SatCon Technology Corporation� (Nasdaq CM: SATC), a developer and
manufacturer of power electronic products for the alternative
energy markets, today announced its operating results for the
quarter ended September 30, 2006. Revenue for the nine months ended
September 30, 2006 decreased $2.6 million or 10% to $24.2 million
principally as a result of the Company exiting non-strategic
product lines, partially offset by a 23% increase in revenue from
its Stationary Power Systems division. Operating loss for the nine
months ended September 30, 2006 increased to $10.2 million compared
with an operating loss of $8.3 million for the same period in 2005
as a result of lower revenue combined with increased investment
spending of approximately $1.1 million in its core businesses,
including renewable energy. Orders on hand are at an all-time high
of $32 million, including $16 million for the Stationary Power
Systems division. While total orders on hand are up over 50%
compared with this same time a year ago, the orders on hand for the
Stationary Power Systems division are up approximately 150%,
compared with $6 million a year ago, and is indicative of the
success the Company is having in its Stationary Power Systems
product lines. �I am pleased to see the growth in our Stationary
Power Systems division revenues and order backlog,� commented David
Eisenhaure, President and Chief Executive Officer. �For the quarter
and nine months ended September 30, 2006, Stationary Power Systems
division revenues increased 28% and 21%, respectively, driven by
continued market success in solar inverters.� On September 20, 2006
the Company announced that it is streamlining its operations to
focus spending on its growing Stationary Power Systems division. In
order to ensure that the Company will be able to respond
effectively to these rapidly emerging market opportunities, steps
are being taken to: (1) curtail activities in non-strategic product
lines; and (2) direct working capital towards growth markets like
alternative energy inverters. Net loss for the quarter was $7.6
million, or $0.19 per share, compared with a net loss of $4.2
million, or $0.12 per share, for the same period in 2005. Net loss
for the nine months ended September 30, 2006 was $14.3 million, or
$0.37 per share, compared with a net loss of $8.8 million, or $0.26
per share, for the same period in 2005. A major contributor to the
increase in net loss for both the quarter and year to date (as
compared to the prior periods in 2005) was non-cash financing
charges associated with the valuation of derivatives related to the
recently issued convertible notes and related warrants. Product
Line Revenues The Company continues to support growth in the
Stationary Power Systems division. At September 30, 2006,
approximately $16 million, or 50%, of the orders on hand were from
the Stationary Power Systems division compared with approximately
$6 million, or approximately 30% of the total orders on hand at
September 30, 2005. For the nine months ended September 30, 2006,
the Stationary Power Systems division revenues were $9.7 million,
or 40% of total revenues, compared with $7.9 million, or 29% of
total revenues for the nine months ended September 30, 2005. As a
further indication of the pace of the changing revenue mix, the
Stationary Power Systems division revenues were $4.1 million, or
48% of total revenues for the most recent quarter ended September
30, 2006, compared with $3.2 million, or 31% of total revenues, for
the comparable quarter in 2005. Commercial grade solar inverters
continue to gain market traction and represent approximately $2.2
million, or 26%, and $5.5 million, or 23%, of its total corporate
revenues for the quarter and year-to-date, respectively, compared
with approximately $1.5 million, or 15%, and $3.0 million, or 11%,
for the comparable periods in the prior year. For the nine months
ended September 30, 2006, Electronics revenues were $7.5 million,
or 30% of total revenues, compared with $7.3 million, or 27% of
total revenues for the comparable period in 2005. This business has
been a stable revenue generator for the Company. For the nine
months ended September 30, 2006 Applied Technology revenues were
$3.5 million, or 15%, of total revenues compared with $5.2 million,
or 20%, of total revenues for the comparable period in 2005.
