Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jul. 29, 2017 | Aug. 22, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | AeroVironment Inc | |
Entity Central Index Key | 1,368,622 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 29, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --04-30 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 23,840,300 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 117,473 | $ 79,904 |
Short-term investments | 107,831 | 119,971 |
Accounts receivable, net of allowance for doubtful accounts of $469 at July 29, 2017 and $291 at April 30, 2017 | 30,685 | 74,361 |
Unbilled receivables and retentions | 10,753 | 14,120 |
Inventories, net | 72,017 | 60,076 |
Income tax receivable | 2,969 | |
Prepaid expenses and other current assets | 5,266 | 5,653 |
Total current assets | 346,994 | 354,085 |
Long-term investments | 35,844 | 42,096 |
Property and equipment, net | 20,317 | 19,220 |
Deferred income taxes | 15,646 | 15,089 |
Other assets | 1,938 | 2,010 |
Total assets | 420,739 | 432,500 |
Current liabilities: | ||
Accounts payable | 13,966 | 20,283 |
Wages and related accruals | 10,608 | 12,966 |
Income taxes payable | 1,418 | |
Customer advances | 4,593 | 3,317 |
Other current liabilities | 8,530 | 10,079 |
Total current liabilities | 37,697 | 48,063 |
Deferred rent | 1,673 | 1,719 |
Capital lease obligations - net of current portion | 104 | 161 |
Other non-current liabilities | 184 | 184 |
Deferred tax liability | 79 | 116 |
Liability for uncertain tax positions | 64 | 64 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value: Authorized shares—10,000,000; none issued or outstanding at July 29, 2017 and April 30, 2017 | ||
Common stock, $0.0001 par value: Authorized shares—100,000,000 Issued and outstanding shares—23,840,300 shares at July 29, 2017 and 23,630,419 at April 30, 2017 | 2 | 2 |
Additional paid-in capital | 165,359 | 162,150 |
Accumulated other comprehensive loss | (125) | (127) |
Retained earnings | 215,486 | 219,929 |
Total AeroVironment stockholders' equity | 380,722 | 381,954 |
Noncontrolling interest | 216 | 239 |
Total equity | 380,938 | 382,193 |
Total liabilities and stockholders' equity | $ 420,739 | $ 432,500 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 469 | $ 291 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, Authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, Authorized shares | 100,000,000 | 100,000,000 |
Common stock, Issued shares | 23,840,300 | 23,630,419 |
Common stock, outstanding shares | 23,840,300 | 23,630,419 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Revenue: | ||
Product sales | $ 31,091,000 | $ 15,737,000 |
Contract services | 12,673,000 | 20,481,000 |
Total revenue | 43,764,000 | 36,218,000 |
Cost of sales: | ||
Product sales | 24,217,000 | 15,222,000 |
Contract services | 7,917,000 | 14,313,000 |
Total cost of sales | 32,134,000 | 29,535,000 |
Gross margin: | ||
Product sales | 6,874,000 | 515,000 |
Contract services | 4,756,000 | 6,168,000 |
Total gross margin | 11,630,000 | 6,683,000 |
Selling, general and administrative | 13,331,000 | 13,663,000 |
Research and development | 6,461,000 | 8,600,000 |
Loss from operations | (8,162,000) | (15,580,000) |
Other income (expense): | ||
Interest income, net | 512,000 | 375,000 |
Other income (expense), net | 4,000 | (300,000) |
Loss before income taxes | (7,646,000) | (15,505,000) |
Benefit for income taxes | (3,180,000) | (3,863,000) |
Net loss | (4,466,000) | (11,642,000) |
Net loss attributable to noncontrolling interest | 23,000 | |
Net loss attributable to AeroVironment | $ (4,443,000) | $ (11,642,000) |
Loss per share attributable to AeroVironment: | ||
Basic (in dollars per share) | $ (0.19) | $ (0.51) |
Diluted (in dollars per share) | $ (0.19) | $ (0.51) |
Weighted average shares outstanding: | ||
Basic (in shares) | 23,336,305 | 22,956,607 |
Diluted (in shares) | 23,336,305 | 22,956,607 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (4,466) | $ (11,642) |
Other comprehensive income: | ||
Unrealized gain on investments, net of deferred tax expense of $2 and $12, respectively | 2 | 18 |
Total comprehensive loss | (4,464) | (11,624) |
Net loss attributable to noncontrolling interest | 23 | |
Total comprehensive loss | $ (4,441) | $ (11,624) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Consolidated Statements of Comprehensive Loss | ||
Unrealized gain (loss) on investments, net of tax portion | $ 4 | $ 12 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Operating activities | ||
Net loss | $ (4,466) | $ (11,642) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,862 | 1,653 |
Loss from equity method investments | 72 | |
Impairment of long-lived assets | 9 | |
Provision for doubtful accounts | 211 | 171 |
(Gains) losses on foreign currency transactions | (106) | 226 |
Deferred income taxes | (596) | |
Stock-based compensation | 1,397 | 992 |
Tax benefit from exercise of stock options | 22 | |
Gain on disposition of property and equipment | (7) | |
Amortization of held-to-maturity investments | 474 | 661 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 43,577 | 23,019 |
Unbilled receivables and retentions | 3,367 | 4,406 |
Inventories | (11,941) | (6,619) |
Income tax receivable | (2,969) | (4,250) |
Prepaid expenses and other assets | 377 | (17) |
Accounts payable | (6,238) | (6,336) |
Other liabilities | (3,676) | (3,594) |
Net cash provided by (used in) operating activities | 21,282 | (1,243) |
Investing activities | ||
Acquisition of property and equipment | (2,973) | (2,634) |
Redemptions of held-to-maturity investments | 59,280 | 28,820 |
Purchases of held-to-maturity investments | (41,806) | (27,487) |
Proceeds from the sale of property and equipment | 7 | |
Sales and redemptions of available-for-sale investments | 450 | 400 |
Net cash provided by (used in) investing activities | 14,951 | (894) |
Financing activities | ||
Principal payments of capital lease obligations | (92) | (95) |
Tax withholding payment related to net settlement of equity awards | (212) | |
Exercise of stock options | 1,640 | 258 |
Net cash provided by financing activities | 1,336 | 163 |
Net increase (decrease) in cash and cash equivalents | 37,569 | (1,974) |
Cash and cash equivalents at beginning of period | 79,904 | 124,287 |
Cash and cash equivalents at end of period | 117,473 | 122,313 |
Cash paid during the period for: | ||
Income taxes | 1,803 | 1,786 |
Non-cash activities | ||
Unrealized gain on investments, net of deferred tax expense of $2 and $12, respectively | 2 | 18 |
Reclassification from share-based liability compensation to equity | 384 | 307 |
Acquisitions of property and equipment included in accounts payable | $ 644 | $ 321 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Consolidated Statements of Cash Flows | ||
Unrealized change in fair value on long-term investments recorded in other comprehensive income loss, net of tax expenses (benefit) | $ 4 | $ 12 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 3 Months Ended |
Jul. 29, 2017 | |
Organization and Significant Accounting Policies | |
