x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 95-2390133 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3888 Calle Fortunada, San Diego, California | 92123 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | ||
Item 1. | Financial Statements |
March 31, 2016 | December 31, 2015 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 21,589 | $ | 24,382 | ||||
Restricted cash | 400 | 400 | ||||||
Trade and other accounts receivable, net of allowance for doubtful accounts of $303 and $252, at March 31, 2016 and December 31, 2015, respectively | 28,110 | 43,172 | ||||||
Inventories, net | 29,200 | 39,055 | ||||||
Prepaid expenses and other current assets | 2,479 | 2,593 | ||||||
Assets held for sale | 14,411 | — | ||||||
Total current assets | 96,189 | 109,602 | ||||||
Property and equipment, net | 31,512 | 32,324 | ||||||
Goodwill | 23,998 | 23,635 | ||||||
Pension asset | 6,125 | 5,849 | ||||||
Other non-current assets | 611 | 603 | ||||||
Total assets | $ | 158,435 | $ | 172,013 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 22,597 | $ | 33,985 | ||||
Accrued employee compensation | 7,133 | 6,672 | ||||||
Deferred revenue and customer deposits | 3,375 | 3,066 | ||||||
Short-term borrowings and current portion of long-term debt | 37 | 42 | ||||||
Liabilities held for sale | 922 | — | ||||||
Total current liabilities | 34,064 | 43,765 | ||||||
Deferred tax liability, long-term | 6,261 | 6,076 | ||||||
Long-term debt, excluding current portion | 44 | 49 | ||||||
Other long-term liabilities | 2,787 | 2,947 | ||||||
Total liabilities | 43,156 | 52,837 | ||||||
Commitments and contingencies (Note 9) | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $0.10 par value per share, 40,000 shares authorized; 31,944 and 31,782 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 3,192 | 3,176 | ||||||
Additional paid-in capital | 292,420 | 291,505 | ||||||
Accumulated deficit | (187,247 | ) | (180,399 | ) | ||||
Accumulated other comprehensive income | 6,914 | 4,894 | ||||||
Total stockholders’ equity | 115,279 | 119,176 | ||||||
Total liabilities and stockholders’ equity | $ | 158,435 | $ | 172,013 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Revenue | $ | 35,203 | $ | 34,670 | ||||
Cost of revenue | 25,550 | 24,367 | ||||||
Gross profit | 9,653 | 10,303 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 10,098 | 10,957 | ||||||
Research and development | 5,607 | 7,918 | ||||||
Restructuring and exit costs | 188 | — | ||||||
Total operating expenses | 15,893 | 18,875 | ||||||
Loss from operations | (6,240 | ) | (8,572 | ) | ||||
Interest expense, net | 70 | 94 | ||||||
Other income | (84 | ) | — | |||||
Foreign currency exchange loss, net | 139 | 328 | ||||||
Loss before income taxes | (6,365 | ) | (8,994 | ) | ||||
Income tax provision | 483 | 347 | ||||||
Net loss | $ | (6,848 | ) | $ | (9,341 | ) | ||
Net loss per share: | ||||||||
Basic and diluted | $ | (0.22 | ) | $ | (0.32 | ) | ||
Weighted average common shares outstanding: | ||||||||
Basic and diluted | 31,650 | 29,445 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Net loss | $ | (6,848 | ) | $ | (9,341 | ) | ||
Other comprehensive income, net of tax: | ||||||||
Foreign currency translation adjustment | 1,942 | 2,613 | ||||||
Defined benefit pension plan, net of tax: | ||||||||
Amortization of deferred loss, net of tax provision of $12 and $2 for the three months ended March 31, 2016 and 2015, respectively | 48 | 9 | ||||||
Amortization of prior service cost, net of tax provision of $7 and $7 for the three months ended March 31, 2016 and 2015, respectively | 30 | 28 | ||||||
Other comprehensive income, net of tax | 2,020 | 2,650 | ||||||
Comprehensive loss | $ | (4,828 | ) | $ | (6,691 | ) |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (6,848 | ) | $ | (9,341 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 2,587 | 2,824 | ||||||
Amortization of intangible assets | — | 51 | ||||||
Pension cost (benefit) | 157 | (20 | ) | |||||
Stock-based compensation expense | 1,203 | 839 | ||||||
Gain on sale of property and equipment | (84 | ) | — | |||||
Unrealized loss on foreign currency exchange rates | 57 | 287 | ||||||
Provision for (recovery of) losses on accounts receivable | 51 | (9 | ) | |||||
Provision for (recovery of) losses on inventory | (10 | ) | 94 | |||||
Provision for warranties | 139 | 202 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade and other accounts receivable | 13,076 | 11,662 | ||||||
Inventories, net | (1,376 | ) | 1,622 | |||||
Prepaid expenses and other assets | 132 | 335 | ||||||
Pension asset | (139 | ) | (168 | ) | ||||
Accounts payable and accrued liabilities | (10,563 | ) | (8,246 | ) | ||||
Deferred revenue and customer deposits | 304 | 533 | ||||||
Accrued employee compensation | (192 | ) | (1,333 | ) | ||||
Deferred tax liability | 81 | — | ||||||
Other long-term liabilities | (169 | ) | (109 | ) | ||||
Net cash used in operating activities | (1,594 | ) | (777 | ) | ||||
INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (2,238 | ) | (1,275 | ) | ||||
Proceeds from sale of property and equipment | 84 | — | ||||||
Net cash used in investing activities | (2,154 | ) | (1,275 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Principal payments on long-term debt and short-term borrowings | (11 | ) | (3,378 | ) | ||||
Proceeds from long-term debt and short-term borrowings | — | 2,946 | ||||||
Proceeds from issuance of common stock under equity compensation plans | 346 | 482 | ||||||
Net cash provided by financing activities | 335 | 50 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 620 | 371 | ||||||
Decrease in cash and cash equivalents | (2,793 | ) | (1,631 | ) | ||||
Cash and cash equivalents, beginning of period | 24,382 | 24,732 | ||||||
Cash and cash equivalents, end of period | $ | 21,589 | $ | 23,101 |
• | 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. |
• | Radiation-Hardened Microelectronic Products: The Company’s radiation-hardened microelectronic products for satellites and spacecraft include single board computers and components, such as high-density memory and power modules. Many of these products incorporate our proprietary RADPAK® packaging and shielding technology and novel architectures that enable them to withstand the effects of environmental radiation and perform reliably in space. In April 2016, the Company sold the assets and certain liabilities of the radiation-hardened microelectronics product line. |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Numerator | ||||||||
Net loss | $ | (6,848 | ) | $ | (9,341 | ) | ||
Denominator | ||||||||
Weighted-average common shares outstanding | 31,650 | 29,445 | ||||||
Net loss per share | ||||||||
Basic and diluted | $ | (0.22 | ) | $ | (0.32 | ) |
Three Months Ended March 31, | ||||||
2016 | 2015 | |||||
Outstanding options to purchase common stock | 907 | 897 | ||||
Unvested restricted stock awards | 216 | 361 | ||||
Unvested restricted stock unit awards | 1,773 | 825 |
March 31, 2016 | December 31, 2015 | |||||||
Raw materials and purchased parts | $ | 13,485 | $ | 21,126 | ||||
Work-in-process | 1,274 | 4,367 | ||||||
Finished goods | 15,283 | 16,913 | ||||||
Consigned finished goods | 129 | 28 | ||||||
Reserves | (971 | ) | (3,379 | ) | ||||
Total inventories, net | $ | 29,200 | $ | 39,055 |
Balance at December 31, 2015 | $ | 23,635 | ||
Foreign currency translation adjustments | 654 | |||
Reclassification of goodwill as held for sale | (291 | ) | ||
Balance at March 31, 2016 | $ | 23,998 |
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, 2015 | $ | 9,933 | $ | (5,039 | ) | $ | 4,894 | |||||||
Other comprehensive income before reclassification | 1,942 | — | 1,942 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | — | 78 | 78 | Cost of Sales, Selling, General and Administrative and Research and Development Expense | ||||||||||
Net other comprehensive income for the three months ended March 31, 2016 | 1,942 | 78 | 2,020 | |||||||||||
Balance as of March 31, 2016 | $ | 11,875 | $ | (4,961 | ) | $ | 6,914 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Total gain (loss) | $ | (15 | ) | $ | 764 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Total gain (loss) | $ | (18 | ) | $ | (1,091 | ) |
March 31, 2016 | December 31, 2015 | |||||||
Gross amounts of recognized asset | $ | 33 | $ | 66 | ||||
Gross amounts offset | (70 | ) | (50 | ) | ||||
Net amount of recognized asset (liability) | $ | (37 | ) | $ | 16 |
Three Months Ended | |||
March 31, | |||
2015 | |||
Expected dividend yield | — | % | |
Expected volatility | 61 | % | |
Risk-free interest rate | 1.61 | % | |
Expected term (in years) | 5.0 |
Three Months Ended | |||
March 31, | |||
2016 | |||
Expected dividend yield | — | % | |
Expected volatility | 62 | % | |
Risk-free interest rate | 1.07 | % | |
Expected term (in years) | 3.0 |
Three Months Ended | ||||||||
March 31, | ||||||||
RSU Type | 2016 | 2015 | ||||||
Service-based | $ | 533 | $ | 212 | ||||
Performance-based specific objectives | 12 | 59 | ||||||
Market-condition | 191 | 34 | ||||||
$ | 736 | $ | 305 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Expected dividend yield | — | % | — | % | ||||
Expected volatility | 60 | % | 56 | % | ||||
Risk-free interest rate | 0.49 | % | 0.03 | % | ||||
Expected term (in years) | 0.5 | 0.5 | ||||||
Fair value per share | $ | 2.27 | $ | 2.10 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Cost of revenue | $ | 235 | $ | 206 | ||||
Selling, general and administrative | 671 | 366 | ||||||
Research and development | 297 | 267 | ||||||
Total stock-based compensation expense | $ | 1,203 | $ | 839 |
Three Months Ended | ||||||||
March 31, | ||||||||
2016 | 2015 | |||||||
Service cost | $ | 290 | $ | 242 | ||||
Interest cost | 61 | 84 | ||||||
Expected return on plan assets | (291 | ) | (392 | ) | ||||
