MAXWELL TECHNOLOGIES INC, 10-Q filed on 8/6/2015
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2015
Aug. 4, 2015
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, 2015 
 
Amendment Flag
false 
 
Document Fiscal Year Focus
2015 
 
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
 
31,815,583 
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Current assets:
 
 
Cash and cash equivalents
$ 25,031 
$ 24,732 
Trade and other accounts receivable, net of allowance for doubtful accounts of $170 and $143, at June 30, 2015 and December 31, 2014, respectively
31,857 
43,698 
Inventories, net
41,147 
44,856 
Prepaid expenses and other current assets
2,872 
2,426 
Total current assets
100,907 
115,712 
Property and equipment, net
35,847 
39,223 
Goodwill
24,915 
23,599 
Pension asset
8,318 
7,362 
Other non-current assets
595 
704 
Total assets
170,582 
186,600 
Current liabilities:
 
 
Accounts payable and accrued liabilities
19,364 
27,011 
Accrued employee compensation
8,643 
9,348 
Deferred revenue and customer deposits
878 
703 
Short-term borrowings and current portion of long-term debt
5,937 
15,549 
Deferred tax liability
1,160 
1,111 
Total current liabilities
35,982 
53,722 
Deferred tax liability, long-term
5,515 
3,304 
Long-term debt, excluding current portion
5 
20 
Other long-term liabilities
3,318 
2,601 
Total liabilities
44,820 
59,647 
Commitments and contingencies (Note 9)
   
   
Stockholders’ equity:
 
 
Common stock, $0.10 par value per share, 40,000 shares authorized; 31,738 and 29,846 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
3,171 
2,982 
Additional paid-in capital
289,050 
277,314 
Accumulated deficit
(176,783)
(158,066)
Accumulated other comprehensive income
10,324 
4,723 
Total stockholders’ equity
125,762 
126,953 
Total liabilities and stockholders’ equity
$ 170,582 
$ 186,600 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Statement of Financial Position [Abstract]
 
 
Trade and other accounts receivable, allowance
$ 170 
$ 143 
Common stock, par value
$ 0.10 
$ 0.1000 
Common stock, shares authorized
40,000,000 
40,000,000 
Common stock, shares issued
31,738,000 
29,846,000 
Common stock, shares outstanding
31,738,000 
29,846,000 
Condensed Consolidated Statements of Operations (Unaudited) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Income Statement [Abstract]
 
 
 
 
Revenue
$ 37,796 
$ 46,074 
$ 72,466 
$ 92,075 
Cost of revenue
25,643 
29,477 
50,010 
57,615 
Gross profit
12,153 
16,597 
22,456 
34,460 
Operating expenses:
 
 
 
 
Selling, general and administrative
10,142 
10,709 
21,099 
21,353 
Research and development
5,930 
6,223 
13,848 
12,394 
Restructuring and exit costs
2,340 
0 
2,340 
0 
Total operating expenses
18,412 
16,932 
37,287 
33,747 
Income (loss) from operations
(6,259)
(335)
(14,831)
713 
Interest expense, net
75 
28 
164 
67 
Amortization of prepaid debt costs
2 
5 
7 
10 
Foreign currency exchange losses, net
85 
232 
413 
520 
Income (loss) from operations before income taxes
(6,421)
(600)
(15,415)
116 
Income tax provision
2,955 
581 
3,302 
978 
Net loss
$ (9,376)
$ (1,181)
$ (18,717)
$ (862)
Net loss per share:
 
 
 
 
Basic and diluted (in dollars per share)
$ (0.31)
$ (0.04)
$ (0.63)
$ (0.03)
Weighted average common shares outstanding:
 
 
 
 
Basic and diluted (in shares)
30,323 
29,206 
29,886 
29,127 
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net loss
$ (9,376)
$ (1,181)
$ (18,717)
$ (862)
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustment
2,913 
(217)
5,526 
632 
Defined benefit pension plan, net of tax:
 
 
 
 
Amortization of deferred loss, net of tax benefit of $2 for the three months ended June 30, 2015; net of tax benefit of $4 for the six months ended June 30, 2015
9 
0 
18 
0 
Amortization of prior service cost, net of tax benefit of $7 and $7 for the three months ended June 30, 2015 and 2014, respectively; net of tax benefit of $14 and $14 for the six months ended June 30, 2015 and 2014, respectively
29 
29 
57 
58 
Other comprehensive income (loss), net of tax
2,951 
(188)
5,601 
690 
Comprehensive loss
$ (6,425)
$ (1,369)
$ (13,116)
$ (172)
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
 
Tax benefit for amortization of deferred loss
$ 2 
$ 0 
$ 4 
$ 0 
Tax benefit for amortization of prior service cost
$ 7 
$ 7 
$ 14 
$ 14 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
OPERATING ACTIVITIES:
 
 
Net loss
$ (18,717)
$ (862)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
Depreciation
5,826 
5,442 
Amortization of intangible assets
102 
102 
Amortization of prepaid debt costs
7 
10 
Pension benefit
(40)
(52)
Stock-based compensation expense
1,850 
1,921 
Unrealized loss on foreign currency exchange rates
(2,182)
0 
Provision for losses on accounts receivable
16 
25 
Provision for losses on inventory
189 
529 
Provision for warranties
592 
469 
Changes in operating assets and liabilities:
 
 
Trade and other accounts receivable
12,321 
(9,950)
Inventories, net
3,771 
(725)
Prepaid expenses and other assets
(390)
(870)
Pension asset
(357)
(372)
Accounts payable and accrued liabilities
(8,407)
953 
Deferred revenue and customer deposits
167 
2,512 
Accrued employee compensation
(760)
138 
Deferred tax liability, long term
2,085 
0 
Other long-term liabilities
687 
103 
Net cash provided by (used in) operating activities
1,124 
(627)
INVESTING ACTIVITIES:
 
 
Purchases of property and equipment
(2,217)
(2,876)
Net cash used in investing activities
(2,217)
(2,876)
FINANCING ACTIVITIES:
 
