MAXWELL TECHNOLOGIES INC, 10-Q filed on 7/31/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2014
Jul. 28, 2014
Document and Entity Information [Abstract]
 
 
Entity Registrant Name
MAXWELL TECHNOLOGIES INC 
 
Entity Central Index Key
0000319815 
 
Document Type
10-Q 
 
Document Period End Date
Jun. 30, 2014 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2014 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
mxwl 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
29,939,734 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets :
 
 
Cash and cash equivalents
$ 30,748 
$ 30,647 
Trade and other accounts receivable, net of allowance for doubtful accounts of $159 and $134, at June 30, 2014 and December 31, 2013, respectively
39,850 
29,869 
Inventories
44,973 
44,736 
Prepaid expenses and other current assets
3,170 
2,314 
Total current assets
118,741 
107,566 
Property and equipment, net
42,192 
44,941 
Intangible assets, net
268 
369 
Goodwill
26,140 
25,978 
Pension asset
11,139 
10,568 
Other non-current assets
665 
665 
Total assets
199,145 
190,087 
Current liabilities:
 
 
Accounts payable and accrued liabilities
26,643 
25,436 
Accrued warranty
583 
180 
Accrued employee compensation
8,935 
8,788 
Deferred revenue and customer deposits
3,181 
1,043 
Short-term borrowings and current portion of long-term debt
10,106 
7,914 
Deferred tax liability
874 
890 
Total current liabilities
50,322 
44,251 
Deferred tax liability, long-term
2,155 
2,125 
Long-term debt, excluding current portion
65 
100 
Other long-term liabilities
3,513 
3,401 
Total liabilities
56,055 
49,877 
Commitments and contingencies (Note 8)
   
   
Stockholders' equity:
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 29,897 and 29,563 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively
2,987 
2,953 
Additional paid-in capital
274,946 
271,928 
Accumulated deficit
(152,656)
(151,794)
Accumulated other comprehensive income
17,813 
17,123 
Total stockholders' equity
143,090 
140,210 
Total liabilities and stockholders' equity
$ 199,145 
$ 190,087 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Statement of Financial Position [Abstract]
 
 
Trade and other accounts receivable, allowance
$ 159 
$ 134 
Common stock, par value
$ 0.10 
$ 0.1000 
Common stock, shares authorized
40,000,000 
40,000,000 
Common stock, shares issued
29,897,000 
29,563,000 
Common stock, shares outstanding
29,897,000 
29,563,000 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Income Statement [Abstract]
 
 
 
 
Revenue
$ 46,074 
$ 55,610 
$ 92,075 
$ 103,358 
Cost of revenue
29,474 
34,034 
57,605 
63,552 
Gross profit
16,600 
21,576 
34,470 
39,806 
Operating expenses:
 
 
 
 
Selling, general and administrative
10,944 
11,988 
21,883 
23,490 
Research and development
6,223 
5,378 
12,394 
11,401 
Total operating expenses
17,167 
17,366 
34,277 
34,891 
Income (loss) from operations
(567)
4,210 
193 
4,915 
Interest expense, net
28 
41 
67 
85 
Amortization of debt discount and prepaid debt costs
5 
15 
10 
30 
Income (loss) from operations before income taxes
(600)
4,154 
116 
4,800 
Income tax provision
581 
749 
978 
1,673 
Net income (loss)
$ (1,181)
$ 3,405 
$ (862)
$ 3,127 
Net income (loss) per share:
 
 
 
 
Basic
$ (0.04)
$ 0.12 
$ (0.03)
$ 0.11 
Diluted
$ (0.04)
$ 0.12 
$ (0.03)
$ 0.11 
Weighted average common shares outstanding:
 
 
 
 
Basic
29,206 
28,858 
29,127 
28,842 
Diluted
29,206 
28,860 
29,127 
28,859 
Condensed Consolidated Statements of Comprehensive Income Loss (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ (1,181)
$ 3,405 
$ (862)
$ 3,127 
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustment
(217)
440 
632 
(2,386)
Defined benefit pension plan, net of tax:
 
 
 
 
Amortization of deferred loss, net of tax benefit of $7 for the three months ended June 30, 2013; net of tax benefit of $14 for the six months ended June 30, 2013 respectively
0 
38 
0 
75 
Amortization of prior service cost, net of tax benefit of $7 and $2 for the three months ended June 30, 2014 and 2013, respectively; net of tax benefit of $14 and $4 for the six months ended June 30, 2014 and 2013, respectively
29 
9 
58 
18 
Other comprehensive income (loss), net of tax
(188)
487 
690 
(2,293)
Comprehensive income (loss)
$ (1,369)
$ 3,892 
$ (172)
$ 834 
Condensed Consolidated Statements of Comprehensive Income Loss (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Tax benefit (provision) for amortization of deferred loss
$ 0 
$ 7 
$ 0 
$ 14 
Tax benefit (provision) for amortization of prior service cost
$ 7 
$ 2 
$ 14 
$ 4 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
OPERATING ACTIVITIES:
 
 
Net income (loss)
$ (862)
$ 3,127 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
Depreciation
5,442 
4,228 
Amortization of intangible assets
102 
182 
Amortization of debt discount and prepaid debt costs
10 
30 
Pension cost (benefit)
(52)
9 
Stock-based compensation expense
1,921 
1,904 
Provision for losses on accounts receivable
25 
10 
Provision for losses on inventory
529 
776 
Provision for warranties
469 
730 
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
(9,950)
(2,179)
Inventories
(725)
585 
Prepaid expenses and other assets
(870)
(267)
Pension asset
(372)
(435)
Accounts payable and accrued liabilities
953 
4,388 
Deferred revenue and customer deposits
2,512 
2,498 
Accrued employee compensation
138 
2,538 
Deferred tax liability, long term
0 
(16)
Other long-term liabilities
103 
(65)
Net cash provided by (used in) operating activities
(627)
18,043 
INVESTING ACTIVITIES:
 