Prior service cost amortization | 37 | 35 | ||||||
Deferred loss amortization | 60 | 11 | ||||||
Net periodic pension cost (benefit) | $ | 157 | $ | (20 | ) |
Employee Severance Costs | Lease Obligation Costs | Other Exit Costs | Total | |||||||||||||
Restructuring liability as of December 31, 2015 | $ | 294 | $ | 1,043 | $ | — | $ | 1,337 | ||||||||
Costs incurred | 60 | — | 262 | 322 | ||||||||||||
Amounts paid | (159 | ) | — | (2 | ) | (161 | ) | |||||||||
Accruals released | (134 | ) | — | — | (134 | ) | ||||||||||
Other non-cash adjustments | — | (77 | ) | — | (77 | ) | ||||||||||
Restructuring liability as of March 31, 2016 | $ | 61 | $ | 966 | $ | 260 | $ | 1,287 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | 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; |
• | 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; |
• | dependence upon the sale of products into Asia and Europe, where macroeconomic factors outside our control may adversely affect our sales; |
• | downward pressures on product pricing from increased competition and potential shift in sales mix with respect to low margin and high margin business; |
• | 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; |
• | 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; |
• | 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 match production volume to actual customer demand; |
• | 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; |
• | our ability to obtain sufficient capital to meet our operating or other needs; and, |
• | our ability to manage and minimize the impact of unfavorable legal proceedings. |
• | Executive Overview |
• | Current Year Highlights |
• | Results of Operations |
• | Liquidity and Capital Resources |
• | Critical Accounting Estimates |
• | Off Balance Sheet Arrangements |
• | In January, we announced that our ultracapacitors had been selected by Beijing Huadian Tianren Electric Power Control Technology Co., Ltd., a subsidiary of China Guodian Corporation, as the core component of a wind farm energy storage demonstration project. One of the five largest power producers in the country, China Guodian Corporation's system is the first megawatt (MW)-scale, ultracapacitor-based wind farm energy storage system in the world. |
• | In February, we announced the newest addition to our K2 family with a 3-volt, 3,000-farad ultracapacitor cell. With 31 percent higher power than our leading 2.7-volt, 3,000-farad cell in the industry-standard 60 mm cylindrical form factor, customers now have the flexibility to either increase available power and energy in the same volume or significantly cost-optimize their system designs with fewer cells or modules while maintaining the same power and energy. |
• | In April, we announced that we had entered into a definitive agreement to sell our microelectronics product line to Data Device Corporation, a subsidiary of ILC Industries, Inc. The agreement includes all assets and certain liabilities related to our microelectronics product line. The transaction was completed on April 27, 2016. |
Three Months Ended March 31, | ||||||
2016 | 2015 | |||||
Revenue | 100 | % | 100 | % | ||
Cost of revenue | 73 | % | 70 | % | ||
Gross profit | 27 | % | 30 | % | ||
Operating expenses: | ||||||
Selling, general and administrative | 28 | % | 33 | % | ||
Research and development | 16 | % | 23 | % | ||
Restructuring and exit costs | 1 | % | — | % | ||
Total operating expenses | 45 | % | 56 | % | ||
Loss from operations | (18 | )% | (26 | )% | ||
Other expense, net | — | % | — | % | ||
Loss from operations before income taxes | (18 | )% | (26 | )% | ||
Income tax provision | 1 | % | 1 | % | ||
Net loss | (19 | )% | (27 | )% |
Three months ended | Three months ended | ||||||||||||||||||||
March 31, 2016 | March 31, 2015 | ||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Increase (Decrease) | % Change | ||||||||||||||||
Revenue | $ | 35,203 | 100 | % | $ | 34,670 | 100 | % | $ | 533 | 2 | % | |||||||||
Cost of revenue | 25,550 | 73 | % | 24,367 | 70 | % | 1,183 | 5 | % | ||||||||||||
Gross profit | $ | 9,653 | 27 | % | $ | 10,303 | 30 | % | $ | (650 | ) | (6 | )% |
Three months ended | Three months ended | ||||||||||||||||||||
March 31, 2016 | March 31, 2015 | ||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Decrease | % Change | ||||||||||||||||
Selling, general and administrative | $ | 10,098 | 28 | % | $ | 10,957 | 33 | % | $ | (859 | ) | (8 | )% |
Three months ended | Three months ended | ||||||||||||||||||||
March 31, 2016 | March 31, 2015 | ||||||||||||||||||||
Amount | % of Revenue | Amount | % of Revenue | Decrease | % Change | ||||||||||||||||
Research and development | $ | 5,607 | 16 | % | $ | 7,918 | 23 | % | $ | (2,311 | ) | (29 | )% |
Employee Severance Costs | Lease Obligation Costs | Other Exit Costs | Total | |||||||||||||
Restructuring liability as of December 31, 2015 | $ | 294 | $ | 1,043 | $ | — | $ | 1,337 | ||||||||
Costs incurred | 60 | — | 262 | 322 | ||||||||||||
Amounts paid | (159 | ) | — | (2 | ) | (161 | ) | |||||||||
Accruals released | (134 | ) | — | — | (134 | ) | ||||||||||
Other non-cash adjustments | — | (77 | ) | — | (77 | ) | ||||||||||
Restructuring liability as of March 31, 2016 | $ | 61 | $ | 966 | $ | 260 | $ | 1,287 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Total cash provided by (used in): | ||||||||
Operating activities | $ | (1,594 | ) | $ | (777 | ) | ||
Investing activities | (2,154 | ) | (1,275 | ) | ||||
Financing activities | 335 | 50 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 620 | 371 | ||||||
Decrease in cash and cash equivalents | $ | (2,793 | ) | $ | (1,631 | ) |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
Item 6. | Exhibits |
Exhibit Number | Description of Document | ||
10.20 | Agreement, dated as of March 11, 2016, by and among Maxwell Technologies, Inc. and Viex Capital Advisors, LLC and its affiliates. (1) | ||
10.21 | Asset Purchase Agreement by and between Maxwell Technologies, Inc. and Data Device Corporation, dated April 12, 2016. (2) | ||
10.22 | First Amendment to Loan and Security Agreement dated April 12, 2016, by and between East West Bank and Maxwell Technologies, Inc. (2) | ||
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, 2016 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. |
(1) | Incorporated herein by reference to Registrant’s Current Report on Form 8-K filed with the SEC on March 14, 2016. |
(2) | Incorporated by reference to Registrant’s Current Report on Form 8-K filed with the SEC on April 12, 2016. |
MAXWELL TECHNOLOGIES, INC. | ||||
Date: | May 4, 2016 | By: | /s/ Franz Fink | |
Franz Fink | ||||
President and Chief Executive Officer | ||||
Date: | May 4, 2016 | By: | /s/ David Lyle | |
David Lyle | ||||
Senior Vice President, Chief Financial Officer, Treasurer and Secretary |
1. | I have reviewed this quarterly report on Form 10-Q of Maxwell Technologies, Inc. for the quarter ended March 31, 2016. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 4, 2016 | MAXWELL TECHNOLOGIES, INC. | ||
By: | /s/ Franz Fink | |||
Franz Fink | ||||
President and Chief Executive Officer | ||||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Maxwell Technologies, Inc. for the quarter ended March 31, 2016. |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report. |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 4, 2016 | MAXWELL TECHNOLOGIES, INC. | ||
By: | /s/ David Lyle | |||
David Lyle | ||||
Senior Vice President, Chief Financial Officer, | ||||
Treasurer and Secretary | ||||
(Principal Financial Officer) |
Date: | May 4, 2016 | MAXWELL TECHNOLOGIES, INC. | ||
By: | /s/ Franz Fink | |||
Franz Fink | ||||
President and Chief Executive Officer | ||||
(Principal Executive Officer) | ||||
Date: | May 4, 2016 | By: | /s/ David Lyle | |
David Lyle | ||||
Senior Vice President, Chief Financial Officer, | ||||
Treasurer and Secretary | ||||
(Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 29, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | MAXWELL TECHNOLOGIES INC | |
Entity Central Index Key | 0000319815 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | mxwl | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,948,177 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
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Statement of Financial Position [Abstract] | ||
Trade and other accounts receivable, allowance | $ 303 | $ 252 |
Common stock, par value | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 31,944,000 | 31,782,000 |
Common stock, shares outstanding | 31,944,000 | 31,782,000 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Income Statement [Abstract] | ||
Revenue | $ 35,203 | $ 34,670 |
Cost of revenue | 25,550 | 24,367 |
Gross profit | 9,653 | 10,303 |
Operating expenses: | ||
Selling, general and administrative | 10,098 | 10,957 |
Research and development | 5,607 | 7,918 |
Restructuring and exit costs | 188 | 0 |
Total operating expenses | 15,893 | 18,875 |
Loss from operations | (6,240) | (8,572) |
Interest expense, net | 70 | 94 |
Other income | (84) | 0 |
Foreign currency exchange loss, net | 139 | 328 |
Loss before income taxes | (6,365) | (8,994) |
Income tax provision | 483 | 347 |
Net loss | $ (6,848) | $ (9,341) |
Net loss per share: | ||
Basic and diluted (in dollars per share) | $ (0.22) | $ (0.32) |
Weighted average common shares outstanding: | ||
Basic and diluted (in shares) | 31,650 | 29,445 |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (6,848) | $ (9,341) |
Other comprehensive income, net of tax: | ||
Foreign currency translation adjustment | 1,942 | 2,613 |
Defined benefit pension plan, net of tax: | ||
Amortization of deferred loss, net of tax provision of $12 and $2 for the three months ended March 31, 2016 and 2015, respectively | 48 | 9 |
