R
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934.
|
For
the quarterly period ended October 27,
2007
|
£
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from ___________ to
___________
|
Delaware
|
95-2705790
|
(State
or other jurisdiction of incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
181
W. Huntington Drive, Suite 202
|
|
Monrovia,
California
|
91016
|
(Address
of principal executive offices)
|
(Zip
Code)
|
PART I. FINANCIAL INFORMATION |
|
|
|
|
|
Item 1. |
|
|
3
|
||
4
|
||
5
|
||
6
|
||
Item 2. |
12
|
|
Item 3. |
17
|
|
Item 4T. |
17
|
|
|
|
|
PART II. OTHER INFORMATION |
|
|
Item 1. |
18
|
|
Item 1A. |
18
|
|
Item 2. |
18
|
|
Item 3. |
18
|
|
Item 4. |
18
|
|
Item 5. |
18
|
|
Item 6. |
19
|
|
20
|
||
Exhibit
Index
|
|
October
27,
2007
|
April
30,
2007
|
|||||||
(Unaudited)
|
||||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$
|
14,283
|
$
|
20,920
|
||||
Restricted
cash
|
406
|
389
|
||||||
Short-term
investments
|
92,400
|
88,325
|
||||||
Accounts
receivable, net of allowance for doubtful accounts of $204 at
October 27, 2007 and $149 at April 30,
2007
|
26,034
|
7,691
|
||||||
Unbilled
receivables and retentions
|
12,837
|
26,494
|
||||||
Inventories,
net
|
12,704
|
14,015
|
||||||
Income
tax receivable
|
4,807
|
-
|
||||||
Deferred
income taxes
|
1,785
|
1,730
|
||||||
Prepaid
expenses and other current assets
|
1,747
|
1,504
|
||||||
Total
current assets
|
167,003
|
161,068
|
||||||
Property
and equipment, net
|
9,667
|
6,229
|
||||||
Deferred
income taxes
|
761
|
761
|
||||||
Other
assets
|
119
|
119
|
||||||
Total
assets
|
$
|
177,550
|
$
|
168,177
|
||||
Liabilities
and Stockholders’ Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$
|
10,791
|
$
|
16,024
|
||||
Wages
and related accruals
|
6,539
|
8,942
|
||||||
Customer
advances
|
101
|
139
|
||||||
Income
taxes payable
|
-
|
4,564
|
||||||
Other
current liabilities
|
3,287
|
1,544
|
||||||
Total
current liabilities
|
20,718
|
31,213
|
||||||
Deferred
rent
|
979
|
541
|
||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock, $0.0001 par value:
|
||||||||
Authorized
shares — 10,000,000
|
||||||||
None
issued or outstanding
|
||||||||
Common
stock, $0.0001 par value:
|
||||||||
Authorized
shares — 100,000,000
|
||||||||
Issued
and outstanding shares — 20,081,738 at October 27, 2007 and
18,875,957 at April 30, 2007
|
2
|
2
|
||||||
Additional
paid-in capital
|
94,614
|
83,611
|
||||||
Retained
earnings
|
61,237
|
52,810
|
||||||
Total
stockholders’ equity
|
155,853
|
136,423
|
||||||
Total
liabilities and stockholders’ equity
|
$
|
177,550
|
$
|
168,177
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
October
27,
|
October
28,
|
October
27,
|
October
28,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue:
|
|
|||||||||||||||
Product
sales
|
$ |
34,042
|
$ |
30,968
|
63,726
|
$ |
54,812
|
|||||||||
Contract
services
|
19,659
|
14,221
|
39,179
|
21,934
|
||||||||||||
|
53,701
|
45,189
|
102,905
|
76,746
|
||||||||||||
Cost
of sales:
|
||||||||||||||||
Product
sales
|
20,611
|
18,249
|
38,902
|
32,550
|
||||||||||||
Contract
services
|
14,163
|
9,170
|
28,239
|
14,440
|
||||||||||||
|
34,774
|
27,419
|
67,141
|
46,990
|
||||||||||||
Gross