 
Purchase of property and equipment
(2,876)
(6,527)
Restricted cash
0 
(2,300)
Net cash used in investing activities
(2,876)
(8,827)
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
(4,185)
(4,060)
Proceeds from long-term and short-term borrowings
6,292 
3,318 
Repurchase of shares
0 
(44)
Proceeds from issuance of common stock under equity compensation plans
1,130 
281 
restricted cash - compensating balance
0 
(1,750)
Net cash provided by (used in) financing activities
3,237 
(2,255)
Increase (decrease) in cash and cash equivalents from operations
(266)
6,961 
Effect of exchange rate changes on cash and cash equivalents
367 
(1,129)
Increase (decrease) in cash and cash equivalents
101 
5,832 
Cash and cash equivalents, beginning of period
30,647 
28,739 
Cash and cash equivalents, end of period
$ 30,748 
$ 34,571 
Description of Business and Basis of Presentation
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 has three manufacturing facilities located in San Diego, California; Rossens, Switzerland; and Peoria, Arizona. In addition, the Company has two contract manufacturers located in China. Maxwell operates as one operating segment called High Reliability, which is comprised of three product lines:
•
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 and multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including transportation, automotive, information technology, renewable energy and industrial electronics.
•
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.
The Company’s products are designed 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 accounting principles generally accepted in the United States (“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
Certain prior period amounts in the consolidated statement of cash flows for the six months ended June 30, 2013 have been reclassified to conform to the current period presentation. These reclassifications do not impact reported net income (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, including deferred income taxes, the incurrence of warranty obligations, impairment of goodwill and other intangible assets, estimation of the cost to complete certain projects, 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 will be met.
Valuation Allowance on Deferred Tax Asset
At June 30, 2014, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $59.5 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 evaluates positive and negative evidence in connection with its assessment of the recoverability of the deferred tax assets. The key objective negative evidence, which is generally difficult to overcome, is a cumulative loss over the past three years. Based on financial projections through 2018, the cumulative three-year position may shift from a loss to an income position as soon as 2018. While other factors will need to be considered during the Company’s assessment of the U.S. valuation allowance, three-years cumulative income is considered significant positive evidence to support realization of all or a portion of the net deferred tax assets. However, the Company will also need to consider whether it expects to be in a cumulative loss position in the near future.  Based on the Company’s current financial projections, the Company may begin releasing the U.S. valuation allowance as soon as 2018.
Warranty Obligation
The Company provides warranties on all product sales. The majority of the Company’s warranties are for one to four years in the normal course of business. 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 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.
Beginning in the fourth quarter of 2011, for three distributors of the Company's products, the Company offered extended payment terms which allowed these distributors to pay the Company after they received payment from their customer, with respect to certain sales transactions. Also beginning in the fourth quarter of 2011, for one other distributor of the Company's products, the Company offered return rights and profit margin protection with respect to certain sales transactions. Therefore, for these four distributors, the Company determined that the revenue recognition criteria of SAB 101 and 104 were not met at the time of shipment, as there was no fixed or determinable price, nor was collection reasonably assured, at least with respect to certain sales transactions. As a result, for the three distributors provided with extended payment terms, which did not provide for a fixed or determinable price, the Company deferred the recognition of revenue on all sales beginning in the fourth quarter of 2011 to the period in which cash is received. For the one distributor provided with return rights and profit margin protection, for which the Company could not estimate exposure, the Company deferred the recognition of revenue on all sales beginning in the fourth quarter of 2011 until the distributor confirmed to the Company that it was not entitled to any further returns or credits. During the third quarter of 2013, this distributor confirmed to the Company that it was not entitled to any further returns or credits, therefore, previously unrecognized revenue related to this distributor was recognized in the quarter ended September 30, 2013. Although the Company had deferred revenue recognition for a significant amount of sales to these four distributors through the quarter ended September 30, 2013, subsequent to this date the amount of deferred revenue related to these distributors has been insignificant.
In addition to the deferred revenue arrangements discussed in the preceding paragraph, revenue is not recognized for sales that do not meet the revenue recognition criteria at the time of sale. Revenue is recognized once all of the criteria for revenue recognition are determined to have been met. For example, if the Company does not believe that collection of the sales price is reasonably assured at the time of sale, it defers revenue recognition until cash is received.
As of June 30, 2014 and December 31, 2013, cumulative sales totaling $2.6 million and $4.5 million, respectively, had not yet been recognized as revenue. The Company has recorded the cost basis of inventory shipped to customers prior to the achievement of the revenue recognition criteria of approximately $1.6 million and $2.5 million at June 30, 2014 and December 31, 2013, respectively, in "inventory" in the consolidated balance sheets.
If the Company receives cash payment from the customer prior to the achievement of the revenue recognition criteria, the amount received from the customer is recorded as deferred revenue in the consolidated balance sheets. Total deferred revenue and customer deposits in the consolidated balance sheets as of June 30, 2014 and December 31, 2013 of $3.2 million and $1.0 million, respectively, 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 Income (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 income per share (in thousands, except per share data):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Numerator
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(1,181
)
 
$
3,405

 
$
(862
)
 
$
3,127

Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
29,206

 
28,858

 
29,127

 
28,842

Effect of potentially dilutive securities:
 
 
 
 
 
 
 
 
Options to purchase common stock
 
—

 
—

 
—

 
12

Restricted stock awards
 
—

 
2

 
—

 
5

Weighted-average common shares outstanding, assuming dilution
 
29,206

 
28,860

 
29,127

 
28,859

Net income (loss) per share
 
 
 
 
 
 
 
 
Basic
 
$
(0.04
)
 
$
0.12

 
$
(0.03
)
 
$
0.11

Diluted
 
$
(0.04
)
 
$
0.12

 
$
(0.03
)
 
$
0.11


The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Outstanding options to purchase common stock
 
758

 
895

 
758

 
807

Unvested restricted stock awards
 
600

 
428

 
600

 
426

Unvested restricted stock unit awards
 
203

 
57

 
203

 
57


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 (“ASU 2014-09”). 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. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016. Early adoption is not permitted. 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.  The Company is in the process of evaluating the impact of adoption on its consolidated financial statements.
Balance Sheet Details
Balance Sheet Details
Balance Sheet Details (in thousands)
Inventories
 
 
June 30,
2014
 
December 31,
2013
 
 
 
Raw material and purchased parts
 
$
20,040

 
$
16,723

Work-in-process
 
2,579

 
2,374

Finished goods
 
20,781

 
23,149

Consigned finished goods
 
1,573

 
2,490

Total inventories
 
$
44,973

 
$
44,736


Intangible Assets
Intangible assets consist of the following:
 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
As of June 30, 2014
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(2,208
)
 
$
268

Developed core technology
 
1,100

 
(1,100
)
 
—

Patent license agreement
 
741

 
(741
)
 
—

Total intangible assets at June 30, 2014
 
$
4,317

 
$
(4,049
)
 
$
268

 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
As of December 31, 2013
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(2,107
)
 
$
369

Developed core technology
 
1,100

 
(1,100
)
 
—

Patent license agreement
 
741

 
(741
)
 
—

Total intangible assets at December 31, 2013
 
$
4,317

 
$
(3,948
)
 
$
369


Goodwill
The change in the carrying amount of goodwill from December 31, 2013 to June 30, 2014 is as follows:
Balance at December 31, 2013
 
$
25,978

Foreign currency translation adjustments
 
162

Balance at June 30, 2014
 
$
26,140


Accrued Warranty
 
 
Six Months Ended
 
 
June 30,
 
 
2014
 
2013
Beginning balance
 
$
180

 
$
269

Product warranties issued
 
233

 
180

Change related to preexisting warranties
 
236

 
(132
)
Settlement of warranties
 
(67
)
 
(138
)
Foreign currency translation adjustments
 
1

 
(3
)
Ending balance
 
$
583

 
$
176


Accumulated Other Comprehensive Income
 
 
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, 2013
 
$
18,804

 
$
(1,681
)
 
$
17,123

 
 
Other comprehensive income before reclassification
 
632

 
—

 
632

 
 
Amounts reclassified from accumulated other comprehensive income
 
—

 
58

 
58

 
Cost of Sales, Selling, General and Administrative and Research and Development Expense
Net other comprehensive income for the six months ended June 30, 2014
 
632

 
58

 
690

 
 
Balance as of June 30, 2014
 
$
19,436

 
$
(1,623
)
 
$
17,813

 
 