Amortization of prior service cost, net of tax provision of $7 and $7 for the three months ended March 31, 2016 and 2015, respectively | 30 | 28 |
Other comprehensive income, net of tax | 2,020 | 2,650 |
Comprehensive loss | $ (4,828) | $ (6,691) |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
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Statement of Comprehensive Income [Abstract] | ||
Tax benefit for amortization of deferred loss | $ (12) | $ (2) |
Tax benefit for amortization of prior service cost | $ (7) | $ (7) |
Description of Business and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation Description of Business Maxwell Technologies, Inc. is a Delaware corporation originally incorporated in 1965 under the name Maxwell Laboratories, Inc. In 1983, the Company completed an initial public offering, and in 1996, changed its name to Maxwell Technologies, Inc. The Company is headquartered in San Diego, California, and as of March 31, 2016, had three manufacturing facilities located in San Diego, California; Rossens, Switzerland; and Peoria, Arizona. In April 2016, the Company exited its manufacturing facility in San Diego, California. In addition, the Company has two contract manufacturers located in China. Maxwell operates as one operating segment, which during the three months ended March 31, 2016 was comprised of three product lines:
The Company’s products are designed and manufactured to perform reliably for the life of the products and systems into which they are integrated. The Company achieves high reliability through the application of proprietary technologies and rigorously controlled design, development, manufacturing and test processes. Financial Statement Presentation The accompanying condensed consolidated financial statements include the accounts of Maxwell Technologies, Inc. and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany transactions and account balances have been eliminated in consolidation. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q contain all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) 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. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Reclassifications Foreign currency exchange gains and losses have been reclassified from "cost of revenue" and "selling, general and administrative" expenses to "foreign currency exchange loss, net" in the condensed consolidated statement of operations for the three months ended March 31, 2015 to conform to the current period presentation. These reclassifications do not impact reported net loss and do not otherwise have a material impact on the presentation of the overall financial statements. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. These estimates include, but are not limited to, assessing the collectability of accounts receivable, applied and unapplied production costs, production capacities, the usage and recoverability of inventories and long-lived assets, deferred income taxes, the incurrence of warranty obligations, impairment of goodwill, estimation of the cost to complete certain projects, estimation of pension assets and liabilities, accruals for estimated losses from legal matters, and estimation of the value of stock-based compensation awards, including the probability that the performance criteria of restricted stock awards and restricted stock unit awards will be met. Restricted Cash Restricted cash as of March 31, 2016 and December 31, 2015 consists of a $0.4 million cash balance on deposit to secure certain ongoing banking transactions. Income Taxes As of March 31, 2016, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $68.1 million, of which the significant majority represents the valuation allowance on its U.S. net deferred tax asset. The Company has established a valuation allowance against its U.S. federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets and at such time as it is determined that it is more likely than not that U.S. deferred tax assets are realizable, the valuation allowance will be reduced accordingly. Any such release would result in recording a tax benefit that would increase net income in the period the valuation is released. The Company records taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside of the U.S. As of March 31, 2016, the Company has recorded a $3.7 million deferred tax liability for Swiss withholding taxes associated with $73.5 million of undistributed earnings of its Swiss subsidiary that are no longer considered indefinitely reinvested. In the event that the Company repatriates these funds, these withholding taxes would become payable. Warranty Obligation The Company provides warranties on all product sales for terms ranging from one to eight years. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. As of March 31, 2016 and December 31, 2015, the accrued warranty liability included in "accounts payable and accrued liabilities" in the condensed consolidated balance sheets was $1.2 million and $1.3 million, respectively. Revenue Recognition Revenue is derived primarily from the sale of manufactured products directly to customers. Product revenue is recognized, according to the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Numbers 101, Revenue Recognition in Financial Statements, and 104, Revenue Recognition, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists (upon contract signing or receipt of an authorized purchase order from a customer); (2) title passes to the customer at either shipment from the Company’s facilities or receipt at the customer facility, depending on shipping terms; (3) customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collectability is reasonably assured. This policy has been consistently applied from period to period. A portion of our revenue is derived from sales to distributors. Distributor revenue is recognized when all of the criteria for revenue recognition are met, which is generally the time of shipment to the distributor; all returns and credits are estimable and not significant. Revenue from production-type contracts, which represent less than five percent of total revenue, is recognized using the percentage of completion method. The degree of completion is determined based on costs incurred as a percentage of total costs anticipated, excluding costs that are not representative of progress to completion. Total deferred revenue and customer deposits in the consolidated balance sheets as of March 31, 2016 and December 31, 2015 was $3.4 million and $3.1 million, respectively, and relates to cash received from customers on sales for which the revenue recognition criteria had not been achieved, customer advances, as well as other less significant customer arrangements requiring the deferral of revenue. Liquidity As of March 31, 2016, the Company had approximately $21.6 million in cash and cash equivalents, and working capital of $62.1 million. In July 2015, the Company entered into a loan agreement with East West Bank (“EWB”), whereby EWB made available to the Company a secured credit facility in the form of a revolving line of credit which is available up to a maximum of the lesser of: (a) $25.0 million; or (b) a certain percentage of domestic and foreign trade receivables. As of March 31, 2016, no amounts have been borrowed under this revolving line of credit and the amount available was $18.1 million. Management believes the available cash balance, along with the available borrowings under the revolving line of credit, will be sufficient to fund operations, obligations as they become due, and capital investments for at least the next twelve months. Net Loss per Share In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):
The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net loss per share calculation because to do so would be anti-dilutive (in thousands):
Restructuring and Exit Costs Restructuring and exit costs involve employee-related termination costs, facility exit costs and other costs associated with restructuring activities. The Company accounts for charges resulting from operational restructuring actions in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”) and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”). The recognition of restructuring costs requires the Company to make certain assumptions related to the amounts of employee severance benefits, the time period over which leased facilities will remain vacant and expected sublease terms and discount rates. Estimates and assumptions are based on the best information available at the time the obligation arises. These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued in the condensed consolidated balance sheet. Assets and Liabilities Held for Sale In connection with the Company's restructuring plan, during the first quarter of 2016, the Company committed to a plan to sell the net assets of its microelectronics product line. Accordingly, during the first quarter of 2016, the Company met the held for sale criteria in accordance with ASC Topic 380, Impairment or Disposal of Long Lived Assets and the Company ceased depreciation on the property and equipment held for sale. As of March 31, 2016, the current assets held for sale in the Company's condensed consolidated balance sheet were primarily comprised of inventory, accounts receivable, property and equipment and goodwill. The current liabilities held for sale in the Company's condensed consolidated balance sheet were comprised mainly of accounts payable and other current liabilities. The sale of the microelectronics product line does not represent a strategic shift that will have a major effect on the Company's operations and financial results. As such, the Company has not accounted for the disposition as a discontinued operation. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the required adoption date of ASU 2014-09 by one year. As a result of the deferred effective date, ASU 2014-09 will be effective for the Company in its first quarter of fiscal 2018. Early adoption is permitted but not before the original effective date of the new standard of the first quarter of fiscal 2017. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, which amends ASU 2014-09 by clarifying the accounting for licenses of intellectual property, as well as the identification of distinct performance obligations in a contract, and is effective concurrently with ASU 2014-09. The Company is in the process of evaluating the transition method that will be elected and the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. The standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance in ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the potential effects of the adoption of this guidance on the consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting that changes the accounting for employee share-based payments, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the new guidance, excess tax benefits associated with share-based payment awards will be recognized in the income statement when the awards vest or settle, rather than in stockholders’ equity. In addition, it will increase the number of shares an employer can withhold to cover income taxes on share-based payment awards and still qualify for the exemption to liability classification. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any annual or interim period. The Company is in the process of evaluating the potential effects of the adoption of this guidance on the consolidated financial statements, as well as whether to adopt the new guidance early. There have been no other recent accounting standards, or changes in accounting standards, during the three months ended March 31, 2016, as compared to the recent accounting standards described in our Annual Report on Form 10-K, that are of material significance, or have potential material significance, to the Company. |
Balance Sheet Details |
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Balance Sheet Related Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Details | Balance Sheet Details (in thousands) Inventories, net
Goodwill The change in the carrying amount of goodwill from December 31, 2015 to March 31, 2016 is as follows:
Accumulated Other Comprehensive Income
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Credit Facilities |
3 Months Ended |
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Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities Revolving Line of Credit In July 2015, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with East West Bank (“EWB”), whereby EWB made available to the Company a secured credit facility in the form of a revolving line of credit (the “Revolving Line of Credit”). The Revolving Line of Credit is available up to a maximum of the lesser of: (a) $25.0 million; or (b) a certain percentage of domestic and foreign trade receivables. As of March 31, 2016 the amount available under the Revolving Line of Credit was $18.1 million. In general, amounts borrowed under the Revolving Line of Credit are secured by a lien on all of the Company’s assets, including its intellectual property, as well as a pledge of 100% of its equity interests in Maxwell SA. The obligations under the Loan Agreement are also guaranteed directly by Maxwell SA. The Revolving Line of Credit will mature on July 3, 2018; however, repayment of amounts owed pursuant to the Loan Agreement may be accelerated in the event that the Company is in violation of the representations, warranties and covenants made in the Loan Agreement, including certain financial covenants set forth therein. The financial covenants that the Company is required to meet during the term of the credit agreement include a minimum four-quarter rolling EBITDA, a quarterly minimum quick ratio and a monthly minimum cash requirement. Amounts borrowed under the Revolving Line of Credit bear interest, payable monthly. Such interest shall accrue based upon, at the Company’s election, subject to certain limitations, either a Prime Rate plus a margin ranging from 0% to 0.50% or the LIBOR Rate plus a margin ranging from 2.75% to 3.25%, the specific rate for each as determined based upon the Company’s leverage ratio from time to time. The Company is required to pay an annual commitment fee equal to $125,000, and an unused commitment fee of the average daily unused amount of the Revolving Line of Credit, payable monthly, equal to a per annum rate in a range of 0.30% to 0.50%, as determined by the Company’s leverage ratio on the last day of the previous fiscal quarter. No amounts have been borrowed under this Revolving Line of Credit as of March 31, 2016. Former Credit Facility In December 2011, the Company obtained a secured credit facility in the form of a revolving line of credit (the “Former Revolving Line of Credit”) and an equipment term loan (the “Equipment Term Loan”) (together, the “Former Credit Facility”). Borrowings under the Former Credit Facility bore interest, payable monthly, at either (i) the bank's prime rate or (ii) LIBOR plus 2.25%, at the Company's option, subject to certain limitations. The balance of the Equipment Term Loan was paid in full by the maturity date of April 30, 2015. Concurrently with entering into the Loan Agreement described above, in July 2015, the Company repaid all outstanding loans under the Former Revolving Line of Credit and the Former Credit Facility was terminated. The Company did not incur any early termination or prepayment penalties under the Former Credit Facility in connection with the above transactions. Other Long-term Borrowings The Company has various financing agreements for vehicles. These agreements are for up to an original three year repayment period with interest rates ranging from 1.9% to 3.9%. At March 31, 2016 and December 31, 2015, $81,000 and $91,000, respectively, was outstanding under these financing agreements. |
Fair Value Measurements |
3 Months Ended |
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Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company records certain financial instruments at fair value in accordance with the Fair Value Measurements and Disclosures Topic of the FASB ASC. As of March 31, 2016, the financial instruments to which this topic applied were foreign currency forward contracts. As of March 31, 2016, the fair value of these foreign currency forward contracts was a liability of $37,000 which is recorded in “accounts payable and accrued liabilities" in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC. All forward contracts as of March 31, 2016 had approximately a one-month original maturity term and mature on April 4, 2016 or May 3, 2016. The carrying value of short-term and long-term borrowings approximates fair value because of the relative short maturity of these instruments and the interest rates the Company could currently obtain. |
Foreign Currency Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign Currency Derivative Instruments | Foreign Currency Derivative Instruments The Company uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables, payables and cash balances, denominated in foreign currencies. The change in fair value of these forward contracts represents a natural hedge as gains and losses on these instruments partially offset the changes in the fair value of the underlying monetary assets and liabilities due to movements in currency exchange rates. These forward contracts generally expire in one month. These contracts are considered economic hedges but are not designated as hedges under the Derivatives and Hedging Topic of the FASB ASC, therefore, the change in the fair value of the instrument is recognized each period in the consolidated statement of operations. The net gains and losses on foreign currency forward contracts included in "foreign currency exchange loss, net" in the condensed consolidated statements of operations are as follows (in thousands):
The net gains and losses on foreign currency forward contracts were partially offset by net gains and losses on the underlying monetary assets and liabilities. Foreign currency gains and losses on those underlying monetary assets and liabilities included in "foreign currency exchange loss, net" in the condensed consolidated statements of operations are as follows (in thousands):
As of March 31, 2016, the total notional amount of foreign currency forward contracts not designated as hedges was $1.2 million. The following table presents gross amounts, amounts offset and net amounts presented in the condensed consolidated balance sheets for the Company's derivative instruments measured at fair value (in thousands):
The Company has the legal right to offset these recognized assets and liabilities upon settlement of the derivative instruments. For additional information, refer to Note 4 – Fair Value Measurements. |
Stock Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Plans | Stock Plans The Company has two active stock-based compensation plans as of March 31, 2016: the 2004 Employee Stock Purchase Plan and the 2013 Omnibus Equity Incentive Plan under which incentive stock options, non-qualified stock options, restricted stock awards and restricted stock units can be granted to employees and non-employee directors. The Company generally issues the majority of employee stock compensation grants in the first quarter of the year; other grants issued during the year are typically for new employees. Stock Options During the three months ended March 31, 2016, no stock options were granted. During the three months ended March 31, 2015, the Company granted 229,657 stock options which had an average grant date fair value per share of $3.68. Compensation expense recognized for stock options for the three months ended March 31, 2016 and 2015 was $82,000 and $24,000, respectively. The fair value of the stock options granted during the three months ended March 31, 2015 was estimated using the Black-Scholes valuation model with the following assumptions:
