Active Power Announces Third Quarter Results.AUSTIN Austin. 1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum , Texas -- Active Power, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ACPW ACPW Asymmetrical Coplanar Waveguide ACPW Advisory Committee of the Purity of Water (Australia) ) today announced results for its third quarter ended September September: see month. 30, 2004. Revenues for the third quarter of fiscal 2004 were $4.1 million, an increase of 36% from the same period last year, and 10% sequentially from the previous quarter. Third quarter's revenue growth was driven primarily by increased sales of our UPS products, including sales of our new 1200 kilovolt-amps (kVA) UPS product family. Net loss for the third quarter of 2004 was $10.9 million, or 26 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to a net loss of $5.1 million, or 12 cents per share, for the same period last year and a net loss of $6.1 million, or 14 cents per share in the second quarter of 2004. Included in this third quarter's net loss was a $4.8 million litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement, or 11 cents per share, that ended the Magnex lawsuit lawsuit: see procedure; tort. . Product gross margin improved 19 percentage points from the same period last year, and 21 percentage points sequentially, to negative 10% due to several factors, including increased UPS product sales, material cost reductions on component parts and the recognition of $152,000 of previously deferred revenue due to the successful completion of required performance guarantees. Consumption of cash and investments for the quarter was $5.9 million, as compared to $4.5 million for the same period last year. The increase in cash and investment consumption was due primarily to the first installment payment against the litigation settlement of $806,000 and legal and professional fees associated with defending this lawsuit. Cash and investments at September 30, 2004 were $56.5 million. "We continue to post significant gains in sales, driven primarily by our new products," said Joe Pinkerton Pin·ker·ton , Allan 1819-1884. Scottish-born American detective. His agency was notorious for breaking strikes and disrupting labor efforts to unionize. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Active Power. "The resulting increase in volume through our factory is also allowing us to show solid improvement in gross margin. We believe that sales of our new high power UPS line will drive additional revenue growth over the next several quarters. With the launch of our thermal and compressed air compressed air, air whose volume has been decreased by the application of pressure. Air is compressed by various devices, including the simple hand pump and the reciprocating, rotary, centrifugal, and axial-flow compressors. storage (TACAS TACAS Tools and Algorithms for the Construction and Analysis of Systems (Workshop) TACAS Terminal Access Controller Access System (VPN) TACAS Tubed Artillery Conventional Ammunition System ) technology in Q3, we are now promoting the industry's first minute-for-minute alternative to batteries -- CleanSource XR. Our prototypes have achieved each of their technical milestones, including operating at 80 kilowatts (kW) for 15 minutes in Q2 and at 10 kW for two hours during Q3. We plan to ship customers a number of CleanSource XR evaluation units over the next several months and begin full production in the second half of 2005." Q3 Business Highlights: --Operated a CleanSource XR prototype at 10 kW for over 2 hours, a milestone that positions the new product well for the low power UPS and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. markets. --Launched our extended runtime Refers to the actual execution of a program. "At runtime" means while the program is running. See runtime library, runtime engine, runtime environment and runtime error. technology at INTELEC INTELEC International Telecommunications Energy Conference in Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. . Customer feedback to date has been overwhelmingly positive and several groups have requested a CleanSource XR evaluation unit. In addition to backup power An additional power source that can be used in the event of power failure. See UPS and backup.  A Half Minute of Backup This roomful of lead acid batteries stands ready to drain itself entirely in less than a minute. , CleanSource XR is also being considered for utility load-shifting applications (storing low cost energy at night and delivering this energy at peak periods during the day). --Received our first order for a parallel multi-megawatt UPS system from a government facility in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). . This system will be used to
protect the country's vital homeland defense efforts. We expect to
install the system in the first half of 2005.--Shipped nine systems to healthcare facilities in Q3, including hospitals and transplant transplant or graft Partial or complete organ or other body part removed from one site and attached at another. It may come from the same or a different person or an animal. One from the same person—most often a skin graft—is not rejected. centers. Our products continue to perform very well in healthcare applications. --Received a $2.7 million order for four high power continuous power systems (CPS (1) (Characters Per Second) The measurement of the speed of a serial printer or the speed of a data transfer between hardware devices or over a communications channel. CPS is equivalent to bytes per second. ) from an existing customer for an industrial application. We expect to ship product against this order over the next two quarters. --Shipped three systems to broadcast customers in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . Our mid-range UPS systems (65 kVA-150 kVA) are an outstanding fit for this industry. --Placed four systems with a leading semiconductor manufacturer to be used in their Austin, Texas, facilities to protect critical semiconductor processing equipment. --Shipped a high power 1200 kVA UPS to a leading scientific research institute in North America. --Sold systems to several repeat customers, including government hospital facilities and state departments of transportation. Repeat customer orders are the strongest vote of confidence for our products and services, and the clearest demonstration of our customers' satisfaction. --Settled a lawsuit against the Company that had consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. resources