Credit Facility
Credit Facility
Credit Facility
In December 2011, the Company obtained a secured credit facility in the form of a revolving line of credit up to a maximum of $15.0 million (the “Revolving Line of Credit”) and an equipment term loan (the “Equipment Term Loan”) (together, the “Credit Facility”). In general, amounts borrowed under the Credit Facility are secured by a lien on all of the Company’s assets other than its intellectual property. In addition, under the credit agreement, the Company is required to pledge 65% of its equity interests in its Swiss subsidiary. The Company has also agreed not to encumber any of its intellectual property. The agreement contains certain restrictive covenants that limit the Company’s ability to, amongst other things; (i) incur additional indebtedness or guarantees; (ii) create liens or other encumbrances on its property; (iii) enter into a merger or similar transaction; (iv) invest in another entity; (v) declare or pay dividends; and (vi) invest in fixed assets in excess of a defined dollar amount. Repayment of amounts owed pursuant to the Credit Facility may be accelerated in the event that the Company is in violation of the representations, warranties and covenants made in the credit agreement, including certain financial covenants. The financial covenants that the Company must meet during the term of the credit agreement include quarterly minimum liquidity ratios, minimum quick ratios and EBITDA targets and an annual net income target. Borrowings under the Credit Facility bear 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. Further, the Company incurs an unused commitment fee, payable quarterly, equal to 0.25% per annum of the average daily unused amount of the Revolving Line of Credit.
The Equipment Term Loan was available to finance 80% of eligible equipment purchases made between April 1, 2011 and April 30, 2012. During this period, the Company borrowed $5.0 million under the Equipment Term Loan. In March 2014, the Company borrowed $3.0 million under the Revolving Line of Credit, and no other amounts have been borrowed to date under the Revolving Line of Credit.
As of December 31, 2013, the Company was not in compliance with the financial covenant pertaining to the quarterly EBITDA target for the quarter ended December 31, 2013. As a result of this noncompliance, borrowings outstanding under the Credit Facility were classified as a current obligation in the consolidated balance sheet as of December 31, 2013.
During the quarter ended March 31, 2014, the Company was in violation with respect to the requirement to maintain a minimum liquidity ratio at all times. On February 27, 2014, the Company entered into a forbearance agreement with the bank wherein the bank agreed to forbear from further exercise of its rights and remedies under the credit agreement to call the Company's outstanding debt obligation in connection with this event of default for a period terminating on the earlier of April 30, 2014 or the occurrence of any additional events of default. The forbearance agreement also required the Company to maintain at least $1.0 million in its account maintained at the bank until the amount outstanding under the Revolving Line of Credit is repaid. On April 30, 2014, the Company entered into another forbearance agreement with the bank which extended the forbearance period from April 30, 2014 to June 30, 2014, or the occurrence of any additional events of default, and removed the requirement for the Company to maintain at least $1.0 million in its account maintained at the bank.
During the quarter ended June 30, 2014, the Company was in violation with respect to the requirement to maintain a minimum liquidity ratio at all times and the failure to maintain the required EBITDA for the quarter ended June 30, 2014. On June 30, 2014, the Company entered into another forbearance agreement with the bank which extended the forbearance period from June 30, 2014 to August 31, 2014, or the occurrence of any additional events of default. As a result of this noncompliance, the bank's obligation to extend any further credit ceased and terminated, and borrowings outstanding under the Credit Facility have been classified as a current obligation in the consolidated balance sheet as of June 30, 2014.
As of June 30, 2014, $1.4 million was outstanding under the Equipment Term Loan and the applicable interest rate was LIBOR plus 2.25% (2.5% as of June 30, 2014). If the bank does not exercise its right to accelerate repayment of this balance after the forbearance period discussed above, under the original terms of the Credit Facility, principal and interest under the Equipment Term Loan are payable in 36 equal monthly installments such that the Equipment Term Loan is fully repaid by the maturity date of April 30, 2015, but may be prepaid in whole or in part at any time. As of June 30, 2014, $3.0 million was outstanding under the Revolving Line of Credit and the applicable interest rate was LIBOR plus 2.25% (2.5% as of June 30, 2014). The amount outstanding under the Revolving Line of Credit is scheduled to be repaid by August 31, 2014.
Fair Value Measurements
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 June 30, 2014, the financial instruments to which this topic applied were foreign currency forward contracts. As of June 30, 2014, the fair value of these foreign currency forward contracts was an asset of $66,000 which is recorded in “prepaid expenses and other current assets" 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 June 30, 2014 have approximately a one-month maturity term and mature on July 2, 2014 or August 4, 2014.
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
Foreign Currency Derivative Instruments
Foreign Currency Derivative Instruments
Maxwell uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables, 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 cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
—

 
$
18

 
$
5

 
$
30

Selling, general and administrative
 
(405
)
 
8

 
(344
)
 
(1,379
)
Total gain (loss)
 
$
(405
)
 
$
26

 
$
(339
)
 
$
(1,349
)

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 cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
3

 
$
(17
)
 
$
5

 
$
(25
)
Selling, general and administrative
 
136

 
(205
)
 
(220
)
 
1,041

Total gain (loss)
 
$
139

 
$
(222
)
 
$
(215
)
 
$
1,016


As of June 30, 2014, the total notional amount of foreign currency forward contracts not designated as hedges was $31.5 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):
 
 
June 30,
2014
 
December 31, 2013
Gross amounts of recognized assets
 
$
230

 
$
472

Gross amounts offset in the condensed consolidated balance sheets
 
(164
)
 
(90
)
Net amount of recognized asset presented in the condensed consolidated balance sheets
 
$
66

 
$
382


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
Stock Plans
Stock Plans
The Company has two active stock-based compensation plans as of June 30, 2014: 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.
Stock Options
Compensation expense recognized from employee stock options for the three months ended June 30, 2014 and 2013 was $43,000 and $154,000, respectively and $41,000 and $331,000, respectively, for the six months ended June 30, 2014 and 2013. Beginning in 2011, the Company ceased granting stock options to employees as part of its annual equity incentive award program. However, during the three months ended June 30, 2013, the Company granted total stock options of 75,000 to its new chief operating officer upon his initial engagement. These options vest in equal annual installments over four years from the date of grant. The Company may determine to grant stock options in the future to employees as part of its annual equity incentive award program.
Restricted Stock Awards
During the three months ended June 30, 2014 and 2013, the Company did not grant any restricted stock awards. During the six months ended June 30, 2014 and 2013 the Company issued 255,600 and 305,143 shares, respectively, under restricted stock awards, which had an average grant date fair value per share of $14.20 and $10.58, respectively. Beginning in the second quarter of 2014, the Company ceased granting restricted stock awards and began granting restricted stock units to employees as part of its annual equity incentive award program. The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three and six months ended June 30, 2014 and 2013 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service-based restricted stock awards
 
$
716

 
$
621

 
$
1,149

 
$
1,270

Performance-based restricted stock awards
 
7

 
25

 
13

 
43

Total compensation expense recognized for restricted stock awards
 
$
723

 
$
646

 
$
1,162

 
$
1,313


Restricted Stock Units
Non-employee director restricted stock units
Non-employee directors receive an annual restricted stock unit award, normally in February of each year, as part of their annual retainer compensation, which vests one year from the date of grant. 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 June 30, 2014 and 2013, no restricted stock units were granted to non-employee directors. During the six months ended June 30, 2014 and 2013, non-employee directors were granted a total of 65,891 and 56,616 restricted stock units, respectively, with an average grant date fair value per share of $9.03 and $10.51, respectively. Compensation expense recognized for non-employee director restricted stock units for the three months ended June 30, 2014 and 2013 was $145,000 and $139,000, respectively, and $321,000 and $253,000, respectively, for the six months ended June 30, 2014 and 2013.
Employee restricted stock units
Beginning in the second quarter of 2014 the Company ceased granting employees restricted stock awards and began granting restricted stock units as part of its annual equity incentive award program. 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 June 30, 2014, the Company granted 137,000 restricted stock units of which 67,000 were service-based restricted stock units vesting in equal installments over four years of continuous service with an average grant date value of $15.17 per share and 70,000 were market-condition restricted stock units vesting upon the achievement of certain stock price thresholds and the completion of three years of continuous employment from the date of grant with an average grant date fair value of $7.71 per share. Since the vesting of the market-condition restricted stock units is dependent on stock price performance, the fair values of these awards were estimated using a Monte-Carlo valuation model with the following weighted-average assumptions:
Market price at grant per share
 
