Good day, everyone, and welcome to the American Superconductor’s Third Quarter Conference Call. [Operator Instructions] With us on the call this morning are American Superconductor’s Founder and CEO, Greg Yurek; Senior Vice President and CFO, David Henry; and Managing Director of Corporate Communications, Jason Fredette. For opening remarks, I would like to turn the call over to Mr. Jason Fredette.

Thank you, Alicia, and welcome to the call, everyone. Before we begin, please note that various remarks management may make on this conference call about American Superconductor’s future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of the company's annual report on Form 10-K for the fiscal year ended March 31, 2010, and subsequent reports filed with the SEC. These forward-looking statements represent the company’s expectations only as of today and should not be relied upon as representing the company’s views as of any date subsequent to today. While American Superconductor anticipates that subsequent events and developments may cause the company’s views to change, the company specifically disclaims any obligation to update these forward-looking statements. I also would like to note that we’ll be referring on today’s call to non-GAAP net income or net income before amortization of acquisition-related intangibles, restructuring and impairments, stock-based compensation, other unusual charges and any tax effects related to those items. Non-GAAP net income is a non-GAAP financial metric. A reconciliation of non-GAAP to GAAP net income can be found 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 from the Investors Page of our website at amsc.com. And finally, I'd like to note that we'll be taking part in several upcoming conferences including the Deutsche Bank's Small and Mid Cap Growth Conference on February 16 in Florida and the Jefferies and Co. Global Clean Tech Conference in New York on February 23. The Deutsche Bank event will be webcast. More details on that will be published next week. With that, let me turn the call over to CEO, Greg Yurek.

Thanks, Jason, and good morning to everyone. We are proud to be reporting to you on our 16th consecutive quarter of revenue growth and a record quarter of profitability here at AMSC. As you will hear from Dave Henry in more detail in a few minutes, we expect to end fiscal year 2010 in powerful fashion as we achieved another quarter of sequential revenue growth with gross and operating margins at or near record levels in our fourth fiscal quarter. The strength of our third quarter results was driven not only by continued growth in our Wind Power business, which remains quite strong, but also by record Power Grid Revenues. Power Grid revenues grew by 60% year-over-year and represented nearly 20% of our total revenues for the fiscal third quarter. We believe revenues for our Power Grid-related products including D-VAR, D-VAR RTs, Solartie, Amperium wire and superconductor cable projects will become a much bigger contributor to our growth over the next 12 to 24 months. Another feature of our third quarter was that virtually all of our revenues and orders for the third fiscal quarter were from outside the United States. That perhaps should not come as a surprise because we are a multinational power technologies company with a focus on the wind energy and power grid markets, and we are, moreover, specifically focused on these markets in China and other fast-growing economies in the Asia-Pacific region. The corollary to that, by the way, is that we are not dependent on the wind energy and power grid markets in the U.S. and Europe, which have been in the doldrums over the past couple of years. While we expect the U.S. and European wind and grid markets to revive and grow quite attractively in the years ahead, for right now, our…

Thanks, Greg, and good morning, everyone. We're happy to be speaking with you about a robust third fiscal quarter at AMSC. This marked our 16th consecutive quarter of sequential revenue growth and was also a record-earnings quarter. In fact, our net income for the third fiscal quarter more than tripled year-over-year. Revenues for the third quarter of fiscal year 2010 were a record $114.2 million. This is up approximately 12% from $101.5 million for the second quarter of fiscal 2010 and 42% from $80.7 million for the third quarter of fiscal 2009. While shipments of wind turbine power electronics and control systems accounted for the majority of our year-over-year revenue growth, our power grid solutions drove the majority of our sequential revenue growth. As Greg mentioned, we expect to see continued strengthening of our power grid-related sales in the years ahead. We generated approximately 82% of our third quarter revenues in the wind power sector, with essentially all of the remainder coming from our power grid solutions and projects. We generate the vast majority of our revenues outside of the U.S In the third fiscal quarter, we generated 97% of our wind energy and power grid revenues outside of the U.S. with the remainder essentially coming from superconductor projects. Sales to China's Sinovel wind represented 73% of total revenues for the third fiscal quarter, down from the previous quarter because of the increase in power grid revenues in third quarter compared with second quarter. Our backlog as of December 31, 2010, stood at approximately $883 million, down from $956 million as of September 30, 2010, and up from $546 million as of December 31, 2009. As we said in the past, that due to the long-term nature of many of our customer contracts, bookings tend to be lumpy on a…

[Operator Instructions] We will take our first question from Jeremy Hellman from Divine Capital Markets.

