UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
March 16, 2006

MAXWELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware	 	1-15477	 	95-2390133	
(State or other jurisdiction of
incorporation)	 	(Commission File Number)	 	(IRS Employer
Identification No.)	
9244 Balboa Avenue
San Diego, California 92133
(Address of principal executive offices, including zip code)
(858) 503-3300
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
 
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
 
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
 
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Item 2.02.	Results of Operations and Financial Condition.	
On March 16, 2006, Maxwell Technologies, Inc. (the “Company”) issued a press release announcing the Company’s final audited financial results for the fourth quarter and FY 2005. A copy of this press release is attached hereto as Exhibit 99.1.
This information and the exhibits hereto are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
 
Item 9.01.	Financial Statements and Exhibits	
(c) Exhibits.

Exhibit No.	  	Description	
99.1	  	Press release issued by Maxwell Technologies, Inc. on March 16, 2006	

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MAXWELL TECHNOLOGIES, INC.	
		
By:	 	/s/ Richard Balanson	
	 	Richard Balanson
Chief Executive Officer	
Date: March 16, 2006

EXHIBIT INDEX

Exhibit No.	  	Description	
99.1	  	Press release issued by Maxwell Technologies, Inc. on March 16, 2006	
 
Exhibit 99.1
NEWS RELEASE

For Immediate Release	  	Contact:	  	Michael Sund	
March 16, 2006	  		  	(858) 503-3233	
MAXWELL TECHNOLOGIES FILES FORM 10-K FOR FISCAL YEAR 2005; FINAL AUDITED RESULTS
REFLECT GAIN FROM ACCOUNTING TREATMENT FOR CONVERTIBLE DEBENTURES AND WARRANTS
SAN DIEGO, Calif. — Maxwell Technologies, Inc. (Nasdaq: MXWL) today filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2005, with the Securities and Exchange Commission (SEC).
The company’s final audited financial results for the fourth quarter and FY 2005 reflect a net gain of $800,000, based on the change in “fair value” of conversion features in $25 million of convertible debentures and warrants to purchase 394,737 shares of Maxwell common stock from their original December 20, 2005 issue date to the company’s December 31, 2005 fiscal year-end. The non-cash gain reduces the company’s net loss for the fourth quarter to $1.1 million, or $0.06 per share, compared with a net loss of $1.9 million, or $0.12 per share, as reported in a press release issued February 28, 2006, pending completion of the valuation. The gain is recorded in the Statement of Operations as a gain on the fair value of “embedded derivative liabilities”.
The year-end fair value gain calculation is based on a $1 decline in the closing price of Maxwell common stock on the Nasdaq Stock Exchange from December 20 to December 29, 2005. The fair value of the debenture conversion feature and warrants will be recalculated at each quarterly reporting period, and any difference in fair value from the prior period will be reflected in the Statement of Operations. Subsequent share price declines would result in recognition of additional gains, while share price increases would result in recognition of expenses. For example, if Maxwell’s closing share price were $17 on March 31, 2006, the company would recognize a $1.9 million non-cash expense in the Statement of Operations due to a fair value change calculation.
The Black-Scholes valuation model is used to calculate fair value. Accounting for the conversion features in the debentures and warrants as derivative liabilities is in accordance with SFAS 133 “Accounting for Derivative Instruments and Hedging Activities”, and EITF 00-19 “Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company’s Own Stock”.
The debentures and warrants are convertible by the holder at any time into Maxwell common shares at a price of $19.00 per share. After eighteen months from the issue date, the company may require that a specified amount of the principal of the debentures be converted if certain conditions are satisfied for a period of 20 consecutive trading days. Maxwell is required to maintain a cash balance of at least $8 million at all times while the convertible debt is outstanding. Therefore $8 million of cash is classified as “restricted cash”.
A summary Income Statement and Balance Sheet reflecting the above noted adjustments follow. Complete financial statements are available with the Form 10-K filed with the SEC, and may be accessed via the following link to the company’s web site: http://www.maxwell.com/company/investors/sec_filings.html
Maxwell is a leading developer and manufacturer of innovative, cost-effective energy storage and power delivery solutions. Our BOOSTCAP ® ultracapacitor cells and multi-cell modules and POWERCACHE ® backup power systems provide safe and reliable power solutions for applications in consumer and industrial electronics, transportation and telecommunications. Our CONDIS ® high-voltage grading and coupling capacitors help to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy. Our radiation-mitigated microelectronic products include power modules, memory modules and single board computers that incorporate powerful commercial silicon for superior performance and high reliability in aerospace applications. For more information, please visit our website: www.maxwell.com.
 
