e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended: June 30, 2010
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o |
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Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to .
Commission File Number: 0-19672
American Superconductor Corporation
(Exact name of registrant as specified in its charter)
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Delaware
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04-2959321 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
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64 Jackson Road, Devens, Massachusetts
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01434 |
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(Address of principal executive offices)
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(Zip Code) |
(978) 842-3000
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required 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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to
submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated
filer þ |
Accelerated filer o |
Non-accelerated filer o
(Do not check if a smaller reporting company) |
Smaller reporting company o
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Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
o No
þ
Shares outstanding of the Registrants common stock:
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Common Stock, par value $0.01 per share
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45,554,877 |
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Class
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Outstanding as of August 2, 2010 |
AMERICAN SUPERCONDUCTOR CORPORATION
INDEX
2
AMERICAN SUPERCONDUCTOR CORPORATION
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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June 30, |
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March 31, |
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2010 |
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2010 |
ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
64,844 |
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$ |
87,594 |
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Marketable securities |
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44,632 |
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54,469 |
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Accounts receivable, net |
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90,212 |
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62,203 |
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Inventory |
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41,022 |
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35,858 |
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Prepaid expenses and other current assets |
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16,315 |
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15,381 |
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Restricted cash |
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5,265 |
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5,713 |
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Deferred tax assets |
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2,022 |
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1,776 |
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Total current assets |
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264,312 |
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262,994 |
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Property, plant and equipment, net |
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70,191 |
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64,315 |
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Goodwill |
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37,934 |
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36,696 |
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Intangibles, net |
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8,016 |
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7,770 |
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Marketable securities |
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5,961 |
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7,342 |
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Deferred tax assets |
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3,652 |
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3,043 |
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Other assets |
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19,967 |
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18,024 |
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Total assets |
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$ |
410,033 |
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$ |
400,184 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
79,113 |
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$ |
84,319 |
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Deferred revenue |
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25,272 |
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19,970 |
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Deferred tax liabilities |
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3,360 |
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471 |
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Total current liabilities |
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107,745 |
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104,760 |
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Non-current liabilities |
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Deferred revenue |
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15,241 |
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13,302 |
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Deferred tax liabilities |
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660 |
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777 |
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Other |
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422 |
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380 |
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Total liabilities |
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124,068 |
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119,219 |
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Commitments and contingencies (Note 8) |
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Stockholders equity: |
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Common stock |
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455 |
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448 |
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Additional paid-in capital |
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706,741 |
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698,417 |
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Accumulated other comprehensive loss |
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(19,512 |
) |
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(7,011 |
) |
Accumulated deficit |
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(401,719 |
) |
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(410,889 |
) |
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Total stockholders equity |
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285,965 |
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280,965 |
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Total liabilities and stockholders equity |
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$ |
410,033 |
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$ |
400,184 |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
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Three months ended |
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June 30, |
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2010 |
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2009 |
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Revenues |
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$ |
97,209 |
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$ |
73,000 |
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Cost and operating expenses: |
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Cost of revenues |
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58,224 |
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50,417 |
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Research and development |
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7,335 |
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4,528 |
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Selling, general and administrative |
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15,183 |
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10,885 |
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Amortization of acquisition related intangibles |
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386 |
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445 |
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Restructuring and impairments |
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334 |
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Total cost and operating expenses |
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81,128 |
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66,609 |
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Operating income |
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16,081 |
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6,391 |
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Interest income |
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175 |
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243 |
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Other income (expense), net |
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171 |
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(1,976 |
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Income before income tax expense |
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16,427 |
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4,658 |
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Income tax expense |
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7,257 |
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2,866 |
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Net income |
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$ |
9,170 |
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$ |
1,792 |
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Net income per common share |
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Basic |
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$ |
0.20 |
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$ |
0.04 |
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Diluted |
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$ |
0.20 |
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$ |
0.04 |
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Weighted average number of common shares outstanding |
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Basic |
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45,242 |
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43,789 |
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Diluted |
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45,983 |
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44,533 |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
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Three months ended June 30, |
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2010 |
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2009 |
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Net income |
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$9,170 |
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$1,792 |
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Other comprehensive income (loss) |
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Foreign currency translation gain (loss) |
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(12,336 |
) |
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4,057 |
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Unrealized losses on investments |
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(165 |
) |
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(90 |
) |
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Other comprehensive income (loss) |
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(12,501 |
) |
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3,967 |
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Comprehensive income (loss) |
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$(3,331 |
) |
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$5,759 |
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The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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Three months ended June 30, |
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2010 |
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2009 |
Cash flows from operating activities: |
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Net income |
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$ |
9,170 |
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$ |
1,792 |
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Adjustments to reconcile net income to net cash used in operations: |
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Depreciation and amortization |
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2,654 |
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2,301 |
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Stock-based compensation expense |
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3,499 |
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3,066 |
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Stock-based compensation expensenon-employee |
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79 |
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30 |
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Allowance for doubtful accounts |
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|
957 |
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(657 |
) |
Deferred income taxes |
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2,027 |
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(707 |
) |
Other non-cash items |
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|
320 |
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|
207 |
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Changes in operating asset and liability accounts: |
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Accounts receivable |
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(35,848 |
) |
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(13,068 |
) |
Inventory |
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(5,654 |
) |
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3,903 |
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Prepaid expenses and other current assets |
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(1,616 |
) |
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513 |
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Accounts payable and accrued expenses |
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(2,140 |
) |
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(10,176 |
) |
Deferred revenue |
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8,073 |
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(1,340 |
) |
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Net cash used in operating activities |
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(18,479 |
) |
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(14,136 |
) |
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Cash flows from investing activities: |
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Purchase of property, plant and equipment |
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(8,185 |
) |
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(1,660 |
) |
Purchase of marketable securities |
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(15,061 |
) |
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(12,441 |
) |
Proceeds from the maturity of marketable securities |
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24,189 |
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23,008 |
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Change in restricted cash |
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|
257 |
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(399 |
) |
Purchase of intangible assets |
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(1,230 |
) |
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(369 |
) |
Change in other assets |
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(11 |
) |
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(427 |
) |
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Net cash provided by (used in) investing activities |
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(41 |
) |
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7,712 |
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Cash flows from financing activities: |
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Proceeds from exercise of employee stock options and ESPP |
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|
561 |
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|
1,494 |
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Net cash provided by financing activities |
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561 |
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1,494 |
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Effect of exchange rate changes on cash and cash equivalents |
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(4,791 |
) |
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1,039 |
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Net decrease in cash and cash equivalents |
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(22,750 |
) |
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(3,891 |
) |
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Cash and cash equivalents at beginning of the period |
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87,594 |
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70,674 |
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Cash and cash equivalents at end of the period |
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$ |
64,844 |
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$ |
66,783 |
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Supplemental schedule of cash flow information: |
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Non-cash issuance of common stock |
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$ |
189 |
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$ |
169 |
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Non-cash contingent consideration in connection with acquisitions |
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4,004 |
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|
3,281 |
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Cash paid for income taxes |
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4,453 |
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|
2,195 |
|
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.
6
AMERICAN SUPERCONDUCTOR CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of the Business and Basis of Presentation
American Superconductor Corporation (the Company or AMSC) was founded on April 9, 1987.
The Company 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 power grid, and seamlessly integrate renewable energy
sources into the power infrastructure. These technologies include superconductor power cable
systems, grid-level surge protectors and power electronics-based voltage stabilization systems. The
Company operates in two business segments: AMSC Power Systems and AMSC Superconductors.
These unaudited condensed consolidated financial statements of the Company have been prepared
in accordance with the Securities and Exchange Commissions (SEC) instructions to Form 10-Q.
Certain information and footnote disclosures normally included in the financial statements prepared
in accordance with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to those instructions. The year-end condensed balance sheet data was
derived from audited financial statements but does not include all disclosures required by
generally accepted accounting principles in the United States of America. The unaudited condensed
consolidated financial statements, in the opinion of management, reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair statement of the results for the
interim periods ended June 30, 2010 and 2009 and the financial position at June 30, 2010. The
unaudited condensed consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated in
consolidation. Certain reclassifications of prior year amounts have been made to conform to current
year presentation.
