California (prior to reincorporation) Delaware (after reincorporation) (State or other jurisdiction of incorporation or organization) | 3721 (Primary Standard Industrial Classification Code Number) | 95-2705790 (I.R.S. Employer Identification Number) |
Craig M. Garner, Esq. Michael E. Sullivan, Esq. Latham & Watkins LLP 12636 High Bluff Drive, Suite 400 San Diego, CA 92130 (858) 523-5400 | Andrew J. Pitts, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, NY 10019 (212) 474-1000 |
Title of Each Class | Proposed Maximum | Amount of | ||||
of Securities to be Registered | Aggregate Offering Price(1)(2) | Registration Fee | ||||
Common Stock, $0.0001 par value | $115,000,000 | $12,305 | ||||
Title of Each Class | Proposed Maximum | Amount of | ||||
of Securities to be Registered | Aggregate Offering Price(1)(2) | Registration Fee | ||||
Common Stock, $0.0001 par value | $115,000,000 | $12,305(3) | ||||
(1) | Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. | |
(2) | Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any. |
(3) | Previously paid. |
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
Per Share | Total | |||||||
Initial public offering price | $ | $ | ||||||
Underwriting discount | $ | $ | ||||||
Proceeds, before expenses, to AeroVironment, Inc. | $ | $ | ||||||
Proceeds, before expenses, to the selling stockholders | $ | $ |
Goldman, Sachs & Co. |
Friedman Billings Ramsey |
Jefferies Quarterdeck |
Raymond James |
Stifel Nicolaus |
Thomas Weisel Partners LLC |
Page | ||||||||
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7 | ||||||||
F-1 | ||||||||
EXHIBIT | ||||||||
EXHIBIT | ||||||||
EXHIBIT | ||||||||
EXHIBIT | ||||||||
EXHIBIT 23.1 |
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1
• | Expand our current solutions to existing and new customers. Our small UAS and PosiCharge products and services are leaders in their respective North American markets. We intend to increase the penetration of our small UAS products within the U.S. military, the militaries of allied nations and non-military U.S. customers. We believe that the increased use of our small UAS in the U.S. military will be a catalyst for increased demand by allied countries, and that our efforts to pursue new applications will help to create non-military opportunities. We similarly intend to increase the penetration of PosiCharge to existing and new customers in North America and globally. Early adopters of PosiCharge are now deploying it in additional |
2
facilities throughout their enterprises while its adoption is increasing among new customers and new industry segments, such as food and logistics. |
• | Deliver innovative solutions. Innovation is the primary driver of our growth. We plan to continue research and development efforts to enable us to satisfy our customers through better, more capable products and services, both in response to and in anticipation of their needs. We believe that by continuing to invest in research and development, we will continue |
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to deliver innovative, new products that address market needs within and outside of our current target markets, enabling us to create new opportunities for growth. |
• | Foster our entrepreneurial culture and continue to attract, develop and retain highly-skilled personnel. We have created a corporate culture that encourages innovation and an entrepreneurial spirit, which helps to attract highly-skilled professionals. We intend to nurture this culture to encourage the development of the innovative, highly technical solutions that give us our competitive advantage. A core component of our culture is the demonstration of trust and integrity in all of our interactions, contributing to a positive work environment and engendering trust among our customers. | |
• | Preserve our agility and flexibility. We are able to respond rapidly to evolving markets and deliver new products and system capabilities quickly, efficiently and affordably. We believe that this ability helps us to strengthen our relationships with customers. We intend to maintain our agility and flexibility, which we believe to be important sources of differentiation when we compete against larger and better-funded competitors. |
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Common stock offered by AeroVironment | shares | |
Common stock offered by the selling stockholders | shares | |
Common stock to be outstanding after this offering | shares | |
Use of proceeds | We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including to finance research and development of new products, sales and marketing activities, opportunistic acquisitions and other capital expenditures. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds” for more information. | |
Dividend policy | We currently intend to retain all future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. | |
Proposed Nasdaq Global Market symbol | AVAV |
• | shares of common stock issuable upon the exercise of the remaining options outstanding as of July 29, 2006 at a weighted average exercise price of $ per share; and | |
• | shares of our common stock reserved for future issuance under our 2006 equity incentive plan, which will become effective on the day prior to the day on which we become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, which we refer to herein as the Exchange Act. |
• | our reincorporation in Delaware prior to the effective date of the registration statement of which this prospectus is a part; | |
• | the exercise of options to purchase an aggregate of shares of common stock at a weighted average exercise price of $ per share to be sold by selling stockholders in this offering; | |
• | no exercise by the underwriters of their option to purchase up to an additional shares of common stock to cover over-allotments; | |
• | except as provided above, no exercise of outstanding options after July 29, 2006; | |
• | the filing of our amended and restated certificate of incorporation and amended and restated bylaws upon completion of this offering; and | |
• | a -for-one stock split of our common stock to be effected before the completion of this offering. |
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Three Months Ended | ||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||
Revenue | $ | 47,680 | $ | 105,155 | $ | 139,357 | $ | 30,752 | $ | 31,557 | ||||||||||
Cost of sales | 33,122 | 58,549 | 82,598 | 19,516 | 19,571 | |||||||||||||||
Gross margin | 14,558 | 46,606 | 56,759 | 11,236 | 11,986 | |||||||||||||||
Research and development | 1,715 | 9,799 | 16,098 | 3,509 | 3,841 | |||||||||||||||
Selling, general and administrative | 9,743 | 16,550 | 24,336 | 5,628 | 6,132 | |||||||||||||||
Income from operations | 3,100 | 20,257 | 16,325 | 2,099 | 2,013 | |||||||||||||||
Other income (expense), net | (70 | ) | (44 | ) | (35 | ) | (187 | ) | 206 | |||||||||||
Income before income taxes | 3,030 | 20,213 | 16,290 | 1,912 | 2,219 | |||||||||||||||
Income tax expense | 859 | 5,531 | 4,881 | 574 | 854 | |||||||||||||||
Net income | $ | 2,171 | $ | 14,682 | $ | 11,409 | $ | 1,338 | $ | 1,365 | ||||||||||
Earnings per common share: | ||||||||||||||||||||
Basic | $ | 1.32 | $ | 8.15 | $ | 6.17 | $ | 0.73 | $ | 0.71 | ||||||||||
Diluted | $ | 1.26 | $ | 7.46 | $ | 5.40 | $ | 0.65 | $ | 0.63 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 1,639,543 | 1,800,930 | 1,848,822 | 1,838,339 | 1,919,361 | |||||||||||||||
Diluted | 1,718,460 | 1,967,550 | 2,113,395 | 2,050,620 | 2,154,890 | |||||||||||||||
Pro forma earnings per common share(1): | ||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | |||||||||||||||
Diluted | $ | $ | $ | $ | $ | |||||||||||||||
Pro forma weighted average common shares outstanding(1): | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted |
Three Months Ended | ||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||
Revenue | $ | 47,680 | $ | 105,155 | $ | 139,357 | $ | 30,752 | $ | 31,557 | ||||||||||
Cost of sales | 33,122 | 58,549 | 82,598 | 19,516 | 19,571 | |||||||||||||||
Gross margin | 14,558 | 46,606 | 56,759 | 11,236 | 11,986 | |||||||||||||||
Research and development | 1,715 | 9,799 | 16,098 | 3,509 | 3,841 | |||||||||||||||
Selling, general and administrative | 9,725 | 16,545 | 24,577 | 5,822 | 6,132 | |||||||||||||||
Income from operations | 3,118 | 20,262 | 16,084 | 1,905 | 2,013 | |||||||||||||||
Interest income | 2 | 61 | 333 | 37 | 206 | |||||||||||||||
Interest expense | (90 | ) | (110 | ) | (127 | ) | (30 | ) | — | |||||||||||
Income before income taxes | 3,030 | 20,213 | 16,290 | 1,912 | 2,219 | |||||||||||||||
Income tax expense | 859 | 5,531 | 4,881 | 574 | 854 | |||||||||||||||
Net income | $ | 2,171 | $ | 14,682 | $ | 11,409 | $ | 1,338 | $ | 1,365 | ||||||||||
Earnings per common share(1): | ||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | |||||||||||||||
Diluted | $ | $ | $ | $ | $ | |||||||||||||||
Weighted average common shares outstanding(1): | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted | ||||||||||||||||||||
Pro forma earnings per common share(1)(2): | ||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | |||||||||||||||
Diluted | $ | $ | $ | $ | $ | |||||||||||||||
Pro forma weighted average common shares outstanding(1)(2): | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted |
5
As of July 29, 2006 | ||||||||
Actual | As Adjusted(2) | |||||||
Consolidated Balance Sheet Data: | (Unaudited, in thousands) | |||||||
Cash and cash equivalents | $ | 13,478 | $ | |||||
Restricted cash(3) | 1,555 | |||||||
Working capital | 30,243 | |||||||
Total assets | 55,776 | |||||||
Total liabilities | 19,850 | |||||||
Total stockholders’ equity | 35,926 |
As of July 29, 2006 | ||||||||
Actual | As Adjusted(3) | |||||||
Consolidated Balance Sheet Data: | (Unaudited, in thousands) | |||||||
Cash and cash equivalents | $ | 13,478 | $ | |||||
Restricted cash(4) | 1,555 | |||||||
Working capital | 30,243 | |||||||
Total assets | 55,776 | |||||||
Total liabilities | 19,850 | |||||||
Total stockholders’ equity | 35,926 |
(1) | Earnings per common share and weighted average common shares outstanding give effect to a -for-one split of our common stock to be effected prior to the completion of this offering. |
(2) | Pro forma earnings per common share and pro forma weighted average common shares outstanding give effect to |
The as adjusted consolidated balance sheet data reflect the issuance of shares of common stock upon the exercise of options at a weighted average exercise price of $ per share to be sold by selling stockholders in this offering and our receipt of estimated net proceeds from our sale of shares of common stock that we are offering at an assumed public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), after deducting estimated discounts and commissions and estimated offering expenses payable by us. |
Restricted cash represents deposits with a bank to secure standby letters of credit established for the benefit of our customers. As of July 29, 2006, there were no claims against these letters of credit. |
6
• | changes in government programs that are related to our products and services; | |
• | adoption of new laws or regulations relating to government contracting or changes to existing laws or regulations; | |
• | changes in political or public support for security and defense programs; | |
• | delays or changes in the government appropriations process; | |
• | uncertainties associated with the war on terror and other geo-political matters; and | |
• | delays in the payment of our invoices by government payment offices. |
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• | generate sufficient revenue to maintain profitability; | |
• | acquire and maintain market share; | |
• | manage growth in our operations; | |
• | develop and renew contracts; | |
• | attract and retain additional engineers and other highly-qualified personnel; | |
• | successfully develop and commercially market new products; | |
• | adapt to new or changing policies and spending priorities of governments and government agencies; and | |
• | access additional capital when required and on reasonable terms. |
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• | customer satisfaction with these types of systems as solutions; | |
• | the cost, performance and reliability of our products and products offered by our competitors; | |
• | customer perceptions regarding the effectiveness and value of these types of systems; | |
• | limitations on our ability to market our small UAS products outside the United States due to U.S. government regulations; | |
• | obtaining timely regulatory approvals, including, with respect to our small UAS business, access to airspace and wireless spectrum; and | |
• | marketing efforts and publicity regarding these types of systems. |
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• | fluctuations in revenue derived from government contracts, including cost-plus-fee contracts and contracts with a performance-based fee structure; | |