Organization and Significant Accounting Policies | 1. Organization and Significant Accounting Policies Organization AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, support and operation of unmanned aircraft systems (“UAS”) and efficient energy systems (“EES”) for various industries and governmental agencies. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the three months ended July 29, 2017 are not necessarily indicative of the results for the full year ending April 30, 2018. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2017, included in the Company’s Annual Report on Form 10-K. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements include the balance sheet and results of operations of Altoy Savunma Sanayi ve Havacilik Anonim Sirketi (“Altoy”), in which the Company increased its ownership to a controlling interest of 85% during the fourth quarter of the fiscal year ended April 30, 2017. Prior to the increase in ownership, the Company's investment in Altoy was accounted for under the equity method. In July 2016, the Company dissolved Charger Bicycles, LLC, the results of which were not material to the consolidated financial statements. During the three months ended October 29, 2016, the Company dissolved Skytower, LLC and Regenerative Fuel Cell Systems, LLC, the results of which were not material to the consolidated financial statements. Recently Adopted Accounting Standards In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. This ASU eliminates from U.S. GAAP the requirement to measure inventory at the lower of cost or market. Market under the previous requirement could be replacement cost, net realizable value, or net realizable value less a normal profit margin. Entities within the scope of this update will now be required to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory using LIFO or the retail inventory method. The Company’s adoption of ASU No. 2015-11 effective May 1, 2017 did not have a material impact on its consolidated financial statements. Segments The Company’s products are sold and divided among two reportable segments to reflect the Company’s strategic goals. Operating segments are defined as components of an enterprise from which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer, who reviews the revenue and gross margin results for each of these segments in order to make resource allocation decisions, including the focus of research and development (“R&D”) activities and performance assessment. The Company’s reportable segments are business units that offer different products and services and are managed separately. Investments The Company’s investments are accounted for as held-to-maturity and available-for-sale and reported at amortized cost and fair value, respectively. Fair Values of Financial Instruments Fair values of cash and cash equivalents, accounts receivable, unbilled receivables, retentions and accounts payable approximate cost due to the short period of time to maturity. Government Contracts Payments to the Company on government cost reimbursable contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company. For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. Historically, the Company has not experienced material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured. During the fiscal year ended April 30, 2017, the Company settled rates for its incurred cost claims with the DCAA for fiscal years 2011 through 2014 without payment of any consideration. At July 29, 2017 and April 30, 2017, the Company did not have any remaining reserves for incurred cost claim audits. Loss Per Share Basic loss per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock. The reconciliation of basic to diluted shares is as follows: Three Months Ended July 29, 2017 July 30, 2016 Denominator for basic loss per share: Weighted average common shares outstanding, excluding unvested restricted stock 23,336,305 22,956,607 Dilutive effect of employee stock options and unvested restricted stock — — Denominator for diluted loss per share Due to the net loss for the three months ended July 29, 2017 and July 30, 2016, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive. Potentially dilutive shares not included in the computation of diluted weighted average common shares because their effect would have been anti-dilutive were 256,011 and 302,332 for the three months ended July 29, 2017 and July 30, 2016, respectively. Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-01, Business Combinations – Clarifying the definition of a business (Topic 805). This ASU clarifies the definition of a business with the objective of providing a more robust framework to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that fiscal year, with early adoption permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230). This ASU adds and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods therein, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires the lessee to recognize the assets and liabilities for the rights and obligations created by leases with terms of 12 months or more. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. The Company currently does not hold a large number of leases that are classified as operating leases under the existing lease standard, with the only significant leases being the Company’s various property leases. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard was originally effective for reporting periods beginning after December 15, 2016 and early adoption was not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date. This update approved a one-year delay of the effective date to reporting periods beginning after December 15, 2017, while permitting companies to voluntarily adopt the new standard as of the original effective date. Since the issuance of ASU 2014-09, the FASB has issued several amendments to provide additional supplemental guidance on certain aspects of the original pronouncement. The core principle of ASU 2014-09 is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. In adopting the guidance, companies are permitted to select between two transition methods: (1) a full retrospective transition method with the application of the new guidance to each prior reporting period presented, or (2) a retrospective transition method that recognizes the cumulative effect on prior periods at the date of adoption together with additional footnote disclosures. The Company currently expects to adopt ASU 2014-09 on May 1, 2018 using the retrospective transition method. The Company is continuing to assess the potential impact of this guidance, including the impact on those areas currently subject to industry-specific guidance such as government contract accounting. As part of its assessment, the Company is reviewing representative samples of customer contracts to determine the impact on revenue recognition under the new guidance. The Company’s contracts with the U.S. government contain provisions that, among other things, allow the government to unilaterally terminate the contract for convenience (in whole or in part), pay the Company for costs incurred plus a reasonable profit and take control of any work in process. The Company is currently evaluating its contracts with the U.S. government to determine whether: (i) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (ii) the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. Revenues for contracts meeting either of these criteria will be recognized over the performance period using an acceptable measure of progress under the new standard. |
Investments
Investments | 3 Months Ended |
Jul. 29, 2017 | |
Investments | |
