What changed in this filing

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Item 1. Financial Statements

2023-03-06 compared with 2022-12-07 · 185 added, 172 removed, 733 unchanged (33% of the section changed)

6 unchanged sentences

Short-term investments

Accounts receivable, net of allowance for doubtful accounts of $ 74 at October 29, 2022 and $ 592 at April 30, 2022

Accounts receivable, net of allowance for doubtful accounts of $ 61 at January 28, 2023 and $ 592 at April 30, 2022

Unbilled receivables and retentions (inclusive of related party unbilled receivables of $ 2,229 at April 30, 2022)

27 unchanged sentences

Authorized shares— 10,000,000 ;

none issued or outstanding at October 29, 2022 and April 30, 2022

none issued or outstanding at January 28, 2023 and April 30, 2022

Common stock, $ 0.0001 par value:

Authorized shares— 100,000,000

Issued and outstanding shares— 25,157,618 shares at October 29, 2022 and 24,951,287 shares at April 30, 2022

Issued and outstanding shares— 25,264,025 shares at January 28, 2023 and 24,951,287 shares at April 30, 2022

Additional paid-in capital

10 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Product sales

Contract services (inclusive of related party revenue of $ 10,342 and $ 20,694 for the three and six months ended October 30, 2021, respectively)

Contract services (inclusive of related party revenue of $ 9,543 and $ 30,237 for the three and nine months ended January 29, 2022, respectively)

Cost of sales:

6 unchanged sentences

Research and development

(Loss) income from operations

Income (loss) from operations

Other (loss) income:

Interest expense, net

Other income (expense), net

Other (expense) income, net

Loss before income taxes

1 unchanged sentence

Equity method investment (loss) income, net of tax

Net (loss) income

Net income attributable to noncontrolling interest

Net loss (income) attributable to noncontrolling interest

Net (loss) income attributable to AeroVironment, Inc.

Net (loss) income per share attributable to AeroVironment, Inc.

Net loss per share attributable to AeroVironment, Inc.

Weighted-average shares outstanding:

1 unchanged sentence

AeroVironment, Inc.

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

Three Months Ended

Six Months Ended

Net (loss) income

Nine Months Ended

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $ 0 for the three and six months ended October 29, 2022 and October 30, 2021, respectively

Unrealized (loss) gain on available-for-sale investments, net of deferred tax expense of $ 0 and $ 1 for the three months ended January 28, 2023 and January 29, 2022, respectively;

and $ 0 and $ 1 for the nine months ended January 28, 2023 and January 29, 2022, respectively

Change in foreign currency translation adjustments

Total comprehensive (loss) income

Net income attributable to noncontrolling interest

Comprehensive (loss) income attributable to AeroVironment, Inc.

Total comprehensive income (loss)

Net loss (income) attributable to noncontrolling interest

Comprehensive income (loss) attributable to AeroVironment, Inc.

See accompanying notes to condensed consolidated financial statements (unaudited).

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity

For the six months ended October 29, 2022 and October 30, 2021 (Unaudited)

For the nine months ended January 28, 2023 and January 29, 2022 (Unaudited)

(In thousands except share data)

1 unchanged sentence

AeroVironment, Inc.

Income (Loss)

(Loss) Income

Balance at April 30, 2022

9 unchanged sentences

Stock based compensation

Balance at October 29, 2022

Balance at January 28, 2023

Comprehensive

11 unchanged sentences

Stock based compensation

Balance at October 30, 2021

Balance at January 29, 2022

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended October 29, 2022 and October 30, 2021 (Unaudited)

For the three months ended January 28, 2023 and January 29, 2022 (Unaudited)

(In thousands except share data)

2 unchanged sentences

(Loss) Income

Balance at July 30, 2022

Net income (loss)

Unrealized gain on investments

Balance at October 29, 2022

Foreign currency translation

2 unchanged sentences

Restricted stock awards forfeited

Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Deconsolidation of previously controlled subsidiary

Stock based compensation

Balance at October 29, 2022

Balance at January 28, 2023

Comprehensive

AeroVironment, Inc.

Income (Loss)

Balance at July 31, 2021

Unrealized gain on investments

(Loss) Income

Balance at October 30, 2021

Net income (loss)

Unrealized loss on investments

Foreign currency translation

Stock options exercised

Restricted stock awards

Restricted stock awards forfeited

Change in non-controlling interest

Stock based compensation

Balance at October 30, 2021

Balance at January 29, 2022

AeroVironment, Inc.

1 unchanged sentence

(In thousands)

Six Months Ended

Nine Months Ended

Operating activities

7 unchanged sentences

Non-cash lease expense

(Gain) loss on foreign currency transactions

Unrealized gain on available-for-sale equity securities, net

Loss on foreign currency transactions

Unrealized loss on available-for-sale equity securities, net

Deferred income taxes

1 unchanged sentence

Loss on disposal of property and equipment

Amortization of debt securities

Amortization of debt securities discount

Changes in operating assets and liabilities, net of acquisitions:

29 unchanged sentences

Non-cash activities

Unrealized (gain) loss on available-for-sale investments, net of deferred tax expense of $ 0 for the six months ended October 29, 2022 and October 30, 2021, respectively

Unrealized (gain) loss on available-for-sale investments, net of deferred tax expense of $ 0 and $ 1 for the nine months ended January 28, 2023 and January 29, 2022, respectively

Change in foreign currency translation adjustments

15 unchanged sentences

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included.

