16. Impact of Adoption of New Accounting Standards

During the three months ended July 28, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The impact to the Company’s unaudited balance sheet as a result of adopting the standard was as follows:


			Effect of the
	April 30, 2018		Adoption of		April 30, 2018
	As Reported		ASC Topic 606		As Adjusted
Assets
Current assets:
Cash and cash equivalents	$	143,517	$	—	$	143,517
Short-term investments		113,649		—		113,649
Accounts receivable, net of allowance for doubtful accounts of $1,080 at April 30, 2018		56,813		—		56,813
Unbilled receivables and retentions (inclusive of related party unbilled receivables of $3,145 at April 30, 2018)		13,076		3,796		16,872
Inventories, net		38,640		(1,215)		37,425
Prepaid expenses and other current assets		5,103		—		5,103
Current assets of discontinued operations		28,349		(2,681)		25,668
Total current assets		399,147		(100)		399,047
Long-term investments		40,656		—		40,656
Property and equipment, net		19,219		—		19,219
Deferred income taxes		11,168		326		11,494
Other assets		2,721		281		3,002
Total assets	$	472,911	$	507	$	473,418
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	21,340	$	—	$	21,340
Wages and related accruals		16,851		—		16,851
Income taxes payable		4,085		—		4,085
Customer advances		2,145		1,419		3,564
Other current liabilities		6,892		62		6,954
Current liabilities of discontinued operations		9,184		110		9,294
Total current liabilities		60,497		1,591		62,088
Deferred rent		1,536		—		1,536
Other non-current liabilities		622		—		622
Deferred tax liability		67		—		67
Liability for uncertain tax positions		49		—		49
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued or outstanding at April 30, 2018		—		—		—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—23,908,736 at April 30, 2018		2		—		2
Additional paid-in capital		170,139		—		170,139
Accumulated other comprehensive loss		(21)		—		(21)
Retained earnings		239,997		(1,084)		238,913
Total AeroVironment stockholders’ equity		410,117		(1,084)		409,033
Noncontrolling interest		23		—		23
Total equity		410,140		(1,084)		409,056
Total liabilities and stockholders’ equity	$	472,911	$	507	$	473,418

The table below presents the impact of adoption on the Company’s unaudited statement of operations.


	Three Months Ended		Effect of the		Three Months Ended
	July 29, 2017		Adoption of		July 29, 2017
	As Reported		ASC Topic 606		As Adjusted
Revenue:
Product sales	$	24,098	$	(5,318)	$	18,780
Contract services (inclusive of related party revenue of $2,551 for the three months ended July 29, 2017)		12,152		3,429		15,581
		36,250		(1,889)		34,361
Cost of sales:
Product sales		18,784		(2,812)		15,972
Contract services		7,371		2,320		9,691
		26,155		(492)		25,663
Gross margin:
Product sales		5,314		(2,506)		2,808
Contract services		4,781		1,109		5,890
		10,095		(1,397)		8,698
Selling, general and administrative		11,287		—		11,287
Research and development		5,542		—		5,542
Loss from continuing operations		(6,734)		(1,397)		(8,131)
Other income (expense):
Interest income, net		512		—		512
Other (expense) income, net		4		—		4
Loss from continuing operations before income taxes		(6,218)		(1,397)		(7,615)
Benefit for income taxes		(2,831)		(390)		(3,221)
Equity method investment activity, net of tax		—		—		—
Net loss from continuing operations		(3,387)		(1,007)	$	(4,394)
Discontinued operations:
Gain on sale of business, net of tax expense of $0		—		—		—
Loss from discontinued operations, net of tax		(1,079)		(409)		(1,488)
Net loss from discontinued operations		(1,079)		(409)		(1,488)
Net loss		(4,466)		(1,416)		(5,882)
Net loss attributable to noncontrolling interest		23		—		23
Net loss attributable to AeroVironment	$	(4,443)	$	(1,416)	$	(5,859)
Net loss per share attributable to AeroVironment—Basic
Continuing operations	$	(0.14)	$	(0.04)	$	(0.19)
Discontinued operations		(0.05)		(0.02)		(0.06)
Net loss per share attributable to AeroVironment—Basic	$	(0.19)	$	(0.06)	$	(0.25)
Net loss per share attributable to AeroVironment—Diluted
Continuing operations	$	(0.14)	$	(0.04)	$	(0.19)
Discontinued operations		(0.05)		(0.02)		(0.06)
Net loss per share attributable to AeroVironment—Diluted	$	(0.19)	$	(0.06)	$	(0.25)
Weighted-average shares outstanding:
Basic		23,336,305		23,336,305		23,336,305
Diluted		23,336,305		23,336,305		23,336,305

The table below presents the impact of adoption on the Company’s unaudited statement of comprehensive loss.


