American Superconductor Selects ALSTOM Power Conversion as its Subcontractor on U.S. Navy Motor Contract.

Business/Technology Editors

WESTBOROUGH, Mass.--(BUSINESS WIRE)--Dec. 20, 2000

Companies to Collaborate on Design and Development

of HTS Ship Propulsion Motors

American Superconductor Corporation (Nasdaq: AMSC) announced today that it has named ALSTOM Power Conversion, Inc. of Philadelphia, an ALSTOM business sector, as a subcontractor for its U.S. Navy Office of Naval Research (ONR) contract for the design and development of high temperature superconducting (HTS) motors for electric ship propulsion. ALSTOM will be responsible for the design of the stator and drive systems as well as for propulsion system integration.

American Superconductor's initial ONR contract, which was completed in September 2000, was for a preliminary design of a 33,500-horsepower, AC synchronous, HTS ship propulsion motor. A recently awarded follow-on contract in which ALSTOM will now participate is to complete the motor design and to start component fabrication and testing. American Superconductor expects to receive additional contracts from the U.S. Navy within the year that will lead eventually to the manufacture and test of HTS motors on Navy ships. Initial sea trials of a sub-scale prototype HTS motor are expected to commence within three years, coincident with the company's planned introduction of industrial HTS motors.

"We believe HTS motors can dramatically enhance the application of electric motors in ship propulsion systems," said Martin Murphy, vice president of ALSTOM Power Conversion's Marine and Offshore business. "We are delighted to be working with American Superconductor - a world leader in this technology - to rapidly bring HTS ship propulsion motors into the marketplace."

American Superconductor engineers have designed and patented ultra-compact HTS motors that will propel ships more efficiently and quietly, and that will create more usable space on board ships. The result will be higher fuel efficiency and more passenger and cargo space on commercial ships, which translates into increased profits. For naval vessels, the result will be more space for weapons, sensors, combat system elements, fuel and crews' quarters, in addition to greater stealth and higher fuel efficiency.

"ALSTOM Power Conversion is clearly the world-leader in the design, manufacture and deployment of electric motors for ship propulsion," said Greg Yurek, American Superconductor's chief executive officer. "Combining their experience and market presence with our disruptive HTS motor technologies is a formula for success in the rapidly growing market for electric ship drives."

The company announced recently that it is also collaborating with Litton Ship Systems regarding the application of HTS technologies, including motors, to commercial and naval vessels. "I believe our teaming arrangements with ALSTOM and Litton positions us to more rapidly bring our technologies and products into the ship propulsion market," Yurek added. "Our analysis shows that the addressable market for ship propulsion motors and generators is a very significant - one that is likely to double the addressable market for HTS motors and generators by the end of the decade."

HTS Technology

American Superconductor's HTS wire, which today can carry more than 100 times the power of copper wires with the same dimensions, creates the possibility for radically new ship designs and extremely compact, quiet and powerful propulsion systems. The company's proprietary HTS ship propulsion motors are expected to be 1/5 the size and 1/3 the weight of standard induction motors, which use copper wire technology. In parallel to its collaboration with ALSTOM, American Superconductor will continue to design and test proprietary HTS motors for industrial applications.

Market for HTS Motors and Generators

American Superconductor estimates that the worldwide market for industrial motors (machines with a power rating of at least 1,000 horsepower) is approximately $1 billion per year. The global market for electrical generators, which are essentially motors run in reverse, is approximately $2 billion per year for generators with ratings over 30 megawatts. The current global market for motors utilized in electric ship propulsion is an additional $250 million per year and this market is growing rapidly as electric drives are becoming the propulsion system of choice. In January 2000, the U.S. Navy announced that it targets electric drives for all future propulsion systems in Navy ships.

ALSTOM

With annual sales of over 20 billion euros and over 140,000 direct employees, ALSTOM serves the energy market through its activities in the field of power generation, power transmission and distribution, power conversion and electrical contracting and the transport market through its activities in rail and marine. ALSTOM Power Conversion, Inc., located in Philadelphia and a business sector of ALSTOM, is an industry leader in electrical engineering, systems integration and the design and manufacturing of a wide range of motors and generators, drives and automation systems. Power Conversion employees more than 4,300 people in 14 countries and maintains major design and manufacturing sites in Belgium, France, Germany, the U.K. and the U.S. The ALSTOM web site is http://www.alstom.com.

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.

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.