<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
(AMENDMENT NO. 1)
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____ TO _____.
COMMISSION FILE NUMBER 0-10964
MAXWELL TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-2390133
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
9275 SKY PARK COURT
SAN DIEGO, CALIFORNIA 92123
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (619) 279-5100
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: COMMON STOCK, PAR
VALUE $.10 PER SHARE
NAME OF EACH EXCHANGE ON WHICH REGISTERED: NASDAQ NATIONAL MARKET ("NASDAQ")
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant on November 21, 1997, based on the closing
price at which the Common Stock was sold on Nasdaq as of November 21, 1997, was
$29.50.
The number of shares of the Registrant's Common Stock outstanding as of
November 21, 1997 was 7,770,345 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for the 1997 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission
pursuant to Regulation 14A (including the Appendix thereto) are incorporated by
reference in Part III of this Report.
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<PAGE> 2
The undersigned Registrant hereby amends the following items of its
Annual Report on Form 10-K for the fiscal year ended July 31, 1997, as set
forth below:
PART I
ITEM 1. BUSINESS
1. The Registrant hereby amends the section entitled "Customers" to
read in full as follows:
CUSTOMERS
The Company's products and services support a broad base of over 1,000
customers that spans each business segment. A number of the Company's customers
and strategic partners that are evaluating or are in the early stages of
adopting the Company's ultracapacitor products or purification systems have
required confidentiality from the Company and therefore are not named in this
Annual Report on Form 10-K or identified in the following table. Such customers
include a major wireless telecommunications device manufacturer and automotive
manufacturers for ultracapacitor products and an international restaurant chain,
an international food products company and a medical products manufacturer for
purification products. The following table is a representative list of the
Company's customers by product family.
<TABLE>
<CAPTION>
CUSTOMER APPLICATION PRODUCT
- ---------------------------------- -------------------------- ----------------------------------
<S> <C> <C>
PULSED POWER AND ELECTRONIC COMPONENTS
Cubic Defense Systems, Inc. Defense Nuclear Event Detector
General Electric Medical Systems Medical X-Ray Equipment Resistors
Hewlett-Packard Medical Equipment Defibrillator Capacitors
Los Alamos National Laboratory Physics Research Switches, Capacitors
PacifiCorp Power Quality Ultracapacitors
Pulse Sciences, Inc. Physics Research Capacitors, Power Supplies
SLS Biophile, Ltd. Medical Laser Equipment Capacitors, Power Supplies
TetraPak Food Packaging PureBright Purification Systems
Western Atlas Oil Well/Logging High Temperature Capacitors
Zoll Medical Medical Equipment Defibrillator Capacitors
EMI FILTERS
Baker Hughes Inteq Oil Field Services Capacitors, EMI Filters
Cardiac Control Systems Medical EMI Filters
Guidant/CPI Medical EMI Filters
Lockheed Martin Military EMI Filters
St. Jude/Pacesetter Medical EMI Filters
INDUSTRIAL COMPUTERS AND SUBSYSTEMS
Active Voice Inc. Voice Mail Systems Enclosures, CPU Boards
Allan Crawford Associates Canadian Distributor All Products
Applied Voice Technology, Inc. Voice Mail Systems Enclosures, CPU Boards
AT&T Computer Telephony Fault Tolerant Platforms, CPU
Boards
Banctec Technologies Document Sorting Systems Enclosures, CPU Boards
Brite Voice Interactive Voice Response Enclosures
Comverse Information Systems Computer Telephony Fault Tolerant Platforms
Digital Equipment Corp. Computer Platforms Enclosures, Fault Tolerant
Platforms
Lucent Technologies Voice Messaging Computer Platforms
Videoserver Inc. Video Conferencing Enclosures, CPU Boards
GOVERNMENT FUNDED RESEARCH AND SYSTEMS DEVELOPMENT
Defense Special Weapons Agency Weapons Effects Simulation Pulsed Power Operations, Analysis
Kyobuto Boeki Kaisha, Limited Geophysics and Geothermal Engineering, Scientific Support
Los Alamos National Laboratory Physics Research High Voltage Power Supplies
Mission Research Corporation Electromagnetic Electronic Testing
Interaction
NASA Space Environment Effects Physics Models and Effects
on Systems Analysis
Sandia National Laboratories Pulsed Power Research Engineering, Scientific Support
U.S. Air Force Phillips Lab Electronic Sensors for Technology Oversight and Analysis
Space
Weapons Effects Simulation Pulsed Power Operations and
Support
U.S. Air Force Hanscom AFB Space Physics Engineering and Scientific
Analysis
</TABLE>
Products and services provided to the Department of Defense constituted a
substantial portion of the Company's sales in fiscal 1997, with sales to the
United States Air Force constituting 14% of consolidated sales. Only one other
individual customer, Lucent, accounted for more than 10% of consolidated sales.
