American Superconductor Recipient Of U.S. Navy Contract for Design of First HTS Ship Propulsion Motor.

BOSTON--(BUSINESS WIRE)--June 24, 1999--

Inherent Quietness, Dramatically Smaller

Size and Cost of HTS Motors Key to

Next Generation Electric Ship Drives

American Superconductor Corporation (Nasdaq:AMSC) announced today the signing of a contract with the U.S. Navy's Office of Naval Research (ONR) to design a high temperature superconducting (HTS) motor for naval ship propulsion systems.

Under the ONR contract, American Superconductor will design a 25,000-horsepower HTS ship propulsion motor for future Navy ships. The basic motor design is a variant on the design being employed for industrial HTS motors, which have been under development for the last decade. The company will also develop and demonstrate key motor components under the program.

The application of HTS technology to ship propulsion is expected to yield inherently quieter motors that have much higher power density; that is, they are expected to be approximately one-fifth the size and weight of conventional motors of the same horsepower rating. A conventional 25,000-hp ship propulsion motor is about the size of a city bus - the HTS model is expected to be about the size of a sport utility vehicle.

"We are excited to start the transfer of our successes in the development of commercial HTS motors to Navy applications," stated Greg Yurek, president and CEO of American Superconductor. "The much higher power density of HTS motors will make them a natural for ship applications. We believe the market for HTS ship propulsion motors for both commercial and defense applications will add significantly to the addressable market for HTS motors, which is already over $1 billion per year based on industrial motor applications."

Design, development and testing of 1,000- and 5,000-hp HTS motors for industrial applications is currently proceeding under a $21 million U.S. Department of Energy (DOE) program being carried out at Reliance Electric, a business unit of Rockwell International (NYSE:ROK), in collaboration with American Superconductor. American Superconductor recently shipped HTS coils for the world's first 1,000-hp motor to Reliance Electric, and is currently manufacturing HTS wire for the first 5,000-hp motor under the DOE program.

This first contract for HTS ship propulsion motors has a value of $2 million, of which the company expects to recognize approximately $1.5 million over the next 12 months. The remainder will be directed to parallel development efforts at the ONR, the Naval Research Laboratory and the National High Magnetic Field Laboratory. The company believes this contract will be the first in a multiyear, multimillion dollar effort to design, develop, manufacture and test HTS motors for incorporation into all-electric ship drives for the next generation of Navy ship propulsion systems.

American Superconductor

American Superconductor Corporation, headquartered in Westborough, Mass., was founded in 1987 and is an industry leader in developing, manufacturing and marketing products utilizing superconducting materials for electric power applications. The company's products are designed to improve power quality and reliability, conserve electricity and reduce operating costs for electric utilities and their customers. Products are sold directly or integrated into the advanced electric power equipment of major suppliers to electric utilities and industrial users of power. For more information, please see www.amsuper.com.

Certain statements in this press 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.