margin
|
18,927
|
17,770
|
35,764
|
29,756
|
||||||||||||
Research
and development
|
3,802
|
3,180
|
8,102
|
7,021
|
||||||||||||
Selling,
general and administrative
|
8,573
|
6,735
|
16,299
|
12,867
|
||||||||||||
Income
from operations
|
6,552
|
7,855
|
11,363
|
9,868
|
||||||||||||
Other
income
|
||||||||||||||||
Interest
income
|
1,143
|
141
|
2,122
|
347
|
||||||||||||
Income
before income taxes
|
7,695
|
7,996
|
13,485
|
10,215
|
||||||||||||
Provision
for income taxes
|
2,531
|
3,102
|
4,477
|
3,956
|
||||||||||||
Net
income
|
$ |
5,164
|
$ |
4,894
|
9,008
|
$ |
6,259
|
|||||||||
Earnings
per share data (a):
|
||||||||||||||||
Basic
|
$ |
0.26
|
$ |
0.36
|
0.47
|
$ |
0.46
|
|||||||||
Diluted
|
0.24
|
0.31
|
0.42
|
$ |
0.40
|
|||||||||||
Weighted
average shares outstanding (a):
|
||||||||||||||||
Basic
|
19,652,095
|
13,620,154
|
19,279,094
|
13,564,438
|
||||||||||||
Diluted
|
21,346,349
|
15,584,150
|
21,218,731
|
15,528,435
|
Six
months ended
|
||||||||
October
27,
2007
|
October
28,
2006
|
|||||||
Operating
activities
|
||||||||
Net
income
|
$
|
9,008
|
$
|
6,259
|
||||
Adjustments
to reconcile net income to net cash and cash equivalents provided
by (used
in) operating activities:
|
||||||||
Depreciation
and amortization
|
1,595
|
1,349
|
||||||
Provision
for doubtful accounts
|
55
|
76
|
||||||
Deferred
income taxes
|
(55
|
)
|
-
|
|||||
Stock-based
compensation
|
185
|
8
|
||||||
Tax
benefit from exercise of stock options
|
9,999
|
210
|
||||||
Gain
on disposition of property and equipment
|
-
|
(4
|
)
|
|||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(18,398
|
)
|
(670
|
)
|
||||
Unbilled
receivables and retentions
|
13,657
|
(2,758
|
)
|
|||||
Inventories
|
1,311
|
2,446
|
||||||
Income
tax receivable
|
(4,807
|
)
|
-
|
|||||
Other
assets
|
(243
|
)
|
(1,443
|
)
|
||||
Accounts
payable
|
(5,233
|
)
|
(1,188
|
)
|
||||
Customer
advances
|
(38
|
)
|
(7,643
|
)
|
||||
Other
liabilities
|
(5,368
|
)
|
1,075
|
|||||
Net
cash and cash equivalents provided by (used in) operating
activities
|
1,668
|
(2,283
|
)
|
|||||
Investing
activities
|
||||||||
Acquisitions
of property and equipment
|
(5,032
|
)
|
(1,289
|
)
|
||||
Proceeds
from sale of property and equipment
|
-
|
15
|
||||||
Purchases
of short-term investments
|
(497,239
|
)
|
-
|
|||||
Sales
of short-term investments
|
493,164
|
-
|
||||||
Net
cash and cash equivalents used in investing activities
|
(9,107
|
)
|
(1,274
|
)
|
||||
Financing
activities
|
||||||||
Transfers
(to) from restricted cash
|
(17
|
)
|
1,143
|
|||||
Repayments
of line of credit
|
-
|
(6,232
|
)
|
|||||
Proceeds
from line of credit
|
-
|
6,232
|
||||||
Exercise
of stock options
|
819
|
204
|
||||||
Net
cash and cash equivalents provided by financing activities
|
802
|
1,347
|
||||||
Net
decrease in cash and cash equivalents
|
(6,637
|
)
|
(2,210
|
)
|
||||
Cash
and cash equivalents at beginning of period
|
20,920
|
15,388
|
||||||
Cash
and cash equivalents at end of period
|
$
|
14,283
|
$
|
13,178
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
October
27,
2007
|
October
28,
2006
|
October
27,
2007
|
October
28,
2006
|
|||||||||||||
Denominator
for basic earnings per share:
|
||||||||||||||||
Weighted
