Good day, everyone, and welcome to the AMSC conference call. This call is being recorded. [Operator Instructions] With us on the call this afternoon are AMSC President and CEO, Daniel McGahn; Senior Vice President and CFO, David Henry; and Manager of Corporate Communications, Kerry Farrell. For opening remarks, I'd like to turn the call over to Kerry Farrell.

Thank you, Angela, and welcome, everyone, to our Q3 conference call. Before we begin, I'd like to note that various remarks management may make on this conference call about AMSC'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 our annual report on Form 10-K/A for the fiscal year ended March 31, 2012, which we filed with the SEC on June 26 and subsequent reports that we have filed with the SEC. These forward-looking statements represent our expectations only as of today and should not be relied upon as representing our views as of any date subsequent to today. While AMSC anticipates that subsequent events and developments may cause the company's views to change, we specifically disclaim any obligation to update these forward-looking statements. I also would like to note that we will be referring on today's call to non-GAAP net loss or net loss before amortization of acquisition-related intangibles, restructuring and impairments, stock-based compensation expense, change in fair value of derivative liability and warrants, noncash interest expense, and other unusual charges. Non-GAAP net loss is a non-GAAP financial metric. A reconciliation of our non-GAAP to GAAP net loss can be found in the press release we issued and filed with the SEC this afternoon on Form 8-K. All of our press releases and SEC filings can be accessed from the Investors page of our website at www.amsc.com. And now, CEO, Dan McGahn will begin our quarterly review. Dan?

Thanks, Kerry, and good afternoon, everyone. I'll begin today by providing an overview of our third quarter fiscal results, as well as providing an update on our litigation against Sinovel. Dave Henry will then review our financial results in detail and provide our forecast for our fourth fiscal quarter. Following that, I'll take you about some of the trends in our key markets and some of our recent customer wins. I'll also tell you about a new product that we've added to our line of Gridtec Solutions. And finally, we will open up the line to your questions. As we've discussed before, the wind industry has been particularly challenging over the past couple of years. Wind farm projects have been delayed, companies across the sector have been facing cash flow constraints. Globally, wind power installation have flattened. In fact, in China, which has become the world's largest wind power market, installations have actually been on the decline. And there also was considerable uncertainty around the renewal of the production tax credit, the key support mechanism for wind power in the United States. We at AMSC have not been immune to these challenges. In the third fiscal quarter, we were unable to meet all of the criteria for revenue recognition for a particular customer. And as a result, we had a revenue shortfall on the wind side of our business. But it is important to highlight here that we were paid promptly by this customer for the scheduled product delivery, in line with our contract. In trying market conditions, flexibility is essential and listening to our customers and responding to their needs is a key to building a sustainable business. Their prompt payment also demonstrates the strength and health of our customer relationship. In the third fiscal quarter, we beat our…

Thanks, Dan, and good afternoon, everyone. AMSC generated $17.4 million in revenue for the third quarter of fiscal 2012, slightly below the $18.1 million that we generated for the third quarter of fiscal 2011. Our forecast at the end of November had called for revenue to exceed $20 million. Our lower-than-forecasted revenue was due to one of our wind customers not being in a position to accept delivery of contracted product at the end of the quarter. We expect this customer to be in a position to accept deliveries in the first quarter of fiscal 2013. The good news here is that the customer is meeting and is expected to continue to meet its contracted payment obligations. On a year-over-year basis, wind revenues declined 33% to $6.8 million. Our grid revenues grew by approximately 34% year-over-year to $10.6 million thanks primarily to increased debar shipments in the U.K., as well as greater wire shipments to Korea. Our total backlog on December 31 was approximately $243 million. This compares with $257 million as of September 30. As many of you know, some of the contracts in our backlog extend for multiple years and were signed when the cleantech market was in a period of significant growth. As a result of the market volatility over the past couple of years, we have been more flexible with our customers around the delivery schedules in some of the contracts. While we still believe that our total backlog figure is relevant, on future calls we will instead be discussing a 12-month backlog figure. This metric has been requested by some of our analysts and investors in the past, and we believe it is a more useful metric from a forecasting perspective. As of today, our 12-month backlog is approximately $72 million. We define 12-month backlog…

