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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Maxwell Technologies, Inc. | NASDAQ:MXWL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.48 | 4.48 | 4.49 | 0 | 01:00:00 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-2390133
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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3888 Calle Fortunada, San Diego, California
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92123
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging growth company
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o
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Page
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Item 1.
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Financial Statements
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June 30,
2017 |
|
December 31,
2016 |
||||
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||||
ASSETS
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|
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|
||||
Current assets:
|
|
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|
||||
Cash and cash equivalents
|
|
$
|
19,181
|
|
|
$
|
25,359
|
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Trade and other accounts receivable, net of allowance for doubtful accounts of $28 and $26 as of June 30, 2017 and December 31, 2016, respectively
|
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30,331
|
|
|
20,441
|
|
||
Inventories, net
|
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30,174
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|
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32,248
|
|
||
Prepaid expenses and other current assets
|
|
4,101
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|
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4,407
|
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||
Total current assets
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83,787
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82,455
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Property and equipment, net
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27,217
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26,120
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Intangible assets, net
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11,469
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—
|
|
||
Goodwill
|
|
35,592
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|
|
22,799
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Pension asset
|
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9,670
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8,887
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Other non-current assets
|
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868
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|
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613
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Total assets
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$
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168,603
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$
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140,874
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||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
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||||
Current liabilities:
|
|
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|
|
||||
Accounts payable and accrued liabilities
|
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$
|
26,467
|
|
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$
|
19,181
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Accrued employee compensation
|
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7,564
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|
|
6,152
|
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||
Deferred revenue and customer deposits
|
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5,802
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|
|
3,967
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|
||
Short-term borrowings and current portion of long-term debt
|
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20
|
|
|
40
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|
||
Total current liabilities
|
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39,853
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|
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29,340
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|
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Deferred tax liability, long-term