The results of operations for the six months ended October 29, 2022 are not necessarily indicative of the results for the full year ending April 30, 2023.

The results of operations for the nine months ended January 28, 2023 are not necessarily indicative of the results for the full year ending April 30, 2023.

For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2022, included in the Company’s Annual Report on Form 10-K.

7 unchanged sentences

The assets, liabilities and operating results of Telerob GmbH have been included in the Company’s unaudited condensed consolidated financial statements.

Telerob USA was subsequently dissolved.

Refer to Note 18—Business Acquisitions for further details.

3 unchanged sentences

Therefore, the Company no longer consolidates Altoy in the Company’s unaudited condensed consolidated financial statements.

As the Company has the ability to exercise significant influence over the operating and financial policies of Altoy, the Company’s investment will now be accounted for as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investments, net of tax.

As the Company has the ability to exercise significant influence over the operating and financial policies of Altoy, the Company accounts for the investment as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investments, net of tax.

Refer to Note 6—Equity Method Investments for further details.

On August 17, 2022, the Company closed its acquisition of Planck Aerosystems, Inc.

(“Planck”) pursuant to the purchase agreement, and post-acquisition, Planck is incorporated into the medium UAS (“MUAS”) segment.

(“Planck”) pursuant to the purchase agreement, and post-acquisition, Planck has been incorporated into the medium UAS (“MUAS”) segment.

The assets, liabilities and operating results of Planck have been included in the Company’s unaudited condensed consolidated financial statements.

7 unchanged sentences

Revenue Recognition

The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products and to provide related engineering, technical and other services according to the specifications of the customers.

These contracts may be firm fixed price (“FFP”), cost plus fixed fee (“CPFF”), or time and materials (“T&M”).

25 unchanged sentences

Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.

Performance obligations satisfied over time accounted for 65 % and 63 % of revenue during the three and six months ended October 29, 2022, respectively.

Performance obligations satisfied over time accounted for 51 % and 55 % of revenue during the three and six months ended October 30, 2021, respectively.

Performance obligations satisfied at a point in time accounted for 35 % and 37 % of revenue during the three and six months ended October 29, 2022, respectively.

Performance obligations satisfied at a point in time accounted for 49 % and 45 % of revenue during the three and six months ended October 30, 2021, respectively.

On October 29, 2022, the Company had approximately $ 293,147,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

Performance obligations satisfied over time accounted for 45 % and 54 % of revenue during the three and nine months ended January 28, 2023, respectively.

Performance obligations satisfied over time accounted for 66 % and 58 % of revenue during the three and nine months ended January 29, 2022, respectively.

Performance obligations satisfied at a point in time accounted for 55 % and 46 % of revenue during the three and nine months ended January 28, 2023, respectively.

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

On January 28, 2023, the Company had approximately $ 413,890,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

The Company currently expects to recognize approximately 40 % of the remaining performance obligations as revenue in fiscal 2023 and the remaining 60 % in fiscal 2024 .

8 unchanged sentences

These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer.

The nature of the Company’s contracts gives rise to several types of variable consideration, including penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The Company generally estimates such variable consideration as the most likely amount.

3 unchanged sentences

As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company regularly reviews and updates its contract-related estimates.

Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the

period identified for contracts with performance obligations recognized over time.

Changes in cumulative revenue estimates, due to

changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations recognized over time.

Changes in cumulative revenue estimates due to changes in the estimated transaction price are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations at a point in time, including undefinitized contract actions.

In the period undefinitized contract actions become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact.

If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

During the three months ended October 29, 2022, the Company recognized forward loss reserves on two MUAS ISR contracts totaling $1,952,000 related to unfavorable changes in the estimated costs to complete the contracts.

The balance of forward loss reserves as of January 28, 2023 and April 30, 2022 was $ 1,561,000 and $ 1,064,000 , respectively.

The Company recorded the forward loss reserves as the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts.

The aggregate impact of the change in estimate decreased net income by $1,500,000 and diluted loss per share by $0.06.

During the three months ended January 28, 2023, the Company recognized a decrease in the forward loss reserves on two MUAS ISR contracts for $ 2,424,000 due to decreases in the estimated costs to complete the contract and an increase in the forward loss reserve of an MUAS products contract for $ 1,593,000 due to increases in the estimated costs to complete the contract.

No adjustment on the forward loss reserve for any one contract was material to the Company’s unaudited condensed consolidated financial statements for the nine month period ended January 28, 2023.

The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses, or revenue.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was not significant for the three or six month periods ended October 29, 2022 nor the three or six month period ended October 30, 2021.

During the three months ended October 29, 2022, the Company revised its estimates of the total expected costs to complete a TMS variant contract.

The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of approximately $ 1,332,000 .

