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Superconductor Technologies Inc. Announces Fourth Quarter and Year-End 2004 ResultsSANTA BARBARA, Calif., March 10 /PRNewswire-FirstCall/ -- Superconductor Technologies Inc. ("STI"), the global leader in high- temperature superconducting (HTS) products for wireless voice and data applications, today announced results for the quarter and year ended December 31, 2004. Net loss for the quarter ended December 31, 2004 was $11.3 million, which included restructuring and impairment charges of $1.9 million, of which $1.6 million was non-cash. The net loss also included increased inventory obsolescence reserves of $4.2 million. The fourth quarter loss compared to net income of $910,000 in the fourth quarter of 2003. Net loss per diluted share for the fourth quarter of 2004 was $0.11, compared to a net income of $0.01 per diluted share in the same quarter of 2003. "As previously announced, our lower than expected fourth quarter revenues reflected delays in receiving a few large government and commercial purchase orders, which the company now expects to receive in 2005," said M. Peter Thomas, STI's president and chief executive officer. "On the other hand, we secured a follow-on purchase contract from one of our major customers in December, which calls for minimum shipments in 2005 of about $7.25 million. Furthermore, our immediately shippable backlog at the end of 2004 was $730,000, as compared with $250,000 at the end of 2003." Total net revenues were $23.0 million in 2004, a decrease of 53 percent as compared to $49.4 million in 2003. Net commercial product revenues for the year 2004 were $16.8 million, a decrease of 56 percent compared to $38.6 million a year ago. The company recorded $6.2 million in government and other contract revenues for the year ended December 31, 2004, versus $10.8 million for the year ended December 31, 2003. Net loss for the year ended December 31, 2004 was $31.2 million, or $0.37 per diluted share, which included restructuring and impairment charges of $5.2 million, of which $3.7 million was non-cash. The net loss for the year also included increased inventory obsolescence reserves of $4.8 million, ISCO related litigation expenses of $545,000 and a non-cash interest charge of $802,000 for warrants issued in connection with a bridge loan. Net loss for the year ended December 31, 2003 was $11.3 million, or $0.18 per diluted share. This net loss included ISCO related litigation expenses of $4.8 million. At December 31, 2004, STI had $12.8 million in cash and cash equivalents, and $16.1 million in working capital. The total number of common shares outstanding was 107,711,026 at December 31, 2004. "Last month we announced the appointment of Jeff Quiram, who will become STI's president and chief executive officer and a member of our Board in conjunction with my retirement on March 15th," continued Thomas. "A 20 plus year telecom veteran, Jeff has the leadership, relationships and new ideas to drive long-term STI growth." Commenting on STI's future Quiram stated, "In 2005, we will focus on capitalizing on STI's successful product cost reduction initiatives and the opportunities presented by the industry's transition to data-intensive networks. One of the elements that attracted me to STI was its unmatched technology when it comes to the interference protection and increased sensitivity today's advanced wireless networks need. We are exploring ways to use our technology to expand our current product base, as well as pursue relationships with carriers and original equipment manufacturers. I look forward to updating you on our progress as the year continues." STI's independent auditor, PricewaterhouseCoopers LLP, (PWC), will express its opinion with respect to the company's Fiscal Year 2004 financial statements in the company's upcoming 10K for 2004. STI anticipates that, as in the last two years, PWC's opinion will include an explanatory paragraph expressing concern about the company's ability to continue as a going concern due to past losses and negative cash flows. Financial Guidance STI has decided to discontinue its practice of providing quarterly guidance due to the continuing unpredictability of the capital spending patterns of its customers who generally purchase products through non-binding commitments with minimal lead-times. Investor Conference Call STI will host an investor conference call today at 2:00 p.m. pacific time, March 10, 2005. The call will be accessible live by dialing 800-240-2430. A replay will be available until March 17 by