Government funding of its power technology initiatives subsidizes
the Company�s research and development activity, as well as
advances its power electronics portfolio. For the nine months ended
September 30, 2006 other power systems, based in Worcester,
recorded revenues of $3.5 million, or 15%, of total revenues
compared with $6.4 million, or 24%, of total revenues for the
comparable period in 2005. The year over year decline of $2.9
million is primarily due to the sale of the Shaker product line in
December 2005 and lower MagLev revenue. Operating Expenses and
Margins Total operating expenses for the quarter ended September
30, 2006 were $12.0 million compared with $14.3 million for the
comparable period in 2005. Excluding combined direct material and
labor costs of $5.3 million, which are volume related, overhead
costs were $6.7 million, a 10% reduction compared with $7.4 million
for the prior year. Total operating expenses for the nine months
ended September 30, 2006 were $34.4 million compared with $35.0
million for the comparable period in 2005. Excluding combined
direct material and labor costs of $13.8 million, which are volume
related, overhead costs were $20.6 million, a 5% increase, compared
with $19.7 million for the prior year. Excluding an incremental
$1.1 million in investment spending in new product and marketing
initiatives, overhead expenses were essentially flat compared with
the comparable period in 2005. Direct margins (Revenues minus
Direct Materials and Direct Labor) for the Company are increasingly
being driven by its Stationary Power Systems division and
Electronics business, which combined, now represent $17.3 million,
or 71% of nine months-to-date revenues. Combined direct margins for
Stationary Power Systems division and Electronics business are $7.2
million for the nine months ended September 30, 2006 compared with
$6.4 million for the comparable period in 2005. The Company
recently announced the planned closing of a facility encompassing
approximately one third of the Company�s capacity, as measured by
square footage. While the Company will incur certain charges
associated with the closing of this facility (as previously
disclosed), this closing is expected to result in a reduction in
annual overhead expenses of approximately $3 million, or 15%. �The
steps we are taking to align our organization with our revenue
growth initiatives is expected to ultimately generate profitability
in our business,� said David Eisenhaure. � As an indication of our
commitment to the growth prospects in Stationary Power Systems and
Electronics, approximately 67% of our employees are now dedicated
to these faster growing businesses, up from 55% one year ago. We
expect this trend to continue.� The Company will conduct a
conference call on Thursday, November 16, 2006 at 10:00 AM Eastern
Time. Interested parties should call 800.289.0572 (US and Canada)
or 913.981.5543 (International) five minutes in advance to
participate. The call will also be open to all interested investors
through a live audio Web broadcast accessible at the SatCon
corporate website, www.satcon.com. 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 �will,�
�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. SATCON TECHNOLOGY
CORPORATION CONSOLIDATED BALANCE SHEETS September 30, 2006 December
31, 2005 ASSETS (Unaudited) (Unaudited) Current assets: Cash and
cash equivalents $9,956,729� $9,194,720� Restricted cash and cash
equivalents 84,000� 84,000� Accounts receivable, net of allowance
of $839,062 and $651,463 at September 30, 2006 and December 31,
2005, respectively 6,416,035� 5,332,668� Unbilled contract costs
and fees 266,166� 114,899� Inventory 7,112,518� 6,502,168� Prepaid
expenses and other current assets 419,774� 710,924� � Total current
assets $24,255,222� $21,939,379� Property and equipment, net
2,838,234� 3,396,432� Goodwill, net 704,362� 704,362� Intangibles,
net 1,357,154� 1,736,152� Other long-term assets 124,179� 551,750�
� Total assets $29,279,151� $28,328,075� LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Bank line of credit $ ��
$2,000,000� Current portion of long-term debt 156,734� 155,919�
Accounts payable 3,709,826� 3,243,675� Accrued payroll and payroll
related expenses 1,747,308� 1,502,681� Other accrued expenses
2,120,266� 1,903,130� Accrued contract losses 84,779� 84,779�
Current portion of senior secured convertible notes 2,502,247� ��
Current portion of investor and placement agent warrant liability
255,811� �� Deferred revenue 2,405,586� 2,359,672� � Total current
liabilities $12,982,557� $11,249,856� Redeemable convertible Series
B preferred stock (345 and 425 shares issued and outstanding at
September 30, 2006 and December 31, 2005, respectively; face value
$5,000 per share; liquidation preference 100%) 1,725,000�
2,125,000� Long-term debt, net of current portion �� 117,715�
Long-term Senior secured convertible notes, net of current portion
9,515,393� �� Long-term warrant liability, net of current portion
2,471,593� �� Other long-term liabilities 109,252� 334,435� Total
