Good day, everyone, and welcome to American Superconductors Fourth Quarter Fiscal 2008 Conference Call. Today's call is being recorded. With us on the call this morning are American Superconductor's Founder and CEO, Greg Yurek; Senior Vice President and CFO, David Henry; and Investor Relations Director, Jason Fredette. For opening remarks and introductions I'd like to turn the call over to Mr. Jason Fredette. Please go ahead, sir. Jason Fredette – Director of Investor Relations: Thanks Dana. I would like to point out that certain remarks we make this morning regarding our financial forecasts and other beliefs, plans and expectations constitute forward-looking statements. There are number of risks and uncertainties that may cause actual results to differ significantly from these statements. Please refer to our 10-K, which was filed with the SEC on June 14, 2007 and our subsequent 10-Qs for information about these risks and uncertainties. I would also like to note that we will be referring to EBITDAS this morning for earnings before interest income, other non-operating expense, income taxes, depreciation, amortization and stock compensation. EBITDAS is a non-GAAP financial metric. A reconciliation of EBITDAS to net loss on a GAAP basis is included in the press release we issued and filed with the SEC this morning on Form 8-K. All of our SEC filings can be accessed in the Investor Section of our website at www.amsc.com. And now, I’ll turn the call over to Greg. Gregory Yurek – Chairman, President and Chief Executive Officer: Thanks Jason. And good morning everyone. We had a very successful fourth quarter and fiscal year on many different fronts. I'll start with the financial highlights, and then review some of our product development progress. Revenues increased by over 100% year-over year to more than $38 million in the fourth quarter and approximately 112…

Thank you, sir. (Operator Instructions.) We'll go first to Carter Shoop of Deutsche Bank.

Hey, guys. Good morning.

Good morning, Carter.

Great quarter. Guidance looks very supportive of the longer trends that you have been seeing. I wanted to ask a couple questions on guidance. And I think you mentioned the percentage of the backlog that could be shipped. So what do we need to see to possibly--to meet '08 guidance here? Do you think that we're going to possibly see some wins on the HTS side, possibly some Entergy -- or do you think it's going to be more on the wind side that will help you meet the full year guidance based on what you already have in the backlog?

I think the main contributors for fiscal '08, which we're already a month into, are going to come from the wind and power grid sectors, primarily in power systems. And Carter, you may remember the model we have out there says approximately 90% of our revenues coming from power systems and 10% from superconductors. And Dave just gave you the range of guidance a little bit less than the 90% here, but that's going to be the main contributors. So power systems, wind, and also power grid marketplace. We do expect additional orders coming in on the HTS side, but the lion's share are going to come from power systems.

And we'll take our next question from Ben Kallo of Stanford Group.

Hi, guys. Good morning.

Good morning.

And thank you for all the detail there. That was very helpful. As far as-- it looks like you're getting a lot of traction obviously in China, but then in India as well. And my first question is do you have plans to have an AMSC India as you do in China? And then, for the guidance I think that I just heard a number that was basically showing a smaller portion of the business coming internationally. So could you just give us an update on how North America's progressing and what's happening there?

Sure. We do have plans to expand in India. This has been part of our long-term planning process. As I said, Ghodawat is getting our foot in the door here on the wind side. We're going to first handle our major needs in India I believe out of China, certainly out of the U.S., of course, out of our operations in the U.S., shifting that very rapidly over to supplying product out or our Chinese operations. Again, it's closer, but it's also lower overall cost to do so. And as we grow in India, then we'll look to form an AMSC India as well and we'll tell you more about how that would shape up later this year. In terms of the percentage of international decreasing a small amount, yes, we think our growth here in the--North America is going to increase and that's obviously what's going to make up the difference here. And where is that going to happen? Primarily, power grid markets in the North American sector. But wind is not slowing down for us. More wind farms are going in and more D-VARs are needed and that's going to be our primary source of additional wind market revenues in North America - that is D-VAR.

And we'll take our next question from Corey Tobin of William Blair and Company.

It's been a good quarter. On quickly on China, what do you estimate the benefit the total corporate gross margin will be from the fact that you've now been shipping manufacturing I should say rather power modules out of China?

