<PAGE>
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, 2000 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 20,096,596
-------------------------------------- --------------------------------
Class Outstanding as of August 8, 2000
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
INDEX
Page No.
--------
Part I - Financial Information
Consolidated Balance Sheets
June 30, 2000 (unaudited) and March 31, 2000 3
Consolidated Statements of Operations
for the three months ended
June 30, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows
for the three months ended
June 30, 2000 and 1999 (unaudited) 5
Notes to Interim Consolidated Financial Statements 6-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
Part II - Other Information 14
Signatures 15
2
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
------------- -------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 56,757,779 $ 126,917,768
Accounts receivable 8,455,572 7,317,009
Inventory 10,844,310 9,246,950
Prepaid expenses and other current assets 890,823 809,129
------------- -------------
Total current assets 76,948,484 144,290,856
Property and equipment:
Equipment 23,798,137 20,300,734
Furniture and fixtures 1,690,891 1,670,029
Leasehold improvements 3,006,814 3,006,814
------------- -------------
28,495,842 24,977,577
Less: accumulated depreciation (15,898,564) (15,199,346)
------------- -------------
Property and equipment, net 12,597,278 9,778,231
Long-term marketable securities 153,289,860 91,737,449
Long-term accounts receivable 1,625,000 1,750,000
Net investment in sales-type lease 279,110 279,110
Goodwill 1,307,127 --
Other assets 1,318,111 1,078,610
------------- -------------
Total assets $ 247,364,970 $ 248,914,256
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $6,182,968 $6,339,023
Deferred revenue 30,000 371,250
------------- -------------
Total current liabilities 6,212,968 6,710,273
Long-term deferred revenue 1,259,883 1,259,883
Commitments
Stockholders' equity:
Common stock, $.01 par value
Authorized shares-50,000,000; issued and outstanding
- 19,964,344 and 19,734,714 at June 30, 2000 and
March 31, 2000, respectively 199,643 197,347
Additional paid-in capital 352,367,359 348,903,034
Deferred compensation (503,816) (530,333)
Deferred warrant costs (562,245) (637,552)
Accumulated other comprehensive income (loss) (336,163) (172,515)
Accumulated deficit (111,272,659) (106,815,881)
------------- -------------
Total stockholders' equity 239,892,119 240,944,100
------------- -------------
Total liabilities and stockholders' equity $ 247,364,970 $ 248,914,256
============= =============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
3
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
------------------
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
-------------- --------------
<S> <C> <C>
Revenues:
Contract revenue $ 700,432 $ 2,136,462
Product sales and prototype
development contracts 3,198,454 111,111
Rental/other revenue 25,452 22,563
-------------- --------------
Total revenues 3,924,338 2,270,136
Costs and expenses:
Costs of revenue 3,618,572 2,272,944
Research and development 5,307,343 3,286,078
Selling, general and
administrative 2,954,871 2,044,464
-------------- --------------
Total costs and expenses 11,880,786 7,603,486
Interest income 3,494,423 339,440
Other income (expense), net 5,247 (84)
-------------- --------------
Net loss $ (4,456,778) $ (4,993,994)
============== ==============
Net loss per common share
Basic $ (0.22) $ (0.32)
============== ==============
Diluted $ (0.22) $ (0.32)
============== ==============
Weighted average number of common shares outstanding
Basic 19,885,363 15,392,981
============== ==============
Diluted 19,885,363 15,392,981
============== ==============
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
4
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
2000 1999
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (4,456,778) $ (4,993,994)
Adjustments to reconcile net loss to net cash used by operations:
Depreciation and amortization 721,373 465,639
Deferred compensation expense 26,517 --
Deferred warrant costs 88,629 108,644
Stock compensation expense 52,057 19,209
Changes in operating asset and liability accounts
(net of effect of acquisition):
Accounts receivable (961,285) (32,334)
Inventory (1,337,380) (868,876)
Prepaid expenses and other current assets (81,694) 156,260
Accounts payable and accrued expenses (156,055) (53,175)
Deferred revenue - current and long-term (341,250) 1,259,883
-------------- ---------------
Total adjustments (1,989,088) 1,055,250
Net cash used by operating activities (6,445,866) (3,938,744)
Cash flows from investing activities:
Purchase of property and equipment (net) (3,326,844) (829,927)
Purchase of long-term marketable securities (61,715,895) (181,281)
Purchase of assets of Integrated Electronics, LLC (755,000)
Net investment in sales-type lease -- 8,000
Increase in other assets (239,501) (99,475)
-------------- ---------------
Net cash used in investing activities (66,037,240) (1,102,683)
Cash flows from financing activities:
Net proceeds from issuance of common stock 2,323,117 363,065
-------------- ---------------
Net cash provided by financing activities 2,323,117 363,065
Net increase (decrease) in cash and cash equivalents (70,159,989) (4,678,362)
Cash and cash equivalents at beginning of period 126,917,768 24,969,142
-------------- ---------------
Cash and cash equivalents at end of period $ 56,757,779 $ 20,290,780
============== ===============
Supplemental schedule of cash flow information:
Noncash issuance of common stock $ 1,156,699 $ 19,209
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
5
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF THE BUSINESS:
American Superconductor Corporation (the "Company"), which was formed on April
9, 1987, is a world leader in developing and manufacturing products using
superconducting materials and power electronic devices for electric power
applications. 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 high temperature superconducting
("HTS") power transmission cables, motors, generators and transformers. In
the area of industrial power quality and transmission network power
reliability, the Company is focused on marketing and selling low temperature
superconducting magnetic energy storage ("SMES") devices and on development
and commercialization of new SMES products. 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 a development contract with Pirelli Cables and Systems ("Pirelli"), who
(through an affiliated company) is a stockholder of the Company.