The results of operations for an interim period are not necessarily indicative of the results
of operations to be expected for the fiscal year. These unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial statements for the
fiscal year ended March 31, 2010 (fiscal 2009) which are contained in the Companys Annual Report
on Form 10-K, filed with the SEC on May 27, 2010.
New Accounting Pronouncements
In September 2009, the Emerging Issues Task Force issued new rules pertaining to the
accounting for revenue arrangements with multiple deliverables. The new rules provide an
alternative method for establishing fair value of a deliverable when vendor specific objective
evidence or third party evidence cannot be determined. The rules provide for the determination of
the best estimate of selling price for separate deliverables and allows for the allocation of
arrangement consideration using this relative selling price model. The guidance supersedes the
prior multiple element revenue arrangement accounting rules that were previously used by the
Company. The Company has adopted this guidance effective April 1, 2010. The adoption did not have a
material impact on its financial condition or results of operations.
2. Stock-Based Compensation
The Company accounts for its stock-based compensation at fair value. The following table
summarizes employee stock-based compensation expense by financial statement line item for the three
months ended June 30, 2010 and 2009 (in thousands):
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Three months ended |
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June 30, |
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2010 |
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2009 |
|
Cost of revenues |
|
$ |
383 |
|
|
$ |
225 |
|
Research and development |
|
|
468 |
|
|
|
467 |
|
Selling, general and administrative |
|
|
2,648 |
|
|
|
2,374 |
|
|
|
|
|
|
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|
Total |
|
$ |
3,499 |
|
|
$ |
3,066 |
|
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|
|
|
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|
During the three months ended June 30, 2010, the Company granted approximately 184,000
shares and 284,000 shares of stock options and restricted stock, respectively, to employees under
the 2007 Stock Incentive Plan. The fair value of the grants made during the three months ended June
30, 2010 was $11.7 million. The restricted stock awards include approximately 83,000 shares of
performance-based restricted stock, which will vest upon achievement of certain financial
performance measurements. The remaining shares granted vest upon the passage of time, generally 3
years. For awards that vest upon the passage of time, expense is being recorded over the vesting period. At June 30,
2010, the Company determined
7
that achievement of the performance measures is probable and as such,
is recognizing the fair value of the performance-based awards over the estimated performance period
of each award.
The total unrecognized compensation cost for unvested employee stock-based compensation awards
outstanding, net of estimated forfeitures, was $24.8 million at June 30, 2010. This expense will be
recognized over a weighted-average expense period of 2.3 years.
The assumptions used in the Black-Scholes valuation model for stock options granted
during the three months ended June 30, 2010 and 2009 are as follows:
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Three months ended |
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June 30, |
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2010 |
|
2009 |
Expected volatility |
|
|
66.4 |
% |
|
|
70.6 |
% |
Risk-free interest rate |
|
|
2.2 |
% |
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|
2.6 |
% |
Expected life (years) |
|
|
6.1 |
|
|
4.8 |
Dividend yield |
|
None |
|
None |
The expected volatility was estimated based on an equal weighting of the historical volatility
of the Companys common stock and the implied volatility of the Companys traded options. The
expected life was estimated based on an analysis of the Companys historical experience of
exercise, cancellation, and expiration patterns. The risk-free interest rate is based on the
average of the five and seven year U.S. Treasury rates for the three months ended June 30, 2010 and
the five-year U.S. Treasury rates for the three months ended June 30, 2009. The stock-based
compensation expense recognized in the unaudited condensed consolidated statements of income is
based on awards that ultimately are expected to vest; therefore, the amount of expense has been
reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures
were estimated based on historical experience. This analysis is re-evaluated periodically and the
forfeiture rate is adjusted as necessary.
3. Computation of Net Income per Common Share
Basic earnings per share (EPS) is computed by dividing net earnings by the weighted-average
number of common shares outstanding for the period. Diluted EPS is computed by dividing the net
earnings by the weighted-average number of common shares and dilutive common equivalent shares
outstanding during the period, calculated using the treasury stock method. Common equivalent shares
include the effect of restricted stock, exercise of stock options and warrants and contingently
issuable shares. For the three months ended June 30, 2010 and 2009, common equivalent shares of 1.4
million shares and 1.3 million shares, respectively, were not included in the calculation of
diluted EPS as they were considered anti-dilutive.
The following table reconciles the numerators and denominators of the earnings per share
calculation for the three months ended June 30, 2010 and 2009 (in thousands, except per share
data):
8
|
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
9,170 |
|
|
$ |
1,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding |
|
|
45,454 |
|
|
|
43,857 |
|
Weighted-average shares subject to repurchase |
|
|
(212) |
|
|
|
(68) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation basic |
|
|
45,242 |
|
|
|
43,789 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of employee equity incentive plans |
|
|
741 |
|
|
|
744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per-share calculation diluted |
|
|
45,983 |
|
|
|
44,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share basic |
|
$ |
0.20 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share diluted |
|
$ |
0.20 |
|
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
4. Fair Value Measurements
The accounting standard for fair value measurements provides a framework for measuring
fair value and requires expanded disclosures regarding fair value measurements. Fair value is
defined as the price that would be received for an asset or the exit price that would be paid to
transfer a liability in the principal or most advantageous market in an orderly transaction between
market participants on the measurement date. The accounting standard established a fair value
hierarchy which requires an entity to maximize the use of observable inputs, where available. This
hierarchy prioritizes the inputs into three broad levels as follows:
Valuation Hierarchy
|
|
|
|
|
Level 1
|
|
-
|
|
Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the
ability to access at the measurement date. |
|
|
|
|
|
Level 2
|
|
-
|
|
Inputs include quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, inputs
other than quoted prices that are observable for the asset or
liability, and inputs that are derived principally from or
corroborated by observable market data by correlation or other
means (market corroborated inputs). |
|
|
|
|
|
Level 3
|
|
-
|
|
Unobservable inputs that reflect the Companys assumptions that
market participants would use in pricing the asset or
liability. The Company develops these inputs based on the best
information available, including its own data. |
A financial asset or liability classification within the hierarchy is determined based on the
lowest level input that is significant to the fair value measurement.
9
The following table provides the assets and liabilities carried at fair value, measured as of
June 30, 2010 and March 31, 2010 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Quoted Prices in |
|
|
Using Significant Other |
|
|
Using Significant |
|
|
|
Carrying |
|
|
Active Markets |
|
|
Observable Inputs |
|
|
Unobservable Inputs |
|
|
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
June 30, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
3,184 |
|
|
$ |
3,184 |
|
|
$ |
|
|
|
$ |
|
|
Derivatives |
|
|
239 |
|
|
|
|
|
|
|
239 |
|
|
|
|
|
Short-term marketable securities |
|
|
44,632 |
|
|
|
|
|
|
|
44,632 |
|
|
|
|
|
Long-term marketable securities |
|
|
5,961 |
|
|
|
|
|
|
|
5,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives |
|
|
144 |
|
|
|
|
|
|
|
144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Quoted Prices in |
|
|
Using Significant Other |
|
|
Using Significant |
|
|
|
Carrying |
|
|
Active Markets |
|
|
Observable Inputs |
|
|
Unobservable Inputs |
|
|
|
Value |
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
March 31, 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents |
|
$ |
29,054 |
|
|
$ |
29,054 |
|
|
$ |
|
|
|
$ |
|
|
Derivatives |
|
|
168 |
|
|
|
|
|
|
|
168 |
|
|
|
|
|
Short-term marketable securities |
|
|
54,469 |
|
|
|
|
|
|
|
54,469 |
|
|
|
|
|
Long-term marketable securities |
|
|
7,342 |
|
|
|
|
|
|
|
7,342 |
|
|
|
|
|
Valuation Techniques
Cash Equivalents
Cash equivalents consist of highly liquid instruments with maturities of three months or less
that are regarded as high quality, low risk investments and are measured using such inputs as
quoted prices, and are classified within Level 1 of the valuation hierarchy. Cash equivalents
consist principally of money market accounts and corporate debt instruments.