Investments | 2. Investments Investments consist of the following (in thousands): July 29, April 30, 2017 2017 Short-term investments: Held-to-maturity securities: Municipal securities $ 37,164 $ 47,437 U.S. government securities 16,104 14,515 Corporate bonds 52,063 55,519 Certificates of deposit 2,500 2,500 Total held-to-maturity and short-term investments $ 107,831 $ 119,971 Long-term investments: Held-to-maturity securities: Municipal securities $ 4,751 $ 8,942 U.S. government securities 29,040 22,540 Corporate bonds — 8,117 Total held-to-maturity investments 33,791 39,599 Available-for-sale securities: Auction rate securities 2,053 2,497 Total available-for-sale investments 2,053 2,497 Total long-term investments $ 35,844 $ 42,096 Held-To-Maturity Securities As of July 29, 2017 and April 30, 2017, the balance of held-to-maturity securities consisted of state and local government municipal securities, U.S. treasury securities, U.S. government-guaranteed agency securities, U.S. government-sponsored agency debt securities, certificates of deposit and highly rated corporate bonds. Interest earned from these investments is recorded in interest income. The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of July 29, 2017 were as follows (in thousands): July 29, 2017 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Municipal securities $ 41,915 $ 32 $ (6) $ 41,941 U.S. government securities 45,144 2 (48) 45,098 Corporate bonds 52,063 4 (66) 52,001 Certificates of deposit 2,500 1 — 2,501 Total held-to-maturity investments $ 141,622 $ 39 $ (120) $ 141,541 The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of April 30, 2017 were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Municipal securities $ 56,379 $ 30 $ (21) $ 56,388 U.S. government securities 37,055 2 (41) 37,016 Corporate bonds 63,636 9 (85) 63,560 Certificates of deposit 2,500 1 — 2,501 Total held-to-maturity investments $ 159,570 $ 42 $ (147) $ 159,465 The amortized cost and fair value of the held-to-maturity securities by contractual maturity at July 29, 2017 were as follows (in thousands): Cost Fair Value Due within one year $ 107,831 $ 107,768 Due after one year through five years 33,791 33,773 Total $ 141,622 $ 141,541 Available-For-Sale Securities Auction Rate Securities As of July 29, 2017 and April 30, 2017, the entire balance of available-for-sale auction rate securities, consisted of two investment grade auction rate municipal bonds, with maturities of approximately 2 and 17 years, respectively. These investments have characteristics similar to short-term investments, because at pre-determined intervals, generally ranging from 30 to 35 days, there is a new auction process at which the interest rates for these securities are reset to current interest rates. At the end of such period, the Company chooses to roll-over its holdings or redeem the investments for cash. A market maker facilitates the redemption of the securities and the underlying issuers are not required to redeem the investment within 365 days. Interest earned from these investments is recorded in interest income. During the fourth quarter of the fiscal year ended April 30, 2008, the Company began experiencing failed auctions on some of its auction rate securities. A failed auction occurs when a buyer for the securities cannot be obtained and the market maker does not buy the security for its own account. The Company continues to earn interest on the investments that failed to settle at auction, at the maximum contractual rate until the next auction occurs. In the event the Company needs to access funds invested in these auction rate securities, the Company may not be able to liquidate these securities at the fair value recorded on July 29, 2017, until a future auction of these securities is successful or a buyer is found outside of the auction process. As a result of the failed auctions, the fair values of these securities are estimated utilizing a discounted cash flow analysis as of July 29, 2017. The analysis considers, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows, and the estimated date upon which the security is expected to have a successful auction. Based on the Company’s ability to access its cash and cash equivalents, expected operating cash flows, and other sources of cash, the Company does not anticipate that the current lack of liquidity of these investments will affect its ability to operate its business in the ordinary course. The Company believes the current lack of liquidity of these investments is temporary and expects that the securities will be redeemed or refinanced at some point in the future. The Company will continue to monitor the value of its auction rate securities at each reporting period for a possible impairment if a further decline in fair value occurs. The auction rate securities have been in an unrealized loss position for more than 12 months. The Company has the ability and the intent to hold these investments until a recovery of fair value, which may be at maturity. As of July 29, 2017, the Company did not consider these investments to be other-than-temporarily impaired. The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the auction rate securities as of July 29, 2017, were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Auction rate securities $ 2,250 $ — $ (197) $ 2,053 Total available-for-sale investments $ 2,250 $ — $ (197) $ 2,053 The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the auction rate securities as of April 30, 2017, were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Auction rate securities $ 2,700 $ — $ (203) $ 2,497 Total available-for-sale investments $ 2,700 $ — $ (203) $ 2,497 The amortized cost and fair value of the auction rate securities by contractual maturity at July 29, 2017, were as follows (in thousands): Cost Fair Value Due after one through five years $ 250 $ 251 Due after 10 years 2,000 1,802 Total $ 2,250 $ 2,053 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Jul. 29, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows: · Level 1 — Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date. · Level 2 — Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data. · Level 3 — Inputs to the valuation that are unobservable inputs for the asset or liability. The Company’s financial assets measured at fair value on a recurring basis at July 29, 2017, were as follows (in thousands): Fair Value Measurement Using Significant Quoted prices in other Significant active markets for observable unobservable identical assets inputs inputs Description (Level 1) (Level 2) (Level 3) Total Auction rate securities $ — $ — $ 2,053 $ 2,053 Total $ — $ — $ 2,053 $ 2,053 The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Significant Unobservable Inputs Description (Level 3) Balance at May 1, 2017 $ 2,497 Transfers to Level 3 — Total gains (realized or unrealized) Included in earnings — Included in other comprehensive income 6 Purchases, issuances and settlements, net (450) Balance at July 29, 2017 $ 2,053 The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at July 29, 2017 $ — The auction rate securities are valued using a discounted cash flow model. The analysis considers, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows and the estimated date upon which the security is expected to have a successful auction. As of July 29, 2017, the inputs used in the Company’s discounted cash flow analysis included current coupon rates of 1.59% and 1.59%, estimated redemption periods of 2 and 17 years and discount rates of 2.15% and 12.36%. The discount rates were based on market rates for municipal bond securities, as adjusted for a risk premium to reflect the lack of liquidity of these investments. |
Inventories, net
Inventories, net | 3 Months Ended |
Jul. 29, 2017 | |
Inventories, net | |
Inventories, net | 4. Inventories, net Inventories consist of the following (in thousands): July 29, April 30, 2017 2017 Raw materials $ 19,378 $ 18,365 Work in process 17,825 16,168 Finished goods 40,782 30,793 Inventories, gross 77,985 65,326 Reserve for inventory excess and obsolescence (5,968) (5,250) Inventories, net $ 72,017 $ 60,076 |
Warranty Reserves
Warranty Reserves | 3 Months Ended |
Jul. 29, 2017 | |
Warranty Reserves | |
Warranty Reserves | 5. Warranty Reserves The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. The warranty reserve is included in other current liabilities. The related expense is included in cost of sales. Warranty reserve activity is summarized as follows for the three months ended July 29, 2017 and July 30, 2016, respectively (in thousands): Three Months Ended July 29, July 30, 2017 2016 Beginning balance $ 3,231 $ 4,134 Warranty expense 447 192 Changes in estimates related to pre-existing warranties — 1,407 Warranty costs settled (793) (510) Ending balance $ 2,885 $ 5,223 During the three months ended July 30, 2016, the Company revised its estimates based on the results of additional engineering studies and recorded incremental warranty reserve charges totaling $1,407,000 related to the estimated costs to repair a component of certain small UAS that were delivered in prior periods. At July 29, 2017, the total remaining warranty reserve related to the estimated costs to repair the impacted UAS was $5,000. As of July 29, 2017, a total of $2,198,000 of costs related to this warranty have been incurred. |
