provided by the ISG Seller, the Company obtained a representation and warranty insurance policy.
+Added: The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the ISG Acquisition (in thousands):
+Added: Customer relationships
+Added: Total net identified assets acquired
+Added: Fair value of consideration:
+Added: Contingent consideration
+Added: 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.
+Added: The fair value of the intangibles assets was determined using a discounted cash flow analysis, which were based on the Company’s preliminary estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.
+Added: Use of different estimates and judgments could yield materially different results.
+Added: The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers.
+Added: For tax purposes the acquisition was treated as an asset purchase and the goodwill is deductible ratably over a period of fifteen years .
+Added: Supplemental Pro Forma Information (unaudited)
+Added: ISG revenue for the year ended April 30, 2021 since acquisition on February 23, 2021 was $ 1,724,000 .
+Added: Other than the aforementioned revenue and intangible asset amortization expense of $ 474,000 for the year ended April 30, 2021 since the acquisition on February 23, 2021, the ISG financial results were not significant.
+Added: The following unaudited pro forma summary presents consolidated information of the Company as if the business acquisition had occurred on May 1, 2019 (in thousands):
+Added: Net income attributable to AeroVironment, Inc.
+Added: 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.
+Added: These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 27, 2019, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2019 with the consequential tax effects, and including the results of ISG prior to acquisition.
+Added: The Company incurred approximately $ 954,000 acquisition-related expenses for the year ended April 30, 2021.
+Added: These expenses are included in selling, general and administrative expenses on the Company’s consolidated statement of operations.
+Added: 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, 2019, nor are they indicative of results of operations that may occur in the future.
+Added: Pulse Acquisition
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.
3 unchanged sentences
The Company financed the acquisition entirely from available cash on hand.
−Removed: In addition to the consideration paid at closing, the acquisition of Pulse includes contingent consideration arrangements that require additional consideration to be paid by the Company to the sellers of Pulse if two specified research and development milestones are achieved by December 10, 2021 and the continued employment of specified employees.
−Removed: Amounts are payable upon the achievement of the milestones.
−Removed: The range of the undiscounted amounts the Company could pay under each of the contingent consideration agreements is zero or $ 2,500,000 ($ 5,000,000 in total if both milestones are achieved and specific key employees continued employment).
+Added: During fiscal year ended April 30, 2021, the Company paid a total of $ 1,492,000 in holdback and retention payments.
+Added: 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.
+Added: Amounts were payable upon the achievement of the milestones.
+Added: The range of the undiscounted amounts the Company could pay under each of the contingent consideration agreements was 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.
−Removed: That measure is based on significant Level 3 inputs not observable in the market.
−Removed: Key assumptions include (1) a discount rate of 4.5 % and (2) the probability that each of the milestones will be achieved.
+Added: That measure was based on significant Level 3 inputs not observable in the market.
+Added: Key assumptions include (1) a discount rate of 4.5 % and (2) the probability that each of the milestones would be achieved.
During the year ended April 30, 2020, one of the research and development milestones was achieved, and the requirements for the payout of remaining contingent consideration were concluded to not have been met.
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On February 26, 2020, $ 2,500,000 of contingent consideration was paid to the sellers for the achieved milestone.
−Removed: The following table summarizes the provisional allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Pulse (in thousands):
+Added: 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):
In-process R&D
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The Company did not incur significant acquisition-related expenses for the year ended April 30, 2020.
−Removed: These expenses are included in selling, general and administrative, research and development, and product cost of sales on the Company’s consolidated income statement.
+Added: 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.
+Added: The Company’s product segments are as follows:
+Added: Unmanned Aircraft Systems—The UAS segment focuses primarily on the design, development, production, delivery and support of a technologically advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses.
+Added: AeroVironment, Inc.
+Added: supplies unmanned aircraft systems (“UAS”), tactical missile systems (“TMS”) and related services primarily to organizations within the U.S.
+Added: Department of Defense (“DoD”) and to international allied governments.
+Added: Medium Unmanned Aircraft Systems—The MUAS segment, which originates with the acquisition of Arcturus, focuses on designs, engineers, tools, and manufactures unmanned aerial and aircraft systems including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related generally to unmanned aircraft systems including ISR services.
+Added: The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other.
+Added: The segment results are as follows (in thousands):
+Added: Year Ended April 30,
+Added: Gross margin:
+Added: Income (loss) from continuing operations:
Geographic Information
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government foreign military sales in which an end user is a foreign government, accounted for 39 %, 45 % and 52 % of revenue for each of the fiscal years ended April 30, 2021, 2020 and 2019, respectively.
+Added: With the acquisition of Arcturus, the Company deploys in-service assets internationally, which as of April 30, 2020 was $ 36,047,000 .