Marketable Securities
Long-term and short-term marketable securities, consist primarily of government-backed
securities and sovereign debt, are measured using such inputs as quoted prices for identical or
similar assets in markets that are not active, inputs other than quoted prices that are observable
for the asset (for example, interest rates and yield curves observable at commonly quoted
intervals), and inputs that are derived principally from or corroborated by observable market data
by correlation or other means, and are classified within Level 2 of the valuation hierarchy.
Short-term marketable securities, with current maturities of greater than three months from
original purchase date but less than twelve months from the date of the balance sheet. All
marketable securities are considered available-for-sale and are carried at fair value. The Company
periodically reviews the realizability of each short and long-term marketable security when
impairment indicators exist with respect to the security. If an other-than-temporary impairment of
value of the security exists, the carrying value of the security is written down to its estimated
fair value.
5. Derivative Financial Instruments
The Companys foreign currency risk management strategy is principally designed to mitigate
the potential financial impact of changes in the value of transactions and balances denominated in
foreign currency, resulting from changes in foreign currency exchange rates. The Companys foreign
currency hedging program uses both forward contracts and currency options to manage the foreign
currency exposures that exist as part of its ongoing business operations.
Cash Flow Hedges
The Company hedges a portion of its intercompany sales of inventory over a maximum
period of 15 months using forward foreign exchange contracts accounted for as cash flow hedges to
mitigate the impact of volatility associated with foreign currency transactions. To the extent
these derivatives are effective in offsetting the variability of the hedged cash flows, and
otherwise meet the hedge accounting criteria, changes in the derivatives value are not included in
current earnings but are included in Other Comprehensive Income in stockholders equity. The
changes in fair value will subsequently be reclassified into earnings as a component of cost of
revenues, as applicable, when the forecasted transaction occurs. To the extent that a previously
forecasted transaction is no longer an effective hedge, any ineffectiveness measured in the hedging
relationship is recorded currently in earnings in the period it occurs. The Company does not enter
into derivative instruments for trading or speculative purposes.
At June 30, 2010, the Company had three forward contracts outstanding to hedge exposure
at the Companys wholly-owned Austrian subsidiary, AMSC Windtec GmbH (AMSC Windtec), selling
Euros and buying USD at $1.2408, $1.242 and $1.2433, with notional values of $6.9 million, $4.6
million and $2.3 million, respectively. These contracts will expire on September 27, 2010, December
27, 2010 and March 28, 2011, respectively. At June 30, 2010, these forward exchange contracts
had an aggregate U.S. dollar equivalent fair value amounting to a net unrealized loss of $0.2
million in other comprehensive income. The net gain or loss from these cash flow hedges reported in
accumulated other comprehensive income will be reclassified
10
to earnings and recorded in cost of
revenues in our consolidated statement of income when the related inventory is sold to third-party
customers.
Other Derivatives
In addition to cash flow hedges, the Company also enters into foreign currency forward
exchange contracts to mitigate the impact of foreign exchange risk related to non-functional
currency receivable balances in its foreign entities. To the extent that hedge accounting criteria
is not met, changes in the fair value of these contracts are recorded in earnings in the period
which they occur. These contracts primarily are denominated in the Euro and Chinese renminbi
(CNY) and have maturities of less than six months. On June 30, 2010, the Company had two forward
contracts outstanding to hedge USD receivables exposure at
AMSC Windtec selling Euros and buying USD at $1.2192 and $1.2173, with
notional values of $27.0 million and $24.0 million,
respectively, which both expired on July 30, 2010. Gains and losses on these contracts are included in other expense, net.
The
following table provides a summary of the derivative instruments carried at fair value measured as of June 30, 2010 and March 31, 2010 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 |
|
March 31, 2010 |
|
|
Asset |
|
|
Liability |
|
|
Balance Sheet |
|
Asset |
|
|
Liability |
|
|
Balance Sheet |
|
|
Derivatives |
|
|
Derivatives |
|
|
Location |
|
Derivatives |
|
|
Derivatives |
|
|
Location |
Foreign currency forward exchange contracts |
|
|
$239 |
|
|
|
|
|
|
Prepaid expenses
and other
current
assets |
|
|
$168 |
|
|
|
|
|
|
Prepaid expenses
and other
current assets |
Cash flow hedges - foreign exchange contracts |
|
|
|
|
|
|
144 |
|
|
Accounts payable
and accrued
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2010, actual unrealized gains included in Prepaid expenses were $0.2
million for foreign currency forward exchange contracts and actual unrealized losses included in
Accrued liabilities were $0.1 million for cash flow hedges. As of March 31, 2010, actual unrealized
gains included in Prepaid expenses were $0.2 million for foreign currency forward exchange
contracts.
Net realized and unrealized losses on forward contracts and option contracts included in other
expense, net, excluding the underlying foreign currency exposure being hedged, were $4.0 million
and $0.3 million for the three months ended June 30, 2010 and 2009, respectively.
6. Accounts Receivable
Accounts receivable
consisted of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
|
2010 |
|
|
2010 |
|
Accounts receivable (billed) |
|
$ |
82,150 |
|
|
$ |
53,825 |
|
Accounts receivable (unbilled) |
|
|
10,716 |
|
|
|
10,305 |
|
Less: Allowance for doubtful accounts |
|
|
(2,654 |
) |
|
|
(1,927 |
) |
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
90,212 |
|
|
$ |
62,203 |
|
|
|
|
|
|
|
|
The Company also recorded
net long-term accounts receivables of $16.1 million and $14.1 million as of
June 30, 2010 and March 31, 2010, respectively that are also classified within other assets on the
condensed consolidated balance sheet and as long-term deferred revenue.
11
7. Inventory
The components of inventory are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
|
2010 |
|
|
2010 |
|
Raw materials |
|
$ |
19,962 |
|
|
$ |
18,065 |
|
Work-in-progress |
|
|
6,449 |
|
|
|
7,318 |
|
Finished goods |
|
|
11,956 |
|
|
|
7,879 |
|
Deferred program costs |
|
|
2,655 |
|
|
|
2,596 |
|
|
|
|
|
|
|
|
Net inventory |
|
$ |
41,022 |
|
|
$ |
35,858 |
|
|
|
|
|
|
|
|
Finished
goods inventory as of June 30, 2010 includes $1.6 million, which represents
costs of product shipped to customers on contracts for which revenue was deferred until final
customer acceptance.
Deferred program costs as of June 30, 2010 and March 31, 2010 primarily represent costs
incurred on wind turbine development programs where the Company needs to achieve certain milestones
or complete development programs before revenue and costs will be recognized.
8. Product Warranty
The Company generally provides a one to two year warranty on its products, commencing upon
installation. A provision is recorded upon revenue recognition to Cost of revenues for estimated
warranty expense based on historical experience.
Product warranty activity was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Balance at beginning of period |
|
$ |
6,431 |
|
|
$ |
4,749 |
|
Accruals for warranties during the period |
|
|
2,305 |
|
|
|
1,115 |
|
Settlements and adjustments during the period |
|
|
(2,361 |
) |
|
|
(539 |
) |
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
6,375 |
|
|
$ |
5,325 |
|
|
|
|
|
|
|
|
9. Income Taxes
The Company recorded income tax expense of $7.3 million and $2.9 million for the three months
ended June 30, 2010 and 2009, respectively, related primarily to income generated in foreign
jurisdictions. The Company has provided a valuation allowance against all deferred tax assets in
the U.S. as it is more likely than not that its deferred tax assets are not currently realizable
due to the net operating losses incurred by the Company in the U.S. since its inception.
10. Commitments and Contingencies
From time to time, the Company enters into long-term construction contracts with customers
that require the Company to obtain performance bonds. The Company is required to deposit an amount
equivalent to some or all the face amount of the performance bonds into an escrow account until the
termination of the bond. When the performance conditions are met, amounts deposited as collateral
for the performance bonds are returned to the Company.