• | the size and timing of orders from military and other governmental agencies, including increased purchase requests from government customers for equipment and materials in connection with the U.S. government’s fiscal year end, which may affect our second quarter operating results; | |
• | the mix of products that we sell in the period; | |
• | seasonal fluctuations in customer demand for some of our products or services; | |
• | unanticipated costs incurred in the introduction of new products; | |
• | fluctuations in the adoption of our products in new markets; | |
• | changes in the level of tax credits available for research and development spending, including whether the federal research and development tax credit which expired in December 2005 will be reinstated; | |
• | cancellations, delays or contract amendments by our governmental agency customers; and |
14
• | changes in policy or budgetary measures that adversely affect our governmental agency customers. |
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• | hire additional engineers and other personnel; | |
• | develop new or enhance existing products; | |
• | enhance our operating infrastructure; | |
• | fund working capital requirements; | |
• | acquire complementary businesses or technologies; or | |
• | otherwise respond to competitive pressures. |
15
• | the unavailability of, or difficulties in obtaining any, necessary governmental authorizations for the export of our UAS products to certain foreign jurisdictions; |
16
• | changes in regulatory requirements that may adversely affect our ability to sell certain products or repatriate profits to the United States; | |
• | the complexity and necessity of using foreign representatives and consultants; | |
• | difficulties in enforcing agreements and collecting receivables through foreign legal systems and other relevant legal issues, including fewer legal protections for intellectual property; | |
• | potential fluctuations in foreign economies and in the value of foreign currencies and interest rates; | |
• | potential preferences by prospective customers to purchase from local(non-U.S.) sources; | |
• | general economic and political conditions in the markets in which we operate; | |
• | laws or regulations relating tonon-U.S. military contracts that favor purchases fromnon-U.S. manufacturers over U.S. manufacturers; | |
• | the imposition of tariffs, embargoes, export controls and other trade restrictions; and | |
• | different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may operate in the future. |
16
• | difficulties in integrating the operations, technologies, products, existing contracts, accounting and personnel of the target company and realizing the anticipated synergies of the combined businesses; | |
• | difficulties in supporting and transitioning customers, if any, of the target company; | |
• | diversion of financial and management resources from existing operations; | |
• | the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if we had allocated the purchase price or other resources to another opportunity; | |
• | risks of entering new markets in which we have limited or no experience; |
• | potential loss of key employees, customers and strategic alliances from either our current business or the target company’s business; |
• | assumption of unanticipated problems or latent liabilities, such as problems with the quality of the target company’s products; and | |
• | inability to generate sufficient revenue to offset acquisition costs. |
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• | the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the formation and administration of, and performance under, U.S. government contracts; | |
• | the Truth in Negotiations Act, which requires certification and disclosure of all factual cost and pricing data in connection with contract negotiations; |
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• | the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign official to help obtain, retain or direct business, or obtain any unfair advantage; | |
• | the False Claims Act and the False Statements Act, which impose penalties for payments made on the basis of false facts provided to the government and on the basis of false statements made to the government, respectively; | |
• | the National Telecommunications and Information Administration and the Federal Communications Commission, which regulate the wireless spectrum allocations upon which UAS depend for operation and data transmission in the United States; | |
• | the Federal Aviation Administration, which is in the process of drafting regulations specifically for small UAS operation in the United States; | |
• | the International Traffic in Arms Regulations, which regulate the export of controlled technical data, defense articles and defense services and restrict from which countries we may purchase materials and services used in the production of certain of our products; and | |
• | laws, regulations and executive orders restricting the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data. |
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• | the need to bid on programs in advance of the completion of their design, which may result in unforeseen technological difficulties and cost overruns; | |
• | the substantial cost and managerial time and effort that must be spent to prepare bids and proposals for contracts that may not be awarded to us; | |
• | the need to estimate accurately the resources and cost structure that will be required to service any contract we are awarded; and | |
• | the expense and delay that may arise if our competitors protest or challenge contract awards made to us pursuant to competitive bidding, and the risk that any such protest or challenge could result in the delay of our contract performance, the distraction of management, the resubmission of bids on modified specifications, or in termination, reduction or modification of the awarded contract. |
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• | U.S. government spending levels, both generally and by our particular customers; |
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• | the volume of operational activity by the U.S. military; | |
• | delays in the payment of our invoices by government payment offices, resulting in potentially reduced earnings during a particular fiscal quarter; | |
• | announcements of new products or technologies, commercial relationships or other events relating to us or our industry or our competitors; | |
• | failure of any of our key products to gain market acceptance; | |
• | variations in our quarterly operating results; | |
• | perceptions of the prospects for the markets in which we compete; | |
• | changes in general economic conditions; | |
• | changes in securities analysts’ estimates of our financial performance; | |
• | regulatory developments in the United States and foreign countries; | |
• | fluctuations in stock market prices and trading volumes of similar companies; | |
• | news about the markets in which we compete or regarding our competitors; | |
• | terrorist acts or military action related to international conflicts, wars or otherwise; |
22
• | sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders; and | |
• | additions or departures of key personnel. |
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• | incur immediate dilution of $ per share, based on an assumed initial public offering price of $ per share, the midpoint of our expected public offering price range; and | |
• | contribute % of the total amount invested to date to fund our company based on the initial offering price to the public of $ per share, but will own only % of the shares of common stock outstanding upon completion of this offering. |
• | a board of directors divided into three classes serving staggered three-year terms; | |
• | a prohibition on stockholder action through written consent; | |
• | a requirement that special meetings of stockholders be called only by the chairman of our board of directors, the chief executive officer, the president or by a majority of the total number of authorized directors; | |
• | advance notice requirements for stockholder proposals and nominations; | |
• | a requirement of approval of not less than 662/3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our certificate of incorporation; and |
24
• | the authority of our board of directors to issue preferred stock on terms determined by our board of directors without stockholder approval. |
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• | the issuance of shares of common stock upon the exercise of outstanding options at a weighted average exercise price of $ per share to be sold by selling stockholders in this offering; | |
• | a -for-one stock split; and | |
• | our receipt of the estimated net proceeds from this offering, based on an assumed initial public offering price of $ per share and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. |
As of July 29, 2006 | ||||||||
Actual | As Adjusted(1) | |||||||
(Unaudited) | ||||||||
(In thousands, except share and par value data) | ||||||||
Cash and cash equivalents | $ | 13,478 | $ | |||||
Long-term debt (including current maturities)(2): | ||||||||
Total long-term debt | — | |||||||
Stockholders’ equity: | ||||||||
Existing common stock, no par value; 25,000,000 shares authorized and 1,935,289 shares issued and outstanding | 2,156 | — | ||||||
Preferred stock, $0.0001 par value; shares authorized and no shares issued or outstanding | — | — | ||||||
New common stock, $0.0001 par value; shares authorized; shares issued and outstanding, actual; shares issued and outstanding, as adjusted(3) | — | |||||||
Retained earnings | 33,770 | |||||||
Additional paid-in capital | — | |||||||
Total stockholders’ equity | 35,926 | |||||||
Total capitalization | $ | 35,926 | $ | |||||
(1) | A $1.00 decrease or increase in the offering price would result in an approximately $ million increase or decrease in each of as adjusted additional paid-in capital, as adjusted total stockholders’ equity and as adjusted total capitalization, assuming the total number of shares offered by us remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. | |
(2) | We have a line of credit that provides for aggregate borrowings of up to $16.5 million and a term loan facility under which we may borrow up to $5.0 million. No amounts were outstanding as of July 29, 2006. |
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(3) | We will reincorporate in Delaware prior to the effective date of the registration statement, of which this prospectus forms a part, and in connection therewith replace our existing common stock with a new class of common stock. |
• | shares of common stock issuable upon the exercise of the remaining options outstanding as of July 29, 2006 at a weighted average exercise price of $ per share; and | |
• | shares of our common stock reserved for future issuance under our 2006 equity incentive award plan, which will become effective on the day prior to the day on which we become subject to the reporting requirements of the Exchange Act. |
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Assumed initial public offering price per share | $ | |||||||
Net tangible book value per share as of July 29, 2006, before giving effect to this offering | $ | |||||||
Increase in net tangible book value per share attributable to investors purchasing shares in this offering | ||||||||
As adjusted net tangible book value per share after giving effect to this offering | ||||||||
Dilution in net tangible book value per share to investors in this offering | $ | |||||||
Shares Purchased | Total Consideration | Average Price | ||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | ||||||||||||||||
Existing stockholders before this offering | % | $ | % | $ | ||||||||||||||||
Investors participating in this offering | ||||||||||||||||||||
Total | 100.0 | % | $ | 100.0 | % | $ | ||||||||||||||
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Fiscal Year | ||||||||||||||||||||||||||||
Ended | Three Months Ended | |||||||||||||||||||||||||||
April 27, | Fiscal Year Ended April 30, | July 30, | July 29, | |||||||||||||||||||||||||
2002 | 2003(1) | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||
Revenue | $ | 32,468 | $ | 45,817 | $ | 47,680 | $ | 105,155 | $ | 139,357 | $ | 30,752 | $ | 31,557 | ||||||||||||||
Cost of sales | 24,184 | 33,156 | 33,122 | 58,549 | 82,598 | 19,516 | 19,571 | |||||||||||||||||||||
Gross margin | 8,284 | 12,661 | 14,558 | 46,606 | 56,759 | 11,236 | 11,986 | |||||||||||||||||||||
Research and development | 575 | 2,091 | 1,715 | 9,799 | 16,098 | 3,509 | 3,841 | |||||||||||||||||||||
Selling, general and administrative | 7,756 | 8,546 | 9,743 | 16,550 | 24,336 | 5,628 | 6,132 | |||||||||||||||||||||
Income (loss) from operations | (47 | ) | 2,024 | 3,100 | 20,257 | 16,325 | 2,099 | 2,013 | ||||||||||||||||||||