Included in costs of revenue are research and development expenses related to
externally funded development contracts of approximately $1,339,000 and
$1,421,000 for the three months ended June 30, 2000 and 1999, respectively.
Selling, general and administrative expenses included as costs of revenue were
approximately $440,000 and $737,000 for the three months ended June 30, 2000
and 1999, respectively.
2. BASIS OF PRESENTATION:
The accompanying consolidated financial statements are unaudited, except for
those dated as of March 31, 2000, and have been prepared in accordance with
generally accepted accounting principles. Certain information and footnote
disclosure normally included in our 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, 2000 and 1999, and the financial
position at June 30, 2000.
The results of operations for the interim periods 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, 2000 which are contained in our Annual Report on Form 10-K
covering the year ended March 31, 2000.
On June 1, 2000, we acquired substantially all of the assets of Integrated
Electronics, LLC ("IE"). The IE acquisition was accounted for under the
purchase method of accounting. Goodwill of $1,329,282 represented the excess
of the purchase price of $1,833,125 over the fair value of the acquired assets
of $503,843 at June 1, 2000. The purchase price consisted of cash paid to IE
of $675,000, miscellaneous transaction costs of $80,000, and the value of
6
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
37,500 shares of our common stock at June 1, 2000 of $1,078,125. The fair
value of the assets acquired were accounts receivable of $52,278, inventory of
$259,980, and fixed assets of $191,585. These asset purchases are included
under "Purchase of assets of Integrated Electronics, LLC" in the Consolidated
Statements of Cash Flows for the period ended June 30, 2000 and thus are
excluded from the "Changes in operating asset and liability accounts" section
of the Consolidated Statements of Cash Flows.
Certain prior year amounts have been reclassified to be consistent with
current year presentation.
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, 2000 and 1999, common equivalent shares of
1,881,232 and 615,515 were not included for the calculation of diluted EPS as
they were considered antidilutive.
4. COST-SHARING AGREEMENTS:
The Company received funding under government cost-sharing agreements with the
Department of Energy of approximately $194,000 and $629,000, for the three
months ended June 30, 2000 and 1999, respectively. This funding was used to
directly offset research and development and selling, general and
administrative expenses.
5. COMPREHENSIVE LOSS:
The Company has adopted SFAS 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
----------------------------
2000 1999
---- ----
Net loss $(4,456,778) $(4,993,994)
Other comprehensive income (163,648) (36,927)
----------- -----------
Total comprehensive loss $(4,620,426) $(5,030,921)
============ ===========
Other comprehensive income represents changes in foreign currency translation
and unrealized gains and losses on investments.
7
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. BUSINESS SEGMENT INFORMATION:
The Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information" ("FAS 131"), as of March 31, 1999. 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") business 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:
<TABLE>
<CAPTION>
Three Months Ended June 30
--------------------------
<S> <C> <C>
REVENUES 2000 1999
----------- -----------
HTS $ 1,780,733 $ 1,981,242
SMES 2,143,605 288,894
----------- -----------
Total $ 3,924,338 $ 2,270,136
=========== ===========
OPERATING INCOME (LOSS)
HTS $(5,928,958) $(3,371,546)
SMES (1,692,490) (1,674,804)
----------- -----------
Total $(7,621,448) $(5,046,350)
=========== ===========
</TABLE>
The segment assets for the HTS and SMES business segments were as follows:
<TABLE>
<CAPTION>
June 30, 2000 March 31, 2000
------------------ ---------------------
<S> <C> <C>
HTS $228,622,670 $235,028,266
SMES 18,742,300 13,885,990
------------ ------------
Total $247,364,970 $248,914,256
============ ============
</TABLE>
The accounting policies of the business segments are the same as those described
in Note 2, except that certain corporate expenses which we do not believe are
specifically attributable or allocable to either business segment have been
excluded from the segment operating losses.