As of June 30, 2010, the Company had six performance bonds on behalf of its AMSC Windtec and
its China subsidiary in support of customer contracts to guarantee supply of core components and
software. The total value of the outstanding performance bonds is $2.3 million expiring between
September 30, 2010 and March 31, 2014. In the event that the payment is made in accordance with the
requirements of any of these performance bonds, the Company would record the payment as an offset
to revenue.
At June 30, 2010 and March 31, 2010, the Company had $5.3 million and $5.7 million,
respectively, of restricted cash included in current assets, which includes the restricted cash
securing the AMSC Windtec performance bonds noted above. The Company also has an additional $3.5
million in bank guarantees and letters of credit supported by unsecured lines of credit.
The Company also has unused, unsecured lines of credit consisting of CNY 11.9 million
(approximately $1.8 million) and 2.0 million (approximately $2.4 million) as of June 30, 2010.
The line of credit was set to expire on
June 30, 2010, but has been extended while we are in discussions with
the bank to increase capacity to the line of credit to better facilitate growth in the local working capital requirements of the Company.
12
11. Cost-Sharing Arrangements
The Company has entered into several cost-sharing arrangements with various agencies of the
United States government. Funds paid to the Company under these agreements are not reported as
revenues but are used to directly offset the Companys research and development (R&D) and
selling, general and administrative (SG&A) expenses, and to purchase capital equipment.
Costs incurred and funding received under these agreements are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Costs incurred |
|
$ |
525 |
|
|
$ |
1,471 |
|
R&D expenditures offset by cost sharing funding received |
|
|
141 |
|
|
|
390 |
|
G&A expenditures offset by cost sharing funding received |
|
|
122 |
|
|
|
340 |
|
At June 30, 2010, total funding received to date under these agreements was $29.9 million.
12. Acquisitions
Acquisition of Windtec Consulting GmbH
On January 5, 2007, the Company acquired Windtec Consulting GmbH (AMSC Windtec), a
corporation incorporated according to the laws of Austria. AMSC Windtec develops and sells
electrical systems for wind turbines. AMSC Windtec also provides technology transfer for the
manufacturing of wind turbines; documentation services; and training and support regarding the
assembly, installation, commissioning, and service of wind turbines.
The acquisition agreement included an earn-out provision for the issuance of up to an
additional 1,400,000 shares of common stock upon AMSC Windtecs achievement of specified revenue
objectives during the first four fiscal years following closing of the acquisition. During the
fiscal year ended March 31, 2009, the Company recorded contingent consideration of $9.8 million to
Goodwill and Additional paid-in capital representing 350,000 shares earned. These 350,000 shares
were issued in the first quarter of the fiscal year ending March 31, 2010. During the fiscal year
ended March 31, 2010, the Company recorded contingent consideration of $10.8 million to Goodwill
and Additional paid-in capital representing 350,000 shares earned. These shares were issued in the
first quarter of the fiscal year ended March 31, 2011. During the three months ended June 30,
2010, the Company recorded contingent consideration of $4.0 million to Goodwill and Additional
paid-in capital representing 150,000 shares earned. These 150,000 shares are expected to be issued
in the first quarter of the fiscal year ending March 31, 2012.
Investment in Tres Amigas
On October 13, 2009, the Company announced it had made a minority investment in Tres Amigas
LLC (Tres Amigas), a merchant transmission company, for $1.8 million. Consideration for the
investment was $0.8 million in cash and $1.0 million in AMSC common stock. The investment was
recorded under the equity method of accounting and is included in Other assets on the condensed
consolidated balance sheet. The Companys minority interest in the losses of Tres Amigas are
included in Other income (expense), net on the condensed consolidated statements of income, and were
immaterial for the three months ended June 30, 2010. The net value of the investment at June 30,
2010 was $1.6 million.
13. Business Segment Information
The Company reports its financial results in two reportable business segments: AMSC Power
Systems and AMSC Superconductors.
AMSC Power Systems business unit produces a broad range of products to increase electrical
grid capacity and reliability; supplies electrical systems used in wind turbines; sells power
electronic products that regulate wind farm voltage to enable their interconnection to the power grid; licenses proprietary wind turbine designs
to manufacturers of such systems; provides consulting services to the wind industry; and offers
products that enhance power quality for industrial operations.
AMSC Superconductors business unit manufactures HTS wire and coils; designs and develops
superconductor products, such as power cables, fault current limiters and motors; and manages
large-scale superconductor projects.
13
The operating results for the two business segments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Revenues: |
|
|
|
|
|
|
|
|
AMSC Power Systems |
|
$ |
94,928 |
|
|
$ |
70,696 |
|
AMSC Superconductors |
|
|
2,281 |
|
|
|
2,304 |
|
|
|
|
|
|
|
|
Total |
|
$ |
97,209 |
|
|
$ |
73,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Operating income: |
|
|
|
|
|
|
|
|
AMSC Power Systems |
|
$ |
25,485 |
|
|
$ |
15,395 |
|
AMSC Superconductors |
|
|
(5,910 |
) |
|
|
(5,497 |
) |
Unallocated corporate expenses |
|
|
(3,494 |
) |
|
|
(3,507 |
) |
|
|
|
|
|
|
|
Total |
|
$ |
16,081 |
|
|
$ |
6,391 |
|
|
|
|
|
|
|
|
The accounting policies of the business segments are the same as those for the consolidated
Company, except that certain corporate expenses which the Company does not believe are specifically
attributable or allocable to either of the two business segments have been excluded from the
segment operating income. Unallocated corporate expenses include stock-based compensation expense
of $3.5 million and $3.1 million for the three months ended June 30, 2010 and 2009, respectively.
Unallocated corporate expenses for the three months ended June 30, 2009 included $0.3 million of
restructuring charges related primarily to the closure of the Companys facility in Westborough,
Massachusetts. For the three months ended June 30, 2009, unallocated corporate expenses also
include operating costs associated with the unoccupied portion of the Companys former corporate
headquarters facility located in Westborough, Massachusetts.
For the quarter ended June 30, 2010, 72% of the Companys revenues were derived from one
customer: Sinovel Wind Co., Ltd. (Sinovel), a manufacturer of wind turbines based in China. For
the quarter ended June 30, 2009, a substantial portion of the Companys revenues was derived from
three customers: Sinovel; ACCIONA S.A., a Spanish renewable power company; and a U.S. subsidiary of
National Grid, an energy company. Sales to Sinovel, ACCIONA and National Grid were 53%, 14% and
10%, respectively, for the three months ended June 30, 2009.
Total assets for the two business segments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
|
2010 |
|
|
2010 |
|
AMSC Power Systems |
|
$ |
217,632 |
|
|
$ |
179,873 |
|
AMSC Superconductors |
|
|
39,751 |
|
|
|
32,978 |
|
Corporate assets |
|
|
152,650 |
|
|
|
187,333 |
|
|
|
|
|
|
|
|
Total |
|
$ |
410,033 |
|
|
$ |
400,184 |
|
|
|
|
|
|
|
|
14. Subsequent Events
The Company has performed an evaluation of subsequent events through August 5, 2010, which is
the date the financial statements were issued.
14
AMERICAN SUPERCONDUCTOR CORPORATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
ITEM 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. For this purpose, any statements
contained herein that relate to future events or conditions, including without limitation, the
statements under Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations and in Part II, Item 1A. Risk Factors and located elsewhere herein regarding
industry prospects or our prospective results of operations or financial position, may be deemed to
be forward-looking statements. Without limiting the foregoing, the words believes, anticipates,
plans, expects, and similar expressions are intended to identify forward-looking statements.
Such forward-looking statements represent managements current expectations and are inherently
uncertain. The important factors discussed below under the caption Risk Factors in Part II. Item
1A and Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2010, among others,
could cause actual results to differ materially from those indicated by forward-looking statements
made herein and presented elsewhere by management from time to time. Any such forward-looking
statements represent managements estimates as of the date of this Quarterly Report on Form 10-Q.
While we may elect to update such forward-looking statements at some point in the future, we
disclaim any obligation to do so, even if subsequent events cause our views to change. These
forward-looking statements should not be relied upon as representing our views as of any date
subsequent to the date of this Quarterly Report on Form 10-Q.
