SATC Satcon Technology Corp. (MM)

SatCon Technology Corporation(C) (Nasdaq NM: SATC), a developer and manufacturer of power electronic products for the alternative energy markets, today announced its operating results for the third quarter ended July 1, 2006. Net loss for the quarter was $3.5 million, or $0.09 per share, compared with a net loss of $2.3 million, or $0.07 per share, for the same period in fiscal 2005. Net loss for the nine months year-to-date was $8.0 million, or $0.21 per share, compared with a net loss of $6.1 million, or $0.19 per share, for the same period in fiscal 2005. Year-to-date, approximately $1.6 million has been invested in new market and product initiatives, which are expected to drive incremental revenue growth over the upcoming quarters. Revenue for quarter ended July 1, 2006 was $8.1 million, compared with $8.2 million for the quarter ended July 2, 2005. Revenue for nine months ended July 1, 2006 was $22.8 million, compared with $25.6 million for the comparable period ended July 2, 2005. Orders on hand at the end of the third quarter were a record $26.6 million compared with $23.3 million at the end of the third quarter 2005. The recently completed financing transaction subsequent to the end of the third quarter has added a net $11.0 million of cash, to strengthen the Company's balance sheet and provide the necessary resources to fund, primarily, the working capital requirements associated with our anticipated revenue growth. "We continue to make solid progress towards transitioning into a growth-oriented business with revenues coming from a diversified but linked portfolio of assets," commented David Eisenhaure, Chairman and Chief Executive Officer. "The investments we are making in new products combined with the increase in marketing and sales initiatives, are beginning to bear fruit. The gains in revenue in our electronics and stationary power systems businesses, associated with these investments, have partially offset the reduction in revenue caused by the sale of our shaker product line in December 2005. I continue to be encouraged by the market reception for our alternative energy and stationary power products. Our commercial grade solar inverters continue to gain market traction and represent approximately 19 percent of our total corporate revenues for the year-to-date, compared with approximately 7 percent in the prior year." "The steps we are taking to align our organization with our product and market initiatives will ultimately drive greater profitability in our business," said David Eisenhaure. " As an indication of our commitment to the growth prospects in alternative energy and electronics, approximately 63 percent of our employees are now dedicated to these businesses, up from 53 percent one year ago. We expect this trend to continue." The previously stated milestones have been updated below: -- 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. Done -- June 2006: Book an order for a megawatt stationary fuel cell power control unit. Done -- June 2006: Introduce a new design for a Powergate solar photovoltaic inverter in the power range of 100 kw for the European photo-voltaic market. Done -- 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. Done -- September 2006: Develop new high-temperature packaging technology for Silicon Carbide power devices. -- 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. Commenting on the outlook for SatCon for the remainder of the year, Mr. Eisenhaure said, "Our two pronged approach to generating sustainable results is taking shape -with our focus on delivering positive EBITDA from a growing electronics business and maximizing revenue growth from stationary power systems - driven by market traction in alternative energy and industrial power products. Taking into consideration the record level of orders on hand combined with active quotes and supply agreements, we are expecting to end fiscal 2006 on a positive note, with a modest increase in fourth quarter revenue compared with third quarter 2006. We believe the record backlog is a strong indicator of revenue growth for fiscal 2007." 