During the six months ended October 29, 2022, the Company revised its estimates of the total expected costs to complete two TMS variant contracts.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was not significant for the three or nine month periods ended January 28, 2023 nor the three or nine month periods ended January 29, 2022.

No adjustment on any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three month period ended January 28, 2023.

During the nine months ended January 28, 2023, the Company revised its estimates of the total expected costs to complete two TMS variant contracts.

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 $ 2,448,000 .

No adjustment on any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three or six month periods ended October 30, 2021.

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

Revenue by Category

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Revenue by segment

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Revenue by contract type

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

Revenue by customer category

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

Revenue by geographic location

9 unchanged sentences

For the Company’s product revenue, the Company generally receives cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable.

Changes in the contract asset and liability balances during the six month period ended October 29, 2022 were not materially impacted by any other factors.

Changes in the contract asset and liability balances during the nine month period ended January 28, 2023 were not materially impacted by any other factors.

For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

Revenue recognized for the three and six month periods ended October 29, 2022 that was included in contract liability balances as of April 30, 2022 was $ 1,080,000 and $ 3,004,000 , respectively, and revenue recognized for the three and six month periods ended October 30, 2021 that was included in contract liability balances as of April 30, 2021 was $ 580,000 and $ 889,000 , respectively.

Revenue recognized for the three and nine month periods ended January 28, 2023 that was included in contract liability balances as of April 30, 2022 was $ 369,000 and $ 3,374,000 , respectively, and revenue recognized for the three and nine month periods ended January 29, 2022 that was included in contract liability balances as of April 30, 2021 was $ 1,521,000 and $ 2,409,000 , respectively.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance.

As of October 29, 2022, the Company’s CODM, the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for research and development (“R&D”).

As of January 28, 2023, the Company’s CODM, the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for research and development (“R&D”).

Accordingly, the Company identifies four reportable segments.

Refer to Note 20—Segments for further details.

Restricted Cash

The Company classifies cash accounts which are not available for general use as restricted cash.

During the three months ended January 28, 2023, Telerob received a restricted customer advance.

The restricted funds are maintained in a separate account and are recorded in other assets on the unaudited condensed consolidated balance sheet.

As of January 28, 2023 and April 30, 2022 restricted cash was € 6,385,000 ($ 6,938,000 ) and € 0 ($ 0 ), respectively.

The Company’s investments are accounted for as available-for-sale and are reported at fair value.

1 unchanged sentence

Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income.

Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other income, net.

Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other (expense) income, net.

Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

9 unchanged sentences

The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured.

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

At January 28, 2023 and April 30, 2022, the Company had no reserve for incurred cost claim audits.

(Loss) Earnings Per Share

2 unchanged sentences

Three Months Ended

Six Months Ended

October 29, 2022

October 30, 2021

October 29, 2022

October 30, 2021

Nine Months Ended

January 28, 2023

January 29, 2022

January 28, 2023

January 29, 2022

Net (loss) income attributable to AeroVironment, Inc.

3 unchanged sentences

Denominator for diluted (loss) earnings per share

Due to the net loss for the three and six months ended October 29, 2022 and for the six months ended October 30, 2021, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 148,196 and 156,625 for the three months and six months ended October 29, 2022, respectively.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 4,742 and 266,077 for the three and six months ended October 30, 2021, respectively.

Due to the net loss for the three and nine months ended January 28, 2023, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 145,793 and 152,047 for the three and nine months ended January 28, 2023, respectively.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 20,554 for the three months ended January 29, 2022.

Due to the net loss for the nine months ended January 29, 2022, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 237,909 for the nine months ended January 29, 2022.

Recently Issued Accounting Standards

No recently issued accounting standards expected to impact the Company.

No recently issued accounting standards are expected to impact the Company.

Discontinued Operations

10 unchanged sentences

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 condensed consolidated statements of operations and in other current liabilities on the condensed consolidated balance sheet.

On December 2, 2021, the Company agreed in principle, subject to formal documentation with Webasto, to settle all existing claims related to the sale of its former EES business for $ 20,000,000 and Webasto keeping the Holdback.

On December 2, 2021, the Company agreed in principle, subject to formal documentation with Webasto, to settle all existing claims related to the sale of its former EES business

for $ 20,000,000 and Webasto keeping the Holdback.

As a result of the agreement in principle to settle the litigation, the Company recorded additional litigation reserve expenses in the amount of $ 10,000,000 during the three months ended October 30, 2021 in other expense on the condensed consolidated statements of operations and in other current liabilities on the condensed consolidated balance sheet.

The Company executed a written settlement agreement with Webasto effective December 16, 2021 to officially and fully settle all claims in the lawsuit.

Under the terms of the written settlement agreement, the Company’s payment of the settlement amount of $ 20,000,000 will occur over a 24 month period from the effective date of the settlement agreement and Webasto will retain the Holdback.

As of October 29, 2022, $ 10,000,000 of the settlement has been paid.

Under the terms of the written settlement agreement, the Company’s payment of the settlement amount of $ 20,000,000 occurred over a 24 month period from the effective date of the settlement agreement, and Webasto will retain the Holdback.

As of January 28, 2023, $ 15,000,000 of the settlement was paid.

