exv10w1



 








	 	 	 
	Company Contact:	 	
Investor Relations Contact:
	Martin McDermut	 	
Lippert / Heilshorn & Associates
	Senior Vice President, Chief Financial Officer	 	
Lillian Armstrong, Moriah Shilton
	Email: mmcdermut@suptech.com	 	
Email:lillian@lhai-sf.com
	(805) 690-4500	 	
(415) 433-3777



SUPERCONDUCTOR TECHNOLOGIES INC. REPORTS FOURTH QUARTER

AND YEAR-END 2002 RESULTS



SANTA BARBARA, CA – March 31, 2003: Superconductor Technologies Inc. (Nasdaq:
SCON) (“STI”) the global leader in high-temperature superconducting (HTS)
products for wireless voice and data applications, today announced financial
results for the quarter and year-ended December 31, 2002.


Total net revenues for the fourth quarter 2002 were $7.0 million, an increase
of 119 percent vs. $3.2 million for the fourth quarter ended December 31, 2001.
Net commercial product revenues, which give effect to the accounting treatment
of warrants issued to one customer under a long term sales agreement, were $4.3
million for the fourth quarter 2002, an increase of 139 percent compared to
$1.8 million in the year ago period. Government contract revenues for the
fourth quarter 2002 were $2.7 million compared to $1.4 million in the fourth
quarter ended December 31, 2001.


The total net loss for the quarter ended December 31, 2002 was $2.9 million vs.
a loss of $5.0 million for the quarter ended December 31, 2001. The net loss
available to common stockholders for the quarter ended December 31, 2001
included deemed distributions to preferred stockholders. As a result, the net
loss attributable to common stockholders for the fourth quarter 2001 was $5.7
million, or $0.31 per diluted share.


On December 18, 2002, the Company acquired 100 percent of the outstanding
shares of Conductus, Inc. The results of Conductus, Inc. are included in the
consolidated financial statement for 13 days following its acquisition through
December 31, 2002.


For the year ended December 31, 2002, total net revenues increased 81 percent
to $22.4 million, vs. $12.4 million for fiscal 2001. Net commercial product
revenues for fiscal 2002 were $17.6 million, an increase of 132 percent
compared to $7.6 million a year ago. The company recorded $4.8 million in
government contract revenues for the fiscal years 2002 and 2001. The total net
loss for fiscal 2002 was $19.5 million vs. $17.2 million in fiscal 2001.


The net loss available to common stockholders for the fiscal years 2001 and
2002 included deemed distributions to preferred stockholders. As a result, the
net loss attributable to common stockholders for the year ended December 31,
2002 was $21.3 million, or $0.89 per diluted share, compared to a net loss of
$19.8 million, or $1.10 per share for fiscal 2001.


 






 


STI had $18.2 million in cash and cash equivalents, and $16.5 million in
working capital as of December 31, 2002. The total number of common shares
outstanding was 59,823,553 as of December 31, 2002. Commercial product backlog
stood at approximately $1.4 million at December 31, 2002.


2002 milestones included:



	 	•	 	The merger with Conductus, Inc., completed in mid December.
	 
	 	•	 	A $20 million dollar equity private placement.
	 
	 	•	 	Conversion of Series E preferred stock
	 
	 	•	 	Surpassing more than 20 million hours of operation in the field for
STI’s flagship product, the SuperFilter
	 
	 	•	 	Expansion of SuperLinkTM Rx family with introduction of SuperLink Rx 850
	 
	 	•	 	General availability of HTS-ReadyTM Duplexer 850 Series HP



Financial Guidance

STI had previously given guidance of approximately $40 million in commercial
product sales and an additional approximate $10 million in government revenue
in 2003, for net sales of roughly $50 million in 2003. STI anticipates
reaching breakeven by the third quarter, and profitability in the fourth
quarter, 2003. The company is currently involved in a patent litigation, and
believes that if STI wins the lawsuit, the company remains on track to reach
its financial goals for 2003.


While the company continues to believe it has meritorious defenses to this
lawsuit, STI cannot predict the outcome of a jury trial. STI’s auditors,
PricewaterhouseCoopers, have determined that there is substantial doubt about
STI’s ability to continue as a going concern, based upon the material adverse
effect the patent litigation could have on STI’s business, coupled with the
company’s recurring losses and its use of $20 million in cash for operations in
2002.


Investor Conference Call

STI is currently involved in a patent litigation, and as a result has elected
to postpone its investor conference call until early April, 2003. The company
has tentatively set a date of April 10, 2003, dependent upon the timing of the
resolution of the litigation. STI anticipates being able at the time of the
call to discuss both the company results for the fourth quarter and full year
2002 and the outcome of the patent litigation.


About Superconductor Technologies Inc.


Superconductor Technologies Inc., headquartered in Santa Barbara, CA, is the
global leader in developing, manufacturing, and marketing superconducting
products for wireless networks. STI’s SuperLinkTM Solutions are proven to
increase capacity utilization, lower dropped and blocked calls, extend
coverage, and enable higher wireless transmission data rates. SuperFilter®,
the company’s flagship product in the SuperLink Rx product line, incorporates
patented high-temperature superconductor (HTS) technology to create a cryogenic
receiver front-


 






 




end (CRFE) used by wireless operators to enhance network performance while
reducing capital and operating costs.


     More than 2,000 SuperFilter Systems have been shipped worldwide, logging
in excess of 25 million hours of cumulative operation. In 2002, STI was named
one of Deloitte & Touche’s prestigious “Technology Fast 50” companies for the
Los Angeles area, a ranking of the 50 fastest-growing technology companies in
the area.


     SuperFilter and SuperLink are trademarks or registered trademarks of
Superconductor Technologies Inc. in the United States and in other countries.
For information about STI, please visit www.suptech.com.