+Added: Subsequent Events
+Added: Telerob Acquisition
+Added: On May 3, 2021, the Company closed its acquisition of Telerob Gesellschaft für Fernhantierungstechnik mbH, a German company based in Ostfildern (near Stuttgart), Germany (“Telerob”), including Telerob’s wholly owned subsidiary, Telerob USA, Inc.
+Added: (“Telerob USA,” and collectively with Telerob, the “Telerob Group”) pursuant to its previously announced Share Purchase Agreement (the “Purchase Agreement”) with Unmanned Systems Investments GmbH, a German limited liability company incorporated under the laws of Germany (the “Seller”), and each of the unit holders of the Seller (collectively, the “Shareholders”), to purchase 100 % of the issued and outstanding shares of Seller’s wholly-owned subsidiary Telerob (the “Acquisition”).
+Added: Upon closing of the transactions contemplated by the Purchase Agreement, Telerob became a wholly-owned subsidiary of the Company.
+Added: Pursuant to the Purchase Agreement at closing, the Company paid € 37,455,000 (approximately $ 45,400,000 ) in cash to the Seller (subject to certain purchase price adjustments as set forth in the Purchase Agreement), less (a) € 3,000,000 (approximately $ 3,636,000 ) to be held in escrow for breaches of the Seller’s fundamental warranties or any other of Seller’s warranties to the extent not covered by a representation and warranty insurance policy (the “RWI Policy”) obtained by the Company in support of certain indemnifications provided by the Seller;
+Added: (b) transaction-related fees and costs incurred by the Seller, including change in control payments triggered by the transaction;
+Added: and (c) 50% of the cost of obtaining the RWI Policy.
+Added: In addition, at closing the Company paid off approximately € 7,811,000 (approximately $ 9,468,000 ), of certain indebtedness of the Telerob Group, which amount was paid in combination to the Seller and the lender under an agreement between Telerob and the lender providing for a reduced payoff amount.
+Added: This indebtedness was offset by cash on hand at the Telerob Group at closing.
+Added: The escrow amount is to be released to the Seller, less any amounts paid or reserved, 30 months following the closing date.
+Added: In addition to the consideration paid at closing, the Seller may receive € 2,000,000 (approximately $ 2,424,000 ) in additional cash consideration if specific revenue targets for the Telerob Group are achieved during the 12 month period after closing beginning on the first day of the calendar month following the closing (the “First Earnout Year”) and an additional € 2,000,000 (approximately $ 2,424,000 ) in cash consideration if specific revenue targets for the Telerob Group are achieved in the 12 month period following the First Earnout Year.
+Added: The Seller may also receive up to € 2,000,000 (approximately $ 2,424,000 ) in additional cash consideration if specific awards and/or orders from the U.S.
+Added: military are achieved prior to the end of a 36-month post-closing period.
+Added: SoftBank Agreement
+Added: On May 29, 2021, the Company entered into an amendment to the DDA with HAPSMobile.
+Added: The parties agreed to the amendment in anticipation of the Company and SoftBank entering into a Master Design and Development Agreement with each other to continue the design and development of the Solar HAPS aircraft developed under the DDA.
+Added: On May 29, 2021, the Company and SoftBank entered into a Master Design and Development Agreement (“MDDA”) to continue the development of Solar HAPS.
+Added: Pursuant to the MDDA, which has a five-year term, SoftBank will issue orders to the Company for the Company to perform design and development services and produce deliverables as specified in the applicable order(s).
+Added: Upon the execution of the MDDA, SoftBank issued to the Company, and the Company accepted, the first order under the MDDA which has a maximum value of approximately $ 51,200,000 .
+Added: Concurrent with the execution of the MDDA, each of SoftBank and the Company agreed to lend HAPSMobile JPY 500,000,000 ($ 4,600,000 ), which loans are convertible into shares of HAPSMobile under certain conditions, and to cooperate with each other to explore restructuring and financing options for HAPSMobile to continue the development of Solar HAPS.
Quarterly Results of Operations (Unaudited )
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Three Months Ended
−Removed: July 27, 2019
+Added: August 1, 2020
October 31, 2020
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from continuing operations—diluted(3)
−Removed: (1) Includes a one-time gain from a litigation settlement of $0.26 per basic and diluted share from continuing operations attributable to AeroVironment recorded to “Other income (expense), net” in the consolidated statement of operations.
−Removed: (2) Includes an impairment loss of $4.4 million related to the long-lived assets of the Company’s commercial UAS Quantix solution, recorded to selling, general and administrative expense in the consolidated statement of operations.
+Added: (1) Includes a loss of $ 8.4 million for the Company’s proportionate share of the HAPSMobile Inc.