for over two years and generated significant legal fees during 2004. Outlook: Active Power expects Q4 2004 revenue to increase to approximately $4.5 to $5.0 million, and Q4 earnings per share to be a loss of approximately 11 to 12 cents. We expect consumption of cash and investments in Q4 to be in the range of $10.0 to $11.0 million, including final payments for the litigation settlement and associated legal and professional fees of approximately $5.0 million, which were expensed in Q3 but not fully paid until Q4. Conference call: The Company will host a conference call today, Wednesday, October 27, at 11:00 a.m. Eastern Time, to further review the Company's fiscal Q3 results. A replay of the webcast will be available until November 10th. Investors may access the live broadcast and replay through our web site: www.activepower.com. About Active Power: Active Power, Inc. (www.activepower.com) designs, manufactures and markets battery-free power quality products that provide the consistent, reliable electric power required by today's digital economy. An ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 9001-certified company, Active Power is the first to commercialize a flywheel energy storage Flywheel Energy Storage (FES) works by accelerating a rotor (flywheel) to a very high speed and maintaining the energy in the system as rotational energy. The energy is converted back by slowing down the flywheel. system, CleanSource(R) that provides a highly reliable, low-cost and non-toxic replacement for lead-acid batteries Noun 1. lead-acid battery - a battery with lead electrodes with dilute sulphuric acid as the electrolyte; each cell generates about 2 volts lead-acid accumulator used in conventional power quality installations. Cautionary Note Regarding Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : This release may contain forward-looking statements that involve risks and uncertainties. Among the important factors that could cause actual results to materially differ from those in the forward-looking statements are: the potential for significant losses to continue; inability to accurately predict revenue and budget for expenses for future periods; fluctuations in revenue and operating results; overall market performance; decreases and/or delays in capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. ; limited product offerings; inability to expand and integrate new distribution channels; inability to manage new and existing product distribution relationships; our dependence on our relationship with Caterpillar caterpillar (kăt`əpĭl'ər, kăt`ər–), common name for the larva of a moth or butterfly. Caterpillars have distinct heads and are segmented and wormlike. (R); competition; delays in research and development; dependence on sole or limited source suppliers; inability to increase product sales; inventory risks; dependence upon key personnel; inability to protect our intellectual property rights; potential future acquisitions; the volatility of our stock price regardless of our actual financial performance; and other factors detailed in our filings with the Securities and Exchange Commission. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. also may become important factors that affect us. Active Power expressly disclaims any obligation to release publicly any updates or revisions to the information contained in this press release or to update or revise any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or on which those statements are based, unless otherwise required by law. Active Power and our Active Power logo and CleanSource are registered trademarks of Active Power, Inc. All other trademarks are the properties of their respective companies.
ACTIVE POWER, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Thousands, except per share amounts)
(unaudited)
Three Nine
Months Ended Months Ended
September 30, September 30,
2004 2003 2004 2003
-----------------------------------------
Revenue $4,074 $2,988 $11,029 $6,484
Operating expenses:
Cost of revenue 4,473 3,867 13,405 10,802
Research and
development 2,693 2,236 7,317 7,130
Selling, general &
administrative 3,109 2,356 8,580 7,209
Litigation settlement
expense 4,800 -- 5,080 --
Amortization of
deferred stock
compensation -- 17 34 83
-----------------------------------------
Total operating
expenses 15,075 8,476 34,416 25,224
-----------------------------------------
Operating loss (11,001) (5,488) (23,387) (18,740)
Interest income 163 423 832 1,429
Other income (expense) (92) (1) (93) (12)
-----------------------------------------
Net loss $(10,930) $(5,066) $(22,648) $(17,323)
=========================================
Net loss per share,
basic & diluted $(0.26) $(0.12) $(0.53) $(0.41)
Shares used in computing
net loss per share,
basic & diluted 42,559 41,995 42,389 41,869
Comprehensive loss:
Net loss $(10,930) $(5,066) $(22,648) $(17,323)
Change in unrealized
gain (loss) on
investments in
marketable
securities 210 (147) (193) (353)
Realized loss on
marketable
securities 78 -- 78 --
-----------------------------------------
Comprehensive loss $(10,642) $(5,213) $(22,763) $(17,676)
=========================================
ACTIVE POWER, INC.
CONDENSED BALANCE SHEETS
(Thousands)
September 30, December 31,
2004 2003
(unaudited)
Assets
Current assets:
Cash and cash equivalents $37,510 $28,438
Restricted cash 805 805
Short-term investments in marketable
securities 9,015 21,763
Accounts receivable, net 3,104 1,528
Inventories 3,670 4,531
Prepaid expenses and other 893 1,404
------------- -------------
Total current assets 54,997 58,469
Property and equipment, net 8,232 9,796
Intangible assets, net 753 838
Long-term investments in marketable
securities 9,125 21,158
------------- -------------
Total assets $73,107 $90,261
============= =============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $2,383 $1,694
Accrued expenses 3,137 3,323
Litigation settlement liability 3,994 --
Deferred revenue 581 184
------------- -------------
Total liabilities 10,095 5,201
Stockholders' equity:
Common stock 42 42
Treasury stock (2) (2)
Deferred stock compensation -- (34)
Additional paid-in capital 215,673 214,993
Accumulated deficit (152,666) (130,018)
Other accumulated comprehensive income (35) 79
------------- -------------
Total stockholders' equity 63,012 85,060
------------- -------------
Total liabilities and stockholders'
equity $73,107 $90,261
============= =============
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