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The long-awaited Fiscal 2000 financial report is out. You can view the actual numbers on the American Superconductor site or read a summary on Yahoo or a number of other news services. I'm sure there will be several analyses, commentaries and bashings of the numbers. I am particularly interested in what Yurek had to say about it and about the future of AMSC.

Assessing AMSC's Growth and Financial Health

`Fiscal Year 2000 was very successful for American Superconductor,' commented Greg Yurek, American Superconductor's chief executive officer. ``During the year we further strengthened our platform for profitable growth across our businesses.'

Yurek pointed to a series of key advances for the company in the fiscal year just ended: ``We achieved new, world records in the electrical and mechanical performance of our high temperature superconducting (HTS) wire, and pulled even further ahead of our competition around the globe. We achieved a significant reduction in manufacturing cost of our HTS wire, created a record build-up in orders, including a new development agreement with Pirelli Cables, significantly strengthened our intellectual property base to over 200 patents, patent applications and licenses, and created a marketing and sales strategic alliance with General Electric for our SMES product line.'

``We believe we have the infrastructure and momentum in place to achieve our revenue and profit goals for our SMES power quality and reliability business during the current fiscal year,' said Yurek. ``The increasing demand for higher reliability of the nation's power grid certainly provides the market context for strong sales growth.'

Yurek noted that the company's highly successful equity offering, which netted $205.6 million to the company provides the financial strength for the company to continue to execute, and in some cases accelerate its growth plans. ``During the last fiscal year, we achieved our goal to double our HTS wire manufacturing capacity to 500 km per year,' said Yurek. ``We are now implementing our plans to expand HTS wire manufacturing to 10,000 km per year, to further expand our SMES manufacturing capacity from two systems per month to 15 per month by the end of calendar 2001, and to accelerate development of our business in HTS motors. We are now able to invest even more aggressively in the development of our second-generation HTS wire technology, which we believe will create accelerated sales growth in the second half of this decade.'

In the previous post Phil already referred to the following announcement concerning the new manufacturing facility:

In a separate announcement today, American Superconductor revealed that it plans to locate the world's first commercial HTS wire manufacturing plant at the Devens Commerce Center, 35 miles northwest of Boston. American Superconductor expects to break ground at the green-field site by the end of the next quarter and to start occupying the building and training new employees in the summer of 2001. Full production of HTS wire is expected to begin in early 2002.

Considering the Bottom Line

IMO the most important factor regarding these announcements is that American Superconductor is doing exactly what they proposed in order to obtain backing for the Secondary Offering in March. The big difference, and the reason they will weather the storm regardless of the state of the stock market, is that although AMSC asked for less, the underwriters were so confident in the company and the need for a manufacturing facility to meet increased demand for their products that they increased the funding to over $200 million.

I'm sure the AMSC price will continue to fluctuate with the tides of the market, and the shorts and day traders will follow the trends and even fuel more volatility. But American Superconductor's future is not dependent upon what is happening now. With management skills and wise decision-making (both of which this company has consistently shown in the face of seemingly overwhelming odds), American Superconductor can work confidently to bring product to market with years of lead time on other superconducting companies currently struggling to find enough funding to become competitive.

Remaining on the Cutting Edge

American Superconductor is unquestionably a world leader and on the cutting edge of an industry gaining global prominence, with or without Gilder's endorsement and the accompanying hype. As summer approaches and the mercury rises, the reality of brownouts and blackouts is becoming an increasing concern. There was a front-page article in the Wall Street Journal last week regarding the serious problem of insufficient and outdated electric power systems in Pennsylvania, New Jersey, Maryland and Delaware and the need for forced brownouts and blackouts to preserve the integrity of the region's electric power grid as power usage soars.

With the proven success of prototypes and the contracted installations of SMES and D-SMES units nearing completion in major markets, AMSC is gaining visibility. Sales could increase exponentially as other power companies realize that the capacity and reliability of their outmoded systems can be updated and dramatically improved with American Superconductor's PQ units without replacing existing infrastructures. AMSC is poised to provide the most cost-efficient and environmentally friendly solution for these problems.

OT: I want to thank the members of this board for the endorsements you have given my posts and the welcome you have given me. Posters have been mutually supportive and stayed above the bickering and spam that permeates and degrades so many other boards. Your appreciation of my research has made me resolve never to post without extensive DD. I hope I can live up to your praise and expectations. The technical analysis I will leave to the experts in the field. My goal is to share my research to keep readers apprised of AMSC announcements and developments and how they can affect present and future shareholders.

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