Restricted Stock Awards Beginning in 2014, the Company ceased granting restricted stock awards and began granting restricted stock units ("RSUs") to employees as part of its annual equity incentive award program, therefore, no restricted stock awards were issued during the three months ended March 31, 2016 or 2015. During the three months ended March 31, 2016 and 2015, compensation expense related to restricted stock awards was $(0.3) million and $0.4 million, respectively. During the three months ended March 31, 2016, there were reversals of previously recorded expense due to terminations under the Company's restructuring plan as well as other employee terminations. Restricted Stock Units Non-employee directors receive annual RSU awards, normally in February of each year, as part of their annual retainer compensation. These awards vest one year from the date of grant provided the non-employee director provides continued service. Additionally, new directors normally receive RSUs upon their election to the board. The Company also grants RSUs to employees as part of its annual equity incentive award program, with vesting typically in equal annual installments over four years of continuous service. Additionally, the Company grants performance-based restricted stock units ("PSUs") to executives with vesting contingent on continued service and achievement of specified performance objectives or relative stock price targets. Each restricted stock unit represents the right to receive one unrestricted share of the Company’s common stock upon vesting. During the three months ended March 31, 2016, the Company granted 732,827 service-based RSUs with an average grant date fair value of $5.67 per share and 302,387 PSUs with an average grant date fair value of $7.54 per share. During the three months ended March 31, 2015 the Company granted 478,989 service-based RSUs with an average grant date value of $7.32 per share and 190,957 PSUs with an average grant date fair value of $7.33 per share. Included in the PSUs granted during the three months ended March 31, 2016, were 256,163 performance-based market-condition stock units. The market-condition PSUs will be earned based on the level of the Company's stock price performance against a determined market index over one, two and three year performance periods. The market-condition PSUs have the potential to vest between 0% and 200% and the recipients must remain employed through each measurement period in order to vest. The fair value of the market-condition PSUs granted was calculated using a Monte Carlo valuation model with the following assumptions:
The following table summarizes the amount of compensation expense recognized for restricted stock units for the three months ended March 31, 2016 and 2015 (in thousands):
Employee Stock Purchase Plan The 2004 Employee Stock Purchase Plan (“ESPP”) permits substantially all employees to purchase common stock through payroll deductions, at 85% of the lower of the trading price of the stock at the beginning or at the end of each six month offering period. The number of shares purchased is based on participants’ contributions made during the offering period. Compensation expense recognized for the ESPP was $82,000 and $83,000, respectively, for the three months ended March 31, 2016 and 2015. The fair value of the ESPP shares for the three months ended March 31, 2016 and 2015 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
Bonuses to be Settled in Stock On January 15, 2016, the Compensation Committee of the Board of Directors of the Company adopted the Maxwell Technologies, Inc. Incentive Bonus Plan to enable participants to earn annual incentive bonuses based upon achievement of specified financial and strategic performance. The Company intends to settle bonuses earned under the plan for the fiscal year 2016 performance period with fully vested common stock of the Company in the first quarter of 2017, therefore, $0.6 million of stock compensation expense was accrued for such bonuses in the three months ended March 31, 2016. Stock-Based Compensation Expense Stock-based compensation cost included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
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Shelf Registration Statement |
3 Months Ended |
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Mar. 31, 2016 | |
Shelf Registration Statement [Abstract] | |
Shelf Registration Statement | Shelf Registration Statement On June 3, 2014, the Company filed a shelf registration statement on Form S-3 with the U.S. Securities and Exchange Commission ("SEC") to, from time to time, sell up to an aggregate of $125 million of any combination of its common stock, warrants, debt securities or units. On June 30, 2014, the registration statement was declared effective by the SEC. On April 23, 2015, the Company entered into an At-the-Market Equity Offering Sales Agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which the Company could sell, at its option, up to an aggregate of $10.0 million in shares of common stock through Cowen, as sales agent. Under the Sales Agreement, the Company agreed to pay Cowen a commission equal to 3.0% of the gross proceeds from the sale of shares of the Company’s common stock. On June 11, 2015, the Company completed the sale of approximately $10.0 million of the company's common stock and terminated the offering. Approximately 1.83 million shares were sold in the offering at an average share price of $5.46. During the second quarter of 2015, the Company received net proceeds of $9.6 million after commissions and offering costs of $0.4 million. Due to a late Form 8-K filing by the Company on June 1, 2015, which was due by May 29, 2015, the Company is currently ineligible to use its shelf registration statement. The Company expects to again be eligible as of June 1, 2016. |
Defined Benefit Plan |
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Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan | Defined Benefit Plan Maxwell SA has a retirement plan that is classified as a defined benefit pension plan. The employee pension benefit is based on compensation, length of service and credited investment earnings. The plan guarantees both a minimum rate of return as well as minimum annuity purchase rates. The Company’s funding policy with respect to the pension plan is to contribute the amount required by Swiss law, using the required percentage applied to the employee’s compensation. In addition, participating employees are required to contribute to the pension plan. This plan has a measurement date of December 31. Components of net periodic pension cost (benefit) are as follows (in thousands):
Employer contributions of $151,000 and $166,000 were paid during the three months ended March 31, 2016 and 2015, respectively. Additional employer contributions of approximately $450,000 are expected to be paid during the remainder of fiscal 2016. |
Legal Proceedings |
3 Months Ended |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings Although the Company expects to incur legal fees in connection with the below legal proceedings, the Company is unable to estimate the amount of such legal fees and therefore, such fees will be expensed in the period the legal services are performed. FCPA Matter In January 2011, the Company reached settlements with the U.S. Securities and Exchange Commission ("SEC") and the U.S. Department of Justice (“DOJ”) with respect to charges asserted by the SEC and DOJ relating to the anti-bribery, books and records, internal controls, and disclosure provisions of the U.S. Foreign Corrupt Practices Act (“FCPA”) and other securities laws violations. The Company paid the monetary penalties under these settlements in installments such that all monetary penalties were paid in full by January 2013. With respect to the DOJ charges, a judgment of dismissal was issued in the U.S. District Court for the Southern District of California on March 28, 2014. On October 15, 2013, the Company received an informal notice from the DOJ that an indictment against the former Senior Vice President and General Manager of its Swiss subsidiary had been filed in the United States District Court for the Southern District of California. The indictment is against the individual, a former officer, and not against the Company and the Company does not foresee that further penalties or fines could be assessed against it as a corporate entity for this matter. However, the Company may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendant and to incur other financial obligations. While the Company maintains directors’ and officers’ insurance policies which are intended to cover legal expenses related to its indemnification obligations in situations such as these, the Company cannot determine if and to what extent the insurance policy will cover the ongoing legal fees for this matter. Accordingly, the legal fees that may be incurred by the Company in defending this former officer could have a material impact on its financial condition and results of operation. Swiss Bribery Matter In August 2013, the Company's Swiss subsidiary was served with a search warrant from the Swiss federal prosecutor’s office. At the end of the search, the Swiss federal prosecutor presented the Company with a listing of the materials gathered by the representatives and then removed the materials from its premises for keeping at the prosecutor’s office. Based upon the Company’s exposure to the case, the