|
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8,805
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|
|
8,580
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Long-term debt, excluding current portion
|
|
57
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|
|
43
|
|
||
Employee severance benefit obligation
|
|
3,354
|
|
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—
|
|
||
Other long-term liabilities
|
|
2,846
|
|
|
2,089
|
|
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Total liabilities
|
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54,915
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|
|
40,052
|
|
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Commitments and contingencies (Note 12)
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Stockholders’ equity:
|
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||||
Common stock, $0.10 par value per share, 80,000 shares authorized at June 30, 2017 and December 31, 2016;
36,934 an
d 32,135 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
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3,691
|
|
|
3,210
|
|
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Additional paid-in capital
|
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325,032
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|
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296,316
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Accumulated deficit
|
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(224,621
|
)
|
|
(204,104
|
)
|
||
Accumulated other comprehensive income
|
|
9,586
|
|
|
5,400
|
|
||
Total stockholders’ equity
|
|
113,688
|
|
|
100,822
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
168,603
|
|
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$
|
140,874
|
|
|
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Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
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June 30,
|
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June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
|
$
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37,103
|
|
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$
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34,135
|
|
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$
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63,789
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|
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$
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69,338
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Cost of revenue
|
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29,276
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|
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24,154
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|
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49,771
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|
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49,704
|
|
||||
Gross profit
|
|
7,827
|
|
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9,981
|
|
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14,018
|
|
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19,634
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|
||||
Operating expenses:
|
|
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Selling, general and administrative
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12,070
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8,223
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21,610
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|
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18,321
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Research and development
|
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4,430
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5,461
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9,116
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11,068
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||||
Restructuring and exit costs
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—
|
|
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109
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|
|
997
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|
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297
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|
||||
Total operating expenses
|
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16,500
|
|
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13,793
