UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarter ended June 30, 2004 | ||
| OR | ||
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to | ||
Commission file number 1-15477
MAXWELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 95-2390133 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 9244 Balboa Avenue San Diego, California (Address of principal executive offices) |
92123 (Zip Code) | |
| (858) 503-3300 (Registrant’s telephone number, including area code) |
||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). YES x NO ¨
The number of shares of the registrant’s Common Stock outstanding as of August 6, 2004 was 14,462,411 shares.
MAXWELL TECHNOLOGIES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the quarter ended June 30, 2004
| Page | ||||
| PART I – Financial Information | ||||
| Item 1. |
Financial Statements: | |||
| Condensed Consolidated Balance Sheets as of June 30, 2004 (unaudited) and December 31, 2003 | 2 | |||
| Unaudited Condensed Consolidated Statements of Operations – Three and Six Months Ended June 30, 2004 and 2003 | 3 | |||
| Unaudited Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2004 and 2003 | 4 | |||
| Notes to Condensed Consolidated Financial Statements (unaudited) | 5 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||
| Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 22 | ||
| Item 4. |
Controls and Procedures | 22 | ||
| PART II – Other Information | ||||
| Item 1. |
Legal Proceedings | 24 | ||
| Item 2. |
Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities | 24 | ||
| Item 3. |
Defaults Upon Senior Securities | 24 | ||
| Item 4. |
Submission of Matters to a Vote of Security Holders | 24 | ||
| Item 5. |
Other Information | 24 | ||
| Item 6. |
Exhibits and Report on Form 8-K | 25 | ||
| 26 | ||||
i
PART I – Financial Information
Item 1. Consolidated Financial Statements
The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K.
In the opinion of management of the Company, these unaudited statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows of Maxwell Technologies, Inc. for all periods presented.
The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire year.
1
MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
| June 30, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 6,847 | $ | 9,784 | ||||
| Short-term investments |
2,213 | 2,455 | ||||||
| Trade and other accounts receivable, net |
6,954 | 5,936 | ||||||
| Inventories (Note 3) |
8,277 | 7,309 | ||||||
| Prepaid expenses and other current assets |
965 | 1,143 | ||||||
| Total current assets |
25,256 | 26,627 | ||||||
| Property, plant and equipment, net |
10,625 | 10,769 | ||||||
| Other intangible assets, net |
1,879 | 2,002 | ||||||
| Goodwill |
19,165 | 19,478 | ||||||
| Prepaid pension asset |
4,008 | 3,962 | ||||||
| Other non-currrent assets |
— | 175 | ||||||
| $ | 60,933 | $ | 63,013 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable and accrued liabilities |
$ | 6,411 | $ | 7,650 | ||||
| Accrued warranty (Note 3) |
1,316 | 1,262 | ||||||
| Customer deposits |
419 | 599 | ||||||
| Accrued employee compensation |
1,844 | 1,653 | ||||||
| Short-term borrowings and current portion of long-term debt (Note 8) |
1,761 | 1,851 | ||||||
| Deferred tax liability – current portion |
401 | 339 | ||||||
| Net liabilities of discontinued operations (Note 5) |
1,177 | 1,494 | ||||||
| Total current liabilities |
13,329 | 14,848 | ||||||
| Deferred tax liability – long-term portion |
473 | 473 | ||||||
| Long-term debt, excluding current portion |
727 | — | ||||||
| Commitments and contingencies (Notes 5, 7, and 10) |
||||||||
| Stockholders’ equity: |
||||||||
| Common stock, $0.10 par value per share, 40,000 shares authorized; 14,453 and 14,339 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
1,445 | 1,434 | ||||||
| Additional paid-in capital |
114,054 | 113,221 | ||||||
| Accumulated deficit |
(71,890 | ) | (70,310 | ) | ||||
| Accumulated other comprehensive income |
2,795 | 3,347 | ||||||
| Total stockholders’ equity |
46,404 | 47,692 | ||||||
| $ | 60,933 | $ | 63,013 | |||||
See accompanying notes to condensed consolidated financial statements.