Loss on equity investment | — | (1,001 | ) | — | — | — | — | — | ||||||||||||||||||||
Other income (expense), net | 680 | (61 | ) | (70 | ) | (44 | ) | (35 | ) | (187 | ) | 206 | ||||||||||||||||
Income before income taxes | 633 | 962 | 3,030 | 20,213 | 16,290 | 1,912 | 2,219 | |||||||||||||||||||||
Income tax expense | 304 | 421 | 859 | 5,531 | 4,881 | 574 | 854 | |||||||||||||||||||||
Income from continuing operations | 329 | 541 | 2,171 | 14,682 | 11,409 | 1,338 | 1,365 | |||||||||||||||||||||
Gain from sale of discontinued operations, net of income taxes of $31 in 2002(2) | 33 | — | — | — | — | — | — | |||||||||||||||||||||
Net income | $ | 362 | $ | 541 | $ | 2,171 | $ | 14,682 | $ | 11,409 | $ | 1,338 | $ | 1,365 | ||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||||
Basic | $ | 0.21 | $ | 0.33 | $ | 1.32 | $ | 8.15 | $ | 6.17 | $ | 0.73 | $ | 0.71 | ||||||||||||||
Diluted | $ | 0.21 | $ | 0.32 | $ | 1.26 | $ | 7.46 | $ | 5.40 | $ | 0.65 | $ | 0.63 | ||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||||
Basic | 1,695,818 | 1,636,809 | 1,639,543 | 1,800,930 | 1,848,822 | 1,838,339 | 1,919,361 | |||||||||||||||||||||
Diluted | 1,724,644 | 1,701,801 | 1,718,460 | 1,967,550 | 2,113,395 | 2,050,620 | 2,154,890 | |||||||||||||||||||||
Pro forma earnings per common share(3): | ||||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Diluted | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Pro forma weighted average common shares outstanding(3): | ||||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||
Diluted |
Fiscal Year | Three Months | |||||||||||||||||||||||||||
Ended | Ended | |||||||||||||||||||||||||||
April 27, | Fiscal Year Ended April 30, | July 30, | July 29, | |||||||||||||||||||||||||
2002 | 2003(1) | 2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(In thousands, except share and per share data) | ||||||||||||||||||||||||||||
Consolidated Income Statement Data: | ||||||||||||||||||||||||||||
Revenue | $ | 32,468 | $ | 45,817 | $ | 47,680 | $ | 105,155 | $ | 139,357 | $ | 30,752 | $ | 31,557 | ||||||||||||||
Cost of sales | 24,184 | 33,156 | 33,122 | 58,549 | 82,598 | 19,516 | 19,571 | |||||||||||||||||||||
Gross margin | 8,284 | 12,661 | 14,558 | 46,606 | 56,759 | 11,236 | 11,986 | |||||||||||||||||||||
Research and development | 575 | 2,091 | 1,715 | 9,799 | 16,098 | 3,509 | 3,841 | |||||||||||||||||||||
Selling, general and administrative | 7,715 | 8,531 | 9,725 | 16,545 | 24,577 | 5,822 | 6,132 | |||||||||||||||||||||
Income (loss) from operations | (6 | ) | 2,039 | 3,118 | 20,262 | 16,084 | 1,905 | 2,013 | ||||||||||||||||||||
Loss on equity investment(2) | — | (1,001 | ) | — | — | — | — | — | ||||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||
Interest income | 34 | 4 | 2 | 61 | 333 | 37 | 206 | |||||||||||||||||||||
Interest expense | (70 | ) | (80 | ) | (90 | ) | (110 | ) | (127 | ) | (30 | ) | — | |||||||||||||||
Other income(3) | 675 | — | — | — | — | — | — | |||||||||||||||||||||
Income before income taxes | 633 | 962 | 3,030 | 20,213 | 16,290 | 1,912 | 2,219 | |||||||||||||||||||||
Income tax expense | 304 | 421 | 859 | 5,531 | 4,881 | 574 | 854 | |||||||||||||||||||||
Income from continuing operations | 329 | 541 | 2,171 | 14,682 | 11,409 | 1,338 | 1,365 | |||||||||||||||||||||
Gain from sale of discontinued operations, net of income taxes of $31 in 2002(4) | 33 | — | — | — | — | — | — | |||||||||||||||||||||
Net income | $ | 362 | $ | 541 | $ | 2,171 | $ | 14,682 | $ | 11,409 | $ | 1,338 | $ | 1,365 | ||||||||||||||
Earnings per common share(5): | ||||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Diluted | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Weighted average common shares outstanding(5): | ||||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||||
Pro forma earnings per common share(5)(6): | ||||||||||||||||||||||||||||
Basic | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Diluted | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Pro forma weighted average common shares outstanding(5)(6): | ||||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||||
Diluted |
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As of | As of | |||||||||||||||||||||||
April 27, | As of April 30, | July 29, | ||||||||||||||||||||||
2002 | 2003(1) | 2004 | 2005 | 2006 | 2006 | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 1,998 | $ | 3,310 | $ | 10,060 | $ | 15,388 | $ | 13,478 | ||||||||||||
Working capital | 2,325 | 3,707 | 6,346 | 19,312 | 28,478 | 30,243 | ||||||||||||||||||
Total assets | 12,682 | 14,385 | 26,464 | 50,364 | 64,778 | 55,776 | ||||||||||||||||||
Long-term debt, including current portion | 278 | 422 | 1,500 | 2,500 | — | — | ||||||||||||||||||
Total stockholders’ equity | 4,810 | 5,363 | 7,514 | 22,647 | 34,131 | 35,926 | ||||||||||||||||||
Dividends paid | — | — | — | — | — | — |
(1) | Effective for the fiscal year ended April 30, 2003, our board of directors approved the change of our fiscal year-end from the last Saturday in April to April 30. Included in the financial statements for the fiscal year ended April 30, 2003 are three additional days of operations as compared to the fiscal year ended April 27, 2002. |
(2) | During the fiscal year ended April 30, 2003, we recorded losses of $1.0 million in a joint venture, iPower Technologies, Inc., which we accounted for on the equity method. |
(3) | Other income of $675,000 for the fiscal year ended April 27, 2002 consisted primarily of the recovery of a note receivable, which had previously been written off, from Alta Mesa Energy LLC pursuant to our sale of our interests in various wind farm partnerships. |
(4) | Gain from sale of discontinued operations, net of income taxes, represents final cash payments of $64,000 made pursuant to the sale of certain assets of two of our subsidiaries, AeroVironment Environmental Services, Inc. and AeroVironment Remediation Services, effective July 31, 1998. This amount was fully reserved previously. |
Earnings per common share and weighted average common shares outstanding give effect to a -for-one split of our common stock to be effected prior to the completion of this offering. |
(6) | Pro forma earnings per common share and pro forma weighted average common shares outstanding give effect to |
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Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 47,680 | 100% | $ | 105,155 | 100% | $ | 139,357 | 100% | $ | 30,752 | 100% | $ | 31,557 | 100% | |||||||||||||||||||||||||
Cost of sales | 33,122 | 69% | 58,549 | 56% | 82,598 | 59% | 19,516 | 63% | 19,571 | 62% | ||||||||||||||||||||||||||||||
Gross margin | 14,558 | 31% | 46,606 | 44% | 56,759 | 41% | 11,236 | 37% | 11,986 | 38% | ||||||||||||||||||||||||||||||
Research and development | 1,715 | 4% | 9,799 | 9% | 16,098 | 12% | 3,509 | 11% | 3,841 | 12% | ||||||||||||||||||||||||||||||
Selling, general and administrative | 9,743 | 20% | 16,550 | 16% | 24,336 | 17% | 5,628 | 18% | 6,132 | 19% | ||||||||||||||||||||||||||||||
Income from operations | 3,100 | 7% | 20,257 | 19% | 16,325 | 12% | 2,099 | 7% | 2,013 | 6% | ||||||||||||||||||||||||||||||
Other income (expense), net | (70 | ) | 0% | (44 | ) | 0% | (35 | ) | 0% | (187 | ) | (1)% | 206 | 1% | ||||||||||||||||||||||||||
Income before income taxes | 3,030 | 6% | 20,213 | 19% | 16,290 | 12% | 1,912 | 6% | 2,219 | 7% | ||||||||||||||||||||||||||||||
Income tax expense | 859 | 2% | 5,531 | 5% | 4,881 | 4% | 574 | 2% | 854 | 3% | ||||||||||||||||||||||||||||||
Net income | $ | 2,171 | 5% | $ | 14,682 | 14% | $ | 11,409 | 8% | $ | 1,338 | 4% | $ | 1,365 | 4% | |||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||||||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 47,680 | 100% | $ | 105,155 | 100% | $ | 139,357 | 100% | $ | 30,752 | 100% | $ | 31,557 | 100% | |||||||||||||||||||||||||
Cost of sales | 33,122 | 69% | 58,549 | 56% | 82,598 | 59% | 19,516 | 63% | 19,571 | 62% | ||||||||||||||||||||||||||||||
Gross margin | 14,558 | 31% | 46,606 | 44% | 56,759 | 41% | 11,236 | 37% | 11,986 | 38% | ||||||||||||||||||||||||||||||
Research and development | 1,715 | 4% | 9,799 | 9% | 16,098 | 12% | 3,509 | 11% | 3,841 | 12% | ||||||||||||||||||||||||||||||
Selling, general and administrative | 9,725 | 20% | 16,545 | 16% | 24,577 | 18% | 5,822 | 19% | 6,132 | 19% | ||||||||||||||||||||||||||||||
Income from operations | 3,118 | 7% | 20,262 | 19% | 16,084 | 12% | 1,905 | 6% | 2,013 | 6% | ||||||||||||||||||||||||||||||
Interest income | 2 | 0% | 61 | 0% | 333 | 0% | 37 | 0% | 206 | 1% | ||||||||||||||||||||||||||||||
Interest expense | (90 | ) | 0% | (110 | ) | 0% | (127 | ) | 0% | (30 | ) | 0% | — | 0% | ||||||||||||||||||||||||||
Income before income taxes | 3,030 | 6% | 20,213 | 19% | 16,290 | 12% | 1,912 | 6% | 2,219 | 7% | ||||||||||||||||||||||||||||||
Income tax expense | 859 | 2% | 5,531 | 5% | 4,881 | 4% | 574 | 2% | 854 | 3% | ||||||||||||||||||||||||||||||
Net income | $ | 2,171 | 5% | $ | 14,682 | 14% | $ | 11,409 | 8% | $ | 1,338 | 4% | $ | 1,365 | 4% | |||||||||||||||||||||||||
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Three Months Ended | ||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||
UAS | $ | 30,372 | $ | 82,249 | $ | 111,104 | $ | 24,303 | $ | 24,983 | ||||||||||
PosiCharge Fast Charge Systems | 9,111 | 15,642 | 19,928 | 4,559 | 4,943 | |||||||||||||||
Energy Technology Center | 8,197 | 7,264 | 8,325 | 1,890 | 1,631 | |||||||||||||||
Total | $ | 47,680 | $ | 105,155 | $ | 139,357 | $ | 30,752 | $ | 31,557 | ||||||||||
Gross margin: | ||||||||||||||||||||
UAS | $ | 10,161 | $ | 37,235 | $ | 44,558 | $ | 8,633 | $ | 9,271 | ||||||||||
PosiCharge Fast Charge Systems | 3,524 | 5,846 | 8,062 | 1,637 | 1,940 | |||||||||||||||
Energy Technology Center | 873 | 3,525 | 4,139 | 966 | 775 | |||||||||||||||
Total | $ | 14,558 | $ | 46,606 | $ | 56,759 | $ | 11,236 | $ | 11,986 | ||||||||||
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Three Months Ended | ||||||||||||||||||||
Fiscal Year Ended April 30, | July 30, | July 29, | ||||||||||||||||||
2004 | 2005 | 2006 | 2005 | 2006 | ||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 1,570 | $ | 8,832 | $ | 13,588 | $ | (1,059 | ) | $ | (1,423 | ) | ||||||||
Net cash used in investing activities | $ | (1,316 | ) | $ | (3,533 | ) | $ | (5,722 | ) | $ | (636 | ) | $ | (704 | ) | |||||
Net cash provided by (used in) financing activities | $ | 1,058 | $ | 1,451 | $ | (2,538 | ) | $ | (250 | ) | $ | 217 |
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Payments Due By Period | ||||||||||||||||||||
Less Than | More Than | |||||||||||||||||||
Total | 1 Year | 1 to 3 Years | 3 to 5 Years | 5 Years | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Operating lease obligations | $ | 5,122 | $ | 1,477 | $ | 2,490 | $ | 1,155 | $ | — | ||||||||||
Supplemental Executive | ||||||||||||||||||||
Retirement Plan(1) | 3,920 | 200 | 431 | 475 | 2,814 | |||||||||||||||
Purchase obligations(2) | 12,666 | 12,666 | — | — | — | |||||||||||||||
Total | $ | 21,708 | $ | 14,343 | $ | 2,921 | $ | 1,630 | $ | 2,814 | ||||||||||
(1) | The supplemental executive retirement plan is a non-qualified benefit plan pursuant to which we have agreed to pay Dr. MacCready, our Founder and Chairman, additional benefits at retirement. This plan will terminate automatically upon completion of this offering. See “Management — Pension Plan.” The amount represents total cash payments anticipated under the plan. For accounting purposes, the liability is recorded at net present value of $2.2 million. | |
(2) | Consists of all non-cancelable purchase orders as of April 30, 2006. |
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• | generate an information advantage through more timely, accurate and relevant information; | |
• | expand the use of deployable, networked sensors, by leveraging intelligence, surveillance and reconnaissance, or ISR, capabilities; | |
• | use sensors to gain information superiority; | |
• | increase the opportunity for low-level forces to operate nearly autonomously and to be able to rapidly adapt; | |
• | make the U.S. military more rapidly deployable and able to successfully complete its mission; and | |
• | enable every weapon platform to be a sensor, from the individual soldier to a satellite. |
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UAS Technology | Efficient Electric Energy Technology | |
• Lightweight, low speed aerostructures and | • Battery management and chemistries | |
propeller design | • Power electronics and controls | |
• Miniaturized avionics and micro/nano | • Lightweight electric propulsion | |
unmanned aircraft systems | • Thermal management | |
• Image stabilization and target tracking | • High-density energy packaging | |
• Unmanned autonomous control systems | • Electric power generation, storage | |
• Payload integration | and management | |
• Hydrogen propulsion systems and high- | • Charging algorithms | |
pressure-ratio turbochargers | • On/off grid controls | |