Lucent accounted for approximately 12% of consolidated fiscal 1997 sales and is
a significant customer in the industrial computers and subsystems business
segment. The Company's products that comprise a significant portion of its sales
to Lucent have not been designed into Lucent's next generation products and the
Company therefore expects that its business with Lucent will decline
substantially in the second half of fiscal 1998 and subsequent periods.
Customers for the Company's software products include federal, state and local
government organizations such as judicial organizations and school districts,
government contractors and textbook publishers.
<PAGE> 3
2. The Registrant hereby amends the section entitled "Backlog" to read
in full as follows:
BACKLOG
The Company's funded backlog as of July 31, 1997 and 1996 amounted to
approximately $39 million and $38 million, respectively. The funded backlog
consists of remaining funding under cost plus contracts for tasks not yet
completed, remaining revenues to be recognized on contracts accounted for on a
percentage of completion basis and firm orders for products not yet delivered.
The Company expects to complete or deliver substantially all of its currently
funded backlog within 12 months. The unfunded portion of contracts awarded was
approximately $23 million and $28 million at July 31, 1997 and 1996,
respectively.
3. The Registrant hereby amends the section entitled "Government
Business" to read in full as follows:
GOVERNMENT BUSINESS
A substantial portion of the Company's sales (approximately 33% in fiscal
1997, 40% in fiscal 1996 and 43% in fiscal 1995) is derived from contracts with
the United States government, principally agencies of the United States
Department of Defense, and subcontracts with government suppliers. The
reductions in defense budgets over the past several years have affected the
Company's activities, particularly in the area of system survivability products
and services, such as weapons effects simulation and testing. The Company has
also experienced increased competition in bidding for new defense programs from
contractors seeking to replace their lost business. The Company has experienced
significant reductions in its business with the Department of Defense through
fiscal 1995 as the Department responded to reduced global threats and shrinking
defense budgets. While the Department of Defense has continued to fund, although
at lower levels, research on next-generation pulsed power concepts, the
operation of existing simulation machines has been curtailed. Three of the four
weapons effects simulators in San Diego which were designed, built, and operated
by the Company and owned by the Department of Defense ceased operation on
October 1, 1995. The Company has provided services to the Department of Defense
to assist in the closure of these facilities, and has nearly completed this
task. The Company will continue to provide testing and analysis on the fourth
simulation facility, after the closure of the other three simulation devices.
The Company's funded government contracts are typically performable over a
one-year period. Government agencies may terminate their contracts, in whole or
in part, at their discretion, and in such event, the government agency is
obligated generally to pay the costs incurred by the Company thereunder plus a
fee based upon work completed. Contract costs for services or products supplied
to government agencies, including allocated indirect costs, are subject to audit
and adjustment. Contract costs have been reviewed and accepted by the government
through fiscal 1993. Contract revenues for periods subsequent to fiscal 1993
have been recorded in amounts which are expected to be realized upon final
review and settlement. Contracts entered into by the Company with government
agencies are fixed-price contracts or cost plus contracts. Under a fixed-price
contract, the customer agrees to pay a specific price for performance. Under a
cost plus contract, the customer agrees to pay an amount equal to the Company's
allowable costs in performing the contract, plus a fixed or incentive fee.
