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Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

As filed with the Securities and Exchange Commission on September 28, 2006

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

AEROVIRONMENT, INC.

(Exact name of Registrant as specified in its charter)


California (prior to reincorporation) Delaware (after reincorporation) (State or other jurisdiction of incorporation or organization)		3721 (Primary Standard Industrial Classification Code Number)		95-2705790 (I.R.S. Employer Identification Number)

181 W. Huntington Drive, Suite 202

Monrovia, CA 91016

(626) 357-9983

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Timothy E. Conver

President and Chief Executive Officer

AeroVironment, Inc.

181 W. Huntington Drive, Suite 202

Monrovia, CA 91016

(626) 357-9983

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:


Craig M. Garner, Esq. Michael E. Sullivan, Esq. Latham & Watkins LLP 12636 High Bluff Drive, Suite 400 San Diego, CA 92130 (858) 523-5400		Andrew J. Pitts, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, NY 10019 (212) 474-1000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE


(1)		Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)		Includes offering price of shares that the underwriters have the option to purchase to cover over-allotments, if any.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion. Dated September 28, 2006.

AeroVironment, Inc.

Common Stock

This is an initial public offering of shares of common stock of AeroVironment, Inc.

AeroVironment, Inc. is offering of the shares to be sold in the offering. The selling stockholders identified in this prospectus are offering an additional shares. AeroVironment will not receive any of the proceeds from the sale of the shares being sold by the selling stockholders.

Prior to this offering, there has been no public market for the common stock. It is currently estimated that the initial public offering price per share will be between $ and $ . AeroVironment intends to apply to have the common stock approved for listing on the Nasdaq Global Market under the symbol “AVAV.”

See “Risk Factors” on page 7 to read about factors you should consider before buying shares of the common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.


	Per Share	Total

Initial public offering price	$	$
Underwriting discount	$	$
Proceeds, before expenses, to AeroVironment, Inc.	$	$
Proceeds, before expenses, to the selling stockholders	$	$

To the extent that the underwriters sell more than shares of common stock, the underwriters have the option to purchase up to an additional shares from the selling stockholders at the initial public offering price less the underwriting discount.

The underwriters expect to deliver the shares against payment in New York, New York on , 2006.

Goldman, Sachs & Co.

Friedman Billings Ramsey

Raymond James

Stifel Nicolaus

Prospectus dated , 2006

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

TABLE OF CONTENTS


		Page

Prospectus Summary		1
Risk Factors		7
Special Note Regarding Forward-Looking Statements		26
Use of Proceeds		27
Dividend Policy		27
Capitalization		28
Dilution		30
Selected Consolidated Financial Data		32
Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
Business		47
Government Contracting Process		62
Management		65
Certain Relationships and Related Party Transactions		76
Principal and Selling Stockholders		78
Description of Capital Stock		80
Shares Eligible for Future Sale		83
Underwriting		86
Legal Matters		91
Experts		91
Additional Information		91
Index to Financial Statements		F-1
EXHIBIT 3.1
EXHIBIT 3.3
EXHIBIT 4.2
EXHIBIT 4.3
EXHIBIT 4.4
EXHIBIT 4.5
EXHIBIT 4.6
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 10.7
EXHIBIT 10.11
EXHIBIT 10.12
EXHIBIT 10.13
EXHIBIT 10.14
EXHIBIT 10.15
EXHIBIT 10.16
EXHIBIT 10.17
EXHIBIT 10.18
EXHIBIT 10.19
EXHIBIT 10.20
EXHIBIT 10.21
EXHIBIT 10.22
EXHIBIT 10.23
EXHIBIT 21.1
EXHIBIT 23.1

Through and including , 2006 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included in this prospectus and the information set forth under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” In this prospectus, all references to “AeroVironment,” “we,” “us” and “our” refer to AeroVironment, Inc. and its subsidiaries, unless the context otherwise requires or where indicated.

AEROVIRONMENT, INC.