 
Principal payments on long-term debt and short-term borrowings
(12,900)
(4,185)
Proceeds from long-term debt and short-term borrowings
2,946 
6,292 
Proceeds from sale of common stock, net of offering costs
9,594 
0 
Proceeds from issuance of common stock under equity compensation plans
482 
1,130 
Net cash provided by financing activities
122 
3,237 
Decrease in cash and cash equivalents
(971)
(266)
Effect of exchange rate changes on cash and cash equivalents
1,270 
367 
Increase in cash and cash equivalents
299 
101 
Cash and cash equivalents, beginning of period
24,732 
30,647 
Cash and cash equivalents, end of period
$ 25,031 
$ 30,748 
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, 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, 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 and manufactured to perform reliably for the life of the products and systems into which they are integrated. The Company achieves high reliability through the application of proprietary technologies and rigorously controlled design, development, manufacturing and test processes.
Financial Statement Presentation
The accompanying condensed consolidated financial statements include the accounts of Maxwell Technologies, Inc. and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All intercompany transactions and account balances have been eliminated in consolidation. The Company has prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the standards of accounting measurement set forth in the Interim Reporting Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Consequently, the Company has not necessarily included in this Form 10-Q all information and footnotes required for audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements in this Form 10-Q contain all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary to present fairly the financial position, results of operations, and cash flows of Maxwell Technologies, Inc. for all periods presented. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for any subsequent period or for the entire year. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s latest Annual Report on Form 10-K. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Reclassifications
Foreign currency exchange gains and losses have been reclassified from "cost of revenue" and "selling, general and administrative" expenses to "foreign currency exchange losses, net" in the condensed consolidated statement of operations for the three and six months ended June 30, 2014 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.
Income Taxes
At June 30, 2015, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $64.2 million, of which the significant majority represents the valuation allowance on its U.S. net deferred tax asset. The Company has established a valuation allowance against its U.S. federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets and at such time as it is determined that it is more likely than not that U.S. deferred tax assets are realizable, the valuation allowance will be reduced accordingly. Any such release would result in recording a tax benefit that would increase net income in the period the valuation is released.
The Company records taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside of the U.S. As a result of changes in business circumstances, the Company changed its estimate of the amount of foreign subsidiary earnings considered permanently reinvested, and recorded a deferred tax liability in 2014 for Swiss withholding taxes of $1.6 million associated with $31.8 million of undistributed earnings of our Swiss subsidiary that were no longer considered indefinitely reinvested. In June 2015, based on revisions to the Company's long term plans, the Company again changed its estimate of the amount of foreign earnings considered permanently reinvested. Therefore, in the quarter ended June 30, 2015, the Company recorded an additional deferred tax liability for Swiss withholding taxes of $2.1 million associated with an additional $41.7 million of undistributed earnings of our Swiss subsidiary that are no longer considered indefinitely reinvested. In the event that the Company repatriates these funds, these withholding taxes would become payable.
Warranty Obligation
The Company provides warranties on all product sales for terms ranging from one to eight years. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure. As of June 30, 2015 and December 31, 2014, the accrued warranty liability included in "accounts payable and accrued liabilities" in the consolidated balance sheets was $920,000 and $716,000, respectively.
Revenue Recognition
Revenue is derived primarily from the sale of manufactured products directly to customers. Product revenue is recognized, according to the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Numbers 101, Revenue Recognition in Financial Statements, and 104, Revenue Recognition, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists (upon contract signing or receipt of an authorized purchase order from a customer); (2) title passes to the customer at either shipment from the Company’s facilities or receipt at the customer facility, depending on shipping terms; (3) customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collectability is reasonably assured. This policy has been consistently applied from period to period.
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.
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, 2015 and December 31, 2014 was $878,000 and $703,000, respectively, and relates to cash received from customers on sales for which the revenue recognition criteria had not been achieved, customer advances, as well as other less significant customer arrangements requiring the deferral of revenue.
Liquidity
As of June 30, 2015, the Company had approximately $25.0 million in cash and cash equivalents, and working capital of $64.9 million. The Company has a total of $5.9 million in debt outstanding to its previous lender as of June 30, 2015, which was paid in full on July 3, 2015. In July 2015, the Company entered into a loan agreement with East West Bank (“EWB”), whereby EWB made available to the Company a secured credit facility in the form of a revolving line of credit which is available up to a maximum of the lesser of: (a) $25.0 million; or (b) a certain percentage of domestic and foreign trade receivables. Management believes the available cash balance, along with the available borrowings under the revolving line of credit, will be sufficient to fund its operations, obligations as they become due, and capital investments for at least the next twelve months.
Net Loss per Share
In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive. The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share data):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Numerator
 
 
 
 
 
 
 

Net loss
 
$
(9,376
)
 
$
(1,181
)
 
$
(18,717
)
 
$
(862
)
Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
30,323

 
29,206

 
29,886

 
29,127

Net loss per share
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.31
)
 
$
(0.04
)
 
$
(0.63
)
 
$
(0.03
)

The following table summarizes instruments that may be convertible into common shares that are not included in the denominator used in the diluted net loss per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Outstanding options to purchase common stock
 
918

 
758

 
918

 
758

Unvested restricted stock awards
 
286

 
600

 
286

 
600

Unvested restricted stock unit awards
 
862

 
203

 
862

 
203

Employee stock purchase plan awards
 
24

 
—

 
24

 
—


Restructuring and Exit Costs
Restructuring and exit costs involve employee-related termination costs, facility exit costs and other costs associated with our restructuring activities. The Company accounts for charges resulting from operational restructuring actions in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”) and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”).
The recognition of restructuring costs require that the Company make certain assumptions related to the amounts of employee severance benefits, the time period over which leased facilities will remain vacant, expected sublease terms and discount rates. Estimates and assumptions are based on the best information available at the time the obligation arises. These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued in the consolidated balance sheet.
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. In April 2015, the FASB proposed a one year deferral of the effective date which is still under consideration. The Company is in the process of evaluating the impact of adoption on its consolidated financial statements.
In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. The standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. Certain disclosures will be required if conditions give rise to substantial doubt about an entity’s ability to continue as a going concern. ASU 2014-15 applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.
In April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  The update changes the presentation of debt issuance costs to a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. ASU 2015-03 is effective for annual and interim reporting periods ending after December 15, 2015. Early adoption is permitted, and the new guidance is to be applied on a retrospective basis to all prior periods. The Company does not expect that the adoption of this standard will have a material effect on its financial statements.
Balance Sheet Details
Balance Sheet Details
Balance Sheet Details (in thousands)
Inventories, net
 
 
June 30,
2015
 
December 31,
2014
 
 
 
Raw materials and purchased parts
 
$
21,591

 
$
23,042

Work-in-process
 
3,667

 
2,522

Finished goods
 
19,234

 
23,311

Reserves
 
(3,345
)
 
(4,019
)
Total inventories
 
$
41,147

 
$
44,856


Goodwill
The change in the carrying amount of goodwill from December 31, 2014 to June 30, 2015 is as follows:
Balance at December 31, 2014
 
$
23,599

Foreign currency translation adjustments
 
1,316

Balance at June 30, 2015
 
$
24,915


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, 2014
 
$
8,359

 
$
(3,636
)
 
$
4,723

 
 
Other comprehensive income before reclassification
 
5,526

 
—

 
5,526

 
 
Amounts reclassified from accumulated other comprehensive income
 
—

 
75

 
75

 
Cost of Sales, Selling, General and Administrative and Research and Development Expense
Net other comprehensive income for the six months ended June 30, 2015
 
5,526

 
75

 
5,601

 
 
Balance as of June 30, 2015
 
$
13,885

 
$
(3,561
)
 
$
10,324

 
 
Credit Facilities
Credit Facilities
Credit Facilities
Revolving Line of Credit
On July 3, 2015, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with East West Bank (“EWB”), whereby EWB made available to the Company a secured credit facility in the form of a revolving line of credit (the “Revolving Line of Credit”). The Revolving Line of Credit is available up to a maximum of the lesser of: (a) $25.0 million; or (b) a certain percentage of domestic and foreign trade receivables. In general, amounts borrowed under the Revolving Line of Credit are secured by a lien on all of the Company’s assets, including its intellectual property, as well as a pledge of 100% of its equity interests in the Company’s Swiss subsidiary. The obligations under the Loan Agreement are guaranteed by the Swiss Subsidiary. The Revolving Line of Credit will mature on July 3, 2018, however, repayment of amounts owed pursuant to the Loan Agreement may be accelerated in the event that the Company is in violation of the representations, warranties and covenants made in the Loan Agreement, including certain financial covenants set forth therein. The financial covenants that the Company is required to meet during the term of the credit agreement include a minimum four-quarter rolling EBITDA, quarterly minimum quick ratio and a monthly cash requirement.
Amounts borrowed under the Revolving Line of Credit bear interest, payable monthly. Such interest shall accrue based upon, at the Company’s election, subject to certain limitations, either a Prime Rate plus a margin ranging from 0% to 0.50% or the LIBOR Rate plus a margin ranging from 2.75% to 3.25%, the specific rate for each as determined based upon the Company’s leverage ratio from time to time.
The Company is required to pay an annual commitment fee equal to $125,000, and an unused commitment fee of the average daily unused amount of the Revolving Line of Credit, payable monthly, equal to a per annum rate in a range of 0.30% to 0.50%, as determined by the Company’s leverage ratio on the last day of the previous fiscal quarter.
Former Credit Facility
In December 2011, the Company obtained a secured credit facility in the form of a revolving line of credit (the “Former Revolving Line of Credit”) and an equipment term loan (the “Equipment Term Loan”) (together, the “Former Credit Facility”). Borrowings under the Former Credit Facility bore interest, payable monthly, at either (i) the bank's prime rate or (ii) LIBOR plus 2.25%, at the Company's option subject to certain limitations. The 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.
The balance of the Equipment Term Loan was paid in full by the maturity date of April 30, 2015. As of June 30, 2015, $5.9 million was outstanding under the Former Revolving Line of Credit and the applicable interest rate was LIBOR plus 2.25% (2.5% as of June 30, 2015). Concurrently with entering into the Loan Agreement described above, on July 3, 2015, the Company repaid all outstanding loans under the Former Revolving Line of Credit and terminated the Former Credit Facility. The Company did not incur any early termination or prepayment penalties under the Former Credit Facility in connection with the above transactions.
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, 2015, the financial instruments to which this topic applied were foreign currency forward contracts. As of June 30, 2015, the fair value of these foreign currency forward contracts was a liability of $167,000 which is recorded in “accounts payable and accrued liabilities" in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC. All forward contracts as of June 30, 2015 have approximately a one-month original maturity term and mature on July 2, 2015.
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 "foreign currency exchange losses, net" in the condensed consolidated statements of operations are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Total gain (loss)
 