Certain costs of doing business, such as interest expenses and advertising
expenses, are not allowable under cost plus contracts. Greater risks are
involved under a fixed-price contract than under a cost plus contract because in
a fixed-price contract the Company assumes responsibility for providing the
specified product or services regardless of the actual costs incurred. Failure
to anticipate technical problems, estimate costs accurately or control costs
during contract performance reduces or eliminates the contemplated profit and
can result in a loss. On the other hand, the government generally permits higher
profit margins when establishing prices for fixed-price contracts because of
such risks. In the technology programs and systems business segment
approximately 77% and 82% of sales were derived from cost plus contracts in
fiscal 1997 and 1996, respectively, and the balance of sales in such years were
derived from fixed-price contracts. See "Risk Factors -- Risks Associated with
Government Business."
<PAGE> 4
PART III
ITEM 11. EXECUTIVE COMPENSATION
1. The Registrant hereby amends the section entitled "Option Grants in
Last Fiscal Year" to read in full as follows:
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows information on grants of stock options pursuant
to the Company's 1995 Stock Option Plan, the 1994 Stock Option Plan of the
Company's subsidiary, PurePulse Technologies, Inc. and the 1996 Stock Option
Plans of the Company's other principal operating subsidiaries, Maxwell Energy
Products, Inc., I-Bus, Inc., Maxwell Federal Division, Inc. and Maxwell
Information Systems, Inc., to the Named Executive Officers. Pursuant to
Securities and Exchange Commission rules, the table also shows the value of the
options at the end of the five and ten year option terms if the stock price were
to appreciate annually by 5% and 10%, respectively. These assumed values may not
reflect actual value at the times indicated.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENTAGE OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR
GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME AND ENTITY GRANTED(1) FY 1997(2) (PER SHARE) DATE 5% 10%
- --------------------------------- ---------- ------------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Potashner
Company........................ 50,000 13.38% $ 19.50 7/22/02 $613,170 $1,553,900
Energy Products................ 100,000 13.65 1.16 11/7/06 72,950 184,870
PurePulse...................... -0- -0- -0- -- -0- -0-
I-Bus.......................... 100,000 15.17 1.15 11/7/06 72,320 183,280
Federal........................ 100,000 14.15 1.45 11/7/06 91,190 231,090
Information Systems............ 100,000 13.34 .26 11/7/06 16,350 41,440
Thomas L. Horgan
Company........................ 9,000 2.41% $ 19.50 7/22/02 $ 48,490 $ 107,140
Energy Products................ 37,500 5.12 1.16 11/7/06 27,360 69,330
PurePulse...................... 33,750 10.15 .65 8/7/06 13,800 34,960
I-Bus.......................... 37,500 5.69 1.15 11/7/06 27,120 68,730
Federal........................ 37,500 5.31 1.45 11/7/06 34,200 86,660
Information Systems............ 37,500 5.00 .26 11/7/06 6,130 15,540
Gregg L. McKee
Company........................ 10,000 2.68% $ 19.50 7/22/02 $ 53,870 $ 119,050
Energy Products................ 125,000 17.06 1.16 11/7/06 91,190 231,090
PurePulse...................... 22,500 6.77 .65 8/7/06 9,200 23,310
I-Bus.......................... 25,000 3.79 1.15 11/7/06 18,080 45,820
Federal........................ 25,000 3.54 1.45 11/7/06 22,800 57,770
Information Systems............ 25,000 3.33 .26 11/7/06 4,090 10,360
Walter P. Robertson
Company........................ 9,000 2.41% $ 19.50 7/22/02 $ 48,490 $ 107,140
60,000 16.06 6.88 8/1/01 114,050 252,020
Energy Products................ 25,000 3.41 1.16 11/7/06 18,240 46,220
PurePulse...................... 22,500 6.77 .65 8/7/06 9,200 23,310
I-Bus.......................... 25,000 3.79 1.15 11/7/06 18,080 45,820
Federal........................ 100,000 14.15 1.45 11/7/06 91,190 231,090
Information Systems............ 25,000 3.33 .26 11/7/06 4,090 10,360
Donald M. Roberts
Company........................ 8,000 2.14% $ 19.50 7/22/02 $ 43,100 $ 95,240
Energy Products................ 37,500 5.12 1.16 11/7/06 27,360 69,330
PurePulse...................... 33,750 10.15 .65 8/7/06 13,800 34,960
I-Bus.......................... 37,500 5.69 1.15 11/7/06 27,120 68,730
Federal........................ 37,500 5.31 1.45 11/7/06 34,200 86,660
Information Systems............ 37,500 5.00 .26 11/7/06 6,130 15,540
</TABLE>
- ---------------
(1) These options are either incentive stock options or non-qualified stock
options and were granted at a purchase price equal to the fair market value
of the underlying common stock at the date of grant. Fair market value of
the Company's Common Stock was based on the trading price of such stock on
the date of grant, and fair market value of the common stock of the
subsidiaries was based on independent outside appraisals. The term of all
options covering shares of common stock of the Company's subsidiaries is ten
years. The term of options covering the Company's Common Stock is five
years, with the exception of Mr. Potashner's options covering Company Common
Stock which have ten year terms. The increments in which the options are
exercisable are determined by the committees which administer the plans.