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|
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31,723
|
|
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29,686
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|
||||
Loss from operations
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(8,673
|
)
|
|
(3,812
|
)
|
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(17,705
|
)
|
|
(10,052
|
)
|
||||
Gain on sale of product line
|
|
—
|
|
|
(6,657
|
)
|
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—
|
|
|
(6,657
|
)
|
||||
Interest expense, net
|
|
97
|
|
|
61
|
|
|
160
|
|
|
131
|
|
||||
Other income
|
|
(52
|
)
|
|
(47
|
)
|
|
(53
|
)
|
|
(131
|
)
|
||||
Foreign currency exchange loss, net
|
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18
|
|
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64
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|
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115
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203
|
|
||||
Income (loss) before income taxes
|
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(8,736
|
)
|
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2,767
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|
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(17,927
|
)
|
|
(3,598
|
)
|
||||
Income tax provision
|
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1,382
|
|
|
600
|
|
|
2,590
|
|
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1,083
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|
||||
Net income (loss)
|
|
$
|
(10,118
|
)
|
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$
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2,167
|
|
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$
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(20,517
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)
|
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$
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(4,681
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)
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Net income (loss) per share
|
|
|
|
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||||||||
Basic and diluted
|
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$
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(0.28
|
)
|
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$
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0.07
|
|
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$
|
(0.61
|
)
|
|
$
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(0.15
|
)
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Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
35,526
|
|
|
31,842
|
|
|
33,871
|
|
|
31,746
|
|
||||
Diluted
|
|
35,526
|
|
|
32,027
|
|
|
33,871
|
|
|
31,746
|
|
|
|
|
|
|
||||||||||||
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
|
$
|
(10,118
|
)
|
|
$
|
2,167
|
|
|
$
|
(20,517
|
)
|
|
$
|
(4,681
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustment
|
|
2,814
|
|
|
(1,070
|
)
|
|
4,126
|
|
|
872
|
|
||||
Defined benefit pension plan, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Amortization of deferred loss, net of tax provision
of $13 for the three months ended June 30, 2016; net of tax provision of $25
for the six months ended June 30, 2016
|
|
—
|
|
|
49
|
|
|
—
|
|
|
97
|
|
||||
Amortization of prior service cost, net of tax provision of $8 for each of the three months ended June 30, 2017 and 2016; net of tax provision of
$15 for each of the six months ended June 30, 2017 and 2016
|
|
31
|
|
|
30
|
|
|
60
|
|
|
60
|
|
||||
Other comprehensive income (loss), net of tax
|
|
2,845
|
|
|
(991
|
)
|
|
4,186
|
|
|
1,029
|
|
||||
Comprehensive income (loss)
|
|
$
|
(7,273
|
)
|
|
$
|
1,176
|
|
|
$
|
(16,331
|
)
|
|
$
|
(3,652
|
)
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net loss
|
|
$
|
(20,517
|
)
|
|
$
|
(4,681
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
||||
Depreciation
|
|
4,407
|
|
|
4,966
|
|
||
Amortization of intangible assets
|
|
202
|
|
|
—
|
|
||
Loss on lease due to restructuring
|
|
—
|
|
|
87
|
|
||
Pension and employee severance obligation cost
|
|
277
|
|
|
318
|
|
||
Stock-based compensation expense
|
|
3,792
|
|
|
2,662
|
|
||
Gain on sale of property and equipment
|
|
—
|
|
|
(131
|
)
|
||
Gain on sale of product line
|
|
—
|
|
|
(6,657
|
)
|
||
Unrealized (gain) loss on foreign currency exchange rates
|
|
(22
|
)
|
|
39
|
|
||
Release of tax liability
|
|
—
|
|
|
(1,518
|
)
|
||
Provision for losses on accounts receivable
|
|
2
|
|
|
67
|
|
||
Provision for losses on inventory
|
|
828
|
|
|
139
|
|
||
Provision for warranties
|
|
209
|
|
|
307