	Three Months Ended		Effect of the		Three Months Ended
	July 29, 2017		Adoption of		July 29, 2017
	As Reported		ASC Topic 606		As Adjusted
Net loss	$	(4,466)	$	(1,416)	$	(5,882)
Other comprehensive income:
Change in foreign currency translation adjustments		—		—		—
Unrealized gain on investments, net of deferred tax expense of $4		2		—		2
Total comprehensive loss		(4,464)		(1,416)	$	(5,880)
Net loss attributable to noncontrolling interest		23		—		23
Comprehensive loss attributable to AeroVironment	$	(4,441)	$	(1,416)	$	(5,857)

The table below presents the impact of adoption on the Company’s unaudited statement of cash flows.


	Three Months Ended		Effect of the		Three Months Ended
	July 29, 2017		Adoption of		July 29, 2017
	As Reported		ASC Topic 606		As Adjusted
Operating activities
Net loss	$	(4,466)	$	(1,416)	$	(5,882)
Gain on sale of business, net of tax		—		—		—
Loss from discontinued operations, net of tax		1,079		409		1,488
Net loss from continuing operations		(3,387)		(1,007)		(4,394)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization		1,406		—		1,406
Loss from equity method investments		—		—		—
Impairment of long-lived assets		9		—		9
Provision for doubtful accounts		209		—		209
Gains on foreign currency transactions		(106)		—		(106)
Deferred income taxes		(597)		—		(597)
Stock-based compensation		1,326		—		1,326
Amortization of held-to-maturity investments		474		—		474
Changes in operating assets and liabilities:
Accounts receivable		43,819		—		43,819
Unbilled receivables and retentions		3,516		2,718		6,234
Inventories		(9,713)		(511)		(10,224)
Income tax receivable		(2,969)		(416)		(3,385)
Prepaid expenses and other assets		358		—		358
Accounts payable		(5,504)		—		(5,504)
Other liabilities		(3,496)		(810)		(4,306)
Net cash provided by (used in) operating activities of continuing operations		25,345		(26)		25,319
Investing activities
Acquisition of property and equipment		(2,705)		—		(2,705)
Proceeds from sale of business		—		—		—
Redemptions of held-to-maturity investments		59,280		—		59,280
Purchases of held-to-maturity investments		(41,806)		—		(41,806)
Redemptions of available-for-sale investments		450		—		450
Net cash provided by investing activities from continuing operations		15,219		—		15,219
Financing activities
Principal payments of capital lease obligations		(92)		—		(92)
Tax withholding payment related to net settlement of equity awards		(212)		—		(212)
Exercise of stock options		1,640		—		1,640
Net cash provided by financing activities from continuing operations		1,336		—		1,336
Discontinued operations
Operating activities of discontinued operations		(4,063)		26		(4,037)
Investing activities of discontinued operations		(268)		—		(268)
Financing activities of discontinued operations		—		—		—
Net cash used in discontinued operations		(4,331)		26		(4,305)
Net increase in cash and cash equivalents		37,569		—		37,569
Cash and cash equivalents at beginning of period		79,904		—		79,904
Cash and cash equivalents at end of period	$	117,473	$	—	$	117,473
Supplemental disclosures of cash flow information
Cash paid, net during the period for:
Income taxes	$	1,803		—	$	1,803
Non-cash activities
Unrealized gain on investments, net of deferred tax expense of $4	$	2		—	$	2
Reclassification from share-based liability compensation to equity	$	384		—	$	384
Change in foreign currency translation adjustments	$	—		—	$	—
Acquisitions of property and equipment included in accounts payable	$	644		—	$	644