average common shares outstanding
|
19,652,095
|
13,620,154
|
19,279,094
|
13,564,438
|
||||||||||||
Dilutive
effect of employee stock options
|
1,694,254
|
1,963,996
|
1,939,637
|
1,963,997
|
||||||||||||
Denominator
for diluted earnings per share
|
21,346,349
|
15,584,150
|
21,218,731
|
15,528,435
|
October
27,
2007
|
April
30,
2007
|
|||||||
(In
thousands)
|
||||||||
Raw
materials
|
$
|
6,718
|
$
|
5,418
|
||||
Work
in process
|
3,247
|
3,514
|
||||||
Finished
goods
|
3,902
|
6,221
|
||||||
Inventories,
gross
|
13,867
|
15,153
|
||||||
Reserve
for inventory obsolescence
|
(1,163
|
)
|
(1,138
|
)
|
||||
Inventories,
net
|
$
|
12,704
|
$
|
14,015
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
October
27,
2007
|
October
28,
2006
|
October
27,
2007
|
October
28,
2006
|
|||||||||||||
Beginning
balance
|
$
|
243
|
$
|
355
|
$
|
263
|
$
|
344
|
||||||||
Warranty
expense
|
262
|
149
|
470
|
301
|
||||||||||||
Warranty
costs incurred
|
(123
|
)
|
(139
|
)
|
(351
|
)
|
(280
|
)
|
||||||||
Ending
balance
|
$
|
382
|
$
|
365
|
$
|
382
|
$
|
365
|
Three
Months Ended
October
27, 2007
|
Six
Months Ended
October
27, 2007
|
|||||||
Expected
term (in years)
|
6.5
|
6.5
|
||||||
Expected
volatility
|
21.25%
|
|
19.74%
|
|
||||
Risk-free
interest rate
|
4.32%
|
|
5.01%
|
|
||||
Expected
dividend
|
—
|
—
|
||||||
Weighted
average fair value at grant date
|
$
|
6.45
|
$
|
7.72
|
Three
and Six Months Ended
October
28, 2006
|
||||
Expected
term (in years)
|
6.5
|
|||
Expected
volatility
|
22.41%
|
|
||
Risk-free
interest rate
|
4.56%
|
|
||
Expected
dividend
|
—
|
|||
Weighted
average fair value at grant date
|
$
|
4.12
|
2006
Plan
|
2002
Plan
|
1994
Directors’ Plan
|
1992
Plan
|
|||||||||||||||||||||||||||||
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||||||||||
Outstanding
at April 30,
2007
|
—
|
$
|
—
|
1,532,423
|
$
|
1.95
|
35,189
|
$
|
0.59
|
1,941,706
|
$
|
0.55
|
||||||||||||||||||||
Options
granted
|
243,310
|
21.48
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Options
exercised
|
—
|
—
|
(102,325
|
)
|
0.76
|
—
|
—
|
(301,527
|
)
|
.59
|
||||||||||||||||||||||
Options
canceled
|
—
|
—
|
(5,630
|
)
|
0.64
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Outstanding
at July 28,
2007
|
243,310
|
21.48
|
1,424,468
|
2.04
|
35,189
|
0.59
|
1,640,179
|
0.55
|
||||||||||||||||||||||||
Options
granted
|
40,000
|
19.87
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||||
Options
exercised
|
—
|
—
|
(176,635
|
)
|
1.13
|
—
|
—
|
(625,294
|
)
|
0.58
|
||||||||||||||||||||||
Options
canceled
|
—
|
—
|
(21,113
|
)
|
3.63
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||
Outstanding
at October 27,
2007
|
283,310
|
21.25
|
1,226,720
|
2.09
|
35,189
|
0.59
|
1,014,885
|
0.53
|
||||||||||||||||||||||||
Options
exercisable at October 27, 2007
|
—
|
—
|
717,885
|
1.29
|
35,189
|
0.59
|
1,014,885
|
0.53
|
|
•
|
Unmanned
Aircraft Systems (“UAS”)
— engages primarily in the design, manufacture, sale and support of
small
unmanned aircraft systems.
|
|
•
|
PosiCharge
Systems (“PosiCharge”)
— engages primarily in the design, manufacture, sale and support of
fast
charge systems and related services for users of electrical industrial
vehicles.
