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30771-007 MAXWELL TECHNOLOGIES
2 0 0 6 A n n u a l R e p o r t a n d F o r m 1 0 - K
the
POWER
link 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.
BOOSTCAP® ultracapacitor cells, multi-cell packs and
modules provide safe and reliable power solutions for
the automotive, transportation, industrial and consumer
electronics industries.
Our radiation-mitigated microelectronic products include
power modules, memory modules and single board com-
puters that incorporate powerful commercial silicon for
superior performance and high reliability in aerospace
applications.
Ultracapacitors
Micro Electronics for Space
High Voltage Capacitors
Innovative, cost effective energy storage and
power delivery solutions. 9244 Balboa Avenue San Diego, CA 92123
March 31, 2007
Letter to Stockholders:
High oil prices, escalating demand for light, heat and power to raise living standards and turn the wheels of
industry, growing concern over carbon emissions and global warming . . . the worlds energy future is in the
spotlight, from Main Street to Wall Street to the teeming streets of the developing world. Not surprisingly, the
glare of that spotlight is shedding light on technologies such as ultracapacitors and companies such as Maxwell
that can play an increasing role in balancing the energy equation. Cleaner, more energy- efficient hybrid and
electric vehicles, wind, solar and other renewable energy sources, automated utility meters to better manage
energy consumption and many other pieces of the energy supply puzzle are benefiting from ultracapacitors
unique capabilities, and the world is beginning to take notice.
In case you missed it, Economist.coms summary of highlights of the 2007 World Economic Forum in Davos,
Switzerland identified supercapacitor as the word of the meeting. The online article recalled that in the film,
The Graduate, a young college grad is advised to get into plastics, and went on to note that this years
Davos graduate is advisedby several billionaires who know a thing or twoto get into supercapacitors. The
writer concluded that . . . if climate change is the next money spinner, supercapacitors are the next big thing.
Although this likely came as a revelation to many Forum attendees and Economist readers, supercapacitors (we
call them ultracapacitors), hardly have been an overnight success. As Maxwell stockholders and employees, we
have been into ultracapacitors for more than a decade
and it is gratifying to see our industry emerging from
obscurity, at last.
Because our BOOSTCAP
®
ultracapacitor products are
Maxwells principal growth driver, most of this message
will be devoted to their progress and prospects. But first we
need to acknowledge the vital role and contributions of our two other product lines, which are profiled briefly on
the opposite page. Our Microelectronic products for space and our CONDIS
®
high-voltage capacitors for electric
utility infrastructure continue to solidify and extend their leadership positions in their respective industries and
produce income that helps to fund our investments in the explosive growth potential of ultracapacitors. For
descriptions of all of Maxwells products and our strategies for them, plus complete information on the
companys 2006 financial results, please turn to the Annual Report on Form 10-K, which immediately follows this
letter.
Ultracapacitors and Energy Efficiency
Ultracapacitors typically increase the efficiency of devices and systems that generate or consume electrical
energy by 20 to 30 percent or more. For example, one of our customers is a light rail vehicle manufacturer that is
introducing an electric drive system with regenerative braking that harnesses the kinetic energy of motion as the
vehicle comes to a stop to generate electrical energy and stores it an ultracapacitor module. The stored energy is
reused for propulsion, reducing grid power consumption by an estimated 30 percent. As an added benefit, the
ultracapacitors store enough energy to power the vehicle for a kilometer disconnected from the grid, eliminating
the need for costly and unsightly overhead wires. For vehicles that use fossil fuels, energy efficiency also
translates into environmental benefits. Transit operators are finding that hybrid gasoline- or diesel-electric buses
with regenerative braking consume about 30 percent less fuel than non-hybrids. Obviously, reduced fuel
consumption means less particulate and greenhouse gas emissions, and, because an internal combustion
engine produces most of its pollution during initial acceleration, a hybrid bus that uses clean electric energy to
get moving after each stop can reduce total emissions by up to 90 percent. Approximately 200 such hybrid buses
using BOOSTCAP
®
ultracapacitors for energy storage are now in daily revenue service, and our hybrid drive train
OEM customers, both here and abroad, are bidding on bus, truck, rail and other heavy vehicle programs that
promise to dwarf that number.
Continued ...
Ultracapacitors typically increase
the efficiency of devices and systems
that generate or consume electrical
energy by 20 to 30 percent or more Extending the life or improving the functionality of other energy devices and systems is another form of energy
efficiency. One example is a hand-held pipe cutting tool for plumbers. Testing various power sources, the designer
found that alkaline batteries could power only six cuts before they needed to be replaced. When three of our
postage stamp size PC-10 ultracapacitors were integrated into the system, the same batteries lasted for 100 cuts!
Another such as example is electric forklifts that are used to move and lift merchandise and other materials in
major indoor facilities such as warehouses and factories. Large lead-acid battery packs generally are used to
power them, but they are less than ideal because they need to be recharged every few hours. To support around-
the- clock operation, each forklift needs three interchangeable packs, and the downtime to switch packs,
maintenance of charging facilities and battery replacement all add up to additional expense. Fuel cells, which can
run all day on a tank of hydrogen looked like a possible better answer, but, to supply the peak power for heavy
lifting, they needed to be oversized, making them too large and too expensive for the application. When the
system designer integrated 60 of our large cell ultracapacitors to handle the brief lifting events, the fuel cell could
be downsized by a factor of four, enabling the combined pack to fit
nicely in the existing battery cavity and the economics became
much more favorable.
Ultracapacitors and Renewable Energy
One of our earliest high-volume applications was in helping to
optimize the efficiency of wind turbines. To keep their energy
output as consistent as possible, the turbine blades need to be
rotated frequently to compensate for fluctuating wind velocity. In 2004, a leading European wind turbine
manufacturer developed a blade pitch mechanism that uses up to 800 of our D-cell ultracaps to deliver high-
voltage jolts of electrical energy to constantly reposition the blades. Earlier designs used batteries, but many wind
turbines are installed offshore or in other difficult-to-service locations, so ultracapacitors ability to operate
without maintenance for a million or more charge/discharge cycles makes them a much lower-maintenance choice
vs. batteries, which have about a 1,000-cycle lifetime. Ultracapacitor packs also are being used to smooth wind
farms input into the utility grid, and to store energy generated by other renewable sources such as solar and wave
power.
Even with all their technical and environmental advantages, cost is the single most important factor in
ultracapacitors ability to penetrate the above-mentioned applications and potentially much larger ones such as
automobile electrical systems and hybrid drive trains, and telecommunications power quality and backup power
systems. Over the past several years, we have redesigned our entire BOOSTCAP
®
product line to simplify
assembly and incorporate lower cost materials, and we are now just weeks away from shifting all large cell
assembly to a low-cost contract manufacturing operation in China. To reduce the cost of producing the most
expensive element of an ultracapacitor, the carbon powder-based electrode, our research and development team
invented a novel process that we believe gives us the industrys lowest cost position. We now sell this proprietary