Safe Harbor Statement



The press release contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, STI’s views on the
outcome of the patent litigation with ISCO International, the expected closing
date of the merger, future commercial revenues, market growth, capital
requirements and new product introductions, and are generally identified by
phrases such as “thinks,’’ “anticipates,’’ “believes,’’ “estimates,’’
“expects,’’ “intends,’’ “plans,’’ and similar words. Forward-looking statements
are not guarantees of future performance and are inherently subject to
uncertainties and other factors, which could cause actual results to differ
materially from the forward-looking statements. These factors and uncertainties
include: STI’s ability to expand its operations to meet anticipated product
demands; the ability of STI’s products to achieve anticipated benefits for its
customers; the anticipated growth of STI’s target markets; unanticipated delays
in shipments to customers; STI’s ability to achieve profitability; the
uncertainties of litigation and the outcome of the patent litigation with ISCO
International. STI refers interested persons to its most recent Annual Report
on Form 10-K and its other SEC filings for a description of additional
uncertainties and factors that may affect forward-looking statements.
Forward-looking statements are based on information presently available to
senior management, and STI has not assumed any duty to update any
forward-looking statements.



	 	 	 	 	 
	Contacts:	 	 	 	 
	STI	 	
Investor relations contact:
	 	 
	Martin McDermut	 	
Lillian Armstrong	 	 
	Chief Financial Officer	 	
Lippert/Heilshorn & Associates	 	 
	Mmcdermut@suptech.com	 	
lillian@lhai-sf.com	 	 
	(805) 690-4500	 	
(415) 433-3777	 	 



- Tables Follow –



 






 





SUPERCONDUCTOR TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	Three Months Ended	 	Twelve Months Ended
	 	 	 	 	 	
	 	

	 	 	 	 	 	December 31	 	December 31	 	December 31	 	December 31
	 	 	 	 	 	2001	 	2002	 	2001	 	2002
	 	 	 	 	 	
	 	
	 	
	 	

	Net revenues:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Net commercial product
revenues
	 	$	1,806,000	 	 	$	4,309,000	 	 	$	7,601,000	 	 	$	17,601,000	 
	 	Government contract
revenues
	 	 	1,421,000	 	 	 	2,662,000	 	 	 	4,782,000	 	 	 	4,785,000	 
	 	Sub license royalties
	 	 	—	 	 	 	—	 	 	 	10,000	 	 	 	10,000	 
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	Total net revenues
	 	 	3,227,000	 	 	 	6,971,000	 	 	 	12,393,000	 	 	 	22,396,000	 
	Costs and expenses:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Cost of commercial
product revenues
	 	 	2,898,000	 	 	 	4,197,000	 	 	 	10,626,000	 	 	 	19,286,000	 
	 	Contract research and
development
	 	 	963,000	 	 	 	1,016,000	 	 	 	3,359,000	 	 	 	2,531,000	 
	 	Other research and
development
	 	 	1,031,000	 	 	 	538,000	 	 	 	4,606,000	 	 	 	4,489,000	 
	 	Selling, general and
administrative
	 	 	3,420,000	 	 	 	3,384,000	 	 	 	11,907,000	 	 	 	14,976,000	 
	 	Write off of
in-process research
and development
	 	 	—	 	 	 	700,000	 	 	 	—	 	 	 	700,000	 
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	Total costs and
expenses
	 	 	8,312,000	 	 	 	9,835,000	 	 	 	30,498,000	 	 	 	41,982,000	 
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	Loss from operations
	 	 	(5,085,000	)	 	 	(2,864,000	)	 	 	(18,105,000	)	 	 	(19,586,000	)
	 	Interest income
	 	 	106,000	 	 	 	20,000	 	 	 	1,050,000	 	 	 	218,000	 
	 	Interest expense
	 	 	(33,000	)	 	 	(81,000	)	 	 	(146,000	)	 	 	(145,000	)
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	 	 	 	Net loss
	 	 	(5,012,000	)	 	 	(2,925,000	)	 	 	(17,201,000	)	 	 	(19,513,000	)
	Less:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Deemed distribution
attributable to the
preferred stock
beneficial
conversion feature
	 	 	(638,000	)	 	 	0	 	 	 	(2,603,000	)	 	 	(1,756,000	)
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	Net loss available to
common stockholders
	 	 	($5,650,000	)	 	 	($2,925,000	)	 	 	($19,804,000	)	 	 	($21,269,000	)
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	Basic and diluted loss per
common share
	 	 	($0.31	)	 	 	($0.09	)	 	 	($1.10	)	 	 	($0.89	)
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 
	Weighted average number of
common
shares outstanding
	 	 	18,133,212	 	 	 	30,867,500	 	 	 	17,955,553	 	 	 	24,019,542	 
	 
	 	 	
	 	 	 	
	 	 	 	
	 	 	 	
	 



 






 



SUPERCONDUCTOR TECHNOLOGIES INC.

CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION




	 	 	 	 	 	 	 	 	 
	 	 	December 31, 2001	 	December 31, 2002
	 	 	
	 	

	 	 	 	 	 	 	Unaudited
	Cash and cash equivalents
	 	$	15,205,000	 	 	$	18,191,000	 
	Total current assets
	 	 	22,982,000	 	 	 	28,498,000	 
	Total assets
	 	 	30,161,000	 	 	 	65,326,000	 
	Total current liabilities
	 	 	4,229,000	 	 	 	11,995,000	 
	Long term debt
	 	 	509,000	 	 	 	2,123,000	 
	Total liabilities
	 	 	6,498,000	 	 	 	15,802,000	 
	Total stockholders’ equity
	 	 	23,663,000	 	 	 	49,524,000	 



###