• Stratospheric flight operations | • Controls integration and systems | |
• Fluid dynamics | engineering | |
• System integration and optimization | • System integration and optimization |
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our commercialization process is ensuring that our technology and business development activities are strongly linked to customer needs in attractive growth markets. Throughout the process we revalidate our customer requirement assumptions to ensure that the products and services we ultimately deliver are of high value. |
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Flight | ||||||||||||||||||||||
Primary | Wingspan | Weight | Standard | Range | Time | |||||||||||||||||
Small UAS Product | Customers | (ft.) | (lbs.) | Recovery | Sensors | (mi.)(1) | (min.)(1) | |||||||||||||||
Raven | U.S. Army, U.S. SOCOM | 4.5 | 4.2 | Vertical autonomous landing capable | Electro-optical or infrared | 6.0 | 90 | |||||||||||||||
Dragon Eye | U.S. Marine Corps | 3.8 | 5.9 | Horizontal autonomous landing capable | Electro-optical or infrared | 3.0 | 60 | |||||||||||||||
Swift | U.S. SOCOM | 3.8 | 5.9 | Horizontal autonomous landing capable | Electro-optical or infrared | 3.0 | 60 | |||||||||||||||
Wasp | U.S. Army, U.S. Marine Corps, U.S. Navy, U.S. SOCOM | 1.3 | 0.6 | Horizontal autonomous landing capable (ground or water) | Electro-optical | 2.4 | 30 | |||||||||||||||
Puma | U.S. Navy, U.S. SOCOM | 8.5 | 12.5 | Vertical autonomous landing capable (ground or water) | Dual electro-optical and infrared | 6.0 | 240 |
Flight | ||||||||||||||||||||||
Primary | Wingspan | Weight | Standard | Range | Time | |||||||||||||||||
Small UAS Product | Customers | (ft.) | (lbs.) | Recovery | Sensors | (mi.)(1) | (min.)(1) | |||||||||||||||
Raven | U.S. Army, U.S. SOCOM | 4.5 | 4.2 | Vertical autonomous landing capable | Electro-optical or infrared | 6.0 | 90 | |||||||||||||||
Dragon Eye | U.S. Marine Corps | 3.8 | 5.9 | Horizontal autonomous landing capable | Electro-optical or infrared | 3.0 | 60 | |||||||||||||||
Swift | U.S. SOCOM | 3.8 | 5.9 | Horizontal autonomous landing capable | Electro-optical or infrared | 3.0 | 60 | |||||||||||||||
Wasp | DARPA for: U.S. Army, U.S. Marine Corps, U.S. Navy, U.S. SOCOM | 1.3 | 0.6 | Horizontal autonomous landing capable (ground or water) | Electro-optical | 2.4 | 30 | |||||||||||||||
Puma | U.S. Navy, U.S. SOCOM | 8.5 | 12.5 | Vertical autonomous landing capable (ground or water) | Dual electro-optical and infrared | 6.0 | 240 |
(1) | Represents minimum customer-mandated specifications for all operating conditions. In optimal conditions, the performance of our products may significantly exceed these specifications. |
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As of April 30, | As of July 29, | |||||||||||
2005 | 2006 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Funded | $ | 70,418 | $ | 79,699 | $ | 79,768 | ||||||
Unfunded | 262,801 | 475,469 | 457,275 | |||||||||
Total | $ | 333,219 | $ | 555,168 | $ | 537,043 | ||||||
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• | terminate existing contracts for convenience, which affords the U.S. government the right to terminate the contract in whole or in part anytime it wants for any reason or no reason, as well as for default; | |
• | reduce or modify contracts or subcontracts, if its requirements or budgetary constraints change; |
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• | cancel multi-year contracts and related orders, if funds for contract performance for any subsequent year become unavailable; | |
• | claim rights in products and systems produced by its contractors if the contract is cost reimbursable and the contractor produces the products or systems during the performance of the contract; | |
• | adjust contract costs and fees on the basis of audits completed by its agencies; | |
• | suspend or debar a contractor from doing business with the U.S. government; and | |
• | control or prohibit the export of products. |
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• | Cost-plus-fixed fee contracts are cost reimbursable contracts that provide for payment of a negotiated fee that is fixed at the inception of the contract. This fixed fee does not vary with actual cost of the contract, but may be adjusted as a result of changes in the work to be performed under the contract. This contract type poses less risk of loss than a fixed-price contract, but our ability to win future contracts from the procuring agency may be adversely affected if we fail to perform within the maximum cost set forth in the contract. | |
• | A cost-plus-award fee contract is a cost reimbursable contract that provides for a fee consisting of a base amount (which may be zero) fixed at inception of the contract and an award amount, based upon the government’s satisfaction with the performance under the contract. With this type of contract, we assume the risk that we may not receive the award fee, or only a portion of it, if we do not perform satisfactorily. |
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• | A cost-plus-incentive fee contract is a cost reimbursable contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. |
Fiscal Year Ended | Three Months | |||||||||||||||
April 30, | Ended July 29, | |||||||||||||||
2004 | 2005 | 2006 | 2006 | |||||||||||||
Fixed-price contracts | 63 | % | 88 | % | 60 | % | 74 | % | ||||||||
Cost reimbursable contracts | 36 | % | 12 | % | 39 | % | 25 | % | ||||||||
Time-and-materials contracts | 1 | % | — | 1 | % | 1 | % |
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Name | Age | Position | ||||
Paul B. MacCready | Founder and Chairman of the Board of Directors | |||||
Timothy E. Conver | 63 | President, Chief Executive Officer and Director | ||||
Stephen C. Wright | Vice President of Finance, Chief Financial Officer and Secretary | |||||
John F. Grabowsky | 59 | Executive Vice President and General Manager, Unmanned Aircraft Systems | ||||
Patrick R. Dellario | 49 | Vice President and General Manager, PosiCharge Systems | ||||
Joseph S. Edwards | 59 | Vice President and General Manager, Energy Technology Center | ||||
Cathleen S. Cline | Vice President of Administration | |||||
Joseph F. Alibrandi(1)(3) | 77 | Director | ||||
Kenneth R. Baker(1)(2) | 59 | Director | ||||
Arnold L. Fishman(1)(2)(3) | Director | |||||
Murray Gell-Mann(2)(3) | 77 | Director | ||||
Charles R. Holland | 60 | Director |
(1) | Member of the audit committee. | |
(2) | Member of the compensation committee. | |
(3) | Member of the nominating and corporate governance committee. |
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• | selecting and hiring our independent registered public accounting firm; | |
• | evaluating the qualifications, independence and performance of our independent registered public accounting firm; | |
• | reviewing and approving the audit and non-audit services to be performed by our independent registered public accounting firm; | |
• | reviewing the design, adequacy, implementation and effectiveness of our internal controls established for finance, accounting, legal compliance and ethics; | |
• | reviewing the design, adequacy, implementation and effectiveness of our critical accounting and financial policies; | |
• | overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; | |
• | reviewing with management and our independent registered public accounting firm our annual and quarterly financial statements; | |
• | reviewing with management and our independent registered public accounting firm any earnings announcements or other public announcements concerning our operating results; | |
• | preparing the audit committee report that the SEC will require in our annual proxy statements; and | |
• | reviewing and approving any related party transactions. |
• | reviewing and recommending compensation and benefit plans for our officers and compensation policies for members of our board of directors and board committees; | |
• | reviewing the terms of offer letters and employment agreements and arrangements with our officers; | |
• | setting performance goals for our officers and reviewing their performance against these goals; | |
• | evaluating the competitiveness of our executive compensation plans and periodically reviewing executive succession plans; and | |
• | preparing the report that the SEC will require in our annual proxy statements. |
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• | evaluating the composition, size and governance of our board of directors and its committees and making recommendations regarding future planning and the appointment of directors to our committees; | |
• | administering a policy for considering stockholder nominees for election to our board of directors; | |
• | evaluating and recommending candidates for election to our board of directors; | |
• | overseeing our board of directors’ performance and self-evaluation process; and | |
• | reviewing our corporate governance principles and providing recommendations to the board regarding possible changes. |
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Long-Term | ||||||||||||||||||||
Compensation | ||||||||||||||||||||
Annual Compensation | Securities | |||||||||||||||||||
Name and | Other Annual | Underlying | All Other | |||||||||||||||||
Principal Position | Salary | Bonus | Compensation(1) | Options | Compensation | |||||||||||||||
Paul B. MacCready | $ | 249,054 | $ | 900,000 | $ | — | $ | — | $ | 6,713 | (2) | |||||||||
Founder and Chairman of the Board | ||||||||||||||||||||
Timothy E. Conver | 258,461 | 1,350,000 | — | — | 8,874 | (3) | ||||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||
Stephen C. Wright | 202,174 | 87,500 | — | — | 11,224 | (4) | ||||||||||||||
Chief Financial Officer | ||||||||||||||||||||
John F. Grabowsky | 205,150 | 100,000 | — | 8,092 | (5) | |||||||||||||||
Executive Vice President and General Manager, Unmanned Aircraft Systems | ||||||||||||||||||||
Patrick R. Dellario | 208,281 | 59,500 | — | 10,149 | (6) | |||||||||||||||
Vice President and General Manager, PosiCharge Systems |
(1) | Pursuant to applicable SEC regulations, perquisites and other personal benefits are omitted because they did not exceed the lesser of either $50,000 or 10% of total annual salary and bonus. | |
(2) | Consists of: (a) a matching payment of $3,909 to our 401(k) plan; (b) $332 representing the value of personal use of company-owned automobile; and (c) $2,472 representing the total value of premium payments for coverage under our group term life plan. | |
(3) | Consists of: (a) a matching payment of $4,387 to our 401(k) plan; (b) $2,508 representing the value of personal use of company-owned automobile; and (c) $1,979 representing the total value of premium payments for coverage under our group term life plan. | |
(4) | Consists of: (a) a matching payment of $10,691 to our 401(k) plan; and (b) $533 representing the total value of premium payments for coverage under our group term life plan. | |
(5) | Consists of: (a) a matching payment of $6,802 to our 401(k) plan; and (b) $1,290 representing the total value of premium payments for coverage under our group term life plan. | |
(6) | Consists of: (a) a matching payment of $9,699 to our 401(k) plan; and (b) $450 representing the total value of premium payments for coverage under our group term life plan. |
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Individual Grants | ||||||||||||||||||||||||
% of Total | Potential Realizable | |||||||||||||||||||||||
Number of | Options | Value at Assumed | ||||||||||||||||||||||
Shares | Granted to | Annual Rates of Stock | ||||||||||||||||||||||
Underlying | Employees | Exercise | Price Appreciation for | |||||||||||||||||||||
Options | In Last | Price Per | Expiration | Options Term | ||||||||||||||||||||
Name | Granted | Fiscal Year | Share | Date | 5% | 10% | ||||||||||||||||||
Paul B. MacCready | — | — | $ | — | — | $ | — | $ | — | |||||||||||||||
Timothy E. Conver | — | — | — | — | — | — | ||||||||||||||||||
Stephen C. Wright | — | — | — | — | — | — | ||||||||||||||||||
John F. Grabowsky | 23.8 | 10/21/15 | ||||||||||||||||||||||
Patrick R. Dellario | 7.9 | 10/21/15 |
Number of | Number of Securities | Value of UnexercisedIn-the- | ||||||||||||||||||||||
Shares | Underlying Unexercised | Money Options at | ||||||||||||||||||||||
Acquired on | Value | Options at April 30, 2006 | April 30, 2006 | |||||||||||||||||||||
Name | Exercise | Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Paul B. MacCready | — | $ | — | — | — | $ | — | $ | — | |||||||||||||||
Timothy E. Conver | — | — | ||||||||||||||||||||||
Stephen C. Wright | ||||||||||||||||||||||||
John F. Grabowsky | ||||||||||||||||||||||||
Patrick R. Dellario | — | — |
7175
• | select the individuals who will receive awards; | |
• | determine the type or types of awards to be granted; | |
• | determine the number of awards to be granted and the number of shares to which the award relates; | |