On February 2, 2023, the final $ 5,000,000 of the settlement was paid.

Investments consist of the following (in thousands):

6 unchanged sentences

Available-for-sale securities:

Equity securities

Equity securities and warrants

Total long-term available-for-sale securities investments

10 unchanged sentences

Realized gains on sales of these investments on the basis of specific identification are recorded in interest expense, net.

As of October 29, 2022, the Company held no available-for-sale debt securities.

As of January 28, 2023, the Company held no available-for-sale debt securities.

The following table is a summary of the activity related to the available-for-sale debt securities recorded in short-term investments as of April 30, 2022, respectively (in thousands):

4 unchanged sentences

Equity Securities

Equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other income (expense), net.

Net gains recognized during the period on equity securities

Net gains recognized during the period on equity securities sold during the period

Unrealized gains recognized during the period on equity securities still held at the reporting date

Equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other (expense) income, net.

Net loss recognized during the period on equity securities

Net loss recognized during the period on equity securities sold during the period

Unrealized loss recognized during the period on equity securities still held at the reporting date

Fair Value Measurements

4 unchanged sentences

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

The Company’s financial assets measured at fair value on a recurring basis at October 29, 2022, were as follows (in thousands):

The Company’s financial assets measured at fair value on a recurring basis at January 28, 2023, were as follows (in thousands):

Fair Value Measurement Using

5 unchanged sentences

Contingently returnable consideration

The Company’s financial liabilities measured at fair value on a recurring basis at October 29, 2022, were as follows (in thousands):

The Company’s financial liabilities measured at fair value on a recurring basis at January 28, 2023, were as follows (in thousands):

Fair Value Measurement Using

26 unchanged sentences

Included in selling, general and administrative

Balance at October 29, 2022

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 October 29, 2022

Pursuant to the Intelligent Systems Group business segment (“ISG”) Purchase Agreement with Progeny Systems Corporation (the “ISG Seller”), the ISG 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 three years following closing.

Balance at January 28, 2023

The amount of total (gains) or losses for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held at January 28, 2023

Pursuant to the Intelligent Systems Group business segment (“ISG”) Purchase Agreement with Progeny Systems Corporation (the “ISG Seller”), the ISG Seller may receive up to a maximum of $ 6,000,000 in additional cash consideration (“contingent consideration”), if certain revenue targets are achieved during the three years following closing.

The contingent consideration was valued using a Black-Scholes option-pricing model.

The analysis considered, among other items, contractual terms of the ISG Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue targets required for payment of the contingent consideration will be achieved.

During the fiscal year ended April 30, 2022, the targets for the first and second year were achieved, and the related consideration of $ 2,000,000 for the first target was released from an escrow account that is not controlled by the Company and therefore not recorded on the condensed consolidated balance sheet.

During the three months ended July 30, 2022, the related consideration of $ 2,000,000 for the second target was released from an escrow account that is not controlled by the Company and therefore not recorded on the condensed consolidated balance sheet.

The fair value of the contingently returnable consideration is equal to the difference between the maximum value of the contingent consideration and the fair value of the contingent consideration and is recorded in other assets on the condensed consolidated balance sheet.

During the fiscal year ended April 30, 2022, the targets for the first and second year were achieved, and during the nine months ended January 28, 2023, the target for the third year was achieved.

The consideration was held and released from an escrow account that is not controlled by the Company and therefore not recorded on the condensed consolidated balance sheet.

The related consideration of $ 2,000,000 for the first target was released from the escrow account during the fiscal year ended April 30, 2022, the related consideration of $ 2,000,000 for the second target was released from the escrow account during the three months ended July 30, 2022, and the related consideration of $ 2,000,000 for the third target was released from the escrow account in February 2023.

Pursuant to the Telerob Purchase Agreement, the Telerob Sellers may receive up to a maximum of € 6,000,000 (approximately $ 7,272,000 ) in additional cash consideration if specific revenue and contract award targets for Telerob are achieved during the 36 month period after closing.

1 unchanged sentence

The analysis considered, among other items, contractual terms of the Telerob Purchase Agreement, the Company’s discount rate, the timing of expected future cash flows and the probability that the revenue and contract award targets required for payment of the contingent consideration will be achieved.

The fair value of the

contingent consideration is recorded in other current liabilities on the condensed consolidated balance sheet.

The fair value of the contingent consideration is recorded in other current liabilities on the condensed consolidated balance sheet.

The first year earnout of € 2,000,000 (approximately $ 2,424,000 ) was not achieved.

15 unchanged sentences

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.

Under the terms of the limited partnership agreement, the Company contributed $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

Under the terms of the limited partnership agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

In March 2022, the Company entered into a limited partnership agreement with a second limited partnership fund also focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

3 unchanged sentences

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have influence when it holds more than a minor interest.

For the three and six months ended October 29, 2022, the Company recorded its ownership percentage of the net loss of the limited partnership, or $( 1,273,000 ) and $( 1,773,000 ), respectively, in equity method investment loss, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

For the three and six months ended October 30, 2021, the Company recorded its ownership percentage of the net gain of the limited partnership, or $ 1,852,000 and $ 2,365,000 , respectively, net of $ 529,000 of tax expense, respectively, in equity method investment loss, net of tax in the unaudited condensed consolidated statements of operations.