Hi, Corey. It's Dave. We're not really talking about what we expect the gross margin benefit to be--quantifying it for you. I mean, there are--it's obviously going to be lower cost, but how that lower cost shakes out is yet to be seen because we're still ramping. I mean, we're just really starting production there. And to really see meaningful benefit, we've got to be producing most of our demand in China and that's not going to happen until later this fiscal year. So it's hard to say at this point, but the guidance that we've given reflects whatever improvement we are expecting to see out of China for gross margin.

And we do expect to be at that-- we're already at our full monthly production rate right now. So we'll keep ramping and we'll be making additional products in China as the year goes on, coincident with what Dave just said here. But we're simply not giving quantitative guidance on that gross margin at this point.

And we'll take our next question from Jim Ricchiuti - Needham & Co.

Yes, good morning. Congratulations on the quarter.

Thanks, Jim.

You clearly had a big bookings quarter. Greg, I wonder if you could give us a sense as to how active the pipeline looks for new orders in both parts of the business. And Dave, if you would, I thought you gave gross margin guidance for fiscal '08, but I may have missed it. Would you repeat it, please?

Well, my question is easy and I'll answer that first. What we said for fiscal 2008, that we were increasing our target range. Recall back in November at our Analyst Day we kind of said our target range for gross margin was 25 to 30%. We're now increasing that range to be between 30 and 35%. But because of the higher mix of turnkey business expected in power systems, which as you remember is lower margin business--higher revenue, but lower margin business--and also, the fact that we do--we're assuming that the dollar is going to strengthen as we move towards fiscal 2008, we're expect to operate at the lower end of that range--that 30 to 35% range for fiscal 2008.

And Jim, on the other part of your question - orders expectations. Obviously, I'll answer you only in general terms here. But it's over different segments, different product lines and solutions. So starting with wind, you know our long-term strategy-- we've said over the last year and a half has been to plant seeds with our AMSC Windtec division that is to license our wind turbine designs or get contracts to design and develop custom systems for new wind turbine manufacturers. And as they go into production, we get the orders for the core electrical systems, and in some cases we also get royalty payments. As we outlined today, we mentioned Ghodawat. They expect to be starting up production in 2009. We talked about Dong Fang. We've already got the first order for their first prototypes and they--their plan is to be in production in '09 Call with ZELRI--CSR-ZELRI, the same thing. And I mentioned Sinovel. We got our order, as you just pointed out, 18 million from Sinovel in March. They're 3 megawatt systems, but they have not and do not plan to stop manufacturing 1.5 megawatt. So we would expect this year to receive an order for calendar '09 for Sinovel's 1.5 megawatt systems. On the D-VAR front, more wind farms are going in around the world and as more go in there are more issues with grid interconnection of these wind farms and our D-VAR is a proven solution around the globe. And we expect more sales orders coming in for the D-VAR from grid interconnection of wind farms. The power grid market, we mentioned SVCs. We'll have our first two systems in later this year and we're actively engaged with utilities certainly in the United States for SVC--potential SVC orders. But I mentioned also out of our Chinese operation now, we are actively marketing our D-VAR and SVC grid products in China. On the superconductor side, we're also marketing superconductors in China. We already, as we've mentioned in the past, have our partnership with Shanghai Electric Cable in Shanghai, of course, and that's going well. But in the U.S., we also expect additional government contracts will be coming in for further development and demonstration. For example, on the--in the front of 8 to 10 megawatt class superconductor wind generators. So a lot of opportunity out there. We're pursuing it all very aggressively. And I want to emphasize it's not just in North America anymore. Look for us to continue to get orders on the Chinese and Indian wind fronts.

And we'll take our next question from Stuart Bush of RBC Capital Markets.

Good morning, guys.

Good morning.

I have a question about one of the wind customers that you haven't commented on yet. Earlier this week it seems like a major wind Canadian customer that you have - AAER - that was planning for a significant order flow from the Hydra Quebec project was not selected. Can you comment on why their design was not selected in your order outlook from them?