liabilities $26,803,795� $13,827,006� � Commitments and
contingencies (Note H) � Stockholders' equity: Common stock; $0.01
par value, 100,000,000 and 50,000,000 shares authorized at
September 30, 2006 and December 31, 2005, respectively; 39,546,635
and 38,382,706 shares issued and outstanding at September 30, 2006
and December 31, 2005, respectively 395,466� 383,827� Additional
paid-in capital 155,683,445� 153,450,771� Accumulated deficit
(153,517,304) (139,213,827) Accumulated other comprehensive loss
(86,251) (119,702) � Total stockholders' equity $2,475,356�
$14,501,069� � Total liabilities and stockholders' equity
$29,279,151� $28,328,075� SATCON TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine
Months Ended September 30, 2006 September 30, 2005 September 30,
2006 September 30, 2005 Revenue: (Unaudited) (Unaudited)
(Unaudited) (Unaudited) Product revenue $ 7,232,110� $7,518,182� $
20,745,333� $ 21,621,380� Funded research and development and other
revenue 1,259,301� 2,822,745� 3,456,073� 5,150,643� � Total revenue
8,491,411� 10,340,927� 24,201,406� 26,772,023� � Operating costs
and expenses: Cost of product revenue 7,263,847� 7,764,620�
19,784,845� 20,412,485� Research and development and other revenue
expenses: Funded research and development and other revenue
expenses 1,123,566� 2,512,622� 3,201,650� 4,664,671� Unfunded
research and development expenses 522,073� 232,302� 1,594,974�
467,887� � Total research and development and other revenue
expenses 1,645,639� 2,744,924� 4,796,624� 5,132,558� Selling,
general and administrative expenses 2,898,676� 2,757,051�
9,651,652� 8,279,916� Amortization of intangibles 97,794� 111,671�
321,136� 335,013� Gain on sale of assets (209,054) (317,802)
(399,015) (317,802) Write-off of impaired long-lived assets ��
1,190,436� �� 1,190,436� Restructuring costs 262,000� �� 262,000�
�� � Total operating costs and expenses 11,958,902� 14,250,900�
34,417,242� 35,032,606� � Operating loss (3,467,491) (3,909,973)
(10,215,836) (8,260,583) Net unrealized gain on warrants to
purchase common stock �� (1,511) �� (28,975) Other income
(expense), net (3,722,788) 37,178� (3,659,417) (98,566) Interest
income 121,976� 14,412� 274,758� 40,091� Interest expense (514,866)
(313,592) (702,982) (465,634) Net loss $ (7,583,169) $ (4,173,486)
$ (14,303,477) $ (8,813,667) Net loss per weighted average share,
basic and diluted $ (0.19) $ (0.12) $ (0.37) $ (0.26) Weighted
average number of common shares, basic and diluted 39,519,376�
35,870,620� 39,052,834� 34,161,256� . SatCon Technology
Corporation(C) (Nasdaq CM: SATC), a developer and manufacturer of
power electronic products for the alternative energy markets, today
announced its operating results for the quarter ended September 30,
2006. Revenue for the nine months ended September 30, 2006
decreased $2.6 million or 10% to $24.2 million principally as a
result of the Company exiting non-strategic product lines,
partially offset by a 23% increase in revenue from its Stationary
Power Systems division. Operating loss for the nine months ended
September 30, 2006 increased to $10.2 million compared with an
operating loss of $8.3 million for the same period in 2005 as a
result of lower revenue combined with increased investment spending
of approximately $1.1 million in its core businesses, including
renewable energy. Orders on hand are at an all-time high of $32
million, including $16 million for the Stationary Power Systems
division. While total orders on hand are up over 50% compared with
this same time a year ago, the orders on hand for the Stationary
Power Systems division are up approximately 150%, compared with $6
million a year ago, and is indicative of the success the Company is
having in its Stationary Power Systems product lines. "I am pleased
to see the growth in our Stationary Power Systems division revenues
and order backlog," commented David Eisenhaure, President and Chief
Executive Officer. "For the quarter and nine months ended September
30, 2006, Stationary Power Systems division revenues increased 28%
and 21%, respectively, driven by continued market success in solar
inverters." On September 20, 2006 the Company announced that it is
streamlining its operations to focus spending on its growing
Stationary Power Systems division. In order to ensure that the
Company will be able to respond effectively to these rapidly
emerging market opportunities, steps are being taken to: (1)
curtail activities in non-strategic product lines; and (2) direct
working capital towards growth markets like alternative energy
inverters. Net loss for the quarter was $7.6 million, or $0.19 per
share, compared with a net loss of $4.2 million, or $0.12 per
share, for the same period in 2005. Net loss for the nine months
ended September 30, 2006 was $14.3 million, or $0.37 per share,
compared with a net loss of $8.8 million, or $0.26 per share, for
the same period in 2005. A major contributor to the increase in net
loss for both the quarter and year to date (as compared to the