+Added: joint venture’s impairment of its investment in Loon LLC recorded to “Equity method investment loss, net of tax” in the consolidated statement of operations.
+Added: (2) Includes a $ 9.3 million legal accrual related to our former EES Business recorded to “Other (expense) income, net” in the consolidated statement of operations.
(3) Earnings per share is computed independently for each of the quarters presented.
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SCHEDULE II— VALUATION AND QUALIFYING ACCOUNTS
+Added: Acquired from
(In thousands)
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Based on this assessment, management concluded that the Company maintained effective internal control over financial reporting as of April 30, 2021 based on the specified criteria.
+Added: In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their final assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.
+Added: Our management’s evaluation of internal control over financial reporting excluded the internal control activities of Arcturus, which we acquired in February 19, 2021 and ISG, which we acquired in February 23, 2021, as discussed in Note 21 – Business Acquisitions, of the notes to the consolidated financial statements.
+Added: We have included the financial results of these in the consolidated financial statements from the date of acquisition.
+Added: Total assets (excluding goodwill and intangible assets) and total revenues subject to Arcturus’ and ISG’s internal control over financial reporting represented approximately 24% and 4% of our consolidated total assets and total revenues as of and for the fiscal year ended April 30, 2021, respectively.
The effectiveness of our internal control over financial reporting as of April 30, 2021 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
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To the Stockholders and the Board of Directors of AeroVironment, Inc.
−Removed: and subsidiaries
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of AeroVironment, Inc.
−Removed: and subsidiaries (the “Company”) as of April 30, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
+Added: (the “Company”) as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended April 30, 2021, of the Company and our report dated June 29, 2021, expressed an unqualified opinion on those financial statements and included an explanatory paragraph regarding the Company’s adoption of a new accounting standard.
+Added: As described in Management’s Report on Internal Controls Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Arcturus, which was acquired on February 19, 2021, and ISG, which was acquired on February 23, 2021.
+Added: Total assets (excluding goodwill and intangible assets) and total revenues subject to Arcturus’ and ISG’s internal control over financial reporting represented approximately 24% and 4% of consolidated total assets and total revenues as of and for the fiscal year ended April 30, 2021, respectively.
+Added: Accordingly, our audit did not include the internal control over financial reporting at Arcturus and ISG.
Basis for Opinion
−Removed: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management’s report.
+Added: The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
122 unchanged sentences
4 dated April 30, 2019, Amendment No.
−Removed: 5 dated December 2, 2019, and Amendment No.
−Removed: 6 dated May 29, 2020 to Standard Consulting Agreement and corresponding Task Orders by and between AeroVironment, Inc.
+Added: 5 dated December 2, 2019, Amendment No.
+Added: 6 dated May 29, 2020, Amendment No.
+Added: 7 dated June 1, 2021 to Standard Consulting Agreement and corresponding Task Orders by and between AeroVironment, Inc.
and Charles R.
5 unchanged sentences
dated as of December 27, 2017
−Removed: Intellectual Property License Agreement by and among AeroVironment, Inc., SoftBank Corp.
−Removed: and HAPSMobile, Inc.
−Removed: dated as of December 27, 2017
Amendment No.1 to the Design and Development Agreement by and between AeroVironment, Inc.
36 unchanged sentences
Amendment No.
+Added: 12 to the Design and Development Agreement by and between AeroVironment, Inc.
+Added: and HAPSMobile Inc., dated as of September 18, 2020
+Added: Amendment No.
+Added: 13 to the Design and Development Agreement by and between AeroVironment, Inc.
+Added: and HAPSMobile Inc., dated as of October 28, 2020
+Added: Amendment No.
+Added: 14 to the Design and Development Agreement by and between AeroVironment, Inc.
+Added: and HAPSMobile Inc., dated as of January 11, 2021
+Added: Amendment No.
+Added: 15 to the Design and Development Agreement by and between AeroVironment, Inc.
+Added: and HAPSMobile Inc., dated as of May 29, 2021
+Added: Amendment No.
1 to the Joint Venture Agreement by and between AeroVironment, Inc.
5 unchanged sentences
dated as of February 8, 2019
+Added: Amendment No.
+Added: 3 to the Joint Venture Agreement by and between AeroVironment, Inc.
+Added: and Softbank Corp.
+Added: dated as of June 21, 2019
+Added: Amendment No.
+Added: 4 to the Joint Venture Agreement by and between AeroVironment, Inc.
+Added: and Softbank Corp.
+Added: dated as of October 30, 2019
+Added: Amendment No.
+Added: 5 to the Joint Venture Agreement by and between AeroVironment, Inc.