$
15.03

Expected dividends
 
$
—

Expected volatility
 
65
%
Risk-free interest rate
 
0.86
%
Fair value per unit
 
$
7.71


The following table summarizes the amount of compensation expense recognized for employee restricted stock units for the three and six months ended June 30, 2014 and 2013 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service-based restricted stock units
 
$
32

 
$
—

 
$
32

 
$
—

Market-condition restricted stock units
 
22

 
—

 
22

 
—

Total compensation expense recognized for employee restricted stock units
 
$
54

 
$
—

 
$
54

 
$
—


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 commencing on January 1 and July 1. The number of shares purchased is based on participants’ contributions made during the offering period.
Compensation expense recognized for the ESPP for the three months ended June 30, 2014 was $201,000 and $343,000 for the six months ended June 30, 2014. For the three and six months ended June 30, 2013, no compensation expense was recognized for the ESPP as the plan had been temporarily suspended. The fair value of the ESPP shares for the three and six months ended June 30, 2014 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
Expected dividends

$
—

Exercise price

$
7.77

Expected volatility

71
%
Risk-free interest rate

0.07
%
Expected life/term (in years)

0.5

Fair value per share

$
7.65


Stock-based Compensation Expense
Compensation cost for restricted stock awards, restricted stock units, stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
190

 
$
261

 
$
442

 
$
535

Selling, general and administrative
 
733

 
507

 
988

 
1,004

Research and development
 
243

 
178

 
491

 
365

Total stock-based compensation expense
 
$
1,166

 
$
946

 
$
1,921

 
$
1,904

Shelf Registration Statement
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, which will allow the Company to access the capital markets for the three year period following this effective date. As of June 30, 2014, no securities have been issued under the Company's shelf registration statement. Net proceeds, terms and pricing of each offering of securities issued under the shelf registration statement will be determined at the time of such offerings.
Defined Benefit Plan
Defined Benefit Plan
Defined Benefit Plan
Maxwell SA, the Company's Swiss subsidiary, 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 (benefit) cost are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service cost
 
$
217

 
$
204

 
$
434

 
$
411

Interest cost
 
179

 
124

 
357

 
249

Expected return on plan assets
 
(458
)
 
(379
)
 
(915
)
 
(762
)
Prior service cost amortization
 
36

 
11

 
72

 
22

Deferred loss amortization
 
—

 
44

 
—

 
89

Net periodic pension cost (benefit)
 
$
(26
)
 
$
4

 
$
(52
)
 
