-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E2UpUFDnIu9SBCh+kbkJYvVvfy8jrYrFL9AHAE7UrAEESZbma7BeVq7S403lleXm V8t6pT7hQQqJ6xpxzr5rXw== 0000936392-97-001582.txt : 19971127 0000936392-97-001582.hdr.sgml : 19971127 ACCESSION NUMBER: 0000936392-97-001582 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19971126 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAXWELL LABORATORIES INC /DE/ CENTRAL INDEX KEY: 0000319815 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 952390133 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-10964 FILM NUMBER: 97728570 BUSINESS ADDRESS: STREET 1: 9275 SKY PARK COURT CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 6192795100 MAIL ADDRESS: STREET 1: 8888 BALBOA AVE STREET 2: 8888 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123 10-K/A 1 AMENDMENT #1 TO FORM 10-K 1 ================================================================================ 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) DELAWARE 95-2390133 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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. ================================================================================ 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.
CUSTOMER APPLICATION PRODUCT - ---------------------------------- -------------------------- ---------------------------------- 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
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. 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." 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.
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% - --------------------------------- ---------- ------------- ----------- ---------- -------- ---------- 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
- --------------- (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. 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. 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.
NUMBER WEIGHTED OF SHARES AVERAGE PRICE --------- ------------- 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 ========
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. 7 NOTE 4 -- STOCK PLANS (CONTINUED) The following table summarizes information concerning outstanding and exercisable stock options at July 31, 1997.
WEIGHTED WEIGHTED AVERAGE WEIGHTED AVERAGE REMAINING AVERAGE RANGE OF EXERCISE NUMBER EXERCISE CONTRACTUAL NUMBER EXERCISE PRICES OUTSTANDING PRICE LIFE EXERCISABLE PRICE - ----------------- ----------- -------- ----------- ----------- -------- $ 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 ========= =======
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:
YEAR ENDED JULY 31, -------------------- 1996 1997 -------- ------ (IN THOUSANDS, EXCEPT PER SHARE DATA) 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
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. 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:
1995 1996 1997 ------- -------- -------- (IN THOUSANDS) 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 ======= ======== ========
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. 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 -----END PRIVACY-ENHANCED MESSAGE-----