$
1,636

 
$
(405
)
 
$
2,399

 
$
(339
)

The net gains and losses on foreign currency forward contracts were offset by net gains and losses on the underlying monetary assets and liabilities. Foreign currency gains and losses on those underlying monetary assets and liabilities included in "foreign currency exchange losses, net" in the condensed consolidated statements of operations are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Total gain (loss)
 
$
(1,721
)
 
$
139

 
$
(2,812
)
 
$
(215
)

As of June 30, 2015, the total notional amount of foreign currency forward contracts not designated as hedges was $611,000.
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,
2015
 
December 31, 2014
Gross amounts of recognized liabilities
 
$
(176
)
 
$
(1,993
)
Gross amounts offset in the condensed consolidated balance sheets
 
9

 
350

Net amount of recognized liability presented in the condensed consolidated balance sheets
 
$
(167
)
 
$
(1,643
)

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, 2015: 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.
Prior to 2011, the Company had issued stock options as the primary form of equity award to its employees. From 2011 to 2014, the Company granted restricted stock awards to employees as the primary form of equity award. In the second quarter of 2014, the Company began issuing restricted stock units to employees instead of restricted stock awards as the primary source of awards.
Beginning in the first quarter of 2015, executives receive three forms of equity awards, including stock options with time based vesting, restricted stock units with time based vesting and performance-based restricted stock units with vesting contingent on continued services and the achievement of specified financial performance targets. Non-executive employees receive restricted stock units with time-based vesting as the primary form of award.
It is typical for the Company to issue the majority of employee stock compensation grants in the first quarter of the year; other grants issued during the year are typically for new employees.
Stock Options
During the three months ended June 30, 2015, the Company granted 33,546 stock options which had an average grant date fair value per share of $2.74. During the six months ended June 30, 2015, the Company granted 263,203 stock options which had an average grant date fair value per share of $3.56. No stock options were issued for the three months and six months ended June 30, 2014. Compensation expense recognized for stock options for the three months ended June 30, 2015 and 2014 was $57,000 and $43,000, respectively, and $80,000 and $41,000, respectively for the six months ended June 30, 2015 and 2014. The fair value of the stock options granted during three months and six months ended June 30, 2015 was estimated using the Black-Scholes valuation model with the following assumptions:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2015
Expected dividends
 
$
—

 
$
—

Exercise price
 
$
6.03

 
$
7.16

Expected volatility
 
60
%
 
60
%
Average risk-free interest rate
 
1.55
%
 
1.58
%
Expected life/term (in years)
 
5.0

 
5.0

Fair value per share
 
$
2.74

 
$
3.56


Restricted Stock Awards
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. During the six months ended June 30, 2014, the Company granted 255,600 shares under restricted stock awards which had an average grant date fair value per share of $14.20. No stock awards were issued in the three months ended June 30, 2014 or the six months ended June 30, 2015. The following table summarizes the amount of compensation expense recognized for restricted stock awards for the three and six months ended June 30, 2015 and 2014 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service-based restricted stock awards
 
$
579

 
$
716

 
$
999

 
$
1,149

Performance-based restricted stock awards
 
(50
)
 
7

 
(44
)
 
13

Total compensation expense recognized for restricted stock awards
 
$
529

 
$
723

 
$
955

 
$
1,162


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. Additionally, new directors normally receive restricted stock unit awards upon their election to the board. 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, 2015, a new non-employee director was granted a total of 11,263 restricted stock units, with an average grant date fair value per share of $5.81. During the three months ended June 30, 2014, no restricted stock units were granted to non-employee directors. During the six months ended June 30, 2015 and 2014, non-employee directors were granted a total of 93,212 and 65,891 restricted stock units, respectively, with an average grant date fair value per share of $7.08 and $9.03, respectively. Compensation expense recognized for non-employee director restricted stock units for the three months ended June 30, 2015 and 2014 was $158,000 and $145,000, respectively, and $288,000 and $321,000 respectively, for the six months ended June 30, 2015 and 2014.
Employee restricted stock units
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 Company grants two forms of restricted stock units, service-based restricted stock units which typically vest in equal annual installments over four years of continuous service, and performance-based restricted stock units with vesting contingent on continued services and the achievement of specified financial targets. Each restricted stock unit represents the right to receive one unrestricted share of the Company’s common stock upon vesting. During the three months ended June 30, 2015 the Company granted 86,886 restricted stock units to employees of which 63,012 were service-based restricted stock units with an average grant date value of $6.03 and 23,874 were performance-based restricted stock units with an average grant date fair value of $6.03, per share. During the six months ended June 30, 2015 the Company granted 674,883 restricted stock units to employees of which 460,052 were service-based restricted stock units with an average grant date value of $7.15 and 214,831 were performance-based restricted stock units with an average grant date fair value of $7.19 per share.
During the three months ended June 30, 2014 the Company granted 137,000 restricted stock units to employees 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. There were no employee restricted stock units issued in the first three months of 2014.
The following table summarizes the amount of compensation expense recognized for employee restricted stock units for the three and six months ended June 30, 2015 (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service-based restricted stock units
 
$
205

 
$
32

 
$
287

 
$
32

Performance-based restricted stock units
 
(27
)
 
$
—

 
$
32

 
$
—

Market-condition restricted stock units
 
34

 
22

 
67

 
22

Total compensation expense recognized for employee restricted stock units
 
$
212

 
$
54

 
$
386

 
$
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, 2015 and 2014 was $57,000 and $201,000, respectively, and was $140,000 and $343,000, respectively, for the six months ended June 30, 2015 and 2014. The fair value of the ESPP shares for the three and six months ended June 30, 2015 and 2014 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
 
 
Three and Six Months Ended
 
 
June 30,
 
 
2015
 
2014
Expected dividends
 
$
—

 
$
—

Exercise price
 
$
5.97

 
$
7.77

Expected volatility
 
54
%
 
71
%
Risk-free interest rate
 
0.11
%
 
0.07
%
Expected life/term (in years)
 
0.5

 
0.5

Fair value per share
 
$
5.97

 
$
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,
 
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
147

 
$
190

 
$
353

 
$
442

Selling, general and administrative
 
657

 
733

 
1,023

 
988

Research and development
 
207

 
243

 
474

 
491

Total stock-based compensation expense
 
$
1,011

 
$
1,166

 
$
1,850

 
$
1,921

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. On April 23, 2015, the Company entered into an At-the-Market Equity Offering Sales Agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”) pursuant to which the Company could sell, at its option, up to an aggregate of $10.0 million in shares of common stock through Cowen, as sales agent. Under the Sales Agreement, the Company agreed to pay Cowen a commission equal to 3.0% of the gross proceeds from the sale of shares of the Company’s common stock.
On June 11, 2015, the Company completed the sale of approximately $10.0 million of the company's common stock and terminated the offering. Approximately 1.83 million shares were sold in the offering at an average share price of $5.46. The Company received net proceeds of $9.6 million after commissions and offering costs of $406,000.
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 are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service cost
 