+Added: and Softbank Corp.
+Added: dated as of March 31, 2021
+Added: Amendment No.
+Added: 6 to the Joint Venture Agreement by and between AeroVironment, Inc.
+Added: and Softbank Corp.
+Added: dated as of May 29, 2021
Asset Purchase Agreement by and between Webasto Charging Systems, Inc.
14 unchanged sentences
Second Amendment to Lease Agreement dated as of May 13, 2020, by and between the Company and Hillside III LLC
−Removed: Subsidiaries of AeroVironment, Inc.
+Added: Second Amendment to Lease Agreement (994 Innovators Way, Simi Valley, CA 93065) dated as of June 1, 2021, by and between the Company and Hillside Associates II, LLC, and related agreements
+Added: First Amendment to Lease Agreement (996 Innovators Way, Simi Valley, CA 93065) dated as of June 1, 2021, by and between the Company and Hillside Associates II, LLC, and related agreements
+Added: Stock Purchase Agreement, dated January 11, 2021, by and among AeroVironment, Inc., Arcturus UAV, Inc., and the shareholders and other equity interest holders of Arcturus UAV, Inc.
+Added: Loan commitment letter, dated January 11, 2021, by and among AeroVironment, Inc., Bank of America, N.A., BofA Securities, Inc., JPMorgan Chase Bank, N.A., and U.S.
+Added: Bank National Association.
+Added: Credit Agreement, dated February 19, 2021, by and among AeroVironment, Inc., 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.
+Added: Bank National Association, as joint lead arrangers and joint bookrunners
+Added: Security and Pledge Agreement, dated February 19, 2021, by and among AeroVironment, Inc., certain obligors, and Bank of America, N.A., as the administrative agent
+Added: Share Purchase Agreement, dated December 3, 2020, by and between AeroVironment, Inc., Unmanned Systems Investments GmbH, and each of the unit holders of Unmanned Systems Investments GmbH
Consent of Deloitte & Touche LLP, independent registered public accounting firm
32 unchanged sentences
(20) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed September 6, 2018 (File No.
−Removed: The representations and warranties contained in the Asset Purchase Agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts and are qualified by information in disclosure schedules that the parties exchanged in connection with the signing of the Asset Purchase Agreement.
+Added: The representations and warranties contained in the Asset Purchase Agreement were made for the purposes of allocating contractual risk between the parties and not as a means of establishing facts and are qualified by information in disclosure schedules that the parties exchanged in connection with the signing of the Asset
+Added: Purchase Agreement.
Moreover, the representations and warranties were made only as of the date of execution of the Asset Purchase Agreement and information concerning the subject matter of the representations and warranties may change after the date of the Asset Purchase Agreement.
8 unchanged sentences
(25) Incorporated by reference herein to the exhibits to the Company’s Current Report on Form 8-K/A filed October 22, 2019 (File No.
+Added: (26) Incorporated by reference herein to the exhibits to the Company's Annual Report on Form 10-K filed June 24, 2020 (File No.
+Added: (27) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed December 9, 2020 (File No.
+Added: (28) Incorporated by reference herein to the exhibits to the Company's Quarterly Report on Form 10-Q filed March 9, 2021 (File No.
Confidential treatment has been granted for portions of this exhibit.
−Removed: Pursuant to Item 601(b)(2) of Regulation S-K, certain immaterial provisions of the agreement that would likely cause competitive harm to the Company if publicly disclosed have been redacted or omitted.
+Added: Pursuant to Items 601(b)(2) and/or 601(b)(10) of Regulation S-K, certain immaterial provisions of the agreement that would likely cause competitive harm to the Company if publicly disclosed have been redacted or omitted.
Indicates management contract or compensatory plan.
−Removed: Not applicable.
+Added: Schedules (or similar attachments) to this Exhibit have been omitted in accordance with Items 601(a)(5) and/or 601(b)(2) of Regulation S-K.
+Added: The Registrant agrees to furnish supplementary a copy of all omitted schedules to the Securities and Exchange Commission on a confidential basis upon request.
+Added: Financial Statement Schedules and Separate Financial Statements of Subsidiaries Not Consolidated and Fifty Percent or Less Owned Persons
+Added: HAPSMobile was deemed a significant equity investee under Rule 3-09 of Regulation S-X for the fiscal year ended April 30, 2021.
+Added: As such, financial statements of HAPSMobile are required to be filed by amendment to this Annual Report on Form 10-K, within six months of HAPSMobile's fiscal year end.
+Added: Accordingly, HAPSMobile financial statements for its fiscal year ended March 31, 2021 will be filed via an amendment to this Annual Report on Form 10-K on or before September 30, 2021.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
34 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.