At October 29, 2022 and April 30, 2022, the carrying value of the investment in the limited partnership of $ 16,434,000 and $ 15,433,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

For the three and nine months ended January 28, 2023, the Company recorded its ownership percentage of the net loss of the limited partnership, or $( 417,000 ) and $( 2,190,000 ), respectively, in equity method investment (loss) income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

For the three and nine months ended January 29, 2022, the Company recorded its ownership percentage of the net gain of the limited partnership, or $ 478,000 and $ 2,843,000 , respectively, net of $ 108,000 and $ 636,000 of tax expense, respectively, in equity method investment (loss) income, net of tax in the unaudited condensed consolidated statements of operations.

At January 28, 2023 and April 30, 2022, the carrying value of the investments in the limited partnership funds of $ 16,017,000 and $ 15,433,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Investment in Altoy

2 unchanged sentences

As a result of the sales, the Company decreased its interest in Altoy from 85 % to 15 %.

The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s condensed consolidated financial statements.

The Company maintains significant influence, accounts for its investment

in Altoy as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investments, net of tax.

For the three and six months ended October 29, 2022, the Company recorded $0 for its ownership percentage of the net loss of the limited partnership in equity method investment loss in the unaudited condensed consolidated statements of operations.

At October 29, 2022, the carrying value of the investment in Altoy of $ 96,000 was recorded in other assets on the unaudited condensed consolidated balance sheet.

The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s unaudited condensed consolidated financial statements.

The Company maintains significant influence, accounts for its investment in Altoy as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investments, net of tax.

For the three and nine months ended January 28, 2023, the Company recorded $ 0 for its ownership percentage of the net loss of the limited partnership in equity method investment (loss) income, net of tax in the unaudited condensed consolidated statements of operations.

At January 28, 2023, the carrying value of the investment in Altoy of $ 96,000 was recorded in other assets on the unaudited condensed consolidated balance sheet.

Investment in HAPSMobile Inc.

2 unchanged sentences

(“HAPSMobile”), which is a Japanese corporation.

Concurrent with the formation of HAPSMobile, the Company executed a Design and Development Agreement (the “DDA”) with HAPSMobile.

Concurrent with the formation of HAPSMobile, the Company

executed a Design and Development Agreement (the “DDA”) with HAPSMobile.

In connection with the formation of the joint venture on December 27, 2017, the Company initially purchased shares of HAPSMobile representing a 5 % ownership.

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Prior to the sale of the equity interest, the Company had 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, and therefore, the Company’s investment was accounted for as an equity method investment.

For the three and six months ended October 30, 2021, the Company recorded its proportionate net loss of HAPSMobile, or $ 190,000 and $ 1,845,000 , respectively, in equity method investment loss, net of tax in the unaudited consolidated statement of operations.

For the three and nine months ended January 29, 2022, the Company recorded its proportionate net loss of HAPSMobile, or $ 200,000 and $ 2,044,000 , respectively, in equity method investment (loss) income, net of tax in the unaudited condensed consolidated statement of operations.

Warranty Reserves

The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred.

The warranty reserve is included in other current liabilities on the unaudited condensed

consolidated balance sheet.

The warranty reserve is included in other current liabilities on the unaudited condensed consolidated balance sheet.

The related expense is included in cost of sales.

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

Warranty reserve activity is summarized as follows for the three and nine months ended January 28, 2023 and January 29, 2022, respectively (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

Beginning balance

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Intangibles, net

The weighted average amortization period at October 29, 2022 and April 30, 2022 was four years .

Amortization expense for the three and six months ended October 29, 2022 was $ 5,983,000 and $ 11,852,000 , respectively.

Amortization expense for the three and six months ended October 30, 2021 was $ 6,843,000 and $ 13,816,000 , respectively.

The weighted average amortization period at January 28, 2023 and April 30, 2022 was four years .

Amortization expense for the three and nine months ended January 28, 2023 was $ 6,073,000 and $ 17,925,000 , respectively.

Amortization expense for the three and nine months ended January 29, 2022 was $ 6,911,000 and $ 20,486,000 , respectively.

Technology and backlog intangible assets were recognized in conjunction with the Company’s acquisition of Planck on August 17, 2022.

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Additions to goodwill

Balance at October 29, 2022

Balance at January 28, 2023

The goodwill addition to MUAS is attributable to the Planck acquisition.

The goodwill additions to the column entitled “All other” is attributable to the Telerob acquisition recorded in Euros and translated to dollars at each reporting date.

Refer to Note 18—Business Acquisitions for further details.

The MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests as the estimated fair value exceeded the carrying value by approximately 10 % during the most recent annual goodwill impairment test during the fiscal year ended April 30, 2022.

The Company’s annual impairment test for the fiscal year ending April 30, 2023 will be performed during the fourth quarter.

The intangibles included in the MUAS reporting unit

of $ 56,000,000 as of January 28, 2023 will also be evaluated for potential impairment during the fourth quarter.

