UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

November 6, 2014

American Superconductor Corporation

(Exact name of registrant as specified in its charter)

 

Delaware

 

0-19672

 

04-2959321

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

64 Jackson Road

Devens, Massachusetts

 

01434

(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (978) 842-3000

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02. Results of Operations and Financial Condition.

On November 6, 2014, American Superconductor Corporation (the “Company”) announced its financial results for the second quarter ended September 30, 2014 of the Company’s fiscal year 2014. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

 

Exhibit
No.

  

Description

99.1   

Press release issued by American Superconductor Corporation on November 6, 2014

(furnished, not “filed,” for purposes of Section 18 of the Exchange Act).

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    AMERICAN SUPERCONDUCTOR CORPORATION
Date: November 6, 2014     By:   /s/ David A. Henry
       

David A. Henry

Executive Vice President and Chief Financial Officer

 

3


EXHIBIT INDEX

 

Exhibit
No.

  

Description

99.1   

Press release issued by American Superconductor Corporation on November 6, 2014

(furnished, not “filed,” for purposes of Section 18 of the Exchange Act).

 

4



Exhibit 99.1

 

LOGO

AMSC Reports Second Quarter

Fiscal 2014 Financial Results and Provides Business Outlook

Company to host conference call today at 10:00 am ET

Devens, MA – November 6, 2014 – AMSC (NASDAQ: AMSC), a global solutions provider serving wind and power grid industry leaders, today reported financial results for its second quarter of fiscal 2014 ended September 30, 2014.

Revenues for the second quarter of fiscal 2014 were $12.5 million, compared with $24.2 million for the same period of fiscal 2013. The year over year decrease in revenues was due to decreases in both the Company’s Wind and Grid segments.

AMSC’s net loss for the second quarter of fiscal 2014 increased to $25.4 million, or $0.31 per share, from $14.6 million, or $0.24 per share, for the same period of fiscal 2013. Net loss for the second quarter of fiscal 2014 includes a charge of $10.2 million relating to an arbitration award to a former customer and a non-cash charge of $3.5 million to fully write off the Company’s remaining investment in Blade Dynamics.

Excluding these and other non-cash and unusual charges, the Company’s non-GAAP net loss for the second quarter of fiscal 2014 was $11.8 million, or $0.14 per share, compared with a non-GAAP net loss of $10.8 million, or $0.18 per share, in the same period of fiscal 2013. Please refer to the financial table below for a reconciliation of GAAP to non-GAAP results.

Cash, cash equivalents, and restricted cash at September 30, 2014 totaled $38.2 million, compared with $42.8 million at June 30, 2014. During the second quarter of fiscal 2014, the Company received net proceeds under its At-Market Sales Facility (ATM), after deducting sales commissions, of $3.7 million from the issuance of approximately 2.1 million shares of common stock at an average sales price of $1.75 per share.

“During the second fiscal quarter, we continued to make progress towards our goals in both our Wind and Grid businesses. Our licensee, Inox Wind, continues to be a growing customer in the Indian wind market as evidenced by our $55 million in orders from Inox this fiscal year. We also announced our Resilient Electric Grid contract with the Department of Homeland Security and partnership with ComEd, and won three new D-VAR contracts – all very important milestones towards growing our grid revenues,” said Daniel P. McGahn, President and CEO, AMSC. “We remain focused on executing on our objectives and we believe that we will see stronger revenues in the second half of the fiscal year.”

 

LOGO


AMSC Reports Q2 Results    Page 2

 

Business Outlook

For the third quarter ending December 31, 2014, AMSC expects that its revenues will be in the range of $18 million to $20 million. The Company’s net loss for the third quarter of fiscal 2014 is expected to be less than $12.5 million, or $0.15 per share. AMSC expects that its non-GAAP net loss (as defined below) for the third quarter of fiscal 2014 will be less than $11.5 million and $0.13 per share. For the full fiscal year 2014, the Company expects revenues to be in the range of $65 million to $75 million.

Conference Call Reminder

In conjunction with this announcement, AMSC management will participate in a conference call with investors beginning at 10:00 a.m. Eastern Time today to discuss the Company’s results and its business outlook. Those who wish to listen to the live or archived conference call webcast should visit the “Investors” section of the Company’s website at http://www.amsc.com/investors. The live call also can be accessed by dialing 785-830-7992 and using conference ID 1801156.

