SATC Satcon Technology Corp. (MM)

SatCon Technology Corporation(C) (Nasdaq NM: SATC), a developer and manufacturer of power electronics and motors for the alternative energy markets, today announced its operating results for the quarter ended December 31, 2005. Net loss for the quarter was $1.3 million, or $0.03 per share, compared with a net loss of $1.4 million, or $0.05 per share, for the same period in fiscal 2005. "This quarter should be viewed as a transition quarter," commented David Eisenhaure, Chairman and CEO. "We closed the books on the December quarter with 14 megawatts of solar inverters already shipped and on the strength of the product launch of our 500kW solar inverter we are emerging as the leading provider of commercial grade inverters. Our market traction in the burgeoning photovoltaic market combined with our leading position in providing inverters for the stationary fuel cell market give us confidence that our revenue growth in the alternative energy sector is sustainable. This is an important inflection point for our company as we invest in the service infrastructure to support the anticipated growth. The sale of the non-strategic shaker and amplifier product line was a key step in this transition." Revenue for quarter ended December 31, 2005 was $7.1 million, compared with $9.2 million for the quarter ended January 1, 2005. This quarter's revenue was impacted by revenue deferrals in the current quarter totaling approximately $0.4 million and still excludes the recognition of the Rotary Uninterruptible Power Supply for the National Institute for Standards and Technology, which was a system we shipped in third quarter of fiscal 2005. Upon successful product commissioning, this previously deferred revenue is expected to be recognized in 2006. Operating loss for the quarter ended December 31, 2005 was approximately $1.2 million, essentially unchanged from the $1.2 million operating loss recorded in the quarter ended January 1, 2005. In spite of the revenue shortfall, costs were contained and channeled towards the businesses poised for growth. The sale of the non-strategic shaker and amplifier product line contributed a gain of approximately $1.4 million, which offset the operating loss in the quarter ended December 31, 2005. "We are keen to pursue the expanding revenue opportunities in the alternative energy sector and we recognize the importance of having a strong balance sheet to support this growth," said Millard Firebaugh, President and Chief Operating Officer. We are aggressively managing all aspects of the Balance Sheet with division management focused on cash usage, receivables days outstanding, and inventory turns. Our cash position at December 31, 2005 is approximately $9.3 million. Our cash usage for the past couple of quarters is in the $1.5 million range per quarter. Given our expectations for revenue growth with sustainable margins in the alternative energy markets, our plans for 2006 are to diminish our cash usage from the 2005 rates. What is important to note here is that we believe that our current cash and availability will sustain our operations through our fiscal 2007 and possibly beyond to a cash positive operation." The previously stated milestones and a status update follow: -- December 2005: Focus on SatCon core business by selling the Ling Shaker product line. Done. -- March 2006: Qualify a 500 kw solar photo-voltaic power control unit product for the California Energy Commission listing. Done. -- March 2006: Secure development projects for the U.S. Army's Future Combat System applications. Done -- June 2006: Book orders for production quantities of HEV motors and converters. On Track -- June 2006: Book an order for a megawatt stationary fuel cell power control unit. On Track -- June 2006: Introduce a new design for a solar photovoltaic power control unit in the power range of 100 kw for the European photo-voltaic market. On Track -- June 2006: Introduce for 2006 delivery a high reliability standard product line of 1 Amp to 5 Amp Class K Low Drop Out Voltage Regulators used in power supplies for space flight and satellite applications. On Track -- September 2006: Develop new high-temperature packaging technology for Silicon Carbide power devices. On Track -- September 2006: Introduce the PowerPac line of industry leading 15W to 30W non-isolated DC to DC converters for the emerging high reliability distributed power markets. On Track In addition to the above stated progress against milestones, SatCon has recently announced a series of development contracts supporting our hybrid electric vehicle and auxiliary power initiatives including a NASA Contract for a Superconducting DC Homopolar Motor, Army Hybrid Electric Vehicle Integrated starter generator contract, and Army Tactical Vehicle Auxiliary Power Unit. Commenting on the outlook for SatCon for the coming year, Mr. Eisenhaure said, "Our prospects for sustainable revenue growth are sound. Our years of experience in high voltage and high reliability power electronics has put us in a great position to not only participate in the market growth for alternative energy products, but to be recognized as a strategic supplier