|
|
•
|
Energy Technology Center—
provides
contract engineering
for electric energy-related projects, and engages in the design,
manufacture, sale and support of power processing test
systems.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
October
27,
|
October
28,
|
October
27,
|
October
28,
|
|||||||||||||
2007
|
2006
|
2007
|
2006
|
|||||||||||||
Revenue:
|
||||||||||||||||
UAS
|
$
|
46,604
|
$
|
37,875
|
$
|
88,477
|
$
|
62,858
|
||||||||
PosiCharge
|
5,236
|
4,515
|
10,594
|
9,458
|
||||||||||||
Energy Technology Center
|
1,861
|
2,799
|
3,834
|
4,430
|
||||||||||||
Total
|
53,701
|
45,189
|
102,905
|
76,746
|
||||||||||||
Gross
margin:
|
||||||||||||||||
UAS
|
16,910
|
14,516
|
31,001
|
23,787
|
||||||||||||
PosiCharge
|
1,402
|
1,821
|
3,347
|
3,761
|
||||||||||||
Energy Technology Center
|
615
|
1,433
|
1,416
|
2,208
|
||||||||||||
Total
|
18,927
|
17,770
|
35,764
|
29,756
|
||||||||||||
Research
and development
|
3,802
|
3,180
|
8,102
|
7,021
|
||||||||||||
Selling,
general and administrative
|
8,573
|
6,735
|
16,299
|
12,867
|
||||||||||||
Income
from operations
|
6,552
|
7,855
|
11,363
|
9,868
|
||||||||||||
Interest
income
|
1,143
|
141
|
2,122
|
347
|
||||||||||||
Income
before income taxes
|
$
|
7,695
|
$
|
7,996
|
$
|
13,485
|
$
|
10,215
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF
OPERATIONS
|
Three
Months Ended
|
||||||||
October
27,
2007
|
October
28,
2006
|
|||||||
(Unaudited)
|
||||||||
Revenue:
|
||||||||
UAS
|
$
|
46,604
|
$
|
37,875
|
||||
PosiCharge
|
5,236
|
4,515
|
||||||
Energy Technology Center
|
1,861
|
2,799
|
||||||
Total
|
$ |
53,701
|
$
|
45,189
|
||||
Gross
margin:
|
||||||||
UAS
|
$
|
16,910
|
$
|
14,516
|
||||
PosiCharge
|
1,402
|
1,821
|
||||||
Energy Technology Center
|
615
|
1,433
|
||||||
Total
|
$
|
18,927
|
$
|
17,770
|
Six
Months Ended
|
||||||||
October
27,
2007
|
October
28,
2006
|
|||||||
(Unaudited)
(In
thousands)
|
||||||||
Revenue:
|
||||||||
UAS
|
$
|
88,477
|
$
|
62,858
|
||||
PosiCharge
|
10,594
|
9,458
|
||||||
Energy Technology Center
|
3,834
|
4,430
|
||||||
Total
|
$
|
102,905
|
$
|
76,746
|
||||
Gross
margin:
|
||||||||
UAS
|
$
|
31,001
|
$
|
23,787
|
||||
PosiCharge
|
3,347
|
3,761
|
||||||
Energy Technology Center
|
1,416
|
2,208
|
||||||
Total
|
$
|
35,764
|
$
|
29,756
|
Six
Months Ended
|
||||||||
October 27,
2007
|
October 28,
2006
|
|||||||
(Unaudited)
|
||||||||
Net
cash provided by (used in) operating activities
|
$
|
1,668
|
$
|
(2,283
|
)
|
|||
Net
cash used in investing activities
|
$
|
(9,107
|
)
|
$
|
(1,274
|
)
|
||
Net
cash provided by financing activities
|
$
|
802
|
$
|
1,347
|
|
1.
|
Proposal
to elect Kenneth R. Baker, Murray Gell-Mann and Charles R. Holland
as
Class I directors for three year
terms:
|
Director
|
For
|
Withheld
|
||
Kenneth
R. Baker
|
17,875,106
|
160,407
|
||
Murray
Gell-Mann
|
17,873,293
|
162,220
|
||
Charles
R. Holland
|
17,870,466
|
165,047
|
|
2.
|
Proposal
to ratify the appointment of the accounting firm of Ernst & Young LLP
as our independent registered public accounting firm for the fiscal
year
ending April 30, 2008.
|
For
|
Against
|
Abstain
|
||
17,917,812
|
114,925
|
2,776
|
Exhibit
Number
|
Description
|
Award
Contract, dated September 24, 2007, between AeroVironment, Inc. and
United
States Special Operations Command, as amended.
|
|
|
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act of 1934, as
amended.
|
|
|
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act of 1934, as
amended.
|
|
|
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
Date:
December 6, 2007
|
|
AEROVIRONMENT,
INC.
|
|
|
|
|
By:
|
/s/
Timothy E. Conver
|
|
|
Timothy E. Conver
|
|
|
Chief
Executive Officer and President
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
/s/
Stephen C. Wright
|
|
|
Stephen C. Wright
|
|
|
Chief
Financial Officer (Principal
|
|
|
Financial
and Accounting Officer)
|