American Superconductor and design, Revolutionizing the Way the World Uses Electricity, AMSC,
Powered by AMSC, D-VAR, dSVC, PowerModule, PQ-IVR, Secure Super Grids, Windtec and SuperGEAR are
trademarks or registered trademarks of American Superconductor Corporation or its subsidiaries. The
Windtec logo and design is a registered European Union Community Trademark. All other brand names,
product names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are the
property of their respective holders.
Executive Overview
American Superconductor Corporation was founded in 1987. We offer an array of proprietary
technologies and solutions spanning the electric power infrastructure - from generation to
delivery to end use. Our company is a leader in renewable energy, providing proven, megawatt-scale
wind turbine designs and electrical control systems. We also offer 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
technologies include superconductor power cable systems, grid-level surge protectors and power
electronics-based voltage stabilization systems. Our technologies are protected by a broad and deep
intellectual property portfolio consisting of hundreds of patents and licenses worldwide.
Our fiscal year begins on April 1 and ends on March 31. This document refers to fiscal 2010,
which is defined as the period beginning on April 1, 2010 and concluding on March 31, 2011. The
first quarter of fiscal 2010 began on April 1, 2010 and concluded on June 30, 2010.
Our revenues today are primarily derived from our AMSC Power Systems business unit, which
designs and licenses wind turbines and provides electrical systems and controls for those wind
turbines; provides a range of products to increase electrical grid capacity and reliability;
provides power electronic products that interconnect renewable energy plants to the power grid; and
provides products that enhance power quality for industrial operations. Most of the products
offered by AMSC Power Systems utilize our proprietary power electronic converters and enabling
software. These solutions increase the quantity, quality and reliability of electric power that is
produced by renewable energy sources, transmitted by electric utilities or consumed by large
industrial entities. The market for these solutions continues to be strong in 2010, particularly
in Asia, where the production of wind turbines and demand for wind turbine electrical systems and
controls continues to increase rapidly.
Our AMSC Superconductors business unit designs and develops superconductor products, such as
power cables, fault current limiters, generators, motors and degaussing systems; and it manages
large-scale superconductor projects. AMSC Superconductors also manufactures the high temperature
superconductor (HTS) wire that goes into superconductor products, providing these systems with
compelling performance, efficiency, size and weight advantages compared with conventional
electrical equipment. Many superconductor product demonstrations have been successfully completed
to date and customer interest is increasing, particularly for superconductor power cables and
superconductor wind turbine generators. These systems have yet to be commercialized, however.
15
Our strategy for both AMSC Power Systems and AMSC Superconductors is to drive revenue growth
and enhance operating results by increasing adoption of our products. We are targeting high-growth
segments of the renewable energy and power grid markets with our advanced engineering capabilities,
support services and power electronics and superconductor product offerings.
Our wind power products and services are marketed globally, with a particular focus on
emerging economies and the Asia Pacific region where demand for local wind turbine manufacturing
has been increasing significantly. Our power grid products and services have historically been
marketed primarily in the United States. However, due to increasing grid interconnection
requirements for renewable energy sites and rising demands for Smart Grid solutions overseas, our
power grid activities and sales have increasingly become global in nature. While we leverage
strategic partnerships and reseller relationships to increase our revenue streams, we address
market needs primarily with our direct sales force.
We currently have offices and operations in 11 countries around the world. Our Devens,
Massachusetts facility serves as our corporate headquarters and our center of excellence for
superconductors research, development and manufacturing. Our facilities in Wisconsin serve as our
center of excellence for power electronics and controls research and development and power grid
product manufacturing. Our facility in Suzhou, China serves as our center of excellence for wind
turbine power electronics manufacturing. Our facility in Klagenfurt, Austria serves as our center
of excellence for wind turbine design and engineering. Our other locations focus primarily on
applications engineering, sales and/or field service.
As of June 30, 2010 and March 31, 2010, we had backlog of approximately $952 million and $588
million, respectively. The increase in backlog was primarily the result of a substantial new order
received from our largest customer, Sinovel Wind Co., Ltd. (Sinovel). Based on this level of
backlog and our pipeline of business, we believe we will be able to continue growing revenue in
fiscal 2010.
Our cash requirements depend on numerous factors, including successful completion of our
product development activities, ability to commercialize our product prototypes, rate of customer
and market adoption of our products and the continued availability of U.S. government funding
during the product development phase. Significant deviations to our business plan with regard to
these factors, which are important drivers to our business, could have a material adverse effect on
our operating performance, financial condition, and future business prospects. We expect to pursue
the expansion of our operations through internal growth and potential strategic alliances and
acquisitions.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements requires that we make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and
related disclosure of contingent assets and liabilities. We base our estimates on historical
experience and various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources. Actual results may
differ under different assumptions or conditions. With the exception of changes to our derivatives
accounting policy as described below, there were no significant changes in the first quarter of
fiscal 2010 in our critical accounting policies as disclosed in our Form 10-K for fiscal 2009,
which ended on March 31, 2010.
Derivative Contracts
We recognize all derivatives, including forward currency-exchange contracts, in the balance
sheet at fair value. If a derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of the derivative are either offset against the change in fair value of the hedged
item through earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. Derivatives that are not designated as hedges are recorded at fair value
through earnings.
Cash flow hedges. For derivative instruments that are designated and qualify as a cash flow
hedge, the effective portion of the gain or loss on the derivative is reported as a component of
other comprehensive income and reclassified into earnings in the same period or periods during
which the hedged transaction affects earnings. As of June 30, 2010, we had three outstanding
derivative contracts that were accounted for as cash flow hedges.
Fair value hedges. For derivative instruments that are designated and qualify as a fair value
hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged
item attributable to the hedged risk, are recognized in earnings. We include the gain or loss on
the hedged items in Other income (expense). As of June 30, 2010, we had two outstanding derivative
contracts that were accounted for as fair value hedges.
16
Results of Operations
Three months ended June 30, 2010 compared to the three months ended June 30, 2009
Revenues
Total revenues increased by 33% to $97.2 million for the three months ended June 30, 2010 from
$73.0 million for the three months ended June 30, 2009. Our revenues are summarized as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Revenues: |
|
|
|
|
|
|
|
|
AMSC Power Systems |
|
$ |
94,928 |
|
|
$ |
70,696 |
|
AMSC Superconductors |
|
|
2,281 |
|
|
|
2,304 |
|
|
|
|
|
|
|
|
Total |
|
$ |
97,209 |
|
|
$ |
73,000 |
|
|
|
|
|
|
|
|
Revenues in our AMSC Power Systems business unit consist of revenues from wind turbine
electrical systems and core components, wind turbine license and development contracts as well as
D-VAR®, D-VAR RT, SVC, and PowerModule product sales, service contracts, and consulting
arrangements. We also engineer, install and commission our products on a turnkey basis for some
customers. Our AMSC Power Systems business unit accounted for 98% and 97% of total revenues for the
three months ended June 30, 2010 and 2009, respectively. Revenues in the AMSC Power Systems
business unit increased 34% to $94.9 million in the three months ended June 30, 2010 from $70.7
million in the three months ended June 30, 2009. The increase in AMSC Power Systems business unit
revenues was primarily due to higher sales of wind electrical systems and core components,
primarily to customers in China, partially offset by lower DVAR-RT system revenues. Based on the
average Euro and renminbi exchange rates for the first quarter of fiscal 2010, revenue denominated
in these foreign currencies translated into U.S. dollars was $0.3 million lower compared to the
translation of these revenues using the average exchange rates of these currencies for the first
quarter of fiscal 2009.
For the quarter ended June 30, 2010, 72% of our revenues were derived from one customer,
Sinovel Wind Co., Ltd. (Sinovel), a manufacturer of wind turbines based in China. For the quarter
ended June 30, 2009, a substantial portion of our revenues was derived from three customers:
Sinovel; ACCIONA S.A., a Spanish renewable power company; and a U.S. subsidiary of National Grid,
an energy company. Sales to Sinovel represented 53% of total revenues for the three months ended
June 30, 2009. Sales to ACCIONA and National Grid were 14% and 10%, respectively, for the three
months ended June 30, 2009.