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Trade and other accounts receivable
|
|
(6,751
|
)
|
|
14,831
|
|
||
Inventories
|
|
6,057
|
|
|
(5,186
|
)
|
||
Prepaid expenses and other assets
|
|
(599
|
)
|
|
(628
|
)
|
||
Pension asset
|
|
(305
|
)
|
|
(297
|
)
|
||
Accounts payable and accrued liabilities
|
|
4,714
|
|
|
(10,719
|
)
|
||
Deferred revenue and customer deposits
|
|
1,351
|
|
|
249
|
|
||
Accrued employee compensation
|
|
240
|
|
|
(495
|
)
|
||
Deferred tax liability
|
|
(190
|
)
|
|
(10
|
)
|
||
Other long-term liabilities
|
|
(197
|
)
|
|
(331
|
)
|
||
Net cash used in operating activities
|
|
(6,502
|
)
|
|
(6,988
|
)
|
||
INVESTING ACTIVITIES:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(2,060
|
)
|
|
(3,629
|
)
|
||
Proceeds from sale of property and equipment
|
|
—
|
|
|
133
|
|
||
Cash used in acquisition, net of cash acquired
|
|
(97
|
)
|
|
—
|
|
||
Proceeds from sale of product line
|
|
1,500
|
|
|
20,486
|
|
||
Net cash provided by (used in) investing activities
|
|
(657
|
)
|
|
16,990
|
|
||
FINANCING ACTIVITIES:
|
|
|
|
|
||||
Principal payments on long-term debt and short-term borrowings
|
|
(17
|
)
|
|
(21
|
)
|
||
Proceeds from issuance of common stock under equity compensation plans
|
|
194
|
|
|
613
|
|
||
Net cash provided by financing activities
|
|
177
|
|
|
592
|
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
|
804
|
|
|
399
|
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
|
(6,178
|
)
|
|
10,993
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
25,359
|
|
|
24,782
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
|
$
|
19,181
|
|
|
$
|
35,775
|
|
•
|
Ultracapacitors:
The Company’s primary focus, ultracapacitors, are energy storage devices that possess a unique combination of high power density, extremely long operational life and the ability to charge and discharge very rapidly. The Company’s ultracapacitor cells, multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including automotive, bus, rail and truck in transportation and grid energy storage, and wind in renewable energy.
|
•
|
High-Voltage Capacitors:
The Company’s CONDIS
®
high-voltage capacitors are designed and manufactured to perform reliably for decades in all climates. These products include grading and coupling capacitors and capacitive voltage dividers that are used to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
|
$
|
(10,118
|
)
|
|
$
|
2,167
|
|
|
$
|
(20,517
|
)
|
|
$
|
(4,681
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
35,526
|
|
|
31,842
|
|
|
33,871
|
|
|
31,746
|
|
||||
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
|
||||||||
Restricted stock awards
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
||||
Restricted stock unit awards
|
|
—
|
|
|
168
|
|
|
—
|
|
|
—
|
|
||||
Employee stock purchase plan
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average common shares outstanding, assuming dilution
|
|
35,526
|
|
|
32,027
|
|
|
33,871
|
|
|
31,746
|
|
||||
Net income (loss) per share
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted
|
|
$
|
(0.28
|
)
|
|
$
|
0.07
|
|
|
$
|
(0.61
|
)
|
|
$
|
(0.15
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Outstanding options to purchase common stock
|
|
393
|
|
|
661
|
|
|
393
|
|
|
636
|
|
Unvested restricted stock awards
|
|
30
|
|
|
99
|
|
|
30
|
|
|
158
|
|
Unvested restricted stock unit awards
|
|
2,499
|
|
|
471
|
|
|
2,499
|
|
|
1,742
|
|
Bonus to be paid in stock awards
|
|
226
|
|
|
—
|
|
|
226
|
|
|
180
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
||||
Raw materials and purchased parts
|
|
$
|
10,386
|
|
|
$
|
12,980
|
|
Work-in-process
|
|
2,819
|
|
|
858
|
|
||
Finished goods
|
|
18,771
|
|
|
19,492
|
|
||
Reserves
|
|
(1,802
|
)
|
|
(1,082
|
)
|
||
Total inventories, net
|
|
$
|
30,174
|
|
|
$
|
32,248
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Beginning balance
|
|
$
|
1,213
|
|
|
$
|
1,288
|
|
Acquired liability from Nesscap
|
|
773
|
|
|
—
|
|
||
Product warranties issued
|
|
270
|
|
|
213
|
|
||
Settlement of warranties
|
|
(181
|
)
|
|
(226
|
)
|
||
Changes related to preexisting warranties
|
|
(61
|
)
|
|
(69
|
)
|
||
Ending balance
|
|
$
|
2,014
|
|
|
$
|
1,206
|
|
|
|
Foreign
Currency Translation Adjustment |
|
Defined Benefit
Pension Plan |
|
Accumulated
Other Comprehensive Income |
|
Affected Line Items in the Statement of Operations
|
||||||
Balance as of December 31, 2016
|
|
$
|
7,826
|
|
|
$
|
(2,426
|
)
|
|
$
|
5,400
|
|
|
|
Other comprehensive income before reclassification
|
|
4,126
|
|
|
—
|
|
|
4,126
|
|
|
|
|||
Amounts reclassified from accumulated other comprehensive income
|
|
—
|
|
|
60
|
|
|
60
|
|
|
Cost of Sales, Selling, General and Administrative and Research and Development Expense
