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March 7, 2013 /PRNewswire/ -- Maxwell Technologies, Inc. (NASDAQ: MXWL) announced today that on
March 1, 2013, the audit committee of its board of directors concluded that the previously issued financial statements contained in its annual report on Form 10-K for the year ended
December 31, 2011, and all unaudited quarterly reports on Form 10-Q in 2011 and 2012 (collectively, the "Prior Periods"), as well its selected financial data for the related periods, should no longer be relied upon because of errors in those financial statements. The errors relate to the timing of recognition of revenue from sales to certain distributors.
In addition to the financial statements for the Prior Periods, related press releases furnished on current reports on Form 8-K, reports and stockholder communications describing its financial statements for the Prior Periods and the report of its independent registered public accounting firm, McGladrey LLP (formerly McGladrey & Pullen, LLP), related to the year ended
December 31, 2011, should no longer be relied upon.
The conclusion that the financial statements for the Prior Periods cannot be relied upon is the result of an investigation by Maxwell's audit committee, with the assistance of independent outside counsel and forensic accountants. The investigation commenced following receipt of information concerning potential recognition of revenue prior to the satisfaction of certain of the criteria required to be met to recognize revenue.
The investigation discovered arrangements with certain distributors regarding the payment terms for sales to such distributors with respect to certain transactions. These arrangements had not been communicated to Maxwell's finance and accounting department and, therefore, had not been considered when recording revenue on shipments to these distributors. Based on the terms of the agreements with these distributors as they were known to the finance and accounting department, it had been the policy to account for revenue related to shipments to these distributors as title passed to the distributor at either shipment from Maxwell's facilities or receipt at the distributor's facility, assuming all other revenue recognition criteria had been achieved. As a result of the arrangements discovered during the investigation, Maxwell does not believe that a fixed or determinable sales price existed at the time of shipment to these distributors, nor was collection reasonably assured, at least with respect to certain transactions. Therefore, the revenue from such sales should not have been recognized at the time of shipment to these distributors.