A question for David. With respect to Power Grid segment stuff. Do you anticipate breaking that out on to its own mine anytime soon?

I guess the question is in terms of reporting, do we expect that we'll change our segments anytime soon? I guess the answer to that is no, there's not an anticipation that we'll change our segments at this time. And by the way, I want to point out that, Dan McGhan, our President Chief Operating Officer is also here in the room. So I may direct a question or two to him as we go through the call.

Our next question comes from John Hardy from Gleacher & Company. John Hardy - Gleacher & Company, Inc.: I wanted to go in a little bit more. I know it's pretty far out there but the $1 billion target for 2014. Again, I know it's early but I was wondering if you could give us some detail on what you think the breakout there will be between HTS (high temperature superconductor) wind and ancillary grid business like D-VAR and that good stuff?

Yes, we're not going to give a detailed breakout on that to be sure, but we pointed out in the last few months that, for example in our Wind growth rate, as SeaTitan starts to make an impact there in the outer years of that five-year plan, it will accelerate the Wind segment, the wind growth rate as we've called it. And I think the bigger one is going to be with superconductors. Superconductors, in the terms of cables for Power Grid sectors is really going to accelerate the Power Grid sectors. So Power Grid, as I mentioned, includes not just the Amperium wire and the super conductor power cables but D-VAR, D-VAR RT and Solartie which is a new product. So Solartie coming in here, sales starting up as we've always said in 2012, is going to be we think a significant contributor to that. We think, as I mentioned in the call, with new standards coming into the wind arena, particularly in China, this year, for low-voltage ride through, we believe we have the right solution for that, and we think they'll be a nice uptick in our revenues associated with low voltage ride through sales. So those are some of the contributors here, but the big contributor over the next few years is going to start to be superconductors to that $1 billion in our five-year plan.

The other thing to note too as we did mention in the call that we do expect by the time you get out to that point in time, Sinovel is well below 50% of our total revenues.

And of course, we talked also in this call about shaving a year off of that five-year plan, and I'm not going to get into anymore specifics on that, but we listed in my remarks some of the ways we will be doing that, and we feel very confident we'll be able to, in fact, achieve that $1 billion in revenue. And I think it's very important to add that's with in excess of 20% operating margins in that four years or less from now.

And we'll take our next question comes from Timothy Arcuri from Citi.

First of all, Dave, what do you think the receivables balance will be given the payments that you've gotten in this month? What were the receivables balance be at the end of the March quarter? Because the last time you got some payments in the following months, the DSOs still went up. So I'm curious what you think the balance will be? And then secondly, last year, you guys tightened the range for the last fiscal quarter of the year to about $3 million, but it's much bigger than that this year. It's about $10 million, so you didn't tighten the range. Is there any reason why?

So on the first question related to the AR balance, I mean we're not guiding to what our balance is going to be on that. But I guess I will tell you that if you look back in history and you look at our operating cash flows, there seems to be a seasonal pattern emerging with our operating cash flows. I can go back two years and point to the fact that first and third quarters, we always have a down quarter for operating cash flow and then that recovers in the second and fourth quarter. So if fourth quarter were to follow that seasonal pattern, I imagine that will be driven by accounts receivable collections. And so if we're able to do that, then the result would be lower accounts receivable. But that's only if that seasonal trend were to continue, and we're not providing any guidance to that.

And Tim, this is Greg. With respect to your second question. If you take the mid range of the guided revenue, it's about 38% growth in revenue year-over-year, and we think that's a pretty strong growth. So we're very happy with that. And by the way, the earnings, non-GAAP earnings per share or non-GAAP earnings for that matter is about 100% growth year-over-year. So we think this is a spectacular year for us. And as I said, the games afoot we're looking forward to the next year and the next few years thereafter to continue this very fast growth rate.