Overview

We design, develop, produce and support a technologically-advanced portfolio of small unmanned aircraft systems that we supply primarily to organizations within the U.S. Department of Defense, and fast charge systems for electric industrial vehicle batteries that we supply to commercial customers. We derive the majority of our revenue from these two business areas, and we believe that both the small unmanned aircraft systems, or UAS, and fast charge markets are in the early stages of development and have significant growth potential. Additionally, we believe that some of the innovative potential products in our research and development pipeline will emerge as new growth platforms in the future, creating market opportunities. The success we have achieved with our current products stems from our ability to invent and deliver advanced solutions, utilizing our proprietary technologies, that help our government and commercial customers operate more effectively and efficiently. Our core technological capabilities, developed through 35 years of innovation, include lightweight aerostructures and electric propulsion systems, efficient electric energy systems and storage, high-density energy packaging, miniaturization, controls integration and systems engineering optimization. We helped to pioneer and are now a leader in the markets for small UAS and fast charge systems, and we have experienced a compound annual revenue growth rate of 71% for the three-year period ended April 30, 2006.

Our small UAS are well positioned to support the transformational strategy of the U.S. Department of Defense, or DoD, the purpose of which is to convert the military into a smaller, more agile force that operates through a network of observation, communication and precision targeting technologies, and its efforts to prosecute the Global War on Terror, which have increased the need for real-time, visual information in new operational environments. Our small UAS, including Raven, Dragon Eye, Swift, Wasp and Puma, are designed to provide valuable intelligence, surveillance and reconnaissance, or ISR, directly to the small tactical unit, or individual “warfighter” level, thereby increasing flexibility in mission planning and execution. Our small unmanned aircraft wirelessly transmit critical live video and other information generated by their payload of electro-optical or infrared sensors, enabling the operator to view and capture images, during the day or at night, on a hand-held ground control unit. We also provide training by our highly-skilled instructors, who typically have extensive military experience, and continuous refurbishment and repair services for our products.

We designed all of our small UAS to be man-portable, launchable by one person and operated through a hand-held control unit. Our small UAS are electrically powered, configured to carry electro-optical or infrared sensors, provide real-time situational awareness and intelligence, fly quietly at speeds reaching 50 miles per hour and travel up to 20 miles from their launch location on a modular, replaceable battery pack. These characteristics make them well suited for reconnaissance, surveillance, target acquisition and battle damage assessment operations. We believe that our small UAS capabilities, combined with our high level of service, logistical support and training, have enabled us to win both competitively bid U.S. military small UAS programs of record as of July 29, 2006.

Our PosiCharge products and services are designed to improve productivity and safety for operators of electric industrial vehicles, such as forklifts and airport ground support equipment, by

improving battery and fleet management. In multi-shift fleet operations, traditional charging systems require users to exchange vehicle batteries throughout the day because these batteries discharge their energy through vehicle usage and there is insufficient vehicle downtime to recharge them during a shift. Changing these batteries, which can weigh as much as 3,500 pounds, requires labor time and dedicated battery changing rooms that consume valuable floor space. PosiCharge utilizes our proprietary technology in energy and battery management to recharge electric industrial vehicle batteries rapidly during regularly scheduled breaks or other times the vehicle is not in service, eliminating the costly and time-consuming process of removing and replacing the battery. PosiCharge is able to recharge a typical electric industrial vehicle battery and return it to service up to 16 times faster than conventional charging methods, while at the same time managing current, voltage and temperature, which can improve battery performance. To date, PosiCharge fast charge systems have been purchased and installed by a diverse group of customers that includes Ford Motor Company, SYSCO Corporation, Southwest Airlines and IKEA. As of July 29, 2006, our PosiCharge fast charge systems serviced over 5,000 electric industrial vehicles. We estimate that approximately 1.0 million electric industrial vehicles currently operate in North America, including over 100,000 new vehicles that we estimate were shipped in 2005.

Research and development activities are integral to our business, and we follow a disciplined approach to investing our resources to create new technologies and solutions. These activities are funded both externally by customers and internally. A fundamental part of this approach is a well-defined screening process that helps business managers identify commercial opportunities that support current or desired technological capabilities. Our UAS research and development activities focus specifically on creating capabilities that support our existing small UAS product portfolio as well as new UAS platforms. Our Energy Technology Center also engages in research and development in support of our existing product lines as well as to develop solutions for other markets such as renewable energy.

For the fiscal year ended April 30, 2006, we generated revenue of $139.4 million, income from operations of $16.3 million and net income of $11.4 million. For the three months ended July 29, 2006, we generated revenue of $31.6 million, income from operations of $2.0 million and net income of $1.4 million. As of July 29, 2006, we had funded backlog of $79.8 million and estimated unfunded backlog of $457.3 million.