|
|||
Net other comprehensive income for the
six months ended June 30, 2017
|
|
4,126
|
|
|
60
|
|
|
4,186
|
|
|
|
|||
Balance as of June 30, 2017
|
|
$
|
11,952
|
|
|
$
|
(2,366
|
)
|
|
$
|
9,586
|
|
|
|
Maxwell common stock
|
|
$
|
25,294
|
|
Settlement of seller’s transaction expenses
|
|
1,006
|
|
|
Total estimated purchase price
|
|
$
|
26,300
|
|
|
|
Fair Value
|
||
Cash and cash equivalents
|
|
$
|
909
|
|
Accounts receivable
|
|
2,545
|
|
|
Inventories
|
|
4,397
|
|
|
Prepaid expenses and other assets
|
|
764
|
|
|
Property and equipment
|
|
3,314
|
|
|
Intangible assets
|
|
11,800
|
|
|
Accounts payable, accrued compensation and other liabilities
|
|
(5,713
|
)
|
|
Employee severance obligation
|
|
(3,340
|
)
|
|
Total identifiable net assets
|
|
14,676
|
|
|
Goodwill
|
|
11,624
|
|
|
Total purchase price
|
|
$
|
26,300
|
|
|
|
Estimated Useful Life (in years)
|
|
Fair Value
|
||
Customer relationships - institutional
|
|
14
|
|
$
|
3,200
|
|
Customer relationships - non-institutional
|
|
10
|
|
4,400
|
|
|
Trademarks and trade names
|
|
10
|
|
1,500
|
|
|
Developed technology
|
|
8
|
|
2,700
|
|
|
Total intangible assets
|
|
|
|
$
|
11,800
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenues
|
|
$
|
38,096
|
|
|
$
|
39,675
|
|
|
$
|
69,948
|
|
|
$
|
78,640
|
|
Net income (loss)
|
|
(9,346
|
)
|
|
1,264
|
|
|
(20,487
|
)
|
|
(6,655
|
)
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
(0.25
|
)
|
|
0.04
|
|
|
(0.56
|
)
|
|
(0.19
|
)
|
||||
Diluted
|
|
(0.25
|
)
|
|
0.03
|
|
|
(0.56
|
)
|
|
(0.19
|
)
|
||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
36,757
|
|
|
35,989
|
|
|
36,511
|
|
|
35,893
|
|
||||
Diluted
|
|
36,757
|
|
|
36,174
|
|
|
36,511
|
|
|
35,893
|
|
•
|
Amortization expense for acquired intangibles and removal of Nesscap historical intangibles amortization
|
•
|
Removal of historical Nesscap interest expenses, gains and losses related to debt not acquired
|
•
|
Recognition of expense associated with the valuation of inventory acquired
|
•
|
Removal of transaction expenses
|
Balance at December 31, 2016
|
|
$
|
22,799
|
|
Goodwill from Nesscap Acquisition
|
|
11,624
|
|
|
Foreign currency translation adjustments
|
|
1,169
|
|
|
Balance at June 30, 2017
|
|
$
|
35,592
|
|
|
|
As of June 30, 2017
|
||||||||||||||||
|
|
Useful Life
(in years)
|
|
Gross Initial Carrying Value
|
|
Cumulative Foreign Currency Translation Adjustment
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||
Customer relationships - institutional
|
|
14
|
|
$
|
3,200
|
|
|
$
|
(36
|
)
|
|
$
|
(39
|
)
|
|
$
|
3,125
|
|
Customer relationships - non-institutional
|
|
10
|
|
4,400
|
|
|
(50
|
)
|
|
(75
|
)
|
|
4,275
|
|
||||
Trademarks and trade names
|
|
10
|
|
1,500
|
|
|
(17
|
)
|
|
(25
|
)
|
|
1,458
|
|
||||
Developed technology
|
|
8
|
|
2,700
|
|
|
(31
|
)
|
|
(58
|
)
|
|
2,611
|
|
||||
Total intangible assets
|
|
|
|
$
|
11,800
|
|
|
$
|
(134
|
)
|
|
$
|
(197
|
)
|
|
$
|
11,469
|
|
|
|
Employee Severance Costs
|
||
Restructuring liability as of December 31, 2016
|
|
$
|
—
|
|
Costs incurred
|
|
997
|
|
|
Amounts paid
|
|
(600
|
)
|
|
Restructuring liability as of June 30, 2017
|
|
$
|
397
|
|
|
|
|
Three Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
||||
Total gain (loss)
|
|
|
$
|
(73
|
)
|
|
$
|
(88
|
)
|
|
|
Three Months Ended June 30, 2016
|
|
Six Months Ended June 30, 2016
|
||||
Total gain (loss)
|
|
$
|
(19
|
)
|
|
$
|
(37
|
)
|
|
|
Three and Six Months Ended June 30, 2017
|
|
Expected dividend yield
|
|
—
|
%
|
Expected volatility
|
|
59
|
%
|
Risk-free interest rate
|
|
1.87
|
%
|
Expected term (in years)
|
|
5.5
|
|
|
|
Three and Six Months Ended June 30,
|
||||
|
|
2017
|
|
2016
|
||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
Expected volatility
|
|
53
|
%
|
|
62
|
%
|
Risk-free interest rate
|
|
1.55
|
%
|
|
1.07
|
%
|
Expected term (in years)
|
|
2.8
|
|
|
3.0
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
RSU Type
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service-based
|
|
$
|
669
|
|
|
$
|
536
|
|
|
$
|
1,337
|
|
|
$
|
1,069
|
|
Performance objectives
|
|
164
|
|
|
29
|
|
|
170
|
|
|
41
|
|
||||
Market-condition
|
|
403
|
|
|
180
|
|
|
595
|
|
|
371
|
|
||||
|
|
$
|
1,236
|
|
|
$
|
745
|
|
|
$
|
2,102
|
|
|
$
|
1,481
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Cost of revenue
|
|
$
|
257
|
|
|
$
|
262
|
|
|
$
|
450
|
|
|
$
|
497
|
|
Selling, general and administrative
|
|
1,596
|
|
|
966
|
|
|
2,665
|
|
|
1,637
|
|
||||
Research and development
|
|
401
|
|
|
231
|
|
|
677
|
|
|
528
|
|
||||
Total stock-based compensation expense
|
|
$
|
2,254
|
|
|
$
|
1,459
|
|
|
$
|
3,792
|
|
|
$
|
2,662