Our next question comes from Ben Schuman from Pacific Crest Securities.

Can you talk a little bit about why you decided to wait until May to give guidance for the out year, given that the last couple of years, you guys have come out and given some directional guidance a little bit earlier than that?

Well, I think you said the key word there. In the last few Analyst Days, maybe last three perhaps, we've given a sense of direction because it was an earlier stage of the company we wanted to give some idea that we were going to be growing, that, that was important and we thought at that time. What we found is that because of that, we subsequently got punished because we didn't up our directional sense or sense of direction on the revenues. Last year, we said we think we'd achieve over $400 million and we left it at that and we got punished because it's not good for our shareholders to do that. So we decided, "Let's get that year done with, let's go into the year-end earnings call and then we will go right into Analyst Day and we can really dig into our strategies, our numbers whatever else we need to cover at that time." So we think this is the right way to do it.

We will take our next question from Theodore O'Neill from Wunderlich Securities.

Just looking at the customer list for the wind turbine customers. You had a pretty big ramp in terms of adding customers, and it sort of settled in here. You've added JCNE but sort of lost Ghodawat. It looks like TECO in model energy, maybe you're pushing out a little bit. Can you talk about how we should think about you adding customers? Or is there a limit here into the number of customers you can serve on the Wind Turbine business?

Well, with respect to the first part of that, I guess you know the cream rises to the top as we used to say in the past, and so we're seeing the strong winters come through here. Ghodawat had some internal family squabbles and those things happen, and so you have to put it aside. We don't expect growth there. Going forward, though, in terms of new licensees, we were very actively engaged in other growth economies, and I think that's again where we need to be focused outside of China and even outside of Asia-Pacific region. Brazil, for example. Brazil has had a lot of renewable energy in the form of hydro. However more recently, they're starting to bring a focus on to wind. Well, they don't have a domestic wind turbine manufacturer so we think here's a growth economy, strong growth economy, here's a country that doesn't have a domestic wind turbine manufacturing yet. They're going in that direction, so we're spending effort as you can well imagine to attack that market. And there are others like that around the world. Russia, for years, has said no, they're not going to really go to wind. They have all this natural gas. On the other hand, more recently, they are now looking quite seriously at adopting wind energy as a source, an additional source of electricity. So we're looking at all of those deal, but again focusing on the growth economies is the right thing. Eventually, the U.S., as I said, is going to come back in the wind area, we believe. Some companies are saying, in fact even this year, the wind industry will start growing again primarily because some of the incentives from the government. We think that our customers Sinovel and Hyundai Heavy Industries will be attacking the market here in the U.S, and we're strongly supporting them in doing that. So watch this page in terms of our entry into the U.S. primarily through our licensees outside the U.S But there could still well be another licensee within the U.S. itself as well going forward. So we'll keep adding to the list in a prudent way I think going forward.

Our next question comes from Colin Rusch from ThinkEquity.

This is actually Brandon Miller [ph] for Colin Rusch. You spoke to some of the geographic mix for the wind turbine-related stuff, and I was wondering if that would be kind of similar for the rest of your products, in particular, the power grid? And then also for the power grid, are you developing some off grid or micro grid kind of power solutions that you might be able to speak about right now?

Well, no is the answer on the micro grid side. But I'm going to let DanMcGhan, our President and Chief Operating Officer, address the first part of your question.

Yes, on the micro grid farming, we're a megawatt-scale type provider, so we're more focused on utility scale. That's where our bailiwick really hits home. You heard a bit in the commentary from Greg and Dave echoed it, when we look at our power grid strategy, in some ways, it mimics what we're doing in wind. We see the Asian-Pacific economies investing not only in renewables but also in the grid infrastructure to support them. You've heard news from the company about our ability to develop business in Korea. You heard today, again, the emergence of a business for power cables in China. So we see a bit of a repeat there on the grid side. But if we broaden it, and we look at all of our products across the grid product line and we already today experienced very good traction in the European and the North American markets for our grid interconnection solutions. So we see the power grid market actually today being more diverse graphically.

