updated 11/9/2010 7:16:55 PM ET 2010-11-10T00:16:55

WATERTOWN, Mass., Nov. 9, 2010 (GLOBE NEWSWIRE) -- A123 Systems (Nasdaq:AONE), a developer and manufacturer of advanced Nanophosphate™ lithium ion batteries and systems, today announced financial results for the quarter ended September 30, 2010.

"We remain very optimistic about our opportunities and the pace of customer activity. During the third quarter, A123 made substantial progress in our production ramp-up and shipped a record number of transportation battery packs," said David Vieau, CEO of A123 Systems. "Based on updated estimates from certain transportation customers, the projected timing for ramping our production volumes has shifted from the fourth quarter of 2010 to the second quarter of 2011. Our long-term expansion plans with these programs remain unchanged, and we continue to make progress with both new and existing customer relationships. We advanced our recent development program with a major auto manufacturer for a new electric vehicle program, which we expect will lead to a production agreement. Activity levels in China are also very strong, and the joint venture established between A123 and SAIC Motor Co. Ltd. has been selected to develop battery packs using A123 cells for a new 2012 model year electric passenger car to be produced by SAIC in China."

Vieau added, "We officially opened our Livonia facility with recognition from several federal, state and local dignitaries. Production start-up expenses with new products and the new facility being scaled up were greater than initially anticipated, though importantly, we expect the company to meet its target to more than double its worldwide manufacturing capacity on a year-over-year basis by the end of 2010. We continue to execute against a strategy to be the leading supplier of lithium-ion batteries to the transportation and electric grid markets, which we believe will create a very large and profitable company over the long-term."

Financial Highlights

Revenue: Total revenue for the third quarter of 2010 was $26.2 million, compared to $23.6 million for the third quarter of 2009. Within total revenue, product revenue was $19.0 million, compared to $20.0 million in the third quarter of 2009, and services revenue was $7.3 million, compared to $3.6 million in the third quarter of 2009.

For the nine months ended September 30, 2010, A123 Systems reported total revenue of $73.3 million, an increase of 10% compared to revenue of $66.5 million in the same period in 2009. For the nine months ended September 30, 2010, product revenue was $54.3 million, compared to $56.6 million in the same period of 2009, and services revenue was $19.0 million, compared to $9.9 million in the same period of 2009.

Gross Profit/(Loss): Gross loss was ($3.1) million in the third quarter of 2010, compared to a gross loss of ($1.9) million in the third quarter of 2009. For the nine months ended September 30, 2010, gross loss was ($8.1) million, compared to ($2.6) million in the same period of 2009.

Net Income/(Loss): Net loss was ($43.7) million, or ($0.42) per common share, based on 104.7 million weighted average common shares outstanding in the third quarter of 2010. This compared to a net loss of ($22.8) million in the third quarter of 2009, or ($1.78) per common share, based on 12.8 million weighted average common shares outstanding. 

Adjusted EBITDA: Adjusted EBITDA, a non-GAAP financial measure, was ($36.5) million in the third quarter of 2010, compared to ($16.3) million in the third quarter of 2009. 

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included at the end of this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

Cash: A123 Systems had cash and cash equivalents of $301 million at September 30, 2010, compared to $353 million at June 30, 2010. This decrease in cash resulted from continued investments to increase our worldwide manufacturing capacity and global operations.

Other Third Quarter and Year-to-Date Business Metrics

Revenue Mix: During the third quarter of 2010, transportation revenue was $9.5 million, electric grid revenue was $6.0 million  and commercial revenue was $3.5 million. This compares to a revenue mix of $8.3 million, $6.3 million and $5.4 million, respectively, in the third quarter of 2009. 

For the nine months ended September 30, 2010, transportation revenue was $30.2 million, electric grid revenue was $11.2 million and commercial revenue was $12.8 million. This compares to a revenue mix of $34.0 million, $6.3 million and $16.3 million, respectively, for the first nine months of 2009.

Product Shipments: During the third quarter of 2010, A123 Systems recorded product shipments equivalent to 15.8 million watt hours, compared to 17.1 million watt hours in the third quarter of 2009. 

For the nine months ended September 30, 2010, A123 Systems recorded product shipments equivalent to 44.2 million watt hours, compared to 44.8 million watt hours for the first nine months of 2009.

Non-GAAP Financial Measures 

This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by A123 Systems management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, A123 Systems believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. A123 Systems management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.

A123 Systems defines "Adjusted EBITDA" as operating loss plus depreciation and amortization of tangible and intangible assets and stock-based compensation expense.

Conference Call Information

About A123 Systems

A123 Systems, Inc. (Nasdaq:AONE) develops and manufactures advanced lithium ion batteries and battery systems for the transportation, electric grid services and commercial markets. Headquartered in Massachusetts and founded in 2001, A123 Systems' proprietary nanoscale electrode technology is built on initial developments from the Massachusetts Institute of Technology. For additional information please visit www.a123systems.com .

The A123 Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6600

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding the Company's manufacturing capacity expansion, customer demand for the Company's products, and the Company's expectations regarding a production agreement with a major auto manufacturer.       

These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond A123 Systems' control.

A123 Systems' actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, the timing and terms of the Company's U.S. government funding, delays in customer and market demand for and adoption of the Company's products in the transportation, electric grid and other target markets, the Company's ability to expand its U.S. manufacturing capacity to address anticipated market demand, delays in the development of the Company's new products, the Company's ability to attract new customers and retain existing customers, continued delays in production by the Company's customers, increases in production start-up expenses, adverse economic conditions in general and adverse economic conditions specifically affecting the markets in which the Company operates, failure to negotiate acceptable contract terms with new customers or early termination of the Company's agreements with key customers, and other risks detailed in A123 Systems' other publicly available filings with the Securities and Exchange Commission.

Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent A123 Systems' views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. A123 Systems undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing A123 Systems' views as of any date subsequent to the date of this press release.

AONE-F

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