Our Strategy

We intend to grow our business by maintaining leadership in the growing markets for small UAS and fast charge systems and by creating new products that enable us to enter and lead new markets. Key components of this strategy include the following:


	•	*Expand our current solutions to existing and new customers.* Our small UAS and PosiCharge products and services are leaders in their respective North American markets. We intend to increase the penetration of our small UAS products within the U.S. military, the militaries of allied nations and non-military U.S. customers. We believe that the increased use of our small UAS in the U.S. military will be a catalyst for increased demand by allied countries, and that our efforts to pursue new applications will help to create non-military opportunities. We similarly intend to increase the penetration of PosiCharge to existing and new customers in North America and globally. Early adopters of PosiCharge are now deploying it in additional facilities throughout their enterprises while its adoption is increasing among new customers and new industry segments, such as food and logistics.

	•	*Deliver innovative solutions.* Innovation is the primary driver of our growth. We plan to continue research and development efforts to enable us to satisfy our customers through better, more capable products and services, both in response to and in anticipation of their needs. We believe that by continuing to invest in research and development, we will continue


		to deliver innovative, new products that address market needs within and outside of our current target markets, enabling us to create new opportunities for growth.


	•	*Foster our entrepreneurial culture and continue to attract, develop and retain highly-skilled personnel.* We have created a corporate culture that encourages innovation and an entrepreneurial spirit, which helps to attract highly-skilled professionals. We intend to nurture this culture to encourage the development of the innovative, highly technical solutions that give us our competitive advantage. A core component of our culture is the demonstration of trust and integrity in all of our interactions, contributing to a positive work environment and engendering trust among our customers.

	•	*Preserve our agility and flexibility.* We are able to respond rapidly to evolving markets and deliver new products and system capabilities quickly, efficiently and affordably. We believe that this ability helps us to strengthen our relationships with customers. We intend to maintain our agility and flexibility, which we believe to be important sources of differentiation when we compete against larger and better-funded competitors.

Our History

Our company was founded by Dr. Paul B. MacCready, the Chairman of our board of directors and an internationally renowned innovator who was instrumental in creating our culture. For over 35 years, this culture has enabled us to attract and retain highly-motivated, talented employees and has established our reputation as an innovator. This reputation for innovation has been acknowledged through a variety of awards and special citations, including Oak Ridge National Laboratory’s Small Business Innovator award in 2002, a “Cool Companies” award from Fortune Magazine in 2004, the World Technology Award for Energy in 2004, a Sustained Excellence by a Performer award in 2005 from the Defense Advanced Research Projects Agency, or DARPA, and Automotive News’s PACE award in 2006.

Corporate Information

We were incorporated in California in July 1971 and, in connection with this offering, plan to reincorporate in Delaware prior to the effective date of the registration statement of which this prospectus is a part. Our principal executive offices are located at 181 W. Huntington Drive, Suite 202, Monrovia, California 91016, and our telephone number is (626) 357-9983. Our website address is http://www.avinc.com. The information on, or accessible through, our website is not part of this prospectus and should not be relied upon in determining whether to make an investment in our common stock.

AeroVironment^® and PosiCharge^® are registered trademarks of AeroVironment, Inc. This prospectus also includes other registered and unregistered trademarks of AeroVironment, Inc. and other persons.

You should carefully consider the information contained in the “Risk Factors” section of this prospectus beginning on page 7 before you decide to purchase our common stock.

THE OFFERING


Common stock offered by AeroVironment		shares

Common stock offered by the selling stockholders		shares

Common stock to be outstanding after this offering		shares

Use of proceeds		We intend to use the net proceeds from this offering for working capital and other general corporate purposes, including to finance research and development of new products, sales and marketing activities, opportunistic acquisitions and other capital expenditures. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds” for more information.

Dividend policy		We currently intend to retain all future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Proposed Nasdaq Global Market symbol		AVAV

The number of shares of common stock to be outstanding after this offering is based on shares outstanding as of July 29, 2006, assumes the exercise of options to purchase an aggregate of shares of common stock to be sold by selling stockholders in this offering and excludes the following:


	•	shares of common stock issuable upon the exercise of the remaining options outstanding as of July 29, 2006 at a weighted average exercise price of $ per share; and

	•	shares of our common stock reserved for future issuance under our 2006 equity incentive plan, which will become effective on the day prior to the day on which we become subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, which we refer to herein as the Exchange Act.

