Form 8-K MAXWELL TECHNOLOGIES For: Apr 27
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E-mailUNITED 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): April 27, 2016
MAXWELL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 001-15477 | 95-2390133 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||
3888 Calle Fortunada
San Diego, California 92123
(Addresses 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):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.01. Completion of Acquisition or Disposition of Assets.
On April 12, 2016, Maxwell Technologies, Inc., a Delaware corporation (the “Company”), announced that it had entered into an asset purchase agreement (the “Asset Purchase Agreement”) to sell certain of its assets and liabilities, comprising the Company’s microelectronics product line, to Data Device Corporation, (“DDC”), a privately-held Delaware corporation. The transaction contemplated by the Asset Purchase Agreement (the “Transaction”) was completed on April 27, 2016. Total consideration paid to the Company was $21.0 million in cash, subject to a post-closing working capital adjustment.
The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to a copy of the Asset Purchase Agreement, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 12, 2016, and is incorporated by reference herein.
Item 8.01. Other Events.
On April 27, 2016, the Company issued a press release announcing the completion of the Transaction. A copy of the press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(b) | Pro Forma Financial Information. |
An unaudited pro forma condensed consolidated balance sheet of the registrant as of December 31, 2015 giving effect to the Transaction as if it had occurred as of that date, and an unaudited pro forma condensed consolidated statement of operations of the registrant for the year ended December 31, 2015 giving effect to the Transaction as if it had occurred on January 1, 2015, are attached to this report as Exhibit 99.2.
(d) | Exhibits. |
Exhibit No. | Description | |
99.1 | Press Release dated April 27, 2016 | |
99.2 | Pro Forma Financial Information | |
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/ David Lyle | ||
David Lyle | |||
Senior Vice President, Chief Financial Officer, Treasurer and Secretary | |||
Date: April 29, 2016
EXHIBIT INDEX
Exhibit No. | Description | |
99.1 | Press Release dated April 27, 2016 | |
99.2 | Pro Forma Financial Information | |
Exhibit 99.1
 | FOR IMMEDIATE RELEASE | ||
Media & Investor Contact: | |||
Amy Wakeham, | |||
(858) 503-3359 | |||
Maxwell Technologies Completes of Sale of Microelectronics Product Line to Data Device Corporation for $21 Million
SAN DIEGO, April 27, 2016 -- Maxwell Technologies, Inc. (NASDAQ: MXWL), a leading developer and manufacturer of ultracapacitor-based energy storage and power delivery solutions, today announced that it has completed the previously announced sale of its microelectronics product line to Data Device Corporation (“DDC”), a subsidiary of ILC Industries, Inc. The sale included all assets and certain liabilities related to the microelectronics product line. As part of the purchase agreement, 37 employees have transitioned from Maxwell to DDC. Existing product customers and business partners should see no disruption in service.
The transaction purchase price was $21 million in cash. Canaccord Genuity acted as Maxwell’s exclusive financial advisor.
About Maxwell:
Maxwell is a global leader in the development and manufacture 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. For more information, please visit our website: www.maxwell.com.
Maxwell is a global leader in the development and manufacture 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. For more information, please visit our website: www.maxwell.com.
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 and are subject to the Safe Harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual events may differ materially. 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 these documents may be obtained by contacting Maxwell's investor relations department at (858) 503-3359, or at our investor relations website: investors.maxwell.com.
###
Exhibit 99.2
Maxwell Technologies, Inc.
Unaudited Pro Forma Financial Statements
On April 12, 2016, Maxwell Technologies, Inc., a Delaware corporation (the “Company”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) to sell certain of its assets and liabilities, comprising the Company’s microelectronics product line, to Data Device Corporation, (“DDC”), a privately-held Delaware corporation that designs and manufactures high-reliability data bus, motion control and solid-state power controller products for aerospace and defense vehicles, and industrial applications. The purchase price under the Asset Purchase Agreement consists of $21 million in cash, subject to certain working capital adjustments. On April 27, 2016, the Company completed the sale of substantially all of the assets and certain liabilities of the Company's microelectronics product line to DDC in accordance with the terms of the Asset Purchase Agreement. The disposition of the microelectronics product line does not represent a strategic shift that has or will have a major effect on the Company's operations and financial results and therefore does not qualify for presentation as a discontinued operation.
The unaudited pro forma condensed consolidated financial statements were derived from the Company’s historical financial statements and are being presented to give effect to the disposition of the assets and certain liabilities of the microelectronics product line.