(2) Total options for the Company include options covering 12,000 shares of
Company Common Stock granted to directors of the Company under the Company's
Director Stock Option Plan.
The stock option plans of the Company's five principal operating
subsidiaries permit options to be granted for an aggregate number of shares of
common stock amounting to approximately 13% of the total outstanding shares of
such stock on a fully-diluted basis (17.3% at one subsidiary). At August 31,
1997, the number of shares of common stock subject to outstanding options under
the Company's subsidiary stock option plans was, in the case of each such
subsidiary, 10.3% to 13.6% on a fully-diluted basis.
<PAGE> 5
2. The Registrant hereby adds the following as a new section entitled
"Compensation of Directors" after the section entitled "Employment Contracts,
Termination of Employment and Change-in-Control Arrangements."
COMPENSATION OF DIRECTORS
Each director of the Company (other than Mr. Potashner and Mr. Horgan who
receive no compensation other than that received as officers of the Company)
receives compensation of $2,268 per quarter and $810 per Board and Committee
meeting attended ($405 per Board or Committee telephonic meeting in which such
director participates).
Alan C. Kolb, a director and formerly the Chief Executive Officer of the
Company, is performing consulting services for the Company. Under the consulting
agreement, Dr. Kolb has agreed to consult with the Company for a substantial
portion of his time and is paid $10,000 per month, with a bonus opportunity of
up to 100% of such monthly fee at the discretion of the Company's Chief
Executive Officer. The consulting agreement has a three-year term ending July
31, 1999, and its scope and the fees provided therein are subject to periodic
reviews by the Chief Executive Officer. During fiscal 1997, Dr. Kolb received a
total of $165,000 in consulting fees, including bonuses.
The Company maintains the Maxwell Technologies, Inc. Director Stock Option
Plan (the "Director Option Plan") which authorizes the granting of ten-year
options to purchase an aggregate of 264,600 shares of the Company's Common Stock
to non-employee directors of the Company during the ten-year term of the
Director Option Plan which expires in 1999. Under the Director Option Plan, each
eligible director automatically receives options to purchase 6,000 shares of
Company Common Stock on the first business day following such director's initial
Annual Shareholders' Meeting of the Company, and options to purchase 2,000
shares following subsequent Annual Shareholders' Meetings. The option price per
share is the fair market value based on the public trading price of such shares
on the date of grant. Options granted to directors vest in full on the first
anniversary of the date of grant.
The Company maintains the Maxwell Technologies, Inc. 1994 Director Stock
Purchase Plan (the "Director Purchase Plan"), under which directors, other than
those who are full-time employees of the Company, have the opportunity to
purchase directly from the Company shares of Common Stock at 100% of the public
trading price of the shares. An aggregate of 100,000 shares have been authorized
for purchase by directors under the plan. The Director Purchase Plan authorizes
purchases by eligible directors from and after January 1, 1995, the effective
date of the plan, until the earlier of ten years thereafter or the issuance of
all shares authorized for purchase.