$
9


Employer contributions of $184,000 and $178,000 were paid during the three months ended June 30, 2014 and 2013, respectively. Employer contributions of $371,000 and $361,000 were paid during the six months ended June 30, 2014 and 2013, respectively. Additional employer contributions of approximately $334,000 are expected to be paid during the remainder of fiscal 2014.
Legal Proceedings
Legal Proceedings
Legal Proceedings
Although the Company expects to incur significant 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
As a result of being publicly traded in the U.S., the Company is subject to the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits companies from making improper payments to foreign officials for the purpose of obtaining or retaining business. Beginning in 2009, the Company conducted an internal review into payments made to its former independent sales agent in China with respect to sales of its high voltage capacitor products produced by its Swiss subsidiary. In January 2011, the Company reached settlements with the 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 FCPA and other securities laws violations. The Company settled civil charges with the SEC, agreeing to an injunction against further violations of the FCPA. Under the terms of the settlement with the SEC, the Company agreed to pay a total of approximately $6.4 million in profit disgorgement and prejudgment interest. The Company settled civil and criminal charges with the DOJ by entering into a three-year deferred prosecution agreement (“DPA”) and agreeing to pay a total of $8.0 million in penalties. Further, under the terms of each agreement, the Company has submitted periodic reports to the SEC and DOJ on its internal compliance program concerning anti-bribery. As of January 25, 2013, all monetary penalties have been paid in full for each settlement described above and, in early February 2014, the DPA expired on its own terms. A judgment of dismissal was issued by the District Judge for the matter 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 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. By reviewing the items to be seized on the search warrant presented by the Swiss prosecutor’s office, 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 DPA 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. At such an early 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.
Securities Matter
In early 2013, the Company voluntarily provided information to the United States Attorney's Office for the Southern District of California and the U.S. Securities and Exchange Commission related to its announcement that it intended to file restated financial statements for fiscal years 2011 and 2012. The Company is currently cooperating with the US authorities in connection with these investigations. At this preliminary stage, the Company cannot predict the ultimate outcome of this action, nor can it estimate the range of 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.
Securities Class Action Matter
From March 13, 2013 through April 19, 2013, four purported shareholder class actions were filed in the United States District Court for the Southern District of California against the Company and certain of its current and former officers. These actions were entitled Foster v. Maxwell Technologies, Inc., et al., Case No. 13-cv-0580 (S.D. Cal. filed March 13, 2013), Weinstein v. Maxwell Technologies, Inc., et al., No. 13-cv-0686 (S.D. Cal. filed March 21, 2013), Abanades v. Maxwell Technologies, Inc., et al., No. 13-cv-0867 (S.D. Cal. filed April 11, 2013), and Mebarak v. Maxwell Technologies, Inc., et al., No. 13-cv-0942 (S.D. Cal. filed April 19, 2013). The complaints alleged that the defendants made false and misleading statements regarding its financial performance and business prospects and overstated the Company's reported revenue. The complaints purport to assert claims for violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 on behalf of all persons who purchased the Company's common stock between April 28, 2011 and March 7, 2013, inclusive. The complaints seek unspecified monetary damages and attorneys' fees and costs. On May 13, 2013, four prospective lead plaintiffs filed motions to consolidate the four actions and to be appointed lead plaintiff and, on October 24, 2013, the court issued a written order consolidating the case under the heading In re Maxwell Technologies, Inc., Securities Litigation. On January 16, 2014, the lead plaintiff filed a consolidated and amended complaint which slightly adjusted the class period to April 29, 2011 to March 19, 2013, and removed a former officer as a defendant. In response, the Company and the individual defendants filed a motion to dismiss the complaint, which the lead plaintiff opposed. On May 5, 2014, the court granted the Company’s motion to dismiss but granted the lead plaintiff leave to amend its complaint. The lead plaintiff filed an amended complaint on June 4, 2014, and the Company then filed another motion to dismiss on July 10, 2014. The lead plaintiffs and the Company are each expected to file additional responses on the issues raised in the motion to dismiss before the court rules on the matter at a hearing scheduled for October 14, 2014. At this preliminary stage, the Company cannot determine whether there is a reasonable possibility that a loss will be incurred nor can it estimate the range of 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.
Federal Shareholder Derivative Matter
On April 23, 2013 and May 7, 2013, two shareholder derivative actions were filed in the United States District Court for the Southern District of California, entitled Kienzle v. Schramm, et al., Case No. 13-cv-0966 (S.D. Cal. filed April 23, 2013) and Agrawal v. Cortes, et al., Case No. 13-cv-1084 (S.D. Cal. filed May 7, 2013). The complaints name as defendants certain of the Company's current and former officers and directors and name the Company as a nominal defendant. The complaints allege that the individual defendants caused or allowed the Company to issue false and misleading statements about its financial condition, operations, management, and internal controls and falsely represented that it maintained adequate controls. The complaints assert causes of action for breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. The lawsuits seek unspecified damages, an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution and disgorgement of profits, benefits, and other compensation, attorneys' and experts' fees, and costs and expenses. On June 10, 2013, the parties filed a joint motion to consolidate the two actions. On September 26, 2013, the plaintiffs filed a motion to stay this case until the resolution of the similar derivative action pending in the California Superior Court for the County of San Diego. The Company opposed this motion to stay. On October 30, 2013, the court issued two orders consolidating the two cases under the heading In re Maxwell Technologies, Inc. Derivative Litigation, which had been mutually agreed upon by all parties, and denying the plaintiffs’ motion to stay their own federal derivative case. The lead plaintiff filed its consolidated and amended complaint on January 30, 2014. In response, the Company and the individual defendants filed a motion to dismiss the complaint, which the lead plaintiff opposed. On May 28, 2014, the court granted the Company’s motion to dismiss but granted the lead plaintiff leave to amend its complaint. The lead plaintiff filed an amended complaint on July 11, 2014, to which the Company expects to respond by filing another motion to dismiss the action. The lead plaintiffs and the Company are each expected to file additional responses on the issues raised in the motion to dismiss before the court rules on the matter at a hearing which is not yet formally scheduled with the court. Because this action is derivative in nature, it does not seek monetary damages from the Company. However, the Company may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendants and to incur other financial obligations. At this preliminary stage, the Company cannot predict the ultimate outcome of this action, nor can it estimate the range of potential loss. Accordingly, the Company has not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation.
State Shareholder Derivative Matter
On April 11, 2013 and April 18, 2013, two shareholder derivative actions were filed in California Superior Court for the County of San Diego, entitled Warsh v. Schramm, et al., Case No. 37-2013-00043884 (San Diego Sup. Ct. filed April 11, 2013) and Neville v. Cortes, et al., Case No. 37-2013-00044911-CU-BT-CTL (San Diego Sup. Ct. filed April 18, 2013). The complaints name as defendants certain of the Company's current and former officers and directors as well as its former auditor McGladrey LLP. The Company is named as a nominal defendant. The complaints allege that the individual defendants made or caused the Company to make false and/or misleading statements regarding its financial condition, and failed to disclose material adverse facts about its business, operations and prospects. The complaints assert causes of action for breaches of fiduciary duty for disseminating false and misleading information, failing to maintain internal controls, and failing to properly oversee and manage the Company, as well as for unjust enrichment, abuse of control, gross mismanagement, professional negligence and accounting malpractice, and aiding and abetting breaches of fiduciary duty. The lawsuits seek unspecified damages, an order directing the Company to take all necessary actions to reform and improve its corporate governance and internal procedures, restitution and disgorgement of profits, benefits and other compensation, attorneys' and experts' fees, and costs and expenses. On May 7, 2013, the Court consolidated the two actions. The Company filed a motion to stay the consolidated action on July 2, 2013. On September 27, 2013, the Court heard oral arguments on the motion to stay and continued the hearing on this motion until the resolution of the motion to stay pending in the federal derivative action referenced above. Given the outcome of the above detailed federal derivative lawsuit, the Company informed the state court of the federal court order denying the federal plaintiffs’ motion to stay. Consequently, on November 1, 2013, the state court stayed the state derivative action pending before it until the resolution of the federal derivative case. Because this action is derivative in nature, it does not seek monetary damages from the Company. However, the Company may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendants and to incur other financial obligations. At this preliminary stage, the Company cannot predict the ultimate outcome of this action, nor can it estimate the range of potential loss. Accordingly, the Company has not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation.
Shareholder Demand Letter Matter
On April 9, 2013, Stephen Neville, a purported shareholder of the Company, sent a demand letter to the Company to inspect its books and records pursuant to California Corporations Code Section 1601. The demand sought inspection of documents related to the Company's March 7, 2013 announcement that it would be restating its previously-issued financial statements for 2011 and 2012, board minutes and committee materials, and other documents related to its board or management discussions regarding revenue recognition from January 1, 2011 to the present. The Company responded by letter dated April 19, 2013, explaining why it believed that the demand did not appear to be proper. Following receipt of a second letter from Mr. Neville dated April 23, 2013, the Company explained by letter dated April 29, 2013 why it continues to believe that the inspection demand appears improper. The Company has not received a further response from Mr. Neville regarding the inspection demand. In conjunction with the state court derivative action referenced above, Mr. Neville filed two motions to compel production of the documents and materials originally sought in the demand letter. On September 27, 2013, the Court heard oral arguments on the motions to compel and, in line with the continuance on the motion to stay in the state shareholder derivative matter referenced above, likewise continued the hearing on the motions to compel, pending resolution of the motions to stay in both the federal and state derivative actions referenced above. On November 15, 2013, the purported shareholder, Mr. Neville, filed a petition for writ of mandate requesting that the state court order the Company to comply with the inspection demand. The Company responded to this writ on January 15, 2014, claiming that the inspection demand is improper on numerous grounds and simultaneously filing a demurrer for the shareholder inspection demand action in its entirety. On July 18, 2014, the court ruled against the Company’s motion to dismiss but left open issues pertaining to the documents to be provided, if any, under the purported shareholder inspection demand. Accordingly, the Company is expected to address the nature and scope of the inspection demand through procedural filings with the court. At this preliminary stage, the Company cannot predict the ultimate outcome of this action, nor can it estimate the range of potential loss. Accordingly, the Company has not accrued an amount for any potential costs associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation.
Description of Business and Basis of Presentation (Policies)
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 accounting principles generally accepted in the United States (“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.
Reclassification, Policy 
Reclassifications
Certain prior period amounts in the consolidated statement of cash flows for the six months ended June 30, 2013 have been reclassified to conform to the current period presentation. These reclassifications do not impact reported net income (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, including deferred income taxes, the incurrence of warranty obligations, impairment of goodwill and other intangible assets, estimation of the cost to complete certain projects, 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 will be met.
Income Tax Disclosure 
Valuation Allowance on Deferred Tax Asset
At June 30, 2014, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $59.5 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 evaluates positive and negative evidence in connection with its assessment of the recoverability of the deferred tax assets. The key objective negative evidence, which is generally difficult to overcome, is a cumulative loss over the past three years. Based on financial projections through 2018, the cumulative three-year position may shift from a loss to an income position as soon as 2018. While other factors will need to be considered during the Company’s assessment of the U.S. valuation allowance, three-years cumulative income is considered significant positive evidence to support realization of all or a portion of the net deferred tax assets. However, the Company will also need to consider whether it expects to be in a cumulative loss position in the near future.  Based on the Company’s current financial projections, the Company may begin releasing the U.S. valuation allowance as soon as 2018.
Cash and Cash Equivalents, Restricted Cash 
Warranty Obligation 
Warranty Obligation
The Company provides warranties on all product sales. The majority of the Company’s warranties are for one to four years in the normal course of business. 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.
Beginning in the fourth quarter of 2011, for three distributors of the Company's products, the Company offered extended payment terms which allowed these distributors to pay the Company after they received payment from their customer, with respect to certain sales transactions. Also beginning in the fourth quarter of 2011, for one other distributor of the Company's products, the Company offered return rights and profit margin protection with respect to certain sales transactions. Therefore, for these four distributors, the Company determined that the revenue recognition criteria of SAB 101 and 104 were not met at the time of shipment, as there was no fixed or determinable price, nor was collection reasonably assured, at least with respect to certain sales transactions. As a result, for the three distributors provided with extended payment terms, which did not provide for a fixed or determinable price, the Company deferred the recognition of revenue on all sales beginning in the fourth quarter of 2011 to the period in which cash is received. For the one distributor provided with return rights and profit margin protection, for which the Company could not estimate exposure, the Company deferred the recognition of revenue on all sales beginning in the fourth quarter of 2011 until the distributor confirmed to the Company that it was not entitled to any further returns or credits. During the third quarter of 2013, this distributor confirmed to the Company that it was not entitled to any further returns or credits, therefore, previously unrecognized revenue related to this distributor was recognized in the quarter ended September 30, 2013. Although the Company had deferred revenue recognition for a significant amount of sales to these four distributors through the quarter ended September 30, 2013, subsequent to this date the amount of deferred revenue related to these distributors has been insignificant.
In addition to the deferred revenue arrangements discussed in the preceding paragraph, revenue is not recognized for sales that do not meet the revenue recognition criteria at the time of sale. Revenue is recognized once all of the criteria for revenue recognition are determined to have been met. For example, if the Company does not believe that collection of the sales price is reasonably assured at the time of sale, it defers revenue recognition until cash is received.
As of June 30, 2014 and December 31, 2013, cumulative sales totaling $2.6 million and $4.5 million, respectively, had not yet been recognized as revenue. The Company has recorded the cost basis of inventory shipped to customers prior to the achievement of the revenue recognition criteria of approximately $1.6 million and $2.5 million at June 30, 2014 and December 31, 2013, respectively, in "inventory" in the consolidated balance sheets.
If the Company receives cash payment from the customer prior to the achievement of the revenue recognition criteria, the amount received from the customer is recorded as deferred revenue in the consolidated balance sheets. Total deferred revenue and customer deposits in the consolidated balance sheets as of June 30, 2014 and December 31, 2013 of $3.2 million and $1.0 million, respectively, 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 Income (Loss) per Share 
Net Income (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.
Derivatives and Hedging 
Maxwell uses forward contracts to hedge certain monetary assets and liabilities, primarily receivables and payables, 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.
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 June 30, 2014, the financial instruments to which this topic applied were foreign currency forward contracts. As of June 30, 2014, the fair value of these foreign currency forward contracts was an asset of $66,000 which is recorded in “prepaid expenses and other current assets" 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.
Description of Business and Basis of Presentation (Tables)
Schedule of computation of basic and diluted net income (loss) per share 
The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Numerator
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(1,181
)
 