Well, I don't know why their design was not selected for that particular opportunity with Hydra Quebec. That's not our design by the way. The (inaudible) 0.5 megawatt systems that they bid on there, that comes from Fuhrlander. And what they're selling now are Fuhrlander 1.5 megawatt designs. We--and we expect they will continue to sell those in smaller quantities, sort of the 15 megawatt kind of wind farms that's been their primary focus in parallel to their effort to try to get into the Hydra Quebec opportunity. So when we look at our forecast for this year, we did not have anything in there for AAER getting or participating in the Hydra Quebec opportunity. We do have in there, of course, the orders we already have from them, but those are for smaller wind farms in Canada and in the U.S. And so, I expect they'll continue to grow in that area. And by the way, they're also working in France and the U.K. and the 2 megawatt supergear design that we did license to them. So all the things I was just talking about was us selling electrical components to AAER for the 1.5 megawatt Fuhrlander design, and we expect that to go forward for the smaller wind farms. The 2 megawatt supergear design we licensed to them last year, I'd expect them to be selling those to first of all probably in France, and I don't see any hold up on that front. So again, our numbers do not include anything for AAER getting Hydra Quebec, so I don't see that affecting us. And by the way, Stuart, from a more -- a broader perspective, not to--that it affects our guidance per se, but I would expect AAER and Lehman Brothers and others that they're involved with to probably challenge that selection process up in Canada. But that's sort of a side issue, not really AMSC related I would say.

And we'll take our next question from Michael Carboy of Signal Hill.

Good morning, ladies and gentlemen. And congratulations also on the great quarter.

Thanks Michael.

Greg, I'd like you to elaborate a little on the supply chain as it relates to the wind power arena. You're--it sounds like you are forecasting some--or you see some terrific volume growth opportunities. I'm wondering how confident you are that the elements of the supply chain are going to be there to make certain all of these orders sort of unfold on time.

Well, let's just focus on where the growth is for fiscal '08. And it's primarily Asia Pacific and it's primarily China for fiscal '08 - Sinovel, Dong Fang, and ZELRI, and primarily Sinovel. And what we do and we're doing right now for Ghodawat in India, is we help them to the supply chain. We're part of that supply chain, so that's good news, of course. But we help them, for example, on generators. We specified three generators that could meet the needs of the particular design they've adopted from us. And we helped them get those suppliers up and running. However, when we look at a Sinovel or a Dong Fang, the second and third largest wind turbine manufacturers in China, they have baked in, in a sense, their own supply chain. Sinovel makes most of the components for their wind turbines within Dalian heavy industries and Dalian crane works, which they're spun out of. So there are challenges there, but they are not anywhere near the magnitude of challenges that we've seen in other parts of the world. And by the way, the Chinese are--have opened up the doors a bit to more components coming in from overseas into China. But I've also seen that they feel pretty comfortable about this, because they're now starting to shut those doors to outside suppliers by putting tariffs on those outside component suppliers. So in China with that huge growth, I think it's going to primarily come from within China as we go over the next years.

Terrific, thanks.

And we'll take our next question from Walter Nasdeo of Ardour Capital.

Good morning. This is Robert Lahey speaking on behalf of Walter.

Hi Robert.

Could you give me a real quick headcount for the Company, and then if possible one for AMSC China?

We have about 380 employees through the end of the year. And as Greg mentioned in his remarks, about 75 of those are in China.

And we'll take our next question from Pavel Molchanov of Raymond James.

Good morning, guys. As everybody has said, excellent results.

Thanks Pavel.

A question on your contract with Ghodawat Industries. This is your--as I understand, your first floor into India. Can you just talk about how you chose the--your customer as your initial means of entering that market? I'm assuming you have--you had other alternatives. What made you pick these guys?

Yes, that's a great question. We actually had 13 potential customers in China - or excuse me, in India, that wanted to our first--be the first to license our technology - 13 of them. We went through a detailed selection process where we analyzed the financials of these companies, we hired a consultant we know well over in India to help on that, we had visits to the companies. What kind of assets do they really have? What kind of capabilities do they have? So we went through a pretty thorough due diligence process. And Ghodawat let's say was the winner for our first licensee in India. Having said that, going through that whole process gives us a lot of information on who's going to be number two or three over in India. But I want to let you know that--I guess that we didn't just pull this one out of the air by any stretch of the imagination.

And we'll take our next question from Brian Yerger of Jesup and Lamont.

Good morning gentlemen, thanks for taking my call.

Sure.

Just following up on Pavel's question, how do you see your strategy for your India penetration in terms of number of people on the ground and how you might serve that market with power modules possibly coming out of China?