The other thing I would add too is that I think it's fair to say that the majority of our power grid revenues during the quarter occurred outside of the U.S., particularly in Asia Pacific, and we talked earlier about a customer in Australia for -- that's just that we had a large order for D-VAR, and we shipped part of that order in the third quarter.

Our next question comes from Stuart Bush from RBC Capital Markets.

In regards to your Tres Amigas, what percentage of the JV do you guys now own? And has the other partner has also put in additional capital? And then to follow on to that, can you give us an update on what's the FERC is looking to do to the -- I guess they previously denied to late jurisdiction on an exception for ERCOT for right -- or you're having oversight on ERCOT if the try to make it connected to other grids. What's the status there and when do you expect to hear a decision on that moving forward?

I'll take the first part of the FERC and then let Dave address the percentage line, I'll get the number wrong. But on FERC, there has been, I mean they gave a ruling, Tres Amigas can be treated basically as a market hub within the usual kind of restrictions and the second ruling was on as you said, Stuart, on the interconnection of ERCOT to the grid and whether or not FERC would get jurisdiction over any transmission coming out of ERCOT. And they said, we can't do it. FERC said they can't do that on a blanket basis, but they would take each case up on a case-by-case basis. There have been some challenges to even that statement by the FERC which have, in fact, been beaten down if I could put up for the technical term is and put aside. And so the original ruling is still in place. And as each case comes up, it'll be taken up on that case-by-case basis. The FERC, of course, was very encouraging in terms of what it would do with those case-by-case basis.

Stuart, with respect to your first question on the investment, we're not disclosing the amount of our total ownership interest in Tres Amigas. I will tell you it's still a minority, and that there were current investors that also adding capital on this round as well.

Our next question comes from Ben Kallo from Baird.

Could you just give us a little more detail on your margin? That was pretty strong this quarter than last quarter. Was that a mix towards the grid products? And then also as we look forward in larger turbines become a larger percentage of your revenue, how is that going to affect your margins? Do you get lower margin on the 3-megawatt in margin turbines or is that equal or less?

On your first question, gross margin was actually basically flat compared to second quarter. It was 40.7% in each quarter. So I'm not sure where you got the comment about maybe lower. But we said in the past that when we have a greater mix of wind turbine core component sales, that's a benefit to our gross margin. And that's what we've set for the fourth quarter as well as we expect a higher mix of there.

Our next question comes from Carter Shoop from Deutsche Bank.

In regards to the reclassification for the VAT on accounts receivable, what was the impact there? And in regards to that $1 billion target in four years, is there any longer-term compensation being tied to that goal? And then my real question is SG&A. If you look at SG&A, in the quarter, obviously, down as a result of the stock options there. But if you look at the past two quarters, sales are up 17%. SG&A is up only 3%. Why aren't we seeing more investment on the SG&A line?

You want to pick one of those four questions?

So let me take your first one, the reclassification impact. It was about $15 million to $16 million or so in the current quarter then we reclassified out to other current assets. And as I said, we did that, DSO is a metric that is tracked, and we don't record any revenue on VAT, so that artificially distorts DSO when people are looking at our balance sheet. So we felt it was prudent to do that and many other companies do the same thing. On SG&A, if I got all your questions right, the reason for the sequential decrease was primarily due to stock comp expense. You know every year in the second quarter, we give a restricted stock grant to our Board as part of their overall compensation. And so if you look back in time, we always have a spike in stock compensation expense in the second quarter then it drops back down in the third. So that's the primary reason, but we do can continue to invest in things like sales and marketing. We try the whole down thing as best as we can, obviously, the overhead, the SG&A.

In terms of your question about compensation being tied to the billion dollars in revenues. No, there is no specific compensation package tied to that. However, the Board measures us every year and has done for a good, good many years in terms of our financial metrics. Net income has been the typical theme objective for the last several years. And of course, individual measurable objectives relate to profits in business units and so forth as well as revenues and orders that are brought forth during a given year. So no, on the billion dollars and yes on everything else that is good financial metrics, of course.

Our next question comes from JinMing Liu from Ardour Capital.

