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Superconductor Technologies Inc. Announces Fourth Quarter and Year-End 2004 Results
SANTA 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.
Total net revenues for the fourth quarter were $3.9 million, a decrease of 76 percent compared to $16.4 million for the year-ago fourth quarter. Net commercial product revenues for the fourth quarter of 2004 were $3.0 million, a decrease of 77 percent compared to $12.9 million in the fourth quarter of 2003. Government and other contract revenue totaled $950,000 during the 2004 fourth quarter compared to $3.4 million during the year ago period.
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, mmcdermut@suptech.com; or Investor Relations, Kirsten Chapman, invest@suptech.com, 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,mmcdermut@suptech.com; or Investor Relations, Kirsten Chapman,invest@suptech.com, or Moriah Shilton, both of Lippert / Heilshorn &Associates, +1-415-433-3777, for Superconductor Technologies Inc.
Web site: http://www.suptech.com/
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