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AMSC Reports Full-Year Fiscal 2010 And First Quarter Fiscal 2011 Financial Results

“We have taken decisive action to immediately lower our expenses, significantly reduce our cash burn in the second half of the fiscal year and put AMSC back on the path to profitability,” McGahn said. “We have a holistic set of Wind and Grid solutions that lower the cost of energy and make our power supplies cleaner, smarter and more reliable, positioning us well within addressable markets that approach $10 billion annually. We believe we have the right people, products and partners to capitalize on these opportunities and ultimately deliver sustainable profits.”

Conference Call Reminder

In conjunction with this announcement, AMSC management will participate in a conference call with investors beginning at 9:00 a.m. Eastern Time to discuss the company’s results and its business outlook. Those who wish to listen to the live conference call webcast should visit the “ Investors” section of the company’s website at www.amsc.com/investors. The live call also can be accessed by dialing 719-457-2703 and using conference ID 8645945. A telephonic playback of the call will be available from 12:00 p.m. ET on September 23 through 12:00 p.m. ET on September 28. Please call 719-457-0820 and refer to conference ID 8645945 to access the playback.

About American Superconductor (NASDAQ: AMSC)

AMSC offers an array of proprietary technologies and solutions spanning the electric power infrastructure – from generation to delivery to end use. The company is a leader in renewable energy, providing proven, megawatt-scale wind turbine designs and electrical control systems. The company also offers a host of Smart Grid technologies for power grid operators that enhance the reliability, efficiency and capacity of the grid, and seamlessly integrate renewable energy sources into the power infrastructure. These include superconductor power cable systems, grid-level surge protectors and power electronics-based voltage stabilization systems. AMSC’s technologies are protected by a broad and deep intellectual property portfolio consisting of hundreds of patents and licenses worldwide. More information is available at www.amsc.com.

American Superconductor and design, Revolutionizing the Way the World Uses Electricity, AMSC, Powered by AMSC, Amperium, D-VAR, dSVC, FaultBlocker, PowerModule, PowerPipelines, PQ-IVR, PQ-SVC, SeaTitan, SuperGEAR and Windtec and design are trademarks or registered trademarks of American Superconductor Corporation or its subsidiaries. All other brand names, product names or trademarks belong to their respective holders.

Any statements in this release about future expectations, plans and prospects for the company, including without limitation our expectations regarding the future financial performance of the company and other statements containing the words "believes," "anticipates," "plans," "expects," "will" and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include: a significant portion of our revenues has been derived from Sinovel Wind Group Co. Ltd., (“Sinovel”), which has stopped accepting scheduled deliveries and refused to pay amounts outstanding; the disruption in our relationship with Sinovel has materially and adversely affected our business and results of operations and if, as we expect, Sinovel continues to refuse to accept shipments from us, our business and results of operations will be further materially and adversely affected; we will require significant additional funding and may be unable to raise capital when needed, which could force us to delay, reduce or eliminate planned activities, including the planned acquisition of The Switch Engineering Oy (“The Switch”); we have a history of operating losses, and we may incur additional losses in the future; our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; if we fail to complete the planned acquisition of The Switch, our operating results and financial condition could be harmed and the price of our common stock could decline; completion of the planned acquisition of The Switch could present certain risks to our business; adverse changes in domestic and global economic conditions could adversely affect our operating results; changes in exchange rates could adversely affect our results from operations; we have identified material weaknesses in our internal control over financial reporting and if we fail to remediate these weaknesses and maintain proper and effective internal controls over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; if we fail to implement our business strategy successfully, our financial performance could be harmed; we may not realize all of the sales expected from our backlog of orders and contracts; many of our revenue opportunities are dependent upon subcontractors and other business collaborators; our products face intense competition, which could limit our ability to acquire or retain customers; our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; we may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; we depend on sales to customers in China, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of China; changes in China’s political, social, regulatory and economic environment may affect our financial performance; many of our customer relationships outside of the United States are, either directly or indirectly, with governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; we rely upon third party suppliers for the components and subassemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; we are becoming increasingly reliant on contracts that require the issuance of performance bonds; problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share; our success in addressing the wind energy market is dependent on the manufacturers that license our designs; growth of the wind energy market depends largely on the availability and size of government subsidies and economic incentives; there are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; we have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential; the commercial uses of superconductor products are limited today, and a widespread commercial market for our products may not develop; we have limited experience in marketing and selling our superconductor products and system-level solutions, and our failure to effectively market and sell our products and solutions could lower our revenue and cash flow; our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government; the continued funding of such contracts remains subject to annual congressional appropriation which, if not approved, could reduce our revenue and lower or eliminate our profit; we may be unable to adequately prevent disclosure of trade secrets and other proprietary information; we have filed a demand for arbitration and other lawsuits against Sinovel regarding amounts we contend are due and owing and are in dispute; we cannot be certain as to the outcome of the proceedings against Sinovel; we have been named as a party to purported stockholder class actions and shareholder derivative complaints, and we may be named in additional litigation, all of which will require significant management time and attention, result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, operating results and financial condition; our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position; third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; and our common stock has experienced, and may continue to experience, significant market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’s attention. Reference is made to many of these factors and others in the “Risk Factors” section of the company’s most recent quarterly or annual report filed with the Securities and Exchange Commission. In addition, any forward-looking statements included in this release represent the company’s expectations as of the date of this release. While the company anticipates that subsequent events and developments may cause the company’s views to change, the company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the company’s views as of any date subsequent to the date of this release.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
               