<PAGE> 6
MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 -- STOCK PLANS
The Registrant hereby amends "Note 4--Stock Plans" to read in full as
follows:
NOTE 4 -- STOCK PLANS
Stock Option Plans
In December 1995, the Company adopted the 1995 Stock Option Plan under
which 500,000 shares of Common Stock were reserved for future grant. In January
1997, an additional 300,000 shares were reserved for future issuance. This Plan,
and the Company's Director Stock Option Plan provide for granting either
Incentive Stock Options or Non-Qualified Stock Options to employees and
non-employee members of the Company's Board of Directors, respectively. Options
are also outstanding under an expired stock option plan. The options granted
under these plans are to purchase Common Stock at not less than fair market
value at the date of grant. Employee options are generally exercisable in
cumulative annual installments of 30 percent or 20 percent, while options in the
Director Option Plan are exercisable in full one year after date of grant. All
options have terms of five to ten years.
The following table summarizes Company stock option activity for the three
years ended July 31, 1997.
<TABLE>
<CAPTION>
NUMBER WEIGHTED
OF SHARES AVERAGE PRICE
--------- -------------
<S> <C> <C>
Balance at August 1, 1994............................ 771,758 $ 5.38
Granted............................................ 224,000 $ 3.77
Exercised.......................................... -- --
Expired or forfeited............................... (278,014) $ 5.49
--------
Balance at July 31, 1995............................. 717,744 $ 4.84
Granted............................................ 623,600 $ 4.31
Exercised.......................................... (37,684) $ 4.13
Expired or forfeited............................... (107,634) $ 5.05
--------
Balance at July 31, 1996............................. 1,196,026 $ 4.57
Granted............................................ 373,700 $ 15.95
Exercised.......................................... (406,656) $ 4.61
Expired or forfeited............................... (108,390) $ 4.42
--------
Outstanding at July 31, 1997......................... 1,054,680 $ 8.60
========
Available for future grant under the 1995 Stock
Option Plan........................................ 83,300
========
Available for future grant under the Director Option
Plan............................................... 124,584
========
</TABLE>
In addition, the Company has established separate stock option plans for
its five principal operating subsidiaries. During fiscal 1997, options to
purchase various shares of subsidiary stock were granted at the estimated fair
value of the subsidiary shares, as determined by an independent outside
appraisal. Options outstanding at July 31, 1997 amount to 10.3% to 13.6% of each
subsidiary's outstanding common stock.
<PAGE> 7
NOTE 4 -- STOCK PLANS (CONTINUED)
The following table summarizes information concerning outstanding and
exercisable stock options at July 31, 1997.
<TABLE>
<CAPTION>
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
AVERAGE REMAINING AVERAGE
RANGE OF EXERCISE NUMBER EXERCISE CONTRACTUAL NUMBER EXERCISE
PRICES OUTSTANDING PRICE LIFE EXERCISABLE PRICE
- ----------------- ----------- -------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 3.56 - 5.00 476,400 $ 3.96 6.4 years 169,875 $ 4.08
$ 5.12 - 7.25 266,580 $ 6.23 3.7 years 164,580 $ 5.73
$11.00 - 20.63 311,700 $17.66 5.0 years -- $ --
--------- -------
1,054,680 334,455
========= =======
</TABLE>
The Company has adopted the disclosure-only provisions of Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation. In accordance with the provisions of Statement No. 123, the
Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock option plans, and accordingly, no
compensation cost has been recognized for stock options in 1996 or 1997. If the
Company had elected to recognize compensation cost based on the fair value
method prescribed by Statement No. 123, the Company's net income (loss) and net
income (loss) per share would have been adjusted to the pro-forma amounts
indicated below:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
--------------------
1996 1997
-------- ------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C> <C>
Net income (loss)
As reported........................................... $(15,176) $4,024
Pro forma............................................. (15,305) 3,405
Net income (loss) per share
As reported........................................... $ (2.76) $ 0.60
Pro forma............................................. (2.78) 0.51
</TABLE>
The impact of outstanding non-vested stock options granted prior to 1996
has been excluded from the pro forma calculations; accordingly, the 1996 and
1997 pro forma adjustments are not indicative of future period pro forma
adjustments when the calculation will reflect all applicable stock options. The
fair value of Company options at date of grant was estimated using the
Black-Scholes option-pricing model with assumptions for both 1996 and 1997 as
follows: risk-free interest rate of 6.0%; dividend yield of 0%; volatility
factor of 52%; and a weighted-average expected term of 3 years. The fair value
of subsidiary options at date of grant was estimated using the Minimum Value
option-pricing model, which is similar to the Black-Scholes model except that it
excludes the factor for volatility since there is no public market for the
subsidiary shares. The estimated weighted average fair value at grant date for
Company options granted during 1996 and 1997 was $1.74 and $7.33 per option,
respectively.