2
MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Net revenues: |
||||||||||||||||
| Products |
$ | 7,136 | $ | 7,915 | $ | 16,009 | $ | 15,748 | ||||||||
| License Fees |
— | — | 1,000 | — | ||||||||||||
| Total net revenues |
7,136 | 7,915 | 17,009 | 15,748 | ||||||||||||
| Cost of sales |
5,275 | 6,827 | 12,190 | 14,060 | ||||||||||||
| Gross profit |
1,861 | 1,088 | 4,819 | 1,688 | ||||||||||||
| Operating expenses (income): |
||||||||||||||||
| Selling, general and administrative |
1,794 | 2,934 | 4,561 | 6,003 | ||||||||||||
| Research and development |
1,392 | 1,550 | 2,610 | 2,834 | ||||||||||||
| Amortization of other intangibles |
19 | 19 | 38 | 38 | ||||||||||||
| Gain on sale of business |
— | (235 | ) | — | (463 | ) | ||||||||||
| Total operating expenses |
3,205 | 4,268 | 7,209 | 8,412 | ||||||||||||
| Loss from operations |
(1,344 | ) | (3,180 | ) | (2,390 | ) | (6,724 | ) | ||||||||
| Interest income, net |
10 | 4 | 62 | 28 | ||||||||||||
| Other (expense) income, net |
6 | (19 | ) | 25 | 21 | |||||||||||
| Loss from continuing operations before income taxes |
(1,328 | ) | (3,195 | ) | (2,303 | ) | (6,675 | ) | ||||||||
| Income tax provision (benefit) |
64 | 13 | 64 | 19 | ||||||||||||
| Loss from continuing operations |
(1,392 | ) | (3,208 | ) | (2,367 | ) | (6,694 | ) | ||||||||
| Discontinued operations (Note 5): |
||||||||||||||||
| Income (loss) from discontinued operations, net of tax |
397 | (231 | ) | 787 | (1,106 | ) | ||||||||||
| Net loss |
$ | (995 | ) | $ | (3,439 | ) | $ | (1,580 | ) | $ | (7,800 | ) | ||||
| Net loss per common share – basic and diluted: |
||||||||||||||||
| Loss from continuing operations |
$ | (0.10 | ) | $ | (0.23 | ) | $ | (0.16 | ) | $ | (0.49 | ) | ||||
| Income (loss) from discontinued operations, net of tax |
0.03 | (0.02 | ) | 0.05 | (0.08 | ) | ||||||||||
| Net loss per common share |
$ | (0.07 | ) | $ | (0.25 | ) | $ | (0.11 | ) | $ | (0.57 | ) | ||||
| Shares used in computing net loss per common share – basic and diluted |
14,455 | 13,774 | 14,416 | 13,758 | ||||||||||||
See accompanying notes to condensed consolidated financial statements.
3
MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities: |
||||||||
| Loss from continuing operations |
$ | (2,367 | ) | $ | (6,694 | ) | ||
| Adjustments to reconcile loss from continuing operations to net cash used in operating activities: |
||||||||
| Depreciation and amortization |
1,665 | 1,941 | ||||||
| Gain on sales of property and equipment |
(81 | ) | (26 | ) | ||||
| Gain on sales of businesses |
— | (435 | ) | |||||
| Provision for losses on accounts receivable |
34 | 248 | ||||||
| Other non-cash items |
— | 172 | ||||||
| Changes in assets and liabilities: |
||||||||
| Trade and other accounts receivable |
(1,056 | ) | 2,288 | |||||
| Inventories |
(994 | ) | 455 | |||||
| Prepaid expenses and other assets |
722 | (681 | ) | |||||
| Deferred income taxes |
62 | 13 | ||||||
| Accounts payable and accrued liabilities |
(1,228 | ) | (3,147 | ) | ||||
| Customer deposits |
(180 | ) | 3,306 | |||||
| Accrued employee compensation |
191 | 322 | ||||||
| Net cash used in operating activities |
(3,232 | ) | (2,238 | ) | ||||
| Cash flows from investing activities: |
||||||||
| Proceeds from sale of businesses |
— | 496 | ||||||
| Acquisition of property, plant and equipment |
(1,772 | ) | (1,093 | ) | ||||
| Proceeds from sale of property and equipment |
17 | — | ||||||
| Proceeds from sale of short-term investments |
376 | 4,388 | ||||||
| Purchases of short-term investments |
(151 | ) | (2,490 | ) | ||||
| Net cash (used in) provided by investing activities |
(1,530 | ) | 1,301 | |||||
| Cash flows from financing activities: |
||||||||