Refer to Note 18—Business Acquisitions and Note 21—Subsequent Events for further details.

In connection with the consummation of the acquisition of Arcturus UAV, Inc.

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The Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Company and its subsidiaries (as defined in the Credit Agreement) to incur any additional indebtedness or guarantee indebtedness of others, to create liens on properties or assets, or to enter into certain asset and stock-based transactions.

In addition, the Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more

than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

In addition, the Credit Agreement includes certain financial maintenance covenants, requiring that (x) the Consolidated Leverage Ratio (as defined in the Credit Agreement) shall not be more than 3.00 to 1.00 as of the end of any fiscal quarter and (y) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) shall not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

On February 4, 2022, the Company entered into a First Amendment to Credit Agreement and Waiver relating to its existing Credit Agreement (the “First Amendment to Credit Agreement”).

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In the event of a default, an additional 2 % default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

As of October 29, 2022, the Company is in compliance with all amended covenants.

As of January 28, 2023, the Company is in compliance with all amended covenants.

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

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Current period interest rate

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

Future long-term debt principal payments at January 28, 2023 were as follows:

(In thousands)

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At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease.

Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities on the unaudited condensed consolidated balance sheet.

leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities on the unaudited condensed consolidated balance sheet.

The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date.

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The Company defines the initial lease term to include renewal options determined to be reasonably certain.

The Company’s leases have remaining lease terms of less than one year to six years , some of which may include options to extend the lease for up to 10 years , and some of which may include options to terminate the lease after two years .

The Company’s leases have remaining lease terms of less than one year to seven years , some of which may include options to extend the lease for up to nine years , and some of which may include options to terminate the lease after three years .

If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities.

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

Six Months Ended

Nine Months Ended

Operating lease cost

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Supplemental lease information were as follows:

Six Months Ended

Nine Months Ended

(In thousands)

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Weighted average discount rate

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

Maturities of operating lease liabilities as of January 28, 2023 were as follows (in thousands):

Total lease payments

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Total present value of operating lease liabilities

Accumulated Other Comprehensive Income (Loss) and Reclassifications Adjustments

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

Six Months Ended

Accumulated Other Comprehensive (Loss) Income and Reclassifications Adjustments

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

Nine Months Ended

Balance, net of $ 8 and $ 1 deferred taxes, as of April 30, 2022 and April 30, 2021, respectively

Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $ 0 for the six months ended October 29, 2022 and October 30, 2021

Unrealized gain (loss) on available-for-sale investments, net of deferred tax expense of $ 0 and $ 1 for the nine months ended January 28, 2023 and January 29, 2022

Change in foreign currency translation adjustments

Balance, net of $ 0 and $ 1 deferred taxes, as of October 29, 2022 and October 30, 2021, respectively

Balance, net of $ 0 and $ 2 deferred taxes, as of January 28, 2023 and January 29, 2022, respectively

Customer-Funded Research & Development

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Revenue from customer-funded R&D contracts is recognized in accordance with ASC 606 over time as costs are incurred.

Revenue from customer-funded R&D was approximately $ 24,937,000 and $ 47,936,000 for the three and six months ended October 29, 2022, respectively.

Revenue from customer-funded R&D was approximately $ 19,175,000 and $ 36,086,000 for the three and six months ended October 30, 2021, respectively.

Revenue from customer-funded R&D was approximately $ 23,193,000 and $ 71,129,000 for the three and nine months ended January 28, 2023, respectively.

Revenue from customer-funded R&D was approximately $ 20,451,000 and $ 56,537,000 for the three and nine months ended January 29, 2022, respectively.

Long-Term Incentive Awards

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and six months ended October 29, 2022, the Company recorded $ 664,000 and $ 1,061,000 of compensation expense related to the Fiscal 2023 LTIP.

The Company recorded no compensation expense related to the Fiscal 2023 LTIP for the three and six months ended October 30, 2021.

At October 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP is $ 12,829,000 .

For the three and nine months ended January 28, 2023, the Company recorded $ 642,000 and $ 1,703,000 of compensation expense related to the Fiscal 2023 LTIP PRSUs.

The Company recorded no compensation expense related to the Fiscal 2023 LTIP PRSUs for the three and nine months ended January 29, 2022.

At January 28,

2023, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP is $ 12,829,000 .

During the three months ended July 31, 2021, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2022 LTIP”).

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and six months ended October 29, 2022, the Company recorded a reversal of $( 311,000 ) and $( 116,000 ) of compensation expense related to the Fiscal 2022 LTIP, respectively.

For the three and six months ended October 30, 2021, the Company recorded $ 201,000 and $ 509,000 of compensation expense related to the Fiscal 2022 LTIP.

At October 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2022 LTIP is $ 10,148,000 .

For the three months ended January 28, 2023, the Company recorded $ 84,000 of compensation expense related to the Fiscal 2022 LTIP PRSUs.

For the nine months ended January 28, 2023, the Company recorded a reversal of $( 31,000 ) of compensation expense related to the Fiscal 2022 LTIP PRSUs.

For the three and nine months ended January 29, 2022, the Company recorded $ 205,000 and $ 714,000 of compensation expense related to the Fiscal 2022 LTIP PRSUs.