dialing 800-405-2236, pass code 11025663. The call will also be simultaneously webcast and available on STI's web site at http://www.suptech.com/. About Superconductor Technologies Inc. (STI) Superconductor Technologies Inc., headquartered in Santa Barbara, CA, is the global leader in developing, manufacturing, and marketing superconducting products for wireless networks. STI's SuperLink(TM) Solutions are proven to increase capacity utilization, lower dropped and blocked calls, extend coverage, and enable higher wireless transmission data rates. SuperLink(TM) Rx, the company's flagship product, incorporates patented high-temperature superconductor (HTS) technology to create a cryogenic receiver front-end (CRFE) used by wireless operators to enhance network performance while reducing capital and operating costs. Almost 4,550 SuperLink Rx systems have been shipped worldwide, logging in excess of 73 million hours of cumulative operation. SuperLink is a trademark of Superconductor Technologies Inc. in the United States and in other countries. For information about STI, please visit http://www.suptech.com/. Safe Harbor Statement The press release contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, STI's views on future fundraising plans, profitability, revenues, market growth, capital requirements and new product introductions and any other statements identified by phrases such as "thinks," "anticipates," "believes," "estimates," "expects," "intends," "plans," "goals" or similar words. Forward-looking statements are not guarantees of future performance and are inherently subject to uncertainties and other factors which could cause actual results to differ materially from the forward-looking statements. For example, the financial results reported in this press release are based on certain assumptions and estimates made by management and are subject to adjustment prior to the filing of the Company's 2004 Annual Report on Form 10-K with the SEC. Other factors and uncertainties include: STI's ability to expand its operations to meet anticipated product demands; the ability of STI's products to achieve anticipated benefits for its customers; the anticipated growth of STI's target markets; unanticipated delays in shipments to customers; and STI's ability to operate its business profitability. Forward-looking statements can be affected by many other factors, including, those described in the Risk Factors section of STI's Prospectus Supplement dated November 22, 2004 and the MD&A section of its most recent Form 10-Q. These documents are available online at STI's website, http://www.suptech.com/, or through the SEC's website, http://www.sec.gov/. Forward-looking statements are based on information presently available to senior management, and STI has not assumed any duty to update any forward-looking statements. For further information please contact: Martin S. McDermut, Senior Vice President, Chief Financial Officer of Superconductor Technologies Inc., +1-805-690-4539, [email protected]; or Investor Relations, Kirsten Chapman, [email protected], or Moriah Shilton, both of Lippert / Heilshorn & Associates, +1-415-433-3777, for Superconductor Technologies Inc. - Tables to Follow - SUPERCONDUCTOR TECHNOLOGIES INC. CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended Year Ended December 31, December 31, December 31, December 31, 2003 2004 2003 2004 Audited Unaudited Audited Unaudited Net revenues: Net commercial product revenues $12,947,000 $2,999,000 $38,577,000 $16,787,000 Government and other contract revenues 3,431,000 950,000 10,759,000 6,189,000 Sub license royalties 17,000 -- 58,000 28,000 Total net revenues 16,395,000 3,949,000 49,394,000 23,004,000 Costs and expenses: Cost of commercial product revenues (1) 8,799,000 7,978,000 28,249,000 23,421,000 Contract research and development 2,238,000 1,318,000 6,899,000 4,855,000 Other research and development 395,000 838,000 4,697,000 4,646,000 Selling, general and administrative 3,953,000 3,647,000 20,567,000 16,051,000 Restructuring expenses and impairment charges -- 1,446,000 -- 4,128,000 Total costs and expenses 15,385,000 15,227,000 60,412,000 53,101,000 Income (loss) from operations 1,010,000 (11,278,000) (11,018,000) (30,097,000) Interest income 30,000 42,000 177,000 125,000 Interest expense (130,000) (32,000) (504,000) (1,245,000) Net income (loss) $910,000 $(11,268,000) $(11,345,000) $(31,217,000) Basic and diluted income (loss) per common share $0.01 $(0.11) $(0.18) $(0.37) Weighted average number of common shares outstanding Basic 65,702,315 98,177,693 