Thank you, Dave. Now let me talk to you about recent developments in the wind and grid segments. I'll begin with wind. For those of you new to AMSC, through our Windtec Solutions, we provide both products and services to wind turbine manufacturers. Our services allow manufacturers to rapidly introduce new wind turbines or upgrade existing turbine platforms to gain competitive advantage and market share. And our products, which we call electrical control systems, provide the brains for the wind turbine, allowing manufacturers to maximize power output and lower the cost of wind energy. We currently have wind turbine manufacturing partners in countries such as China, Korea and India. And the dynamics in each of these markets is distinct. Let's start with India. Our Indian partner, Inox, was a key contributor to our wind segment in the third quarter. Our relationship with Inox began in 2009 with its purchase of a 2-megawatt wind turbine license from AMSC. Since then, they have been producing high-quality wind turbines, with one of the most compelling power curves in India. Inox has taken a vertical approach to the market by developing wind farms, as well as manufacturing wind turbines. This enabled them to capture greater market share against industry leader Suzlon even as the overall market was contracting in 2012. Looking at India from a high level, it is currently the third largest wind power market in the world, and this market is expected to expand in the coming years. The country is facing huge electricity shortages. And despite major capacity additions, power supply still struggles to keep up with demand. The government is increasingly looking to renewables to bridge that gap. Inox's stated objective is to become India's premier wind turbine company. And today, we announced a new order from them that's valued…

[Operator Instructions] And we'll take our first question from Benjamin Schuman with Pacific Crest Securities.

Can you give us JCNE and Inox just as percentage of sales for the quarter?

It's Dave Henry. JCNE was less than 10% of revenue in the quarter, and Inox was about 19% in the third quarter.

Okay, great. And then if I look at the guidance for 2013 and the $72 million in 12 months backlog and then back out kind of $18 million revenue guidance for fourth quarter, is it fair to assume you have about half of the 2013 revenue guidance currently in backlog?

Yes, that's one way of looking at -- but remember that the backlog for 2013 we're reporting doesn't have the full year.

Remember, you're missing a future quarter in there in the year.

Okay, that makes sense.

And then, we remind you about the business. I mean, on the grid side, we do have this lumpiness, and the book and bill can be at a pretty good clip. And I think we'll be in -- we have a good news today with Inox, so you see that. I think you know what's been going on with some of the other customers on the wind side.

To be clear, our 12-month backlog is the backlog that's aged through December 31, 2013.

Okay, got it. Because you said as of today that it included the Inox order. Okay. And if you look at that guidance, Dan, what would you say the biggest potential swing factors are in terms of opportunities for upside or maybe downside there?

I think when you look at the grid business, what we've shown I think is good, stable revenue generation. I mean, you look year-to-year, you see some good growth there. You see the expansion of the grid business into new geographies. We mentioned today Romania. We mentioned a lot of other target countries that we're going to go after. We're starting to see continued repeat business in a lot of our core markets for the D-VAR. I had mentioned potential expansion as well for superconductor interest in a lot of different countries. I think the challenge to grow revenues greatly really is on the wind side of our business. So we saw challenges coming down our way here in the past quarter or so. We made that change last quarter where we reduced 25% of our costs to be able to kind of get through the near term. The good news that we talked about today and I think that everyday we wake up we see additional good news happening in the wind market is that China is changing for the better. India is going to get back to growth here. And the Koreans are in a very good situation, where they can deploy locally and export globally. So I think you're going to see a very nice grid business. And on top of that, the wild card becomes how much growth could we see in wind. And that's why we went through in a little bit of detail what's going on specifically in China, what we see growth there, what's going on specifically in India and Korea today on the call.

And we'll take our next question from Carter Driscoll with Ascendiant Capital Markets.

I just want to revisit the definition that you gave for the new classification of the backlog to 12 months. My understanding is, so this is revenue that you expect to, obviously, ship and book there the sales for within 12 months. But is there a qualitative difference between that and what you have in providing the past in terms of some type of comfort level that it is more predictable? Or is it really just trying to parse it on a different time frame?

I'll let Dave answer. But I think spiritually, we look at it as we were reporting kind of backlogging aggregate without defined timetable. Now what we're trying to do is to give a specific timetable with a specific number to provide some additional transparency to really help in forecasting the business.

And to add on top of that, Carter, we are -- if you look at the 12-month backlog for what's -- according to contracts, it's actually a larger number than the 72. What I said in the call is we're reporting what we believe is shippable. So there's some customers that have backlog, where they pushed out deliveries already based on the current contract. And we see uncertainty about being able to fill that backlog under the timetable that are currently in those contracts. So where there are those uncertainties, we back them out. So the 12-month backlog is what we believe, like I said, is the orders that we have on backlog that we believe are shippable through that time period, which is December 31, 2013.

Okay. It's also a pretty firm number. Okay, that's helpful. Dave, could you talk about what the 0 cost inventory impact did to the gross margin and maybe try to back into a kind of clean gross margin figure if you weren't using any of the stuff off the balance sheet? And was the gross margin positive outside of that one factor?

Yes, you actually can see -- it's in the -- because we wrote off that inventory previously, we don't take credit for it in our non-GAAP net loss. So we add that gross margin back. So if you look at the non-GAAP reconciliation table, you can see, it's about $600,000 in the quarter compared to like $50,000 for the same period a year ago. So it's about $550,000 of impact for third quarter. And then I mentioned the expiration of warranty. That was somewhere in the ballpark of like $800,000.