• | determine the terms and conditions of any award, including the exercise price and vesting; | |
• | determine the terms of settlement of any award; | |
• | prescribe the form of award agreement; | |
• | establish, adopt or revise rules for administration of the 2006 Plan; | |
• | interpret the terms of the 2006 Plan and any matters arising under the 2006 Plan; and | |
• | make all other decisions and determinations as may be necessary to administer the 2006 Plan. |
7276
• | Options — Options provide for the right to purchase our common stock at a specified price, and usually will become exercisable in the discretion of the compensation committee in one or more installments after the grant date. The option exercise price may be paid in cash, by check, shares of our common stock which have been held by the option holder for at least six months, other property with value equal to the exercise price, through a broker assisted cashless exercise or such other methods as the committee may approve from time to time. The committee may at any time substitute SARs for options granted under the 2006 Plan. Options may take two forms, nonstatutory options, or NSOs, and ISOs. ISOs will be designed to comply with the provision of the Code and will be subject to certain restrictions contained in the Code in order to qualify as ISOs. Among such restrictions, ISOs must: |
• | have an exercise price not less than the fair market value of our common stock on the date of grant, or if granted to certain individuals who own or are deemed to own at least 10% of the total combined voting power of all of our classes of stock (10% stockholders), then such exercise price may not be less than 110% of the fair market value of our common stock on the date of grant; | |
• | be granted only to our employees and employees of our subsidiary corporations; | |
• | expire within a specified time following the option holder’s termination of employment; | |
• | be exercised within ten years after the date of grant, or with respect to 10% stockholders, five years after the date of grant; and | |
• | not be first exercisable during any calendar year for more than $100,000 worth of our common stock, determined based on the exercise price at the time the option is granted. |
• | Restricted Stock — A restricted stock award is the grant of shares of our common stock that, during a restricted period, is nontransferable and, unless otherwise determined by the compensation committee at the time of award, may be forfeited upon termination of employment or service. The committee shall determine in the award agreement whether the participant will be entitled to vote the shares of restricted stockand/or receive dividends on such shares. | |
• | Stock Appreciation Rights — SARs provide for payment to the holder based upon increases in the price of our common stock over a set base price. Payment for SARs may be made in cash, our common stock or any combination of the two. | |
• | Restricted Stock Units — Restricted stock units represent the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of such right. If the restricted stock unit has not been forfeited, then on the date specified in the restricted stock award we will deliver to the holder of the restricted stock unit unrestricted shares of our common stock, which will be freely transferable. |
7377
• | Dividend Equivalents — Dividend equivalents represent the value of the dividends per share we pay, calculated with reference to the number of shares covered by an award (other than a dividend equivalent award) held by the participant. | |
• | Performance Awards — Performance awards are denominated in shares of our common stock and are linked to satisfaction of performance criteria established by the compensation committee. If the committee determines that the award is intended to meet the requirements of “qualified performance based compensation” and therefore be deductible under Section 162(m) of the Code, then the performance criteria upon which the award will be based shall be with reference to any one or more of the following: net earnings (either before or after interest, taxes, depreciation and amortization), economic value-added (as determined by the committee), sales or revenue, net income (either before or after taxes), operating earnings, cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, return on assets (net or gross), return on stockholders’ equity, return on sales, gross or net profit margin, productivity, expense margins, operating efficiency, customer satisfaction, working capital, earnings per share, price per share, and market share, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group. |
7478
7579
• | the amount involved exceeded or will exceed $60,000; and | |
• | a director, executive officer, holder of 5% or more of any class of our capital stock or any member of their immediate family had or will have a direct or indirect material interest. |
• | any breach of the director’s duty of loyalty to us or our stockholders; | |
• | any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; | |
• | any act related to unlawful stock repurchases, redemptions or other distributions or payment of dividends; or | |
• | any transaction from which the director derived an improper personal benefit. |
• | we may indemnify our directors, officers and employees to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; | |
• | we may advance expenses to our directors, officers and employees in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; and | |
• | the rights provided in our bylaws are not exclusive. |
7680
7781
• | each person, or group of affiliated persons known to us to be the beneficial owner of more than 5% of our common stock; | |
• | each of our named executive officers; | |
• | each of our directors; | |
• | all of our executive officers and directors as a group; and | |
• | each selling stockholder. |
Shares Beneficially | ||||||||||||||||||||
Owned Prior to the | Shares Beneficially | |||||||||||||||||||
Offering | Shares Being | Owned After the Offering | ||||||||||||||||||
Beneficial Owner | Number | Percentage | Sold(12) | Number | Percentage | |||||||||||||||
5% Stockholders: | ||||||||||||||||||||
Taylor Family Trust, dated September 8, 1993(1) | 179,825 | 9.3 | % | |||||||||||||||||
Directors and Named Executive Officers: | ||||||||||||||||||||
Paul B. MacCready(2) | 811,762 | 41.9 | ||||||||||||||||||
Timothy E. Conver(3) | 669,003 | 34.6 | ||||||||||||||||||
Stephen C. Wright(4) | 14,000 | * | ||||||||||||||||||
John F. Grabowsky(5) | 9,600 | * | ||||||||||||||||||
Patrick R. Dellario(6) | 10,000 | * | ||||||||||||||||||
Joseph F. Alibrandi(7) | 7,400 | * | ||||||||||||||||||
Kenneth R. Baker(8) | 7,400 | * | ||||||||||||||||||
Arnold L. Fishman(9) | 32,400 | 1.7 | ||||||||||||||||||
Murray Gell-Mann | 9,900 | * | ||||||||||||||||||
Charles R. Holland(10) | 2,000 | * | ||||||||||||||||||
Executive officers and directors as a group (12 persons)(11) | 1,646,465 | 80.7 |
7882
Shares Beneficially | ||||||||||||||||||||
Owned Prior to the | Shares Beneficially | |||||||||||||||||||
Offering | Shares Being | Owned After the Offering | ||||||||||||||||||
Beneficial Owner | Number | Percentage | Sold(12) | Number | Percentage | |||||||||||||||
Other Selling Stockholders: | ||||||||||||||||||||
(1) | The address for the Taylor Family Trust, dated September 8, 1993, is 1405 S. Oakland Avenue, Pasadena, CA 91106. Stanley and Joann Taylor are co-trustees of the Taylor Family Trust and have shared voting and investment power over these shares. |
(2) | Includes 439,432 shares held in the P. and J. MacCready Living Trust (Restated), of which Dr. MacCready is the trustee, 23,625 shares held by Ray Morgan, over which Mr. MacCready has voting power pursuant to a proxy granted to him by Mr. Morgan and 116,235 shares held by each of Dr. MacCready’s children, Marshall MacCready, Parker MacCready and Tyler MacCready, over which Dr. MacCready has voting power pursuant to proxies granted to him by his children. | |
(3) | Includes 545,965 shares held by the Conver Family Trust, of which Mr. Conver is one of the trustees; 109,238 shares held by the Whiting Family Limited Partnership, over which Mr. Conver, as one of its limited partners, has voting control and 4,600 shares held by each of Mr. Conver’s children, Brent Conver, Morgan Conver and Nicholas Conver, over which Mr. Conver has voting power pursuant to a voting agreement. | |
(4) | Includes options to purchase 11,500 shares of our common stock that are fully vested and immediately exercisable. | |
(5) | Includes options to purchase 4,000 shares of our common stock that are fully vested and immediately exercisable. | |
(6) | Includes options to purchase 6,000 shares of our common stock that are fully vested and immediately exercisable. | |
(7) | Includes options to purchase 7,400 shares of our common stock that are fully vested and immediately exercisable. | |
(8) | Includes options to purchase 200 shares of our common stock that are fully vested and immediately exercisable. | |
(9) | Includes options to purchase 200 shares of our common stock that are fully vested and immediately exercisable. | |
(10) | Includes options to purchase 2,000 shares of our common stock that are fully vested and immediately exercisable. | |
(11) | Includes options to purchase 45,000 shares of our common stock held by Joseph S. Edwards that are fully vested and immediately exercisable. Includes options to purchase 28,000 shares of our common stock held by Cathleen S. Cline that are fully vested and immediately exercisable. | |
(12) | If the underwriters’ over-allotment option is exercised in full, the additional shares sold would be allocated among the selling stockholders as follows: |
Shares Subject to | ||||
the Over-allotment | ||||
Selling Stockholders | Option | |||
7983
80
84
81
85
8286
• | shares will be eligible for immediate sale on the date of this prospectus; | |
• | shares will be eligible for sale 90 days after the date of this prospectus; | |
• | shares will be eligible for sale upon the expiration of thelock-up agreements, as more particularly and except as described below, beginning 180 days after the date of this prospectus; and | |
• | the remaining restricted shares will be eligible for sale from time to time thereafter upon expiration of their respective one-year holding periods. |
• | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for common stock; or | |
• | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock, whether any transaction described above is to be settled by delivery of our common stock or such other securities, in cash or otherwise. |
8387
8488
8589
Number of | ||||
Underwriters | Shares | |||
Goldman, Sachs & Co. | ||||
Friedman, Billings, Ramsey & Co., Inc. | ||||
Jefferies Quarterdeck, a division of Jefferies & Company, Inc. | ||||
Raymond James & Associates, Inc. | ||||
Stifel, Nicolaus & Company, Incorporated | ||||
Thomas Weisel Partners LLC | ||||
Total | ||||
No Exercise | Full Exercise | |||||||
Per Share | $ | $ | ||||||
Total | $ | $ |
No Exercise | Full Exercise | |||||||
Per Share | $ | $ | ||||||
Total | $ | $ |
90
86
• | the sale of shares to the underwriters; | |
• | the issuance by the company of shares of its common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus of which the underwriters have been advised in writing; | |
• | the entry by the company’s directors or executive officers into written trading plans designed to comply withRule 10b5-1 of the Exchange Act, provided that no sales or other dispositions may occur under such plans until the expiration of the restricted period; | |
• | transactions relating to shares of common stock or other securities acquired in open market transactions after the completion of this offering; | |
• | the sale or transfer by a stockholder of shares of common stock or any security convertible into common stock to the company upon termination of such stockholder’s employment with the company; | |
• | the sale or transfer of shares of common stock to pay the exercise price of options to purchase common stock pursuant to the cashless exercise feature of such options; | |
• | transfers by a stockholder to a trust, all of the beneficial interests of which are held, directly or indirectly, by such stockholder; or | |
• | transfers of shares or any security convertible into common stock as a bona fide gift; |
91
87
92
88
93
89
9094
9195
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-1
F-2
April 30 | ||||||||
2005 | 2006 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,060 | $ | 15,388 | ||||
Restricted cash | — | 1,532 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $88 in 2005 and $86 in 2006 | 19,378 | 21,582 | ||||||
Unbilled receivables and retentions | 788 | 4,842 | ||||||
Inventories, net | 11,505 | 11,453 | ||||||
Deferred income taxes | 1,134 | 1,090 | ||||||
Prepaid expenses and other current assets | 2,587 | 621 | ||||||
Total current assets | 45,452 | 56,508 | ||||||
