SEC Filing | AMSC

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarter Ended: June 30, 1999 Commission File Number 0-19672 ------------- American Superconductor Corporation ----------------------------------- (Exact name of registrant as specified in its charter) Delaware 04-2959321 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer organization or incorporation) Identification Number) Two Technology Drive Westborough, Massachusetts 01581 -------------------------------- (Address of principal executive offices, including zip code) (508) 836-4200 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $.01 per share 15,446,216 - -------------------------------------- --------------------------------- Class Outstanding as of August 13, 1999

AMERICAN SUPERCONDUCTOR CORPORATION INDEX ----- Page No. ---------- Part I - Financial Information Item 1. Financial Statements Consolidated Balance Sheets June 30, 1999 and March 31, 1999 3 Consolidated Statements of Operations for the three months ended June 30, 1999 and 1998 4 Consolidated Statements of Cash Flows for the three months ended June 30, 1999 and 1998 5 Notes to Interim Consolidated Financial Statements 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-14 Item 3. Quantitative and Qualitative Disclosure about Market Risk Part II - Other Information 15 Signatures 16 2

AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED BALANCE SHEETS June 30, March 31, 1999 1999 ----------- ----------- (unaudited) ASSETS Current assets: Cash and cash equivalents $20,290,780 $24,969,142 Accounts receivable 4,131,545 4,099,211 Inventory 5,893,428 5,024,552 Prepaid expenses and other current assets 382,225 538,485 ----------- ----------- Total current assets 30,697,978 34,631,390 Property and equipment: Equipment 15,900,623 15,159,313 Furniture and fixtures 1,315,206 1,243,894 Leasehold improvements 2,667,441 2,657,188 ----------- ----------- 19,883,270 19,060,395 Less: accumulated depreciation (13,411,404) (12,945,765) ----------- ----------- Property and equipment, net 6,471,866 6,114,630 Long-term marketable securities 6,754,235 6,602,829 Net investment in sales-type lease 279,110 287,110 Other assets 593,819 494,344 ----------- ----------- Total assets $44,797,008 $48,130,303 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $4,118,773 $4,171,948 Deferred revenue 1,259,883 - ----------- ----------- Total current liabilities 5,378,656 4,171,948 Commitments Stockholders' equity: Common stock, $.01 par value Authorized shares-50,000,000; issued and outstanding - 15,418,797 and 15,378,656 at June 30, 1999 and March 31, 1999, respectively 154,188 153,787 Additional paid-in capital 134,425,925 134,030,618 Deferred warrant costs (923,181) (1,018,391) Accumulated other comprehensive income (loss) (26,535) 10,392 Accumulated deficit (94,212,045) (89,218,051) ----------- ----------- Total stockholders' equity 39,418,352 43,958,355 ----------- ----------- Total liabilities and stockholders' equity $44,797,008 $48,130,303 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. 3

AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, -------------------------- 1999 1998 ---- ---- Revenues: Contract revenue $ 2,136,462 $ 2,228,386 Product sales and prototype development contracts 111,111 131,536 Rental/other revenue 22,563 22,569 ----------- ----------- Total revenues 2,270,136 2,382,491 Costs and expenses: Costs of revenue 2,272,944 2,700,610 Research and development 3,286,078 2,629,632 Selling, general and administrative 2,044,464 1,503,861 ----------- ----------- Total costs and expenses 7,603,486 6,834,103 Interest income 339,440 496,074 Interest expense 0 (9,827) Other income (expense), net (84) 3,245 ----------- ----------- Net loss $(4,993,994) $(3,962,120) =========== =========== Net loss per common share Basic $ (0.32) $ (0.27) =========== =========== Diluted $ (0.32) $ (0.27) =========== =========== Weighted average number of common shares outstanding Basic 15,392,981 14,450,488 =========== =========== Diluted 15,392,981 14,450,488 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. 4

