American Superconductor and Litton Ship Systems Announce Collaboration to Apply HTS Technology to Naval and Commercial Ships.

Business/Technology Editors

WESTBOROUGH, Mass.--(BUSINESS WIRE)--Nov. 29, 2000

HTS Technology Targeted for Key Role in New Ship Designs

Litton Industries (NYSE: LIT), through its Litton Ship Systems (LSS) group, and American Superconductor Corporation (Nasdaq: AMSC) announced today an agreement to collaborate in the utilization of High Temperature Superconductor (HTS) technology for commercial and naval ships. The initial focus of the collaboration will be on the application of HTS motors for electric ship propulsion.

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.

"We believe that HTS motors provide great potential for ship propulsion," said Dr. Lawrence J. Cavaiola, president of the Litton Ship Systems Full Service Center, which will administer LSS' collaboration with American Superconductor, and vice president of Litton Ship Systems. "We are very excited to be working with American Superconductor - a world leader in HTS technology - to transition this technology to the fleet."

American Superconductor announced earlier this week that it had completed the first phase of a U.S. Navy program for an initial design of a 33,500-horsepower HTS ship propulsion motor, and that it had received a follow-on contract from the Navy to complete the motor design and to start component fabrication and testing. The company stated it expected to obtain additional Navy contracts over the next several years leading to the manufacture and testing of HTS motors for installation on Navy ships.

"We are delighted to be collaborating with Litton Ship Systems, one of the nation's leading shipbuilders," said Greg Yurek, chief executive officer of American Superconductor. "We are looking forward to ultimately providing LSS with an array of systems and components that will provide the basis for creation of entirely new concepts in ship design. The application of HTS technology will create a paradigm shift in ship design that hasn't been seen since the transition from sails to steam-driven systems."

In July 2000, the company and Rockwell Automation announced the successful operation of the world's first 1,000-horsepower HTS motor. American Superconductor also announced that it is currently fabricating a 5,000-horsepower, HTS industrial motor of its own proprietary design, which it expects to have ready for test in the spring of 2001.

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 uses copper wire technology. In parallel to its collaboration with Ingalls, 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.

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.

Litton Ship Systems (LSS)

Litton Ship Systems (LSS), headquartered in Pascagoula, Mississippi, includes Litton Ingalls Shipbuilding and the Litton Ship Systems Full Service Center, also in Pascagoula, and Litton Avondale Industries, in New Orleans, Louisiana, and Gulfport, Mississippi. LSS, which currently employs more than 17,000 shipbuilding professionals, primarily in Mississippi and Louisiana, is one of the nation's leading full service systems companies for the design, engineering, construction, and life cycle support of major surface ships for the U.S. Navy, U.S. Coast Guard and international navies, and for commercial vessels of all types. LSS has a firm business backlog exceeding $5.6 billion, in a variety of naval and commercial shipbuilding programs. The LSS website is www.littonshipsystems.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.