Intangibles
Intangibles | 3 Months Ended |
Jul. 29, 2017 | |
Intangibles | |
Intangibles | 6. Intangibles Intangibles are included in other assets on the balance sheet. The components of intangibles are as follows: July 29, April 30, 2017 2017 (In thousands) Licenses $ 818 $ 818 Customer relationships 1,600 1,600 Trademarks and tradenames 60 60 Other 3 3 Less accumulated amortization (737) (658) Intangibles, net $ 1,744 $ 1,823 The customer relationships, trademarks and tradenames, and other intangible assets were recognized in conjunction with the Company’s acquisition of a controlling interest in Altoy on February 1, 2017. |
Goodwill
Goodwill | 3 Months Ended |
Jul. 29, 2017 | |
Goodwill. | |
Goodwill | 7. Goodwill The following table presents the changes in the Company’s goodwill balance (in thousands): Balance at April 30, 2017 $ 122 Changes in goodwill - Balance at July 29, 2017 $ 122 Goodwill is attributable to the acquisition of a controlling interest in Altoy on February 1, 2017. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss and Reclassifications | 3 Months Ended |
Jul. 29, 2017 | |
Accumulated Other Comprehensive Loss and Reclassifications | |
Accumulated Other Comprehensive Loss and Reclassifications | 8. Accumulated Other Comprehensive Loss and Reclassifications Adjustments The components of accumulated other comprehensive loss and adjustments are as follows (in thousands): Available-for-Sale Accumulated Other Securities Comprehensive Loss Balance, net of $76 of taxes, as of April 30, 2017 $ (127) $ (127) Reclassifications out of accumulated other comprehensive loss, net of taxes — — Unrealized gains, net of $4 of taxes 2 2 Balance, net of $72 of taxes, as of July 29, 2017 $ (125) $ (125) |
Customer-Funded Research & Deve
Customer-Funded Research & Development | 3 Months Ended |
Jul. 29, 2017 | |
Customer-Funded Research & Development | |
Customer-Funded Research & Development | 9. Customer-Funded Research & Development Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform R&D activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the R&D services are performed. Revenue from customer-funded R&D was approximately $6,235,000 and $14,737,000 for the three months ended July 29, 2017 and July 30, 2016, respectively. |
Long-Term Incentive Awards
Long-Term Incentive Awards | 3 Months Ended |
Jul. 29, 2017 | |
Long-Term Incentive Awards | |
Long-Term Incentive Awards | 10. Long-Term Incentive Awards During the three months ended July 29, 2017, the Company granted awards under its amended and restated 2006 Equity Incentive Plan (the “Restated 2006 Plan”) to key employees (“Fiscal 2018 LTIP”). Awards under the Fiscal 2018 LTIP consist of: (i) time-based restricted stock awards which vest in equal tranches in July 2018, July 2019 and July 2020, and (ii) performance-based restricted stock units (“PRSUs”) which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2020. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100% for each such metric. Threshold achievment levels for which the PRSUs would vest at 50% for each such metric and maximum achievement levels for which such awards would vest at 200% for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. As of July 29, 2017, no compensation cost has been recognized for the performance-based portion of the Fiscal 2018 LTIP, as the Company concluded that it was not probable that the performance conditions will be achieved. At July 29, 2017, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2018 LTIP is $2,850,000. During the three months ended July 29, 2017, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2017 LTIP”). Awards under the Fiscal 2017 LTIP consist of: (i) time-based restricted stock awards which vest in equal tranches in July 2017, July 2018 and July 2019, and (ii) PRSUs which vest based on the Company’s achievement of revenue and operating income targets for the three-year period ending April 30, 2019. At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100% for each such metric. Threshold achievement levels for which the PRSUs would vest at 50% for each such metric and maximum achievement levels for which such awards would vest at 200% for each such metric were also established. The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and operating income targets for the performance period. Settlement of the PRSUs will be made in fully-vested shares of common stock. As of July 29, 2017, no compensation cost has been recognized for the performance-based portion of the Fiscal 2017 LTIP, as the Company concluded that it was not probable that the performance conditions will be achieved. At July 29, 2017, the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2017 LTIP is $2,630,000. During the year ended April 30, 2016, the Company granted a three-year performance award under the Restated 2006 Plan to key employees (“Fiscal 2016 LTIP”). The performance period for each three-year award is the three-year period ending April 30, 2018. A target payout was established at the award date. The actual payout at the end of the performance period will be calculated based upon the Company’s achievement of revenue and gross margin for the performance period. Payouts will be made in cash and restricted stock units. Upon vesting of the restricted stock units, the Company has the discretion to settle the restricted stock units in cash or stock. As of July 29, 2017, no compensation cost has been recognized for this award as the Company has concluded that it was not probable that the performance conditions will be achieved. At July 29, 2017, the maximum compensation expense that may be recorded for the Fiscal 2016 LTIP is $2,690,000. At each reporting period, the Company reassesses the probability of achieving the performance targets. The estimation of whether the performance targets will be achieved requires judgment, and, to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised. |
Income Taxes
Income Taxes | 3 Months Ended |
Jul. 29, 2017 | |
Income Taxes | |
Income Taxes | 11. Income Taxes For the three months ended July 29, 2017, the Company recorded a (benefit) for income taxes of $(3,180,000), yielding an effective tax rate of 41.6%. For the three months ended July 30, 2016, the Company recorded a (benefit) for income taxes of $(3,863,000), yielding an effective tax rate of 24.9%. The variance from statutory rates for the three months ended July 29, 2017 was primarily due to federal R&D credits and the recording of discrete excess tax benefits of $1,025,000 resulting from the vesting of restricted stock awards and exercises of stock options. The variance from statutory rates for the three months ended July 30, 2016 was primarily due to federal R&D credits and the reversal of a $968,000 reserve, including the related interest, for uncertain tax positions due to the settlement of prior fiscal year audits recorded during the first quarter of fiscal 2017. |
Share Repurchase
Share Repurchase | 3 Months Ended |
Jul. 29, 2017 | |
Share Repurchase | |
Share Repurchase | 12. Share Repurchase In September 2015, the Company’s Board of Directors authorized a program to repurchase up to $25,000,000 of the Company’s common stock with no specified termination date for the program. No shares were repurchased under the program during the three months ended July 29, 2017. As of July 29, 2017 and April 30, 2017, approximately $21.2 million remained authorized for future repurchases under this program. |