to the solar, wind and fuel cell industries. Our current orders on hand combined with outstanding requests for quotations give us confidence that we are poised to create sustainable value for our shareholders." About SatCon Technology Corporation SatCon Technology Corporation is a developer and manufacturer of electronics and motors for the Alternative Energy, Hybrid-Electric Vehicle, Grid Support, High Reliability Electronics and Advanced Power Technology markets. For further information, please visit the SatCon website at www.satcon.com. Statements made in this document that are not historical facts or which apply prospectively are forward-looking statements that involve risks and uncertainties. These forward-looking statements are identified by the use of terms and phrases such as "believes," "expects," "plans," "anticipates" and similar expressions. Investors should not rely on forward looking statements because they are subject to a variety of risks and uncertainties and other factors that could cause actual results to differ materially from the Company's expectation. There can be no assurance that the company will continue to maintain this level of new orders or that it can successfully deliver the components and systems ordered. Additional information concerning risk factors is contained from time to time in the Company's SEC filings. The Company expressly disclaims any obligation to update the information contained in this release. -0- *T SATCON TECHNOLOGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended ------------------------ December 31, January 1, 2005 2005 ------------------------ Revenue: Product revenue $ 6,038,029 $ 8,270,224 Funded research and development and other revenue 1,079,052 912,865 ------------------------ Total revenue 7,117,081 9,183,089 ------------------------ Operating costs and expenses: Cost of product revenue 5,801,833 7,218,699 Research and development and other revenue expenses: Funded research and development and other revenue expenses 1,111,102 747,400 Unfunded research and development expenses 260,396 45,316 ------------------------ Total research and development and other revenue expenses 1,371,498 792,716 Selling, general and administrative expenses 2,487,852 2,522,080 Amortization of intangibles 111,671 111,671 Gain on sale of assets (1,442,915) -- Restructuring costs -- (255,612) ------------------------ Total operating costs and expenses 8,329,939 10,389,554 ------------------------ Operating loss (1,212,858) (1,206,465) Net unrealized gain on warrants to purchase common stock -- 21,939 Other expense (4,397) (18,056) Interest income 47,098 1,818 Interest expense (137,570) (231,676) ------------------------ Net loss $(1,307,727)$(1,432,440) ======================== Net loss per weighted average share, basic and diluted $ (0.03)$ (0.05) ======================== Weighted average number of common shares, basic and diluted 38,355,974 29,114,757 SATCON TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS December 31, September 30, 2005 2005 ---------------------------- ASSETS (Unaudited) (Audited) Current assets: Cash and cash equivalents $ 9,194,720 $ 6,627,352 Restricted cash and cash equivalents 84,000 84,000 Accounts receivable, net of allowance of $651,463 at December 31, 2005 and September 30, 2005, respectively 5,332,668 6,473,665 Unbilled contract costs and fees 114,899 147,938 Inventory 6,502,168 7,017,419 Prepaid expenses and other current assets 710,924 587,083 ---------------------------- Total current assets $ 21,939,379 $ 20,937,457 Property and equipment, net 3,396,432 3,662,746 Goodwill, net 704,362 704,362 Intangibles, net 1,736,152 1,867,118 Other long-term assets 551,750 560,021 ---------------------------- Total assets $ 28,328,075 $ 27,731,704 ============================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank line of credit $ 2,000,000 $ -- Current portion of long-term debt 155,919 167,588 Accounts payable 3,243,675 3,363,878 Accrued payroll and payroll related expenses 1,502,681 1,563,332 Other accrued expenses 1,903,130 2,225,003 Accrued contract losses 84,779 84,779 Deferred revenue 2,359,672 2,139,434 ---------------------------- Total current liabilities $ 11,249,856 $ 9,544,014 Redeemable convertible Series B preferred stock (425 shares issued and outstanding; face value $5,000 per share; liquidation preference 100%) 2,125,000 2,125,000 Long-term debt, net of current portion 117,715 143,590 Other long-term liabilities 334,435 316,844 ---------------------------- Total Liabilities $ 13,827,006 $ 12,129,448 Commitments and contingencies (Note H) Stockholders' equity: Common stock; $0.01 par value, 50,000,000 shares authorized; 38,382,706 and 38,283,208 shares issued and outstanding at December 31, 2005 and September 30, 2005, respectively 383,827 382,832 Additional paid-in capital 153,450,771 153,239,276 Accumulated deficit (139,213,827) (137,906,100) Accumulated other comprehensive loss (119,702) (113,752) ---------------------------- Total stockholders' equity $ 14,501,069 $ 15,602,256 ---------------------------- Total liabilities and stockholders' equity $ 28,328,075 $ 27,731,704 ============================ *T