AMERICAN SUPERCONDUCTOR CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended June 30, ---------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $ (4,993,994) $ (3,962,120) Adjustments to reconcile net loss to net cash used by operations: Depreciation and amortization 465,639 480,398 Deferred warrant costs 108,644 80,455 Stock compensation expense 19,209 130,625 Changes in operating asset and liability accounts : Accounts receivable (32,334) (1,696,441) Inventory (868,876) (752,272) Prepaid expenses and other current assets 156,260 (122,351) Accounts payable and accrued expenses (53,175) (448,540) Deferred revenue 1,259,883 (99,640) -------------- --------------- Total adjustments 1,055,250 (2,427,766) Net cash used by operating activities (3,938,744) (6,389,886) Cash flows from investing activities: Purchase of property and equipment (net) (829,927) (500,688) Purchase of long-term marketable securities (181,281) (31,214) Net investment in sales-type lease 8,000 21,000 Increase in other assets (99,475) (102,620) -------------- --------------- Net cash used in investing activities (1,102,683) (613,522) Cash flows from financing activities: Payments on notes payable - (29,609) Payments on long-term debt - (3,141,793) Net proceeds from issuance of common stock 363,065 45,833,307 -------------- --------------- Net cash provided by financing activities 363,065 42,661,905 Net increase (decrease) in cash and cash equivalents (4,678,362) 35,658,497 Cash and cash equivalents at beginning of period 24,969,142 1,842,142 -------------- --------------- Cash and cash equivalents at end of period $ 20,290,780 $ 37,500,639 ============== =============== Supplemental schedule of cash flow information: Cash paid for interest $ - $ 119,789 Noncash issuance of common stock $ 19,209 $ 130,625 The accompanying notes are an integral part of the consolidated financial statements. 5

AMERICAN SUPERCONDUCTOR CORPORATION NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1. NATURE OF BUSINESS: ------------------- American Superconductor Corporation (the "Company"), which was formed on April 9, 1987, develops and commercializes high temperature superconducting ("HTS") wire, wire products and systems, including current leads, multistrand conductors, electromagnetic coils, and electromagnets and subsystems comprising electromagnetics integrated with appropriate cooling systems. The focus of the Company's development and commercialization efforts is on electrical equipment for use by electric utilities and industrial users of electrical power. For large-scale applications, the Company's development efforts are focused on power transmission cables, motors, transformers, generators and fault current limiters. In the area of industrial power quality and transmission network power quality, the Company is focused on marketing and selling commercial low temperature superconducting magnetic energy storage ("SMES") devices, on development and commercialization of new SMES products, and on development of power electronic subsystems and engineering services. The Company operates in two business segments. The Company derives a substantial portion of its revenue from research and development contracts. A significant portion of this contract revenue relates to development contracts with Pirelli Cavi E Sistemi S.p.A. and Electricite de France who (through affiliated companies) are stockholders of the Company. Included in costs of revenue are research and development expenses related to externally funded development contracts of approximately $1,421,000 and $1,624,000 for the three months ended June 30, 1999 and 1998, respectively. Selling, general and administrative expenses in the amounts of approximately $737,000 and $717,000 were included as costs of revenue for the three months ended June 30, 1999 and 1998, respectively. 2. BASIS OF PRESENTATION: ---------------------- The accompanying consolidated financial statements are unaudited, except for those dated as of March 31, 1999, and have been prepared in accordance with generally accepted accounting principles. Certain information and footnote disclosure normally included in the Company's annual consolidated financial statements have been condensed or omitted. The interim consolidated financial statements, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results for the interim periods ended June 30, 1999 and 1998 and the financial position at June 30, 1999. The results of operations for the interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. It is suggested that these interim consolidated financial statements be read in conjunction with the audited consolidated financial statements for the year ended March 31, 1999 which are contained in the Company's Annual Report on Form 10-K covering the year ended March 31, 1999. Certain prior year amounts have been reclassified to be consistent with current year presentation. 6

AMERICAN SUPERCONDUCTOR CORPORATION NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 3. NET LOSS PER COMMON SHARE: -------------------------- The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" effective December 28, 1997. SFAS No. 128 requires presentation of basic earnings per share ("EPS") and, for companies with complex capital structures, diluted EPS. Basic EPS excludes dilution and is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS includes dilution and is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares include the effect of the exercise of stock options. For the three months ended June 30, 1999 and 1998, common equivalent shares of 615,515 and 449,129 were not included for the calculation of diluted EPS as they were considered antidilutive. 4. COST-SHARING AGREEMENTS: ----------------------- The Company received funding under a government cost-sharing agreement with the Department of Energy of approximately $629,000 and $538,000, for the three months ended June 30, 1999 and 1998, respectively. This funding was used to directly offset research and development and selling, general and administrative expenses. 5. COMPREHENSIVE LOSS: ------------------ The Company has adopted Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income", which requires that an entity include in total comprehensive income certain amounts which were previously recorded directly to stockholders' equity. The Company's comprehensive loss was as follows: Three Months Ended June 30 -------------------------- 1999 1998 ---- ---- Net loss $(4,993,994) $(3,962,120) Other comprehensive income (loss) (36,927) 5,226 ----------- ----------- Total comprehensive loss $(5,030,921) $(3,956,894) =========== =========== Other comprehensive income represents changes in foreign currency translation and unrealized gains and losses on investments. 7