$
245

 
$
217

 
$
487

 
$
434

Interest cost
 
85

 
179

 
169

 
357

Expected return on plan assets
 
(396
)
 
(458
)
 
(788
)
 
(915
)
Prior service cost amortization
 
36

 
36

 
71

 
72

Deferred loss amortization
 
11

 
—

 
22

 
—

Net periodic pension benefit
 
$
(19
)
 
$
(26
)
 
$
(39
)
 
$
(52
)

Employer contributions of $174,000 and $184,000 were paid during the three months ended June 30, 2015 and 2014, respectively. Employer contributions of $339,000 and $371,000 were paid during the six months ended June 30, 2015 and 2014, respectively. Additional employer contributions of approximately $241,000 are expected to be paid during the remainder of fiscal 2015.
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 paid the monetary penalties under these settlements in installments such that all monetary penalties were paid in full by January 2013. With respect to the DOJ charges, a judgment of dismissal was issued in the U.S. District Court for the Southern District of California on March 28, 2014.
On October 15, 2013, the Company received an informal notice from the DOJ that an indictment against the former Senior Vice President and General Manager of its Swiss subsidiary had been filed in the United States District Court for the Southern District of California. The indictment is against the individual, a former officer, and not against the Company and the Company does not foresee that further penalties or fines could be assessed against it as a corporate entity for this matter. However, the Company may be required throughout the term of the action to advance the legal fees and costs incurred by the individual defendant and to incur other financial obligations. While the Company maintains directors’ and officers’ insurance policies which are intended to cover legal expenses related to its indemnification obligations in situations such as these, the Company cannot determine if and to what extent the insurance policy will cover the legal fees for this matter. Accordingly, the legal fees that may be incurred by the Company in defending this former officer could have a material impact on its financial condition and results of operation.
Swiss Bribery Matter
In August 2013, the Company's Swiss subsidiary was served with a search warrant from the Swiss federal prosecutor’s office. At the end of the search, the Swiss federal prosecutor presented the Company with a listing of the materials gathered by the representatives and then removed the materials from its premises for keeping at the prosecutor’s office. Based upon the Company’s exposure to the case, the Company believes this action to be related to the same or similar facts and circumstances as the FCPA action previously settled with the SEC and the DOJ. During initial discussions, the Swiss prosecutor has acknowledged both the existence of the Company's 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. In late March 2015, the Company was informed that the Swiss prosecutor intended to inform the parties in April 2015 as to whether the prosecutor’s office will bring charges or abandon the proceedings. However, to date, the Swiss prosecutor has not issued its formal decision. At this stage in the investigation, the Company is currently unable to determine the extent to which it will be subject to fines in accordance with Swiss bribery laws and what additional expenses will be incurred in order to defend this matter. As such, the Company cannot determine whether there is a reasonable possibility that a loss will be incurred nor can it estimate the range of any such potential loss. Accordingly, the Company has not accrued an amount for any potential loss associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation.
Government Investigations
In early 2013, the Company voluntarily provided information to the United States Attorney's Office for the Southern District of California and the U.S. Securities and Exchange Commission ("SEC") related to its announcement that it intended to file restated financial statements for fiscal years 2011 and 2012. On June 11, 2015, the Company received a subpoena from the SEC requesting certain documents related to, among other things, the facts and circumstances surrounding the restated financial statements. The Company is providing information to the SEC in response to that subpoena and continues to cooperate with the SEC. At this stage, the Company cannot predict the ultimate outcome of this investigation or whether it will result in any loss. Accordingly, the Company has not accrued an amount for any potential loss associated with this action, but an adverse result could have a material adverse impact on its financial condition and results of operation.
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 names 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 jointly moved to consolidate the two actions. The court issued an order consolidating the two actions on October 30, 2013 under the heading In re Maxwell Technologies, Inc. Derivative Litigation. Plaintiffs filed a consolidated amended complaint on January 30, 2014. The Company and the individual defendants filed motions to dismiss the complaint. On May 28, 2014, the court granted with leave to amend the Company’s motion to dismiss for failure to make a demand before filing suit. Plaintiffs filed an amended complaint on July 11, 2014. The Company and individual defendants moved to dismiss on August 18, 2014. On September 19, 2014, the parties entered into a memorandum of understanding concerning settlement of this matter related to certain corporate governance reforms to be implemented and/or maintained by the Company; the parties did not agree on the legal fees to be paid to plaintiffs for the benefit conferred to the Company as a result of the corporate governance reforms. On December 10, 2014, the parties signed a stipulation of settlement; the legal fees to be paid to plaintiffs remained a contested matter. On January 6, 2015, the court granted preliminary approval of the settlement. Three of the plaintiffs firms have applied to the court for an award of legal fees and costs in the amount of approximately $1.3 million; in addition, one of the plaintiffs’ firms has separately sought fees of approximately $300,000, which it argues should be paid out of the approximately $1.3 million. On March 16, 2015, the court granted final approval of the settlement and dismissed this action. The deadline to appeal the judgment issued by the Court dismissing the federal derivative action lapsed on April 15, 2015. The Court deferred ruling on the fee applications pending a court-ordered settlement conference before a U.S. Magistrate Judge scheduled for May 2015. A settlement of legal fees to be paid to the plaintiffs was not reached at this court ordered settlement conference and therefore, the matter was referred back to the Court for a final decision. On July 13, 2015, the court issued an order establishing a fee award of $1.1 million. Therefore, the Company has an accrued liability recorded for $1.1 million, which is included in “accounts payable and accrued liabilities” as of June 30, 2015. As the Company’s insurance carrier would cover this potential settlement, the Company has a corresponding receivable from its insurance carrier recorded in the amount of $1.1 million, which is included in “trade and other accounts receivable”.
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. On July 2, 2013, the Company filed a motion to stay the actions pending resolution of the federal derivative actions, which the state court granted on November 1, 2013. Pursuant to the stipulation of settlement in the federal shareholder derivative matter, the state plaintiffs will seek dismissal with prejudice of the state actions. As a result of the settlement in the federal derivative action above, the parties filed a joint stipulation to dismiss this matter and, on May 13, 2015, the Court signed an order dismissing the matter with prejudice. The deadline to appeal this order is August 24, 2015.
Shareholder Inspection Letter
On April 9, 2013, Stephen Neville, a purported shareholder of the Company, sent a letter to the Company seeking 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 letters dated April 19 and 23, 2013, explaining why it believed that the demand did not appear to be proper. Pursuant to the stipulation of settlement in the federal shareholder derivative matter, the shareholder will seek dismissal of all proceedings concerning this inspection letter. As a result of the settlement in the federal derivative action above, the parties filed a joint stipulation to dismiss this matter and, on May 12, 2015, the Court signed an order dismissing the matter with prejudice. The deadline to appeal this order is August 24, 2015.
Restructuring and Exit costs
Restructuring and Exit costs
Restructuring and Exit Costs
The Company has initiated a restructuring plan to consolidate U.S. manufacturing operations and to reduce headcount and operating expenses in order to align the Company’s cost structure with the current business forecast and to improve operational efficiency. The plan also includes the potential divestiture of a product line. In connection with the restructuring plan, the Company expects to incur total restructuring and related charges of approximately $4.2 million, including $2.1 million in facilities costs related to the consolidation of manufacturing operations, $1.2 million in employee severance costs, $740,000 in accelerated equipment depreciation expense, as well as $160,000 in relocation costs. Upon completion of the plan, which is anticipated to be by the end of the first quarter of 2016, total cash expenditures related to restructuring activities are expected to be approximately $2.2 million, including $118,000 which was paid in the second quarter of 2015.
The Company accounts for charges resulting from restructuring and exit activities in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”), and, ASC Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”) for employee termination benefits to be paid in accordance with its ongoing employee termination benefit arrangement.
In June 2015, the Company had ceased use of approximately 60,000 square feet of its Peoria, AZ manufacturing facility, and determined this leased space would have no future economic benefit to the Company based on the current business forecast. As a result, in the three months ended June 30, 2015, the Company recorded a liability for the future rent obligation associated with this space, net of estimated sublease income, in accordance with ASC Topic 420. The liability recorded related to the exit of this leased space was $1.2 million, before tax, and is a component of the total expected restructuring charge of $4.2 million.
Restructuring charges for the three months ended June 30, 2015 also include $1.1 million in employee severance costs for work force reductions. This accrual includes planned severance payments that are provided in consideration of past employee services under the Company’s ongoing employee termination benefit arrangement, which were probable of incurrence and estimable as of June 30, 2015. The Company paid $118,000 in employee severance costs during the three months ended June 30, 2015.
For the three months ended June 30, 2015, the Company recorded total charges related to its restructuring plan of $2.3 million, within "restructuring and exit costs" and recorded $185,000 of accelerated depreciation expense within “cost of goods sold” in the condensed consolidated statements of operations. As of June 30, 2015, the Company had a $1.0 million liability associated with employee severances recorded in “accrued employee compensation”, $327,000 of lease obligation costs recorded within “other current liabilities” and $881,000 of lease obligation costs recorded within other “long term liabilities” in the consolidated balance sheet.
The following table summarizes the restructuring and exit costs as of and for the quarter ended June 30, 2015 (in thousands):
 
