American Superconductor reports fiscal 1997 second quarter results.

WESTBOROUGH, Mass.--(BUSINESS WIRE)--Nov. 11, 1996--American Superconductor Corporation (Nasdaq:AMSC) today reported that revenues for the second quarter of fiscal year 1997, ended September 30, 1996, increased to $1,664,692 from $1,598,630 for the comparable year-ago period. The company reported a net loss of $2,396,788, or $0.25 per share, for the second quarter compared with a net loss of $1,858,701, or $0.20 per share, for the same period a year ago.

For the six months ended September 30, 1996, revenues increased to $2,938,000 from $2,603,338 for the first six months of the previous fiscal year. The net loss for the six months ended September 30, 1996 amounted to $5,670,841, or $0.59 per share, compared with a net loss of $3,914,338, or $0.41 per share, for the six months ended September 30, 1995.

The increase in operating losses reflects planned increases in research and development and sales and marketing expenses associated with the company's efforts to commercialize its product lines currently under development.

Government cost-sharing funds to the company, which cannot be included in revenues, totaled $806,232 for the second quarter compared with $260,462 for the second quarter of last year. For the six months ended September 30, 1996, government cost-sharing funds to the company were $876,794 versus $809,451 for the same period last year.

The sum of revenues and cost-sharing funds received by the company for the second quarter ended September 30, 1996 were 84 percent greater than this sum for the first quarter ended June 30, 1996.

During the second quarter, the company received notification of four new contracts with potential revenues totaling $1,950,000 from the U.S. Department of Defense. Revenues from these contracts will be recognized in future quarters. "With these and additional contracts we are expecting to receive," stated Greg Yurek, president and CEO, "losses in the second half should be significantly less than in the first half."

The second quarter marked a significant step in American Superconductor's alliance and partnership strategy. Yurek said that the company will be concentrating on alliances that are focused more on commercial applications of its HTS wire technologies, rather than on fundamental materials research.

One of American Superconductor's materials development partners, Inco Alloys International, Inc., has decided not to continue its participation in a joint research and development program focused on the company's metallic precursor wire technology. Effective December 31, 1996, Inco Alloys will discontinue its $1.1 million annual funding of this program to direct its resources toward its current R&D priorities in its high nickel alloys and related businesses.

Scott M. Hand, president of Inco Alloy's parent company, Inco Limited, said that Inco has enjoyed a successful, close working relationship with American Superconductor. "We would expect that our Inco Alloys unit would be in a position to provide American Superconductor with its future needs of metallic precursors based on a customer-vendor relationship," stated Mr. Hand. "Inco currently plans to retain its 4.6 percent equity position in American Superconductor."

American Superconductor will continue to develop the metallic precursor manufacturing process, which the joint program focused on, and anticipates covering most of the related expenses under government contracts. Under the terms covering the program, American Superconductor can license all Inco-owned technologies necessary to practice the metallic precursor process for making HTS materials. "Perhaps the most important aspect of this move," stated Yurek, "is that it solidifies our long-term technology strategy by retaining our rights to future generations of HTS wire technology that are likely to evolve after we achieve commercialization of major product lines based on our current generation of wires."

American Superconductor is a leader in developing commercial applications of high temperature superconductor technology for the global electric power industry. With world-class expertise in electromagnetics, cryogenic integration, power semiconductors and power engineering as well as high temperature superconductors, the company is driving the evolving market for advanced electric power equipment and power quality products.

Certain statements in this press release, including statements containing the words "believes", "anticipates", "plans", "expects" 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 the company's actual results to differ materially from those indicated by such forward-looking statements. Such factors include the uncertainty that the company will be able to get the anticipated funding from corporate and government contracts and the uncertainty that the company will be able to successfully develop and manufacture commercial products; the uncertainty that a robust market will develop for the company's products; 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; and 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.

    -0-
                American Superconductor Corporation
                           (Nasdaq:AMSC)

           Results Report for Second Quarter Fiscal 1997

                     Three Months ended      Six months ended
                        September 30            September 30

                      1996        1995        1996        1995

Revenues           $1,664,692  $1,598,630  $2,938,000  $2,603,338

Net loss           $2,396,788  $1,858,701  $5,670,841  $3,914,338

Net loss per share      $0.25       $0.20       $0.59       $0.41

Weighted average
shares outstanding  9,561,551   9,469,244   9,559,520   9,468,940

-0- Note: For the three months ended September 30, 1996, in addition to reported revenues, AMSC recorded $806,232 in funding under cost- sharing agreements versus $260,462 in the previous year's period. For the six-month period ended September 30, 1996, funding from cost- sharing agreements was $876,794 compared with $809,451 for the previous year's period.

Additional information on American Superconductor can be found by visiting our home page at: http://www.amsuper.com

CONTACT: Ramesh Ratan

American Superconductor Corporation

[phone]