Included herein are the following unaudited pro forma financial statements:
• | Condensed consolidated balance sheet as of December 31, 2015, as adjusted assuming the disposition occurred on December 31, 2015; and |
• | Condensed consolidated statement of operations for the year ended December 31, 2015, as adjusted assuming the disposition occurred on January 1, 2015. |
The unaudited pro forma condensed consolidated financial statements are prepared in accordance with Article 11 of Regulation S-X. The pro forma adjustments are described in the accompanying notes and are based upon information and assumptions available at the time of the filing of this report on Form 8-K.
The unaudited pro forma condensed consolidated balance sheet and statement of operations should be read in conjunction with our historical financial statements and accompanying notes included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 17, 2016.
The unaudited pro forma financial information is based on financial statements prepared in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. The unaudited pro forma condensed consolidated financial statements were based on and derived from our historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the disposition, factually supportable, and with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on our consolidated results. Actual adjustments, however, may differ materially from the information presented. In addition, the unaudited pro forma financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma financial information for illustrative purposes in compliance with the disclosure requirements of the SEC. The unaudited pro forma financial information is not necessarily indicative of the financial position or results of operations that would have actually occurred had the disposition occurred on the dates indicated. In addition, these unaudited pro forma condensed consolidated financial statements should not be considered to be indicative of the future financial performance and results of operations of the Company.
MAXWELL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
December 31, 2015 | ||||||||||||
Maxwell Technologies, Inc. Historical | Pro Forma Adjustments | Pro Forma | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 24,382 | $ | 17,953 | (a)(b)(c) | $ | 42,335 | |||||
Restricted cash | 400 | — | 400 | |||||||||
Trade and other accounts receivable, net | 43,172 | (803 | ) | 42,369 | ||||||||
Inventories, net | 39,055 | (11,709 | ) | 27,346 | ||||||||
Prepaid expenses and other current assets | 2,593 | 1,500 | (a) | 4,093 | ||||||||
Total current assets | 109,602 | 6,941 | 116,543 | |||||||||
Property and equipment, net | 32,324 | (660 | ) | 31,664 | ||||||||
Goodwill | 23,635 | (292 | ) | 23,343 | ||||||||
Pension asset | 5,849 | — | 5,849 | |||||||||
Other non-current assets | 603 | — | 603 | |||||||||
Total assets | $ | 172,013 | $ | 5,989 | $ | 178,002 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued liabilities | $ | 33,985 | $ | 249 | (b) | $ | 34,234 | |||||
Accrued employee compensation | 6,672 | (381 | ) | (c) | 6,291 | |||||||
Deferred revenue and customer deposits | 3,066 | (732 | ) | 2,334 | ||||||||
Short-term borrowings and current portion of long-term debt | 42 | — | 42 | |||||||||
Total current liabilities | 43,765 | (864 | ) | 42,901 | ||||||||
Deferred tax liability, long-term | 6,076 | — | 6,076 | |||||||||
Long-term debt, excluding current portion | 49 | — | 49 | |||||||||
Other long-term liabilities | 2,947 | (84 | ) | 2,863 | ||||||||
Total liabilities | 52,837 | (948 | ) | 51,889 | ||||||||
Commitments and contingencies | — | |||||||||||
Total stockholders’ equity | 119,176 | 6,937 | (d) | 126,113 | ||||||||
Total liabilities and stockholders’ equity | $ | 172,013 | $ | 5,989 | $ | 178,002 | ||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
MAXWELL TECHNOLOGIES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Years Ended December 31, | ||||||||||||
Maxwell Technologies, Inc. Historical | Pro Forma Adjustments | Pro Forma | ||||||||||
Revenue | $ | 167,372 | $ | (11,129 | ) | $ | 156,243 | |||||
Cost of revenue | 116,410 | (4,805 | ) | (e) | 111,605 | |||||||
Gross profit | 50,962 | (6,324 | ) | 44,638 | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 40,758 | (1,221 | ) | 39,537 | ||||||||
Research and development | 24,697 | (2,784 | ) | 21,913 | ||||||||
Restructuring and exit costs | 2,512 | — | 2,512 | |||||||||
Total operating expenses | 67,967 | (4,005 | ) | (e) | 63,962 | |||||||
Income (loss) from operations | (17,005 | ) | (2,319 | ) | (19,324 | ) | ||||||
Interest expense, net | (266 | ) | — | (266 | ) | |||||||
Amortization of prepaid debt costs | (18 | ) | — | (18 | ) | |||||||
Foreign currency exchange loss, net | (441 | ) | — | (441 | ) | |||||||
Income (loss) before income taxes | (17,730 | ) | (2,319 | ) | (20,049 | ) | ||||||
Income tax provision | 4,603 | — | (f) | 4,603 | ||||||||
Net income (loss) | $ | (22,333 | ) | $ | (2,319 | ) | $ | (24,652 | ) | |||
Net income (loss) per share: | ||||||||||||
Basic and diluted | $ | (0.73 | ) | $ | (0.80 | ) | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic and diluted | 30,716 | 30,716 | ||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
MAXWELL TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Sale of Microelectronics Product Line
On April 27, 2016, pursuant to the Asset Purchase Agreement, the Company completed the sale of substantially all of the assets and certain liabilities related to its microelectronics product line. The accompanying unaudited pro forma condensed consolidated balance sheet reflects the historical consolidated balance sheet as presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, with adjustments to eliminate the assets and liabilities being sold or otherwise disposed of or settled, and add the estimated cash proceeds and transaction costs based on the microelectronics working capital as of December 31, 2015. The actual cash proceeds will be based on the actual working capital as of the closing date of the sale. The estimated cash proceeds are reduced by a $1.5 million holdback amount, which is to be held in escrow to secure any post-closing adjustments to the purchase price, as specified in the Asset Purchase Agreement. The carrying value of the net assets sold was $12.4 million at December 31, 2015. In addition, had the disposition occurred as of December 31, 2015, the Company would have released liabilities of $0.3 million primarily related to deferred rent.
