Superconductor Technologies, Inc., Exhibit 10.1



 



Exhibit 10.1



Superconductor Technologies Inc. Announces First Quarter Results


- Revenues Up 65% Versus First Quarter of 2002 -



     SANTA BARBARA, Calif., April 30 /PRNewswire-FirstCall/ — Superconductor
Technologies Inc. (Nasdaq: SCON) (“STI”), the global leader in high-temperature
superconducting (HTS) products for wireless voice and data applications, today
announced final results for its first quarter ended March 29, 2003.


     STI met previously announced expectations, posting first quarter revenues
of $7.6 million compared to $4.6 million in the first quarter of 2002. Net
commercial product revenues for the first quarter of 2003 were $5.1 million
compared to $3.7 million in the first quarter of 2002. Government and other
contract revenue totaled $2.5 million during the 2003 first quarter compared to
$909,000 during the year ago period.


     The total net loss available to common stockholders for the quarter ended
March 29, 2003 was $8.3 million (including litigation expenses of $4.0 million)
versus a net loss available to common stockholders of $6.4 million for the
quarter ended March 30, 2002. The net loss during the first quarter of 2003
was $0.14 per common share compared to a loss of $0.33 per common share in the
same quarter of 2002. The net loss available to common stockholders for the
first quarter of 2002 included a deemed distribution to preferred stockholders
of $596,000.


     During the first quarter of 2003, STI’s senior management and its legal
counsel focused time and attention on a patent litigation trial with ISCO
International. On April 3, 2003, the jury returned a unanimous verdict that
ISCO’s patent is invalid and unenforceable. The jury also awarded STI $3.8
million in compensatory damages based upon a finding that ISCO engaged in
unfair competition and acted in bad faith by issuing press releases and
contacting STI’s customers asserting rights under the invalidated patent. The
award will only be recognized as income if and when received. Expenses
associated with the litigation are expected to drop considerably in the second
quarter.


     At March 29, 2003 STI had $12.1 million in cash and cash equivalents, and
$7.4 million in working capital. The total number of common shares outstanding
was 59,823,553. Commercial product backlog stood at approximately $4.5 million
versus $1.4 million at December 31, 2002. The total number of common shares
outstanding at the end of the first quarter of 2002 was 19,427,091.


     M. Peter Thomas, STI’s president and chief executive officer, stated, “STI
is now entirely focused on our goal of profitability by the fourth quarter. The
first quarter results reflect progress on many fronts. First, we achieved our
sales targets and recently added a new large wireless customer. Second, we
achieved manufacturing efficiencies and posted another quarter of positive
gross margins. We are also benefiting from expense reductions in 2002,
although they are somewhat obscured by the litigation expenses and the
acquisition of Conductus, which by itself accounts for the increase in R&D
compared to the first quarter last year. Adjusting for these events, operating
expenses are comparable on a larger revenue base this quarter compared to last
year’s first quarter.”


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     Thomas continued, “Our sales team is focused on three primary goals:
further penetrating existing wireless carrier customers; signing on new
wireless carrier customers in the U.S.; and adding customers in the most
promising international markets, such as Mexico, Brazil and China. We are
beginning to ship the SuperLink RxTM 850, which is a cryogenic receiver
front-end (CRFE) incorporating industry-leading high-temperature
superconducting (HTS) technology and a state-of-the-art, cryogenically-cooled
low noise amplifier. While we expect modest increases in marketing expenses to
support our revenue growth targets, we also anticipate this new product will
help drive higher margins over the coming quarters.”


     “STI is poised for growth and is better positioned than ever,” Thomas
added. “Our products are meeting the real, tangible need for wireless carriers
to ‘do more with less’ in terms of spending on capital equipment. We look
forward to building on our leadership status by providing highly reliable, cost
effective solutions to the wireless industry.”


     2003 Financial Guidance


     STI remains confident in its outlook for 2003 based on increasing market
acceptance, especially among target customers, as well as continued demand for
its cost-effective solutions. STI is maintaining its guidance of $50 million
in revenues in fiscal 2003, consisting of approximately $40 million in
commercial revenue and $10 million in government and other contract revenue.
The company expects revenues of $10-11 million in the second quarter, with
modest improvements in gross margins, and lower operating expenses. The
company believes revenue growth will be driven by increasing demand for its
network optimizing products, as well as focused sales execution by the STI
team. However, revenue growth is also dependent on a relatively stable or
recovering economic environment and improved wireless carrier capital
expenditures in the second half of 2003. In order to reach its goal of
profitability by the fourth quarter of 2003, STI will focus on continually
improving gross margins and closely monitoring operating expenses. Based on
current forecasts, STI believes it will have sufficient resources to fund
normal operations until it reaches profitability expected later this year.


