Superconductor Technologies Inc. Reports Third Quarter 2008 Results

SANTA BARBARA, Calif., Nov 12, 2008 (GlobeNewswire via COMTEX) -- SCON | Quote | Chart | News | PowerRating -- Superconductor Technologies Inc. (Nasdaq:SCON) ("STI"), a leading provider of advanced wireless solutions, innovative adaptive filtering, and world class cryogenic products for commercial and government applications, reports results for the quarter and nine months ended September 27, 2008.

Total net revenues for the third quarter were $3.6 million, compared to $2.9 million in the second quarter of 2008 and $4.1 million in the year ago third quarter. Net commercial product revenues for the third quarter of 2008 were $2.7 million, compared to $1.3 million in the second quarter of 2008 and $2.3 million in the third quarter of 2007. Government and other contract revenue totaled $854,000 during the 2008 third quarter, compared to $1.6 million for the second quarter of 2008 and $1.8 million in the third quarter of 2007.

"During the third quarter, our wireless operator customers increased their investments in performance enhancement projects. As a result, STI is reporting significantly improved commercial product revenues of $2.7 million, representing a sequential increase of over 100 percent and a 20 percent increase year-over-year. While we cannot predict how the current economic uncertainty may impact operators' investment priorities and capital spending decisions in the future, we are encouraged by our performance in the third quarter," stated Jeff Quiram, STI's president and chief executive officer. "The reduced revenue level from our government projects reflects the completion of Phase I of our Air Force SURF contract during the third quarter of 2008 and we are still awaiting the final approval of Phase II of that contract."

Net loss for the third quarter was $3.2 million, compared to a net loss of $3.3 million in the second quarter of 2008 and $2.0 million in the third quarter of 2007. Net loss per share was $0.18, compared to of $0.21 per share in the second quarter of 2008 and $0.16 in the year ago period.

"Our strategic focus continues to be on attractive, high growth opportunities for wireless voice and data applications such as China's TD-SCDMA 3G network build-out and the planned 700 megahertz (MHz) network deployment in the United States. We have completed the TD-SCDMA field trial in China and have begun the process of evaluating the results and benefits of the trial with our customers. As we have stated in the past, successful field trial results will determine the size and scope of the commercial opportunity for our TD-SCDMA solution in China. In the United States, we are sharing our expertise with our wireless operator customers as they explore requirements to solve the interference challenges that exist for the deployment of the new 700 MHz networks."

"In addition, we continue to pursue strategies to apply our world leading materials science and radio frequency (RF) expertise to new markets such as re-configurable handset filters for the rapidly growing Smartphone market segment and HTS coated conductors for next generation electricity distribution systems. Our development efforts on re-configurable handset filters remain on track, and we have met key milestones that demonstrate our ability to provide the essential enabling technology for a cell phone module that can manage multiple frequencies in a low cost, efficient and compact package. In addition, we continue to move forward in our collaborative agreement with the Department of Energy's Los Alamos National Laboratory to apply our material sciences expertise to its research initiative to develop HTS coated conductors for next generation electricity distribution systems," Quiram concluded.

For the nine-month period ending September 27, 2008, total net revenues were $10.0 million, compared to $13.0 million for the first nine months of 2007. Net commercial product revenues for the first nine months of 2008 were $6.1 million, compared to $9.5 million in the year ago period. The company recorded $3.9 million in government and other contract revenues for the first nine months of 2008, compared to $3.5 million for the first nine months of 2007. The net loss for the first nine months of 2008 was $8.9 million, compared to $6.9 million for the prior year's first nine months. The net loss was $0.56 per share for the first nine months in 2008, equal to the loss for the same period in 2007.

As of September 27, 2008, STI had $15.7 million in working capital, including $10.7 million in cash and cash equivalents. As of September 27, 2008, STI had a commercial product backlog of $217,000 compared to $12,000 at the end of the second quarter of 2008 and $647,000 at the end of the year-ago quarter.

Investor Conference Call

STI will host an investor conference call today at 11:00 a.m. ET / 8:00 a.m. PT, November 12, 2008. The call will be accessible live by dialing 800-240-5318 at least 10 minutes before the start of the conference. International participants may dial 303-262-2075. No pass code is required. A telephone replay will be available until midnight ET on November 14 by dialing 800-405-2236 or 303-590-3000, and entering pass code 11121231#. The call will also be simultaneously webcast and available on STI's web site at http://www.suptech.com.

About Superconductor Technologies Inc. (STI)

STI, headquartered in Santa Barbara, CA, is a leading provider of high performance infrastructure products for wireless voice and data application as well as advanced HTS thin film deposition techniques and cooling technologies. Commercially, STI's SuperLink(r) solution increases capacity utilization, lowers dropped and blocked calls, extends coverage, and enables faster wireless data rates. Its AmpLink(tm) solution enhances the performance of wireless base stations by improving receiver sensitivity and geographic coverage.

For information about STI, please visit http://www.suptech.com.

The Superconductor Technologies Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=3963

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 fundraising plans, profitability, revenues, market growth, capital requirements and new product introductions and any other statements identified by phrases such as "thinks," "anticipates," "believes," "estimates," "expects," "intends," "plans," "goals" or 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: fluctuations in product demand from quarter to quarter which can be significant; the need for additional capital depending on unpredictable cash flow; STI's ability to diversify its concentrated customer base; the impact of competitive filter products technologies and pricing; unanticipated decreases in the capital spending of wireless network operators; and manufacturing capacity constraints and difficulties. Forward-looking statements can be affected by many other factors, including, those described in the Business and the MD&A sections of its Annual Report on Form 10-K for 2007 and in STI's other public filings. These documents are available online at STI's website, www.suptech.com, or through the SEC's website, www.sec.gov. 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.

SUPERCONDUCTOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended ------------------------ ------------------------ Sept. 29, Sept. 27, Sept. 29, Sept. 27, 2007 2008 2007 2008 ----------- ----------- ----------- ----------- Net revenues: Net commercial product revenues $ 2,277,000 $ 2,741,000 $ 9,463,000 $ 6,082,000 Government and other contract revenues 1,844,000 854,000 3,525,000 3,933,000 ----------- ----------- ----------- ----------- Total net revenues 4,121,000 3,595,000 12,988,000 10,015,000 Costs and expenses: Cost of commercial product revenues 2,697,000 3,078,000 9,827,000 7,252,000 Contract research and development 963,000 709,000 2,019,000 3,198,000 Other research and development 528,000 1,006,000 2,251,000 2,156,000 Selling, general and administrative 1,973,000 2,096,000 5,916,000 6,513,000 ----------- ----------- ----------- ----------- Total costs and expenses 6,161,000 6,889,000 20,013,000 19,119,000 ----------- ----------- ----------- ----------- Loss from operations (2,040,000) (3,294,000) (7,025,000) (9,104,000) Interest income 28,000 66,000 115,000 235,000 Interest expense (9,000) (7,000) (30,000) (23,000) ----------- ----------- ----------- ----------- Net loss $(2,021,000) $(3,235,000) $(6,940,000) $(8,892,000) =========== =========== =========== =========== Basic and diluted loss per common share $ (0.16) $ (0.18) $ (0.56) $ (0.56) =========== =========== =========== =========== Weighted average number of common shares outstanding 12,483,367 17,750,761 12,483,367 15,908,298 =========== =========== =========== =========== SUPERCONDUCTOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS December 31, September 27, 2007 2008 ----------- ----------- (See Note) (Unaudited) Current Assets: Cash and cash equivalents $ 3,939,000 $10,711,000 Accounts receivable, net 2,413,000 1,409,000 Inventory, net 3,415,000 5,114,000 Prepaid expenses and other current assets 442,000 367,000 ----------- ----------- Total Current Assets 10,209,000 17,601,000 Property and equipment, net of accumulated depreciation of $19,129,000 and $19,604,000, respectively 3,961,000 3,025,000 Patents, licenses and purchased technology, net of accumulated amortization of $1,722,000 and $1,971,000, respectively 2,236,000 2,238,000 Investment in joint venture -- 521,000 Other assets 219,000 244,000 ----------- ----------- Total Assets $16,625,000 $23,629,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 1,467,000 $ 806,000 Accrued expenses 1,405,000 1,026,000 Proceeds for shares to be issued 4,000,000 -- Current portion of capitalized lease obligations and long term debt 45,000 72,000 ----------- ----------- Total Current Liabilities 6,917,000 1,904,000 Other long term liabilities 518,000 499,000 ----------- ----------- Total Liabilities 7,435,000 2,403,000 Stockholders' Equity: Preferred stock, $.001 par value, 2,000,000 shares authorized, 611,523 issued and outstanding -- 1,000 Common stock, $.001 par value, 250,000,000 shares authorized, 12,511,414 and 17,869,030 shares issued and outstanding, respectively 12,000 18,000 Capital in excess of par value 209,163,000 230,084,000 Accumulated deficit (199,985,000)(208,877,000) ----------- ----------- Total Stockholders' Equity 9,190,000 21,226,000 ----------- ----------- Total Liabilities and Stockholders' Equity $16,625,000 $23,629,000 =========== =========== Note-December 31, 2007 balances were derived from audited financial statements SUPERCONDUCTOR TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended ------------------------ September 29, September 27, 2007 2008 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(6,940,000) $(8,892,000) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,748,000 1,313,000 Share-based compensation 258,000 452,000 Provision for excess and obsolete inventories 160,000 -- Reserve for impairment of note and interest receivable from Stockholder (583,000) -- Changes in assets and liabilities: Accounts receivable (383,000) 1,003,000 Inventory 1,955,000 (1,699,000) Prepaid expenses and other current assets 597,000 75,000 Patents, licenses and purchased technology (148,000) (252,000) Other assets 12,000 (24,000) Accounts payable, accrued expenses and other long-term liabilities (622,000) (1,006,000) ----------- ----------- Net cash used in operating activities (3,946,000) (9,030,000) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from the sale of property and equipment 26,000 -- Investment in joint venture -- (521,000) Purchases of property and equipment (91,000) (126,000) ----------- ----------- Net cash used in investing activities (65,000) (647,000) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from shares issued 1,000,000 (4,000,000) Payments on long-term obligations (14,000) -- Proceeds from the sale of common stock -- 20,449,000 ----------- ----------- Net cash provided by financing activities 986,000 16,449,000 ----------- ----------- Net increase (decrease) in cash and cash equivalents (3,025,000) 6,772,000 Cash and cash equivalents at beginning of period 5,487,000 3,939,000 ----------- ----------- Cash and cash equivalents at end of period $ 2,462,000 $10,711,000 =========== ===========

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SOURCE: Superconductor Technologies Inc.

Lippert / Heilshorn & Associates Investor Relations Kirsten Chapman Cathy Mattison +1-415-433-3777 invest@suptech.com

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