American Superconductor Announces New Contract from U.S. Navy for Development of HTS Ship Propulsion Motors.

Business/Technology Editors

WESTBOROUGH, Mass.--(BUSINESS WIRE)--Nov. 27, 2000

HTS Motors to Provide Markedly Superior Operational

and Tactical Benefits

American Superconductor Corporation (Nasdaq:AMSC) announced today that it has received a follow-on contract for $1.6 Million from the U.S. Navy's Office of Naval Research (ONR) for the design and development of high temperature superconducting (HTS) motors for electric ship propulsion. The company expects to complete this contract within the next six months.

American Superconductor's initial ONR contract, which was recently completed, was for a preliminary design of a 33,500-horsepower, AC synchronous, HTS ship propulsion motor. The follow-on contract is to complete the motor design and to start component fabrication and testing. The company expects to receive additional contracts from the U.S. Navy within the year that will lead to the manufacture and test of HTS motors on Navy ships. Initial sea trials of a sub-scale prototype 5,000-horsepower HTS motor are expected to commence within three years, coincident with the company's planned introduction of industrial HTS motors.

Secretary of the Navy Richard Danzig announced earlier this year that the Navy targets electric drives for future propulsion systems in Navy ships. "Changes in propulsion systems fundamentally change the character and power of our forces," said Danzig in a press release on January 6, 2000. "This has been shown by the movement from sail to steam or from propeller to jet engines or to nuclear power. Electric drive will reduce the cost, noise and maintenance demands of how our ships are driven. More importantly, electric drive, like other propulsion changes, will open immense opportunities for redesigning ship architecture, reducing manpower, improving shipboard life, reducing vulnerability and allocating a great deal more power to war-fighting applications."

The current global market for motors utilized for electric propulsion in commercial cruise and cargo ships is approximately $250 million per year. This market is anticipated to grow rapidly because electric drives are becoming the propulsion system of choice for both commercial and Navy ships.

"HTS motors are a great example of a disruptive technology," said Greg Yurek, American Superconductor's chief executive officer. "The dramatic changes in size, weight and manufacturing costs created by HTS technology are leading to radically new ship designs, which provide tremendous tactical and operational advantages to the Navy and pathways to increased profitability for commercial ships."

American Superconductor's HTS wire today can carry more than 100 times the power of copper wires with the same dimensions. The company has used this dramatic increase in power density of its wires to design proprietary, ultra-compact HTS ship propulsion motors. These motors are expected to be 1/5 the size and 1/3 the weight of standard induction motors, which uses copper wire technology.

HTS Technology

Superconductors are materials that carry large quantities of electricity with zero electrical resistance when cooled to very low or cryogenic temperatures. While superconductors have been known for decades, the only commercial application until recently was in medical magnetic resonance imaging (MRI) devices. These devices utilize low temperature superconductor (LTS) wires. In 1986, two IBM scientists discovered a new family of superconductor materials that still require cooling to cryogenic temperatures, but that operate at 5 to 20 times higher temperatures than the old LTS materials. The new materials, which are ceramic compounds, have become known as high temperature superconductors (HTS). The lower cost of cooling these new materials significantly enhanced the commercial economics of superconductor applications, and created the possibility of using high power density superconducting wires in electric power applications, such as power cables, motors and generators. American Superconductor has over 250 U.S. patents, patent applications and licenses related to the manufacture of HTS wires and the applications of superconductors to electric power applications.

American Superconductor (AMSC)

AMSC, with headquarters in Westborough, Mass., was founded in 1987 and is a world leader in developing and manufacturing products utilizing superconducting materials and solid-state power electronic devices for the power infrastructure. The company's products, and products sold by electrical equipment manufacturers that incorporate its products, can dramatically increase the capacity and reliability of power delivery networks, significantly reduce the manufacturing costs of electrical equipment such as motors and generators, lower electrical operating costs and conserve resources that are used to produce electric power. AMSC's web site is http://www.amsuper.com.

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Certain statements in this release, including 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. There are a number of important factors that could cause actual results to differ materially from those indicated by such forward-looking statements. Such factors include the uncertainties that the company will be able to obtain the anticipated funding from corporate and government contracts; the company will be able to successfully develop and manufacture additional commercial products; a robust market will develop for the company's products; and the company will secure anticipated orders. Additionally such factors include: the risk that strategic alliances and other contracts may be terminated; the risk that certain technologies utilized by the company will infringe intellectual property rights of others; the competition encountered by the company; the amount and timing of the company's future cash requirements and the availability of satisfactory financing sources. Reference is made to these and other factors discussed in the "Management's Discussion and Analysis of Financial Condition and Results of Operation" section of the company's periodic reports filed with the Securities and Exchange Commission