Segment Data
Segment Data | 3 Months Ended |
Jul. 29, 2017 | |
Segment Data | |
Segment Data | 13. Segment Data The Company’s product segments are as follows: · Unmanned Aircraft Systems — The UAS segment focuses primarily on the design, development, production, support and operation of innovative UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects to increase the security and effectiveness of the operations of the Company’s customers. · Efficient Energy Systems — The EES segment focuses primarily on the design, development, production, marketing, support and operation of innovative efficient electric energy systems that address the growing demand for electric transportation solutions. The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other. Depreciation and amortization related to the manufacturing of goods is included in gross margin for the segments. The Company does not discretely allocate assets to its operating segments, nor does the CODM evaluate operating segments using discrete asset information. Consequently, the Company operates its financial systems as a single segment for accounting and control purposes, maintains a single indirect rate structure across all segments, has no inter-segment sales or corporate elimination transactions, and maintains limited financial statement information by segment. The segment results are as follows (in thousands): Three Months Ended July 29, July 30, 2017 2016 Revenue: UAS $ 36,250 $ 30,497 EES 7,514 5,721 Total 43,764 36,218 Cost of sales: UAS 26,408 25,083 EES 5,726 4,452 Total 32,134 29,535 Gross margin: UAS 9,842 5,414 EES 1,788 1,269 Total 11,630 6,683 Selling, general and administrative 13,331 13,663 Research and development 6,461 8,600 Loss from operations (8,162) (15,580) Other income (expense): Interest income, net 512 375 Other income (expense), net 4 (300) Loss before income taxes $ (7,646) $ (15,505) |
Organization and Significant 22
Organization and Significant Accounting Policies (Policies) | 3 Months Ended |
Jul. 29, 2017 | |
Organization and Significant Accounting Policies | |
Segments | Segments The Company’s products are sold and divided among two reportable segments to reflect the Company’s strategic goals. Operating segments are defined as components of an enterprise from which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer, who reviews the revenue and gross margin results for each of these segments in order to make resource allocation decisions, including the focus of research and development (“R&D”) activities and performance assessment. The Company’s reportable segments are business units that offer different products and services and are managed separately. |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the three months ended July 29, 2017 are not necessarily indicative of the results for the full year ending April 30, 2018. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2017, included in the Company’s Annual Report on Form 10-K. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. The accompanying consolidated financial statements include the balance sheet and results of operations of Altoy Savunma Sanayi ve Havacilik Anonim Sirketi (“Altoy”), in which the Company increased its ownership to a controlling interest of 85% during the fourth quarter of the fiscal year ended April 30, 2017. Prior to the increase in ownership, the Company's investment in Altoy was accounted for under the equity method. In July 2016, the Company dissolved Charger Bicycles, LLC, the results of which were not material to the consolidated financial statements. During the three months ended October 29, 2016, the Company dissolved Skytower, LLC and Regenerative Fuel Cell Systems, LLC, the results of which were not material to the consolidated financial statements. Recently Adopted Accounting Standards In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This ASU does not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. This ASU eliminates from U.S. GAAP the requirement to measure inventory at the lower of cost or market. Market under the previous requirement could be replacement cost, net realizable value, or net realizable value less a normal profit margin. Entities within the scope of this update will now be required to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory using LIFO or the retail inventory method. The Company’s adoption of ASU No. 2015-11 effective May 1, 2017 did not have a material impact on its consolidated financial statements. |
Investments | Investments The Company’s investments are accounted for as held-to-maturity and available-for-sale and reported at amortized cost and fair value, respectively. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments Fair values of cash and cash equivalents, accounts receivable, unbilled receivables, retentions and accounts payable approximate cost due to the short period of time to maturity. |
Government Contracts | Government Contracts Payments to the Company on government cost reimbursable contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company. For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. Historically, the Company has not experienced material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at actual rates unless collectability is not reasonably assured. During the fiscal year ended April 30, 2017, the Company settled rates for its incurred cost claims with the DCAA for fiscal years 2011 through 2014 without payment of any consideration. At July 29, 2017 and April 30, 2017, the Company did not have any remaining reserves for incurred cost claim audits. |
Earnings Per Share | Loss Per Share Basic loss per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock. The reconciliation of basic to diluted shares is as follows: Three Months Ended July 29, 2017 July 30, 2016 Denominator for basic loss per share: Weighted average common shares outstanding, excluding unvested restricted stock 23,336,305 22,956,607 Dilutive effect of employee stock options and unvested restricted stock — — Denominator for diluted loss per share Due to the net loss for the three months ended July 29, 2017 and July 30, 2016, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive. Potentially dilutive shares not included in the computation of diluted weighted average common shares because their effect would have been anti-dilutive were 256,011 and 302,332 for the three months ended July 29, 2017 and July 30, 2016, respectively. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In January 2017, the FASB issued ASU 2017-01, Business Combinations – Clarifying the definition of a business (Topic 805). This ASU clarifies the definition of a business with the objective of providing a more robust framework to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within that fiscal year, with early adoption permitted. The amendments are to be applied prospectively to business combinations that occur after the effective date. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230). This ASU adds and clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017 and interim periods therein, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires the lessee to recognize the assets and liabilities for the rights and obligations created by leases with terms of 12 months or more. The guidance is effective for fiscal years beginning after December 15, 2018 and interim periods therein, with early adoption permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. The Company currently does not hold a large number of leases that are classified as operating leases under the existing lease standard, with the only significant leases being the Company’s various property leases. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new standard was originally effective for reporting periods beginning after December 15, 2016 and early adoption was not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606)-Deferral of the Effective Date. This update approved a one-year delay of the effective date to reporting periods beginning after December 15, 2017, while permitting companies to voluntarily adopt the new standard as of the original effective date. Since the issuance of ASU 2014-09, the FASB has issued several amendments to provide additional supplemental guidance on certain aspects of the original pronouncement. The core principle of ASU 2014-09 is to recognize revenue upon the transfer of goods or services to customers at an amount that reflects the consideration expected to be received. In adopting the guidance, companies are permitted to select between two transition methods: (1) a full retrospective transition method with the application of the new guidance to each prior reporting period presented, or (2) a retrospective transition method that recognizes the cumulative effect on prior periods at the date of adoption together with additional footnote disclosures. The Company currently expects to adopt ASU 2014-09 on May 1, 2018 using the retrospective transition method. The Company is continuing to assess the potential impact of this guidance, including the impact on those areas currently subject to industry-specific guidance such as government contract accounting. As part of its assessment, the Company is reviewing representative samples of customer contracts to determine the impact on revenue recognition under the new guidance. The Company’s contracts with the U.S. government contain provisions that, among other things, allow the government to unilaterally terminate the contract for convenience (in whole or in part), pay the Company for costs incurred plus a reasonable profit and take control of any work in process. The Company is currently evaluating its contracts with the U.S. government to determine whether: (i) the Company’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (ii) the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. Revenues for contracts meeting either of these criteria will be recognized over the performance period using an acceptable measure of progress under the new standard. |
Organization and Significant 23
Organization and Significant Accounting Policies (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Organization and Significant Accounting Policies | |
Schedule of reconciliation of basic to diluted shares | Three Months Ended July 29, 2017 July 30, 2016 Denominator for basic loss per share: Weighted average common shares outstanding, excluding unvested restricted stock 23,336,305 22,956,607 Dilutive effect of employee stock options and unvested restricted stock — — Denominator for diluted loss per share |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Investments | |
Schedule of investments | Investments consist of the following (in thousands): July 29, April 30, 2017 2017 Short-term investments: Held-to-maturity securities: Municipal securities $ 37,164 $ 47,437 U.S. government securities 16,104 14,515 Corporate bonds 52,063 55,519 Certificates of deposit 2,500 2,500 Total held-to-maturity and short-term investments $ 107,831 $ 119,971 Long-term investments: Held-to-maturity securities: Municipal securities $ 4,751 $ 8,942 U.S. government securities 29,040 22,540 Corporate bonds — 8,117 Total held-to-maturity investments 33,791 39,599 Available-for-sale securities: Auction rate securities 2,053 2,497 Total available-for-sale investments 2,053 2,497 Total long-term investments $ 35,844 $ 42,096 |
Held-to-maturity securities | |
Investments | |
Schedule of amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of held-to-maturity investments | The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of July 29, 2017 were as follows (in thousands): July 29, 2017 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Municipal securities $ 41,915 $ 32 $ (6) $ 41,941 U.S. government securities 45,144 2 (48) 45,098 Corporate bonds 52,063 4 (66) 52,001 Certificates of deposit 2,500 1 — 2,501 Total held-to-maturity investments $ 141,622 $ 39 $ (120) $ 141,541 The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of April 30, 2017 were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Municipal securities $ 56,379 $ 30 $ (21) $ 56,388 U.S. government securities 37,055 2 (41) 37,016 Corporate bonds 63,636 9 (85) 63,560 Certificates of deposit 2,500 1 — 2,501 Total held-to-maturity investments $ 159,570 $ 42 $ (147) $ 159,465 |
Schedule of amortized cost and fair value by contractual maturity | The amortized cost and fair value of the held-to-maturity securities by contractual maturity at July 29, 2017 were as follows (in thousands): Cost Fair Value Due within one year $ 107,831 $ 107,768 Due after one year through five years 33,791 33,773 Total $ 141,622 $ 141,541 |
Available-for-sale securities | Auction rate securities | |
Investments | |
Schedule of amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of held-to-maturity investments | The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the auction rate securities as of July 29, 2017, were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Auction rate securities $ 2,250 $ — $ (197) $ 2,053 Total available-for-sale investments $ 2,250 $ — $ (197) $ 2,053 The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the auction rate securities as of April 30, 2017, were as follows (in thousands): Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Auction rate securities $ 2,700 $ — $ (203) $ 2,497 Total available-for-sale investments $ 2,700 $ — $ (203) $ 2,497 |
Schedule of amortized cost and fair value by contractual maturity | The amortized cost and fair value of the auction rate securities by contractual maturity at July 29, 2017, were as follows (in thousands): Cost Fair Value Due after one through five years $ 250 $ 251 Due after 10 years 2,000 1,802 Total $ 2,250 $ 2,053 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Fair Value Measurements | |
Schedule of financial assets measured at fair value on a recurring basis | The Company’s financial assets measured at fair value on a recurring basis at July 29, 2017, were as follows (in thousands): Fair Value Measurement Using Significant Quoted prices in other Significant active markets for observable unobservable identical assets inputs inputs Description (Level 1) (Level 2) (Level 3) Total Auction rate securities $ — $ — $ 2,053 $ 2,053 Total $ — $ — $ 2,053 $ 2,053 |
Schedule of reconciliation between beginning and ending balances of items measured at fair value on recurring basis that used significant unobservable inputs (Level 3) | The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Significant Unobservable Inputs Description (Level 3) Balance at May 1, 2017 $ 2,497 Transfers to Level 3 — Total gains (realized or unrealized) Included in earnings — Included in other comprehensive income 6 Purchases, issuances and settlements, net (450) Balance at July 29, 2017 $ 2,053 The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at July 29, 2017 $ — |
Inventories, net (Tables)
Inventories, net (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Inventories, net | |
Schedule of inventories | Inventories consist of the following (in thousands): July 29, April 30, 2017 2017 Raw materials $ 19,378 $ 18,365 Work in process 17,825 16,168 Finished goods 40,782 30,793 Inventories, gross 77,985 65,326 Reserve for inventory excess and obsolescence (5,968) (5,250) Inventories, net $ 72,017 $ 60,076 |
Warranty Reserves (Tables)
Warranty Reserves (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Warranty Reserves | |
Summary of warranty reserve activity | Warranty reserve activity is summarized as follows for the three months ended July 29, 2017 and July 30, 2016, respectively (in thousands): Three Months Ended July 29, July 30, 2017 2016 Beginning balance $ 3,231 $ 4,134 Warranty expense 447 192 Changes in estimates related to pre-existing warranties — 1,407 Warranty costs settled (793) (510) Ending balance $ 2,885 $ 5,223 |