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Service cost
|
|
$
|
245
|
|
|
$
|
297
|
|
|
$
|
486
|
|
|
$
|
587
|
|
Interest cost
|
|
57
|
|
|
62
|
|
|
114
|
|
|
123
|
|
||||
Expected return on plan assets
|
|
(252
|
)
|
|
(298
|
)
|
|
(499
|
)
|
|
(589
|
)
|
||||
Prior service cost amortization
|
|
39
|
|
|
38
|
|
|
75
|
|
|
75
|
|
||||
Deferred loss amortization
|
|
—
|
|
|
62
|
|
|
—
|
|
|
122
|
|
||||
Net periodic pension cost
|
|
$
|
89
|
|
|
$
|
161
|
|
|
$
|
176
|
|
|
$
|
318
|
|
|
|
Three and Six Months Ended June 30, 2017
|
||
Service cost
|
|
$
|
88
|
|
Interest cost
|
|
13
|
|
|
Net cost
|
|
$
|
101
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
dependence upon the sale of products to a small number of customers and vertical markets, some of which are heavily dependent on government funding or government subsidies which may or may not continue in the future;
|
•
|
uncertainties related to the global geopolitical landscape and the recent elections in the United States;
|
•
|
risks related to acquisitions and potential for unsuccessful integration of acquired businesses;
|
•
|
risk that our restructuring efforts may not be successful and that we may not be able to realize the anticipated cost savings and other benefits;
|
•
|
our ability to obtain sufficient capital to meet our operating or other needs;
|
•
|
regulatory and other approvals related to the completion of financing transactions;
|
•
|
downward pressures on product pricing from increased competition and potential shift in sales mix with respect to low margin and high margin business;
|
•
|
our ability to manage and minimize the impact of unfavorable legal proceedings;
|
•
|
risk that activist stockholders attempt to effect changes to our company which could adversely affect our corporate governance;
|
•
|
risks related to our international operations including, but not limited to, our ability to adequately comply with the changing rules and regulations in countries where our business is conducted, our ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations arising from our international operations, and our ability to continue to comply with the U.S. Foreign Corrupt Practices Act as well as the anti-bribery laws of foreign jurisdictions;
|
•
|
dependence upon the sale of products into Asia and Europe, where macroeconomic factors outside our control may adversely affect our sales;
|
•
|
our ability to remain competitive and stimulate customer demand through successful introduction of new products, and to educate our prospective customers on the products we offer;
|
•
|
successful acquisition, development and retention of key personnel;
|
•
|
our ability to effectively manage our reliance upon certain suppliers of key component parts, specialty equipment and logistical services;
|
•
|
our ability to manage product quality problems;
|
•
|
our ability to protect our intellectual property rights and to defend claims against us;
|
•
|
our ability to effectively identify, enter into, manage and benefit from strategic alliances;
|
•
|
occurrence of a catastrophic event at any of our facilities;
|
•
|
occurrence of a technology systems failure, network disruption, or breach in data security, and
|
•
|
our ability to match production volume to actual customer demand.
|
•
|
Executive Overview
|
•
|
Current Year Highlights
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Critical Accounting Estimates
|
•
|
Recent Accounting Pronouncements
|
•
|
Off Balance Sheet Arrangements
|
•
|
In January 2017, we announced a definitive agreement with CRRC-SRI to localize manufacturing of our ultracapacitor-based modules for use in the China new energy bus market. Under the terms of the agreement, localized production of our ultracapacitor-based modules is expected to begin in China in the second half of 2017, coinciding with the peak buying season for China's new energy bus market. The production of bus modules extends our strategic partnership with CRRC-SRI and we believe will enable us to compete more effectively in the China bus market moving forward.
|
•
|
In February 2017, we announced that we entered into an agreement to acquire substantially all of the assets and business of Nesscap Energy, Inc., a developer and manufacturer of ultracapacitor products for use in transportation, renewable energy, industrial and consumer markets. On April 28, 2017, we completed this acquisition through the issuance of approximately 4.1 million shares of Maxwell common stock and the assumption of certain liabilities. The acquisition adds complementary businesses to our operations and expands our portfolio of products and we believe the acquisition will add value for our customers.