About AMSC (NASDAQ: AMSC)

AMSC generates the ideas, technologies and solutions that meet the world’s demand for smarter, cleaner … better energy™. Through its Windtec™ Solutions, AMSC provides wind turbine electronic controls and systems, designs and engineering services that reduce the cost of wind energy. Through its Gridtec™ Solutions, AMSC provides the engineering planning services and advanced grid systems that optimize network reliability, efficiency and performance. The Company’s solutions are now powering gigawatts of renewable energy globally and are enhancing the performance and reliability of power networks in more than a dozen countries. Founded in 1987, AMSC is headquartered near Boston, Massachusetts with operations in Asia, Australia, Europe and North America. For more information, please visit www.amsc.com.

AMSC, Windtec, Gridtec, and Smarter, Cleaner … Better Energy are trademarks or registered trademarks of American Superconductor Corporation. All other brand names, product names, trademarks or service marks belong to their respective holders.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this release about our expectations regarding our belief that our Resilient Electric Grid contract with the Department of Homeland Security, partnership with ComEd, and new D-VAR contracts are important milestones toward growing our Grid revenues; our belief that we will see stronger revenues in the second half of the fiscal year,; our expectations regarding our future financial results, and other statements containing the words “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements represent management’s current expectations and are inherently uncertain. There are a number of important factors that could materially impact the value of our common stock or cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include: We have a history of operating losses, which may continue in the future. Our operating results may fluctuate significantly from quarter to quarter and may fall below expectations in any particular fiscal quarter; we have a history of negative operating cash flows, and we may require additional financing in the future, which may not be available to us; Our Term Loans include certain covenants and other events of default. Should we not comply with these covenants or incur an event of default, we may be required to repay our obligation in cash, which could have an adverse effect on our liquidity; We may be required to issue performance bonds or provide letters of credit, which restricts our ability to access any cash used as collateral for the bonds or letters of credit; Changes in exchange rates could adversely affect our results from operations; If we fail to maintain proper and effective internal controls over financial reporting, our ability to produce accurate and timely financial statements could be impaired and may lead investors and other users to lose confidence in our financial data; Our success in addressing the wind energy market is dependent on the manufacturers that license our designs; Our success is dependent upon attracting and retaining qualified personnel and our inability to do so could significantly damage our business and prospects; We may not realize all of the sales expected from our backlog of orders and contracts; Our financial condition may have an


AMSC Reports Q2 Results    Page 3

 

adverse effect on our customer and supplier relationships; Failure to successfully execute the consolidation of our Grid manufacturing operations or achieve expected savings could adversely impact our financial performance; Our business and operations would be adversely impacted in the event of a failure or security breach of our information technology infrastructure; We may not be able to launch operations at our newly leased manufacturing facility in Romania, and, if we are able to do so, we may have manufacturing quality issues, which would negatively affect our revenues and financial position; We rely upon third-party suppliers for the components and subassemblies of many of our Wind and Grid products, making us vulnerable to supply shortages and price fluctuations, which could harm our business; Many of our revenue opportunities are dependent upon subcontractors and other business collaborators; If we fail to implement our business strategy successfully, our financial performance could be harmed; Problems with product quality or product performance may cause us to incur warranty expenses and may damage our market reputation and prevent us from achieving increased sales and market share; New regulations related to conflict-free minerals may force us to incur significant additional expenses; Our contracts with the U.S. government are subject to audit, modification or termination by the U.S. government and include certain other provisions in favor of the government. The continued funding of such contracts remains subject to annual congressional appropriation which, if not approved, could reduce our revenue and lower or eliminate our profit; Many of our customers outside of the United States are, either directly or indirectly, related to governmental entities, and we could be adversely affected by violations of the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery laws outside the United States; We have limited experience in marketing and selling our superconductor products and system-level solutions, and our failure to effectively market and sell our products and solutions could lower our revenue and cash flow; We may acquire additional complementary businesses or technologies, which may require us to incur substantial costs for which we may never realize the anticipated benefits; Our success depends upon the commercial use of high temperature superconductor (HTS) products, which is currently limited, and a widespread commercial market for our products may not develop; Growth of the wind energy market depends largely on the availability and size of government subsidies and economic incentives; We have operations in and depend on sales in emerging markets, including China and India, and global conditions could negatively affect our operating results or limit our ability to expand our operations outside of these countries. Changes in China’s or India’s political, social, regulatory and economic environment may affect our financial performance; Our products face intense competition, which could limit our ability to acquire or retain customers; Our international operations are subject to risks that we do not face in the United States, which could have an adverse effect on our operating results; Adverse changes in domestic and global economic conditions could adversely affect our operating results; We may be unable to adequately prevent disclosure of trade secrets and other proprietary information; Our patents may not provide meaningful protection for our technology, which could result in us losing some or all of our market position; There are a number of technological challenges that must be successfully addressed before our superconductor products can gain widespread commercial acceptance, and our inability to address such technological challenges could adversely affect our ability to acquire customers for our products; We have not manufactured our Amperium wire in commercial quantities, and a failure to manufacture our Amperium wire in commercial quantities at acceptable cost and quality levels would substantially limit our future revenue and profit potential; Third parties have or may acquire patents that cover the materials, processes and technologies we use or may use in the future to manufacture our Amperium products, and our success depends on our ability to license such patents or other proprietary rights; Our technology and products could infringe intellectual property rights of others, which may require costly litigation and, if we are not successful, could cause us to pay substantial damages and disrupt our business; We have filed a demand for arbitration and other lawsuits against our former largest customer, Sinovel, regarding amounts we contend are overdue. We cannot be certain as to the outcome of these proceedings; We have been named as a party in various legal proceedings, and we may be named in additional litigation, all of which will require significant management time and attention, result in significant legal expenses and may result in an unfavorable outcome, which could have a material adverse effect on our business, operating results and financial condition; Our common stock has experienced, and may continue to experience, significant market price and volume fluctuations, which may prevent our stockholders from selling our common stock at a profit and could lead to costly litigation against us that could divert our management’s attention.