prior periods in 2005) was non-cash financing charges associated
with the valuation of derivatives related to the recently issued
convertible notes and related warrants. Product Line Revenues The
Company continues to support growth in the Stationary Power Systems
division. At September 30, 2006, approximately $16 million, or 50%,
of the orders on hand were from the Stationary Power Systems
division compared with approximately $6 million, or approximately
30% of the total orders on hand at September 30, 2005. For the nine
months ended September 30, 2006, the Stationary Power Systems
division revenues were $9.7 million, or 40% of total revenues,
compared with $7.9 million, or 29% of total revenues for the nine
months ended September 30, 2005. As a further indication of the
pace of the changing revenue mix, the Stationary Power Systems
division revenues were $4.1 million, or 48% of total revenues for
the most recent quarter ended September 30, 2006, compared with
$3.2 million, or 31% of total revenues, for the comparable quarter
in 2005. Commercial grade solar inverters continue to gain market
traction and represent approximately $2.2 million, or 26%, and $5.5
million, or 23%, of its total corporate revenues for the quarter
and year-to-date, respectively, compared with approximately $1.5
million, or 15%, and $3.0 million, or 11%, for the comparable
periods in the prior year. For the nine months ended September 30,
2006, Electronics revenues were $7.5 million, or 30% of total
revenues, compared with $7.3 million, or 27% of total revenues for
the comparable period in 2005. This business has been a stable
revenue generator for the Company. For the nine months ended
September 30, 2006 Applied Technology revenues were $3.5 million,
or 15%, of total revenues compared with $5.2 million, or 20%, of
total revenues for the comparable period in 2005. Government
funding of its power technology initiatives subsidizes the
Company's research and development activity, as well as advances
its power electronics portfolio. For the nine months ended
September 30, 2006 other power systems, based in Worcester,
recorded revenues of $3.5 million, or 15%, of total revenues
compared with $6.4 million, or 24%, of total revenues for the
comparable period in 2005. The year over year decline of $2.9
million is primarily due to the sale of the Shaker product line in
December 2005 and lower MagLev revenue. Operating Expenses and
Margins Total operating expenses for the quarter ended September
30, 2006 were $12.0 million compared with $14.3 million for the
comparable period in 2005. Excluding combined direct material and
labor costs of $5.3 million, which are volume related, overhead
costs were $6.7 million, a 10% reduction compared with $7.4 million
for the prior year. Total operating expenses for the nine months
ended September 30, 2006 were $34.4 million compared with $35.0
million for the comparable period in 2005. Excluding combined
direct material and labor costs of $13.8 million, which are volume
related, overhead costs were $20.6 million, a 5% increase, compared
with $19.7 million for the prior year. Excluding an incremental
$1.1 million in investment spending in new product and marketing
initiatives, overhead expenses were essentially flat compared with
the comparable period in 2005. Direct margins (Revenues minus
Direct Materials and Direct Labor) for the Company are increasingly
being driven by its Stationary Power Systems division and
Electronics business, which combined, now represent $17.3 million,
or 71% of nine months-to-date revenues. Combined direct margins for
Stationary Power Systems division and Electronics business are $7.2
million for the nine months ended September 30, 2006 compared with
$6.4 million for the comparable period in 2005. The Company
recently announced the planned closing of a facility encompassing
approximately one third of the Company's capacity, as measured by
square footage. While the Company will incur certain charges
associated with the closing of this facility (as previously
disclosed), this closing is expected to result in a reduction in
annual overhead expenses of approximately $3 million, or 15%. "The
steps we are taking to align our organization with our revenue
growth initiatives is expected to ultimately generate profitability
in our business," said David Eisenhaure. " As an indication of our
commitment to the growth prospects in Stationary Power Systems and
Electronics, approximately 67% of our employees are now dedicated
to these faster growing businesses, up from 55% one year ago. We
expect this trend to continue." The Company will conduct a
conference call on Thursday, November 16, 2006 at 10:00 AM Eastern
Time. Interested parties should call 800.289.0572 (US and Canada)
or 913.981.5543 (International) five minutes in advance to
participate. The call will also be open to all interested investors
through a live audio Web broadcast accessible at the SatCon
corporate website, www.satcon.com. 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 "will,"