Intangibles (Tables)
Intangibles (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Intangibles | |
Schedule of components of intangibles | July 29, April 30, 2017 2017 (In thousands) Licenses $ 818 $ 818 Customer relationships 1,600 1,600 Trademarks and tradenames 60 60 Other 3 3 Less accumulated amortization (737) (658) Intangibles, net $ 1,744 $ 1,823 |
Goodwill (Tables)
Goodwill (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Goodwill. | |
Schedule of the changes in goodwill balances | The following table presents the changes in the Company’s goodwill balance (in thousands): Balance at April 30, 2017 $ 122 Changes in goodwill - Balance at July 29, 2017 $ 122 |
Accumulated Other Comprehensi30
Accumulated Other Comprehensive Loss and Reclassifications (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Accumulated Other Comprehensive Loss and Reclassifications | |
Schedule of components of accumulated other comprehensive loss | The components of accumulated other comprehensive loss and adjustments are as follows (in thousands): Available-for-Sale Accumulated Other Securities Comprehensive Loss Balance, net of $76 of taxes, as of April 30, 2017 $ (127) $ (127) Reclassifications out of accumulated other comprehensive loss, net of taxes — — Unrealized gains, net of $4 of taxes 2 2 Balance, net of $72 of taxes, as of July 29, 2017 $ (125) $ (125) |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Jul. 29, 2017 | |
Segment Data | |
Schedule of segment results | The segment results are as follows (in thousands): Three Months Ended July 29, July 30, 2017 2016 Revenue: UAS $ 36,250 $ 30,497 EES 7,514 5,721 Total 43,764 36,218 Cost of sales: UAS 26,408 25,083 EES 5,726 4,452 Total 32,134 29,535 Gross margin: UAS 9,842 5,414 EES 1,788 1,269 Total 11,630 6,683 Selling, general and administrative 13,331 13,663 Research and development 6,461 8,600 Loss from operations (8,162) (15,580) Other income (expense): Interest income, net 512 375 Other income (expense), net 4 (300) Loss before income taxes $ (7,646) $ (15,505) |
Organization and Significant 32
Organization and Significant Accounting Policies (Details) - segment | 3 Months Ended | |
Jul. 29, 2017 | Apr. 30, 2017 | |
Segments | ||
Number of reportable segments | 2 | |
Altoy | ||
Ownership percentage | 85.00% |
Organization and Significant 33
Organization and Significant Accounting Policies Other (Details) - shares | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Denominator for basic earnings per share: | ||
Weighted average common shares (in shares) | 23,336,305 | 22,956,607 |
Dilutive effect of employee stock options, restricted stock and restricted stock units (in shares) | 0 | 0 |
Denominator for diluted earnings per share (in shares) | 23,336,305 | 22,956,607 |
Number of shares reserved for issuance that are anti-dilutive | 256,011 | 302,332 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Short-term investments: | ||
Total held-to-maturity and short-term investments | $ 107,831 | $ 119,971 |
Long-term investments: | ||
Total long-term investments | 35,844 | 42,096 |
Held-to-maturity securities | ||
Short-term investments: | ||
Total held-to-maturity and short-term investments | 107,831 | 119,971 |
Long-term investments: | ||
Total long-term investments | 33,791 | 39,599 |
Held-to-maturity securities | Municipal securities | ||
Short-term investments: | ||
Total held-to-maturity and short-term investments | 37,164 | 47,437 |
Long-term investments: | ||
Total long-term investments | 4,751 | 8,942 |
Held-to-maturity securities | U.S. government securities | ||
Short-term investments: | ||
Total held-to-maturity and short-term investments | 16,104 | 14,515 |
Long-term investments: | ||
Total long-term investments | 29,040 | 22,540 |
Held-to-maturity securities | Corporate bonds | ||
Short-term investments: | ||
Total held-to-maturity and short-term investments | 52,063 | 55,519 |
Long-term investments: | ||
Total long-term investments | 8,117 | |
Held-to-maturity securities | Certificates of deposit | ||
Short-term investments: | ||
Total held-to-maturity and short-term investments | 2,500 | 2,500 |
Available-for-sale securities | ||
Long-term investments: | ||
Total long-term investments | 2,053 | 2,497 |
Available-for-sale securities | Auction rate securities | ||
Long-term investments: | ||
Total long-term investments | $ 2,053 | $ 2,497 |
Investments - Held-To-Maturity
Investments - Held-To-Maturity Securities (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Held To Maturity Securities | ||
Amortized Cost | $ 141,622 | $ 159,570 |
Gross Unrealized Gains | 39 | 42 |
Gross Unrealized Losses | (120) | (147) |
Fair Value | 141,541 | 159,465 |
Municipal securities | ||
Held To Maturity Securities | ||
Amortized Cost | 41,915 | 56,379 |
Gross Unrealized Gains | 32 | 30 |
Gross Unrealized Losses | (6) | (21) |
Fair Value | 41,941 | 56,388 |
U.S. government securities | ||
Held To Maturity Securities | ||
Amortized Cost | 45,144 | 37,055 |
Gross Unrealized Gains | 2 | 2 |
Gross Unrealized Losses | (48) | (41) |
Fair Value | 45,098 | 37,016 |
Corporate bonds | ||
Held To Maturity Securities | ||
Amortized Cost | 52,063 | 63,636 |
Gross Unrealized Gains | 4 | 9 |
Gross Unrealized Losses | (66) | (85) |
Fair Value | 52,001 | 63,560 |
Certificates of deposit | ||
Held To Maturity Securities | ||
Amortized Cost | 2,500 | 2,500 |
Gross Unrealized Gains | 1 | 1 |
Fair Value | $ 2,501 | $ 2,501 |
Investments - Amortized Cost an
Investments - Amortized Cost and Fair Value of the Held-to-Maturity Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Amortized cost of held-to-maturity securities by contractual maturity | ||
Due within one year | $ 107,831 | |
Due after one year through five years | 33,791 | |
Total | 141,622 | $ 159,570 |
Fair value of held-to-maturity securities by contractual maturity | ||
Due within one year | 107,768 | |
Due after one year through five years | 33,773 | |
Fair Value | $ 141,541 | $ 159,465 |
Investments - Auction rate secu
Investments - Auction rate securities (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Jul. 29, 2017USD ($)item | Apr. 30, 2017USD ($)item | |
Available-For-Sale Securities | ||
Amortized Cost | $ 2,250 | $ 2,700 |
Gross Unrealized Losses | (197) | (203) |
Total | $ 2,053 | $ 2,497 |
Auction rate securities | ||
Investments | ||
Number of available-for-sale securities | item | 2 | 2 |
Available-For-Sale Securities | ||
Amortized Cost | $ 2,250 | $ 2,700 |
Gross Unrealized Losses | (197) | (203) |
Total | $ 2,053 | $ 2,497 |
Auction rate securities | Minimum | ||
Available For Sale Securities | ||
Maturity period of available-for-sale securities | 2 years | 2 years |
Pre-determined interval to reset interest rates to current rates | 30 days | 30 days |
Auction rate securities | Maximum | ||
Available For Sale Securities | ||
Maturity period of available-for-sale securities | 17 years | 17 years |
Pre-determined interval to reset interest rates to current rates | 35 days | 35 days |
Auction rate securities | Available-for-sale securities | Maximum | ||
Available For Sale Securities | ||
Period for which the issuer of securities is not required to redeem the securities | 365 days | 365 days |
Investments - Amortized Cost 38
Investments - Amortized Cost and Fair Value of the Auction Rate Securities (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Amortized cost of available-for-sale securities by contractual maturity | ||
Total | $ 2,250 | $ 2,700 |
Fair value of available-for-sale securities by contractual maturity | ||
Total | 2,053 | 2,497 |
Auction rate securities | ||
Amortized cost of available-for-sale securities by contractual maturity | ||
Due one through five years | 250 | |
Due after 10 years | 2,000 | |
Total | 2,250 | 2,700 |