 
Employee Severance Costs
 
Lease Obligation Costs
 
Other Exit Costs
 
Total
Costs incurred
 
$
1,132

 
$
1,208

 
$
—

 
$
2,340

Amounts paid
 
$
(118
)
 
$
—

 
$
—

 
$
(118
)
Amounts reserved at June 30, 2015
 
$
1,014

 
$
1,208

 
$
—

 
$
2,222

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 U.S. GAAP have been condensed or omitted in the accompanying interim consolidated financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP.
Reclassifications 
Reclassifications
Foreign currency exchange gains and losses have been reclassified from "cost of revenue" and "selling, general and administrative" expenses to "foreign currency exchange losses, net" in the condensed consolidated statement of operations for the three and six months ended June 30, 2014 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 Taxes 
Income Taxes
At June 30, 2015, the Company has a cumulative valuation allowance recorded offsetting its worldwide net deferred tax assets of $64.2 million, of which the significant majority represents the valuation allowance on its U.S. net deferred tax asset. The Company has established a valuation allowance against its U.S. federal and state deferred tax assets due to the uncertainty surrounding the realization of such assets. Management periodically evaluates the recoverability of the deferred tax assets and at such time as it is determined that it is more likely than not that U.S. deferred tax assets are realizable, the valuation allowance will be reduced accordingly. Any such release would result in recording a tax benefit that would increase net income in the period the valuation is released.
The Company records taxes on the undistributed earnings of foreign subsidiaries unless the subsidiaries’ earnings are considered indefinitely reinvested outside of the U.S. As a result of changes in business circumstances, the Company changed its estimate of the amount of foreign subsidiary earnings considered permanently reinvested, and recorded a deferred tax liability in 2014 for Swiss withholding taxes of $1.6 million associated with $31.8 million of undistributed earnings of our Swiss subsidiary that were no longer considered indefinitely reinvested. In June 2015, based on revisions to the Company's long term plans, the Company again changed its estimate of the amount of foreign earnings considered permanently reinvested. Therefore, in the quarter ended June 30, 2015, the Company recorded an additional deferred tax liability for Swiss withholding taxes of $2.1 million associated with an additional $41.7 million of undistributed earnings of our Swiss subsidiary that are no longer considered indefinitely reinvested. In the event that the Company repatriates these funds, these withholding taxes would become payable.
Warranty Obligation 
Warranty Obligation
The Company provides warranties on all product sales for terms ranging from one to eight years. The Company accrues for the estimated warranty costs at the time of sale based on historical warranty experience plus any known or expected changes in warranty exposure.
Revenue Recognition 
Revenue Recognition
Revenue is derived primarily from the sale of manufactured products directly to customers. Product revenue is recognized, according to the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) Numbers 101, Revenue Recognition in Financial Statements, and 104, Revenue Recognition, when all of the following criteria are met: (1) persuasive evidence of an arrangement exists (upon contract signing or receipt of an authorized purchase order from a customer); (2) title passes to the customer at either shipment from the Company’s facilities or receipt at the customer facility, depending on shipping terms; (3) customer payment is deemed fixed or determinable and free of contingencies or significant uncertainties; and (4) collectability is reasonably assured. This policy has been consistently applied from period to period.
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.
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, 2015 and December 31, 2014 was $878,000 and $703,000, respectively, and relates to cash received from customers on sales for which the revenue recognition criteria had not been achieved, customer advances, as well as other less significant customer arrangements requiring the deferral of revenue.
Liquidity 
Liquidity
As of June 30, 2015, the Company had approximately $25.0 million in cash and cash equivalents, and working capital of $64.9 million. The Company has a total of $5.9 million in debt outstanding to its previous lender as of June 30, 2015, which was paid in full on July 3, 2015. In July 2015, the Company entered into a loan agreement with East West Bank (“EWB”), whereby EWB made available to the Company a secured credit facility in the form of a revolving line of credit which is available up to a maximum of the lesser of: (a) $25.0 million; or (b) a certain percentage of domestic and foreign trade receivables. Management believes the available cash balance, along with the available borrowings under the revolving line of credit, will be sufficient to fund its operations, obligations as they become due, and capital investments for at least the next twelve months.
Net Loss per Share 
Net Loss per Share
In accordance with the Earnings Per Share Topic of the FASB ASC, basic net income (loss) per share is calculated using the weighted average number of common shares outstanding during the period. Diluted net income per share includes the impact of additional common shares that would have been outstanding if potentially dilutive common shares were issued. Potentially dilutive securities are not considered in the calculation of diluted net loss per share, as their inclusion would be anti-dilutive.
Restructuring and Exit Costs 
Restructuring and Exit Costs
Restructuring and exit costs involve employee-related termination costs, facility exit costs and other costs associated with our restructuring activities. The Company accounts for charges resulting from operational restructuring actions in accordance with ASC Topic 420, Exit or Disposal Cost Obligations (“ASC 420”) and ASC Topic 712, Compensation-Nonretirement Postemployment Benefits (“ASC 712”).
The recognition of restructuring costs require that the Company make certain assumptions related to the amounts of employee severance benefits, the time period over which leased facilities will remain vacant, expected sublease terms and discount rates. Estimates and assumptions are based on the best information available at the time the obligation arises. These estimates are reviewed and revised as facts and circumstances dictate; changes in these estimates could have a material effect on the amount accrued in the consolidated balance sheet.
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, 2015, the financial instruments to which this topic applied were foreign currency forward contracts. As of June 30, 2015, the fair value of these foreign currency forward contracts was a liability of $167,000 which is recorded in “accounts payable and accrued liabilities" in the consolidated balance sheet. The fair value of these derivative instruments is measured using models following quoted market prices in active markets for identical instruments, which is a Level 2 input under the fair value hierarchy of the Fair Value Measurements and Disclosures Topic of the FASB ASC.
Derivatives and Hedging 
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.
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,
 
 
2015
 
2014
 
2015
 
2014
Numerator
 
 
 
 
 
 
 

Net loss
 
$
(9,376
)
 
$
(1,181
)
 
$
(18,717
)
 
$
(862
)
Denominator
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding
 
30,323

 
29,206

 
29,886

 
29,127

Net loss per share
 
 
 
 
 
 
 
 
Basic and diluted
 
$
(0.31
)
 
$
(0.04
)
 
$
(0.63
)
 
