American Superconductor Expands Patent Coverage for Its Proprietary Second Generation Wire Technology.

Business/Technology Editors

OAK RIDGE, Tenn.--(BUSINESS WIRE)--May 30, 2000

Combination of Processing Technologies

Exclusive to American Superconductor 

American Superconductor (Nasdaq:AMSC) announced today that it has further strengthened its proprietary position in second generation, high temperature superconductor (HTS) wire technology by obtaining a non-exclusive license on a key component of this technology from the Oak Ridge National Laboratory (ORNL). The company also revealed that it has obtained exclusive licenses from the Massachusetts Institute of Technology (MIT) on another key component of its second generation HTS wire technology, adding significantly to the portfolio of patents and patent applications that the company has generated in its own laboratories.

"The combination of our technologies with those of Oak Ridge and MIT gives us a very powerful, exclusive position in second generation HTS wire technology," stated Greg Yurek, American Superconductor's chief executive officer.

Yurek added that American Superconductor has achieved world-leading results in the lab with its proprietary technology for low-cost, second-generation HTS wire. "Our second-generation HTS wire technology puts us on a path to beat the price/performance characteristics of copper wire, and we have now locked in a strong proprietary position for all key components of our manufacturing methodology for second-generation wire," said Yurek.

American Superconductor believes it has the largest research and development effort on second generation HTS wire technology in the world. The new licensing agreement with ORNL is accompanied by a joint research and development agreement, which American Superconductor will fund and which will further expand the company's HTS wire development efforts. American Superconductor will have exclusive rights to all technology generated under this program.

"We are excited to join forces with American Superconductor to accelerate the development of this new technology," said Bill Madia, director of ORNL. "This is a compliment to the work we have done at Oak Ridge related to finding more efficient ways to transmit electricity in the future."

American Superconductor has been investing in the development of second-generation HTS wire technology in an alliance with EPRI, the former Electric Power Research Institute, over the last four years. Under this alliance, American Superconductor has exclusive rights to all EPRI technology on second-generation HTS wire.

"American Superconductor has been successful in developing what we believe to be the most commercially advantageous route to manufacturing second-generation HTS wire, opening an even bigger market for HTS products in the future," said Paul Grant, executive scientist at EPRI.

American Superconductor has achieved world-leading performance with its proprietary second-generation HTS technology in short, laboratory samples of wire. The company plans to further improve the performance of this wire, and to scale up to high volume production of long-length wires within the next three to five years. The company is currently focused in the near term on opening the markets for products such as HTS power cables, motors and generators through the application of its first generation HTS wire.

"We recently announced that we have selected a site in Massachusetts for the world's first commercial manufacturing of HTS wire," said Yurek. "The first commercial HTS power cables, motors, generators and other applications will be introduced on the basis of our first generation wire coming from this plant. We expect the market for these and other applications to expand significantly in the second half of this decade on the basis of our second-generation wire, which will be a form, fit, function replacement for our first generation wire."

Technical Background

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. First- and second-generation HTS wires differ both in terms of wire architecture and the HTS compounds used in the wires. American Superconductor has over 200 patents, patent applications and licenses related to the manufacture of HTS wires and the applications of superconductors to electric power applications.

American Superconductor

American Superconductor Corporation, headquartered in Westborough, Mass., was founded in 1987 and is a world leader in developing and manufacturing products utilizing superconducting materials and power electronic devices for electric power applications. 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. For more information, please visit us at www.amsuper.com.

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 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, including several large Japanese companies; 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.