 

Three months ended March 31,

Year ended March 31,

2011 2010 2011 2010
Revenues:
Power Systems $ 56,938 $ 84,763 $ 276,440 $ 304,276
Superconductors   2,813     2,861     10,163     11,679  
Total revenues 59,751 87,624 286,603 315,955
 
Cost of revenues   159,016     54,479     308,183     200,977  
 
Gross profit   (99,265 )   33,145     (21,580 )   114,978  
 
Operating expenses:
Research and development 8,908 7,228 32,517 23,593
Selling, general and administrative 25,662 13,968 72,382 50,446
Goodwill and long-lived asset impairment 49,955 - 49,955 -
Amortization of acquisition related intangibles 394 449 1,549 1,827
Restructuring   -     -     -     451  
Total operating expenses   84,919     21,645     156,403     76,317  
 
Operating (loss) income (184,184 ) 11,500 (177,983 ) 38,661
 
Interest income, net 281 160 830 788
Other income (expense), net   2,079     (39 )   6,822     (2,693 )
 
(Loss) income before income tax expense (181,824 ) 11,621 (170,331 ) 36,756
 
Income tax expense   3,311     6,684     15,953     20,508  
 
Net (loss) income $ (185,135 ) $ 4,937   $ (186,284 ) $ 16,248  
 
Net (loss) income per common share
Basic $ (3.67 ) $ 0.11   $ (3.95 ) $ 0.37  
Diluted $ (3.67 ) $ 0.11   $ (3.95 ) $ 0.36  
 
Weighted average number of common shares outstanding
Basic   50,423     45,133     47,103     44,445  
Diluted   50,423     45,955     47,103     45,290  
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
       
 

Three months ended June 30,

2011 2010
Revenues:
Wind $ 4,262 $ 83,006
Grid   4,796     14,203
Total revenues 9,058 97,209
 
Cost of revenues   16,955     58,224
 
Gross profit   (7,897 )   38,985
 
Operating expenses:
Research and development 8,136 7,335
Selling, general and administrative 21,990 15,183
Amortization of acquisition related intangibles   304     386
Total operating expenses   30,430     22,904
 
Operating (loss) income (38,327 ) 16,081
 
Interest income, net 241 175
Other income, net   566     171
 
(Loss) income before income tax expense (37,520 ) 16,427
 
Income tax expense   159     7,257
 
Net (loss) income $ (37,679 ) $ 9,170
 
Net (loss) income per common share
Basic $ (0.74 ) $ 0.20
Diluted $ (0.74 ) $ 0.20
 
Weighted average number of common shares outstanding
Basic   50,709     45,242
Diluted   50,709     45,983
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
           
June 30, March 31, March 31,
2011 2011 2010
ASSETS
Current assets:
Cash and cash equivalents $ 130,885 $ 123,783 $ 87,594
Marketable securities 25,894 116,126 54,469
Accounts receivable, net 11,652 17,233 57,290
Inventory 31,068 25,828 35,858
Prepaid expenses and other current assets 39,073 30,785 20,294
Advance payment for planned acquisition 20,551 - -
Restricted cash 6,516 5,566 5,713
Deferred tax assets   484     484     1,776  
Total current assets 266,123 319,805 262,994
 
Property, plant and equipment, net 98,615 96,494 64,315
Goodwill - - 36,696
Intangibles, net 6,650 7,054 7,770
Marketable securities - - 7,342
Restricted cash 2,857 - -
Deferred tax assets 5,840 5,840 3,043
Other assets   13,577     12,016     18,024  
 
Total assets $ 393,662   $ 441,209   $ 400,184  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
Accounts payable and accrued expenses $ 66,395 $ 90,273 $ 84,319
Adverse purchase commitments 40,292 38,763 -
Line of credit 4,641 - -
Deferred revenue 13,676 10,304 19,970
Deferred tax liabilities   5,840     5,840     471  
Total current liabilities 130,844 145,180 104,760
 
Deferred revenue 2,063 2,181 13,302
Deferred tax liabilities 484 484 777
Other   530     509     380  
Total liabilities   133,921     148,354     119,219  
 
Stockholders' equity:
Common stock 509 507 448
Additional paid-in capital 889,394 885,704 698,417
Treasury stock (271 ) - -
Accumulated other comprehensive income (loss) 4,961 3,817 (7,011 )
Accumulated deficit   (634,852 )   (597,173 )   (410,889 )
Total stockholders' equity   259,741     292,855     280,965  
 
Total liabilities and stockholders' equity $ 393,662   $ 441,209   $ 400,184  
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
                   