$800,000. All right, so positive gross margin. Okay. Could you talk about the customer, the rev recognition, the geographic location of the customer, if it's not identifying the customer, would you have the revenue recognition issue?

We want to be really sensitive to them. One of the things that we're trying to communicate to you all, and we've been out talking specifically to our customers, is that we're only going to be successful if they're successful. So we want to focus and honor the conversations that we've had with them, but we want to be as transparent as we possibly can, and we've really said all that we can say so far in the prepared remarks. I really don't want to get into [indiscernible] and where. The issue -- specific revenue recognition issue was -- I mean, even though the customer paid for the product, they couldn't accept delivery. So because they couldn't accept delivery, even though they paid, we couldn't recognize revenue.

That would be reversed in this quarter, correct? Third quarter?

I said we expect the customer to be -- to take the delivery of the product in the first quarter of fiscal 2013.

Okay. I'm sorry, I thought it was this quarter. The stolen property, Dan, the PTC being re-upped, how do you see that playing out? Do you think there's somewhat of a lag effect? Was it a little bit disruptive when it expired? Maybe you could give your take on how it does or does not affect -- potentially the wind business, obviously, I heard what you said about the grid business, but on the wind side, do you think that restarts some growth in the U.S. or maybe...

I think in the wind market, it will restart some growth. I think there's 2 pieces to it. I think there's an immediate, say, change in the market, where there's some pent-up projects that might be opportunities. But really, as you look later in the year, we would see, hopefully, getting back to the kind of the rates that happened in the past, say, 2 years in the US. But the benefit to our company really in the U.S. has historically come from the grid business using D-VAR to connect those wind farms to the grid. There may emerge opportunities for some of our Asian partners to start to export into the U.S., and we've repeated comments we've gotten from them on a previous call, where they have begun to enter the U.S. market. So we believe that any real activity on the wind side in the U.S. is going to help the company overall, first and foremost on the grid side, but potentially on the wind side as well.

[Operator Instructions] And we will take our next question from JinMing Liu with Ardour Capital.

First of all, I need to look at more information about your Asian customers, especially I think one name is the XJ Group. [indiscernible] installed roughly close to 200 megawatts last year, where [indiscernible] installed 30 megawatts. But I don't think they order that much [indiscernible] electronics from you, or what's the position there?

I think that the first part of XJ that you have to understand is the content, JinMing, is a bit different. When you compare those 2 customers, with most of the newer customers, we're supplying full ECF systems, which is a higher value per megawatt. With XJ, we're supplying core components. And XJ has placed purchase orders, and they bought equipment from us in the past, and their 2-megawatt platform is using our technology and using our brains as well.

Okay, I see that. Okay. Also, just you mentioned your D-VAR sales into the U.S. wind market. Can you give us some idea how much D-VAR sales you had in the American market in 2012?

We don't generally give percentages. But the way that you can see the -- you'll be able to see the breakout of the business unit revenue. When you look at the grid business, it typically comes from the U.S., Europe, and we talked a bit today on the call about Australia; whereas the wind business comes principally from Asia. So you can make a decent approximation, I think, of some part of the U.S. business really is coming from the grid segment. But we don't delve down into those kinds of fractions.

And we will take our final question from Pavel Molchanov with Raymond James.

Can we get a quick update on Tres Amigas? Any updates on that project?

Yes. They seem to be doing well. They are currently right now working to continuing towards progressing towards their Phase 1 construction, which is a 750-megawatt back-to-back line between the Eastern and Western interconnections I believe. And the next stage of that, they need to raise the capital to enable that. I think they'll be looking to do that here in the, hopefully, near future. So Phase 1, as you recall and as we've said in the past, it has nothing to do with superconductors. It's strictly to set up a back-to-back line and begin getting revenue streams so they can move to Phase 2 and Phase 3, which may involve superconductors depending on the configuration and what they decide to do.

And can you remind me real quick what your current equity ownership of the project is?

It's just over 25%.

That concludes today's question-and-answer session. Mr. McGahn, at this time, I'd like to turn the conference back to you for any additional or closing remarks.

Thanks, Angela. After what's been a challenging 24 months, we believe that we're beginning to see signs of a turnaround in the wind industry. China has forecasted increased installations, the U.S. has extended the PTC, and Inox has recently placed a large order with us. Our grid business has demonstrated good year to-year growth. Based in part on these trends and our ongoing customer discussions and dialogues, we believe that in addition to our forecasted growth of 10% for FY 2012, we can increase our annual revenues by more than 25% in fiscal year 2013. I look forward to talking to you guys next quarter and doing a recap on the year that was 2012. Certainly each year going forward, things start to look better for the company, and we hope to continue to talk about the good things that are going on in our business. Thank you very much.

Ladies and gentlemen, this concludes today's conference. We thank you for your participation.