On May 17, 2010, we announced an extension of our supply of core electrical components for 1.5
megawatt (MW) wind turbines, to Sinovel through late 2013 under a new contract valued at
approximately $445 million.
Revenues in our AMSC Superconductors business unit consist of contract revenues, HTS wire
sales, revenues under government-sponsored electric utility projects, and other prototype
development contracts. AMSC Superconductors business unit revenue is primarily recorded using the
percentage-of-completion method. AMSC Superconductors business unit accounted for 2% and 3%
revenues for the first quarter of fiscal 2010 and 2009, respectively. AMSC Superconductors business
unit revenue remained essentially flat at $2.3 million in the first quarters of fiscal 2010 and
fiscal 2009, respectively. Significant AMSC Superconductors government-funded contract revenues are
summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Earned for the three months |
|
|
|
|
|
|
|
Revenue Earned |
|
|
ended June 30, |
|
|
|
Expected Total |
|
|
through |
|
|
|
|
|
|
|
|
|
Contract Value |
|
|
June 30, 2010 |
|
|
2010 |
|
|
2009 |
|
Project Name |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HYDRA |
|
|
24,908 |
|
|
|
9,694 |
|
|
|
121 |
|
|
|
264 |
|
LIPA I and II |
|
|
40,141 |
|
|
|
35,133 |
|
|
|
782 |
|
|
|
707 |
|
DOE-FCL |
|
|
7,898 |
|
|
|
4,977 |
|
|
|
571 |
|
|
|
62 |
|
NAVSEA Motor Study |
|
|
6,511 |
|
|
|
6,319 |
|
|
|
107 |
|
|
|
15 |
|
These significant projects represented 69% and 45% of AMSC Superconductors business unit
revenue for the three months ended June 30, 2010 and 2009, respectively.
The slight decrease in AMSC Superconductors business unit revenue for the first quarter of
fiscal 2010 was driven primarily by lower OEM wire revenue slightly offset by increased government
project revenues. We recognize superconductor cable project revenues from the Project HYDRA
contract with Consolidated Edison, Inc. (ConEdison),
17
which is being funded by the Department of Homeland Security (DHS). DHS is expected to invest up to a total of $24.9 million in the
development of a new high temperature superconductor power grid technology to enable Secure Super
Grids. Secure Super Grids utilize customized HTS wires, superconductor power cables and ancillary
controls to deliver more power through the grid while also being able to suppress power surges that
can disrupt service. Of the total $24.9 million in funding expected from DHS, it has committed
funding of $12.6 million to us as of June 30, 2010. We recognized $0.1 million in revenue related
to the Project HYDRA during the first quarter of fiscal 2010, compared to $0.3 million in the same
period of fiscal 2009. ConEdison and Southwire Company are subcontractors to us on this project. On
April 1, 2010, we received a modification to the contract that re-aligns the project funding to
correlate with our current project plans to do further development and testing.
LIPA I, completed in the first quarter of fiscal 2009, was a project to install an HTS power
cable system at transmission voltage using our first generation HTS wire for the Long Island Power
Authority. LIPA II is a project to install an HTS power cable utilizing our second generation HTS
wire for the Long Island Power Authority. DOE-FCL is a project to develop and demonstrate a
transmission voltage SuperLimiter fault current limiter (FCL). The NAVSEA Motor Study is a
project designed to test the 36.5 MW superconductor motor developed for the U.S. Navy.
The increase in the LIPA project revenue is related to a new phase of the project starting up.
Revenues from our DOE-FCL project were positively impacted by a release of funding that was
authorized in July 2009. The increase in the NAVSEA Motor Study project revenue represents a
conclusion of the follow-on contracts from the U.S. Navy.
Cost-sharing funding
In addition to reported revenues, we also received funding of $0.3 million for the first
quarter of fiscal 2010 under U.S. government cost-sharing agreements with the U.S. Air Force and
the Department of Energy (DOE), compared to $0.7 million for the first quarter of fiscal 2009.
The decrease in cost-sharing funding is primarily due to the completion of the NIST Advanced
Technology Program. All of our cost-sharing agreements provide funding in support of development
work on 344 superconductors being done in our AMSC Superconductors business unit. We anticipate
that a portion of our funding in the future will continue to come from cost-sharing agreements as
we execute joint programs with government agencies. Funding from government cost-sharing agreements
is recorded as an offset to research and development (R&D) and selling, general and
administrative (SG&A) expenses, rather than as revenue. As of June 30, 2010, we anticipate
recognizing an additional $0.5 million offset to R&D and SG&A expenses related to these
cost-sharing agreements over the following quarters of this fiscal year.
Cost of Revenues and Gross Margin
Cost of revenues increased by 15% to $58.2 million for the first quarter of fiscal 2010
compared to $50.4 million for the first quarter of fiscal 2009. Gross margin was 40.1% for the
first quarter of fiscal 2010 compared to 30.9% for the first quarter of fiscal 2009. The increase
in gross margin in the first quarter of fiscal 2010 as compared to the same period in fiscal 2009
was due primarily to a shift in mix towards higher margin wind turbine core electrical component
shipments, material cost reductions, resulting primarily from the localization of component supply
in China for our power electronic converters, which are now manufactured there, as well as
favorable foreign exchange effects. Based on average Euro and renminbi exchange rates for the
first quarter of fiscal 2010, cost of revenues denominated in these foreign currencies translated
into U.S. dollars was approximately $1.4 million lower compared to the translation of these cost of
revenues, using the average exchange rates of these currencies for the first quarter of fiscal
2009.
Operating Expenses
Research and development
A portion of our R&D expenditures related to externally-funded development contracts has been
classified as costs of revenue (rather than as R&D expenses). Additionally, a portion of R&D
expenses was offset by cost-sharing funding. Our R&D expenditures are summarized as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
R&D expenses per Consolidated Statements of Income |
|
$ |
7,335 |
|
|
$ |
4,528 |
|
R&D expenditures reclassified as costs of revenue |
|
|
3,369 |
|
|
|
1,487 |
|
R&D expenditures offset by cost-sharing funding |
|
|
141 |
|
|
|
390 |
|
|
|
|
|
|
|
|
Aggregated R&D expenses |
|
$ |
10,845 |
|
|
$ |
6,405 |
|
|
|
|
|
|
|
|
18
R&D expenses (exclusive of amounts classified as costs of revenue and amounts offset by
cost-sharing funding) increased by 62% to $7.3 million, or 8% of revenue, for the three months
ended June 30, 2010 from $4.5 million, or 6% of revenue, for the same period of fiscal 2009. The
increase in R&D expenses was driven primarily by increased headcount and related labor, material
and overhead spending to support new product development in our AMSC Power Systems business unit.
The increase in R&D expenditures reclassified to costs of revenue was a result of increased efforts
under our government funded contracts in AMSC Superconductors business unit compared to the prior
year period and increased efforts under license and development contracts for wind turbine designs in AMSC Windtec. Aggregated R&D expenses, which include amounts classified as costs of revenue and
amounts offset by cost-sharing funding, increased 69% to $10.8 million, or 11% of revenue, for the
first quarter of fiscal 2010 compared to $6.4 million, or 9% of revenue, for the first quarter of
fiscal 2009.