Three months ended June 30, Year ended March 31,
2011 2010 2011 2010
Cash flows from operating activities:
Net (loss) income $ (37,679 ) $ 9,170 $ (186,284 ) $ 16,248
Adjustments to reconcile net (loss) income to net cash used in operations:
Depreciation and amortization 3,242 2,654 11,300 9,789
Stock-based compensation expense 3,466 3,578 13,443 13,632
Impairment of goodwill and long-lived assets - - 49,955 -
Provision for excess and obsolete inventory 413 - 63,882 -
Losses on purchase commitments 1,071 - 38,763 -
Allowance for doubtful accounts - 957 25 (523 )
Write-off of prepaid value added taxes - - 5,905 -
Deferred income taxes - 2,027 3,660 (2,717 )
Other non-cash items 827 320 2,345 1,155
Changes in operating asset and liability accounts:
Accounts receivable 670 (35,848 ) 63,175 (16,993 )
Inventory (5,324 ) (5,654 ) (51,942 ) (656 )
Prepaid expenses and other current assets (7,812 ) (1,616 ) (15,428 ) (10,051 )
Accounts payable and accrued expenses (19,732 ) (2,140 ) (222 ) 23,775
Deferred revenue   3,084     8,073     (21,398 )   7,021  
Net cash (used in) provided by operating activities   (57,774 )   (18,479 )   (22,821 )   40,680  
 
Cash flows from investing activities:
Net cash provided by (used in) investing activities   59,753     (41 )   (104,833 )   (39,996 )
 
Cash flows from financing activities:
Net cash provided by financing activities   4,376     561     163,058     19,003  
 
Effect of exchange rate changes on cash and cash equivalents   747     (4,791 )   785     (2,767 )
 
Net increase (decrease) in cash and cash equivalents 7,102 (22,750 ) 36,189 16,920
Cash and cash equivalents at beginning of period   123,783     87,594     87,594     70,674  
Cash and cash equivalents at end of period $ 130,885   $ 64,844   $ 123,783   $ 87,594  
 
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income
(In thousands, except per share data)
                 
Three months ended March 31, Year ended March 31,
2011 2010 2011 2010
Net (loss) income $ (185,135 ) $ 4,937 $ (186,284 ) $ 16,248
Goodwill and long-lived asset impairment 49,955 49,955 451
Provision for excess and obsolete inventory 61,216 63,882
Losses on purchase commitments 38,763 38,763
Write-off of prepaid value added taxes 5,355 5,905
Stock-based compensation 3,338 3,054 13,412 13,494
Amortization of acquisition-related intangibles 394 449 1,549 1,827
Tax effects       (90 )       (367 )
Non-GAAP net income (loss) $ (26,114 ) $ 8,350   $ (12,818 ) $ 31,653  
 
Non-GAAP (loss) earnings per share $ (0.52 ) $ 0.18   $ (0.27 ) $ 0.70  
Weighted average shares outstanding *   50,423     45,955     47,103     45,290  
 
* Diluted shares are used for periods where net income is generated.
 
Reconciliation of GAAP Net (Loss) Income to Non-GAAP Net (Loss) Income
(In thousands, except per share data)
       

Three months ended June 30,

2011 2010
Net (loss) income $ (37,679 ) $ 9,170
Stock-based compensation 3,466 3,499
Severance costs 2,066
Losses on purchase commitments 1,071
Amortization of acquisition-related intangibles 304 386
Tax effects       (83 )
Non-GAAP net (loss) income $ (30,772 ) $ 12,972  
 
Non-GAAP (loss) earnings per share $ (0.61 ) $ 0.28  
Weighted average shares outstanding *   50,709     45,983  
 
* Diluted shares are used for periods where net income is generated.
 
   

Reconciliation of Forecast GAAP Net Loss to Non-GAAP Net Loss for the Quarter Ended September 30, 2011

(In millions, except per share data)
 
 
Net loss $ (38.0 )
Amortization of acquisition-related intangibles 0.3
Stock-based compensation 2.5
Sinovel litigation expenses 5.2
Restructuring charges   3.0  
Tax effects   -  
Non-GAAP net loss $ (27.0 )
Non-GAAP net loss per share $ (0.53 )
Shares outstanding   50.9  
 

Note: Non-GAAP net income (loss) is defined by the company as net income (loss) before amortization of acquisition-related intangibles, restructuring and impairments, stock-based compensation, severance and other unusual charges, and any tax effects related to these items. The company believes non-GAAP net income (loss) assists management and investors in comparing the company’s performance across reporting periods on a consistent basis by excluding these non-cash or non-recurring charges that it does not believe are indicative of its core operating performance. The company also regards non-GAAP net income (loss) as a useful measure of operating performance and cash flow to complement operating income, net income (loss) and other GAAP financial performance measures. In addition, the company uses non-GAAP net (loss) income as a factor in evaluating management’s performance when determining incentive compensation and to evaluate the effectiveness of its business strategies.

Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP measures included in this release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP to GAAP net income is set forth in the table above.

Copyright Business Wire 2010
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