-more-

MAXWELL FILES FORM 10-K FOR FISCAL YEAR 2005
-2-
Forward Looking Statements
Statements in this news release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:
 
 	•	 	the company’s history of losses and uncertainty about its ability to achieve or maintain profitability, or to obtain sufficient capital to meet customer demand or other corporate needs;	
 
 	•	 	development and acceptance of products based on new technologies;	
 
 	•	 	demand for original equipment manufacturers’ products reaching anticipated levels;	
 
 	•	 	general economic conditions in the markets served by the company’s products;	
 
 	•	 	cost-effective manufacturing of new products;	
 
 	•	 	the impact of competitive products and pricing;	
 
 	•	 	risks and uncertainties involved in foreign operations, including the impact of currency fluctuations;	
 
 	•	 	product liability or warranty claims in excess of our reserves.	
For further information regarding risks and uncertainties associated with Maxwell’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our SEC filings, including, but not limited to, our annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Maxwell’s investor relations department at (858) 503-3434 or at our investor relations website at http://www.maxwell.com/company/investors/sec_filings.html
All information in this release is as of March 16, 2006. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
# # #

Maxwell Technologies, Inc. & Subsidiaries
Consolidated Statements of Income

 	  	Three Months Ended December 31,	 	 	Year Ended December 31,	 	
 	  	2005	 	 	2004	 	 	2005	 	 	2004	 	
Total revenue	  	$	12,609	 	 	$	8,487	 	 	$	45,437	 	 	$	32,212	 	
Gross profit	  	 	4,590	 	 	 	574	 	 	 	14,034	 	 	 	6,911	 	
Selling, general and administrative expenses	  	 	4,484	 	 	 	3,169	 	 	 	14,127	 	 	 	10,214	 	
Research and development	  	 	1,906	 	 	 	1,427	 	 	 	7,175	 	 	 	5,528	 	
Loss from continuing operations	  	 	(1,135	)	 	 	(5,061	)	 	 	(6,254	)	 	 	(9,808	)	
Discontinued operations, net of tax	  	 	15	 	 	 	(20	)	 	 	(40	)	 	 	733	 	
Net loss	  	$	(1,120	)	 	$	(5,081	)	 	$	(6,294	)	 	$	(9,075	)	
Basic and diluted net loss per share:	  				 				 				 				
Loss from continuing operations	  	$	(0.07	)	 	$	(0.33	)	 	$	(0.39	)	 	$	(0.67	)	
Discontinued operations, net of tax	  	 	0.01	 	 	 	—  	 	 	 	—  	 	 	 	0.05	 	
Net loss per share	  	$	(0.06	)	 	$	(0.33	)	 	$	(0.39	)	 	$	(0.62	)	

MAXWELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

 	  	December 31,
2005	 	 	December 31,
2004	 	
ASSETS	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	25,760	 	 	$	10,740	 	
Investments in marketable securities	  	 	696	 	 	 	2,055	 	
Trade and other accounts receivable, net	  	 	6,915	 	 	 	6,911	 	
Inventories, net	  	 	9,536	 	 	 	8,105	 	
Prepaid expenses and other current assets	  	 	841	 	 	 	921	 	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	43,748	 	 	 	28,732	 	
Property and equipment, net	  	 	10,368	 	 	 	10,892	 	
Other intangible assets, net	  	 	1,541	 	 	 	1,891	 	
Goodwill	  	 	18,549	 	 	 	21,101	 	
Prepaid pension asset	  	 	4,930	 	 	 	5,060	 	
Restricted cash	  	 	8,000	 	 	 	—  	 	
Other non-current assets	  	 	1,328	 	 	 	50	 	
	  	 	 	 	 	 	 	 	
	  	$	88,464	 	 	$	67,726	 	
	  	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	  				 				
Current liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	6,870	 	 	$	7,291	 	
Accrued warranty	  	 	632	 	 	 	701	 	
Accrued employee compensation	  	 	2,588	 	 	 	1,591	 	
Short-term borrowings and current portion of long-term debt	  	 	1,695	 	 	 	1,970	 	
Deferred tax liability - current portion	  	 	291	 	 	 	357	 	
Net liabilities of discontinued operations	  	 	527	 	 	 	1,045	 	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	12,603	 	 	 	12,955	 	
Deferred tax liability - long-term portion	  	 	1,198	 	 	 	1,167	 	
Long-term debt, excluding current portion	  	 	22,212	 	 	 	813	 	
Stock warrants	  	 	2,600	 	 	 	—  	 	
Stockholders’ equity:	  				 				
Common stock, $0.10 par value per share, 40,000 shares authorized; 16,600 and 15,695 shares issued and outstanding at December 31, 2005 and 2004, respectively	  	 	1,660	 	 	 	1,569	 	
Additional paid-in capital	  	 	136,135	 	 	 	126,317	 	
Unearned compensation	  	 	(2,438	)	 	 	—  	 	
Accumulated deficit	  	 	(87,600	)	 	 	(81,306	)	
Accumulated other comprehensive income	  	 	2,094	 	 	 	6,211	 	
	  	 	 	 	 	 	 	 	
Total stockholders’ equity	  	 	49,851	 	 	 	52,791	 	
	  	 	 	 	 	 	 	 	
	  	$	88,464	 	 	$	67,726