Fair value of available-for-sale securities by contractual maturity | ||
Due one through five years | 251 | |
Due after 10 years | 1,802 | |
Total | $ 2,053 | $ 2,497 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring basis $ in Thousands | Jul. 29, 2017USD ($) |
Fair Value Measurement | |
Available-for-sale securities | $ 2,053 |
Auction rate securities | |
Fair Value Measurement | |
Available-for-sale securities | 2,053 |
Significant unobservable inputs (Level 3) | |
Fair Value Measurement | |
Available-for-sale securities | 2,053 |
Significant unobservable inputs (Level 3) | Auction rate securities | |
Fair Value Measurement | |
Available-for-sale securities | $ 2,053 |
Fair Value Measurements Reconci
Fair Value Measurements Reconciliation (Details) $ in Thousands | 3 Months Ended |
Jul. 29, 2017USD ($) | |
Reconciliation between beginning and ending balances of items measured at fair value on recurring basis | |
Balance at the beginning of the period | $ 2,497 |
Total gains (realized or unrealized) included in other comprehensive income | 6 |
Purchases, issuances and settlements, net | (450) |
Balance at the end of the period | $ 2,053 |
Fair Value Measurements Other (
Fair Value Measurements Other (Details) - Significant unobservable inputs (Level 3) - Discounted cash flow - Auction rate securities | 3 Months Ended |
Jul. 29, 2017 | |
Minimum | |
Fair Value Inputs | |
Coupon rates (as a percent) | 1.59% |
Estimated redemption periods | 2 years |
Discount rates (as a percent) | 2.15% |
Maximum | |
Fair Value Inputs | |
Coupon rates (as a percent) | 1.59% |
Estimated redemption periods | 17 years |
Discount rates (as a percent) | 12.36% |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Inventories, net | ||
Raw materials | $ 19,378 | $ 18,365 |
Work in process | 17,825 | 16,168 |
Finished goods | 40,782 | 30,793 |
Inventories, gross | 77,985 | 65,326 |
Reserve for inventory excess and obsolescence | (5,968) | (5,250) |
Inventories, net | $ 72,017 | $ 60,076 |
Warranty Reserves (Details)
Warranty Reserves (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Warranty Reserves | ||
Beginning balance | $ 3,231 | $ 4,134 |
Warranty expense | 447 | 192 |
Changes in estimates related to pre-existing warranties | 1,407 | |
Warranty costs settled | (793) | (510) |
Ending balance | $ 2,885 | $ 5,223 |
Warranty Reserves Estimated Cos
Warranty Reserves Estimated Cost (Details) - USD ($) | 3 Months Ended | |||
Jul. 29, 2017 | Jul. 30, 2016 | Apr. 30, 2017 | Apr. 30, 2016 | |
Warranty Reserves | ||||
Standard Product Warranty Accrual, Preexisting, Increase (Decrease) | $ 1,407,000 | |||
Standard Product Warranty Accrual | $ 2,885,000 | 5,223,000 | $ 3,231,000 | $ 4,134,000 |
UAS | ||||
Warranty Reserves | ||||
Standard Product Warranty Accrual, Preexisting, Increase (Decrease) | $ 1,407,000 | |||
Standard Product Warranty Accrual | 5,000 | |||
Product Warranty Expense | $ 2,198,000 |
Intangibles (Details)
Intangibles (Details) - USD ($) $ in Thousands | Jul. 29, 2017 | Apr. 30, 2017 |
Intangibles | ||
Less accumulated amortization | $ (737) | $ (658) |
Intangibles, net | 1,744 | 1,823 |
Licenses | ||
Intangibles | ||
Intangibles, gross | 818 | 818 |
Customer relationships | ||
Intangibles | ||
Intangibles, gross | 1,600 | 1,600 |
Trademarks and tradenames | ||
Intangibles | ||
Intangibles, gross | 60 | 60 |
Other | ||
Intangibles | ||
Intangibles, gross | $ 3 | $ 3 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | Jul. 29, 2017USD ($) |
Goodwill. | |
Goodwill, Beginning Balance | $ 122 |
Goodwill, Ending Balance | $ 122 |
Accumulated Other Comprehensi47
Accumulated Other Comprehensive Loss and Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | Apr. 30, 2017 | |
Accumulated other comprehensive loss | |||
Total accumulated other comprehensive loss balance as of April 30, 2017 | $ (127) | ||
Total accumulated other comprehensive loss balance as of July 29, 2017 | (125) | $ (127) | |
Other Comprehensive Income (Loss), Tax | 72 | 76 | |
Unrealized gain, tax portion | 4 | $ 12 | |
Available-for-sale securities. | |||
Accumulated other comprehensive loss | |||
Total accumulated other comprehensive loss balance as of April 30, 2017 | (127) | ||
Unrealized gains, net of $2 of taxes | 2 | ||
Total accumulated other comprehensive loss balance as of July 29, 2017 | (125) | (127) | |
Accumulated Other Comprehensive Loss. | |||
Accumulated other comprehensive loss | |||
Total accumulated other comprehensive loss balance as of April 30, 2017 | (127) | ||
Unrealized gains, net of $2 of taxes | 2 | ||
Total accumulated other comprehensive loss balance as of July 29, 2017 | $ (125) | $ (127) |
Customer-Funded Research & De48
Customer-Funded Research & Development (Details) - USD ($) | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Customer-Funded Research & Development | ||
Revenue from customer-funded R&D | $ 6,235,000 | $ 14,737,000 |
Long-Term Incentive Awards (Det
Long-Term Incentive Awards (Details) - Performance based restricted stock units - USD ($) | 3 Months Ended | 12 Months Ended |
Jul. 29, 2017 | Apr. 30, 2016 | |
Fiscal 2018 LTIP | ||
Long-Term Incentive Awards | ||
Exercisable period from grant date | 3 years | |
Stock based compensation expense | $ 0 | |
Fiscal 2018 LTIP | 100% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 100.00% | |
Fiscal 2018 LTIP | 50% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 50.00% | |
Fiscal 2018 LTIP | 200% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 200.00% | |
Fiscal 2018 LTIP | Maximum | ||
Long-Term Incentive Awards | ||
Stock based compensation expense | $ 2,850,000 | |
Fiscal 2017 LTIP | ||
Long-Term Incentive Awards | ||
Exercisable period from grant date | 3 years | |
Stock based compensation expense | $ 0 | |
Fiscal 2017 LTIP | 100% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 100.00% | |
Fiscal 2017 LTIP | 50% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 50.00% | |
Fiscal 2017 LTIP | 200% Vested | ||
Long-Term Incentive Awards | ||
Vesting (as a percentage) | 200.00% | |
Fiscal 2017 LTIP | Maximum | ||
Long-Term Incentive Awards | ||
Stock based compensation expense | $ 2,630,000 | |
Fiscal 2016 LTIP | ||
Long-Term Incentive Awards | ||
Exercisable period from grant date | 3 years | |
Performance period | 3 years | |
Stock based compensation expense | 0 | |
Fiscal 2016 LTIP | Maximum | ||
Long-Term Incentive Awards | ||
Stock based compensation expense | $ 2,690,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Income taxes | ||
Benefit for income taxes | $ (3,180,000) | $ (3,863,000) |
Effective tax benefit rate (as a percent) | 41.60% | 24.90% |
Excess tax benefits | $ 1,025,000 | |
Reversal of uncertain tax position reserve, including interest | $ 968,000 |
Share Repurchase (Details)
Share Repurchase (Details) - USD ($) | 3 Months Ended | ||
Jul. 29, 2017 | Apr. 30, 2017 | Sep. 30, 2015 | |
Share Repurchase | |||
Stock Repurchase Program, Authorized Amount | $ 25,000,000 | ||
Shares repurchased and retired | 0 | ||
Share authorized for future repurchases | $ 21,200,000 | $ 21,200,000 |
Segment Data (Details)
Segment Data (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jul. 29, 2017 | Jul. 30, 2016 | |
Segment Data | ||
Revenue | $ 43,764 | $ 36,218 |
Cost of sales | 32,134 | 29,535 |
Total gross margin | 11,630 | 6,683 |
Selling, general and administrative | 13,331 | 13,663 |
Research and development | 6,461 | 8,600 |
Loss from operations | (8,162) | (15,580) |
Interest income, net | 512 | 375 |
Other income (expense), net | 4 | (300) |
Loss before income taxes | (7,646) | (15,505) |
Inter-segment and corporate elimination | ||
Segment Data | ||
Revenue | 0 | 0 |
UAS | ||
Segment Data | ||
Revenue | 36,250 | 30,497 |
Cost of sales | 26,408 | 25,083 |
Total gross margin | 9,842 | 5,414 |
EES | ||
Segment Data | ||
Revenue | 7,514 | 5,721 |
Cost of sales | 5,726 | 4,452 |
Total gross margin | $ 1,788 | $ 1,269 |