Selling, general, and administrative
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). Additionally, a portion of SG&A
expenses was offset by cost-sharing funding. Our SG&A expenditures are summarized as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
SG&A expenses per Consolidated Statements of Income |
|
$ |
15,183 |
|
|
$ |
10,885 |
|
SG&A expenditures reclassified as costs of revenue |
|
|
120 |
|
|
|
55 |
|
SG&A expenditures offset by cost sharing funding |
|
|
122 |
|
|
|
340 |
|
|
|
|
|
|
|
|
Aggregated SG&A expenses |
|
$ |
15,425 |
|
|
$ |
11,280 |
|
|
|
|
|
|
|
|
SG&A expenses (exclusive of amounts classified as costs of revenue and amounts offset by
cost-sharing funding) increased by 39% to $15.2 million, or 16% of revenue, in the first quarter of
fiscal 2010 from $10.9 million, or 15% of revenue, for the first quarter of fiscal 2009. The
increase in SG&A expenses was due primarily to higher stock-based compensation expense and higher
labor and related costs driven by headcount growth. Bad debt expense also increased in the first
quarter of fiscal 2010 over the same period last fiscal year by $0.9 million to reserve for certain
past due accounts. In addition, in the first quarter of fiscal 2009, there was a recovery of bad
debt reserves of $0.8 million due to payments received on previously reserved customer accounts. For
these same reasons, Aggregated SG&A expenses, which include amounts classified as costs of revenue
and amounts offset by cost sharing funding, increased 37% to $15.4 million, or 16% of revenue, for
the first quarter of fiscal 2010 from $11.3 million, or 15% of revenue, for the first quarter of
fiscal 2009.
We present Aggregated R&D and Aggregated SG&A expenses, which are non-GAAP measures, because
we believe this presentation provides useful information on our aggregate R&D and SG&A spending and
because R&D and SG&A expenses as reported on the Consolidated Statements of Income have been, and
may in the future be, subject to significant fluctuations solely as a result of changes in the
level of externally funded contract development work, resulting in significant changes in the
amount of the costs recorded as cost of revenues rather than as R&D and SG&A expenses, as discussed
above.
We plan to continue to increase R&D and SG&A expenditures in absolute terms in the coming
quarters to provide the platform for growth in subsequent years, but expect them to decline in
fiscal 2010 as a percent of revenue from fiscal 2009 levels.
Amortization of acquisition related intangibles
We recorded $0.4 million in amortization expense related to our contractual
relationships/backlog, customer relationships, core technology and know-how, trade names and
trademark intangible assets for the first quarters of each of fiscal 2010 and fiscal 2009. These
intangible assets are a result of our AMSC Windtec and PQS acquisitions.
Operating income (loss)
Our operating income (loss) is summarized as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
AMSC Power Systems |
|
$ |
25,485 |
|
|
$ |
15,395 |
|
AMSC Superconductors |
|
|
(5,910 |
) |
|
|
(5,497 |
) |
Unallocated corporate expenses |
|
|
(3,494 |
) |
|
|
(3,507 |
) |
|
|
|
|
|
|
|
Total |
|
$ |
16,081 |
|
|
$ |
6,391 |
|
|
|
|
|
|
|
|
19
AMSC Power Systems operating income increased to $25.5 million in the first quarter of fiscal
2010 from $15.4 million in the first quarter of fiscal 2009. The increase in the first quarter of
fiscal 2010 was primarily the result of higher sales, as described above.
AMSC Superconductors operating loss increased to $5.9 million in the first quarter of fiscal
2010 from $5.5 million in the first quarter of fiscal 2009. The increase in operating loss for the
first quarter of fiscal 2010 is primarily due to increased operating expenses to support planned
operations expansion.
Unallocated corporate expenses include stock-based compensation expense of $3.5 million for
the first quarter of fiscal 2010 compared to $3.1 million for the first quarter of fiscal 2009.
Non-operating income (expenses)/Interest income
Interest income was $0.2 million for the first quarters of each of fiscal 2010 and fiscal
2009. Due to current economic conditions, yields are low for interest bearing assets.
Other income (expense), net, was $0.2 million of other income in the first quarter of fiscal
2010 compared to $2.0 million of other expense in first quarter of fiscal 2009. Other income, net,
primarily relates to net foreign currency translation gains and losses and net realized and
unrealized losses on hedging contracts. In the first quarter of fiscal 2009 a hedging program had
not been implemented for the entire quarter, resulting in a larger foreign exchange loss.
Income Taxes
During the first quarters of fiscal 2010 and fiscal 2009, we recorded income tax expense of
$7.3 million and $2.9 million, respectively. Income tax expense in both periods was driven by
income generated in foreign jurisdictions. We incurred losses in the U.S. during the first quarters
of fiscal 2010 and fiscal 2009.
Non-GAAP Measures
Generally, a non-GAAP financial measure is a numerical measure of a companys 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 Form 10-Q, however, should be considered in
addition to, and not as a substitute for or superior to, the comparable measure prepared in
accordance with GAAP.
We define non-GAAP net income as net income before amortization of acquisition-related
intangibles, restructuring and impairments, stock-based compensation, other unusual charges and any
tax effects related to these items. We believe non-GAAP net income is an important measurement for
management and investors given the effect that these non-cash or non-recurring charges have on our
net income. We regard non-GAAP net income as a useful measure of operating performance which more
closely aligns net income with cash earnings generated by continuing operations. A reconciliation
of non-GAAP to GAAP net income is set forth in the table below (in thousands, except per share
data):
20
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
June 30, |
|
|
|
2010 |
|
|
2009 |
|
Net income |
|
$ |
9,170 |
|
|
$ |
1,792 |
|
Amortization of acquisition-related intangibles |
|
|
386 |
|
|
|
445 |
|
Restructuring and impairments |
|
|
|
|
|
|
334 |
|
Stock-based compensation |
|
|
3,499 |
|
|
|
3,066 |
|
Tax effects |
|
|
(83 |
) |
|
|
(88 |
) |
|
|
|
|
|
|
|
Non-GAAP net income |
|
$ |
12,972 |
|
|
$ |
5,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP earnings per share |
|
$ |
0.28 |
|
|
$ |
0.12 |
|
|
|
|
|
|
|
|
Weighted average diluted shares outstanding |
|
|
45,983 |
|
|
|
44,533 |
|
|
|
|
|
|
|
|
We generated
non-GAAP net income of $13.0 million or $0.28 per diluted share, for the three
months ended June 30, 2010, compared to a non-GAAP net income of $5.5 million or $0.12 per diluted
share, for the three months ended June 30, 2009. The increase in non-GAAP net income was driven
primarily by higher net income and, to a lesser extent, higher stock-based compensation expense,
which was added back to net income.
Liquidity and Capital Resources
At June 30, 2010, we had cash, cash equivalents, marketable securities and restricted cash of
$120.7 million compared to $155.1 million at March 31, 2010, a decrease of $34.4 million. Our cash
and cash equivalents, marketable securities and restricted cash are summarized as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
March 31, |
|
|
|
2010 |
|
|
2010 |
|
Cash and cash equivalents |
|
$ |
64,844 |
|
|
$ |
87,594 |
|
Marketable securities |
|
|
50,593 |
|
|
|
61,811 |
|
Restricted cash |
|
|
5,265 |
|
|
|
5,713 |
|
|
|
|
|
|
|
|
Total cash, cash equivalents, marketable securities and restricted cash |
|
$ |
120,702 |
|
|
$ |
155,118 |
|
|
|
|
|
|
|
|
The decrease in cash and cash equivalents, marketable securities and restricted cash at June
30, 2010 from March 31, 2010 was primarily due to some customer payments shifting from June to July
2010, an increase in capital expenditures in line with our earlier forecast and a decrease of the
dollar value of cash held in foreign currencies.
For the quarter ended June 30, 2010, net cash used in operating activities was $18.5 million
compared to net cash used in operating activities of $14.1 million in the first quarter of fiscal
2009. The increase in cash used by operations is due primarily to an increase in cash used for
working capital of $17.0 million, partially offset by our increase in net income of $7.4 million.
For the quarter ended June 30, 2010, net cash used in investing activities was less than $0.1
million compared to net cash provided by investing activities of $7.7 million in the first quarter
of fiscal 2009. The decrease in cash provided by investing activities was driven primarily by an
increase in capital expenditures.
For the first quarter of fiscal 2010, cash provided by financing activities was $0.6 million
compared to $1.5 million in the first quarter of fiscal 2009. The decrease was due to a reduction
in proceeds from the exercise of employee stock options.
Although our cash requirements fluctuate based on a variety of factors, including customer
adoption of our products and our research and development efforts to commercialize our products, we
believe that our available cash will be sufficient to fund our working capital, capital
expenditures, and other cash requirements for at least the next twelve months.