8
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") 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 instrument'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, as amended by Statement 138, effective July 1, 2000, is effective
for fiscal years beginning after June 15, 1999. In June 1999, FASB issued
Statement 137 which defers the effective date to 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). We believe the impact on our
financial statements of adopting Statement 133 will be immaterial.
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101, "Revenue
Recognition," which outlines the basic criteria that must be met to recognize
revenue and provides guidance for presentation of revenue and for disclosure
related to revenue recognition policies in financial statements filed with the
SEC. The SEC subsequently delayed the implementation date of SAB 101 until no
later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. We have not yet determined the impact, if any, of adopting this
interpretation.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
Opinion No. 25". This interpretation clarifies (a) the definition of employee
for purposes of applying Opinion 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequence of
various modifications to the terms of a previously fixed stock option or award,
and (d) the accounting for an exchange of stock compensation awards in a
business combination. This interpretation is effective July 1, 2000, but certain
conclusions in this interpretation cover specific events that occur after either
December 15, 1998, or January 12, 2000. To the extent that this interpretation
covers events occurring during the period after December 15, 1998, or January
12, 2000, but before the effective date of July 1, 2000, the effects of applying
this interpretation are recognized on a prospective basis from July 1, 2000. We
have not yet determined the impact, if any, of adopting this interpretation.
9
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30,2000
RESULTS OF OPERATIONS
---------------------
Total revenues during the three months ended June 30, 2000 were $3,924,000,
compared to $2,270,000 for the same period of the prior year, an increase of
$1,654,000. This increase was due to $2,118,000 in higher SMES product sales,
$345,000 in higher HTS product sales driven by the shipment of the first half of
an HTS wire order to Pirelli Cables and Systems, and $625,000 in higher
prototype development contract revenues from the U. S. Navy. These increases
were partially offset by a $1,436,000 reduction in development contract revenues
from our HTS and SMES business units.
For the three months ended June 30, 2000, we also recorded funding of $194,000
under government cost-sharing agreements with the Department of Energy ("DOE").
Funding under these cost-sharing agreements for the three months ended June 30,
1999 was $629,000. We anticipate that a portion of our funding in the future
will continue to come from cost-sharing agreements as we continue 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.
Total costs and expenses for the three months ended June 30, 2000 were
$11,881,000 compared to $7,603,000 for the same period of the prior year. The
increase in costs and expenses was primarily the result of our increased
investment in research and development and increased costs of revenue associated
mainly with the higher level of SMES product sales.
Adjusted research and development ("R&D") expenses, which include amounts
classified as costs of revenue and amounts offset by cost-sharing funding,
increased to $6,746,000 in the three months ended June 30, 2000 from $5,031,000
for the same period of the prior year. This increase was due to the continued
scale-up of our 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 2001 and 2000 were $1,339,000 and $1,421,000,
respectively. Additionally, R&D expenses that were offset by cost-sharing
funding were $100,000 and $324,000 for the three months ended June 30, 2000 and
1999, respectively. Net R&D expenses (exclusive of amounts classified as costs
of revenue and amounts offset by cost-sharing funding) were $5,307,000 in the
three months ended June 30, 2000 compared to $3,286,000 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, increased to $3,489,000 in the three months ended June 30, 2000 from
$3,086,000 for the same period of the prior year. This increase was primarily
due to the hiring of additional personnel and related
10
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30,2000
expenses incurred to support corporate development and marketing activities and
future planned growth. A portion of the SG&A expenditures related to externally-
funded development contracts has been classified as costs of revenue (rather
than as SG&A expenses). These SG&A expenditures that were included as costs of
revenue during the first quarter of fiscal years 2001 and 2000 were $440,000 and
$737,000, respectively. Additionally, SG&A expenses that were offset by cost-
sharing funding were $94,000 and $305,000 for the three months ended June 30,
2000 and 1999, respectively. Net SG&A expenses (exclusive of amounts classified
as costs of revenue and amounts offset by cost-sharing funding) were $2,955,000
in the three months ended June 30, 2000 compared to $2,044,000 for the same
period last year.
Interest income was $3,494,000 in the three months ended June 30, 2000 compared
to $339,000 for the same period of the prior year. This increase in interest
income reflects the higher cash balances available for investment as a result of
receiving $205,625,000 in net proceeds from our March, 2000 public offering of
3,500,000 shares of common stock.