     Investors are cautioned the guidance above constitutes a forward-looking
statement which is made with reliance upon the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Risks associated with this
and other forward-looking statements included in this press release are
detailed below, and in STI’s SEC filings.


     Investor Conference Call


     STI will host an investor conference call today at 2:00 p.m. pacific time,
April 30, 2003. The call will be accessible live by dialing 800-572-9829. A
48-hour replay will be available by dialing 800-642-1687, pass code 9958046.
The call will also be simultaneously webcast and available on STI’s web site at
http://www.suptech.com .


     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.


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     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 future profitability, 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; and STI’s ability to achieve profitability. 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.


     For further information please contact: Martin McDermut, Senior Vice
President, Chief Financial Officer, Superconductor Technologies Inc.,
+1-805-690-4500, mmcdermut@suptech.com; or Investor Relations, Lillian
Armstrong, lillian@lhai-sf.com, or Moriah Shilton, both of Lippert / Heilshorn
& Associates, +1-415-433-3777, for Superconductor Technologies Inc./


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SUPERCONDUCTOR TECHNOLOGIES INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)




	 	 	 	 	 	 	 	 	 
	 	 	March 30, 2002	 	March 29, 2003
	 	 	
	 	

	Net revenues:
	 	 	 	 	 	 	 	 
	Net commercial product revenues
	 	$	3,707,000	 	 	$	5,121,000	 
	Government and other contract revenues
	 	 	909,000	 	 	 	2,450,000	 
	Sub license royalties
	 	 	—	 	 	 	9,000	 
	Total net revenues
	 	 	4,616,000	 	 	 	7,580,000	 
	Costs and expenses:
	 	 	 	 	 	 	 	 
	Cost of commercial product revenues
	 	 	4,374,000	 	 	 	4,797,000	 
	Contract research and development
	 	 	651,000	 	 	 	1,385,000	 
	Other research and development
	 	 	1,306,000	 	 	 	1,711,000	 
	Selling, general and administrative
	 	 	4,105,000	 	 	 	7,982,000	 
	Total costs and expenses
	 	 	10,436,000	 	 	 	15,875,000	 
	Loss from operations
	 	 	(5,820,000	)	 	 	(8,295,000	)
	Interest income
	 	 	65,000	 	 	 	67,000	 
	Interest expense
	 	 	(24,000	)	 	 	(115,000	)
	Net loss
	 	 	(5,779,000	)	 	 	(8,343,000	)
	Less:
	 	 	 	 	 	 	 	 
	Deemed distribution attributable
to the preferred stock beneficial
conversion feature
	 	 	(596,000	)	 	 	—	 
	Net loss available to
common stockholders
	 	 	($6,375,000	)	 	 	($8,343,000	)
	Basic and diluted
loss per common share
	 	 	($0.33	)	 	 	($0.14	)
	Weighted average number
of common shares outstanding
	 	 	19,427,091	 	 	 	59,823,553	 



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SUPERCONDUCTOR TECHNOLOGIES INC.

CONSOLIDATED SUMMARY BALANCE SHEET INFORMATION




	 	 	 	 	 	 	 	 	 
	 	 	December 31, 2002	 	March 29, 2003
	 	 	 	 	(Unaudited)
	 	 	
	 	

	Cash and cash equivalents
	 	$	18,191,000	 	 	$	12,123,000	 
	Total current assets
	 	 	28,498,000	 	 	 	21,817,000	 
	Total assets
	 	 	65,326,000	 	 	 	58,645,000	 
	Total current liabilities
	 	 	11,995,000	 	 	 	14,386,000	 
	Other long term liabilities
	 	 	3,807,000	 	 	 	2,999,000	 
	Total liabilities
	 	 	15,802,000	 	 	 	17,385,000	 
	Total stockholders’ equity
	 	 	49,524,000	 	 	 	41,260,000	 



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