$
(0.03
)
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 loss per share calculation because to do so would be anti-dilutive (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Outstanding options to purchase common stock
 
918

 
758

 
918

 
758

Unvested restricted stock awards
 
286

 
600

 
286

 
600

Unvested restricted stock unit awards
 
862

 
203

 
862

 
203

Employee stock purchase plan awards
 
24

 
—

 
24

 
—

Balance Sheet Details (Tables)
Schedule of inventories 
 
 
June 30,
2015
 
December 31,
2014
 
 
 
Raw materials and purchased parts
 
$
21,591

 
$
23,042

Work-in-process
 
3,667

 
2,522

Finished goods
 
19,234

 
23,311

Reserves
 
(3,345
)
 
(4,019
)
Total inventories
 
$
41,147

 
$
44,856

Schedule of change in the carrying amount of goodwill 
The change in the carrying amount of goodwill from December 31, 2014 to June 30, 2015 is as follows:
Balance at December 31, 2014
 
$
23,599

Foreign currency translation adjustments
 
1,316

Balance at June 30, 2015
 
$
24,915

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, 2014
 
$
8,359

 
$
(3,636
)
 
$
4,723

 
 
Other comprehensive income before reclassification
 
5,526

 
—

 
5,526

 
 
Amounts reclassified from accumulated other comprehensive income
 
—

 
75

 
75

 
Cost of Sales, Selling, General and Administrative and Research and Development Expense
Net other comprehensive income for the six months ended June 30, 2015
 
5,526

 
75

 
5,601

 
 
Balance as of June 30, 2015
 
$
13,885

 
$
(3,561
)
 
$
10,324

 
 
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 "foreign currency exchange losses, net" in the condensed consolidated statements of operations are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Total gain (loss)
 
$
1,636

 
$
(405
)
 
$
2,399

 
$
(339
)
Schedule of foreign currency gains and losses on underlying assets and liabilities 
Foreign currency gains and losses on those underlying monetary assets and liabilities included in "foreign currency exchange losses, net" in the condensed consolidated statements of operations are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Total gain (loss)
 
$
(1,721
)
 
$
139

 
$
(2,812
)
 
$
(215
)
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,
2015
 
December 31, 2014
Gross amounts of recognized liabilities
 
$
(176
)
 
$
(1,993
)
Gross amounts offset in the condensed consolidated balance sheets
 
9

 
350

Net amount of recognized liability presented in the condensed consolidated balance sheets
 
$
(167
)
 
$
(1,643
)
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,
 
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
$
147

 
$
190

 
$
353

 
$
442

Selling, general and administrative
 
657

 
733

 
1,023

 
988

Research and development
 
207

 
243

 
474

 
491

Total stock-based compensation expense
 
$
1,011

 
$
1,166

 
$
1,850

 
$
1,921

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, 2015 and 2014 (in thousands): 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service-based restricted stock awards
 
$
579

 
$
716

 
$
999

 
$
1,149

Performance-based restricted stock awards
 
(50
)
 
7

 
(44
)
 
13

Total compensation expense recognized for restricted stock awards
 
$
529

 
$
723

 
$
955

 
$
1,162

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, 2015 (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service-based restricted stock units
 
$
205

 
$
32

 
$
287

 
$
32

Performance-based restricted stock units
 
(27
)
 
$
—

 
$
32

 
$
—

Market-condition restricted stock units
 
34

 
22

 
67

 
22

Total compensation expense recognized for employee restricted stock units
 
$
212

 
$
54

 
$
386

 
$
54

Schedule of stock-based compensation expense 
The fair value of the ESPP shares for the three and six months ended June 30, 2015 and 2014 was estimated using the Black-Scholes valuation model for a call and a put option with the following weighted-average assumptions:
 
 
Three and Six Months Ended
 
 
June 30,
 
 
2015
 
2014
Expected dividends
 
$
—

 
$
—

Exercise price
 
$
5.97

 
$
7.77

Expected volatility
 
54
%
 
71
%
Risk-free interest rate
 
0.11
%
 
0.07
%
Expected life/term (in years)
 
0.5

 
0.5

Fair value per share
 
$
5.97

 
$
7.65

Schedule of valuation assumptions for fair value of stock options granted 
The fair value of the stock options granted during three months and six months ended June 30, 2015 was estimated using the Black-Scholes valuation model with the following assumptions:
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2015
Expected dividends
 
$
—

 
$
—

Exercise price
 
$
6.03

 
$
7.16

Expected volatility
 
60
%
 
60
%
Average risk-free interest rate
 
1.55
%
 
1.58
%
Expected life/term (in years)
 
5.0

 
5.0

Fair value per share
 
$
2.74

 
$
3.56

Defined Benefit Plan (Tables)
Schedule of components of net periodic pension income
Components of net periodic pension benefit are as follows (in thousands):
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
 
 
2015
 
2014
 
2015
 
2014
Service cost
 
$
245

 
$
217

 
$
487

 
$
434

Interest cost
 
85

 
179

 
169

 
357

Expected return on plan assets
 
(396
)
 
(458
)
 
(788
)
 
(915
)
Prior service cost amortization
 
36

 
36

 
71

 
72

Deferred loss amortization
 
11

 
—

 
22

 
—

Net periodic pension benefit
 
$
(19
)
 
$
(26
)
 
$
(39
)
 
$
(52
)
Restructuring and Exit costs (Tables)
Schedule of severance and exit costs
The following table summarizes the restructuring and exit costs as of and for the quarter ended June 30, 2015 (in thousands):
 
 
Employee Severance Costs
 
Lease Obligation Costs
 
Other Exit Costs
 
Total
Costs incurred
 
$
1,132

 
$
1,208

 
$
—

 
$
2,340

Amounts paid
 
$
(118
)
 
$
—

 
$
—

 
$
(118
)
Amounts reserved at June 30, 2015
 
$
1,014

 
$
1,208

 
$
—

 
$
2,222

Description of Business and Basis of Presentation (Details Textual) (USD $)
1 Months Ended 6 Months Ended 12 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2015
Segment
manufacturing_location
Dec. 31, 2014
Jun. 30, 2014
Dec. 31, 2013
Jul. 3, 2015
Revolving Credit Facility
East West Bank
Subsequent Event
Jun. 30, 2015
High Reliability
product_line
Jun. 30, 2015
China
contract_manufacturer
Description of Business and Basis of Presentation (Textual) [Abstract]
 
 
 
 
 
 
 
 
Manufacturing locations
 
3 
 
 
 
 
 
 
Number of contract manufacturers
 
 
 
 
 
 
 
2 
Operating segments
 
1 
 
 
 
 
 
 
Number of product lines
 
 
 
 
 
 
3 
 
Cumulative valuation allowance
$ 64,200,000 
$ 64,200,000 
 
 
 
 
 
 
Deferred tax liability recorded associated with unremitted earnings of foreign subsidiary no longer considered indefinitely reinvested
2,100,000 
2,100,000 
1,600,000 
 
 
 
 
 
Unremitted earnings of foreign subsidiary
41,700,000 
 
31,800,000 
 
 
 
 
 
Warranty period, minimum, in years
 
1 year 
 
 
 
 
 
 
Warranty period, maximum, in years
 
8 years 
 
 
 
 
 
 
Accrued warranty liability
920,000 
920,000 
716,000 
 
 
 
 
 
Deferred revenue and customer deposits
878,000 
878,000 
703,000 
 
 
 
 
 
Cash and cash equivalents
25,031,000 
25,031,000 
24,732,000 
30,748,000 
30,647,000 
 
 
 
Working capital amount
64,900,000 
64,900,000 
 
 
 
 
 
 
Debt outstanding
5,900,000 
5,900,000 
 
 
 
 
 
 
Revolving line of credit
 
 
 
 
 
$ 25,000,000 
 
 
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, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Schedule of computation of basic and diluted net income (loss) per share
 
 
 