We expect to continue to incur operating losses in the next year, as we continue
to devote significant financial resources to our research and development
activities and commercialization efforts.
We expect to be party to agreements which, from time to time, may result in
costs incurred exceeding expected revenues under such contracts. We 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 our Annual Report on Form 10-K for the fiscal year ended March 31,
2000 for a discussion of certain factors that may affect our future results of
operation and financial condition.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, we had cash, cash equivalents and long-term marketable
securities of $210,048,000 compared to $218,655,000 at March 31, 2000. The
principal uses of cash during the three months ended June 30, 2000 were the
funding of our operations, the acquisition of capital equipment, primarily for
research and development and manufacturing, and the beginning of expenditures
for our planned new HTS manufacturing facility in Devens, Massachusetts.
Long-term accounts receivable of $1,625,000 represents the amount due after June
30, 2001 on the $2,500,000 recognized as revenue in the year ended March 31,
2000 for R&D work performed by us prior to the effective date (October 1, 1999)
of the Pirelli development agreement. The $2,500,000 payment by Pirelli for R&D
performed before October 1, 1999 is
11
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30,2000
guaranteed by the agreement and is payable in quarterly installments over the
five-year period between October 1, 1999 and September 30, 2004.
Goodwill of $1,307,000 at June 30, 2000 represents the excess of the purchase
price paid for the acquisition of substantially all of the assets of Integrated
Electronics, LLC ("IE") on June 1, 2000, over the fair value of IE's assets,
less one month of amortization. The IE transaction was accounted for under the
purchase method of accounting. Goodwill was initially calculated to be
$1,329,000, and will be amortized over a five-year period beginning June 1,
2000, in an amount equal to $22,000 per month. Results of operations for IE for
the month of June, 2000 are incorporated in our consolidated financial results.
We have potential funding commitments of approximately $18,803,000 to be
received after June 30, 2000 from strategic partners and government and
commercial customers compared to $21,324,000 at March 31, 2000. However, these
commitments, including $2,272,000 on U.S. government contracts and subcontracts,
are subject to certain cancellation or buyback provisions.
To date, inflation has not had a material impact on our financial results.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") 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 instrument'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, as amended by Statement 138, effective July 1, 2000, is effective
for fiscal years beginning after June 15, 1999. In June 1999, FASB issued
Statement 137 which defers the effective date to 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). We believe the impact on our
financial statements of adopting Statement 133 will be immaterial.
12
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30,2000
In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") 101,"Revenue
Recognition," which outlines the basic criteria that must be met to recognize
revenue and provides guidance for presentation of revenue and for disclosure
related to revenue recognition policies in financial statements filed with the
SEC. The SEC subsequently delayed the implementation date of SAB 101 until no
later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. We have not yet determined the impact, if any, of adopting this
interpretation.
In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"), "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
Opinion No. 25". This Interpretation clarifies (a) the definition of employee
for purposes of applying Opinion 25, (b) the criteria for determining whether a
plan qualifies as a noncompensatory plan, (c) the accounting consequence of
various modifications to the terms of a previously fixed stock option or award,
and (d) the accounting for an exchange of stock compensation awards in a
business combination. This Interpretation is effective July 1, 2000, but certain
conclusions in this Interpretation cover specific events that occur after either
December 15, 1998, or January 12, 2000. To the extent that this Interpretation
covers events occurring during the period after December 15, 1998, or January
12, 2000, but before the effective date of July 1, 2000, the effects of applying
this Interpretation are recognized on a prospective basis from July 1, 2000. We
have not yet determined the impact, if any, of adopting this interpretation.
13
<PAGE>
AMERICAN SUPERCONDUCTOR CORPORATION
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On June 1, 2000, we issued 37,500 shares of common stock and paid
$675,000 in cash to IE in consideration for our acquisition of
substantially all of the assets of IE. The issuance of the shares to
IE was made in reliance on Section 4(2) of the Securities Act of 1933,
as amended, which provides an exemption from the registration
provisions of the Securities Act for sales by an issuer not
involving a public offering.
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
(a) Exhibit 27.1 Financial Data Schedule
14
<PAGE>
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
8/11/2000 /s/ Gregory J. Yurek
______________________________________ ____________________________________
Date Gregory J. Yurek
Chairman of the Board, President and
Chief Executive Officer
8/11/2000 /s/ Thomas M. Rosa
______________________________________ ____________________________________
Date Thomas M. Rosa
Chief Accounting Officer, Corporate
Controller and Assistant Secretary
15
