News | Energy Efficiency

http://www.newenergyworldnetwork.com/renewable-energy-news/by-technology/wind/amsc-battles-suit-over-shipment-revenue-allegations.html

Investors in global American Superconductor (AMSC) have launched a law suit led by US investor-focused law firm Hagens Berman against the manufacturer in the Massachusetts district court.

The investigation centres on alleged revenue misrepresentation of financial data based on a failure to disclose shipment information for the 2010 financial year.
Headquartered in Massachusetts, AMSC is a leader in manufacturing power components for renewable energy technologies such as wind turbines and electronic control systems.
The complaint charges the manufacturer and some of its executive officers with federal securities violations involving revenues in relation to Sinovel Wind Group between now and mid-2010.
According to the complaint, AMSC claims that Sinovel, which is one of its largest customers, refused to accept contracted shipments at the end of March last year, coinciding with the end of its fiscal year.
AMSC said Sinovel planned to reduce its inventory levels before accepting any further contracted shipments, leading to lower-than-forecasted earnings.
AMSC’s shares fell 41.84 per cent to close at $14.47 per share following the disclosure of the shipment incident earlier this month. The manufacturer said it would review the appropriateness of the timing of the revenue recognition on approximately $56m of unpaid shipments in the second, third and fourth quarters of fiscal 2010.
The period of investigation has now been extended to allow the company to review the timing of revenue recognition in the last financial year.
Allegations against AMSC claim that the company contracted shipments with Sinoval that were in excess of its needs, and that its management had knowledge of this, which it allegedly failed to disclose.
The suit suggests that Sinovel was not paying AMSC for some contracted shipments but continued to make the shipments in order to overstate its revenue.
Law firm Hagens Berman said in a statement, ‘This is not a sudden event unknown by management. Admitting that they have to go back to review the timing of revenue recognition in the second, third and fourth quarters hints of desperation to hide their weak demand from Sinovel for much of the year. Clearly, their accountants have refused to sign-off on such accounting gimmickry at year end.’