The accompanying unaudited pro forma condensed consolidated statement of operations reflects the historical consolidated statement of operations for the year ended December 31, 2015 as presented in the Company's Annual Report on Form 10-K for the year ended December 31, 2015, with adjustments to eliminate the revenues and expenses attributable to the microelectronics product line being sold for the period presented.
Purchase price using a December 31, 2015 valuation calculated as follows (in thousands): | |||
Base purchase price | $ | 21,000 | |
Working capital adjustment: | |||
Target working capital | (12,300 | ) | |
Actual working capital | 11,529 | ||
Purchase price | $ | 20,229 | |
Assets and liabilities being disposed of (in thousands): | |||
Accounts receivable, net | $ | 803 | |
Inventories | 11,709 | ||
Property, plant and equipment, net | 660 | ||
Goodwill | 292 | ||
Accounts payable and accrued liabilities, and other long-term liabilities | (585 | ) | |
Deferred revenue and customer deposits | (732 | ) | |
Change in assets and liabilities, net | $ | 12,147 | |
Note 2 - Pro Forma Adjustments
The following is a description of the pro forma adjustments reflected in the unaudited pro forma condensed consolidated financial statements based on preliminary estimates, which may change as additional information is obtained:
(a) Purchase price: Reflects adjustments made to include estimated cash proceeds of $20.2 million based on the microelectronics product line working capital as of December 31, 2015, and the $1.5 million holdback.
(b) Disposition costs: Includes (1) an accrual of $0.8 million of estimated transaction costs related to the sale, and (2) the payment of microelectronics employee bonuses payable on the success of the sale in the amount of $0.4 million.
(c) Assets and liabilities not assumed: Reflects adjustments made for microelectronics employee liabilities of $0.4 million as of December 31, 2015 that were not assumed by DDC pursuant to the Asset Purchase Agreement and were settled in conjunction with the completion of the sale.
(d) Retained earnings: As a result of the sale, we computed an estimated pre-tax gain of $6.9 million, based on the microelectronics working capital as of December 31, 2015. This gain is not included in the pro forma adjustments to the unaudited condensed consolidated statement of operations due to its non-recurring nature, but it is recorded in the unaudited pro forma condensed consolidated balance sheet as of December 31, 2015.
Retained Earnings (in thousands) | |||
Cash proceeds, including $1.5 million holdback | $ | 20,229 | |
Change in assets and liabilities, net | (12,147 | ) | |
Estimated transaction costs described in (b) above | (1,145 | ) | |
Estimated gain on sale | $ | 6,937 | |
(e) Allocations: As the Company's microelectronics operations were conducted in a shared facility which the Company used for other operations, the adjustments include only a portion of these facility costs based on the proportion of the facility square footage occupied by microelectronics operations. In conjunction with a restructuring plan the Company initiated in 2015, this entire facility has been exited, therefore, the costs savings considering the exit of this entire facility are expected to be higher than the costs adjustments shown in the proforma condensed consolidated statement of operations. The adjustments also exclude certain other corporate allocations which would have been absorbed by the Company independent of the sale of the microelectronics product line.
(f) Income taxes: The pro forma adjustments were not tax effected as the Company has substantial net operating loss carryforwards and has established a valuation allowance against its deferred tax assets.
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