Maxwell Technologies Reports Second Quarter Financial Results

SAN DIEGO, July 28, 2011 /PRNewswire/ -- Maxwell Technologies, Inc. (Nasdaq: MXWL) today reported revenue of $38.5 million for its second quarter ended June 30, 2011, up 30 percent over the $29.6 million recorded in the same period in 2010.  Ultracapacitor revenue increased by 54 percent, to $24.4 million in Q211, compared with $15.9 million in the same period last year.  Sales of high voltage capacitor and microelectronics products totaled $14.0 million in Q211, up two percent from the $13.7 million recorded in Q210.

"Rapidly increasing sales into stop-start idle elimination systems in micro hybrid autos and various backup power applications augmented continuing strong sales for wind turbine blade pitch systems and hybrid and electric transit vehicle drive systems to generate another record quarter for ultracapacitor sales," said David Schramm, Maxwell's president and chief executive officer.

On a U.S. generally accepted accounting principles (GAAP) basis, operating loss for Q211 was $1.6 million compared with an operating loss of $3.3 million in Q210. GAAP net loss for the second quarter 2011 was $1.2 million or $0.04 per share, compared with a GAAP net loss of $2.6 million, or $0.10 per share, in the same period last year. GAAP operating and net loss comparisons are affected by:

• A reserve of $2.6 million, $2.0 million net of tax, or $0.07 per diluted share, in Q211 for an anticipated legal settlement.
• A non-cash gain of $1.2 million, or $0.05 per diluted share, in Q210, based on the quarterly valuation of conversion features and warrants associated with convertible debentures. As the warrants were exercised in December 2010, and the convertible debentures were retired in February 2011, the company will no longer record gains or losses related to the conversion features and warrants.
• An accrual of $3.4 million, or $0.13 per diluted share, in Q210 for settlement of U.S. Foreign Corrupt Practices Act violations.

On a non-GAAP basis, the company reported operating income of $1.9 million in Q211, compared with operating income of $933,000 in the same period last year, and net income of $1.7 million or $0.06 per diluted share in Q211, compared with net income of $455,000, or $0.02 per diluted share in Q210. A reconciliation of GAAP to non-GAAP financial measures is included as an addendum to this release.

GAAP gross margin was 40 percent in Q211, compared with 40 percent in Q210 and 39 percent in Q111.  GAAP operating expenses totaled approximately $17.1 million, or 44 percent of revenue in Q211, compared with $15.2 million, or 51 percent of revenue in Q210.  Non-GAAP operating expenses totaled approximately $13.7 million, or 36 percent of revenue, in Q211, compared with $11.1 million, or 37 percent of revenue, in Q210. Cash and cash equivalents totaled $29.8 million as of June 30, 2011, compared with $33.1 million as of March 31, 2011. Complete financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations will be available with the filing of the company's Quarterly Report on Form 10-Q with the Securities & Exchange Commission.

Outlook:  "We expect sequential top line growth of five to seven percent in the third quarter," Schramm said. "For the full year, we continue to expect that year-over-year top line growth will exceed 20 percent, and steadily improving operating performance should enable the company to be profitable on a non-GAAP basis going forward."

Non-GAAP Financial Measures: The Company uses non-GAAP financial measures for internal evaluation and to report the results of its business. These non-GAAP financial measures include non-GAAP gross profit, non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss), and non-GAAP diluted net income (loss) per share. These measures are not in accordance with, nor an alternative to, GAAP. These measures are intended to supplement GAAP financial information, and may be computed differently from non-GAAP financial measures used by other companies. The company believes that these measures provide useful information to its management, board of directors and investors about its operating activities and business trends related to its financial condition and results of operations. The company believes that it is useful to provide investors with information to understand how specific line items in the statement of operations are affected by certain non-cash or non-recurring items, such as:

• stock-based compensation expense;
• amortization of intangible assets;
• accruals and reserves for  FCPA and legal settlements, and
• prior period gains or losses on embedded derivative and warrants.

In addition, the company's management and board of directors use these non-GAAP financial measures in developing operating budgets and in reviewing the company's results of operations, as non-cash and non-recurring items have limited impact on current and future operating decisions. Additionally, the company believes that inclusion of non-GAAP financial measures provides consistency and comparability with its past reports of financial results. However, investors should be aware that non-GAAP measures have inherent limitations and should be read in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. Please refer to the accompanying tables for a detailed reconciliation of GAAP to non-GAAP gross profit, operating expenses, income (loss) from operations, net income (loss), and diluted net income (loss) per share.

Conference Call: Management will conduct a conference call and simultaneous webcast to discuss reported financial results and the future outlook at 5 p.m. (EDT) today. The call may be accessed by dialing toll-free, (800) 895-1085 from the U.S. and Canada, or (785) 424-1055 for international callers, and entering the conference ID, 7MAXWELL. The live webcast and subsequent archived replay may be accessed at the company's web site via the following link: http://investors.maxwell.com/phoenix.zhtml?c=94560&p=irol-IRHome.

Maxwell is a leading developer and manufacturer of innovative, cost-effective energy storage and power delivery solutions. Our ultracapacitor products provide safe and reliable power solutions for applications in consumer and industrial electronics, transportation and telecommunications. Our 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.

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. Such risks, uncertainties and contingencies include, but are not limited to, the following:

• risks related to our international operations, including, but not limited to, our ability to comply with changing rules and regulations in countries where we conduct business, our ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations, and our ability to continue to comply with the U.S. Foreign Corrupt Practices Act, anti-bribery laws of foreign jurisdictions and the terms and conditions of our settlement agreements with the U.S. Securities and Exchange Commission and Department of Justice.
• our ability to remain competitive and stimulate customer demand by successfully introducing new products and matching our production capacity to customer demand;
• dependence upon the sale of products to a small number of customers and vertical markets, some of which depend heavily on government funding or subsidies which may not continue in the future;
• acquisition, development and retention of key personnel;
• our ability to effectively manage our reliance upon certain suppliers of key component parts and specialty equipment;
• our ability to manage product quality problems;
• our ability to protect our intellectual property rights and to defend claims against us;
• our ability to enter into, manage and benefit from strategic alliances;
• occurrence of a catastrophic event at any of our facilities; and,
• our ability to obtain sufficient capital to meet our operating or other needs.

Many of these factors are beyond our control, and there can be no assurance that we will not encounter unforeseen risks and costs in the conduct of our business. Forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. For further information regarding risks and uncertainties associated with our 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 10-KA and quarterly reports on Form 10-Q. Copies of these documents may be obtained by contacting Maxwell Investor

Relations at (858) 503-3434 or at our investor relations website: http://investors.maxwell.com/phoenix.zhtml?c=94560&p=irol-IRHome. All information in this release is as of July 28, 2011. The company undertakes no duty to update any forward-looking statement to reflect actual results or changes in the company's expectations.

SOURCE Maxwell Technologies, Inc.