Acquisitions were mentioned as a way to grow your revenue reaching that $1 billion mark. Can you provide us more details regarding say, in what areas you will look into acquisition? If possible, the five on your targets?

Well, no, we don't have any specifics this year, of course. But what we said is first of all, we're looking for accretive acquisitions and we'd look and we examine things that come across our desk on a quite regular basis that have to do with power grid, that have to do with wind, that have to do with solar. So it'd be right in our core business areas in electric power applications. And that, I guess is the general answer I can give you today.

Our next question comes from Jim Ricchiuti from Needham & Company. James Ricchiuti - Needham & Company, LLC: Just based on your backlog, should we assume that Sinovel is a similar percent of revenues in Q4? Or do you see continued convergence or growth accelerating in that non-Sinovel portion of the Power Systems business?

Yes, Jim. We haven't really guided to what customer concentration is going to be in the fourth quarter. We're not prepared to do that today, but we did mention that overall wind core component sales would be a higher part of our mix in the fourth quarter.

Our next question comes from Pavel Molchanov from Raymond James.

This is actually Alex for Pavel. You touched on those briefly in your comments earlier, do you have any thoughts on what China's level of wind inflation is going to be again into '11? And kind of following up on that, do you see that the percentage of the wind capacity in China that hasn't been connected to the grid in the past, have you been seeing that come down or do you have any thoughts on whether that's going to be coming down this year?

We've looked at a lot of information. Of course, we have a lot of feed on the street there in China. We think it probably goes 16 to 18 gigawatts of shipments in 2011. And as of 2010, where we saw more connections to the grid occurring, but it's still something at 25% range of wind turbine is not being connected to a grid. They're getting better on it, they're moving faster, the gap is closing but I think it's going to be like that for a while as they continue to build out wind as rapidly as they can. Don't forget, one of China's objectives, and I say China not an individual company per se, China's objective is to be a net exporter of wind turbines in the years ahead. So they're going full blast to meet their internal needs today and at the same time, they're doing that, they're building up all the supply chains in the basic industry that can ship wind turbines around the world and of course, setup manufacturing from that base in other countries around the world to meet local needs. So they're doing, I think, quite well at this.

Our next question comes from Paul Clegg from Mizuho.

You talked a little bit about acquisitions, and I wanted to know as you try to broaden your share of the value of the turbine and other products, does that pull you into some more capital capital-intensive parts of the value chain? And if so, Greg, how do you think about balancing that out, the goal of providing more value with wanting to be kind of capital light which has been one of the really great parts of your business model up until now?

Yes, and we still see ourselves be capitalized. So I think I could say with conviction, don't look for us to look at an acquisition or something that makes powers or things of that nature. However, there's a lot of guts within a wind turbine that are high value-added, high-technology products and parts of the drivetrain which we're really good that, we think it. And so there's a lot of opportunity in that space, Paul. When you look at, in the grid side here, low voltage right through, new standards coming on. We've done some of this in the past. We've solved a lot of problems. We think we have some great opportunities there. But you know, there could be some opportunities for acquisitions in the low voltage right through. So Power Electronics, full systems, that sort of thing, some of which goes into the guts of the wind turbines, some of which goes into the guts of the power grid. So that's the general direction. But not capital-intensive businesses. I just don't see us doing that in any way going forward, high value-added products.

Our next question comes from Anthony Kitch [ph] from Barclays Capital.

This is Vishal Shah from Barclays Capital. Greg, can you talk about your bookings breakdown between grid and wind customers in the fiscal third quarter? And it sounds like your non-Sinovel wind revenues in the quarter declined sequentially. Can you talk about what sustainable run rate we should expect in both the non-Sinovel wind customers and also grid customers?

Yes, as to your first question on the bookings breakdown, we don't break down, obviously, our bookings by customers. I'm afraid I'm not going to be able to go there. Obviously, though, I mean when you look at our overall backlog, Sinovel makes up a large share of our backlog. Now with respect to your other question, with respect to I guess non-Sinovel wind, I guess, I mean, overall, Sinovel revenues, they were 73% in the third quarter and was down from about 79% of the second quarter. And as I look over our list, I would say I'm not seeing appreciable movement one way or the other in our overall, say non-Sinovel wind revenues. So that wasn't really a meaningful contributor to our revenues one way or the other in terms of the direction one way or the other during the quarter.

