WESTBOROUGH, Mass., May 19, 2003 — American Superconductor Corp., an electricity solutions company, reported a net loss for fiscal 2003 of $87.6 million, or $4.21 per share.
Net revenues for fiscal 2003 increased 80 percent to a record $21.0 million from net revenues of $11.7 million for fiscal 2002. The net loss for fiscal 2003 was $87.6 million, or $4.21 per share, and includes non-cash charges totaling $45.3 million, or $2.18 per share for an asset impairment, an inventory write-down and an increase to the allowance for doubtful accounts.
The entire $45.3 million in non-cash charges was recorded in the fourth quarter of fiscal 2003. A year ago, the company recorded a net loss of $57.0 million, or $2.79 per share for fiscal 2002. For the fourth quarter, net revenues reached a record $10.9 million compared with $3.2 million for the fourth quarter of fiscal 2002.
The net loss for the quarter totaled $54.0 million, or $2.54 per share, including the non-cash charges, compared with a net loss of $27.9 million, or $1.36 per share, for the fourth quarter of fiscal 2002. American Superconductor ended fiscal 2003 with cash, cash equivalents and long-term investments of $20.0 million and no long-term debt. The company’s use of cash in the fourth quarter was $3.7 million.
Excluding the asset impairment, inventory write-down and increase to the allowance for doubtful accounts, American Superconductor’s pro forma net loss for fiscal 2003 was $42.4 million, or $2.03 per share, compared with $43.1 million, or $2.11 per share for fiscal 2002. For the fourth quarter of fiscal 2003, the pro forma loss was $8.7 million, or $0.41 per share, compared with a pro forma loss of $14.1 million or $0.69 per share for the fourth quarter of fiscal 2002.
The pro forma net loss for fiscal 2002 excludes charges for inventory write-down and doubtful accounts, restructuring charges and certain Pirelli license costs.
American Superconductor reported net loss and net loss per share for fiscal 2003 and fiscal 2002 both in accordance with Generally Accepted Accounting Principles (GAAP) and on a pro forma basis because it believes the pro forma presentation provides investors with a useful view of the company’s operating results by isolating special charges and describing the company’s performance without them.
A reconciliation of the reported pro forma net loss to the GAAP net loss appears in the financial tables of this news release on the company’s web site. “The fourth quarter and full year were records for American Superconductor in terms of revenues, orders and the build up in backlog,” said Chief Executive Officer Greg Yurek. “As of March 31, 2003, we had $78 million in backlog. Combined with new orders and contracts we booked in April, our April backlog climbed to $92 million, the highest level in the company’s history, providing us a strong base for revenue growth over the next couple of years. In fact, from this backlog, we expect to recognize $37 million in revenue in the fiscal year ending March 31, 2004 putting us on track to double revenue year-over-year.”
Yurek added that, based on the company’s current backlog and the cost-control measures implemented last year, American Superconductor expects to have between $5 million and $7 million in cash at the end of fiscal 2004 if no additional capital were to be raised.
He also stated that the company continues to explore multiple options to raise additional cash for working capital and to enable the scale-up of its lower cost, second generation high temperature superconductor (HTS) wire manufacturing technology.
“We are actively exploring a number of financing opportunities, which include potential strategic investments by corporations, potential private equity investors and several debt financing options,” Yurek said. “We are optimistic that we will be able to achieve an acceptable form and level of financing within the next 90 days.”
Commenting further on the company’s recent sales growth, Yurek said: “The orders and contracts we’ve received recently from Tennessee Valley Authority, the US Navy, Long Island Power Authority, Dupont, Northeast Utilities, and Rayburn Electric, among others, further validates our technologies and product lines, and opens a new chapter in the business growth story for AMSC.”
“We expect our SuperMachines and Power Electronic Systems businesses to be profitable and cash flow positive this fiscal year,” he added. “The AMSC Wires business unit will be a net user of cash as we continue to increase manufacturing yield from our new wire plant in its first year of operation, prime further demand for our wire products and invest in second generation wire technology.”
Yurek said he expects the company’s current HTS wire technology to be the industry standard over the next three to four years while its lower cost, second generation wire is being scaled up as a form-fit-function replacement. AMSC made rapid advances during the last fiscal year in the development of its second generation HTS wire technology, far exceeding near-term U.S. Department of Energy goals for second generation wire performance.
“AMSC has developed the highest performance, lowest cost HTS wire in the world and we have built the world’s first manufacturing plant to produce this wire in commercial volumes to meet immediate customer demand, which is beginning to accelerate,” Yurek said.
“We have also achieved breakthrough results for a much lower cost, second generation wire — results that have been so successful that we are currently exploring financing alternatives to fund the scale-up of our second generation wire technology.”
Contingent on obtaining financing and continued research and development successes, American Superconductor plans to transition over the next three to four years from its first generation wire to manufacturing a lower cost, second generation HTS wire in its Devens, Mass. wire manufacturing plant.
The $45.3 million in non-cash charges recorded in the fourth quarter included $39.2 million, or $1.88 per share, recorded as an impairment charge tied to the company’s decision to transition to its second generation HTS wire manufacturing methodology, in accordance with GAAP.
The future effect of the non-cash impairment charge will be a decrease in depreciation and amortization of wire manufacturing property, plant and equipment by $2.4 million annually over the next six years and a corresponding increase in earnings before interest and taxes beginning in the current fiscal year, according to company estimates.
Regarding the other non-cash charges recorded during the fourth quarter, American Superconductor decided to take an inventory write-down charge equal to the $3.4 million value of remaining low temperature superconductor storage devices. This equipment is a component of its integrated power electronic systems product line and is used for applications that require real energy to address power reliability and quality issues.
While the company will continue to offer and physically maintain these storage devices, none of its sales of integrated power electronic systems during fiscal 2003 included such storage devices.
Separately, the company elected to increase its allowance for doubtful accounts to cover $2.6 million in accounts receivable on its balance sheet. The company will continue its efforts to collect this receivable.
More information: http://www.amsuper.com/investors/index.html.
About American Superconductor Corp.
American Superconductor develops solutions and manufactures products to dramatically improve the cost, efficiency and reliability of systems that generate, deliver and use electric power. The company has a vertically integrated portfolio of products supported by more than 500 patents, patent applications, and licenses covering technologies fundamental to Revolutionizing the Way the World Uses Electricityà¢â€ž-.
Products from AMSC include High Temperature Superconductor wire for electric power, transportation, medical and industrial processing applications; HTS motors and generators for ship propulsion; and advanced power electronic systems that ensure the quality and reliability of electricity for residential, commercial and industrial customers. More information is available at www.amsuper.com .