|
•
|
In April 2017, we announced the signing of a stock purchase agreement with SDIC Fund Management Co., Ltd. ("SDIC"), which is expected to bring approximately $46.6 million in cash to Maxwell before transaction costs. The transaction is subject to certain closing conditions, including U.S. and Chinese government approvals. Subject to obtaining the necessary approvals and meeting the closing conditions, the cash received from the transaction is to be used for strategic developments, including dry battery electrode development, as well as working capital and general corporate purposes. SDIC has significant investments in China's energy storage industry, including top battery companies, major system integrators in the new energy market, as well as leading OEMs in the China auto and grid industries.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Revenue
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
|
79
|
%
|
|
71
|
%
|
|
78
|
%
|
|
72
|
%
|
Gross profit
|
|
21
|
%
|
|
29
|
%
|
|
22
|
%
|
|
28
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
|
32
|
%
|
|
24
|
%
|
|
34
|
%
|
|
27
|
%
|
Research and development
|
|
12
|
%
|
|
16
|
%
|
|
14
|
%
|
|
16
|
%
|
Restructuring and exit costs
|
|
—
|
%
|
|
—
|
%
|
|
2
|
%
|
|
—
|
%
|
Total operating expenses
|
|
44
|
%
|
|
40
|
%
|
|
50
|
%
|
|
43
|
%
|
Loss from operations
|
|
(23
|
)%
|
|
(11
|
)%
|
|
(28
|
)%
|
|
(15
|
)%
|
Gain on sale of product line
|
|
—
|
%
|
|
(19
|
)%
|
|
—
|
%
|
|
(9
|
)%
|
Income (loss) before income taxes
|
|
(23
|
)%
|
|
8
|
%
|
|
(28
|
)%
|
|
(5
|
)%
|
Income tax provision
|
|
4
|
%
|
|
2
|
%
|
|
4
|
%
|
|
2
|
%
|
Net income (loss)
|
|
(27
|
)%
|
|
6
|
%
|
|
(32
|
)%
|
|
(7
|
)%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Increase (Decrease)
|
|
% Change
|
|
2017
|
|
2016
|
|
Decrease
|
|
% Change
|
||||||||||||||
Revenue
|
|
$
|
37,103
|
|
|
$
|
34,135
|
|
|
$
|
2,968
|
|
|
9
|
%
|
|
$
|
63,789
|
|
|
$
|
69,338
|
|
|
$
|
(5,549
|
)
|
|
(8
|
)%
|
Cost of revenue
|
|
29,276
|
|
|
24,154
|
|
|
5,122
|
|
|
21
|
%
|
|
49,771
|
|
|
49,704
|
|
|
67
|
|
|
—
|
%
|
||||||
% of Revenue
|
|
79
|
%
|
|
71
|
%
|
|
|
|
|
|
78
|
%
|
|
72
|
%
|
|
|
|
|
||||||||||
Gross profit
|
|
$
|
7,827
|
|
|
$
|
9,981
|
|
|
$
|
(2,154
|
)
|
|
(22
|
)%
|
|
$
|
14,018
|
|
|
$
|
19,634
|
|
|
$
|
(5,616
|
)
|
|
(29
|
)%
|
% of Revenue
|
|
21
|
%
|
|
29
|
%
|
|
|
|
|
|
22
|
%
|
|
28
|
%
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Increase
|
|
% Change
|
|
2017
|
|
2016
|
|
Increase
|
|
% Change
|
||||||||||||||
Selling, general and administrative
|
|
$
|
12,070
|
|
|
$
|
8,223
|
|
|
$
|
3,847
|
|
|
47
|
%
|
|
$
|
21,610
|
|
|
$
|
18,321
|
|
|
$
|
3,289
|
|
|
18
|
%
|
% of Revenue
|
|
32
|
%
|
|
24
|
%
|
|
|
|
|
|
34
|
%
|
|
27
|
%
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||||||||||||||||||
|
|
2017
|
|
2016
|
|
Decrease
|
|
% Change
|
|
2017
|
|
2016
|
|
Decrease
|
|
% Change
|
|||||||||||||
Research and development
|
|
$
|
4,430
|
|
|
5,461
|
|
|
$
|
(1,031
|
)
|
|
(19
|
)%
|
|
$
|
9,116
|
|
|
$
|
11,068
|
|
|
$
|
(1,952
|
)
|
|
(18
|
)%
|
% of Revenue
|
|
12
|
%
|
|
16
|
%
|
|
|
|
|
|
14
|
%
|
|
16
|
%
|
|
|
|
|
|
|
Employee Severance Costs
|
||
Restructuring liability as of December 31, 2016
|
|
$
|
—
|
|
Costs incurred
|
|
997
|
|
|
Amounts paid
|
|
(600
|
)
|
|
Restructuring liability as of June 30, 2017
|
|
$
|
397
|
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Total cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
(6,502
|
)
|
|
$
|
(6,988
|
)
|
Investing activities
|
|
(657
|
)
|
|
16,990
|
|
||
Financing activities
|
|
177
|
|
|
592
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
804
|
|
|
399
|
|
||
Increase (decrease) in cash and cash equivalents
|
|
$
|
(6,178
|
)
|
|
$
|
10,993
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 4.