Look, the first thing we'll be doing there is a regional sales hub, to be more specific about it. I mean, that's just the natural evolution and maybe it's not obvious to everybody. But we're right there on the ground working with Ghodawat helping them to localize their supply chain and so forth. As we mentioned, we helped them through the development, get up their first prototype 1.65 megawatt wind turbine. So it's a very close interactive process. And the people from AMSC come from Austria, they come from Wisconsin, wherever we need to get the experts to help in that process. As we go--as they go into production and our orders ramp up from them, given what we said that's going on in China, with AMSC China, we're going to be making most of our power model 1000 units in AMSC China. We're already at our monthly capacity right now. And we would expect to ship the first power modules right out of AMSC China over to Ghodawat. As we shift over to our PM3000s, which we had in an earlier call forecasted we would introduce PM3000s late in fiscal 2008, we'd expect to ramp up production of PM3000s. in China. We'll start production, of course, in our Wisconsin operations you have China and it's about a 354, 375-mile flight from Shanghai to New Delhi. It's not that far away. So that's the obvious thing to do - work on--set up a regional sales hub in India in the meantime. And then, from that nucleus, we can examine and look at the possibility of perhaps going into production in India. Quite frankly, we don't have to do that necessarily. We're--I think we're doing extremely well in China and as long as that meets our financial objectives, we'll ship product out of China to India.

And we'll take our next question from Pete Patterson of Patterson Investments.

Good morning, gentlemen.

Hay Pete, morning.

You guys are almost ready for the Boston Marathon. Congratulations on the major accomplishments. I just wanted to ask you concerning potential motor OEMs, is there some continuing dialogue going on there?

Oh, yes. There is definitely continuing dialogue, both with end use customers as well as OEM partners. We haven't given up on motors at all. And keep in mind, we delivered the 36.5 megawatt motor to the Navy about a year ago, actually March of '07, factory-tested. The Navy owns that motor. And their plans are to get through full load testing of that motor sometime late this year. So all those pieces are moving in parallel, Pete, and we'll see where that goes. We're optimistic.

And we'll take our next question from Carter Shoop of Deutsche Bank.

Hi. I want to get a little bit more clarity into Sinovel. I was hoping that you guys could tell us what percentage of sales Sinovel was in fiscal 4Q and what your expectations are for Sinovel percentage of sales in '08?

Yes, hi. We--we're not giving specific customer guidance for '08. But for '07 they were 51% of revenue for the full year and 49% for the fourth quarter.

And we'll go next to Ben Kallo of the Stanford Group.

Hey, guys. I just wanted to--maybe you could go through your commodity exposure and how you plan on having an increase in your gross margins even though we have some commodity price increases - what your plans are around those?

Yes. I mean, the only real commodity exposure we have is in silver for our 344 superconductor manufacturing process. But compared to what we used to have with the 1G wire, the precious metal component of it is significantly less. So precious metals and commodities are really a de minimis part of our--that have any impact to our gross margin. So we don't really feel we have to do anything special like forward contracts or anything like that to hedge the price of silver because it's not— it's just not a big component of our total manufacturing cost.

And we'll go next to Jim Ricchiuti of Needham and Company.

Hi, guys. I just wanted to go back to your earlier comment on the production line for the wire business. Can you give us some sense as to when you think you might be through these mechanical issues that you've experienced? It sounds like you've made some headway, but not entirely through it.

Yes. We're essentially there, Jim. As you go forward, you never know what's going to happen on any given day, of course. But we've identified all the issues here and we have solutions for all those issues. So I don't know, 98-99% of the way there. I don't want to say 100%, but we're essentially there. And so, it's going well.

And we'll take our final question today from Michael Carboy of Signal Hill.

Thank you for the follow up. David, could you elaborate, please, on the amount--the specific amount of gross margin enhancement that arose from foreign exchange? Thank you.

For the quarter, the income effect of that was roughly $400,000. So when you look at it for the full year, somewhere in the range of 1 to 2 million. But for the fourth quarter, it was about $400,000.

And that concludes our question and answer session. I'd like to turn the call back over to Mr. Yurek for any additional or closing remarks.

Well, thanks for your great questions. We had a great fourth quarter, as we said, and a terrific fiscal year 2007. And as we mentioned several times throughout this call, fiscal 2008 is going to be a great one. So we're looking forward to it and getting back to you on the next earnings call. Thanks.

And that does conclude today's conference call. Thank you for your participation. You may disconnect at this time. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited. THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS. If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!