$
3,405

 
$
(862
)
 
$
3,127

Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
29,206

 
28,858

 
29,127

 
28,842

Effect of potentially dilutive securities:
 
 
 
 
 
 
 
 
Options to purchase common stock
 
—

 
—

 
—

 
12

Restricted stock awards
 
—

 
2

 
—

 
5

Weighted-average common shares outstanding, assuming dilution
 
29,206

 
28,860

 
29,127

 
28,859

Net income (loss) per share
 
 
 
 
 
 
 
 
Basic
 
$
(0.04
)
 
$
0.12

 
$
(0.03
)
 
$
0.11

Diluted
 
$
(0.04
)
 
$
0.12

 
$
(0.03
)
 
$
0.11

Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive 
The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Outstanding options to purchase common stock
 
758

 
895

 
758

 
807

Unvested restricted stock awards
 
600

 
428

 
600

 
426

Unvested restricted stock unit awards
 
203

 
57

 
203

 
57

Balance Sheet Details (Tables)
Schedule of inventories 
 
 
June 30,
2014
 
December 31,
2013
 
 
 
Raw material and purchased parts
 
$
20,040

 
$
16,723

Work-in-process
 
2,579

 
2,374

Finished goods
 
20,781

 
23,149

Consigned finished goods
 
1,573

 
2,490

Total inventories
 
$
44,973

 
$
44,736

Schedule of intangible assets 
Intangible assets consist of the following:
 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
As of June 30, 2014
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(2,208
)
 
$
268

Developed core technology
 
1,100

 
(1,100
)
 
—

Patent license agreement
 
741

 
(741
)
 
—

Total intangible assets at June 30, 2014
 
$
4,317

 
$
(4,049
)
 
$
268

 
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
As of December 31, 2013
 
 
 
 
 
 
Patents
 
$
2,476

 
$
(2,107
)
 
$
369

Developed core technology
 
1,100

 
(1,100
)
 
—

Patent license agreement
 
741

 
(741
)
 
—

Total intangible assets at December 31, 2013
 
$
4,317

 
$
(3,948
)
 
$
369

Schedule of change in the carrying amount of goodwill 
The change in the carrying amount of goodwill from December 31, 2013 to June 30, 2014 is as follows:
Balance at December 31, 2013
 
$
25,978

Foreign currency translation adjustments
 
162

Balance at June 30, 2014
 
$
26,140

Schedule of accrued warranty 
 
 
Six Months Ended
 
 
June 30,
 
 
2014
 
2013
Beginning balance
 
$
180

 
$
269

Product warranties issued
 
233

 
180

Change related to preexisting warranties
 
236

 
(132
)
Settlement of warranties
 
(67
)
 
(138
)
Foreign currency translation adjustments
 
1

 
(3
)
Ending balance
 
$
583

 
$
176

Schedule of accumulated other comprehensive income 
 
 
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, 2013
 
$
18,804

 
$
(1,681
)
 
$
17,123

 
 
Other comprehensive income before reclassification
 
632

 
—

 
632

 
 
Amounts reclassified from accumulated other comprehensive income
 
—

 
58

 
58

 
Cost of Sales, Selling, General and Administrative and Research and Development Expense
Net other comprehensive income for the six months ended June 30, 2014
 
632

 
58

 
690

 
 
Balance as of June 30, 2014
 
$
19,436

 
$
(1,623
)
 
$
17,813

 
 
Foreign Currency Derivative Instruments (Tables)
Schedule of gains (losses) on foreign currency forward contracts 
The net gains and losses on foreign currency forward contracts included in cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
—

 
$
18

 
$
5

 
$
30

Selling, general and administrative
 
(405
)
 
8

 
(344
)
 
(1,379
)
Total gain (loss)
 
$
(405
)
 
$
26

 
$
(339
)
 
$
(1,349
)
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 cost of revenue and selling, general and administrative expense are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
3

 
$
(17
)
 
$
5

 
$
(25
)
Selling, general and administrative
 
136

 
(205
)
 
(220
)
 
1,041

Total gain (loss)
 
$
139

 
$
(222
)
 
$
(215
)
 
$
1,016

Offsetting Liabilities 
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):
 
 
June 30,
2014
 
December 31, 2013
Gross amounts of recognized assets
 
$
230

 
$
472

Gross amounts offset in the condensed consolidated balance sheets
 
(164
)
 
(90
)
Net amount of recognized asset presented in the condensed consolidated balance sheets
 
$
66

 
$
382

Stock Plans (Tables)
Schedule of stock-based compensation expense 
Compensation cost for restricted stock awards, restricted stock units, stock options and the ESPP included in cost of revenue; selling, general and administrative expense; and research and development expense is as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Cost of revenue
 