Company believes this action to be related to the same or similar facts and circumstances as the FCPA action previously settled with the SEC and the DOJ. During initial discussions, the Swiss prosecutor has acknowledged both the existence of the Company's deferred prosecution agreement with the DOJ and its cooperation efforts thereunder, both of which should have a positive impact on discussions going forward. Additionally, other than the activities previously reviewed in conjunction with the SEC and DOJ matters under the FCPA, the Company has no reason to believe that additional facts or circumstances are under review by the Swiss authorities. To date, the Swiss prosecutor has not issued its formal decision as to whether the charges will be brought against individuals or the Company or whether the proceeding will be abandoned. At this stage in the investigation, the Company is currently unable to determine the extent to which it will be subject to fines in accordance with Swiss bribery laws and what additional expenses will be incurred in order to defend this matter. As such, the Company cannot determine whether there is a reasonable possibility that a loss will be incurred nor can it estimate the range of any such potential loss. Accordingly, the Company has not accrued an amount for any potential loss associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation. Government Investigations In early 2013, the Company voluntarily provided information to the SEC and the United States Attorney's Office for the Southern District of California related to its announcement that it intended to file restated financial statements for fiscal years 2011 and 2012. On June 11, 2015, the Company received a subpoena from the SEC requesting certain documents related to, among other things, the facts and circumstances surrounding the restated financial statements. The Company has provided information to the SEC in response to that subpoena and continues to cooperate with the SEC. At this stage, the Company cannot predict the ultimate outcome of this investigation or whether it will result in any loss. Accordingly, the Company has not accrued an amount for any potential loss associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation. |
Restructuring and Exit costs |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Exit costs | Restructuring and Exit Costs In 2015, the Company initiated a restructuring plan to consolidate U.S. manufacturing operations and to reduce headcount and operating expenses in order to align the Company's cost structure with the current business forecast and to improve operational efficiency. The plan also included the disposition of the Company's microelectronics product line, which was completed in April 2016. The restructuring plan was otherwise substantially completed in the first quarter of 2016. Total restructuring charges were $2.7 million, which includes $1.2 million in facilities costs related to the consolidation of manufacturing operations, $1.2 million in employee severance costs and $0.3 million in other exit costs. The Company also incurred $0.6 million in accelerated equipment depreciation expense related to the consolidation of manufacturing operations. Total cash expenditures related to restructuring activities are expected to be approximately $1.5 million. The Company accounts for charges resulting from restructuring and exit activities in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”), and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits for employee termination benefits to be paid in accordance with its ongoing employee termination benefit arrangement. In June 2015, the Company ceased use of approximately 60,000 square feet of its Peoria, AZ manufacturing facility, and determined this leased space would have no future economic benefit to the Company based on the current business forecast. As a result, in June 2015, the Company recorded a liability for the future rent obligation associated with this space, net of estimated sublease income, in accordance with ASC Topic 420. The expense related to the exit of this leased space was $1.2 million, before tax, and was recorded as a component of the total restructuring charge. During the three months ended March 31, 2016, cash payments in connection with the restructuring plan were $0.2 million, primarily related to employee severance costs. For the three months ended March 31, 2016, the Company recorded net charges related to its restructuring plan of $0.2 million within "restructuring and exit costs" and also recorded $0.1 million of accelerated depreciation expense within “cost of revenue” in the condensed consolidated statements of operations. As of March 31, 2016, the Company had a $61,000 liability associated with employee severance recorded in “accrued employee compensation”, $0.2 million in lease obligation costs and $0.3 million in other exit costs recorded in “accounts payable and accrued liabilities” and $0.8 million in lease obligation costs recorded in "other long term liabilities” in the condensed consolidated balance sheet. The following table summarizes the restructuring and exit costs for the three months ended March 31, 2016 (in thousands):
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 12, 2016, the Company announced that it had entered into an asset purchase agreement (the “Asset Purchase Agreement”) to sell its assets and certain of its liabilities, comprising the Company’s microelectronics product line, to Data Device Corporation, a privately-held Delaware corporation. The transaction contemplated by the Asset Purchase Agreement (the “Transaction”) was completed on April 27, 2016. The Transaction purchase price was $21.0 million, subject to a working capital adjustment and a $1.5 million escrow holdback on the purchase price. In the second quarter of 2016, upon completion of the sale, the Company expects to record a gain of approximately $7 million. In connection with the Transaction, on April 12, 2016, the Company also entered into a first amendment (the “First Amendment”) to the Loan Agreement, to align certain financial covenants with the Company’s remaining business following the Transaction. Among other things, the First Amendment amended certain financial covenants, including decreasing minimum EBITDA requirements for the period of September 30, 2016 through June 30, 2017 and increasing minimum consolidated cash requirements beginning with the fiscal quarter ending September 30, 2016. |
Description of Business and Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Financial Statement Presentation | Financial Statement Presentation The accompanying condensed consolidated financial statements include the accounts of Maxwell Technologies, Inc. and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany transactions and account balances have been eliminated in consolidation. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q contain all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) 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. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. |
Reclassifications | Reclassifications Foreign currency exchange gains and losses have been reclassified from "cost of revenue" and "selling, general and administrative" expenses to "foreign currency exchange loss, net" in the condensed consolidated statement of operations for the three months ended March 31, 2015 to conform to the current period presentation. These reclassifications do not impact reported net loss and do not otherwise have a material impact on the presentation of the overall financial statements. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and related disclosures. These estimates include, but are not limited to, assessing the collectability of accounts receivable, applied and unapplied production costs, production capacities, the usage and recoverability of inventories and long-lived assets, deferred income taxes, the incurrence of warranty obligations, impairment of goodwill, estimation of the cost to complete certain projects, estimation of pension assets and liabilities, accruals for estimated losses from legal matters, and estimation of the value of stock-based compensation awards, including the probability that the performance criteria of restricted stock awards and restricted stock unit awards will be met. |
Income Taxes | Income Taxes As of March 31, 2016, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $68.1 million, of which the significant majority represents the valuation allowance on its U.S. net deferred tax asset. The Company has established a valuation allowance against its U.S. federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets and at such time as it is determined that it is more likely than not that U.S. deferred tax assets are realizable, the valuation allowance will be reduced accordingly. Any such release would result in recording a tax benefit that would increase net income in the period the valuation is released. The Company records taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside of the U.S. As of March 31, 2016, the Company has recorded a $3.7 million deferred tax liability for Swiss withholding taxes associated with $73.5 million of undistributed earnings of its Swiss subsidiary that are no longer considered indefinitely reinvested. In the event that the Company repatriates these funds, these withholding taxes would become payable. |
Warranty Obligation | Warranty Obligation The Company provides warranties on all product sales for terms ranging from one to eight years. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. |