62,685,292 84,241,447 Diluted 72,652,146 98,177,693 62,685,292 84,241,447 (1) The three-month period and year ended December 31, 2004 includes restructuring expenses and impairment charges of $439,000 and $1,055,000, respectively. SUPERCONDUCTOR TECHNOLOGIES INC. CONSOLIDATED BALANCE SHEET ASSETS December 31, December 31, 2003 2004 Audited Unaudited Current Assets: Cash and cash equivalents $11,144,000 $12,802,000 Accounts receivable, net 8,809,000 1,434,000 Inventory 8,802,000 9,327,000 Insurance settlement receivable -- 4,000,000 Prepaid expenses and other current assets 760,000 906,000 Total Current Assets 29,515,000 28,469,000 Property and equipment, net of accumulated depreciation of $15,061,000 and $15,189,000, respectively 12,534,000 10,303,000 Patents, licenses and purchased technology, net of accumulated amortization of $3,173,000 and $768,000, respectively 5,367,000 2,833,000 Goodwill 20,107,000 20,107,000 Other assets 600,000 646,000 Total Assets $68,123,000 $62,358,000 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Line of credit $3,308,000 $938,000 Accounts payable 5,154,000 2,691,000 Accrued expenses 4,832,000 4,601,000 Legal settlement liability -- 4,050,000 Current portion of capitalized lease obligations and long term debt 645,000 43,000 Total Current Liabilities 13,939,000 12,323,000 Capitalized lease obligations and long term-debt 76,000 33,000 Other long term liabilities 1,888,000 753,000 Total Liabilities 15,903,000 13,109,000 Commitments and contingencies Stockholders' Equity: Preferred stock, $.001 par value, 2,000,000 shares authorized, none issued and outstanding -- -- Common stock, $.001 par value, 125,000,000 shares authorized, 68,907,109 and 107,711,026 shares issued and outstanding, respectively 69,000 108,000 Capital in excess of par value 168,776,000 196,983,000 Notes receivable from stockholder (820,000) (820,000) Accumulated deficit (115,805,000) (147,022,000) Total Stockholders' Equity 52,220,000 49,249,000 Total Liabilities and Stockholders' Equity $68,123,000 $62,358,000 SUPERCONDUCTOR TECHNOLOGIES INC. CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended December 31 2002 2003 2004 Audited Audited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(19,513,000) $(11,345,000) $(31,217,000) Adjustments to reconcile net loss to net cash used for operating activities: Depreciation and amortization 1,931,000 3,277,000 3,463,000 Non-cash restructuring and impairment charges -- -- 3,659,000 Amortization of accrued loss on sales contract (1,998,000) -- -- Warrants and options charges 2,283,000 104,000 973,000 Provision for excess and obsolete inventories 567,000 719,000 4,836,000 Purchase of in process research and development 700,000 --- -- Changes in assets and liabilities, net of businesses acquired Accounts receivable (1,655,000) (5,404,000) 7,375,000 Inventory (1,180,000) (3,174,000) (5,361,000) Prepaid expenses and other current assets 160,000 (184,000) (146,000) Patents and licenses (553,000) (531,000) (546,000) Other assets (75,000) (114,000) (46,000) Accounts payable and accrued expenses (618,000) (1,806,000) (4,570,000) Net cash used in operating activities (19,951,000) (18,458,000) (21,580,000) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (5,398,000) (3,855,000) (1,812,000) Decrease in restricted cash 374,000 -- -- Payment of up front license fee -- (500,000) -- Cash used in acquisition of Conductus, Inc. (429,000) -- -- Net cash used in investing activities (5,453,000) (4,355,000) (1,812,000) CASH FLOW FROM FINANCING ACTIVITIES: Proceeds from borrowings -- 7,234,000 5,567,000 Payments on short term borrowings -- (3,926,000) (7,937,000) Payments on long-term obligations (519,000) (1,402,000) (645,000) Net proceeds from sale of common stock and exercise of warrants and options 31,909,000 13,860,000 28,065,000 Payment of preferred stock conversion premium (3,000,000) -- -- Net cash provided by financing activities 28,390,000 15,766,000 25,050,000 Net increase (decrease) in cash and cash equivalents 2,986,000 (7,047,000) 1,658,000 Cash and cash equivalents at beginning of year 15,205,000 18,191,000 11,144,000 Cash and cash equivalents at end of year $18,191,000 $11,144,000 $12,802,000 Superconductor Technologies Inc. CONTACT: Martin S. McDermut, Senior Vice President, Chief FinancialOfficer of Superconductor Technologies Inc., +1-805-690-4539,[email protected]; or Investor Relations, Kirsten Chapman,[email protected], or Moriah Shilton, both of Lippert / Heilshorn &Associates, +1-415-433-3777, for Superconductor Technologies Inc. Web site: http://www.suptech.com/ |