We have unused, unsecured lines of credit consisting of CNY 11.9 million (approximately $1.8
million) and 2.0 million (approximately $2.4 million). We also have an additional $3.5 million in
bank guarantees and letters of credit supported by unsecured lines of credit.
21
The possibility exists that we may pursue additional acquisition and joint venture
opportunities in the future that may affect liquidity and capital resource requirements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined under SEC rules, such as
relationships with unconsolidated entities or financial partnerships, which are often referred to
as structured finance or special purpose entities, established for the purpose of facilitating
transactions that are not required to be reflected on our balance sheet except as discussed below.
We occasionally enter into construction contracts that include a performance bond. As these
contracts progress, we continually assess the probability of a payout from the performance bond.
Should we determine that such a payout is likely, we would record a liability. As of June 30, 2010,
there were no recorded performance-based liabilities.
New Accounting Pronouncements
In September 2009, the Emerging Issues Task Force issued new rules pertaining to the
accounting for revenue arrangements with multiple deliverables. The new rules provide an
alternative method for establishing fair value of a deliverable when vendor specific objective
evidence or third party evidence cannot be determined. The rules provide for the determination of
the best estimate of selling price for separate deliverables and allows for the allocation of
arrangement consideration using this relative selling price model. The guidance supersedes the
prior multiple element revenue arrangement accounting rules that we previously used. We have
adopted this guidance effective April 1, 2010. The adoption did not have a material impact on our
financial condition or results of operations.
22
|
|
|
ITEM 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We face exposure to financial market risks, including adverse movements in foreign currency
exchange rates and changes in interest rates. These exposures may change over time as our business
practices evolve and could have a material adverse impact on our financial results.
Cash and cash equivalents
Our exposure to market risk through financial instruments, such as investments in marketable
securities, is limited to interest rate risk and is not material. Our investments in marketable
securities consist primarily of government-backed securities and sovereign debt and are designed,
in order of priority, to preserve principal, provide liquidity, and maximize income. Investments
are monitored to limit exposure to mortgage-backed securities and similar instruments responsible
for the recent turmoil in the credit markets. Interest rates are variable and fluctuate with
current market conditions. We do not believe that a 10% change in interest rates would have a
material impact on our financial position or results of operation.
Foreign currency exchange risk
Our foreign currency risk management strategy is principally designed to mitigate the
potential financial impact of changes in the value of transactions and balances denominated in
foreign currency, resulting from changes in foreign currency exchange rates. Our foreign currency
hedging program uses both forward contracts and currency options to manage the foreign currency
exposures that exist as part of its ongoing business operations.
Cash Flow Hedges
We hedge a portion of our intercompany sales of inventory over a maximum period of 15 months
using forward foreign exchange contracts which are accounted for as cash flow hedges, to mitigate
the impact of volatility associated with foreign currency transactions. To the extent these
derivatives are effective in offsetting the variability of the hedged cash flows, and otherwise
meet the hedge accounting criteria, changes in the derivatives value are not included in current
earnings but are included in Other Comprehensive Income in stockholders equity. The changes in
fair value will subsequently be reclassified into earnings as a component of cost of revenues, as
applicable, when the forecasted transaction occurs. To the extent that a previously forecasted
transaction is no longer an effective hedge, any ineffectiveness measured in the hedging
relationship is recorded currently in earnings in the period it occurs. We do not enter into
derivative instruments for trading or speculative purposes.
At June 30, 2010, the Company had three forward contracts outstanding to hedge exposure at the
Companys wholly-owned Austrian subsidiary, AMSC Windtec GmbH (AMSC Windtec), selling Euros and
buying USD at $1.2408, $1.242 and $1.2433, with notional values of $6.9 million, $4.6
million and $2.3 million, respectively. These contracts will expire on September 27, 2010, December
27, 2010 and March 28, 2011, respectively. At June 30, 2010, these forward exchange contracts had
an aggregate U.S. dollar equivalent fair value amounting to a net unrealized loss of $0.2 million
in other comprehensive income. The net gain or loss from these cash flow hedges reported in
accumulated other comprehensive income will be reclassified to earnings and recorded in revenues in
our consolidated statement of operations when the related inventory is sold to third-party
customers.
Other Derivatives
In addition to cash flow hedges, the Company also enters into foreign currency forward
exchange contracts to mitigate the impact of foreign exchange risk related to non-functional
currency receivable balances in its foreign entities. To the extent that hedge accounting criteria
is not met, changes in the fair value of these contracts are recorded in earnings in the period
which they occur. These contracts primarily are denominated in the Euro and Chinese renminbi
(CNY) and have maturities of less than six months. On June 30, 2010, the Company had two forward
contracts outstanding to hedge USD receivables exposure at AMSC Windtec, selling Euros and buying
USD at $1.2192 and $1.2173, with
notional values of $27.0 million and $24.0 million, respectively, which both expired on July 30, 2010
.. Gains and losses on these contracts are included in other expense, net.
As of June 30, 2010, actual unrealized gains included in Prepaid expenses were $0.2 million
for foreign currency forward exchange contracts and actual unrealized losses included in Accrued
liability were $0.1 million for cash flow hedges. As of March 31, 2010, actual unrealized gains
included in Prepaid expenses were $0.2 million for foreign currency forward exchange contracts.
Net realized and unrealized losses on forward contracts and option contracts included in other
expense, net, excluding the underlying foreign currency exposure being hedged, were $4.0 million
and $0.3 million for the three months ended June 30, 2010 and 2009 respectively.
23
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial
officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2010.
The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934 (the Exchange Act), means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by a company in the
reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the companys management, including its principal executive
and principal financial officers, as appropriate to allow timely decisions regarding required
disclosure. Management recognizes that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls
and procedures. Based on the evaluation of our disclosure controls and procedures as of June 30,
2010, our chief executive officer and chief financial officer concluded that, as of such date, our
disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the
fiscal quarter ended June 30, 2010 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
24
PART IIOTHER INFORMATION
Investing in our common stock involves a high degree of risk. You should carefully consider
the risks and uncertainties described in our annual report on Form 10-K for the year ended March
31, 2010 in addition to the other information included in this quarterly report. If any of the
risks actually occurs, our business, financial condition or results of operations would likely
suffer. In that case, the trading price of our common stock could fall.
As of June 30, 2010, there have not been any material changes to the risk factors disclosed in
our Annual Report on Form 10-K for the fiscal year ended March 31, 2010, although we may disclose
changes to such risk factors or disclose additional risk factors from time to time in our future
filings with the SEC.
See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits
filed as part of this quarterly report, which Exhibit Index is incorporated herein by this
reference.
25
SIGNATURE
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
|
|
Date: August 5, 2010 |
By: |
/s/ DAVID A. HENRY
|
|
|
|
David A. Henry |
|
|
|
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
|
26
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description |
|
|
|
|
31.1
|
|
Chief Executive OfficerCertification pursuant to Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2
|
|
Chief Financial OfficerCertification pursuant to Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32.1
|
|
Chief Executive OfficerCertification pursuant to Rule13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
32.2
|
|
Chief Financial OfficerCertification pursuant to Rule 13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
101.INS
|
|
XBRL Instance Document.** |
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.** |
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document.** |
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document.** |
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document.** |
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.** |
** submitted electronically herewith
Attached as Exhibits 101 to this report are the following formatted in XBRL (Extensible Business Reporting
Language): (i) Condensed Consolidated Statements of Income for the quarters ended June 30, 2010 and 2009,
(ii) Condensed Consolidated Balance Sheets at June 30, 2010 and March 31, 2010, (iii) Condensed Consolidated
Statements of Cash Flows for the quarters ended June 30, 2010 and 2009, (iv) Condensed Consolidated Statements
of Comprehensive Income (Loss) for the three months ended June 30, 2010 and 2009 and (v) Notes to Condensed
Consolidated Financial Statements.
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly
Report on Form 10-Q is deemed not filed or part of a registration statement or prospectus for purposes of sections 11
or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
27