At January 28, 2023, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2022 LTIP is $ 10,148,000 .

During the three months ended August 1, 2020, the Company granted awards under the Restated 2006 Plan to key employees (“Fiscal 2021 LTIP”).

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and six months ended October 29, 2022, the Company recorded $ 116,000 and $ 192,000 of compensation expense related to the Fiscal 2021 LTIP, respectively.

For the three and six months ended October 30, 2021, the Company recorded a

reversal of $( 572,000 ) and $( 507,000 ) of compensation expense related to the Fiscal 2021 LTIP, respectively, due to a change in estimate resulting from a decrease in the estimated achievement.

At October 29, 2022, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $ 5,858,000 .

For the three and nine months ended January 28, 2023, the Company recorded $ 36,000 and $ 228,000 of compensation expense related to the Fiscal 2021 LTIP PRSUs, respectively.

For the three and nine months ended January 29, 2022, the Company recorded a reversal of $( 29,000 ) and $( 536,000 ) of compensation expense related to the Fiscal 2021 LTIP PRSUs, respectively, due to a change in estimate resulting from a decrease in the estimated achievement.

At January 28, 2023, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2021 LTIP is $ 5,858,000 .

During the three months ended July 27, 2019, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2020 LTIP”).

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During the three months ended July 31, 2022, the Company issued a total of 5,678 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2020 LTIP.

For the three and six months ended October 29, 2022, the Company recorded no compensation expense related to the Fiscal 2020 LTIP, respectively.

For the three and six months ended October 30, 2021, the Company recorded a reversal of $( 617,000 ) and $( 619,000 ) of compensation expense related to the Fiscal 2020 LTIP, respectively, due to a change in estimate resulting from a decrease in the estimated achievement.

For the three and nine months ended January 28, 2023, the Company recorded no compensation expense related to the Fiscal 2020 LTIP PRSUs, respectively.

For the three and nine months ended January 29, 2022, the Company recorded a reversal of $( 30,000 ) and $( 648,000 ) of compensation expense related to the Fiscal 2020 LTIP PRSUs, respectively, due to a change in estimate resulting from a decrease in the estimated achievement.

At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs.

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No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

For the three and six months ended October 29, 2022, the Company recorded a benefit from income taxes of $( 10,457,000 ) and $( 7,851,000 ) yielding an effective tax rate of 66.1 % and 37.2 %, respectively.

For the three and six months ended October 30, 2021, the Company recorded a benefit from income taxes of $( 9,511,000 ) and $( 10,468,000 ) yielding an effective tax rate of 117.6 % and 48.0 %, respectively.

For the three and nine months ended January 28, 2023, the Company recorded a benefit from income taxes of $( 531,000 ) and $( 8,382,000 ) yielding an effective tax rate of 67.2 % and 38.3 %, respectively.

For the three and nine months ended January 29, 2022, the Company recorded a benefit from income taxes of $( 15,396,000 ) and $( 25,864,000 ) yielding an effective tax rate of 98.7 % and 69.1 %, respectively.

Historically, the Company calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate (“AETR”) for the full fiscal year to the pretax income or loss for the interim reporting period.

For the three and six months ended October 29, 2022, the Company calculated the provision for income taxes using a discrete effective tax rate (“ETR”) method.

The Company determined that due to the fact small changes in the Company’s estimated pretax income or loss would result in significant changes in the estimated AETR, the historical method would not provide a reliable estimate for the three and six months ended October 29, 2022.

The variance from statutory rates for the three and six months ended October 29, 2022 was primarily due to a combination of federal R&D credits and the foreign-derived intangible income deduction.

The variance from statutory rates for the three months ended October 30, 2021 was primarily due to a change in estimate of full year projected income (loss) before income taxes, federal R&D credits and the recording of discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options.

The variance from statutory rates for the six months ended October 30, 2021 was primarily due to federal R&D credits and the recording of discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options.

For the three and nine months ended January 28, 2023, the Company calculated the provision for income taxes using a discrete effective tax rate (“ETR”) method.

The variance from statutory rates for the three and nine months ended January 28, 2023 was primarily due to a combination of federal R&D credits, the foreign-derived intangible income deduction and discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options.

The variance from statutory rates for the three and nine months ended January 29, 2022 was primarily due to federal R&D credits and the recording of discrete excess tax benefits resulting from the vesting of restricted stock awards and exercises of stock options.

Share Repurchase Plan and Issuances

In September 2015, the Company’s Board of Directors authorized a program to repurchase up to $ 25,000,000 of the Company’s common stock.

No shares were repurchased under the program during the six months ended October 29, 2022 or October 30, 2021.

No shares were repurchased under the program during the nine months ended January 28, 2023 or January 29, 2022.

As of April 30, 2022, approximately $ 21,200,000 remained authorized for future repurchases under this program.

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On September 8, 2022 the Company filed an S-3 shelf registration statement to offer and sell shares of the Company’s common stock, including a prospectus supplement in relation to an Open Market Sale Agreement SM , also dated September 8, 2022, with Jefferies LLC relating to the proposed offer and sale of shares of our common stock having an aggregate offering price of up to $ 200,000,000 from time to time through Jefferies LLC as the sales agent.