$
190

 
$
261

 
$
442

 
$
535

Selling, general and administrative
 
733

 
507

 
988

 
1,004

Research and development
 
243

 
178

 
491

 
365

Total stock-based compensation expense
 
$
1,166

 
$
946

 
$
1,921

 
$
1,904

Schedule of employee stock purchase plan weighted-average assumptions 
The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three and six months ended June 30, 2014 and 2013 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service-based restricted stock awards
 
$
716

 
$
621

 
$
1,149

 
$
1,270

Performance-based restricted stock awards
 
7

 
25

 
13

 
43

Total compensation expense recognized for restricted stock awards
 
$
723

 
$
646

 
$
1,162

 
$
1,313

Schedule of employee stock purchase plan weighted-average assumptions 
Since the vesting of the market-condition restricted stock units is dependent on stock price performance, the fair values of these awards were estimated using a Monte-Carlo valuation model with the following weighted-average assumptions:
Market price at grant per share
 
$
15.03

Expected dividends
 
$
—

Expected volatility
 
65
%
Risk-free interest rate
 
0.86
%
Fair value per unit
 
$
7.71

Schedule of stock-based compensation expense 
The following table summarizes the amount of compensation expense recognized for employee restricted stock units for the three and six months ended June 30, 2014 and 2013 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service-based restricted stock units
 
$
32

 
$
—

 
$
32

 
$
—

Market-condition restricted stock units
 
22

 
—

 
22

 
—

Total compensation expense recognized for employee restricted stock units
 
$
54

 
$
—

 
$
54

 
$
—

Schedule of stock-based compensation expense 
The fair value of the ESPP shares for the three and six months ended June 30, 2014 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
Expected dividends

$
—

Exercise price

$
7.77

Expected volatility

71
%
Risk-free interest rate

0.07
%
Expected life/term (in years)

0.5

Fair value per share

$
7.65

Defined Benefit Plan (Tables)
Schedule of components of net periodic pension income
Components of net periodic pension (benefit) cost are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2014
 
2013
 
2014
 
2013
Service cost
 
$
217

 
$
204

 
$
434

 
$
411

Interest cost
 
179

 
124

 
357

 
249

Expected return on plan assets
 
(458
)
 
(379
)
 
(915
)
 
(762
)
Prior service cost amortization
 
36

 
11

 
72

 
22

Deferred loss amortization
 
—

 
44

 
—

 
89

Net periodic pension cost (benefit)
 
$
(26
)
 
$
4

 
$
(52
)
 
$
9

Description of Business and Basis of Presentation (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Schedule of computation of basic and diluted net income (loss) per share
 
 
 
 
Net income
$ (1,181)
$ 3,405 
$ (862)
$ 3,127 
Effect of assumed conversion of convertible debentures
 
 
 
 
Weighted-average common shares outstanding
29,206 
28,858 
29,127 
28,842 
Weighted-average common shares outstanding, assuming dilution
29,206 
28,860 
29,127 
28,859 
Net income per share
 
 
 
 
Basic
$ (0.04)
$ 0.12 
$ (0.03)
$ 0.11 
Diluted
$ (0.04)
$ 0.12 
$ (0.03)
$ 0.11 
Stock Options
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
0 
0 
0 
12 
Restricted Stock [Member]
 
 
 
 
Effect of assumed conversion of convertible debentures
 
 
 
 
Effect of potentially dilutive securities
0 
2 
0 
5 
Description of Business and Basis of Presentation (Details 1)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Outstanding options to purchase common stock
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
758 
895 
758 
807 
Restricted Stock Awards
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
600 
428 
600 
426 
Restricted Stock Unit
 
 
 
 
Schedule of instruments convertible into common shares that are not included in the denominator used in the diluted net income (loss) per share calculation because to do so would be anti-dilutive
 
 
 
 
Anti-dilutive, shares
203 
57 
203 
57 
Description of Business and Basis of Presentation (Details Textual) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Jun. 30, 2014
Segment
manufacturing_location
Description of Business and Basis of Presentation [Line Items]
 
 
 
Deferred Tax Assets, Valuation Allowance
$ 59,500,000 
 
$ 59,500,000 
Deferred Revenue, Additions
2,600,000 
4,500,000 
 
Description of Business and Basis of Presentation (Textual) [Abstract]
 
 
 
Manufacturing locations
 
 
3 
Operating segments
 
 
1 
Warranty period, minimum, in years
 
 
1 year 
Warranty period, maximum, in years
 
 
4 years 
Cost of Inventory Shipped
1,573,000 
2,490,000 
1,573,000 
Deferred revenue and customer deposits
$ 3,181,000 
$ 1,043,000 
$ 3,181,000 
Balance Sheet Details (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Schedule of inventories
 
 
Raw material and purchased parts
$ 20,040 
$ 16,723 
Work-in-process
2,579 
2,374 
Finished goods
20,781 
23,149 
Cost of Inventory Shipped
1,573 
2,490 
Total inventories
$ 44,973 
$ 44,736 
Balance Sheet Details (Details 1) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Schedule of intangible assets
 
 
Gross Carrying Value
$ 4,317 
$ 4,317 
Accumulated Amortization
(4,049)
(3,948)
Net Carrying Value
268 
369 
Patents
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
2,476 
2,476 
Accumulated Amortization
(2,208)
(2,107)
Net Carrying Value
268 
369 
Developed core technology
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
1,100 
1,100 
Accumulated Amortization
(1,100)
(1,100)
Net Carrying Value
0 
0 
Patent license agreement
 
 
Schedule of intangible assets
 
 
Gross Carrying Value
741 
741 
Accumulated Amortization
(741)
(741)
Net Carrying Value
$ 0 
$ 0 
Balance Sheet Details (Details 2) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Schedule of change in the carrying amount of goodwill
 
Balance at December 31, 2013
$ 25,978 
Foreign currency translation adjustments
162 
Balance at June 30, 2014
$ 26,140 
Balance Sheet Details (Details 3) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Schedule of accrued warranty
 
 
Beginning balance
$ 180 
$ 269 
Product warranties issued
233 
180 
Settlement of warranties
(67)
(138)
Change related to preexisting warranties
236 
(132)
Ending balance
583 
176 
Product Warranty Accrual, Currency Translation, Increase (Decrease)
$ 1 
$ 3 
Balance Sheet Details (Details 4) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2013
$ 17,123 
Other comprehensive loss before reclassification
632 
Net other comprehensive income (loss) for three months ended June 30, 2014
690 
Balance as of June 30, 2014
17,813 
Foreign Currency Translation Adjustment [Member]
 
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2013
18,804 
Other comprehensive loss before reclassification
632 
Net other comprehensive income (loss) for three months ended June 30, 2014
632 
Balance as of June 30, 2014
19,436 
Defined Benefit Pension Plan [Member]
 
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2013
(1,681)
Other comprehensive loss before reclassification
0 
Net other comprehensive income (loss) for three months ended June 30, 2014
58 
Balance as of June 30, 2014
(1,623)
Selling, General and Administrative Expenses
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income (loss)
(58)
Selling, General and Administrative Expenses |
Foreign Currency Translation Adjustment [Member]
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income (loss)
0 
Selling, General and Administrative Expenses |
Defined Benefit Pension Plan [Member]
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income (loss)
$ (58)
Credit Facility (Details Textual) (USD $)
3 Months Ended 12 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 13 Months Ended 3 Months Ended
Jun. 30, 2014
Dec. 31, 2011
Revolving Credit Facility [Member]
Dec. 31, 2012
Revolving Credit Facility [Member]
Jun. 30, 2014
Secured Debt [Member]
Jun. 30, 2014
London Interbank Offered Rate (LIBOR) [Member]
Revolving Credit Facility [Member]
Jun. 30, 2014
Revolving Credit Facility [Member]
Secured Debt [Member]
Jun. 30, 2014
Equipment Term Loan [Member]
Secured Debt [Member]
Apr. 30, 2012
Equipment Term Loan [Member]
Secured Debt [Member]
Jun. 30, 2014
Equipment Term Loan [Member]
London Interbank Offered Rate (LIBOR) [Member]
Secured Debt [Member]
Mar. 31, 2014
Collateral for Borrowing [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
 