Our next question comes from Jesse Pichel from Jefferies. Jesse Pichel - Jefferies & Company, Inc.: Mr. Yurek, can you confirm is the first SeaTitan being built now? And what will you do with that first SeaTitan? Will it be a DoE demonstration project and where will that be installed? And my second question is, up until last week, Egypt had bids out on about 1,000 turbines, I think 2.5 gigs. I think Siemens and the Japanese had to jump on that. Do you know if any of your customers are exposed in Egypt?

We have on that question and I'm going to turn the first one over to Dan to give him a chance here to answer your question. No exposure in terms of Egypt for any of our customers. There is some in the Mid East, but it's really minor part of the exposure that some of our customers have. We're thinking positive areas, by the way, but not in Egypt for sure. Dan, you want to take the first one on SeaTitan and give an update where we're at?

If you look backwards, Jesse, I mean we announced a ways-back development agreement where there is U.S. Department of Commerce money to help develop some of the underlying technologies. Since that, we've invested our own money to continue the development of the product, both the generator itself, the subcomponents for that generator and the turbine design. So our business model will remain consistent with which is to put a partner in the business of making that turbine. And that's kind of the next logical step here is to involve a partner in the continued development of the product, the erection of the first turbine and get underway with the business that will be SeaTitan.

Our next question comes from Benjamin Kallo from Baird.

As your turbines get bigger, how does your margin profile change as you're selling for bigger turbines?

Yes, Ben this is Dave Henry. As we said in the past, we're not expecting any big margin difference between 3 megawatt and the 5 megawatt and what we’re currently generating on the 1.5. I mean it really all depends on the really on the pricing that we will negotiate going forward. 3 megawatt, the volumes are still fairly low, but we would negotiate a new contract, as Greg mentioned in his remarks, in the next three to nine months.

And by the way, I think part of that question at least what I think of there is part of our objective is to continue to take more dollars per megawatt for every turbine going forward. So not only do we see increasing our market share and what percentage of the wind turbines that we're inside of but taking more dollars per megawatt for those wind turbines. That's part of our growth strategy, of course.

We will go to Jim Ricchiuti from Needham & Company. James Ricchiuti - Needham & Company, LLC: Just on the superconductors side of the business. It looks like you had the lowest level of revenue in this area, at least that I can recall, and it seems they were in counter to the backlog that you've talked about. So maybe you could just help us understand when you see that starting to pick up a little bit?

Jim, this is Dan McGahn. What we're really seeing is this transition more to commercial. I mean we announced what we're doing in Korea with that order. We've talked about the revenues there starting in 2012. We're at the point here in 2010 going into 2011 where we're going to be winding down some of the projects, some of the projects we're going to continue. So we're really in a transition phase from the government-sponsored projects that we've had to really what we've been talking about for some time now which is the utilities looking to specifically adopt the technology, starting with Asia Pacific and continuing again along the lines in Europe, and we have visibility in America as well.

And that does concludes today's Q&A session. At this time, we would like to turn the call back over to Mr. Greg Yurek for closing comments.

Well, thank you, Alicia. I want to thank all of you for participating on our earnings call this morning. We had another excellent quarter to report to you today, and we expect to end fiscal 2010 in strong fashion by increasing both revenues and earnings year-over-year to new record levels: 38% growth in revenue year-over-year at the mid range; 100% growth in earnings per share at the mid range as well. As far as the future beyond this fiscal year is concerned, the game is afoot. We're very excited both our near- and longer-term growth plans, and we believe we have delineated the pathway for our company to accelerate achievement of our next big goal and that's the goal of $1 billion in revenues with an excess of 20% operating margins. So our expectation is that we can achieve this next big goal in four fiscal years or less. We look forward to reporting back to you in our May earnings call and to go into more details with you at our Analyst Day after earnings in May. In the meantime, enjoy the Super Bowl this Sunday. Take care. Bye.

That does conclude today's conference. We thank you for your participation. You may now disconnect.