As of October 29, 2022, the Company has sold 125,441 of its shares for total gross proceeds of $ 12,700,000 , and the Company has $ 187,300,000 aggregate offering price remaining available under the registration.

As of January 28, 2023, the Company has sold 221,971 of its shares for total gross proceeds of $ 21,439,000 , and the Company has $ 178,561,000 of aggregate offering price remaining available under the registration.

Related Party Transactions

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Upon the execution of the MDDA, SoftBank issued the first order under the MDDA, which has a maximum value of approximately $ 51,200,000 .

The Company recorded revenue under both the MDDA and DDA of $ 10,342,000 and $ 20,694,000 for the three and six months ended October 30, 2021.

The Company recorded revenue under both the MDDA and DDA of $ 9,543,000 and $ 30,237,000 for the three and nine months ended January 29, 2022.

Business Acquisitions

Planck Acquisition

On August 17, 2022 the Company closed its acquisition of Planck Aerosystems, Inc.

(“Planck”), a leading provider of advanced unmanned aircraft navigation solutions based in San Diego, California.

On August 17, 2022 the Company closed its acquisition of Planck, a leading provider of advanced unmanned aircraft navigation solutions based in San Diego, California.

Pursuant to the purchase agreement, the Company paid a total purchase price of $ 5,105,000 from cash-on-hand plus a $ 500,000 holdback for certain assets of Planck.

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The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

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 Planck (in thousands):

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 Planck.

The purchase price allocation is expected to be finalized as soon as practicable within the measurement period, but not later than one year following the acquisition date (in thousands):

Fair value of assets acquired:

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Three Months Ended

Six Months Ended

Nine Months Ended

Net (loss) income attributable to AeroVironment, Inc.

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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 31, 2021, reflecting the additional amortization that would have been charged and including the results of Planck prior to acquisition.

The Company incurred approximately $ 569,000 of acquisition-related expenses for the three months ended October 29, 2022.

The Company incurred approximately $ 286,000 and $ 855,000 of acquisition-related expenses for the three and nine months ended January 28, 2023.

These expenses are included in selling, general and administrative on the Company’s unaudited condensed consolidated statement of operations.

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Three Months Ended

Six Months Ended

Nine Months Ended

Net loss attributable to AeroVironment, Inc.

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These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended August 1, 2020, reflecting the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from May 1, 2020 with the consequential tax effects and including the results of Telerob prior to acquisition.

The Company incurred approximately $ 411,000 of acquisition-related expenses for the three months ended July 31, 2021.

The Company incurred approximately $ 113,000 and $ 661,000 of acquisition-related expenses for the three and nine months ended January 29, 2022.

These expenses are included in selling, general and administrative on the Company’s unaudited condensed consolidated statement of operations.

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Funded status of the plan

The projected benefit obligation includes assumptions of a discount rate of 1.7 % and pension increase for in-payment benefits of 1.5 % for October 29, 2022 and April 30, 2022.

The projected benefit obligation includes assumptions of a discount rate of 1.7 % and pension increase for in-payment benefits of 1.5 % for January 28, 2023 and April 30, 2022.

The accumulated benefit obligation is approximately equal to the Company’s projected benefit obligation.

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The Company does not expect to make any contributions to the plan in the fiscal year ending April 30, 2023.

The Company assumed expected return on plan assets of 2.9 % for October 29, 2022 and April 30, 2022.

The Company assumed expected return on plan assets of 2.9 % for January 28, 2023 and April 30, 2022.

Expected benefits payments as of April 30, 2022 (in thousands):

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Three Months Ended

Six Months Ended

Nine Months Ended

(In thousands)

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Adjusted income (loss) from operations is defined as income (loss) from operations before intangible amortization, amortization of purchase accounting adjustment related to increasing the carrying value of certain assets to fair value, and acquisition related expenses.

Three Months Ended October 29, 2022

Three Months Ended January 28, 2023

Income (loss) from operations

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Adjusted income (loss) from operations

Three Months Ended October 30, 2021

Three Months Ended January 29, 2022

Income (loss) from operations

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Adjusted income (loss) from operations

Six Months Ended October 29, 2022

Nine Months Ended January 28, 2023

Income (loss) from operations

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Adjusted income (loss) from operations

Six Months Ended October 30, 2021

Nine Months Ended January 29, 2022

Income (loss) from operations

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

October 29, 2022

January 28, 2023

Identifiable assets

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Identifiable assets

Subsequent Events

On February 24, 2023, the Company was issued a stop work notification for the Company’s remaining MUAS COCO services site location, which terminated the COCO flight services effective immediately.

The impacts of the site completion will include accelerated depreciation charges of certain deployed fixed assets related to the MUAS site location of approximately $ 6,000,000 , which will be recorded during the Company’s fiscal quarter ending April 30, 2023, and will be evaluated as part of the annual goodwill and intangible asset impairment test performed during the fourth quarter.

Refer to Note 9—Goodwill for further details.

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.

What changed 10-Q

Item 1. Financial Statements