 
Net loss
$ (9,376)
$ (1,181)
$ (18,717)
$ (862)
Weighted-average common shares outstanding
30,323 
29,206 
29,886 
29,127 
Net loss per share
 
 
 
 
Basic and diluted (in dollars per share)
$ (0.31)
$ (0.04)
$ (0.63)
$ (0.03)
Description of Business and Basis of Presentation (Details 1)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
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
918 
758 
918 
758 
Unvested 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
286 
600 
286 
600 
Unvested restricted stock unit 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
862 
203 
862 
203 
Employee stock purchase plan 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
24 
0 
24 
0 
Balance Sheet Details (Details) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Schedule of inventories
 
 
Raw materials and purchased parts
$ 21,591 
$ 23,042 
Work-in-process
3,667 
2,522 
Finished goods
19,234 
23,311 
Reserves
(3,345)
(4,019)
Total inventories
$ 41,147 
$ 44,856 
Balance Sheet Details (Details 1) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Schedule of change in the carrying amount of goodwill
 
Balance at December 31, 2014
$ 23,599 
Foreign currency translation adjustments
1,316 
Balance at June 30, 2015
$ 24,915 
Balance Sheet Details (Details 2) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2015
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2014
$ 4,723 
Other comprehensive income before reclassification
5,526 
Net other comprehensive income for the six months ended June 30, 2015
5,601 
Balance as of June 30, 2015
10,324 
Foreign Currency Translation Adjustment
 
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2014
8,359 
Other comprehensive income before reclassification
5,526 
Net other comprehensive income for the six months ended June 30, 2015
5,526 
Balance as of June 30, 2015
13,885 
Defined Benefit Pension Plan
 
Schedule of accumulated other comprehensive income
 
Balance as of December 31, 2014
(3,636)
Other comprehensive income before reclassification
0 
Net other comprehensive income for the six months ended June 30, 2015
75 
Balance as of June 30, 2015
(3,561)
Cost of Sales, Selling, General and Administrative and Research and Development Expense
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income
75 
Cost of Sales, Selling, General and Administrative and Research and Development Expense |
Foreign Currency Translation Adjustment
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income
0 
Cost of Sales, Selling, General and Administrative and Research and Development Expense |
Defined Benefit Pension Plan
 
Schedule of accumulated other comprehensive income
 
Amounts reclassified from accumulated other comprehensive income
$ 75 
Credit Facility (Details Textual) (USD $)
1 Months Ended 6 Months Ended 0 Months Ended 0 Months Ended 13 Months Ended
Dec. 31, 2011
Dec. 31, 2011
Secured Debt
Dec. 31, 2011
LIBOR
Revolving Credit Facility
Jun. 30, 2015
LIBOR
Revolving Credit Facility
Jul. 3, 2015
East West Bank
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
Minimum
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
Maximum
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
Prime Rate
Minimum
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
Prime Rate
Maximum
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
LIBOR
Minimum
Revolving Credit Facility
Subsequent Event
Jul. 3, 2015
East West Bank
LIBOR
Maximum
Revolving Credit Facility
Subsequent Event
Jun. 30, 2015
Revolving Credit Facility
Secured Debt
Apr. 30, 2012
Equipment Term Loan
Secured Debt
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving line of credit
 
 
 
 
 
$ 25,000,000 
 
 
 
 
 
 
 
 
Percentage of equity interests pledged
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
Borrowings under credit facility, interest related to Libor rate
 
 
2.25% 
2.25% 
 
 
 
 
0.00% 
0.50% 
2.75% 
3.25% 
 
 
Annual commitment fee amount
 
 
 
 
125,000 
 
 
 
 
 
 
 
 
 
Unused commitment fee percentage
 
 
 
 
 
 
0.30% 
0.50% 
 
 
 
 
 
 
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 June 30, 2015) 
 
 
 
 
 
 
 
 
 
 
 
 
Percentage of eligible equipment purchases financed
 
 
 
 
 
 
 
 
 
 
 
 
 
80.00% 
Amount borrowed under Equipment Term Loan
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
Amount under debt agreement
 
 
 
 
 
 
 
 
 
 
 
 
$ 5,900,000 
 
Applicable interest rate percentage at period end
 
 
 
2.50% 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurements (Details Textual) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Fair Value Measurements (Textual) [Abstract]
 
Fair value of derivatives
$ (167)
Foreign Currency Derivative Instruments (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Schedule of gains (losses) on foreign currency forward contracts
 
 
 
 
Net gains (loss) on foreign currency forward contracts
$ 1,636 
$ (405)
$ 2,399 
$ (339)
Foreign Currency Derivative Instruments (Details 1) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
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
$ (1,721)
$ 139 
$ (2,812)
$ (215)
Foreign Currency Derivative Instruments (Details Textual) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Foreign Currency Derivative Instruments (Textual) [Abstract]
 
Notional amount of foreign currency forward contracts not designated as hedges
$ 611 
Foreign Currency Derivative Instruments Foreign Currency Derivative Instruments (Details 2) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2015
Dec. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]
 
 
Gross amounts of recognized liabilities
$ (176)
$ (1,993)
Gross amounts offset in the condensed consolidated balance sheets
9 
350 
Net amount of recognized liability presented in the condensed consolidated balance sheets
$ (167)
$ (1,643)
Stock Plans (Details Textual) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Mar. 31, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Stock-based compensation plans
2 
 
 
2 
 
Stock options granted during the period
33,546 
 
 
263,203 
0 
Average grant date fair value per share
$ 2.74 
 
 
$ 3.56 
 
Stock-based compensation expense
 
 
 
$ 1,850 
$ 1,921 
Executives
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Number of forms of equity awards
 
 
 
3 
 
Stock Options
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Stock-based compensation expense
57 
 
43 
80 
41 
Fair value per share
$ 2.74 
 
 
$ 3.56 
 
Restricted stock awards
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Restricted stock granted
255,600 
 
 
 
 
Fair value per share
$ 14.20 
 
 
 
 
Restricted stock unit awards
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Number of forms of equity awards
 
 
 
2 
 
Restricted stock unit vesting period (in years)
 
 
 
1 year 
 
Restricted stock unit, granted
86,886 
 
137,000 
674,883 
 
Number of unrestricted shares of common stock received upon vesting
1 
 
 
 
 
Restricted stock unit awards |
Share-based Compensation Award, Tranche One
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Restricted stock unit vesting period (in years)
4 years 
 
4 years 
 
 
Fair value per share
$ 6.03 
 
$ 15.17 
$ 7.15 
 
Restricted stock unit, granted
63,012 
 
67,000 
460,052 
 
Restricted stock unit awards |
Share-based Compensation Award, Tranche Three
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Fair value per share
$ 6.03 
 
 
$ 7.19 
 
Restricted stock unit, granted
23,874 
 
 
214,831 
 
Restricted stock unit awards |
Share-based Compensation Award, Tranche Two
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Restricted stock unit vesting period (in years)
 
 
3 years 
 
 
Fair value per share
 
 
$ 7.71 
 
 
Restricted stock unit, granted
 
 
70,000 
 
 
Restricted stock unit awards |
Non-employee directors
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Stock-based compensation expense
158 
 
145 
288 
321 
Fair value per share
 
$ 5.81 
 
$ 7.08 
$ 9.03 
Restricted stock unit, granted
 
11,263 
 
93,212 
65,891 
Employee stock purchase plan
 
 
 
 
 
Stock Plans (Textual) [Abstract]
 
 
 
 
 
Stock-based compensation expense
$ 57 
 
$ 201 
$ 140 
$ 343 
Discount rate from market value on offering date
 
 
 
85.00% 
 
Stock Plans (Details)
6 Months Ended 3 Months Ended 6 Months Ended
Jun. 30, 2015
Employee stock purchase plan
Jun. 30, 2014
Employee stock purchase plan
Jun. 30, 2015
Stock Options
Jun. 30, 2015
Stock Options
Schedule of stock options and employee stock purchase plan weighted-average assumptions
 