These and the important factors discussed under the caption “Risk Factors” in Part 1. Item 1A of our Form 10-K for the fiscal year ended March 31, 2014, and our other reports filed with the SEC, 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 management’s estimates as of the date of this press release. 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 press release.


AMSC Reports Q2 Results    Page 4

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

     Three months ended     Six months ended  
     September 30,     September 30,  
     2014     2013     2014     2013  

Revenues

        

Wind

   $ 7,462      $ 14,691      $ 15,113      $ 29,392   

Grid

     4,993        9,490        9,038        17,875   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenues

     12,455        24,181        24,151        47,267   

Cost of revenues

     13,773        22,611        25,860        40,598   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross (loss) profit

     (1,318     1,570        (1,709     6,669   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Research and development

     3,078        3,083        6,198        6,110   

Selling, general and administrative

     8,046        8,682        15,984        19,508   

Arbitration award expense

     10,188        —          10,188        —     

Restructuring and impairments

     3,731        751        4,909        764   

Amortization of acquisition related intangibles

     39        82        79        164   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     25,082        12,598        37,358        26,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (26,400     (11,028     (39,067     (19,877

Change in fair value of derivatives and warrants

     795        886        760        1,355   

Interest expense, net

     (496     (3,505     (1,030     (5,617

Other income (expense), net

     740        (635     588        (566
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax expense

     (25,361     (14,282     (38,749     (24,705

Income tax expense

     62        341        190        430   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (25,423   $ (14,623   $ (38,939   $ (25,135
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

        

Basic

   $ (0.31   $ (0.24   $ (0.49   $ (0.42
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ (0.31   $ (0.24   $ (0.49   $ (0.42
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding

        

Basic

     81,471        61,116        79,590        59,712   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     81,471        61,116        79,590        59,712   
  

 

 

   

 

 

   

 

 

   

 

 

 


AMSC Reports Q2 Results    Page 5

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

     September 30,     March 31,  
     2014     2014  
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 34,679      $ 43,114   

Accounts receivable, net

     9,673        7,556   

Inventory

     24,460        20,694   

Prepaid expenses and other current assets

     10,280        9,004   

Restricted cash

     3,425        2,913   
  

 

 

   

 

 

 

Total current assets

     82,517        83,281   

Property, plant and equipment, net

     60,388        64,574   

Intangibles, net

     1,708        1,995   

Restricted cash

     100        3,394   

Deferred tax assets

     7,724        7,724   

Other assets

     3,410        7,541   
  

 

 

   

 

 

 

Total assets

   $ 155,847      $ 168,509   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable and accrued expenses

   $ 23,537      $ 21,764   

Accrued arbitration liability

     10,631        —     

Note payable, current portion, net of discount of $361 as of September 30, 2014 and $555 as of March 31, 2014

     4,793        6,240   

Derivative liabilities

     1,841        2,601   

Deferred revenue

     17,591        9,456   

Deferred tax liabilities

     7,724        7,761   
  

 

 

   

 

 

 

Total current liabilities

     66,117        47,822   

Note Payable, net of current portion and discount of $137 as of September 30, 2014 and $287 as of March 31, 2014

     4,529        6,380   

Deferred revenue

     2,895        990   

Other liabilities

     965        1,058   
  

 

 

   

 

 

 

Total liabilities

     74,506        56,250   
  

 

 

   

 

 

 

Stockholders’ equity:

    

Common stock

     860        789   

Additional paid-in capital

     975,831        966,390   

Treasury stock

     (771     (370

Accumulated other comprehensive income

     749        1,839   

Accumulated deficit

     (895,328     (856,389
  

 