AMERICAN SUPERCONDUCTOR CORPORATION NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 6. BUSINESS SEGMENT INFORMATION: ----------------------------- The Company adopted Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("FAS 131"), as of March 31, 1999. Prior year information was restated in conformity with this accounting standard. The Company has two reportable business segments as defined by FAS 131--High Temperature Superconducting ("HTS") business segment, and the Superconducting Magnetic Energy Storage ("SMES") segment. The HTS business segment develops and commercializes HTS wire, wire products and systems. The focus of this segment's development efforts is on HTS wire for power transmission cables, motors, transformers, generators and fault current limiters for large-scale applications. The SMES business segment is focused on marketing and selling commercial low temperature SMES devices, on development and commercialization of new SMES products, and on development of power electronic subsystems and engineering services for industrial power quality and transmission network reliability applications. The operating segment results for the HTS and SMES business segments were as follows: NET SALES - --------- For the three months ended June 30 1999 1998 ---- ---- HTS $ 1,981,242 $ 2,359,922 SMES 288,894 22,569 ------------ ------------- Total $ 2,270,136 $ 2,382,491 ============ ============= OPERATING INCOME (LOSS) - ----------------------- For the three months ended June 30 1999 1998 ---- ---- HTS $ (3,658,546) $ (3,230,302) SMES (1,674,804) (1,221,310) ------------ ------------- Total $ (5,333,350) $ (4,451,612) ============= ============= The segment assets for the HTS and SMES business segments were as follows: June 30, 1999 March 31, 1999 ------------- -------------- HTS $ 37,651,998 $ 42,288,549 SMES 7,145,010 5,841,754 ------------ ------------- Total $ 44,797,008 $ 48,130,303 ============ ============= The accounting policies of the business segments are the same as those described in Note 2. 8

AMERICAN SUPERCONDUCTOR CORPORATION NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED 7. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: ------------------------------------------------------------ In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities". The Statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. Statement 133 is effective for fiscal years beginning after June 15, 2000. A company may also implement the Statement as of the beginning of any fiscal quarter after issuance. Statement 133 cannot be applied retroactively. Statement 133 must be applied to (a) derivative instruments and (b) certain derivative instruments embedded in hybrid contracts that were issued, acquired or substantively modified after December 31, 1997 (and, at the company's election, before January 1, 1998). The Company's management believes the impact of adopting Statement 133 on its financial statements will be immaterial. 9

AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 RESULTS OF OPERATIONS - --------------------- American Superconductor Corporation's revenues during the three months ended June 30, 1999 were $2,270,000 compared to $2,382,000 for the same period a year earlier. The HTS business segment revenues decreased $378,000. This decrease was primarily a result of a planned reduction in funding under the Company's four- year development contract with Pirelli. The decrease in HTS revenues was partially offset by higher SMES development contract revenues of $266,000. For the three months ended June 30, 1999, the Company also recorded funding of $629,000 under government cost-sharing agreements with the Department of Energy ("DOE"). Funding under these cost-sharing agreements for the three months ended June 30, 1998 was $538,000. The Company anticipates that a portion of its funding in the future will continue to come from cost-sharing agreements as the Company continues to develop joint programs with government agencies. Funding from government cost-sharing agreements is recorded as an offset to research and development and selling, general and administrative expenses, as required by government contract accounting guidelines, rather than as revenues. The Company's total costs and expenses for the three months ended June 30, 1999 were $7,603,000, compared to $6,834,000 for the same period last year. This increase reflects a continued increase in research and development expenses and higher marketing expenses. Adjusted research and development ("R&D") expenses, which include amounts classified as costs of revenue and amounts offset by cost sharing funding, increased to $5,031,000 in the first quarter from $4,531,000 a year earlier. This increase was due to the continued scale-up of the Company's internal research and development activities including the hiring of additional personnel and the purchases of materials and equipment. A portion of the R&D expenditures related to externally funded development contracts has been classified as costs of revenue (rather than as R&D expenses). These R&D expenditures that were included as costs of revenue during the first quarter of fiscal years 2000 and 1999 were $1,421,000 and $1,624,000, respectively. Additionally, R&D expenses that were offset by cost sharing funding were $324,000 and $277,000 in the first quarter of fiscal years 2000 and 1999, respectively. Net R&D expenses (exclusive of amounts classified as costs of revenue and amounts offset by cost sharing funding) increased to $3,286,000 in the three months ending June 30, 1999 from $2,630,000 for the same period last year. Adjusted selling, general and administrative ("SG&A") expenses, which include amounts classified as costs of revenue and amounts offset by cost sharing funding, were $3,086,000 for the quarter ended June 30, 1999 compared to $2,482,000 for the same period the prior year. This increase was primarily due to the hiring of additional personnel and related expenses incurred to 10

AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 support future planned growth and increased marketing activities, primarily in the SMES business unit. The SG&A amounts offset by cost-sharing funding were $305,000 and $261,000 in the first quarter of fiscal years 2000 and 1999, respectively. In addition, certain SG&A expenditures related to externally funded development contracts have been classified as costs of revenue (rather than as SG&A expenses). Such indirect costs included in costs of revenue during the three-month period ended June 30, 1999 were $737,000 compared to $717,000 for the same period last year. Net SG&A expenditures (exclusive of amounts classified as costs of revenue and amounts offset by cost share funding) increased to $2,044,000 for the three months ended June 30, 1999 compared to $1,504,000 for the same period the prior year. Interest income was $339,000 in the quarter ended June 30, 1999 compared to $496,000 for the same period in the previous year. This decrease primarily reflects the reduced cash balances available for investment as a result of cash being used to fund the Company's operations and purchase capital equipment. Interest expense was $0 in the quarter ended June 30, 1999, compared to $10,000 for the same period in the previous year. This decrease reflects the Company's retirement of all long-term debt in the quarter ended June 30, 1998. The Company expects to continue to incur operating losses for at least the next few years, as it continues to devote significant financial resources to its research and development activities and commercialization efforts. The Company expects to be party to agreements which, from time to time, may result in costs incurred exceeding expected revenues under such contracts. The Company may enter into such agreements for a variety of reasons including, but not limited to, entering new product application areas, furthering the development of key technologies, and advancing the demonstration of commercial prototypes in critical market applications. Please refer to the "Future Operating Results" section of the Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1999 for a discussion of certain factors that may affect the Company's future results of operation and financial condition. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At June 30, 1999, the Company had cash, cash equivalents and long-term marketable securities of $27,045,000 compared to $31,572,000 at March 31, 1999. The principal uses of cash during the quarter ended June 30, 1999 were the funding of the Company's operations and the acquisition of capital equipment, primarily for research and development and manufacturing. The Company believes that several years of further development will be necessary before HTS wires 11

AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 and related products are available in significant quantities for commercial power applications. The Company believes, based on its current business plan, that its current cash and marketable securities should be sufficient to fund the Company's operations through the end of fiscal year 2001. However, the Company may need additional funds sooner than anticipated if the Company's performance deviates significantly from its current business plan or there are significant changes in competitive or other market factors. There can be no assurance that such funds, whether from equity or debt financing, development contracts or other sources, will be available, or available under terms acceptable to the Company. To date, inflation has not had a material impact on the Company's financial results. YEAR 2000 ISSUES - ---------------- The Company is currently addressing a universal problem commonly referred to as "Year 2000 Compliance," which relates to the ability of computer programs and systems to properly recognize and process date sensitive information before and after January 1, 2000. Many computer programs and systems recognize dates using two-digit year data (rather than four-digit data), and therefore may be unable to determine the correct century for the year. Failure to properly recognize and process date information may cause such programs and systems to fail to operate or to operate with erroneous results. The Company has analyzed and continues to analyze its internal information technology ("IT") systems ("IT systems") to identify any computer programs that are not Year 2000 compliant and implement any changes required to make such systems Year 2000 compliant. The Company believes that its critical IT systems currently are capable of functioning without substantial Year 2000 compliance problems. The Company has identified only a few non-critical, but important, IT systems that must be replaced due to Year 2000 concerns, and the Company already has plans to replace these IT systems with Year 2000 compliant systems providing increased functionality. The Company believes such IT systems will be Year 2000 capable in a time frame that will avoid any material adverse effect on the Company. Also, the Company does not believe that the expenditures related to replacing or upgrading any of its IT systems to make them Year 2000 compliant will have a material adverse effect on the operating results or financial condition of the Company. The Company has evaluated its critical equipment and critical systems that contain embedded software and the Company believes that all of its critical Non-IT systems are capable of functioning without substantial Year 2000 compliance problems. A substantial portion of the current products being developed, manufactured and/or sold by the Company (e.g. HTS wire and related products) contain no computer programs and as such pose no significant Year 2000 compliance concerns. The SMES business unit has previously manufactured several SMES units that contain computer systems that may be susceptible to Year 2000 compliance problems. The Company is in the process of upgrading and testing these 12

AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 systems to insure Year 2000 compliance, and believes that all changes will be in place in the third calendar quarter of 1999 on all these previously sold units. SMES units that are currently being manufactured have computer systems that are Year 2000 compliant. However, the Company's products are often used by its customers in systems that contain third party products. Therefore, even though the Company's current products may be Year 2000 compliant, the failure of such third party products to be Year 2000 compliant, or to properly interface with the Company's current products, may result in a system failure. The Company is investigating each of its significant vendors, suppliers, financial service organizations, service providers and customers to confirm that the Company's operations will not be materially adversely affected by the failure of any such third party to have Year 2000 compliant computer programs. This is being undertaken by a process that includes questionnaires, interviews, on-site visits and other available means. The Company expects to complete this process by the end of the third calendar quarter of 1999. Regardless of the responses that the Company receives from such third parties, the Company is establishing contingency plans to reduce the Company's exposure resulting from the non-compliance of third parties. First, the Company plans to build inventories of critical and/or important components prior to January 1, 2000, and thereby decrease the Company's dependence on suppliers that are not Year 2000 compliant. Second, the Company plans to review delivery schedules with its major customers, commencing in the third calendar quarter of 1999. Such review should enable customers to accept ordered products after January 1, 2000, even if their internal computer systems are not operating properly. The Company estimates that, through June 30, 1999, it has spent less than $75,000 to remediate Year 2000 issues in its IT systems, and the Company estimates that it will spend less than an additional $75,000 to remediate Year 2000 issues in its IT systems. Additionally, the Company accelerated into fiscal 1999 the planned replacement of its E-mail software, and is currently implementing the planned replacement of its financial systems software to avoid potential Year 2000 problems. For the development and deployment of SMES system computer upgrades to remedy Year 2000 problems, the Company has spent, through June 30, 1999, approximately $25,000 and estimates it will spend an additional $10,000 to complete deployment and testing of these upgrades. All of such expenditures are included in the budgets of the various departments of the Company tasked with various aspects of the Year 2000 project. No IT projects have been deferred due to the Company's Year 2000 efforts. Finally, the Company is in the process of developing contingency plans to be implemented as part of its efforts to identify and correct any Year 2000 compliance problems. Such plans are expected to be completed by the end of the third calendar quarter of 1999. 13

AMERICAN SUPERCONDUCTOR CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 The Company does not currently believe that any of the foregoing will have a material adverse effect on its financial condition or its results of operations. However, the process of evaluating the Company's products and third party products and systems is ongoing. Although not expected, failures of critical suppliers, critical customers, critical IT systems, critical non-IT systems, or products sold by the Company (including any delay in the deployment of SMES computer program upgrades) could have a material adverse effect on the Company's financial condition or results of operations. Year 2000 Compliance has many issues and aspects, not all of which the Company is able to accurately forecast or predict. There is no way to assure that Year 2000 Compliance will not have adverse effects on the Company, some of which could be material. Many of the Company's statements related to Year 2000 are forward-looking statements and actual results could differ materially from those anticipated above. Item 3. Quantitative and Qualitative Disclosure about Market Risk --------------------------------------------------------- There were no material changes in the Company's exposure to market risk from March 31, 1999. 14

AMERICAN SUPERCONDUCTOR CORPORATION PART II OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- None Item 3. Defaults Upon Senior Securities ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibit 27.1 Financial Data Schedule 15

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN SUPERCONDUCTOR CORPORATION August 13, 1999 /s/ Gregory J. Yurek - ------------------------------------ ------------------------------------ Date Gregory J. Yurek Chairman of the Board, President and Chief Executive Officer August 13, 1999 /s/ Thomas M. Rosa - ------------------------------------ ------------------------------------- Date Thomas M. Rosa Chief Accounting Officer, Corporate Controller and Assistant Secretary 16

5 1,000 3-MOS MAR-31-2000 APR-01-1999 JUN-30-1999 20,291 6,754 4,132 0 5,893 30,698 19,883 (13,411) 44,797 5,379 0 0 0 154 39,264 44,797 111 2,270 108 2,273 5,331 0 0 (4,994) 0 (4,994) 0 0 0 (4,994) (0.32) (0.32)