 
 
 
Expected dividends
0.00% 
0.00% 
0.00% 
0.00% 
Exercise price
$ 5.97 
$ 7.77 
$ 6.03 
$ 7.16 
Expected volatility
54.00% 
71.00% 
60.00% 
60.00% 
Average risk-free interest rate
0.11% 
0.07% 
1.55% 
1.58% 
Expected life/term (in years)
6 months 
6 months 
5 years 
5 years 
Fair value per share
$ 5.97 
$ 7.65 
$ 2.74 
$ 3.56 
Stock Plans (Details 1) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
 
 
$ 1,850 
$ 1,921 
Total stock-based compensation expense
1,011 
1,166 
1,850 
1,921 
Restricted stock awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
529 
723 
955 
1,162 
Restricted stock unit awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
212 
54 
386 
54 
Restricted stock unit awards |
Market-condition restricted stock units
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
34 
22 
67 
22 
Service-based restricted stock awards |
Restricted stock awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
579 
716 
999 
1,149 
Service-based restricted stock awards |
Restricted stock unit awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
205 
32 
287 
32 
Performance-based restricted stock awards |
Restricted stock awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
(50)
7 
(44)
13 
Performance-based restricted stock awards |
Restricted stock unit awards
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Share-based Compensation
(27)
0 
32 
0 
Cost of revenue
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
147 
190 
353 
442 
Selling, general and administrative
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
657 
733 
1,023 
988 
Research and development
 
 
 
 
Schedule of stock-based compensation expense
 
 
 
 
Total stock-based compensation expense
$ 207 
$ 243 
$ 474 
$ 491 
Shelf Registration Statement (Details Textual) (USD $)
Share data in Millions, except Per Share data, unless otherwise specified
6 Months Ended 0 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 3, 2014
Jun. 11, 2015
Cowen and Company
Equity Offering Sales Agreement under Shelf Registration Statement
Apr. 23, 2015
Cowen and Company
Equity Offering Sales Agreement under Shelf Registration Statement
Jun. 11, 2015
Cowen and Company
Equity Offering Sales Agreement under Shelf Registration Statement
Stock Offering (Textual) [Abstract]
 
 
 
 
 
 
Aggregate value of securities permitted for issuance (up to $125 million)
 
 
$ 125,000,000 
 
 
 
Number of shares the Company may sell per equity offering sales agreement (up to $10 million)
 
 
 
 
10,000,000 
 
Percentage commission of gross proceeds
 
 
 
 
3.00% 
 
Amount of common stock sold
 
 
 
10,000,000 
 
 
Common stock, shares issued
 
 
 
1.83 
 
 
Average share price
 
 
 
 
 
$ 5.46 
Proceeds from sale of common stock, net of offering costs
9,594,000 
0 
 
9,594,000 
 
 
Commissions and offering costs
 
 
 
$ 406,000 
 
 
Defined Benefit Plan (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Schedule of components of net periodic pension income
 
 
 
 
Service cost
$ 245 
$ 217 
$ 487 
$ 434 
Interest cost
85 
179 
169 
357 
Expected return on plan assets
(396)
(458)
(788)
(915)
Prior service cost amortization
36 
36 
71 
72 
Deferred loss amortization
11 
0 
22 
0 
Net periodic pension benefit
$ (19)
$ (26)
$ (39)
$ (52)
Defined Benefit Plan (Details Textual) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2015
Jun. 30, 2014
Jun. 30, 2015
Jun. 30, 2014
Defined Benefit Plan (Textual) [Abstract]
 
 
 
 
Employer contributions
$ 174 
$ 184 
$ 339 
$ 371 
Additional employer contributions, expected to be paid during the remainder of fiscal year
 
 
$ 241 
 
Legal Proceedings (Details Textual) (USD $)
0 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended 3 Months Ended
Jan. 6, 2015
Plaintiffs that have Separately Sought Damages
Jan. 6, 2015
Federal Shareholder Derivative Settlement
plaintiff
Jun. 30, 2013
Federal Shareholder Derivative Settlement
shareholder_class_action
Jun. 10, 2013
Federal Shareholder Derivative Settlement
shareholder_class_action
Jan. 6, 2015
Federal Shareholder Derivative Settlement
Plaintiffs that have Separately Sought Damages
plaintiff
Jun. 30, 2015
Federal Shareholder Derivative Settlement
Accounts Payable and Accrued Liabilities
Jun. 30, 2015
Federal Shareholder Derivative Settlement
Trade and Other Accounts Receivable
Jul. 13, 2015
Federal Shareholder Derivative Settlement
Subsequent Event
Jun. 30, 2013
State Shareholder Derivative Matter
shareholder_class_action
May 7, 2013
State Shareholder Derivative Matter
shareholder_class_action
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
Number of shareholder class actions filed
 
 
2 
 
 
 
 
 
2 
 
Number of actions
 
 
 
2 
 
 
 
 
 
2 
Number of plaintiffs
 
3 
 
 
1 
 
 
 
 
 
Amount plaintiffs requested in fees
$ 300,000 
$ 1,300,000 
 
 
 
 
 
 
 
 
Fee award amount
 
 
 
 
 
 
 
1,100,000 
 
 
Accrued liability amount
 
 
 
 
 
1,100,000 
 
 
 
 
Amount of corresponding receivable from insurance carrier
 
 
 
 
 
 
$ 1,100,000 
 
 
 
Restructuring and Exit costs (Narrative) (Details) (Restructuring Plan, USD $)
3 Months Ended 12 Months Ended 3 Months Ended 3 Months Ended
Jun. 30, 2015
Jun. 30, 2015
Restructuring and exit costs
Jun. 30, 2015
Cost of goods sold
Mar. 31, 2016
Scenario, Forecast
Jun. 30, 2015
Facility Closing
sqft
Jun. 30, 2015
Facility Closing
Other Current Liabilities
Jun. 30, 2015
Employee Severance Costs
Jun. 30, 2015
Employee Severance Costs
Accrued Employee Compensation
Jun. 30, 2015
Relocation costs
Jun. 30, 2015
Lease Obligation Costs
Jun. 30, 2015
Lease Obligation Costs
Other Long Term Liabilities
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Expected restructuring charge
$ 4,200,000 
 
 
 
$ 2,100,000 
 
$ 1,200,000 
 
$ 160,000 
 
 
Accelerated equipment depreciation expense
 
 
185,000 
740,000 
 
 
 
 
 
 
 
Amount of liability
2,222,000 
 
 
 
1,200,000 
327,000 
1,014,000 
1,000,000 
 
1,208,000 
881,000 
Employee severance costs paid
118,000 
 
 
 
 
 
118,000 
 
 
0 
 
Square feet of manufacturing facility
 
 
 
 
60,000 
 
 
 
 
 
 
Employee severance costs
 
 
 
 
 
 
1,100,000 
 
 
 
 
Total charges related to restructuring plan
 
$ 2,340,000 
 
 
 
 
$ 1,132,000 
 
 
$ 1,208,000 
 
Restructuring and Exit costs (Schedule of Severance and Exit Costs) (Details) (Restructuring Plan, USD $)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2015
Restructuring Cost and Reserve [Line Items]
 
Amounts paid
$ (118)
Amounts reserved at June 30, 2015
2,222 
Employee Severance Costs
 
Restructuring Cost and Reserve [Line Items]
 
Costs incurred
1,132 
Amounts paid
(118)
Amounts reserved at June 30, 2015
1,014 
Lease Obligation Costs
 
Restructuring Cost and Reserve [Line Items]
 
Costs incurred
1,208 
Amounts paid
0 
Amounts reserved at June 30, 2015
1,208 
Other Exit Costs
 
Restructuring Cost and Reserve [Line Items]
 
Costs incurred
0 
Amounts paid
0 
Amounts reserved at June 30, 2015
$ 0