Stock Purchase Plans
In December 1994, the Company established the 1994 Employee Stock Purchase
Plan and a Director Stock Purchase Plan. The employee plan 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 director plan permits non-employee directors to
purchase Common Stock at 100% of the trading price of the Stock on the date a
request for purchase is received. In fiscal years 1996 and 1997, 93,112 and
39,129 shares were issued under the two plans for an aggregate of $361,000 and
$442,000, respectively. At July 31, 1997, 339,335 shares are reserved for future
issuance under these plans.
Stockholder Rights Plan
In 1989, the Company adopted a Stockholder Rights Plan, and subsequently
distributed one nonvoting Common Stock purchase right ("Right") for each
outstanding share of Common Stock. The Rights are not exercisable and will not
trade separately from the Common Stock unless a person or group acquires, or
makes a tender offer for, 20% or more of the Company's Common Stock. Initially,
each Right entitles the registered holder to purchase one-half of a share of
Company Common Stock at a price of $16.25 per one-half share, subject to certain
anti-dilution adjustments. The Rights expire on June 20, 1999.
If the Rights become exercisable and certain conditions are met, then each
Right not owned by the acquiring person or group will entitle its holder to
receive, upon exercise, Company Common Stock having a market value of four times
the exercise price of the Right. These provisions will not apply if a majority
of the Board of Directors determines that the acquisition or other business
combination is in the best interest of the stockholders. In addition, the
Company may redeem the Rights at a price of $0.01 per Right, subject to certain
restrictions.
<PAGE> 8
NOTE 4 -- STOCK PLANS (CONTINUED)
Deferred Compensation
In 1996 and 1997, one of the executive officers of the Company was granted
shares of the Company's Common Stock subject to certain restrictions. The shares
vest over four year periods, and at the respective grant dates, the shares
issued in fiscal 1996 had a value of approximately $645,000, while the shares
issued in fiscal 1997 had a value of approximately $190,000. Those values, net
of accumulated amortization, are shown as deferred compensation in the
stockholder's equity section of the Balance Sheet. The deferred compensation is
being amortized to expense over the four year vesting periods, and such
amortization totaled $40,000 and $173,000 in fiscal 1996 and 1997, respectively.
NOTE 10 -- BUSINESS SEGMENTS
The Registrant hereby amends "Note 10--Business Segments" to read in
full as follows:
NOTE 10 -- BUSINESS SEGMENTS
For purposes of analyzing and understanding the financial statements, the
Company's operations have been classified into the following business segments:
Power Conversion Products: Includes design, development and
manufacture of electrical components and subsystems, including products
that capitalize on pulsed power such as ultracapacitors, microbial
purification systems, high voltage capacitors and other electrical
components and EMI filter capacitors.
Industrial Computers and Subsystems: Includes design and manufacture
of standard, custom and semi-custom industrial computer modules, platforms
and fully integrated systems primarily for OEMs.
Technology Programs and Systems: Includes research and development
programs in pulsed power, pulsed power systems design and construction,
weapons effects simulation and computer-based analytic services, primarily
for the Department of Defense.
Information Products and Services: Includes design, development and
integration of software products and services including job cost accounting
and management information systems and other software products including
applications for the Internet, as well as wide-area and local-area network
and software integration services.