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. (SATC-E) 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 Nine Months Ended ------------------------- ------------------------- July 1, 2006 July 2, 2005 July 1, 2006 July 2, 2005 ------------ ------------ ------------ ------------ Revenue: Product revenue $6,852,666 $6,971,627 $19,551,252 $22,373,422 Funded research and development and other revenue 1,250,491 1,186,141 3,275,824 3,240,763 ------------ ------------ ------------ ------------ Total revenue 8,103,157 8,157,768 22,827,076 25,614,185 ------------ ------------ ------------ ------------ Operating costs and expenses: Cost of product revenue 6,675,853 6,182,023 18,322,831 19,866,564 Research and development and other revenue expenses: Funded research and development and other revenue expenses 1,100,077 1,205,756 3,189,186 2,899,449 Unfunded research and development expenses 512,819 145,397 1,333,297 280,901 ------------ ------------ ------------ ------------ Total research and development and other revenue expenses 1,612,896 1,351,153 4,522,483 3,180,350 Selling, general and administrative expenses 3,393,602 2,723,064 9,240,828 8,044,945 Amortization of intangibles 111,671 111,671 335,013 335,013 Gain on sale of assets (189,960) -- (1,632,875) -- Restructuring costs -- -- -- (255,612) ------------ ------------ ------------ ------------ Total operating costs and expenses 11,604,062 10,367,911 30,788,280 31,171,260 ------------ ------------ ------------ ------------ Operating loss (3,500,905) (2,210,143) (7,961,204) (5,557,075) Net unrealized gain on warrants to purchase common stock -- -- -- (7,036) Other income (expense) 42,535 (22,867) 58,975 (152,289) Interest income 57,483 16,392 199,880 27,497 Interest expense (85,568) (57,283) (325,686) (383,718) ------------ ------------ ------------ ------------ Net loss $(3,486,455) $(2,273,901) $(8,028,035) $(6,072,621) ============ ============ ============ ============ Net loss per weighted average share, basic and diluted $(0.09) $(0.07) $(0.21) $(0.19) ============ ============ ============ ============ Weighted average number of common shares, basic and diluted 39,114,884 33,364,094 38,665,033 31,909,302 SATCON TECHNOLOGY CORPORATION CONSOLIDATED BALANCE SHEETS July 1, September 30, 2006 2005 ------------- ------------- ASSETS (Unaudited) (Unaudited) Current assets: Cash and cash equivalents $3,324,407 $6,627,352 Restricted cash and cash equivalents 84,000 84,000 Accounts receivable, net of allowance of $757,395 and $651,463 at July 1, 2006 and September 30, 2005, respectively 6,076,085 6,473,665 Unbilled contract costs and fees 214,567 147,938 Inventory 7,005,057 7,017,419 Prepaid expenses and other current assets 666,012 587,083 ------------- ------------- Total current assets $17,370,128 $20,937,457 Property and equipment, net 3,079,698 3,662,746 Goodwill, net 704,362 704,362 Intangibles, net 1,474,234 1,867,118 Other long-term assets 309,405 560,021 ------------- ------------- Total assets $22,937,827 $27,731,704 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank line of credit $2,000,000 $-- Current portion of long-term debt 160,655 167,588 Accounts payable 3,395,767 3,363,878 Accrued payroll and payroll related expenses 1,555,952 1,563,332 Other accrued expenses 1,815,197 2,225,003 Accrued contract losses 84,779 84,779 Deferred revenue 2,394,179 2,139,434 ------------- ------------- Total current liabilities $11,406,529 $9,544,014 Redeemable convertible Series B preferred stock (345 and 425 shares issued and outstanding at July 1, 2006 and September 30, 2005, respectively; face value $5,000 per share; liquidation preference 100%) 1,725,000 2,125,000 Long-term debt, net of current portion 35,346 143,590 Other long-term liabilities 110,856 316,844 ------------- ------------- Total liabilities $13,277,731 $12,129,448 Commitments and contingencies (Note H) Stockholders' equity: Common stock; $0.01 par value, 100,000,000 and 50,000,000 shares authorized at July 1, 2006 and September 30, 2005, respectively; 39,439,047 and 38,283,208 shares issued and outstanding at July 1, 2006 and September 30, 2005, respectively 394,391 382,832 Additional paid-in capital 155,266,120 153,239,276 Accumulated deficit (145,934,135) (137,906,100) Accumulated other comprehensive loss (66,280) (113,752) ------------- ------------- Total stockholders' equity $9,660,096 $15,602,256 ------------- ------------- Total liabilities and stockholders' equity $22,937,827 $27,731,704 ============= ============= *T