Property and equipment, net | 4,175 | 6,098 | ||||||
Deferred income taxes | 647 | 2,053 | ||||||
Other assets | 90 | 119 | ||||||
Total assets | $ | 50,364 | $ | 64,778 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,273 | $ | 8,521 | ||||
Wages and related accruals | 5,089 | 8,451 | ||||||
Customer advances | 9,732 | 9,031 | ||||||
Other current liabilities | 1,046 | 2,027 | ||||||
Current maturities of long-term debt | 1,000 | — | ||||||
Total current liabilities | 26,140 | 28,030 | ||||||
Deferred rent | 77 | 408 | ||||||
Long-term debt, less current maturities | 1,500 | — | ||||||
Long-term retirement costs | — | 2,209 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock, no par value: | ||||||||
Authorized shares — 25,000,000 | ||||||||
Issued and outstanding shares — 1,838,339 shares in 2005 and 1,887,489 in 2006 | 1,651 | 1,726 | ||||||
Retained earnings | 20,996 | 32,405 | ||||||
Total shareholders’ equity | 22,647 | 34,131 | ||||||
Total liabilities and shareholders’ equity | $ | 50,364 | $ | 64,778 | ||||
F-3
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Revenue: | ||||||||||||
Product sales | $ | 30,342 | $ | 85,291 | $ | 98,664 | ||||||
Contract services | 17,338 | 19,864 | 40,693 | |||||||||
47,680 | 105,155 | 139,357 | ||||||||||
Cost of sales: | ||||||||||||
Product sales | 20,084 | 39,123 | 55,483 | |||||||||
Contract services | 13,038 | 19,426 | 27,115 | |||||||||
33,122 | 58,549 | 82,598 | ||||||||||
Gross margin | 14,558 | 46,606 | 56,759 | |||||||||
Research and development | 1,715 | 9,799 | 16,098 | |||||||||
Selling, general and administrative | 9,743 | 16,550 | 24,336 | |||||||||
Income from operations | 3,100 | 20,257 | 16,325 | |||||||||
Other expenses, net | (70 | ) | (44 | ) | (35 | ) | ||||||
Income before income taxes | 3,030 | 20,213 | 16,290 | |||||||||
Provision for income taxes | 859 | 5,531 | 4,881 | |||||||||
Net income | $ | 2,171 | $ | 14,682 | $ | 11,409 | ||||||
Earnings per share data: | ||||||||||||
Net income | ||||||||||||
Basic | $ | 1.32 | $ | 8.15 | $ | 6.17 | ||||||
Diluted | $ | 1.26 | $ | 7.46 | $ | 5.40 | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 1,639,543 | 1,800,930 | 1,848,822 | |||||||||
Diluted | 1,718,460 | 1,967,550 | 2,113,395 | |||||||||
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Revenue: | ||||||||||||
Product sales | $ | 30,342 | $ | 85,291 | $ | 98,664 | ||||||
Contract services | 17,338 | 19,864 | 40,693 | |||||||||
47,680 | 105,155 | 139,357 | ||||||||||
Cost of sales: | ||||||||||||
Product sales | 20,084 | 39,123 | 55,483 | |||||||||
Contract services | 13,038 | 19,426 | 27,115 | |||||||||
33,122 | 58,549 | 82,598 | ||||||||||
Gross margin | 14,558 | 46,606 | 56,759 | |||||||||
Research and development | 1,715 | 9,799 | 16,098 | |||||||||
Selling, general and administrative | 9,725 | 16,545 | 24,577 | |||||||||
Income from operations | 3,118 | 20,262 | 16,084 | |||||||||
Interest income | 2 | 61 | 333 | |||||||||
Interest expense | (90 | ) | (110 | ) | (127 | ) | ||||||
Income before income taxes | 3,030 | 20,213 | 16,290 | |||||||||
Provision for income taxes | 859 | 5,531 | 4,881 | |||||||||
Net income | $ | 2,171 | $ | 14,682 | $ | 11,409 | ||||||
Earnings per share data: | ||||||||||||
Net income | ||||||||||||
Basic | $ | 1.32 | $ | 8.15 | $ | 6.17 | ||||||
Diluted | $ | 1.26 | $ | 7.46 | $ | 5.40 | ||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 1,639,543 | 1,800,930 | 1,848,822 | |||||||||
Diluted | 1,718,460 | 1,967,550 | 2,113,395 | |||||||||
F-4
Common Stock | Retained | |||||||||||||||
Shares | Amount | Earnings | Total | |||||||||||||
Balance at May 1, 2003 | 1,649,587 | $ | 1,220 | $ | 4,143 | $ | 5,363 | |||||||||
Stock options exercised | 15,000 | 53 | — | 53 | ||||||||||||
Repurchase of common shares | (22,838 | ) | (73 | ) | — | (73 | ) | |||||||||
Net income | — | — | 2,171 | 2,171 | ||||||||||||
Balance at April 30, 2004 | 1,641,749 | 1,200 | 6,314 | 7,514 | ||||||||||||
Stock options exercised | 257,040 | 884 | — | 884 | ||||||||||||
Repurchase of common shares | (60,450 | ) | (433 | ) | — | (433 | ) | |||||||||
Net income | — | — | 14,682 | 14,682 | ||||||||||||
Balance at April 30, 2005 | 1,838,339 | 1,651 | 20,996 | 22,647 | ||||||||||||
Stock options exercised | 69,950 | 274 | — | 274 | ||||||||||||
Tax benefit from exercise of stock options | — | 113 | — | 113 | ||||||||||||
Repurchase of common shares | (20,800 | ) | (312 | ) | — | (312 | ) | |||||||||
Net income | — | — | 11,409 | 11,409 | ||||||||||||
Balance at April 30, 2006 | 1,887,489 | $ | 1,726 | $ | 32,405 | $ | 34,131 | |||||||||
F-5
Year ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Operating activities | ||||||||||||
Net income | $ | 2,171 | $ | 14,682 | $ | 11,409 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 764 | 1,053 | 1,999 | |||||||||
Long-term retirement costs | — | — | 2,209 | |||||||||
Provision for doubtful accounts | 3 | 53 | (2 | ) | ||||||||
Deferred income taxes | 185 | (678 | ) | (1,362 | ) | |||||||
Tax benefit from exercise of stock options | — | — | 113 | |||||||||
(Gain) loss on disposition of property and equipment | (51 | ) | (4 | ) | 268 | |||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | (2,422 | ) | (9,139 | ) | (2,203 | ) | ||||||
Unbilled receivables and retentions | (5,134 | ) | 4,118 | (4,053 | ) | |||||||
Inventories | (2,785 | ) | (6,824 | ) | 52 | |||||||
Prepaid expenses and other assets | (11 | ) | (2,220 | ) | 1,937 | |||||||
Accounts payable | 2,670 | 3,828 | (752 | ) | ||||||||
Customer advances | 5,496 | 4,614 | (701 | ) | ||||||||
Other liabilities | 684 | (651 | ) | 4,674 | ||||||||
Net cash provided by operating activities | 1,570 | 8,832 | 13,588 | |||||||||
Investing activities | ||||||||||||
Acquisition of property and equipment | (1,373 | ) | (3,541 | ) | (4,190 | ) | ||||||
Transfer to restricted cash | — | — | (1,532 | ) | ||||||||
Proceeds from sale of property and equipment | 57 | 8 | — | |||||||||
Net cash used in investing activities | (1,316 | ) | (3,533 | ) | (5,722 | ) | ||||||
Financing activities | ||||||||||||
Payment of long-term debt | (422 | ) | (500 | ) | (2,500 | ) | ||||||
Proceeds from long-term debt | 1,500 | 1,500 | — | |||||||||
Exercise of stock options | 53 | 884 | 274 | |||||||||
Repurchase of common stock | (73 | ) | (433 | ) | (312 | ) | ||||||
Net cash provided by (used in) financing activities | 1,058 | 1,451 | (2,538 | ) | ||||||||
Net increase in cash and cash equivalents | 1,312 | 6,750 | 5,328 | |||||||||
Cash and cash equivalents at beginning of year | 1,998 | 3,310 | 10,060 | |||||||||
Cash and cash equivalents at end of year | $ | 3,310 | $ | 10,060 | $ | 15,388 | ||||||
Supplemental disclosures of cash flow information | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 78 | $ | 93 | $ | 139 | ||||||
Income taxes | $ | 670 | $ | 8,040 | $ | 3,229 |
F-6
1. | Organization and Significant Accounting Policies |
F-7
F-8
Assets held for lease | 2 to 5 years | |||
Machinery and equipment | 3 years | |||
Computer equipment and software | 2 to 3 years | |||
Furniture and fixtures | 3 years | |||
Leasehold improvements | Lesser of useful life or term of lease |
F-9
F-9
F-10
F-10
F-11
F-11
F-12
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
Denominator for basic earnings per share: | ||||||||||||
Weighted average common shares | 1,639,543 | 1,800,930 | 1,848,822 | |||||||||
Dilutive effect of employee stock options | 78,917 | 166,620 | 264,573 | |||||||||
Denominator for diluted earnings per share | 1,718,460 | 1,967,550 | 2,113,395 | |||||||||
F-12
F-13
April 30 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 3,568 | $ | 4,750 | ||||
Work in process | 5,404 | 2,413 | ||||||
Finished goods | 3,665 | 5,103 | ||||||
12,637 | 12,266 | |||||||
Reserve for inventory obsolescence | (1,132 | ) | (813 | ) | ||||
Inventories, net | $ | 11,505 | $ | 11,453 | ||||
F-13F-14
April 30 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 3,568 | $ | 4,750 | ||||
Work in process | 5,404 | 2,413 | ||||||
Finished goods | 3,665 | 5,103 | ||||||
12,637 | 12,266 | |||||||
Reserve for inventory obsolescence | (1,132 | ) | (813 | ) | ||||
Inventories, net | $ | 11,505 | $ | 11,453 | ||||
3. | Property and Equipment, net |
April 30 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Assets held for lease | $ | 699 | $ | 998 | ||||
Leasehold improvements | 1,335 | 1,556 | ||||||
Machinery and equipment | 3,467 | 5,163 | ||||||
Furniture and fixtures | 1,086 | 1,347 | ||||||
Computer equipment and software | 2,693 | 5,387 | ||||||
Construction in process | 2,127 | 560 | ||||||
11,407 | 15,011 | |||||||
Less accumulated depreciation and amortization | (7,232 | ) | (8,913 | ) | ||||
Property and equipment, net | $ | 4,175 | $ | 6,098 | ||||
4. | Warranty Reserves |
April 30 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Beginning balance | $ | 160 | $ | 282 | ||||
Warranty expense | 315 | 589 | ||||||
Warranty costs incurred | (193 | ) | (527 | ) | ||||
Ending balance | $ | 282 | $ | 344 | ||||
5. | Bank Borrowings |
F-14
F-15
6. | Employee Savings Plan |
7. | Supplemental Executive Retirement Plan |
F-15
Year ending | ||||
April 30 | ||||
(In thousands) | ||||
2007 | $ | 200 | ||
2008 | 210 | |||
2009 | 221 | |||
2010 | 232 | |||
2011 | 243 | |||
Thereafter | 2,814 | |||
$ | 3,920 | |||
8. | Stock Based Compensation |
F-16
F-16F-17
2002 Plan | 1994 Directors’ Plan | 1992 Plan | ||||||||||||||||||||||
Weighted- | Weighted- | Weighted- | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at May 1, 2003 | 127,000 | $ | 4.60 | 210,140 | $ | 3.57 | 424,000 | $ | 3.73 | |||||||||||||||
Options granted | 7,000 | 4.48 | — | — | — | — | ||||||||||||||||||
Options exercised | — | — | (15,000 | ) | 3.55 | — | — | |||||||||||||||||
Options canceled | — | — | (5,000 | ) | 2.60 | (4,000 | ) | 4.17 | ||||||||||||||||
Outstanding at April 30, 2004 | 134,000 | $ | 4.60 | 190,140 | $ | 3.60 | 420,000 | $ | 3.73 | |||||||||||||||
Options granted | 61,000 | 5.50 | — | — | — | — | ||||||||||||||||||
Options exercised | (10,600 | ) | 4.78 | (180,140 | ) | 3.57 | (66,300 | ) | 2.87 | |||||||||||||||
Options canceled | (1,000 | ) | 4.48 | — | — | (1,800 | ) | 4.17 | ||||||||||||||||
Outstanding at April 30, 2005 | 183,400 | $ | 4.89 | 10,000 | $ | 4.17 | 351,900 | $ | 3.89 | |||||||||||||||
Options granted | 63,000 | 15.00 | — | — | — | — | ||||||||||||||||||
Options exercised | (9,150 | ) | 4.69 | — | — | (60,800 | ) | 3.81 | ||||||||||||||||
Options canceled | (4,700 | ) | 5.50 | — | — | — | — | |||||||||||||||||
Outstanding at April 30, 2006 | 232,550 | $ | 7.62 | 10,000 | $ | 4.17 | 291,100 | $ | 3.91 | |||||||||||||||
Options exercisable at April 30, 2004 | 31,800 | $ | 4.58 | 190,140 | $ | 3.60 | 381,800 | $ | 3.68 | |||||||||||||||
Options exercisable at April 30, 2005 | 46,000 | $ | 4.55 | 10,000 | $ | 4.17 | 336,900 | $ | 3.88 | |||||||||||||||
Options exercisable at April 30, 2006 | 73,750 | $ | 4.70 | 10,000 | $ | 4.17 | 291,100 | $ | 3.91 |
F-17F-18
Options Outstanding | ||||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Options Exercisable | |||||||||||||||||||
Remaining | Weighted | Weighted | ||||||||||||||||||
Range of | As of | Contractual | Average | As of | Average | |||||||||||||||
Exercise | April 30, | Life In | Exercise | April 30, | Exercise | |||||||||||||||
Prices | 2006 | Years | Price | 2006 | Price | |||||||||||||||
$2.60 | 49,000 | 7.15 | $ | 2.60 | 49,000 | $ | 2.60 | |||||||||||||
$4.17 | 252,100 | 5.41 | $ | 4.17 | 252,100 | $ | 4.17 | |||||||||||||
$4.17-$5.50 | 169,550 | 7.05 | $ | 4.88 | 73,750 | $ | 4.70 | |||||||||||||
$15.00 | 63,000 | 9.47 | $ | 15.00 | — | — | ||||||||||||||
$2.60-$15.00 | 533,650 | 6.57 | $ | 5.53 | 374,850 | $ | 4.07 | |||||||||||||
Year ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In thousands except share | ||||||||||||
and per share data) | ||||||||||||
Pro forma: | ||||||||||||
Net income — as reported | $ | 2,171 | $ | 14,682 | $ | 11,409 | ||||||
Stock based compensation, net of tax | (48 | ) | (42 | ) | (114 | ) | ||||||
Net income — pro forma | $ | 2,123 | $ | 14,640 | $ | 11,295 | ||||||
Earnings per share data | ||||||||||||
Basic — reported | $ | 1.32 | $ | 8.15 | $ | 6.17 | ||||||
Basic — pro forma | $ | 1.29 | $ | 8.13 | $ | 6.11 | ||||||
Diluted — reported | $ | 1.26 | $ | 7.46 | $ | 5.40 | ||||||
Diluted — pro forma | $ | 1.24 | $ | 7.44 | $ | 5.34 | ||||||
Weighted average shares outstanding used in computation: | ||||||||||||
Basic | 1,639,543 | 1,800,930 | 1,848,822 | |||||||||
Diluted | 1,718,460 | 1,967,550 | 2,113,395 | |||||||||
F-18F-19
9. | Income Taxes |
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
U.S. federal statutory income tax rate | 34.0 | % | 35.0 | % | 35.0 | % | ||||||
State and local income taxes, net of federal benefit | 5.2 | 5.7 | 5.5 | |||||||||
Reduction of amount in excess of tax liability | (11.1 | ) | — | — | ||||||||
R&D credit | — | (14.5 | ) | (11.6 | ) | |||||||
Other | 0.3 | 1.2 | 1.1 | |||||||||