 

   

 

 

 

Total stockholders’ equity

     81,341        112,259   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 155,847      $ 168,509   
  

 

 

   

 

 

 


AMSC Reports Q2 Results    Page 6

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     Six months ended September,  
     2014     2013  

Cash flows from operating activities:

    

Net loss

   $ (38,939   $ (25,135

Adjustments to reconcile net loss to net cash used in operations:

    

Depreciation and amortization

     4,901        5,343   

Stock-based compensation expense

     3,099        4,287   

Impairment of long lived assets

     3,464        —     

Provision for excess and obsolete inventory

     1,285        192   

Loss on minority interest investments

     410        499   

Change in fair value of derivatives and warrants

     (760     (1,355

Non-cash interest expense

     343        4,765   

Other non-cash items

     (860     892   

Changes in operating asset and liability accounts:

    

Accounts receivable

     (2,264     10,704   

Inventory

     (5,283     9,315   

Prepaid expenses and other current assets

     (1,533     3,531   

Accounts payable and accrued expenses

     4,154        (8,944

Accrued arbitration liability

     10,188        —     

Deferred revenue

     10,426        (18,873
  

 

 

   

 

 

 

Net cash used in operating activities

     (11,369     (14,779
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Net cash provided by investing activities

     2,264        3,443   
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Net cash provided by (used in) financing activities

     844        (2,266
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (174     226   
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (8,435     (13,376

Cash and cash equivalents at beginning of year

     43,114        39,243   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

     34,679      $ 25,867   
  

 

 

   

 

 

 


AMSC Reports Q2 Results    Page 7

 

RECONCILIATION OF GAAP NET INCOME (LOSS) TO NON-GAAP NET INCOME (LOSS)

(In thousands, except per share data)

 

     Three months ended
September 30, 2014
    Six months ended
September 30, 2014
 
     2014     2013     2014     2013  

Net loss

   $ (25,423   $ (14,623   $ (38,939   $ (25,135

Stock-based compensation

     1,518        2,152        3,099        4,287   

Arbitration award expense

     10,188        —          10,188        —     

Amortization of acquisition-related intangibles

     39        82        79        164   

Restructuring and impairment charges

     3,731        751        4,909        764   

Sinovel litigation costs

     —          (5     —          (7

Consumption of zero cost-basis inventory

     (1,195     (1,319     (2,567     (2,493

Change of fair value of derivatives and warrants

     (795     (886     (760     (1,355

Non-cash interest expense

     154        3,093        343        4,765   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net loss

   $ (11,783   $ (10,755   $ (23,648   $ (19,010
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP loss per share

   $ (0.14   $ (0.18   $ (0.30   $ (0.32
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding

     81,471        61,116        79,590        59,712   
  

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION OF FORECAST GAAP NET LOSS TO NON-GAAP NET LOSS

(In millions, except per share data)

 

     Three months ending
December 31, 2014
 

Net loss

   $ (12.5

Stock-based compensation

     1.6   

Restructuring and impairment charges

     0.8   

Non-cash interest expense

     0.1   

Consumption of zero-cost inventory

     (1.5
  

 

 

 

Non-GAAP net loss

   $ (11.5
  

 

 

 

Non-GAAP net loss per share

   $ (0.13
  

 

 

 

Shares outstanding

     86.0   
  

 

 

 

Note: Non-GAAP net loss is defined by the Company as net loss before stock-based compensation; arbitration award expense; amortization of acquisition-related intangibles; restructuring and impairment charges; Sinovel litigation costs; consumption of zero cost-basis inventory;change in fair value of derivatives and warrants; non-cash interest expense; and other unusual charges, net of any tax effects related to these items. The Company believes non-GAAP net loss assists management and investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding these non-cash, non-recurring or other charges that it does not believe are indicative of its core operating performance. The Company also regards non-GAAP net loss as a useful measure of operating performance to complement operating loss, net loss and other


AMSC Reports Q2 Results    Page 8

 

GAAP financial performance measures. In addition, the Company uses non-GAAP net loss as a factor in evaluating management’s performance when determining incentive compensation and to evaluate the effectiveness of its business strategies.

Generally, a non-GAAP financial measure is a numerical measure of a company’s 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 release, however, should be considered in addition to, and not as a substitute for or superior to, operating income, cash flows, or other measures of financial performance prepared in accordance with GAAP. A reconciliation of non-GAAP to GAAP net loss is set forth in the table above.

AMSC Contact:

Kerry Farrell

Phone: 978-842-3247

Email: kerry.farrell @ amsc.com

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