 
$ 15,000,000 
 
 
 
 
 
 
 
Line of Credit Facility, Required Pledge of Equity Interests in Subsidiary, Percent
65.00% 
 
 
 
 
 
 
 
 
 
Borrowings under credit facility, interest payable description
at either (i) the bank’s prime rate or (ii) LIBOR plus 2.25% 
 
 
applicable interest rate was LIBOR plus 2.25% (2.5% as of March 31, 2014) 
 
 
 
 
 
 
Borrowings under credit facility, interest related to Libor rate
 
 
 
 
2.25% 
 
 
 
2.25% 
 
Equipment term loan number of payments
 
 
 
 
 
 
36 months 
 
 
 
Equipment term loan, interest rate
 
 
 
 
2.50% 
 
 
 
2.50% 
 
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage
 
0.25% 
 
 
 
 
 
 
 
 
Proceeds from Issuance of Debt
 
 
 
 
 
 
 
5,000,000 
 
 
Short-term Debt
 
 
 
 
 
3,000,000 
 
 
 
 
Restricted cash
 
 
 
 
 
 
 
 
 
1,000,000 
Long-term Debt
 
 
 
 
 
 
$ 1,398,000 
 
 
 
Fair Value Measurements (Details Textual) (USD $)
Jun. 30, 2014
Fair Value Measurements (Textual) [Abstract]
 
Fair value of derivatives
$ 66,000 
Foreign Currency Derivative Instruments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
$ (405)
$ 26 
$ (339)
$ (1,349)
Cost of Sales [Member]
 
 
 
 
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
0 
18 
5 
30 
Selling, General and Administrative Expenses
 
 
 
 
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
$ (405)
$ 8 
$ (344)
$ (1,379)
Foreign Currency Derivative Instruments (Details 1) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
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
$ 139 
$ (222)
$ (215)
$ 1,016 
Cost of Sales [Member]
 
 
 
 
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
3 
(17)
5 
(25)
Selling, General and Administrative Expenses
 
 
 
 
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
$ 136 
$ (205)
$ (220)
$ 1,041 
Foreign Currency Derivative Instruments (Details Textual) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Foreign Currency Derivative Instruments (Textual) [Abstract]
 
Notional amount of foreign currency forward contracts not designated as hedges
$ 31.5 
Foreign Currency Derivative Instruments Foreign Currency Derivative Instruments (Datails 2) (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Foreign Currency [Abstract]
 
 
Derivative Asset, Fair Value, Gross Asset
$ 230 
$ 472 
Derivative Liability, Fair Value, Gross Asset
(164)
(90)
Derivative Asset
$ 66 
$ 382 
Stock Plans (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
 
 
$ 1,921,000 
$ 1,904,000 
Allocated Share-based Compensation Expense
1,166,000 
946,000 
1,921,000 
1,904,000 
Restricted Stock [Member]
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
723,000 
646,000 
1,162,000 
1,313,000 
Restricted Stock Unit
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
54,000 
0 
54,000 
0 
Service-based restricted stock [Member] |
Restricted Stock [Member]
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
716,000 
621,000 
1,149,000 
1,270,000 
Service-based restricted stock [Member] |
Restricted Stock Unit
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
32,000 
0 
32,000 
0 
Performance-based restricted stock [Member] |
Restricted Stock [Member]
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
7,000 
25,000 
13,000 
43,000 
Performance-based restricted stock [Member] |
Restricted Stock Unit
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
22,000 
0 
22,000 
0 
Cost of revenue
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
190,000 
261,000 
442,000 
535,000 
Selling, General and Administrative Expenses
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
733,000 
507,000 
988,000 
1,004,000 
Research and development [Member]
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Allocated Share-based Compensation Expense
$ 243,000 
$ 178,000 
$ 491,000 
$ 365,000 
Stock Plans (Details 1)
6 Months Ended
Jun. 30, 2014
Employee Stock [Member]
 
Schedule of stock options and employee stock purchase plan weighted-average assumptions
 
Expected dividends
0.00% 
Exercise price
$ 7.77 
Expected volatility
71.00% 
Average risk-free interest rate
0.00% 
Expected life/term (in years)
6 months 
Fair value per share
$ 7.65 
Restricted Stock Unit
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Grant Date Intrinsic Value
$ 15.03 
Schedule of stock options and employee stock purchase plan weighted-average assumptions
 
Expected dividends
0.00% 
Expected volatility
65.00% 
Average risk-free interest rate
1.00% 
Fair value per share
$ 7.71 
Stock Plans (Details Textual) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation plans
2 
 
2 
 
Stock-based compensation expense
 
 
$ 1,921,000 
$ 1,904,000 
Outstanding options to purchase common stock
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
43,000 
154,000 
41,000 
331,000 
Restricted Stock Awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Restricted stock granted
0 
0 
255,600 
305,143 
Restricted stock, average grant date fair value per share
 
 
$ 14.20 
$ 10.58 
Restricted stock unit awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Restricted stock unit, granted
137,000 
 
 
 
Restricted stock unit vesting period (in years)
 
 
 
1 year 
Employee Stock Purchase Plan
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
201,000 
0 
343,000 
0 
Discount rate from market value on offering date
 
 
 
85.00% 
Chief Financial Officer [Member]
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross
 
75,000 
 
 
Director [Member] |
Restricted stock unit awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Stock-based compensation expense
$ 145,000 
$ 139,000 
$ 321,000 
$ 253,000 
Restricted stock unit, granted
 
 
65,891 
56,616 
Restricted stock, average grant date fair value per share
 
 
$ 9.03 
$ 10.51 
Service Based Restricted Stock [Member] |
Restricted stock unit awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Restricted stock unit, granted
67,000 
 
 
 
Restricted stock, average grant date fair value per share
$ 15.17 
 
 
 
Performance Based Restricted Stock [Member] |
Restricted stock unit awards
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
Restricted stock unit, granted
70,000 
 
 
 
Restricted stock, average grant date fair value per share
$ 7.71 
 
 
 
Shelf Registration Statement (Details Textual) (USD $)
36 Months Ended
Jun. 30, 2017
Stock Offering (Textual) [Abstract]
 
Value of Securities Permitted to be Issued Under Shelf Registration
$ 125,000,000 
Defined Benefit Plan (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Schedule of components of net periodic pension income
 
 
 
 
Service cost
$ 217 
$ 204 
$ 434 
$ 411 
Interest cost
179 
124 
357 
249 
Expected return on plan assets
(458)
(379)
(915)
(762)
Prior service cost amortization
36 
11 
72 
22 
Deferred loss amortization
0 
44 
0 
89 
Net periodic pension income
$ (26)
$ 4 
$ (52)
$ 9 
Defined Benefit Plan (Details Textual) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Defined Benefit Plan (Textual) [Abstract]
 
 
 
 
Employer contributions
$ 184 
$ 178 
$ 371 
$ 361 
Additional employer contributions, expected to be paid during the remainder of fiscal year
 
 
$ 334