Revenue Recognition | Revenue Recognition Revenue is derived primarily from the sale of manufactured products directly to customers. Product revenue is recognized, according to the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Numbers 101, Revenue Recognition in Financial Statements, and 104, Revenue Recognition, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists (upon contract signing or receipt of an authorized purchase order from a customer); (2) title passes to the customer at either shipment from the Company’s facilities or receipt at the customer facility, depending on shipping terms; (3) customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collectability is reasonably assured. This policy has been consistently applied from period to period. A portion of our revenue is derived from sales to distributors. Distributor revenue is recognized when all of the criteria for revenue recognition are met, which is generally the time of shipment to the distributor; all returns and credits are estimable and not significant. Revenue from production-type contracts, which represent less than five percent of total revenue, is recognized using the percentage of completion method. The degree of completion is determined based on costs incurred as a percentage of total costs anticipated, excluding costs that are not representative of progress to completion. Total deferred revenue and customer deposits in the consolidated balance sheets as of March 31, 2016 and December 31, 2015 was $3.4 million and $3.1 million, respectively, and relates to cash received from customers on sales for which the revenue recognition criteria had not been achieved, customer advances, as well as other less significant customer arrangements requiring the deferral of revenue. |
Net Loss per Share | Net Loss per Share In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive. |
Restructuring and Exit Costs | Restructuring and Exit Costs Restructuring and exit costs involve employee-related termination costs, facility exit costs and other costs associated with restructuring activities. The Company accounts for charges resulting from operational restructuring actions in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”) and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”). The recognition of restructuring costs requires the Company to make certain assumptions related to the amounts of employee severance benefits, the time period over which leased facilities will remain vacant and expected sublease terms and discount rates. Estimates and assumptions are based on the best information available at the time the obligation arises. These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued in the condensed consolidated balance sheet. |
Assets and Liabilities Held for Sale | Assets and Liabilities Held for Sale In connection with the Company's restructuring plan, during the first quarter of 2016, the Company committed to a plan to sell the net assets of its microelectronics product line. Accordingly, during the first quarter of 2016, the Company met the held for sale criteria in accordance with ASC Topic 380, Impairment or Disposal of Long Lived Assets and the Company ceased depreciation on the property and equipment held for sale. As of March 31, 2016, the current assets held for sale in the Company's condensed consolidated balance sheet were primarily comprised of inventory, accounts receivable, property and equipment and goodwill. The current liabilities held for sale in the Company's condensed consolidated balance sheet were comprised mainly of accounts payable and other current liabilities. The sale of the microelectronics product line does not represent a strategic shift that will have a major effect on the Company's operations and financial results. As such, the Company has not accounted for the disposition as a discontinued operation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. The standard provides companies with a single model for accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative adjustment. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date, which defers the required adoption date of ASU 2014-09 by one year. As a result of the deferred effective date, ASU 2014-09 will be effective for the Company in its first quarter of fiscal 2018. Early adoption is permitted but not before the original effective date of the new standard of the first quarter of fiscal 2017. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, which amends ASU 2014-09 by clarifying the accounting for licenses of intellectual property, as well as the identification of distinct performance obligations in a contract, and is effective concurrently with ASU 2014-09. The Company is in the process of evaluating the transition method that will be elected and the impact of adoption on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. The standard requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The guidance in ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating the potential effects of the adoption of this guidance on the consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting that changes the accounting for employee share-based payments, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under the new guidance, excess tax benefits associated with share-based payment awards will be recognized in the income statement when the awards vest or settle, rather than in stockholders’ equity. In addition, it will increase the number of shares an employer can withhold to cover income taxes on share-based payment awards and still qualify for the exemption to liability classification. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any annual or interim period. The Company is in the process of evaluating the potential effects of the adoption of this guidance on the consolidated financial statements, as well as whether to adopt the new guidance early. There have been no other recent accounting standards, or changes in accounting standards, during the three months ended March 31, 2016, as compared to the recent accounting standards described in our Annual Report on Form 10-K, that are of material significance, or have potential material significance, to the Company. |
Fair Value Measurements and Disclosures | The Company records certain financial instruments at fair value in accordance with the Fair Value Measurements and Disclosures Topic of the FASB ASC. As of March 31, 2016, the financial instruments to which this topic applied were foreign currency forward contracts. As of March 31, 2016, the fair value of these foreign currency forward contracts was a liability of $37,000 which is recorded in “accounts payable and accrued liabilities" in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC. |
Derivatives and Hedging | The Company uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables, payables and cash balances, denominated in foreign currencies. The change in fair value of these forward contracts represents a natural hedge as gains and losses on these instruments partially offset the changes in the fair value of the underlying monetary assets and liabilities due to movements in currency exchange rates. These forward contracts generally expire in one month. These contracts are considered economic hedges but are not designated as hedges under the Derivatives and Hedging Topic of the FASB ASC, therefore, the change in the fair value of the instrument is recognized each period in the consolidated statement of operations. |
Description of Business and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted net loss per share | The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share data):
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Schedule of anti-dilutive shares excluded from computation of net loss per share | The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net loss per share calculation because to do so would be anti-dilutive (in thousands):
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Balance Sheet Details (Tables) |
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Schedule of change in the carrying amount of goodwill | The change in the carrying amount of goodwill from December 31, 2015 to March 31, 2016 is as follows:
|
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Schedule of accumulated other comprehensive income |
|
Foreign Currency Derivative Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of gains (losses) on foreign currency forward contracts | The net gains and losses on foreign currency forward contracts included in "foreign currency exchange loss, net" in the condensed consolidated statements of operations are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of foreign currency gains and losses on underlying assets and liabilities | Foreign currency gains and losses on those underlying monetary assets and liabilities included in "foreign currency exchange loss, net" in the condensed consolidated statements of operations are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of derivative assets (liabilities): gross, offset and net | The following table presents gross amounts, amounts offset and net amounts presented in the condensed consolidated balance sheets for the Company's derivative instruments measured at fair value (in thousands):
|
Stock Plans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocation of stock-based compensation expense | Stock-based compensation cost included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
|
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Stock options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of valuation assumptions for fair value of stock options granted | The fair value of the stock options granted during the three months ended March 31, 2015 was estimated using the Black-Scholes valuation model with the following assumptions:
|