|
Controls and Procedures
|
•
|
On April 28, 2017, we completed the acquisition of Nesscap Energy, Inc. We are in the process of evaluating the internal controls of the acquired business and integrating it into our overall system of internal control over financial reporting.
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 6.
|
Exhibits
|
Exhibit
Number |
|
|
Description of Document
|
|
|
|
|
3.1
|
|
|
Restated Certificate of Incorporation of Registrant. (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1987 (SEC file no. 001-10964)).
|
|
|
|
|
3.2
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated November 22, 1996. (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1997 (SEC file no. 001-10964)).
|
|
|
|
|
3.3
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated February 9, 1998. (incorporated herein by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended July 31, 1999 (SEC file no. 001-10964)).
|
|
|
|
|
3.4
|
|
|
Certificate of Amendment of Restated Certificate of Incorporation of Registrant, dated June 15, 2016. (incorporated herein by reference to the Registrant’s Current Report on Form 8-K filed on June 20, 2016 (SEC file no. 001-15477)).
|
|
|
|
|
3.5
|
|
|
Amended and Restated Bylaws of Maxwell Technologies, Inc. (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 27, 2017 (SEC file no. 001-15477)).
|
|
|
|
|
10.1
|
|
|
Stock Purchase Agreement, dated April 10, 2017, between Maxwell Technologies, Inc. and SDIC Fund Management Co., Ltd. (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 10, 2017 (SEC file no. 001-15477)).
|
|
|
|
|
10.2
|
|
|
Principal Shareholder Agreement, dated April 10, 2017, between Maxwell Technologies, Inc. and SDIC Fund Management Co., Ltd. (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 10, 2017 (SEC file no. 001-15477)).
|
|
|
|
|
10.3
|
|
|
Registration Rights Agreement, dated April 10, 2017, between Maxwell Technologies, Inc. and SDIC Fund Management Co., Ltd. (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 10, 2017 (SEC file no. 001-15477)).
|
|
|
|
|
10.4
|
|
|
Agreement, dated as of April 10, 2017, by and among Maxwell Technologies, Inc. and Viex Capital Advisors, LLC and its affiliates (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 10, 2017 (SEC file no. 001-15477)).
|
|
|
|
|
10.5
|
|
|
2013 Omnibus Equity Incentive Plan (incorporation herein by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on June 2, 2017 (SEC file no. 001-15477)).+
|
|
|
|
|
10.6
|
|
|
2004 Employee Stock Purchase Plan (incorporation herein by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on June 2, 2017 (SEC file no. 001-15477)).+
|
|
|
|
|
31.1
|
|
|
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
31.2
|
|
|
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
32
|
|
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 Certification), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
101
|
|
|
The following financial statements and footnotes from the Maxwell Technologies, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) (iv) Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements. *
|
*
|
Filed herewith.
|
+
|
Indicates management compensatory plan or arrangement.
|
|
|
|
MAXWELL TECHNOLOGIES, INC.
|
|
|
|
|
|
|
Date:
|
August 8, 2017
|
|
By:
|
/s/ Franz Fink
|
|
|
|
|
Franz Fink
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
August 8, 2017
|
|
By:
|
/s/ David Lyle
|
|
|
|
|
David Lyle
|
|
|
|
|
Senior Vice President, Chief Financial Officer, Treasurer and Secretary
|
1 Year Maxwell Technologies, Inc. Chart |
1 Month Maxwell Technologies, Inc. Chart |
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