Effective Income Tax Rate | 28.4 | % | 27.4 | % | 30.0 | % | ||||||
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
U.S. federal statutory income tax rate | 34.0 | % | 35.0 | % | 35.0 | % | ||||||
State and local income taxes, net of federal benefit | 5.2 | 5.7 | 5.5 | |||||||||
R&D credit | (11.0 | ) | (14.5 | ) | (11.6 | ) | ||||||
Other | 0.2 | 1.2 | 1.1 | |||||||||
Effective Income Tax Rate | 28.4 | % | 27.4 | % | 30.0 | % | ||||||
Year ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Current: | ||||||||||||
Federal | $ | 407 | $ | 5,730 | $5,321 | |||||||
State | 267 | 478 | 922 | |||||||||
674 | 6,208 | 6,243 | ||||||||||
Deferred: | ||||||||||||
Federal | 212 | (149 | ) | (897 | ) | |||||||
State | (27 | ) | (616 | ) | (463 | ) | ||||||
185 | (765 | ) | (1,360 | ) | ||||||||
Change in valuation allowance | — | 88 | (2 | ) | ||||||||
Total income tax expense | $ | 859 | $ | 5,531 | $4,881 | |||||||
F-19F-20
April 30 | ||||||||
2005 | 2006 | |||||||
(In thousands) | ||||||||
Deferred income tax assets: | ||||||||
Book over tax depreciation | $ | 196 | $ | 411 | ||||
Accrued expenses | 600 | 1,672 | ||||||
Allowances, reserves, and other | 534 | 391 | ||||||
Research and development credit carryforwards | 451 | 663 | ||||||
Net operating loss and other | 203 | 207 | ||||||
1,984 | 3,344 | |||||||
Less: valuation allowance | (203 | ) | (201 | ) | ||||
Total deferred income tax assets | $ | 1,781 | $ | 3,143 | ||||
10. | Related Party Transactions |
F-21
F-20
11. | Commitments and Contingencies |
Year ending | ||||
April 30 | ||||
(In thousands) | ||||
2007 | $ | 1,477 | ||
2008 | 1,231 | |||
2009 | 1,259 | |||
2010 | 883 | |||
2011 | 272 | |||
$ | 5,122 | |||
12. | Segment Data |
• | Unmanned Aircraft Systems (“UAS”) — The UAS segment consists primarily of the design and manufacture of small unmanned aircraft systems solutions. | |
• | PosiCharge Fast Charge Systems (“PosiCharge”) — The PosiCharge segment supplies fast charge systems for users of electric industrial vehicle batteries. |
F-22
AeroVironment, Inc. |
• | Energy Technology Center — The Energy Technology Center segment consists of energy development projects and power processing test equipment product sales. |
F-21
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Revenue | ||||||||||||
UAS | $ | 30,372 | $ | 82,249 | $ | 111,104 | ||||||
PosiCharge | 9,111 | 15,642 | 19,928 | |||||||||
Energy Technology Center | 8,197 | 7,264 | 8,325 | |||||||||
Total | 47,680 | 105,155 | 139,357 | |||||||||
Gross margin | ||||||||||||
UAS | 10,161 | 37,235 | 44,558 | |||||||||
PosiCharge | 3,524 | 5,846 | 8,062 | |||||||||
Energy Technology Center | 873 | 3,525 | 4,139 | |||||||||
Total | 14,558 | 46,606 | 56,759 | |||||||||
Research and development | 1,715 | 9,799 | 16,098 | |||||||||
Selling, general and administrative | 9,743 | 16,550 | 24,336 | |||||||||
Income from operations | 3,100 | 20,257 | 16,325 | |||||||||
Other expenses, net | (70 | ) | (44 | ) | (35 | ) | ||||||
Income before income taxes | $ | 3,030 | $ | 20,213 | $ | 16,290 | ||||||
Year Ended April 30 | ||||||||||||
2004 | 2005 | 2006 | ||||||||||
(In thousands) | ||||||||||||
Revenue | ||||||||||||
UAS | $ | 30,372 | $ | 82,249 | $ | 111,104 | ||||||
PosiCharge | 9,111 | 15,642 | 19,928 | |||||||||
Energy Technology Center | 8,197 | 7,264 | 8,325 | |||||||||
Total | 47,680 | 105,155 | 139,357 | |||||||||
Gross margin | ||||||||||||
UAS | 10,161 | 37,235 | 44,558 | |||||||||
PosiCharge | 3,524 | 5,846 | 8,062 | |||||||||
Energy Technology Center | 873 | 3,525 | 4,139 | |||||||||
�� | ||||||||||||
Total | 14,558 | 46,606 | 56,759 | |||||||||
Research and development | 1,715 | 9,799 | 16,098 | |||||||||
Selling, general and administrative | 9,725 | 16,545 | 24,577 | |||||||||
Income from operations | 3,118 | 20,262 | 16,084 | |||||||||
Interest income | 2 | 61 | 333 | |||||||||
Interest expense | (90 | ) | (110 | ) | (127 | ) | ||||||
Income before income taxes | $ | 3,030 | $ | 20,213 | $ | 16,290 | ||||||
F-22F-23
13. | Quarterly Results of Operations (unaudited) |
Three Months Ended | ||||||||||||||||
July 31, | October 30, | January 29, | April 30, | |||||||||||||
2004 | 2004 | 2005 | 2005 | |||||||||||||
(In thousands except per share data) | ||||||||||||||||
Year ended April 30, 2005 | ||||||||||||||||
Revenue | $ | 18,305 | $ | 27,951 | $ | 26,212 | $ | 32,687 | ||||||||
Gross margin | $ | 6,035 | $ | 11,122 | $ | 11,485 | $ | 17,964 | ||||||||
Net income | $ | 1,018 | $ | 4,211 | $ | 3,651 | $ | 5,802 | ||||||||
Net income per share — Basic(1) | $ | 0.60 | $ | 2.30 | $ | 1.99 | $ | 3.16 | ||||||||
Net income per share — Diluted(1) | $ | 0.55 | $ | 2.17 | $ | 1.88 | $ | 2.84 |
Three Months Ended | ||||||||||||||||
July 30, | October 29, | January 28, | April 30, | |||||||||||||
2005 | 2005 | 2006 | 2006 | |||||||||||||
(In thousands except per share data) | ||||||||||||||||
Year ended April 30, 2006 | ||||||||||||||||
Revenue | $ | 30,752 | $ | 42,550 | $ | 35,468 | $ | 30,587 | ||||||||
Gross margin | $ | 11,236 | $ | 17,650 | $ | 15,377 | $ | 12,496 | ||||||||
Net income (loss) | $ | 1,338 | $ | 6,028 | $ | 3,972 | $ | 71 | ||||||||
Net income (loss) per share — Basic | $ | 0.73 | $ | 3.28 | $ | 2.15 | $ | 0.04 | ||||||||
Net income (loss) per share — Diluted | $ | 0.65 | $ | 2.85 | $ | 1.88 | $ | 0.03 |
(1) | Earnings per share is computed independently for each of the quarters presented. The sum of the quarterly earnings per share in fiscal 2005 and 2006 does not equal the total earnings per share computed for the year due to rounding. |
F-23F-24
Additions | ||||||||||||||||||||
Balance at | Charged to | Charged to | Balance at | |||||||||||||||||
Beginning | Costs and | Other | End of | |||||||||||||||||
Description | of Period | Expenses | Accounts | Deductions | Period | |||||||||||||||
Allowance for doubtful accounts for the year ended April 30: | ||||||||||||||||||||
2004 | $ | 32 | $ | 153 | $ | 36 | $ | (186 | ) | $ | 35 | |||||||||
2005 | $ | 35 | $ | 159 | $ | — | $ | (106 | ) | $ | 88 | |||||||||
2006 | $ | 88 | $ | 6 | $ | — | $ | (8 | ) | $ | 86 | |||||||||
Warranty reserve for the year ended April 30: | ||||||||||||||||||||
2004 | $ | 160 | $ | 236 | $ | — | $ | (236 | ) | $ | 160 | |||||||||
2005 | $ | 160 | $ | 315 | $ | — | $ | (193 | ) | $ | 282 | |||||||||
2006 | $ | 282 | $ | 589 | $ | — | $ | (527 | ) | $ | 344 | |||||||||
Reserve for inventory excess and obsolescence for the year ended April 30: | ||||||||||||||||||||
2004 | $ | 364 | $ | 913 | $ | 517 | $ | (1,201 | ) | $ | 593 | |||||||||
2005 | $ | 593 | $ | 2,355 | $ | 1,537 | $ | (3,353 | ) | $ | 1,132 | |||||||||
2006 | $ | 1,132 | $ | — | $ | 505 | $ | (824 | ) | $ | 813 |
F-24F-25
April 30, | July 29, | |||||||
2006 | 2006 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 15,388 | $ | 13,478 | ||||
Restricted cash | 1,532 | 1,555 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $86 in April 30, 2006 and $86 in July 29, 2006 | 21,582 | 14,313 | ||||||
Unbilled receivables and retentions | 4,842 | 5,310 | ||||||
Inventories, net | 11,453 | 11,037 | ||||||
Deferred income taxes | 1,090 | 1,090 | ||||||
Prepaid expenses and other current assets | 621 | 709 | ||||||
Total current assets | 56,508 | 47,492 | ||||||
Property and equipment, net | 6,098 | 6,112 | ||||||
Deferred income taxes | 2,053 | 2,053 | ||||||
Other assets | 119 | 119 | ||||||
Total assets | $ | 64,778 | $ | 55,776 | ||||
Liabilities and shareholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 8,521 | $ | 5,312 | ||||
Wages and related accruals | 8,451 | 5,173 | ||||||
Customer advances | 9,031 | 4,312 | ||||||
Other accrued liabilities | 2,027 | 2,452 | ||||||
Total current liabilities | 28,030 | 17,249 | ||||||
Deferred rent | 408 | 392 | ||||||
Long-term retirement costs | 2,209 | 2,209 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Common stock, no par value: | ||||||||
Authorized shares — 25,000,000 | ||||||||
Issued and outstanding shares — 1,887,489 at April 30, 2006 and 1,935,289 at July 29, 2006 | 1,726 | 2,156 | ||||||
Retained earnings | 32,405 | 33,770 | ||||||
Total shareholders’ equity | 34,131 | 35,926 | ||||||
Total liabilities and shareholders’ equity | $ | 64,778 | $ | 55,776 | ||||
F-25F-26
Three months ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Revenue: | ||||||||
Product sales | $ | 25,933 | $ | 23,844 | ||||
Contract services | 4,819 | 7,713 | ||||||
30,752 | 31,557 | |||||||
Cost of sales: | ||||||||
Product sales | 16,242 | 14,301 | ||||||
Contract services | 3,274 | 5,270 | ||||||
19,516 | 19,571 | |||||||
Gross margin | 11,236 | 11,986 | ||||||
Research and development | 3,509 | 3,841 | ||||||
Selling, general and administrative | 5,628 | 6,132 | ||||||
Income from operations | 2,099 | 2,013 | ||||||
Other (expenses) income, net | (187 | ) | 206 | |||||
Income before income taxes | 1,912 | 2,219 | ||||||
Provision for income taxes | 574 | 854 | ||||||
Net income | $ | 1,338 | $ | 1,365 | ||||
Earnings per share data: | ||||||||
Net income | ||||||||
Basic | $ | 0.73 | $ | 0.71 | ||||
Diluted | $ | 0.65 | $ | 0.63 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 1,838,339 | 1,919,361 | ||||||
Diluted | 2,050,620 | 2,154,890 | ||||||
Three months ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Revenue: | ||||||||
Product sales | $ | 25,933 | $ | 23,844 | ||||
Contract services | 4,819 | 7,713 | ||||||
30,752 | 31,557 | |||||||
Cost of sales: | ||||||||
Product sales | 16,242 | 14,301 | ||||||
Contract services | 3,274 | 5,270 | ||||||
19,516 | 19,571 | |||||||
Gross margin | 11,236 | 11,986 | ||||||
Research and development | 3,509 | 3,841 | ||||||
Selling, general and administrative | 5,822 | 6,132 | ||||||
Income from operations | 1,905 | 2,013 | ||||||
Other income (expense) | ||||||||
Interest income | 37 | 206 | ||||||
Interest expense | (30 | ) | — | |||||
Income before income taxes | 1,912 | 2,219 | ||||||
Provision for income taxes | 574 | 854 | ||||||
Net income | $ | 1,338 | $ | 1,365 | ||||
Earnings per share data: | ||||||||
Net income | ||||||||
Basic | $ | 0.73 | $ | 0.71 | ||||
Diluted | $ | 0.65 | $ | 0.63 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 1,838,339 | 1,919,361 | ||||||
Diluted | 2,050,620 | 2,154,890 | ||||||
F-26F-27
Three months ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Operating activities | ||||||||
Net income | $ | 1,338 | $ | 1,365 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 373 | 667 | ||||||
Long-term retirement costs | 559 | — | ||||||
Tax benefit from grant of stock options | — | 213 | ||||||
Loss on disposition of property and equipment | 185 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 5,803 | 7,269 | ||||||
Unbilled receivables and retentions | (2,584 | ) | (468 | ) | ||||
Inventories | 1,622 | 416 | ||||||
Other assets | (19 | ) | (88 | ) | ||||
Accounts payable | (4,000 | ) | (3,209 | ) | ||||
Customer advances | (4,919 | ) | (4,719 | ) | ||||
Other liabilities | 583 | (2,869 | ) | |||||
Net cash and cash equivalents used in operating activities | (1,059 | ) | (1,423 | ) | ||||
Investing activities | ||||||||
Acquisition of property and equipment | (636 | ) | (681 | ) | ||||
Transfer to restricted cash | — | (23 | ) | |||||
Cash and cash equivalents used in investing activities | (636 | ) | (704 | ) | ||||
Financing activities | ||||||||
Payment of long-term debt | (743 | ) | (6,232 | ) | ||||
Proceeds of long-term debt | 493 | 6,232 | ||||||
Exercise of stock options | — | 217 | ||||||
Net cash (used in) provided by financing activities | (250 | ) | 217 | |||||
Net decrease in cash | (1,945 | ) | (1,910 | ) | ||||
Cash and cash equivalents at beginning of period | 10,060 | 15,388 | ||||||
Cash and cash equivalents at end of period | $ | 8,115 | $ | 13,478 | ||||
Supplemental disclosures of cash flow information | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 38 | $ | 5 | ||||
Income taxes | $ | 69 | $ | 13 |
F-27F-28
1. | Organization and Significant Accounting Policies |
F-28F-29
2. | Inventories, net |
April 30, | July 29, | |||||||
2006 | 2006 | |||||||
(In thousands) | ||||||||
Raw materials | $ | 4,750 | $ | 4,449 | ||||
Work in process | 2,413 | 2,757 | ||||||
Finished goods | 5,103 | 4,661 | ||||||
12,266 | 11,867 | |||||||
Reserve for inventory obsolescence | (813 | ) | (830 | ) | ||||
Inventories, net | $ | 11,453 | $ | 11,037 | ||||
3. | Bank Borrowings |
F-29F-30
4. | Earnings Per Share |
Three Months Ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Denominator for basic earnings per share: | ||||||||
Weighted average common shares | 1,838,339 | 1,919,361 | ||||||
Dilutive effect of employee stock options | 212,281 | 235,529 | ||||||
Denominator for diluted earnings per share | 2,050,620 | 2,154,890 | ||||||
5. | Stock Based Compensation |
F-30F-31
2002 Plan | 1994 Directors’ Plan | 1992 Plan | ||||||||||||||||||||||
Weighted | Weighted- | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Shares | Price | Shares | Price | Shares | Price | |||||||||||||||||||
Outstanding at April 30, 2006 | 232,550 | $ | 7.62 | 10,000 | $ | 4.17 | 291,100 | $ | 3.91 | |||||||||||||||