"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 BALANCE SHEETS September 30, December 31,
2006 2005 ------------- ------------- ASSETS (Unaudited)
(Unaudited) Current assets: Cash and cash equivalents $9,956,729
$9,194,720 Restricted cash and cash equivalents 84,000 84,000
Accounts receivable, net of allowance of $839,062 and $651,463 at
September 30, 2006 and December 31, 2005, respectively 6,416,035
5,332,668 Unbilled contract costs and fees 266,166 114,899
Inventory 7,112,518 6,502,168 Prepaid expenses and other current
assets 419,774 710,924 ------------- ------------- Total current
assets $24,255,222 $21,939,379 Property and equipment, net
2,838,234 3,396,432 Goodwill, net 704,362 704,362 Intangibles, net
1,357,154 1,736,152 Other long-term assets 124,179 551,750
------------- ------------- Total assets $29,279,151 $28,328,075
============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Bank line of credit $-- $2,000,000 Current
portion of long-term debt 156,734 155,919 Accounts payable
3,709,826 3,243,675 Accrued payroll and payroll related expenses
1,747,308 1,502,681 Other accrued expenses 2,120,266 1,903,130
Accrued contract losses 84,779 84,779 Current portion of senior
secured convertible notes 2,502,247 -- Current portion of investor
and placement agent warrant liability 255,811 -- Deferred revenue
2,405,586 2,359,672 ------------- ------------- Total current
liabilities $12,982,557 $11,249,856 Redeemable convertible Series B
preferred stock (345 and 425 shares issued and outstanding at
September 30, 2006 and December 31, 2005, respectively; face value
$5,000 per share; liquidation preference 100%) 1,725,000 2,125,000
Long-term debt, net of current portion -- 117,715 Long-term Senior
secured convertible notes, net of current portion 9,515,393 --
Long-term warrant liability, net of current portion 2,471,593 --
Other long-term liabilities 109,252 334,435 -------------
------------- Total liabilities $26,803,795 $13,827,006 Commitments
and contingencies (Note H) Stockholders' equity: Common stock;
$0.01 par value, 100,000,000 and 50,000,000 shares authorized at
September 30, 2006 and December 31, 2005, respectively; 39,546,635
and 38,382,706 shares issued and outstanding at September 30, 2006
and December 31, 2005, respectively 395,466 383,827 Additional
paid-in capital 155,683,445 153,450,771 Accumulated deficit
(153,517,304) (139,213,827) Accumulated other comprehensive loss
(86,251) (119,702) ------------- ------------- Total stockholders'
equity $2,475,356 $14,501,069 ------------- ------------- Total
liabilities and stockholders' equity $29,279,151 $28,328,075
============= ============= *T -0- *T SATCON TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine
Months Ended ------------------------- --------------------------
September September September 30, September 30, 2006 30, 2005 2006
30, 2005 ------------ ------------ ------------- ------------
Revenue: (Unaudited) (Unaudited) (Unaudited) (Unaudited) Product
revenue $7,232,110 $7,518,182 $20,745,333 $21,621,380 Funded
research and development and other revenue 1,259,301 2,822,745
3,456,073 5,150,643 ------------ ------------ -------------
------------ Total revenue 8,491,411 10,340,927 24,201,406
26,772,023 ------------ ------------ ------------- ------------
Operating costs and expenses: Cost of product revenue 7,263,847
7,764,620 19,784,845 20,412,485 Research and development and other
revenue expenses: Funded research and development and other revenue
expenses 1,123,566 2,512,622 3,201,650 4,664,671 Unfunded research
and development expenses 522,073 232,302 1,594,974 467,887
------------ ------------ ------------- ------------ Total research
and development and other revenue expenses 1,645,639 2,744,924
4,796,624 5,132,558 Selling, general and administrative expenses
2,898,676 2,757,051 9,651,652 8,279,916 Amortization of intangibles
97,794 111,671 321,136 335,013 Gain on sale of assets (209,054)
(317,802) (399,015) (317,802) Write-off of impaired long- lived
assets -- 1,190,436 -- 1,190,436 Restructuring costs 262,000 --
262,000 -- ------------ ------------ ------------- ------------
Total operating costs and expenses 11,958,902 14,250,900 34,417,242
35,032,606 ------------ ------------ ------------- ------------
Operating loss (3,467,491) (3,909,973) (10,215,836) (8,260,583) Net
unrealized gain on warrants to purchase common stock -- (1,511) --
(28,975) Other income (expense), net (3,722,788) 37,178 (3,659,417)
(98,566) Interest income 121,976 14,412 274,758 40,091 Interest
expense (514,866) (313,592) (702,982) (465,634) ------------
------------ ------------- ------------ Net loss $(7,583,169)
$(4,173,486) $(14,303,477) $(8,813,667) ============ ============
============= ============ Net loss per weighted average share,
basic and diluted $(0.19) $(0.12) $(0.37) $(0.26) ============
============ ============= ============ Weighted average number of
common shares, basic and diluted 39,519,376 35,870,620 39,052,834
34,161,256 *T .
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