Westborough, Mass. (PRNewswire-FirstCall) American Superconductor Corporation, a global supplier of superconductor products and power electronic converters for the electric power industry, today announced a series of restructuring, consolidation and cost-cutting measures that will create a more streamlined and flatter organization aimed at reducing the cost structure of the company as it drives to commercialize its technology and products.
“The restructuring of the company we are announcing today dramatically shifts our focus from that of a research-oriented company to one focused on commercial products while significantly reducing our cost of doing business,” said Greg Yurek, chief executive officer of American Superconductor. “These changes are a logical next step in the evolution of our company and they result in a significant reduction in our rate of cash burn.”
The total restructuring and other one-time charges will be approximately $9 to $11 million, consisting of severance costs related to a reduction-in- force of 25 percent of the company’s employees, non-cash charges related to reserves for potential excess inventory, and facility and equipment write- offs. The cash cost to the company of the restructuring is approximately $2 million, which will be paid out over the next 12 months and will be offset by cost savings, primarily in cash, of approximately $9 million over this 12- month period. The costs of the restructuring, which has been fully implemented, and other one-time charges, will be taken entirely within the company’s fourth quarter ending March 31, 2002. The impact on a loss per share basis will be about $0.44 to $0.54 for both the quarter and the year ending March 31, 2002. The company expects to have approximately $69 million in cash and cash equivalents on April 1, 2002.
The restructuring includes combining the company’s Power Quality and Reliability business unit, based in Middleton, Wisconsin, with its Power Electronics business unit, based in New Berlin, Wisconsin. This change leverages personnel with similar skills in the two business units and significantly reduces the cost structure. The new business unit, AMSC Power Electronic Systems, will be led by Chuck Stankiewicz, former general manager of the Power Quality and Reliability business unit, who will now report to Yurek.
The new Power Electronic Systems business unit will continue to serve AMSC’s utility and industrial customers with its power-electronics-based superconducting magnetic energy storage (SMES) products, which will remain a co-branded product in the US with GE Industrial Systems. It will also continue to develop its next power electronic converter product, the PowerModuleà¢â€ž- PM-1000, and it will continue development of high-power- density power converters under one of the company’s two new Office of Naval Research contracts.
Additionally, the company has reprioritized research and product development programs within its HTS business to lower its cost structure as it drives to shorten the time to achieve profitability.
The HTS business unit will continue to focus on qualifying and starting up its new HTS wire manufacturing plant, and on research focused on reducing the cost of manufacturing HTS wires through productivity and product performance gains and through the use of new wire architectures.
“Based on our many years of world- research on HTS wire-making technologies, we are now in a position to focus our wire R&D on those technologies that we believe have the most promise to increase our productivity and to achieve profitability in the future,” said Yurek. “We have also focused our HTS motors and generators product development efforts on ship propulsion systems, leveraging our new $8 million contract from the U.S. Navy to build and demonstrate the first HTS ship propulsion motor next year.”
As a result of the restructuring, the company will implement a reduction- in-force of approximately 100 employees, or 25 percent of its worldwide fulltime workforce. Employees affected by the reduction-in-force came from all levels of the company, including seven senior-level managers, two being officers of the company, Roland Lefebvre, executive vice president and chief operating officer, and Chester Lyons, vice president for corporate strategic marketing.
“The reduction-in-force was necessary to bring our cost structure more in line with our goals for achieving profitability,” continued Yurek. “We are also driving more of the day-to-day decision-making into the business units where the P&L responsibility lies. As a result we have made significant changes in the way we are organized.”
Yurek pointed out that the general managers of the three business units, HTS Wires, Electric Motors and Generators and Power Electronic Systems will now report directly to him. Others reporting to Yurek are the chief financial officer, the chief technology officer, the chief administrative officer and the vice president for corporate communications. Background information on the new senior management of the company can be viewed at http://www.amsuper.com/manage.htm.