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Restricted stock unit awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of RSU expense by vesting type | The following table summarizes the amount of compensation expense recognized for restricted stock units for the three months ended March 31, 2016 and 2015 (in thousands):
|
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Performance restricted stock unit awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of market-condition awards fair value assumptions | The fair value of the market-condition PSUs granted was calculated using a Monte Carlo valuation model with the following assumptions:
|
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Employee stock purchase plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of employee stock purchase plan fair value assumptions | The fair value of the ESPP shares for the three months ended March 31, 2016 and 2015 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
|
Defined Benefit Plan (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net periodic pension cost (benefit) | Components of net periodic pension cost (benefit) are as follows (in thousands):
|
Restructuring and Exit Costs (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restructuring and exit costs | The following table summarizes the restructuring and exit costs for the three months ended March 31, 2016 (in thousands):
|
Description of Business and Basis of Presentation (Net Loss per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of computation of basic and diluted net income (loss) per share | ||
Net loss | $ (6,848) | $ (9,341) |
Weighted-average common shares outstanding | 31,650 | 29,445 |
Net loss per share | ||
Basic and diluted (in dollars per share) | $ (0.22) | $ (0.32) |
Description of Business and Basis of Presentation (Anti-dilutive Shares) (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Outstanding options to purchase common stock | ||
Schedule of anti-dilutive shares excluded from computation of net loss per share | ||
Anti-dilutive, shares | 907 | 897 |
Unvested restricted stock awards | ||
Schedule of anti-dilutive shares excluded from computation of net loss per share | ||
Anti-dilutive, shares | 216 | 361 |
Unvested restricted stock unit awards | ||
Schedule of anti-dilutive shares excluded from computation of net loss per share | ||
Anti-dilutive, shares | 1,773 | 825 |
Balance Sheet Details (Schedule of Inventories, Net) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of inventories | ||
Raw materials and purchased parts | $ 13,485 | $ 21,126 |
Work-in-process | 1,274 | 4,367 |
Finished goods | 15,283 | 16,913 |
Consigned finished goods | 129 | 28 |
Reserves | (971) | (3,379) |
Total inventories, net | $ 29,200 | $ 39,055 |
Balance Sheet Details (Goodwill) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Schedule of change in the carrying amount of goodwill | |
Balance at December 31, 2015 | $ 23,635 |
Foreign currency translation adjustments | 654 |
Reclassification of goodwill as held for sale | (291) |
Balance at March 31, 2016 | $ 23,998 |
Fair Value Measurements (Details Textual) |
Mar. 31, 2016
USD ($)
|
---|---|
Fair Value Measurements (Textual) [Abstract] | |
Fair value of derivatives | $ 37,000 |
Foreign Currency Derivative Instruments (Schedule of Gains and Losses on Foreign Currency Forward Contracts) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of gains (losses) on foreign currency forward contracts | ||
Net gains (loss) on foreign currency forward contracts | $ (15) | $ 764 |
Foreign Currency Derivative Instruments (Schedule of Gain and Losses on Underlying Assets and Liabilities) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of foreign currency gains and losses on underlying assets and liabilities | ||
Net gains (loss) on foreign currency forward contracts were partially offset on assets and liabilities | $ (18) | $ (1,091) |
Foreign Currency Derivative Instruments (Details Textual) $ in Millions |
Mar. 31, 2016
USD ($)
|
---|---|
Not Designated as Hedging Instrument | Foreign Currency Forward | |
Foreign Currency Derivative Instruments (Textual) [Abstract] | |
Notional amount of foreign currency forward contracts not designated as hedges | $ 1.2 |
Foreign Currency Derivative Instruments (Schedule of Derivatives: Gross, Offset and Net) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gross amounts of recognized asset | $ 33 | $ 66 |
Gross amounts offset | (70) | (50) |
Net amount of recognized asset (liability) | $ (37) | $ 16 |
Stock Plans (Stock Option Fair Value Assumptions) (Details) - Stock options |
3 Months Ended |
---|---|
Mar. 31, 2015 | |
Schedule of fair value assumptions | |
Expected dividend yield | 0.00% |
Expected volatility | 61.00% |
Risk-free interest rate | 1.61% |
Expected term (in years) | 5 years |
Stock Plans (Market-condition Awards Fair Value Assumptions) (Details) - Market-condition - Performance restricted stock unit awards |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
Schedule of fair value assumptions | |
Expected dividend yield | 0.00% |
Expected volatility | 62.00% |
Risk-free interest rate | 1.07% |
Expected term (in years) | 3 years |
Stock Plans Stock Plans (Schedule of RSU Expense by Vesting Type) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 1,203 | $ 839 |
Restricted stock unit awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 736 | 305 |
Restricted stock unit awards | Service-based | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 533 | 212 |
Performance restricted stock unit awards | Performance-based specific objectives | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 12 | 59 |
Performance restricted stock unit awards | Market-condition | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 191 | $ 34 |
Stock Plans (Allocation of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of stock-based compensation expense | ||
Stock-based compensation expense | $ 1,203 | $ 839 |
Total stock-based compensation expense | 1,203 | 839 |
Cost of revenue | ||
Schedule of stock-based compensation expense | ||
Total stock-based compensation expense | 235 | 206 |
Selling, general and administrative | ||
Schedule of stock-based compensation expense | ||
Total stock-based compensation expense | 671 | 366 |
Research and development | ||
Schedule of stock-based compensation expense | ||
Total stock-based compensation expense | $ 297 | $ 267 |
Stock Plans (Employee Stock Purchase Plan Fair Value Assumptions) (Details) - Employee stock purchase plan - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of fair value assumptions | ||
Expected dividend yield | 0.00% | 0.00% |
Expected volatility | 60.00% | 56.00% |
Risk-free interest rate | 0.49% | 0.03% |
Expected term (in years) | 6 months | 6 months |
Fair value per share | $ 2.27 | $ 2.10 |
Shelf Registration Statement (Details Textual) - USD ($) $ / shares in Units, shares in Thousands |
Jun. 11, 2015 |
Apr. 23, 2015 |
Jun. 03, 2014 |
---|---|---|---|
Stock Offering (Textual) [Abstract] | |||
Aggregate value of securities permitted for issuance (up to $125 million) | $ 125,000,000 | ||
Cowen and Company | Equity Offering Sales Agreement under Shelf Registration Statement | |||
Stock Offering (Textual) [Abstract] | |||
Number of shares the Company may sell per equity offering sales agreement (up to $10 million) | $ 10,000,000.0 | ||
Percentage commission of gross proceeds | 3.00% | ||
Amount of common stock sold | $ 10,000,000 | ||
Common stock, shares issued | 1,830 | ||
Average share price | $ 5.46 | ||
Proceeds from sale of common stock, net of offering costs | $ 9,600,000 | ||
Commissions and offering costs | $ 400,000 |
Defined Benefit Plan (Schedule of Net Periodic Pension Cost (Benefit))(Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Schedule of net periodic pension cost (benefit) | ||
Service cost | $ 290 | $ 242 |
Interest cost | 61 | 84 |
Expected return on plan assets | (291) | (392) |
Prior service cost amortization | 37 | 35 |
Deferred loss amortization | 60 | 11 |
Net periodic pension cost (benefit) | $ 157 | $ (20) |
Defined Benefit Plan (Details Textual) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Defined Benefit Plan (Textual) [Abstract] | ||
Employer contributions | $ 151,000 | $ 166,000 |
Additional employer contributions, expected to be paid during the remainder of fiscal year | $ 450,000 |
Restructuring and Exit Costs (Schedule of Restructuring and Exit Costs) (Details) - 2015 Consolidation of US Manufacturing Operations $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Amounts reserved | $ 1,337 |
Costs incurred | 322 |
Amounts paid | (161) |
Accruals released | (134) |
Other non-cash adjustments | (77) |
Amounts reserved | 1,287 |
Employee Severance Costs | |
Restructuring Reserve [Roll Forward] | |
Amounts reserved | 294 |
Costs incurred | 60 |
Amounts paid | (159) |
Accruals released | (134) |
Other non-cash adjustments | 0 |
Amounts reserved | 61 |
Lease Obligation Costs | |
Restructuring Reserve [Roll Forward] | |
Amounts reserved | 1,043 |
Costs incurred | 0 |
Amounts paid | 0 |
Accruals released | 0 |
Other non-cash adjustments | (77) |
Amounts reserved | 966 |
Other Exit Costs | |
Restructuring Reserve [Roll Forward] | |
Amounts reserved | 0 |
Costs incurred | 262 |
Amounts paid | (2) |
Accruals released | 0 |
Other non-cash adjustments | 0 |
Amounts reserved | $ 260 |
Subsequent Events (Narrative) (Details) - Microelectronics Product Line - Disposal Group, Disposed of by Sale, Not Discontinued Operations - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Apr. 27, 2016 |
|
Scenario, Forecast | ||
Subsequent Event [Line Items] | ||
Expected gain on completion of sale | $ 7.0 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Consideration paid for microelectronics product line | $ 21.0 | |
Escrow holdback on the purchase price | $ 1.5 |
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