Business segment financial data for the three years ended July 31 is as
follows:
<TABLE>
<CAPTION>
1995 1996 1997
------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Power Conversion Products................................. $15,207 $ 16,448 $ 27,039
Industrial Computers and Subsystems....................... 23,319 26,131 34,259
Technology Programs and Systems........................... 31,064 30,198 31,087
Information Products and Services......................... 5,414 8,134 9,026
------- -------- --------
Consolidated total................................ $75,004 $ 80,911 $101,411
======= ======== ========
Operating profit (loss):
Power Conversion Products................................. $ (561) $ (752) $ 2,482
Industrial Computers and Subsystems....................... 2,287 1,078 2,417
Technology Programs and Systems........................... 1,550 2,131 1,804
Information Products and Services......................... (1,097) (3,680) (2,886)
------- -------- --------
Total operating profit (loss)..................... 2,179 (1,223) 3,817
Corporate expenses and revenues........................... (1,448) (9,709) 434
Interest expense.......................................... (315) (329) (173)
------- -------- --------
Income (loss) before income taxes, minority
interest and cumulative effect of change in
accounting principle............................ $ 416 $(11,261) $ 4,078
======= ======== ========
Identifiable assets:
Power Conversion Products................................. $13,932 $ 11,253 $ 12,299
Industrial Computers and Subsystems....................... 8,000 9,166 12,167
Technology Programs and Systems........................... 12,640 7,586 8,298
Information Products and Services......................... 3,893 3,136 5,920
Corporate................................................. 13,905 9,583 8,436
------- -------- --------
Consolidated total................................ $52,370 $ 40,724 $ 47,120
======= ======== ========
Depreciation and amortization:
Power Conversion Products................................. $ 1,138 $ 763 $ 887
Industrial Computers and Subsystems....................... 260 316 469
Technology Programs and Systems........................... 1,563 994 647
Information Products and Services......................... 61 162 258
Corporate................................................. 393 272 326
------- -------- --------
Consolidated total................................ $ 3,415 $ 2,507 $ 2,587
======= ======== ========
Capital expenditures:
Power Conversion Products................................. $ 1,078 $ 670 $ 1,768
Industrial Computers and Subsystems....................... 337 529 992
Technology Programs and Systems........................... 1,034 240 424
Information Products and Services......................... 435 482 1,231
Corporate................................................. 67 55 310
------- -------- --------
Consolidated total................................ $ 2,951 $ 1,976 $ 4,725
======= ======== ========
</TABLE>
<PAGE> 9
NOTE 10 -- BUSINESS SEGMENTS (CONTINUED)
Intersegment sales are insignificant. Operating profit (loss) is sales less
cost of sales and operating expenses, excluding interest expense and corporate
expenses and revenues. Corporate expenses in fiscal 1996 include certain
restructuring costs and asset writedowns relating to the adoption of FASB
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of. Identifiable assets by segment include the
assets directly identified with those segments. Corporate assets consist
primarily of cash and cash equivalents, facilities and land, and, as of July 31,
1997, certain telecommunications, computers and networking equipment of the
Company.
Sales under United States government contracts and subcontracts are
primarily in the Technology Programs and Systems business segment, and
aggregated $32,120,000, $32,622,000 and $33,526,000, in fiscal 1995, 1996, and
1997, respectively. The portion of such sales to the United States Air Force in
fiscal 1997 amounted to 14% of total Company sales in that year. A customer of
the Industrial Computers and Subsystems business segment represented 12% of
total sales of the Company in fiscal 1997.
International sales amounted to $7,318,000, $7,555,000 and $12,609,000 in
fiscal 1995, 1996, and 1997, respectively, principally to countries in Europe
and the Pacific Rim.
<PAGE> 10
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Diego, State of California, on this 26th day of November, 1997.
MAXWELL TECHNOLOGIES, INC.
By: /s/ GARY J. DAVIDSON
------------------------------------
Gary J. Davidson
Vice President-Finance and
Administration, Treasurer and Chief
Financial Officer