Except as otherwise indicated, all information in this prospectus assumes the following:


	•	our reincorporation in Delaware prior to the effective date of the registration statement of which this prospectus is a part;

	•	the exercise of options to purchase an aggregate of shares of common stock at a weighted average exercise price of $ per share to be sold by selling stockholders in this offering;

	•	no exercise by the underwriters of their option to purchase up to an additional shares of common stock to cover over-allotments;

	•	except as provided above, no exercise of outstanding options after July 29, 2006;

	•	the filing of our amended and restated certificate of incorporation and amended and restated bylaws upon completion of this offering; and

	•	a -for-one stock split of our common stock to be effected before the completion of this offering.

SUMMARY CONSOLIDATED FINANCIAL DATA

The following table provides a summary of our consolidated financial data for the periods indicated. The summary historical consolidated financial data for each of the fiscal years ended April 30, 2004, 2005 and 2006 have been derived from our audited consolidated financial statements. The summary historical consolidated financial data for the three months ended July 30, 2005 and July 29, 2006 have been derived from our unaudited consolidated financial statements. You should read this information together with our consolidated financial statements and related notes, “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


										Three Months Ended
	Fiscal Year Ended April 30,									July 30,			July 29,
	2004			2005			2006			2005			2006
										(Unaudited)
	(In thousands, except share and per share data)

Consolidated Income Statement Data:
Revenue	$	47,680		$	105,155		$	139,357		$	30,752		$	31,557
Cost of sales		33,122			58,549			82,598			19,516			19,571

Gross margin		14,558			46,606			56,759			11,236			11,986

Research and development		1,715			9,799			16,098			3,509			3,841
Selling, general and administrative		9,743			16,550			24,336			5,628			6,132

Income from operations		3,100			20,257			16,325			2,099			2,013
Other income (expense), net		(70	)		(44	)		(35	)		(187	)		206

Income before income taxes		3,030			20,213			16,290			1,912			2,219
Income tax expense		859			5,531			4,881			574			854

Net income	$	2,171		$	14,682		$	11,409		$	1,338		$	1,365

Earnings per common share:
Basic	$	1.32		$	8.15		$	6.17		$	0.73		$	0.71
Diluted	$	1.26		$	7.46		$	5.40		$	0.65		$	0.63
Weighted average common shares outstanding:
Basic		1,639,543			1,800,930			1,848,822			1,838,339			1,919,361
Diluted		1,718,460			1,967,550			2,113,395			2,050,620			2,154,890
Pro forma earnings per common share⁽¹⁾:
Basic	$			$			$			$			$
Diluted	$			$			$			$			$
Pro forma weighted average common shares outstanding⁽¹⁾:
Basic
Diluted


	As of July 29, 2006
	Actual		As Adjusted⁽²⁾
Consolidated Balance Sheet Data:	(Unaudited, in thousands)

Cash and cash equivalents	$	13,478	$
Restricted cash⁽³⁾		1,555
Working capital		30,243
Total assets		55,776
Total liabilities		19,850
Total stockholders’ equity		35,926


(1)		Pro forma earnings per common share and pro forma weighted average common shares outstanding give effect to (a) our sale of shares of our common stock in connection with this offering and (b) a -for-one split of our common stock to be effected prior to the completion of this offering, as if such transactions were completed on May 1, 2005.

(2)		The as adjusted consolidated balance sheet data reflect the issuance of shares of common stock upon the exercise of options at a weighted average exercise price of $ per share to be sold by selling stockholders in this offering and our receipt of estimated net proceeds from our sale of shares of common stock that we are offering at an assumed public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), after deducting estimated discounts and commissions and estimated offering expenses payable by us.

(3)		Restricted cash represents deposits with a bank to secure standby letters of credit established for the benefit of our customers. As of July 29, 2006, there were no claims against these letters of credit.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this prospectus, before deciding whether to invest in our common stock. If any of the following risks actually materializes, then our business, financial condition and results of operations would suffer. The trading price of our common stock could decline as a result of any of these risks, and you might lose all or part of your investment in our common stock. You should read the section entitled “Special Note Regarding Forward-Looking Statements” immediately following these risk factors for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this prospectus.

Risks Related to Our Business

We re

Title of Each Class

Proposed Maximum

Amount of

of Securities to be Registered

Aggregate Offering Price(1)(2)

Registration Fee

Common Stock, $0.0001 par value

$115,000,000