Options granted | — | — | — | — | — | — | ||||||||||||||||||
Options exercised | (28,600 | ) | 4.79 | (5,000 | ) | 4.17 | (14,200 | ) | 4.17 | |||||||||||||||
Options canceled | (900 | ) | 10.78 | — | — | — | — | |||||||||||||||||
Outstanding at July 29, 2006 | 203,050 | $ | 8.01 | 5,000 | $ | 4.17 | 276,900 | $ | 3.89 | |||||||||||||||
Options exercisable at July 29, 2006 | 57,550 | $ | 4.81 | 5,000 | $ | 4.17 | 276,900 | $ | 3.89 |
Options Outstanding | ||||||||||||||||||||
Weighted | ||||||||||||||||||||
Average | Options Exercisable | |||||||||||||||||||
Remaining | Weighted | Weighted | ||||||||||||||||||
Range of | As of | Contractual | Average | As of | Average | |||||||||||||||
Exercise | July 29, | Life In | Exercise | July 29, | Exercise | |||||||||||||||
Prices | 2006 | Years | Price | 2006 | Price | |||||||||||||||
$2.60 | 49,000 | 6.90 | $ | 2.60 | 49,000 | $ | 2.60 | |||||||||||||
$4.17 | 232,900 | 5.68 | $ | 4.17 | 232,900 | $ | 4.17 | |||||||||||||
$4.48-$5.50 | 140,550 | 6.88 | $ | 4.90 | 57,550 | $ | 4.81 | |||||||||||||
$15.00 | 62,500 | 9.23 | $ | 15.00 | — | $ | 0.00 | |||||||||||||
$2.60-$15.00 | 484,950 | 6.61 | $ | 5.62 | 339,450 | $ | 4.05 | |||||||||||||
6. | Segment Data |
• | Unmanned Aircraft Systems (“UAS”) — The UAS segment consists primarily of the design and manufacture of small unmanned aircraft systems solutions. | |
• | PosiCharge Fast Charge Systems (“PosiCharge”) — The PosiCharge segment supplies fast charge systems for electric industrial vehicle batteries. | |
• | Energy Technology Center — The Energy Technology Center segment consists of energy development projects and power processing test equipment product sales. |
F-31F-32
For the Three Months Ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Revenue | ||||||||
UAS | $ | 24,303 | $ | 24,983 | ||||
PosiCharge | 4,559 | 4,943 | ||||||
Energy Technology Center | 1,890 | 1,631 | ||||||
Total | 30,752 | 31,557 | ||||||
Gross margin | ||||||||
UAS | 8,633 | 9,271 | ||||||
PosiCharge | 1,637 | 1,940 | ||||||
Energy Technology Center | 966 | 775 | ||||||
Total | 11,236 | 11,986 | ||||||
Research and development | 3,509 | 3,841 | ||||||
Selling, general and administrative | 5,628 | 6,132 | ||||||
Income from operations | 2,099 | 2,013 | ||||||
Other expenses, net | (187 | ) | 206 | |||||
Income before income taxes | $ | 1,912 | $ | 2,219 | ||||
For the Three Months Ended | ||||||||
July 30, | July 29, | |||||||
2005 | 2006 | |||||||
Revenue | ||||||||
UAS | $ | 24,303 | $ | 24,983 | ||||
PosiCharge | 4,559 | 4,943 | ||||||
Energy Technology Center | 1,890 | 1,631 | ||||||
Total | 30,752 | 31,557 | ||||||
Gross margin | ||||||||
UAS | 8,633 | 9,271 | ||||||
PosiCharge | 1,637 | 1,940 | ||||||
Energy Technology Center | 966 | 775 | ||||||
Total | 11,236 | 11,986 | ||||||
Research and development | 3,509 | 3,841 | ||||||
Selling, general and administrative | 5,822 | 6,132 | ||||||
Income from operations | 1,905 | 2,013 | ||||||
Interest income | 37 | 206 | ||||||
Interest expense | (30 | ) | — | |||||
Income before income taxes | $ | 1,912 | $ | 2,219 | ||||
F-32F-33
Item 13. | Other Expenses of Issuance and Distribution |
Amount to be | ||||
Item | paid | |||
SEC Registration Fee | $ | 12,305 | ||
NASD Filing Fee | 12,000 | |||
Nasdaq Global Market Listing Fee | 100,000 | |||
Legal Fees and Expenses | * | |||
Accounting Fees and Expenses | * | |||
Printing and Engraving Expenses | * | |||
Blue Sky Fees and Expenses | * | |||
Transfer Agent and Registrar Fees | * | |||
Miscellaneous Expenses | * | |||
Total | $ | * | ||
* | To be completed by amendment. |
Item 14. | Indemnification of Directors and Officers |
II-1
Item 15. | Recent Sales of Unregistered Securities |
Item 16. | Exhibits and Financial Statement Schedules |
II-2
Item 17. | Undertakings |
II-3
By: | /s/ Timothy E. Conver |
Signature | Title | Date | ||||
/s/ Timothy E. Conver Timothy E. Conver | Chief Executive Officer and Director (Principal Executive Officer) | |||||
Stephen C. Wright | Chief Financial Officer (Principal Financial and Accounting Officer) | |||||
Paul B. MacCready | Chairman of the Board of Directors | |||||
Joseph F. Alibrandi | Director | |||||
Kenneth R. Baker | Director |
II-4
Director | ||||||
Murray Gell-Mann | Director | November 2, 2006 | ||||
* Charles R. Holland | Director | |||||
By: /s/ Timothy E. Conver Timothy E. Conver Attorney-in-Fact |
II-5
II-4
Exhibit | ||||
Number | Description | |||
1 | .1* | Form of Underwriting Agreement | ||
3 | .1 | Restated Articles of Incorporation of AeroVironment, Inc., as currently in effect | ||
3 | .2* | Form of Amended and Restated Certificate of Incorporation of AeroVironment, Inc., to be in effect upon completion of the offering | ||
3 | .3 | Amended Bylaws of AeroVironment, Inc., as currently in effect | ||
3 | .4* | Form of Amended and Restated Bylaws of AeroVironment, Inc., to be in effect upon completion of the offering | ||
4 | .1* | Form of AeroVironment, Inc.’s Common Stock Certificate | ||
4 | .2 | Voting Agreement, dated July 29, 2004, among AeroVironment, Inc., P. and J. MacCready Living Trust (Restated), Parker MacCready, Tyler MacCready, Marshall MacCready, the Whiting Family Limited Partnership and Timothy E. Conver | ||
4 | .3 | Irrevocable Proxy, dated October 30, 2000, between W. Ray Morgan and AeroVironment, Inc. | ||
4 | .4 | Proxy for Common Stock of AeroVironment, Inc., dated January 8, 1993, between Marshall MacCready and Paul B. MacCready | ||
4 | .5 | Proxy for Common Stock of AeroVironment, Inc., dated January 14, 1993, between Tyler MacCready and Paul B. MacCready | ||
4 | .6 | Proxy for Common Stock of AeroVironment, Inc., dated January 14, 1993, between Parker MacCready and Paul B. MacCready | ||
5 | .1* | Opinion of Latham & Watkins LLP | ||
10 | .1*# | Form of Director and Executive Officer Indemnification Agreement | ||
10 | .2# | AeroVironment, Inc. Nonqualified Stock Option Plan | ||
10 | .3# | Form of Nonqualified Stock Option Agreement pursuant to the AeroVironment, Inc. Nonqualified Stock Option Plan | ||
10 | .4# | AeroVironment, Inc. Directors’ Nonqualified Stock Option Plan | ||
10 | .5# | Form of Directors’ Nonqualified Stock Option Agreement pursuant to the AeroVironment, Inc. Directors’ Nonqualified Stock Option Plan | ||
10 | .6# | AeroVironment, Inc. 2002 Equity Incentive Plan | ||
10 | .7# | Form of AeroVironment, Inc. 2002 Equity Incentive Plan Stock Option Agreement | ||
10 | .8*# | Director Equity Compensation Policy | ||
10 | .9*# | AeroVironment, Inc. 2006 Equity Incentive Plan | ||
10 | .10*# | Form of Stock Option Agreement pursuant to the AeroVironment, Inc. 2006 Equity Incentive Plan | ||
10 | .11# | AeroVironment, Inc. Supplemental Executive Retirement Plan, dated May 19, 2005 | ||
10 | .12 | Sublease Agreement, dated February 17, 2005, among AeroVironment, Inc., L-3 Communications Corporation and Thermotrex Corporation, for the property located at 900 Enchanted Way, Simi Valley, California 93065 | ||
10 | .13 | Standard Industrial/Commercial Single-Tenant Lease, dated August 8, 2005, between AeroVironment, Inc. and FKT Associates, for the property located at 1960 Walker Ave., Monrovia, California 91016 | ||
10 | .14 | Business Loan Agreement, dated June 16, 2005, between AeroVironment, Inc. and California Bank & Trust | ||
10 | .15† | AV Direct Project Request, dated July 7, 2005, between AeroVironment, Inc. and Marine Corps System Command | ||
10 | .16† | Award Contract, dated December 22, 2005, between AeroVironment, Inc. and Marine Corps System Command | ||
10 | .17† | Award Contract, dated August 15, 2005, between AeroVironment, Inc. and U.S. Army Aviation & Missile Command | ||
10 | .18† | Award Contract, dated September 21, 2004, between AeroVironment, Inc. and Natick Contracting Division |
Exhibit | ||||
Number | Description | |||
1 | .1** | Form of Underwriting Agreement | ||
3 | .1* | Restated Articles of Incorporation of AeroVironment, Inc., as currently in effect | ||
3 | .2 | Form of Amended and Restated Certificate of Incorporation of AeroVironment, Inc., to be in effect upon completion of the offering | ||
3 | .3* | Amended Bylaws of AeroVironment, Inc., as currently in effect | ||
3 | .4 | Form of Amended and Restated Bylaws of AeroVironment, Inc., to be in effect upon completion of the offering | ||
4 | .1** | Form of AeroVironment, Inc.’s Common Stock Certificate | ||
4 | .2* | Voting Agreement, dated July 29, 2004, among AeroVironment, Inc., P. and J. MacCready Living Trust (Restated), Parker MacCready, Tyler MacCready, Marshall MacCready, the Whiting Family Limited Partnership and Timothy E. Conver | ||
4 | .3* | Irrevocable Proxy, dated October 30, 2000, between W. Ray Morgan and AeroVironment, Inc. | ||
4 | .4* | Proxy for Common Stock of AeroVironment, Inc., dated January 8, 1993, between Marshall MacCready and Paul B. MacCready | ||
4 | .5* | Proxy for Common Stock of AeroVironment, Inc., dated January 14, 1993, between Tyler MacCready and Paul B. MacCready | ||
4 | .6* | Proxy for Common Stock of AeroVironment, Inc., dated January 14, 1993, between Parker MacCready and Paul B. MacCready | ||
5 | .1** | Opinion of Latham & Watkins LLP | ||
10 | .1# | Form of Director and Executive Officer Indemnification Agreement | ||
10 | .2*# | AeroVironment, Inc. Nonqualified Stock Option Plan | ||
10 | .3*# | Form of Nonqualified Stock Option Agreement pursuant to the AeroVironment, Inc. Nonqualified Stock Option Plan | ||
10 | .4*# | AeroVironment, Inc. Directors’ Nonqualified Stock Option Plan | ||
10 | .5*# | Form of Directors’ Nonqualified Stock Option Agreement pursuant to the AeroVironment, Inc. Directors’ Nonqualified Stock Option Plan | ||
10 | .6*# | AeroVironment, Inc. 2002 Equity Incentive Plan | ||
10 | .7*# | Form of AeroVironment, Inc. 2002 Equity Incentive Plan Stock Option Agreement | ||
10 | .8**# | Director Equity Compensation Policy | ||
10 | .9# | AeroVironment, Inc. 2006 Equity Incentive Plan | ||
10 | .10**# | Form of Stock Option Agreement pursuant to the AeroVironment, Inc. 2006 Equity Incentive Plan | ||
10 | .11*# | AeroVironment, Inc. Supplemental Executive Retirement Plan, dated May 19, 2005 | ||
10 | .12* | Sublease Agreement, dated February 17, 2005, among AeroVironment, Inc., L-3 Communications Corporation and Thermotrex Corporation, for the property located at 900 Enchanted Way, Simi Valley, California 93065 | ||
10 | .13* | Standard Industrial/Commercial Single-Tenant Lease, dated August 8, 2005, between AeroVironment, Inc. and FKT Associates, for the property located at 1960 Walker Ave., Monrovia, California 91016 | ||
10 | .14* | Business Loan Agreement, dated June 16, 2005, between AeroVironment, Inc. and California Bank & Trust | ||
10 | .15*† | AV Direct Project Request, dated July 7, 2005, between AeroVironment, Inc. and Marine Corps System Command | ||
10 | .16*† | Award Contract, dated December 22, 2005, between AeroVironment, Inc. and Marine Corps System Command | ||
10 | .17*† | Award Contract, dated August 15, 2005, between AeroVironment, Inc. and U.S. Army Aviation & Missile Command | ||
10 | .18*† | Award Contract, dated September 21, 2004, between AeroVironment, Inc. and Natick Contracting Division |
Exhibit | ||||
Number | Description | |||
10 | .19† | Award Contract, dated January 2, 2004, between AeroVironment, Inc. and U.S. Army Aviation & Missile Command | ||
10 | .20# | Standard Consulting Agreement, dated February 1, 2004, between AeroVironment, Inc. and Charles R. Holland | ||
10 | .21# | Standard Consulting Agreement, dated November 1, 2005, between AeroVironment, Inc. and Charles R. Holland | ||
10 | .22# | Promissory Note, dated June 30, 2004, between AeroVironment, Inc. and Timothy E. Conver | ||
10 | .23# | Retiree Medical Plan | ||
21 | .1 | Subsidiaries of AeroVironment, Inc. | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm | ||
23 | .2* | Consent of Latham & Watkins LLP (included in Exhibit 5.1) | ||
24 | .1 | Power of Attorney (See page II-4) |
Exhibit | ||||
Number | Description | |||
10 | .19*† | Award Contract, dated January 2, 2004, between AeroVironment, Inc. and U.S. Army Aviation & Missile Command | ||
10 | .20*# | Standard Consulting Agreement, dated February 1, 2004, between AeroVironment, Inc. and Charles R. Holland | ||
10 | .21*# | Standard Consulting Agreement, dated November 1, 2005, between AeroVironment, Inc. and Charles R. Holland | ||
10 | .22*# | Promissory Note, dated June 30, 2004, between AeroVironment, Inc. and Timothy E. Conver | ||
10 | .23*# | Retiree Medical Plan | ||
21 | .1* | Subsidiaries of AeroVironment, Inc. | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm | ||
23 | .2** | Consent of Latham & Watkins LLP (included in Exhibit 5.1) | ||
24 | .1* | Power of Attorney |
* | Previously filed. |
** | To be filed by amendment. |
† | Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from the Registration Statement and submitted separately to the SEC. | |
# | Indicates management contract or compensatory plan. |